Direct selling– a familiar territory if you can remember that door-to-door kitchenware salesperson or that one particular neighbour who hosts regular parties to sell cosmetics.
It’s less about making sales and more about delivering personalised experiences.
It’s a practise that’s very lucrative and rewarding, but only if you get to learn and understand a few things.
Having said that, let’s get some perspective on what it entails and some hard-earned pointers on how to maximise it to your full benefit.
What are Direct Sales?
Direct sales or selling is the process of selling your products or services directly to the final consumer in a non-retail setting. There are no third-parties. Instead, your products or services are marketed and sold directly to consumers through independent sales representatives (or consultants, distributors, and presenters, as they’re also known).
How Direct Sales Work?
Direct sales eliminate intermediaries or the third parties involved in product distribution, particularly wholesalers and regional distribution centres. Instead, products move directly from the manufacturer to a direct sales company, who in turn pass it to a sales representative or distributor to takes it to the consumer.
When a company decides to embrace direct selling, that means its products won’t be found in any retail location. The only way to buy them is to find one of the company representatives or distributors.
Types of Direct Selling
There are 3 different ways to utilise direct selling:
- Single-level direct selling
- Host or party-plan direct selling
- Multi-level marketing
Single-level Direct Sales
Single-level is the simplest it can get. All you have to do is get your sales representatives to move from door-to-door selling your products or services. A different approach would be to organise in-person presentations, catalogues, or online meetings, where sales reps earn a commission or possible bonuses when they reach predetermined target goals.
Host or Party-plan Sales
Host or party-plan selling doesn’t target individuals, but a group. They usually involve a sales rep organising a presentation or party in their home or the home of a potential customer. The point is to impress, persuade, or woo them enough to want to buy from them.
Again, the sales rep earns a commission from the sales made, and sometimes by recruiting other reps.
Multi-level Marketing (MLM)
Selling in MLM occurs in various ways, including the same strategies employed in single-level and party-plan sales. Reps earn a commission and a fraction of the commission earned by the sales partner they recruited.
The Difference Between Direct Sales, Multi-level, and Network Marketing
Some people use the term direct sales, MLM, and networking interchangeably. However, the three do not mean the same thing.
For starters, MLM and networking are both forms of direct sales. It’s direct sales as long as there are no intermediaries or third parties or the selling isn’t occurring in a retail setting.
Both MLM and network marketing fit the bill. So, they’re all part of direct selling. However, not all forms of direct sales are MLM or network marketing. For example, in single-level marketing, reps only earn a commission based on the sales they make — and from recruiting other sales reps. Nor do they earn a commission from their sales.
Direct Sales Vs. Pyramid Schemes
Sadly, it’s hard to distinguish between multilevel marketing and pyramid schemes because they both share so many similar characteristics.
First, both MLM and pyramid schemes require the recruited participant or distributor to recruit participants. Again, the recruited participants are compensated based on their recruiting results.
But here’s what makes them different:
In a pyramid scheme, the money has to flow back to the company. Most of them will even go to the extent of charging exorbitant fees or requiring distributors to maintain a certain high number of products to sell – even when it’s clear they don’t need them.
Pyramid schemes are as complicated as they come. They may or may not have a product to sell.
Here are a few tell-tale signs that the company you’re working with could be a pyramid scheme:
- Have lavish promises of overnight success or get-rich-quick schemes
- They’re more hang-up on getting you to recruit other distributors or participants and less concerned about product sales
- They’ll require you to invest a lot of money at the start
- They use emotional sales tactics to persuade you into joining
- They’re less concerned about the product or services
Is Direct Selling Legal in Singapore?
Direct selling – particularly Multi-level and Networking Marketing – have been suffering a bad rap lately. The reason being, they’re scrutinised for using the same marketing methods pyramid schemes use.
However, direct sales are perfectly legal in Singapore, while pyramids are scams and, therefore, illegal.
