Alan is a US DSA Hall of Famer and a member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Working Through a World of Misinformation

It’s everywhere. Misinformation now permeates nearly every aspect of our lives. Fake news, fantastical conspiracy theories and out and out lies spread through social media and cable personalities who are have learned that they can make a lot of money propagandizing every conspiracy theory that will play well to their audience. Spreading misinformation is much more profitable than telling the truth based on provable facts and reliable data.

This toxic atmosphere leaves those of us looking to make decisions about our lives and our businesses based on facts, truth and reason in a constant and energy sapping search for answers.

Dealing with misinformation, whether spread through ignorance or intent to mislead is nothing new for those of us who have spent our careers in direct selling. For years, the critics of our industry have offered up ill-informed opinions that express a negative opinion about direct selling as an income opportunity. Too often these negative opinions are based on incomplete data combined with individual anecdotes of dissatisfied former sellers that the propagators of the misinformation then apply to the whole industry.

Now before we go any further, it is important to note that in some cases the criticism is fully justified and factually supported. Like any industry, direst selling has had its share of bad actors who use dubious and misleading recruiting pitches and other types of unethical practices that attract regulatory attention and deserved to be condemned. But too often the industry critics assume that the entire industry is guilty of the perpetrating the same bad practices.

What is not, or is rarely, acknowledged is that there are many, if not most, direct selling companies that have provided part and full-time income opportunities for decades without a single blemish on their record or regulatory action against them. Many of these companies sell products that have become will known brands with thousands of loyal customers. The undeniable fact is that the ethical companies who follow industry best practices far outnumber the bad actors but you almost never hear about that from the industry critics.

So, back to some of the current and most egregious misinformation that is spread on social media are addressed in what follows:

1. Direct selling is in decline as a business model and has falling sales revenue.

The facts just do not support that conclusion in any way. Almost every public direct selling company has reported double digit sales and or revenue growth for the first quarter of 2021. Likewise, the privately held direct selling companies that are clients of Strategic Choice Partners all have reported that 2020 was a great year for sales growth and increases in the number of people selling their products and services. The annual Direct Selling Association review of industry performance has yet to publish for 2020 as the information is still being compiled, but all the early indications are that 2020 was a banner year for the industry.

The only possible conclusion based upon facts supported by credible data is that the direct selling model is doing well in this market environment.

2. Direct selling is behind the times and not suited to compete in today’s virtual economy.

Again, the facts say otherwise. In no small part direct selling has enjoyed growth has had strong growth because the companies and their sales forces were quickly able to move to using virtual platforms rather than the traditional face to face sales presentation. The companies quickly industry pivoted to providing online catalogs, product demonstration videos and order processing systems that could be used on both smart phones as well as desk top and tablet computers. The industry used its flexibility and resourcefulness to provide their sellers with all the tools to successfully conduct their sales of products and services on line and the sales forces responded by growing in numbers and productivity.

3. Direct selling cannot compete with the plethora of new gig income opportunities.

It is true that the many new gig opportunities create a large and growing category of competitors for people to represent and sell our products and services. But, as the facts about the industry growth prove, so far direct sellers are competing quite successfully. Here are just some of the things that companies are doing to improve the competitiveness of their part-time income opportunity:

• Companies have been reducing the cost of joining the business and making the enrollment process much easier and capable of being quickly and easily completed on line from smart phones.
• Companies are quickly shifting the publishing of needed business information to being delivered to smart phones to ensure that the needed information is quickly and accurately published.
• Many companies have undertaken projects to amend the compensation plans to make part-time retailing more profitable than it may have been in the past.
• Most companies are reviewing their entire sales system with a goal of making their marketing and sales programs more customer centric and focused on retail sales.

Added to what the companies are doing, existing sellers and potential direct selling candidates have discovered that selling online, rather than using the traditional face to face techniques, is actually more profitable than the old system. As online sellers they do not need to cover car expenses, lose the time to drive to and from an appointment and other expenses such as child care if a single Mom is engaged in the direct selling business. It turns out that the dollars earned for time spent is actually greater as online sellers. And, being an online seller for a direct selling company is safer than the traditional business. That they do not have to leave the security of their home is an important reason for single Moms to choose direct selling over other gig opportunities.

For more about the gig economy, I highly recommend the recently published book entitled The Ultimate Gig. This book and the related service and updates that the author will publish is must reading for all direct selling executives.

These are just three types of misinformation floating around in the social media realm. Each of these false claims can be easily debunked by simply looking at the actual facts and data. But to really combat misinformation nonsense direct sellers must become engaged by challenging these false claims with the facts and truth. We need senior executives to speak out telling the true story of our direct selling model. No responsible person will claim that direct selling is perfect as it is. There will always be places where we can improve and will have to change to meet evolving market trends. But the truth is mostly on our side. Direct selling has a good story to tell. We need everyone in the business to help tell that story on line and in other communications formats.

Speak up folks!

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Alan Luce: John Fleming has been one of direct selling’s most consistent and strongest advocates over a great many years. The March issue of Direct Selling News lists John as a “Direct Selling Legend”. Most importantly, John is a personal friend, and I have had the pleasure of being a contributor to his most recent work: Ultimate Gig, published by Emerald Publishing, U.K., which is being released March 25, 2021. The book will be available via Amazon U.K., Amazon U.S., and the Emerald Publishing Bookstore. Ultimate Gig is the most recent, in-depth look at the gig economy’s incredible growth and appeal in mature markets throughout the world.

John, thank you for joining me for this interview. My key questions are: What does the book say about the role direct selling/network marketing plays in the broader gig economy phenomenon? And, what motivated you to do the study, research and writing that goes into publishing a book with a major global publisher?

John Fleming: Alan, first of all, I wish to thank you and Hakki Ozmorali for the opportunity to share thoughts with this audience.

I became motivated to embrace this work because I have been involved directly and indirectly for quite some time. When executed well, there is no other business model quite like direct selling.

People from all walks of life can participate in a channel of distribution in which all of the stakeholders win. The customer receives excellent products and services and also benefits from the intermediary – the direct seller, adding personal experiences to the marketing and promotion of the products or services. The direct sellers benefit from an income-earning opportunity based upon customer acquisition, retention, and sharing with others how they too can become direct sellers and benefit from doing what I just described. The provider of the opportunity to be part of the channel of distribution – the direct selling company, benefits by being able to build a brand based upon the personal experiences of those who engage the brand.

Alan: John, tell us more about what motivated you to do this work and what we can expect.

John: I created the Ultimate Gig Project and embraced the work required to write the book because I observed the gig economy exploding throughout mature markets all over the world while the direct selling model, overall, had been experiencing a flat to shrinking year-over-year growth rate since 2015.

Technology changed the game. We are evolving from the industrial economy model to a digital economy where more can be accomplished with less. Complexity is being reduced to simplicity. The gig economy has explored and executed upon the preceding faster and very effectively!

We have more choices in terms of how work can be done efficiently. The gig economy is showing us how “underutilized assets” and “underutilized time” can be converted into income-earning opportunities. Micro-enterprise opportunities and opportunities associated with being an independent contractor have never been greater, and I wanted to tell a story that needed to be told.

Overall, the direct selling model has not kept pace with the growth and utilization of digital platforms in a new digital economy. However, the direct selling model is quickly catching up. The unique attributes of the model will become even stronger than ever before.

Ultimate Gig is inclusive of the role direct selling plays. We interviewed four C-level executives who are leading a phenomenal transformation within their companies. However, the book is about much more. The book is about the future, the changing definition of the word “work,” the importance of flexibility and freedom in how work can be done, inclusive of when and where the work is done, plus more. The gig economy is unleashing uncommon freedoms relative to work opportunities, and direct selling companies will certainly play a growing and even more significant role from my perspective!

Regardless of how one may be participating in any form of microenterprise, I truly believe the book will add value to their thinking about their goals and objectives. The reader will learn a lot about the gig economy. As an adjunct to the book, we also created and are sharing five digital assets — our Ultimate Gig Resources — that we developed during our study and research. It’s hard to believe, but we have been working on the Ultimate Gig Project for approximately three years. Ultimate Gig Resources, via a one-time subscription, is now available through our website.

Alan: I recommend the book as a must-read for all of us who have embraced the direct selling/network marketing channel of distribution. The resources you created for the one-time subscription are also fascinating and valuable. Most authors do not share their assets in this manner.

As we continue our march into the future, the labels will not mean as much as what we do with our models and how we position our models to be considered the ultimate form of gig work. John is quick to remind us that his work is not about direct selling; it is about the gig economy. However, he is also quick to remind us that the direct selling channel of distribution had to be included in a significant manner because it is probably the original form of gig work.

