Direct sales is a $30 billion dollar industry that includes anything that’s sold directly to the consumer. There’s so many options for what you can sell (from beauty and makeup to savings accounts and life insurance). There’s different missions you can align with, different compensation plans, and so on. Within the direct sales industry, there’s a lot of choices for an entrepreneur who wants to get into business, or one who wants to add another stream of income.
Typically, direct sales enables members to get paid from their own sales volume, their recruits, and their recruits’ recruits to multiple levels, so they’re called “multi-level marketing companies”. Not all direct sales companies are multi-level marketing companies though. There’s different compensation plans, but the most common direct sales business model is multi-level marketing.
An added benefit of being in the direct sales industry is the mentorship and camaraderie that sometimes comes along with it. Since, your “upline”, or person who referred you, gets paid by your sales volume, it incentivizes them to mentor you, and tell you what they know about how to get sales in the business. The flow of mentorship from upline to downline can be good or bad depending on how business savvy the upline is.
When you join a team where the upline is not good at direct sales marketing, it will negatively impact your sales until you realize the problem. In this article, I want to help you realize some common direct sales marketing mistakes, and how to fix them, so you can get more sales, and become a direct sales superstar.
- 1 A Common Scenario
- 2 Why Many People Fail in Direct Sales
- 3 How Failure in Direct Sales Typically Goes Back to Marketing
- 4 What Direct Sales Can Offer
- 5 The Top Direct Sales Marketing Mistakes
- 6 2. They Rely too Heavily on their Social Circle
- 7 Final Words on The Top 10 Mistakes in Direct Sales Marketing
- 8 Now, it’s Your Turn…
A common scenario goes like this…
You get a call from your friend who says “I’m having a home party with facials. Would you like to come? You don’t have to bring anything.”
In excitement, you respond, “Sure”.
You go to this home party and find it’s a direct sales presentation of a beauty brand. The pampering is fun, but after the facial, there’s pressure to buy something or to join the business.
You’re inspired by the person who did the facials, and you think, “I could probably do some facials with other women and make some extra money. Why not?”
You sign up.
Shortly after signing up and talking to your friends about hosting a party, you realize it’s harder than you thought.
People are saying “no”. Those who you thought would be supportive are not. Your upline is suggesting you talk to more friends and family, but you no longer like this approach, and you’re getting discouraged with your new business.
Why Many People Fail in Direct Sales
Many people get into direct sales without knowing what it takes. Often times, uplines are too concerned about selling starter kits or recruiting, they don’t thoroughly understand or explain what it takes to excel in a direct sales business model which is why I wrote 7 Things to Consider before Joining a Home Party Business.
It’s common for new direct sales recruits to:
- Work a job full-time or part-time to cover expenses
- Be parents
- Have time-constraints
- Have monetary constraints and not much to invest
- Be pursuing direct sales as their first business startup
- Have mentality conflicts related to personal confidence
- Be unable to persist because of unrealistic expectations associated with a “job mentality”
- Need direction to learn the product line and its competitive advantages
- and more…
There are quite a few hurdles new direct sellers face, and if their upline team isn’t prepared to help them overcome these things, one of the hurdles is likely to cause them to drop out.
How Failure in Direct Sales Typically Goes Back to Marketing
When a person joins direct sales, they already have a product or service to sell. They have a way they’re taught to perform client fulfillment. Their processes can be made more fancy than what their taught, but they don’t necessarily need to change anything. They can simply sign up and begin selling.
Since people come to direct sales with so many hurdles, even if they love the product, turning around and selling can be difficult. Then, since direct sales often teaches the referral marketing model where you start with your social circle, it can be a struggle for people who have a social circle that’s not the target audience for the direct sales business.
As a result, the newbie direct seller is pitching mom, dad, sister, brother, and their friends with a new product or service, getting lots of “no’s” and becoming discouraged.
What Direct Sales Can Offer
Direct sales can be a great business model if you have realistic expectations. You can:
- Set your own hours
- Get discounts on products you love
- Take vacations when you want
- Have a wide range earning potential
- Start without a college degree or education background
- and, help people solve problems with your products or services
Direct sales could be a really exciting adventure if you can overcome the hurdles and challenges common to the industry.
The Top Direct Sales Marketing Mistakes
1. Direct Sellers Don’t Treat their Business as a Business
Often times, in the direct sales industry, people get consumed by the tactics to convert a sale, rather than the strategy to grow a business. In his book, The E-Myth, Michael Gerber talks about the technician mentality versus the entrepreneur mentality.
