Direct Selling vs. Network Marketing vs. Pyramid Scheme

Joan March 26, 2018

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Take a look at the comparisons in the columns below to help you distinguish the differences. The big difference between a network marketing company and a pyramid scheme is the way it operates. In a pyramid scheme it is the number of people who are willing to sign up that matters, not the product or services being offered. Always remember Network Marketing and Direct Selling are legitimate business models, but a pyramid scheme is an illegal way of operating.

Direct Selling

Network Marketing

Pyramid Scheme

DEFINITION

Direct selling is a form of retail in which products and services are marketed directly to consumers.
Direct selling generally takes place one to one, in a group setting, party or online. The personal component of selling directly to a customer is what makes this channel unique.

Direct selling method in which independent agents serve as distributors of goods and services, and are encouraged to build and manage their own sales force by recruiting and training other independent agents.

Pyramid scheme (commonly known as pyramid scams) is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services.

DYNAMICS AT PLAY

This is a legitimate way of doing business and there are so many well known names of companies operating this way.
Direct selling can take place in many different forms, and often it is not even necessary to meet with the buyer face to face eg. over the internet.
Here is an example, and anyone can do direct selling:
- A child at school in the tuck-shop who sells his homemade lemonade, and starts a small business selling his wares, that is direct selling.
- Someone who sells automobiles to someone else is engaging in direct selling. So the product is sold direct from the manufacturer to the consumer.

Essentially network marketers sell or share products to consumers by word of mouth, (this is how we advertise) building relationships, and journeying with their customers!
This is such an amazing market to become a part of!
The strategy of a network marketer is to educate about the value of the product and gather customers. We then build a network of other distributors doing the same thing.
It is not just recruiting, but is an ever expanding of networking with consumers.
Then as leaders we apply knowledge and training and leaderships skills to the network, to improve the productivity of that network. This is the key to see the value and growth and productivity.
In Summary the wonderful benefit of network marketing can be seen as follows:
- We are in the middle of the manufacturer and the consumer, we are not involved in direct selling. The sale is connected through us! Yes we market our product to customers, mainly through word of mouth. But a better description of what we do is we are marketing products and services through a network of distributors and network marketing is a clear description of what we do. This clearly defines what we are and we should not hide it, but be proud of it. It is a wonderful entrepreneurial business model to align ourselves with.

Usually when someone approaches you to join a Company and tells you you can earn a lot of money, Be weary of the following:
- You are required to invest money into the company without an immediate transaction taking place.
- You are required to purchase inventory, you may be encouraged to participate in a venture you are not really interested in, or not going to be actively involved in.
- Your income will be based mainly on the number of people you recruit, and the money the new recruits have to invest in the business venture.
Most people end up LOSING money when they invest in a pyramid scheme.

Who is DSA?

DSA (Direct Selling Association) is the name of similar trade associations that represent direct selling companies, primarily those that use multi-level marketing compensation plans. On behalf of its member companies, the DSA engages in public relations and lobbying efforts against regulation of the multi-level marketing industry.

Both Direct Selling Companies and Network Marketing Companies are often governed and protected by the DSA.

What does DSA do?

The Direct Selling Association (DSA) is representing member direct selling companies that distribute goods and services through independent contractors (also referred to as sellers, distributors, consultants, managers, sales agents, and independent business operators, amongst others) directly to consumers, away from a fixed retail location.

Source: DSA.SA

Chrysalis Tip

Managing objections positively within the Network Marketing Module is crucial. Let us now take a look at some of the objections members encounter on a regular basis and how you can equip yourself to respond positively:

SALES

Prospect: Does this involve sales?
Your response: What do you mean by that?
Prospect: Do I have to go and try and sell products to friends and family?
Your response: Is that what you are looking for?
Prospect: No!!
Your response: Great. That is not what we want you to do! So welcome aboard! We are in the business of improving people’s quality of life by sharing and caring!

PYRAMID SCHEMES

Prospect: Is this one of those pyramid schemes?
Your response: Is that what you are looking for?
Prospect: No!!
Your response: Great then we are on the same page!

SUPPLEMENTS

Prospect: Must I take these supplements for the rest of my life?
Your response: How serious are you about improving your health and wellness?
Prospect: I will try them, but for how long must I use them?
Your response: Well the beauty of The AIM companies ™ products is that they are whole foods and compliment a healthy lifestyle; they form a part of your daily routine to improve your quality of life. They help support the areas where we fall short of taking in all the valuable nutrients our body needs at cellular level to be nourished. It therefore forms an important part of your daily lifestyle.

TIME

Prospect: I don’t have the time to do this.
Your response: I do understand how busy you are. However are you really serious about improving your health but have some concerns about the time needed to grow in knowledge and equip you with what you need, or are you saying you aren’t that serious right now about taking action to address your health?
Prospect: No I am serious, I just don’t have the time right now.
Your response: If I made the time to help you get started and we addressed your concerns together, are you willing to try and get started over the next month?

MONEY

Prospect: I don’t have the money….. or …. I can’t afford the products.
Your response: So have you fallen on some serious hard times and you don’t have the extra money, or are you just saying that you can’t afford it because it is not a priority to you right now?
Prospect: No I would like to try the products but I just don’t have a budget for it right now.
Your response: Great, so all the more reason why we are here to help you. If you are willing to attend some training, let’s see if we can help you earn some money so that you can afford to use the products, and even tap into the business opportunity whereby you can earn a monthly commission check and be helping others to do the same too!

Chrysalis Tip

There are 3 primary ways you can address the need of prospective customers:

PRODUCT: Providing products that really make a difference in their lives
SERVICE: Exceptional service is no longer negotiable. This is often the greatest way you can distinguish yourself from the competition
VALUE: Offering value to your client. The value of your product is a relationship between its costs and benefits.

People are often willing to pay a higher cost, for a greater perceived benefit!

Action Plan

Can you now see how objections can be handled confidently with a positive outcome? Be consistent and start now by building a trusting relationship with your customers.

The Blueprint

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Direct Selling vs. Network Marketing vs. Pyramid Scheme

Joan March 26, 2018

Who is DSA?

What does DSA do?

Chrysalis Tip

Chrysalis Tip

Action Plan