TrueStar Thoughts

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.

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