Guest Post by Brett Duncan
The 7 Most Common Recommendations for Today’s Direct Selling Company

Every direct selling company thinks of itself as extremely unique. You probably feel that way about your company, too. Your product is one-of-a-kind. Your compensation plan has unique perks. Your founder offers both special privileges and special challenges. Your culture is special and unprecedented and unlike anything you’ve ever seen. And I bet that’s all true. I just bet it’s not as true as you think it is.

My experience has shown me that direct selling companies have a lot more in common than they think. Especially in the areas that you think are unique to you. Especially in the areas that you feel are most challenging to your company right now.

I guess what I’m trying to say is, “You think you’re special, but you’re not ;-).” That can be comforting; more companies are dealing with the same struggles as you are, no matter how “exceptional” they are.

4 Years of Consulting Summarized in a Single Article

This past March, I celebrated my fourth year of consulting with direct selling companies, and I’ve loved every single second of it. It’s been a real pleasure helping so many of you as we all collectively navigate our way through the opportunities and challenges that face direct selling in today’s marketplace. It’s been an eye-opening four years. When I tack those four years onto the 12 years I spent working on the corporate side of direct selling, it can uncover some interesting perspective.

As I was reflecting on this personal milestone, I realized just how often I’ve given so many companies a different twist of the same advice. I definitely don’t believe in one-size-fits-all strategies, and I treat every engagement as a clean slate that deserves a specific and differentiated approach.

But in the midst of my work with more than 40 companies in the last four years, I’ve also seen many of the same needs for every company. I’ve actually been shocked at how often I’ve offered up pieces of the same advice for my clients, because their situations required it.

So, with that said, I thought I may do us all a favor and outline the most common bits of advice I’ve given my clients over the past four years, assuming that your company, like them, could benefit from them.

A quick disclaimer: These aren’t necessarily the most innovative ideas out there; they are the most common bits of advice I’ve given. They are the lowest hanging fruit. Some are no-brainers, which is probably why they are so common. Many companies are already aware of the need to act on the recommendations; they just haven’t done it for whatever reason yet.

Here’s my challenge to you: as you read through these thoughts, don’t settle for a response of only “Oh yeah, I could’ve told you that,” or “That makes sense,” or “Yep, that’s how it is here, too.” I want you to look at each point I’ve listed below and ask yourself this question: “What is my company doing to improve in this area right now?” Commit to getting better, no matter where you’re at now.

So here they are, the seven most frequently recommended thoughts I’ve passed along to direct selling companies over the past four years:

1. Invest exponentially more in your development resources and your core enterprise platform.

Think just a second about every initiative and idea that you come up with. A contest, a campaign, an incentive, a comp plan change, a promotion, a launch, a usability/design update, a report, a dashboard, an app, whatever. We’re really good at coming up with extremely creative ideas.

But like an icon of our industry, Mary Kay Ash, once said, “Ideas are a dime a dozen; people who implement them are priceless.” In today’s direct selling environment, essentially every idea requires some form of development. And I’m referring to actual IT/website developers.

Think of all the ideas that have come up for you that have just sat there because you didn’t have the current development resources in place to pull them off. I’m astounded how many of us settle for that. While an initiative could generate thousands, even millions, in revenue and profit, we allow our minuscule development resources to determine what we work on and at what pace we work on them.

Want to accelerate your pace of growth? Invest responsibly but adequately in enough development resources to match your own innovation. Then it can actually become more than an idea. Similarly, how many ideas have been offered up, only to hear someone chime in with, “Oh, our system can’t do that.” I know I’ve heard it… a lot!

So many of us are leveraging back-end systems that are outdated and borderline irrelevant in today’s marketplace. We’ve band-aided them with third parties and plugins and standalone websites to help us get by, but we all know that’s not the true answer.  If your current system can’t handle the innovations required to excel in today’s marketplace, how in the world will it hold up to what’s coming a year or two from now?

There’s never a good or convenient time to upgrade your core enterprise system. Do it anyway. Set your company up to be as flexible and accessible for today’s, and tomorrow’s, innovations as possible.

2. Go to the utmost extreme to optimize your new Distributor’s first 90 days.

Every somewhat-seasoned direct selling executive will acknowledge the importance of a Distributor’s first 90 days in your company. Almost every executive will also admit they fall short of even their own expectations for their company’s first-90-day experience. Something’s wrong with that, don’t you think?

There’s a lot that a direct selling company can focus on. It can be overwhelming. But if you had to choose one segment of your Distributor base to focus on, I will tell you to focus on this one.

I recently spoke with the head of field development for a well-known company in the $500 million+ annual revenue range. They have great training programs, segmented for new Distributors, new leaders, up-and-coming leaders and top leaders. I asked him this question: “If you could only have one of these training programs, which one would it be?” Without hesitation, he told me he would choose the new Distributor training. Each training has been fruitful, but the fruit and impact that comes from a successful Distributor in her first 90 days is irreplaceable.

Do you even know what your new Distributors are experiencing in their first 90 days? Make that a priority. In addition, map out every single touch point your company currently has with its new Distributors over their first 90 days. Review it, and then update it to what makes sense for them. Create new communications where it makes sense, and even filter out other communications if it doesn’t make sense for them.

