Chapter 1

Examining the Direct Sales Industry

IN THIS CHAPTER

Grasping a clearer picture of direct sales

Checking out the three types of direct sales models

Getting off to a great start with a checklist

Working on the right skills to succeed

Viewing ways to work your business

You may have been drawn to start your direct sales business for any number of reasons, or perhaps you're still conducting research before you move forward. Either way, I welcome you to direct sales, a distribution model that has changed many lives.

Direct sales or direct selling refers to the sale of products or services away from a fixed retail location. These products are marketed and sold directly through independent sales representatives, also known as consultants, presenters, distributors, and a variety of other names.

Direct sales reps aren't employees of the direct sales company. Rather, they're independent business owners who enjoy all of the benefits of being self-employed with the added perk of being a part of a company that handles operations like shipping, product development, marketing, and more.

You're in business for yourself, not by yourself.

Direct selling gives both men and women the opportunity to be in business for themselves, add to their families' incomes, and help create the life they have always imagined. The direct sales industry is filled with success stories from stay-at-home parents paying for dance lessons, retirees seeking extra income, and families buying their dream home. Whatever your goal is, direct sales is probably an industry that can help get you there.

Was your mother a Tupperware lady when you were a kid? Did your neighbor sell Avon? Did your family know an Amway millionaire? Even if not, you're probably quite aware of some of the legendary companies that have used this network style of marketing their products. Direct sales companies include some major household names and global brands nearly as familiar as Coca-Cola, McDonald's, General Mills, or Kraft. Here are a few examples:

• Beach Body
• Cutco
• Mary Kay
• Pampered Chef

You may have noticed friends on social media posting about making extra money, earning free trips, or perhaps even quitting their day jobs. Plenty of people have been successful with businesses like these. Regular people just like you continue to build thriving businesses in direct sales today.

You may be interested in starting your business to generate extra income while working part time - or maybe you aim to ultimately rely on direct sales as your primary income. Or you could be like a lot of people who have fallen in love with a product, watched a friend or acquaintance work their business, and decided that you, too, want to earn free product and some income by sharing something you're passionate about. If you're like the vast majority of people who join direct sales companies, your reasons may involve a combination of these possibilities.

The world of direct sales has been very significant in my life for more than 40 years. I'm sincerely grateful for all it has provided me and my family. The income and rewards of direct sales companies have afforded me a lifestyle I couldn't have imagined and have led me to treasured lifelong friendships.

The direct selling industry can help you achieve what you want out of life. The details of what a better life looks like are completely up to you.

But how does direct sales work, and what does becoming an independent direct sales rep involve? This chapter serves as a jumping-off point to the world of direct sales and explains what you need to know to have a better understanding of this opportunity.

Understanding How Direct Sales Works

In direct sales, the products are sold by independent representatives, not employees. These salespeople purchase a business starter kit to join a direct sales company. A business starter kit typically requires a low-cost fee for materials, the details of which differ among companies. This starter kit often includes products that you can use personally or use to showcase at online or in-person events. This kit includes necessary paperwork and training materials that will help you get your business off to a fantastic start. This purchase, along with signing the company's standard agreement, sets you up as a member or independent representative.

As a rep (or consultant, or brand ambassador, or perhaps another title, depending on the company), you're an independent contractor who works on a commission-only basis, running your own small business. Because you're truly independent, you don't report to a supervisor. You set your own hours. You decide when, whether, or how often you will work. If you feel like it, you can increase your efforts and earn more money - in effect, giving yourself a raise - or you can pursue advancement with a new title. With direct selling, all career titles, promotions, and pay raises are based solely on production.

You are independent, yes, but you also have a built-in support system from the company and from your team. You're part of a team of other independent representatives who have a vested interest in your success - your upline. Your upline includes your sponsor, the person who helped you join the business (whom you get placed directly under in terms of organizational structure), along with other experienced people whose businesses are connected to your business through a sponsorship line. These upline mentors can really help you. They know how to create success in the business and have sponsored many other independent representatives. Because they already know how to sponsor, they can show you how to do the same. Your access to this mentorship is built in to the direct sales business model.

In addition to being taught how to sell products, you'll be trained on how to meet people outside your own personal circle to sell products to and how to introduce people to the benefits of becoming a representative as well.

You can feel comfortable turning to your upline for support because the business model pays them commissions based on the success of the people in their sponsorship line. They're eager to see you succeed and they understand the details of your business better than anyone. Your success contributes to their success, so they have an incentive to provide you access to the tools and information you need to run your business well.

Direct sales offers the average person a way to earn income with an established business model and a marketable product line. It works almost like a mini-franchise without the initial investment. It can cost a new business owner tens of thousands or even millions of dollars to open a brick-and-mortar franchise like a donut shop or fast-food restaurant. With direct sales, you benefit from your affiliation with a company that has created the concept, conducted research and development, incurred the manufacturing costs, and invested the money in starting the larger business and brand. This provides you with a low-risk opportunity to earn more money than you could realistically by starting from scratch alone.

The company also absorbs the ongoing expenses of warehousing the product, developing new products, creating marketing materials, complying with government regulations, and taking care of a number of other high-ticket costs that you'll never even have to think about, let alone be responsible for. This arrangement removes some headaches for you and eliminates the need to hire a staff of your own or become an expert in these other areas. When things work well, reps can focus solely on marketing the products, taking great care of their customers and teams, and recruiting new people into their teams.

So, what's in it for the company? Independent reps are the sales and marketing arm of the company, and the company only pays commissions for actual sales. Instead of paying for advertising and other expensive marketing, the company only pays the independent sales force after a sale has been made. That's appealing to companies, especially when they have products they believe will do better with word-of-mouth advertising and live demonstration.

Recognizing the Three Different Direct Sales Models

Since the disruption of COVID-19, a tremendous amount has changed in the direct selling industry. Today, there are three types of direct selling, which I introduce here (Chapter 2 dives deeper into the ins and outs of these models):

• Network Marketing:Network Marketing refers to a company structure designed to move consumable products through a network of independent reps, through both personal use and sales to end consumers. When a Network Marketing company is building its sales force, it's focused on building a network of consumers. The company doesn't distinguish between those who join as independent representatives to earn money and those who join merely for a discount on their personal products. Examples of companies that use the Network Marketing model are Isagenix, Plexus, and Modere.

• Social Selling: This model is done in a couple of ways:

  • Products are shared directly to consumers either in person or online through various social media platforms.
  • Products are sold to groups of people who have been gathered together by a host...