The most prominent examples of direct selling companies include Amway, Avon, Mary Kay, Nu Skin, and Herbalife, which recently went public. In 2003, U.S. total direct selling sales totaled more than $29 billion, or almost 1% of the over $3,397 billion for total U.S. retail sales (U.S. Census Bureau).

Any business model that has achieved this kind of success probably has lessons that all business people can learn from. We define this family of business models as a method of distribution in which people are paid for sales volume generated by people they have recruited into the distribution network. 20% of American adults reported they are now (6%) or have been (14%) a direct selling representative — defined as “the sale of a consumer product or service, person-to-person, away from a fixed retail location.” In 2000, 55% of American adults reported having, at some time, purchased goods or services from a direct selling representative.

A significant number of network marketers have negative experiences with the industry. That is why 70% of all people who have ever been a direct selling representative are no longer in the industry. For the purposes of this column, we will not go into the challenges and problems in the network marketing model. There are plenty of Web sites on that topic.

We all work for ourselves. Gone are the days of being a “company man” — your career is your business. Multi-level marketing just makes that explicit. Yet one of the things that makes the sector most attractive, the low barrier to entry, also creates some its greatest dangers. Many people get into it without the necessary skills to run a successful business.

We are primarily interested in what lessons all business people can learn from successful network marketing practices. We recently interviewed some of the industry’s top experts and found seven lessons that all sales and marketing professionals can use to be more effective, regardless of their industry:

Every business is a relationship-based business

So says John Milton Fogg, founding editor of Networking Times, author of The Greatest Networker in the World, and one of the most successful teachers of network marketing. You cannot sell an inferior product with a superior relationship, but you need at least a functional relationship to sell your product. That is particularly apparent in multi-level marketing, an industry built around belly-to-belly sales.

Think analytically about your network

Shaul Gabbay, in his book Social Capital in the Creation of Financial Capital: The Case of Network Marketing, reports that the fastest-rising group of entrepreneurs [of the direct selling representatives whom he studied] were those who had initial weak ties to dense networks. In other words, successful salespeople penetrate an untouched market, and then work to gain a high market share in that market. This is easier to do if that untouched market is highly dense; everyone in it knows all the players. Why? Because word of mouth in that type of network will spread more rapidly about the value of your product or service. This principle is particularly evident in network marketing, an industry where “networks go to work.” However, the same idea applies to almost any business.

Create a community around your product

One of the great ironies of the software business is that not only do many software companies outsource their development off shore; many also outsource their customer support to their own customers! When Best Software encourages you to visit their user forums to discuss your issues in using Act! software, that is a very cheap way for Best to support their product. Multi-level marketing companies rely almost exclusively on their communities for sales, support, follow-up, and recruiting.

Leverage the unleveraged

In 2002, 79.9% of the direct selling sales force was female. 56% completed only a partial college education, technical or trade school, or have only a high school education. This sales force looks very unlike the traditional American corporate sales force, which typically is much more male and has a higher level of education. However, the direct selling sales force looks just like their customers. People can be very effective salespeople when selling to their own community, because the common culture and interests create a foundation to build strong relationships more quickly.

Build a relationship first

“Internet marketers and network marketers share a common, terminal disease,” Fogg says. “If you think of the whole process like dating, we bring someone to our Web site, and then we ask them to have sex immediately. There has to be some courtship first.” One of the delicate aspects of network marketing is that people leverage their personal relationships to sell a product. Although that leverage makes some people queasy, the success of the network marketing model shows that many people do comfortably build multiplex relationships: Their friends are their customers, and vice versa. With delicacy, you can do the same thing.

Not everyone is a prospect

One mistake some network marketers make, as do many other sales people and marketers, is thinking of everyone they meet as a prospect. In network marketing, this is known as the “Three-Foot Rule”, i.e., anyone within three feet of you is a prospect. But top network marketers don’t do this. Max Steingart, creator of the “Success Online” training course for network marketers, says that it’s not just about figuring out when to make your pitch, but even if to make your pitch. “You just build relationships with a lot of people. Some will become prospects and some won’t,” he says. “There’s no timetable. If the time is right, you’ll know.”

