July 01, 2017
Consumer Trends: Technology Is Still King
by Courtney Roush
In 1995, Newsweek magazine published an article by astronomer Clifford Stoll in which he stated that the Internet was a passing fad, and that in two or three years hence people would find little value there (Clifford Stoll: The Internet? Bah! Newsweek, February 27, 1995). Acknowledging his incredibly inaccurate prediction 11 years later in a 2006 TED Talk, he said, “If you really want to know about the future, don’t ask a technologist, a scientist, a physicist…. No, if you want to know what society is going to be like in 20 years, ask a kindergarten teacher.”
This quote highlights one of the primary reasons direct selling companies should take note of emerging trends. More than any time in history, children are the harbingers of future consumer trends: They enter the world of consumption at an increasingly earlier age, given the demands on busy families; their desire for time-saving, ready-to-go convenience; their early access to technology; and their greater independence and involvement in purchasing decisions. Companies have an incredible opportunity to engage this younger demographic and gain brand loyalists in their formative years.
But the impact of technology doesn’t stop with the youngsters; it is driving the behavior of consumers of all ages. Consider these statistics:
- This year, online video is expected to account for 74 percent of all online traffic (KPCB).
- 55 percent of people watch videos online every day (MWP).
- 85 percent of Facebook video is watched without sound (Digiday).
- Marketers who use video grow revenue 49 percent faster than non-video users (VidYard).
- 82 percent of U.S. adults say they at least sometimes read online customer ratings or reviews before purchasing items for the first time, including 40 percent who say they always or almost always do (Pew Research).
- 70 percent of U.S. millennials say they would appreciate a brand or retailer using AI technology to show more interesting products (SONAR/J. Walter Thompson).
- The virtual reality industry is growing at a fast pace, with revenues from VR hardware and software projected to increase from $3.7 billion in 2016 to more than $40 billion by 2020 (Statista).
- The average person spends approximately two hours on social media every day (Mediakix).
- The average person will spend more than five years of his or her life (to be exact, five years and four months) on social media (Mediakix). That comes in ahead of eating or drinking, grooming, socializing and even doing laundry.
These statistics remind us that we’re talking about more than just a trend here; this is our new reality. How are direct sellers responding to this new reality, then—including the emerging, yet compelling, technologies still gaining footholds and the ever-increasing expectations of consumers who have grown accustomed to the instant gratification these innovations deliver?
“We must put technology at the center of everything we do,” says LegalShield CEO Jeff Bell. “It must be in our presentation, our client service, and our business management. We must do more for our distributors than Uber does for their drivers.”
What these emerging technologies share is their ability to tell a story. When we think about the appeal of online peer recommendations, what exactly is it about those testimonials that resonates with people? Those before-and-after stories trigger self-identification and customer engagement. Brands who can forge emotional connections with their customers are far more likely to retain them. We’re living in an era in which many consumers are wading through information overload and questioning if they can trust what they’re reading. They’re searching for authenticity. We’ve seen a seismic shift in the way brands communicate: They’re showing, not telling. And that’s precisely why written words are becoming secondary to images and experiences.
The Search for Personalization
North America 17 Consumer Trends, a report issued by market research firm Mintel, sets the scene for our current landscape, stating that 63 percent of Americans say technology gives them so many choices that it’s hard to pick the best one for them. In short, we’re inundated, and we need help weeding through the muddle. Personalization does exactly that. Consumers are seeking not just authenticity, but also confirmation of their core beliefs and values. Retailers are responding with more targeted, data-driven messages.
While consumers appreciate that, there’s a bit of a downside involved, both for them and for the messengers seeking to retain them. Consumers aren’t being exposed to new and different products, services and ideas outside their “parameters,” and, taking the path of least resistance, retailers limit their audience. “Whether or not they are aware of it,” the report says, “many consumers find themselves in a perpetual cycle of being exposed only to ideas, beliefs, opinions and services with which they already identify. In the coming year, these figurative echo chambers will place a greater distance between people—and between consumers and brands—leaving the latter with more complex challenges.” In other words, retailers who want to expand their markets have to find ways to attract consumers in other, different silos. “Brand disruption is paramount,” the report adds, “in getting inside of consumers’ echo chambers and making connections with them. Human interaction could prove effective because advice from real people has the benefit of
being more trustworthy.”
