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December 01, 2009

Cover Story

Direct Selling and Decision Making: Listening to Your Field Leaders

by Barbara Seale


Direct Selling and Decision Making

It’s a spin on the well-known commercial. Sales? Can’t do without ’em. Recruiting? It’s the future of the business. Informed, experienced opinions? Priceless.

Company executives regularly turn to field leaders for insights on a variety of topics, ranging from promotions and incentives to marketing, and, of course, compensation.

“Team National has been using field leadership committees since our inception,” recalls Angela Loehr Chrysler, President and CEO of National Companies. “My father, our founder, was always passionate about that. We value them as business partners and use them in pretty much every aspect of our business. There are very few decisions we make that don’t affect our sales field.”

The moniker “Team National” actually grew from the company’s beliefs and management style that embrace not just corporate employees but distributors as part of the whole team. Almost 200 field leaders—typically couples who form a distributorship—formally participate in advisory councils.

Direct Selling and Decision Making Listening to Your Field LeadersExperienced Advice

MonaVie solicits the opinions of a small, rotating group of its Black Diamond distributors and above during conference calls that take place about every six weeks.

“Some of our best ideas come from leaders in the field,” says MonaVie Founder, Chairman and CEO Dallin Larsen. “I like to say that no major decision regarding the company’s direction is made without consulting with our District Advisory Board.” Larsen purposely keeps the group at around 10 members to ensure that everyone is heard. And he chooses the board’s members carefully. “I want to surround myself with people who have been through the various seasons of network marketing so they can bring differing perspectives and sound advice to the table.”

Top executives are often directly involved with the field-leadership discussions. Particularly for an international company, that can translate into long hours.“It’s a time zone challenge to have conferences with leaders from all over the world, but I’m personally involved as often as I can be,” says Greg Provenzano, President & Co-Founder of telecommunications direct seller ACN, which operates in 20 countries spanning  North America, Europe, Australia and New Zealand. Provenzano includes about 25 top producers in the group called the Circle of Champions, which has biweekly interactive phone calls. “That helps me keep the pulse of the organization and get real-time feedback so we don’t have to wait for market conditions to change before we’re alerted. It’s important to interact as often as we can without taking up too much time for either them or us.”

International company Tahitian Noni has established President’s Councils in each of its international regions—North America, Japan, Southeast Asia and Europe. Each council consists of between four and 12 distributorships. The company plans to create an additional council for South America in 2010.

“Normally, the members of our President’s team are selected from our top leaders and highest titles,” explains Daniel Hillstrom, Managing Director, U.S. Sales. “Depending on the maturity and size of the market, we will select the fastest- growing and -producing distributors. The councils are made up of the most active and growing leaders.” Each council has monthly conference calls, plus informal conversations with individual members.

Take Shape for Life CEO Michael McDevitt says that the company works hard to create a single, unified management system that includes both the field and corporate support organizations. It has a council of field leaders that comes to TSFL’s offices for two days four times a year to focus on field and corporate issues. In addition, every other week, an executive meeting gathers field and corporate leaders together by phone or in person.

“With this system, there’s really just a central flow of leadership, prioritization and culture,” McDevitt notes. “That’s allowed us to really have a level of alignment that is extremely powerful.”

Direct Selling and Decision Making Listening to Your Field LeadersQuantity and Quality Time

At candle-maker Gold Canyon, some 15 top demonstrators participate in a monthly teleconference as well as one-on-one discussions during the month. Company President Curt Waisath makes a point of spending an hour a month with each leader, as well. Chief Marketing Officer Michael Norris says that the relaxed discussions provide the company with a lot of good information from the perspective of top leaders. But the company makes a point of also sampling distributors at lower levels of the organization.

“We don’t believe that only one forum is a good enough way for you to get a true understanding of what’s happening in the field,” he says. “When we’re bouncing around ideas for promotions, we have to expand the discussion to other groups, not only leadership. That gives you a better perspective before a launch.”

Gold Canyon values demonstrator input so much that it even devotes an entire day of its convention to focus groups. While the groups focus primarily on products, other topics are included in the discussion, too. Any distributor attending the convention can sign up to be in one of the groups, which are limited to about 20 people each.

“They provide a lot of guidance about what we should be doing in the future,” Norris says. “We can probe them about ideas we’re having, and they provide feedback.”

Gold Canyon has considered starting a marketing steering committee of demonstrators, but it hasn’t resolved how to keep such a committee’s perspective fresh.

“If you rotate too much, you don’t have continuity,” Norris notes. “If you don’t rotate, you get stale.”

“I want to surround myself with people who have been through the various seasons of network marketing so they can bring differing perspectives and sound advice to the table.”
—Dallin Larsen, Founder, MonaVie

Balancing Membership

National Companies has solved the rotation issue by basing council participation on distributor achievement, making it a form of recognition. When a distributor reaches Platinum level—which is based on business building—the distributorship automatically becomes part of the company’s Chairman’s Circle. Double Platinums make up the President’s Advisory Council.

