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May 01, 2016

Cover Story

Direct Selling: Our Unique Position in the YouEconomy

by Courtney Roush

Click here to order the May 2016 issue in which this article appeared or click here to download it to your mobile device.

A seismic shift is occurring right now in the American workplace. This shift is happening; there is no stopping it, and the impacts are not yet fully imaginable. The era in which employees invested lifetime tenure at a single company is essentially extinct. It used to be that you’d graduate college, find employment immediately after graduation, do your job well and rest easy that you had an insurance policy of sorts—a financial safety net that would carry you and your family for decades. You’d earn a promotion if you worked hard enough, and would receive the occasional perk over the years. The ultimate symbols of your achievement: the gold watch and pension plan upon your retirement.

Through a combination of changing economic conditions, corporate layoffs, employee ambition and evolving attitudes, lifetime employment became far less common. Downsizing forced employees to re-enter the job market as candidates, an experience that exposed them to new corporate cultures and different ideas. Some discovered jobs they liked better.

Among those who were spared a pink slip, morale began to decline as they watched longtime colleagues exit the building after years of service. Those layoff survivors were now expected to do more work for the same pay, or less. Employees’ professional goals were muffled in favor of bottom-line profits.

At the same time, we began to see a creep in the traditional corporate workday. The standard 9-to-5 schedule stretched to 8-to-5, then 8-to-6 and beyond. Commutes became longer as more families moved to the suburbs to avoid rising real estate costs. Technology tethered employees to their mobile devices and essentially put them on call 24 hours a day. Employee burnout was the inevitable result.

All of these factors have inspired some bold thinking among the American workforce. While some might say “new” bold thinking, we know that the current redefining of what it means to work is drawing upon the ideas and values that are fundamental to direct selling. Indeed, the market dynamics that are being celebrated today as the “Gig” or “Shared Economy” in which entrepreneurs have patched together various jobs, or “gigs,” based on their specific skill sets, draws heavily from the direct selling model of distribution.

Those involved in Uber, TaskRabbit, AirBnB, Rover and the myriad of other companies popping up are not traditional employees or temp workers but rather independent contractors. Given the potential this phenomenon has to change the way millions of Americans work—financial software company Intuit estimates that 40 percent of Americans would be performing some kind of freelance work by 2020—and its focus on the needs of the individual versus the corporation, we think the term “YouEconomy” is the most fitting descriptor.

As the YouEconomy continues to reshape the American marketplace, we as direct selling leaders have the opportunity to promote greater understanding of our channel and the role it can play in this movement toward more independence. New hip and modern brands are appearing on the would-be entrepreneur’s horizon every morning, each one competing, not just for customers, but for the independent contractor that powers the business. Each new opportunity presents viable options to every person who might consider your company as the chosen venue for their time, attention, energy and engagement. We must ensure we are conveying the many benefits of direct selling opportunities over the trendy alternatives. In fact, we must strive to be the hot alternative.

For anyone considering a more entrepreneurial lifestyle, this channel undoubtedly offers a slew of additional opportunities that make it one of the best choices. Today’s critical question for direct selling executives is simple: Is your company distinguishing itself as one of the most powerful avenues within the YouEconomy? If the answer is no, then you might be losing out even though you’re holding a winning hand.

Financial software company Intuit estimates that 40 percent of Americans will be performing some kind of freelance work by 2020.

Building Long-Term Income

There are several powerful differentiators between the rest of the YouEconomy opportunities and direct selling. One lies in the trading of time and assets for money. The contingent workers who represent most YouEconomy brands are making a direct exchange—their time and/or personal assets (car, home or other supplies) for a one-time swap of money. These companies provide a platform (in most cases, a mobile app) that connects service providers with customers who seek those services. They’re middlemen, so to speak. The workers who represent these brands realize almost immediate financial rewards; for example, a driver for Uber may spend four hours driving customers around today, and he or she will be paid for that time. The worker/customer relationship is likely to be a brief, transactional one.

