In 2007, Daryl transitioned to the supplier side as the Director of Technology for ByDesign. His strategic contributions led to his appointment as President in 2015 and CEO in 2018.

Addressing the Challenges of Person-to-Person Selling in a Digital Age

Today, technology is transforming representative and customer experiences and expectations. The ongoing balancing act of optimizing the power of digital solutions without sacrificing the personalized experiences that make our industry unique is one of the challenges we’re hearing about most from clients right now. As I shared in my last article, the ability to establish and maintain trust with representatives and customers is the biggest driver of direct-selling success, by far.

How do you find the right balance between technology and relationship-based selling? As we consult with clients, we’re seeing them take on two nearly universal challenges – how to increase their focus on customer centricity and how to leverage technology tools to effectively differentiate their relationship-based brands. I’ve compiled our observations of these challenges, along with real-life solutions to help your sales strategies succeed – and thrive – in our digital age.

Challenge 1: Leveraging data to increase customer centricity

As we all know, digital technology is transforming when, how, and where people shop – and the experiences they expect. As companies look to keep pace with customer expectations, it’s no surprise that increased customer centricity leads the list of priorities for many of our clients. Overall, research shows that companies with customer-centric strategies achieve an estimated 60 percent more in profits.

However, no company is looking for Ecommerce and digital communications to overtake the vital interpersonal connections between reps and their customers. Instead, we are seeing companies leverage smart technology solutions to bring data together and analyze it to create a new type of customer-centric shopping experience that meets and exceeds today’s customer expectations.

Customer data is the key. The challenge lies in capturing the right data and putting it together to produce actionable insights. While technology reduces the barriers to capturing thousands of data points, having comprehensive – often overwhelming – amounts of data doesn’t guarantee usable information. Turning data into insights that drive increased customer centricity takes a four-step approach:

1. Identify the questions you want to answer about your customers. For example, you may want to better understand one-time purchasers vs. repeat customers in order to help reps convert more of the one-timers into regular buyers. The questions your customer data can help you answer include: How many one-time customers do we have? How can they be segmented based on what they purchased, the timing, or purchase drivers, such as promotions or events? What is the average timing between first and second purchases by a customer? How can repeat customers be segmented based on profile attributes, purchase patterns, or responses to rep outreach and promotions?

2. Determine the data points that will help you answer the questions. The more complex the question, the more data points you’ll likely need to bring together. Continuing the example from step 1, you’ll want to ensure you’re capturing detailed customer information tied to each transaction that tells you the who, what, and when, and links it back to past purchase history, when applicable. While this may seem daunting, you’re likely to find your systems are already capturing most of the data points you need.

3. Create regular reports to give you a view of key performance indicators (KPIs). Actionable insights come from monitoring your data over time. In our example of building a better understanding of repeat purchase patterns, you’ll want to track dashboard-level metrics that show your one-time and repeat purchase rates – and how they change. You’ll also want the ability to dig into the data details behind the KPIs to help you craft and test strategies to move the needle.

4. Put your data to work. It’s more possible than ever to make the data you’re collecting actionable. We’re seeing clients integrating marketing automation tools like Klaviyo with their platforms to create highly targeted representative or customer communications based on data points like purchase history or representative ranks.

Challenge 2: Making person-to-person selling a digital differentiator

Today’s customers expect omnichannel shopping experiences that allow them to move seamlessly from online to social media to person-to-person shopping. As Generation Z (born 1997 – 2012) comes of age, this expectation will increase, but with an added emphasis on the person-to-person element.

Research shows while Gen Z-ers are true digital natives, they also place a high value on human connection and personalized recommendations when making purchase decisions. Half of Gen Z says they will abandon a purchase if customer reviews aren’t available. Sixty-six percent want personalized recommendations to be part of their shopping experience – but only 39 percent say retailers are delivering. This gap underscores the opportunity for our industry.

Technology, including social media, online selling events, and mobile selling apps, gives us new ways to connect with customers – and still provide a personal, relationship-based touch. Providing reps with tools, templates, and social selling training enables them to build a customer community based on relationships, even in a digital world. Used effectively, these tools extend a rep’s reach far beyond the traditional constraints of personal networks and geography.

Along with strengthening personal connection through technology, many companies are finding face-to-face sales of on-hand inventory to be a differentiator in an increasingly digital world. Whether one-to-one or at events, selling from personal inventory enables reps to capitalize on interactions with customers and feed the customers’ desire for instant gratification by putting a product in their hands.

However, selling on-hand inventory can also create compliance headaches. In many cases, capturing “retail receipts” to verify retail sales for voluntary regulatory compliance tracking can be virtually impossible, especially when field sales representatives tackle point-of-sale solutions on their own. Over the years, we’ve seen clients take on this challenge in a number of ways, from requiring reps to submit manual receipts to building custom software to facilitate this type of tracking. Today, we’re seeing more companies engage app providers to implement automated tracking solutions that integrate with their back-office software while providing mobile point-of-sale ease for representatives.

In our current environment, we recommend optimizing person-to-person selling based on a three-step foundation:

1. Audit your current processes and identify best practices for virtual relationship-building. Technology and social platforms are evolving rapidly, so having a strategy to keep pace is vital. Identify representatives who are having social selling success and develop training, tips, and mentoring opportunities to share insights and help other reps build their skills.

2. Get ready for Generation Z. The oldest members of Gen Z are turning 25 in 2022. Not only does their desire for shopping experiences that integrate technology and a personal touch align with direct selling, 62 percent have entrepreneurial aspirations. Now is the ideal time to also adapt your recruiting strategies to highlight how becoming a representative is a cost-effective, quick way For Gen Z-ers to build a business, either full-time or as a side gig.

3. Ensure your retail receipts compliance is aligned with person-to-person sales strategies. If your reps are selling on-hand inventory, evaluate your retail receipts tracking processes to identify – and close – compliance gaps.

Ever-evolving technological innovations make it possible to enhance representative and customer experiences without losing the human connection of person-to-person selling. In the years ahead, striking the right balance between tech and relationships will be difference-makers in our industry.

What other challenges are you seeing when blending technology and person-to-person connections? Please share your insights in the comments below.

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Embracing a Next-Steps Mentality

I go to a church that is built on a simple but profound principle: help people take their next step in their spiritual journey. When you hear it explained, it’s a pretty powerful concept. The idea is that everyone, no matter where on their journey they are, has a next step to take. Everyone can progress. Everyone can still become more.

In many ways, I feel like this is the underlying promise that every direct sales company offers. As an industry that celebrates personal development, what we really embrace is this idea that anyone, no matter where they’re at or their level of experience, can take a next step toward becoming whatever it is they want to become. The company and its products and its rewards can help with that, but they are really just a vehicle to a greater development in that person’s life.

Direct sales companies help people take a next step in their lives.

But a next-steps mentality isn’t just good for personal development; it’s really smart for business, too. Our channel, probably more than any other, leverages the small steps of many to generate revenue and profit and growth. Sure, every business has its “all-stars,” and its “top dogs,” but companies that are growing are companies that are embracing small progress made by thousands.

In my last article, 3 Stats Direct Selling Companies Must Pay More Attention to in 2022, I shared some very practical reports and data you should have handy to get a handle on where your business is at today. Those reports aren’t the end-all, be-all of KPIs, for sure, but they do a great job at getting down to identifying what I think really matters for us all: creating a next-steps culture.

The underlying question with everyone who interacts with our company and our brand is this: “what do you want out of this?” It can’t be “Here’s what we want out of your involvement with our company.” It must be centered on what they want. Only when we can deliver what they want out of interacting with our company will they ever be open to all the other things they may be interested in down the road.

With the rest of this article, I want to share some thoughts and prompt you to think through where your company could do a better job of embracing a next-steps culture. We too often focus on the big plays, the “giant leaps,” when our model is specifically created with more of a “next steps” mentality in mind.