“That has served us well because both committees are ever growing,” Loehr Chrysler says. “Without taking anything away from anyone, we’re always adding fresh blood and participants.”

The exception to that rule is the Executive Committee, which is made up of four couples and one individual, who are all chosen by the company’s top executive.

“The same folks my dad chose are still on the committee today. We haven’t changed or rotated the committee, though we have thought about the idea,” Loehr Chrysler says. “I literally took several weeks to review the idea and to discuss it with various leaders. I came full circle. Because the dynamics of that committee work so well, and because each individual was chosen because of their different locations, backgrounds and ages, each provides a different perspective. They have relationships and work well together. If we rotated membership, it would change the dynamic until we got back to our comfort level.”

Tahitian Noni blends rotation with committee tenure. It rotates memberships each year to ensure that the company is keeping a diverse and broad representation of its field leadership, but it asks some people to serve on its advisory council for multiple years. And its communications channels extend beyond councils.

“As a global and large organization, our local and regional managers all have key influencer groups that they work with on a regular basis to get input from the field,” Hillstrom notes. “We also have a Web site where any distributor can submit questions, suggestions or feedback directly to the president of our company.”

Members of Take Shape for Life’s leadership council serve for a two-year rotation, which begins after a “trial meeting” that introduces distributors to the process. They’ve found that the period lets distributors get their feet wet and understand how the council works so that they can provide meaningful feedback and be involved with the execution of plans during their term. TSFL believes that the relatively short period helps keep ideas fresh while not taking distributors away from their businesses for too long.

A key element of the TSFL communication process is a field-led organization called Team Global, made up of elected distributors who have achieved the second-to-highest rank in its organization. Among its responsibilities is keeping a pulse on the overall business and identifying rising stars. When the group gets together with corporate executives quarterly, they bring concerns that have been raised in their downlines.

“Definitely, it’s an expense to the business,” McDevitt says, “but it’s one that’s shown to have a return on investment that has been significant, both in the ability to have better flow of communication and better speed of the execution in the business. Now we have just so much more trust among the corporation and the field.”

Distilling Advice

MonaVie also makes sure its process enables distributors from around the globe to participate.

 “We try to empower our general managers in international markets,” Larsen says. “Each has their own district advisory board made up of people they trust in their local market. Then I invite the GMs to listen in on my district advisory board of director calls. They provide the advice they’re getting from their boards. North America and each market have district advisory boards that deal with issues germane to those markets.”

Larsen leaves his options open for changing the membership of the councils.

“Every year, I’ll look at it and ask myself, Am I comfortable with the board? Is it serving the greater good of the company and distributors? More often than not, they’re one and the same. You want to make sure you have good, sound people there.” Larsen notes that the council engages in healthy debate, not always agreeing. But, in the end, the buck stops with him. “I can think of some times when we’ve been at an impasse and haven’t had complete agreement, but I’ve made a final decision. I can’t think of a time when the board hasn’t backed me up.”

The effectiveness of each council in influencing company decision making, and the rapport between the leaders and executives, boils down to a single factor: trust.

ACN makes eligibility for membership in its Circle of Champions an earned position based on production, but the final choices are at the discretion of the company’s co-founders.

“We as co-founders look at each individual, making sure they’re operating their business with integrity,” Provenzano says. “The members of the Circle of Champions are an extension of the co-founders.”

Relationships Built on Trust

In the end, the effectiveness of each council in influencing company decision making and the rapport between the leaders and executives boils down to a single factor: trust.

“Because we interact so often and have such great rapport with our leaders, if there came a time when we had to make a difficult decision, they would understand our heart as a company, and that goes a long way,” Provenzano says. “This is a  relationship business at every level. If relationships are broken, whether from executives to leaders, or from leaders to the people in the field, or between the people in the field to their prospects, it just doesn’t work.”

Distributor leaders affect decision making in a wide variety of important ways that contribute to the company’s bottom line and also reflect its heart.

Gold Canyon recently revamped its Web site and its online shopping cart, thanks to field feedback. Leaders had reported that customers who tried to shop directly from the Web site were encountering problems.

“We got feedback saying that it was difficult for someone who isn’t a demonstrator to actually shop through the Web site,” Norris explains. “Within six months, we gave them a brand- new Web site and shopping cart. Their feedback has been very positive since then.”

Key Issue: Compensation

The most frequently mentioned business decision that distributors impact is compensation. Their input influences everything from monthly promotions and incentives to the structure of the plan itself. MonaVie recently changed the structure of its compensation plan based on distributor comments, reducing the number of legs that distributorships were required to build and actually making the business easier to build.

Tahitian Noni used distributor advice to make a major addition to its compensation plan, and then its advisory councils worked hand in hand with the company to roll out the program and train distributors on it.

Gold Canyon’s Norris emphasizes that when companies solicit and receive feedback, they’re wise to act on it or to make a point of explaining why they don’t implement a recommendation. Otherwise, they lose distributor trust.

MonaVie’s Larsen agrees, and he emphasizes that the relationship between the company and field leaders is a partnership.

