After submission of a membership application the pending process takes at least one year. There are three main things that happen during this period:

1) DSA reviews company materials, including a starter kit and other documents that represent what a potential recruit would receive, to ensure compliance with the DSA Code of Ethics. Does the company offer a 90% buyback policy? Are the startup costs reasonable? Are there any statements that indicate inventory loading or other prohibited practices?

2) DSA makes inquiries to law enforcement and consumer protection agencies such as the Attorney General in the state where the company is located, the Better Business Bureau, and on a case-by-case basis any other entity that may have relevant information to share. It is also important to note that the mere existence of a complaint with any of these bodies does not preclude membership, but instead what is considered is the way any issues were resolved.

3) It is clear that the two activities above could be completed in far less than a year. However, one of the most important parts of the pending process is what is essentially a waiting period during which potential issues have an opportunity to come to the surface. These are issues that may not necessarily be obvious with a review of the materials, but are exposed by the marketplace over time.

Should questions arise from any of the three activities above, companies must answer and/or address those questions before the company can move forward to full membership. In fact, each year there are dozens of companies that make application and either withdraw their application or are not put before the Board of Directors for approval because of outstanding issues. Additionally, once a member, companies go through the entire review process at least once every five years (possibly more often).

I’m tempted to reiterate here the difference between a law enforcement agency and DSA, but that’s mostly embodied in my last post. What’s key though is that DSA’s review is not a substitute for one’s own review of a company and it also doesn’t guarantee that a law enforcement agency won’t disagree with DSA’s interpretation.

DSA has come under fire by industry critics recently as a result of a complaint filed against YourTravelBiz.com, a subsidiary of YTB, International, Inc., a DSA member company.

It has been interesting for me to recognize disconnect between the perception some people hold about the role of a trade association and the parameters under which a self-regulatory Code of Ethics operates. The questions have been posed to me in various ways – some more civil than others - but the questions essentially boil down to one: How can a company be prosecuted as a pyramid scheme and still be a member?

Using YTB as an example, the basic answer is easy – so far the allegations are merely that – allegations. Nothing has been proven – the company has not even had a chance to respond to the court. The Code of Ethics says companies cannot operate as pyramid schemes – it does not say they can’t be accused of being pyramid schemes. But the tiny little point about due process aside, based on the information presented to DSA at the time of their application, in DSA’s interpretation, this company met the standards of both the Code of Ethics and laws applicable to direct selling. Information presented by the California Attorney General may change that view, or it may not – that’s what due process is all about.

However, until information is presented that runs contrary to the information we evaluated as part of the application process, there are no grounds to revoke their membership. You can be sure, though, that we are keenly following this case and are evaluating information as we receive it.

Here are a couple more questions that have been raised:

What value does DSA membership have if a company can be prosecuted as a pyramid scheme? First, the standards of the Code are designed as a guide for consumers when evaluating a company – member or not. In the case of a member, though, if the Code Administrator determines a company has not met the standards, the company must make it right. DSA cannot guarantee that a company will not violate the Code, just like a government cannot guarantee that people will not break the law. But as with the law, there is a process for recourse when the rules are broken.

Does the Code process guarantee satisfaction for consumers? Of course the Code can’t guarantee satisfaction, but it provides an option that in most cases is exactly what a consumer needs. Instead of a lengthy complaint process with the Attorney General or Better Business Bureau, most complaints can be taken care of through the independent Code Administrator. However, if the Code process doesn’t yield the desired results, more formal legal action can still be pursued. I don’t know about you, but I’d much rather try the easy (and free) route before filing a lawsuit.

Why not kick a company out when they violate the Code? The answer is two-fold. First, a company CAN lose their membership if they are determined to have violated the code – either once or repeatedly. However, in most cases this is not necessarily the best course of action because the company is then not subject to the additional standards provided by the Code at all. From DSA’s perspective it’s far better to keep the company’s feet to the fire by enforcing the Code than by kicking them out, thus releasing them from the Code requirements. I’d much rather see a company reform than go somewhere else and continue to act unethically.

I guess in some respects I’m flattered to learn that DSA’s Code is recognized as such an important example of self-regulation. At the same time I’m disappointed to learn that there is so much misunderstanding about the limits of the Code. However, I view this as a great opportunity to evaluate public opinion and explore ways to both strengthen the Code and help close the gap between public understanding of the role of the Code.

To be sure, we are proud of our members and their collective efforts over decades to create standards for themselves regarding sales and recruiting practices. Those standards are embodied in the DSA Code of Ethics. The Code is not a perfect document – that’s why our Ethics Committee and Board are constantly evaluating the Code to reflect what we see going on in the marketplace. But the Code is an enforceable standard of behavior for our members and a mechanism that does aid salespeople and customers alike with getting answers to many of their complaints. Thankfully, despite millions of consumer transactions each year, we get relatively few complaints. That’s a testament to the standards themselves and the pledge that our member companies make to abide by them.

And that’s what DSA membership really means – that DSA member companies pledge to abide by the rigorous standards of the Code – that they will buyback inventory from departing distributors – that they will not allow inventory loading – that they will not require unreasonable upfront fees – that they will not make misrepresentations about their products or opportunities – that they will not be pyramid schemes – that they will not hide behind the independent contractor status of their salespeople to avoid application of the Code. And when a company doesn’t abide by these standards, it will be subject to the judgment of an independent Code Administrator who makes determinations that are in the best interests of the consumer and the industry – not necessarily the company.

