What Is Direct Sales? [Meaning + Everything You Need to Know About Direct Selling]

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When companies skip retail stores, wholesalers, and other intermediaries to sell products directly to consumers, that’s called direct selling. Companies use direct sales agents to make this happen.

Pin image of Direct Sales

Becoming a direct sales agent is a great way to make money, especially if you’re looking for some flexibility and autonomy. But you’ll need to understand exactly what direct sales is and the direct sales business model in order to choose the right direct sales companies, and to avoid scams.

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Read on to learn:

  • What direct sales is
  • The advantages and disadvantages of direct selling
  • The different direct selling methods and types
  • How to become a direct sales agent and create a winning direct selling marketing strategy
  • How to start your own direct sales company and more!

What Is Direct Selling?

Direct selling is a business model which eliminates intermediaries from the product supply chain, selling directly to consumers instead. 

So instead of physical stores, wholesale warehouses, and regional distribution centers, companies use sales agents to channel sales and reach people at their homes, offices, and sometimes, online. The direct sales agents also handle customer service on behalf of the company.

How Does Direct Sales Work?

Image of direct sales vs indirect sales

Like we’ve stated above, direct selling has no intermediaries in the distribution of products. There is no retailer or wholesaler. The products go directly from the manufacturer to the direct sales company which gives it to their distributors or sales reps. From the distributors, the products get to the consumers. 

You can’t find the products sold by direct sales companies in a typical retail store. The only way to get it is to look for a distributor or sales representative and buy the products or services from them. 

Direct selling is also associated with party-plan and network marketing companies. These are not the only companies that use direct sales, many other businesses that sell business-2-business (B2B) use direct sales also to target their end customers and sell to them. 

An example of how direct sales work is this: A company that sells office supplies will send their distributors or sales reps into offices or stores that can use their products. 

Please note that direct selling differs from direct marketing. In direct selling, the sales reps or distributors directly approach the consumers and sell to them. Whereas, in direct marketing, the company markets to the consumer directly. 

Are There Advantages To Direct Selling?

Photo of items on sale; Direct Sales is a great way to earn

Yes, there are a lot of advantages of direct selling or becoming a direct seller. Direct sales is so popular now in many parts of the world and according to SendPulse, direct sales has over 118.4 million representatives worldwide. 

59% of them are in Asia, North and South America has 26%, while Europe has 12%. In 2019, direct sales companies were said to enrich the world’s economy with over $193 billion in total sales. 

Below are some of the advantages and benefits of direct sales

  • Direct sales companies have a promising business model and they have been experiencing sustainable growth since the last couple of years.  The World Direct Sales Association revealed that direct sales produced a compound annual growth rate of 1.7% between 2015 and 2018. 
  • Direct sales companies have more opportunity to adjust their products to the needs of their customers. They control the whole cycle, from the production to the final sale to the consumer. This approach helps them get feedback from their customers and these feedbacks help them tailor their products or services to meet the market demand and the needs of their customers. 
  • Also, direct sales companies have better personalization. They interact with customers directly through their sales reps and this helps them provide highly important and even personalized offers to their customers. Studies reveal that people are more likely to buy with companies that make relevant and personalized offers. 
  • They have better control at every stage of customer interaction by eliminating middle men. Also, they have full control over the price of their products and they can adjust it to their customer’s needs. They can even regulate their customer experience strictly during the process of purchasing and have lower reputational risks. 
  • Direct sales companies have strong customer relationships because they have personal contacts with their customers through their sales reps. Their sales reps use an individual approach to every customer and thereby build a long-lasting relationship with them. This act alone leads to a 5% increase in customer retention and it also expands profit by more than 25%.
  • Direct sales companies have higher margins because there are no intermediaries. All the revenue goes back to the company and they don’t have to divide it between business and third party sellers. Check out more advantages of direct selling.

Types Of Direct Selling

There are many types of direct selling and businesses can use these various ways to sell their products or services and make money. 

  1. Single-level direct sales 

This kind of direct sales is done by one-on-one interaction with the consumer or door-to-door sales or presentations. It can also be done via in-person presentation, online meetings, or distributing catalogs. 

Sales reps or distributors earn commission on each sale they make and there are bonuses and awards for reaching target goals and reaching certain stages or levels in the business.

In single level direct sales, you don’t have to recruit anyone as sales team members and you don’t earn commission from someone’s sales.  

  1. Party-plan or host sales 

This type of direct sales is made in a group setting. The sales reps or distributors are required to do a presentation in their homes. The presentation can also be done in a potential customer’s house. 

Sales reps or distributors earn commission from each sales and also by recruiting other reps. 

  1. Multi Level marketing 

There are many ways sales are made in multi-level marketing. Some of the ways include those associated with single-level and party-plan sales. 

Income is earned in multilevel marketing through commission on sales, recruiting other distributors or sales reps, and through sales made by the business partners you recruit into the company – you get a share from their commission. 

