Network Marketing

Network Marketing refers to a company structure designed to move consumable products through a network of independent representatives, through both personal use and sales to end consumers. When a Network Marketing company is building its sales force, it is focused on building a network of consumers. The company doesn’t distinguish between those who join as independent representatives to earn money and those who join merely for a discount on their personal products.

(Network Marketing has also been referred to as multi-level marketing or MLM, but that is a misnomer—actually, all of direct sales is structured with multi-level compensation plans to pay their representatives, and all direct sales companies are therefore multi-level marketing companies.)

One strength of the Network Marketing model is that companies can grow very large and sell huge amounts of products through a vast network of people who have, in many senses of the word, joined as members. Many members set themselves up for a subscription to receive their products each month — an arrangement often called auto-ship. These continuous re-orders through a network of people affiliated with the company by choice can lead to consistent sales growth, as long as people in the network continue to see the benefit of the product.

Examples of companies that use the Network Marketing model are Isagenix, USANA, and Amway.

Party Plan

Party Plan refers to a model focused on efficiently selling to groups of people who have been gathered together by a host they know personally, either in person or virtually (online). These types of gatherings are typically referred to as parties. However, some companies personalize the term they use for their parties in order to make the experience more unique. For example, jewelry bars, tastings, cooking shows, makeovers, and so on.

These parties are hosted at a customer’s home, and this customer is known as the host. The host traditionally is rewarded with a series of discounted and free products as well as host-exclusive specials. The host invites her friends over as guests to attend the party. The party usually consists of light refreshments, socializing, and a presentation done by the representative. The purpose of a home party is to create a fun, relaxing, home shopping experience with friends.

Toward the end of the party, the rep collects payment (usually through credit cards or cash) for the products the host and her guests want to order. These orders are placed through the rep’s virtual office (which is provided to her through her company). Chapter 9 discusses in detail how to conduct a successful party.

This model lends the power of the host’s personal recommendation to the products and facilitates social proof, which means the weight of influence carried by a group of people. Once one person decides to buy, it increases the likelihood that the rest of the guests in attendance will also buy — that’s social proof in action.

The model is called Party Plan, but many companies who use this structure prefer different terminology. Some companies refer to the gatherings as parties, whereas others will call them shows, demonstrations, classes, mixers, tastings, trunk shows, or showcases. Some direct sales companies even actively discourage the use of the word party. Regardless of what they are called, Party Plan parties are quite effective in generating sales, attracting recruits, and teaching others how to sell.

One clear strength of the Party Plan model is the easy-to-understand emphasis on selling products to customers. This structure can include one-on-one sales and a variety of other ways to sell, but the majority of training conducted by these companies focuses on the most efficient and enjoyable method of sales — which is, of course, the party. New independent representatives can easily grasp the concept of this fun method of commerce, and that makes it a very accessible business model for the average person.

Examples of companies that use the Party Plan model are Jamberry, The Pampered Chef, Scentsy, and Stella & Dot.

Hybrid

This is the new kid on the block. As you might guess, it blends the practices of Network Marketing and Party Plan. In Hybrid companies, as with those in the Party Plan model, independent representatives have hosts gather their friends and family to experience a product demonstration, in-person or online. But with Hybrid, the emphasis is as much on the business opportunity as it is on sales of the product. The structures of the compensation plan tend to borrow traditional elements from both Party Plan and Network Marketing.

One significant difference is that with Hybrid companies, it is common for the representative to encourage the host to have an impromptu gathering, rather than scheduling it weeks in advance. They might say, “Sure, I’d love to demonstrate how this product works. I absolutely love it and I think you will, too. You can get it for free, too, and I can show you how. Why don’t you and a few friends come over and watch while I show it to you tonight or tomorrow?”

Hybrid companies typically represent tangible products that are consumable, such as health and wellness or beauty products. As in Network Marketing, these products lend themselves well to auto-ship, the subscription order model where independent representatives and customers get monthly replenishment orders shipped to their homes automatically.

In Hybrid companies, auto-ship usually offers a price break for the customer, (sometimes referred to as a preferred customer rate). You will see programs that offer vanishing auto-ship or free auto-ship for customers who refer other customers through referral programs. These referral programs can also include free auto-ship for independent representatives who have a certain number of customers on auto-ship, meaning that the representative’s own monthly consumption of product is covered. These referral programs, which attractively combine the customer-focused Party Plan outlook with the Network Marketing-style auto-ship approach, have been very successful and have led to significant growth for the companies and leaders involved.

