The Network Marketing industry is also referred to as Multilevel Marketing (MLM), Referral Marketing, or Direct Selling. The Network Marketing industry is one of the fastest-growing ones in India.
However, there have been many MLM companies that have committed frauds and duped innocent investors. They have been accused of implementing the illegal pyramid business model.
As per the Direct Selling Association Code of Ethics – 1999, MLM companies registered with the Direct Selling Association promise transparency for what their salesforce does. MLM companies promise transparency about the status of their salesforces to avoid responsibility for what they do. Therefore, it is essential to know the ethics to follow in the Network Marketing sector.
Multilevel Marketing (MLM) – The Practice of Selling Directly to Consumers
Multilevel Marketing (MLM) involves distributing or selling products or services directly to consumers via independent agents.
The Network Marketing companies employ salespeople, known as Distributors or Direct Sellers or Network Marketers, who are not directly on their payrolls.
The Direct Sellers earn attractive commissions for executing sales of products or services of Direct Selling companies. The Direct Sellers also earn incentives for recruiting more salespeople who are placed under them in the company’s sales network – it is known as the downline.
The Direct Sellers also earn a residual income. Residual income is that income that you earn without making any efforts! You earn a percentage of the commission on the sales done by your downline and their downlines.
What is Upline and Downline in Multilevel Marketing?
When you recruit another salesperson, you become the UPLINE of that recruit. And the salesperson you recruit is your downline.
In the MLM business model, uplines earn bonuses or commissions on the sales made by your downline and downline’s downlines.
Your success depends on the growth of your downline. Therefore, you should recruit your downline appropriately. Recruit members who are dedicated, passionate about sales, and have a desire to become financially independent. It is imperative for you to motivate, mentor, and support your downline properly.
So, it would help if you led your downline by example. It would help if you stayed in touch with your downline regularly. Give your downline members recognition and focus on the personal development of each of them. And don’t forget to remind them why they are into Network Marketing!
What are Ethics in a Business?
Those new to the Network Marketing business need to know certain ethics that you need to adhere to and follow when collaborating with a Network Marketing company.
To generate the trust and confidence of your prospects and customers, teaching business ethics is a must. Now, you may be getting impatient in knowing about the business ethics that you need to follow in Direct Selling. So, what are business ethics all about?
Business ethics are policies and practices involving controversial subjects about corporate governance, bribery, discrimination, social responsibility, and fiduciary responsibilities.
Defining fiduciary in Network Marketing further is about you, as the Sales Representative, acting on behalf of your Direct Selling company. A fiduciary is about putting your customer interests ahead of your own and a duty to preserve good faith and trust.
As a fiduciary, you are bound legally and ethically to act in the best interests of your customers. But it is the law that often guides business ethics. Business ethics are a basic guideline platform that businesses choose to follow to gain public trust and approval.
Importance of Business Ethics
Business ethics are a set of practices and procedures that help you to build trust with your consumers.
Business ethics play an important role in creating a lasting impression at different levels. Today, there is an increased consumer awareness about environmental, social, and governance issues. The reputation of your business is always at stake.
For example, if a business indulges in an unethical practice like negligence in following customer privacy guidelines, it could mean a data breach. And that could lead to losing a lot of customers or erosion of their trust in your business.
IDSA – The Self-Regulatory Body for the Direct Selling Industry in India
The Indian Direct Selling Association (IDSA) was incorporated in 1996. The IDSA is an autonomous and self-regulatory body for the Direct Selling industry in India. It is an interface between the Direct Selling industry and policy-making bodies of the Indian Government.
IDSA facilitates the cause of the Direct Selling Industry in India and strives to create an environment conducive to the industry’s growth. IDSA has set forth the Code of Ethics that its registered companies need to comply with for the conduct of their businesses.
Code of Ethics to Follow in Network Marketing
The Direct Selling Association (DSA) commits itself to the highest ethical business standards for the Direct Selling industry and their customers. The Code of Ethics of the DSA covers a series of policies that all its registered members agree to follow.
