Snake Oil Anyone?

There’s an old adage that says, “if you stick around long enough – things will change.” Well, I have and they did!

If you’ve been around as long as I have, then you can remember when you told people who asked that you were in “Direct Sales” – they pegged you about two steps above a snake oil salesman. I’m happy to tell you that has all changed, and to buy and sell in the comfort of a home setting is at the heart of direct sales today.

Latest available figures from the Direct Selling Association (DSA) shows more than $28 billion for the direct-selling industry in 2002, and an estimated 13 million independent direct salespeople. This was an increase from $22 billion in 1997, with 9.3 million salespeople.

Neil H. Offen, DSA President, attributes this growth to having more people involved and a more sophisticated industry. He claims there are more college graduates as consultants, and the industry being global and more attractive to Wall Street investors and Venture Capital groups.

Direct-sales consultants, though still primarily made up of women, are becoming more diverse. The male contingent is steadily growing from 10% in 1990 to 25% today. This is attributed to the growth of new products such as vitamins, food supplements, long-distance telephone service, etc., that are not perceived as typically female-centric products as cosmetics and housewares were.

With all the growth, entrepreneurs still have to deal with the stigma that direct-sales opportunities are like pyramid schemes. Pyramid schemes require you to lay out cash for the right to recruit others. There is usually no product involved, and profits for those at the top levels come solely from new recruits.

Direct sales, on the other hand, involves selling legitimate products or services and the profit goes to the seller and his/her recruiter. At the higher levels of a direct-sales company, consultants have a group of recruits selling below them from which they receive commissions – also known as a downline. (Affiliate offers on the Internet are a copy of this concept.)

Successful entrepreneurs in direct selling concentrate on customer satisfaction and company warranties to distance them from any stigma. DSA President Offen suggests ways of checking out the legitimacy of a company by asking about the kinds of warranties and protection they offer. Ask other consultants and customers how their problems and issues were treated. And even if the company has a good track record, make sure you absolutely love the product you’ll be selling because that will determine how successful you are.

Here is a list of questions that should help you determine whether a company is shady or just plain wrong for you:

• Is the money you’re going to make come primarily from recruiting or selling a product? Recruiting is generally part of direct selling, but your primary income as a consultant should come from sales. If the company is only discussing recruiting – be suspicious.

• Do you risk financial loss by being involved with the company? Almost all direct-selling companies require minimal starting costs – usually $500 maximum. Watch out for schemes where people make money solely from selling startup kits.

• Would you buy the product if you weren’t working for the company? If you don’t see a compelling reason to be a customer, you probably don’t want to sell the product either.

• Does it sound too good to be true? Be wary of get-rich-quick schemes, such as making a million dollars in 6 months. Investigate company literature, reputation, consultants and customers before you get involved with any opportunity.

• Is the company a member of DSA? This association has a one-year application process for new direct-selling companies and on-going regulations for all members. This ensures good business practices. You can check out the DSA Web site at www.dsa.org for industry information.

Mary Kay Cosmetics is one of the most well-known direct-selling companies in the industry and it took Lise Clark of Greenwood Village, Colorado, nearly 20 years to reach one of the highest levels in the company. She started her business in 1984 at the age of 26, planning only to sell the cosmetics over the holidays, but her sales income soon outstripped what she was earning working several other jobs. She went into the business full time and, today, she expects her area unit sales to hit nearly $2 million by the end of 2004.

Despite any negative associations consumers might have with direct-selling entrepreneurs, the industry is alive and well today. Find the right company with a great product or service, and the highest ethical standards, and you could be on your way to fulfilling your entrepreneurial dream.