Even the best of us make mistakes, and DSA’s purpose is to minimize those mistakes by creating the standards I’ve described and providing a mechanism to address them when they happen. But what about companies that are accused of breaking the law? Fortunately, DSA member companies are rarely accused of this in any credible way. But it sometimes happens that one of the hundreds of DSA members, or some of their millions of salespeople, are charged with serious, systemic wrongdoing. How can this happen and what does DSA do about it?

DSA’s process for reviewing companies prior to becoming association members is a rigorous one. It takes at least one year for applicants to become members. During that year, we look at company marketing materials, contracts, manuals, video and other items to ensure compliance with the DSA Code. We contact law enforcement agencies and others to determine what kind of consumer complaints and legal and regulatory actions have been lodged that might raise questions about the applicant. We will periodically attend company meetings to help ensure that the materials we’ve seen and real world practices of the applicants are consistent. If there are any questions about the company or its marketing plan, or any complaints that we’ve been made aware of, we ask the company to explain them. If they can’t explain, or won’t, we’ll defer their application or recommend to our Board that the company not be admitted to membership.

After approval, if a member company is accused of a fundamental wrongdoing, we take the allegation seriously. If there is an allegation, we forward it to our Code Administrator for possible further action based on his review and the evidence and conclusions that come from any government claim.

But DSA’s reviews and standards are no substitute for one’s own wisdom, caution and education about direct selling. Whether a company is a member of DSA or not, anyone considering direct selling should always ask the same questions – Is the cost to get started reasonable? Is the product a viable one that you think you can sell? Is the compensation of the plan based on sales to real users of the product and not merely based on recruiting other people? Are you being told that this will take hard work to succeed? Does the company have an inventory buy-back policy?

We’re confident that when you ask these questions about DSA members, they’ll be answered to your satisfaction. If not, the DSA Code comes into play. If a member company is not complying with the requirements of the Code or the law, the Code Administrator will take action to force the company to comply, help any individual complainant, or if necessary, ask the Company to leave DSA, make the matter known publicly, or refer it to law enforcement for action.

We’re proud of our Association, our Code, and our member companies and we know that the standards we adopt, fight for, and enforce are an important part of making sure direct selling is a business model that represents the best for consumers, sellers and companies.

When I was a kid, August 1 meant another full month of vacation. Not any more. In fact, many kids will head back to school in three weeks – or less! Like many parents, I find myself with mixed emotions: a little joy at the prospect of getting back to a familiar routine, and a little sadness that another carefree summer is coming to an end.

This was reinforced on my way to work when I stopped at the store to pick up a couple things for my son’s last day at Art camp and saw that the entire front of the store was filled with fall foliage and Halloween decorations!

While I’m not ready to start hanging ghosts and goblins in my front yard yet, it did occur to me that while many people prepare for back to school, there are also many people who are preparing to start or reinvigorate their direct selling businesses in anticipation of the holiday season.

People become direct sellers to earn extra money for a variety of reasons, and the impetus is often seasonal. Fall is a time to work toward Christmas, spring offers a chance to save for a summer vacation – and summer sales can help pay for back-to-school clothing and supplies.

Similarly, direct selling is a great way to get your holiday shopping done early – why not beat Santa to the lunch this year and check off everything on your shopping list before Thanksgiving – all while having a great time and catching up with friends and family? Many people are busy right now setting up and conducting home parties and in-person appointments to help get ready for whatever the rest of the year has in store for them.

If direct selling is a part of your plans between now and December, please share your plans with us here. And, I hope everyone enjoys these final, precious days of summer.

Of course, one of the other staples of any holiday weekend, especially one where millions of hard-working Americans find themselves with an extra day off, are in-store sales. Dozens, even hundreds, of ads proclaim the great deals that can be had from sea to shining sea. I did venture to the local shopping mall at the behest of my daughter, who at four is a verified shop-a-holic, and the sea of people I found there was fairly reminiscent of the sea of people that had been present the day before on the National mall.

I didn’t find too many great deals, but since my mind is never far from direct selling, as I was watching the crowd and sipping on my lite coffee Frappuccino while we took a quick rest, I was reminded that shopping in the home offers respite from several common aspect of the mall that are often better left behind:

• crowded parking lots and stores, especially around the holidays
• salespeople who aren’t familiar with the products
• impersonal shopping experiences that don’t provide a high level of customer service

Instead, direct selling takes place in the comfort of your own home (or the home of a friend, relative or coworker) with a knowledgeable sales representative who cares a lot about her products and works hard to personalize each shopping experience.

Clearly, direct selling will never completely replace retail shopping. I shop at the mall like most others, but it’s nice to know that direct selling can offer a little independence from the traditional shopping experience.

While I’d certainly be a direct selling customer no matter what, my role with DSA has given me a different perspective on the many reasons why people are involved in direct selling. When we talk about the benefits of direct selling, we tend to focus on the fact that direct selling provides customers with a unique experience that includes the personal touch of a knowledgeable sales representative, or the opportunity for supplemental income that many find attractive. But whenever I attend a party or a personal demonstration I’m always reminded that for many people, the best thing about direct selling is that it builds a community. Admittedly, women will look for any excuse to do a little shopping – it’s a relaxing pastime that for many is a much-needed release from otherwise stressful lives. The chance to shop and socialize is, well, the best of both worlds.

