Glossary Terms

Glossary of Human Resources Management and Employee Benefit Terms

Table of contents

Direct selling

Direct selling is a method of selling products or services directly to consumers, bypassing traditional retail channels.

In this approach, sellers typically work independently or as part of a direct sales organization, often through personal interactions, demonstrations, or online platforms. This model focuses on building personal relationships with customers to encourage purchases.

What is direct selling?

Direct selling is a method where products or services are sold directly to the consumers outside of a fixed retail location.

In this business model, individual sales representatives, often called consultants or distributors, interact with potential customers to promote or sell products or services.

What are the main types of direct selling?

Direct selling comes in different formats, each offering unique ways for individuals to connect with buyers and build a business:

Single-level marketing: This involves selling products directly to consumers and earning a commission on personal sales. It's a straightforward model with a focus on one-on-one customer interaction.

Multi-level marketing (MLM): In MLM, sellers earn from both their own sales and those made by team members they recruit. This model offers broader income potential but also requires leadership and team-building skills.

Party-plan selling: This method revolves around hosting social events where sellers showcase products in a fun, informal setting. It’s commonly used in industries like cosmetics, kitchenware, and home goods.

Is direct selling and network marketing the same?

Direct selling is a broad term that refers to selling products directly to consumers outside of a retail setting. Network marketing, often used interchangeably with multi-level marketing (MLM), is a type of direct selling where sellers earn income through personal sales and by building a team of recruits.

So, while all network marketing is a form of direct selling, not all direct selling involves network marketing.

What is an example of direct selling?

An example of direct selling is Sarah, who sells natural skincare products directly to customers through social media and home events. She earns a commission on each sale and builds relationships by offering personalized product advice—showcasing the importance of direct selling in creating trust and convenience without relying on retail stores. Some well-known companies that use direct selling include:

Avon – Sells beauty products through independent representatives.

Tupperware – Offers kitchenware via in-home parties hosted by sellers.

Mary Kay – A cosmetics brand that relies on personal sales from consultants.

Each example of direct selling highlights a business model built around direct customer relationships and personalized service.

Why is direct selling important?

The importance of direct selling lies in its ability to build personal connections with customers, offer flexible business opportunities, and reduce overhead costs.

For companies, it provides a cost-effective way to enter new markets. For sellers, it creates a platform for entrepreneurship with minimal investment.

How does direct selling work?

In direct selling, individuals become independent distributors or consultants for a brand. They sell products to friends, family, or through social networks. Sales may occur through one-on-one demos, home parties, or digital platforms.

Commissions or bonuses are earned based on personal sales or team performance.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.

eNPS:

eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

Promoters
Employees who have responded positively or agreed.
Detractors
Employees who have reacted negatively or disagreed.
Passives
Employees who have stayed neutral with their responses.

How is direct selling different from e-commerce?

Though both models sell directly to consumers, their methods and experiences vary:

Sales interaction: Direct selling relies on personal touch—face-to-face meetings, home parties, or social selling. E-commerce is digital-first, with transactions happening through websites or apps.

Business model: Direct selling may include MLM structures with commissions from sales and team building. E-commerce often follows a D2C or B2C model with no personal selling required.

Customer experience: The importance of direct selling lies in its customized approach and relationship-building. E-commerce, while convenient, depends on digital engagement and lacks the personal connection direct selling offers.

How to improve direct selling?

To improve direct selling efforts, consider the following strategies:

Training and development: Provide ongoing education on product knowledge and sales techniques.

Customer relationship management: Build strong, long-lasting relationships with customers by offering personalized service and follow-up.

Leverage social media and digital tools: Use platforms like Instagram, Facebook, or LinkedIn to expand your reach and interact with a broader audience.

Incentivize and motivate sellers: Offer rewards or bonuses for top performers to encourage ongoing effort and commitment.

Focus on customer experience: A great experience can lead to repeat business and referrals, which is vital in direct selling.

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