When it comes to the direct selling channel, there’s no escaping our foundation of personalized service, nor should there be. “Technology has helped make the experience better, it’s helped connect people more easily, and it has brought more clarity and focus on what we offer, but the part that we’re preserving—the most important part of the differentiation—is that personal touch,” says Mona Ameli, President of Take Shape For Life, Medifast’s direct selling division, which is currently being rebranded as OPTAVIATM, effective this month. “The transformational aspect of our business related to relationships—none of those tools can replace that. And we don’t want it to be replaced, because that’s where the DNA of our business is.”
Direct selling executives are considering how to blend the tried-and-true with the new and innovative, giving consideration to several emerging technologies and trends like the ones covered below.
The Growing Predominance of Video
When managed correctly, video can add a great deal of personalization to the consumer experience, which is why it’s an especially powerful medium. Facebook Live is dominating this conversation. The service offers a number of advantages over Periscope: You can limit your Facebook Live exposure to specific groups on your page, and the videos don’t expire after 24 hours. Traci Lynn Jewelry Founder and CEO Traci Lynn, who also serves as Vice Chairman of the Direct Selling Association Board of Directors, uses it for training. “If I’ve got a new consultant group, I can bring them into our corporate office virtually, and I can introduce them to the staff,” she explains. “It’s fresh and new every single month, without bringing any production crew in. We’re in-house with our cameras—our phones.” She adds, “My video likes and engagements have quadrupled from what I’d get on a normal post. Video works. People want to hear from you—just the real you, in jeans, sitting at your desk.”
The Need for Speed, and Convenience
You’ve undoubtedly noticed the U.S. Postal Service delivering packages on Sundays. Call it the Amazon Effect. Modern consumers want shipping fast, and they’re often willing to pay for the privilege. A holiday survey commissioned by Deloitte and released in December 2016 found that the number of consumers who consider three- to four-day shipping to be “fast” is on the decline. Consumers are quickly becoming accustomed to push-button/get-it-now services like Amazon Dash, Alexa, Siri and UberEATS that offer near-instant gratification; or the short turnaround times provided by companies like Zappos and Amazon Prime, who deliver within an average of 24 to 48 hours.
“Speedier deliveries and an overall faster customer experience is something we’re putting a lot of thought into,” says Mike Edwards, Vice President of Global Digital Services and Channel Strategy at Amway. “As one market example, Amway India is currently working on a one-on-one consumer connect strategy that enables us to deliver products within one day in Amway India’s top 20 cities. The model is run like this: one minute for the customer to register to buy Amway products, an hour to get in touch with an Amway Business Owner who is selling the products, and one day to deliver the products to the customer. For this type of model to work, the consumer experience with the brand is critical. You cannot have Amway delivering in 10 days while other e-commerce companies are delivering in two days or less.”
In the months and years ahead, our channel is likely to face increased pressure to deliver faster and better.
“What direct selling has traditionally relied on is that the direct selling community—people who are vested—will put up with things that regular consumers would not. Today, that’s completely different,” says Lori Bush, retired CEO of Rodan + Fields and an advisor, speaker and consultant. “If you’re going to convince me that I should be part of this business model, I know what my expectations are as a customer. I want to know that I can deliver those same expectations to the people I bring into the business.”
Subscription “boxes,” which contain products from makeup, jewelry and razors to food, cleaning supplies and even mysteries, are a hot trend, capitalizing on the consumer’s desire for novelty, both from a packaging and products standpoint. The attraction is that these companies are curating or hand-selecting specific items that are of interest to consumers, based on the answers they provide to questions about their preferences. Some direct sales companies, like Amway, have been examining how to leverage this model, while some, like Traci Lynn Jewelry, already are doing it successfully.
