Direct selling is a unique channel of distribution where individual salespeople choose their own level of involvement, where some companies categorize their sellers and others do not, and where unique aspects of the business model continually offer compelling rewards not available in traditional work environments.
For those individuals willing to put in time and energy, direct selling truly has significant earning potential. Many people get their start in direct selling in order to make a car payment, pay school tuition or credit card debt, or for other specific reasons. At first, they may work a handful of hours per week to earn this extra money. But many quickly come to understand that direct selling is based upon a directly proportional equation: The more time and energy you put into building your business, the more money you make. But even then, the dollars are only a part of what should be measured.
When it comes to the many moving parts of opportunity within the direct selling industry, multiple aspects must be considered to truly cover the spectrum of success. Some of these aspects are not easily measureable in the traditional sense, such as levels of self-satisfaction or rewards such as recognition. This is why oversimplification of the industry can lead to misunderstanding, and even misrepresentation.
Multiple aspects must be considered to truly cover the spectrum of success and some of these aspects are not easily measureable in the traditional sense.
Motivation and Intent
To better understand the direct seller, it’s necessary to consider the individual motivations and intentions of some 15.6 million direct sellers in the United States and some 91.5 million worldwide. Among their ranks, the “why” stories of these direct sellers are as unique as their personalities and their varying needs. From earning small amounts of money to making big career changes, direct sellers get involved with their companies for a variety of reasons.
Additionally, small-business ownership and entrepreneurialism still hold out hope for many disillusioned people, as traditional corporate jobs become less reliable. When a previously unemployed or underemployed person finds success in running a small direct sales business, the relief, joy and aspirations that are all tied up in that act are hard to separate from the dollars one earns.
A signup fee with a direct selling company not only allows the direct seller to “open for business,” it also provides invaluable resources. On the back end, the company conducts all the development and branding necessary to ensure that its product or service is viable. Then, on the front end, it provides the mechanisms needed for the salesperson to build a business based on that product.
This support structure is a very appealing aspect of the industry, according to David Bach, New York Times best-selling author. He says, “The beauty of the direct selling business opportunity is that it’s all done for you. You don’t have to create a business plan. You don’t have to create a product. The only thing you need to do is find a reputable company—one that you can trust—that offers a product or service that you believe in and can get passionate about.”
Is it any wonder then that direct sellers measure their success differently than someone analyzing traditional industry data? Outside direct selling, success most often correlates directly to product sold and revenue earned. Inside the industry, effective results take on a broader definition. Direct sellers take into account personal development, obtaining or refreshing job skills at little or no cost, social interaction, ability to control one’s method of work or gaining wholesale pricing on top-notch products.
With direct seller intent in the equation, it is easy to see how simple division does not adequately or accurately depict success within the direct sales industry. Also, adding in all the complexity that Gen Y brings to the table makes measurements that much more difficult. According to the 2011 Cisco Connected World Technology Report, over half of the Gen Ys surveyed felt their work schedules should be flexible, and a whopping 70 percent believed that being in an office regularly was unnecessary. These are choices that can be satisfied through direct selling.
“The more you can love what you do, because it’s connected to an interest you have, the more successful you’re going to be. Passion is often the difference between drudgery and heaven.”
Obviously, these things cannot be measured in the traditional sense of dividing what’s been sold by the number of sellers. Self-satisfaction and passion are often the motivators for those engaged in direct selling businesses. Tory Johnson, best-selling author and Founder/CEO of Women for Hire, a high-caliber diversity career expo company, says, “The more you can love what you do, because it’s connected to an interest you have, the more successful you’re going to be. Passion is often the difference between drudgery and heaven.” How is that measured?
Larry Chonko, the Thomas McMahon Professor of Business Ethics, University of Texas at Arlington, says, “Based on a simple review of the broader number, one could easily assume that a relatively small percentage of folks that enroll in a direct selling company actually make significant sums of money. My response: That’s because only a relatively small percentage have that intention to begin with. The vast majority is not getting into direct selling to start a full-time business and only those with that intent should be evaluated from the perspective of how much money they made.”
