How does the direct sales model of network marketing work?

Yes, there are probably more compensation plan models apart from MLM and direct sales. But, far and away, they are the most popular. The compensation plans for the direct sales businesses are similar, but do vary from company to company. I am also including gifting programs in this model.

My experience in the Direct Sales model is that the top tier opportunities use this one. Most of the products are higher investments, but also the amount of money that can be generated greatly surpasses the MLM model. While similar income can be generated in the MLM model, it is the exception rather than rule, simply because it takes a lot longer and considerably more tenacity. Most people who join an MLM organization, leave it within 90 days of joining.

The general model for direct sales uses a referral type compensation plan. In order to get to profit in the business, the new associate passes up their first one or two sales to the sponsor who introduced them to the business. Beyond that, the associates profits from all the new people they sponsor and their pass ups. So, some would criticize the "pass up" model, feeling that it is unfair. Actually, it is because of the referral model that so many people generate a great deal of money in direct sales. The sales that must be passed up can actually be viewed as training sales. The sponsor is spending a great deal of time and energy to help the new person launch their business successfully.

Several of the companies I have experience with also have other income generation opportunities apart from the basic plan. These create residual income, so that your earnings continue from the people you bring into the business.

While the name of this model is Direct Sales, there actually is no sales involved. Many people will back away from this, saying something like "I can't sell". The key to these businesses is marketing which is different. Clearly define and understand what you have to offer and others will want what you have. In fact, selling will absolutely turn your prospects off.

I personally love the direct sales model and the future that it holds for my family and I. My life is built upon the notion that I want to be free to pursue my spiritual path in this life with all the passion that I have without spending large amounts of time with a job, making far less money than I can with a direct sales business. I am free to do whatever I want, whenever I want, with whoever I want!