Everything you ever wanted to know about direct selling

Many businesses remain in the dark over direct selling; here we take a look at everything you'd ever want to know about it.

In the modern world of direct selling, also known as network marketing, there are many seemingly baffling questions which beg straightforward answers. Learning Enterprises Organisation Ltd (LEO), an established company in the industry, receives many such queries and does its best to address any concerns.

So, in an effort to answer everything you ever wanted to know about direct selling but were afraid to ask, here are LEO’s top ten frequently asked questions and the answers that demystify the issues…

1. Does ‘direct selling’ and ‘pyramid scheme’ mean the same thing?

Absolutely not! Although they might initially appear similar, they are very different from each other indeed.

In pyramid schemes, income is dependent only on recruiting new participants to the scheme and late joiners rarely get any decent income for their efforts, while those who join early earn the most money. In complete contrast, in direct selling, the participants’ earnings depend upon selling goods and services, and their earnings are directly related to the sales they make and the amount of effort they put into doing this.

2. What is a ‘Ponzi scheme’ and how does this relate to direct selling?

Put simply, a Ponzi scheme is the finance industry’s pyramid scheme and again is completely different to a legitimate direct selling organisation. Such a scheme is presented as an investment with a guaranteed high rate of return.

However, unlike a legitimate direct selling business, participants’ incomes are not paid from the profits generated by their own efforts but from the investments of newcomers to the scheme being paid out as ‘dividends’ to earlier joiners. So, inevitably, a scheme of this sort will eventually just collapse.

3. Do direct selling organisations have the potential to last the test of time?

This is obviously something you want to know before joining such an organisation and setting up your own direct selling business – so, is there a future in this?

The short answer is ‘yes, definitely’.

You only have to look at the long history of the following direct selling companies, still operating in the industry today, to see just how long term such organisations can be – Southwestern (1855), J.R. Watkins (1868), Vorwerk (1883) Avon (1886), Kleeneze (1923), Tupperware (1946), Shaklee (1956), Amway (1959), Mary Kay (1963), Oriflame (1967) and Natura (1969).

In fact, LEO is now over five years old, and is also going strong. With around half of all start-up businesses not continuing past five years, this stability is reassuring and sets solid ground for the future. Indeed, with over 250,000 Members in more than 190 countries, LEO plans to be around for a long time to come.

4. Is direct selling, as a marketing method, only successful for selling beauty products and food supplements?

Direct selling started out with beauty products because they are best promoted by personal recommendation. However, nowadays the range of products and services successfully retailed this way is very broad indeed, and LEO was launched because of the great opportunity to offer education products via the Internet.

Personal recommendation is again very important with these, and LEO has found that an endorsement of ‘I’ve used it myself and it works’ is just as valuable for educational products as other products marketed by direct selling, if not more so.

5. Does direct selling offer a get-rich-quick opportunity?

As a micro-entrepreneurship model, direct selling does provide an opportunity for individuals to build their own business and earn very high levels of income regardless of their educational backgrounds and work experience. However, you should not expect to achieve a high income in a short time, as just like any other business, hard work, time and commitment are required to be successful.

However, if you are thinking of starting up a direct selling business, it is also important to consider the set-up costs, as these can differ from company to company. While some direct selling organisations require you to buy inventory before starting, which can add up, you can actually get started with LEO completely free of charge, or for £150 you can purchase a LEO Value Pack, to get your business off to the best start.

6. How important is it to be one of the first members to join a direct selling organisation?

Being one of the founding members of a legitimate field organisation does not guarantee you a higher income than other members. If this were the case, no one would want to join any direct selling organisation after a while. However, LEO has recognised that this is a possible misperception people may have, which can act as a barrier to them joining, so has added a unique element to its compensation plan to address this – the reverse matching bonus.

This enables members to be paid commission on the sales of their upline as well as their downline. LEO therefore has many successful members who have reached very senior ranks – above those of their sponsor and others in their upline – and earn more commission than their upline. This is a direct result of the hard work they have put into making personal sales and supporting and developing their downline team members to improve their sales performances.

7. Can you make a long-term career of working in direct selling?

The answer to this is most definitely ‘Yes’. Many people do just that, and after building a successful business for many years, you can pass it on as an inheritance to relatives. This is a great career!

LEO is only five years old but has people who joined the company after being with other companies for 20 years. So, not only do they know that direct selling is a career, they see LEO as a better opportunity, where they can use their many years of experience.

8. Is direct selling more suitable for women?

Although it is true to say that globally around 75 per cent of direct sellers are women and 25 per cent are men, this does not mean it is more suitable for women than men. Direct selling may have a particular appeal for women, as it can more easily be conducted on a part-time basis to fit around other commitments than some work.

However, in today’s uncertain, gig economy, the universal appeal of direct selling, for men, women, young and old, is growing, as many turn to entrepreneurship and the chance to take control of their careers by building their own business. At LEO, the ratio of women to men is in line with the global statistics, but unlike many corporate jobs, a high percentage of women are among the top achievers, reaching senior ranks.

Direct selling therefore offers equal opportunities to men and women – so, success is just based on hard work, there is no traditional ‘glass ceiling’ limitation for women, or indeed men!

9. What is a compensation plan?

A compensation plan provides details of how a direct seller will be compensated for the sales they make. Some plans are quite simple while others can be rather complicated. The LEO compensation plan is constructed to be straightforward and deliver rewards that are realistic and achievable.

In fact, there is virtually no limit to earnings if you work hard and support your teams, and the extra, industry-unique commission category, ‘reverse matching bonus’, LEO offers helps to accelerate the rewards for team performance.

10. Do the advances taking place in technology pose a threat to the future of direct selling?

It was initially thought that they would, but in fact quite the opposite has proved to be true. In particular, the Internet, and especially social media, has become an indispensable tool for direct selling professionals. LEO has embraced this innovation and provides guidance for its Members on how to use social media to help build a booming business.

In fact, with its great range of online education products, LEO has taken full advantage of the opportunities the Internet offers to provide invaluable entrepreneurial skills training. In addition, with the exciting advancements made in mobile technology, LEO also offers its Members access to the groundbreaking LEO Smart app, which provides business-building guidance and delivers rewards when milestones are achieved.

11. Don’t you need to be good at sales to be successful?

OK, so I know I said 10 frequently asked questions, but it’s worth squeezing this extra point in, as you may be thinking ‘that all sounds good, but I’m just not a sales person’. Well, actually, you don’t have to be. That’s the beauty of it – anyone can succeed, if they are just prepared to commit the time and effort to building their business.

In fact, reputable direct selling organisations will offer the training needed to set you on the path to success. As an education organisation, this is something LEO particularly excels at, and it provides specialist network marketing training and support to help new members reach the first major rank as soon as possible. Of course, this still requires hard work, but then launching any new business always does.

So, although a lot of confusion has grown up around the industry over the years, the bottom line is that legitimate direct selling companies, like LEO, are here for the long haul and offer unmissable business opportunities to those prepared to work hard to succeed.

Further reading on direct selling

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the Smallbusiness.co.uk and Growthbusiness.co.uk titles before moving on to be a Digital Technology reporter for the Express.co.uk.

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Direct selling

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