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June 01, 2010

Working Smart

Blended Methods Are the Future of Direct Selling

by Alan Luce and Jennifer Fong

Most of my 35-plus years in direct selling have been spent building and managing new or established companies, either as a senior executive or an outside consultant. While the companies changed, one thing did not: They were almost always party plan companies.

So I was more than a little surprised to find that my consulting services were being sought out by mature network marketing and traditional MLM companies. What have they wanted from a party plan guy like me? Simple. They wanted to know how to build product sales using group selling techniques. In other words, they wanted to add party plan to their marketing mix.

Yep… they wanted advice on how to teach their distributors, especially the new folks, how to achieve success through a focus on retail sales. Were they going to convert from a network sales approach to a party sales approach? No, not at all. But they did want to add another dimension to their network marketing programs—a dimension that encouraged new distributors to build their retail customer bases by selling to groups instead of to one person at a time.

Party-ish

In all cases, the companies had approached me and members of our firm for two reasons: First, various groups among their distributors were already experimenting with partylike selling events. Some of these experimenters were moving impressive amounts of volume. Even better, they were enjoying higher productivity and retention rates among recruits. Increased unit volume, productivity and retention will always get direct selling management’s attention.

Second, these product-focused group selling events created a softer, more indirect path to a discussion about the opportunities of becoming a distributor. In a world where it’s getting harder to entice people to come to “opportunity” events, any forum that offers the possibility of a discussion about the opportunity is welcome.

At the same time I started working with “party-curious” MLM marketers, I also encountered some strong interest among party plan clients in… guess what? Sales techniques that most would associate with MLM companies! I’m talking about customer clubs featuring discounted, direct-to-company online ordering, one-on-one and party sales taking place online, and auto-ship programs.

I wondered what was going on, especially since I had pioneered customer clubs and online sales programs in a number of companies. But the move to insert an auto-ship program into a party plan program? That was something else again. And everyone, regardless of their company’s preferred sales format, was experiencing salespeople experimenting with online sales in a wide variety of formats. I was curious. Why were so many people from one or the other traditional sales formats now trying out crossover techniques?

With the help of my associate Jennifer Fong, we found the answer. Jennifer is an expert in the relationship between direct selling and social media. We quickly determined this crossover charge was being led not by companies, but by independent sellers themselves. No real surprise there, I guess. What was unexpected was the fact that so much experimentation was going on in long-established companies.

For instance, we found leaders in at least two mature network marketing companies who set aside company-sanctioned procedures in favor of new, faster ways to help new distributors gain customers and make profits. One technique was to show new distributors how they could more quickly recover their sign-up costs: Reach broader groups of potential customers and prospective distributors by doing a product-based demo to groups rather than to individuals.

Selling to Groups

The process involved using group retail events to help launch a business, create early profits and help build networks by converting satisfied customers into distributors. Various types of group demo events were tried, and the results were all over the place. But one constant quickly emerged. Home offices noted these downlines were among their most energetic and fastest-growing producers. Interesting, isn’t it?

Meanwhile, party plan companies were coping with several emerging trends of their own. For many, the percentage of product sales coming solely from parties was falling, often to about 60 to 70 percent of sales. The majority of non-party sales were coming from shows and fairs, one-on-one sales, virtual parties, replicated website sales and personal orders.

At the same time, those same companies were better understanding this basic truth—the average party plan customer only buys from the average representative about 1.5 times. Party plan companies, especially those selling consumable products, began actively looking for ways to increase unit volume. And they found the best way to accomplish this was through the multiple sales generated by auto-ship programs and customer clubs.

Adding fuel to the fire was the old “kitnapper” issue—recruits who sign up and buy the kit simply to get products at a steeply discounted price and then place a few orders for personal consumption only. It’s always been around but has been an increasing problem in recent years.
So much change in so little time, all driven not by companies, but by salesforce actions and attitudes. What was happening? And why? Three big things…

Reason No. 1—More recruits with prior direct sales experience. Most companies these days have a higher percentage of sellers who have worked in other direct selling companies. That means network marketers working with party plan companies and vice versa. These folks bring the skills and practices from their former companies to their current ones. Some established companies now actively support both types of direct sellers. A few years ago, that wouldn’t have happened.

Reason No. 2—Companies are no longer the sole source of information and training for their salespeople. I know of one case where a network marketing leader paid a party plan trainer to share her team group sales techniques. This leader had seen how group sales could help a network marketer quickly get a business started and become financially viable.

These days, there are so many ways for direct sellers to locate and establish relationships with each other. You have local networking groups, Internet chat rooms and work groups, blogs, and an ever-growing variety of social media outlets, to name just a few. All enable direct sellers to contact one another freely and easily.

Reason No. 3—Direct selling’s key demographic is still younger people, and they want to do things differently. By definition, direct sellers are already entrepreneurial self-starters who are willing to experiment. Then add this to the mix—Gen X and Y people aren’t nearly as tied to tradition as the baby boomers are. The “Amazon. com generation” is demanding to do at least a portion of its business online. Young direct sellers are comfortable with placing orders online and through the auto-ship model, as are their customers. And their customers don’t want to show up at a party every time they’re ready to reorder.

The New Model

So what does this new landscape look like? Smart salespeople are connecting with former customers, as well as prospects, on social networking tools, such as Facebook. They’re creating communities where people get product tips, specials and other customer-centric content that creates loyalty for the brand and the individual salesperson. When the customer needs another product, all they need to do is reach that distributor with a simple click and get what they need delivered to their door. Customers expect this today, and we need to be prepared to support salespeople in serving their customers this way.

So what does this all mean to you? Well, we all have some choices to make. We can rely on tradition, which has served us well in the past, and hope that it continues to serve us well in the future. Or we can take the bold step of looking at our businesses differently. This may be an uncomfortable thing to do. But as many of our field leaders are discovering, some basic new truths are emerging. These are:

The crossover or blended sales approach trends will continue and expand. Companies that learn to embrace and incorporate these trends most effectively will succeed.

Blending sales methods will have a major impact on tactics, delivery systems and especially training approaches. Look for more online training to meet the multiple learning styles of our ever-changing salespeople.

Social media will play a growing role in everything we do. The way we communicate with the field and our customers is changing. As your understanding and effective use of social media grow, so will your success.

One thing that hasn’t changed, and will never change is this: The key is and always has been about sustainable salesforce success. Companies that focus on creating a business model that’s current, effective and attractive will continue to grow and prosper.

Alan Luce’s hall of fame direct selling career spans nearly 40 years as party plan company executive, founder and CEO and top advisor to some of today’s fastest-growing party plan companies.

Jennifer Fong, also a DSA award-winning company founder, is widely recognized as one of direct selling’s top experts in social networking media.