By contrast, an individual can generate both near-term income from a new direct sales business, as well as a longer-term foundation for a meaningful income stream. Though this aspect does require a bit of patience and persistence, the rewards for that investment of time and effort can be greater than anything that can be found elsewhere in the YouEconomy: repeat business and residual income that works for the independent contractors even when they are not trading time or an asset.

YouEconomy brands are serving an important role in our marketplace. But how strongly tied are those contingent workers to the companies they represent?

This aspect of building a scalable business that transcends a mere point-of-sale transaction is one of the biggest draws of our channel. That’s also where direct selling stands alone in the YouEconomy. Automatic customer reorders plus team members’ sales and recruiting efforts all contribute to the solid foundation of a business that can sustain a consultant, earning her continued commissions, bonuses, trips, prizes and other recognition for years to come. Again, the focus is on the long term—not a quick sale. The more time and effort a consultant invests in her relationships with her customers and team members, the better the odds of developing a strong direct sales business with deep roots and significant residual income. With the emphasis on relationship-building, those strong customer ties result in longevity in direct sales.

A Culture of Community

Another differentiator within the YouEconomy opportunity of direct selling is the sense of community and culture that develops in and among the salesforce and in and among their customers. This community feel and engagement is akin to what employees may feel when they are engaged at work, and something that is often sacrificed when one joins the YouEconomy.

The rewards for the investment of time and effort in direct selling can be greater than anything you could find elsewhere in the YouEconomy: a broad customer base, repeat business, residual income, recognition and, above all, personal development.

The Society for Human Resource Management commissioned a survey of 600 employees in November 2014. The results, published in a research report titled “Employee Job Satisfaction and Engagement: Optimizing Organizational Culture for Success,” revealed that there are several conditions under which engagement at work is more likely to occur. The top three: satisfaction with relationships they held with co-workers, satisfaction with the contribution of their work to the organization’s business goals, and the meaningfulness of the job. Indeed, identification with a purpose beyond one’s daily tasks is absolutely vital for employee retention. In those circumstances, work feels less like work and employees perform at a higher level, are more productive, experience less stress, and are simply happier. Employees who enjoy that connection to a larger corporate mission almost always work for a company that’s taken great care to build a solid culture that governs every decision. That culture is so pervasive that it builds a reserve of trust between employees and employer; employees are able to rest with the assurance that they work for a company with integrity.

Take a look around the YouEconomy landscape, and it becomes clear that most of these companies are a means for connecting product and service providers with interested consumers, usually via mobile technology. The entire economy depends upon strangers extending trust to one another for peer to peer transactions, and reliance upon referrals across that same peer network.

This foundational premise of today’s newer competitors has, of course, been the very fabric of direct selling for decades. Direct selling connects buyers and sellers through a network of trusted friends and acquaintances. These connections are made both online and offline and are forged between people who might otherwise never have been connected. The same tightknit culture that develops among friends, peers and trusted advisors also develops amidst the goods and services traded amongst those individuals. Direct sellers have always known this. The YouEconomy is now catching up.

In an environment in which faith in big corporations has waned, this decentralized new-world economy creates a sense of community in which peers become our trusted resource for information.

But how strongly tied are those non-direct selling contingent workers to the companies they represent? Do those companies recognize, reward and motivate their workers? Further, do those workers have the opportunity for advancement?

As all of us in the direct selling channel realize, the recipe for retention and sustained growth is creating a strong culture—a rallying cry, if you will—that forges loyalty among those who represent your brand.

With any independent business, there will be bumps in the road, at which point it’s vital to have a support system around you. A business owner who doesn’t have the benefit of a network, or who isn’t able to draw upon a greater purpose for her work, is more likely to lose her drive than someone with stronger ties to fellow representatives and a company that she knows has her back. 

Events serve as the cornerstone for motivating independent salesforce members, inspiring them and validating their decision to start a direct selling business. Within our channel are countless stories of consultants who, while sitting in the audience at one of those events, found themselves mesmerized during a salesforce leader’s speech. Many of those leaders began their journey with humble means and made the rise to the top through sheer determination and vision. For a representative to succeed, she has to see the journey beyond where she stands today, and that’s why attendance at company events is so important. It’s worth mentioning, too, that events typically offer professional training, recognition and product previews, which are all elements that can give direct sellers a leg up on their businesses.

