Direct sales explained: What it is and how to implement it in your business model

Direct sales can help your business both remove costs and reach a wider consumer audience. Continue reading for a detailed explanation of what direct sales is, what it isn’t, and strategies to achieve business success. Use the links below to jump around if you’re interested in one particular section.

• What is direct sales?
• 3 direct sales types + examples
• 5 direct sales strategies to close a sale
• 3 tips for finding success with direct sales

What is direct sales?

Direct selling refers to selling products directly to the consumer in a non-retail environment (i.e. the sales process occurs at home, work, or another non-store location).

A direct sales business removes the intermediaries involved in product distribution, like a regional distribution center and wholesaler. Instead, products go from the manufacturer to the direct sales company. 

Why should my company use direct sales?

You can apply direct sales to any industry, with the most popular niches being wellness, services, and home care. Some of the other benefits include:

• Cuts costs by eliminating intermediaries: As we mentioned, the middlemen involved in production and distribution suck up a chunk of your profit share. With direct sales, you can eliminate a portion or all of this expense. 
• Offers several sales avenues: Direct sales can be made online through a personal website, email, social media, or in person. You aren’t confined to a brick-and-mortar storefront.
• Expands customer reach and retention: With more avenues comes a broader scope of doing business and a potential for more customers. Plus, with the personability that comes with this tactic, you also achieve higher customer retention. 

MLM vs direct sales

Many businesses have a predisposition toward direct sales and confuse it with multi-level marketing (MLM). While this is a type of direct sales, it’s not one we would recommend, as it’s been correlated with pyramid schemes.

However, the Federal Trade Commission has been cracking down on certain companies for the misuse of MLM to conduct pyramid schemes. Direct sales, when done correctly, is both a legal and lucrative sales tactic for business owners.

3 direct sales types + examples

Three types of direct sales can be utilized to capture a potential audience:

• Single-level marketing
• Direct-to-consumer marketing
• Multi-level and host/party plan

The main direct sales types we will focus on are single-level marketing and direct-to-consumer marketing, but we will explain the full scope of MLM so you know what to avoid. 

Single-level sales

Single-level marketing is a one-on-one sales type that involves a salesperson who sells a product or service for a commission. For example, a dealership owns the cars on the lot and the sales team works as contractors for the dealership. Whenever they sell a car, they will earn a commission on the sale. 

Takeaway: Businesses looking for a more aggressive sales tactic will usually hire a salesperson to be responsible for promoting their product, moving customers through a sales funnel, and closing the sale. Otherwise, it’s left up to a more product-led strategy where you rely on product marketing alone to charm the customer into buying. This is more indicative of a direct-to-consumer strategy. 

Direct-to-consumer (D2C) sales 

Direct-to-consumer (D2C) marketing uses a website, landing page, or social media to sell directly to its customers. For example, an online clothing boutique makes sales through the traffic generated by its website. They rely on referrals, customer incentives, and their brand to draw in customers and close the sale. 

Takeaway: Businesses with unique products, brand recognition, and a product-led marketing strategy can find success with D2C marketing. They don’t have sales teams to push products, instead, they offer competitive pricing, incentives, and exclusive product offering to make a sale.

Multi-level and host/party-plan

Multi-level marketing is where you use the tactics of single-level marketing. However, on top of earning a commission, you’re also compensated for recruiting more sales distributors. 

The setting takes place in person, usually at someone's home, and you will promote a product through a presentation. Primary compensation comes from recruiting new distributors. To attract them, the host will typically offer an additional discount to anyone wanting to sign up as a company distributor.

Takeaway: As discussed previously, MLMs have left a bad impression on many business owners due to the nature and legality of the system. Rest assured, direct sales using D2C and single-level are both legal and successful sales strategies.

5 direct sales strategies to close a sale

Having a friendly and professional attitude is a great start to being a direct sales superstar. Still, savvy business owners also use effective strategies to get their physical goods into customers' hands. 

Here are five direct selling strategies to help you achieve long-term success:

1. Offer freebies
2. Use email marketing
3. Promote with social media
4. Take advantage of cross-promotion
5. Give extra incentives

1. Offer freebies

Startups and small businesses rarely have the funds to finance large marketing initiatives. Plus, without brand recognition, convincing customers to pay for products they haven’t even heard of can be problematic. Free samples are an effective direct selling strategy because they allow customers to try your product or service before they buy it.

You can use free samples to:

• Introduce your product to new audiences who are unfamiliar with your brand.
• Create loyalty with existing customers and develop relationships.
• Expand prospective customers’ knowledge about the products you provide.
• Establish repeat customers to generate more sales of new products.

