DSA

Thanks to all of the DSA member companies that once again generously donated to the TODAY Show Toy Drive! I just returned from my trip to New York to present the direct selling channel’s collective donation of more than $16.5 million in products live on the show! You can see the complete list of donors on DSA’s website. This is the 8th year DSA companies have given a collective donation, having given more than $85 million during that time.

After the show today my daughter, Kaitlyn, and I were leaving a shop near Rockefeller Plaza where we had stopped to get a quick bite to eat. A woman stopped Kaitlyn to tell her how nice she looked in her fancy dress and she proudly announced that she had been on the TODAY Show. I’m sure the woman was instantly trying to figure out what our claim to fame might be as her eyes lit up looking for an explanation. I obliged, telling her all the details of the wonderful companies and people that comprise the direct selling community. It probably wasn’t quite the brush with fame she had hoped for, but she nonetheless gave us an exhuberant thank you and congratulations and went on her way.

I tell this story because I frequently get the opportunity to tell people about direct selling’s participation in the TODAY Show Toy Drive, and I can’t help but feel a bit guilty about the fact that each of the donating companies can’t hear every one of the “thank you”s that I receive. DSA is pleased to serve as a conduit for these donations, but it’s really the generosity of the companies that make this possible. If it weren’t for their ongoing commitment to improving the lives of others – both members of their salesforces and those in the community at large – there would be no representation of DSA in this endeavour.

So to each of the donating companies, and to each person in the direct selling community who works to make a better life for themselves, their familes and others, THANK YOU. Your work impacts the lives of more people than you will ever know, and I’m proud to be able to play some small role in spreading that message.

See the video

The Pew Research Center recently released a report examining the major reasons why Americans use social media platforms such as Facebook, Twitter, MySpace and LinkedIn. “Roughly two thirds of social media users say that staying in touch with current friends and family members is a major reason they use these sites, while half say that connecting with old friends they’ve lost touch with is a major reason behind their use of these technologies,” the reports cites. While the study offered great insight on how adults of all ages use social media to strengthen their personal relationships, it didn’t address another important use of social media: the interaction between consumers and their favorite products and brands.

According to the DSA-commissioned report, “U.S. Consumer Trends Impacting the Direct Selling Industry” issued by GfK Roper Consulting earlier this year, 48 percent of social networking users say they use the sites to “post comments or read what other users have said about a brand, product or company.” Additionally, the report reveals that 67 percent of the total U.S. population considers online sites, reviews or online communities to be a trustworthy source for information.

Further, more than 75 percent of consumers get information about products through friends or family members (presumably often through online resources), and more than 50 percent go to company websites or look for online product reviews before buying a product they’ve never purchased before.

But have we reached a point yet where online marketing is accepted as a mainstream method of product promotion? The facts may surprise you.

Consider this: Facebook boasts more than four million product, public figure and company fan pages alone, and according to a study conducted by Digital Buzz in 2010, 40 percent of Facebook’s 500 million users followed brands through the networking site, while 25 percent of Twitter’s 106 million users followed brand-associated Twitter accounts. Astonishingly, the study concluded that 51 percent of brand followers (approximately 102 million people) on Facebook and 67 percent of brand followers (approximately 17.75 million people) on Twitter would go on to make purchases from that specific brand. While the study doesn’t account for any overlap between Facebook and Twitter users who follow the same brands on each platform, the numbers clearly illustrate that social media plays a huge role in the choices consumers make when researching products.

There’s no doubt online resources are key to purchase decisions for many consumers – and I believe one more example of direct selling on the leading-edge of consumer trends. Person-to-person communication about products and companies is at the core of direct selling – and that’s been true for decades! Direct sellers didn’t need the Internet to effectively use word of mouth marketing – but technology has certainly made it easier.

So the next time you’re online, think about how social networking has changed or enhanced your relationship with your favorite brands. You likely feel a closer connection to them because they are only a click away, or even better, they come directly to you based on your interests. Just last week Starbucks treated me to a coffee for my birthday – courtesy of the fact that I had connected with them online.

