Direct Sales or multi-level marketing (MLM) is not new business model. But it is a business model with new life and potential. Often equated with pink Mary Kay Cadillacs and home parties, MLM is seeing a new place in e-commerce and a global economy. As a result, those plugged into the direct sales business are seeing a major surge in popularity and success. This is, in part, due to the higher unemployment and decreased economic stability of late. However, the real driver of the surge in revenue potential of the direct sales business is much more than past middle class women home parties. Consumer behavior is driving the demand for direct sales and its a business change that will stay.
While word of mouth and the recruitment of team members (typically called the downline) is still a major aspect of MLM, the way sales are made and teams are built, and the ceiling on earning potential have dramatically changed. This is due primarily to changes in consumer behavior and expectations coupled with a growing global economy. Technological advances that provide fast access and a myriad of tools and applications have made e-commerce simple and virtually real-time. This has created a new direct sales business model and opportunity that may very well dominate over the next decades.
Gone are the days of calling everyone on “your list” to network, bring in business partners, and generate sales. While still an important part of any successful company, the emphasis of MLM now is more on blogging, social media, internet marketing, and lead generation. Word of mouth still prevails, however new independent distributors use the social networks on the web to promote their products and business opportunities. And new direct sales companies are not pricing themselves out of the market. While team building is still a core function, the emphasis in on selling the product. To be competitive and profitable, direct sales companies know that their products must be priced right and of high quality.
Successful direct sales companies which provide a legitimate business and income opportunity have the following key business elements:
- Corporate training and tools
- Active consultant network
- High quality products
- Internet centered
- Minimal inventory requirements
- Corporate media exposure and advertising
The business model has real potential for long-term success with the right mix of attributes. Not all current MLM companies have made the necessary changes in their business. However, the prediction is that they will soon make significant adjustments and follow the model of leaders in the business.