As we come to the end of another year, I asked some of the prominent persons of the direct selling community to offer their perspectives on what they see coming in 2020.
“What will be the most important issue, whether it be an opportunity or a threat, in the direct selling industry that will need a closer focus Next Year?” was the question.
You will read their responses in two-parts, this week and next week. Feel free to add your comments at the end of the text.
Oscar Canio Arias, Managing Director of Direct Selling Europe
“2020 will be a transition period for the sector in the EU from a regulatory perspective. First of all, we will follow closely the transposition of the new EU provisions on unsolicited marketing sales in the EU 28 Member States. Furthermore, we will continue working to make sure that the upcoming EU laws on Collective Redress and e-Privacy are in line with the interests of our industry. In addition to the ongoing regulatory initiatives, Direct Selling Europe will meet in Q1 with the new EU Commission and Parliament, to ensure that any potential legislative proposals on consumer rights and self-employed persons reflect the interests of the reputed and sustainable direct selling companies.”
Jeff Babener, Legal Counsel at Babener and Associates
“To create certainty for the direct selling/MLM model, the industry, by consensus with the FTC or through federal legislation, must address the recent legal challenges in FTC litigation against Advocare and Neora. Utilizing the seminal case of Koscot, that differentiates legal MLM from pyramid, the industry needs clear guidelines and expectations for the level of non-participant retail sale mandates that will satisfy the Koscot standard of downline or MLM sales rewards must be based on sale of product or service to the ultimate user.”
Michel Bayan, CEO of Directech Labs
“Many companies are talking about 2020 as the year of segmentation. Going deeper on this topic than simply separating reps and customers will allow DS companies to catch up with e-commerce and other gig companies in offering more personalized experiences for people who need to experience their time with a brand in different ways. But segmenting alone won’t do it. Direct selling is too far behind to wait. Quickly operationalizing the insights gained from segmentation will be the key to ROI and a more competitive industry. Here is a case study on how a top 100 company began using segments for more effective promotions.”
Jacques Cosnefroy, General Secretary of France Direct Selling Association
“In a changing world, the major challenge for our direct selling companies will be their ability to adapt to new generations of freedom-loving distributors, and the digitalization of business relationships. A freedom that reveals attitudes and personal variable-geometry projects and that are not apprehended by companies, whose economic model is based on individual and collective success, could lead to intergenerational disruptions. The implementation of trade relations (companies / distributors / consumers) based on the use of digital tools could create mistrust movements in older networks. These are the challenges and opportunities that we face.”
Sean Eggert, CEO of Hanna Shea Executive Search
“I believe the biggest threat and greatest opportunity is the ability of our industry to compete with online retailers and changing consumer habits. Consumers today have an increased comfort level with online retail shopping across all age groups, According to Adobe Analytics, purchases on Cyber Monday this year were up nearly 17% from the previous year, that’s $9.4 Billion in sales. The age group with the largest percentage of online shoppers, seniors, accounting for nearly 20%. While these statistics may feel like doomsday for some people, there are DS companies leveraging these new buying habits successfully. So, while this is a major threat to organizations that haven’t evolved, it also an incredible opportunity for those that have been able to change and adapt to new consumer habits.”
Krister Fraser, President of Sweden Direct Selling Association
“What will determine in the future whether or not a direct sales company will succeed? It´s not about technology, economics or logistics. Nor is it about who has the best lipstick or most practical plastic box – it’s all about building trustworthy relationships between people. Direct selling is not difficult, but it is easy to make mistakes because this is a People Business. Maintaining trustworthy relationships is sometimes a balancing act when it comes to make tough business decisions and this is where we often go wrong. The company that understands the magic and power of building trustworthy relationships will be tomorrow’s winner.”
Jonathan Gilliam, CEO of Momentum Factor
“In what could turn out to be an opportunity or a threat, I think the outcome of the Neora vs. FTC case is a major milestone in the history of the channel, in the US at least. It’s pretty clear the FTC has stepped up its enforcement actions against direct selling companies. Although the industry has long sought clearer direction from both the legislative branch and the FTC on what the real boundaries of fair play are, no help is on the horizon on that score. In fact, it can be argued that the FTC has done the opposite of drawing clearer boundaries. The Neora action is plainly aimed at forcing that issue to the forefront and seeks a judicial determination of what the FTC can and cannot do— the outcome could either be good or bad for the channel. At stake is not only the regulatory environment, but everything about how we do business, compensation plans, advertising, and how we train and govern the field. No matter the final judgement, it is surely the most important issue facing the channel.”
Ed Jarrin, President and Co-Founder of Exigo
“The most significant issue that we see today is access and use of data, in real-time. Most companies are hyper-focused on accessing and using their data to drive their incentive and rewards programs for their distributor, expanding into new markets, targeted retail messaging and promotions, and last but not least, data for regulatory compliance. It goes without saying, real-time data driven decisions should be at the core of every business strategy. Regardless of which area direct selling companies focus on, each of them must run a better business. They can’t run on gut alone, and they need to see their data on a mobile device, in real-time.”
Dan Jensen, Founder of Dan Jensen Consulting
“A wise man once said that those who do not learn from history are doomed to repeat it. The future of direct sales holds tremendous opportunity for those companies who learn from their mistakes and adapt to the changing marketplace and regulatory climate. Failing to adapt is our greatest threat. In addition, delivering an Amazon experience with strong value to both our customers and our sales force is vital to our future growth.”
We will be sharing another group of experts’ views next week. Stay tuned!
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