Whether we like to admit it or not, social media has become a critical part of our consumer identity – both individual and collective. Brands have been invited into our lives more intimately than ever before. The key for marketers will be to take advantage of that access without abusing it.

For finance analysts and business owners alike, the end of 2011 means one thing – budget outlooks for the coming year. And for many, it comes as no surprise that the latest reports released by the Congressional Budget Office are far less than ideal.

While forecasters estimate that the national unemployment rate will remain well above 8 percent through 2012, and perhaps even longer, even Federal Reserve Chairman Ben Bernanke stated earlier this week that the pace of progress of labor market conditions will likely be “frustratingly slow.” Several analysts have largely credited the slow progress to structural impediments in the labor market, including the “mismatch” between existing job openings and the characteristics of job seekers – many of whom are highly qualified college graduates and experienced professionals in search of a new career path.

Where does direct selling fit in, you ask? With countless individuals facing job cuts, reduced pay or hardship in applying for their first job out of school, the direct sales channel offers a unique, challenging – and rewarding! – opportunity for people of all ages to launch a business with the backing of an industry that has been in important part of the U.S. economy since the early 20th century, not to mention the network of millions across the globe who find direct selling to be a source of empowerment and extra income.

Consider the millions of people out there who are unemployed or underemployed and searching for an opportunity to put their skills, knowledge and motivation to succeed into practice. These men and women of all ages and backgrounds can each find their own personal success in direct selling, whether it’s a stop-gap measure until they find a new traditional job, or something they find to be a long-term source of income! With so many individuals striving to earn an income, many of the jobless are merely looking for new ways to channel their energy into a career that produces results, provides opportunities for flexibility and enables individuals to gain invaluable business experience.

While it may be cliché, recognizing the “glass as half full” is as important now as ever; while the national unemployment rate has seen little improvement over the past few years, now is the perfect time to spread the word about all of the opportunities direct selling has to offer!

Less than a week ago – and much to our amazement – here at the DSA office in Washington, D.C., we saw the first snowflakes of the 2011-2012 winter season. Whether or not we were ready to acknowledge that it’s already November, Mother Nature stepped in to remind us all just how fast the year can fly by.

While the holidays are just around the corner, for many direct sellers, the next few months represent one of the biggest – and busiest – seasons for sales, party bookings and outreach to potential customers. With that in mind, Jay Rudman, CEO of DSA member Paperly, put forth an exciting idea to encourage direct sellers to show their support and dedication to the industry.

Inspired by American Express’s successful “Small Business Saturday” campaign last year, Jay proposed a “direct selling only” holiday season campaign, whereby direct sellers everywhere could show their love for the industry by completing all of their holiday season purchases only from direct sellers.

With nearly 16 million people involved in direct selling in the United States alone, committing to a “direct selling only” holiday season presents not a challenge, but a fun and creative way to illustrate how direct selling impacts the economy, as well as the livelihoods of countless people across the globe. Just imagine – a “direct selling only” holiday season would not only provide revenue for direct sellers throughout the country, but it would also spread the word about the credibility of this phenomenal industry.

As nearly 200 companies have formally pledged to adhere to DSA’s Code of Ethics, holiday shoppers who commit to this campaign will not only find that there is a direct selling company out there for everyone on your gift list, but also that your purchases will support local businesses that have demonstrated a firm belief in ethical and reliable business practices.

Whether you’re shopping for your family, friends or co-workers, consider just how many types of products are offered through direct selling companies everywhere! From home decor and clothing to cosmetics and bed linens – or even chocolate and jewelry for that special someone – there’s no question even Santa could fill his sleigh solely with direct selling products!

Let’s support one another and make the 2011 holiday season one that direct sellers everywhere will never forget!

When I began reading Lori Penner’s piece “Why We love Our Tupperware” that appeared in a Canadian publication today, I could feel the Letter to the Editor forming in my head. “The patronizing stereotypes reinforced in this piece do not do justice to the millions of women and their satisfied customers who enjoy direct selling,” I would say.

To my surprise and delight, though, Lori’s description of her mother’s home parties as shallow and uncomfortable took an unexpected turn when she said: “Being at one of these parties recently made me keenly aware of just how much fun you can have when you throw a bunch of enthusiastic women together. Yet, there was a casualness about this get together I didn’t remember from the parties my mother and aunts used to throw.”

