Before anything, it is important to know what network marketing is. Network marketing is a term usually referred to as Multi-level Marketing (MLM) in the industry. Passive income seekers usually use this method as an investment opportunity.

The principle consists of a company selling it’s products through distributors, who in turn start their own network of customers by adding other distributors underneath. This chain reaction creates revenue for both the companies and distributors, through a system that has been coined compensation plan.

Now, this basic outline has been in use by thousands of companies for several decades. Many different products and compensation plans have evolved over this period of time.

The most attractive part of a company applying network marketing tactics (aside from the procucts which obviously have to meet certain standards), is the compensation plan involved. A compensation plan is, simply put, the commission a distributor receives for sales or downline product consumption. There are several varieties of plans, and they can change from company to company.