Modern commerce has brought businesses and customers closer together. Personalized advertising, social media, and newsletter subscriptions have helped companies build stronger relationships with customers and help increase sales.
While these relationships are great, having a direct sales model can help businesses leverage the brand further. This is because it gives you more control over the sales process and helps create even stronger customer communication channels. This can improve customer relationships and increase brand loyalty. Keep reading to find out more.
What is the direct sales model?
While indirect sales uses distribution channels and third-party retailers, the direct sales model means that businesses sell their products straight to the customer. Products sold through a direct sales model are not usually available to buy elsewhere.
This sales model doesn’t rely on traditional retail methods such as stores. Instead, it utilizes selling through your website or face-to-face through pop-up stores, in the home, or through organized gatherings. This helps businesses protect their brand and control the quality of their service.
While the direct sales model prioritizes personal engagement and control, exploring a channel sales strategy could further enhance market reach.
By partnering with other sales channels, businesses can access broader audiences while maintaining a strong brand presence and leveraging insurance solutions can help protect against operational risks, offering a strategic complement to their direct efforts.
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Talk to SalesHow the direct sales model works
Here are the three main types of direct sales.
- Single-level sales
This is a one-to-one model in which a salesperson sells a product directly to a customer, usually for a commission. For example, let’s take the case of an IT company helping businesses reduce technical debt. The company employs a sales team to sell its support packages. If a salesperson sells a support package, they will earn a commission on that sale.
- Direct-to-customer sales
This is where a business sells to the customer through its website, social media channels, or newsletter. Instead of salespeople, they rely on marketing, referrals, and promotions to generate sales. An example of this could be a skincare brand that sells exclusively through its own website. This type of direct selling requires a good eCommerce framework.
- Multi-level sales
Multi-level sales involve using the same strategy as single-level selling. The extra levels involve the added dynamic of salespeople earning commissions for recruiting more sales representatives.
Sales reps can sell products in several ways, such as via their network and social media, door-to-door, or by hosting parties in someone’s home where they can demonstrate the products and make sales on the day. A well-known example of this is the famous “Tupperware parties” of the 50s and 60s.
Benefits of the direct sales model
Direct selling has various advantages over traditional retail models. These make the model an attractive option for some businesses, especially in markets where you need to make a significant impact on customers. Some reasons for a direct sales approach include the ones listed below.
- Reduces costs
Direct selling cuts out the middleman. The costs of using intermediaries, such as paying for retail space, distribution, rent, and staffing, can be reduced significantly. On top of this, you can sell products at retail prices rather than selling to other parties for wholesale prices, which can further maximize revenue.
- Offers a range of sales channels
Direct selling doesn’t limit your options to a physical shop front. Instead, it can give you more autonomy over which sales channels you want to use. This could include:
- Your website
- Your social media platforms
- Your newsletters
- In-person
Moreover, these channels are flexible and can change to meet market demands. Managing this can be simplified with an enterprise integration platform, which allows you to centralize analytics, communications, and much more.
Additionally, a Personal CRM system enhances customer interaction and data management, crucial for personalizing sales approaches.
- Expands customer reach
Using channels like social media to sell your product can enable you to reach a broader audience. While a physical store has the advantage of passing trade, this still has geographical limitations. Social media, on the other hand, can help you reach a global audience.
Pro tip: using the best sales automation software can help you maintain high customer service as you expand.
- Improves customer relations
It’s no secret that building great customer relationships allows you to build brand loyalty and customer retention. Direct selling means you deal directly with the customer, whether face-to-face or virtually, which gives you several opportunities to connect.
When you sell your products indirectly through a third-party retailer, such as a wholesaler or a retailer, you lose the opportunity to connect with the customer, either at the point of engagement, the point of sale, or during any aftercare. Instead, you can rely on their customer experience, whether good or bad.
- Provides more control over branding
Think about it; your product is your baby. You and your team(s) created it, brought it to life, and brought it to market. Now imagine that dusty product on the top shelf at the back of a store, tucked behind a display board for another brand. People who see that probably won’t walk away with the brand image you intended to put out there.
By following a direct sales model, you’re in the best position to look after your brand and how your product is marketed. The direct sales model also means you are keeping consistent messaging across all channels.
- Benefits from direct customer feedback
When you’re in direct contact with customers, you have the opportunity to gather crucial feedback on your products and services by sending out feedback forms or asking for reviews. Your customer services team can also speak directly to customers, gathering valuable information on how you can make improvements moving forward.
