The 3 P's of Every Direct Sales Company - dummies

The 3 P’s of Every Direct Sales Company

By Belinda Ellsworth

There are several factors to consider when choosing which direct selling company you want to launch your business from. It’s absolutely important to look at the “three Ps.”

Products

It is extremely important for you to really like the product that you are going to represent, especially if it is your first time in direct selling.

Most people actually join a company because they really believe in the product. For others, they may have experienced great results from a product and have a great testimonial and really want others to have that same experience. And then there are those for whom it is a product they really need, will use, and want to be able to get at an ongoing discount. For others, it’s the season in their life, what their interests are, and what their circle of friends are into at that time. And for still others, it’s simply that someone believed in them and thought they would be good at doing something different combined with the idea of being able to make some extra income.

There is an incredible amount of variety in products and services in the direct selling industry. In fact, almost every product you can purchase through a retail outlet can be purchased through a direct seller. You can choose nutritional supplements, discount memberships, financial services, clothing, accessories, kitchenware, décor, cosmetics, entertainment, essential oils, food and wine, and much, much more.

When considering a business, think for a minute: Do you like the product? Do you think the product is marketable to a large group of people? From that perspective, it doesn’t really matter how much the commission is — if you can’t sell it to anyone, then you won’t have much success.

Ask yourself these questions:

  • How marketable is the product?

  • Does it appeal to men and women, and to a variety of ages?

  • Is it a consumable?

  • Will you be able to re-service your clients?

  • Is there room for growth?

  • Will customers be able to continue to add to the collection?

  • Is it at a good price point for the majority of people you will be dealing with?

Another thing to consider is that products that benefit from an explanation or demonstration usually do better being sold through direct sales channels than simply sitting on the shelf in a big box discount store. So if you love a product and know that when you can explain its appeal, it will sell, you may have found a good company for yourself.

Profitability

Profitability is a product or service’s ability to consistently sell and deliver a good wage. When selecting the right direct selling company for you, keep an eye on profitability. Commissions or profits are very important because 80 percent of people join a company with the hopes that they will be able to make a nice additional income.

When considering a direct sales company, ask these questions about profitability:

  • How much are you going to be paid for working?

  • What is the percentage you will receive for personal sales?

  • How much will you have to sell personally to get any bonuses?

  • What does it take to move up the ladder?

  • What does the career plan look like?

  • Are you compensated quickly for bringing others into the business?

  • Because commission is based on a percentage of sales, is that based on wholesale or retail?

  • If commissions are based on a volume model, how many points of volume are you getting for each dollar in sales?

  • What is an average sale per customer?

  • What is the average party?

These are things that you need to know, but again you can still be successful as long as you understand the structure of compensation and work with the program to reach those benchmarks.

Programs

Finally, consider what programs the company has in place for you to be successful. Determine what rewards are offered to you and your hosts and customers.

It’s important to find out what programs a company offers. Ask the following questions:

  • Does the company offer benefits or incentives to the people that will host a party in their home?

  • Does the company offer a referral program where hosts are given free product when one of their guests books a party?

  • Does the company provide a merchant account so you don’t have to get your own to accept credit and debit card payment?

  • Does the company handle sending out all the products?

  • Do you have a personal website provided and what are your ongoing costs, if any (for example, monthly website fee, newsletter subscription fee, processing fee for commission checks or direct deposit, annual renewal fee, monthly minimums, and so on)?

Depending on what’s important to you, many programs may be as important as the cash you earn. Find out the following:

  • Does the company offer a car program?

  • Do they offer trip incentives?

  • Is traveling important to you?

One of the most important factors in deciding which direct selling company to join is how appealing the kit program is and whether it’s easy and affordable to join. This will matter as you attract others to the business. You’ll also need to know what type of training the company provides and how easy it is to access.

Another added perk is whether the company provides a professionally written newsletter that you can send to your customers or a continuous email campaign. These are just a few that you may want to look at.

Regardless of which direct selling structure you choose — Party Plan, Network Marketing, or Hybrid — the company will offer several types of programs. First and foremost should be a good training program. Training should include a plan for your first months in business as well as ongoing support.

Most companies have a program that offers additional products to add to your kit while you’re earning your money back. Most of these programs are 90-day programs that have benchmarks at the 30-, 60-, and 90-day marks.

Other programs will recognize you for your efforts, awarding you titles or gifts for achieving sales or recruiting goals. Recruiting means adding representatives to your team.