Direct Selling Lesson 101

articlemania By articlemania, 15th May 2011 | Follow this author | RSS Feed
Posted in Wikinut>Money>Making Money

Direct Selling has been around for ages. However, the misconceptions and lack of understanding has led many people to lose money in such a venture. The main problem is that people are ignorant about a genuine direct selling opportunity. There are various ways you can gauge a direct selling company before you commit. This page aims to bring to attention to the people considering entering the direct selling market but are help back by popular beliefs.

Understand the Company

What is the main business?
Is it recruiting or is it product sales? If the main business of the company is in recruiting and not much on product sales you better pack your bags and leave. The company is a pyramid scheme and you will not make much, if anything in that company.

A stable and successful direct selling company has a good line up of products that are of value to the customers. They will have a wide range of products under various categories. Suppose the company is a wellness company, it will have product ranges from skin care, weight management and supplements at the least.

Recruiting should be secondary and you should not be paid just to recruit a prospect. A company who actually pays your to recruit is lousy. You should look for a direct selling company that will pay you compensation when a person you recommend likes the product and helps you grow the business.

It is no good if you get paid for recruiting a person and that person remain inactive without buying anything or selling anything. All you earn is just a mere sum as a form of introduction. Someone could actually sign up just to get you out of their hair. There is no business involved here and this is not what you want. Direct selling is a business with a lot of potential and you do not want to just add people to your list without adding value to your business.

How Long has the Company been Around?
Long strong years means commitment and stability. This is a company that has been around and people have stayed on to make it successful. More than 7 years would be a good bet and there are companies that have been around for more than 33 years in this industry.

Does it have Products?
Believe it or not, there are companies that have one or no products but call themselves direct selling company. Beats me what they are selling! A good company has a strong lineup of products in various categories. And the main focus of the company is to sell products instead of joining people into the company. If they like the product, enrollment is a natural process.

Understand the Products

Products are the lifeline of any direct selling company. What you need to know about is the unique selling point of the products that are offered by the company. Is it something that is of value and not already found in market? Does the product have research backing? Does the product really work?

All direct selling companies (genuine ones) have product presentations to familiarize you with the products. They will conduct demos and bring in experts to teach you about the products in depth. If you do not find such practices in the company you are looking at right now, you need to leave as well. Without proper introduction to the products,unless you are an expert in the product they are selling, you will have no idea if the products are any good.

Understand the Compensation Plan

If you do not understand how the compensation plan works, how do you expect yourself to present the same information to a prospect?

How Stable is it?
A compensation plan is what makes a direct selling distributes prosper. There should be a clear and non interruptive compensation plan laid out clearly. There should not be instances where the company has changed its compensation plans time and again. This is very disturbing to the network of distributors as they have to learn a plan, master it, unlearn it, learn a new plan and master it all again. A stable company has a stable compensation plan that is easy to understand.

Do You Understand?
If you are not able to grasp the compensation plan after 5 sittings and you feel as if your queries are not being answered to eliminate any doubts you have, you need to leave. Nothing can be more stupid than getting into a business without understanding the underlying compensation system.

What are the Elements?
Different direct selling companies have different ways of computing earnings. Some follow the points system. Some follow the business value system. Some follow case credits.

Some direct selling companies require that you balance your legs; Right Leg and Left Leg, before you can make any money. If you keep getting sales on leg and the other leg is inactive, you could be making millions in sales for the company but you will not earn anything.

Some direct selling companies base their compensation on the wholesale price.

Some direct selling companies base their compensation on the retail price.

Do your math and see how much you can realistically make in a month should you work normal working hours and find the opportunity that is right for you. Never jump into an opportunity that looks too good to be true. It probably is.

Are the Products Sale-able?

Look at the retail price of the products the company is selling. If it is high, is it justified? Many people do not buy from direct sellers because the price higher for a similar product in the market.

If your direct selling company is a manufacturer of the raw materials of the products, the prices will be much cheaper and it will have the better way of handling price increases and so on. Many direct selling companies buy from third parties and as such, they are not able to control the prices.

Understand the Buy Back Option

If the direct selling companies have no buy back option (30 day / 60 day etc) its better you do not opt in. Genuine direct selling companies have products they will back well. As such, they will have buy back option and they will make it easy for you to exchange or return products.

Understand the Catch 9 Situation

Catch 9 situation in a direct selling occurs is when you find yourself in a position that you find out something you have not been told initially. This could be in the situation of the how the compensation is calculated, the minimum joining fee, training fee, compulsory monthly payments, etc.

To avoid the catch 9 situation, you need to ask questions and lots of it before you invest in any direct selling company.

Ask if there is a minimum threshold you need to reach before you can start earning
Ask if there is a minimum quota of references needed in any month to be considered an active member
Ask about the payment options. How often are the payouts made etc.
Ask if you can track your sales and references 24/7.
Ask if there is a buy back policy.
Ask what happens to the down lines when a person leaves.
Ask what happens when your sponsor leaves
Ask what are the levels of compensations and what happens if a down line starts earning more than you do.
Ask if you can take your business international.

Ask anything else you need to know before it is too late.

Enthusiasm of Your Sponsor

This is quite important although not very as you will be in charge of your own business. A sponsor is a person who introduce you to the direct selling opportunity. The sponsor will be your first point of contact and you will be taking all your initial queries to your sponsor. Therefore, it is necessary that you understand what your sponsor will offer you. There must be a business path that both of you agree upon a work towards such that you succeed.

A quality sponsor will ensure that you attain success and will help you in any way possible. If you fin that your sponsor is not enthusiastic or knowledgeable about the company, something is very wrong. You have 2 options here; find a new sponsor if you are not already committed or start finding out about the company and its products yourselves.

Summary

There are scams everywhere and the last thing you want to end up in is that. Therefore, ensure that you take your time and run down every aspect of your concern and get answers before you commit. Also, ensure that you understand what you are getting into before spending anything.

If you have queries or suggestions to improve this page, I am open to the idea. Also, if you had any experience (good/bad) please feel free to share.

Good Luck to a Successful and Happy Direct Selling Journey.

Tags

Business, Business Management, Business Online, Business Opportunities, Business Opportunity, Business Owner, Business Startup, Business-To-Business Services, Businesses, Direct Sales, Direct Selling, Door To Door Selling, Mlm, Mlm Training, Personal Sales, Personal Selling

Meet the author

author avatar articlemania
I am a freelance writer and my works are mostly business and career related while I love writing about beauty, skin care, health and wellness as well.

I am also a consultant with Forever Living.

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Comments

author avatar Tranquilpen
15th May 2011 (#)

What a great read, thank you articlemania

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author avatar articlemania
16th May 2011 (#)

Thank You :)

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author avatar Ashley Riggs
21st May 2011 (#)

I really appreciate the advice here, I didn't know this when I got started 4.5 years ago in the direct sales industry but dumb luck landed me into a fabulous company full of great people and even better products that is consumer driven like you mentioned above. We even did a documentary on the industry so people can get a clear idea of what thenlife of a network marketer really is...check out www.thepyramidthing.com

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author avatar D in The Darling
22nd May 2011 (#)

This is an eye opener. Thanks a lot for sharing. Please keep them coming.

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