Guest author Alan Luce is Co-Founder and Managing Principal of Strategic Choice Partners (SCP), a consulting firm that provides strategic support and services to help today’s direct selling companies thrive.
Alan is a US DSA Hall of Famer, and member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.
Guest post by Alan Luce
Without Trust You Can Kiss Success Goodbye!
Direct selling companies spend tens of thousands of dollars on equipment, marketing materials, product development and social media branding programs, but often squander or even neglect their most precious asset; the sales forces’ trust and belief.
Over the years and working for, leading and advising more than 100 companies as a consultant I came to learn that successful direct selling companies that excel for decades are very careful to maintain the field’s trust. Too often I have observed senior company executives take the sales force’s trust and belief for granted and therefore make serious, trust damaging mistakes. Set out below are the four the most common trust damaging mistakes that companies make:
1. Assuming that the field leaders will understand your motives or the facts:
The “never explain, never deny” posture often taken by companies usually leads to disaster. When faced with a serious mistake, or when the field reacts badly to a change in the product line, the compensation plan, service fees, usually involves an arrogant or careless management assumption that the field will somehow intuit that the Company has their best interests at heart or that the Company will always do the right thing.
To maintain trust you must explain, explain and explain! Transparency and effective communications are key to maintaining trust. If you need to change a service, a program or even the compensation plan because the Company is losing money, give them the facts. Your field leaders are reasonable people for the most part. They understand that both the Company and the field must make money in order to stay in business. Never assume that they “are not business people and will not understand” or that the field is only “concerned with their profit”. Of course, they are self-interested but they also know that they need a strong and profitable Company to enjoy future business success. When you fully explain and enlist their help more often than not, they will respond in a positive fashion.
2. Designing incentive programs primarily to avoid cheaters:
Given the opportunity, some independent sellers will find a way to manipulate the rules of a contest to win the prize or award without meeting the spirit and letter of the contest rules. It happens! But if your contest rules are designed in such a draconian way to prevent cheating, over time they will demotivate many of your folks from participating this defeating the point of the contest or promotion. More importantly, overly protective rules will send the message that the Company does not trust the field and assumes that many will cheat. In my experience, only a small percentage actually cheat, maybe 5% or less. But the 90+ percent who do not cheat resent the implication that the Company thinks they will cheat. Even the cheaters do not like to be called out as “cheaters”!
The better path is to design your contests with reasonable and based upon the belief that 90% or more of your field will act honestly and responsibly. At the same time, identify actual cheaters and privately call them out for cheating. Tell them that they will not receive the prize and that they will be terminated if caught cheating again. It is important that you notify the upline leader of the disciplinary action you are taking. Over time, this course of action will create a climate where the field believes that you trust them to act honorably but that there will be consequences if you do not. Trust is built on the actions the Company takes even more than what the Company says.
3. Never overlook breaches of policy or negative plan manipulation because the offender is a top leader!
It is unfortunate but true that some of the most prominent, widely recognized, high profile leaders will conduct their business in ways that violate clearly stated Company policies and values. Noting will erode the field’s trust in the Company more than its failure to take action against an unethical leader. All of your top leaders already know that this person is not playing by the rules. When the Company fails to take corrective action, it sends a message to the field that the Company values the profits she generates for the Company more than the Company policies and values. The longer you ignore the situation, the more toxic it becomes.
When faced with this type of situation some in the Company will argue that the leader is too prominent, has too much influence and clout to risk angering when the Company tries to enforce its policies. They fear that this leader, if forced to leave, will take her downline with him or her and even entice other top leaders and their downlines to leave also. Never be deterred from taking corrective actions when faced with those arguments and fears. Over time, failing to enforce your policies and values is far more corrosive to maintaining trust and confidence of the field and a much bigger risk than taking corrective action.
The company must treat these situations like a test. The field leadership knows of the leader in questions violations of policy and or values. They are watching to see what the Company will do. I have faced this situation many times as a CEO and senior Company executive and as an advisor to client companies. Here is the trust building process that I recommend that you take:
1. Have a face to face meeting with the offending leader. Confront them with their violations and the evidence that you have. Regardless of whether she/he agrees or denies, tell her/him that if these actions do not cease immediately that she/he will be terminated. Tell her/him this is her/his only warning.
2. Let other top leaders know by in person or telephone conversation that you have had a discussion with an “offending leader” (Do not name the leader. They will know!) and that you expect the violations of policy or values to cease immediately.
3. If there is no evidence of continued violations, all is well. The other top leaders know that you enforced the policies and took corrective action. If the violations continue, terminate the offender immediately.
4. If you must terminate, communicate with other top leaders and the senior leaders of the offender’s downline that after discussions with the offender (without any details or allegations) that the Company determined that it was in the best interest of the Company and the field that this leader no longer represent the Company and its products. Most will know the reasons without being told.
In nearly all cases, after such a termination the other top leaders express support and relief and, usually only a few if any of the terminated leader’s downline choose leave also. But even if many do leave and sales suffer, the sales drop will be temporary and the field’s trust that the Company will do the right thing will be increased immeasurably. Field trust is much more valuable in the long run than the profits produced by an unethical top leader.
4. Failure to acknowledge what is clearly a Company mistake:
Sometimes bad things happen: The distribution system breaks down and orders go out late or with mistakes; a supplier sends a shipment of products that fail to meet quality standards and break or fail when customers use them; the order processing system fails on the last day of the month or any other type of mess up. When these situations occur, the worst thing a Company can do is try to shoulder through without fully accepting responsibility and explaining what happened as soon as the facts are known. The faster the Company explains, fully accepts responsibility and takes corrective action, the faster things will get back to normal with the field’s trust intact. The field may be upset and even embarrassed by the failure, but they understand that sometimes mistakes are made no matter how careful. They also understand B. S. when they read it and hear it.
Two things must happen to avoid the B.S interpretation:
First, the Company must quickly communicate explaining and fully accepting responsibility along with telling them about the corrective actions being taken.
Two, the Company must understand how the problem happened and take action to correct the situation. If the same mistake happens over and over again, even the fullest explanation and acceptance of responsibility will not restore that field’s loss of confidence in the Company.
Company growth and success happens when four key elements are in balance. The three elements are great products, an attractive compensation plan, good logistics and field services and the trust and belief of the field that the Company will always do the right thing and not embarrass them in the eyes of their customers and families. While all of these elements are important, in my view over time, the trust and belief element is the most important. If the field loses trust and belief in the Company, it will go into decline no matter how good the first three elements are. Without the field’s trust and belief, you can kiss success goodbye!
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Thank Denise, Jen, Roseanne and Nina. I have had the pleasure of working directly with three of you over a long career and I know the caliber of leaders you are. All of you have had remarkable direct selling careers and have made positive contributions to the people that have worked with you.
I’ve been on both sides , corporate and now back in the field. Great Article Alan! Trust & Belief are #1!
Great post Alan! Ethical behavior is not only a way to build a solid company, but also a way to elevate the industry as a whole. This benefits all direct sellers. Thanks for continuously showing the right path forward!
Thank you for this summary, I fully agree and had opportunities to experience both ways. There is no long term success without trust and transparency.
Absolutely true and the company may get away with “mistakes” or incomplete information once or twice. After that they start to lose their credibility and trust from the sales force. Thanks Alan!