My question is, are we really embracing that as well as we could?

Here are some thoughts to get your company taking a next step toward a next-step culture.

Next Steps for Your Customers

In the previous article I reference above, I give guidance on a way you can segment your Customers based on their buying habits over a year with your company. Here’s a short excerpt for reference:

“What you need to understand is how often and how much your current Customers and Distributors purchase from you over the span of 12 months. To do this, I like to create about five buckets, or segments, and place all of your current Customers and Distributors into one of these buckets:

• Purchased only 1 time the past 12 months.
• Purchased 2-3 times …
• Purchased 4-6 times …
• Purchased 7-10 times …
• Purchased 11+ times …

Then, for each segment, I want to know the total revenue generated by that segment, the total # of orders and the average order size.”

There are many other ways you could segment your Customer base, so do as it makes sense for your company. Regardless, what you really want to focus on is how to help each segment take a next step with your brand. In some cases, these “next steps” will be central to a sales program or promotion you put in place. In other cases, it could just be timely communication.

Let’s take a look at the Customer who has purchased only one time in the last year. What could be a logical next step for them?

Well, first let’s think about what might not be the most logical next step. They probably aren’t quite ready to sign up for our autoship program (because they haven’t even reordered at all). And it’s probably not likely that they’re ready for our referral program yet (since they jury is still probably out for themselves). And yet, for many direct selling companies, these are prominent next steps offered to a Customer who has ordered only once.

The most logical next step for this Customer is… (wait for it…)… a second order. Is there something we can do to prompt a second order from this Customer. Is there a way that we can clarify how a second order will bring value to their life? Is there an incentive (like a discount code) that could help? Or maybe just timely information about our products?

And what if that next step is still a stretch for them? Do we have clear next steps in place that don’t require a second purchase? Maybe it’s a review, or maybe we can send them testimonials of others who have used the same product.

Just think of the impact on your business if you could optimize the next steps for this segment of your Customers. If you could focus on helping them get just a little bit more out of their journey with your company.

Of course, you can (and should) play this thinking out with all of your Customer segments. What’s a proper next step for those who have ordered from you twice? Maybe their ready to join your Preferred Customer program. Or your autoship program? What about people who have ordered 10 times this year? They may even be ready to become a Distributor, who participate in your referral program. Or try a new product.

For Customer alone, if you could get just 10% more to take a logical next step in their journey with you, it would do wonders for your business (and them).

Next Steps for New Distributors

You can obviously play this thinking out for your Distributors, too. If we look at the other two reports mentioned in my previous article, you’ll see that they focus on your segments of Distributors in terms of annual activity, as well as the engagement of new Distributors with your Fast Start Program.

I think a next steps mentality is even more critical to use with our Distributors, as we too often push giant leaps on them, assuming they are as committed to building their business as we want them to be. But all the signs points to that not being the case, so how can we help them achieve what they want to achieve with us?

If you can segment your training and field development appropriately, it can have a dramatic impact on how to best leverage your training opportunities. Some quick segments, and possible next steps, are as follows:

• Distributors who have still not made their first sale; next steps include a) conversation starters, b) tips on social media posting c) prompts on who to reach out to, d) specific scripts or talking points to bring up.
• Distributors who have not sponsored anyone; next steps include a) clarifying benefits on building a team, b) how to identify someone who may want to be a Distributor, c) how to bring up the opportunity without being pushy
• Distributors who have built wide but not deep; next steps include a) how to be a great sponsor, b) how to leverage our Fast Start program with your new Distributors, c) how to duplicate yourself

The options here are endless. And while every direct sales company has a leadership ranking system in place that inherently helps with this segmentation, so few are really focused on the intentional and specific work of getting someone from one rank to the next, let alone the smaller “next steps” between each rank.

How can you clarify the next steps for your new Distributors better? More importantly, how can you make sure you aren’t wasting their time with talking about next steps that they clearly aren’t ready for?

Next Steps for Leaders

Quite possibly the hardest next steps to line out are those for your top leaders. In many ways, they’ve figured it out. It can feel like they really don’t have a next step to take; they’ve taken them all.

Of course, we know this isn’t true. As soon as your leaders don’t feel like there’s a next step for them to take, crazy stuff will start happening. They’ll come up with a new system or get more involved in something else (or even another company). Who knows what it can be, but just know that we all as humans are seeking out ways to progress, so even your leaders are susceptible to this. If they can’t find their next step at your company, they will start looking for it elsewhere. It’s not a business issue; it’s human nature.

So, make sure you’re nurturing this process as much as possible. Sometimes, you just need to facilitate it and let the leaders run with it. Other times, you need to truly line it out for them. But make sure you’re in tune with what they want out of the business now (as their original “why” may now be a reality, so they need something more).

More importantly, make sure they stay connected to the mission and vision of the company, and understand their role in it. One of the other things I love about my church’s teaching on next steps is this: “When you take your next step, you’re opening up a space for someone else to take their next step.” How powerful is that!

For your leaders, this is the leadership culture you want to cultivate. In some cases, your leaders’ primary role is to build up the next generation of leaders.

What’s Your Next Step?

This next step mentality can really play itself out in every area of your business (and your life). I’m just scratching the surface here. But what I do know is that we all have a clear next step in paying more attention to nurturing and prompting the next steps of our people in a way that makes sense for them.

How do you do this at your company? What are some practical ways you’ve seen this play out?

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The Truth About Your Top Leaders

There’s a good chance I end up regretting that I wrote this article.

I can feel the hostility and defensiveness forming now. The “virtual vegetables” being thrown my direction. The accusations of blasphemy, even.

I’ve talked myself out of writing this article several times this year. While the topic continually pops to the front of the line in my brain when I’m up for a new post, I’ve desperately searched for other subjects to write about to avoid it altogether. I figured I didn’t need the hassle the will inevitably come with it, and maybe it wasn’t the right audience for it.

But, alas, it’s a topic that won’t leave me alone. I guess its time has finally come. So here we go.

A few disclaimers before we dive in:

1. I work with corporate executives of direct sales companies. I have served as one myself in the past. So, while this article will be talking a lot about top field leaders, its target is actually the corporate executive.
2. I’ve shared these thoughts we a few companies over the last year or so, and I’ve always been surprised at just how well it has been received. Which only underscores the fact that it’s as much of a challenge and issue for direct selling companies as I observe that it is.
3. I love direct sales, and I love direct selling leaders. You will likely question my sincerity on this one several times over throughout this article, so I will likely repeat this fact throughout.
4. More importantly, I respect what top leaders have accomplished, immensely. I haven’t done it myself, and I probably couldn’t do it. On top of that, the character and work ethic that is required to make it happen is something I find beyond honorable.

OK, now that we have that out of the way, shall we get started?

The Game Has Changed

But first, an allegorical reference that I think could help.

I played baseball growing up, all the way into college. In many ways, it consumed my life until I was 20. I was pretty good at it, and played for a great program. Specifically, I was a pitcher. I was quite successful, and the last game I pitched in was in the College World Series. It was a good run.

Now, I have a 12-year old who is involved in Select Baseball, and I get to help coach the team. I love it. It takes a lot of our time, but it is so worth it. My son is also becoming quite a pitcher, so I’m trying to steward that talent in him the right way.

Here’s what I’ve realized, and I’ll keep referencing throughout this article: Baseball has changed since I played it last in 1997. I didn’t want it to, but it did. And my coaching for my son and his team in 2021 will only go so far until I accept, and adapt, to this fact. It’s as simple as that.

And while baseball has changed a lot over the last 25 years, I think direct selling has changed even more. And yet, I watch so many companies revert back to tactics and strategies that worked so well 10,15, 20 years ago. And I see so many companies hide behind the bravado and type-A personalities of their field leaders, while they hesitate to make the bold decisions that are necessary to adapt to the way the game is played today.