Do everything you can to help them have the best start possible. Keep them focus on what matters right now, and worry about the rest later. It pays off for months and years to come.

3. Put less stuff in your Welcome Kit.

Part of the First-90-Day-Experience includes the Welcome Kit sent to your new Distributors. Some companies have streamlined this component quite effectively. Most are still incorporating a Kit strategy that was appropriate in the ‘90s.

Here’s the thing: we all know that a lot of the stuff you cram into your Welcome Kit never gets used. At best, a go-getter uses only some of it the way you intended. At worst, the mass amount of tools and paper and product completely overwhelms your new Distributor.

And don’t even get me started on the money that’s wasted on so many of these kits. I often sign-up with clients as a Distributor to capture the new Distributor experience for them, and I’ve honestly had to use a dolly sometimes to move the shipment that’s sent to me. It’s that heavy!

I’m still a big believer in shipping something to your New Distributors. In a digital world, these touch points can sometimes stand out more than they ever have before. But we must be strategic about what we ship.

To start, take a look at your Kit, and ask yourself if you could send 5 of something instead of 25 of it. Include a coupon for free tools so those that actually want them can get them, but at least you’re not wasting it all on people who will never use them.

And don’t over-discount your products in your Kit. There’s such a thing as diminishing returns. If you’re already giving a new Distributor $300 worth of product for that $150 enrollment fee, is pushing it to $450 really going to get you more enrollments?

4. Get serious about segmenting buyers from sellers.

Yes, today’s legal environment is making this a more top-of-mind initiative. But, to me, it’s not a legal thing. It’s a good business thing. Let me say something that may be viewed as sacrilege in direct selling: I don’t think it’s all about getting more Distributors.

Hear me on this: Of course, I want to have as many Distributors as possible. But I want them to actually want to be Distributors. I don’t want them to be forced into it to get the best deal, or to “pay for the products.” As a marketer, it will help me to know who is in it for their own personal product purchases, who’s in it to share the products with a few friends, and who’s actually interested in earning some serious income by building a team.

In the party plan industry especially, I’m shocked at how many companies have no access or data related to customers. In the past, we probably billed this as a feature, that your Distributor is who had access to their customers, not the home office. Today, that just won’t cut it. There are too many opportunities for the home office to complement and support the work of the Distributor with direct-to-Customer campaigns to ignore this transition.

If you don’t have “customer accounts,” get them ASAP. It will form a foundation for all kinds of opportunities moving forward. Then, make sure you’re positioning the Distributor position in a way that attracts those who want to earn income, and incorporate a strong customer program that suits everyone else. It may mean you enroll less Distributors than before, but at least you know they are actual “Distributors.”

And make it easy for your Customers to upgrade to Distributors when they are ready.

5. Get obsessive about keeping your corporate team strategically aligned.

Simply put, too many companies allow for department heads to create department strategies that don’t necessarily support the company’s overall strategic plan. And sometimes that happens because the company foregoes a strategic plan altogether.

You can’t waste a single dollar or minute of your internal resources. Everything, collectively, must all be pointed to the same end goals. If marketing has a pet project that requires IT resources, and that project isn’t fundamental to the company’s overall strategy, then you are screwing up in a major way. If a month-long promotion is rolling out that encourages behavior that flies in the face of the year-long incentive, that’s not alignment.

Human nature creates some interesting inter-office dynamics that have the potential to become major distractions. Do not let that happen. The field brings enough drama into the equation already; don’t multiply it by letting the home office team add to it.

If your home office needs a cultural shift in this area, get deliberate about changing it, and overdo it. As a place to start (and assuming you have a strategic plan in place), hold a strategic touchbase meeting every two weeks with the executive team, and make sure everyone is clear on what everyone else is doing. Accountability is key, so make sure it’s clear on who is doing what by when.

Over time, you can probably push this out to once a month. But don’t go there too quickly. Make sure every effort is aligned with the strategic plan, and make sure your executives are accountable to company goals, not their own pet projects.

6. Do less stuff.

I haven’t worked with a company yet that I haven’t suggested that they simply do less stuff. We are so good at coming up with last-minute promos, social media campaigns, product launches and other really good stuff. But when you look at it holistically, it’s a bunch of stuff that just creates a bunch of white noise to the field. So instead of doing it all, or even doing something, they just do nothing.

It’s our nature to add something to the mix to make something happen. Lots of times, it’s taking something off our plate and the field’s plate that will actually lead to success.

Take a look at what you’ve got going on. Where can you cut back? Which projects are minor impact items? Do you really need to launch them? Or are they just getting in the way?

Streamline your expectations for the field. The key is getting a lot of people to take a few select actions, and not getting a few people to take a lot of actions.

7. Do what you’re doing the right way.

Not only do we do too much stuff, but we typically just launch it. We don’t actually figure out how to incorporate it over time into the daily method of operation of our Distributors.

For being an industry that’s known for training and leadership development, we typically don’t account for training when we launch all the stuff that we’re launching. We simply launch it, let the field figure out what to do with it and then move on to the next item to launch.

It may be a new website feature, a third-party tool, a new product, or whatever. If you don’t have the bandwidth to completely and comprehensively plan your training and ongoing communication plan for a launch item, you shouldn’t launch it. Either it’s not important enough to train on adequately, or you don’t have the training bandwidth to squeeze it into everything else you’re doing.

