Chapter 3
Working with Different Direct Selling Models
In This Chapter
Understanding Network Marketing
Checking out Party Plan
Zeroing in on the Hybrid model
For many years, there was a big distinction between the Network Marketing business model and the Party Plan business model. In recent years, the two models have started to come together, and in large part, that is where we get the term Hybrid. Companies take the best attributes of both models and bring them together in one company. I have also heard people refer to their company as a hybrid because of the type of compensation plan they have created. And many of the Network Marketing companies are becoming more product focused, whereas they used to focus almost exclusively on the business opportunity.
At the end of the day, what they all have in common is that direct sales is where the representative sells direct to the consumer or customer without the aid of a retail establishment.
There are many strong opinions about which model is best. So I felt it was important to just cover a bit more about the differences and who may be best suited to you — and along the way dispel some myths about direct selling in general.
The Network Marketing Model
Network Marketing is characterized by a number of factors that are consistent across companies. Companies using the Network Marketing model market readily consumable products like vitamins, skincare products, and subscription services that lend themselves well to auto-ship. The idea is to generate orders every single month, build income consistency and growth, and create a “customer for life.”
The emphasis in these companies is frequently on the income opportunity as much or even more than it is on the product. Because the cost of joining as a “member” is often quite low, and can be offered without a kit or product included, many people who would normally just be customers join as independent representatives, often with their first order. That means that when a product becomes popular, there is the opportunity for exponential growth in company size, team size, and income.
There can be a significant benefit to joining earlier, because the structure of the sales force can mean that you may be rewarded by “getting in first” when people who join after you are put into your team, sometimes without any effort on your part. Timing can matter in Network Marketing, and you’ll sometimes hear this “getting in first” process referred to as getting your spot or position.
Income can appear low at first because the strength of this model is in the residual income. Residual income results from repeat purchases from the same customers, often on auto-ship. These customers are sometimes retail customers of yours, as well as independent representatives who make up your team of both consumers and marketers. Due to the ongoing consumption in your network or team, your income can continue to grow even as your personal selling and recruiting plateaus or drops.
There is a strong online component with a high level of e-commerce in the Network Marketing model, so customers and independent representatives will often re-order online or stay on auto-ship indefinitely, bringing you the same income that you received from their original orders, with no additional effort from you.
Recruiting in Network Marketing
With such a strong focus on the business and income opportunity and how common it is for customers to just go ahead and join right at the beginning, in Network Marketing, you will commonly be offering the business opportunity to your contacts at the same time you offer the product. Often in these companies, the opportunity is strongly considered to actually be one of the most compelling “products” you offer. So, you’ll sometimes present the income opportunity before they even try the product, or soon after they become your customer.
When recruiting into your Network Marketing business, you look for people who are seeking a business opportunity, who are interested in earning money, and/or people who absolutely love the product. Due to the consumer network nature of your Network Marketing business, people who are not interested in promoting the business at all can still provide excellent contributions to your network due to their sheer enthusiasm about the product. Product superfans who talk about the product and either sign their friends up “by accident” or refer their contacts to talk to you can be just as effective for the growth of your network as people intent on making an income.
Your main objective when seeking new, independent representatives for your team is to naturally and organically gain access to other people’s networks and therefore expand your own network. This expansion into the people your contact knows and the people they know (and so on) is part of what drives the exponential growth in network marketing.
Each of the people who join will experience at least a small financial benefit from their own referrals, so it ends up being a winning situation, even for those who are just in the network to get a discount or because they are in love with the product for their own personal use.
Sharing the product and the opportunity
Products and the opportunity are shared in a few different ways in Network Marketing.
Testimonials
Network Marketers are urged to become a product of the product — which means that they use the product regularly so that they can have their own testimonial regarding its benefits. With so many of the products being in skincare, weight loss, wellness, and business and utilities services, it’s believed that when you are using your company’s product to its maximum recommended “dosage,” it will become apparent in your physical appearance or in your life.
Before-and-after images and stories are a hallmark of the Network Marketing sales approach because, as is commonly repeated in these companies, facts tell, stories sell. So, rather than talk about all the details and specifics of the product the company is offering, independent representatives are encouraged to share their individual positive experiences and let the emotion and authenticity of that sharing attract sales and recruits.
