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Portrait of a growth industry.
Network marketer businesses have grown a lot over the past ten years, and its growth prospects are very significant. This is a highly creative industry job, self-employed majority. Open to all profiles, very formative, direct sales allow you to acquire solid professional skills quickly.
It also provides, for the most motivated sellers of real prospects to reach financial freedom.
What is network marketing?
Network marketing when a seller is a buyer gets together outside of a place intended like a store, commercial agency. Door-to-door sell is the most common form of a multi level marketing, whether face-to-face or in a meeting.
The seller provides the consumer with a product presentation and explanation service, explains the commercial offer, draws up the dated and signed order form by the consumer.
This form of sale is the third distribution channel alongside store sales and mail-order and distance selling. Network marketer has the particularity of not being identified as a professional branch but of covering many different departments such as housing, energy, cosmetic-beauty, clothing.
The profession of a network marketer is exercised by self-employed bound as a distribution contract to the company or employees bound by an employment contract with the company.
Network marketing business.
Worldwide10,128 companies specialized in multilevel marketing. Their turnover stands at 2.69 billion (Insee figures, 2009). If we add all start-ups practicing direct sales but linked to other activity codes, the estimated world turnover in 2017 is $ 190 billion.
Network marketing is experiencing substantial growth. Between 2012 and 2020, business in the sector saw their turnover increase by 58%. Their added value increased by 20% of the global turnover in Europe.
Lots of jobs, few employees
Network marketing concerns around 430,000 to 480,000 sales jobs in England, 15% of which are salaried. 80% of companies saw their jobs increase by 9.5% in 2019 (20,000 additional sellers) with 35,000 other sellers, reaching 300,000. The sector is, therefore, an influential creator of jobs.
In addition to these sales jobs, there are several induced jobs. The member companies generated around 10,500 full-time equivalent salaried jobs in 2015: 40% of these jobs are in direct sales companies themselves, in administrative, production and logistics functions; 60% are with subcontractors.
Essentially, these are building specialists who work for direct sales companies specializing in housing. They carry out, for example, the installation of windows, the installation of air conditioning systems.
The growth in employment with the development of the activity. In the direct sales business model, the event is through work. Recruitment is, therefore, strategic (see testimony).
Compared to European neighbours, France lacks independent home sellers, which hinders its development (France is in third place behind Germany and the United States).
To raise awareness of this sector among job seekers, in particular young people, the elderly and people in retraining, an agreement was signed in 2010 between the Ministry of Employment.
The key: a prospect of creating 100,000 jobs over three years. In 2019, 39,200 jobs created.
I RECRUIT TO DEVELOP
The company I took over in 2014 produced silicone baking racks approved and used by bakers, pastry chefs and caterers. I commissioned a market study to make this material available to the general public. His conclusion was formal: we had to carry out cooking workshops at home to present the products. It was clear that network marketer was the most suitable economic model because we can demonstrate the products in real situations. Sales have increased dramatically. So I directed part of the company to these meetings. The consumer activity is growing enormously, the turnover is increasing every year, and I am recruiting more and more salespeople.
Friendliness, proximity, quality of products and associated service: the characteristics of network marketer are in line with the rising values of our company. Consumers today expect personalized service, need support and reassurance and are looking for positive experiences.
These new needs are leading to a recomposition of the landscape of distribution channels. Since 2016, large-scale distribution has seen its market share decrease regularly in favour of local trade and local markets. Electronic service is undoubtedly experiencing strong growth.
But focusing on a few flagship products (IT, cultural goods, travel) which are now possible via direct sales. Besides, remote buyers, even if they are above all motivated by the saving of time and the comparison of prices. Express a need for additional services (recovery of old products at the time of delivery of the new, specific guarantees, assistance when using the product).
We can, therefore, consider that e-commerce, far from being a competitor of network marketing. Should above all be seen as an additional tool to meet new societal expectations.
