Jonathan has an extensive background in Internet technologies and interactive marketing and is a regular speaker and presenter at industry conferences and conventions.

Post-Pandemic Social Selling Spurs New Opportunities & Challenges

As social media has become more and more a part of our daily lives, direct sellers have applied their relationship-building skills to these channels in order to expand their customer connections and pivot towards a new e-commerce strategy: Social selling.

Although the direct sales industry has always had a stake in this consumer-centric approach, other businesses have been quick to adopt this model that became even more prolific amid the Covid-19 pandemic. With people prioritizing online interactions and purchases, companies had to escalate their digital transformation to compete by working within a more direct-to-consumer approach. As a result, online channels exploded with new content, driving more engagement between consumers and brands.

To build on this momentum and capitalize on this business culture shift, many current social platforms began expanding their offerings.  The user-created video market boomed with TikTok’s incredibly rapid growth, and social audio stepped onto the scene with Clubhouse. Tenured platforms like Facebook, YouTube, LinkedIn, Twitter, and Instagram began testing audio and video components.

Social channels also began to introduce ways to sell directly from their content spaces to shorten the sales funnel and encourage users to “impulse-buy”. Work-from-home software like video conferencing and live streaming became the norm for direct sellers. These changes prompted social channels to incorporate similar functionality to enhance and streamline the social selling experience. Now, large brands host live-streamed product events on social channels, interacting with consumers in a space where they can purchase that product with the click of a button. And these are just a few of the many features being offered and developed.

Essentially, social selling has gone mainstream. And this carries both opportunities and risks.

This poses a challenge for direct sellers, who have always found a niche market in the consumer-centric sales approach. Even so, taking advantage of these new social offerings also provides an opportunity to build better relationships in exciting ways for the direct selling industry. While the competition has increased, direct selling representatives have the know-how to better leverage these new tools that spur connection, interaction, loyalty and sales– this is their home turf.

While it’s very exciting, there are some additional challenges besides increased competition to keep in mind. These new features and offerings open direct sellers to increased compliance risks. How representatives utilize these channels can lead to violations of company policy, or worse, attention from regulators. Field social media needs to be monitored vigilantly to avoid regulatory issues. Up-to-date field education will also be needed to reduce the claims, and unauthorized sellers will have to be curtailed as they find innovative ways to move inventory at the expense of company sales, enrollment and retention.

It’s a lot to consider, but it all can be done. The benefits of social selling in the hands of direct sellers outweighs the challenges. Like everything, it’s about having a plan, tools and techniques for effectively leveraging these new platforms and features, so the field can do what it does best: build relationships.

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As we come to the end of another year, I 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.

You will read their responses in two-parts, this week and next week. Feel free to add your comments at the end of the text.

Oscar Canio Arias, Managing Director of Direct Selling Europe

“2020 will be a transition period for the sector in the EU from a regulatory perspective. First of all, we will follow closely the transposition of the new EU provisions on unsolicited marketing sales in the EU 28 Member States. Furthermore, we will continue working to make sure that the upcoming EU laws on Collective Redress and e-Privacy are in line with the interests of our industry. In addition to the ongoing regulatory initiatives, Direct Selling Europe will meet in Q1 with the new EU Commission and Parliament, to ensure that any potential legislative proposals on consumer rights and self-employed persons reflect the interests of the reputed and sustainable direct selling companies.”

 Jeff Babener, Legal Counsel at Babener and Associates

“To create certainty for the direct selling/MLM model, the industry, by consensus with the FTC or through federal legislation, must address the recent legal challenges in FTC litigation against Advocare and Neora. Utilizing the seminal case of Koscot, that differentiates legal MLM from pyramid, the industry needs clear guidelines and expectations for the level of non-participant retail sale mandates that will satisfy the Koscot standard of downline or MLM sales rewards must be based on sale of product or service to the ultimate user.”

Michel Bayan, CEO of Directech Labs

“Many companies are talking about 2020 as the year of segmentation. Going deeper on this topic than simply separating reps and customers will allow DS companies to catch up with e-commerce and other gig companies in offering more personalized experiences for people who need to experience their time with a brand in different ways. But segmenting alone won’t do it. Direct selling is too far behind to wait. Quickly operationalizing the insights gained from segmentation will be the key to ROI and a more competitive industry. Here is a case study on how a top 100 company began using segments for more effective promotions.”

Jacques Cosnefroy, General Secretary of France Direct Selling Association

“In a changing world, the major challenge for our direct selling companies will be their ability to adapt to new generations of freedom-loving distributors, and the digitalization of business relationships. A freedom that reveals attitudes and personal variable-geometry projects and that are not apprehended by companies, whose economic model is based on individual and collective success, could lead to intergenerational disruptions. The implementation of trade relations (companies / distributors / consumers) based on the use of digital tools could create mistrust movements in older networks. These are the challenges and opportunities that we face.”