Most of the women at a recent gathering I attended are long-time friends – and those who didn’t know each other quickly found conversation centered on the products for sale, which led to discovering other common interests. It was clear that they welcomed the opportunity to peruse the items offered for sale; and most went home with a new-found gem or two. However, what was most clear was that they came for the opportunity to sip wine, catch up with old friends and take a brief break from their responsibilities back home. The direct selling experience facilitated their community gathering, but by no means drove it – and while they still talked about their kids, their husbands and their jobs, it was a welcome respite from the outside world.

I also spent some time talking to the sales consultant, a single mother of two who started with the company to earn some extra money to make ends meet. She’s part of a community too, one that provides her with access to training from the company she represents and support from her fellow consultants across the country. It’s not uncommon for consultants to form life-long friendships and even business partnerships through their participation direct selling.

My experience at this event and others like it always reminds me that direct selling is more than a business. It’s a community that often extends far beyond any financial motivations. Today, many people make personal connections online through social networks, but direct selling companies used this concept far before the Internet even existed. Direct selling not only reflects current social trends - it even helps shape social trends. So, whether you’re chatting with your friends online, or sitting in your best friend’s living room browsing through product samples, think about the community you’re a part of and the important connections you are making.

One thing I didn’t fully anticipate was that people would have questions about DSA’s mission. Several people have asked, “How can DSA represent the direct selling industry and work to protect the sales consultants and consumers involved?”

It’s a legitimate question, one that DSA President Neil Offen addressed during his Annual Meeting Speech last week in Phoenix. He explained that these twin goals are really two sides of the same coin, but I’ll let Neil speak for himself:

“Of course we have a duty to our dues-paying members to protect and promote their interests, but one of the most important ways we fulfill that part of our mission is through a commitment to consumer protection. By holding ourselves to a higher standard, by policing our own actions through a system of self-regulation that goes above and beyond the requirements of the law, we do more to promote and protect ourselves than is possible through any other method.”

In other words, we achieve one goal by achieving the other. Happy, satisfied customers who understand and exercise their rights as consumers represent the best kind of success for DSA and every member company. We never rest on our laurels, and Neil shared his thoughts on where we plan to focus our efforts in the coming year and beyond:

“We must continue to do more to enforce our own rules and always act in the best interests of our sellers and their customers. Throughout the course of this meeting, we have heard about Corporate Social Responsibility. But it means more than “doing well by doing good.” It means operating using only the highest standards in business ethics by every measure of the term. The tenets of the (DSA) Code (of Ethics) outline this behavior, but consumers and distributors will ultimately define acceptable marketplace standards. Today’s consumers and distributors are empowered and they speak loud and clear – we must listen and act accordingly. Companies and industries that do not meet consumer expectations will be left by the roadside.”

Neil, who reinforced the Association’s ongoing review and enhancement of the Code of Ethics, closed his remarks by reminding attendees that when it comes to DSA’s mission they must think about the long term:

“We have made great strides this past year, but the road before us is long and winding. We are in it for the long-haul and we shall not retreat from [our members’] mandate to always do what is right, to choose the high road when faced with a fork and to always have DSA act in the public interest…for that is in the interest of our companies and its millions of salespersons who rely on us.”

Neil’s remarks accurately reflect the importance of representing member companies, independent sellers and consumers – the concepts really are inseparable and I look forward to continuing to comment on this site about our efforts.

I chose to post this as a new entry because there are certainly many opportunities for discussion here, and I don’t think being buried in the comments of an old post would give site viewers enough opportunity to review and react to it. As such, it is posted in its entirety below. I will look forward to the reactions of others.

Just one final note before we get to the post itself. Thus far the visitors to this site have conducted themselves with respect to the opinions of others. The intent of this blog is to discuss the issues, and personal attacks have no place here. However, I am posting this message in its entirety because I hesitate to do ANY editing to posts - one would then always need to wonder if something had been left out. Since the bulk of the post does address relevant issues, I did not want to lose that input – no matter how far afield it may be from my viewpoint or that of DSA. That being said, in the future I will not post any comments from this author or any other that make personal attacks on people or their opinions, or simply restate the same information regardless of the topic at hand.

Message from Jon Taylor posted 10:28 pm ET 6/4/2008:

Amy - Is this the same Amy Robinson that used the web version of identity theft to register pyramidschemealert.com to divert honest people seeking the truth from finding the pyramidschemealert.org web site they were seeking? And the same DSA that blatantly lied in our Utah legislative committee hearings to get MLM exempted from prosecution as pyramid schemes? The same DSA that used blatant influence peddling to get MLM exempted from a Business Opportunity Rule that would have given consumers some protection from the worst business opportunity scams?

I don’t expect that you would dare post my response (below) to some of the above comments on your blog. It would only be honest and ethical to do so, since the statistics you challenge are my statistics. But I would be surprised if you were that open to honest feedback. Here are a few points for readers to consider:

1. The 89%, 84%, and 91% satisfaction rates for direct selling you cited above on “Happy Mothers Day” (and which have been cited in legislative hearings, etc.) are themselves extremely misleading, since they combine legitimate direct selling with pyramid or chain selling. MLM is not considered as a separate category, but is treated as core direct selling activity.