Please note that not all direct sales involve multi level marketing but MLM and network marketing are a type of direct sales. 

How To Do Direct Sales

Photo of two people in front of a laptop; Direct Sales can be done online

Here are some tips to help you succeed in direct sales. 

1. Pick a direct sales company whose products interest you

There are many direct sales companies and the first step to succeed in direct sales is to pick a company that aligns with your interests. The company products or services should be something you love or love doing, this will make work easy and fun for you. 

There are even unique direct sales companies that think out of the box. If you do not fancy regular direct sales, you can pick from any of those unique companies. 

You won’t struggle to make sales or convince people to join your company if it is something you love doing. If you love makeup for instance, you should pick a direct sales company in the makeup niche rather than picking one in sales of office equipment or kitchen utensils. 

A time tested technique to succeed and be a super sales rep is to use and love what you are selling. People can easily tell when you are just hyping a product to sell to them and when you are genuinely using the product and excited about offering it to them. 

You will be able to talk about your products with enthusiasm if you use them and that will help you sell well and faster. Using your products or services will also give you personal experiences and information that you can accurately and honestly discuss with your potential customers. 

This is one of the top tricks to being a great sales reps. 

2. Set your goals 

After picking a direct sales company of your choice, the next step is to set your goals. This will motivate you and it is an important factor for success. If you want to succeed, you should set clear and measurable goals. An example of a feasible goal is to increase revenue by 15% in the third quarter. 

3. Determine your target audience 

You need to have a clear understanding of your audience. You will have better sales and better return on investments if you know your prospects. A good way to start is to identify your buyers’ personas, note their age, occupations, interests, habits, lifestyles, and even pain points. 

This will help you serve them better, talk to them better, and you will retain them for as long as you can, thereby building a long-lasting relationship with them. 

4. Create a sales strategy that works for you and key performance indicators (KPIs)

A good direct selling marketing strategy will help you to meet the needs of your customers, shorten your sales cycle, and even increase your return on investment (ROI). 

You also have to include KPIs to help you implement your sales strategy correctly and to the letter so you can achieve your goals. 

There is also the need to keep track of your KPIs, this will help you evaluate your strategy, see the flaws in it, correct or change it, and also find more effective techniques

5. Align sales and marketing 

Marketing and lead generation are very important for any business, so you need to develop a detailed plan on how to target potential customers. To get better results, combine your sales and promotional efforts. 

Your sales will improve from your marketing when you obtain warm leads. Your marketing will also improve when you get information about your customers. 

6. Learn and implement sales activities

You have to keep learning and improving in your sales. And when you learn new things, implement them. 

Also, you have to be careful of how you interact with your audience during each stage of the sales funnel. You should be able to qualify a prospect as a potential buyer, present your products or services professionally, work with the objections of your customers, close deals, and even keep in touch with clients to convert them into returning customers. 

7. Promote your direct sales business online 

You need to take your business online to be more successful. We have over 4.57 users of the internet in the world today. This can help you reach people far from your locality, and you can ship your products to them or offer your services virtually if possible. 

Add digital marketing to your sales strategy and you will reach a wider audience and make more sales. 

Here are some of the ways you can promote your business online: 

  • Start a blog: Blogging is an effective way to promote your business and this is why more than 55% of marketers make blog content creation their top priority. Blogging helps attract people, gives your business an online presence, builds strong and trustworthy relationships with people, and even turns them into customers. Make your blog highly informative. 
  • Use lead magnets: Use this if you have a blog or website. You make a special offer for your audience in exchange for their email addresses, this special offer can be a discount, an e-book, a gift with a purchase, check-list, additional service, etc. You can then follow up with other offers using their email addresses.
  • Go social: You need social media platforms, these are wonderful places to meet and communicate with your audience. Majority of the world’s population spend a lot of time on social media. You will get a wider audience here and even generate leads and increase your brand awareness. 

This finding reveals that 43% of internet users checked social media to research products before buying. 

You can easily build a strong community around your brand on social media. 

  • Use email marketing: This is one of the most powerful ways to boost sales. Email marketing can help you engage your customers and also give them special offers. About 60% of people prefer to receive promotional messages via email. 
  • Promote your brands with influencers: You can collaborate with bloggers and influencers to promote your brand. About 89% of marketers claim that the return on investment from influencer marketing is better than other channels of marketing. 
  • Use messenger marketing: It is estimated that over 1.3 billion people use messenger monthly. To reach a wider audience via messenger marketing, you need chatbots. With this, you can interact with customers around the clock and even provide feedback in seconds.  

8. Learn direct sales techniques 

Direct sales need certain tricks and you have to know some of them to succeed well in this business. You need these direct selling skills to be able to convince a client that they are making the right decision by buying your product or services. 

