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Publisher’s Perspective

The direct sales industry is–by itself–well over a century old. The multi-level marketing (MLM) segment of the industry is now over 50 years old. The direct selling/MLM industry has given millions of people opportunities to live a dream life.

But, everyone in this industry needs to constantly be aware that they must adapt with the times. Certainly, everyone is aware that things have changed a lot in 50 years. We have gone from vinyl records to cassettes to compact disks. Most homes now have central air conditioning, microwave ovens, home computers, color televisions, electric blenders, freezers and many other technological advances. These modern conveniences did not exist 50 years ago. Phones were all pay phones with collectors coming to your home each month for the nickels. Now we have cordless phones, cellular phones, pagers, and many phone features such as call forwarding, caller ID, and voicemail.

More than just added comfort, feature items, our lifestyles have changed. The most significant change is the role of women. Fifty years ago, most stayed home to raise their children and maintain their homes while husbands were the main “breadwinners. Today, a far higher percentage of women work regularly.

The direct sales/MLM industry has always been in the forefront of providing significant income opportunities that allowed women to work while also spending time with their families. It has allowed women to buy the creature comforts that are now available. It has helped divorced and single-parent women who needed to work.

Thanks to the direct sales/MLM industry, many families have been able to do well despite their increasing tax burden. Most families now have two to three jobs to support just an average lifestyle. This trend has been growing over several decades. Under President Bill Clinton, it has reached new highs.

When a mother returns to work–whether to provide for the basics, or a better standard of living or future needs such as college education–the family finds itself moving into a higher and higher tax bracket. Even with two average incomes, many families find themselves in the highest tax bracket when their incomes are added together. This results in lowering the net income of both earners so that two incomes frequently is only 50 percent more than one when additional costs such as child care and transportation are considered. This is one major factor that has resulted in the rapid expansion of home-based businesses.

Many families are now paying 50 to 70 percent of their income in taxes. This includes federal and state income taxes, real estate taxes, Social Security, Medicare, sales taxes, excise taxes, and many other hidden taxes. Because of these taxes and the compound effects of higher income tax brackets on multiple incomes, many families require three incomes to have a net disposable income.

Two other factors that affect the direct sales/MLM industry are transportation and crime. Thanks to the deregulation of the airlines industry, competition has increased and airplanes are now often the cheapest mode of transportation. Today, you can fly from Chicago to Los Angeles for as little as $92. Lower-cost transportation and advances in telecommunications, including the advent of the Internet, have made it much easier to build national sales organizations.

Increases in crime in all parts of American society have affected the direct sales/MLM industry in two ways. First, it has created whole new lines of security products. Secondly, it has impacted some of the methods of recruiting and distributing products. We will discuss this shortly.

Recruiting is emphasized today When the MLM industry first started 50 years ago, a distributor’s primary function was to retail products to their warm market. Recruiting was emphasized much less than it is today.

As the industry and its marketing techniques evolved, the concept of brand loyalty was introduced with companies emphasizing the need of the distributors to become “a product of the product.” In other words, distributors became increasingly important as consumers–while they were also retailers. Recruiting also became increasingly important because it became more difficult to retail products as family schedules became busier.

Retailing products requires more time by the distributor. With more and more families working, it was harder to catch either parent at home. Door-to-door sales became increasingly more difficult. The point of sale frequently shifted from the home to the office. Companies responded by no longer requiring the distributor to do the retail distribution. Instead, companies provided drop shipment to the distributor’s retail customers.

Recruiting also changed over the years. Initially, distributors were taught to retail to their “warm market”–people who are most apt to buy a distributor’s product because they are friends or relatives. When recruiting became the primary emphasis, many companies and distributors still turned to their warm market first. This trend has caused high attrition in the industry for several reasons.

Although people in the warm market are more apt to purchase products from the new distributor, they are less likely to make a time commitment–which is of greater value because it is a limited commodity. They also very seldom catch the salesperson’s vision or have the desire to develop a home-based business. Even when they do, they share much of the same warm market with many of the distributor’s other friends and relatives. This greatly hampers the growth of the sales organization.

Finally, recruiting requires disposable income and takes longer to get a return than retailing. Since most new distributors join because of lack of disposable income and the desire to attain it, recruiting the warm market can be counterproductive in creating a disposable income and can erode possible profits. All these factors have resulted in high attrition and failure rates in the direct sales/MLM industry.

Fewer late evening meetings Many companies have now returned to the concept that distributors should retail to the warm market and find individuals who desire to build a home-based business.

The current legal environment is also encouraging an increase in retail sales. Technical developments have also been developed to support retailing and recruiting. The mail, the home and meetings in a hotel are no longer the only avenues to present product and income opportunities. Today, you can use fax machines, modems and the Internet to provide information. In some cases, you can use full-color catalogs and product and application entries.

Just a decade ago, it was common for companies and top distributors to hold an evening opportunity meeting held over two nights, let’s say either on Monday and Wednesday or Tuesday and Thursday, and then follow that up with a Saturday training meeting. These have become less popular and more difficult to pull off. With the rise of taxes and the increased number of hours that parents spend at work, it is more difficult to get people to commit more time away from their homes for such demanding meeting schedules.

With more single-parent families, it has also become more difficult for people to leave their children in the evenings and on Saturdays. In the past, a very large percentage of people who attended these meetings were women, but they have far less time today. Another factor in their reluctance is increased crime. Women–and men–are reluctant to leave the safety of their homes to go to late evening meetings or invite strangers into their homes.

With the growth of the direct sales industry and home-based businesses, several publications dedicated to this niche such as Money Makers Monthly and Wealth Building are available to help find and recruit prospects who desire to build a direct sales business. With electronic technology, you can recruit from the comfort of the home. It makes little difference if the recruit is local or across the nation. With technology such as conference calls and the Internet, you can support new prospects from your home and their recruiting and retailing efforts. Opportunity meetings can be held with few recruits ever having to leave their home or office.

“Face to face” via TV, The Internet is now available through television sets. By the turn of the century, video interactive TV will become common enough that you will be able to recruit face to face across the nation without ever having to leave the security and comfort or home or hire a babysitter.

More and more companies are already using interactive computer programs and the Internet to support recruiting, retail sales with application, and order entry. Distributors can check on their genealogy and downline sales volumes and react accordingly. Product catalogs and information can be supplied through the computer and the Internet.

These technologies will provide more information and three-dimensional color views of products not previously available in catalogs and company brochures. Once the technology is widely available, it will become more cost effective, timely and cost-efficient than present methods. Although the Federal Trade Commission (FTC) is introducing legal restrictions on advertising over the Internet as they have with the fax, these technologies are already proving to be great mediums for follow up.

Society and technology are changing rapidly. Methods that distributors have used in the past may not be effective now or in the future. This new technology can be used to retail, recruit and manage large sales organizations locally, nationally and internationally. Those distributors who learn to integrate new technology and recruiting or retailing methods without losing the personal sales and support touch of direct selling will probably be highly successful.

The secret of long-term success in the direct sales/MLM industry has always been the industry’s ability to change and get in the forefront of society’s evolution. This industry has always been on the innovative edge and it is highly likely that they will prosper in America’s rapidly changing environment.

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