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…

Disregarding Regulations

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.

Communication Breakdown

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.

Staff Neglect

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.

Mishandling Promotions

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.

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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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Partner Selection

In some cases, direct selling companies wishing to expand internationally choose to do so through partnering with a local entrepreneur. Most of the time this is not by forming a joint venture, but through granting an exclusive distributorship in a certain country. Although this might reduce the financial risks, it brings very high business risks if the chosen local partner is not the right one. Unfortunately, direct selling companies are still misled by the locals who present themselves as the kings or queens of network marketing. This is merely due to poor background checks.

Local Manager Hire

Actually, this is an area of failure that is similar to the above. Because again, the failure here is due to not doing the homework properly. A local field leader who has so far built a sizable network organization in that market does not necessarily mean s/he will run your operations successfully. Requirements at a managerial corporate role is very different than those of the field’s.

Appointment of an Expat

Are you sure the person you will leave the company abroad to has had enough international exposure in his/her life before? Is that next person at the HQ who is dying to be re-located to an exotic, warm place the right choice? Does that individual have adequate understanding of what s/he is about to face in terms of the legal environment, the business ethics, and the cultural climate, to name only a few? You might want to read Jeff Dahl’s insightful article on this together with examples from his own personal experiences.

Cultural Differences

I have witnessed so many wrong moves made in this field, too. Yes, globalization is a strong trend. And yes, billions of people are being exposed to tons of global information on the Internet now. Yet, making business in a foreign culture can be quite different. A company from abroad does not have the luxury of ignoring those cultural differences. On the contrary, what always pays back is respecting and complying with them. Direct selling is truly a people business, to remind.

Leaving It to International Leaders

Allowing the international field leaders to open a new market is another tricky area. If not well-monitored, the whole launch project and the weeks of hard work behind it, can easily turn into a disaster. Alongside all the business risks involved, the company may very well find itself in troubles with the local authorities due to various compliance issues. We have seen numerous examples to this.

Physical Presence

While some markets can easily be managed from one central location, it is literally not possible to succeed by doing so in many others. Thus, knowing the difference is crucial. Even if there may no legal requirements imposing a physical presence, some societies are more skeptic than the others. Individuals in such markets just have a need to build confidence in that company before and also, after they join. And physically being there plays a very important role here.

Ongoing Supervision

Finally, we have the supervision (and also, guidance) by the HQ. This is vital, period! Some of the companies turn their managerial focus to the next potential market as soon as a country has been opened. Some others lose interest in markets where they think they are not growing well enough and start spending less time on these. This is so dangerous. It only speeds up the downfall in that country, negatively impacting the international sales leaders who have expectations from that market.

Expanding into a new market is not an easy task as some tend to think, but it is absolutely not as difficult as some may visualize it either. It is only a matter of doing the necessary homework well.

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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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The post 7 Main Reasons Behind Failures in International Markets appeared first on The World of Direct Selling.

Jeff also advises Private Equity, and recently started a Fractional Leadership practice with Strategic Choice Partners.

The Golden Rule of International Expansion

I have been fortunate, actually blessed, over my career to see the world up close and personal. My career has taken me to 40+ countries across Asia-Pacific, Europe, and Latin America, 4+ million flight miles, and lots of learning the hard way! It all started in 1996 immediately after graduating from Northwestern, Kellogg School of Management. My executive sponsor at The Coca-Cola Company called and said it was time to repay the Company for that pricey MBA! Then he said we were moving to Hong Kong… I about fell out of my chair! But my wife was up for the adventure, and our three kids were too young to know any better, so off we went.

Fast forward to my years in the direct selling industry… building and leading multi-national and multi-cultural teams, opening new markets, repairing old markets, and guiding global strategy has been an absolute adrenaline blast! Whenever a young employee asks me for career advice, I always say try at least one international assignment. We live and work in a global economy, and the related learning is not taught in text books.

The First Rule of International Expansion in Direct Selling

Assuming you have done your homework, have the required funding and organizational bandwidth, and you are convinced your business model and products will do well in the targeted country, do nothing more until you hire a strong GM… even before drafting your new launch plans. Trust me, I have seen several premature launch plans shredded by a new GM with better information and market-specific experience.

So, what’s The Golden Rule? To put it simply… Hire a local and industry-proven GM! The GM role is the public face, corporate leader, and hub of all activity in the respective market. They need to be grounded in the local culture, business environment, and the local direct selling industry. I detailed in a previous article about the complexity of our industry and the difficulty explaining it to outsiders. Good luck trying to teach an outsider about our industry from the other side of the globe. Your new GM needs to hit the ground running!