In Singapore, recruiting people to join a pyramid is a felony.
Is Direct Selling Legal in Singapore?
Pyramid schemes are technically illegal in Singapore, whereas legit MLM companies are not.
However, only two types of MLM companies are legitimately allowed to operate in the country.
The first one is direct sales companies registered with the DSAS (Direct Selling Association of Singapore). That includes big companies like Amway and Tupperware.
The DSAS is responsible for stopping pyramid cases. They’ll evaluate your MLM company and only register it after they’ve confirmed that it’s not a pyramid scheme.
Remember: direct sales come in various forms, and not all of them are MLM. If the distributors aren’t earning any commission from their recruits, then that’s technically single-level selling, which happens to be legal in Singapore.
Who Enforces MLM Laws in Singapore?
MLM companies in Singapore are regulated by the Multi-level Marketing & Pyramid Selling Prohibition Act.
MLM schemes are banned in Singapore, save for the few that are specifically excluded for meeting specific criteria. Examples of MLM schemes that qualify for exclusion include master franchises, direct selling companies, and insurance companies.
For a direct sales company to be qualified for the exclusion, it’s a general requirement that they must first be registered by the DSAS (part of which requires them to abide by the specified Code of Ethics and Conduct).
This is a general requirement that serves to protect everyone’s interests, including those of the participants or targeted consumers.
Also, the Consumers Association of Singapore has been actively educating the masses on the issues relating to multi-level marketing.
The responsibility to enforce MLM & Pyramid selling Prohibition Act is bestowed to the department of Commercial Affairs in Singapore’s Police Force. But the whole act is regulated and administered by the MTI (Ministry of Trade Industry).
What’s the Penalty for Companies that Breach the MLM Act?
Under the MLM law, any person who engages in MLM or pyramid selling activities commits an offense, whether or not they understand the implications of what they’re doing.
Ignorance is no excuse for participating in an MLM or pyramid scheme. And so is the lack of ill intent. You’ll also be held liable for all the damages you’d have caused people by signing them up for the schemes.
Any MLM offense attracts a maximum fine of $200, 000 and a maximum jail term of 5 years, if not both. Keep this in mind next time someone tries to convince you to join a pyramid scheme. Do your due diligence and make sure you understand the implications of what you’re dealing with before going forth with it.
Where to Report a Pyramid Scheme in Singapore
If you suspect any scheme contravening the MLM law, the best place to file your report is with the CAD.
Telephone Number: (65) 6325 0000
Report in Person: 391 New Bridge Rd, Police Cantonment Complex, #06-701 Block D, Singapore-088763
Follow this Link to Report Online: http://www.police.gov.sg/e-services/report/suspicious-transaction-report-online-lodging-system/lodging-a-commercial-crime-report
Pros and Con of Direct Selling
- You don’t necessarily need an extensive team to support you. One person is enough to help you create the marketing materials you’ll be using to reach out to your potential customers.
- There are no intermediaries. That means you have total control over your company’s image and message.
- You’re not subject to company restrictions. You have the freedom to work from home or anywhere else you prefer.
- There’re no prerequisites or initial requirements. Anyone is qualified to be a direct sales representative, regardless of their educational background and job history.
- There’re no predetermined or set hours in which to work. You get to plan your own schedule and determine when to work and when to take a rest. That explains why so many stay-at-home mums are into direct selling.
- If the seller is more motivated to recruit other sellers or participants than to sell your inventory, then that makes it a pyramid scheme. Remember: there’s a thin line between an MLM and a pyramid scheme. You have to be careful with how you conduct your operations to avoid sending off the wrong signals.
- Direct selling is intrusive and uninvited. Quite often, sellers have to persuade consumers to buy something that they initially never intended to buy.
- Direct selling works for outgoing individuals with an active network. It’s a never-ending business that requires significant output from you to expand your network and increase sales.
The 3 Different Methods of Direct Selling
Direct salespeople use different communication approaches to reach out to prospects.