In addition, we downplay the importance of change management in the work we do. Whether something changes for the better or for the worse, it doesn’t matter: it’s all change. The home office rarely accounts for managing this change in a responsible manner. Most issues that traditionally plague direct selling companies have to do with a lack of proper testing upfront, and a lack of change management prepared for post-launch.

As you budget resources and time to launch your “next big thing,” budget at least 30% of it to what you’re going to do after it launches. And a lot of time, that’s not even enough. Stop skipping your internal testing protocol when timelines get squeezed. I’d rather push the release date than skip testing. Too many companies regret this mistake for months and years to come when it happens. If you can’t launch something well, then why bother launching it?

……

That’s it: The most common recommendations I’ve given to direct selling companies over the last four years.

What do you think is missing? Which ones of the items listed above are the biggest challenges for you? I’d love to hear from you.

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Could you tell us about your education?

I completed a degree course in communication sciences, psychology and sociology at Ludwig Maximilian University in Munich after finishing school. Originally, I had intended to become a journalist or work in PR. But I was gripped by a passion for direct sales when I took a student job working for Jafra Cosmetics, a direct sales company. I was offered and accepted a position in marketing after graduating. I learned that the ‘power’ of the word is limited and that you can only really motivate and convince people if you ‘walk the talk’ by using effective action to underpin authentic communication.

What was your childhood dream?

I wanted to become an Egyptologist, certainly to explore the world, visit many countries, meet people and speak foreign languages. That’s what motivated and inspired me. I had this burning curiosity, and it continues to drive me today.

What were your past experiences before your current role at PartyLite?

In 1999 I moved from my position as Marketing Manager Germany for Jafra Cosmetics to PartyLite, where I was initially General Manager for PartyLite Switzerland. I was then made General Manager of PartyLite Germany in 2003. I was appointed President of PartyLite Europe in 2010. Europe became PartyLite’s biggest market around this time. We convinced crowds of people of our products and the company, moved into new markets – especially in eastern Europe – and helped our consultants to fulfil their potential and lead independent, successful lives.

What do you attribute your career success to most? 

Authenticity. We do not see PartyLite as your everyday company. Party is not just in the name of our company, it’s in our philosophy as well. We believe that our company is an experience, an opportunity for our consultants to be all that they can be. But it means that the boss of a company like this will need a broader repertoire of skills than just managing, deciding and preferably leading by example as well. I interpret my role as being part of a team that inspires, thrills and trains our consultants. Working for PartyLite has to be fun. It’s about passion and the pride of belonging to this fantastic community. So, my job is to help our consultants use their diversity and talent to maximize success.

What has been your most inspiring moment?

The particularly touching moments are when our consultants explain how much PartyLite has changed their lives. How they were able to make their dreams come true and give their families opportunities they would never have enjoyed without PartyLite or their own personal commitment. That’s why we consistently celebrate the amazing success of our consultants – at our national conferences or with our incentive trips. These are the opportunities to experience the success stories, big ones and small, that our company produces. And they are amazingly inspiring and motivating, not just for me, but for all of us here at PartyLite.

Your hobbies?

I really enjoy browsing through magazines from all over the world and like looking at modern art and photography. And I still enjoy travelling, however much I’m on the road for business.

How would you describe being a direct selling executive to an outsider?

Direct sales is always intimate. You cannot get by without loving the product and the brand. And you have to care just as much about the people that work for you, appreciate them and accept their perceptions of how they want things to be done. You’re dealing with independent colleagues. It’s our job to create lucrative incentives, to provide guidance and to enable training to maximize the number of consultants enjoying the best possible success. We enable people to become entrepreneurs, not employees.

What is your biggest achievement at PartyLite?

My path at PartyLite took me from the position of Marketing Manager in Germany to President Worldwide. I believe that I owe this stellar ascent to the continuity of my work and my personality as well, of course. So I would tend to speak of steady performance instead of an exceptional one. Naturally it helps a lot if you love what you do and sell and you don’t associate each promotion with an apparent increase in power, but especially with the added responsibility that goes with each new position.

And your biggest challenge at a direct selling company executive role?

When I became President Worldwide, it was the second switch at the top in quick succession. There had also been a change in ownership and necessary restructuring measures. It was only natural that I sensed uncertainty among our full-time staff and consultants, so my biggest concern was to radically transform that mood.

My guiding principle was to reignite the enthusiasm for PartyLite and to return the love of our products, the fragrances and the stories they tell to the heart of our work. I believe that the team and I have succeeded. Now the time has come to shape the future. We are currently investing several million dollars in an update of our digital presence and above all in the digital tools used by our consultants. Our goal is to create a modern, exciting and interactive job experience and customer journey for current and future PartyLite fans.

What would be your best advice to those who are thinking of joining a direct sales company at a corporate position?

Besides the love of the product – which I believe is indispensable in direct sales – it is the absolute determination to help people reach their goals that drives us. Direct sales companies can only be successful if their consultants are, too. So the most important task of every employee – in any position within the direct sales company – is to be willing to do what it takes to ensure that every consultant is successful.