Like Lori, many women certainly have childhood memories of clanking tea cups and polite conversation in their own living room. I remember the tiny lipstick samples a fragrant perfume vials my mother’s friend would leave for me each time she visited. These memories certainly form the basis for the particular feelings evoked in each of us, now as adults, when we imagine those same parties and demonstrations in the first person instead of as the small child sneaking hors d’oeuvres from the table.

If your last experience with direct selling didn’t have you in the starring role, perhaps it’s time to update your memory bank with an experience in your own living room – or that of the next friend who sends an invite your way.

Lori sums up her first-person experience this way: “To say we didn’t feel a pressure to purchase would be lying. We all felt a certain urgency – after all, we wanted to make our hostess happy,” she states.

But in the end, Lori happily purchased several items – “the two consultants had done their job so well – none of us wanted to go home without these amazing products,” she continued.

I’m glad Lori was able to write her own ending – how about you? 

During its quarterly meeting in mid-December the DSA Board of Directors approved an amendment to its policies and procedures document that clarifies the actions that will be taken in the case of marketing plan changes by a company as a result of a state or federal action.

Under current procedures, all active direct selling company members are automatically reviewed at least once every five years. This procedure is in place to continually verify that marketing plans approved as part of the initial membership application process have not subsequently been changed in a way that puts it outside of compliance with the Code.

Under the new policy, any company that makes changes to its marketing plan as a result of a state or federal action, and that would fall under the scope of the Code, must notify DSA and will automatically be set for review of the new plan. Actions against a company frequently result in a voluntary change to a marketing plan that satisfies both the law enforcement entity and the company. However, in order to assert that the new plan is in compliance with the DSA Code, a new review must take place.

In the case of any criminal finding or admission, the company’s DSA membership can be terminated by a majority vote of the Board of Directors.

While the DSA Code Administrator has the authority to recommend various actions be taken regarding a company’s membership status as a result of his work, these additions to the Board policies ensure that swift and appropriate action can be taken in cases where it is clear that a plan needs to be reviewed or a company is found to be violating the law.

Many may also be surprised to learn that a significant number of companies that apply for membership do not ultimately make it through the review process. In addition to going out of business, companies often realizes they cannot comply with all of the provisions of the Code. Many companies will voluntarily change their policies when presented with a list of areas of concern by DSA staff,  but others choose instead to withdraw from consideration.

As part of its actions at the recent meeting, the Board also directed DSA staff to evaluate and enhance the membership application review process with additional checks and investigations to ensure all companies admitted into membership are practicing the highest level of business ethics. Additionally, the list of companies pending review will be listed on the DSA Web site and comments from the public will be welcome.

The past year has been a busy one as many new provisions were added to the Code in September, and additional reviews of various Code provisions and possible enhancements are ongoing. These Code enhancements are critical steps in proactively working to make sure DSA member companies represent the best of the best.

Hello 411 readers! It was a busy summer and early fall as I continue to get many inquiries about direct selling in this poor economy from both media outlets and the general public. It’s also been very busy at the Direct Selling Association as we prepare for our 100th anniversary in 2010.

However, some of the most exciting work has been done by the Ethics and Self-Regulation Committee which has spent more than a year carefully reviewing every clause of DSA’s Code of Ethics. For those who aren’t aware, the Code outlines the ethical guidelines DSA member companies must  follow, and guides DSA’s independent Code Administrator in handling any violations of the Code.

The Code is a living document that maintains its strength because it can adapt to a changing marketplace. After review, the Ethics and Self-Regulation Committee recommended substantial changes and additions to the Code. These changes were adopted by the DSA Board of Directors in September and I am pleased to be able to share these with readers of this blog!