On a more personal level, direct selling consultants have the benefit of other consultants within easy reach, in their respective networks and, often, in their communities. Regular meetings, phone calls and even social media all help reinforce those ties. And direct selling companies are known for maintaining close relationships with the independent salesforce members they serve; after all, without the salesforce, there would be no corporate jobs, and vice versa. That mutual support creates a family-like atmosphere that’s rare if not nonexistent within the broader YouEconomy, where it’s all too easy to be in a vacuum.

Personal Development

In this YouEconomy, success is entirely up to the individual. The very freedom that is offered away from the corporation also can be isolating if the individual does not seek community and personal opportunities on their own. Undertaking the journey of personal development is an absolute need within the YouEconomy. Yet, without being plugged into a group that also understands this need and makes it readily available, some members of the YouEconomy will falter in this area.

The opportunity for ongoing and systematic personal development is perhaps the most life-changing of all the differentiators that exist between direct selling and the rest of the YouEconomy opportunities. Opportunities for personal development are baked into the direct selling offering. From day one of any direct selling business, an independent consultant has full access to training and tools designed to help him share the products and, ultimately, the business opportunity. Everyone begins their journey at the same starting line, and the playing field is level. There is no discrimination by education, race, religion, age or any other factor. Expertise isn’t required, only passion.

Jim Rohn once said, “Effective communication is 20 percent what you know and 80 percent about how you feel about what you know.” As a channel, we have a tremendous opportunity to promote the wealth of personal development resources to which independent representatives are given access. Mobile technology has empowered direct sellers to invest in their personal development wherever they happen to be, whether it’s in the car between appointments or in the home office. Direct selling companies have taken great care to simplify this business and walk new consultants through this journey step by step. That path is well-worn by the consultants who traveled it before, and those veterans are an invaluable resource for newer salesforce members, with many of them traveling the country to inspire and motivate others.

Personal development is where the real magic of a direct sales business happens. Most people who begin a direct selling business are coming into the YouEconomy for the first time. They usually have little to no prior sales experience. They face the early roadblocks: the occasional no, the canceled order, the skepticism from family members or friends. It’s here that the road forks, and while some choose to remain focused on a long-term vision for their success, others can’t see beyond the short term. It’s the training that makes the difference here. It helps prevent the inevitable moments of discouragement from veering a consultant off course. There really is no finish line with direct sales—it’s an open-ended opportunity—and so the training never stops. Our channel serves it up every step of the way. The rewards for patience and determination are profound, including the personal satisfaction that comes from developing and nurturing a team and the transformation into a leader.

Unlike many other YouEconomy companies, we need never fear that technology will take over the direct selling industry. Instead, we’ve made room for its continued growth and evolution alongside the personalized customer service that continues to be our mainstay. 

Etsy, TaskRabbit, Society6 and other marketplaces are merely platforms for sellers; they do not provide the level of coaching, mentoring, encouragement and recognition that direct selling companies offer. These and other work opportunities in the YouEconomy are simply more flexible means to income generation than they are avenues for advancement. Direct selling, on the other hand, provides at every stage numerous opportunities for motivated individuals to stretch for the next rung on the ladder. No matter how high they climb, there’s always more to learn and achieve. And, of course, the beauty of this business is that distributors can’t reach the top without taking others with them. The opportunity for professional, personal and financial growth is exponential, as those team members in turn become mentors to their own team members. A direct sales business has the potential to be so much more than a financial stopgap. All of the ingredients are there for a representative to build and sustain a long-term, successful business and develop invaluable leadership skills good for a lifetime.

Our Channel Can Lead the Way

In our channel, we’ve been clear about the distinction between our corporate employees and the independent salesforce members who represent our brands. We’ve long defended ourselves against myths and allegations that sought to tarnish our reputation. We were pioneers of sorts, and that comes with the territory.

In our offering in the YouEconomy, we do not ask the sellers to bring extra rooms in their homes, or their cars, or their tools or any other asset. We supply everything they need and ask them to bring customers and invite them to leverage the material support we bring them. Our appeal as a channel is as broad as every consumer product and service imaginable—from household goods to beauty products; from health and wellness to essential services such as energy and broadband, and much more—all backed by support, training and proven systems. We are perfectly positioned to be the thought and action leaders in the YouEconomy.