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Guest Post by Brett Duncan
The 9 Overlooked Benefits of an Attractive Customer Program

Plenty of experts have reported on and provided suggestions about how to respond to new regulatory requirements and best practices that have popped up in direct selling over the past two years. One of those best practices is the creation of a strong and distinct customer program, in which a customer would be allowed and encouraged to purchase products and, in most cases, receive a discount without having to become a distributor and have the ability to earn income.

My thinking on this is… why did it take us so long?!?

Having a strong customer program is not something we should feel like we “have to do”, but rather something we should “want to do”. It’s not a regulatory burden we must bear, but rather a wonderful (albeit obvious) opportunity for us to serve our customers and distributors better and more effectively.

I surveyed several direct selling customers at the end of 2016, asking them what types of projects were at the top of their lists for 2017. They were given about 15 different choices, and the top answer by far was the development of a customer program. In my discussions with clients, it continues to come up. So in this article, I hope to spotlight a few benefits that can be easy to overlook when it comes to customer programs.

First, here are a couple clarifications for this article. The term “Customer” refers to a person who is interested in simply buying and using your product. A “Distributor” is someone who is interested in sharing and selling products and earning income from that work. In your company, you may call these people “Consultants,” “Ambassadors,” “IBOs,” etc.

Here are nine advantages of strong customer programs that you may not be thinking about:

1. Be Satisfied (Elated) with Customers.

The fundamental shift in our thinking starts here. Any and every business, regardless of industry or product, thrives and survives on paying customers. And paying customers come when companies serve a certain audience by providing something they want in a way that they deem to be valuable. Put another way, if customers are the lifeblood of any business (and they are), then direct selling companies shouldn’t simply “tolerate” customers, or view them as a means to an end, but actually be elated when we get new customers, and see them as the end goal themselves.

For network marketers especially, we often think of “Customers” as our distributors (those who want to earn income). And I get that, and could even make an argument that they are a type of customer. But I think the best way to start looking at our distributors is as an extension of customer service. They can serve their customers in ways that our home office team cannot. They compliment the efforts of our corporate departments, and the synergy can be a true differentiator for you. In fact, with so many technologies and new direct-to-consumer capabilities available now in the marketplace, I believe direct selling’s ability to serve customers in the most personal and personalized way is and will become even more what sets us apart.

So for that reason, we must be ecstatic with new customers, and we must see everything else we do as a means to that end, and not the other way around. When product is leaving the warehouse and customers are receiving products they appreciate and value, then everything else about our business (recruiting, income earned, leadership development, etc.) gets much easier and more effective.

2. Sharing Wants Is Much Easier (and Better) Than Selling Needs.

I tell a story all the time of how, when he was four years old, my son would do everything he could not to brush his teeth. It was something I knew he needed to do, but he definitely didn’t want to do it. On the other hand, I could mention having some ice cream, and he jumped at the opportunity to have some without any further convincing. Ice cream was something he wanted.

So, what was easier for me to share to this audience (my son)? Toothpaste or ice cream?

When we focus on a customer, the best marketing we can do is give them what they want, not what we think they need. We too often try to convince someone who simply wants to try our product that they need to share this with all their friends and get life on their terms. Why don’t we start with “product on their terms,” and then just go from there? It’s that “on their terms” part we so easily say and yet so often ignore.

Think about it for yourself. When someone gives you what you want, not only do you value the solution, but you also appreciate the person/company who provided it. You think fondly of them. They clearly understood you. You want to talk about them to others, because the experience you had with them was awesome. And, because they don’t force you to make a decision about something you didn’t even think you needed to begin with, you’re more open to what they have to say as the relationship deepens.

3. Segmentation is a Marketer’s Best Friend.

As a consultant, I work with a lot of companies to help streamline their marketing and communications efforts internally to serve distributors and customers best. And I’m shocked how many direct selling companies don’t segment their communications. More times than not, companies are sending every message out to everyone in their database. And given that the majority of their database is made up of people who just want to buy and use their product, it’s hugely counterproductive when the majority of the messages these people receive has to do with Distributor incentives, contests, recognition, earning money and more.

There are definitely ways to position the income opportunity to customers the right way (see point #6 below). But great, effective marketing begins with knowing the recipient of your communication, and making sure the message resonates with the audience. Having a strong customer program in place that separates those with a “customer mindset” from those with a “distributor mindset” automatically helps you with the most basic segment.

Don’t stop there; use the data you have at your fingertips and tailor  your messaging appropriately to deeper segments within your customer base. Customers who purchase something every month vs. those who purchase three times a year are very different. Customers who purchase a certain type of product vs. another type of product clearly have different interests. Customers who have been with you for two months vs. those who have been with you for two years are very different. Start segmenting more, and tailor every message to fit the audience.

4. Distributors Can Now Be More Qualified Than Ever Before.

More than anything, I love the fact that having a distinct customer program makes it so much easier to quickly identify those who are truly interested in and engaged with earning an income as a distributor. When someone chooses to become a distributor instead of a customer, and invests whatever you’re asking them to invest to do so, they are telling you in no uncertain terms that they are ready to start a business and share product. Not only is this a great opportunity for messaging segmentation at corporate, but it also helps your current field leaders tremendously, because they know who they should spend their time helping and developing as new distributors, and who they should help have the best possible customer experience.