Examples of companies that lend themselves to a hybrid model are Nerium, ItWorks, and Thrive Life.

Who does best with each model?

Direct sales appeals to people interested in earning extra money outside of a traditional job. Some choose to work part-time with a direct sales company as a way to pay for the extras that challenge their budget, often in addition to a full-time job. Others are looking for a way to make additional money while still attending to priorities in their lives like parenting, caregiving, school, or charitable work and appreciate that they can control their calendar and plan events, parties, and one-on-one appointments (where you meet with clients individually instead of in a group setting, like a home party) around their schedules.

According to the Direct Selling Association of the United States, 83 percent of representatives in direct selling are women. In the past, generally speaking, men tended to be drawn more to the Network Marketing model, with women feeling more comfortable focused on the Party Plan style of business.

Perhaps sharing products they are passionate about comes more easily to most women. In any case, there’s no question that Party Plan selling is very popular among females. In general, women enjoy gathering with other women and tend look for reasons to do so. Having a Party Plan business or hosting a party provides an excellent excuse to get together.

In recent years, with the growth of the Internet, the increase in dual-income families, and product lines that are more appealing to modern women (weight loss, skincare, and energy products), there has been a noticeable increase in Hybrid and Network Marketing companies targeting a female salesforce.

In addition, busy people of both genders see the benefit of Network Marketing’s reputation for ongoing automatic income (also known as residual income) from a business that can fit into the nooks and crannies of their schedule and be handled by phone and keyboard, instead of with a schedule of home parties. This could explain why many married couples choose to build a business together in the Network Marketing model.

Party Plan is still going strong and continues to be the top choice of people interested in earning profits and creating cash flow from even the early stages of their business. Quite often, representatives in Party Plan get paid for some or all of their sales the night of each party. For people looking to alleviate day-to-day budget shortfalls, the Party Plan model is especially attractive.

With the changes in the industry through the Internet and social media, as well the globalization of the industry, direct sales is growing. And with multiple ways to touch your business, all three models are becoming more appealing.

Belief in the product

It is imperative that you authentically and completely believe in the product you represent. Without that, your skills will fail to convince others, and the experience will be so lacking in satisfaction that it will all feel like hard work.

Vision and goals

You need a clear and specific vision of what you want to achieve with your business. And you need to define, in writing, your income goals, production goals, progress up the company ranks, and what having this business will do for your life and how it will feel (read more about this in Chapter 5). You’ll hear people refer to this as your why. Having this strong why will help you overcome the challenges you will inevitably encounter.

Superior communication skills

If you’re naturally a great communicator, you’re in luck. But even if you’re not, if you’re determined, it is possible to significantly improve your communication skills and reap the benefits in your life and in your business. This includes becoming a better listener who asks questions to gain clearer understanding; a better connector, because people do business with those they know, like, and trust; and presenter, because being able to demonstrate your products or explain your opportunity with confidence is essential.

Patience

Rome wasn’t built in a day and regardless of the model you choose (see Chapter 3 for a rundown on the three different direct sales models), gaining mastery and building your business so that it provides a steady, reliable income take time. In Network Marketing, people often give up too soon, because their small initial checks make them feel unsuccessful. In Party Plan and Hybrid, a lack of patience often leads to frustration because achieving a rhythm of parties booked and getting better at consistently running them will take time, as well. People do get better at the activities of their businesses, but there is no substitute for practice — and practice takes time.

Patience is also helpful in your interactions with customers and prospects. Statistically speaking, it takes seven exposures before someone makes a buying decision. Learning to feel calm during this process can be a great help.

The yes you’re looking for can feel like it takes a long, long time. The more you practice some detachment to the outcome and just stay the course and maintain patience, the more enjoyable your business will be.

Interpersonal skills

You should have a desire to build relationships with others, including your new contacts, party guests, hosts, team members, and recruit leads. The better you are at working with others and building relationships, the farther you’ll go in any business, and the better results you’ll experience.

When you put relationships first, business follows naturally — sometimes directly, and sometimes through referrals.

Presentation skills

In Party Plan and Hybrid, you’ll do not only product presentations, but also presentations designed to encourage others to become party hosts and team members.

The key to great presentations is to be brief. The primary reason people attend an in-person home party is to socialize with their friends — shopping while they do it is an added bonus.