Presentations
Instead of relying on hosts who gather their friends for a presentation (as in the party plan and hybrid models, covered next), most Network Marketing presentations are conducted one-on-one, either over the phone, using Internet presentation tools, or in person as a business presentation. These are also often called appointments. Often in these presentations, the business opportunity is emphasized as much as the products or services.
In recent years, many Network Marketing companies and leaders are promoting the value of having new independent representatives kick off their businesses with a “Launch Party” or “Grand Opening” event. They have discovered that in-home events to launch someone’s business are a simple, accessible, efficient, and fun way for the new team member to effectively introduce the products and opportunity to a large group of friends, family, and associates all at once.
Systems, tools, and sampling
Network Marketing is also known for the practice of relying on sampling to spark interest in the products and using tools to share information, including about the business opportunity. These tools are often websites, videos, magazines, audio recordings, and even smartphone and tablet apps. With a belief that the average person can be successful if they follow a system, Network Marketing encourages the independent representative to let the product and the tools do the talking. This lends itself well to long-distance recruiting and sales, as well as a strong reliance on the Internet and phone for even personal sales and recruiting.
You can mail samples almost anywhere and follow up online or by phone to take orders or point interested people in the direction of tools to answer their questions or a website for them to join. Network Marketers often have enough product on hand to supply their personal use and sampling, typically mailed to their homes through an auto-ship program.
Customer orders are typically shipped directly by the company to the customers after an order is placed online, so representatives stocking inventory is no longer necessary and is actively discouraged. In fact, reputable Network Marketing companies ban the practice of purchasing enough product to earn a promotion or advance to a higher job title (or rank) and do their best to sanction representatives who place these kinds of orders (also called bonus buying).
Years ago, companies began to recognize that though it may appear to increase sales, having a high percentage of sales coming from representatives purchasing an inventory of product that just sits around instead of selling products to end consumers burdens the sales force and weakens the company. Companies now measure their ratio of retail customers to independent representatives and use that measurement as a gauge of healthy growth.
Who is best suited for Network Marketing?
The Network Marketing model is best suited for people who fit the following profile:
- Enjoy networking one-on-one
- Like building relationships over time
- Find comfort in following a very specific system
The people who do best in this model are people who are comfortable allowing the product and the business opportunity to take center stage. They then see themselves more as a messenger of the tools that share the information, rather than being the star, expert, or source of information themselves.
This is not to say that they have no appetite for recognition, but rather that they can comply with a system that is already in place and has a proven track record. Often, the process of effectively building a network involves deferring to the expertise of others with the sole purpose of demonstrating the “system” to the prospects.
The key to lasting and satisfying success in Network Marketing is the art of duplication. To attract a lot of recruits and foster duplication in your network, your business practices must be duplicable. Being the expert is not easily duplicable because it leads to attracting only people who already believe they are capable of being or quickly becoming the expert, too. That slows your recruiting and network growth.
People who need to “know it all” (and a lot of us fall into that camp) do best in this business when they can preserve their knowledge for supporting their team in the building of their businesses. Your team, also known as your downline, is your line of sponsorship who looks to you for guidance. You are considered their upline or sponsor. You can share your wisdom, your tips, your extensive product knowledge and much more in support of them.
Other traits that are a good match for Network Marketing are:
- Desire for a residual income stream, delivered regularly (often weekly) via direct deposit
- Willingness to take a small risk now for potential substantial payoff later (which is true for every direct seller, no matter what type of model).
- Ability to delay financial gratification and work harder now for a small initial income that could grow in the future
What does it take to be successful?
Are you someone who takes action? Are you a risk-taker with a positive attitude, and you just believe deep down that you will succeed? If the word no doesn’t faze you, if you are decisive, and if people are attracted to your energy, you may be a fantastic fit for success in the Network Marketing model.
With that said, many people are under the misconception that you have to be a certain kind of person to get involved in Network Marketing. The truth is you don’t. Average people can do well in Network Marketing, as do people who are focused on improving themselves, those who need some encouragement to step outside of their comfort zones, and people who tend to be shy when in groups.
