Businesses always try to facilitate their customers as much as possible. For instance, online/non-store retailing allows customers to buy a product without physically going to any brick-and-mortar store. It not only saves their time but is easy and convenient as well.
Apart from online retailing, businesses facilitate their customers or even potential customers with direct marketing. That is, rather than selling the products at a brick-and-mortar store, companies sell their products face-to-face.
The sales may take place at customers’ homes, workplaces, shopping malls, or any non-store location. In marketing terms, this concept is called Direct Selling. It can be a face to face selling, or companies even use online platforms for Direct selling.
What is Direct Selling?
Direct selling is a mode of doing business where the seller sells its products directly to the customer. There isn’t any other party (third party) involved in the transaction. The sales generally take place at customers’ doorstep such as their homes, offices, cafes, shopping malls, online, etc.
Direct selling basically relies on salespersons because there are no intermediaries in the process. A business following this type of selling method skips whole sellers and distributors from the supply chain.
How Direct Selling works?
Direct selling typically eliminates few “ingredients” in the supply chain. Generally, these companies skip regional distributors and whole sellers from their supply chain. The manufacturer dispatches the product directly to the sales company. Then, the sales company sends the products to end distributors or representatives.
Direct selling doesn’t involve any typical store retailing. This means the customers can buy the product from reps or distributors. Generally, party-plan and network marketing companies are associated with it. However, there are many B2B companies that work with the direct selling method. For instance, a business may get help from a distributor or rep to sell its products to other businesses.
It is important to understand that direct selling and direct marketing are two different practices. Selling directly to customers involves selling through reps or distributors. Direct marketing involves a company marketing its products directly to customers without any reps, etc.
Types of Direct Selling
Single Level Direct Sales
This is a typical form of direct selling that involves face to face selling. The reps may go door-to-door and give one on one presentations to sell the products. But, this practice is not limited to face-to-face selling. The reps may sell the products through online channels directly. These reps get commissions and occasional bonuses from the company.
This selling practice basically focuses on group settings. That said, the sales representatives organize a social event or a party and then offer the products for sales. In fact, sometimes, these sales representatives may ask the customers if they want to organize and host selling parties. Mary Kay is a common example as they often arrange social events and sell their products at such gatherings.
Multi-level marketing can be a blend of the above-mentioned methods as well as new practices. For instance, a sales company may do single-level marketing, host or party sales, and hire new salespersons as well.
This way, a sales company or representative earns commission through sales and sales made by the other hired sales partners/reps. Some common examples of this blended strategy include Arbonne, LulaRoe, Mary Kay, Avon products inc, Herbal Life nutrition, and Scentsy. Most of these firms do single-level direct selling, host social events, and hire new recruits for selling products.
Direct Selling VS Pyramid Scheme
It is pretty difficult to distinguish these two terminologies because of similar characteristics. However, there are few specific differences that can differentiate one from the other.
|Direct Selling||Pyramid Scheme|
|The core objective in Direct selling is to sell the products.||The pyramid scheme mainly focuses on hiring new people (base workers).|
|It can be done through single-level sales, host/party sales plans, or MLM.||Organizations that follow this scheme mainly focus on hiring new recruits rather than selling the products.|
|Everyone who makes sales get a rewarding commission.||Base workers hardly earn good reasonable money.|
Advantages of Direct Selling
Direct selling is one of the most popular modes of selling products, and here is why:
- Direct selling is one of the most effective methods to get direct feedback from the customers. As sales companies or reps interact directly with customers, their feedback helps the companies to improve their products regularly.
- It is a great way to ensure maximum personalization. Sellers know what their customers want and what kind of offers will suit different customers. Customers prefer those brands which offer them customized offers and recommendations.
- Price regulation is another brilliant advantage of direct selling. As there are no intermediaries, the companies have better control over their products’ prices and a more transparent sale process.
- Customer retention is one of the most important objectives of any business. It allows businesses to directly interact with their customers and be more empathetic. When you know what your customers want, you can easily satisfy them.
- Direct selling also allows companies to set higher profit margins. As there are no middlemen to take their share of profit, a business can earn more profit with this scheme.
- Convenient working hours is another benefit for sales reps. They don’t have to follow strict working hours. As long as they are making sales, everything will be fine.
Disadvantages of Direct Selling
- Direct selling can be a tricky scheme for reps or distributors. The manufacturing company generally does not provide any leads. Therefore, reps have to build their network on their own.
- If the seller/manufacturer focuses on incentivizing the reps to recruit new people than actually selling products, it may create a pyramid scheme.
- Direct selling can be a difficult method when you talk about business growth or expansion. These sellers heavily rely on distributors and reps. Besides, this business model will work only if the reps/distributors are giving you constant and growing sales.
- Last but not least, direct selling requires reps and distributors to have literally “impeccable” marketing skills. It is extremely difficult to persuade a customer and sell a product door-to-door.
Tips for Direct Selling
Direct selling is not that easy as one may think, but following few valuable practices can make things a lot easier.
Build Relationships Before Sales
Knowing your potential customer is extremely important in any form of business. Therefore, the first priority should be establishing a relationship with potential customers and finding their “pain points.” When you know what your customer needs, you can make a much better product.
It is not easy to convince someone to buy your product. You may get rejections, but it is important that you are consistent with your efforts. Constant efforts and customized offers can turn a prospect into an actual customer.
Building a strong and growing network is vital in the direct selling method. In fact, it is virtually impossible for direct sellers to actually establish their business without networking. A thorough customer database can help you build and track a strong network.
Stay Connected With Your Customers
It is important for direct sellers to stay connected with their customers. Customers can easily forget you if you are not in touch with them. You can educate them about the product features and upgrades. Inform them about your new offers through emails or newsletters.
Offer Incentives to your Reps or Distributors
Your sales reps or distributors are as important as your customers. If you reward them handsomely, you can earn their loyalty and maximized efforts. You can offer them higher commission rates to motivate them. If you are paying more commission, it means you are making more sales.
Train your Reps
Well, direct sellers don’t have to give a share from profit to whole sellers and other intermediaries. However, investing in your reps can be very profitable. You can train and upgrade their professional skills regularly. Selling requires updated and effective communication skills, and this investment will definitely bring more sales.
Turn Your Customers into your Brand Ambassadors
There is no better way to market your brand than “word of mouth” from an elated customer. A happy customer will surely bring more customers, and this chain will never stop if you keep delivering what you promise or what your customer needs.