Local industry knowledge and proven mastery of all the operational and cultural nuances in the respective market is critical to a smooth and successful launch, and then leading the general business forward. And it goes without saying that language fluency is critical in effectively communicating with the local team, field distributors, and local vendors, as well as managing the occasion conflict between all of them.

Expats, please don’t be offended. I have seen several expat GMs succeed over my career, but I have seen many more fail. Sure, expats can be effective in functional roles, but in my experience, the market leader needs to be local. If you want to develop a family member or someone from your corporate team, don’t first thrust them into an international GM role. Start them in a market support role, or a functional regional role that interacts with multiple markets and/or liaisons with headquarters.

Just a side note on expats: I played an expat role too, and survived. Back in the day, 1 in 3 never made it past their first year. Living conditions, schools, separation anxiety, environmental, language challenges, and political unrest unsettled many families. For example, the biggest issue I observed in Hong Kong and China was expat kids picking up asthma from the smog. We all love our kids, and this led to an early exit for several families. On a positive note, I will mention that my expat assignment was the cornerstone experience for our family. The kids returned to the US academically advanced, grounded in cultural diversity, and “worldly wise”. So, I’m in no way knocking expats; I’m simply highlighting the facts I’ve experienced in my own situations.

The only exception to The Golden Rule, in my personal experience, was in Japan where I hired an American GM already living in Japan. A missionary kid raised in Japan, he was fluent in Japanese, culturally grounded, and had a proven track record and established reputation in the local direct selling industry. It was a smooth and successful launch.

Before switching topics, I want to reinforce the importance of engaging your new GM on the front end of planning. Bring your new GM to headquarters so they can help your team bake out launch plan details and educate your team on local topics like competition, industry trends, and culture. Additionally, bringing your new GM to headquarters will help build important relationships with the corporate team (a team that they will be routinely calling, outside of your normal working hours, for support). Trust me: that relationship is helpful when your phone rings at 3am!

Think Global, Act Local

Some would agree that it’s relatively easy for your corporate team to cook up a strategy to conquer the world and build a template for new market launches. Access to international data and information is much easier today, and there are deep insights and established protocols and lessons from within our industry that your team can source. Not to mention, there are dozens of battle-hardened international veterans who have “been there, done it” and can help guide your team.

Thinking Global is important as it helps your team establish a global brand and general competitive positioning, as well as building synergies within your global business, like organizational structure, supply chain, operational hubs, and regional communications and marketing. But honestly, I have never seen a “cookie cutter” new market launch plan. You’re lucky if you can replicate 60% of the details as you open new markets.

The operational and field nuances within each country is where many trip. Again, just because it worked a certain way in Korea does not mean it is going to work the same way in Indonesia. Act Local always challenges even the best prepared plans. Governmental, regulatory, trade, competition, and local consumer dynamics are constantly changing around the globe. Another reason why hiring a local and industry proven GM is critical. Let them help you before you burn some of your launch funding.

The new market launch template I have used repeatedly in the past has 48 core topics with an average of 10 sub-tasks each, and all spread across 4 different phases… Market Assessment, Plan Development, Implementation, and Post Launch. That’s 480 tasks orchestrated across 4 phases! And again, this is just the template. Your new GM will possess the local knowledge and experience to help you modify and adapt your template.

Important note: Please don’t skip the Post Launch phase. Many corporate teams are quick to move on to the next new market launch, and don’t build the discipline and process to monitor and learn from the most recent launch. We jokingly called this “launching orphans.” You’ll learn more and get better at launching new markets by taking your time, monitor and study, and dive deep into the data. Not to mention that mentoring and developing that new market team is priceless, so you can pull on them to help launch the next market.

Culture is King

I’m not referring to your individual company culture; I’m referring to understanding and adapting to the local culture within the country of operation. Over time, global executives learn to act like a chameleon. Every country culture is different, and every time they step off that plane, they change their colors. As a young executive operating in Asia-Pacific, I was bruised and battered over the first couple years. Effectively moving between diverse markets like Thailand, Korea, Philippines, Fiji, and Indonesia was a huge cultural challenge. Every flight was spent preparing to change colors. And just because they speak English in Australia and New Zealand, please don’t think you can play American without ruffling some feathers. Use your ears first, listen and learn, and be slow to speak and act.

