2020 is almost behind us. This was a rather tough year for all and the difficulties are far from being over. Yet, we are seeing very promising signs as well. Similar to last year (*), I asked some of the prominent figures of the global direct selling industry their opinions on this matter:

“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.

Their responses have forged a two-part article. This week’s part encompasses comments from seven notable persons from the industry. Feel free to add yours at the end of the article.

Laure Alexandre, Executive Director of Seldia (The European Direct Selling Association)

“The EU is unambiguous in its determination to lead the twin green and digital transition despite the coronavirus crisis. Numerous regulatory proposals affecting companies supply and value chains are to be expected, as well as an “EU digital levy”. Some Members States, and the European Commission have also clearly expressed their wish to offer some level of social protection, balanced with adequate tax collection for ‘new forms of work’. While there are fundamental differences between platform workers, freelancers and direct sellers, there are also many similarities. Risk mitigation will be required when the EU legislative proposal is presented in 2021.”

Mona Ameli, Founder and Managing Partner of Ameli Global Partnerships

“While 2020 was a year of challenges and changes, 2021 would be a year of strategic stabilization and full transformation. Some of the effects of the pandemic and the social-racial movements triggered immediate and accelerated adjustments. It’s imperative for organizations to discern which of these changes will be permanent and how to integrate them as part of a longer-term re-defined business plan. The priorities would be to re-calibrate between 2020’s “circumstantial” and 2021 more “real” growth expectations and to re-assess budget allocations accordingly. This will ensure priority for key transformation opportunities: Cultural inclusion, customer focus, virtual & digital evolution, and operational nimbleness.”

Oscar Cano Arias, Managing Director of Direct Selling Europe

“2021 will be an intense year for the sector in the EU from a regulatory perspective. First of all, Direct Selling Europe (DSE) will follow closely the transposition of the new provisions on unsolicited marketing sales in the EU 27 Member States. Furthermore, we will continue working to make sure that the upcoming legislative proposals on the revision of the rules on Commercial Agents or the Consumer Credit Directive are in line with the interests of the industry. Last but not least, DSE will continue helping its members and sellers to make sure that they can continue receiving economic and/or financial support from their respective national authorities to mitigate the effects of the Covid-19 pandemic.”

Michel Bayan, CEO of Directech Labs

“2021 is the year of retention. With the gains made by the industry in 2021 we need to prove that we provide better value to more of the customers and representatives who put their trust and belief in us. We prove this quantifiably by increasing the lifespan and lifetime value of our people. Our rewards: A more stable business that is less dependent on big recruiting numbers in order to grow. A much improved public image. The praise and admiration of regulators. Higher multiples for valuations and market cap. This is all within our grasp if we give it the energy and focus It deserves.”

Tamuna Gabilaia, Executive Director and COO of the WFDSA (World Federation of Direct Selling Associations)

“These are unprecedented times we are living in with the current pandemic.  It profoundly affected the lives of millions of people around the world disabling entire communities and forever changing our lives. At the same time, despite unprecedented challenges, we saw our industry has not only been resilient but has seen the wave of inspiring new ideas, innovation, adaptability and creativity even more than ever before. As our new WFDSA Chairman Roger Barnett said so well, it is an opportunity to look forward and to ‘Reimagine, Reinvent and Redefine’ the global direct selling industry. It is truly and amazing, inclusive and diverse industry I love so much which provides an income earnings opportunities to millions of people around the world and changes lives.”

Dan Jensen, Compensation Plan Specialist, Founder of Dan Jensen Consulting 

“Things that do not change will remain the same. We must either ADAPT to the changing marketplace or see revenues and active sales force counts decline. Adapt or die a slow death. That is our greatest challenge. But how should we adapt? Attention spans… have they grown longer or shorter in the last 5 years? Adapt. Social media influence. Use it. Instant gratification. Drive it. Predictable results – if I do this, I WILL get that. Vital. Many of the things we did 5 years ago no longer work well. Change takes courage and leadership and your future depends on both.”

Robert Kreklewetz, Founding Partner of Millar Kreklewetz

“We see 2021 as a huge opportunity for home-based businesses like those in the direct selling industry – and particularly for new companies look to start-up operations in Canada. Almost everyone I know is either working from home OR looking to supplement their primary source of income OR both! We offer US direct sellers a ‘one-stop shop’ for Canadian start-ups and have personally seen an uptick in companies looking to open up Canada. I see 2021 as a ‘early bird gets the worm’ situation, with the first companies opening up, reaping the bulk of the rewards!”

(*) Please click here and here to read last year’s comments.

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The post In 100 Words: Looking Ahead to 2021 – Part 1 appeared first on The World of Direct Selling.

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.

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.”

…..

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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