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Direct Selling
What is Direct Selling
Direct selling refers to selling goods or services without intermediaries, meaning there is a direct interaction between the seller and the customer. In this model, the company produces products, finds customers, and sells its goods in person or online. Therefore, the primary condition for direct selling is direct contact between the producers and potential consumers. However, face-to-face communication is not always necessary. For example, an entrepreneur might sell products through social media, respond to messages from interested customers, suggest the most suitable product based on their inquiries, and personally engage with consumers. This is also considered direct selling, even though the seller and buyer do not interact in person.
Interestingly, direct selling is often used for the following types of products:
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Household chemicals;
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Decorative and skincare cosmetics;
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Home goods and home furnishings;
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Dietary supplements, various vitamins, and anti-aging products.
Typically, such products are sold by company representatives or distributors. In contrast, indirect sales involve many more people. Besides the producer, distributor, and consumer, the traditional business model also includes:
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Dealers who purchase goods from the company
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Intermediaries, who buy part of the products from the dealer
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Stores and various retail outlets that distribute the goods
Many brands successfully combine direct and indirect sales in their business practices. However, direct selling companies rely solely on direct selling as a crucial element, unique selling proposition, and key product and service features. One of the most notable examples in the direct selling industry is companies involved in network marketing, such as Oriflame and Mary Kay in cosmetics, Amway in household chemicals and dietary supplements, and Lux International in vacuum cleaners, air purifiers, and filters.
History of Direct Selling
Marketing and sales have developed alongside civilization. The first hunters, fishermen, and gatherers who bartered by offering their products in exchange for more essential goods can be considered the pioneers of direct selling.
With the advent and development of industry, sales methods also evolved. In the 18th century, Yankee peddlers or hawkers began bringing goods to remote, isolated rural areas and offering them to the local population. However, it wasn't until a century later that James Robinson Graves developed a business model most similar to the modern direct-selling business model. He worked for a small publishing house, Southwestern, which printed religious pamphlets and other literature. Initially, the company sold its products by mail, but after the Civil War, Reverend Graves proposed a new idea: young employees should go door-to-door offering Southwestern's products to people they encountered.
Later, with Alexander Graham Bell's invention of the telephone in 1876, another means of communication and interaction with potential customers emerged. By the end of the 18th century, the California Perfume Company, which closely resembled today's network marketing brands, emerged on the market. It is still considered a benchmark in direct selling and a model for later companies like Avon, Oriflame, and others. By 1910, California Perfume Co. had merged with nine similar companies from New York, Massachusetts, and Michigan. This was the first association that focused on addressing the needs and challenges faced by direct selling representatives. Today, this association is known as the Direct Selling Association of the United States, which now includes several hundred of America's largest companies.
In the same 1900s, the soon-to-be successful entrepreneur C.J. Walker developed her hair care products and founded Madam C.J. Walker Manufacturing Company for their production and distribution. She went door-to-door, offering her products to potential customers. Moreover, Walker encouraged other African American women to leave low-paying and unpromising jobs as laundresses and maids to become her direct selling agents and earn commissions from sales. She succeeded-Walker built a successful business and helped hundreds of other women find their dream jobs, increase their income, and elevate their social status.
In the following years, such companies grew significantly, with the emergence of Fuller Brush, West Bend Aluminum Co, Amway, Nutrilite, Electrolux, and Mary Kay Cosmetics. Initially, representatives of these companies engaged in so-called "door-to-door sales." With new tools and opportunities for interacting with potential customers, the internet, and social media, the direct selling method has only improved, bringing together thousands of people. While initially, the direct selling agents were primarily housewives, they became future successful businesspeople over time.
Advantages and Disadvantages of the Direct Sales
Direct selling is so popular and widespread due to its advantages:
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Personal contact. The company representative directly interacts with potential customers, making the success of this interaction solely dependent on them. During the conversation, the sales tactic can be adjusted to meet the client's needs and interests, convincing them that your product is the solution they've been looking for.
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Prompt feedback. If a client declines to purchase your product, there is an opportunity to immediately learn the reasons behind their decision and the shortcomings they perceive in the product. By collecting feedback from several clients, you can identify your product's weak points and flaws that may have previously gone unnoticed. This allows you to improve the product.
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Individual approach. The best offer is tailored to the specific consumer, considering their interests, desires, needs, and "pain points." Through personal interaction, the seller learns what problem the client is facing and selects the most suitable solution. This increases consumer loyalty and their chances of returning to your company's products.
Additionally, direct selling offers a flexible work schedule, allows savings on renting premises and paying sales staff, and provides other advantages.
Among the disadvantages are:
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The need for a large workforce. To achieve significant results in direct selling, a large number of brand representatives are required to work with the customer base and sell directly.
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High costs. Regularly expanding the customer base and increasing revenue requires significant investment in advertising and marketing campaigns. This helps more people learn about the company and increases the loyalty of existing customers. Moreover, reaching a large number of people and giving each other enough attention often is more expensive than many other product distribution methods.
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Distrust from potential customers. Direct selling and network marketing often involve scammers, leading to consumer skepticism about this type of sale. Startups or companies that haven't yet established a reputation may also face doubts about product quality.
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There is a risk of being perceived as a pushy salesperson. The human factor plays a crucial role in direct selling. The customer's final decision primarily depends on the behavior of the seller. Therefore, it is particularly important to interact with potential clients carefully and tactfully. Avoid interrupting them, questioning their needs, or arguing and contradicting the client's beliefs. Yes, the goal is to satisfy the customer's request, but it's important to remember that they may not have a need, so pushing them to make a purchase is not advisable.