- Helps control your promotions
Using the direct sales model means you can benefit from instant access to analytics and quickly adapt to market trends by offering relevant promotions whenever needed. For example, if there’s a big football game on, you can offer a ‘game day discount.’ without having to go through various channels.
Challenges with the direct sales model
The direct sales model is not without its challenges. Having more control over sales and distribution inevitably means more work, and without good enterprise architecture frameworks in place, it can be tricky. Some other challenges are illustrated below.
- Distribution responsibility
With direct selling, you’ll need to plan how to distribute your product thoroughly. This may involve setting up sales and marketing teams and looking at ways to generate leads. In-house teams bring challenges, such as managing recruitment, staff absence, or turnover.
There are also costs involved with recruitment, training, and commission management, especially if you want to attract top talent. This should be factored into your planning.
- Reputation management
A strong brand voice is important in the direct sales model, requiring planning, effort, and consistency.
Whilst you have more control over your reputation, this means taking much care to protect it. If anyone on your customer service team is curt or a sales representative is too aggressive, it can impact how people view your brand. Staff training and motivation are essential parts of maintaining the standards you expect different teams to deliver.
- Market saturation
Direct selling, especially when face-to-face, relies heavily on local area marketing. There’s a risk of over-saturation where salespeople are involved when more sales representatives join the field and operate within a small geographical area. OneStream finance modeling, for example, can show you the real-world impact on sales that such occurrences may cause.
How to use the direct sales model to maximize revenue opportunities
If you’ve done business capability modeling and think the direct sales model could benefit your business, knowing how to implement it well is key to its success. Generating leads and developing a successful sales funnel is an important process. Taking these simple steps can help you make sure you make the most of the model.
- Make sure it’s right for you
The direct selling model won’t suit all businesses. There are several green flags to look out for in your business and strategies to implement to make it work. These are:
- You already have a company with a strong brand voice
- Your product has a solid customer following.
- Your product can be easily found and bought online
- You’re equipped with the sales and marketing personnel and knowledge (or know how to be)
- You’re passionate about your product and ready to put the hard work in
- Use email marketing…
Email marketing is a great way to keep in touch with your audience. It helps you nurture leads, build customer relationships, and offer more personalized communication. The key to a successful marketing campaign is careful planning and curation.
This means varying your content and keeping it relevant. Depending on your market, you may look at sending emails that range from informative and helpful (such as top tips) to company news (e.g. new products) or special offers.
- … And social media
Social media is a key asset in direct sales. It can help you showcase your products and brand personality and reach new audiences if done well. Social media can and will bring you closer to your target market if you use it well. This means being consistent with posts, using high-quality images, and responding to comments.
Each platform can vary in terms of how you build engagement, so taking time to learn how to make the most of each channel or using third-party experts can help you maximize the performance of your social media accounts.
- Offer freebies and giveaways
Everyone loves a freebie, right? Free samples can be a cost-effective way to generate a buzz around your products. For example, free samples can be offered to people new to your brand (in exchange for signing up for your newsletter) or to existing customers (such as when a new product variation is launched).
This can help customers develop a love for your brand without taking any risks while also fostering trust with existing customers.
- Utilize product demonstration tools
New brands often lack customer backing because they’re not tried and tested. Practical product demonstration is an essential part of showcasing your products’ greatness. In face-to-face direct sales, this can mean live demonstrations of the product in action. However, videos can be a great tool if you sell online directly from your website. You can use webinars, live streaming, and even third-party influencers on social media to show how great your products are.
- Incentivize your sales team
If you decide to use single or multi-level sales, incentivizing your sales team can help to improve their sales rates. The commission is one way, but what about your business development team? Having a business development commission structure doesn’t just focus on sales. It focuses on rewarding the team for the whole sales process, from finding new ways to generate business to nurturing leads through the sales pipeline.
- Collect customer data
Knowing who has purchased what (and when) can help you refine the sales process and improve your personalized marketing. For example, if you sell laundry detergent, you’ll have a good idea when that will run out. Having this data means you can send a ‘ready to re-order?’ email.
You can also collect valuable feedback to help you improve your product or service moving forward and even offer referral incentives to generate new customers.
Final thoughts
The direct sales model is a great way to maintain brand control. If you’re prepared to upskill your sales team and put in the work, it can help you build strong customer relationships and improve brand loyalty.
Getting it right could mean a shift in your current company culture, but that’s not always a bad thing. We don’t evolve if we don’t change, right?
Recruiting the right people, training them well, and having an attractive sales compensation package are the key ingredients to applying the direct sales model successfully.