Sean Eggert, CEO of Hanna Shea Executive Search

“I believe the biggest threat and greatest opportunity is the ability of our industry to compete with online retailers and changing consumer habits. Consumers today have an increased comfort level with online retail shopping across all age groups, According to Adobe Analytics, purchases on Cyber Monday this year were up nearly 17% from the previous year, that’s $9.4 Billion in sales. The age group with the largest percentage of online shoppers, seniors, accounting for nearly 20%. While these statistics may feel like doomsday for some people, there are DS companies leveraging these new buying habits successfully. So, while this is a major threat to organizations that haven’t evolved, it also an incredible opportunity for those that have been able to change and adapt to new consumer habits.”

Krister Fraser, President of Sweden Direct Selling Association

“What will determine in the future whether or not a direct sales company will succeed? It´s not about technology, economics or logistics. Nor is it about who has the best lipstick or most practical plastic box – it’s all about building trustworthy relationships between people. Direct selling is not difficult, but it is easy to make mistakes because this is a People Business. Maintaining trustworthy relationships is sometimes a balancing act when it comes to make tough business decisions and this is where we often go wrong. The company that understands the magic and power of building trustworthy relationships will be tomorrow’s winner.”

Jonathan Gilliam, CEO of Momentum Factor

“In what could turn out to be an opportunity or a threat, I think the outcome of the Neora vs. FTC case is a major milestone in the history of the channel, in the US at least. It’s pretty clear the FTC has stepped up its enforcement actions against direct selling companies. Although the industry has long sought clearer direction from both the legislative branch and the FTC on what the real boundaries of fair play are, no help is on the horizon on that score. In fact, it can be argued that the FTC has done the opposite of drawing clearer boundaries. The Neora action is plainly aimed at forcing that issue to the forefront and seeks a judicial determination of what the FTC can and cannot do— the outcome could either be good or bad for the channel. At stake is not only the regulatory environment, but everything about how we do business, compensation plans, advertising, and how we train and govern the field. No matter the final judgement, it is surely the most important issue facing the channel.”

Ed Jarrin, President and Co-Founder of Exigo

“The most significant issue that we see today is access and use of data, in real-time. Most companies are hyper-focused on accessing and using their data to drive their incentive and rewards programs for their distributor, expanding into new markets, targeted retail messaging and promotions, and last but not least, data for regulatory compliance. It goes without saying, real-time data driven decisions should be at the core of every business strategy. Regardless of which area direct selling companies focus on, each of them must run a better business. They can’t run on gut alone, and they need to see their data on a mobile device, in real-time.”

Dan Jensen, Founder of Dan Jensen Consulting

“A wise man once said that those who do not learn from history are doomed to repeat it. The future of direct sales holds tremendous opportunity for those companies who learn from their mistakes and adapt to the changing marketplace and regulatory climate. Failing to adapt is our greatest threat. In addition, delivering an Amazon experience with strong value to both our customers and our sales force is vital to our future growth.”

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We will be sharing another group of experts’ views next week. Stay tuned!

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The post In 100 Words: Looking Ahead to 2020 – Part 1 appeared first on The World of Direct Selling.

This new article in “Wisdom in 100 Words” series on The World of Direct Selling covers “Expanding into New Countries”. While the potential of increasing the existing business is enormous with this move, the risk of damaging it is also there.

The question was as follows:

“What would be your best advice to a direct sales company to maximize the potential benefits of going international (or, to avoid serious risks)?”

Below, you will read comments from a group of persons of expertise form the industry.

Jeffrey Babener, Legal Counsel at Babener and Associates:

“With today’s technology, communication and logistics, U.S. companies are pressured, almost from day one, to expand internationally. The opportunity is so great that most leading companies ultimately post the vast majority of global sales beyond U.S. borders. Long story short: Don’t jeopardize this expansion by playing “fast and loose” or “on the quick”. If done incorrectly, the foreign market opportunity is tainted forever. Having assisted leading companies in expansion for over 30 years, our first “go to” are our counterpart professional colleagues in other countries, to address import, trademark, fulfillment, and distribution of product and service, regulatory and legal compliance with direct selling and consumer legislation, staffing and visas and addressing a big financial structuring picture, with our tax professional colleagues, for an international seamless sponsoring system. All of these professionals have been accustomed to working under our law firm supervision for decades.”