You can review a standard party plan presentation in Chapter 9. Practice is key when it comes to presentation skills.

And though it is true that the Network Marketing model relies on tools to make these presentations, as you build a team you’ll be called on more to present to groups. You’ll also present over the phone to your team member’s prospects. Developing solid presentation skills is valuable in that model, too.

Ability to recognize buying cues

To succeed, it helps greatly if you’re able to recognize small, tell-tale signs that someone is interested in exploring opportunities to purchase, join your team, or host a party. Often, people won’t directly ask for more information on hosting or joining the business. Instead, they may simply lean in to listen intently as you mention a benefit. Or they may ask you about how much time you spend on your business or how much money can be earned. Sometimes, the clue is as subtle as offering to help you collect your demonstration products and put them in your car, connect with you on social media, or even just sit next to you at a luncheon.

In general, when someone gives you a conversation opener, they are exhibiting interest. And, as tempting as it is to let all your enthusiasm show, you’ll find that your best results occur when you give small pieces of information in an upbeat manner and avoid overwhelming them.

Customer care

More of a scheduled habit than a skill, this is crucial, nonetheless. Each month, or at least every other month, you should contact your customers and ask how you can serve them. What you’re also doing is reading their temperature. Start these conversations by asking how they’re enjoying the products they purchased. In following months, offer them products they may be interested in for themselves or for upcoming holidays. At least twice a year, offer them the opportunity to earn free or discounted products by hosting a fun party for their friends.

These periodic conversations keep you connected to your customers and provide them the opportunity to share their product testimonials with you, express interest in your income opportunity, or provide you referrals.

Chapter 13 talks in detail about providing excellent customer care.

Technological aptitude

You don’t need to be a computer geek, but companies are turning to technological solutions more and more. Currently that means e-commerce, mobile phone apps, and leveraging social media at the corporate level — and encouraging their independent representatives to do the same. They’re using apps, running webinars, and conducting online conferences. Some companies (most often in Hybrid and Network Marketing) even boast that you can “work your business from your phone.” To keep up, you’re going to need to plug in and connect online. See Chapter 11 for more on how to run a successful online business.

Commitment to personal development

Efforts to build your vision, become a better communicator, and develop a more patient personality all fall under personal development. An essential part of your job in direct sales is to improve your attitude, resilience, interpersonal skills, and leadership skills.

You’ve got to realize that, although the time spent developing these skills may not appear to have an immediate or direct impact on your business, it makes a significant difference in your experience and your results. Reading books, listening to motivational audio, and seeking out additional training will all help with your personal development.

I always laugh at the idea of a child walking into a stable filled with manure and gleefully shouting, “I know there’s a pony in here somewhere!” I laugh because life usually trains that optimism out of us. Personal development is a simple way to put it back in. Whether it’s a magazine article on how someone overcame the odds to achieve a dream or a podcast that helps bring to mind principles you already know, personal development material really does remind you that good things happen when you don’t give up.

Surrounding yourself with people you want to be like and observing them will improve your skills. Each day is new, regardless of what you did or didn’t do yesterday, and you get to start fresh.

Be persistent, be patient, help others, keep an open mind, develop a positive attitude, and you will go far!

Live presentations and home parties

When people get to attend a party and interact with other guests, they experience that great energy that comes from people having a good time together. The right balance of fun, the excitement of seeing friends make similar purchases, the information provided in the brief presentation, and the added bonus of your expert advice all combine to create the social proof mentioned earlier in the chapter. Social proof can create stronger sales, result in more bookings, and even make recruiting new team members easier. In my experience, holding parties regularly results in higher sales and recruiting numbers.

Trade shows and vendor events

Trade shows can help you reach out into your community and meet people you may not have met otherwise. Here’s something surprising: I’ve found that smaller, less expensive events tend to provide a bigger return on your investment.

I’ve also discovered that there’s a key ingredient to creating success: Decide on your purpose for that particular event. If it’s to get bookings, then don’t focus on selling product. Concentrate on engaging people so that you get bookings. That means you’d most likely have just display product and only a small amount of product to sell. Your focus will be on creating an urgency to book a party with you, perhaps with a Book Today special.

If your goal is to earn enough to pay for your booth as you expand your contacts, you’ll want to focus on selling product you have on hand. You’ll experience the best results if, instead of bringing along your catalog or a variety of items, you instead offer a specific Show Special. A Show Special is a particular item or bundle of items that you’re highlighting for that particular event. You’ll have a supply of this to sell cash-and-carry to people who visit your booth.