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Other development factors
The ageing of the population provides a favourable framework for the development of network marketing. The lower mobility of seniors makes them prefer local shops and, elements, the presentation of products at home. They also have at least the new generations of seniors, a higher standard of living.
Consumer protection regulations are likely to reassure buyers. The regulations impose, in particular a strict content of the contract as well as a withdrawal period of seven days.
Rather than a constraint, this regulation can constitute a pledge of confidence between the two parties and reinforce the image of the network marketer to a sometimes suspicious consumer.
92% Is the proportion of network marketing products or services that estimate that their turnover will grow in the next five to ten years.
Seven main areas of activity
business and their activity
The business carrying out an activity mainly dedicated to direct sales mainly develop in 7 sectors:
- Textile / Fashion accessories
- Care products
- Publishing / Press
- Gastronomy / Culinary universe
- Cosmetics / Beauty
It is at home that the member companies of direct sales(network marketing) achieve the highest turnover, because of the prices and types of products offered.
They distribute them well beyond their region of operation since two-thirds have a social influence – and almost a third is present internationally. Almost a third of their customers are rural and are mostly in the 40-60 age group. The housing sector by an older and more urban commercial target.
The competition is above all in their ranks. Retail, mass distribution, and e-commerce are seen as lesser competitors. Two-thirds of marketing MLM believe that competition has increased in previous years and that the movement will continue in the medium term.
The various stages of the sale – prospecting, demonstration, completion of the deal, collection – are often fully supported by the seller: this is the case for 70% of independent sellers and 50% of salaried sellers. The group is the part most often taken care of by other players, often centralized at headquarters.
Two sales methods coexist individual sales (or face to face) and sales in meetings. In meeting sales, several customers or prospects to demonstrations, product presentations or participation in workshops.
Face to face, sales are most often made in the home of the prospect who has solicited the network marketer (relationship with a previous customer, canvassing by telephone). A commercial transaction, or even by door-to-door.
The sale in meetings dominates if we exclude the habitat where 100% of the deal is done face to face. Companies also want to focus more on meeting sales in the future.
Internet and diversification: two areas of development
In most companies, network marketer is the only distribution network. Past experiences have indeed shown that the multiplication of different distribution networks for the same product (stores, commercial agencies, branches) creates serious competition.
Most small business is considering development possibilities on the Internet while being vigilant about the border to be put in place so as not to switch from direct sales to distance sales.
In some companies, sellers have a “virtual store” where customers can contact them and place orders for specific products. Social networks are also starting to be used by some in an industrial or recruitment process.
The other axis of development is through diversification. Depending on the sector, this results in a widespread renewal of collections. The creation of new groups in addition to the original one (for example a women’s group which is added to that for children).
The development of services such as workshops. Cooking, beauty workshops or the organization of specific events for customers.
Mostly independent sellers
Salaried sellers represent 4% of sellers working in member companies. The self-employed are almost exclusively independent home sellers, the other separate statutes commercial agents, traders, service providers. Being very minority (2% of the total sellers).
Women are the majority: they represent 80% of the sellers. However, there are differences by sector. The energy and housing sectors are more masculine (more than 60% of the workforce are men), press publishing, and telecommunications are close to parity. Sellers earn a commission on sells.
There is no data on independent sellers: they individually set a target of turnover to achieve rather than several hours to perform. They, therefore, adjust their working hours to reach this financial objective, taking into account their professional situation (mono-activity, multi-activity, additional salary).
Salaried sellers are younger than the self-employed: 27% are under 30, compared with 16% for the self-employed. Compared to the general population of sellers in France and the USA, direct sellers are much older.
In essence, the share of young people is half that, including salaried sellers. The housing sector is an exception to the rule, with 45% of employees under the age of 30. Salaried sellers and home seller do not have the same level of training.
In essence, nearly 60% of the self-employed have a level equal to or higher than the diploma, compared to 33% for employees. They are more highly qualified: 67% have at least the High School Diploma.