Jack Crowley, Owner of The Crowley Collaborative Group:

“Having launched direct selling businesses in over twenty countries, experience proves no one path ensures success or eliminates errors. Formerly, as a company executive and now as a consultant to the industry, I’ve used these “Rules of the Road” to eliminate numerous obstacles and generate sound, profitable international businesses: 1. Expand internationally for the right reasons. 2. International expansion is a “full” corporate commitment. 3. Commitment starts at the top. 4. An internal and external strategic analysis is essential. 5. Think globally… act locally. 6. Have realistic expectations. 7. Do the homework (Details, details, details). 8. Strive for transparency. 9. Utilize local resources. 10. Flexibility and creativity are essential. Each of these points has numerous subsets but used as a “road map” they do help companies avoid the pitfalls and enjoy the benefits of operating internationally.”

Jonathan Gilliam, CEO of Momentum Factor:

“Avoiding shortcuts in order to meet a new market demand is paramount. When a company is interested in a new market it’s usually because they’ve seen a spike in demand in those countries, either from its own network or perhaps a competitor’s network seeking to move over. It can be tempting to dive right in, damn the torpedoes. But a company will nearly always have new and interesting regulations and legal requirements to address, and it’s important to get them right from the start. From product registration, certifications and MLM-specific legal and compliance mandates, companies will find entering new markets much slower than they would like, especially when there are people on the ground ready to join and buy their products. I think too many companies chase revenue in new countries when demand presents itself, often to the peril of sustainability that they could have enjoyed otherwise.”

Dan Jensen, President of Dan Jensen Consulting:

“Direct selling offers huge opportunities as well as dangerous pitfalls when expanding internationally. Many find themselves in a “money pit” subsidizing poorly performing markets. Lessons learned in my 38 years in direct selling include: 1. Get it right in your home market first. 2. Focus on markets similar to your home market. Different countries and cultures require different approaches. 3. Don’t launch into a new market unless you have the right team of people. 4. Find the best experts to guide you. It won’t be what you know that causes you to fail in a new market. It will be what you don’t know. 5. Only allow competent and loyal leaders to start building in the new market. Amateurs’ downlines often feel abandoned and overwhelm the office staff with questions and complaints. 6. Go slow until you perfect your launch methodology. There are countless tales of tragedy where a company launched aggressively into multiple markets and failed in every one of them. 7. Plan to spend a lot more than you think you will. 8. Look for diamonds in your own backyard first – there’s massive opportunity where you already do business.”

Brent Kugler, Partner at Scheef & Stone, LLP:

“Do your homework and determine which countries are the best expansion possibilities for your company. Many companies have felt the pressure to rush into international markets and later paid a steep price for not fully researching and understanding the business environment and culture of the country they expanded into. Develop a tiered expansion strategy with the initial focus on markets that have the lowest barriers to entry. It is also critical to partner with local resources with experience in advising companies in this industry. What works in one country may not work in another. Preparation and patience are essential to execute a successful international expansion strategy.”

Alan Luce, Senior Managing Partner at Strategic Choice Partners:

“One significant risk for young companies is going international before they have fully developed their home market. We often see this in the US with young companies anxious to go into Canada or Mexico as soon as possible, often when they have just begun to penetrate the potential of the US market. For young US companies it takes a lot more management oversight, legal and regulatory investment and arranging distribution to go into Canada with its 33 million people than it does to get strong market penetration and growth in the state of California with 38 million people. Focus on getting your home market established and building up the staff and management experience that will be needed to go into a new international market. It may not be as satisfying for your ego, but it will be a lot more beneficial for your profit line.”

Nick Mallett, Director at Pan European Solutions:

“Get expert local advice from people who know the industry. Employ senior staff who have a background in the industry from the territory in question and listen carefully to what they say, especially when they disagree with you. By all means set KPIs (Key Performance Indicators) but do not try to micro-manage remotely.”

Bobbie Wasserman Managing Director of Wave2 Alliances: 

“Direct selling companies revel in their international accomplishments – they should.  Going international is exciting – yet at the same time, a complicated, cumbersome process. A key component of succeeding on an international playing field entails having a senior-level communications executive involved in the planning process – right from the start. This can ensure that communications strategies speak to the local sensibility while keeping corporate messaging intact and creating momentum within targeted audiences and the potential distributor base. The Country Communications and Corporate Integration Plan focuses on internal and external corporate needs. External areas can include social media platforms and messaging apps priorities; content development for education and online sharing; influencer and media/blogger outreach; and reputation management. Internally, the plan can revolve around processes that ensure a company remains unified with one corporate culture. Knowing what to say and when to say it is a key formula for maximizing benefit and minimizing risk.”

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Comment below to share your thoughts on this topic.

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