Like many of you, I am working harder than ever to maintain the level of business this year versus last. As I work on the core of my business – consulting, training, writing books, etc. – I am always searching for new revenue streams. Who isn’t looking to make more money?
My search led me to look into the field of direct selling. I know what you’re thinking: "What’s Lis gone off and done now?" Hear me out.
Direct selling, also known as multilevel marketing (MLM), is sometimes confused with what people call "pyramid schemes." According to my research, although seemingly the same, direct selling and pyramid schemes are very different. By definition pyramid schemes rarely involve a product of value. The income from a pyramid scheme comes primarily from the recruiting of other associates. On the other hand, multi-level marketing is a marketing strategy that compensates promoters not only for product sales they personally generate, but also for the sales of others they introduced to the company. With multilevel marketing, you can continue to make money by selling the product even if you never recruit another person.
The products and company are usually marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing, basically another form of retail marketing. In a 2007 Wall Street Journal interview, economist Peter Vander Nat stated, "If people are buying because they want to use a company’s products, those sales can count as retail. So now I'm wondering is, could network marketing simply be another retail business without a store?
The most recognized MLM businesses have been Amway, Avon Products and Tupperware, to name a few. These days, you see MLM businesses for all kinds of products and services. Health and wellness is a huge MLM segment (think Herbalife, Melaleuca, etc.). The majority of direct sales companies use a compensation plan where the seller is paid not only for their own sales, but also a percentage of the sales of other representatives they introduced into the organization and helped train. The key to success in any MLM business is in duplicating a system and then leveraging that system through the work of other associates on your team. You do not need to be successful sales professional to be successful in direct selling.
The World Federation of Direct Selling Associations reports that its 59 regional member associations accounted for more than US $114 billion in retail sales in 2007, through the activities of more than 62 million independent sales representative. The United Sates Direct Selling Association reported that in 2000, 55% of adult Americans had at some time purchased goods or services from a direct selling representative and 20% reported that they were currently (6%) or had been in the past (14%) a direct selling representative.
You can see why the multi-level marketing industry has experienced growth in each of the last 20 years. I can’t think of any other industry that can say the same.
The second part of this recipe for success involves the explosion of the Internet. Every day over 100 million videos are viewed on YouTube. In the last 5 seconds, 10 million emails have been sent! According to a New York Times article, overall, 57 percent of Internet use was devoted to communications like e-mail, instant messaging and chat rooms, and 43 percent for other activities including Web browsing, shopping and game playing. Users reported that they spent 8.7 percent of their Internet time playing online games. I guess what it says is that people are online.
Direct selling has seen entrance into the world of email, video and the video email business.
What’s next? Stay tuned for my experience with direct selling and new technology.