Of course, your “recruiting” numbers may go down when this shift occurs, but just remember you’re comparing apples to oranges at this point. The real advantage here is that the productivity and activation of your Distributors now should increase significantly, because they are more qualified from the beginning. And customer acquisition is now just as important as distributor recruiting, if not moreso.

5. Discounts Are The Best Reward for Customers, not Distributors.

For many companies, one of the greatest benefits of becoming a distributor is to receive the top discount on products. In many of these situations, there is an opportunity to earn retail profits off of your wholesale purchases, so the larger that discount margin, the better. However, what has occurred more often than not is that people with a true customer mentality have become distributors on paper only because they want the discount.

This should tell us something. A discount on the product is first and foremost most valuable to those who value the product. Yes, I’m sure your distributors value the product highly. But clearly your customers do, too (or else they wouldn’t be customers). So I am a big fan of leveraging discounts for customers, not just distributors.

There are several ways you can go about doing this, and it’s not a one-size-fits-all solution. I won’t go into all the options now, but suffice it to say you need to ask for something in return for your discount off of retail (be it a “membership,” etc.), and distributors should definitely have access to the same discounts. You may also still want to include some form of additional discount for distributors. But be careful with this, or you may end up in the same place you were before: attracting product consumers who simply want the highest discount to become distributors. I challenge you to leverage your compensation plan and income earning potential as the primary perk for becoming a distributor, and not a product discount.

6. We Can Position the Income Opportunity the Right Way and at the Right Time.

In so many companies, field leaders will tell you they first started as just a product consumer. Their results and experiences with the product then led them to consider sharing it with others, and the rest is history. I love it when this happens. I feel like it’s the most organic and even most productive way for a distributor to join your company. I wouldn’t make it the only way someone can join your company as a distributor, but I certainly wouldn’t downplay it either.

By having a distinct customer program in place, you’re not taking away your opportunities to “upsell” customers toward becoming a distributor. You’re simply becoming a better steward of how and when to tell them about it.

When you can consistently deliver value at the product level to a customer in a way that meets a want they have, you can also make them aware of additional ways to interact with your brand and your products. One of those ways is as a distributor. Instead of “pushing” the opportunity on them, you can position it in a way that makes sense to them, when it makes sense to them. Instead of “exposing” them to the income opportunity, you can simply make them aware of it. And because you’ve delivered on providing value already, they will be much more open to receiving your messages now.

7. Most “Distributors” Actually Want to Just Share Product with Customers.

New distributors don’t always understand downlines and overrides, but they do understand that they can make a little money when they share and sell products to people they know. They don’t typically get how your breakaway compensation plan works, but they do know they are rewarded when people come over for a party and buy product.

The common denominator of every level of distributor you have is that they all want to share products with potential customers. So when you have an attractive and distinct customer program in place, you’re equipping distributors with something they can start sharing right away. You’re not forcing them to apologetically sign up their friends and family as distributors just so they can get the best discount. You’re allowing them to simply talk about products they love to other people they think will love them, too.

I believe conversations are the fundamental unit of success in direct selling. By allowing new distributors to simply have the conversation they’re most comfortable with having (and rewarding them for it), then more conversations take place, and everyone wins.

8. Corporate Must Have Access to the Customer Directly.

I’m always surprised how many corporate teams do not have access to customer information. I get how it happens. Especially in party plan companies, customers are viewed as “property” (for lack of a better term) of the distributor, not the Home Office. So companies have not accommodated for even collecting the information of those customers. Inevitably, the Home Office reaches a point where they would love to connect with these customers directly, in a way that compliments and supports the work of their distributor, but they cannot, because they do not have the information.

If you’re in this situation, creating a customer program gives you the opportunity to change this moving forward. As these customers choose to join your program, you now receive their information and can connect with them directly. Continue to honor the partnership with your distributors, viewing them as the most important part of your customer service team to these customers. But also leverage all the messaging and promotional opportunities (retargeting, email marketing, text notifications, etc.) in a way that only the corporate office can, simultaneously bolstering the efforts of the field in tandem. Implementing a customer program gives you the perfect scenario to gain access to your customers moving forward.

9. It’s a Natural Opportunity to Tighten Up Your Compensation Plan.

Compensation plans are all about rewarding, and influencing, certain behaviors. Additionally, shifting discounts and other components of your plan to accommodate a customer program can directly and indirectly influence other behaviors and your distributors’ income. So move forward carefully and methodically.

Firstly, to drive the cultural shift toward a higher focus on the customer, you must earmark certain components of your compensation plan to this behavior. Which means you probably need to find this money elsewhere in your compensation plan. Secondly, model every aspect of your plan and identify and account for any unintended consequences. Lastly, if you need help, don’t hesitate to ask for it. In my experience, you can never be too cautious about even the smallest improvement to your compensation plan.

My hope is there are at least a couple thoughts here that haven’t crossed your mind yet when it comes to the benefits of a strong and attractive customer program. If you’ve already incorporated a customer program, are there some ideas here that could help you leverage and/or position it in a stronger way? If you have not incorporated a customer program yet, my hope is you are now convinced that this isn’t just “safe” business (driven from a regulatory perspective), but also “good” business (driven from a marketing/growth perspective).

What stood out most to you? What aspects am I missing? I’d love to hear your feedback in the comments below.

