Over 30 years ago I was introduced to direct sales and immediately fell in love with the industry. Being introduced to companies and amazing products that made a massive difference for people was the thing that really struck me. And just as compelling was the brilliance of providing a unique opportunity for individuals to create a network to sell these powerful products. It made a massive impression to me how a hard-working individual with virtually no sales or business experience could be given a unique opportunity to build a team, create an additional stream of income, and provide the same opportunity to others to distribute powerful products that really worked.
One of the first leaders I met in the early ‘90s was an individual who was living in a trailer home in Oklahoma. Unsophisticated but hard working, this individual’s life was changed by a unique product, and in turn he began to share this product with close friends and family members. Over time, he impacted hundreds of thousands of lives around the globe, both from a product and an opportunity standpoint. He saw a need for creating a pathway to take care of his customers and also his team members that started sharing the products. My friend became an expert in creating simple systems for his team members and his customers. He treated both groups uniquely, and frankly, he did a better job than the company did of creating separate pathways and experiences for his customers and his team members.
Fast forward 20 years and we find a very different environment for direct sales. Recently, several prominent companies have been in the news relating to issues with compliance and other regulatory concerns that have involved the FTC. Over the past couple years both Vemma and Herbalife settled high profile cases with the FTC. As part of their settlement, Vemma was required to change their compensation plan and enforce a qualification requirement based on a high percentage of volume coming directly from customers. With the recent decision by Advocare to leave the direct sales space, there are more and more concerns about how to correctly navigate the current direct sales landscape.
Let’s just say my friend’s unique experience is more relevant today than ever before.
So, where do we go from here?
As we look into 2020, I believe that there are two main areas that proactive companies will put their focus and create initiatives to not only follow regulations, but also add massive growth to their business. By creating segmentation and unique pathways for customers and business builders, companies will both protect themselves and create growth opportunities for the future.
Segmentation of the Salesforce
The issue at hand is whether the FTC views a direct sales company as a “pyramid scheme” or a valid business. Segmenting new enrollments as business builders and customers is critical—but it’s also just the first step. Historically many companies had the default enrollment as a distributor. Smart companies are changing that—and much more. Likewise, if companies aren’t proactive in making these type of changes, their businesses will be changed for them.
Several of the companies that we partner with at Verb are not only segmenting the enrollment process—and creating a separate pathway for customers to become independent distributors—but they are also segmenting how they market to these two groups. I recently sat in a boardroom and met with the Marketing Director for the Business Builder Segment and later had a meeting with the Marketing Director for the Customer Segment. That’s right! Two completely separate teams within the same company with separate initiatives for how the company markets to the two groups. This type of forward-thinking vision not only simplifies the segmentation process, but also creates a powerful focus and massive momentum within the company.
Ask yourself these questions:
- How do we segment the enrollment process for our distributors?
- Is the purchase process separate for our customers?
- Does our back office recognize these two groups separately?
- How can we improve the enrollment process and the segmentation of customers and business builders?
- If we had to show distinct separation of the two groups, could we?
- How might segmentation improve our sales and the pathways we create for customers and business builders?
Goals, Focus & Duplication
Segmentation of the enrollment process and recognition by the back office is just the beginning. The most successful companies in the industry today create a completely separate experience and journey for their customers and business builders. Think back to the company I mentioned that has separate marketing teams for customers and business builders. How might this type of segmented focus improve your company’s initiatives for 2020?
I recently spoke with an executive from a large company that is leading the way in this area. We discussed the goals that are driving their business heading into 2020. Looking at the separate buckets of goals for the company with regards to these two segments can help us visualize how successful companies can win in this area.
Company Goals for Business Builders
- Increase Enrollments
- Provide Incentives that are behavior-driven to create the right activities
- Drive rank advancements
- Increase retention
Company Goals for Customers
- Increase Product Consumption
- Grow customer sales
- Provide education
- Increase retention
Notice how this company has similar goals of retention for the two groups, but the other goals focus on very different aspects. This is the true essence of direct sales—create products that work, build a customer base, incentivize business builders who enroll customers, and then create a cycle of duplication. By segmenting not only the enrollment, but also the goals for the two groups, companies can control these two areas, focus differently on the two groups and have a massive impact on momentum.
Distinct Journeys Mean Success for Everyone
What is a journey? A journey is defined as passage or progress from one stage to another. The progress for a customer is very different from a business builder—and you should treat it that way. You may provide a journey for your customers in which they experience your products, consume them with frequency, educate themselves about the benefits, consistently order and use the products, and ultimately recommend and share the products with others. Conversely the journey and passage for your business builders would consist of learning about the company and systems, sharing the products, enrolling customers, building a team, and advancing through leadership ranks.
By creating a unique journey and combining education, rewards, and value for your customers and distributors, your company will ultimately succeed. The strongest companies in the industry today have solid customer-to-distributor ratios, unique experiences for both segments, and a clear focus on how they market to and define success for these groups.
If the industry that we love is to enjoy continued growth and success, this is a critical area that the industry must embrace and focus on. More companies need to share their success and how they are addressing the challenges. If at first you don’t succeed, don’t lose focus. A journey of a thousand miles begins with a single step. And we all need to start somewhere.
Side note: Just over a year ago our team took on the challenge of viewing how we can support our clients’ initiatives to drive customer retention. In January we are releasing our biggest internal initiative to date: a Customer version of our app that will focus on education, retention, and communication to the customer segment. This project has pushed us and helped us find unique ways to not only address these needs, but also hit them head on in a way that can expedite solutions for the entire industry. This Customer App combines a Mobile LMS with our industry-leading technology. We are excited to help our clients and partners achieve success in this new industry landscape. Reach out to me today to share ideas, get a free demo of our customer and distributor platforms, or just to connect.
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