“The vast majority is not getting into direct selling to start a full-time business and only those with that intent should be evaluated from the perspective of how much money they made.”
—Larry Chonko, the Thomas McMahon Professor of Business Ethics, University of Texas at Arlington
Full-Timer, Part-Timer or Some-Timer
Defining a direct seller is no easy task, but the World Federation of Direct Selling Associations recently released language that sums up the motivating factors for millions who participate in the industry.
“Direct sellers are career-minded entrepreneurs building their own businesses… or part-time entrepreneurs earning extra income. Through direct selling, they learn new skills, make new friends/ contacts, gain greater self-esteem, and have the opportunity to give back to the community through the many social responsibility initiatives that direct selling companies undertake. Of this diverse group, many were customers of the products/services prior to becoming a company representative. As direct sellers, all enjoy significant discounts.”
According to Connie Tang, President and CEO of Princess House, “Not every company chooses to categorize direct sellers into different buckets—full-timer, part-timer or some-timer. But they are all inclusively correct because that person has a choice in how they want to engage with the company.”
Michael Norris, President of PartyLite, says, “People often join a particular company because they fall in love with the product—for their own use. If I have a belief in the product and what it offers me, I want to share it. That’s the genesis of anyone getting into direct sales. They love the product, they consume the product and they are advocates of the product.” But not every direct seller advocates for their favorite products in the same way.
Some simply consume and enjoy the discounts that come along with joining the direct selling company. Discounts on products actually then become a benefit.
Chonko explains, “I get rewards points if I shop Best Buy, for example, or some of the tire stores. I get cash back if I use a credit card. I get cash back if I use a Sam’s or Costco membership.” A variety of industries use rewards programs like these to draw loyalty and build relationships with customers, then consumers reap the rewards.
Chonko, a business ethics professor, views personal use as a natural bonus of the model in direct sales. “All it means,” he says, “is that I am signing on with something in some way and have the opportunity to personally use what I’m selling.”
That incentive could be access to wholesale pricing or loyalty program discounts, which could turn a dedicated customer into a distributor.
“Salespeople in any industry are more likely to be successful if they personally use and understand the products they sell. Direct selling is no different,” says Sandy Spielmaker, Vice President of Sales at Amway North America.
Personally using the products one sells speaks to product confidence. Ask the president of General Motors why GM offers discounts to employees and their families. It’s because they want them driving GM cars. The employees are brand ambassadors, spreading the word about the qualities of GM cars. In so doing, GM has plenty of advocates driving on American highways.
Companies have come to understand that from their maintenance staff on up through the mid-management ranks to the senior execs, if the people who work in the building become ardent users and promoters of the company’s products and services, this attitude will spill over to the customer service policies and actions, and then on over to the end customer. Here, building brand ambassadors all starts with the company employees. In direct selling, the same effort is at work with the independent consultant.
“You’ve got to think like a microbusiness owner,” Norris says. “I have a ‘store front’ and I have to treat it like a business. If I’m an independent business owner in any direct selling company, I’m not going to use similar products from another company. First and foremost, I have to believe in the product I am selling.”
Tang adds, “To genuinely and authentically represent company values, products and services, you have to be a consumer—your own best customer.”
Better Servicing Customers
With technology advancing at great speed, customer service options are also advancing for direct sellers. Far more productive methods for servicing customers exist today than even five years ago. From personal consultant websites, mobile tablets and apps for accessing product descriptions and demos, to smartphones that can both order and process payments, consultants have a variety of ways to better serve customers than ever before. Many companies are now supplying both their independent consultants and consumers with world-class service experiences.
For those more mature companies who have traditionally relied upon delivery of product to the consultant, who then sells to the customer, tech advancements are making it easy to transition to carrying less inventory. The opportunity is often even more attractive to people who can go into business immediately, without having to order products to have on hand.