Make use of the following techniques to succeed in your direct sales business. 

  • The favor upfront technique: Human beings are social beings and they tend to give something in return for favor shown to them. This trait is fully explored in the principle of reciprocity. To make use of this, give something in advance to your client, this can be a free trial period, an additional service, or a discount. This goodwill gesture will make your customer accept your offer. 
  • SPIN selling: This trick teaches that the most interesting subject for every person is themselves and not even your product or service. This SPIN technique will teach you how to benefit from this technique. 

When negotiating with a customer or trying to convince a customer, you should let them talk more than you do and then ask them questions about their Situation (S), Problem (P), Impact or Implication (I) of the issue on them, and the Need for a solution or need-payoff (N).

After you’ve moved through all these stages, you can now introduce your product or services as the solution to solving their issues. 

  • The foot-in-the-door technique: This direct sales method is perfect for upselling and the main aim is to help you make an initial request followed by a bigger one. You can also use this technique to offer low prices at first then you charge an extra amount for profound service. 
  • But you are free (BYAF): This technique teaches you to give freedom while being persistent which is crucial for closing deals. Some salespersons go too far with being persistent and due to this, some customers may turn away because the salesperson is overly-pushy after one purchase. 

To reduce the pressure during negotiation, tell your customers that they are free in their decisions and mean it. This is a popular technique for selling information products and services. 

  • Features-advantages-benefits (FAB): Almost all landing pages, promotional materials, and scripts use this technique. This technique involves you constantly telling your customers about the key features of your products or services, their advantages, and even positive effects on them if they get it. 

This technique makes your offer crystal clear for potential customers and will also increase their interests in your products or services. 

Please note that you can use these techniques in your offline and online approach.  

The Best Direct Sales Companies to Join

Some of the best direct sales companies to join include recognized brands like Avon, Mary Kay, Perfectly Posh, Color Street, WineShop, Tupperware and lots more.

If you’re looking for something specific, check out these lists:

How to Start a Direct Sales Company

If you have a product and you want to take advantage of the direct selling method, here are some tips to start your own direct sales company to promote your products:

  1. Understand the Industry – A good way to do this is the under-study companies that have been in business for years.
  2. Obtain licenses and insurance – Get all major permits required to start a direct sales company including your Health inspection certification, Zoning permit, Sales tax registration e.t.c
  3. Write your mission – Identify the problem you want to solve using your product.
  4. Study your competitors and likely challenges.
  5. Start with a few products

See this post for more information on starting a direct sales company.

FAQs About Direct Selling And The Direct Sales Model

Are Direct Sales Companies Legal?

If you are wondering if direct selling is legal, well, it is. But direct sales companies, most especially MLM and network marketing, have suffered poor reputation because a lot of companies that are actually pyramid schemes are posing as MLM and network marketing companies. 

Pyramid schemes are illegal in the US, they are regarded as scams and recruiting people into pyramid schemes is considered a felony. The Federal Trade Commission is responsible for stopping such acts. 

However, direct selling and direct sales companies are legal. 

Difference Between Direct Selling And Pyramid Schemes

Sometimes, it can be quite difficult to distinguish between direct selling and pyramid schemes because both of them share a lot of characteristics. 

But direct selling is legal while pyramid scheme isn’t. 

Similarities Between Direct Selling And Pyramid Schemes 

  • Both pyramid schemes and multi-level marketing (a form of direct selling) require their participants (usually called distributors or sales reps) to recruit other people. 
  • They also tie their distributors’ earnings directly to their recruiting results. 

Differences Between Direct Selling And Pyramid Schemes

  • The main difference or way to tell a pyramid scheme from direct selling is that pyramid schemes are designed to make the distributors’ money go back into the company.  
  • How much you earn in a pyramid scheme depends largely on how well you can recruit more people into the company because the company is more focused on having a steady flow of income from their reps. 

Other ways to identify pyramid schemes are: 

  • Pyramid schemes make promises of getting rich quick. 
  • They lay excess emphasis on recruiting many distributors instead of making sales or offering services. 
  • You will be told that you have to invest a lot of money initially. 
  • Their promoters use emotional tactics to convince people to join the company 
  • They lay very little emphasis on their products or services 

Difference Between Direct Sales And Indirect Sales

Direct sales, as stated above, has no intermediaries. Products go directly from the manufacturers to the hands of the distributors. 

Meanwhile, in indirect sales, there are various intermediaries like distribution centers, regional representatives, wholesalers, etc. 

Conclusion

If you are looking for a side hustle to increase your source of income, you can consider direct sales. It is a flexible and easy way to make money. Some people even do it full time and meet their financial goals. It all depends on the work and effort you put in. 

We hope this post answers your questions about direct sales, direct selling, and direct sales companies. You should also check out new direct sales companies and direct sales companies free to join, to kick start your journey into direct selling.

Lily & The FBM Team
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