Let’s shed some light on three of these approaches:
One-one-One Sales: This method implies an in-person interaction between a sales rep and the customer. The salesperson has to meet the consumer or client in person and sell to them directly. In most cases, salespeople wander from door-to-door as they try to sell their products. Other times, the salesperson will be organising business meetings with different clients.
Online Sales: This is precisely as the name suggests – sales happen online, on a company’s website or social media account. It’s a common practise among single-level and multi-level companies.
Party-plan sales: Here, the salesperson has to figure out how to gather a group of potential customers and present their products to them. The meeting organised come in the form of parties, where consumers gather together for a moment of fun as the salesperson tries to convince them to buy a product or service.
5 Direct Sales Techniques Every Marketer Needs to Know
It’s not enough to be in direct contact with the customers you’re trying to sell to. You need a few tricks up your sleeves. The point is to try to convince potential customers that buying your product or services is the best decision they could ever make.
Here are a few techniques that salespeople could use to achieve this:
Feature, Advantage, and Benefits (FAB): This is commonly used in scripts and promotional materials. It’s where brands opt to consistently remind customers of some of the key features of their products or company. It’s more about harping about the main advantages or the positive effects of a product or company to prospects until they make up their mind and take action.
Companies do this to boost interest and influence how prospects view their products or services.
But You’re Free (BYAF): Persistence is key when it comes to closing deals. Unfortunately, there’s the risk of going overboard with it. There’s the problem of coming off as too pushy or overly sales-y.
The last thing you want is to mount so much unnecessary pressure on the customer. Instead, let the customer know that it’s upon them to decide if they want to buy the product or not. You’re simply highlighting the benefits of buying the product and throwing the ball to their court.
The foot-in-the-door Technique: This technique puts a lot of emphasis on small initial requests. Works perfectly with upselling. You can bait customers with a small price and then charge them extra for your more profound services.
The point is to get your prospects to try out your products and services, and once they’re hooked in, you hit them up with the real deal. We’re not talking about bait and switching, but winning customers’ trust first before serving them with a more profound deal.
SPIN Selling: Forget about your products for a minute and focus on the customer. As you’re soon to find out, the most interesting subject of discussion isn’t your product, but the customer. With this technique, you’re to give your customers time to talk about themselves. Ask them about their Situation, Problem, the Impact the issue has on them, and most importantly, the Solution they need.
That way, you’ll have an easy time introducing your product to them as a solution.
The Favour-upfront Technique: It’s human nature. The easiest way to get people to do something for you or give you something is to do them a favour first. It’s a trait that’s closely tied to the principle of reciprocity.
With this technique, you’re to give something first – a discount, free trial, or additional service. It’s this goodwill gesture that will get the bulk of the prospects you’re targeting to accept your offer.
These tricks don’t work with direct sales only, but digital marketing in general.
How to Become a Successful Direct Sales Consultant in Singapore
Success in direct selling is defined by the same things that make one successful in any other businesses, as well (know your target market, find it, deliver your marketing message and make sure it appeals to them, and then dedicate the rest of your life trying to serve them well).
It’s that simple.
No matter which direct sales technique or model you choose, here are a few pointers that inch you closer to success:
Use (and Genuinely Love) the Product You’re Selling
Your customers can easily tell if you’re genuinely excited about the product you’re trying to sell to them or if you’re just giving them a spiel.
Customers want to see it in your talk, in the manner at which you present the product to them. There should be enthusiasm in your talk.
Also, using the product means you’ll have a lot of personal experiences with the product to share with them. The information you give your customers will not only be honest but also convincingly accurate.
Here’s how things work in the world of direct sales.
You can talk to 50 people, but end up with only five of them warming up to your offer. But that’s not where it all ends — you’re to help each one of them talk to 80 people so that they can each get 8 people.
These are just random numbers we came up with to help you understand the point we’re trying to drive home. You’ll be met with a lot of “no’s” before you finally meet a person that says “yes.”