As I’ve shared with them what I’m about to share with you, I’ve seen heavy burdens lifted from their shoulders, and sparks of enlightenment twinkle in their eyes.

I know The World of Direct Selling has its fair share of both corporate executives and field leaders, so let me just say this again: This article’s primary audience is the corporate executive, but I’m also hoping it provides some enlightenment and guidance for field leaders to consider, too.

Two Undeniable Truths About Your Top Leaders

Corporate execs have such an interesting relationship with the top leaders in the field. They are the Distributors you will hear the most from, interact with the most and include the most in your planning and strategizing. On the one hand, you covet their buy-in and praise for everything you do. On the other hand, their constant requests, frequent complaints and occasional drama can push you to the edge at times.

It’s an interesting relationship, but it’s a necessary one. So learning how to best navigate it is of utmost important, for both parties.

Here’s truth #1 about your leaders: We love them, and we wouldn’t be where we are today without them. And, we want nothing but the best for them.

I’m going to assume we can all agree with this.

Here’s truth #2: In a direct sales company that’s 15 years old (maybe even 10?) or older, your current top leaders cannot be the source of your future growth.

I’ll wait just a second to let the sting wear off of that one for a bit.

I’m not speaking to the skills or capabilities or heart of your leaders. I’m simply speaking to the extremely logical facts surrounding their situation and yours. Let me break it down for you in three core points.

Direct Sales Has Dramatically and Fundamentally Changed

Many articles have been written here about the changes we’re facing in direct selling. I even wrote about 2019 as The Year Direct Selling As We Know It Changed Forever. So I don’t think we need to spend time making this point.

What we do need to spend time on is taking the next step in our thinking: If things have changed so much, then we must recognize that what worked well before might not (probably doesn’t) work so well now.

Your top leaders obviously did something right. There’s no disputing this. The real question is… “What is right for right now?” At least some of what your top leaders relied on before as a key part of their success doesn’t work the same and/or as well as it did when they were climbing the ranks. And yet, that’s the system they know the best and believe in the most. Because it’s the system that worked for them!

We all like to lean on “tried and true” methods. But too many of them aren’t “tried” as much anymore, and many aren’t quite as “true” as they used to be.

Let me dip back into my baseball allegory. There are mechanics and principles of pitching that I swore by, and my coaches swore by, as I was developing in the 1990s. They worked for me then. But as a coach, I’m realizing there are some key elements that I would swear by that professionals are telling me is not longer seen as a best practice.

For example, above all else, I was taught to keep the ball low. If I could keep most of my pitches down in the zone, then everything would be alright. Now, hitters have actually been trained to change the path of their swings, so that keeping the ball low on every pitch no longer makes sense. And it’s batting, not pitching, that has required pitchers to rethink this principle. Put another way, if I was pitching now, and I lived by the creed to keep all of my pitches down in the zone, I wouldn’t experience anywhere near the success I did in the ‘90s. Because the game has changed.

Don’t get me wrong; there are plenty of principles from the ‘90s that do still apply to today’s game. But sometimes even those need to be applied a little differently to adapt. Now that I’m a coach, I owe it to the kids I coach to learn the new principles as best I can, and teach them that. It won’t help them for me to show them the now outdated approach that I swore by in the ‘90s, no matter how much I loved it or how well it worked for me.

Harsh statement alert: Your top leaders aren’t the experts they think they are. It doesn’t mean they aren’t experts, and it certainly doesn’t mean they don’t know what they’re talking about at times. But my experience is they often lose sight of the fact that the game has changed, and those principles that worked so well for them, like 3-way calls or leading with opportunity or even in how they position their income claims, just don’t work the same way today (thanks to technology, the regulatory environment and the marketplace).

And even when what used to work still does work, it often doesn’t work as well, and requires a lot more work to get the same results.

They Don’t Have the Growth Mindset Like They Used To

Now I’m really stepping on toes.

It is very rare for your top leaders to truly have the growth mindset needed to grow your business. It’s not their fault; it’s human nature. If I was in their shoes, I would be the exact same way.

Your top leader has likely earned a great income with your business, and established a strong recurring paycheck. And this is awesome, because it is one of the great benefits of our model. So, your leader’s primary driver right now, especially if your company has experienced a recent decline in sales, is to keep what they have. Like I said, this is human nature. Your leaders will innately prioritize anything that keeps them from losing what they have over anything that will increase what they have.

This is an extremely understandable mindset. But it is not a growth mindset.

When your leaders started, they most definitely had a growth mindset. All they could do is grow. They had nothing to lose. Now, they have so much to lose. To expect them to not protect what they have for the good of the company overall is ridiculous. They have a maintenance mindset.

Hear me out: I’m not saying that your top leaders don’t want to grow. As a matter of fact, I can promise you that most of them do want to grow. But they want to grow without risking what they’ve already built. And that is where the friction lies.

They Don’t Have the Energy or Time They Once Had

Your top leaders have worked really hard for a really long time. And yet, it seems most companies continue to ask for even more from them because of their status. Which only exhausts and burdens them more, which ends up being unproductive.

Sure, these are the people that were your road warriors before, who would stand in front of the state until 1 a.m. talking with anyone and everyone who wanted to chat. They had a drive and energy that was unmatched, and, especially in those early years, the business essentially rose and fell with them.

Now, they are in a different place in life. They’ve been successful. They’ve reaped rewards for their work and commitment. To expect them to have the same drive and tenacity now that they had 15 years ago to get their (and your) business off the ground is unrealistic.

And yet we keep asking our top leaders to do the bulk of the work. Not only is it unfair to them, but it’s actually not the way our model works.

Direct selling is not made to succeed from the work of just a few top leaders. By its very nature, it rewards everyone the most when more people are doing a little bit of work and buying a little bit of product.

On top of that, especially if your company is experiencing a decline (which is inevitable if your 10 years old or older), that means your top leaders’ income has also dipped. And I’m sure, for many of them, that they are frustrated by the fact that, in some ways, they have to start all over again. At least it can feel that way sometimes. I’m sure many of them didn’t think they would still have to work this hard or this much to keep the business going.

So as the corporate leader, how much are you burdening amazing leaders to accomplish a mission they’ve already accomplished? Could it be that the corporate team is relying on those top leaders even more than the top leaders want to be relied upon?

There’s a Necessary Cycle to Direct Sales

The very design of this model creates the very issue we’ve been talking about. It’s an issue that rises up every 10-15 years. It has to do with generations of leaders. And I would daresay it is the fundamental component of longterm success for a direct sales company.

If your company is not seeing a new generation of top-performing leaders rise up every 10 years, you can almost guarantee a decline until you do. If your company continues to burden your top leaders with the responsibilities that should be given to that next generation of leadership, then you will stumble and shrink. Because this model celebrates the development of the next generation of leaders.

There are so many components to the “growth formula” for a direct sales company. To be honest, it’s no formula at all; every company is different. But I do think you’ll find these three elements at the core of any growing company in our channel:

• New People (Customers and Distributors): If new people aren’t coming in at a regular pace, then growth will not occur.
• Young Leaders (not in age, but in tenure and ranks): If new leaders aren’t rising up, then growth will eventually stall out.
• Market-friendly Offer: If you don’t have a great product and/or a great program to introduce those products that’s easy to share, then eventually people stop talking about you.

As a corporate executive, you are the steward of your business. And while it’s unfair to expect everyone to have a growth mindset in the field, it’s not unfair to expect you to always have it. In fact, that’s your job. The best way you can support everyone involved in your company is to nurture growth at every turn. I believe that starts with making sure the three components above are addressed and re-addressed on an ongoing basis.

And, it also means that you have to know how to receive the feedback from all of your constituents, and filter them accordingly. It’s not easy, but it’s necessary.

I hope it’s obvious that I value top leaders, and their opinions, and all they do and have done. I wouldn’t exchange it for anything. I’m in no way saying you should ignore them or overlook them. But my challenge to the corporate executive is that you can’t stop there. You have a lot more people you’re responsible for beyond your top leaders. And to rely solely on their input, or to not use discernment or understand the context, is lazy leading.

