In his beautifully crafted article The Table Stakes for Success as a Direct Selling Company, Jeff Dahl explains the business model that he built to frame out a successful direct selling business.
To complement that article, I have put together those undesirable practices that are found at some of the direct sales companies. Without exception, these practices drive their independent representatives, customers, and investors crazy.
I am sure you will find at least a few of them familiar…
Disregarding Regulations
Compliance is not something that should be expected only from staff members. It is just as important to enforce those written policies on the field and hold the independent consultants accountable for what they do. And this should be done before the authorities act upon them. The price of being blind to the things happening on the field can be very high.
Failing to Keep Promises
This presents itself on various grounds: Missing the dates of opening new markets, product introductions, promotions, new training programs or improvements in service quality… Worse by far is missing commission payout dates!
Fiddling With the Compensation Plan and Policies
Frequent changes made on the compensation plan and the policies indicate management’s unpreparedness, if not lack of competence. Any attempts made to create “additional” or “parallel” compensation plans also fall under this heading. Last but not least, seeking ways to generate extra funds for the company out of the compensation plan only helps alienate the sales force.
Jumping into the International Arena
International expansion has to be a part of the overall strategy, a planned activity. Furthermore, each potential market has to be analyzed for all its pros and cons before making the “Go” decision. It is always prudent to first, test the business for a lengthy period in your home country before taking it abroad.
Sticking to the Local Market
This is not a good habit, either. There are companies who have been in business for many years that still have no intentions to expand internationally. Conservatism in this sense only means lost opportunities for all stakeholders.
Overlooking Communication
Believe it or not, words do not spread by themselves especially when you expect this to happen. It is vital to establish proper communication channels between the HQ and the field and also between the public in general.
Concentrating on Sales Force, Ignoring Staff
It is true that the field is where growth is created and where revenue is generated. However, consultants cannot come even near to success if the company does not have a competent, motivated team at the head office. The inevitable consequence of having demotivated staff is having poor service quality.
Mismanaging the Field
Sales force is a force that needs to be managed and controlled well and in fairness. It is never advisable to give full credit to every single piece of feedback and implement every idea pouring in from consultants. On the other hand, it is just as important not to close ears. When it comes to implementation of policies and procedures, treating consultants equally regardless of their ranks is crucial.
Messing Up Promotions
The most common failures here are setting wrong objectives, wrong targets, and wrong rewards (or not setting them up at all). Then comes, being forced to stop the promotion before its announced date due to failing in these three. The worst-case scenario under this heading is creating a parallel compensation plan built on promotions.
I am glad to note here that most businesses are not plagued with such practices. We see them at some of the businesses. Yet we also see they are not taken as seriously.
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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 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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Great perspective Hakki. Particularly the section on International. So many jump there without any long term strategy, and without a thoroughly vetted operational plan and local knowhow. Chasing a prominent leader around the globe leveraging his personal network is not a real long term strategy. Just saying….
Thank you for your input, Jeff!