2. I worked my way through college selling World Book Encyclopedia while you were still in diapers. World Book, Fuller Brush, Tupperware, etc. were not endless chain selling operations, but legitimate direct sellers at that time. I have watched MLMs gradually take over the agenda of the DSA, which initially represented legitimate direct sellers. Now the DSA spends its resources twisting the truth to match the deceptions used to recruit hapless victims into the revolving door of recruits needed to fuel the insatiable appetites of TOPPs (top of the pyramid promoters), officers, and founders of MLMs that are its most profitable members.

3. Back to your statistics, only “active” participants in MLM are included in statistical population, not the 90% that are gone within 5 years in many of the programs we’ve studied. If you included only MLM and ALL who were enrolled in a 5-year period, you would get strikingly different statistical results. This is only fair, since some of the “successes” included in the studies have been with the company for ten or more years.

4. As far as the “99% myth,” you should read Bob Fitzpatrick’s “The Myth of ‘Income Opportunity’ in Multi-level Marketing.” (See www.falseprofits.com) He comes up with a loss rate of closer to 99% using the numbers published by the MLM companies themselves – assuming you subtract minimal expenses. My 99.9% figure comes from a more strict accounting and statistical standard – subtracting “pay to play” expenses (purchases required to qualify for commissions and advancement) and minimal operating expenses – which I established be carefully tracking expenses in a one-year test. It also includes ALL recruits within a reasonable time period – not just “active distributors,” etc. And since the vast majority of MLM recruits soon become EX-participants, they deserve to be represented.

5. Now to the tax studies. If you read my tax survey carefully, you would know that I acknowledged the problems of doing the survey from the outset. If anyone were to do a simple survey of tax professionals on the profitability of MLM participants using a standard survey questionniare, they would be unable to get the desired data – period. You should know that. This is confidential information. What happened to me was that accountants aware of my research were asking me why no one doing MLM was reporting any profits. So they gave me the opening for talking with others. I would simply ask “…  Shoot, I’m not going to write out pages to repeat the process that is reported on my site. Go to www.mlm-thetruth.com and click on the research link, and you will find it. My approach was the best I could do under the circumstances. And I stand by my 99.9% loss rate for the companies I have studied – not based on the tax survey, but on careful analysis of actual company data.

6. You should know that Bruce Craig, while working in the AG office in Wisconsin in the 70’s and 80’s, was able in a state action to obtain the tax returns of the top 1% of Amway distributors. Their average income was minus $900. So there was a precedent.

This feedback is surely too honest and straightforward for you to post, so I don’t expect anyone but you to see it. But I feel better having written it.

Amy Robinson, how can you sleep nights, knowing (as you must) the great harm the DSA and its member firms are doing world wide?

Jon M. Taylor, MBA, Ph.D., President, Consumer Awareness Institute and Advisor, Pyramid Scheme Alert

Amy’s response:

The author says he has the same goal as DSA – and that’s to make sure pyramid schemes are not able to operate in the marketplace. The problem is we don’t agree on the definition of a pyramid scheme. However, I find value in the exercise of finding common ground from which to start a discussion. Undoubtedly there is somewhere in the middle where we have some agreement, and both sides could probably benefit from an open and honest discussion of each other’s opinions. Certainly there are areas where we would have to agree to disagree, but I’m not sure the author would ever be able to accept that his views might be wrong.

Now, since I chose to proceed with posting the personal attacks, I will respond to them briefly. The online identity theft assertion has been used frequently by the author – and is absurd. Why the author has made this an issue personal to me, I’m not sure – it is only my name on the registration because one has to be there. But that detail aside, DSA does in fact own a domain similar to one used by the author and at one point we did have information posted there relevant to anti-pyramid scheme legislation being considered by Congress. However, at no point did we conceal our identity or masquerade as anyone else.

Assertions about DSA’s testimony with regard to anti-pyramid scheme legislation in Utah are equally as absurd – and in reality represent no more than a difference of opinion. Just because our view is different than the author’s doesn’t take away from the truth of what we are saying – we simply view the facts differently. This is further evidence that the author is unwilling or unable to entertain different points of view.

With regard to the Business Opportunity Rule, the FTC reviewed our feedback on the issue just as they reviewed the feedback from the author and others and decided the merits were on our side. If we had the influence the author suggests, wouldn’t we have used it to prevent the Rule from being proposed in the first place? We are confident in our position because we know we have the facts on our side and verifiable data to back it up.

Now to the specific, and more substantive, assertions made by the author:

Regarding the author’s specific comments on my previous posts, the numbers I quoted with regard to satisfaction are from our 2002 National Salesforce Survey, during which more than 1,800 direct sellers involved in both MLM and non-MLM compensation systems were polled by an independent research firm. While the interviewees were current direct sellers when selected at random from the salesforce, that group ultimately represents people who were just starting, well-established or in the process of quitting – for a variety of reasons. I don’t understand the suggestion to limit the pool of respondents to only companies using a multilevel marketing compensation plan – while most direct selling companies use MLM, some don’t and they should be represented proportionately. And why would we want to limit the time period to exclude those who have been active for a long period of time? Are the experiences of those people less relevant than newcomers, people who had only a short-term goal or decided direct selling was not for them? You can’t pick and choose your respondents to get the results you want, nor is it credible to conduct your own research and analysis, as the author did, when you have a clear and stated bias.

Interestingly enough, the author goes on to state in another part of his post that when looking at income stats, then we should consider ALL distributors – not just those who are active. So which way is it? Do we pick and choose or do we include ALL participants?