Part of what makes Network Marketing so successful is that it is so system-focused, that average people can experience better than average results. The load isn’t all on your shoulders to be an incredible presenter or a great salesperson. The model itself is designed to rely on tools and on existing relationships and networks so that you can create a business following the steps of the people before you.
You can recruit to your weaknesses. If you are the most know-it-all of know-it-alls, you may recruit someone who is more humble, more coachable, and more willing to comply with the system — they can become a recruiting magnet on your team, and you benefit. Terrified of speaking in front of groups? Recruit a friend who is a natural host and connector, partner up, and the next thing you know, your team has doubled in size.
In Network Marketing, as in both Party Plan and the Hybrid Model, what is most important is a burning desire for success, a strong work ethic, persistence, and resilience. Use the tools and the system that is already in place, and maintain the discipline to stick with it.
The Party Plan Model
Party Plan places less emphasis on recruiting new team members than the other two models do. In general, women — who make up the vast majority of Party Plan independent representatives, hosts, and party guests — are often more comfortable sharing products to create income than they are recruiting to create income. Fortunately, finding interested recruits becomes almost a natural side bonus of a well-run home party. You get in front of enough women enough times and you will encounter many who are looking for something like a Party Plan business.
So, despite a common discomfort with recruiting, when trained properly, women often discover that helping other women succeed by recruiting and training them brings great satisfaction in addition to boosting their business income.
Party Plan is characterized by a number of factors that are consistent across companies. First, most of the product sales and recruiting takes place during events (parties), both in-person and online, where groups of people (called guests) have been gathered together by a host they know personally.
The emphasis in these companies is typically on the products and the gatherings themselves. Hosts act as partners with the independent representative to boost attendance and sales. The parties are the primary source of new contacts and leads.
Parties serve a dual purpose:
- They generate sales
- They introduce the independent representative to new, fresh contacts on a regular basis
Many representatives earn all the money they want through their parties and through re-orders from their customers. They find they can continue their businesses successfully as long as they like with little or no recruiting. Their commissions on their personal sales are often quite satisfying, even in the beginning.
The specials provided for customers and perks offered to the hosts of parties are typically provided at no cost to the representative and can be leveraged to get more parties booked and increase initial sales and re-orders.
Instead of being paid with a periodic direct deposit of commissions for their personal sales, Party Plan representatives often receive their sales commissions directly the night of the party or within a few days of submission of the sale, depending on the company’s order-taking structure.
Recruiting in Party Plan
The natural life cycle for new recruits in Party Plan is to start out as a guest and customer, become a host next, and later join as a representative. It is common to find potential recruits at the party and invite them to be hosts so they can learn more before approaching them with the business opportunity.
Recruiting in Party Plan is a skill set that piggybacks on the party structure. Each well-run party, in addition to being a sales event, is an opportunity event. The party is the ideal place to showcase exactly what your business looks and feels like. It gives each guest who might be interested in earning money the chance to see how simple, easy, and fun it can be.
In recent years, recruiting in Party Plan has increased exponentially due to the introduction of social selling through online platforms and social media. See Chapter 11 for more information on running a successful online business.
Sharing the product and opportunity
Products and the opportunity to join are shared in a few different ways in Party Plan.
Party presentation and customer re-orders
The product presentation at the party is the primary source of sales for the independent representative. The party is where new customers are found, and through ongoing customer care and establishing a relationship, representatives gather future orders and re-orders and book future parties.
Guests as your best customers
An independent representative meets a few or many new people at each party, which provides both immediate sales and a steady supply of future customers and hosts. Presenting products once to a group of people is an efficient way to sell, and the energy of the group usually leads to larger orders by each customer than if the customer were approached independently. Because the guests at the party are a self-selected group who chose to attend after being invited, they are open to the product line before the representative even begins the presentation.
Guests as your new recruit leads
Parties also mean a constant stream of fresh eyes and new potential team members. By structuring the party to include an invitation to take a closer look at the business potential, an independent representative deliberately increases her pool of recruit leads. These leads are the strongest because they have already been exposed to your primary business function and have even begun unconsciously training by observing you in action. See Chapter 9 for more on party structure and Chapter 14 for all about recruiting.