It’s a paradox, really. Ultimately, the thing that will help your top leaders the most is growth below them in the organization. So focus on a growth mindset at all times, even when all the input you may be receiving is rooted in a maintenance mindset.

My high school baseball coach had an interesting saying. He would always tell us, “There’s no such thing as staying the same. You’re either getting better, or you’re getting worse.” He typically would tell us this right before we were going through a hard round of conditioning. While I would finish those burpees or run those foul poles, I would ponder that statement a lot. I would think, “Wait a second, I think it is possible to stay the same.”

And yet, the more I played baseball, and, more importantly, the more I’ve lived life, the more I’ve realized how true his statement is. There ain’t no staying the same. You’re either growing, or you’re shrinking.

Commit to growing. It’s the best thing you can do for everyone (whether they know it or not).

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The Makings of a Modern Compensation Plan for a Direct Sales Company

In April, I shared with you my thoughts on The Makings of a Modern Marketing Team for a Direct Sales Company. As so many areas of direct sales has shifted over the last 10 years, in light of both changes in direct sales as well as around direct sales, it is imperative that members of the corporate team, those who are stewards of the brand and the model, proactively shift components of the business to keep up, if not stay ahead.

But marketing is not the only area that deserves our attention here. In fact, while my firm, Strategic Choice Partners, has always worked with direct sales companies to create or adjust their compensation plans, we’ve seen a massive increase in both the number of companies and the breadth of changes requested over the last 18 months.

This makes sense, of course. The regulatory environment alone is requiring every company to take a hard look at the structure of how it pays compensation. There’s no need for me to go into those details here; plenty has been written about it already. I will say that I have been a tad surprised at the lack of urgency that most companies have had in making what appear to be obvious updates in their plans in light of these new regulatory insights.

Beyond these regulatory changes, however, is an even bigger question that seems to be at the top of every executive’s mind, either consciously or subconsciously, when it comes to thinking about compensation plans. That question is this: “What exactly am I paying for?”

It’s a simple but extremely profound question. And it is of utmost importance when working through any updates to your compensation plan. If you aren’t clear on what you’re paying for (and what you’re not), then you’ll never really be clear on what your compensation plan needs to accomplish.

As I mentioned in my Annual Checkup for 2021: “As direct sales companies continue to dish out 40%+ in commissions, they find themselves asking a very important question: “What am I getting in return for that 40%?” The expenses and responsibilities of the home office in today’s direct sales landscape is much more involved than in decades past, and yet the payout of the compensation plan in most cases has not been adjusted to account for those additional expenses. It makes for quite a tight margin!”

So, what are you paying all of your commissions for? Are you leaning on Distributors to acquire new Customers, and let the corporate office do the rest? Are you leaning on Distributors to do much more? Are Distributors your primary marketing channel, or are you having to invest more in things like online advertising, influencer outreach and video production?

Here’s the fundamental thought: If you’re still paying a 1990s compensation plan for a 2021 deliverable, you’re probably finding it very hard to finance “all the other stuff” that the corporate office has to do now.

With the rest of this article, I want to merely skim the surface of a few areas that are becoming bigger and bigger parts of compensation plan design today. It’s not intended to be comprehensive. But as I’ve had conversations with so many executives over the last few months, I’ve noticed these areas and ideas always seem to resonate with them most.

1. Your Preferred Customer Program

A Preferred Customer program is nothing new in direct sales. That said, many companies (especially 10+ year-old network marketing companies) are still struggling to find the right fit in this area. This struggle is due mostly to the hope that a simple Preferred Customer program can be incorporated without impacting much of the rest of your compensation plan.

This, of course, is futile. On the one hand, to create a Preferred Customer program that doesn’t require some other shifts in your compensation plan creates a Preferred Customer program that no customer actually prefers. If we prioritize keeping our comp structure in place, paying out the way it does, hoping we can just add this new component, then it’s extremely difficult to a) create a program that’s attractive to a Customer while b) incorporating compensation components that are attractive to the Distributor for obtaining Preferred Customers.

If the last two years have taught us anything, it is that we must prioritize the Customer. The modern comp plan needs to start with putting together the best offer for your Customers, and appropriately attractive compensation for those who find and serve those Customers. Figure that out, and try to work your way out from there.

2. Your “Hourly Rate”

Compensation plans don’t pay by the hour, but the normal Distributor is certainly going to think in those terms. In a world where gigs are abundant and easy for anyone to tap into, and where time and attention are more precious than they’ve ever been, a direct selling opportunity must prove (quickly) that it’s worth someone’s time to become a Distributor.

On average, what does someone make per hour spent sharing your products with new and prospective Customers? In our experience, reaching a rate of $30/hr. is a great target.

This doesn’t need to be an exact algorithm, but rather just simple, back-of-the-napkin math. If you’re a party plan company that offers 25% retail commissions, and the time spent to prep for, present and close out a party is 4 hours, and the typical sales of that party is $400, then your Distributor essentially earns $25/hr ($100 earned for 4 hours of work). Not bad, but you may want to consider a) raising your commissions to 30%, b) finding ways to increase the average party size or c) decreasing the time needed to conduct a party.

For a more one-to-one approach, if your company offers 25% retail commissions, and the time it takes for someone to post a live-streamed video to show your products takes about one hour total, and they sell $150 worth of product during that time, then that’s $37.50/hr.

As you can see, so much impacts the earnings per hour beyond just your retail commission rate. As my partner Alan Luce explained in his most recent article, “Added to what the companies are doing, existing sellers and potential direct selling candidates have discovered that selling online, rather than using the traditional face to face techniques, is actually more profitable than the old system.”

Dig into what this hourly rate could be for your company, and across the different selling scenarios.

3. Compensation Isn’t Just Commissions

One of more refreshing components of modern compensation plan design is recognizing that not all people are actually motivated by money alone. In fact, given that the vast majority of Distributors don’t expect their direct selling opportunity to provide anything close to a full-time income, we can sometimes find ourselves increasing compensation in ways that actually doesn’t resonate best with our constituents.

Many companies are starting to incorporate very creative loyalty and/or rewards programs that operate outside of/alongside the compensation plan. In some cases, these programs are only for Customers. In other cases, they include Distributors, too. Regardless, these programs offer all kinds of fun ways to earn discounts and credits toward product purchases, among other things. I’ve been involved in a few of these programs, and I can tell you, if done correctly, they can provide a very powerful motivation for otherwise overlooked Customers and Distributors, and a powerful lever for the corporate team to access as needed.

And a quick side note here: for party plan companies, the most common concern I hear is with Hostess programs. Namely, more and more, hostess programs are being used by Distributors to collect orders. While this isn’t “wrong,” it’s certainly not why the Hostess program was created. In its purest form, a Hostess program is a very rewarding referral program. Your Distributors have likely found very creative ways to take advantage of this program. This is all fine, but when you realize how much you’re paying out in Hostess Rewards, you want to make sure this is actually getting you maximum referrals. This has led many companies to consider incorporating a broader Rewards program instead. It’s worth looking into.

4. Learn from Affiliate Marketing

I think direct sales offers a much better overall platform than traditional affiliate marketing. That said, I believe we can learn so much from affiliate marketing programs. And the modern compensation plan design will look more and more like a multi-tiered affiliate marketing program than a traditional direct sales program.

I won’t go into all the details and differences of affiliate marketing, but I believe there’s a space between traditional direct selling and “traditional” affiliate marketing that represents the future of our industry. On the one hand, direct selling provides a community and culture that brands crave to have and customers love to be a part of. Ultimately, this is what everyone loves when they look at the companies within the direct sales channel. Relatively speaking, our compensation plans are massively more lucrative than affiliate marketing programs.

