4 Common Misconceptions People Have About Direct Sales Industry

4 Common Misconceptions About Direct Sales

Multi-level marketing, network marketing and direct sales. These are just a few of the words often used to describe the type of business that myself and millions of others are involved with. While all are accurate terms to describe this field, I would like to propose that we simply start calling it what it is, and treat it as such…a business! 

Why Direct Sales is So Popular

2016 yielded the second highest direct retail sales in history, at an estimated $35.54 billion! There is a reason why more and more companies are choosing direct sales consultants to sell their products. It is smart business and it works! There is also a reason why millions of people choose to become a consultant each year. How many careers do you know of that allow you full control of your schedule, hours, customers, strategy, pay and well, almost everything else?! It is incredibly enticing, that concept of running your own business exactly how you want and getting paid on an even scale, regardless of race, gender, age, etc. No glass ceilings here ladies! Heck, there isn’t even a cap on how much you can make. 

For too long though, this industry and the people within it have been viewed through the lens of misperception and misunderstanding. I would know as I myself was one of those people, and not that long ago. I quickly made assumptions about those involved and figured they were going to hound me to buy something, so I was already planning a quick exit strategy in my head. Sounds familiar, doesn’t it? 

direct sales

According to the DSA (Direct Selling Association), a record 20.5 million people were involved in direct selling in the United States alone in 2016! As such, I can pretty much guarantee that you already personally know at least a few people who are involved with a direct sales company (think Scentsy, Pampered Chef, etc.) right now. Unfortunately, I am also certain that you have heard of a few unpleasant experiences, either with a direct sales consultant or from a consultant. There are valid reasons why this industry, and consultants within it, have gotten a bad rap. 

However, I am writing this post so that you will also see the many valid reasons behind why direct sales companies offer a uniquely rewarding, flexible and yes, completely legitimate and fair opportunity to a wide variety of people, including myself. I will do so by debunking the top 4 misconceptions surrounding direct sales companies, specifically those involved in multi-level marketing (MLM).


Misconception#1: "I don’t trust in those pyramid schemes.”

pyramid scheme

(if you could only hear the hilarious voice-over in my head as I typed that out)

The main difference between a pyramid scheme and a lawful MLM program is that pyramid schemes are designed to deceive/take advantage of the public, as well as their reps, and employees only make profit from recruitment, not product sales. MLM companies compensate their reps based on sales, with additional bonuses paid for team sales volume.

If you are still confused on how to sort through the difference, there is a good article on how to distinguish between a legitimate MLM company and a pyramid scheme here.

Now, that is not to say that every MLM company is reputable. That is where you, the individual, should do some homework on the background and history of your company, their compensation plan, products and more. However, if you get nothing else from this, please note that MLM is NOT the same as a pyramid scheme! 


Misconception #2: If MLM’s are not the same as pyramid schemes, then why the need for recruitment and commission from other people’s sales?

This is the one that really gets me the most. The way MLM’s are set up are really no different than any other major company out there, so why is it not viewed the same way? Let me explain.

The Importance of Management
Anyone who works for a large company knows that after you hit a certain number of customers and/or employees, you must hire on additional staff to help oversee those additional numbers. You can’t have one manager for 200 employees any more than you can have a consultant with thousands of customers on their own. The reason? Quality customer service, and sanity for that matter, starts to suffer. Once you are providing products or services to an extensive amount of people on your own, your follow up and personal touch begin to take a hit .

This is why companies will then hire out additional managers and positions to help keep the business and customer service running smoothly amid increased sales and clients. MLM companies are no different. After you take on a certain amount of customers, it is only natural that personal attention and time begins to decrease.

Management in Direct Sales
That is why it makes practical sense to have other consultants on your team who can then take on their own customers, as well as expand in different areas you can not reach and/or manage. Since they are on your team, you are now their manager or director, so to speak. While it is each individual consultant’s responsibility to grow their own business, their upline (aka the people who recruited them and up) is there for guidance and assistance, especially to those just beginning. When someone joins under you, you are essentially taking them under your wing and working to help them be as successful as they can be. 

direct sales management

For many, including myself, this is one of the most rewarding aspects of the business, empowering others like yourself to start their own businesses and teaching them from your own experiences. When done right, there is a good bit of time and effort invested into those on your team, so it only makes sense that you would get rewarded for that. Just like a manager gets paid to help those under him/her excel in their roles, uplines are paid bonuses for the success of those they brought into the company, and are mentoring on a regular basis.

It is important to note that the bonuses received for the sales of those on your team NEVER take away from the commission and profit of the consultant under you. They still receive their full commission earned and their upline receives an additional bonus from their sales. It is the company itself giving up a share of it’s profits in order to reward those who are managing others under them. No business can grow to its full potential without increasing customers, sales and eventually, staff. Period.


Misconception #3: High drop off rates for consultants prove that these business models are not successful in the long run.