Truly understanding local culture is not easy, but it can be learned. Unfortunately, I have witnessed how the lack of cultural sensitivity can quickly stress local relationships. I recall one experience where I didn’t know whether I wanted to laugh or cry. I watched one US-based executive, with little international exposure, dent our relationships in three consecutive markets. The first was in Canada where he opened with a verbose colloquy on Maple Syrup. Then in Mexico, he couldn’t stop raving about Margaritas & Nachos. The proverbial “straw that broke the camel’s back” was in Colombia where he mentioned cocaine while discussing business opportunities. It took me quite a while to talk several angry local leaders off the cliff.

Yes, it was a painful event. Once again, a local and experienced GM can help you navigate the cultural rapids. And please let them review any speech from a foreign executive before they take the stage!

In closing, I really want to reinforce that the GM is your most important hire when launching new markets. The new GM will then help you recruit and build out the rest of the local team. The GM will make or break your international expansion plans. You can also leverage local and regional recruiters that have worked in the respective market, so you don’t miss any important cultural nuances and required operational experiences. Take your time, check all references, and include industry veterans to help you and your recruiter vet any candidates, as well as vet your new market launch plans.

Best of luck with your international expansion. It’s both a challenge and a rewarding adventure. Cheers!

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This week’s article is a compilation of 2022’s significant direct selling industry news from all over the world. It was most certainly a difficult year for all players. Yet we know there were positives alongside all the negatives. Also included, you will find selected articles we published last year that stood out according to readers’ responses.

> CEO Ryan Napierski Shares Nu Skin’s 2022 Strategy
> Mary Kay Celebrates 2021 Year-End Highlights
> How Albania Became a Pyramid Scheme
> IDShield Named Among Best Identity Theft Protection Services of 2022
> Kannaway Opens Office and Warehouse in Poland
> COVID-19 Behaviors and the Impact on Beauty
> Sunrider International Celebrates 40 Years
> Betterware to Acquire JAFRA’s Operations in Mexico and the U.S.
> 2021: Another Record Year for PM-International
> Beautycounter Appoints Marc Ray as New CEO

Most-Read Article in January on The World of Direct Selling:
The Case for an LMS – McKinley Oswald

> Amway Co-Chair Doug DeVos Building Up His Own Family Office
> Nu Skin Reports $2.7 Billion Sales in 2021
> FTC Takes Action to Combat Bogus Money-Making Claims in the U.S.
> Primerica Reports Fourth Quarter 2021 Results
> Regal Ware Expands Leadership Team With Three Executive Hires
> Herbalife’s Net Sales $5.8 Billion in 2021
> Mary Kay Names Nathan Moore President, Global Sales and Marketing
> Tupperware Announces $1.6 Billion Sales in 2021
> Oriflame’s 2021 Revenue Down 12%
> Medifast Reports $1.5 Billion Revenue in 2021, an Increase of 63%

Most-Read Article in February on The World of Direct Selling:
6 Common Reasons Behind Direct Sales Start-Up Failures – Hakki Ozmorali

> Kendra Scott Launches Direct-Selling Platform For Women Entrepreneurs
> doTERRA and University of Mississippi Partner to Advance Essential Oil Research
> Melaleuca Announces New President
> SeneGence Taps Anita Krpata as New Chief Commercial Officer
> Natura &Co Q4 2021: Income More Than Triples, Despite Sales Dip
> Young Living Names Ben Riley as New Acting President
> DSSRC Recommends Mary Kay Discontinue Certain Earnings Claims
> India to Be Herbalife Nutrition’s Largest Market Globally: CEO
> Young Living Appoints Lyndi Smith as Chief Marketing Officer
> Natura &Co Opens Joint Offices in Chile for Its Natura, Avon and The Body Shop Brands

Most-Read Article in March on The World of Direct Selling:
2021 Results: Brakes on Growth in the Fourth Quarter – Hakki Ozmorali

> Arbonne Appoints Jorden Bell as new Chief Marketing Officer
> Betterware Completes Acquisition of JAFRA’s Operations in Mexico and the U.S.
> Fitch Downgrades Oriflame to ‘B’; Outlook Negative
> Nature’s Sunshine Celebrates 50^th Anniversary
> Fitch Affirms Natura &Co’s Rating at ‘BB’; Outlook Remains Positive
> IDLife Announces Josh Paine as New CEO
> Amway’s Global Sales Reach $8.9 Billion in 2021, Up 4%  
> Nu Skin’s Ryan Napierski on Taking the Company Into the Digital Age
> LR Group Sales in 2021 Increased by 4.0% to EUR 296.2 Million
> Amway: “We Stand Behind Our Business in India”

