A business can’t be successful if it can’t generate consistent revenue. If you need to make consistent revenue, you need to make sales. When it comes to direct sales, you need to find ways to attract and retain customers which is essential to run a business.
Direct sale is a distribution and marketing strategy where a product or service is sold via a network of independent distributors or representatives. Usually, distributors engage in personal sales rather than retail shops. Most of the companies use a multilevel marketing model to hire and train new representatives to help salespeople.
We will cover the following:
- What is Direct Sale?
- Types of Direct Sale
- Methods of Direct Sales
- Difference between Direct Sales and Indirect Sales
- Benefits of Direct Sales
- Summary
What is Direct Sale? 🤔
The direct sale or direct selling is a marketing method that relies on independent salespeople who sell products and services directly to customers in a non-retail environment. Direct sales remove the middleman involved in distribution like a regional distribution centre and wholesaler.
The product goes straight from the manufacturer to the direct sales company. If you are a distributor or a sales representative working with a direct selling company, then the manufacturer gives you the products to ultimately sell to the customer.
Unlike commissioned or salaried salespeople who are all working in a company to sell products or services over the phone, these distributors or representatives are self-employed and responsible for purchasing their own marketing materials and samples, planning their own schedules, and paying income tax directly to the state and central governance. Distributors or representatives earn a commission on the sale price of the products or services that they sell to the customer.
"Direct selling is a blanket term that encompasses a variety of business forms premised on person-to-person selling in locations other than a retail establishment, such as social media platforms or the home of the salesperson or prospective customer." Says FTC.
Many products and services are selling in direct sales:
- Cosmetics
- Cookware
- Food storage
- Clothing
- Household décor
- Nutritional supplements
- Insurance
- Toys
- Books
- Personal care items, etc.
Many successful direct selling companies sell consumable products such as skin care, cosmetics, clothes, vitamins, food, and household products. These products are generally inexpensive to produce but can be sold at a reasonably high makeup. Also, these products are consumable, customers need to repurchase them regularly and create a steady stream of sales for distributors.
Types of Direct Sale ✌️
Types of direct sales are inconsistent. People often confuse types with methods that various companies use in their business. Generally, the direct sale includes two main business models:
- Single-level Sales
Sales-level sales are performed one-to-one through door-to-door or in-person presentations, meetings, or catalogs. Basically, income is earned on sales commissions with possible bonuses for reaching business goals.
In single-level sales, a salesperson makes money by buying products from an organization and selling them directly to customers. - Multi-level Sales
Multi-level sales are made in various ways including those associates of single-level sales. A representative not only sells products and services but also recruits new salespeople. They get paid for their own sales and for sales made by people the representative recruits into the business.
Methods of Direct Sales 🤝
Distributors use different communication approaches for their customers. Let’s see some of them.
- One-on-One Sales
This approach implies in-person communication between a salesperson and a customer. It happens when a salesperson goes to an individual business meeting with a client from door-to-door to present their products to customers. - Online Sales
Online sales loved by both single-level and multi-level sales companies. Large companies, small businesses, and local representatives sell products and services through their own websites or social media accounts. - Host-Plan Sales
A salesperson gathers a group of customers to presents a product or service. Such meetings often resemble parties and participants to enjoy a laid-back atmosphere to celebrate and become more inclined to purchase the product or service. Although, the presentation can also take place in an office environment.
Difference between Direct Sales and Indirect Sales 👀
In direct sales, a company interacts with prospects immediately. For example, Airlines. The airline companies offer their service directly to potential customers.
While indirect sales include various intermediaries such as distribution centres, wholesalers, regional representatives, and much more. For example, cool drinks companies use this approach where a customer can buy a drink from a third-party vendor but not from the company’s website.
Benefits of Direct Sales 👍
If you are wondering why direct selling is so popular in different parts of the world, direct sales have certain advantages. Some of them are:
- Promote Your Business 👆
Direct selling has been experiencing reliable growth during the last couple of years. In the year 2015 to 2018, direct sales generated a compound annual growth rate of 1.7% based on the statistics of the World Direct Sales Association.
- Opportunity to Change a Product Based on Customer’s Needs 🙌
Direct selling companies control the complete cycle from manufacturing to a final sales presentation. By using direct sales, a company swiftly receives feedback from customers and can tailor its products and services to meet client’s needs and market demand on the whole.
- Better Customization 🤠
By interacting with customers directly, representative knows their buyer persona better and can provide their customers with highly relevant and customized offers. It affects the company’s revenue. Statistics reveal that 91% of customers are more likely to shop with brands that make relevant offers and recommendations.
- Complete Control at Every Stage of Customer Interaction ✊
A company has full control over its product’s price without having a middleman and can adjust it based on customer's needs. Companies can strictly regulate customer experience during the purchasing of the product or service and have lower reputational risks.
- Improve Customer Relationship 👌
The direct sale is completely based on personal contact with customers. It allows representatives to approach every client in an individual way and build a strong relationship with them. Having a long-lasting relationship has a major impact on business. For example, a 5% increase in customer retention rate will increase profits by over 25%.
- Higher Profit ☝️
Another benefit of doing direct selling is that all revenue goes straight to the company. There is no need to divide the revenue between the business and third-party vendors.
Summary
Direct sales can provide distributors and representatives the opportunity to earn money without maintaining a strict work schedule. Make sure you focus on developing a customer experience, building a community, improving exceptional customer service, nurturing strong partnerships, and having your online presence convert into a powerful story. It makes the sales process work for you rather than you work for sales.
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