The credibility of DSA’s numbers is backed up by the outside research firms that conduct the studies. A respectable research firm won’t risk their reputation by cooking the numbers - regardless of who pays for the study.

That said, I’ve made no claims on this blog that there are not issues to address. On the contrary, one of the reasons we’ve started this Web site and this blog is to have an open exchange of ideas about the industry regardless of one’s position. Our goal is to improve the direct selling experience for everyone – if that means changing policies or educating companies about what today’s consumer’s want, then everyone would win.

Further, this site encourages people to do their homework regarding direct selling in general and the companies they are considering in particular before signing up – and to begin with realistic expectations regarding the time involved and the income potential. In case I have not been clear, direct selling is not an easy way to get rich quick.

In addition, the site promotes the DSA Code of Ethics – which acts to both prevent issues and solve them. Compliance with the provisions of the Code sets a framework for ethical behavior, but if a seller or consumer encounters a problem, it also provides a structure for relief.

Regarding the studies the author cites, it’s not surprising that one would choose to cite the research of others they agree with – particularly when they already work closely with those individuals, closely enough in fact that they are all advisors for each others’ organizations. The studies the author cites contain limited data. For example, his own study group was admittedly a sample of just 33 tax preparers from three counties in Utah who were asked what they recalled about returns they had completed. Further, they were asked to divulge confidential information and then coaxed further by being told what others had already said. That is simply not an objective way to collect data. The data may have been difficult to collect, but that doesn’t mean you can introduce a bias to extract information or randomly fill in missing information. At best, the data is anecdotal, at worst it’s just outright wrong.

Lastly, Mr. Taylor asked how I can sleep nights. Well, with a full-time job, a husband, and two small children, I don’t sleep as much as I’d like to. However, I do sleep well because I know that direct selling can be a rewarding opportunity for men and women, whether they’re looking to begin a new career or just earn some extra money to pay bills or take a trip. And I also know that those of us at the DSA are working to make the industry even better.

Mr. Taylor is certainly welcome to be part of the conversation and I do hope that we’ll be able to have a useful back and forth free from personal attacks that focuses on the issues at hand. It’s fine if we reasonably disagree on the basis of facts and data. It is not acceptable to degrade the other party.

In fact, more than half of direct sellers report that their net income from direct selling, after taxes and expenses, is positive. In addition, positive net income is reported by nearly half of new direct sellers – those representing their current company for less than a year. The research from our sales force survey also shows the following:

• 89% of direct sellers rate their personal experience in direct selling as excellent, very good, or good;
• 84% of direct sellers say that direct selling meets or exceeds their expectations as a good way to supplement their income or make a little extra money, and;
• 91% of direct sellers say that direct selling meets or exceeds their expectations as a business where the harder they work the more money they can make.

Does this mean that all of these people are making six-figure incomes? Of course not! In fact, most are probably earning very modest amounts - exactly meeting their goals. One of the advantages of direct selling is that you can set your own goals and develop your own schedule to meet those goals. Many people begin direct selling as a way to earn a little extra money in their spare time - they’re not looking for a fulltime job.

I’ve always found this 99.9% myth fascinating because it essentially asserts that nearly 15.2 million people in the U.S. and 60 million people around the world continue as direct sellers despite losing money. Are we to believe that five percent of the U.S. population would continue in a business where they are losing money? Simply put, most people do not lose money in direct selling.

Further, anyone who gets involved with a legitimate direct selling company should not risk financial loss by doing so. The DSA’s Code of Ethics, for example, is designed to protect direct sellers and customers. Inventory buybacks (which include sales aids) and other provisions of the code allow sellers recourse if there’s an issue with the company.

It is my hope that everyone who tries direct selling will begin with reasonable expectations and a clear understanding of the path to their goal - hopefully information found on this site will help with that.
Certainly, direct selling is not a fit for everyone - but no one should risk financial loss by giving it a try. Managing expectations for new independent sellers is critical for success, and is an issue I’m sure we’ll address more than once on this site.

The bottom line is, just as it’s wrong to tell someone considering the direct selling opportunity that they’re guaranteed to succeed, it’s just as wrong to tell them that 99.9% of direct sellers lose money and that they’re guaranteed to fail.

I have two beautiful children whom, on most days, can light up a room with just their smiles. My son has developed the most adorable trail of freckles across his cheeks and, having lost five front teeth within just a few weeks, his grin is the epitomy of childhood innocence. My daughter, for better or worse, is nearly an exact replica of me. She requires constant hugs and tells me I’m “pretty” until I can barely stand to hear it anymore. That said, we do have our fair share of whining in our household, often prompted by my request for them to clean up their toys. When asked what I wanted for Mother’s Day, my request was simple (or so I thought) - no whining and a clean house.

I anxiously awaited waking this morning to see if my request would be fulfilled. So far, I’ve had to endure whining about the number and size of pancakes each child would receive, what clothes are appropriate for a birthday party we’ll be attending later today and, of course, the expected whining when I asked that misplaced toys be cleaned up so I could use one of my exercise videos.

I think I’d have better luck waiting for Santa Claus, the Easter Bunny or, really, even the tooth fairy. But wait, I play all of those roles as well, so I guess I’d better strap on the beard, fluffy tail and wings and get to work cleaning the house.

But I digress. Back to Terry Neese’s article. Neese points out that flowers, gifts and nice dinners are much appreciated by hard-working moms, but there are other things - namely time and money - that really embody what most moms are looking for.

I couldn’t agree more.