Most-Read Article in April on The World of Direct Selling:
How To Start Thinking Differently About Compensation Plans in 2022 – Brett Duncan

> FTC Sends $149 Million in Refunds to People Harmed in Alleged AdvoCare Scheme
> Herbalife Nutrition Announces First Quarter 2022 Results
> Natura Resumes Growth in Brazil and Further Improvement in Avon Fundamentals in Q1
> Tupperware Reports First Quarter 2022 Financial Results
> Medifast Announces Q1 2022 Financial Results
> Kyäni Makes Announcements About Leadership
> Tupperware’s Party of One: Direct Selling Brand Seeking Turnaround
> Vorwerk Group Reports Record Sales of 3.4 Billion Euros in 2021
> Management Today Awards CEO Angela Cretu Trailblazer of the Year
> New doTERRA Product Center to Serve Thousands in Hawaii

Most-Read Article in May on The World of Direct Selling:
Power Skills for Powerful Onboarding – Lauren Mason Carris

> US Direct Selling Association Releases 2021 Industry Statistics
> Tupperware Enters into Definitive Agreement to Sell its Nutrimetics Business
> NewAge Announces Review of Strategic Alternatives
> Hinode Seeks to Increase Global Footprint and to Sell in 30 Countries by 2030
> Brazil’s Natura Announces Restructuring Plan and New CEO
> Melaleuca Promotes Frank VanderSloot to Executive Chairman, Jerry Felton to CEO
> WFDSA Shares 2021 Global Industry Statistics
> doTERRA Commences Operations in Chile
> Direct Seller Nu Skin Pivoting to ‘Social Commerce’
> Beautycounter CEO: “Even in a Recession, We Have a Lot of Growth Opportunities”

Most-Read Article in June on The World of Direct Selling:
Increase Sales by Improving Your Company’s Google Results – Don Sorensen

> Direct Selling in Europe: 2021 Industry Statistics
> New Image Acquires Nutrimetics From Tupperware Brands
> doTERRA Continues Growth with Expansion into India
> Avon CMO: “You Need a Unique Value Proposition to Transform as a Brand”
> Ryan Napierski of Nu Skin on The Future of Retail Over the Next Few Years
> Nature’s Sunshine’s US Manufacturing Facility Now Using 100% Renewable Energy
> The Beauty Metaverse: We Are at the Beginning of Something That Is Huge
> AVEDISCO (Italy DSA) Releases Sales Force Statistics by Regions
> Canada DSA Announces 2022 Award Winners
> In Its 108th Year, Kirby Rolls Out Direct Selling to Consumer on Its Website

Most-Read Article in July on The World of Direct Selling:
15 Principles for Developing Your Independent Salesforce – Brett Duncan

> Herbalife Exceeds Q2 2022 Expectations and Reaffirms Full Year 2022 Guidance
> Nu Skin Reports Second Quarter Financial Results
> Tupperware’s Q2 Revenue Decreases 18%
> Oriflame Reports 14% Sales Decline in the Second Quarter
> Herbalife to Invest $400 Million in Key Digital Transformation Growth Initiative
> Natura &Co’s Sales Stabilized in Q2, Profitability Is Impacted by Cost Pressure
> Young Living Launches Strategic Restructuring, Suspends Operations in Brazil
> Juice Plus+ Announces Biggest Rebrand Since It Was Launched in 1993
> Direct Selling and the Big Impact It Has on the Utah Economy
> NewAge Files for Bankruptcy

Most-Read Article in August on The World of Direct Selling:
Direct Selling in Q2: Confronted With Challenges – Hakki Ozmorali

> Market America Co-Founder J.R. Ridinger Dead at 63
> Natura Not Considering a Spin-off of Aesop or the Sale of The Body Shop
> Saladmaster Announces European Expansion, Opens Warehouse in Netherlands
> Avon Survey: Cost-of-Living Crisis Leads 80% of Women to Seek Side Hustle
> Amare Global Announces Acquisition of Kyäni, Inc.
> Is Livestream Commerce About to Break Through?
> Redefining Anti-Aging Skincare: Interview with Lori Bush, Founder of Solvasa
> Tupperware Announces Settlement of SEC Investigation for House of Fuller Business
> Shaklee Enters New Category with Launch of Anti-Aging Body Care Line
> 10 Top Retail Trends to Watch

Most-Read Article in September on The World of Direct Selling:
3 Ways Integrated Data Fuels Direct Selling Success – Daryl Wurzbacher