Thank you, John, for your time and for providing this message for world of direct selling.

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The question was:

“Explosive start, growth, sustainability of growth, profitability, cost efficiency, positive cash flow… For a typical start-up in direct selling during these days, which one would you pick as the most important? Or is there another area that you would emphasize the most?”

Below are comments from a group of persons of expertise form the industry:

Shilpa Ajwani, Founder and CEO of unomantra 

“The year 2020 has brought with it a more level playing field as both big and small companies faced unprecedented challenges. This is a good time for innovative direct selling companies to start up.

They should focus on explosive growth to catch the attention of potential salesforce seeking extra income and consumers wanting effective products for their homes and well-being. While gaining momentum needs to be the first priority, the leadership must create strategic initiatives that focus on creating a unique culture coupled with robust systems for retention and leadership development using both high touch and high tech enablers.

This would lead to positive unit economics and sustainable growth.“

Mona Ameli, Founder and Managing Partner of Ameli Global Partnerships

“While devastating in many ways, the pandemic has created an interesting mix of opportunities and challenges for many start-ups within our industry.

From remote and virtual interactions for both employees and field, to more versatile digitally-based business approach for both customers and consultants, the start-ups have benefited from far greater advantages of agility and flexibility compared to their legacy traditionally-run and technology-strapped counterparts.

But the key challenges of careful risk-management and strategically-planned sustainable growth model that can effectively distinguish key fundamental changes to the business from temporary circumstance-based momentum remains a core area. A core area of focus for those looking to create a long-term, financially stable and scalable business.”

Emily Barr, Owner of Orbis Consulting 

“I feel sustainability of growth is a key for start-ups, and the means to achieving this is through a strong initial ‘go to market’ strategy.

This strategy needs to emphasize corporate recruiting, because for a new company one will not be able to rely solely on organic field growth. Identifying the most effective ways to use your recruitment budget is critical.

The good news, in our post pandemic world many individuals are looking for supplemental income opportunities. Whether due to income loss or added free time, there is a large, captive audience waiting to hear what you have to offer.”

Mark Beiderwieden, Founder of DiSSECT

 “The current crisis shook many households with the realisation that their trusted income stream & lifestyle are more vulnerable than they assumed.

This “new reality” is creating a new segment of direct selling participants seeking to protect their future that are both well informed and cautious when considering where to put their trust.  Expectations are high, and must be met with realistic, value-driven promises coupled with attractive income, all supported by a solid foundation of quality service, training and sales support.

The current growth potential is real! Never before has the focus on business fundamentals been more essential in order to realize this potential.”

Craig Fleming, CEO/President at Direct Sales Experts

“Currently we are launching 5-7 new direct selling companies each month and the key differentiator between highly successful companies has always been communications.

In order to successfully launch your new business, we encourage entrepreneurs to start with a well written strategic business plan. A plan that communicates your mission, vision, values, culture, unique selling proposition and key ‘go to market’ strategies.

Once written, you now have a roadmap that can be easily communicated to all team members, eliminating confusion and misunderstandings. This clear focus helps everyone understand what the future looks like and the steps needed for success.”

Doug Hepfer, President at Hepfer & Associates 

“Sustainable growth has been the focus of the most successful direct selling start-ups for as long as I can remember. Sustainable growth can deliver the exponential sales increases that drive super-start launches, without the risks of compensation plans that are highly weighted toward explosive distributor recruiting.

Focusing only on profitability often leads to under-investment in the infrastructure you’re going to need when your company passes its next revenue milestone.

Balanced growth built on strong distributor trees supported by growing customer sales has been the key to long-term success for the most successful new direct selling companies of the last decade.”

Dan Jensen, Founder of Dan Jensen Consulting

“Sustainable growth is vital for every startup. How? Think long term.

Have a great product that knocks the socks off people who experience it. Priced right.

Have great training systems that produce predictable results when applied.

Have an amazing compensation plan that makes it worth their time at 1 hour per week or 40 hours per week.

The elephant in the room is the question, ‘Is it worth my time?’”

Jay Leisner, President of Sylvina Consulting

“None of those are most important. For a direct selling startup in today’s pandemic world, what is most important is the ability of a company’s representatives to transact business entirely online (selling, recruiting, team building, leadership development, etc).

Of second importance is the need to sell products or services that people will buy even if they are not earning any money through the company’s compensation plan.

Third, I would list having company executives who are focused on both the needs of the field and the needs of the company.

Finally, I would list patience as next in importance.”

Alan Luce, Senior Managing Partner at Strategic Choice Partners

“Start-up companies face any number of significant challenges: Not enough cash, often little operational skill among the founders, and lots of investment is needed in technology, registering intellectual property and development of a product line. When they do not know what the best sellers might be, they tend to over compensate by offering more products. In most cases it is the better practice to offer fewer items with a larger count of each item.

In recent years the rise of excellent third-party warehousing and pick, pack and ship operations has removed the headache and the start-up costs associated managing logistics. This is another area where the founders usually lack expertise. The third-party logistics option saves money, time and worry.

In my experience, poor inventory management is one of the most common reason why start-up companies fail.”

Daryl Wurzbacher, CEO of ByDesign Technologies

“In successful startups, the common trend we are seeing is long-term thinking. These companies are launching with advanced tools for their representatives, investing time in building out digital assets libraries, and keeping the field focused on the next step and the next rank versus EVERYTHING needed for success.

They are also listening to customers and paying attention to the things that matter to them, like transparency, ethical supply chain, and quickly adapting to shifts in demand.

We are also seeing more companies doing industry research: Reading blogs, listening to podcasts, and contacting mature companies for tips. Those startups who take advantage of the available resources tend to avoid costly mistakes/missteps that could have deterred their growth.”

(*) Click below links for previous articles in this series:

Looking Ahead to 2020 – Part 1
Looking Ahead to 2020 – Part 2
Recommendations in Times of the Global Pandemic

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The post In 100 Words: Direct Sales Start-Ups in Pandemic Times appeared first on The World of Direct Selling.

Alan is a US DSA Hall of Famer and a member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Alan Luce
Lessons from the Lockdown: Part Three:  The Pandemic Is Over, Now What? (*)

Imagine, if you can, that it is some point in the future and the threat from the Covid-19 pandemic is now mostly behind us. We have all has the vaccine and can begin to return to normalcy. Granted, we don’t know exactly what the new post pandemic normal is going to look like. We’re pretty sure that it will not be a return to exactly what it was before the pandemic but it is widely agreed that the following will be true:

• • Unemployment levels will continue to come down to 5% or so as the economy kicks back into high gear. Many of our current part-time sellers who are currently unemployed will have the option of going back to an employment position. Can your company’s income potential for a person willing to work at your business 20 to 40 hours a week compete with employment opportunities?

• • Our potential customers and sellers will once again be participating in weeknight events outside the home; church, clubs, kids’ sports, classes, hobbies, etc. etc. Getting their time and attention will become more difficult again. How are direct sellers going to capture their   attention and motivate them to devote some time to our sales demonstration?

• • Will direct selling ever return to a majority of sales coming in person events either one to one or one to many (parties) sales demonstrations? If direct selling becomes effectively an online selling process, what does this mean to company cultures and stories built around the idea of developing personal relationships. What’s more, virtual online sales force meetings have been well received by the sellers. Will virtual conventions replace in person national and regional sales meetings very personal hands on recognition and sales leader bonding during the down times. We have believed that these events are essential to building the culture and instilling company values. Can virtual conventions accomplish the same goals?

• • Social media platforms and smart phone technology tools have been immensely important in allowing direct sellers to switch from in person relationship selling to online relationship selling.

• • The regulatory environment continues to evolve with no clear rules that direct sellers can rely on as they develop their product claims, recruiting pitches, and compensation plan structures. One element of the regulatory drive is to make the industry more strongly focused on retail selling to end user customers who are not participants in the compensation plan.

Some companies are going to have to make changes to their compensation plans to create more profit potential from retail sales and shift the story from depending on aspirational “change your life from rags to riches” stories. Selling the new plan and business building strategies can be a real challenge and implementation of the new strategy is high risk to say the least.

These are some of the key issues that company senior executives must recognize and prepare strategies to address. But preparing the strategies is only part of the story, persuading senior field leaders to accept the changes and adopt the new strategies and tactics is the real challenge. Based upon our work with client companies during this time, it has been quite apparent that finding the ways to work online during the lockdown has been primarily led by mid-level leaders and part-time sellers. With a few notable exceptions, top field leaders have not been the driving forces behind developing new tactics and driving change.

