TrueStar Thoughts

While compensation gets all of the visibility, statistics show that most people joining a Direct Selling company don’t do it for the money. In fact, the Direct Selling Associations reports that money is number 4 on the top 5 reasons to join.  I’m not saying compensation is not important, it is.  I am suggesting that are additional factors that will motivate your sales force and cost to implement these is minor compared to traditional forms of compensation.

Think back throughout the year, where did your paychecks go?  I can’t remember.  Let’s see, there were house, car, utilities, fast food, and I hope there is some in the bank.  How did you do?  Hopefully better than I.

Now think back to the last vacation, last time your spouse praised you (I mean really praised you, not just acknowledge), recognition from the boss.  How did that make you feel? Do you remember the details?

Many people in your company want to belong to something that is good and personally rewarding.  Money helps with the spouse and friends, but recognition and positive experience help to build the person.  There are lots people hurting and they want to belong to something good.  Is your company addressing the personal side of business?

admin Direct Selling

In the world of direct selling, everyone is always trying to build a better mousetrap. A faster way to recruit, an even better compensation plan, hot-fast-best-uber leads, and on we go. In reality, the core values and principles of direct selling have not changed in 100 years. The technology and business processes continue to evolve in order to better support these core values.

There are many people hurting in the world and they want to belong to something that is good. Belong to something that recognizes them for their effort. To praise them when they do well and to pick them up and encourage them when they are down. And yes, to pay them for their efforts.

This has been, and continues to be, at the core for all successful direct selling companies.

What has changed?

Technology and business processes continue to change in order to make it easier to provide a high level of service to your people. This should be the only role of technology for a company. Make it easier to do business.

How do you make sure you are providing the best service?

Build trust with your sales people, especially your leaders, and listen to them. The people working the business will usually give you the best ideas. If the biggest problem is late deliveries, fix that problem first. Don’t give them another exciting toy that IT or marketing came up with when they are saying the biggest challenge is your shipping process.

Be careful on what you wish for

When you engage your sales people and ask them what can we do to help, often times the response will be “Get this tool”, “Work like this company”, “Have these bonuses”, etc. It is important to work through these replies to get a better understanding of what the real problems are. Otherwise, you run the risk of causing more damage by offering the wrong solutions.

Here are some examples:

I love the party plan business model because it blends social activity with the purchase of products and opportunities for additional parties. The beginning consultant is faced with numerous challenges when they have their first parties including:

Problem
Hostess only wanting to invite a small number of people because she is concerned that there will be too many people at her house.

Result
2 out of the 5-7 people that were invited show up and the party does not produce hostess rewards or compensate the consultant for the time she spent. One or two of these and the consultant will most likely quit the business before she had a chance for success.

Potential Solution

• Have a simple training program (process) that explains the problem and how to coach the hostess for success.
• Have a simple application (technology) that allows the hostess to quickly add people to a list and have the consultant follow-up to make sure she has enough materials for the party.

Problem

Administration time needed to enter and submit orders from a party.

Result
The consultants hourly earnings is reduced because of the time it takes to enter a party order. This causes a level of disappointment and time away from their personal life (this was one of the benefits of being your consultant , right?)

Potential Solutions
Have a simple order entry process that allows her to enter the information quickly. Emphasis here is simple and not a solution designed by technology people just because they want to use the latest and greatest widgets.

Maybe they value speed of entry over look and feel. The real solution is most likely in the middle somewhere. The key is listening to them. If you are trying to establish a $25/hour opportunity for the new consultant then saving them time on the administration part of the business is much less expensive then changing your compensation structure.

In Summary

These are pretty straight forward potential solutions to common problems that you may have.  The reality is life isn’t usually as simple, but hey, this is just a blog right?

The key is to understand the core values of the direct selling industry and make sure your company is aligned with them as well. Once this is done, then start to build trust with your field by starting with your leaders. Ask questions and listen to understand, not to confirm what you think you know. Make sure the new consultants are factored into your solution and then prioritize the issues and knock them out.

admin Direct Selling

Scrum makes sense on paper.  It seems easy.  There are few rules for Scrum.  Transparency must make it easier for everyone to know what is being done.  Right??

Scrum, like everything, takes dedicated work in order to continually improve and reap the benefits.  I think one of the biggest challenges most companies face, is how Scrum is implemented and the focus for continuous improvement in each role.

Scrum is typically implemented by a champion within the company.  Sometimes this is one or two people, usually in the development team.  There are several articles on Scrum and also many courses on Scrum Master Certification.

As I began to learn more about Scrum and eventually implementing it at a company I worked for, I knew I needed executive support.  Someone who would help to protect the framework and let us have the chance to succeed.

We both became Scrum Certified and we even had a couple of other people get certified.  The role of Scrum Master was implemented pretty well.  The roles of the Developers were implemented well.  The importance of the role of Product Owner was not fully appreciated.

The Product Owner has to be involved in the Scrum process.  While their roles are pretty well defined; prioritize the backlog and accept the stories when ‘done’.  They also have to be available throughout the sprint in order to define the acceptance criteria, and answer questions during the sprint.  This usually takes more time than people think.  How much time will depend on the projects, people, and technology.

A company I recently worked with needed the Scrum Master about 20% of the time and the Product Owner about 60% of the time.  The challenge is the Product Owner was only available for about 20%, which required the Scrum Master to increase their time to about 30%.  This increase of time was mostly solving blockers because the Product Owner was not available.  Unfortunately, the Scrum Master cannot assume the Product Owner responsibilities and even with the additional time, the success of the sprints suffered.