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An expert in compensation plans, startup strategies and sales management programs, Alan sits on the boards of numerous direct sales companies. His many honors include induction into the Direct Selling Association Hall of Fame and the Direct Selling Education Foundation’s Circle of Honor.

Guest Post by Alan Luce
5 Critical Mistakes that Plague New Party Plan Companies

“What are the mistakes should I avoid?”

At Strategic Choice Partners, this is one of most common questions we hear from a start-up or young party plan company.  I’d like to say that the best answer is “Avoid them all!” But unfortunately, by the time we’re brought in to help, it’s often too late. Avoidable mistakes have already happened. It doesn’t have to be this way.

In this article, we’ll explore the five most common mistakes new companies make, and how to avoid them. For the record, those mistakes are:

* Working from overly optimistic growth forecasts.
* Failing to understand the relationship between product offerings and inventory management, particularly when goods are imported.
* Adopting the wrong compensation plan.
* Establishing an in-house warehouse and distribution center
* Failing to provide outstanding service to customers and sales force members.

#1 and #2 stand out as the most common ones, but any one of them can help sink a startup. So let’s take a close look at each.

MISTAKE #1-Working from overly optimistic growth forecasts

Some companies just take off and enjoy near-instant phenomenal growth. Unfortunately, too many other hopeful startups believe the same thing will happen for them, and most of the time, it doesn’t. That’s because they focus on the wrong thing, which is trying to recruit large numbers of new sales people. But anyone involved in building more than one new party plan company knows that sheer numbers aren’t the answer.

Instead, the goal should be to develop 3-5 strong, consistent sales leaders. Then let them turn the promised potential of the new compensation plan into their own personal realities. In the process, everyone in the sales force will see how performance leads to rewards and success. When pace-setting leaders set an example for others, that’s when recruiting and sales really begin to grow.

I’ve seen it happen time and again. A young company with just 300 total recruits but 2 to 5 rising stars will almost always grow faster than a company with 1,000+ recruits but no pace setting leaders.

Additionally, the performances (personal and team) of your pace setters will establish your key operating indicators for productivity, activity rates and average central team sales. Without these hard numbers, it’s almost impossible to make a truly accurate sales forecasts for year two and beyond.

So avoid the mistake of overly optimistic sales forecasts. Don’t concentrate on large recruiting numbers in your first year. Instead, focus on developing your first 3 to 5 high performing pace setting leaders. This is a much more effective strategy.

MISTAKE #2- Failing to understand the relationship between product offerings and inventory management

Proper forecasting and inventory management is a challenge for all start-up companies, but it’s especially risky for party plan companies selling non-consumable products. In most cases, companies must source these non-consumable products from Asia, Mexico or Latin America.  Lead times are often 4-5 months to ensure timely delivery. With no history to guide the buying quantities it’s very much a “best guess” scenario. This is one reason we strongly suggest new companies hold at least 10 “test parties.” The purchase rates from these parties let you know what your best-selling products are likely to be.

Before placing initial order quantities, every startup company needs to thoughtfully consider these constants of the business:

CONSTANT #1: Back orders are your worst enemy. Nothing will stop recruiting, torpedo sales and generally demoralize your sales force like stock outs and back orders. Sellers absolutely hate out-of-stock situations, and with good reason. First, it’s embarrassing for them.  Second, out-of-stocks mean extra work. Sellers must either return the purchase price, set up the back-order procedure or sell the customer something else. So back-orders are the bad news. Here’s the good news.

CONSTANT #2: While the risk of back orders can never be eliminated, it can be controlled.  Here are a few steps you can take to proactively address the problem.

1- Buy larger quantities of fewer products. A common startup mistake is offering more products and SKUs than they really need. When a new company has a fixed amount of capital available to invest in inventory, its’s better to buy larger quantities of fewer products rather than have thin inventories of a wide selection of products. The “wide selection” offering will inevitably lead to more runs on favorite items and more out of stock situations. Companies should always launch with the lowest number of product offerings possible, and then have reasonable inventories of those products.

2- Be prepared! Have a “Stop Sell” program already in place. You’ll rarely have a start-up situation without a few stock out situations. So it’s important from day one to publish and train the sales force on a “stop sell” program. Here’s what that means: when inventories on certain items are down to about 5-7 days average run rate, the company puts those items on a stop sell status. The sales force is trained to check the inventory availability page on their back office every day and before any sales event.  The “stop sale” program does not make the sales force happy either, but it does allow them to not make the sale on the item in the first place. So they save time, avoid embarrassment and have the opportunity to sell the customer another item that is in stock.

Balancing inventories against supply & demand is always a juggling act.  So make informed ordering decisions and be prepared for the inevitable issues.

 MISTAKE #3: Adopting the wrong compensation plan

Too often we see new companies failing because they chose to copy a very successful company’s compensation plan. Don’t do that. Instead, design a compensation plan that fits:

* Your product line
* Your ratio of cost of goods sold to the suggested retail price
* Your primary method of selling the product to retail customers, and
* Your culture, or the culture you want to develop.

Simply stated, not all compensation plans fit all product lines, margin levels and sales methods.  Copying a compensation plan without a serious analysis of whether that plan will work for your company is an almost certain path to failure.