Moreover, top leaders have too often led the resistance to change, especially if proposed changes to the compensation plan to improve retail profitability might reduce their income potential.

So, Now What?

What follows is a suggested process of defining your post pandemic strategies and implementing the changes you feel will be needed for your Company to make a successful post pandemic transition:

1. Identify your best lockdown performers in the sales force and learn what makes them so successful. Take those learnings and create training programs to promote those lessons and build or buy the online tools to make them as effective as possible. What each Company is looking for is a message that tells prospective sellers why joining that Company is the best part-time income opportunity available and train your sales force to use that message for sponsoring.

2. Game out the possible consequences of a return to a more normal time without the necessity to for social distancing, limited group gatherings and fully open restaurants and bars. What will this mean for your business? How will this help or hurt a person’s ability to be successful selling your products and services? How will a return to more normal employment rates impact your  Company’s ability to attract sales people who, in turn, bring new customers? How will that change help and how will it hurt?

The job of senior management, among other duties, is to understand the marketplace and the civic environment and chart a course of action that will give the Company the best chance to be successful in a time of change. Gaming out the possibilities and planning strategies to optimize helpful trends and other strategies to counteract negative trends is a critical management skill. Producing such strategies is quickly becoming a business survival imperative.

3. If your Company has not moved toward providing your sales force with the technology to essentially conduct all aspects of their direct selling business on their smart phones, you need to move in that direction quickly. During this lockdown many, if not most, of our sellers, have learned to conduct their business online.

But the ability to sell and sponsor online was not the only things they learned. They found that doing business on line was easier, more convenient and required less time. No to and from travel time. No to and from expense for gasoline. No need for a car for that matter. No need to worry about child care when you are out of the house doing business. As a matter of money earned for time spent, working from a computer at home is far more efficient and raises the income received for the time spent on the business by the sellers.

As our society returns to some levels of pre-Covid-19 activities our sales forces expect their companies to provide them with the ability to conduct business on their phones. The rapid advance of mobile phone technology to enable the sellers to do so is indicative of that demand. Ignore or put this off at your peril. Not offering up to date mobile sales capability, access reports, CRM customers information and catalog access will put your company at ta distinct recruiting disadvantage.

4. Anyone who tries to tell you that they can predict where the regulators are going with the evolving rules to govern direct selling simply does not know what they are talking about. Between the court case challenges of FTC authority and the ominous statements coming out of FTC officers the only thing we know for sure is that a final set of rules that we can all rely on has has yet to be promulgated and approved.

So, what do we do in the meantime? Among other lessons coming out of the lockdown is that those companies that offer a reasonable profit for selling at retail to end user customers who are not members of the company compensation plan are the companies that are doing the best during the lockdown. This retail focused trend started several years ago and the lockdown impact has simply accelerated the shift from consumption to retail selling that had already been underway.



If your company is looking to revise their program to focus more on retail sales, keep the points I set out below in front of mind as you consider the options:

1. To make a successful transition to a more retail focused plan you must be sure to make selling at retail as profitable and easy to accomplish as possible. Typically, that means offering a retail profit of 20 to 25% of the retail sales price of the product. To recruit sellers successfully they must see the opportunity the company is offering provides a good opportunity to make $15 to $25 dollars for every hour they spend selling.

2. If you are modifying an existing plan, making retail selling more attractive and compelling will require either reducing company profits or shifting comp plan payouts from the middle and the top of the plan to fund the retail profit payout. In this situation it is imperative that the company senior management communicate and win the support of the field leadership to make the change.

To garner this support requires that management be more transparent than they may have been in the past about the percentage of revenue that is paid out to the field and the market trends and forces that are driving the need for change. It is really important that the field leaders fully understand that the shift toward retailing is not being forced upon direct selling by regulators. Market trends, the competition of the gig economy and the rise of ecommerce retailing are forcing this change even more than regulators.

In fact, one could argue that the regulators are simply trying to move the rules to conform with the unstoppable, unchangeable market forces. That does not mean that the regulators may not have gone to far. When believe that to be true, then the regulators must be challenged. However, in my view the evidence on an inevitable trend are clear.

3. Test your programs to find effective retail focused initiatives before making changes to the compensation plan. Top management should not expect the field leadership to simply accept a major change without proof that what is being substituted and driving that change works and that the data unequivocally demonstrates the new initiative’s success.

All in all, there is much for us to learn from the impact of the Corona virus lockdown about our businesses and our society. Don’t miss this opportunity. Take the time to really think about what has changed, what may stay the same and what your company must do to be successful in what is a very dynamic and rapidly changing environment. We may never see an opportunity like this again!

(*) Click to read the first two parts here: Lessons from the Lockdown and Lessons from the Lockdown – Part Two

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The post Lessons from the Lockdown – Part 3: The Pandemic Is Over, Now What? appeared first on The World of Direct Selling.

Alan is a US DSA Hall of Famer and a member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Alan Luce
Lessons from the Lockdown: Part Two (*)

Recent discussions with direct sellers have expressed feelings ranging from surprise to astonishment about how well their companies are doing during the Covid-19 lockdown.

Three things have happened that have produced these good results: First, millions of people have lost their jobs and are open to direct selling opportunities that can help them make some money while staying socially isolated at home; second, the millions of people isolating at home and with little else to break the monotony have been willing to join direct sellers for online product demonstrations, and third, direct selling sales forces have adapted to using online selling techniques much more rapidly than anyone would have or could have predicted. The combination of these factors has produced outstanding, even record-breaking sales and sponsoring results for many direct selling companies in April and May. June appears to be going in the same direction. All is good, right?



Maybe yes and maybe no. Many are doing well at this time in these unique circumstances. But can we expect things to stay the way they are now? No. Sooner or later the pandemic will recede and the economy will come back. We may not come fully back until a vaccine is readily available and the populace has been mostly vaccinated and that may not be until next year, but we will eventually come back. We do not know whether we will resume our lives as we lived them before the pandemic lock down or something less social. The unemployment rate will go down again to something below 10% and many jobs will be hiring again. It is likely that that due to automation and robotics that more full-time jobs will be eliminated and, for that reason and others, gig work will continue to be a major competitor for part-time income opportunities. As that recovery occurs, the market environment will likely look more like the pre-pandemic period than now.

Knowing those things will likely occur, how do direct sellers maintain some of the momentum and advantages that have been enjoyed during this shelter-in-place lock down period?

First, figure out what your folks are doing now that they were not doing or not doing as much before the lock down. If your company is like most, your sales force has quickly adapted to using online platforms such as Zoom, Facebook Live and Facebook Rooms and other platforms to arrange opportunities to show their products and services, generate orders and attract and sponsor recruits. Exactly what are they doing that is the most successful and what can you the company do to make the salesforces online activities even easier. Have you provided improved images and content designed to assist online presentations? Have you implemented one of the many smart phone applications that allow sales folks to show products and videos and place orders? Have you adopted a new seller kit program that fits a sales activity that needs fewer actual product full size samples and more single use sample packets? Does a new seller need a physical kit at all? What are the best online sales and sponsoring practices? Are you spending anytime trying to learn the answers to these questions and create new support materials, training and programs?

Second, have you considered that selling on line may require your sellers to spend less time to make a sale? Online selling does not involve travel, and is often less social than one to one or one to many in person sales. Yet, for many companies this important difference from in person selling may not have been considered or even thought about. But it is an important difference and one that may become a competitive advantage for thoughtful direct sellers when the employment figures go up again and things post vaccine begin to return to some level of pre-pandemic normalcy.

Historically direct sellers have not talked about or even tried to calculate a dollars earned for time spent or, as more commonly thought about, the dollars per hour opportunity associated with selling their products and service. We have avoided this topic because our sellers are not employees and direct sellers do not pay salaries or wages. Rather, direct sellers receive commissions for the products they sell or they make retail profits from the difference between what they pay for the product when they buy it from the company at wholesale and what they sell it to their customers for at retail. Out of an abundance of caution to protect the independent contractor status and, in some cases, because the retail sales profit reward does not tell a good story, we simply stay away from the subject. However, I not only think we can safely tell this story, but will be forced to do so as we come out of the lockdown and have to once again aggressively compete for gig workers to sell our products and services.

