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August 01, 2017

DSA News

A Hidden Giant

by Joseph N. Mariano

Click here to order the August 2017 issue in which this article appeared or click here to download it to your mobile device.

In mythology, a giant is defined as an entity of prodigious size and strength. With $182.6 billion in global sales in 2016, according to the World Federation of Direct Selling Associations (WFDSA), there is no doubting the size or economic strength of direct selling. The giant of myth, however, is unmistakable in its nature—easy to spot; easy to comprehend. Not so with direct selling. I have often referred to direct selling as a hidden giant—partly due to our lack of mainstream advertising. But also due, perhaps, to a lack of understanding of who we are.

As direct sellers, we have sometimes been required to describe who we are not: We are not high-pressure sales, not pyramid schemes, not get-rich-quick scams. I urge all direct selling companies to join me in lifting the veil, once and for all, from the hidden giant of direct selling and let the world know, instead, who we are.

Because of our primary relations with our salespeople, our relationship at times with our customers has been somewhat opaque. This seemingly innocuous aspect of our business model has resulted in a degree of misunderstanding about direct selling. In a meeting I once had with the FTC, for example, I asked what we could do to improve understanding of direct selling companies. “Tell them to figure out who their customers are,” they said.

For years, we have described who we are by the numbers we generate. Building on the global efforts of our colleagues at the WFDSA, we are now taking a closer look at the number of “people involved in direct selling.” For the past four years, with active participation of DSA member companies, DSA has been researching segmentation of those people involved to better represent the varying realities of their individual involvement.

Of the 20.5 million “people involved in direct selling” in the United States in 2016, all had signed or renewed an agreement with a direct selling company within the previous 12 months and were thus eligible to purchase products and services at a discount, re-sell at a profit, and sponsor others. But not all of them had joined to necessarily sell. Some 800,000 were full-time business builders, selling at a profit and potentially inviting others to do the same; 4.5 million were part-time business builders; the remaining 15.2 million were discount customers, buying our products and services to use at home.

Why do these distinctions matter? This is not merely an exercise in definition, but is reflective of a trend taking place among our companies already: a greater focus on the end user—the ultimate consumer. As companies focus more on end consumers (both within and outside the network), several things will inevitably happen:

  • Companies will identify discount buyers as “preferred customers”—not automatically eligible to participate in the sales network.
  • Companies will be able to better reflect average earnings and benefits for true sellers with non-salespeople removed from the count.
  • Companies will be better able to target marketing and promotions based on the needs and desires of those joining the business, and reduce likelihood of misunderstanding or over-promising.
  • Companies will be better able to demonstrate product demand on the part of non-salespeople.
  • Finally, outsiders will better understand and, thus, be less skeptical of direct selling.

We must demystify our industry and eliminate the confusion that has sometimes led to accusations of inflated earnings potentials. More accurately defining and describing business builders versus discount buyers versus customers who do not actively engage in our companies will be a major step in revealing the hidden giant, and ensuring it becomes understandable to all.

Joseph N. Mariano is President of the U.S. Direct Selling Association and the Direct Selling Education Foundation.