multi-level marketing

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.

I love attending direct selling parties or demonstrations – not only for the fun and the shopping experience (I can be a bit of a shop-a-holic), but also because I think it’s important to continually update my practical knowledge of direct selling. In most cases, I wait until later in the event to let to let on that I’m somewhat more than a casual observer. It’s important for me to see exactly how people are approaching their business.

But this past weekend I had an interesting opportunity to be part of a conversation that was a bit different from a product demonstration. I was at the mall with my daughter and we stopped in the food court for lunch. We were seated in a cluster of tables and next to us six women were having a friendly conversation. During a break in the discussion I was having with my daughter about her upcoming birthday party, the conversation at the next table caught my ear. After casually eavesdropping for a few moments it was confirmed – the women were direct sellers having a team meeting. It didn’t take long to determine that the company they were with is a DSA member, so I listened intently. What would the sales leader say to motivate her team, particularly in this tough economy? Would she say anything that would make me want to leap up and flash my business card as though I were an undercover cop? Would the ladies report brisk sales or tough times?

The leader asked the women how they were feeling about their business. One woman began by reporting strong sales the week before. Another woman reported that even though sales were pretty good she said she knew the economy was having an impact on people – they were considering more carefully how their money was going to be spent. After going around the table the leader chimed in again. Her direction to her team was the following –

“Almost all of you joined this company after having used the products yourselves. You know they are great products, but just as with anything, some people will love them and some people won’t. It’s our job as consultants to show people the products and help them decide if they are the right products for them. If you find yourself trying to convince someone to make a purchase, that’s not the right kind of sale. Just give them the facts and let them decide.”

By this time my daughter was asking me to remind her who had RSVP’d for her party so my attention went back to her, but I was grinning on the inside. Despite the urge I had to turn around and congratulate this seller on her wise advice (and wanting to continue listening), I finished my lunch and headed back to shopping. The meeting continued and no one in the group had any idea that I had been listening to the conversation or that their words had fallen on the ears of someone who had a much different perspective than most.

It’s not that the conversation at that adjacent table was unique – it happens thousands of times each day in this country and around the world. But the perspective was unique – and what I heard reaffirmed for me why direct selling works. Tough economy or not, direct selling has a real impact on the lives of millions of people around the globe every day. It works because it’s a business about people. I don’t know the stories of each of those women, but I know they wouldn’t stand out in a crowd – they are just doing what they need to do to put food on the table, have a little fun, buy products they love, etc. etc.

So, thanks to those women for providing me with an opportunity to be a fly on the wall. I wish them good luck in their business and hope they continue to find success.

I called my cell service provider today to cancel one of two lines that I had. I recently got a new phone and no longer needed a separate account for my PDA. I’m happy with the provider, I just didn’t need separate devices anymore. When I called and requested the line be terminated, the conversation went something like this:

Phone rep: “Oh, I’m sorry to hear that you want to cancel your service. You have been a valued customer since 2000. Is there anything we can do to convince you to stay with our service?”

ME: “I’m not unhappy with the service and as I explained I’m not leaving your company – I just don’t need two lines anymore.”

Phone rep: “Well perhaps we could offer you a better rate plan. Would you like me to look into that?”

ME: “No, thanks, I still have all the same services I had before, but now I get them through one account so I have no need, at any price, for the second line.”

Phone rep: “OK, I can certainly take care of closing your account for you if there’s nothing we can do to keep your business. PAUSE. OK, ma’am, your account has been closed, but just so you know, you have 59 days should you decide you’d like to reinstate services from our company as we do value you as a customer and are disappointed that you no longer need our service. Is there anything else I can help you with today?”

ME: “No.”

Phone rep: “OK, thank you and please refer us to your family and friends.”

I had to wonder where the training broke down there. She was treating a perfectly happy customer as though I was unhappy, and in fact made me feel like I wasn’t getting good customer service because she clearly wasn’t listening to a word I was saying. To top it all off, at the end of the conversation, she asked me to refer my friends and family to her. So which is it – am I an unhappy customer they want back or am I satisfied customer that they want to encourage to go out and talk about their services to people who trust me? Sounds like they need to update their phone script.

