Direct Selling Association President Joe Mariano describes how direct sales embodies the American Dream. He discusses how nearly 16 million direct sellers today earn income through their independent businesses that contribute to the U.S. economy.
Archive for 2012
Direct sellers are once again the target of unfounded accusations by critics and journalists who either don’t understand the direct selling business model or simply choose to ignore the facts.
The headline of MarketWatch’s recent “10 things direct-sales marketers won’t say” column holds more truth than the author (or the copywriter who wrote the headline) probably intended. The reason direct sellers won’t say these 10 things is because they aren’t true – at least not in the cloak and dagger double entendre way that was intended for this article.
Author Kelli Grant spent a great deal of time on the phone with me going over in detail each one of these tired accusations that are bantered about by industry critics with reckless disregard for the truth, so I had some level of hope that the story would be fair and balanced after she learned of the facts the critics conveniently tend to leave out. But not surprisingly even perfectly reasonable activities (like having to work to earn money!) were portrayed as negatives, with key information that clearly illustrates why the critics’ arguments hold no water as an “oh by the way” at the end of each segment.
For example, a professor of marketing at Georgetown (who for all I know has no expertise in direct selling at all) does some quick math (like the critics do) and advises people to divide a company’s revenue by the number of salespeople. That could sound reasonable, but what it doesn’t take into account is the fact that a significant percentage of direct sellers join companies to buy the product at a discount and never try to sell to others or recruit anyone. They aren’t eligible to earn commissions but yet this calculation throws them into the mix, artificially lowering the “average” per consultant. The critics leave out that little glitch in their math. In fact, there are plenty of people who earn nothing – but for most it’s because they don’t even try to sell or recruit! The best advice for anyone considering direct selling is to assess how much time you plan to spend on your direct selling business, identify your income goals and talk to enough people to determine if your expectations are reasonable. No simple math computation will answer those questions for you.
Then there’s the assertion that “this stuff might not sell in stores.” In fact, the products best suited for direct sales are those that can benefit from demonstration so critics who make this assertion might be right – but what’s wrong that? There are plenty of products that don’t sell well on store shelves so smart marketers take them directly to the customers and show them the features and benefits. And don’t forget assertions about the price of direct selling products. The author cites one product that sells for $31 through a direct selling company and a “nearly identical” model for $20 at a discount store. While it’s unclear what “nearly identical” means, anyone who has ever been in a retail store in a free-market economy knows that one can find a wide range in price levels of just about any product. Products that aren’t priced competitively won’t sell – regardless of the sales method.
While each of the “10 things” cited provides an alarming “buyer beware” beginning before reluctantly revealing the truth at the end, one of my favorite examples was from a woman who recalled an experience she had 30 years (yes, that’s three decades) ago. It struck me because most of the critics who malign direct selling haven’t updated their facts for just about that long. Today more than 16 million Americans participate in direct selling for a wide variety of reasons. Some support their families with their income, some pay the cable bill and some buy the products at a discount. It’s just a shame that news outlets like Marketwatch find the negative spin to be preferable to describing the millions of people who have found success in direct selling, but then again, that’s one of the “things they won’t say.”
September’s Jobs Report revealed unemployment reached its lowest level since 2009, showing signs of a strengthening economy. Though any hint of growth is great, increasing employment opportunities would relieve the pressure many American families are experiencing over their finances. If you choose to pursue direct selling, you are choosing to take an active role in your financial future and in the economic future of the country.
Direct sellers come from a diverse set of backgrounds. Some have other full-time employment, some are seeking a full-time income, but all have an entrepreneurial mindset. You may come in contact with one of our sellers who is a stay at home mother, making use of her business background while her children are in school, or you may stumble upon an undergraduate student working as a seller part-time to earn money while also gaining valuable business skills.
These diverse individuals each bring unique goals and approaches to their business. I always say that direct selling is the original social network. Utilizing and expanding that network is a key part of direct selling. Our sellers can connect to potential customers like never before. Social media platforms like Twitter and Facebook give sellers the opportunity to be global businessmen and women. Now, opportunities to grow one’s business and contribute to the economy extend far beyond the confines of the cul-de-sac.