That said, affiliate marketing is simple, and proves that commissions probably don’t need to be so lucrative. Affiliate marketing is asking for help with brand awareness and customer acquisition, and that’s about it. The company will take it from there. So their commissions and rewards align with that.

Several direct sales companies have added and Affiliate level to their programs over the past few years. While I think this is a step in the right direction, we must get away from simply adding on components while ignoring the rest of the program. The modern direct sales compensation plan (and overall program) needs to be attractive to an affiliate marketer, and also to existing Distributors to acquire new affiliates. This requires a holistic look at your plan.

5. Plans Are Getting Flatter (Not Fatter)

The real hallmark of the modern direct sales compensation plan is that most plans are getting flatter. “Flatter” can mean a lot of different things, but it generally refers to plans not paying out on as many downline levels, and/or plans not paying quite so much to the very top leaders over time.

This trend is typically what stops 10-year-old+ companies in their tracks. And that’s mostly because the field leaders that have their ears the most are the leaders at the highest levels of the plan. I have a completely separate article on that I’ll share at a later time ;-).

Simply put, with a compensation plan, you get what you pay for. As any of us with any corporate experience can attest to, the field has uncanny ways of showing us what we’re really paying for, and you can’t blame them for that. But as stewards of the company, our responsibility is to help stabilize the company, and grow the company. This normally occurs at the lower to middle parts of our “plan”. Which is why the modern plan will be a little flatter than what we’ve been used to.

Especially when a company is experiencing a decline in sales, it is very common to introduce new bonuses, new levels or new compensation plan elements to motivate your top leaders, thinking these All-Stars, if they could just give a little more, will help make things right. This very rarely works. The reason it rarely works is because there’s only so much more your All-Stars can give you, incrementally speaking. They already give so much. And while it may be natural for them to want a bigger slice of a shrinking pie, your job is to increase the size of the pie.

Don’t look for ways to make the top levels of your plan fatter. Look for ways to motivate the new Distributor, the new Customer and the young leader. Not only will it help the company overall, but the fact that the pie is getting bigger will actually reward your top leaders more than anything else you could come up with.

6. Simplicity

The modern direct sales compensation plan will be more committed to simplicity that ever before. We’ve touted the importance of simplicity in our industry for a long time, but few companies have really made it happen. Sadly, is a running and well-known joke that compensation plans are too confusing. We laugh about it, and then we do nothing about it.

But the modern company won’t just talk about it. They will build plans that are simple and straightforward. New companies have the advantage of starting from scratch to make this happen. Existing companies have a tougher job, having to morph their existing plans into a more streamlined model. But the innovative ones will do it, no matter how hard it is.

For a plan to be truly simple, a company cannot start their plan design with figuring out how someone can make $500k per year, and then work your way down. The modern plan also won’t be as concerned with creating massive income for its top producers. Don’t get me wrong: There will still be plenty of high incomes with the modern plan design, but that will be because the sales volume warrants it, not because of “17 ways to earn income” and infinity bonuses and the like.

There are so many other intricacies and ideas that constitute a modern direct sales compensation plan. I’m sure many of you have incorporated some great improvements into your own plan over the last few years. I’d love for you to share them in the comments.

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Alan is a US DSA Hall of Famer and a member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Working Through a World of Misinformation

It’s everywhere. Misinformation now permeates nearly every aspect of our lives. Fake news, fantastical conspiracy theories and out and out lies spread through social media and cable personalities who are have learned that they can make a lot of money propagandizing every conspiracy theory that will play well to their audience. Spreading misinformation is much more profitable than telling the truth based on provable facts and reliable data.

This toxic atmosphere leaves those of us looking to make decisions about our lives and our businesses based on facts, truth and reason in a constant and energy sapping search for answers.

Dealing with misinformation, whether spread through ignorance or intent to mislead is nothing new for those of us who have spent our careers in direct selling. For years, the critics of our industry have offered up ill-informed opinions that express a negative opinion about direct selling as an income opportunity. Too often these negative opinions are based on incomplete data combined with individual anecdotes of dissatisfied former sellers that the propagators of the misinformation then apply to the whole industry.

Now before we go any further, it is important to note that in some cases the criticism is fully justified and factually supported. Like any industry, direst selling has had its share of bad actors who use dubious and misleading recruiting pitches and other types of unethical practices that attract regulatory attention and deserved to be condemned. But too often the industry critics assume that the entire industry is guilty of the perpetrating the same bad practices.

What is not, or is rarely, acknowledged is that there are many, if not most, direct selling companies that have provided part and full-time income opportunities for decades without a single blemish on their record or regulatory action against them. Many of these companies sell products that have become will known brands with thousands of loyal customers. The undeniable fact is that the ethical companies who follow industry best practices far outnumber the bad actors but you almost never hear about that from the industry critics.

So, back to some of the current and most egregious misinformation that is spread on social media are addressed in what follows:

1. Direct selling is in decline as a business model and has falling sales revenue.

The facts just do not support that conclusion in any way. Almost every public direct selling company has reported double digit sales and or revenue growth for the first quarter of 2021. Likewise, the privately held direct selling companies that are clients of Strategic Choice Partners all have reported that 2020 was a great year for sales growth and increases in the number of people selling their products and services. The annual Direct Selling Association review of industry performance has yet to publish for 2020 as the information is still being compiled, but all the early indications are that 2020 was a banner year for the industry.

The only possible conclusion based upon facts supported by credible data is that the direct selling model is doing well in this market environment.

2. Direct selling is behind the times and not suited to compete in today’s virtual economy.

Again, the facts say otherwise. In no small part direct selling has enjoyed growth has had strong growth because the companies and their sales forces were quickly able to move to using virtual platforms rather than the traditional face to face sales presentation. The companies quickly industry pivoted to providing online catalogs, product demonstration videos and order processing systems that could be used on both smart phones as well as desk top and tablet computers. The industry used its flexibility and resourcefulness to provide their sellers with all the tools to successfully conduct their sales of products and services on line and the sales forces responded by growing in numbers and productivity.

3. Direct selling cannot compete with the plethora of new gig income opportunities.

It is true that the many new gig opportunities create a large and growing category of competitors for people to represent and sell our products and services. But, as the facts about the industry growth prove, so far direct sellers are competing quite successfully. Here are just some of the things that companies are doing to improve the competitiveness of their part-time income opportunity:

• Companies have been reducing the cost of joining the business and making the enrollment process much easier and capable of being quickly and easily completed on line from smart phones.
• Companies are quickly shifting the publishing of needed business information to being delivered to smart phones to ensure that the needed information is quickly and accurately published.
• Many companies have undertaken projects to amend the compensation plans to make part-time retailing more profitable than it may have been in the past.
• Most companies are reviewing their entire sales system with a goal of making their marketing and sales programs more customer centric and focused on retail sales.

Added to what the companies are doing, existing sellers and potential direct selling candidates have discovered that selling online, rather than using the traditional face to face techniques, is actually more profitable than the old system. As online sellers they do not need to cover car expenses, lose the time to drive to and from an appointment and other expenses such as child care if a single Mom is engaged in the direct selling business. It turns out that the dollars earned for time spent is actually greater as online sellers. And, being an online seller for a direct selling company is safer than the traditional business. That they do not have to leave the security of their home is an important reason for single Moms to choose direct selling over other gig opportunities.

For more about the gig economy, I highly recommend the recently published book entitled The Ultimate Gig. This book and the related service and updates that the author will publish is must reading for all direct selling executives.

These are just three types of misinformation floating around in the social media realm. Each of these false claims can be easily debunked by simply looking at the actual facts and data. But to really combat misinformation nonsense direct sellers must become engaged by challenging these false claims with the facts and truth. We need senior executives to speak out telling the true story of our direct selling model. No responsible person will claim that direct selling is perfect as it is. There will always be places where we can improve and will have to change to meet evolving market trends. But the truth is mostly on our side. Direct selling has a good story to tell. We need everyone in the business to help tell that story on line and in other communications formats.

