Everybody knows somebody who’s working in direct sales. You may be wondering what the heck they’re saying when they use terms like network marketing, multi-level marketing, and direct selling. With this guide, you’ll be up to speed for your next conversation.
Commonly Used Direct Sales Terminology
Commission: A method of compensation in which a salesperson sells to the customer who then pays the company for the product. The company gives the salesperson a percentage of the receipts as a commission. Alternatively, the customer’s down payment represents the commission and the outstanding contract and balance exists between company and customer.
Direct sales: Also known as direct selling, it is “a retail channel used by top global brands and smaller, entrepreneurial companies to market products and services to consumers. Companies market all types of goods and services, including jewelry, cookware, nutritionals, cosmetics, housewares, energy and insurance, and much more.”
Direct Selling Association (DSA): The national trade association for companies that offer entrepreneurial opportunities to independent sellers to market and sell products and services, typically outside of a fixed retail establishment.
Downline: Direct sellers who are sponsored one or more levels away from another in a directly linked line. For example, a Wine Guide with Traveling Vineyard might refer to a new team member that has joined the business under their leadership as a “downline.” Conversely, the aforementioned Wine Guide is considered an “upline.”
Independent contractor: An individual who sells the products of a company according to his or her own methods and without being subject to the control of the company. Ninety-nine percent of all direct selling is done by independent contractors who are not employees of the company whose products they sell.
Multi-Level Marketing (MLM): A distribution and compensation method of direct selling where individuals sell products to the public and receive compensation for recruiting new salespeople to act as a team under them. Recruiters earn what are called “override commissions” from the products their recruits sell. (This is typical in almost all sales industries; they are sometimes called bonuses or “overrides.”) The salespeople of legitimate MLMs earn income from sales to customers and the sales of their teams. Profit comes from outside the organization. Some people confuse direct sales vs. multi-level marketing, but MLM is really just a method under the umbrella of direct sales.
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Network marketing: A business model in which a distributor network is needed to build the business. Usually such businesses are also multilevel marketing in nature in that payouts occur at more than one level. A characteristic of this model is person-to-person sales, like Avon and Beachbody, and not a party plan model, like Traveling Vineyard and Pampered Chef. Some people confuse direct sales vs. network marketing, but network marketing is really just a method under the umbrella of direct sales.
Party plan: A sales presentation made to a group of individuals (guests), invited by the homeowner (host/hostess). For example, a host invites a Traveling Vineyard Wine Guide to a social event at their home, where potential customers get a chance to sample and order the company’s products. At Traveling Vineyard, we refer to this as an opportunity to “try before you buy.”
Personal volume: The total of commissionable product sold by a direct seller in a given period.
Pyramid scheme: In a pyramid scheme, recruiters earn their money based on how many people they recruit and the money those recruits pay to be part of the business. The money comes from inside the organization, because executives profit from start-up and training fees of recruits. Pyramid schemes are illegal.
Upline: All independent contractors who are in a direct line toward a company responsible for the individual salesperson’s involvement. See the definition of “Downline,” above.
Terms Specific To Traveling Vineyard
awesomm: Traveling Vineyard’s mobile app designed for Traveling Vineyard Wine Guides that allows them to conduct business on-the-go via their Apple device.
Guests: Wine lovers and wine newbies who attend an in-home Traveling Vineyard wine tasting conducted by an Independent Wine Guide.
Host: Individual who invites wine lovers and wine newbies to attend a wine tasting event in his or her home, and who provides the food pairings suggested by his or her Wine Guide as ideal pairings for the five bottles of complimentary Traveling Vineyard wine that will be sampled at the tasting.
Thrive Rewards: Traveling Vineyard’s reward program for Wine Guides that offers a variety of non-monetary awards for business-building activities that go above and beyond the Traveling Vineyard compensation plan.
Sommology: Traveling Vineyard’s unique approach to pairing food and wine, developed by a Master Sommelier and adapted by our veteran field experts. Sommology food pairings are developed for each of our Traveling Vineyard wines and accessed via a QR code on the back of the bottle.
Wine Guide: Independent wine consultant with Traveling Vineyard.
Wine tasting: Events where Host and Guests, led by a Traveling Vineyard Wine Guide, sample various types of wines available for purchase.