People typically join direct selling for its flexible hours, a chance to gain supplemental income and to increase their business skills, but not everyone understands just how much direct selling affects the economy. The nearly 16 million direct sellers in America make about $29 billion a year in sales. Jobs are created as those sellers need people to manufacture and transport the products they sell. The money direct sellers make can then be spent in the economy, on family vacations or even a down payment on a home – all fueling the economic recovery that can’t come fast enough.
DSA Senior Vice President & Chief Marketing Officer Amy Robinson discusses the direct selling industry’s direct and indirect contributions to the economy.
Tell most people that you work for a trade association, like DSA, and you’ll likely get a blank stare. After more than 15 years working for associations (nearly 13 of them with DSA), I’m used to it – and it’s OK, because what really matters is the work we’re doing on behalf of direct sellers.
But every once in awhile it doesn’t hurt to remind people, friends and critics alike, who it is that DSA’s activities benefit, and what we aim to accomplish.
DSA is supported financially by direct selling companies that choose to uphold the ideals of the DSA Code of Ethics, which speaks to the interests of both sellers and consumers. That doesn’t mean just any company can be a member (some direct selling companies successfully complete the minimum one-year pending period required to display the DSA logo – others don’t, or choose not to), and despite the source of the funds that support DSA’s activities, the focus and impact of DSA’s work extend far beyond just its member companies.
Even given a poor economy, DSA has nearly 250 active and pending member companies, strong revenue figures (which are also indicative of strong industry performance), a growing pool of applicant members and an enthusiastic and active Board of Directors comprised of industry executives who recognize the importance of our business model to the US and world economies, as well as to the millions of individuals who call themselves direct sellers.
So what does DSA actually DO? In short, we call it the “Three Ps” – Protect, Police and Promote.
In its role of protecting direct sellers DSA works with legislators and regulators at the Federal, state and local levels to ensure proposed legislation won’t negatively impact companies OR their sellers. Sometimes we work proactively to update existing laws or implement new ones – all with the goal of keeping the marketplace open and fair for direct sellers. DSA also has a political action committee that, on a scale that by Washington standards is very modest, helps to support candidates for elected office who have been supportive of direct sellers and small business in general. However, DSA’s leaders have always prided themselves on being able to prevail on the merits of our positions. It’s nice to be able to support those who believe in us, but despite what some may believe, the size of one’s PAC is not always an indication of one’s political clout.
DSA’s second role is that of policing the industry, which is based on the association’s Code of Ethics. The Code sets the standard for the ethical behavior that consumers and independent direct sellers should expect from ALL direct selling companies. It is DSA members, however, that are held accountable to the Code by an independent Code Administrator who receives, investigates and, where necessary, resolves complaints by consumers or sellers. DSA believes the Code promotes honest, ethical behavior, but it also provides a mechanism for relief if there is an occasional lapse. So why doesn’t DSA’s authority extend beyond its membership? The Code is a form of voluntary self-regulation and DSA is not a law enforcement agency. The collective DSA community sets the standard and companies are free to decide if they choose to meet it. In the big picture, though, the mere existence of the Code raises the bar on ethics so even companies that are not members are wise to aim to meet it.
The third role of the DSA is that of promoting the industry. An important phrase to remember here is that a rising tide lifts all boats. DSA members have a vested interest in ensuring the phrase “direct selling” evokes a feeling of goodwill in the marketplace. Companies do their part by upholding the Code of Ethics and ensuring the actions of their sellers are consistent with the ethical bar it sets. DSA works to educate the public about what direct selling is, the benefits it provides to individuals and the economy, and what customers and sellers should expect from a direct selling experience. So how does DSA accomplish this? Well, if we had the budget of the “Got Milk” campaign or the NBA we would pour millions of dollars every year into a national advertising campaign that extols the merits of direct selling. However, DSA’s much more modest level of funding requires a more targeted approach. It involves building relationships with consumer groups (this is done primarily through the work of the Direct Selling Education Foundation), securing earned media placements in print, broadcast and online, and continuously taking the pulse of the public at large to determine what messages resonate and then how best to deliver them. It is true that given the opportunity DSA will seek to highlight member companies as examples of all the good that is embodied in direct selling, but in the end, a job well done will soften the marketplace for ALL direct sellers. It will mean sellers can focus on the unique selling proposition of their particular company, versus having to first debunk myths, negative stereotypes and misunderstandings that can (and should) be addressed at an industry level by the industry’s trade association.