MISTAKE #4: Establishing your own in-house warehouse and distribution center

It may seem counter-intuitive to focus on warehousing and distribution as a startup company mistake. However, once you consider the benefits of the affordable alternatives to building your own in-house warehouse and distribution function, it might make sense for you.  Here’s what you can do:

-Unlike earlier times, the industry now has several highly professional third party warehouse and distribution operations to choose from. Due to their volume pricing, these operations can offer deep discounts on shipping fees, resulting in significant savings for you. Partnering with an experienced third party provider allows a startup to:

– Avoid the cost of operating a warehouse. These include rent, utilities, and insurance, plus the labor costs of a warehouse manager and staff.

– Avoid the significant investment necessary for shelving, rolling racks, receiving programs, bar coding and picking systems.

Outsourcing your warehouse and distribution function saves considerable management time and effort. It also assures good performance, good timing and high accuracy from the beginning. For many if not most startups, it’s a cost-efficient alternative to building your own system from scratch.

MISTAKE #5: Failing to provide outstanding service to customers and sales force members

For many startups, the how and why of providing customer service to retail customers and their volunteer sales force is an after-thought.  But in today’s world, failure to pay attention to this can sink your business.

We live in a world where our competition provides 24/7 instant access to customer service. The best online retailers are setting the gold standards; they’ve created a set of customer expectations that cannot be denied.  So startup companies must have the coverage, systems and personnel to match expectations. That means providing as close to instant access to customer service as possible.  Making this happen requires a commitment of management time, financial resources and technology. And people. You’ll need bring in the right people.

So these are the most common and most serious mistakes that new companies, especially party plan companies, make. Every startup will probably make some combination of these mistakes at some time. But there is a way to greatly reduce or even eliminate them. First, you need to know these stumbling blocks are out there. And then you need to prepare for them.







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Guest Post by Roseann “Ro” Shales
Could ‘Facebook Live’ Change The Game?

If you work corporately in a direct sales company today you may wonder, “Where have all the parties gone?” “Where is all the sales activity?” Do you sometimes feel like you have tried everything and nothing works like it used to?

The constant changes we face today makes our jobs as corporate executives harder. We have to be more nimble and view our sales force with “fresh eyes,” without filters or bias from the good old days. We are pioneering a new pathway, utilizing more technology, and working through changes for our current base and future generations of direct sellers.

Success for you and your sales force is STILL about creating relationships, now more than ever. Our people have unlimited opportunities to join other companies at their fingertips 24/7. Today’s sellers and team builders are more demanding, less forgiving, and work fewer hours each week than in the past. Some want to sell at live parties and events, however many others want to work from home in their pajamas. Everyone wants business to be simple and they want to make more money on their own terms. People’s lives are busier and they want faster results with less time commitment – full-time (<25 hours/week), part-time (10 hours/week) and even spare-time (< 5 hours/week).

JIC Nation started with an online presence 3-years ago by giving away free e-Commerce stores before launch. When Christmas 2013 hit, they backordered 35,000 orders, 85,000 products. It took four months to fill them and they survived. Today we provide weekly product graphics for the sales force, in part to prevent reps from taking time away from selling, booking and sharing, to create their own materials.

Many of our reps fall into the make money from home in their pajamas category, and I suspect many of you feel the same about your people. To support all reps, we actively manage Facebook groups and chats for both our sales force and our customer base. We provide weekly corporate training, plus we spotlight tips from our key leaders online daily and in our 5-day a week rep newsletter.

We train on best practices for both in-home and online parties. In-home parties take 3-4 hours for booking, host coaching, presentation, closing and ordering host rewards and average $500-750 in sales. Online parties take longer, 30 minutes a day, over 5-7 days, plus set-up time, with lower sales averages. Over the summer, we observed the advent of Facebook Live for product sales, parties and training. If you are not familiar with this fresh, new way to get visibility for your company offers, click here and here.

Here are general Facebook Live party tips: 

1. Schedule a party time and alert people on your personal and/or business pages 1-3 days before to build initial interest and engagement.

2. Prepare everything you want or need to share and have it within arms reach.

3. Be aware of the view through your camera lens. You don’t want attendees to see things online that could embarrass you or someone else. Limit external distractions.

4. Start on time. As guests arrive, interact immediately as they begin watching. It’s important to ask guests to share the party with their Facebook friends on their own page. This will create a larger viewing audience. Get comfortable talking about products and welcoming people at the same time as they must be acknowledged and encouraged to share the party.

5. Be engaging, interesting and make it fun. Just like a traditional party, keep your presentation to 15-20 minutes.

6. Follow the general flow of an in home party. Welcome everyone, share the benefits of your products, the host opportunity, and the business opportunity. Explain how to order, book, and join.

7. Be sure to answer questions that come up in the comments.

8. End the party making sure everyone knows how to contact you. Thank them for their participation.

We started holding our own Facebook Live parties a few months ago. Our leaders took them one step further and began to combine in-home and Facebook Live parties. This allows hosts to invite their local and non-local connections. During a combined party, reps ask the host to stay close to the computer screen to relay questions from online guests. Reps get to maximize their time and sales opportunities for the best of both worlds. Guests can “attend” a party anywhere from their mobile device. They don’t need to set aside dedicated time to support the host. This is important in today’s busy world. Streaming a Live Party breaks down barriers and transcends traditional sales strategies. It can facilitate new relationships across the country that may have never happened otherwise. It can enhance sales, recruiting and team building. It allows leaders to train their teams easily and efficiently in a live setting by inviting their team members to observe from home.

