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?

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.

Direct Selling

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.

Direct Selling