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Recently, it came to my attention that a few “naysayers” are once again attempting to spread falsehoods about the direct selling industry. It is ironic, though, that this is occurring in one of the most challenging times in many, many years. Millions of people have been hurt by layoffs, salary cuts, lost bonuses and uncertainty. In this type of economic climate, the microenterprise opportunities offered by companies selling products and services through independent contractors could just be the very hope people from all walks of life need to survive, or perhaps even thrive.
Debunking the falsehoods that dog direct selling companies could seem like a game of Truth or Consequences—except, in this game, there are no winners. Misunderstandings, myths and misperceptions may mean missed opportunities for distributors, lost revenues for sound companies and slumping stock prices for publicly traded businesses, making exposing myths of critical importance.
Naysayers are not to be discounted completely, because they may, at times, reveal aspects of a company’s business that warrants attention and adjustment. However, myths can be dangerous, and companies should not be content to let them slide. Those who tend to find fault with an industry that keeps its door of opportunity open for all people, regardless of business experience, would do well to take a closer look at what really attracts people to microenterprise opportunities—and direct selling as a form of microenterprise. Financial, legal and discount healthcare services and real estate opportunities are often looked upon as being forms of direct selling. However you describe a microenterprise opportunity, the same rules apply to it that apply to any other venture in life. Some distributors will succeed beyond the norm, build careers and earn substantial sums of money, and some will continue their day-to-day lives and earn extra income.
Research indicates that there is a dichotomy between the public perception of the direct selling industry and individuals’ personal experiences. Personal experiences are uniformly positive—well into the 90 percent positive ratings. However, some of the major myths that often need debunking are: The products sold through direct selling companies are often overpriced, people are pressured to buy or be recruited, earnings potential is exaggerated and no one makes any money.
Globally, there are more than 60 million people involved in direct selling, so there must be something going on to attract so many types of people.
Products and services have always been a key attraction. Typically, products sold through direct selling are either unique or they offer a great price-value relationship. Many direct selling distributors were initially passionate and loyal customers of the products and services they now sell, including everything from cookware to health and wellness products to legal and financial services. Within direct selling companies, product information and education abound, whereas at traditional retail stores, the consumer struggles to understand what they are buying. Often, purchases based on price because there is no real, relevant information. At direct selling companies, however, there is more product information available, the product quality is first-class, and the price-value relationship meets the scrutiny of the consumer and exceeds the perceived value of the competition.
The income potential provided by direct selling companies is contingent upon the personal effort of the independent contractor. Some distributors earn a few dollars per month, and some earn several thousand. Naysayers often confuse themselves, though, by focusing on the fact that some distributors do achieve extraordinary rewards and make their dreams come true!
Companies would be wise to make sure their distributors do not set the bar too high when presenting the opportunity to others. When selling the dream too heavily, you could be setting others up for failure. You also run the risk that financial success may not be that person’s definition of success. Some people just want to offset the cost of their products. Others want to cover their house or car payment or earn enough money to get out of debt. When a distributor tells a prospect that they’re going to be able to achieve financial independence, they set that prospect up for failure if their drives don’t match. Many do achieve financial independence, and many don’t. The income earned is determined by each individual.
The facts are these: Distributors participate in this industry overwhelmingly on a part-time basis. Mean gross income is about $14,500, but $2,500 is the median income, meaning 50 percent of people earn more and 50 percent earn less. The reality is that you have to understand the motivations that bring people into this industry, and people’s motivations are primarily modest. They may not even be financial. They could be more about recognition or social contact.
Several companies have been accused by naysayers in past several years of misrepresenting their opportunities and attracting people based on false hopes. To the best of my knowledge, none of these attacks have ever stood the test of scrutiny and investigation. In fact, these allegations are usually dropped after the companies defend their policies and practices through their communication vehicles. Some of these allegations appear to be an attempt to manipulate stock prices, as they are usually directed at publicly held companies. Those who attempt to manipulate stock prices are normally known as “short-sellers.” Short-sellers sell stock they don’t own and then “plant” stories in articles, TV shows and other media that are derogatory to the company so as to drive down the share price of the company they are “shorting.” The short-seller’s goal is to make a profit on the shares of the company they are shorting.
The beauty of direct selling is that the companies provide people hope, no matter their circumstances or objectives. Many companies also emphasize personal development, which stresses the importance of setting goals and adhering to specific plans to make dreams come true. And direct selling companies create an environment where people with a variety of backgrounds and experiences can interact with other successful business builders, as well as those who’ve embraced direct selling to supplement their income or increase their social interaction.
Direct selling is a unique industry at a very unique moment in time. Participants can gain access to some of the finest products and services, learn new skills and build a business, if they choose, without limiting their reward expectations. The industry provides what many need right now: hope. Congratulations to the leaders of the direct selling industry for all that you do! It is our hope that you, the leaders and decision-makers, will lead your people by debunking the myths and demonstrating to all what this industry is really all about!
Myth: Ninety percent of people who enter direct selling businesses lose money.
Fact: The median annual income for direct selling distributors in the United States is $2,500 a year, or just more than $200 a month. The typical cost to get involved in a network marketing business is less than $100. Overwhelmingly, distributors work part time to earn supplemental income. Less than 8 percent of distributors put in 40 hours a week or more. Of those working their businesses full time, 25 percent earn more than $100,000 annually.
Myth: All direct selling businesses are pyramid schemes.
Fact: This fable is caused by true pyramid schemes that try to pass themselves off as legitimate.
Myth: Products sold by direct sellers are overpriced.
Fact: Distributors who join companies are the most accurate measurement of this myth. The fact is they would not remain with a company if they felt the products to be overpriced.
Myth: Direct selling is populated with intrusive, high-pressure salespeople.
Fact: Fortunately, this myth is becoming less common. Companies that Direct Selling News interviewed were unanimous in their response—pushy salespeople are rare. Most simply show products and let the quality speak for itself. Then, if a customer seems interested, they’ll explain the opportunity.
