Direct selling businesses are often celebrated for their entrepreneurial opportunities and flexibility. Yet, amid the success stories, lurk several practices that significantly undermine the trust of independent consultants, customers, and investors.
Jeff Dahl’s insightful article The Table Stakes for Success as a Direct Selling Company explains the business model that he built to frame out a successful direct selling business.
It’s equally crucial to dissect and address the unfavorable practices that plague certain companies in this sphere. I am sure you will find at least a few of them familiar…
Compliance is not something that should be expected only from corporate staff. It is just as important to enforce those written policies on the field and hold the independent consultants accountable for what they do. And this should be done before the authorities act upon them. The repercussions of overlooking field activities can be dire, especially if regulatory bodies intervene. Companies need proactive measures to ensure adherence at all levels.
Failing to Keep Promises
Missing the dates of opening new markets, product introductions, promotions, new training programs or improvements in service quality… Worse by far is missing commissions payout dates! Consistency and reliability form the bedrock of trust. Fulfilling promises is imperative for fostering lasting relationships with consultants and customers alike.
Fiddling With the Compensation Plan and Policies
Frequent changes made on the compensation plan and the policies signal a lack of foresight and competence within management. Any attempts made to create “additional” or ‘parallel” compensation plans also fall under this heading. Last but not least, seeking ways to generate extra funds for the company out of the compensation plan only serves to alienate the sales force.
Jumping Into the International Arena
While global outreach is a significant growth strategy, hasty international expansion without thorough analysis can backfire. Launching the business in other markets has to be a part of the overall strategy, a planned activity and each new market has to be analyzed for all its pros and cons. It is always prudent to first, “test” the business for a lengthy period in your home country before taking it abroad.
Neglecting International Markets
Conversely, reluctance to explore international markets, despite having a stable local presence, can limit growth potential. There are companies who have been in business for many years that still have no intentions to expand internationally. Conservative approaches might lead to missed opportunities for growth and diversification.
Effective communication channels between headquarters, the field, and the public are imperative. Believe it or not, words do not spread by themselves especially when you expect this to happen. It is vital to establish proper communication channels between the HQ and the field and between the public in general. This fosters transparency and unity.
It is true that the field is where growth is created and where revenue is generated. However, consultants cannot come even near to success if the company does not have a competent, motivated team at the head office. Do not refrain from listening to their ideas or complaints, and be generous in praising their hard work. Demotivated staff inevitably translates into compromised service quality, affecting the entire business ecosystem.
Mismanaging the Field
Sales force needs to be managed, listened to, controlled well and in fairness. It is never advisable to give full credit to every single piece of feedback and implement every idea pouring in from consultants. On the other hand, it is just as important not to close ears. When it comes to implementation of policies and procedures, treating consultants equally irrespective of their rank is crucial.
The most common failures here are setting wrong objectives, wrong targets, and wrong rewards (or not setting them up at all). Then comes being forced to stop the promotional campaign before it’s announced date due to failing in these three. Ensuring clear, attainable goals and rewards is imperative for the success of promotional endeavors.
In examining these practices, it’s important to note that while prevalent in some businesses, the majority operate without succumbing to these pitfalls. However, addressing these issues with earnestness is crucial to ensure the sustained growth and integrity of direct selling companies.
Hakki Ozmorali is the Founder of WDS Consultancy, a management consulting and online publishing firm in Canada, specialized in providing services to direct selling firms. WDS Consultancy is the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki Ozmorali is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.
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