There’s one caveat when it comes to these subscription services, though. “What comes in those boxes has to delight,” Bush says. “I think it’s a brilliant approach, though I’m not seeing a lot of it in direct selling yet. But it makes a lot of sense. If you’re going to set up these mixed box programs, though, you’re going to have to really rock at processing returns, and that could be what gets in the way. It’s a wonderful consumer experience if it’s done right.”
First of all, what is artificial intelligence? In a nutshell, the term describes the science of creating intelligent computers that respond like humans. When you call an airline to make a reservation and you’re walked through a series of voice-commanded steps before you’re delivered to a live customer service representative, that’s AI in perhaps its most basic form. The potential applications of such technology could be significant for the direct selling channel, particularly in the customer service arena. However, given that our channel has set the bar high for customer service, there’s no margin for error here. It remains to be seen whether AI could assume this function, at least in part.
Ever heard of chatbots? Imagine a chatty, conversational exchange through text messages, much like you’d have with a good friend or family member who knows you well. According to Chatbots magazine, there are two types of chatbots. The first one is based on simple commands, and it’s only as smart as it’s programmed to be. If it asks you a question and you don’t give an exact answer, it won’t know how to respond. The second variety is based on more sophisticated machine learning. You can give an approximate answer, and the chatbot is smart enough to figure out what you meant. This chatbot actually becomes “smarter” over time; it remembers your previous conversations and stores information about you.
If all of this sounds a bit futuristic, well, it is, but this form of technology already is more common than you might think. In fact, for the first time, messaging app use is beginning to pull ahead of social network use, according to Business Insider. In an online survey of more than 1,000 18-to-65-year-old U.S. consumers, 44 percent said that if the company could get the experience “right” (read: accurate), they’d prefer to communicate with a chatbot versus a human.
The customer service potential for chatbots comes from the fact that they work around the clock. If you’ve got a worldwide presence spanning multiple time zones, and/or if you simply want to be able to service those distributors or customers who are working late-night hours, chatbots could offer a solution.
Add to this that consultants are already putting in a lot of hours recruiting people and working to meet volume requirements and make commission levels. To meet the direct selling level of service, AI can help fill the gaps, shortening response times and enhancing the customer experience. “This is where I think a lot of things are going because people have expectations of service levels that can’t be met with humans,” says Bush. “You just can’t hire enough bodies and train them well enough to provide that continuous level of service.”
For now, direct selling companies are keeping an eye on the trend and considering its possible applications. “I think it’s clear that AI is going to affect every business moving forward,” says Amway’s Edwards. “The advancements occurring in AI are really staggering. We’re definitely staying on top of computer science trends and thinking about how we can embrace AI advancements to help build efficiencies in our business. It’s not easy to make bold forecasts around AI, but I can comfortably say that each year the impact on direct selling will become more pronounced—just like it will be for every business.”
The question still remains whether or not it is simply a trend that will pass. Are there other ways to provide personal service and keep up with the competition without AI? Outsourcing customer service remains an option, which can save money as well as keep a company competitive in different markets.
Virtual reality, or VR, refers to computer-generated, three-dimensional images with which you can interact in a seemingly real way with the use of special equipment like a headset. VR could certainly prove useful for distributors because, as convenient as it is to research or shop online, the computer screen remains a barrier. Because we’re a channel that prides itself on “try before you buy,” we’re faced with the challenge of how to bridge the gap between digital and physical. This technology, once mainstream, could possibly be used to help provide customers with a more realistic product sampling or viewing experience. LegalShield’s Bell calls VR “the ultimate test drive,” and it remains to be seen how, and if, it could find its place in a selling situation.