World Federation of Direct Selling Associations (WFDSA) – Model Code of Ethics
The IDSA is affiliated with the World Federation of Direct Selling Association (WFDSA), established in 1978. The WFDSA code of ethics covers the activities of companies and individuals engaged in Direct Selling.
As per the Code of Ethics, it aims to achieve the following objectives:
- Preventing advertisements and promotions from misleading or being deceptive.
- Sales conduct should ensure and respect the rights and privacy privileges of customers.
- Product demonstrations should give full explanation and information.
- Direct Sellers must disclose their full identity and contact details.
- Complete details and terms of payment should be given to the customer at the time of order.
- Implementation of a procedure that addresses comprehensive complaints and disputes.
- Implementation of a mechanism that ensures the Code of Ethics is implemented.
It needs to be noted that the Direct Sellers are not bound directly to the above code. However, as a condition of membership, they need to adhere to the rules of conduct in meeting the standards of the code.
Further, the code is not law. Its non-observance will not create any civil law responsibility or liability. However, companies and Direct Sellers need to oblige to ethical behaviour and conform to applicable legal requirements. It will only enable them to build a strong reputation in the industry and gain consumer trust and following.
Why Follow Ethics in Direct Selling
Many people simply believe that businesses should purely focus on making money, irrespective of how it comes. But that is not the right way to do business.
Doing it lawfully and ethically can generate significant benefits for a business. It enhances their reputation and enables them to sustain their business in the longer run.
When you collaborate with a company that implements ethical practices, it makes you feel comfortable. Some of the benefits of following ethics in your Network Marketing business include:
- Attracts new customers.
- Makes customers loyal to your business.
- It has a positive impact on society.
Implementation of ethical practices may limit your freedom to maximize profits. But ethical behaviours can significantly benefit your Network Marketing business in the long run. It will improve your reputation, which will then help to boost your sales and revenues.
Ethical Behavior in Real-life For Direct Sellers
Direct Selling ethics pertains to behaviours to ensure every lead, prospect, or customer is treated with respect, fairness, and honesty.
Ethical behaviour in sales is sensible to follow. Doing it rightly and lawfully helps you in the long run. It helps you to build loyalty and trust with your customers. Adopting ethical means in Direct Selling makes a big statement: You sell to customers what they want to buy from you, and you are not forcing it on them!
As a Direct Seller or Network Marketer, you need to keep the people’s interests you sell topmost. You must respect the choice and opinion of your customers and not force your agenda on them.
Your ethical behaviours can ensure the success of your Direct Selling.
- Be honest about how your products or services will impact society.
- It is advisable to avoid attacking your competitors.
- Adopt a strategy to serve rather than sell.
It is interesting to note that it helps to serve and help them build a customer base. And it enables you to generate relationships that will ensure your success going ahead.
Fostering Ethics in Your Direct Selling
Ethically growing your business helps you to build a reputation. Building an ethical culture helps you to grow and sustain your business. You can make ethics a habit in your in several ways.
- Set goals for yourself and your team. It would help if you moved your entire business forward.
- Ensure to hire the right salespeople in your downline. Honesty, Helpfulness, Courteousness, Humbleness, and Resilience are some of the qualities that you can look for when hiring them.
- Implement a code of conduct for ethical selling. And this code of ethics could include the values your business stands for, ways to prospect and approach prospects, principles to communicate, guidelines for handling grievances and conflicts, undesirable prospecting and negotiating practices.
Further, it is a great idea to document your ethical ways. And it can be your living and breathing asset you can improve and update as you evolve.
Conclusion: Ethical practices will build a good reputation for your MLM business.
All along, you have known how Network Marketing helps you to attain financial freedom. All along, you have known how Network Marketing enables you to become entrepreneurs.
And now you know how following and implementing ethical means can help build your business’s reputation and further its success!
Your actions can affect not only yourselves but also those around you. Many professional decisions of yours involve ethics. Telling someone a lie can lose their trust. It can undermine your integrity. Using shoddy communication of sharing irrelevant material with your prospects can jeopardize your chances of making a sale or recruiting them. So, it is always a sensible move to use ethical means in running your business.