If your goal is recruiting, make a gift basket that goes to a new team member and make sure all your conversations include the message “I’m looking for people to join me.”

Event parties

Event parties are an exciting new twist on the home parties that have been the bastion of the Party Plan industry for decades. Event parties are held outside the home, and are growing more and more popular. There are two basic types of event parties: those held at an office, restaurant, or coffee shop and those held in partnership with a retail establishment. The first type has been around for years. It is really just a home party held in a different venue.

The second type seems to be growing in popularity, as more shops are starting to pair up with representatives on a monthly basis. A boutique, gym, or bookstore might want representatives that offer tea or food samples, or even an unrelated but still non-competing product. A cafe might like to invite representatives of jewelry, clothing, or home decor companies to display their products.

For example, a cafe near my home features a different party each month, displaying a flyer every day until the event. They let the selected representative set up a display of products, and the cafe owners and the representatives both tell me they love it.

Because both the store front and the representative promote the event, it becomes a blending of their customers. The representative’s customers return to the store, and the store’s customers become the representative’s customers, too.

Want more examples? Appliance stores let cookware representatives do cooking demonstrations. Women’s gyms love partnering with nutrition supplements and weight-loss product representatives. Some boutiques who don’t carry jewelry allow jewelry reps to set up their displays and meet their clientele during key weekends. Libraries have been known to allow food and beverage reps to distribute samples during book readings. The key is for the establishment to provide added value for their customers, while also using your business to drive more people to their location. Of course, the added benefit for you is the exposure to a new clientele.

Online marketing and online parties

These days, one of the most touted aspects of direct selling is the benefit of doing business online. There’s no question that online parties can be a great boost to your business. They allow you to reach people outside your general vicinity and offer the convenience of being able to cover your responsibilities at home while popping over to the computer to host an online party on Facebook.

When it comes to doing a great online party, you use exactly the same skills as an in-home party. The difference is in how you utilize those skills. To succeed with virtual parties, you need to engage guests, make it fun, and show them how your product really answers a need they have. Successful online parties also demonstrate why hosting a party is exciting and rewarding and how becoming a representative meets a need that each guest has.

You’ll find that doing a combination of virtual parties and live parties is often the best fit for both you and your hosts. You may need to be home on a certain evening, and she may believe her house isn’t large enough to do a live party — that’s a great time to utilize an online party. You don’t have to leave your house, you can put the kids in bed and sit down and do your virtual party. She doesn’t have to rush around cleaning — she simply grabs her laptop and helps you engage her friends.

Fundraising

Fundraising is a $19 billion market. The great part of fundraising programs is that people want to support their community. Fundraising can introduce you and your products to an entirely different crowd. Many companies offer a fundraising program that divides your normal profit so that the bulk of it goes to the school or organization. But if not, you can develop your own program. Focus on offering about a dozen top items on a flyer rather than using the entire catalog. Make sure the receipt offers an opt-out option for future contact and that the products are delivered with your contact information included. People who come from a long-term corporate background find this model of doing business very successful and appealing.

Re-servicing

This is a piece of the business that many people leave out, and that’s a huge amount of cash to leave on the table. Re-servicing is more than simply posting on Facebook “I’m putting in an order, does anyone want anything?” Re-servicing is true customer care, meaning it involves contacting customers by phone with a simple, short conversation to ensure that they’re doing well and like the products, and to determine whether they need more or would like to try the monthly special.

If your company doesn’t offer a monthly special, create one for just your customers. Or look at each customer’s previous purchases and suggest something tailored just to them. Re-servicing can turn into an independent stream of income. I made thousands of dollars in sales by focusing just one day a week on re-servicing. You can also schedule about 15–20 minutes a day for this task.

For more details on re-servicing, see Chapter 13.

Personal shopping experience

Consider providing a service as well as selling products. For example, for those who sell food-storage products, you might tell your prospective customers something like “For a fee, I will come in and organize your pantry.” The customer then pays the fee, and you come in, show them how to organize and what products should be used — and tell them they can apply their fee as a credit toward their order. Representatives that offer cooking tools can offer to streamline kitchens. Those offering clothing can also offer seasonal wardrobe-organization services. For many companies, it’s appropriate to offer this service twice a year.

Personal shopping may not be something you can base your entire business on, but it is one more layer you can add to it. Though you may have time to do just one party a week, perhaps during the middle of the day you can do a couple of personal shopping experiences.