I think Facebook Live is a game changer! If you and your sales force embrace it, activity and sales can increase quickly. We need to be flexible in the ways we create and enhance our relationships to grow business for the long term. When we seek and implement new ideas, train and communicate effectively, and encourage our sales force to try new things, we are re-creating the “good old days,” in brand new ways. E-Commerce is here to stay and by taking advantage of it, we can engage a new generation of young, eager direct sellers with dreams of their own. We need to fully embrace it, because our future depends on it!

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Guest Post by Roseann “Ro” Shales
The Changing Face of Party Plan

Party Plan as a business model is constantly evolving. When I started my Tupperware business 25+ years ago, top sellers typically held five in-home parties and talked with five to ten prospective recruits every week. We learned there was a formula for success: Recruit one person a week personally and one for your team, for eight recruits a month compounding to about 100 new recruits per year. Every connection was face to face or by telephone. Invitations were mailed and parties were held in the host’s home. Consultants attended weekly meetings, mostly on Monday mornings, with one each month in the evening. Party orders were delivered to the host who distributed them to her guests. Consultants received commission checks paid monthly by mail.

Today, the business world has changed dramatically and so has the way party plan companies conduct their business.

We still have in-home parties, but the average consultant holds two to four a month (including in-home, online and virtual parties, plus direct orders through customer accounts). Direct shipping to the customer is the norm. We see a wider variety of products sold at parties with added benefits, including consumable products that may be re-ordered by auto-ship.

Training today comes in many forms. While there are still some local team meetings, many companies now live-stream regional and national conferences so more consultants can join in remotely. We utilize group calls, webinars, Skype, Google+, online chat groups and daily training posts on corporate Facebook pages, YouTube channels, Twitter and Pinterest.

We understand far better the benefits of creating a coaching and mentorship culture. We are all connected, all the time, via computer and mobile devices. Companies push e-blasts, releases and announcements on social media daily. Events and incentive trips are seen instantly on Snap Chat, Vine, Instagram and Periscope. These tools have also allowed companies, consultants and leaders to grow their business with virtual parties and expanded virtual training, to reach people across the country and around the world. You can run your entire business on a smart phone or tablet from anywhere you have an Internet connection.

Today companies pay commissions by direct deposit weekly or twice a month on personal sales, with team commissions paid at month-end. Most provide direct deposit to an e-wallet, on a company branded debit card or into a bank account for instant access and maximum convenience.

We still have print materials — catalogs, recruiting and host brochures, business cards and more. And everything is also online. The sales or recruiting process may include a text, email with a link, a call, short video, a verbal close or immediate online direction to a website to order or sign up. The consultant and upline get an email or text, confirming a sale or a new recruit enrollment. It has become cost effective to do business anywhere 24/7.

25 years ago, my Tupperware compensation plan was single level. We had true breakaways (in reality a “takeaway”) and top-performing Leaders could be offered a franchise (which cost significant dollars). That model doesn’t work in our world now.

Today our most successful companies have married party plan selling with MLM compensation strategies sometimes producing $100,000 to $1,000,000 annual earners. A good plan eliminates “takeaways” for promoting leaders by increasing income for the right behaviors. The most powerful plans directly reward personal sales, recruiting and team building, leader development and senior level mentorship. The leaders who work all the available profit centers earn the biggest paychecks.

Consultants used to communicate and follow up with their personal customers (Or did they?). Hosts delivered orders. Companies usually had no idea who their end- users were. They treated the consultants as their customers. Today, successful companies work in the spirit of true partnership with their sales force. They provide technology to generate post-party sales and direct re-orders on behalf of their consultants. This approach builds true residual income for consultants, and increased retention of both customers and consultants, while creating stronger teams and leaders.

Improved technology allows companies to direct-market to customers and alerts them to new products, special offers and business opportunities. We support our sales force’s efforts and we know our end-users well. The asset value of a company is not based on the number of sales consultants you have. Rather the sales volume or net profits tied to a relationship with the end-customer create the company’s true business value — which is significant if you ever intend to become an acquisition candidate or go public. The most important metric for a party plan company today may be the number of customers that buy monthly. This is what defines the company’s book of business.

When companies are proactively marketing directly to their customers, while preserving the integrity of the customer-consultant relationship, they grow faster. Retention increases significantly. Although consultants still come and go, companies can frequently keep a customer far longer by rewarding them with loyalty points, monthly promotions or special discounts. Today’s companies recognize that inactive consultants can still be loyal customers using the product even when they stop doing the business. They are an important part of the overall business base.

If you’re a company owner or corporate executive, the changing face of party plan requires you to implement new ways to stay competitive in today’s marketplace. Keep in mind you don’t only compete for product sales; you compete for your consultants’ and leaders’ time, energy, focus and commitment. When you provide methods of doing business that combine high tech with high touch outreach, along with high product visibility, you leverage your sales force efforts and activities. Then your consultants can truly earn a full-time income with part-time effort. That’s the dream we still sell and the opportunity that will grow the next generation of direct sellers.

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