Almost 40 years full time in the Direct Selling profession has offered me some perhaps valuable perspectives.
I started off like a lot of Network Marketing enthusiasts captivated by the “4 who get 4 who get 4” model of geometric progressions. The focus always being on sales leaders, commitment, playing full out to build an empire, and finding your ace who will build an even bigger empire than you … oh wait. That actually cannot happen. I love this business model.
I had the gift of being mentored by that niche of leaders in Network Marketing who focused on Personal Development as the edge to build an empire. It saved my life … or at least a life of what would have been 40 years in a chicken factory. And at the same time, these mentors came from a dark side of Network Marketing, companies like Holiday Magic, Bestline, Koscot and Dare to Be Great. Not dark in what they offered people in terms of personal development … they actually launched the whole pop psychology movement … but dark in terms of the all-or-nothing approach to building an organization.
There was no room for “customers” in their model. The compensation plan drove all the sales. The buy-in was $5,000 or more, which in today’s dollars, would be more like $20,000. Product didn’t matter. Koscot did $3 million its first year and $37 million its second year in business before shipping any product at all. By today’s definition these were pyramid schemes.
I built an organization of 30,000 people and earned millions from their mentorship. A good question though is where is that business today? Gone. It was built on a mountain of compensation plan sand, thousands of plates spinning to the music of “everyone is going to get rich.” It didn’t take much to start the plates crashing … a lawsuit here … a bad news article there … and the pathogenic cascade began.
I must have had a premonition even back then when I authored The Ten Step Retail Plan and the Customer Endorsement Manual. The product was actually good enough to build customers and I wanted to. But I was no match for the culture of recruit, recruit, recruit.
Many Direct Selling companies don’t have this issue at all. Their culture is one of sharing the products with potential customers whether it is via parties, one-on-one, or social media. But the more pure MLM geometric progression culture where the size of the sales organization is king always has a challenge making customers a priority.
My next venture perhaps swung the pendulum too far the other way. I found a product line that customers loved, but not enough people actually wanted to sell. I didn’t even want to sell it, and because of that, almost missed the opportunity. Fortunately, I saw something I had yet to see in Network Marketing … a product line that customers kept buying over and over at full retail price with zero influence from the financial opportunity. I jumped on it and built over the years a significant business.
Ultimately, after 30 years, that business did not continue as a Network Marketing opportunity, but it did as a business … a business with tens of thousands of repeat customers. It was just never sexy enough to attract the recruiters. I guess balance is in order.
In today’s Network Marketing climate, the Customer is King. The competition is too fierce with over 700 US-based Network Marketing opportunities. The financial opportunity is certainly very, very important, but without a Customer Culture, what we have learned is there is no longevity. There are too many dramatic and political events that create mood swings in the sales organization. Without a customer base, we are just spinning those fickle plates.
SO HOW DO YOU CREATE A CUSTOMER CULTURE?
It starts with the “Value Proposition” of the product. In simple terms, is the product valuable enough in the actual results it produces to be worth the price charged? And this has nothing to do with the first sale … marketing hype can create first sales. I am talking about offering customers an experience that they are willing to pay for over and over for years … actually decades. This is not an easy threshold to reach.
A question all Network Marketers might ask themselves is whether their products reach that threshold. Do enough people actually experience the marketing story for themselves? Is it worth the price? Can you prove it by your metrics? Do you have a growing base of repeat customers?
If you do have a customer base, you can build an empire that will last virtually forever, providing you keep the financial opportunity fresh, relevant and moving forward. If you do not, you are building a house of cards, perhaps even a pyramid scheme. You are likely doomed to squander your reputation, your relationships, your finances, and your precious years of life just to be faced with starting over.
The second way you create a Customer Culture is to place the money in the compensation plan. You can tell at a glance where a company’s priorities lie by their compensation plan. Historically in the pure MLM model, the money had been placed in recruiting and building a huge team. Somebody creating customers or building a small team would likely not earn enough to sustain their motivation over a long period of time. Attrition is the price one pays for stacking the money in favor of the “big MLM guns.”