Some representatives overlook this opportunity. They fail to recognize that there are people who will not have a party, but they will buy your products. Recently, I overheard a conversation between a well-to-do professional and an eager representative. When the prospect mentioned that she’d love to have the representative come help her one-on-one, the representative replied, “You can have a party!” From the prospect’s objections, it was clear that she had no interest in hosting, but was ready and willing to buy products. The representative was so focused on persuading the woman to host a party that she missed an opportunity to make what could have been a very lucrative sale.

Traveling salesmen

Salesmen, hawking their wares, would gather in the center of the village or town, and the community would come to listen to the presentations and then purchase the items they needed. Some would work only in their own town, whereas others traveled from town to town, seeking new markets and new customers.

The archetype of a traveling salesman is universal. When people need something and it is brought to them, they purchase. In essence, that is the long tradition that modern direct sales is built on.

Later, as the practice evolved to match the changes in the ways communities and families lived, door-to-door selling developed. With home parties showing up on the scene in the 1950s, the image of the traveling salesman was expanded to include another image: the career woman venturing out to build a different kind of career for herself (with Mary Kay or Avon) and the stay-at-home mother (with Tupperware) earning income either for her own fun, for extras, or to supplement the family budget.

These days with the Internet and smartphones, the demographics of who is earning money with direct sales has shifted again. The common denominators are a desire on the part of individuals for more income on their own terms, for more flexibility, and to promote products and/or a business opportunity they feel passionate about.

The Internet age

Just as direct-to-consumer salesmen adapted over the years to the changes in communities, direct sellers are a resilient bunch. Over the years, the methods of sales have evolved to reflect the trends of the time, as well as demographic shifts.

From the door-to-door sales practices of companies like Fuller Brush and Avon, which enabled people to shop from home, to the emergence of home parties, which allowed guests to socialize while shopping and catered to a burgeoning population of women eager to get out of the house and earn their own money, one thing is clear: As the times change, the methods of commerce do, too.

Nowadays, the home party is going strong due to its effectiveness, but people can also work their businesses completely online (more in Chapter 11). Many representatives can operate successful businesses and build networks and connections through the Internet and their social media channels.

Besides making it so much easier to place orders, ship direct to the customers, run sales reports, and track your income with company-hosted software, the digital age has opened up new horizons for staying connected, creating buzz, and sharing valuable information (I discuss this more in Chapter 11). There has never been a more exciting or more efficient time to be involved in direct selling.

New technologies, mobile apps, and social media channels are constantly emerging and are changing the way we grow our brands. Social networks, especially Facebook, Instagram, and Pinterest, are changing the way we socialize, buy, sell, make money, do business, bank, and do all kinds of other stuff. I really could go on forever, because in reality, social media is changing the way we do everything.

So, if the business landscape is changing, we have to change. It’s as simple as that. Social media is becoming an integral part of the direct sales industry, even down to the way we communicate with our company’s corporate office, our teams, and our customers.

The emergence of social selling

Much like Groupon, LivingSocial, Uber, Fabletics, Airbnb, and a number of other e-commerce ventures, direct sales is a form of referral marketing. The difference is a lot of these high-tech companies are new to the game in comparison to direct selling, which has been relying on referral marketing for decades. Over the past several years, a new term has been circulating: social selling.

Social selling can refer to someone who just wants to sell socially to friends and family. But it’s most often used to describe people who sell mainly through social networking. Social selling is the use of social media networks to interact directly with customers, leads, and clients. Platforms like Facebook and Instagram give independent representatives the opportunity to build friendships, be visible, and answer questions.

Social proof is simply the weight of influence carried by a group of people. Social proof can show up in online communities and is visible and at play in social selling. But the prime example of the power of social proof in direct sales is the Party Plan model. Party Plan refers to a direct sales model that is focused on efficiently selling to groups of people who have been gathered together by a host they know personally, either in person or virtually online. (Chapter 2 talks a bit more about the different models of direct selling.) This lends the power of the hosts’ personal recommendation to the products along with harnessing and facilitating social proof. In the party environment, whether during an online party on Facebook or at a traditional in-home party, once one person decides to buy, it increases the likelihood that the rest of the guests in attendance will also make a purchase.

Social selling continues to gain prominence and is beginning to look like the modern way to do business. With your direct sales business, you have that power built right into the distribution model.