There are successful direct selling companies in the world. Actually, there are numerous very successful companies. What separates them from the rest? Is it a novelty product that they have launched? Or is it the compensation plan each has been using that had not been thought of before?
A real, economically sustainable success can never fully be tied to one determinant. In my opinion, it is the result of a combination of five factors:
Despite a widely accepted belief among entrepreneurs, the compensation plan should never be the starting point for a new venture. Nor could it bring success (regardless of how well-developed it can be), if the other pillars that I will explain are not strong enough.
All good compensation plans on the other hand, has several common characteristics:
- It is an integral part of the overall company strategy.
- It rewards all (and only the) key behaviors on the field.
- It is easy to understand, easy to explain.
- It provides unlimited income opportunity to the direct seller.
- It is a controlled expense to the company.
- It is in full compliance with regulations.
Have you noticed I have not mentioned “being new / unused” or “having the biggest payout”?
Operations within this context encompasses all tasks that are to be accomplished for the purpose of enabling the independent direct seller to build and grow his/her business.
This pillar consists of such building blocks as product procurement, distribution, information technologies, commissions payouts, customer services to give a few examples.
A not-so-well constructed operations brings only crises… on a daily basis. Some of these could be small and some of them more substantial. Yet, some of the crises could be quite catastrophic.
Good communication is vital in direct selling, period. There are two major aspects of this as far as we are concerned: Field and general public.
Field communication includes a) all “transmission” to the direct sellers to help continue their businesses smoothly, and b) keeping the channels open for them to facilitate their voices being heard.
Communication with the public, serves two purposes: Building awareness and trust towards the brand among people and voluntarily representing oneself to the authorities.
Thanks to the bad apples in the industry, this pillar has been more important than ever before. Regulators around the world are bringing in tighter restrictions every day and consequently, compensation plans and “claims” are being scrutinized heavily. Therefore, it is essential to make sure every aspect of a company’s dealings with direct sellers and the direct sellers’ with end-users are in full compliance with the regulations in that market.
Needles to say, failures in this area only lead to investigations, substantial fines and sometimes, to closures of that business. The harm done to the industry as a whole is an additional collateral damage.
A well-prepared training strategy is critical in becoming a winning direct sales venture. In essence, the objective of training is to show the field members ways to do their businesses better and to earn more.
Field training has several sub-headings like product, selling techniques, working with the compensation plan, leadership, compliance etc. And each of these will have to be provided in various levels such as introductory, mid-level and advanced.
The primary benefit expected to be provided to the field is “knowledge”. Yet, an important side-benefit is always “motivation”. So, this part should never be neglected.
No, I have not forgotten about the products. It is just so obvious that there should be a reasonable product portfolio that will be demanded by the end users and wide enough to allow independent direct sellers to make money. Without it, those five pillars above will take the business nowhere but to a launch that is doomed to fail.
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 a Supplier Member of the Canada DSA. It 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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