Anyway, the point I’m trying to make here is customer service cannot be a cookie cutter. I’m sure the minute the word “cancel” came out of my mouth the computer chugged away and spit out a script for this woman to read. It didn’t matter what my answers were – she was trained to read that script and by-golly that’s what she was going to do. Do I feel valued? Nope, not at all.

I would have much preferred the rep to actually listen to what I was saying and offer assistance based on what I said. Asking how I liked my new phone or if there were any additional services I would be interested in would have been more appropriate. But, no, not in the script.

Think about the last time you experienced great service……still thinking?……not surprising. Good customer service is lost on most people today. A poor economy usually means customer service improves, but I haven’t noticed it. I rarely even get a “thank you” after the completion of a sale.

Perhaps I’m particularly cognizant of this as I spend a lot of time talking about the individualized service offered through direct selling. Think about it – you’re shopping with someone who knows you or at least knows something about you. You can call them at any time with questions and they’ll follow up with you after the sale to make sure you’re happy with your purchase. It’s their job to make sure you are happy and most take that role very seriously. Some people may not like being treated like a valued customer – and may even mistake it for being pestered – but the alternative is anonymous and sterile and doesn’t make me feel good in an economy that could use a little sunshine.

So the next time you’re out shopping, take note of how you are treated as a customer and then consider how you would like to be treated. Try the same thing if you are a direct seller yourself – treat your customers in the same way you’d like to be treated, listen carefully when they talk to you, pick up on the details that will make them feel important and then do your best to make them the most satisfied customer you have. Do this and you’ll feel confident saying “Please refer me to your family and friends!”

I was recently involved in a situation where someone asserted that direct sellers aren’t relevant because they don’t contribute to the community. My first thought was that this person clearly doesn’t know much about direct selling because not only do direct sellers contribute to the community – they ARE the community. So, in the process of enumerating a few of the many ways direct sellers contribute to the community, a blog post was born.

The following information only touches on the ways direct sellers contribute – if you have other examples that illustrate direct sellers contributing to the betterment of their communities, I’d love for you to talk about them here.

• There are more than 15 million independent direct sellers in the United States selling everything from organic gardening supplies and household products to cosmetics and food mixes. A majority of these individuals pursue direct selling on a part-time basis, earning supplemental income, although some do make direct selling a full-time career. Without the additional income some would find it difficult to make ends meet.
• There are many well-known name brands that use a direct selling model, but perhaps more importantly there are countless small sole-proprietorships – individuals who started their businesses in their home as a way to stay at home with their families. In turn, they are now helping others have a flexible schedule that meets each person’s unique needs.
• Direct selling is a perfect example of micro-enterprise. For just the cost of a starter kit (which is usually less than $100 and typically contains product samples, catalogs and training manuals provided by the company at-cost or below) a person from any background, with any level of education and with any goal can get started in direct selling. That small investment may enable that person to make ends meet or he/she may grow it into a larger business. And, if a person decides direct selling is not a fit, he/she has invested little more than their time.
• Direct selling companies and their independent sellers are passionate about giving back to the community. In fact, according to a study on the socio-economic contribution of direct selling to the US economy, in 2004 US direct selling companies gave an estimated $90 million to charitable causes. When asked what types of organizations benefited, 89 percent said they contributed to human services and charities, 36 percent of respondents contributed to education and 14 percent said they contributed to causes that benefited the environment.
• The direct and indirect economic activity generated by direct selling companies resulted in an estimated $6.6 billion in total federal, state, and local taxes in 2004. This helps communities run.
• While economic contributions are more easily measured, the industry also contributes considerably to the quality of life enjoyed by many Americans. Supplementary income, work schedule flexibility, and the entrepreneurial aspects of direct selling are some of the major benefits cited by direct sellers. These social contributions are no less important than the economic contributions.