> Tupperware, the 76-Year-Old Staple of Door-to-Door Sales Is Now Selling at Target
> Plexus Worldwide Announces the Appointment of Gene Tipps as Chief Executive Officer
> Natura & Co. Considers IPO for Aesop, Its Beauty & Wellness Brand
> Thirty-One Gifts Founder Cindy Monroe Releases Her First Book, “More Than a Bag”
> The Body Shop CEO: “They Say Retail Is Dead. But We’re Social Creatures”
> Modere Named to Newsweek’s Top 100 Most Loved Workplaces for 2022
> 15,000 Participants Attend QNET’s Annual Convention
> Metaverse, a Year After the Hype: To Jump in or to Wait and See
> Herbalife Nutrition Announces Leadership Change
> TikTok Set to Launch Live Shopping in the U.S.

Most-Read Article in October on The World of Direct Selling:
The Pillars of Success in Direct Selling – Hakki Ozmorali

> Third Generation to Lead Mary Kay as Ryan Rogers Named Next CEO
> Karalee Mora Appointed as JAFRA USA’s New CEO
> Avon to Build New Research & Development Operations in Brazil and Poland
> Medifast Named to the 2022 FORTUNE 100 Fastest-Growing Companies List
> Natura &Co Results Show The Body Shop Challenges Remain
> Tupperware Reports 20% Decline in Sales in Q3
> WFDSA Launches Website for 2023 World Congress in Dubai
> Monat Expands Into Color Cosmetics
> US Direct Selling Association Announces DSA Digital Marketing Awards
> Oriflame Launches Operations in Germany

Most-Read Article in November on The World of Direct Selling:
The Table Stakes for Success as a Direct Selling Company – Jeff Dahl

> Amway Launches Singapore Business Innovation Hub
> Natura &Co Could Sell Stake in Aesop to CVC Capital, L’Occitane or Shiseido
> Infinitus Celebrates 30^th Anniversary, Launches New Brand ‘Oriherb’
> DSA Canada’s 2022 Year in Review
> Avon Hit With $52.1M Verdict for Asbestos-Contaminated Talc
> Utah Companies Are Trying to Pull Out of China
> US DSA: Proposed Rulemaking Creates Confusing Standards for Millions of Direct Sellers
> Amway Announces Peter Strydom as New Chief Marketing Officer
> Herbalife CEO Michael O. Johnson Agrees to “$1” Salary and Removing “Interim” Title
> Mary Kay Announces Awards, Milestones, and Accomplishments From Full-Year 2022

Most-Read Article in December on The World of Direct Selling:
Canada Remains Steady in a Sea of Uncertainty – Peter Maddox

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The post Industry News Roundup: 2022 appeared first on The World of Direct Selling.

To complement that article, I have put together those undesirable practices that are found at some of the direct sales companies. Without exception, these practices drive their independent representatives, customers, and investors crazy.

I am sure you will find at least a few of them familiar…

Disregarding Regulations

Compliance is not something that should be expected only from staff members. 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 price of being blind to the things happening on the field can be very high.

Failing to Keep Promises

This presents itself on various grounds: Missing the dates of opening new markets, product introductions, promotions, new training programs or improvements in service quality… Worse by far is missing commission payout dates!

Fiddling With the Compensation Plan and Policies

Frequent changes made on the compensation plan and the policies indicate management’s unpreparedness, if not lack of competence. 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 helps alienate the sales force.

Jumping into the International Arena

International expansion has to be a part of the overall strategy, a planned activity. Furthermore, each potential market has to be analyzed for all its pros and cons before making the “Go” decision. It is always prudent to first, test the business for a lengthy period in your home country before taking it abroad.

Sticking to the Local Market

This is not a good habit, either. There are companies who have been in business for many years that still have no intentions to expand internationally. Conservatism in this sense only means lost opportunities for all stakeholders.

Overlooking Communication

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 also between the public in general.

Concentrating on Sales Force, Ignoring Staff

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. The inevitable consequence of having demotivated staff is having poor service quality.

Mismanaging the Field

Sales force is a force that needs to be managed and 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 regardless of their ranks is crucial.

Messing Up Promotions

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 promotion before its announced date due to failing in these three. The worst-case scenario under this heading is creating a parallel compensation plan built on promotions.

I am glad to note here that most businesses are not plagued with such practices. We see them at some of the businesses. Yet we also see they are not taken as seriously.

…..

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 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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The post Some Bad Habits Seen in the Direct Sales Industry appeared first on The World of Direct Selling.

In addition to serving as an advisor in the private equity space, Jeff serves direct selling companies as an advisor and Fractional Executive as part of Strategic Choice Partners.

