Monday, October 25, 2010

Direct Sales Tips: The Problem With The Warm Market Strategy

If you're like me, you have friends or know people that are in direct sales or have done direct sales at one point or another.

Personally, I think it's a fantastic business for some people to get into. Notice I said 'some' and not all because this business isn't a good fit for everyone.

But with the right training and preparation the success rate could be much higher. There are numerous reasons why so many promising superstars fail but first ... the most obvious is this:

There are numerous problems with using the warm market approach and here is my take on it:

Traditionally, direct sales has relied on and teaches consultants to sell to their friends and family through the home party plan format.

Basically you invite your friends, family, and neighbors i.e. your warm market list to your first product launch. The goal is to sell products and sponsor anyone at the party who might be interested in joining the business with you and get additional bookings.

This strategy has worked for the direct sales industry since the Tupperware and Amway days but times have changed. There are thousands of opportunities today. And with most people online to search for products and to buy products there’s a lot more competition.

With that said, selling directly to consumers is a powerful way to move products. Think of Costco food demos or your grocery stores. We’re more likely to buy if we can sample and try the product in person.

The problem is that it’s challenging for direct sellers to consistently get people to attend their home parties. The warm market strategy works to some degree because your friends and family are supportive and want to help.

But if you don’t learn how to market your business beyond your warm market you’ll run out of potential customers to sell to and quickly.

Without leads, your business will cease to exist, especially if you have the type of business that is non-consumable i.e. home d├ęcor, jewelry, collectible items that people aren’t likely to buy on a recurring basis.

Let’s be honest here, when the good times were rolling, people were more likely to splurge but with the economy still shaky, people are cutting back. When gas prices are over $3 a gallon people are going to drive less and spend money on the necessities such as food and groceries.

That’s not to say people aren’t buying because we love to buy but the masses have become more selective on what they’re buying. There are bargains abound with retail slashing prices everywhere you go.

As a direct seller, you need to compete online, offline, with other direct sellers, and business owners. As I said, the competition is fierce but not entirely doom either if ...

You learn the right marketing skills. So if you’ve made it this far in my article it’s not all doom and gloom.

Hopefully the point I’m trying to make is this … there are thousands of direct sales opportunities to choose from. Do your research and think hard about the product need in the marketplace. And price points.

If it takes you the same amount of time and resources to promote a $10 product versus a $50 product earning the same 30% commission … it might be wiser to consider the higher point item.

Not all opportunities are created equal so do a thorough research. Think about product need in the marketplace.

*Is it a product that people are already using which means it’s an easier sell?
*Is it a one-time purchase OR can you get recurring business from it?

Regardless of the type of business you choose understand that marketing and the right kind is what keeps your business growing.

Without marketing, your business will die.

So there’s nothing wrong with selling to your warm market but it only works to a degree. In today’s competitive online and offline competition, you will need to learn not only online marketing skills but incorporate as many marketing strategies as possible to build your business.

What are your thoughts on the warm market approach. Share your success stories :).

'til next time,

Janette Stoll

P.S. **To learn how you can start generating leads, tips and techniques to start your business go to and get instant access to my FREE ebook that will show you how to attract prospects the RIGHT way.

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