Direct selling has an impact on many sectors of the economy. It is about much more than selling products and earning an income. For many it’s a chance to accomplish a goal, develop business skills, or simply to meet new people. The companies are active in their communities and encourage their sellers to do the same. It’s really impossible to separate direct sellers from the community because they are one in the same.

Happy New Year! After a healthy winter break (went skiing – luckily no broken bones) I’m greeting the new year with a dose of optimism I hope will infect others so the economy can find the jump start it needs. Everyone is evaluating their financial situation and looking for ways to make things a little brighter. Over the break I thought about some of the reasons why direct selling is generally fairly resilient during any economic situation and thought the following five messages summed it up pretty well.

1. Direct selling represents the ultimate microenterprise. Any individual who is willing to work hard has the potential to be a successful direct seller. Some choose to do that on a small scale – others take it much further. The flexibility, creativity and potential for growth distinguish direct selling from more traditional businesses. Low-start-up costs and ease of setting up shop add to the appeal.
2. Direct selling is a case study in personal empowerment. From getting over the fear of standing in front of an audience to being the first person in a family to own a small business, direct selling provides millions of women and men around the world with a path to success. Reaching one’s financial goals is often secondary to the importance of the life skills gained through direct selling.
3. Every direct seller is the equivalent of a local small business. Even direct sellers working with companies with billions in annual revenue are making a local impact through their individual efforts. For their customers, the company itself isn’t nearly as important as the fact that they are supporting someone in their community.
4. There’s never been a better time to stay home and enjoy the company of family and friends. Who needs a night out on the town when you can have just as much fun at home – without the crowds. Adding shopping to the mix just doubles the fun.
5. Consumers tend to look for things that will make them feel good during a recession. Many direct selling products can do just that. From a lipstick to “look good” to nutritional supplements to “feel good,” people are looking for little extras that won’t make big dents in their pocket books. Eating at home more? Try some new kitchen accessories or food mixes. Foregoing the family vacation? Redo a room in your home instead. With the wide variety of products and services offered through direct selling, it’s easy to get creative with ways to spark consumer interest.

The economy will rebound – it always does. It may take time and there may be some bumps in the road, but in the meantime, focusing on stabilizing and improving your personal financial situation is key. For some, that may mean pinching pennies, for others it may be looking for additional sources on income. Either way, the future for America is always bright.

I came across an interesting blog post today by industry critic Robert FitzPatrick. On his blog he recounts the story of Lasdwun N. Luzes – a fanciful economist who is described as, among other things, “a lobbyist for the Direct Selling Association, a fierce critic of consumer protection and a fervent anti-regulation spokesman.” The fact that no such person is a lobbyist for DSA is only the first indication that the entire scenario is a carefully-crafted farce. It turns out this sham character dates back to a 2000 April Fool’s hoax Mr. FitzPatrick engaged in for a publication related to the printing industry. What I find most telling about this particular literary expedition by Mr. FitzPatrick is what it reveals about his position on ethics. In short, if you don’t have facts to support your theories – make them up! Oh, and don’t forget to present the fictitious ramblings without noting that they are satire – that way you’ll fool a lot of people into believing what you have said is true, but if anyone ever calls you on it, you can claim it was all a joke. Nice.

Ironically, it is exactly this kind of deceptive behavior Mr. FitzPatrick accuses direct sellers of engaging in.

Anyway, in the interest of setting the record straight, I’d like to propose a more realistic alternative – one that’s actually true. Meet Bjorn Boss. Bjorn works for a small consulting firm in Anytown, USA. Bjorn is also an independent seller for a direct selling company. He works about 10 hours per week on his direct selling business and makes about $200 per month. It’s not a lot, but it helps pay the bills each month. He joined the company about two years ago because he wanted to buy products he was already using at a discount. After awhile, others found out he was selling the products and wanted to buy them too – thus his business began to grow. Maybe someday he’ll build the business into a full-time endeavor, but for now, he’s enjoying the extra income and the flexibility to decide when, where and how he runs his direct selling business.