As a working mom, I often find my mind wandering during the drive home, thinking about the many hours my own mother spent with me while I was growing up. She was always there to greet me when I arrived home from school, and summers could be summed up as a three-month-long play date. She and I were inseparable. Of course, when I think about what it would be like to be a stay at home mom, I am immediately jolted back to reality when I remember that living on a single income is difficult in today’s society, and for many is just not possible.

But many moms have found a happy solution to this dilemma in direct selling. It’s an alternative that can provide supplemental income, but also the opportunity to buy products and services you probably already use at a discount, and perhaps most importantly for some - contact with other adults! 

It’s flexible - accommodating weekend or evening schedules - and can either be a short- or long-term endeavor. You can take it easy during the summer if you choose, and once the nest is empty, you don’t have a multi-year gap on your resume. While parenting and running a household should trump any MBA, many mothers returning to the workforce find the cards stacked against them if they haven’t kept up their professional activities - but who can argue with building your own business?

So, for moms who desire the gift of time and money this Mother’s Day, consider if direct selling might be a fit for you.

But above all, Happy Mother’s Day!

(Now, where did I put that Santa hat?)

As you can imagine, one of the ways the women in the story are earning extra money is through direct selling - whether it’s via a DSA member company, or by selling a product they’ve developed themselves.

One of them, Carrie Wilson, became an independent seller for a DSA company. She told the News-Press:

“I thought it would help me get out of the house and make a little extra money. It’s worked out great. In addition to meeting lots of new people and getting better in the kitchen, I’ve been able to pay off a couple of credit cards.”

This is such a great story because it underscores the fact that most people are not involved in direct selling to make a lot of money. It’s disheartening when people claim direct selling is not a viable way to buy and sell products and services because everyone isn’t making a full-time income. There are millions of people out there earning a couple hundred dollars a month through direct selling – and that meets or exceeds their goals!

The problem comes in when someone doesn’t enter direct selling with reasonable expectations – and that could be because they were told by someone else it would be easy money, or because they themselves underestimated the time and effort it will take to achieve their goals. Unfortunately, those are the stories that taint what is otherwise a great chance to do something fun and interesting.

Anyone who says something’s wrong with direct selling because everyone isn’t making millions absolutely doesn’t understand what constitutes success for the average direct seller. True – you do find a relative few super earners – but there’s a reason for that which doesn’t involve flaws in the business model.

Many also fail to take into account the fact that money is not the only reason people try direct selling. The women profiled in the News-Press story discuss how direct selling has enabled them to earn some extra income, but also outline a number of additional aspects they find attractive about direct selling and other home-based businesses.

The writer summed up Momtrepreneurship this way:

“Although we set out to discover how Southwest Florida moms are making money by embracing entrepreneurism, we learned that, in many cases, money isn’t the driving factor.

“The moms we spoke with pursue their businesses for a variety of reasons, including getting out of the house, meeting other women, socializing with friends and pursuing a passion. The money is certainly nice and even necessary to an extent, but these modern moms are filling more voids than one with their businesses.”

A quick Google search today uncovered a blog post questioning not only the motivations behind this site, but also the Direct Selling Association’s credibility. I think the directselling411.com mission has been made very clear – to provide accurate information about direct selling, as well as a forum for dialogue about direct selling. Don’t agree with the information provided? Then let’s talk about it. There aren’t many other sites about direct selling out there that provide a two-way street for the dialogue. It’s fine if, in the end, you disagree with the information on the site, but at least engage in the conversation.

I’ll be the first to admit that the direct selling industry is not without its issues – if it were perfect you wouldn’t be reading this blog. But contrary to what industry critics would have you believe, the vast majority of participants in this industry are honest, ethical human beings.

The part most critics choose to ignore is that the good guys are working hard to address the industry’s issues – as well as change outdated stereotypes kept alive only through the misinformation spread by those who refuse to understand direct selling is an honorable and time-tested method of product distribution that helps millions of people achieve their goals.

Do the good guys ever err? Of course – that’s one of the reasons the Direct Selling Association’s Code of Ethics, enforced by an independent Code Administrator, is a great consumer protection vehicle. Anyone who has encountered a problem with a DSA member company is invited and encouraged to file a Code complaint. Complain to your friend or neighbor if you choose, but to get a resolution, file a Code complaint. DSA member companies are required to resolve all issues to the satisfaction of the Code Administrator – their membership depends on it.

I was hoping this post wouldn’t get too long, but quickly I want to respond to some of the specific statements from the aforementioned post.

1. “Most of the direct selling that is done by direct selling companies are to their distributors.” FALSE! What’s true is that more than 50% of Americans have purchased through direct selling in the past year. In addition, there are a significant number of people who sign up only to purchase the products at a discount – they never intend to sell a single thing (or make a single dollar for that matter!). Some companies have a fairly high percentage of people in this category – often called discount buyers. However, certainly anyone reading this post knows more than a handful of people with kitchens outfitted with direct selling products, homes accented with direct selling products and even jewelry boxes, well, you know…
2. “In past years the FTC has taken a dim view of [sales made to participants in the plan, a.k.a. internal consumption].” FALSE! While the FTC maintains an interest in making sure bad actors do not use internal consumption as a cover for inventory loading, and has looked closely at this issue with regard to specific companies (and in some cases has imposed requirements specific to those companies based on their findings), there is no FTC rule regarding internal consumption. In fact, in a 2004 staff advisory opinion, the FTC specifically states that the amount of internal consumption does not determine whether a plan is illegal; such a determination is instead dependent on the source of funds for commissions.
3.  “The DSA operates to keep direct selling businesses in business.” TRUE! That’s the nature of a trade association. But what’s also true is that DSA helps keep its companies in business by making sure they operate in a legal and ethical manner. And through the work of the Direct Selling Education Foundation (DSEF), direct sellers work with consumer protection groups around the world to advance the rights of consumers everywhere. (Incidentally, the post in question also asserts “the DSA probably manages to put mucho cashola in Senate and Congressional pockets very effectively.” Anyone who believes legislators and regulators are influenced by DSA’s money vs. being on the right side of the issue should check here to get the real picture.)