2. Use email marketing

Email marketing is an excellent tool for building trust and nurturing your leads through your sales funnel. Although email marketing offers several benefits including greater reach and affordability, you should be aware of the best practices when employing this marketing method.

• Avoid automated programs: Automated programs can come off as insincere and look like you’re only interested in selling a specific product line, rather than creating a connection or solving a problem for the consumer. 
• Keep your email pitches short and to the point: Include your offer in the subject line. Limit your first message to a few sentences where you can encourage the recipient to contact you by phone or respond directly to your email.
• Don't give it all away at once: Building an email list is hard enough but you also want to keep your audience coming back for more. Plan a series of emails where you do a big reveal at the end. Or offer incentives to keep them interested. 

3. Promote with social media

Social media has become an effective marketing and sales tool for businesses looking to engage in direct sales. With social media, you can expand to a greater market. Social media can help you:

• Create business pages
• High-quality posts and photos
• Give business updates
• Collect feedback from customers

But most importantly, you can build a community. 

4. Take advantage of cross-promotion

Cross promotion can be done one of two ways: allowing you to promote one product by using another, or through a strategic partnership. 

Cross-promotion: promote one product by using another

Rather than spending heavily on advertising for both products, you can create strategic cross-promotions to help you cut down on your marketing budget, like bundled offerings or offering an accessory or product at a discounted price with the purchase of another product. With the right cross-promotional marketing, you can attract more customers with less effort. 

Cross promotion: strategic partnerships

Cross-promotion can pay off exponentially with strategic partnerships, such as joint media appearances and guest hosting a podcast. You can successfully expand through each other’s customer bases. 

Cross-promotion is also a great way to cut marketing costs because you can split the costs between partners. As part of your overall direct sales strategy, don’t just build relationships with customers. Strive to build relationships with other sellers in the community too.

5. Give extra incentives

To succeed in direct sales, businesses must find ways to attract and retain customers.

One of the most effective ways of building a loyal customer base is by offering extra incentives. Extras can include discounts like:

• Buy-one-get-one-free or half-off offers
• Value-added services like providing free gift wrapping.

Also, consider sponsorships like sponsoring a local youth sports team or charitable contributions like volunteering at events that relate to your business. These activities can raise your business’s profile.

3 tips for finding success with direct sales

Deploy these tips throughout the different strategies you try to make your pitches more effortless and increase your customer retention. 

1. Understand your product
2. Maintain personability
3. Collect customer information

Understand your product

Selling a product that is yours is arguably the easiest to pitch, simply because you know everything there is to know about it. But if you’re employing a sales team to pitch and sell your product, then you will need an in-depth understanding. Here are the questions you need to pose to each sales member to best prepare them for their pitch:

• Do you believe in the product? A fake-it-till-you-make-it strategy only goes so far. Having a strong belief that the product is actually worth its hype is important.
• How is it made? Knowing at least the high-level points of production shows potential customers you know your product on a better level. 
• What “pain points” does it relieve for your customer? This is your biggest sales point. Customers want to know that you can solve their problems.
• How is it better than the competition? Focus on price, accessories, and quality when making a comparison to your competitors.  

Maintain personability

Customers are people, just like you. And they don’t want to be a number on a page. Customers want you to earn their trust and in turn their business. Know who your customers are and ask questions to understand what they’re looking for. Remember these tips for maintaining personability:

• Personalize the experience: Learn who they are and what they’re looking for.
• Have a sales pitch ready: Know your strengths and be able to communicate them in a concise sales pitch.
• Maintain contact with prospects: Follow up to thank them for their time and keep the conversation going.

Collect customer information

Collect customer feedback and information for marketing purposes. If they’ve bought from you once they are known as a warm lead and can be ripe for buying again in the future. Here’s what you’ll want to collect:

• Name
• Address
• What they purchased
• Customer survey

Also, remember to ask for referrals—people are more likely to buy a product based on their friend's recommendation.

Build a connection with direct sales

In recent years, direct selling has had a renaissance with an ever-increasing focus on providing valuable content, products, and services to consumers. If you take the proper steps, you can work to build a trustworthy and successful business. 

Exercising a strong accounting software like QuickBooks can drastically improve your direct selling model through proper bookkeeping and payments from your customers. 

Whatever direct sales strategy you employ, it’s important to make every customer feel like a valued member of the company’s family. It fosters loyalty, builds a connection, and creates trust.