Compliance—it’s a hot topic of conversation in the direct sales industry. For some, it’s a concern and a priority and for others, it’s something that is (at best) ignored by sticking their head in the sand. Being proactive when it comes to compliance ensures that you protect your company and field. If ignored, the compliance issue can create major problems that can have negative impacts on your company.
This episode of the Direct Sales Masterclass features a conversation with Jonathan Gilliam, Founder, and CEO of Momentum Factor. The technology that Momentum Factor provides enables your direct sales companies to protect themselves and their fields with the right tools. Jonathan’s experience in direct sales began in 2009, with great success as a CMO launching a company and utilizing social media. This led to him starting a social media consulting firm, which eventually transitioned to be centered on compliance and is known today as Momentum Factor. Our conversation addresses the impact of social media on the industry and how to be proactive in your compliance approach.
The Social Media Impact on Compliance
Over a decade ago, Jonathan was an executive at a direct sales company, and he utilized Facebook to pre-qualify leads and create exposure. He was quick to notice that social media worked in parallel with direct sales—it had the network effect and helped people to create connections with others. The company had massive success with these efforts and Jonathan realized that the companies who aligned with social media had the potential to create massive momentum.
Jonathan’s success led him to create a social media consulting company to help others in the industry find success with social. He had experienced firsthand that there is a right way and a wrong way to do social media. Here are a few quick tips from Jonathan on how to leverage social media the right way:
- Leverage social to connect with people rather than collecting names
- Have a relationship mentality instead of a database mentality
- Authenticity creates differentiation
The beauty and the challenge of leveraging social media in direct sales is that it can be a great tool when used correctly, but in the wrong hands, it can create massive problems.
Compliance is Key
Jonathan’s firm eventually transitioned from focusing on social media to helping companies to use tools and processes to create compliance systems around social media and other areas of their business. Eight years ago, Jonathan and his team released FieldWatch. This tool by Momentum Factor provided a workflow for companies to be able to listen on the web for compliance violations.
The challenge is that most direct sellers are part-time, independent distributors for the direct sales company they are aligned with. And most new people won’t know how to stay compliant and may ignorantly put a company in harm’s way. With the right tools, the right technology, and the right processes, companies can accomplish the two main needs when it comes to compliance:
- Protect the company from risk
- Create a workflow with technology to manage it
This technology and workflow can help put the right people in the right seats, limit the necessary headcount, and provide substantial benefits to companies when used correctly.
In addition to having the right processes and workflows in place, companies need to be able to proactively address these areas of compliance. Whether it is educating the field, or dealing with issues as they arise, how proactive a company is in its response will determine how protected their company is.
“You can’t say: ‘I can’t manage everything.’ You chose this business model.”
- Lois Greisman, Associate Director of the FTC’s Bureau of Consumer Protection
Historically, direct sales companies may have turned a blind eye to compliance issues or simply stated that they simply aren’t able to manage everything that comes with an independent sales force typically found in the direct sales industry. The FTC has made it very clear that this type of response won’t be an acceptable excuse. Direct sales companies chose this business model and therefore need to be proactive in how they find compliance solutions. Companies must do the best they can in addressing these types of compliance issues.
The Right Tools to Help Your Company Succeed
In addition to EthicsPro (Momentum Factor’s Compliance Education Tool), Momentum Factor recently released FieldCheck—a mobile compliance tool that helps prevent independent consultants from unknowingly posting something non-compliant on social media. In a unique partnership with Momentum Factor, Verb has released a new version of our social posting tool that incorporates FieldCheck in a way that warns the app user prior to posting a non-compliant social post. This new partnership creates a tool that benefits companies in two ways:
1. It creates an education tool that instructs the app users about what is and isn’t compliant
2. Provides a log of non-compliant posts for the company to use in order to engage with distributors who may be in violation of the company’s policies and procedures. In this way, the field can learn from this posting tool while also providing the company with an additional tool in their efforts to be proactive in addressing compliance concerns.
What is the Future of Compliance in Direct Sales
With recent attention from government regulations (including a $40,000 fine for each violation), the direct sales industry has been put on notice that sticking your head in the sand will not be an acceptable approach when it comes to compliance. Regulators have been taking old rules and dusting them off. Companies may feel overwhelmed, thinking they need to handle it on their own. Rest assured, partnering with companies like Momentum Factor can help ease the burden and provide a proactive solution. Verb is proud to partner with Momentum Factor in providing unique solutions to address the compliance concerns facing our industry.
For the full Direct Sales Masterclass with Jonathan Gilliam, click here.