For a direct selling venture to succeed, several vital issues need to be addressed. While some of these are relevant to any new business, some are quite unique to the direct selling industry.
Ten of such issues seem to be outpacing others in significance.
1. Strategy
While this may seem a no-brainer to many, do you know how many start ups do not have a clear strategy and fail just because of lacking it?
2. Management
I believe this does not require much explanation. That said, direct selling companies that have failed due to poor top management are not so few. Alongside with having all necessary skills, the management in a direct selling company also has to learn well and respect the dynamics of this industry.
3. Products
Whether it be goods or services, the company needs to offer products that
a) are of value to the end-user, and
b) will create enough income to the sales organization.
4. Compensation Plan
A good compensation plan is the one that promotes the direct seller behaviors in line with company’s strategy, that creates unlimited income opportunities to the field, and where commissions are limited by the company’s overall bonus payout percentage.
5. Service / Operations
If the company has not taken all measures to provide a good-quality service to the direct sellers, it can just forget about succeeding. Good quality service includes fast and reliable order-taking and delivery, fast and proper communication, correct calculation and timely payment of commissions, and honestly, plus many others.
6. Training
No direct selling company on earth says it does not emphasize field training. On the contrary, many put this item on top of the list of areas that they are very good at. But, is it so in reality? Without high-quality training, it is simply not possible to move the full-timers towards company’s strategic targets and to have the part-timers climb the career ladder to become full-timers.
7. Communications
This is still a field that still has not gained the importance that it should have in some of the direct selling companies. This situation is quite ironic in an industry that claims to be “people business”. I believe not too few people would agree with me.
8. Motivation
With the disclosures of commissions data by various direct selling firms, it has now been publicized that a majority of the sales organizations consist of users and part-timers. Not only this very large group, but also the full-timers need to be constantly motivated by the company to be able to maintain and even grow their businesses.
9. Planning
It can be a short-term promotional campaign or for instance, a very long-term retention program. All such actions must be planned well with all the possible good and bad consequences in mind.
10. Sustainability
A vital issue in direct selling. To attract and further grow successful field leaders who would stay loyal to the company for years can only be achieved through a sustainable business.
I have seen many cases where the entrepreneur sees a successful direct selling firm in a product category and decides to take this route. However, success here is not that easy to achieve without taking into consideration all the universal managerial issues and the issues that are unique to this industry.
Leave a Reply