As society is in a constant state of evolution and change, it can seem at times that fulfilling any of the “Three Ps” is a never-ending quest. Just as it has been for the past 40 years and earlier, there will always be new legislation to consider, there will always be bad actors who don’t meet the accepted industry standards and there will always be critics of our industry and those who simply haven’t experienced all the good that direct selling can do for individuals, communities and the economy. But then again, it is the wise who understand that most things in life are journeys and not destinations, and the only alternative to evolution is death, so by that account, I’ll take that blank stare when I tell someone I work for a trade association, because it’s one more person whom I can enlighten about the benefits of direct selling.
With the first month and a half of 2012 behind us, now is the perfect time to take a step back and remind ourselves of those oh-so-ambitious New Year’s Resolutions we set for ourselves a mere 50-some days ago. While gym membership will inevitably wane in the coming months and those who fervently swore off stress or bad habits may fall back into similar patterns in the future, in terms of direct selling, it’s imperative that we – at the very least – keep our 2012 business goals in focus, however daunting a task that might seem at times.
While many companies have established full-year sales and recruitment goals, for direct sellers everywhere, a new year means a new opportunity to revive business, reach out to new audiences and strengthen relationships with former customers or team members.
With that in mind, February provides us with an extraordinary opportunity to take some time to visualize what the next 11 months could mean for direct selling as an industry.
Recently, we asked a number of executives from a variety of direct selling companies to share with us their insights, predictions and concerns for 2012. While DSA members had the opportunity to read the full responses from those executives mentioned below in a previous edition of our InTouch publication, some of their insights deserve further exposure.
Cindy Juncaj, President & CEO, Demarle at Home: “Due to the state of the economy as well as the rising cost of education, people will continue to look for ways to create, supplement or build their income through non-traditional means such as direct selling, but, it is imperative to simplify the business so that anyone can do it and anyone can afford it. People today are looking for more value when it comes to spending the money they worked so hard to earn and many direct selling companies offer only top-notch products as well as friendly, personalized sales.”
Lori Bush, President & General Manager, Rodan + Fields: “When economic times are tough, discretionary purchasing will be impacted. People will trade down or do without. However, direct selling does have the opportunity to alter the value proposition by providing a more personal engagement than other classes of trade.”
Jay Rudman, CEO, Paperly: “Nationally, one of the biggest challenges for direct selling in 2012 is consumer behavior. Businesses have truly trained consumers to look for and wait for a deal, either through online deals or extreme discounting. Couponing is almost glorified at this point through television and radio, as well as other mediums. For these reasons and many others, in our industry, competition is a significant challenge. Traditional retailers can live in the moment. They can drop a promotion to hit the next day, whereas direct sellers have a much longer cycle, meaning that in order for a direct selling company to promote something, it’s got to go through the field, out to the customer and then back to the company. Conversely, I still believe that direct selling far trumps a website or even a traditional retail experience because nothing compares to the one-to-one social interaction that the direct selling experience provides. Direct selling will continue to thrive in 2012 and beyond because there will always be a need for that consultative relationship.”
AJ Deeds, President, Loving Works, LLC: “In order for our credential as a community to be as strong as it should be, we need to help spread the message about the direct sales channel to those outside the industry. We’re not commonly perceived as an influence in the economy by those who aren’t directly involved in this industry. Our goal should be to spread the word about direct selling such that people begin to look to our leadership to espouse how to run organizations or set an example for economic success. Every person in the United States who has any degree of entrepreneurial spirit can own their own part-time business and achieve the benefits that are just waiting there to be achieved. While we have more success stories than can be counted, we are rarely considered for, much less invited to, the national leadership table. By bringing the stories of our industry forward in 2012 to a national stage, we, the direct sales channel, can represent part of the economic solution.”
What do you envision for direct selling in the months ahead?
- 77% of sellers have been with their company 1+ years
- 80% of sellers say direct selling meets or exceeds their expectations
- 85% of sellers report a good, very good or excellent experience with direct selling
- 74% of US adults have purchased products from a direct seller
- 15.8 million people in the U.S. are involved in direct selling
- $28.56 billion in total US sales
- $117 billion sales worldwide