“The customer today can go onto the consultant’s website when they get a promotional offer and get it shipped to their home,” Norris says. “We’re finding ways for consultants to carry less and less inventory and they can service customers without the need of pre-ordering product. Over 25 percent of our sales are online and we ship direct to the customer. Our customers are everywhere. Philosophically, we incentivize our consultants to have just enough inventory to conduct their business.”
“We’re finding ways for consultants to carry less and less inventory and they can service customers without the need of pre-ordering product.”
—Michael Norris, President, PartyLite
A Unique Channel of Distribution
Twenty-first century direct selling emphasizes a stronger business approach to recruiting team members, thanks in part to the Direct Selling Association’s Code of Ethics.
Today’s direct sales practice of recruiting people into a downline to sell products is more simply defined as “a distribution channel,” according to Professor Chonko. He takes no issue with the business ethics of a distribution channel that is structured differently than the traditional—manufacturer, wholesaler, retailer—version known best to the public.
“Direct selling regroups people primarily to promote and sell their products. The ethics issues with that seem to come from the notion that I make all of my money strictly on recruiting and not on the sale of the product,” Chonko says.
After 30 years studying the ethics of the direct selling industry and sifting through compensation plans, Chonko says he finds direct selling companies “stress products have to change hands from seller to buyer before any distributor can earn money as a result of recruiting or as a result of the efforts of other people in the downline. If you are the top dog in the downline, you still have to sell products to earn commissions that accrue up the downline.”
For those who may have questions regarding the recruiting aspects of direct selling, collective accountability comes by way of the DSA’s Code of Ethics. “The industry has a high level of integrity today,” says Norris, who notes the DSA’s ethics policy is built into many company codes of ethics, including PartyLite’s. “I know companies that aren’t members, but they still follow the DSA Code of Ethics.”
Direct selling has a unique way of employing word-of-mouth. The power it holds for marketing and selling products has been obvious for decades in a variety of industries. But Chonko says, “Word-of-mouth can be positive or negative, depending upon who is issuing out the directives as credible.” Social media plays a huge role in word-of-mouth today, and everyone—expert or not—can access the forum to praise or disparage. Often a few negative comments about a direct selling experience can get blown out of proportion, simply because anyone can be an expert today.
Consumers purchase countless products every year. Some perform to their expectations and others do not. Chonko’s business ethics class at the University of Texas at Arlington recently bore out his theory that solitary bad product experiences tend to linger and outweigh countless good ones. “To some degree, we do the same thing with direct sales experiences. We remember the one bad sales experience, but we’ve dealt with lots of folks in various direct selling settings that have been very good,” he says.
Coming off a year when so much focus in the media related to jobs, direct selling companies led the way in providing opportunities for over 91 million individuals globally, generating nearly $154 billion in sales. The benefits of creating opportunity for this many people are often overlooked by those who do not take the time to understand the many benefits of direct selling. A newly developed skill is something a person has forever, and can utilize in other circumstances. Direct selling companies are some of the only businesses that offer significant, substantial training for little or no cost to the individual.
Glenn Williams, President of Primerica, a financial services company, says he believes direct selling is the ideal solution for anyone looking to earn an income and simultaneously develop priceless skills. “The training experience you receive when you join Primerica has value in and of itself—first, it benefits the individuals personally, and second, it can be applied to other careers in their future.”
What lies ahead for direct sellers and their companies? “We keep having the conversation about opportunity, standing on our ethics that we know are true,” says Adrienne Murphy, Vice President of Sales and Marketing at Gigi Hill. “The fundamentals are solid. They will keep us going and keep us relevant. We can pull back the curtain and have nothing to hide. That’s what makes this industry so great.”
Direct selling is an “all-embracing, all-inclusive opportunity that you won’t find in any other industry,” Tang says. And that is precisely why she defends it. “It’s an incredible thing we do to help people have opportunities to do what they do in direct sales.”
Editor’s Note: To learn more about direct selling, visit the Direct Selling Education Foundation website at www.dsef.org. Go under Current Initiatives: Ethics Initiative—What is Direct Selling? to watch a compelling video.