The new millennium is rapidly approaching and the world is changing just as fast. Direct sales has not only kept up with the pace, but at times been at the forefront of the advancements. The direct sales industry has been evolving rapidly.
In 1910 the first industry association was established. Although direct sales is several millenniums old, network and multi level marketing compensation structures were introduced in the middle of this century. For over a quarter of a century, direct sales companies with these compensation plans have been expanding internationally. Foreign countries have seen the development of their own direct sales companies with network and multilevel compensation structures for almost two decades. The secondary supplier industry specializing in direct sales also emerged. About 15 years ago, the National Safety Association company proved, with its water filters, that capital goods could also be marketed through direct sales companies with network and multilevel compensation plans. Until then, it was thought only consumable products could be offered through this method of distribution. Services were also introduced about the same time as capital goods by several companies including Money Makers Monthly. About a decade ago, with the demonopolization of telecommunications, network and multi level marketing (MLM) companies started offering communications and high-tech products and services.
Legal structures resolved in past
Direct sales has evolved in many other ways besides in the areas of compensation plans and the product categories that are offered. The way we look upon ourselves has changed, as well. In the beginning, the industry’s legal status was in question. Some representatives and companies actually treated their network and MLM income opportunities as a game or used evasive and deceptive marketing methods. Amway played an important role in resolving the industry’s legal structure, as well as creating the public’s questionable image of the industry. Amway representatives became renowned for inviting their prospects to dinner and, without warning, springing the Amway income opportunity on them. In the late 1970s, Amway also paved the way for the expansion of the number of network and MLM companies by winning its now famous FTC case.
While some saw direct sales companies with network marketing and MLM structures becoming world dominant by the next millennium, others saw it as the last frontier of entrepreneurship. I believe, by the millennium, an honest appraisal will find direct sales making great strides for entrepreneurs throughout the world; however, it will also find that both the above claims are exaggerations. The Internet has shown that direct sales is not the last frontier for entrepreneurs. There are approximately 50 million representatives and $100 billion of sales worldwide. So, although the direct sales distribution system may fall well short of world dominance, it has proven to be big business.
Marketing has come full circle
Thousands of years ago camel caravans in the east sold direct to their customers along their routes. During the 18th, 19th and 20th centuries, direct sellers with wagon loads of products were depended on as the primary source of consumer products especially in rural areas. Later, a traditional form emerged when direct sales representatives started to sell their products to friends, neighbors, relatives and door-to-door. Home parties were also used by representatives to retail their products. Retailing was emphasized over recruiting. Network and MLM compensation structures changed much of that, however.
Recruiting became the focus. “Everyone does a little so that everyone earns a lot” was a saying commonly used. It implied that personal use and little retailing should be done because the emphasis should be on recruiting. This also contributed to suspicions by traditional business and government authorities as well as the general public that the network and MLM companies were game-like or illegal.
Some representatives taught “sponsor wide, fast.” Others taught that the product and company was secondary; building a sales organization alone was important. Some representatives achieved success using this approach, but at what cost? Attrition exceeded 100 percent. Some of these so-called “successful representatives” who used this recruiting approach became leaders because they received large checks and their methods were copied. Unfortunately, their success sometimes came more as a result of being at the right spot at the right time or because of the efforts of a few other representatives in their downline. There have even been a few self-declared gurus who have never had any real success as representatives themselves, but who are teaching these philosophies.
Balance emphasized now
Partially, due to pressure by authorities, many companies and compensation plans are again encouraging retailing. The general public has become more aware of direct sales. With the strong economy they need less get-rich-quick schemes and more real business opportunities. The general public wants a business which can demonstrate a realistic business plan. A balanced approach of retailing and recruiting, as well as honest expectations, will be more acceptable in the educated society of the new millennium.
In addition, people are looking for a real income that retailing can provide instead of some huge-income potential few achieve that building a large sales organization promises. Recruiting has become more difficult and expensive in a full employment economy. Reducing attrition and retaining representatives makes good business sense as we approach the new millennium. Increasing retailing helps new representatives to earn an income sooner, which in turn encourages them to continue. This also allows everyone to earn more income with less recruiting. Thus, the new millennium may see more retailing in direct sales.
Marketing methods are evolving in direct sales. Personal sales methods such as one-on-one, party plans and home presentations were emphasized in the past by traditional direct sales companies. Many companies and representatives still strictly emphasize personal selling methods. For the last couple of decades, many representatives have found success using mass media marketing methods. In the last few years, the Internet and other high-tech methods of marketing have been attempted. Companies and representatives have discovered that an integrated method of marketing will be needed in the new millennium.
In short, direct sales will have to become more professional in the new millennium. Direct sales will have to offer real business opportunities with realistic expectations and business plans which include an emphasis on retailing. Direct sales companies and representatives will find a competitive labor market. The general public has a greater awareness of direct sales and is better educated. They will have other income-generating alternatives in the new millennium. Methods like sponsoring wide, fast will become more difficult and less cost effective in the new millennium. For direct sales to thrive in the new millennium, it must do what it has done so well in the past. Direct sales will need to continue to evolve rapidly as we evolve into the new millennium.