Whether you recognized it as a direct sale or not, you’ve almost certainly encountered people who engage in the practice. Maybe it was a door-to-door knife salesperson, a family member selling cosmetics, or Uncle Rico from Napoleon Dynamite at your door, offering model ships to help hawk plastic dinnerware.
In any case, direct sales is an immediately personal type of selling that requires an entrepreneurial spirit and initiative. It can be lucrative and rewarding, but I think there’s a lot to know if you’re considering pursuing it.
In this article, I’ll give you perspective on what direct sales is, a few different subcategories, and key tips on how to do it right.
Table of Contents
What is direct sales?
Direct sales is the practice of selling a product or service directly to customers without intermediaries. That means a company engaging in direct sales will have its own internal sales team responsible for generating, contacting, and nurturing leads through to a closed deal.
How does direct selling work?
Direct sales is common in a huge range of industries from herbal supplements to enterprise software, and while there are a few different methods of direct selling I’ll touch on below, what they have in common is that they happen outside a traditional retail environment — for example, at your front door, on a Zoom call, or at a friend’s house.
Different methods come with their own advantages and disadvantages for the salesperson, but let’s quickly establish why a company would pursue the direct sales route over channel sales.
Direct Sales vs. Channel Sales
Direct sales stand in contrast to channel sales, which generally involve one or more intermediary transactions before a customer buys. For example, many manufacturing companies sell to wholesalers, who then sell to retailers, who finally sell a product to an end user.
I was surprised to find out that channel sales account for some 75% of the world’s commerce — so why is the remaining 25% holding out?
The main advantage of direct sales is the control it offers. Companies selling direct have complete control over their marketing, pricing, positioning, and more. They’re also able to establish and maintain valuable relationships with their audience, which isn’t always possible or practical when selling to intermediaries.
A direct sales situation also allows the seller to capture more of the profit from each sale made instead of sharing it with wholesalers, retailers, and anyone else who touches the product on its way from creation to distribution to the end-user.
Of course, the advantages come at a cost, and the direct seller will need a way to market to prospects and amass an audience, build the sales infrastructure and team to get in front of that audience with a pitch, and offer post-sale support to consumers who have questions, run into issues, want to warranty products, and more.
If you’ve weighed the pros and cons and you’re set on the direct sales approach, here are a few of the ways your company can go about getting in front of customers to make your pitch.
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Types of Direct Selling
1. Direct-to-Consumer (D2C)
In direct-to-consumer sales, a business sells directly to the end user without intermediaries. In ecommerce, for example, this would be a sale of the company’s own products made on the company’s own website instead of through an intermediary like Amazon. Brands with physical storefronts also sell their products directly to consumers.
Best for: Products with tighter margins that make it difficult for manufacturers to thrive after losing profit to the additional touchpoints of a channel sales approach.
2. Single-Level Selling
Single-level direct sales are performed primarily through one-on-one meetings between salespeople and prospects. This type of direct sales can be conducted through mediums like in-person pitches, over the phone, via catalogs, or online.
Single-level selling often has a straightforward commission structure. The companies supporting these kinds of sales offer commission for each sale and might have other incentives available for meeting specific goals or quotas.
My own role in sales falls in this category, and although motivated sellers can be successful with many different approaches, I personally think single-level selling is the sweet spot for many salespeople.
Best for: Very expensive or complex products that require expert knowledge or a consultative sales approach. A single-level sale can happen in one meeting, but it could also have a longer sales cycle involving numerous meetings with a variety of stakeholders.
3. Host Selling
Host selling is generally conducted in a group setting — often through a party or event dedicated to pitching a specific offering. It usually entails a direct salesperson presenting to prospects in someone’s home or office.
Best for: Host selling is ideal for products where quality is somewhat subjective, or those that need to be tried (such as a fragrance) before a prospect wants to commit to a purchase. Ever tried to convey a scent on a website? Host selling is also a good fit for any product that’s more compelling with an in-person demonstration, since these demos are often difficult to replicate for digital consumption.
4. Multi-Level Marketing
Multi-level marketing (MLM) is a mode of direct sales that can encompass aspects of single-level and party-plan sales, but the practice contains a recruitment element not generally associated with the other two.
I sometimes conflate MLM operations with illegal pyramid schemes, but in pyramid schemes, payment is based solely on a recruit’s ability to recruit other reps instead of actually selling a product.
In MLM, representatives sell products while recruiting and training other representatives. Once the recruited reps start selling products, their recruiters earn a partial commission for their efforts — all on top of the commission those original reps earn through their own sales.
Most multi-level marketing operations are legitimate and are distinguished from pyramid schemes in three ways: the product is legitimate and of high quality, the income reps earn comes from sales and recruitment instead of just recruitment, and recruitment isn’t billed or pushed as the primary focus of the operation.
Best for: The MLM model makes the most sense when a company needs to attract part-time sellers who may only have a few hours per week to sell. It also helps tap into the network effect, and MLM can scale a well-received company quickly.
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Direct Sales Examples
So what do the four direct sales methods above look like in the real world? Let’s check out some companies swimming against the channel sales mainstream with a direct sales model.