The bottom line is this:

Anyone who asserts DSA is doing anything that is not open and honest clearly hasn’t spent too much time on this site. The facts are here for all to see – with an invitation to comment. Sure, we can be accused of “whitewashing MLM,” making an “attempt to paint [the] business with respectability,” and “treating the public like small children,” but in the end, DSA’s goal is to make sure all direct selling companies are operating ethically and fairly. I would encourage those who share this goal to work with DSA to improve the industry.

In her column today (scroll down to the second question/answer) she responds to a reader who wishes to decline an invitation for a home party. I applaud Miss Manners for asserting that one can feel free to say “I’m not interested,” and decline the invitation – it really is just that simple. No need to make up excuses – just decline.

However, Miss Manners (and the inquirer) errs when she assumes the hostess is only extending the invitation because she wants the friend’s business. In this case, the hostess and invitee were not close acquaintances - I say having a casual get-together at one’s home is an excellent opportunity to make an invitation to someone with whom you may not have the occasion to arrange an exclusive afternoon. There is no harm in inviting distant acquaintances to such a gathering – in fact it might be just the chance to further solidify the relationship based on shared interests. The opportunity to peruse and purchase products is only an added feature to what is otherwise a chance to catch up with old friends and make new ones.

If Miss Manners truly believed the earlier advice she had given about not feeling obligated to purchase anything, she would have counseled today’s inquirer to evaluate the invitation based on interest in socializing with the other attendees. Based on that, the inquirer would have had no trouble enjoying her afternoon and feeling guilt-free about walking away empty-handed (or staying at home alone).

I find shopping with friends to be quite enjoyable – no matter the venue. When I go to the mall with a friend I do not feel obligated to purchase anything. Likewise, I would not feel obligated to purchase anything at a home party. The problem in both cases is I usually find several things I just can’t live without.

Miss Manners, in the future, please consider that for some, shopping and socializing go hand in hand. Continue with your advice to be upfront and honest, but please don’t assume invitations to home parties are anything other than an open door.

While some choose to approach direct selling as a full-time endeavor, many see it as a fun way to earn a little extra income in their spare time.

I just finished reading an interesting article from the Muncie, Indiana, Star Press about three sixth-grade schoolteachers who work together outside the classroom as well as inside. The three are direct sellers who, though they each sell different products, team up for in-home sales parties.

The article notes that while the school year can be a busy time for teachers, the three said they wanted something to do after hours and during school breaks.

‘“It’s an opportunity to have fun, fellowship with women and earn a little extra money on the side,”’ one of the women told the Star Press, later adding, ‘“…There’s freedom to do things on your own schedule.”’

I couldn’t have said it better.

I’m sure you can see where I’m going with this – try inserting “direct seller” into any of the scenarios above. There are a lot of similarities. Unfortunately, the recruiting techniques of some more passionate direct sellers have become the stuff of legends, sometimes becoming fodder for late-night variety shows, but in the end resulting in a public that has a lot of preconceived notions about direct selling and recruiting.

But the truth of the matter is that recruiting is important to almost every type of business. Turnover requires bringing on new people on a regular basis, and there is a natural hierarchy in any business where a few people at the top manage progressively larger numbers of people below them (and are rewarded accordingly). But, in the end, no business can be successful, regardless of the number of “recruits,” without the sale of products and services. As a result, the emphasis on selling versus recruiting must be balanced.

It’s likely that at some point everyone will be approached with a direct selling opportunity. The opportunity may sound intriguing, or you may not be interested right now (never say never). Either way, just be straight with the person who’s trying to recruit you – don’t be afraid to say no, but also keep in mind that they are approaching you because they like what they do and as a friend, neighbor, colleague, etc. want you to be involved too. If you say no, don’t be surprised if they continue to try to convince you, and know that they’ll probably try again later. Can you imagine if consumer products companies ran one ad for a product and then never tried again? Or if colleges sent only one marketing brochure to their top prospects?

And sellers, if someone says no, accept it and consider trying again later if it’s appropriate. It’s not worth your time or effort to recruit people who aren’t really interested because they’re not likely to be successful. Let the person know that you respect their decision, but if they change their mind, you would love to have them on your team. The next person you meet might say yes and become the next star seller – imagine if you had wasted your time on someone who would only resent you and the opportunity later. Plus, remember that your friends and neighbors are that, first and foremost. Don’t risk your relationships when you have a whole world of potential customers out there – it’s just a matter of meeting them.