The Table Stakes for Success as a Direct Selling Company

Business Model Fundamentals for the Direct Selling Industry

We all have witnessed the rapidly changing business environment. Specifically, the rise of the Gig Economy which brings with it competition for participation. The rise of Social Media Influencers and traditional businesses launching Affiliate Marketing models also creates consumer competition. Most of us are also scrambling to keep up with changing consumer shopping preferences, online marketplaces, social and community platforms, and all the technology and system requirements to play in this new game.

However, with that said, our industry is still one of the purest forms of commerce, still relevant and growing, with some basic business model fundamentals that have both evolved and withstood the tests of time.

The Art and Science Can Be Difficult for Outsiders to Understand

It wasn’t until I stepped out of the industry for a couple years to advise in the private equity space that I realized how complicated direct selling is to understand for those outside of the industry. When asked to explain how it works, I naturally started talking like they were one of my direct selling peers. As you can imagine, their eyes quickly began to roll!

Financially brilliant and grounded in data, many struggled with the concept of Art & Science. Motivating and incenting a volunteer work force (versus salaried employees), variable/multi-level compensation plans (versus fixed salaries), and building a fun and rewarding community (versus just do your job) were equally perplexing. One highlight, and most comical, was when a Senior Partner asked me to explain the purpose behind all those extravagant “rah-rah events” and how to justify the ROI. The Art, which is intuitive for many of us in the industry, is a difficult concept for many outside the industry.

Full transparency: I also struggled with the Art when entering the industry 18 years ago. In fact, I have seen multitudes of CPG (consumer packaged goods) and traditional business executives enter our industry only to fly out the revolving door never really figuring it out. My best advice? Get them out of the corporate office and into the field ASAP so they can witness the Art (and Heart!) of our business. Make no mistake: Our industry needs the expertise and experience of these “outsiders” to help us evolve. We need to do everything we can to help them “get it.” At the same time, if the struggle to sync up with the spirit of what we do scares them away, we’re better off knowing that sooner rather than later.

Early in my direct selling career, I was fortunate to help lead a global research study for a legacy leader in our industry. It specifically addressed why distributors join and stay with a direct selling company. The findings were fascinating, varied some by country, and permanently altered the way I looked at our industry. It provided a structured view, like a Business Model, that all could understand, and more importantly could guide strategy, business planning, and investment needs. Much of it was intuitive to industry veterans, but it was a life-saver for this new executive. Since, I have seen other studies within the industry that touched on similar findings.

Over the years, I have combined these findings along with new learning to build a model that frames out a successful direct selling business. Needless to say, I eventually used this model to better explain direct selling to the private equity community. Basically, the model has 6 fundamental elements that direct sellers need to attract and retain distributors:

1. Flexible Income Opportunity
2. Product Pride
3. Business Support & Service
4. Community
5. Self-Improvement
6. Reputation & Citizenship

Again, these elements vary in rank importance across different countries and channels depending on cultural and socio-economic factors. If I recall, in one study “Flexible Income” over indexed in the US, “Product Pride” over indexed in Canada, and “Community” over indexed in Japan. I recall one women in Japan commented, “I come to the meetings for the cookie and conversation.”  She clearly was looking for community with other women.

So, What About Customers?

If your distributors are happy, engaged and effective, a growing customer base will quickly follow. I firmly believe that you need to start with the distributor, even in an Affiliate Marketing model.  A difficult concept for CPG executives that typically start with the end consumer. I, too, struggled with this one.

Not saying that building strategies to reach out directly to end consumers are bad ideas. But I consider these secondary activities, and only if done in a way that won’t disrupt your distributor base. Help your distributors first, they will help you build a customer base. This model may look distributor-oriented, and it is, but do it right and customers will follow.

So, Let’s Dig a Little Deeper

First, let me say that I believe that all these fundamentals are required, in varying degrees, regardless if you consider yourself Single-Level, Multi-Level, Party Plan, or Affiliate Marketing. One can also argue that they play a role in any Gig Economy opportunity.

Flexible Income Opportunity

• Low-risk, low-cost startup. I recently talked with an international jewelry company that said they were SLM and doubted we could teach them anything. Hmm, last I checked, a mandatory $250 Starter Kit is not “low cost start up.”
• Simple to understand Compensation Plan. Good luck with this one! Just remember confusion leads to doubt and suspicion.
• Easy to make money quickly. The founder of one of our legacy companies taught me that the first check, even if only $10, kept the new distributor engaged and moving forward.
• Meaningful and clear return for effort. If you break down weekly earnings into hours worked, is it really meaningful? And does it meet expectations communicated up front?
• Choice to set own hours, location, and income goals. I think we all get this one.