Hosts as your most likely next recruit
A trademark aspect of Party Plan is that the representative helps the host have a successful party through coaching (called host coaching, the topic of Chapter 10). The host earns perks and rewards based on the results of the party and is therefore grateful for the support and has an incentive to promote the party. This process of prepping for a great party (Chapter 9) often reveals which hosts would make good representatives and serves as an opportunity for the host to learn more about the business, which often piques their interest in becoming representatives themselves.
Who is best suited for Party Plan?
Party Plan is a great fit for those who enjoy helping others discover new things, people who love to share the things they’re passionate about, and for those interested in supporting the success of others.
There are two types of personalities who tend to succeed in the Party Plan model of direct selling. The first type is the one you probably already have in mind: confident, outgoing, never at a loss for words, with a strong personality and no fear of public speaking. The second personality type may be a bit of a surprise: the introvert who almost seems to shun the spotlight, possibly soft-spoken, but with a passion for the product and willingness to share that passion.
To succeed in the Party Plan model, you need to know your product, but you don’t have to memorize every fact. It’s perfectly okay to say, “I don’t have that answer, but I do know I can call my upline or the company to get it. May I call you tomorrow to let you know what I learn?”
Another factor that will help you succeed in the Party Plan model is a willingness to engage people in purposeful conversations. By purposeful conversation, I mean finding out what is important to them so you can help them achieve what they define as success. Being someone they can look to for guidance and expertise in the areas related to your product line is also key.
As with the Network Marketing model, being passionate about the product is important to succeeding in the Party Plan structure.
Here are some other traits that are a good match for Party Plan:
- Desire for a part-time income stream without a formal part-time job
- Relatively immediate need for that income (new Party Plan reps can begin making income with their very first parties and often receive their commissions the night of their party or soon thereafter)
- Comfortable being the “expert” or personal shopper and advisor
- Desire to get out of the house and socialize
- Love of the product and enjoyment in talking about the product line
- Knack for entertaining and demonstrating
The Hybrid Model
As the name suggests, the Hybrid model is a combination, in both pay structure and business practices, of Network Marketing and Party Plan. In Hybrid companies, as in Party Plan companies, most product is sold through gatherings where hosts have invited their contacts, in-person or online, to learn more about a product and the income opportunity.
With its frequent focus on online demonstrations and how-to videos and a reliance on e-commerce and auto-ship, the Hybrid model is the most flexible of the models when it comes to schedule and structuring a business around other priorities, while still getting paid primarily for selling product through presentations to several people at once.
Hybrid recruiting methods rely on the party approach and on emphasizing the business opportunity as strongly as the products during these parties. The use of testimonials, tools, and systems is almost identical to the way things are done in Network Marketing.
Because the Hybrid model combines some of the best features of both Network Marketing and Party Plan, it seems to draw both men and women equally. It also appeals to couples who want to work a business together.
This model seems to attract all demographics. Baby Boomers usually aren’t as familiar with this model as they are with the other two, so they tend to enthusiastically engage because it appears to be something different, about which they haven’t already developed strong opinions. Generation X adults seem to appreciate the authenticity of the product emphasis that also allows for building a significant income fairly quickly. Millennials, also know as Gen Y, like the balance of product and opportunity, which seems realistic and exciting, as well as the reliance on new technologies.
If income is important to you, but you still want to be focused on and passionate about a product that meets a real need, you may prefer a Hybrid company. If you enjoy low-pressure gatherings, online and in-person, that can provide social proof that encourages purchases and presents the benefits of a new venture in a comfortable, casual environment, the Hybrid may be a better fit for you than straight Network Marketing, which relies more on one-on-one presentations. If you are readily able to connect with others through your passion for an interest or for a product you love or through the possibilities of a lucrative opportunity and the lifestyle that results, you may prefer the Hybrid model.
The Hybrid model is such a natural blending of the Network Marketing and Party Plan models, that if you suspect that you have some of the traits of success for either or both of those, a Hybrid company may also be a good fit for you.
Because things change so fast in direct sales companies, more and more companies are of a Hybrid nature. There are Party Plan companies who have developed auto-ship programs, and there are Network Marketing companies who have adopted the Party method, even though neither may refer to themselves as Hybrid.