Various work situations
The confirmed seller, “keystone of network marketer”, is responsible for prospecting customers, preparing home sales, selling at home and monitoring customers and activity. However, the work situations are diverse and have an impact on the profiles and skills sought.
Several criteria influence the content of the profession: the type of product, its technicality, its cost, the income, the choice of an organization, the sales method (meeting or face to face), whether or not the sales process is fully taken care of from prospecting to delivery, legal status and how you will be earning from the results. For example, meeting sales mobilize organizational skills (working upstream with the hostesses at whom meetings) and develop interpersonal skills.
In the housing sector, the share of administrative management is substantial, and contracts require legal rigor and financial study. Technical skills may be required. The press-publishing industry, which often relies on door-to-door service without prior appointment, uses yet other skills.
Strong opportunities for development
The progression in the organization is done by developing its turnover and by recruiting a team that the seller leads. This team, in a specific business, can be of considerable size.
A network marketer is a real breeding ground for opportunities for sellers. It allows progress that would not be possible in more traditional sectors. It, therefore, plays the role of the social elevator (see pyramid schemes). Also, the skills acquired help secure career paths.
The sellers insist on the transferability of the skills implemented, in particular the knowledge of the action – organize your time, optimize your trips to limit transport times, apply prospecting techniques. – and interpersonal skills – successfully obtaining appointments, anticipating the needs of customers or prospects, developing autonomy in their activity.
Human resource management practices
In the vast majority of direct sales companies, sellers are involved in the recruitment and support of their peers, whether they carry out the recruitments themselves or they pre-recruit by presenting applicants.
In companies known as “direct sales by network”, formerly called “multi-level”, recruitment is delegated to the salespeople already in place, under the control of the head office.
They thus constitute their teams and are rewarded on the sales which they carry out. In turn, sellers recruited by recruiting others. (most often there are between 5 and 7 levels).
As the development of the business is based on the expansion of the sales network, sellers are strongly encouraged to recruit future colleagues through financial incentives and benefits in kind. In a single-level sales business (a sales team supervised by a sales manager), recruitment is carried out by the hierarchy (coordinator, agency manager, head office).
Sellers already in place can be associated with recruitment but are not decision-makers. In 7 out of 10 companies, recruitment is by co-optation. Recruitment via the company’s website is the second recruitment channel.
Very open recruitment
In 9 out of 10 companies, no minimum level of training is required to hire a salesperson. The housing sector is a little more selective (7 out of 10 companies). Likewise, no sales experience is needed, and the professional origins of the sellers are incredibly diverse (secretary, cook, hairstylist, delivery driver.).
Companies in the more technical activity sectors (energy, housing), while being open to all types of profiles, seek to target more industrial training and offer internships or even work-study contracts (see testimony).
Recruitment ages can range from 20 to 80 years! Some pyramid scheme also targets senior citizens who thus constitute a supplementary pension. However, it is among the 35-55 year-olds that the majority of recruitments are made.
The requirements of a good company in terms of recruitment relate instead to the interest in the product sold, the personality, the time available to devote to the activity, and, often, the fact of having a personal car, travel being imperative and mainly carried out in rural areas or small towns.
Among salaried sellers, the turnover rate is comparable to that of all sellers: 23% per year. The turnover rate for independent sellers is close to 45%.
Departures occur mainly within three to six months of activity. This could be compared to a trial period. The average seniority of employees is seven years, that of the self-employed two and a half years. Concerned about this turnover rate, companies are pursuing active loyalty policies for their sales force.
The method of integration, coordination of the teams and the support offered by the training are part of this strategy.
The integration phase of recruits is the strong point of direct sales companies. The modern salesperson is closely supervised by a facilitator or “sponsor” who can be seen as a form of tutoring.
He has significant training in the company, products, legislation and ethics of the profession, sales techniques. The training, provided by the facilitators, is very pragmatic and often takes the form of action workshops.
They use dynamic and participative teaching methods and innovative methods such as e-learning, in addition to group training (see testimony). Quite often, people can participate in training as many times as they want until they own it.