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Is This Insanity?

Industry Outlook - March 20, 2021

You know that saying. The one about insanity. How doing the same thing over and over while expecting different results is a formula for madness? If we know this, then why do the direct and social selling industries insist on being stuck in this insanity loop?

Let’s take a step back and look at the direct and social selling industries as a whole. Both sales and recruiting are down and COVID isn’t to blame. They have been down for the last five years. Everyone knows this. And, it’s especially true in North America. But despite this negative trend, companies in these industries keep doing the same old things. It’s time to look at what we’re doing and where we want to be. If we’re honest and ask ourselves if what we’re doing is aligned with where we want to be, the answer will be clear: it’s time for a change.

Whether we want to admit it to ourselves, the network marketing industry doesn’t work anymore. Not only does it not work, but it is also backward. In order to achieve different results, companies will have to make some big changes. Changes that will straighten the industry out.

First, companies should pay those people who want to be customers before anyone else. This can be achieved by paying people once they actually become customers instead of when they initially sign up. This is similar to successful reward programs. Customers get paid first and then work for the company by earning and receiving rewards.

By paying customers first, companies will then be able to ask more from their distributors. Distributors would then be able to shift their focus to customer service. This would allow for better and deeper customer engagement with a company’s products. In turn, customers become stickier. One change that would result from this approach would be companies no longer charging customers to teach them how to use products. Instead, product education and training would only help further a customer’s engagement in products. Companies should strive for a ratio of 15% distributors to 85% customers.

Second, companies should change the way compensation plans are structured. These industries value distributors who are able to hit metrics. Instead, companies should value those who think differently and compensation plans should be adjusted to reflect that. The reality is there is no value in reports. Compensation plans should be a way of achieving change in the industry and mirror what’s happening in the e-commerce landscape. If companies did embrace these changes, commissions and reporting would become an afterthought. Distributors should be used as distributors of products instead of cheap advertising and marketing, as so often is the case. This would allow companies to be different, which is not only desirable but valuable. It’s easier to sell different to customers. It’s much harder to sell better.

Third, companies should pivot to a customer-acquisition platform. This would allow companies to take ownership of customer acquisition and move away from the current enrollee-acquisition platform. That’s where the future lies for these industries: a network partnering model. This would allow companies to have a unified acquisition platform, including communications, where commissions and reporting would become an afterthought. Selling platforms instead of partners should be a company’s primary focus.

As marketing and technology are more effective than distributors, companies should be focusing on owning the core of their own business. Companies should want to be network partnering by working with people who want to invest in technology. Fourth, there needs to be a focus on fixing regulatory issues. Not only do these industries have public perception problem, governments overly scrutinize them. Companies continue fighting with governments, claiming they are misunderstood. But this hasn’t, and won’t, change anything. Companies must start thinking differently about how they interact with governments and do more to develop relationships and changing perceptions. Until companies accept that there is an issue, nothing will change.

Despite the need for the changes outlined here, there is reason to be optimistic. These industries have changed in the past and are capable of changing now. For example, companies were able to adapt to a changing world by transitioning from independent contracts to brand partners. We must start thinking differently, asking ourselves the hard questions, and dare to forge new paths and make the necessary changes. This won’t be easy but we should remember that all true innovation is just reinvention.

So when you’re looking for third-party services that will help build your business for the future, make sure you partner with those who are thinking like this.


About DirectScale, Inc.

Based in Orem, Utah, DirectScale has been setting the standard for social and direct sales industry software platforms since 2013. DirectScale’s powerful SaaS platform boasts fully configurable management tools that are vital to not only running, but to efficiently tracking and growing your business.

With its focus on providing an intuitive and impactful customer experience to corporate clients, independent sellers, influencers and affiliates, DirectScale has revolutionized the way direct selling businesses can be launched and managed. Through the DirectScale Marketplace, customers are able to choose from multiple 3rd-party service providers or opt to integrate with their own preferred providers to extend the power of the platform and even override core processes to exactly fit their own needs.

The platform is fully extensible using REST APIs and therefore, able to meet the custom needs of corporate users, influencers and independent sellers. DirectScale is committed to helping your organization and your influencers and distributors plan for and drive growth. Its vast experience in the direct sales and software industries have proven time and again that the company truly understands how to help clients succeed. To learn more or request a demo, visit directscale.com.