Like any ground floor business, one's success is largely determined by the amount of hard work, investment, drive and motivation of the individual behind it. Let’s be honest - not everyone is up for that. Even more helpful to realize is the fact that many people who go into direct sales have no desire to turn it into a full-time business.

Different Types of Direct Sales Employees
Some people join MLM companies simply to receive a discount on products they already love and will continue to purchase. Some join to sell only to their close friends and family for some extra spending money and others view it more as a fun hobby. None of these are bad or wrong reasons to join, but these are not the people you look at to determine the long-term efficacy and viability of a company as a business venture. Additionally, you will have those who join with hopes of turning it into a full-time career one day, but with very misguided expectations. 

Direct sales is NOT a get rich quick plan, despite what many people preying on the hopes of others will promise in order to get them on board. They want you to think that all you need to do is create a few samples, announce your new business to the world and sit back while the orders pour in. Let’s be honest, if that is truly all there is to it, then everyone would be in direct sales! That doesn’t mean direct sales is hard or complicated, but neither is it easy. Like all good things, it takes time and a willingness to learn and apply yourself. 

There are countless stories of people who have been able to quit their 9-5 careers and make significant amounts with their direct sales business, but for a majority of them, it took years of consistent work and relationship building to get there, and they continue building on that foundation even after reaching the “top.” You can be successful in this industry, but you will only be as successful as what you invest into it, especially in terms of persistence and consistency. 


Misconception#4: Direct sales businesses are not the same as a brick-and-mortar business.

This misconception is quite common, but completely unfair. One definition of the word business is the practice of making one's living by engaging in commerce. Notice it does not say this only counts if you have a storefront. If that were the case, tons of current, successful online businesses (Amazon, anyone?) would be left out. Most people would agree on this definition of business, yet many still view direct sales businesses differently.

Store-front Businesses versus Direct Sales Businesses
Have you ever thought about why it is 100% socially acceptable for store owners (be it a cafe, pet store, etc.) to tell those they meet about their business and invite them to come try it out, yet somehow off-putting when a direct sales rep does the same exact thing? Moreover, you would probably find it odd if someone you knew owned a business, but never spoke about it or offered you a special such as a free cup of coffee or 10% off their first purchase.

This is marketing and we are all very familiar and comfortable with it when done by storefront owners - we expect it and understand that they are simply trying to get the word out. Yet when a direct sales rep even casually mentions their business in discussion, some people will tend to start shifting in their seats. Why? That sales rep works just as hard building their business and brand and marketing is a crucial part of that process. 

I assume most of this discrepancy comes from bad experiences with previous reps. We have all heard of them or met them before, the ones that push their business on others and let it take over all conversations and news feeds (thank you Facebook for creating a block option). No one wants to be bombarded with product information and sales pitches all the time - heck, that is the #1 reason why I never thought I would go into sales. No one wants to be “that” person. 

Marketing Differences That Are Not That Different
While there are definitely better ways to promote one’s self and brand than others, I want you to consider this. Every major company and brand you currently use and are aware of has done this same thing to you. Think about the endless chain of Taco Bell or Budweiser commercials and ads you come across weekly or even daily. These companies are household names for a reason - they have put extensive time and money into marketing and branding. They have put themselves in front of the public eye in a wide variety of ways many times over, week after week. No one is upset by this because they are this giant company without a real face to it. They are known by their name and products, not by their CEO. 

In direct sales, the individual reps are the face of the business. While the company they work for and the products have their own reputation and brand, it is entirely up to the individual rep to do their own marketing. There will not be any magazine ads or commercials for us. Direct sales marketing involves a lot of creativity and work, and takes a lot of courage to put yourself out there. Promotional fliers, social media pages, free samples, local partnerships, etc. The sky is the limit for direct sales marketing, but make no mistake, that individual will be responsible for getting the word out to others and introducing them to the products. As such, direct sales marketing has a much more personal touch and feel to it. 

So, instead of feeling turned off because someone is sharing what they do with you, just remember it is their business. Of course they are enthusiastic about it and want you to try it! It is something they believe in and use themselves. They simply want to spread the word and invite you in just like any business owner.  


Conclusion


While not all encompassing, I hope I have helped clear up some of the misconceptions about MLM companies and the employees within them. While we all run our businesses very differently and are all learning along the way, it is important to remember that we are ultimately business owners. We believe in our company and products and we are working hard to succeed.

So, the next time you come across a direct sales rep, I hope you remember this post and treat them the same way you would your local mechanic or gym owner. We are just normal people pursuing our passions and dreams through legitimate businesses offering quality products and services.


ABOUT THE AUTHOR: 

Jamie Hallman is an Independent Scentsy Consultant. She enjoys helping men and women start and maintain their own home-based businesses in the US, Canada, Mexico, Australia, New Zealand, Puerto Rico, Germany, Ireland, UK, France, Austria, Spain and the Netherlands. For information about how to start your own home business as well as to learn about our compensation plan please go here.

Be sure to connect with me on Facebook or Instagram!

Direct SalesJamie Hallman