D2C: Canyon Bikes
If you’ve ever been to a bike shop, you’ve probably come across models from Giant, Specialized, and Trek that use channel sales — but a few brands are seeing success with the direct-to-consumer model. Canyon Bikes is one company leading the charge, selling products straight to the end user and promising better value by cutting out the retail middleman.
Single-Level Selling: CutCo
CutCo (and its controversial parent organization, Vector Marketing) is a well-known brand that relies on single-level selling. Instead of recruiting other reps for downline commissions, CutCo salespeople are exclusively compensated through their own sales.
Host Selling: Tupperware
This form of direct selling was popularized by brands like Tupperware, whose direct sales reps held “Tupperware Parties” to show off the brand’s products to friends and family. Mary Kay is another company that’s famous for its effective use of the host selling practice to leverage the social networks of its sellers.
MLM: Avon
Avon is one of the most recognizable examples of MLM direct selling. It operates through a network of individual representatives responsible for selling directly to consumers and who receive a commission for each sale. They travel and make in-person connections that drive sales, and they also earn a commission for recruiting more direct sales representatives for the company.
Direct Sales Tips
Looking to make a living in direct sales? Here are a few tips I’ve gleaned from more than a decade of experience in the space.
1. Understand your product and its value proposition.
I know this point is key in any type of sales, but it’s particularly important in direct sales. Because you’re immediately interfacing with customers, you generally won’t have a lot of time to refer to other materials to help you clear things up or better convey your points.
Know your product front to back, so you can answer any questions or concerns that might arise as you learn more about the prospect and make your pitch. You also have to pinpoint and reliably articulate your product’s value proposition. It’s easy to drone on about all your product’s awesome features — it’s harder to translate that information into concrete benefits for your prospect’s specific needs.
If you want to thrive in direct selling, it’s important to both show and tell. Some questions I recommend asking yourself as you prepare are:
- What problem will your product address?
- Why is that problem important?
- How will your product address that problem better than comparable offerings from your competitors?
2. Sincerely believe in your product.
In my opinion, this is the most important tip for success in sales — and that’s especially true in direct sales. In direct sales, you’re interacting with your customers, and humans are very good at spotting insincerity. If you actually believe in the value of what you’re selling, you’ll be much better at conveying that value in a way that resonates with people. Don’t believe in what you’re selling? I strongly believe you should jump ship and find something to sell that you can get behind.
Not to belabor the point, but success in direct sales is often dependent on your own personal initiative and aspiration. You’re taking it upon yourself to learn a product and connect with prospects, and it’s a lot harder to do all that when you don’t care about what you’re selling. By contrast, if I use the product I’m selling and genuinely believe my prospects can get a lot out of it, I’ll be in a better position to close a direct sale.
3. Understand your company and your role within it.
Familiarize yourself with every aspect of the industry you’re in and the company you’re working for. Know the policies and procedures that dictate what you can and cannot say or do when conducting sales. For instance, your company might not allow you to set up your own independent consultant website, or they might have specific protocols for how you should market.
Beyond the nuts and bolts of how your company wants you to operate, you also need to understand what you can expect to receive for your efforts. Take the time to comb through your company’s compensation plan. Get a feel for any products that are particularly profitable and, as a result, worth more attention and effort on your part.
If you want to get the most out of a direct-selling gig, you need to understand the rules of the game. Comb through the fine print to make sure you know how and where to best allocate your effort and what you can expect in return.
4. Maintain contact with your prospects.
Direct sales are inherently personal. It’s based on immediate engagements with potential customers. If you want to effectively convey your value proposition as a direct salesperson, your prospects will need a front-row seat, so I’d suggest setting in-person or virtual appointments.
Lock down potential customers’ time and try to keep a full calendar — no matter how you conduct your presentations. Whether you’re reaching customers online, over the phone, or in person, always block out time for your prospects and try to hold them to those arrangements.
Once you’ve conducted your meetings and nailed your pitch, follow up with your prospects and stay in touch. I can’t stress enough that getting a “no” doesn’t necessarily mean getting a “no, never.” It just means that now isn’t the right time. Ask your prospect if you can follow up with them down the road, and make sure you do it.
5. Keep your eyes on the prize and remain persistent.
Direct sales isn’t a cakewalk. It’s a pretty personal brand of sales, so it’s hard not to take rejection personally. But nothing good comes easy, and that’s especially true in direct sales.
You’ll need to stay persistent to succeed in the direct sales world, and I can guarantee you it won’t always be comfortable or straightforward. But if you keep your head down, consistently learn, and constantly improve, you’ll be in the best possible position to get the most out of it.
6. Prioritize relationship building.
The last tip I’ll give aspiring direct salespeople is to be an expert at establishing relationships. Build rapport and engage in deep conversation with a prospect to learn about them and their pain points. This makes it easier to tailor your value proposition to their specific needs.
The most effective strategies for building rapport when selling are being attentive and engaged, staying positive, and finding common ground — try it out!
Dealing Direct
Channel sales might have a bigger share of the global market, but direct sales is still around for a reason. With greater control for the company and the chance for determined and knowledgeable sellers to interact directly with prospects, a direct sales approach offers advantages that make it a compelling option in the right scenario.
If you’re interested in selling your product direct or pursuing a career in direct sales, I hope the tips above help you find success.
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Outline your company's sales strategy in one simple, coherent sales plan.
- Target Market
- Prospecting Strategy
- Budget
- Goals
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