Here’s how: Do the research surveying your sales force to find statistically supportable data as to the time it takes to make the average sale to a buying customer. Data should be gathered for one on one in person sales, one on one online sales and one to many (party) in person sales and one to many online sales. Match the time data with the average customer purchase amount data and you will come up with an average retail commission or profit for average time spent making the sale. Most companies will find this data very revealing. First, do your sellers make a decent profit for time spent selling your products or services. If your average profit for time spent is less than $15 an hour, you may not be competitive with other direct selling or gig part-time income opportunities. On the other hand, if your average profit for time spent making a sale is $25 an hour or more, you may have a recruiting advantage. In either case, this is information that is well worth knowing. Can you use such data in promoting your opportunity without damaging the independent contractor status of your sellers? I think you can so long as your data is statistically accurate and supportable and you clearly state that this data is a composite of all independent seller activity and not a dollar per hour income promise. Of course, before publishing any such income hypothetical please check with your legal counsel.



Summary:

Many direct sellers are experiencing strong sales and recruiting during the pandemic lockdown. It seems clear that it is the very limitations the lockdown places on customers and part-time income seekers that is working to direct sellers’ advantage. The sales forces of the companies have adapted to selling and sponsoring online more quickly than most companies were prepared to support. The companies can learn from what their best online performers are doing. At some point, science and medicine will defeat the Covid-19 plague and the limitation of the lockdown will be lifted and some degree of pre-pandemic employment and social norms will return.

The companies that take the lessons learned during the lockdown and do the work to have supportable accurate data as to the competitiveness of their part-time income opportunities will survive and prosper when the pandemic is finally over.

Do not simply enjoy these strong months! Learn the important lessons from the lockdown and prepare for the post lockdown period.

(*) Click to read the first part of Alan Luce’s article here: Lessons from the Lockdown

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The post Lessons from the Lockdown: Part Two appeared first on The World of Direct Selling.

Alan is a US DSA Hall of Famer, and member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Alan Luce
Lessons from the Lockdown

The two most commonly asked questions I get from clients these days are first, “How do we cope with the shelter in place situation?” and second, “How is this social isolation experience going to change direct selling going forward?”

The “lockdown – shelter in place – social distancing” experience, regardless of what you call it, has radically altered nearly every aspect of our work, family, neighborhood, social, community and civic life and brought the economy to its knees in 6 weeks or less. This is completely unknown territory to every living soul on earth. Everyone is searching for answers and speculating as to when things many return to normal, whatever that means, and what “normal” might look like when we get to whatever that is?

But, for direct sellers, there are certain things we should agree on and there are “path-finders” out there who are successfully navigating the road to the future of a healthy direct selling business. As direct sellers I believe that we should agree on the following:



1. The coronavirus pandemic is not the cause of the changes impacting direct selling.

The pandemic has simply but dramatically accelerated the changes that were happening anyway. Changes that were already underway due to the impact of the Gig economy competition for sales people, the best of e-commerce company practices concerning delivery and 7/24/365 access and one-contact solutions for customer service issues along with evolving regulatory guidelines.

2. The company and sales force reputations on social media are now ever present and highly influential participants in our sales force recruiting and retention processes.

What our sales force, former sales force members, customers and former customers are saying about the company, its products and/or services and the income/business opportunity afforded by selling for the company is much more influential than what the company is saying. Companies need to pay much more attention as to how their business, products and opportunities are being reviewed on social media. Use this time to attend to and polish, if necessary, your online reputations. There are experts at social media reputation repair and management who can help with this effort. Cleaning things up now and keeping your reputation positive will pay big dividends as we come out of this pandemic.

3. Direct selling companies must find ways to be more accessible to customers and the sales force members who may have complaints or problems.

The best e-commerce companies have created new levels of expectations among customers: They now expect every company to be accessible on a 7/24/365 basis and, what’s more, they expect that their problem of complaint will be resolved quickly and at the very first contact whether it be by phone or online. This new expectation of all-hours accessibility carries over to our sales force. They too, have come to expect quick all-hours access to their company for help with their problems or their customers’ problems. Direct sellers have a long way to go to match world class practices in these areas, but we have no choice but to find ways to do so.

4. Direct selling companies must focus on retail selling to end-user customers.

The rapid growth of e-commerce and the customer expectations that it has created requires that every form of selling focus more than ever on the customer experience. Is the buying process as easy and convenient as possible? Is delivery on time with a nearly perfect record of getting exactly what the customer ordered to that customer on time and in perfect condition? Is the after-purchase customer care easily accessed with one stop problem solutions? Does the company/sales person keep in touch with the customers in a regular basis? Does the company offer a preferred customer program which mixes the best of high touch direct selling with the best of e-commerce marketing techniques?

Added to the trends and movements these questions engender is the fact that federal regulators increasingly want to look at whether the companies derive a majority of their revenue from retail sales to end user retail customers as an indication of legitimacy. Focusing on providing an outstanding retail customer experience is the future of direct selling and something with which we should all agree.

If these are the things we can agree upon, where do we find the “path-finders” who will show the company the best ways to present and sell your products and/or services to retail customers and promote the business to folks looking for a low investment part-time income gig.

The path-finders more often exist within the current sales force rather than in the corporate headquarters.

It has always been thus: The sales force path-finders innovate in times of change. Generally speaking, creative members of our sales forces are way ahead of their company partners in adopting new technologies, finding better language to enhance their sales presentations, exploring social media platforms for ways to better communicate with their customers and sales team members. This was true of online order processing, adopting to email and the internet, using social media platforms such as Facebook, Twitter, What’s App and Tick Tock to support their businesses.

What smart companies are good at, and all companies should adopt, is the practice of paying attention to what the best of their sales force innovator path-finders are doing. Who is really selling a lot in this time of change? What are they doing that most of their colleagues are not doing and that their company does not train or support?  Why is Mary’s team growing and flourishing with good productivity when most of the sales force is struggling? Even in the worst down times every company has sales path-finders who are doing well. Go to school on your path-finders. Learn what they are doing and find ways to develop company training to make what the path-finders are doing duplicatable. Develop the communication, technology, incentive and other types of support programs to help all members of the salesforce adopt these new ways of doing things. Be sure to update your new seller onboarding incentive programs to incorporate the new techniques and methods.

It makes sense when you think about it that our sales forces will find the best new practices to be successful sellers and sponsors in this time of change. They are on the front lines trying to respond to what the market forces and their customers are demanding. It has always been so just as it has also been so that the best and most successful companies understand that their wisest course through change is to follow the lead of their most successful sellers and find ways to support them.

For direct sellers paying attention to and following the lead of their sales force, path-finders is the most important and useful lesson learned from the lockdown.

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The post Lessons from the Lockdown appeared first on The World of Direct Selling.

It is evident that we are globally going through unprecedented times. Within this, the direct selling industry is facing immense difficulties. That being said, there are things that can and should be done by company management. Below you will find what several prominent figures of the industry have to say on this. Feel free to add your own comments.

“What will be your most important advice to direct selling companies, in times of the global pandemic?” was the question.

Oscar Canio Arias, Managing Director of Direct Selling Europe

“At the time of writing this article, COVID-19 continues to expand. The priority for the industry should continue being safeguarding the lives of our employees, collaborators and customers. Beyond the health implications, together with the contingency plans being currently implemented, companies should be working on a two-steps approach: 1) In the short term, work to return to business as soon as confinements are over; and, 2) Furthermore, prepare your company for a new post COVID-19 scenario, where both policy makers and consumers’ priorities and behaviour will be heavily shifted by the crisis.”

Tamuna Gabilaia, Executive Director and COO of the WFDSA

“In light of the global CoVid19 pandemic WFDSA is supporting the global direct selling industry by planning virtual global networking sessions for the leadership of direct selling associations and companies to enable them to share best practices and strategies designed to overcome the challenges posed to direct sellers by the CoVid19 pandemic. These challenges range from distribution channel disruption to limitations on the traditional person-to-person business model. Equally important will be ways for companies to innovate with digital sales and the opportunity also afforded by direct selling distance selling that has advantages over retail businesses. While WFDSA’s paramount priority continues to be consumer protection and adherence to the highest standards of ethical business practices enshrined in the WFDSA Code of Conduct, WFDSA will also be a leader in convening and facilitating global events and seminars that explore ways to navigate the challenges of the CoVid19 pandemic while also identifying opportunities that can position direct selling in a competitive posture in the changing marketplace as a consequence of the CoVid19 pandemic.”

Vince Han, Founder and CEO of MobileCoach

“COVID-19 is the first pandemic that many have experienced and the accompanying uncertainty, fear and disruption to jobs and life can wreak havoc on one’s well-being. In trying times, people are going to cling to their most meaningful relationships. More than traditional retail brands, direct sellers enjoy a greater sense of kinship between them and their distributors and customers. This is a time to find ways to genuinely come together as a community. Be there for your community in times of trouble and you’ll enjoy the ensuing goodwill and loyalty for years to come.”

