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\Retention—the “R Word”—has become a hot topic over the last few years in direct sales. With the shift to customer acquisition and a customer journey has come an increased focus on creating customer pathways that will lead to long-term retention. In a recent conversation with Todd Falcone and Nate Cox, we talked about what companies are doing within the industry to increase retention. Todd has been involved in the industry for over 31 years as a distributor, trainer, coach, and author. He works with start-ups and established companies alike, doing hundreds of millions of dollars in monthly revenue. Nate Cox is the VP of Sales at Verb Technology and has helped dozens of direct sales companies increase their retention rates and develop successful customer and distributor pathways.
Customer Service vs Customer Experience
In the late 80s and 90s, most direct sales companies treated their customers and distributors the same. Basically, everyone who signed up for a product discount was treated as a distributor. The experience was the same and the end result was usually the same: low levels of customer retention. Lots of churn. In the current regulatory environment, companies can’t afford to do business this way, so they’ve had to shift their focus to customer acquisition and retention. That is where true, reliable revenue can come from. Focusing on building distribution networks of individual business builders who acquire true customers provides an opportunity to help support acquisition and retention.
The key question to ask is: How do you keep more of the customers that your distributors bring in? Keeping them is key, as a one-time purchase is never the end goal in direct sales. This brings us to the discussion of customer service vs customer experience.
Customer Service – a reaction to a problem or issue that needs to be resolved. Typically, reactionary in nature.
Customer Experience – a pathway that your customer enters, leading to education, additional purchases, product use habits, and long-term retention. Typically, proactive in nature.
Creating a Successful Customer Journey
“Asking yourself: ‘What are the ways we can wow our customers?’ is the key to customer retention.” – Todd Falcone
A customer experience is just that—creating a successful product experience for your customers. Apple redefined what a customer experience was all about. Typically, technology hardware companies had delivered their products in gaudy boxes with Styrofoam or packing peanuts holding the hardware safely inside. Cords and a long user manual in several languages were typically thrown in at the bottom of the box. Apple changed this. Think of the last time you purchased an iPhone, iPad, or computer from Apple. It is truly an experience—a controlled journey. They unveil the product and create a “WOW” moment at the same time.
“A recipe for attrition is hoping they will stay.” – Todd Falcone
Successful direct sales companies are doing the same. And it doesn’t start with the initial order, it starts much earlier. One Verb client has created a customer journey that starts with the opportunity to try the product before they buy it. The sample experience includes communication from the distributor to coach them on how to successfully use the product, educate themselves about the benefits, and purchase the product after trying it. Along the way, the business builder is coached to follow up and communicate with the person trying the sample. Once they make the purchase, the journey continues. The company communicates with them repeatedly about the purchase, their shipment, and the benefits of the product. This client also sends an experiential customer welcome kit that helps them experience not only the product they purchased, but other products offered by the company. The communication continues, leading up to a second purchase. Multiple touch-points are required to effectively take the customer down this pathway. Communication is a key aspect that fosters the experience and increases retention. Your strategy has to include more than a receipt and a hope that they will say on auto-ship.
Some tips for increasing retention and creating rabid fans among your customer base:
- Wow them with the product
- Create feelings of reciprocity—your customers wanting to give back to the company
- Reward them with free product and savings
- Always maintain contact: add value, communicate, foster the relationship
- Ask for referrals
Several Verb clients are also looking at mobile app technology to help create a successful customer journey. Here are some simple keys that the Verb platform utilizes to help you impact the customer journey:
- Sampling: An introduction to the company and products through a “try it before you buy it” process.
- Customer App: A separate app for customers with the goal of education, communication and retention.
- Magic Link: The Verb Magic Link welcomes the new customer to the company immediately upon enrollment, giving them the opportunity to download an app to start their customer journey, earn rewards, and learn about the products.
- VerbLEARN: The LEARN platform is a mobile LMS (Learning Management System) that provides courses that educate, utilizing gamification to teach about the product benefits.
- Communication: Push notifications are a better way to communicate with your customers. They have much higher open rates than emails and are cheaper than sending texts.
- Up-line notification: Business builders who enroll customers are notified as their customers advance in the LEARN platform, pass off lessons, and qualify for rewards.
- Rewards: Integrates with your back office to include native tiles showing recent orders and reward points makes the app a perfect way for your customers to get quick insights on their phone.
Tell, Show, Try, Do
Some companies in this current environment get so focused on customer acquisition that they forget to focus on retaining their business builders. Their greatest strength turns into their greatest weakness. Focusing on the retention of business builders is just as critical as retaining customers. Similar to the customer experience, communicating with your business builders is critical. Most new distributors have a ticking clock—when they get to the point where they aren’t where they want to be, it leads them to exit your company. So, what can you do to increase business builder retention?
It starts with the simple process: Tell, Show, Try, Do
Tell: Lay out a simple plan and tell them you are there to support them in their business builder journey.
Show: Give them the necessary tools and then show how to use them to succeed.
Try: Get them to try to duplicate the process on their own and help them succeed.
Do: Help them do it on their own and repeat the process with others.
One of the most successful companies we have worked with over the last decade has a simple system for success. They give the field a 90-day Game Plan to help them succeed. They tell them what to expect, show them how they can achieve success, give them technology to help them try it on their own, and then they help them to teach it to others. Creating this type of a system helps to remove the fear and provides a pathway to success. You can’t simply sign someone up and send them on their merry way, hoping that they will find success. This type of process creates a much higher likelihood that they will succeed and can heavily impact your numbers.
Case Study: One Verb client was averaging just over two months of retention with their business builders. They launched the app, provided LEARN to educate them about how to get started, and also gave them tools like sampling to succeed and quickly find wins in their business. After about a year on the app, they analyzed the data and found that new business builders who logged into the app in month 1 averaged over 6.5 months in the business. This tripling of their retention rate was made possible by providing a simple pathway to learn the system and achieve success.
Integrating technology with other parts of the customer and business builder journey can greatly impact your company’s retention rates. Communication and a true pathway can greatly impact not only retention, but revenue and profits. It is much harder to acquire new customers and business builders than it is to retain them. And focusing on these key points can help ensure that you succeed in your retention efforts.
BONUS VIDEO: Check out Todd Falcone’s thoughts on finding success with your direct sales company during the pandemic.