Did you know that it costs five times more to attract a new customer than it does to retain an existing one? It’s surprising how many businesses forget this simple fact when seeking new business.

If you want to stay in business for a reasonable length of time then you will need to have customers who keep returning to do business with you. It makes good business sense to have a sales environment that is stable, fair and serves your customers. The way you or your staff deal with customers will determine whether they return to you, or go to a competitor.

Place yourself in your customer’s shoes and experience what the customer experiences when dealing with your business. Do they have to wait long? Are your staff helpful? Do customers feel intimidated by your staff? Do you make promises that you don't always keep? Are customers happy with your sales policies (refunds, exchanges etc)?

If you value sales, then you should realise that it is your customers who will continue to make them happen. If your customers aren’t comfortable with your business, say a staff member is intimidating or is later found to be dishonest, then they will stay away. They also tell their friends to stay away and that’s a recipe for disaster.

Basically:

• be sure to obtain an order to provide goods before supplying them
• make sure you have enough stock to meet the order
• take possible delays into account before committing to a delivery date
• if offering prizes or gifts as part of a sale, supply them as offered
• if promoting business opportunities, don’t make misleading statements.
  

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Be sure to obtain an order to provide goods or services before supplying them. If you send goods or services to a person who has not ordered them, you risk not being paid.

Under the law, that person (the recipient) does not have to pay you for the goods unless they:

• wish to keep the goods you supplied to them, or
• have wilfully damaged or lost the goods.

You may reclaim the goods at your own expense within:

• three months after the person received them, or
• one month after they notified you that they received the unordered goods, whichever is the earlier.

If you don’t take action to get your goods back (or obtain payment for loss or damage) during this time, the person automatically becomes the owner; except when they:

• unreasonably refuse you access to reclaim the goods
• knew, or should reasonably have known, that the goods were not intended for them, for example, they were sent to the wrong address.

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Direct commerce is a new way of describing particular selling and marketing methods. It covers what used to be known as ‘door-to-door sales’. The new laws replace the Door-to Door Sales Act 1967, which has been repealed. Direct commerce also covers what is generally known as ‘telemarketing’. For more information go to the Direct commerce page.

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Direct marketing is where you sell your products or services directly to the customer through means of communication at a distance. For example, this can be done through a mail-order catalogue, by telephone or through the Internet.

Direct marketing by telephone (telemarketing) may be subject to the Direct Commerce provisions of the Fair Trading Act 1987 and the Commonwealth laws (refer to the Direct commerce section above).

The Australian Direct Marketing Association (ADMA) is a self-regulatory body which governs the way its members do business.  ADMA has a self-regulatory Direct Marketing Code of Practice designed to maintain the integrity and honesty of the direct marketing industry. In essence, the code states that advertisers and telemarketers:

• must provide accurate information so that customers know exactly what is being offered
• shall not make any false or misleading claims
• shall not use fictitious or misleading endorsements by other people
• shall not quote scientific data unless the claims can be proven
• print a full street address where they can be contacted.

Items bought through direct marketing are subject to the same laws as all consumer goods and services. Merchants must honour any claims they make about their goods or services. When customers place an order with you or your business, you are entering into a legally binding contract. This means that you or the business must send what was ordered by the customer and they in turn must pay for the goods.

Goods must, as a minimum standard:

• be fit for the purpose for which goods of that kind are commonly bought, as is reasonable having respect to their price, any description you apply to them and other relevant circumstances
• be as they were described
• must suit the particular purpose for which they are described.

Where there are inconsistencies between the Direct Marketing Code of Practice, NSW laws or Commonwealth laws. NSW laws take precedence over the Direct Marketing Code of Practice. Commonwealth laws take precedence over NSW laws and the Direct Marketing Code of Practice

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In NSW, pyramid schemes have caused a great deal of financial hardship to consumers and businesses over the years, which is why they are now outlawed. If you promote or participate in a pyramid scheme, you can be prosecuted.

Pyramid schemes are where money flows up a pyramid or triangle-like structure to the people at the top of the scheme. They usually involve large joining fees with little or no product selling. To survive, they depend on an endless supply of new recruits with most never seeing their money again. The mathematics used to justify their operations can be seductive, but is fatally flawed. Ask yourself the question, if money-making was as easy as these schemes make out then why isn’t everyone doing it? These schemes are outlawed in NSW under the Fair Trading Act. If you promote or participate in such a scheme you may face fines of up to $22,000 if an individual and $110,000 if a corporation.

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While pyramid sales schemes make profits from large joining fees from new recruits to the scheme and there is generally little or no selling involved, multi-level marketing schemes actually make their money from the sale of products and or services that have an intrinsic value.  Genuine multi-level marketing schemes depend upon consumer sales for their survival and are a form of direct marketing.

Generally, the entry fees for most multi-level marketing firms are fairly low and may involve the purchase of a sales kit sold at cost.  Multi-level schemes that do not fall within the definition of a pyramid selling scheme are usually considered legitimate.

If you want salespeople to sell your product why not give it to them on a ‘sale or return’ basis where it can be returned to you if it doesn’t sell. This demonstrates some faith in your product and doesn’t penalise salespeople for supporting you.

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Customers referring their friends to your business is usually a good sign that you’ve got things right. However paying customers to tell their friends may affect your business reputation and is against the law. The practice of inducing customers to buy goods and services by giving them the impression that you will pay them, or that they will benefit in some other way, if they refer new customers to your business is illegal.

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Businesses which value their customers will realise that any salesperson’s behaviour which is intimidating or threatening to a customer can only damage the profitability of their business.

The law takes a dim view of this sort of conduct, whether directed at the customer, their relatives or friends. It is an offence to use physical force, undue harassment or coercion when supplying products or receiving payments from customers.

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