Here’s a brief summary of what’s new:

• Statements Regarding Other Companies: Member companies are specifically prohibited from making misleading comparisons of another company’s direct selling opportunity, products or services. All comparisons must be based on objectively substantiated facts. 
• Promotional Materials: Promotional literature, advertisements and mailings may not contain product descriptions or other information that is false, deceptive or misleading. All literature must also contain the address and telephone number of the direct selling company and may include contact information for the independent salesperson. 
• Training and Materials: Independent salespeople may not market supplemental materials that are inconsistent with the member company’s policies and procedures. Further, the materials must be reasonably priced and cannot be a required purchase. The materials must also have a return policy consistent with that of the company itself. 
• Sales Receipts and Cooling Off: In the case of sales made in a non-face-to-face manner, such as via mail, phone or the Internet, a written order or receipt must be provided either in a printable or downloadable form via the Internet or with the initial order. Consumers must also be offered a clearly written description of the cooling-off period permitting cancellation of an order within three days for a full refund of the purchase price. 
• Inventory Loading: Companies must reasonably ensure that sellers who receive compensation for downline sales are consuming, using or reselling the products they purchase. In other words, salespeople should not be purchasing product for the sole purpose of qualifying for their downline commissions. 
• Fees: Any fees charged by a company to become a salesperson must be directly related to the value of materials, products or services provided in return. This provision does not prohibit a company from making a profit on their sales kit or other fees, but it would prohibit, for example, a $300 sales kit that includes nothing more than a set of pamphlets worth $20. 
• Extraterritorial Effect: U.S. DSA member companies operating in a country where they are not a member of the local DSA, or where a DSA does not exist, must comply with the World Code to the extent it is not inconsistent with U.S. law.

These changes address some very important and hotly debated direct selling issues and I’m confident the new provisions will add clarity and strength in these areas. Of course, the Code is only effective when consumers are aware of its existence and take advantage of it if they encounter a problem. The Code doesn’t have the power of law, but DSA member companies are responsible for making sure their corporate policies and the actions of each individual seller are in compliance – otherwise they risk losing their DSA membership or other remedial action. DSA’s job is to set standards and be the first line of protection if there’s a problem.

I encourage everyone to liberally share these changes, and the Code itself, with any one involved in direct selling – whether as a customer of the product or as a seller. You can also find an updated ”plain language” version of the Code online for both consumers and sellers.

As always, anyone is welcome to file a Code complaint if they’ve encountered a problem. 

And don’t think DSA is done yet! There will likely be additional tweaks and changes coming over the next 6-12 months so stay tuned.

I’m writing today from the national convention of one of DSA’s member companies. I came to speak to the group about the benefits this company’s DSA membership provides to its consultants. Each time I have the chance to meet and mingle with some of the 15 million U.S. direct sellers I am reminded what a wonderful collective story there is to tell. Each of the women I’ve had the chance to talk with during the past two days has a slightly different story about how or why she became a direct seller, but I have yet to find one that doesn’t have something to do with personal empowerment, supporting a family or just looking for something new to do.

I sat with a group of four women at lunch yesterday. Their experience with the company ranged from two years to just a few months. I asked each how she got involved and was impressed with the candor of their responses. None of them set out saying “I want to be a direct seller,” but each had found her way here. One had reluctantly attended a party, ended up buying several products and a few months later decided to give selling a shot because she thought some extra money each month would take the pressure off the family finances – that was two years ago.

All the consultants I’ve met are very genuine, real, intelligent and motivated women. There’s no hype, there’s no pretense – but there is a lot of camaraderie. During the introduction of the fall product line each was busy writing notes and facts that they will use when they demonstrate the products. The addition of additional colors was a particular high point. “I can’t tell you how many people have been asking me for that in red!” I heard one woman say.

I’m headed home on a red-eye flight tonight. Most of the women here will make their way home tomorrow, armed with a new selection of products, new friends and new strategies for achieving their goals. I leave here with a certain satisfaction that the collective story of direct selling, for all of its diversity, is still just as I portray it every day – a flexible opportunity that can be personalized to one’s own situation. In a world with so much bad news, I think that’s pretty cool.

There’s an important legislative issue being considered in California right now that will affect millions of independent contractors (Realtors, taxi drivers, many in the construction trades, etc.) – including direct sellers.

In a desperate attempt to balance California’s budget, lawmakers there are considering a proposal that would mandate withholding on all payments to independent contractors.