As a direct sales rep, rejection should be like the air you breathe. And if you’re not getting rejected a lot, that can only means one thing – you’re not trying enough.
Read the Fine Print
Before you throw yourself into the field of direct sales, take your time to study and understand the company in question. Read about their marketing and compensation plan. Not forgetting their procedures and policies.
Make sure you understand their rules and restrictions. And most importantly, find out about their most popular product or the product with the greatest potential to make you money.
Identify Your Target Market
Identify the right buyers for your product or services.
Your direct sales company may suggest you start with a list of 100 people you know. While this strategy may work, it’s not always the most efficient method to get started.
The best strategy is to identify interested buyers for your products and services and dedicate all your marketing effort to them. This should save you from wasting your time trying to sell to people who aren’t interested in your offering.
Another common mistake sales reps make all the time is focusing on people who are only interested in making money. While there’s nothing wrong with this approach, we suggest you start by focusing on people who want to make money and, at the same time, are genuinely interested in your products or services.
As we mentioned earlier: the sales reps you recruit are more likely to succeed if they’re genuinely interested in the product and not just motivated by the idea of making money.
So, before you even sell to them the idea of making money, spare a few minutes to just harp about the product and give them a chance to try it out and see if it’s something they can rally behind.
Determine the Value Proposition
How will the market benefit from your products, services, or business plan? What are they bound to gain at the end of it all?
Will they become better cooks, feel more confident, feel inspired, or gain more energy?
What’s in for them?
The trick is to rephrase all your product features into benefits. Maybe your products are non-toxic, unlike the alternatives on the market.
Be sure to spell it all out and put it out there in the open before hitting the streets with your marketing message.
Know Where Your Target Market Is
It’s one thing to know who your target market is and quite another to know where they can be found.
There’s a great difference between general promotion and advertising and sending your marketing messages directly to customers who are already interested in what you’re selling.
You’re to identify their favourite hanging spots, the magazines they read, the organisations they belong to, and so on. That’s the place to direct much of your marketing effort.
Find Out What Sets You Apart
Why would a customer buy from you and not from the next sales rep? What makes you unique from other sales reps?
There should be something about you that makes you stand out. The easiest approach would be to tell your story, considering no other person shares the same story as you.
That should be your biggest differentiator. And the more people resonate with the story, the more they’re likely to buy from you.
Direct sales is effective because it’s person-to-person. When presenting your product or introducing your business plan to customers, you want to make sure you’re doing it in front of your target audience.
In which case, you’re more likely to make more sales by doing more presentations. So, try to make as many appointments as you possibly can – and thanks to technology, this can easily be done via phone, video, webinars, and so on.
You can even organise group presentations via live video, webinar, or phone. Alternatively, try inviting your prospects to a meeting or party and let your mentors handle the presentation bit.
Follow-ups are important in direct selling. For this, you want to make sure you’ve organised a system that you’ll be using to stay in touch with your clients, prospects, and new business builders.
A direct sales consultant may be quick to blurt out the word “no,” but that’s not to say they have zero interest in what you’re offering. It could be that they’re indisposed at the moment or in the middle of other critical stuff.
Instead of walking away crestfallen, vowing to never contact them again, a good sales rep will always find a way to keep the line of communication open, in case they change their mind or soften up.
Remember it’s a fine line between being persistent and coming off as someone annoying. So, this is a line that you want to tread carefully.
As the saying goes, “quitting is for losers.”
Always be reminding yourself that you’re in this until success comes knocking at your door.
Keep your ears shut to naysayers and your eyes blind to the failure rate in direct sales and networking. Instead, keep pushing until success starts warming up to you.
What distinguished successful people from failures is the commitment to never throw in the wet towel. So, develop a thick stick and figure out how to overcome rejection. And while at it, you want to learn from your mistakes and stay on course as you trudge towards success.