Brenton Kugler, Partner at Scheef & Stone, LLP

“In such an uncertain time, it is critically important for companies to focus on the things they can control rather than spend time and energy on the growing number of things that are beyond their control. For sure, this is easier said than done. If corporate staff is working remotely, provide regular communication, preferably via video conference, to keep employees engaged and focused. Maintain regular contact with manufacturers and suppliers so that your company is prepared for supply chain interruptions. It is critical to maintain operating capital and companies and suppliers should determine if they are eligible for benefits available from the COVID-19 stimulus loan programs.  Most importantly, have a plan in place for quickly resuming full-scale business activity once the pandemic finally ends. You don’t want to be slow out of the gate because opportunities will likely be available to the companies that are the quickest to return to full operating capacity.”

Alan Luce, Senior Managing Partner at Strategic Choice Partners

“My most important advice to direct selling companies would be for them to recognize that this event will forever change us as a society. While the pandemic will eventually recede driven back by science and social distancing, some of the social and business practices that societies and nations have adopted will stay with us for generations. For example, most may not remember that the US Social Security program began during the Great Depression of 1929 as a program intended to alleviate the extreme poverty of senior citizens. This crisis and the social boundaries both imposed and self-activated will, in some ways not fully foreseeable at this time, change the way we think about subjects like the role and size of government, universal income assistance, pandemic and other types of catastrophe planning and preparation, health care as a right or an option, safety nets for independent contractors and how to pay for them and, whether direct selling becomes much more virtual on line rather than traditional person to person. Pay attention to what our most effective online sellers and team builders are doing now! Going forward these may become the backbone of direct selling standard operating procedure. This experience is changing us. We just don’t know all the ways it has yet!”

Peter Maddox, President of the Direct Sellers Association of Canada

“There are so many unknowns right now, so giving advice is a fraught exercise. Nevertheless, here are some things for direct selling leaders to consider both during and post COVID-19: • Look after your people and get the payback in the future – relationships developed during tough times can become enduring and powerful, • Don’t forget ongoing compliance requirements – perhaps more than ever, regulators and others are looking for missteps around product claims and earnings, • Search for ways to grow your business and the economy – without appearing predatory, investigate opportunities to sensitively and intelligently promote the direct selling opportunity, • Work together with your industry colleagues – this is an important time for sharing problems, solutions and best practices with your peers.”

Gillian Stapleton, Executive Director of the Australia Direct Selling Association

“When my team in Australia chose our conference theme for 2020 back in 2019, we had no idea how topical it would actually become. ‘Right Here, Right Now’ is how we are all operating these days and things are changing daily, so planning effectively becomes nearly impossible. Make decisions based on what you know today, and know it will change and you will have to make that decision again. Right here Right now, my three-guiding principles in this time of crisis, when there is no rulebook: Back Yourself, Back Your Team and Make Decisions.”

Kevin Thompson, Partner and Co-Founder of Thompson Burton

“Press! I would encourage anyone to fight through this period. If they come out of this lockdown period without a new skill or a new strategy, they did it wrong. This is the perfect time to reconsider patterns of behavior, keeping the good and discarding the bad. In life, it’s always wise to recalibrate your business goals every few months. We get busy and generally fail to dig deep to think through our strategies. Well now that we’re all shut down, there’s no better time than today.”

Daryl Wurzbacher, CEO of ByDesign Technologies

“Stay Positive! Our industry has a strong history of growth during economic downturns. This current issue is no different. Now is the time to plant seeds with relationship building, supporting your online communities, and preparing for the growth that is just around the corner. This is an excellent time to focus on the fundamentals of your business: optimize your supply chain, develop consistent onboarding, and leverage this as an opportunity to make ourselves and the industry better. Let’s make the direct sales industry the leader in helping people become truly self-reliant.”

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The post In 100 Words: Recommendations in Times of the Global Pandemic appeared first on The World of Direct Selling.

We have come to the end of 2019! I had asked some of the prominent persons of the direct selling community to offer their perspectives on what they see coming in 2020.

“What will be the most important issue, whether it be an opportunity or a threat, in the direct selling industry that will need a closer focus Next Year?” was the question.

Last week’s article covered the first group of responses. You will now read the second group below. Feel free to add your own comments at the end of the text.

Brenton Kugler, Partner at Scheef & Stone, LLP

“MLM companies operating in the U.S. must take a fresh look at their compensation structures in the wake of heightened FTC scrutiny of MLM compensation plans and new criteria announced by the FTC for determining what is and is not a legally compliant compensation plan. Companies should review and update antiquated compensation plan terminology and concepts, and where necessary rewrite the compensation plan so that it is easy to understand (and conversely, is not capable of being misunderstood or misconstrued by a regulator). The FTC has promised further “aggressive” enforcement activity directed at MLM companies operating in the U.S. Companies should ensure that their compensation plans in structure, practice and terminology make it clear that compensation paid to program participants is primarily based on verifiable sales of products and services to non-participant consumers.”

Marie Lacroix, Executive Director of European Direct Selling Association (Seldia)

“It is clear by now that companies who miss the digitalization train will not survive in the coming years. Besides that, at least in the EU, there has been a great deal of attention afforded lately to the opportunities arising from flexible working conditions. In the context of a changing world of work where people stop working from 9 to 5 the same job all their lives, one of the strengths of our industry is salesforce training. In the near future, companies should focus on transferable soft skills, as well as a strict ethical framework benefitting both consumers and sellers”.

Sebastian J. Leonardi, President & Chief Business Strategist at DSXgroup

“For direct sales and social commerce companies, the current state of market transformation is a board level agenda item. An imminent threat facing traditional direct sales models is failure to recognize that transformation isn’t just here, it’s accelerating. Today, while some DS companies explore the impact of Gig Economy pressures, companies such as Uber (a favorite DS comparison) are expanding and multiplying opportunities for independents through Uber Works and other technology-driven growth initiatives. Simultaneously, retail brands are continuing their pursuit of omnichannel nirvana by honing personalization, strengthening emotional connections, and innovating fresh experiences- all designed to retain and capture new customers. Aside from simplifying compensation plans, refining messaging, and initiating compliance audits; what’s your strategy for driving customer acquisition, brand loyalty, and network growth in the retail transformation age?”

Alan Luce, Senior Managing Partner at Strategic Choice Partners

“The next five years will see direct selling become more retail-oriented with the focus on customer acquisition, customer retention and customer service. At the same time, direct selling sales force attraction will focus more than ever on having an attractive, competitive and compelling part-time income opportunity for people looking to earn $500 to $1,500 a month.”



Peter Maddox, President of Direct Sellers Association of Canada

“I believe that the most important issue for direct selling in 2020 is ensuring that our business practices continue to evolve – to a point where we can consider ourselves a positive role model to all industries. This doesn’t mean always agreeing with regulators, nor does it prevent us from fighting back when we are unfairly targeted. But it does mean working together through forums such as DSA Canada, questioning colleagues when we are not sure that their actions are best for the industry, and investing in compliance. In this changing landscape, DSA Canada membership provides excellent value. We act as our member’s extra set of eyes and ears, helping to protect their investments in this market.”

Nick Mallett, Director at Pan European Solutions

“Whatever the political, social or economic view one takes, surely our General Election creates certainty that BREXIT will happen, on 31 January 2020. BREXIT is still shrouded in uncertainty, as regards the timing and substance of the all-important trade deal, even down to whether there will be a “deal” or not. BREXIT does not raise any concern that the UK-origin law should be changed – quite the opposite, given the clamour for recovering sovereignty. EEC/EU-origin law was all implemented into UK law by UK legislation, so that will remain in force indefinitely. For the UK government to voluntarily change any law of relevance to the direct selling industry would damage the integrity of the single market, which would surely be unwise. So, the status quo is bound to prevail for quite some time, as there is no BREXIT-related need to change any law in this area.”

Gillian Stapleton, Executive Director of Australia Direct Selling Association

“In 2017, Direct Selling Australia celebrated its 50th anniversary with a conference theme of ‘Disrupt Yourself Before You Get Disrupted’. Two years on and shifts both domestic and global mean we can linger no longer. Right now, the media target our industry with relentless frequency, regulators have the channel on their radar and consumers seeking flexibly and remote working options have many choices. The industry must address education and training of the distributor, improved compliance and compensation and change the culture of recruiting. In Australia, DSA is focused on making the industry attractive once again, by sharing the realities of our best product – our people, always with the aim to enhance reputation and better protect and promote our members. When they succeed, we succeed. Disruption is here but now, like a Phoenix, the channel will gain new life that is stronger, that connects across cultures and celebrates another 50 years of growth.”