Product Pride

• Wear the brand. Will your distributors wear your swag in public and proudly talk about it? Are they regular users of the products and “Brand Ambassadors?”
• “Quality Confidence” with a positive product reputation. Back it up with proven science and a free return policy. Efficacy is key!
• Easy to demonstrate and sell. This is where training plays a key role. It’s hard to sell something you really can’t explain.
• Consumer buzz. Traditional PR and advertising always helps… as well as newer approaches across social media. It’s a very noisy consumer marketplace.
• Multiple categories. Let your distributors choose one they are comfortable with and grow into a subject matter expert versus pitch a large catalog of SKUs. I experienced one company scale to over $300M with only two primary SKUs before expanding. A commitment to focus and simplicity here, especially early on, is powerful.
• Package and price. Science is key. Have you really researched competition and the broader marketplace? Remember, Amazon is one click away. If you want to grow your customer base, you need to dig deep into analysis.

Business Support & Service

• Easy to do business with. Ask both your distributors and customers for their opinions on your service levels, delivery time, website navigation, payment process, returns process, etc. “Death by a thousand papercuts” is a very common cause of leaving for distributors. If they are spending all their time chasing down orders and fixing shipping errors, they are not growing their (and your) business.
• Deliver the promise. If you can’t deliver on a consistent basis, it’s better not to promise anything.
• Reliable customer service with easy access. This can be a real deal-killer, regardless of how well you do in every other area. If a customer has a poor experience with your brand, and especially with your customer service, not much else matters.
• Reliable distributor support with easy access. Is your back office optimal? Does it provide the tools and reports to build and manage a business? Is it really easy to use? I can’t count the number of companies I have worked with where the field is spending too much time playing in the back office.
• Getting started. This includes onboarding, providing a complete and professional-looking Starter Kit, and a clear “First 90-Day Road Map”.
• Business-building tools. Mobile Apps, Social Media content, CMS, CRM, etc. The new digital space is both rich and complicated. Get some outside help to get it right. New distributors need help selling and growing your customer base.
• Customer experience. Have you defined and built plans to make it the best experience possible? Sticky loyalty programs? These are key drivers for customer retention.

Community

• Join a fun and exciting community. Some companies point to a “Family,” others to a “Sisterhood,” and many more. Regardless of what you call it, is it authentic and engaging? Or just lip service?
• No tribes. One for all, all for one!
• Fun and rewarding events. Yes, those rah-rah events! Are they the right frequency? Do they balance thoughtful education with recognition, or is it just a boondoggle?
• Personal and team recognition. It’s a great way to cement and rally field teams.
• Mentorship and peer support. Methods vary by SLM and MLM. Have you ever talked with an Uber driver? Many feel like they were left on a deserted island to figure it out on their own. All humans need personal relationships.

Self-Improvement

• Robust training curriculum. Do you have a “Learning Management System” that’s easy to access and navigate? Many point to a company “University,” but is it really comprehensive, engaging, and customized to your business and product? Back in the day, both my wife and I worked for different Fortune 500 CPG companies, and both received multiple boxes of training binders and materials during orientation. I’m not promoting a wall full of binders, but training has always been an expectation for any company. Are you meeting that expectation? There are several vendors in our space that can help you build a state-of-art LMS, both in pathway and competency models.
• Add “Free” to the “Easy” above. Again, it’s an expectation, not a revenue stream.
• Personal development. Our industry has a rich culture in motivation, but take it a step further and add life skills. For example, home budgeting, financial management tools, conflict resolution, and team management. Again, I strongly advise “Free” for training like this, instead of looking at it as an additional revenue stream. You win when they win!
• Oh yea, add “Voluntary”. If you force it, they will just check off the box. If your training is real and adds personal value, others will promote it for you.

Reputation & Citizenship

• A trustworthy company. Yes, our industry still struggles a bit with a bad rap. It’s interesting to watch even pure Affiliate Marketing companies get tagged and thrown under the bus. A PR firm can help you bake out a strategy to tackle this one. Supporting the DSA and DSEF is also important… Help them help us!
• Join something “Bigger”. Many in our industry have done a great job giving back and paying it forward. I know from personal experience that global organizations like Habitat for Humanity and World Vision really appreciate our industry’s support. Just make sure it’s real, and not just a photo opp. Your field is looking for authenticity!
• Include both field and corporate teams. Pull everyone together under a single purpose. Don’t just send them a magazine with pictures. Build opportunities to get all engaged locally or supporting a broader initiative.