Top Direct Sales Companies in Singapore
The Best World International
Best World International is a global investment holding company that’s deeply rooted in Singapore. Their main line of business is the distribution of personal care products, nutritional supplement products, and healthcare equipment.
Its segments include export and manufacturing, wholesale, and direct selling.
Their direct selling segment consists of sales made to customers through their direct selling channels in Malaysia, Indonesia, Thailand, Hong Kong, Singapore, and so on.
Year Founded: 1990
Axxa Global revolutionised the concept of wellness, health, and lifestyle by pioneering advanced seed nutrition.
With cutting edge technology, the healing power of seeds, and the idea of nutrient synergy, they managed to come up with products that provide more health benefits than standard single nutrient supplements on the market.
Address: 17 Changi South Street 1, Singapore-486781
Phone: (65) 6543 1506
Amway is a household name in the field of direct selling.
They started by selling a product that had absolutely no competition – and luckily for them, the product was well received.
The company blew up almost immediately before the founders could even conceptualise what was happening.
Here’s how things started:
Two family men agreed to quit their day job and start their own businesses. They wanted to do more for their families, and business was the only way they knew how.
That way, Amway was born. They started by releasing an organic liquid cleaner, the first-ever concentrated biodegradable cleaner to ever hit the market.
Fast forward that and the company has grown to include a variety of products into their pipeline – from beauty products to cleaning supplies.
Year Founded: 9th November 1959
Headquarters: Michigan, US
Avon is one of the pioneers of direct selling. They specialise in women products and have generous sales commissions for their sales reps. They target women from the age of 20 to mid-70s and 40+.
Products: Fashion, cosmetics, and accessories.
Avon has one of the simplest recruitment processes. All you’re required to do is sign-up with them after paying the specified $30 registration fee. You’re to then pick a free gift, after which you’ll be entitled to a 40% discount on your first order. You also get to pocket 40% of the sales you make as your commission.
Herbalife has been around since 1980. They have one of the most interesting success stories – especially since everyone predicted they wouldn’t make it far with their direct-selling approach.
But here they are.
As a company that specialises in wellness products, the competition was fierce for Herbalife. There was always a company that’s launching a new product on the market. But Herbalife would go on to prove all doubters wrong.
They managed to pick up quickly and grow into a household name.
Nikken was started in 1975, under the Five Pillars of Health – Mind, Body, Family, Finance, and Society.
They were strong advocates of a healthy balance between these five elements, which they believed made life more meaningful.
Using the network marketing strategy, they managed to send shockwaves into the wellness industry and create a name for themselves.
Tupperware is a prime example of why quitting should never be an option.
Things weren’t rosy for Tupperware at the beginning. They experimented with so many things, all of which turned out unsuccessful.
But instead of packing and walking away with whatever was left of their dignity, they hang on and managed to turn things around.
The company was founded in 1946. At the time, they only sold their products in supermarkets, but when things failed to work, they decided to try direct selling. And that’s how they managed to turn things around and grow into the giant company they are today.
Direct selling is an incredibly successful business strategy that’s sending shockwaves into the world of marketing.
With more and more businesses joining the trend, it’s only logical that any company would want to stand out and come up with something unique that gives them an edge over all the businesses they’re competing with.
That’s exactly what Mint Builder did to get to where they’re today.
Usana was started in 1990, by a microbiologist named Myron Wentz. The company manufactures weight loss and dietary supplements that they directly sell to customers (no intermediaries or third-parties).
As one of the largest multi-level companies in the world, Usana recently opened its doors to Singapore but they have yet to set up any store in the country.
NuSkin’s story began in 1984 when it was founded (in Provo, Utah). In 1991, they decided to enter the Asian market, where they were greatly accepted.
Of course, they have had to battle claims of being a pyramid scheme – a roadblock they have managed to overcome.
NuSkin both manufactures and sells a wide range of personal and dietary products. But most people know them for their high-end skin products.