Kevin Thompson, Partner and Co-Founder of Thompson Burton

“2020 is going to be a challenging year in our sales channel. The negativity in mainstream media will continue to climb, making it more difficult for distributors in the field.  Then there’s the litigation between the FTC and Neora. The stakes are high and I expect there to be some consequences to come out of that case, for better or worse. There’s a stampede coming and the intelligent companies are going to find ways to ‘climb up a tree’ to avoid being crushed.”

Terrel Transtrum, President and Founder of ServiceQuest

“Direct selling works when companies understand that humans are hard-wired for connection, growth, and significance. Service is the key to helping people see their way to success, by clearing hurdles, lifting burdens, and building hope. More than ever before, 2020 is the year to focus on serving customers and reps. From cracking down on hold times or using social media as a contact center touch-point, to one-call problem resolution and amazing on-boarding, the prize will go to the business that understands who is king (the customer) and who is the heart of direct sales (the distributor).”

Daryl Wurzbacher, CEO of ByDesign Technologies

“We have a tremendous opportunity to elevate the credibility of direct selling with better reporting and tracking of retail sales to customers. Consumers around the world depend on the innovation our industry delivers, making retail sales the backbone of what we do. For companies that ship directly to customers, this is a given and easy to show; but for companies where there’s a “cash and carry” component, there needs to be a better solution. As an industry, we need an easy-to-use method to demonstrate objectively what we already know — that real customers are driving our sales.”

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The post In 100 Words: Looking Ahead to 2020 – Part 2 appeared first on The World of Direct Selling.

Alan is a US DSA Hall of Famer, and member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Guest post by Alan Luce
AdvoCare, Neora, an Ever More Aggressive FTC! What Now?

In recent weeks, the direct selling industry has been shocked by one revelation after another involving the Federal Trade Commission’s actions against direct selling companies. The stunning transformation of AdvoCare from a marketer with an MLM compensation plan to a single level plan due to an FTC enforcement action was still being absorbed when, BANG!, along comes the FTC action against Neora (formerly “Nerium”) and Jeff Olson and the counter civil suit by Olson and Neora challenging the FTC’s actions. Adding to the confusion was a recent address to DSA members by Andrew Smith, Director of the FTC Bureau of Consumer Protection wherein Mr. Smith expressed the agency’s belief that MLM is a legitimate business model, while then spotlighting fundamental areas of direct selling as we’ve known it as problem areas. (*) Wow! Where did that come from?



Industry legal advisors tell us that there is no case law to support the position that simply having a compensation plan that pays more than two levels deep may be enough to make the company a target of FTC enforcement. There is no FTC Trade Regulation Rule to that effect either. What’s more, just last year the FTC sent a letter of guidance to DSA setting out the parameters of what companies should and should not do to operate legally and there was no mention that “more than two levels of compensation” absent any other evidence could put a company in jeopardy. Rather, it seems that this idea, along with several others expressed by Mr. Smith, in his address to DSA are new unpublished standards that are being applied retroactively by the FTC staff in enforcement actions.

Applying new “standards or rules” that have never been published retroactively seems more than a bit bizarre as a rule making process, not to mention unfair to direct selling companies that may be held liable for violating a rule that they did not know existed. That such an unusual process violates basic fairness and due process is a significant theme in the Olson/Neora civil suit against the FTC.

In time the courts will rule on whether the FTC has the authority and power to create new rules and apply them retroactively without notice in enforcement actions against companies and individuals. As an industry direct selling companies are going to have to challenge the FTC for over reach and abuse of its power. All of this will be worked by individual company cases and the industry trade associations.

BUT, in the meantime what should companies do to protect themselves?

How do they organize their marketing programs and plan for the future? Direct selling, like any form of business, needs clarity as to what the “rules of the road” are for their form of distribution and certainty that the published guidelines, by agency rule making or court precedent, will be in place for a reasonable period of time. Many believed that the FTC’s letter to DSA last year was intended to provide some of that certainty and predictability. It didn’t as the recent actions against AdvoCare and Neora make abundantly clear. So, what now?

Well if you want legal advice, you need to go to the attorney who advises your company. But if you want some practical management advice, let me offer a few ideas of things you can/should do now to protect your company from an unwanted and unexpected challenge by the FTC or a similar state agency.

1. FTC actions are still most often initiated due to exaggerated earnings and opportunity claims and/or complaints from former distributors. And when the FTC does move it is usually when if finds a number of issues with company and/or distributor actions. For example, exaggerated earnings and life style claims coupled with not have enough retail sales to end users who are not participants in the compensation plan, plus paying commissions on kits, etc, etc.

So, step one in my play book would be to take a hard look at company literature and social media messages delivered by the company. Are any claims made about income factual with full disclosure about what percentage of the field makes that income? Does your corporate material focus too much on mansions, and exotic cars and travel?  Do a full review with your company attorney and compliance folks and try to look at the material as the FTC would. If its questionable, change it quickly.

Now, review your policies to ensure that it is a clear violation of company policy to make exaggerated earnings and lifestyle claims. Working with the advice of counsel, it may be necessary to republish revised company policies.

2. Actively monitor materials that your distributors produce on their websites, webinars and social media. The FTC will hold the company, as well as the individuals as they did in AdvoCare, liable for offending independent distributor communications. Move quickly to have them removed and take disciplinary action if they violated existing company policies.

3. If your compensation plan pays commissions on the kits, samples and self-purchases bought by newly recruited sellers to their uplines, consider whether you want to continue that feature of your plan. That seems to be a red flag to the FTC and other regulators. What the final rules may be on this issue is unclear at this time.

4. Is your company able to accurately and easily produce data that unequivocally demonstrates that 70% or more of your sales are made to retail customers who are not participants in the compensation plan? If so, keep that date up to date and easily accessible. Review your compensation plan, recruiting literature, fast start programs, social media to be sure that your material focuses on retail sales. Monitor your field materials to be sure that they are following the company lead on communicating about retail sales to end users.

If you do not have accurate data about retail sales and/or your plan and communications do not focus on retail sales, you may want to consider adding a preferred customer club for lower level sellers to convert to and looking to ways to incent retail selling and the enrollment of preferred customers.



5. If you are in good shape on items “1” through “4” above, then you may want to hold fast for the time being on your compensation plan if it pays overrides on more than two levels. At this point, while Smith’s recent comments do not directly express the opinion that a compensation plan of more than two levels may be considered an illegal pyramid scheme, many experts have interpreted this nonetheless based on the statements relative to compensation plans that are overly dependent on recruiting for success in the business. (*)

Remember, the FTC and other agencies tend to focus their enforcement activities against companies where they can allege multiple violations of existing standards as well as in recent actions trying to establish new standards and rules. So, review the recent enforcement actions and settlements with a qualified attorney who works with FTC cases to be sure that your corporate and field practices are in full compliance with the established case law and published agency trade regulation rules.

If you are a new company, just getting started and seeking to avoid any of these conflicts, there are consultants and industry attorneys who can advise you as to the best practices and policies that will protect you from conflict with regulatory agencies going forward.

This is a fast moving and confusing time for direct sellers. Do what you can to ensure that your company is focused on retail sales, makes honest and accurate income claims that do not exaggerate the possibility of making high incomes or enjoying an extravagant life style. And make sure that your sales force members are not making inappropriate claims either. Encourage your trade association to take action to protect legitimate direct sellers and, if you possibly can, help provide the funds necessary to mount that defense.

(*) These statements have been updated since the original publishing of the article to clarify the intent of the author.

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The post AdvoCare, Neora, an Ever More Aggressive FTC! What Now? appeared first on The World of Direct Selling.

Alan is a US DSA Hall of Famer, and member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Guest post by Alan Luce
Winning Back the Trust

In times of change, companies often find themselves at odds or even in an adversarial struggle for dominance with their field sales leaders. There are many reasons why these divisions occur, including declining sales, changes of ownership (especially when the founder (s) sell out or retire), and rising competition from other gig/part-time income opportunities.

These divisions lead to a lack of trust and belief on the part of the field sales leaders, and will obstruct, if not outright sabotage, any efforts to reverse or correct the situation that fueled the divisions in the first place. How does the company management team rebuild that trust and regain a productive working partnership with the field sales leaders? The answers lie in effectively employing the following tactics: Accountability, analysis, transparency, moral suasion and, most important of all, recognizing that your top field leaders are your partners, not your direct reports in a traditional corporate hierarchy. Let me say that again: Partners, not employees who report to top management!