Considering the advantages and disadvantages of direct selling, large companies typically involve dealers and other intermediaries. This approach helps expand the business's reach and brand awareness among various audiences. On the other hand, small businesses and individual entrepreneurs often rely solely on direct selling.
Learning by topic
Types of Direct Selling
Direct selling can vary depending on where the interaction with the customer takes place. The types include:
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"Door-to-Door Sales"
In this type of direct selling, the seller literally goes door-to-door in selected homes or neighborhoods, offering their products to potential clients. Before widespread internet and social media use, this method was the most popular and effective. This is how products like pots, vacuum cleaners, cosmetics, and various interior items became commonplace in people's homes. However, today, this method is rarely used. After several fraud cases, people began to view door-to-door sales with skepticism and distrust. A more modern equivalent of door-to-door sales is direct meetings. The seller and potential client agree in advance to meet in a café, shopping center, or business center. The main condition for such meetings is to choose the most convenient time and place for the customer, offer them a personalized advantageous deal, and maintain contact in the future.
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Street Sales and Sales in Other Public Places
This involves selling goods in parks, shopping centers, subway stations, and pedestrian crossings. In such sales, potential customers are offered products on more favorable terms, samples are demonstrated, effectiveness and the necessity of purchase are visually proven, and samples are offered for tasting. In other words, sellers use various methods to attract the attention of passersby to their products.
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Office Sales
In this case, sales managers visit company offices, coworking spaces, and business centers to offer their products to employees, describe their features, and highlight the benefits. This type of direct selling is considered the most effective, as customers feel confident and secure on their "home turf." Moreover, who would refuse the opportunity to take a break from monotonous work to look at a product, inquire about its features, and try it out? Once one colleague decides to make a purchase, others are likely to follow their example or become interested, even if they don't buy anything.
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Telephone Sales
This type of sales involves managers calling a potential customer base, offering products or services, and sometimes arranging personal meetings and presentations. Currently, telephone sales are considered an ineffective method, especially when trying to connect with new customers.
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Selling Online
This category includes all possible ways to interact with customers remotely-websites and forums, social networks, messengers, etc. Typically, company representatives contact potential clients through official accounts in private messages, offering their products in the most appealing manner. Interested clients are then invited to a full presentation. Today, online customer interaction is one of the most effective forms of direct selling.
Direct Selling Techniques
Direct selling techniques refer to specific tools for conducting effective and well-crafted dialogues with customers, presenting products attractively, and closing deals. The most common techniques, which differ only in their approach to product offerings, include:
1. Consultative Sales
This is the most common method, where the seller first identifies the client's needs and "pain points" to help them address these issues with a particular product. Thus, managers offer a solution to a problem rather than just a product.
2. FAB
The name stands for features, advantages, and benefits. According to the FAB technique, the seller should gradually reveal the value of the offered product. First, they describe its features and distinctive qualities, then its benefits and competitive advantages, and finally, the gain customers will receive if they purchase the product. This technique is usually used after identifying the customer's needs to spark interest in the product.
3. SPIN sales
This technique is based on four key types of questions that lead the customer to decide to purchase:
- S - Situation, that is, situational questions that help identify the customer's life situation, what interests them, and what it is related to.
- P - Problem, problem questions help the seller uncover the customer's true desires, interests, and needs.
- I - Implication, these questions prompt the buyer to think about what might happen if the problem isn't resolved.
- N - Need-Payoff, prompting or guiding questions that the seller uses to "suggest" a solution to the problem, nudging the customer toward a purchase.
4. SNAP
This technique is essentially a guide for sales managers. The first rule is to offer products that are as simple and understandable to the target audience as possible (Simple). The second rule is to provide a specific value (iNvaluable). The third rule is to align with the buyer's interests and desires (Align). The fourth rule is to increase the importance and priority of the product (Priorities). If your offer meets each of these points, there is a high probability that the customer will choose your product.
5. Foot-in-the-door
This technique is used after the first contact with the buyer, hence the literal translation "foot in the door." The seller then tries to open this door even wider, increasing loyalty and interest in the product. First, managers introduce basic products, services, and other solutions with a trial period. Then, they inform consumers about more expensive and advanced product versions. After all, if you immediately offer a customer a large and costly purchase, they will likely refuse. But if you approach it gradually, the chances of a positive decision significantly increase.
The Future of Direct Selling
With the development of technology and generative artificial intelligence, the direct selling industry is experiencing a resurgence in popularity. One of the main trends in direct selling today is using AI, neural networks, and direct-selling software. For example, chatbots allow for improved customer communication, providing instant responses to their inquiries within seconds, thereby retaining them and increasing loyalty. Additionally, online platforms are often used to optimize sales, directly interact with customers, and provide them with even better service.
Moreover, the shift to online sales and digital platforms to enhance these processes is another important trend in modern marketing. This allows companies to expand their audience and geographical reach, improve sales efficiency, and offer personalized deals to customers.
Thus, companies that have adapted to changes and successfully integrated innovations into their operations remain competitive in the market despite previous predictions of the demise of direct selling.
Conclusion
Direct selling remains one of the most effective and profitable techniques. By avoiding common mistakes, such as disputing a customer's opinion or failing to establish contact with them, direct selling allows for creating a trusting atmosphere, quickly obtaining feedback on the product, visually demonstrating all its advantages, and ultimately increasing revenue, enhancing customer loyalty, and strengthening the brand's image. Remember that it is crucial to demonstrate your expertise, present your offer skillfully, and confidently use the aforementioned techniques to showcase the product in the best light and convince the customer of the necessity of the purchase.