The defining difference between Lasdwun and Bjorn Boss is that Bjorn actually exists – in the form of millions of Americans who are direct sellers. Some get involved for supplemental income, some build a business, and some sign up as a seller because they want to buy products they already use at a discount. There’s no cookie cutter description for all the Bjorns out there. That’s one of the greatest attributes of direct selling – it’s completely customizable to each person’s unique goals.

Critics like Mr. FitzPatrick will try to lump all direct sellers into one big pot and suggest that no one succeeds because only a small percentage make a full-time income. Not only does that completely misrepresent the reality of direct selling, but it disrespects to the millions of people who rely on their modest direct selling income to pay the bills each month. I’d like to see Mr. FitzPatrick look those people in the eye and tell them they aren’t successful. It might give him a whole new perspective on what “success” means – and for most, that’s not a 6-figure income.

I came across a blog post today by a guy who had seen a recent article on the increasing popularity of direct selling. He was bemoaning the fact that the result would be more invitations to direct selling parties or demonstrations. He’s right that the poor economy will probably encourage many people to explore whether direct selling is for them. There are tons of products out there that are of interest to people – especially with the holidays coming up. But what really caught my attention was his “warning” to people to decline the invitations. What? His logic is as follows: “The hard truth is that we do not need more broke Americans spending what little surplus cash they have on stuff they don’t need,” he says. I hardly think it’s fair to paint the U.S. economy that unfavorably – the majority of Americans are far from broke. In fact, I believe it’s his kind of pessimism that makes an already tentative economic situation worse. He probably has his mattress filled with cash, too. My logic says that in this type of situation you should get out there and do what you can to return our economy to good health – and while that doesn’t mean extravagant, careless spending, it also doesn’t mean hunkering down and becoming a hermit in your own home.

Here are just a few thoughts:

1)      Give yourself a “pick-me-up.” If the news of economic woes has you feeling down, you need to look on the bright side. The economy is cyclical – it always has been and always will be. Sitting at home a worrying about it won’t change a thing. If you are invited to a direct selling party or demonstration – go and have fun! It’s an inexpensive night out. If you find something you love, consider it a little gift to yourself. If not, thank the hostess for a wonderful evening, and on the drive home think about how you didn’t spend $25 for dinner, $10 for a movie ticket, and who knows how much for drinks afterwards.

2)      Be part of the solution. Most women don’t stop wearing cosmetics when a recession hits, just like most people don’t stop their health and wellness routine. For people who already buy these products, most will keep on buying. Others may even discover new brands because smart companies (direct selling, traditional retail or otherwise) increase their marketing during economic slowdowns. Research shows people are very receptive to marketing when the economy is slow because they are looking for signs that things are getting better. I say, don’t just look for signs – get out there and do something about it! When people start buying again, the economy is going to get better, so forget about putting your money in your mattress and be part of the solution.

3)      Do yourself a favor. A thriving economy is built on commerce. Whether a particular company has its products on store shelves, sells through mail order or engages a salesforce of consultants to market its products – the end result is the same – products and services are distributed to those who want them. There is always going to be a market for quality products and services – and direct selling gives people the opportunity to earn supplemental income while having fun at the same time. If you are looking for an additional source of income and are intrigued by the thought of doing something on your own, direct selling may be a good option. But, that doesn’t mean you should take the choice lightly. Be sure to set goals and thoroughly check out any company you are interested in to make sure your expectations are reasonable. Direct selling is, in fact, selling, so don’t expect the commission checks to start rolling in without putting in some work. And be sure to think beyond your immediate family and friends. While they are a great group to start with to get your feet wet, long term success will require you to get out of your comfort zone and market your products on a wider scale.

Pessimism fuels economic woes, and depriving oneself of a little fun now and then only makes the situation seem worse. So America, while the government is busy throwing billions of dollars at the situation, take the easiest step you can and change your own outlook. Get out there and have a little fun. If you happen to pick up a new shade of lipstick or a new centerpiece for the dining room table, all the better. Consider it a dose of medicine for both your psyche and the economy.