Use online networks

The network marketing industry is a particularly good industry for leveraging online networks. Steingart teaches people how to “make the world your warm market,” specifically by using online networks. He reports that when he instant-messages someone to start a conversation about potentially joining his distribution network, 50% of the people he contacts will respond to the conversation. More and more sales and marketing professionals will use online networks to accelerate their sales.

What else can traditional businesses learn from the best practices of successful network marketers? We welcome your comments and feedback.

That may or may not be true, depending on what the author’s business model is. Ultimately, though, how you can use someone else’s writings is not your decision, it’s the author’s. Here are a few basic concepts and some resources to help you stay within the law, as well as build respectful relationships with the people whose content you find so valuable:

Blogs posts are copyrighted by default. The #1 rule to remember is that, by default, posts to a blog (or to a discussion forum, for that matter) are copyrighted material, and the author owns the copyright. Just because it’s “public” doesn’t mean it’s “public domain”. That means that it is subject to all the restrictions on copyrighted work, i.e., it can’t be freely copied and used even with proper credit without either a) the permission of the author or b) within the context of “fair use”. The owners of the site, e.g., Ecademy, may also have rights to use it as part of the user agreement, but no one else does.

Fair use is a concept that allows limited use of copyrighted material, generally for the purposes of criticism, education, satire, etc. And no the “education” umbrella doesn’t allow you to use works in their entirety. There are no hard-and-fast guidelines as to where the line is drawn, but using a work in its entirety is never allowed, whether it’s a four-line poem or a four-page article. Similarly, an entire chapter from a book would also be a copyright violation. You can use excerpts, but not “complete” anythings: chapters, articles, posts, poems, etc. You can see a quick summary of “fair use” at the U.S. Government Copyright Office or get more in-depth information at the Stanford Copyright & Fair Use Center. The Electronic Frontier Foundation provides some great legal resources for bloggers, including Bloggers’ FAQ - Intellectual Property.

Think win-win.

Scott Allen is the About.com Entrepreneurs Guide, providing free resources and guidance to help entrepreneurs as they start and grow their business. He is coauthor with David Teten of The Virtual Handshake: Opening Doors and Closing Deals Online, the first guide to winning friends and influencing clients with online networks, and joint contributor to the companion resource site and blog. They write a monthly column for FastCompany.com and are contributing authors to Blog! How the Newest Media Revolution is Changing Politics, Business and Culture.

1. Presume good intent. What is the best possible way the other person could mean by what they said? If your initial reaction to what somebody says is negative, pause. Take a deep breath. Try to detach from your own personal context and put yourself in their context. What might they have meant by that? Maybe you’re misinterpreting what they’re saying.

So pick the best possible meaning, and respond to that. What’s the worst that can happen? They correct you and say, “No, I really meant…”? On the other hand, if you respond to your negative reaction, the worst possible thing is that an escalation begins — a vicious circle. Sound familiar?

You’re never backed into a corner online. Take the time to cool off and re-think it before you reply.

2. Don’t say anything online that you wouldn’t say in person. Would you say it to their face at a networking event? If not, then why would you say it here? Don’t think that the relationships here are any less important, the feelings any less real, etc. And don’t think it won’t have any impact on your business.

No one looks good when they get emotional in an argument, even when they’re right. Does it reflect better on you to be right? Or to be someone who’s easy to get along with?

I’m not saying people shouldn’t voice their opinions, or debate their differences of opinion, but not at the expense of their relationships and even their reputation.

Think about it… would you want to do business with someone who was always right but always arguing about it to show how right they are? (unless they’re a trial lawyer, of course, in which case that’s a very desirable trait)

Scott Allen is the About.com Entrepreneurs Guide, providing free resources and guidance to help entrepreneurs as they start and grow their business. He is coauthor with David Teten of The Virtual Handshake: Opening Doors and Closing Deals Online, the first guide to winning friends and influencing clients with online networks, and joint contributor to the companion resource site and blog. They write a monthly column for FastCompany.com and are contributing authors to Blog! How the Newest Media Revolution is Changing Politics, Business and Culture.