If a person has never had a business before, it’s very easy to focus on the client fulfillment and forget the other business systems, but as an entrepreneur, client fulfillment has to be a component of a diverse set of responsibilities.
In addition to fulfilling the requests of the clients (placing orders, delivering orders, and ensuring customer satisfaction), you have to also divide your time between lead generation, lead conversion, branding, and strategically planning for growth.
Typically, at a job, you’d focus on one of these functions as your specialty, however, in a business, the entrepreneur has to understand client fulfillment, lead generation, lead conversion, branding, management, and leadership functions.
2. They Rely too Heavily on their Social Circle
Unfortunately, the most commonly taught marketing strategy is to attempt to recruit your social circle, but it doesn’t work for everybody. It’s okay to inform your social circle of what you’re doing, but for most people, even if everyone in their social circle buys in, they still wouldn’t be able to work full-time.
Decide how much you’d like to make, what types of sales volumes you’d need to achieve to reach that goal, and you’ll see, it’s very unlikely you’ll be able to achieve financial freedom from your social circle alone.
3. They Don’t Diversify the Marketing Strategy (and even worse, they’re not doing Internet Marketing!)
Home parties are a great marketing strategy. They can be intimate, build quality relationships, and create alot of fun, however, they don’t have to be the “end all be all”.
In addition to home parties, you can:
- Hand out pamphlets or brochures
- Become a vendor at vendor events
- Do cold email marketing
- Host webinars or live events to educate people on how your product or service can solve problems
- or, learn internet marketing to tap into the 3.9 billion+ user database.
A big common mistake I’ve seen in direct sales is how their giving their reps websites that are copies of one another. Customers cannot go to a rep site and checkout. Instead, for most direct sales businesses, if a customer wanted to buy online, they would have to buy thru the main company site and the rep wouldn’t get credit.
If reps want to enable their customers to go thru the whole buying process online, they have to hire a web designer or learn to build the website on their own. With a custom website or not, reps have to learn how to acquire website traffic and convert the traffic into action (email signups, sales, phone calls, etc.), but unfortunately, most direct sellers don’t know how to perform these tasks.
There are so many ways to get the word out about your business that even if you were only taught one marketing strategy, you can evolve into more and more.
4. They’re Not Reinvesting Earnings back into the Business
Inventory costs and customer acquisition costs can sneak up on you. In the beginning, most people don’t realize the time effort and monetary costs of acquiring a customer, so they don’t budget for it.
Instead, when they’ve earned their money, they are quick to spend it. In his book, The Millionaire Next Door, Thomas Stanley talks about how common it is for people to live above their means, but those who have the “rags to riches” stories typically become that way because they exercise discipline.
Even after earning, it’s important to remember:
- The business requires more tools to grow
- You’ll need to hire people to grow
- and, the business has to get more customers, and it costs to get customers. Check out my article on calculating customer acquisition costs.
If you can’t avoid touching your first earnings, then consider taking a small percentage, so the remainder can grow into working capital to help with growth spurts, savings for future employees, savings for upcoming tools and equipment investments, savings to cover yourself when you’re on the payroll, and customer acquisition.
5. They don’t Follow-up with People They Met
Whether you are networking online or in person, there’s a limit to how many people you’ll meet, and you want to maximize your efficiency in that. For most people, even meeting and interacting with 10 people per day may be a lot, so take seriously every person you meet.
Make sure they know what scenarios you can be useful for them (including your product or service). If you’ve committed to a product or service that you don’t want associated with your reputation, then you may want to rethink what you’ve signed up for.
If you’ve signed up for something you’re passionate about, then it should be fairly easy to share your elevator pitch explaining how you and your business can be useful to others.
6. They’re not Networking Enough
It’s okay to be an introvert until you use it as an excuse for maximizing your potential. Nowadays, networking can be done from the comfort of your couch, so it’s really no excuse for why you “can’t” network.
Social media, forums, live events, masterminds, business consulting, and professional development enable you the opportunities to meet like-minded people or complimentary people. When you network, you’ll find people who need your service and some who you need theirs, however, if you’re not networking enough, you’ll be at a constant state of not having enough leads.