Speak up folks!

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Depending on the company’s overall strategy and on that specific product, the endorsing personality can be a movie star, a musician, model, athlete or even an ex-politician. If the company has operations in multiple countries, it is a good idea for that chosen figure to be internationally well-known. Generally, the characteristics sought-after are the familiarity of that figure to the target audience, his or her trustworthiness and attractiveness.

So, the effectiveness of a celebrity marketing program depends on finding the right figure for that product or business and obviously, on successfully executing the program after that. The celebrity’s personal stability and dependability are crucial for the program’s success. When all the pieces fit in, such campaigns can bring in huge benefits. On the other hand, there are also big failures ruining both the brand’s and the company’s image.

While some of the celebrities appear merely on product catalogues, websites or ad campaigns, others’ involvements might go deeper by being a spokesperson or the “face” of the brand or the whole company for longer periods of time.

The direct selling industry is no exception when it comes to utilizing this marketing tool. Here are some examples:

ACN

Probably the most interesting of all celebrities that direct selling companies have ever worked with was ACN’s pick: Donald Trump. He featured the company in his TV shows, pitched ACN’s products and made paid appearances for the company. Reportedly, he was paid $8.8 million by ACN.

AMWAY

Movie stars like Alan Ladd, Sandra Bullock and Teresa Palmer, international football player Ronaldinho, NBA star Shaquille O’Neal and NFL Super Bowl MVP Kurt Warner are on the list of famous figures Amway worked with.

AVON 

Avon has a long history and a long list of celebrity partnerships. The famous baseball player Joe DiMaggio, and the stars like Rosalind Russel, Claudette Colbert, and Catherine Deneuve are only a few of the icons that collaborated with Avon in the past. Then, came in other international stars like Jacqueline Bisset, Julia Roberts, Fergie, Reese Witherspoon, Patrick Dempsey, Megan Fox, Salma Hayek, and the famous tennis champion Maria Sharapova.

HERBALIFE

Being predominantly a nutrition company, Herbalife’s choices have been among athletes. Within this context, it worked with the two biggest names in international football: Ronaldo and Messi.

LR HEALTH & BEAUTY SYSTEMS

Germany-based cosmetics direct seller LR worked with stars to promote especially its fragrances. Among these were Bruce Willis, Michael Schumacher, Heidi Klum, and Karolina Kurkova.

MANNATECH

Mannatech is another company that decided partnering with athletes. Former basketball player nicknamed “Lady Magic” Nancy Lieberman was an example. Besides athletes, Mannatech was also endorsed by Dr. Ben Carson who then served as as the Secretary of Housing and Urban Development in the Trump Administration.

ORIFLAME   

This European direct selling giant does not have a long list of international stars, yet did work with some very familiar names like the actress Demi Moore and the famous tennis player Caroline Wozniacki.

USANA

The last example that we cover here will be USANA. USANA works with quite a number of individual athletes and sports teams to get endorsements from them. The company was also endorsed by Dr. Oz as his “Trusted Partner”.

Although not too many, there are still people in the direct selling community who are categorically against doing any marketing activities. Whether a company should allocate budgets on activities like celebrity endorsements, instead of making the funds available to the field should not be a discussion in today’s day and age. The question here is choosing the right marketing tools and executing them effectively. Further to this, you might want to take a look at Brett Duncan’s insightful article that was published last week: The Makings of a Modern Marketing Team for a Direct Sales Company
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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 a Supplier Member of the Canada DSA. It 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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We have learned by experience that a compensation plan can boost a business when designed and implemented well. But it can also have disastrous impacts if this aspect of the operation is taken for granted.

In this article, we will briefly go over some of the most frequently asked questions:

1. What Is a Compensation Plan in Direct Selling?

It is a plan that shows how and by how much a company rewards its independent sales force for promoting and selling its goods and services to end-users.

2. Is There Only One Form of Compensation Plan?

There are various plan types; “stairstep-breakaway”, “unilevel” and “binary” are the most popular ones.

3. Is Any of These Types Better Than the Others?

Every plan has its own pros and cons. One type of plan can definitely be more suitable to a specific company’s strategies, products and culture. However, we cannot say one of them is categorically superior to others. This is why we see various plan types being used by different companies with great success.

4. What Does “Hybrid Plan” Mean?

A hybrid compensation plan is the one that brings two or more different plans together. For instance, if a plan is designed by putting together various components of a unilevel and a binary plan, we call the outcome a hybrid plan. While it might be rewarding a broader range of behaviors than an individual plan on the field, all hybrid plans bring the advantages and disadvantages of its components. A hybrid plan usually requires heavy field training due to its increased complexity.

5. Are There Other Names Being Used Instead of “Compensation Plan”?

While “compensation plan” is by far the most widely used name within the industry, some companies choose other names like “marketing plan”, “success plan” or “financial rewards plan”.

6. If a Compensation Plan Does Not Limit Depth, Is This a Sign of a Pyramid?

Not at all! There are numerous legitimate network marketing companies that use plans paying bonuses to unlimited depth.

7. From an Independent Direct Seller’s Perspective, Is it Always Good to Work with a Plan with Higher Commissions?

Obviously, a direct seller would want to make more money. However, the “income claim” is only one aspect of a plan. Few examples to other important aspects are: Legality of it, its appeal to candidates that will join with various expectations, and the required activities to earn commissions.

8. Are Complex Plans Better Than Simple Ones?

These come with their own advantages and disadvantages. While a complex plan can be rewarding a wider array of activities and success levels, a simplistically designed one can be easier to learn and to explain to others. If structured well enough though, a simple plan can also be rewarding all field activities that a company wants. Likewise, a complex plan can also be learned well if it is supported by a sound training program.

9. Do Compensation Plans Reward Those Who Join Earlier More?

This is an urban legend! A well designed compensation plan has no such “V.I.P rooms” for those who join earlier. If this was true, who would want to join a company later on?

10. Can a Company’s Compensation Plan Change in Time?

Regardless of how much thought was put into its initial design, after a while a plan may not be bringing in the expected results. At that point, certain modifications have to be implemented to improve the plan. This is a tricky task though, that must be done well and must also be communicated to the field 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 a Supplier Member of the Canada DSA. It 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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We generally call this activity “recruiting”. What we also generally do is to accept a high level of attrition in this industry as a given… Even from the day those direct sellers join the company. But does this have to be so? Maybe not! Let’s have a look at the common causes of attrition.

1) Personal

Some of those independent contractors who leave a direct sales company do so because they feel they just don’t fit in. Whether the primary motive initially is to pursue a hobby, a way of socializing, a part-time source of income or a full-time business, this can happen to anybody.

As long as this is the true reason and there is nothing else behind it, there is not much a company can do to reverse this decision. But what if in reality, there is something else behind that have caused this?

2) Upline

In some cases, what motivates the direct seller to quit is the sponsor or even the whole upline. The sponsor’s neglect in “training & leading” usually ends up with losing the newcomer. In other times, it is an unrealistic income expectation that is created purely by the sponsor.

Even if it is merely a clash of personalities between two people, I believe there is a lot of homework that can be done by the management, most of it being on the field training side.

3) Company

And yes, sometimes it is the company itself that is the cause of people’s leaving.

Poor customer services, commissions payments not made on time, rejecting product return requests for no good reason, abruptly cancelling promotions, frequent price and/or compensation plan changes, failures in communicating news updates and announcements in a timely manner… These are not unheard of in this industry and they definitely lead to higher attrition rates.

4) Dissatisfaction with the Opportunity

Another common reason is direct seller’s discontent with present or potential earnings that the company provides. It may be that the individuals might have set their own expectations too high. Alternatively, the company might be intentionally or unintentionally sending wrong messages. And in some cases, the compensation plan itself is poorly designed.

