Follow these tips from our friends at RetailMeNot to become a direct-selling star and make money on your own terms.
by Emma Johnson
This year Mary Fish will earn about $200,000 as one of the top direct sales marketers for crafts company Stampin’ Up!. Fish, a married mom of a college-aged daughter, is what every salesperson aspires to be when she signs up to sell for Jamberry Nails, Stella & Dot or any of the countless other direct sales companies that promise big bucks.
But Fish, a former real estate agent who started a daily blog in 2007 to sell the craft items, is out of the ordinary. While the direct sales industry has grown steadily in the United States (to $32.67 billion in 2013, according to the Direct Selling Association), failure rate of what are called distributors—meaning those who sell directly to buyers—is astounding. Estimates vary, but only between less than 1 percent and 5 percent survive the first year.
“Being successful in network marketing means being an entrepreneur,” says Melinda Emerson, who brands herself as SmallBizLady online and is the author of Become Your Own Boss in 12 Months ($14.87 at Amazon). “Most people have no idea how hard it is.”
So can you be one of the successful ones?
First, you have to understand the industry. Direct selling is a business model in which the sales force buys product from a company at a deep discount and sells it directly to consumers through in-person demonstrations, social media or other direct-to-consumer channels. Examples include Avon, Tupperware, Thirty-One and Pampered Chef.
Network marketing, also called “multilevel marketing,” is similar, except that salespeople make money from selling products directly to customers and receive a percentage of money from sales made by their recruits. Examples include Amway, Shaklee and Herbalife.
“One of the biggest mistakes people who get into this business make is not understanding the difference between network marketing and direct sales,” says Vanessa Horn, a business coach, speaker and author who specializes in helping salespeople in this industry maximize performance. “[They think] they’re product pushers when they’re really recruiters for the company.” Horn should know: She previously held top sales positions at direct sales industry giants Arbonne and Boresha International.
So is the business right for you? Experts like Horn and Emerson say there are four personality traits of successful sellers:
• They’re outgoing, with a naturally confident personality.
• They’re influencers. “Do you often enthusiastically refer people to products or services that you love?” Horn asks.
• They have a network they can sell to. If you have to build a network from scratch, this likely isn’t for you. “It is astonishing how many people who never return phone calls or send holiday cards will call you up and pitch you a ‘great opportunity,’” Emerson says.
• They love people. “You don’t need to be an expert on the product—you need to be an expert on people,” Horn says.
Choosing the right company
If you fit the profile, the next step is to pinpoint a company. Make the right choice by getting answers to the following questions:
• Is it a direct sales or a network-marketing model? If the salesperson receives a large commission of about 50 percent or more, that typically means it is a direct sales company. If the big bucks come from the “downline” (other distributors you recruit), then you are looking at a multilevel marketing organization.
• How long has the company been in business? There is a high failure rate of these companies, and while younger direct sales organizations offer lots of potential opportunity, “there are always lots of hiccups the first few years,” Horn says.
• Is the product both unique and easily understandable? Products that are simple to explain and show either visual results or elicit enthusiastic testimonials are much easier to sell than those that require technical or scientific explanations. Diet supplements often fall into this category, Horn says.
• Is your market saturated with other salespeople offering the same product or a similar brand? If so, there might not be room for you.
• What is the typical customer profile? Find out the average consumer’s age, income, family status and so on. Is this a group you feel comfortable selling to? Does your personal network of family, friends and colleagues reflect these characteristics?
• How solid is the leadership? Horn says that in her experience, people who have deep on-the-ground experience are the ones who lead successful direct sales companies. “Otherwise, leaders make decisions in isolation of the interests of the distributors in the field, and then the company goes down,” she says.
• What do other distributors say? Ask for contacts of successful salespeople in the company, and speak with them directly. Ask them to share their sales figures. (Emerson urges potential distributors to go as far as to ask to see a pay stub.) Find out how long it took them to earn significant income, and inquire about their honest experience with the organization.
• What does it cost to start? Get specifics about the cost of starting with the company and monthly minimum orders. Horn says buy-in costs range from $250 to $4,000, with the average being between $800 and $1,000, while monthly order minimums average around $100 per month.
Your recipe for success
If you feel strongly that you have identified a company to partner with, keep these pointers in mind:
• Be consistent. Emerson says it typically takes a new small business between 12 and 18 months to break even, and that also applies to direct sales.
• Create a business plan. Understand how many hours it will take you to earn the promised commissions. Create a profit-and-loss statement. Set goals and identify specific steps for reaching them. “My number one advice is to write a business plan, and revise it at least once per year,” says Fish, who spends about 60 hours per week at her business, and employs an assistant for 30 hours per week. “And crunch your numbers every month so you know where your profit is coming from. No one wants to hear that, but that’s reality.”
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Photo: Martin Barraud/Getty