#1 = Accountability and Equality

Top managers are often reluctant to accept any responsibility for service breakdowns, product quality, declining sales or failing to adapt to a changing market environment. Perhaps this reluctance is driven by the “never admit mistakes” positions that being a public company often dictates how public companies communicate with shareholders and investors. Direct selling companies, whether public or private, are different. The sales and distribution of our products to end-user customers is done almost entirely through our independent sales force. And the top leaders of that sales force are powerful figures that have risen to the top or our compensation plans and have been promoted, recognized and publicized as exceptional leaders who all the independent sellers should strive to emulate. It has been the company that has put them on the podium and sung their praises. They are not the equivalent of a wholesaler’s retail outlet. Direct selling field leaders see themselves as of equal importance to the success of the business as the corporate leadership. The relationship is more like that of partners in the enterprise.

Company management must recognize and respect that the field leaders see themselves as equal to, not subservient to, the top company management. One of the surest ways to begin to reestablish trust with the field leaders is to call out and accept responsibility for any failures or mistakes the company has made. This includes failure to anticipate changes in the market environment. It is important that the corporate team accept a share of responsibility for the current toxic atmosphere with the field leaders. Any conversation between equals will go better when both parties accept their share of responsibility for the situation. Generally, if the corporate team starts off by holding themselves accountable, it opens the door for the field to accept responsibility for their part of the problems.

#2 = Analysis & Transparency

It is important that the company conducts a full and complete analysis of the company performance, the impact of market place changes and whether the competitive climate for customers and prospective independent sellers has changed. This is one area where the company has a significant advantage over the field leaders in terms of business analysts, whether in house or engaged third party experts. Once this analysis is completed and conclusions are reached, it is very important that the analysis behind each conclusion is fully shared with the field leaders. They want to feel that they are helping formulate the strategies and tactics to overcome the issues revealed by the analysis. They want to be participants in the discussions and decisions, not simply an audience. The more they feel dictated to, the less trust and belief the field leaders will have.

#3 = Moral Suasion

Effective leadership of independent field leaders is more a matter of moral suasion than corporate authority. This is often the hardest thing for corporate leaders who do not come from a direct selling background to come to understand. You cannot order the field leaders to follow your recommendations. You must persuade them to accept your recommendation or point of view. Any time company management falls back on any type of “I’m the boss and you will do as I say!” or any other type of expression of company authority over the field leaders, the company has lost the argument and fostered the distrust you are trying to overcome.

Using persuasion and reasonableness with ideas supported by the analysis takes time, patience and persistence. Many corporate top managers are not used to having to persuade rather than order. If you want to overcome distrust and once again foster the confidence and belief of senior field leaders, then you must take the time to use persuasion and reasonableness to win their agreement, cooperation and support. After all, the field leaders are the ones who must execute the strategy. It is important that each side recognize the skills that the other side brings. The company has better analysis and research resources and capability.  The field leaders have better field implementation skills.  Without the field leaders’ full and enthusiastic agreement and active support, no strategy will work!

The one thing you do not want to do is promise that a particular new program is going to solve the issue. It is better that you position all new programs as a potential help that will only be proven out as effective when implemented with excellence by the company and the field sales leaders. When facing big challenges, especially changes in the market environment, it often requires trying several different program approaches to find the one or the combination of programs that works.



#4 = Recognizing the Partnership Status of Top Field Leaders

“Leadership authority” is granted by the partners, not conferred by some higher authority.

There is no question that the company has more actual power than any individual or group of top field leaders. But power is not authority! Having power is not the same as being recognized as the “leader.” In a partnership, the reality is that not all partners are actually equal when it comes to leadership of the group. Some partners grant the authority to lead to another partner because of that partner’s skills, persuasiveness and ability to build consensus among the group. In direct selling, smart company executives use their leadership, communication and persuasion skills to convince their field leader partners to grant them the authority to lead the combined and company/ field organization.

The company management team and the top field leaders are co-dependent on each other.

Direct selling companies have a unique symbiotic relationship with the independent field and field leaders. Neither side can exist without the full and complete support of the other. When direct selling companies are really clicking, it is because the company and field leaders are aligned with full belief in the dependability and support of each side.  When companies are in decline, the misalignment of the field leaders with company directions and decisions is often at the core of the problems.

Take the time to develop a partnership mentality with your top field leaders. Win their confidence and belief in your leadership. Your ability to lead your field partners depends entirely on their willing grant of leadership authority to you.  That grant of authority to you is well worth developing and never taken for granted!

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The post Winning Back the Trust appeared first on The World of Direct Selling.

Alan is a US DSA Hall of Famer, and member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Guest post by Alan Luce
4 Fundamentals of Reversing a Sales Decline in Direct Sales

Here’s a familiar story: Your business has entered a period of decline in sales and recruiting. After a period of years of solid growth in sales and sales force numbers, the momentum has not only stopped, but appears to be working in reverse. The management team pulls out all the stops using various promotions and incentives that have worked in the past to stimulate sales and/or recruiting. These tried and true “get back to basics” promotional techniques mean that the company is spending more promotionally and it will only pay off if key operating metrics are positively impacted. And that happens less than most executives like to admit. After a year or more of trying the “tried and true” techniques to reverse the decline, nothing has worked. What now?



I know this story well. I lived it as a C-level executive at Tupperware in the 80s and early 90s. Tupperware US peaked at more than $600 million in sales in the early 80s. Then, in the mid-80s, it started into a period of persistent year-over-year declines. At first, we went back to the “tried and true” promotions and juiced up the prizes and values. It didn’t work. Then we decided that we had to redo all of the training on basic sales and sponsoring techniques. That didn’t work. We spent a fortune on the Boston Consulting Group to examine our business. BCG suggested that direct selling as a method of selling may be in decline. They made the prediction that in spite of the fact that DSA annual industry statistics showed that the industry was growing with new players like The Pampered Chef, a resurgent Mary Kay and PartyLite Gifts growing like crazy.

By the time I left in September of 1992, sales were down over $150 million from the peak and declines continued through management changes, layoffs and failed programs that helped the company but did not help the field. What went wrong?

In the wonderful accuracy of hindsight, we now know that what plagues Tupperware were two fundamental changes in the expectations of customers and prospective members of the sales force. In the early 80s, right at Tupperware’s peak, a number of existing and new party plan companies introduced multilevel compensation plan concepts into their plans. Within a few years, it was clear that sales leaders in the companies with multilevel compensation plans could make a lot more money than Tupperware managers and distributors, and with much less effort and risk. Tupperware’s field positions went from being among the best in direct selling to no longer competitive within a period of five years. The trends were clear by the mid-80s.

We ran field tests of simple multilevel pay plans that showed great promise. These programs were ultimately killed as “too expensive” and “not compatible” with the Tupperware culture. It was in the mid 90’s, long after I had left, that the company finally adopted some multilevel pay elements to their career plan and began to stabilize the US business. And while Tupperware has had and continues to have significant international businesses, the US has never regained the status or success it enjoyed in the 90s.

I took the time to share this story because I had a world class lesson in how not to address a direct selling business in decline. Later, I spent a brief period as Senior VP of Sales and Marketing at PartyLite in the late 90s. I saw clear signs of a management team captured in a bubble of more than 10 years of success. They were totally focused on their internal matters and paying little attention to changing forces in the marketplace. “Having seen this movie before,” I chose to resign my position. I just did not want to live through the experience I had at Tupperware again. Within a year or two, PartyLite entered its own long period of decline.

So, what are the lessons I learned from these experiences? What are the steps or techniques a company in decline should employ to figure out the problems and begin to right the ship?

Lesson #1: Always Understand Today’s Marketplace

More often than not, long successful companies that go into persistent decline are in decline because their program is no longer competitive with other programs and opportunities in the marketplace. A company thrives when the combination of its products or services combined with its business opportunity and field services meet or exceed the expectations of customers and prospective sales people. Practices, service levels and technology tools for the field tend to become encased in “mental concrete” with each year of success the company has. The more years of steady success, the more stubbornly the management team will cling to their existing programs as “the basics of our success and culture.”

In my personal executive experience and working with a number of companies in decline, the reasons are usually not the result of poor execution of existing programs. Rather, the products, services, access, training, communications and field income opportunities no longer meet the expectations of prospective customers and prospective sales people.

The lesson here is look first at what is happening in the marketplace. What has changed? What does the marketplace demand of companies?

Study the best competitors in the marketplace. With cold objectivity, compare what you are doing with what they are doing. You may well need outside help to effectively do this in order to overcome internal bias and achieve an objective comparison. The outside help needs to be objective analysts with a deep understanding of what is working best in today’s market environment.

