“What’s the difference between direct selling and network marketing?” That’s what family, friends and acquaintances ask me after they ask, “So, what is it that you do?” The simplest way that I’ve found to explain the difference to them is: I work in the Direct Selling Industry.
In the Direct Selling industry, there are two “camps”: direct sales and network marketing. Direct Sales companies tend to market non-consumables and the products tend to be higher priced. There is rarely the opportunity to generate a residual income, so the parent company generally pays the distributor a larger upfront commission.
Network Marketing companies, on the other hand, tend to market consumable products so there is a greater call for repeat business. The company tends to pay a smaller commission up front to the distributor, but network marketing companies have varied pay structures created to generate residual incomes for their marketers and it’s all based on the concept of a lot of people doing a little bit of work: you find two who find two who find two. As you build a team and rise in rank, you have the ability to grow your income over the long haul. There’s a great (short) article in Entrepreneur.com that explains it very clearly: click here to read it.
So, why do I prefer direct selling?
Actually, I prefer direct selling and premium products – big ticket items. And here’s why: it takes just as much effort to market a $9.95 product as it does to market a $19.95 product as it does to market a $995.00 product as it does to market a $39,995.00 product. The effort is all the same. There is absolutely no difference. Zero.
The difference in profit, however, is tremendous.
If I’m going to do the work anyway, I much prefer the larger profits. It’s as simple as that.
I can hear all of the excuses bubbling up in your brain! But who buys a $39,995.00 product? Aren’t there more customers for a $9.95 product? What if they say no?
What if they don’t? Have you considered that?
And as for the rest of those objections? They’re only objections and you’ll learn to handle them just like you would anything else. Maybe that’s another blog topic.
In the meantime, I’ll let you in on two secrets. The first one is this: you’ll get more tire-kickers on a $9.95 product than you will on a $39,995.00 product for the simple reason that only the folks that can afford to entertain the idea of purchasing a product for $39,995.00 will stick around. They know that you mean business, and you know that they do. You’ll find that you’ll be working with a more interested and generally more qualified client.
The $9.95-ers are a dime a dozen (literally) and frankly, if someone can’t afford $10, you can’t afford to take them on as a business partner. Besides, once you figure out how many $9.95 products you have to sell to equal the profit of just one $39,995.00 sale (and keep in mind, the effort to make the sale is the same) you quickly see that your time is better spent marketing a premium product.
The second secret takes a little story.
When I was in my early twenties, I had moved back to West Springfield, Massachusetts to help take care of my grandmother. I was living in her basement in a quiet residential neighborhood, right next to an elementary school. I decided to take the opportunity (free room and board) to go to college, so I started buying and selling used cars to make some money to go to school. Pretty soon, I had filled my grandmother’s backyard with Triumphs, Porsches, a Saab and a couple of Mercedes’. The neighbors started to complain so with my dad as my mentor, I went out and found a location with a 2-bay garage, got my dealer’s license, etc. and became a used car dealer.
Long story short, one day I had come back from buying a package of wholesale cars from a dealer group in Hartford, Connecticut. My drivers were just starting to roll in with the cars that I had bought and as I was looking them over, I lamented to my dad that I had had to take one particular car that I didn’t really want in order to get one that I really did. I was worried about whether or not I’d be able to sell the car that I didn’t want.
My dad, a veteran entrepreneur, laughed and said “Don’t worry about it…there’s an ass for every seat!”
I might have been 22, maybe 23 at the time and I understood the words, I understood the concept, but I didn’t have the experience that my father had to understand the wisdom of those words. Now I do.
If you’re worrying about who’s going to buy your products, don’t. Unless you’re way off base in market research (e.g. selling ice to Eskimos), there are plenty of customers out there for your products. Using the internet to market to your clients, staying away from “get rich quick” gurus, and working hard and smart, you’ll match client with product and profit with your bank account and I think you’ll quickly come to prefer direct selling to network marketing, too!