“The degree to which you can build a partnership with leadership will be the degree to which a company can grow,” he says. “It’s about building trust that decisions are not made behind closed doors. Distributors know that they can only do so much. They can show the product and present the opportunity in an exceptional manner. But a certain amount of the future is out of their hands. That’s entrusted to the corporate office and its management. So it’s important that we listen to distributors.”

TSFL’s McDevitt also concurs, suggesting that his company’s current growth is a direct result of the close working relationship between corporate and field leaders. The company’s two-day sessions are punctuated by fun as well as business.

“We’re working hard for eight hours a day, but at the same time, we’ve got such a great culture among our corporate and field together that we have a lot of fun,” he says. “When the day is over, we get out, we go to dinner, we catch up, we hear about each other’s families and friends. We’re still lucky enough that although we are a growing business, we try to operate culturally as a small business, and we’ve been able to do that.”

Distributor advice is so important to company decision making that top executives often devote hours each week to it. National Companies’ Chrysler is so sold on getting field leader counsel that she participates in every advisory panel and makes a point of meeting distributors and soliciting their opinion at every opportunity.

“You can manage your time well enough that you can make a few phone calls.” She adds, “There is never a downside to running something past a committee and getting their input on how to handle something. It’s part of the process and part of getting their buy-in. Distributor advice goes hand in hand with growth. If they feel valued, a part of the team, then they’ll grow their business faster, which grows the bottom line faster. But you have to know that it’s going to take time. As an executive, you must delegate other aspects of what you can do, knowing that you can’t delegate building relationships with the sales field.”

In the Beginning . . .

If distributor input is important to an established company, just imagine how critical it has to be as a new company is getting off the ground.

Direct Selling News spoke with executives from three young companies who all said that distributor counsel was essential to their early success. Moreover, it started even before the company launched.

Although he had some 15 years of experience in direct selling, Ambit Energy Chief Marketing Officer Chris Chambless didn’t hesitate to solicit advice from the company’s early-adopter distributors.

“I definitely had a couple of my friends who joined me whose skills and opinions I respect. I spent a lot of time talking with them as we were developing the compensation plan and business presentation,” Chambless says. “One of the things about starting a business from scratch—the number of people you have to draw from is very small. Brian McClure, who is one of our founding national consultants, joined us very early on. He was a person I relied on to bounce ideas and strategy off of.” He adds, “A business has to reflect the personality of its founders but also its field leaders. If you don’t do that, then you limit your success. You have to be able to allow field leaders to tell the story that they’re part of.”

Even something as foundational as the company’s compensation plan demanded the distributor touch, Chambless believed. When it was being developed in 2006, Ambit’s plan was based on the comp plan he helped develop at a different company. As a field leader from that same company, McClure had experience with the plan.

“We spent a lot of time trying to decide the requirements that were good for the company and also allowed people to achieve pin levels,” he recalls. “Ultimately, that’s been a key factor in our success. Thirty percent of people who join our business achieve that first pin level. That’s off the charts compared to what it was at my previous company. It’s been a differentiator for the number who stick to their business. We keep a lot of people because we made some good decisions early on.”

At less than a year old, wellness company EIRO Research is off to a fast start, thanks in part to the early advice of its field leaders. Even before its “pre-launch,” distributors were active on the ground floor. They were involved in the design of the compensation plan and business presentation, as well as marketing materials.

EIRO CEO Chris Hausman recognized that while his strong business background was a plus, he lacked experience in network marketing. So he brought in key field leaders and other experienced direct selling industry executives.

“Essentially, our feeling is that the best thing we can do to design a compensation plan or set up a promotion is to get out of the way and let key field leaders and experienced people handle it,” he says. “We want experts designing them, specifically to support the field. [CFO] Joe [O’Connor] and I understand that in direct selling, it is critical that the corporate office be aligned behind the field and associates. There are two types of corporate mentalities. One sees the sales team as being there to support the home office. The other is where the corporate office is there to support the sales team. We’re the latter.”

He noted that the philosophy has already proven itself. When EIRO’s management designed a promotion and then introduced it to the field, it fell flat.

“We went back, consulted with our field leadership, redesigned the promotion, and it took off,” Hausman says. “That perfectly illustrates that field leaders know what kind of promotions and activities will drive the right behavior and support the field overall.”

Four-year-old ViSalus had an even more dramatic experience. Its top distributors rotate through what the company calls Mastermind Sessions, which meet for a full day about once a month. As many as 20 distributors who are top producers, loyal to the company’s mission and who bring perspective and good input, are invited to participate. During the dialog at several Mastermind Sessions, distributors and executives kicked around the idea of doing a weight-loss challenge that featured a money-back guarantee. Over time, the concept evolved into the strategy, message and marketing that backs up Body by Vi.

“Our entire company strategy and message shifted because of what started out as an idea that evolved,” says ViSalus Chief Marketing Officer Blake Mallen. “Ever since the launch of the challenge, our growth has been through the roof. We launched the challenge in July, and our business has grown in all categories ever since then.”