Leaving aside pure consumers, most of the field members are part-timers and hobbyists in direct selling. This is a fact. Therefore, probably it will never be possible to even get close to perfection. Yet I believe companies can make significant moves in that direction.

The first step here is identifying the true reasons behind quitting. Once this phase is over, it will not be too difficult to deal with each of them and make improvements. Don’t you think?

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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 a Supplier Member of the Canada DSA. It 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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Daryl Wurzbacher began his career in the direct selling industry in 1999 as the Director of Information Technology for a direct sales start-up. That company was the first client of ByDesign Technologies, and Daryl was a critical liaison between ByDesign, the field leaders, and his corporate team. In that role, Daryl scaled the company from $0 to $70 million using ByDesign’s platform.

In 2007, Daryl transitioned to the supplier side as the Director of Technology for ByDesign. His strategic contributions led to his appointment as President in 2015 and CEO in 2018.

5 Essential Lessons on Success I Have Learned from Clients

Many of the most important things I have learned about success have come from clients. Today, I will be sharing 5 of the most important lessons that I have learned over the past two decades and how you can benefit from the hindsight, wisdom, and experience of hundreds of great companies.

1. The Grass Isn’t Always Greener.

The grass is always greener on the other side of the fence is an English proverb, which means that a different situation or circumstance always seems better than one’s own. When it comes to direct selling tools, technology, and back-office software, 90% of your current system may be excellent and working perfectly. But, the 10% that isn’t perfect can overshadow your perception of that product or vendor. You decide to look for a new vendor and find one who says all the right things, has a perfect way to solve all the items in your 10% list. Your company goes through a significant expense to migrate to the new vendor. Shortly after the launch, you realize that while the 10% items are, in fact, now great, the 90% that was perfect is now full of new issues and creating a lot of frustration for corporate and the field. You realize that your prior vendor was superior and make plans to migrate back to them.

To avoid this syndrome:
• Recognize that no one is perfect, no software is perfect, and no company is perfect. But they are each capable of improvement.
• Instead of changing vendors as a first step, focus on trying to resolve the issues. Collaborate with your technology providers and allow them the opportunity and time to correct things.
• Ask them how other companies have solved the problems you are experiencing, and for alternatives that you may not have considered.

Switching vendors is never an easy process, and there is always some level of pain involved in a move; it should be the last choice after you have done all you can to make things work in your current situation.

2. Experience Matters – Wisdom Prevents Mistakes.

Albert Einstein said, “The only source of knowledge is experience.” This is especially true when working with consultants or vendors that do not have a lot of Direct Selling experience as their value in many cases is limited due to having to learn through trial and error at a clients’ expense. Inexperienced people make more mistakes, and when they transfer their experience from other industries to direct selling, they can send your business down the wrong path.

To avoid this dilemma:
• Work with consultants or vendors with decades of Direct Selling, MLM, and Party Plan experience.
• Check for online reviews and case studies to learn more about the results other companies have had working with them.
• Pick partners that are experts in our industry and know where things are going — so they can help you get there faster.

Work with seasoned experts to benefit from the wisdom they have gained from each of their clients and avoid the mistakes they have seen other make over many years.

3. Stay Current with the Technology That Runs Your Representatives’ Business.

Before the pandemic, it was not uncommon for companies to get some pushback from the field regarding new tools or technology. A few leaders and representatives may believe that new technology will disrupt their business, and they may provide several alternative areas that must be fixed, such as the products, the comp plan, and shipping — diverting the efforts of corporate to areas that don’t require them to change. Companies that held back on launching new technologies found themselves scrambling to catch up when COVID-19 hit.

To avoid this situation:
• Give the field what they need, not what they want.
• Regularly assess your technology and take action before a crisis forces the change.
• When you find mediocre to poor experiences in any business area, look for ways that technology can be leveraged to enhance that experience.

When representatives worldwide were forced to rely on new technology to run their business this year, they realized the benefits of innovation. Staying current on your technology allows you to continually deliver that level of service to the field.

4. Momentum Becomes Possible When You Overcome the Trap of Inertia.

A company’s mindset has the same effect on its culture that an individual’s perspective has on their life. When there is a cultural belief that “we do things this way because it’s the way we’ve always done them,” it creates an aversion to new ideas, change, or risk-taking. This trap of inertia fosters organizational stagnation. The staff can become so comfortable that they are imperceptibly just going through the motions and relying on past achievements to carry the company into a successful future that never comes. The habit of rigid thinking binds a company to the status quo, halting growth, and ultimately leading to a loss of relevancy in the market.

To avoid this trap:
• Challenge every assumption.
• Encourage risk-taking and give your team permission to fail.
• Embrace a culture of change that creates a learning/growth mindset — personally, professionally and organizationally.

Staying relevant is the natural outcome of a corporate culture focused on learning and growing.

5. Always Have a Backup Plan When Doing a Tech Demo “Live” at Convention/Events.

For weeks you’ve been talking about the reveal of new technology at the convention. The day is finally here! The representatives are anxiously awaiting and enthusiastically cheer as you begin your presentation. You announce an incredible new tool and introduce your technology partner to do a live demo. Things are off to a great start and your reps are thrilled! Then, in a flash, the demo freezes, the spinning wheel appears, and then the internet connection fails. Several minutes go by as the team tries to get the internet working and the demo back on track.

Despite every effort to regain the excitement, the moment is lost.

To avoid this event mishap:
• Plan for both the perfect live demo and an excellent off-line demo as a plan “B.”
• Prepare a presentation that sets the context and provides the benefits of the new solution. Capture screenshots or short videos of the tool in action that can walk representatives through the screens and showcase the new features.
• If the technology has a mobile app, provide instructions on downloading it, and encourage reps to take a test drive. This allows them to see the tools in their business context and starts the adoption/training right away.

A live demo is always the best option, and having a plan B ready ahead of time will ensure a successful introduction.

The value of learning from the people around us cannot be overestimated. I hope that these 5 essential lessons that I have learned over the past 20 years will provide insights and inspiration for your company.

What have your clients taught you? Share your essential lessons in the comments below.

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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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Ben Woodward

Ben Woodward
The Joy and Pain of New Opportunities

I once watched my stepdad grimace as he sat down at the kitchen table with the most foul-smelling fish pie I’ve ever come across in my life. Every bite that he took looked painful. I asked him what he was doing, and he cringed as he replied, “I bought it and don’t want it to go to waste.” Even worse, it had been on sale for about fifty cents.

How often do we feel obligated to get value out of what we’ve sunk time and money into, long after the value is gone? Far beyond fish pie, we do this in misaligned business plans, off target projects and a hundred other strategies, commitments, choices and decisions. Companies pour thousands of dollars, sometimes millions, into projects (or people) that have failed beyond reason, and will keep investing in them for thousands more, all for fear of losing what has already been spent.

We have an inbuilt mechanism within us that tries to get the maximum value out of things, and another to avoid loss whenever possible. When those mechanisms are at war, we’re left with the sunk cost fallacy. We’re doing what we can to avoid loss of what has already been invested, even when it creates more loss than redirection might.

Frustratingly, we often persist even when it ceases to return benefits, simply because of what it meant to us in the past. And the cost doesn’t have to be great for this to be true, either. Yet when we cling unhealthily to the past, we’re likely to miss present opportunities and future possibilities.

Once we’ve put our heart and soul into something, we don’t want to admit when it’s time to move on. We want to save face—to believe that it’s going to work, not because of where it’s taking us but because of what we’ve put into it.

This, at its core, is ego. It’s a distorted view of reality that tells us doing what we’ve done will get us something other than what we’ve already gotten.

So here’s a critical question. What are you refusing to recognize or admit isn’t working in your business in spite of your persistent investment of time, money and resources?