In a state that has an 11.5% unemployment rate, lawmakers are looking at any and every mechanism to make the numbers work – even if they only work on paper. It is estimated that the withholding plan will generate $1.9 billion in revenue, but in reality very little of that money will be new revenue and the majority of it will be returned to taxpayers at the end of the year. By 2011, the Franchise Tax Board estimates the state will lose money on the program. In the end, all the state will be left with is the bill for administering the program.

For direct sellers, this withholding program doesn’t take into account expenses, the cost of items bought for resale or any other costs of doing business. Taxes are withheld on the entire amount paid to the direct seller. Until the state refunds the money, a direct seller’s cash flow is limited and they have essentially given an interest-free loan to the government.

At a time when the State of California should be looking for ways to encourage spending and business growth, they are instead considering proposals that look good only on paper and will end up negatively impacting millions of Californians.

This provision is included in the budget proposal approved by the conference committee and could be considered by the Assembly and Senate any time during the week of June 22. View the following video for all the details and contact your California legislators and the Governor right away to ask them to remove independent contractor withholding from the budget proposal or to exempt direct sellers from any such proposal.

This proposal is bad for direct sellers, bad for business and bad for California!

Contact Your Elected Officials in California:

I saw an interesting segment on the TODAY Show this morning – an interview with Wal-Mart’s new CEO, Mike Duke. Among other things he talked about various product categories that are doing particularly well during this economic period that has few bright spots. It caught my attention because many of these same products (or products that consumers are choosing as alternatives) make up a large percentage of products sold through direct selling – thus underscoring the reason why direct selling has historically performed well during recessionary periods.

For example, Mr. Duke said health and wellness products are a particular bright spot, he theorizes because people feel they need to take better care of themsleves as they can’t afford to be sick or miss work. Wellness products account for nearly a quarter of sales in direct selling. Let’s face it – people aren’t willing to give up their favorite vitamin, even if they are cutting back in other areas. Based on Mr. Duke’s experience, there are also many others who might be adding wellness products to their regular routine.

There may be a similar mindset when it comes to other products – “The Lipstick Factor” has become a popular buzz word, but it really applies to more than cosmetics. It applies to any product that a consumer views as a “little luxury” that makes him or her feel better but doesn’t put a huge dent in the pocketbook. In the case of direct selling, this could be cosmetics (which I’ll tell you would not be the first thing most women would cut from their shopping list!), costume jewelry, home decor or a variety of other items.

Mr. Duke also noted with some surprise that electronics were doing very well. He attributes this to the fact that so many families are opting to stay at home instead of going out so they tend to spend money on the latest video game as home entertainment instead of eating out or taking a vacation. The increase in the home products category underscores this observation and applies to direct selling in categories such as home decor, and food products and associated kitchen accessories. (Really, who wants the boring meatloaf grandma used to fix when you can have gourmet meatloaf made with a simple mix, accompanied by hand-smashed potatoes, covered with freshly grated cheese and twice-baked in an attractive stoneware dish? – still cheaper than eating out and you can feel good about the meal while spending quality time with your family.)

The one area cited in a Wal-Mart press release that does seem to be significantly different in direct selling is the jewelry category. The release states jewelry sales have been soft, but anecdotal reports from several direct selling companies in this category have indicated strong sales. This is likely do to consumers who are not stopping their spending altogether, but are instead making different choices. For example, a consumer might forego buying a new suit, but instead decide to accessorize the one she already has with a $25 necklace. That little luxury is enough to satify the consumer in all of us but keeps total spending in check.

Wal-Mart may be the biggest traditional retailer in the country (with about 1.4 million associates), but direct selling’s 15 million salespeople make up an important part of today’s economy and will play an important part in recovery. As people tend to stay closer to home, their buying habits shift and direct selling offers relevant and appealing products and services, a comfortable shopping environment with knowledgable salespeople, and even a brief escape from all the negative economic news. It’s only a matter of time before Americans are spending full-tilt again, but until then direct selling offers appealing buying options and a way to earn supplemental income at exactly the time when people need reasons to be hopeful.