Lawful Direct Selling is Not a Pyramid Scheme

What a Pyramid Scheme actually looks likeThe New York Times recently ran an opinion piece by Joe Nocera. In it, Mr. Nocera implied that all multi-level marketing companies are just pyramid schemes in disguise. Joe Mariano, DSA President, wrote an excellent follow-up opinion piece called “Lawful Sales Methods.”

The thing that surprised me about the original article is that the New York Times would run it at all. Any amount of research will show that the courts have ruled decisively on the definition of pyramid schemes. What sets direct selling apart is the fact that money is made primarily through product sales, not the building of pyramids where only the people at the top make money. Legitimate direct sellers are not paid for the act of recruiting. They are only paid when products are sold, and the commissions they earn are rewards for the work that they do to sell those products personally, and help others sell them.

People are not cheated out of money when they join direct selling companies. They purchase a business kit (usually around $100-$200) with sample products to demonstrate and business supplies. Try setting up a business of your own for less than it costs to start a direct sales business! And then, if someone decides not to continue in a business, DSA member companies have a buy-back policy that allows distributors to return unused merchandise. Again, try doing that with your own business! There are more protections built into a direct selling business than most other entrepreneurial ventures! So all these attacks honestly make me scratch my head. What, exactly, is the problem here?

Sure, not everyone is going to be good at direct selling. Not everyone is good at being a barista either. But the direct selling industry has done a great job at self-regulation. Those companies that join the Direct Selling Association willingly submit to industry self-regulation and the DSA Code of Ethics which are put in place to protect distributors and consumers.

And there are millions of direct sellers around the world who have benefited from direct selling. You probably know some. Not everyone makes millions of dollars (few do, in fact.) But many people make a car payment, grocery money, vacation money, school tuition, etc. That extra monthly income is the difference between making it and not. And as far as I’m concerned, that’s the most powerful testimony in favor of the direct selling industry that I know.

It’s time for rich investors with an agenda and journalists who don’t bother to do research to find another whipping boy. The direct selling industry is just as legitimate as retailing and online sales. The courts have decided it time and again. Direct selling puts financial power in the hands of the everyman. Isn’t that what we all want? Enough with rich people trying to tear down the little guy.

Direct selling is a legitimate, powerful way for people to make a significant impact on their personal finances through the sale of goods and services to their neighbors, and gain some personal development along the way. It’s time for those with other agendas to butt out, and let us get on with it.

Your thoughts?

Consultant Crisis Management in the Face of Company Challenges

Consultant Crisis Management in the Face of Company Challenges by Jennifer Fong

Recently a direct selling company promoted a big sale that they were going to offer. They prepared their consultants with online techniques to promote the sale, provided lots of materials, and everyone was excited. There were some great offers on some amazing products, and people stayed up late to get first dibs on the sale items.

And then the site broke. For most of the day, people who attempted to access the sale got error messages. It was a disaster. Finally, the company had to admit that they did not have the capacity for the unprecedented demand, and they had to indefinitely postpone the sale.

And what impressed me most was the incredible grace of my consultant throughout the challenge.

It is very easy to get upset with your company when they’ve promised something and then do not deliver. It was not intentional…the company just did not predict the demand. But the consultant, who had set up a group for her customers to promote the sale, was incredibly graceful throughout, providing updates from the company on the status of the sale, and finally offering free shipping to all her customers when it became clear that the sale would not go on.

It was likely an embarrassing situation for the consultant…for all the consultants in the company…who had promised something to their customers and couldn’t deliver. It probably felt even worse for the corporate office who likely worked for hours on end trying to get things back up and running. Most corporate offices are highly aware of the faith and trust they build with their salespeople, and do everything they can to maintain that relationship.

In the end I think the company made the right decision. Better to postpone until better technology could support customers appropriately than to deliver a sub-par experience which would damage the customer relationship even more.

But I have to give kudos to the consultants for this company that understood this, and managed this experience with their customers with grace. It is very easy to point fingers. It is harder to be understanding when you feel embarrassed, even when everyone gave their best-faith effort.

Will the company learn lessons from this experience? Undoubtedly. They will make sure they are prepared next time.

But I also think we can all learn lessons from the grace of the company’s consultants. Rather than tear down their company when they were already down, they managed the situation well, and the comments that I saw from customers were filled with understanding and appreciation, mingled with their disappointment. I’m sure there was internal feedback given by consultants to the corporate office. But the public face was grace, and it was impressive.

The next time you are disappointed with something your company has done, think on this. Yes, give feedback privately. But remember that the customer relationship with both you and your company is paramount to build a long-term business. Communicate well with your customers, and do your best to support them through any disappointment, without bad-mouthing your company. You look more professional. And you’re likely to wind up impressing your customers.

And this is what builds long-term business.

Your thoughts?

Guest Post: How to Generate 1,000 Leads per Month with Facebook Ads

From Jen: Since I’ve stepped into my corporate role as Senior Vice President of Marketing & Communications at SwissJust North America, my business partner (and husband!) John Fong has stepped out from behind the curtain, managing the consulting business we used to run together. He focuses primarily on lead generation for direct selling companies, and […]

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Understanding How Canada’s Anti-Spam Law Affects Your Direct Sales Business

An overview of the 2014 Canadian Anti-Spam Law and how it may affect your direct sales business.

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Book Review: The Mobile Mind Shift

I was recently provided with a review copy of a book called The Mobile Mind Shift: Engineer Your Business to Win in the Mobile Moment by Ted Schadler, Josh Bernoff and Julie Ask of Forrester Research. I have to tell you, I found the book to be a fascinating look at how mobile has changed […]

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You’re Invited: Global Impact Sparks 24-Hour Global, Digital Celebration

As you may know, I founded a direct selling company in 2006 for the sole purpose of giving 100% of its corporate profits away to help those in need. We funded projects according to the “Teach a Man to Fish” principle, giving money that helped people help themselves. In our 3 years in business, we […]

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