Let me confront the elephant in the room of Network Marketing. We aren’t collectively doing a great job of being customer centric. Sure we talk about it. And yes, we make policy changes to keep up with changing regulations, and yes, perhaps we are now starting to segment our data better than in the past, but let’s be serious here. It isn’t enough! Too many companies in our industry are grimacing while they eat fish pie on this issue. I had one new senior employee of a large MLM say to me, “I knew there was a problem when I saw the size of their legal team.” Ouch! Are we just used to getting a bad rap? There is an old poem by Alexander Pope that applies here:

“Vice is a monster of so frightful mien
As to be hated needs but to be seen;
Yet seen too oft, familiar with her face,
We first endure, then pity, then embrace.”

We wouldn’t have the FTC on our backs like we do, or companies like TINA.org keeping watchful eyes on us if we were world leaders of customer experience. And we wouldn’t be watching the court cases of other MLMs so closely when they happen if we didn’t see the seeds of their issues sprouting in our own backyards. Have we not seen the trends in the courtrooms? What are the typical issues? Customer vs Distributor ratios, earnings opportunities for the masses, product claims and product prices.

Now, please don’t misinterpret my strong words here as unhealthy criticism. I love our industry, yet I think we have an opportunity to really transform and become better. Much better. We see the trends. We see what technology is offering the consumer and we know how entrepreneurship is evolving. To anyone who wants a business that matters in the future – this is a transformation journey you cannot ignore. Where-ever we are on the road to better customer acquisition, retention and engagement – we need to level up. What’s the biggest barrier? Culture. This kind of change for many is very uncomfortable, will take a long time and will require support and engagement at all levels – both in the corporate office and in the field. But it is possible. And not only is it possible – it can be a thrilling experience too.

If the thought of confronting these issues seems a little daunting, you’re not alone and it isn’t unnatural to feel. Author Daniel Kahneman once explained that all decisions involve uncertainty about the future, and in response, the human brain has evolved an automatic and unconscious system to protect against potential loss. Our default setting becomes a focus on the loss rather than potential future gains. Of our naturally inclined perspectives, he writes: “Organisms have placed more urgency on avoiding threats than they did on maximizing opportunities, and these are more likely to be passed on in our genes. Over time, the prospect of loss has become a more powerful motivator to our behavior than the promise of gain. Wherever possible, we try to avoid losses of any kind, and when comparing losses to gains, we don’t treat them equally.” Knowing this, we must fight against our instincts and march uphill to the higher ground where throngs of loving customers reside.

When we can reward distributors better and support them more in the acquisition, retention and engagement of customers we will see the culture of the business start to shift. The message will align more appropriately between the office and the field. The right behaviours will start to duplicate. Earnings will reflect effort more healthily and industry reputation will evolve. Regulators will have less concerns and companies and distributors will have more freedom.

Let’s not sit here eating fish pie when there is so much more on the table up for the taking.

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Alan is a US DSA Hall of Famer and a member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.

Alan Luce
Lessons from the Lockdown: Part Two (*)

Recent discussions with direct sellers have expressed feelings ranging from surprise to astonishment about how well their companies are doing during the Covid-19 lockdown.

Three things have happened that have produced these good results: First, millions of people have lost their jobs and are open to direct selling opportunities that can help them make some money while staying socially isolated at home; second, the millions of people isolating at home and with little else to break the monotony have been willing to join direct sellers for online product demonstrations, and third, direct selling sales forces have adapted to using online selling techniques much more rapidly than anyone would have or could have predicted. The combination of these factors has produced outstanding, even record-breaking sales and sponsoring results for many direct selling companies in April and May. June appears to be going in the same direction. All is good, right?



Maybe yes and maybe no. Many are doing well at this time in these unique circumstances. But can we expect things to stay the way they are now? No. Sooner or later the pandemic will recede and the economy will come back. We may not come fully back until a vaccine is readily available and the populace has been mostly vaccinated and that may not be until next year, but we will eventually come back. We do not know whether we will resume our lives as we lived them before the pandemic lock down or something less social. The unemployment rate will go down again to something below 10% and many jobs will be hiring again. It is likely that that due to automation and robotics that more full-time jobs will be eliminated and, for that reason and others, gig work will continue to be a major competitor for part-time income opportunities. As that recovery occurs, the market environment will likely look more like the pre-pandemic period than now.

Knowing those things will likely occur, how do direct sellers maintain some of the momentum and advantages that have been enjoyed during this shelter-in-place lock down period?

First, figure out what your folks are doing now that they were not doing or not doing as much before the lock down. If your company is like most, your sales force has quickly adapted to using online platforms such as Zoom, Facebook Live and Facebook Rooms and other platforms to arrange opportunities to show their products and services, generate orders and attract and sponsor recruits. Exactly what are they doing that is the most successful and what can you the company do to make the salesforces online activities even easier. Have you provided improved images and content designed to assist online presentations? Have you implemented one of the many smart phone applications that allow sales folks to show products and videos and place orders? Have you adopted a new seller kit program that fits a sales activity that needs fewer actual product full size samples and more single use sample packets? Does a new seller need a physical kit at all? What are the best online sales and sponsoring practices? Are you spending anytime trying to learn the answers to these questions and create new support materials, training and programs?

Second, have you considered that selling on line may require your sellers to spend less time to make a sale? Online selling does not involve travel, and is often less social than one to one or one to many in person sales. Yet, for many companies this important difference from in person selling may not have been considered or even thought about. But it is an important difference and one that may become a competitive advantage for thoughtful direct sellers when the employment figures go up again and things post vaccine begin to return to some level of pre-pandemic normalcy.

Historically direct sellers have not talked about or even tried to calculate a dollars earned for time spent or, as more commonly thought about, the dollars per hour opportunity associated with selling their products and service. We have avoided this topic because our sellers are not employees and direct sellers do not pay salaries or wages. Rather, direct sellers receive commissions for the products they sell or they make retail profits from the difference between what they pay for the product when they buy it from the company at wholesale and what they sell it to their customers for at retail. Out of an abundance of caution to protect the independent contractor status and, in some cases, because the retail sales profit reward does not tell a good story, we simply stay away from the subject. However, I not only think we can safely tell this story, but will be forced to do so as we come out of the lockdown and have to once again aggressively compete for gig workers to sell our products and services.

Here’s how: Do the research surveying your sales force to find statistically supportable data as to the time it takes to make the average sale to a buying customer. Data should be gathered for one on one in person sales, one on one online sales and one to many (party) in person sales and one to many online sales. Match the time data with the average customer purchase amount data and you will come up with an average retail commission or profit for average time spent making the sale. Most companies will find this data very revealing. First, do your sellers make a decent profit for time spent selling your products or services. If your average profit for time spent is less than $15 an hour, you may not be competitive with other direct selling or gig part-time income opportunities. On the other hand, if your average profit for time spent making a sale is $25 an hour or more, you may have a recruiting advantage. In either case, this is information that is well worth knowing. Can you use such data in promoting your opportunity without damaging the independent contractor status of your sellers? I think you can so long as your data is statistically accurate and supportable and you clearly state that this data is a composite of all independent seller activity and not a dollar per hour income promise. Of course, before publishing any such income hypothetical please check with your legal counsel.



Summary:

Many direct sellers are experiencing strong sales and recruiting during the pandemic lockdown. It seems clear that it is the very limitations the lockdown places on customers and part-time income seekers that is working to direct sellers’ advantage. The sales forces of the companies have adapted to selling and sponsoring online more quickly than most companies were prepared to support. The companies can learn from what their best online performers are doing. At some point, science and medicine will defeat the Covid-19 plague and the limitation of the lockdown will be lifted and some degree of pre-pandemic employment and social norms will return.

The companies that take the lessons learned during the lockdown and do the work to have supportable accurate data as to the competitiveness of their part-time income opportunities will survive and prosper when the pandemic is finally over.

Do not simply enjoy these strong months! Learn the important lessons from the lockdown and prepare for the post lockdown period.

(*) Click to read the first part of Alan Luce’s article here: Lessons from the Lockdown

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