That’s a lot. I could spend hours talking about each one these elements. I’m sure many of you could, too. My hope is that this breakdown and overview sparks a thought or two for you and your company, an area where you feel like you could do better. When I engage with a company as an advisor or fractional executive, I always start by assessing these fundamentals. We can all go about addressing these areas uniquely and in line with our culture and approach, but we cannot ignore them. They are table stakes for success in direct selling.

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From the very beginning, we have been featuring articles from renowned personalities from the global direct sales industry. You will find their insightful articles below.

Jeff Babener (1948-2020)
Jeff Babener was the principal attorney in the law firm of Babener & Associates. For more than 30 years, he advised leading U.S. and international companies in the direct selling industry. Read from Jeff Babener

Meredith Berkich
Meredith Berkich is the President of LifeWave. She was the Chief Growth Officer at Jenkon, working with corporate leadership seeking solutions to digital transformation and business evolution. Read from Meredith Berkich

Jeff Dahl
Jeff Dahl is recognized as an industry leader and innovator, with over 35 years of experience working with global consumer brands and direct selling companies. Read from Jeff Dahl

Clark Diemer
Clark Diemer is an Associate of Strategic Choice Partners and the owner of Left Hook Videos. He has worked closely with more than 30 different direct sales companies. Read from Clark Diemer

Brett Duncan
Brett Duncan is Co-Founder and Managing Partner of Strategic Choice Partners, a business development firm that helps direct selling companies take their next steps. Read from Brett Duncan

Jonathan Gilliam
Jonathan Gilliam is the Founder & President of Momentum Factor, a compliance software and services firm serving direct selling companies exclusively. Read from Jonathan Gilliam

Vince Han
Vince Han is the founder and CEO of MobileCoach and an industry thought-leader for learning technology with an emphasis on artificial intelligence and chatbot technology. Read from Vince Han

Rick Loy
Rick Loy is an Associate with Strategic Choice Partners, and a sales strategist and training specialist with more than 20 years of experience as a Senior Executive in direct selling. Read from Rick Loy

Alan Luce (1945-2021)
Alan Luce was Co-Founder and Managing Principal of Strategic Choice Partners. He was a US DSA Hall of Famer and a member of the DSEF’s Circle of Honor. Read from Alan Luce

Peter Maddox
Peter Maddox has been the President of the Direct Sellers Association of Canada since early 2018. He has extensive experience in the association world and the marketing industry. Read from Peter Maddox

Michele McDonough
Michele McDonough is Co-Founder of  C3 Executive Search, serving the companies in the acquisition of exceptional executive talent in the direct selling channel. Read from Michele McDonough

Max Pecherskyi
Max Pecherskyi is Co-Founder and CEO of PromoRepublic, a distributed marketing platform for multi-location brands that launched a social selling solution for direct selling businesses. Read from Max Pecherskyi

Andi Sherwood
Andi Sherwood is the Director of Strategy and Plan Design at Dan Jensen Consulting. Since joining in 2066, she has personally designed more than 400+ compensation plans globally. Read from Andi Sherwood

Don Sorensen
Don Sorensen is an Associate with Strategic Choice Partners. He is an online reputation management authority whose expertise has been featured in numerous prominent publications. Read from Don Sorensen

Gillian Stapleton
Gillian Stapleton was the CEO of Direct Selling Australia between 2016 and 2022. She was appointed to this role as the first female in the association’s 54-year history. Read from Gillian Stapleton

Nancy Tobler
Nancy Tobler is an Associate of Strategic Choice Partners, and Chief Data Analyst at MLM Compensation Consulting. She has worked in the direct sales industry on commission analytics for 20 years. Read from Nancy Tobler

Crayton Webb
Crayton Webb is the owner and CEO of Sunwest Communications, a public relations and public affairs firm. Previously, he was the VP, Corporate Communications at Mary Kay. Read from Crayton Webb

Ben Woodward
Ben Woodward is an Associate of DISSECT and the author of a best-selling book. He previously assumed executive roles at various internationals like Amway, Melaleuca and Nikken. Read from Ben Woodward 

Daryl Wurzbacher
Daryl Wurzbacher is the CEO of ByDesign Technologies, a company dedicated to delivering leading-edge capabilities in software-as-a-service, and platform-as-a-service solutions. Read from Daryl Wurzbacher

The post Guest Authors appeared first on The World of Direct Selling.