Lesson #2: The Field Leaders Who Got You Here Probably Can’t Get You There

Your senior field sales leaders are usually not good sources of information about what is needed and for ideas to fix the problems. Why? Because they built their success using the very programs, policies and marketing methods that may no longer be competitive! They believe in what they did to build their current success. Too often their response is to “just get back to basics” to fix the problems. Back to basics is usually moving in the wrong direction.

Lesson #3: Keep Up with Your KPIs (and Theirs!)

Compare your company KPIs with the best in the marketplace. Analysis of your KPIs against the best industry standards is a useful way to identify where the company may be spending too little, too much or simply may no longer be competitive. Again, it is often useful to bring in an experienced industry financial management expert to add the needed degree of objectivity and unbiased analysis.



Lesson #4: Focus on the Feedback from Your Newest Distributors

Survey your newest sales people and especially those who leave. The real pulse of your sales force is usually located in your new recruits and first level leaders, not with your long-term senior leaders. What obstacles are they finding when it comes to recruiting? What were their experiences as new sellers? What worked and what didn’t? Why did they leave?

In today’s market, there is an increased focus on meeting or exceeding customer and sales force expectations. Direct sellers now must compete for customers with ecommerce affiliate and preferred customer programs as well as compete with GIG-centric companies like Uber and Grub Hub for folks looking for a side hustle to generate extra income. Your new sellers and first level leaders are in the front lines of the marketplace competition battlefield. Talk to them! Listen!

In summary, a successful turnaround strategy for a company in decline requires the management team to be willing to examine every aspect of their business against the best of best in the marketplace. The focus needs to be “what are they doing that we are not” rather than wasting time with a deep internal look seeking what may have gone wrong. Once in a while there is a slip in execution or service that is the reason, but that is the exception and not the rule. That problem will come to the surface most quickly by examining your KPIs against the best of the best and by talking in depth with your newest sellers and leaders.

Successful turnarounds are difficult on many levels. In some cases, the growth of the company has simply outgrown the expertise and skill sets of the founding management team. Those home-grown company loyalists may need to be replaced with folks with broader experience and more competitive skills. Those are difficult situations emotionally and culturally.

If you find yourself in a persistent decline situation, remember these four important lessons and techniques and, if necessary, get outside help!

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The post 4 Fundamentals of Reversing a Sales Decline in Direct Sales appeared first on The World of Direct Selling.

Alan is a US DSA Hall of Famer, and member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Guest post by Alan Luce
Without Trust You Can Kiss Success Goodbye!

Direct selling companies spend tens of thousands of dollars on equipment, marketing materials, product development and social media branding programs, but often squander or even neglect their most precious asset; the sales forces’ trust and belief.

Over the years and working for, leading and advising more than 100 companies as a consultant I came to learn that successful direct selling companies that excel for decades are very careful to maintain the field’s trust. Too often I have observed senior company executives take the sales force’s trust and belief for granted and therefore make serious, trust damaging mistakes. Set out below are the four the most common trust damaging mistakes that companies make:



1. Assuming that the field leaders will understand your motives or the facts:

The “never explain, never deny” posture often taken by companies usually leads to disaster. When faced with a serious mistake, or when the field reacts badly to a change in the product line, the compensation plan, service fees, usually involves an arrogant or careless management assumption that the field will somehow intuit that the Company has their best interests at heart or that the Company will always do the right thing.

To maintain trust you must explain, explain and explain! Transparency and effective communications are key to maintaining trust. If you need to change a service, a program or even the compensation plan because the Company is losing money, give them the facts. Your field leaders are reasonable people for the most part. They understand that both the Company and the field must make money in order to stay in business. Never assume that they “are not business people and will not understand” or that the field is only “concerned with their profit”. Of course, they are self-interested but they also know that they need a strong and profitable Company to enjoy future business success. When you fully explain and enlist their help more often than not, they will respond in a positive fashion.

2. Designing incentive programs primarily to avoid cheaters:

Given the opportunity, some independent sellers will find a way to manipulate the rules of a contest to win the prize or award without meeting the spirit and letter of the contest rules. It happens! But if your contest rules are designed in such a draconian way to prevent cheating, over time they will demotivate many of your folks from participating this defeating the point of the contest or promotion. More importantly, overly protective rules will send the message that the Company does not trust the field and assumes that many will cheat. In my experience, only a small percentage actually cheat, maybe 5% or less. But the 90+ percent who do not cheat resent the implication that the Company thinks they will cheat. Even the cheaters do not like to be called out as “cheaters”!

The better path is to design your contests with reasonable and based upon the belief that 90% or more of your field will act honestly and responsibly. At the same time, identify actual cheaters and privately call them out for cheating. Tell them that they will not receive the prize and that they will be terminated if caught cheating again. It is important that you notify the upline leader of the disciplinary action you are taking. Over time, this course of action will create a climate where the field believes that you trust them to act honorably but that there will be consequences if you do not. Trust is built on the actions the Company takes even more than what the Company says.

3. Never overlook breaches of policy or negative plan manipulation because the offender is a top leader!

It is unfortunate but true that some of the most prominent, widely recognized, high profile leaders will conduct their business in ways that violate clearly stated Company policies and values. Noting will erode the field’s trust in the Company more than its failure to take action against an unethical leader. All of your top leaders already know that this person is not playing by the rules. When the Company fails to take corrective action, it sends a message to the field that the Company values the profits she generates for the Company more than the Company policies and values. The longer you ignore the situation, the more toxic it becomes.

When faced with this type of situation some in the Company will argue that the leader is too prominent, has too much influence and clout to risk angering when the Company tries to enforce its policies.  They fear that this leader, if forced to leave, will take her downline with him or her and even entice other top leaders and their downlines to leave also. Never be deterred from taking corrective actions when faced with those arguments and fears. Over time, failing to enforce your policies and values is far more corrosive to maintaining trust and confidence of the field and a much bigger risk than taking corrective action.

The company must treat these situations like a test. The field leadership knows of the leader in questions violations of policy and or values. They are watching to see what the Company will do. I have faced this situation many times as a CEO and senior Company executive and as an advisor to client companies. Here is the trust building process that I recommend that you take:

1. Have a face to face meeting with the offending leader. Confront them with their violations and the evidence that you have. Regardless of whether she/he agrees or denies, tell her/him that if these actions do not cease immediately that she/he will be terminated. Tell her/him this is her/his only warning.

2. Let other top leaders know by in person or telephone conversation that you have had a discussion with an “offending leader” (Do not name the leader. They will know!) and that you expect the violations of policy or values to cease immediately.

3. If there is no evidence of continued violations, all is well. The other top leaders know that you enforced the policies and took corrective action. If the violations continue, terminate the offender immediately.

4. If you must terminate, communicate with other top leaders and the senior leaders of the offender’s downline that after discussions with the offender (without any details or allegations) that the Company determined that it was in the best interest of the Company and the field that this leader no longer represent the Company and its products. Most will know the reasons without being told.

In nearly all cases, after such a termination the other top leaders express support and relief and, usually only a few if any of the terminated leader’s downline choose leave also. But even if many do leave and sales suffer, the sales drop will be temporary and the field’s trust that the Company will do the right thing will be increased immeasurably. Field trust is much more valuable in the long run than the profits produced by an unethical top leader.



4. Failure to acknowledge what is clearly a Company mistake:

Sometimes bad things happen: The distribution system breaks down and orders go out late or with mistakes; a supplier sends a shipment of products that fail to meet quality standards and break or fail when customers use them; the order processing system fails on the last day of the month or any other type of mess up. When these situations occur, the worst thing a Company can do is try to shoulder through without fully accepting responsibility and explaining what happened as soon as the facts are known. The faster the Company explains, fully accepts responsibility and takes corrective action, the faster things will get back to normal with the field’s trust intact. The field may be upset and even embarrassed by the failure, but they understand that sometimes mistakes are made no matter how careful. They also understand B. S. when they read it and hear it.

Two things must happen to avoid the B.S interpretation:

First, the Company must quickly communicate explaining and fully accepting responsibility along with telling them about the corrective actions being taken.

Two, the Company must understand how the problem happened and take action to correct the situation. If the same mistake happens over and over again, even the fullest explanation and acceptance of responsibility will not restore that field’s loss of confidence in the Company.

Company growth and success happens when four key elements are in balance. The three elements are great products, an attractive compensation plan, good logistics and field services and the trust and belief of the field that the Company will always do the right thing and not embarrass them in the eyes of their customers and families. While all of these elements are important, in my view over time, the trust and belief element is the most important. If the field loses trust and belief in the Company, it will go into decline no matter how good the first three elements are. Without the field’s trust and belief, you can kiss success goodbye!

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