Amway currently is using VR to draw visibility for its Corporate Social Responsibility initiatives, a means of bringing authenticity to the brand. In 2016, the company sent a camera crew to Lusaka, Zambia, where more than half the population lives in poverty. Amway’s Nutrilite Power of 5 Campaign has been working with Non-Governmental Organizations (NGOs) in Zambia since 2011 to fight against chronic malnutrition. VR video captured the program in action. “Interestingly, Nielsen recently reported that 48 percent of consumers who viewed VR video content from a nonprofit were more likely to donate afterward, so we hope that new ways of using VR could help spread awareness of the Power of 5 campaign’s efforts to fight childhood malnutrition,” Edwards says.
An article published by Harvard Business Review (“Online Retailers Should Care More About the Post-Purchase Experience”; Amit Sharma; May 24, 2016) states that only 16 percent of companies are focused on customer retention, despite the knowledge that it’s far more expensive to find new customers than it is to retain them. This gap represents a tremendous opportunity for the direct selling channel. The post-purchase experience, of course, is among our key strengths and points of difference. And because consumers are hungry for better service in our tech-driven world, direct selling companies would be wise to draw more attention to what we do best.
In your standard retail transaction, you purchase a product, then never hear from the retailer again outside of the occasional email offers you receive. Order online, and the retailer might send your package via FedEx or UPS, which is a fast but hardly personalized means of delivery. Savvy retailers, however, are realizing that they’re leaving money on the table if they don’t capitalize on the opportunity to build customer relationships. Retention is achieved by ensuring a consistent experience across channels, and from the moment the consumer presses the “submit your order” button. For example, a visually appealing, brand-consistent email with a fun, conversational message can help reinforce the customer’s decision to purchase. The best post-purchase messages even lay the groundwork for the customer’s next purchase, with a special offer or product suggestion. Or perhaps they encourage the customer to leave a review or follow them on social media—anything to keep them engaged.
While consumers are focusing more and more on “self-seeking, self help or self-service,” according to Bell, personal interaction with a direct selling company could go a long way toward building the trust they so eagerly seek when making product purchases, and at the same time establish “the transference of belief in a product/service” for the company. For consumers, “the foundation is distrust of traditional means of learning about products (advertising or shelf space).” What our channel may need to pay close attention to is that the Internet is learning quickly and presenting more transparency, he says.
Still, the direct selling channel can build upon its foundation of personalized service, using technology to amplify what we already do so well. “We have this amazing opportunity to compete by having our sales consultants be a part of the experience in a way that you can’t compete or duplicate with online shopping,” says Thirty-One Gifts Founder, President and CEO Cindy Monroe. “We know that we have to be faster and rethink our digital experience for our customers, but we’re doing that with our sales field being a part of that experience.”
How can direct sellers further capitalize on consumers’ desire for a post-purchase experience? “Compensate distributors more for retention and repeat sales than for first sales,” Bell suggests. “In addition, set up referral programs, recognizing that everyone doesn’t want to be a distributor, but everyone likes a reward.”
As part of its rebranding effort, Take Shape For Life has taken a deep dive into the experience each of its tools delivers, whether it’s a Health Coach using the back office, or a customer receiving her first food order. “All of those have been given a high level of importance, because that’s where you really bring value and create customer retention and satisfaction,” says President Ameli. “The experience still has to be built into it, so that people feel that we care about them, even if it’s not a person talking to them on the phone.
“Even the language and the experience flow needs to show that. It’s not just about efficiency. We talk about the soul of the brand and the soul of the company showing up in all the technology touchpoints. Even though you’re interfacing with the technology, you still feel that the brand is connecting with you.” To support that philosophy, OPTAVIA has created a new Experience and Support department designed to ensure a seamless experience for its community of Health Coaches and their clients, which, Ameli believes, will have a direct and positive impact on retention. The overriding objective for the company’s transition to OPTAVIA is the development and support of Health Coaches who will guide clients through not just short-term weight loss, but a total life transformation.
For any direct selling company grappling with how to keep up or even get ahead of the curve with these evolving consumer trends, Traci Lynn has a piece of advice: “If we go back to the basics, a lot of times we’ll find some great answers. The reason I’m still standing today is because I’ve got a field that believes in me and trusts me. We use technology to our benefit, but at the core of who we are, we still want human connection.”