So, the Army recruiter I saw this morning was probably on his way to a high school or community event. He probably talked with dozens of people about signing up. Maybe one or two will ultimately do so. It’s possible, but not likely, that one of those people will one day be a five-star general. But either way, the recruiter will probably be out again tomorrow, doing the same thing again. Along the way, it’s likely that he’ll run into a direct seller. They’ll certainly have lots of stories to share with each other. Who knows, maybe that army recruiter will decide to earn a little extra money by selling financial services, pet products, personal care products or any of a multitude of products and services sold through direct selling.
 

It’s particularly interesting given Avon’s positive early 2008 forecast - predicting mid-single digit growth in 2008 despite a questionable U.S. economy, according to this Reuters story. It hardly seems like a company in trouble.

Even more interesting are the post’s assertions about the direct selling model in general.

Point #1: Companies “live and die by how many new representatives they can recruit.”

Nope, that statement misses the point entirely. Of course recruiting is a critical part of the direct selling model, but companies rely on those recruits to sell products, not just to sign up. Recruiting alone doesn’t result in income for sales reps or the company. With low start up costs (usually less than $100, and in some cases, far less than that) money is made in direct selling when products move. Products move when sellers sell product.

Point #2: “While MLM companies like to focus the public’s attention on the selling of products, the reality is that it is through the recruitment of new representatives that these companies grow.” No, the reality is it’s still product sales that matter. If a company has 10 reps that each sell $5000 in products, that’s always going to be better than having 100 reps that sell $100 each. Just adding more representatives doesn’t increase profits – which is why many direct selling companies are focusing on making the “career opportunity” more attractive. By nurturing promising recruits to sell more and, yes, recruit more motivated sellers, sales and profits rise. Any business, direct selling or otherwise, has an interest in cultivating leaders who can be top performers and inspire others to do the same, thereby building the business. Not everyone will rise to the top, but those who do will be the next leaders.

Point #3: “Representative turnover is high, however, in large part due to the fact that the representatives don’t make much money from selling products.” Turnover in direct selling averages about 56%, comparable to turnover in retail, which is about 53%, not really that notable. Yes, there are plenty of people who try direct selling and decide it’s not for them. There are also lots of people who might try a new brand of cereal and decide it’s not for them either. That doesn’t make the cereal bad, and quite frankly the financial risk for either scenario is about the same. But beyond those who just decide not to continue, you have the equivalent of seasonal workers in direct selling (who may sign up and drop out every year like clockwork) and you have people who achieve their modest goals and then see no need to continue, each of whom contribute to the turnover rate, but none of whom is unhappy with their experience.

Point #4: “My hope is that this outdated method of doing business is something that more and more women are avoiding.” Sorry to disappoint, but more and more women are choosing direct selling because it offers a flexible alternative to a 9-to-5 job. There’s minimal upfront cost, low risk (especially given the generous buyback DSA members are required to offer) and ultimate flexibility. When fears of recession are rising, people are looking for additional income sources – and direct selling provides a perfect fit. Combine that with relatively low-cost, consumable products that the average consumer doesn’t abandon in slow economic times, and both recruiting and sales are in a position to increase.

Point #5: “With over 99% of distributors losing money in the MLM schemes, it’s no wonder that recruiting representatives may be harder and harder.” It’s absurd to believe that 15.2 million American direct sellers (and 60 million sellers worldwide) are the mindless followers suggested by this assertion. With $32 billion in sales in 2006, direct selling provides opportunity and success for millions every year. As in any type of business there are people who are not successful. However, there are many more who achieve their goals – both financial and non-financial – and consider their direct selling experience to be a fulfilling one.

Considering all these points reminds me what a solid business model direct selling really is. Companies like Berkshire Hathaway, Hallmark, Reader’s Digest, Jockey, The Body Shop and myriad others operate, or have invested in, direct selling companies – something they wouldn’t be doing if the model were questionable. So, don’t count the Avon lady out quite yet – she’s alive and well.

In thinking about my inaugural post to the DirectSelling411.com blog, I felt that way. Direct selling has an incredibly rich history that can’t begin to be encapsulated in this post or even in an entire Web site. There are millions of stories to be told, about the stay-at-home mom who earns extra income by working a few hours a week as a direct seller, to the former corporate executive who left his 9-?? job and now works his own hours, selling products and services he actually enjoys talking about.

But the whole “conversation” about direct selling is about much more than just the success stories - it’s about understanding what direct selling is, what it isn’t, and how that relates to one’s own situation. Five-hundred success stories might be meaningless to a direct seller who is considering abandoning her efforts, if she cannot draw a parallel to her own experience. Similarly, one failure might inspire someone to try a new approach and find success that had otherwise been elusive.

On this blog, I’ll talk about the good, the bad and the, well, misunderstood parts of direct selling - and there are plenty of topics in each of those areas. Direct selling has the luxury of a long, honorable history, but it also wears the scarlet letter of stereotypes (some deserved, some not), misinformation (some rooted in truth then distorted, some not) and the occasional bad actor (whose missteps reinforce the stereotypes and misinformation). All of these topics are worth talking about because direct selling has a lot to offer - and we also have some work to do.

My singular interest is providing a forum where we can have a frank, honest and open discussion about the issues. Whether you love or hate direct selling isn’t the point - it’s about having accurate information on which to base that opinion.

Consider this inaugural post my invitation to anyone out there with an interest in direct selling to help me begin, and continue, the conversation about direct selling. I look forward to your frank and thoughtful questions and ideas, and in return I will do my best to provide a balanced perspective that perhaps to date has not had a loud enough voice.

Let the conversation begin!