Is this a problem with Scrum or is this the power of Scrum giving transparency to the real problems?  In this case, a resource constraint by the Product Owner.  Scrum does not promise miracles, but it does shine the light on problem areas.  Companies need to acknowledge and address the problem areas as they are discovered.  Failure to do this will prevent the company from receiving many of the efficiencies that Scrum was implemented for in the first place.

Change is difficult and getting everyone to really buy-in to the changes needed for Scrum to work can be too difficult.

If you are struggling with implementing Scrum, make sure you have the right people doing the right roles and that everyone is empowered to do their job.  This means they have the authority, knowledge, and time.

admin Agile, Scrum

This quick answer to this question is it is up to the team.  When starting to use Scrum or other agile frameworks, sometimes the Scrum Master needs to explain benefits to the Scrum team and management.  My experience is when developing software, management AND the developers expect to have software available to track the backlog, sprint, and schedule.

Most Scrum Trainers recommend not using a third party solution to manage the Scrum model.  Having implemented Scrum in a traditional software company used to the waterfall method, I agree with the trainers.

It is recommended that the Product Owner use Excel to track the backlog and Scrum team can use Excel to help track the burndown in the sprint.  See the Scrum Alliance for a spreadsheet template.   The Sprint Planning and tracking can be done by using an old fashion cork board.  This may seem like you went back in time, but this process has several benefits.

• Buying software to manage the process will set an expectation to all stakeholders that the process is being managed.  Not to mention that when a company invests money in tools, they expect to see quick results.  This can really set the team up for failure before they have the chance to succeed.
• Story cards on a cork board are inexpensive and engage the team in the process.  Remember that, once committed, the team is responsible for delivering the work.  The ‘how’ is up to them and the Scrum Master is responsible to facilitate the how.  The team is responsible for getting it done.Story cards are also extremely flexible and easy to move around.
• Story cards help to create the conversations that are so important for successful sprint
• Cork boards are highly visible and help to create the transparency that is so important.
• The team can figure out the best processes for them instead of complying with their initial understanding of how the software solution wants them to do Scrum.

Challenges that I have experienced when using software

• The product owner and/or stakeholders end up putting too much detail in the product backlog.  This can cause the team to spend more time creating estimates and also have a higher expectation of the accuracy given the additional information.
• The team begins to reduce the conversations because the software can capture more detailed requirements.
• Observers can tend suggest/manage the scrum team in order to attempt for them to become more effective.  This can be the most difficult part of implementing a strong agile methodology.

Scrum and other flavors of Agile processes require a high level of trust among team members and the executive teams.  It is generally understood by Scrum ‘experts’ that it will take a team about 2 years to really figure it out.  This needs to be understood and emphasized early on.  While 2 years seems like a long time, it doesn’t mean that the team is less productive than the traditional waterfall.  It just means the team needs to make mistakes and figure out how to get better over many cycles.

admin Agile, Scrum

Direct Selling companies have common business practices in an unconventional business model.  Companies compete in three ways

1. Have a unique product or service with a story to tell
2. Have a compensation plan that attracts people into the business and then rewards them for their efforts
3. Have excellent customer service to support your sales force and customers

You need a balance of all three to work.  If you do not plan to have excellent customer service, then please find another industry because this one has already been beaten up enough.

Unique Product or Service

No surprise here, but the more unique the product or service is, the more control you have over your destiny.  This is even more important for those companies using the Multi-level Marketing approach.  Other forms have the benefit of having a warmer audience and more time to present the details of your products.

This will give you more flexibility with your compensation plan as well because you have more control over the selling price.  This can be a trap for some companies though, keep your retail sales price set at what a customer would really pay for it.

Me-too products can be done, but you need to be aware that it will cause you to have to compete more in the compensation and customer service areas.

Compensation Plans

Compensation plans involve all forms of rewarding your sales force.  There are three main forms of compensation:

1. Commission Plan – This is the main part of your compensation structure and usually includes people being paid for their own selling and the selling done by people within their sales organization (genealogy).
2. Incentive Plan – This is often overlooked by startup companies and yet has the ability to create excitement in the field.  Incentive plans are a great way to have short-term contests that can really focus your salesforce on a desired behavior.  The best part is when it is done it is done.  If it was good, then you can repeat it or maybe even include it in your commission plan.  If it was not as good as you hoped, then you end it and everyone is happy.  You don’t have this luxury  with the commission plan.
3. Hostess Plan (Party Plan companies) – For companies using the party plan business model, the Hostess Plan can be almost equally as important as the commission plan.  If the hostess doesn’t receive enough benefit, the consultant will have a harder time booking a party.  This will cause them to lose interest in your business and go find another opportunity.

Excellent Customer Service

I was at a Direct Selling Annual meeting one time and heard Ron Armes, formerly with Creative Memories, say “Never make your Consultants look stupid.”  It is hard to make this any clearer although as Direct Selling Companies, it is easy to do.    I will write more about this in a future blog, but here are some common ways that we can make our consultant look stupid:

• Delaying an order
• Shipping problems
• Payment Problems (overpayments)
• Not able to answer questions
• Website problems
• Commission Wrong
• No Product Returns Process
• Bad product
• etc.

Do you get it?  There are many ways to have a mistake at the expense of the consultant.  Good systems and process will help you eliminate this, but it starts with the mindset at the top of the company.

admin Direct Selling