The world is home to a plenty of successful direct selling companies, many of which have stood the test of time. What sets these industry giants apart from the rest? Is it the launch of a groundbreaking product or a unique compensation plan that hadn’t been conceived before?
The path to genuine, economically sustainable success in direct sales is multifaceted and cannot be attributed to a single determinant. In this article, we will look into the six key factors that, when combined effectively, pave the way for success in the direct sales industry.
1. Compensation Plan: The Foundation of Success
While entrepreneurs often regard compensation plans with great importance, it’s essential to recognize that they should not be the initial focal point when embarking on a new venture. A compensation plan, no matter how meticulously crafted, cannot guarantee success if the other pillars we will discuss aren’t firmly established. However, a robust compensation plan does share common characteristics:
Alignment with Company Strategy: It must seamlessly integrate with the overall company strategy.
Rewards for Key Behaviors: It should incentivize and reward the essential behaviors that drive success.
Simplicity: The plan should be easy to comprehend and explain, ensuring clarity for all stakeholders.
Unlimited Income Potential: Direct sellers should have the opportunity to earn unlimited income, motivating their efforts.
Cost Control: It should be designed to be a controlled expense for the company.
Regulatory Compliance: Adherence to regulations is paramount to maintain legitimacy and to ensure viability.
Notably, factors like being “new/unused/unheard of” or boasting the “biggest payout” are not inherent indicators of a compensation plan’s effectiveness.
2. Operations: The Backbone of Long-Term Growth
Operations encompass a broad spectrum of activities that facilitate independent direct sellers in building and expanding their businesses. This pillar includes product procurement, distribution, information technologies, commissions payouts, and customer services, among others. The efficiency and effectiveness of operations play a pivotal role in a direct sales company’s daily functioning.
A poorly structured operations system can lead to frequent crises, some minor and others catastrophic. To ensure sustained success, meticulous attention must be paid to the operational foundation of the business.
3. Communication: The Lifeline of Direct Selling
Effective communication is the lifeblood of any direct selling venture. It has two primary facets: Field communication and communication with the public.
Field communication involves disseminating information to direct sellers, enabling them to conduct their businesses seamlessly. Moreover, it involves maintaining open channels for direct sellers to voice their concerns and ideas, fostering a sense of involvement and partnership.
Communication with the public serves the dual purpose of building brand awareness and trust among consumers. It also ensures that the company presents itself transparently to regulatory authorities.
4. Compliance: Navigating the Regulatory Landscape
Thanks to some of the players in the industry, this pillar has never been more important. Regulators around the world are bringing in tighter restrictions every day and consequently, compensation plans and “claims” are being scrutinized heavily. To safeguard the business, it is imperative to ensure that every aspect of the company’s interactions with direct sellers and end-users aligns with the regulations in each market.
Failure in compliance can result in investigations, hefty fines, and even the closure of the business. Such instances also cast a shadow over the entire industry, causing collateral damage to its reputation.
5. Training: Equipping the Field for Success
A well-structured training strategy is essential in the journey towards success. Training serves the dual purpose of providing knowledge and motivation to field members, empowering them to grow their businesses and earnings.
Field training encompasses various aspects, including product knowledge, selling techniques, understanding the compensation plan, leadership skills, and compliance requirements. These should be delivered at various levels, from introductory to advanced, to cater to the diverse needs of the field.
While the primary goal of training is knowledge transfer, an equally important benefit is the boost in motivation it provides. Neglecting this aspect can be detrimental to the morale and performance of direct sellers.
6. Product Portfolio: Meeting Market Demands
Last but certainly not least, we must not overlook the importance of the product portfolio. A direct sales company should offer a range of products that cater to end-users’ demands and provide ample opportunities for independent direct sellers to generate income. Without a compelling product portfolio, those pillars above will take the business nowhere but to a launch that is doomed to fail.
The road to success in direct sales is obviously a complex one, with success hinging on the harmonious interplay of these key components: A well-designed compensation plan, efficient operations, effective communication, stringent compliance, and comprehensive training, all underpinned by a compelling product portfolio. By embracing these principles, direct sales companies can not only succeed but also thrive in a competitive marketplace, standing the test of time and emerging as industry leaders.
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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 Ozmorali 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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