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May 01, 2015

New Perspectives

An Executive Approach to the Changing Role of Communications

by Bobbie Wasserman

Click here to order the May 2015 issue in which this article appeared or click here to download it to your mobile device.


Historically, the direct sales industry has flourished with a distributor “outbound” marketing approach—person-to-person selling. Under this model, it has been the independent distributors’ responsibility to promote their businesses, though this approach can produce fragmented messaging about the company and products. Often, distributors’ personal experiences influence how they represent their businesses, and occasionally they augment the company’s materials with their own. As a result, the public relations efforts are localized based on the distributors’ market and customer base. Any issues or problems that are experienced are also generally solved “under the radar” at a localized level. Even so, the model has been extremely effective, and direct sales companies have flourished.

Enter Web 2.0

While technologists argue the phrase, the generation of the World Wide Web that is used by the masses today is one that is focused on the ability of people to collaborate and share information online. For direct sellers, this adds a critical approach to the company’s success—“inbound” marketing—as distributors and even customers now have a platform for voicing their own opinions and experiences. Simply put, the Internet changed the game around the type and frequency of publicity a company receives. With inbound marketing:

  • Word of mouth is spread primarily through technology, which vastly increases its reach.
  • Distributor referrals include a critical online component.
  • The buying experience can include a period of socializing and engagement (often online).
  • AND
  • Business is able to be conducted anywhere and everywhere via the Web (which offers its own set of compliance and operations issues).

Additionally, all issues or “crises” that occur tend to happen above the radar, and that information remains online for all to see at any time.


A Minute on Messaging: The following chart illustrates some of the differences between strategic corporate messaging and product marketing messaging. Corporate messaging is a broader, more strategic function than marketing messaging, which is generally based around specific products and audiences.

 

Corporate

Marketing

The voice of the company

Shapes how products or services are perceived

Messages that represent the company as a unified entity

Positions a company’s offering in the best light

Broad audience message with more specific proof points

Multiple messages for different target audiences based on product


Building Corporate Credibility

The role of building corporate credibility through public relations and communications efforts is often housed within the marketing department, as that department has responsibility for product and (sometimes) brand reputation. Corporate communications, sometimes referred to as corporate PR, is a different function and requires a different skill set.

Corporate communications is a strategic process that builds relationships for and the credibility of the company—beyond the distributor. The function represents the voice of the company, and the stronger, more unified that voice, the more credibility a company has, which in turn, attracts more distributors and customers.

It is a function that works with numerous departments and usually oversees communication strategy, media relations, crisis communications, internal communications, reputation management and corporate responsibility. In public companies, the department might include investor relations and government affairs.

Outside the direct selling industry, multinational corporations such as IBM, Wal-Mart and Toyota have elevated the role of corporate communications over the past decade—adding the position of Chief Communications Officer, which reports directly to the CEO. These companies, as well as many others, understand the critical importance of effective communications in today’s volatile environment, where the Internet and media demonstrate that the game can change in an instant.


Corporate communications is a strategic process that represents the voice of the company, and the stronger, more unified that voice, the more credibility a company has, which in turn, attracts more distributors and customers.


An Enterprise View

While the vast majority of direct selling companies might not need a CCO, a senior-level communications professional officer or “counsel” that has a seat at the executive table can play an important role. For example, corporate communications works closely with compliance and legal. In a recent situation, a compensation plan issue in one European country was publicized via a government press release describing the issue as an “unfair business practice, i.e., pyramid sales.” And though the issue was resolved while the company continued operations in the country, that press release remained online and was picked up by a reporter halfway around the world—thanks to Google Translate—who used that press release and company’s name as a proof point in his “pyramid scheme” example.

A senior-level communications person might have worked with legal to stop the government from issuing a press release (very unlikely), or ensure that the country issue a compliance statement upon issue resolution (very likely), monitor online and social channels for comments, and have a company statement ready to be released, if needed.

In opening countries, corporate public relations can also play an important role. The online role might include seeding highly trafficked regional online and social media sites with teasers or “controlled leaks.” Issuing press statements is also key since those are now being indexed as news by Google. All these tactics can increase buzz and credibility to attract new distributors and customers—in every country of operation. The offline PR role might include arranging executive meet-and-greets with government officials, community leaders and/or other champions of the business—all opportunities for the company to build relationships, gain credibility and leverage online and social channels to record the event(s).

Impact to the Industry

In today’s climate, it can be important to have access to an experienced corporate communications expert. The issues that impact one company can bring scrutiny to others—private and public alike. And direct selling company executives know that an attack on one company is an attack on the entire industry.

Negative industry stereotypes tend to stay alive and even grow on the Internet. Negative posts, along with articles from traditional news sources with high engagement that cast companies in a bad light, tend to be clicked on and shared often, resulting in a high SEO when a particular company is searched for on Google. Additionally, potential customers cannot help but question the practices of companies when an aggressive push to distribute the products is attached to the sale, adding to negative online conversation, sharing and clicks.

Yet 82 percent of consumers’ experiences are favorable or neutral toward direct selling, according to the Direct Selling Association (DSA). Using the U.S. as the leading indicator, the number of direct sales representatives continues to grow and stood at a record 16.8 million in 2013, and industry sales continue to thrive with a compound annual growth rate over the prior three years at 4.6 percent, according to the DSA. This growth in both retail sales and people involved in direct selling serves as a testimony to the strength of the industry.


Distributors need a strong corporate presence and reputation to build their business, just as the companies need strong and committed distributors. It is a symbiotic relationship.


A Symbiotic Relationship

No other industry offers the opportunity a direct sales company does for such a minimal investment. The industry comprises global companies with innovative and premium products and a spirit of entrepreneurialism and camaraderie that other industries simply cannot match. Distributors need a strong corporate presence and reputation to build their business, just as the companies need strong and committed distributors. It is a symbiotic relationship.

That is why it is so important to support and empower distributors so that they have the communication tools and knowledge to build strong businesses. Providing tools and training as well as updating policies and procedures that allow distributors to leverage technology can be a critical gesture of parity that builds loyalty as well as sales. Distributors want to build their business the right way, within the guidelines of the company, and they tend to be receptive to the do’s and don’ts of public relations and social media best practices.

Not adapting communications practices and department structures to this new environment of heightened scrutiny and online sharing could mean difficulty for some companies. All direct selling businesses, small and large, need to work together to bolster the reputation of the industry, as each company will most likely benefit. A rising tide lifts all ships, as the saying goes.


Bobbi WassermanBobbie Wasserman is Managing Director of Wave2 Alliances, a public relations consultancy that focuses on restructuring communications departments.