You have a great product or service. You’re confident it will go BIG. Now you’re faced with the million-dollar question… what’s the best way to sell my product to get the highest sales while creating a very profitable business for many years?
You have 3 choices
- eCommerce / Amazon: where you will be competing with all of the other vendors for market share. You need hundreds of very positive consumer reviews to get traction. Negative reviews can easily tank your offering. Your advertising spend could be significant.
- Retail Stores: you will be competing with other products on the same shelf and have a hard time getting your story told. You will sell wholesale to stores (30% to 60% of consumer price). The lower your wholesale price the more stores will sell your product to their customers. Advertising costs will be very high to gain momentum.
- Direct Selling: you need to attract a large volunteer part-time sales force to share your products with their friends, family, and others. If you reward them well, they will enroll others to do the same.
Advantages of a direct selling approach
1. Direct access to customers: Direct selling allows companies to establish direct relationships with customers who are enrolled by your sales force. This provides an opportunity to better understand customer needs, promote other products, and build long-term customer loyalty. The technology tools you provide your sales force helps them develop their loyal customer base which drives your revenues higher. Many Direct Selling companies have thousands of customers on monthly autoship which drives a perpetual revenue stream.
2. Increased control over distribution: By selling directly to customers and your sales reps, you will have greater control over how your products are marketed, priced, and distributed. You can tailor your sales strategies with laser focus and make adjustments in real-time based on customer preferences and market trends. YOU are in control of your destiny (not a retail store or Amazon)!
3. Cost-effective distribution: Direct selling can be a cost-effective distribution channel. It eliminates the need for traditional retail infrastructure and mass market advertising. Direct selling often involves leveraging personal networks, conducting home parties, or utilizing online platforms, which can be more affordable. The startup cost is often a fraction of a retail store strategy.
4. Flexibility and scalability: Direct selling offers a more cost-effective approach to scaling up the business. Done correctly, it can scale to annual revenues well over $100 million. Companies can more easily expand into new markets or regions by recruiting and training independent sales representatives. This allows for rapid market penetration without the constraints of traditional distribution channels.
5. Personalized customer experience: Direct selling allows for personalized interactions between sales representatives and customers. No other channel can leverage the power of personal relationships and influence. This one-on-one engagement enables better product demonstrations, customized recommendations, and the ability to address specific customer concerns. It can result in a more engaging and memorable shopping experience with a more loyal customer base.
6. Word-of-mouth marketing: Sales reps will first approach their “warm market” of people they already know such as friends and family. It relies on personal word-of-mouth marketing where satisfied customers (and reps) become advocates for the products. Positive recommendations from trusted friends or family members can significantly influence purchasing decisions. Leveraging this personal network can lead to increased sales and brand awareness.
7. Entrepreneurial opportunities: In a world driven by the “gig economy” and “side hustles”, Direct selling provides individuals with entrepreneurial opportunities to inexpensively start their own business by becoming your independent sales representatives, often for less than $100. This business model can be appealing to those seeking flexible work arrangements or looking to supplement their income. It offers a low-barrier entry into entrepreneurship with training and support from the company.
8. Making a Difference in the Lives of Others: No other industry or business model changes lives for the better like Direct Selling. I’m not referring to “the money”. It’s about helping people gain greater freedom to lead balanced and happier lives. It’s about helping people become successful in a personal business that you help them build. Give them the tools, the motivation, and teach them how to succeed. There’s nothing better than hearing stories of how hundreds or thousands of lives change for the better because of what you are building – because you make it possible for people to achieve their dreams.
Products That Work Best
While direct selling can offer many advantages, it may not be suitable for every type of product or business. The best products and services for the Direct Selling channel have common characteristics:
- A strong Unique Selling Proposition (USP) which sets it apart from other similar products. There is a compelling story to share which is why person-to-person sharing works so well.
- A strong gross margin where the customer price is 5x to 10x of the cost of goods. A product that costs you $10 should sell for $50 to $100 to retail customers.
- The product is simple and easy to explain (complicated product stories often fail to attract sales reps)
- The product is consumable with monthly consumption (supports monthly autoship which drives strong retention).
- Customers love the product because it works very well for them. Positive results are vital to encouraging people to share their story.
Conclusion
The Direct Selling channel can bring amazing results but it is not for everybody and every product.
About the Author
Dan Jensen has worked in the Direct Selling industry since 1978 and has worked with over 1,000 Direct Selling companies around the world. He has helped some companies grow into billion-dollar companies.