Perhaps a wiser choice that accomplishes both objectives is to stack the money in acquiring customers and building small teams so that the “average” networker is motivated to acquire customers and reaches the magic attrition threshold quickly. The number varies by expert, but somewhere between $300-$500 a month in income will keep the average distributor actively building. It’s when they build for months on end and earn virtually nothing that attrition sets in.
A third and final way to create a Customer Culture is to educate, educate, educate; and serve, serve, serve the customer. People declare they love a product after they have a positive experience. But what about months later? They have risen to a new normal and they don’t necessarily “feel” the product anymore. Or maybe they never did. That does not mean it is not working magic, subtle magic. Educating the customer about the context and the need for the product, feeding them continued credibility and endorsements, and showing them how much you value and appreciate them will keep them coming back.
HERE ARE A FEW IDEAS THAT WORK:
- A live, local and knowledgeable customer service team that answers the phone promptly.
- Monthly newsletters educating the customer on the need for the product.
- Monthly stream of new product endorsements and stories.
- Prizes, swag, free product and recognition either randomly or for your best repeat customers.
- The same for distributors who do the best job of acquiring customers.
- Constant improvement of the products, packaging and order processes.
HERE ARE JUST A FEW OF THE DISTINCT BENEFITS OF CREATING SALES VOLUME FROM CUSTOMERS:
- Titled customers (those not receiving or tapped into the business opportunity communications from the company and not titled to participate in the plan) do not get the effects of all the drama and politics inherent in the business opportunity. They do not know or care who the VP of Sales is or how many people showed up to the national convention, or who the newest, hottest, fastest growing competitor is or which top leader just jumped ship for it. Proven repeat customers can be the backbone sales volume of your business, locked in based purely on their motive to be a customer.
- 90% of the prospects we talk to at least initially think they want nothing to do with our opportunity. They don’t want to sell and they don’t want to be an MLMer. If all we lead with is the income opportunity, if that is all we are selling, then we are leaving 90% of our potential business on the table. Take your current team’s sales volume now … what if you could increase it five fold just by adding a history of customer acquisition culture?
- For almost the same sales volume as you might get from a distributor, a customer requires infinitely less attention, training, motivating, and putting Humpty Dumpty back together again. Customers actually can fulfill on the promise of residual income freedom. You don’t have to show up for them 24/7.
We don’t have to give up one modality for another. The most potent Direct Sales business has a powerful customer culture AND empowers its sales force to build their own sales force.
The future of Direct Selling depends on every company in our space taking these challenges seriously. The regulators and the media are demanding it. Our sheer survival demands it. Integrity demands it.
We can start by banding together and making a commitment to hold each other accountable to create customer cultures. We can recognize and celebrate those of us who do it the best.
We could also agree to define a customer as simply “anyone who buys our product during any business cycle in which that order does not qualify them for any commissions regardless of whether they are now or ever have been a distributor.”
For example, if the personal ordering requirement for earning commissions is a $100 auto ship and a distributor orders $75 and does not earn commissions, then we would declare that the $75 is for personal use only. Why else would they order it? Additionally, if a distributor orders $175, we could declare that $75 of it is also for personal use. Plus, of course, any orders from any non-distributors whether they are called customers, preferred customers, etc.
What if further, every company agreed to “track and submit the percent of their total sales that come from ‘customers’ and have that information audited.” Imagine what a potent force that would be in defining and defending our business model.
And imagine if we accomplished this together, the position it would put us in to go on the offense on our right to recruit. Recruiting … everyone recruiting … everyone recruiting everyone is what defines the growth aspect of our model. Amway would not be Amway; Herbalife would not be Herbalife; and Mary Kay would not be Mary Kay without the geometric growth created by the rule that invented and defines Network or Multilevel Marketing: that everyone has the opportunity to recruit others to build their own sales teams.
I imagine a day when we do not have to mitigate our posture on recruiting. I imagine the day when we don’t have to defend how much time and energy we spend teaching people how to recruit and why to recruit. I imagine the day when we have full ownership of our business model and can promote it with full conviction to anyone who chooses to listen.
AND THE WAY WE WILL GET THERE IS WITH A CUSTOMER CULTURE.
Who is with this idea?
– Richard –