7. When they’re Networking, they’re not Doing it Right
Alternatively, if you’re networking, but you’re being too spammy, insincere, apparently selfish, or absolutely resistant to come off “salesy”, you could be networking wrong. Customers don’t buy from people they can’t know, like, or trust, therefore, it’s important to be sincerely networking in an effort to get to know people and find those who would benefit from the solutions you offer.
On the other hand, if your product solves the problem and you see a person who needs it, it makes you selfish to withhold the solution. Don’t let your fear of sales disable others from having the chance of improved quality of life.
8. They Anticipate Income without Delivering Sufficient Value
With a job, you know that if you put in X number of hours, you’ll get back X number of pay, but a business doesn’t work like that. In business, the first thing you have to do is build trust and a reputation. Depending on what you’re selling (high ticket or low ticket), you may need to invest more time in the trust-building phase.
Once a trust relationship is established by adding value to others, then the money will start to flow in. I love this article by a successful entrepreneur I admire. In the article, “Eddy with a Y” compares business to farming. In the beginning, it seems you’re working very hard without seeing results, but just like a farmer who plants and waters a seed, the business will sprout if you keep going.
9. There’s a Poor Work Ethic
There’s so many trash get rich quick ads and people promising you can get lots of money without working for it. Often times, people are jumping into opportunities because of false promises and optimistic hopes, however, sometimes, they have a work ethic issue.
Regardless of what many ads tell you, the majority of successful self-made millionaire business owners worked more than a 40-hour work week. In fact, some very successful entrepreneurs like Grant Cardone or Gary Vaynerchuk say you should work more than 12 hours per day.
There’s a very small anomaly of people who are able to work less than a 40 hour work week (especially in the startup phase) and acquire “passive income” that replaces earned income. It’s more likely to begin with hard work for one to two years, then build in automation, begin hiring, and start to see a little more freedom; however, if you’re Grant Cardone you’d work 95 hours/week even as a multimillionaire.
Outthink, Outwork, and Outperform Your Competition
His philosophy is “If you can outwork the rest of the population, you’re going to get lucky”, and once you start seeing results, don’t change your mentality. He said, “If you gave me $5 billion, I’d still be grinding tomorrow.”
Other successful entrepreneurs like Daymond John, Mark Cuban, and Barbara Corcoran also constantly talk about the importance of work ethic. It’s better to focus on working hard than to attempt to chase a jackpot opportunity that’ll enable you to get money without working.
In his video interview with Omar Elattar, multimillionaire Dan Lok shares how he earned enough to retire at a very young age. He tried to retire to live the vacation and luxury lifestyle, but he quickly got bored and found no satisfaction in doing that.
He uses his story to explain how helping people gives a sense fulfillment and satisfaction even beyond money. Rather than aspiring to attain passive income, he suggests building leveraged income and pursuing work you can get paid well for and enjoy.
Instead of looking for a business as an opportunity to get out of working, look to a business to give you work you can have fun doing and use to serve others well. Put your best effort into your business rather than cutting corners and you’ll grow a reputation that creates financial stability and longevity for your business.
10. They Haven’t Established an Authoritative Reputation
In my article How To Build a Reputation that Takes Generic and Makes it the Industry Standard, I talk about how valuable a reputation is. When your reputation is established, it enables you to have alot of flexibility because you become a trusted advisor and authority in your niche.
For example, Rolex is a very reputable company who sells watches. Even though watches can be sold very inexpensively and acquired by most people fairly easily, people are willing to pay upwards of $10,000 and be on a wait list to get the one they want from Rolex as a result of their reputation.
Similarly, if you take time to establish a good reputation, you’ll have more loyalty, more retention, and more flexibility in pricing and other matters. In the beginning, you may be generic and required to give flexibility, but with time, you’ll be able to reap from the effort you invested in the startup phases if you’re diligent.
Final Words on The Top 10 Mistakes in Direct Sales Marketing
The goal of this article was to show how to avoid the top 10 mistakes in direct sales marketing. It’s much easier to follow what everyone else is doing, but if you want to be a part of the minority of direct sales professionals who win, you have to go against the grain.
If you have questions or concerns about this, don’t hesitate to leave them in the comments section. I’d love to help you out! If you would like to start or scale your business, check out my free e-course. It’s a framework to grow a business: from idea to enterprise. Check out my free e-course here.
Now, it’s Your Turn…
Have you seen common mistakes in direct sales marketing? What have you seen? Leave your comments and questions below.