Written by Dan Lundell. Dan is the President of the Sheffield Group. Dan joined Sheffield as an Executive Consultant in 2014. Since that time, he has advised over 70 direct selling companies. His work with Sheffield clients has included start-up executive training, brand development, assistance in raising capital, improving production capacity, and establishing whole departments.
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The direct selling industry stands at a pivotal moment. In 2024, it’s valued at USD 252 billion, with projections to reach $425 billion by 2033 at a 6% compound annual growth rate (Business Research Insights). For decades, multi-level marketing (MLM), party-plan, and hybrid models have fueled opportunity, generating billions and mainstreaming innovative products. Yet something’s shifting. Successful MLMs are “going affiliate”, recruitment is slowing, and trust in the traditional model is waning. This isn’t a blip – it’s a signal. If direct selling companies operating in North America want to thrive, they must see the landscape clearly and adapt. The alternative? A slow fade into irrelevance.
What’s Really Going On?
The industry’s foundation – person-to-person sales – remains powerful. But let’s be candid: the market’s growing weary of traditional MLM. People hesitate at the mention of it, and not without reason. Public perception has soured, often associating the model with exaggerated claims and unfulfilled promises. Yet the issue isn’t the tiered structure itself. Multi-tiered commissions work in real estate, insurance, and finance – sectors that thrive without the skepticism plaguing direct selling. The real problem? Execution.
Too often, companies overpromise – on product benefits, income potential, or both. Complex compensation plans confuse new reps, and motivational rhetoric from leaders rings hollow when it doesn’t match action. Research underscores this: 60% of direct sellers exit within their first year, often due to unclear guidance or unrealistic expectations (Direct Selling Association). People don’t reject genealogy, they reject inauthenticity.
So why are some MLMs pivoting to affiliate models? Some cite modernization or regulatory pressures. Others point to declining recruitment and sales, unable to sustain genealogy-based payouts. The deeper issue is compensation mismanagement. Plans that overpay top earners while under-rewarding the base erode stability. Adjusting them is tough – once a field gets comfortable, change sparks resistance. But for companies serious about longevity, it’s essential.
Compliance Isn’t the Villain
Regulatory risks loom, but they’re not the apocalypse some fear. The rules are straightforward: avoid income or product exaggerations, don’t tie earnings to enrollment fees, stop paying for recruitment alone, and ensure real customers – not just reps – buy your products. Build on a solid product foundation, and compliance becomes manageable. The bigger threat? Leaders who lack the knowledge to instill confidence. When a sales force doubts the plan, that uncertainty spreads, stalling momentum.
The Old Playbook Won’t Cut It
Many companies cling to a dated assumption: launch a product, unveil a comp plan, and watch sales roll in. That’s a fantasy. Even established brands with active reps see flat recruitment and lackluster growth. Why? They rely solely on traditional sellers when the market demands more. Data reveals the gap: 55% of sales reps miss targets without a clear, structured plan (Salesforce). The days of expecting reps to “figure it out” are over. Success now hinges on systems that work for everyone, not just distributors.
P2P: The Path Forward
Affiliate models might seem like the answer, but they’re a sidestep, not a solution. They’re transactional – lacking the community and scalability of direct selling. Once payments to influencers stop, so do the sales. Social selling, however, taps into something bigger: P2P – person-to-person marketing. It’s the oldest form of sales, reimagined for today. Consumers trust people over ads – 87% say social media influences their buying decisions (OptinMonster). Brands like Younique, with its live video strategy, and Monat, leveraging TikTok, show how it’s done. They turn customers into advocates, not just buyers.
P2P isn’t about forcing recruitment – it’s about creating a movement. Happy customers share naturally when given simple tools and incentives. Reps succeed when duplication is clear and repeatable. The best companies blend sales and marketing into one seamless system, aligning everyone – customers, influencers, affiliates, and traditional sellers – around a unified message. Complexity kills this.
Forrester found that simplified comp plans boost engagement by 40% (Forrester). If the first dollar isn’t easy to earn, people won’t stick around.
What Works and What’s Worth Keeping
Despite the challenges, direct selling’s core strengths endure. Relationships drive trust, word-of-mouth remains the gold standard. A personal sales force connects in ways corporations can’t. When structured well, the model scales exponentially. The trick is keeping what works while shedding the baggage. That means:
- Simplicity: If a comp plan needs a spreadsheet to explain, it’s too much. Focus on a game plan anyone can follow.
- Incentives: Reward sales and advocacy, not just sign-ups. Early wins build belief – HubSpot notes a 2X increase in new rep activation with clear earning models (HubSpot).
- Systems: Provide plug-and-play tools, pre-made content, step-by-step guide, so reps don’t flounder.
Duplication shouldn’t mean chaos. Consistent messaging and accessible resources turn a sales force into a cohesive network. Brands that get this right don’t just survive, they lead!
The Conversation We Need
The problem isn’t MLM itself, it’s how it’s run. Leaders must bridge their knowledge gap to build confidence that inspires action. The solution isn’t abandoning tiers but modernizing them into ethical, sustainable systems people want to join. Ask:
- How do we design incentives that balance reward and growth?
- How do we equip people to succeed from day one?
- How do we keep the human connection without the old pitfalls?
The next era of direct selling is taking shape. It’s P2P-driven, digitally savvy, and community-focused. Companies that embrace it – integrating social selling, streamlined plans, and diverse advocates – will dominate. Those that don’t will struggle to keep up.
Time to Act
North America’s direct selling landscape won’t wait. The industry’s worth billions, but growth isn’t guaranteed for everyone. See the shift: trust is fragile, simplicity scales, and P2P beats outdated tactics. Evolve your approach – focus on real relationships, clear systems, and modern tools – or risk fading into the background. The future isn’t coming, it’s here! Are you ready?
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