We’re well aware that access to health insurance, a 401(k) and other perks would go a long way toward increasing salesforce attraction and retention. Those are challenges we’ve been mulling over as a channel for years, long before the YouEconomy came on the scene. However, now that these issues are garnering more mainstream attention, some important conversations are taking place, and the direct selling channel should play a leadership role in shaping those discussions.

While corporate America isn’t going anywhere, it’s undeniable that it has lost much of its appeal over the years, and that there are quite a few Americans who have decided it’s time to try something else. That fundamental shift has produced a question: What does it mean to be independent, and at what point is one really an employee?

In July 2015, David Weil of the U.S. Labor Department’s Labor and Wage division issued an opinion asserting that the majority of contingent workers were, in fact, employees under the Fair Labor Standards Act. The laws that define who’s who really haven’t changed over the past 60 years, according to Fortune reporter Anne Fisher in her article, “Does the U.S. Need New Rules for Workers in the Gig Economy?” But the advent of the YouEconomy and its subsequent momentum are raising some interesting questions.

The employee classification typically is determined by factors including whether work happens on the employer’s turf, whether the employer is providing the supplies used by its workforce, and the hours its workforce spends on the job. The worker versus employee classification is a critical distinction because companies must pay Social Security and Medicare taxes for employees, and adhere to state and federal laws that govern pay and hours. Employees also have the right to organize and bargain and are entitled to a minimum wage, overtime pay, unemployment insurance, workers compensation and civil rights protection.

While corporate America isn’t going anywhere, it’s undeniable that it’s lost some of its appeal over the years, and that there are quite a few Americans out there who have decided it’s time to try something else.

While Weil’s opinion isn’t law, it’s influential, raising what some consider to be a legitimate argument in the American marketplace, but especially within the YouEconomy. The name brands making news headlines today—the aforementioned Lyft, Uber and Rover, along with others like Thumbtack, Postmates, Instacart and Handy—perform the service of connecting, via an app, people who want a particular service and independent contractors who perform that service. Those contingent workers enjoy the freedom of working on a schedule of their choosing; however, there are aspects of their businesses that they don’t control, including fee caps, and they can be fired at the discretion of the companies they represent. The lines are becoming blurry, and that’s given rise to multiple lawsuits, most notably the class-action suit currently facing $40 billion giant Uber over the alleged misclassification of its workforce. The ability of the YouEconomy to continue to grow and prosper in large part depends upon resolving these lingering challenges, and that might include embracing—and absorbing the cost for—a broader definition of the term “employee.”

Direct selling companies can, and should, take a leadership role in these ongoing conversations. Collectively, direct selling represents over 18 million independent contractors in the U.S. alone and has established a network of political engagement at the local, state and national level. By participating in the discussions and leveraging our strengths, direct selling can support the growth of the YouEconomy, and thereby fuel a rise of entrepreneurship that can benefit us all.

Online magazine Shareable posted its top 10 predictions for the Sharing Economy in 2016. Among the experts featured in the article was Natalie Foster, Co-Founder of Peers, a company that helps independent workers obtain portable benefits, or benefits that follow an individual throughout the YouEconomy. “A growing conversation around portable benefits is looking to create a ‘flexicurity’ answer for the United States,” Foster says. “In 2016, we will see the conversation around portable benefits grow into demonstration projects, as companies, unions and non-profits will try different variations of what it would look like for independent workers to have access to the social safety net.”

Another aspect of the YouEconomy that those in direct selling need not fear is that technology will take over the channel. Instead, we’ve made room for its continued growth and evolution alongside the personalized customer service that continues to be our mainstay. We can give the opportunity seekers a new way of life and a new way of thinking. We prove over and over again that it’s possible to maintain uncompromising standards of service while providing the technology, options and convenience absolutely essential for success in the 21st century.

It’s up to every one of us to promote better understanding of direct selling, and that’s not just because we have the great potential to attract many more Americans seeking to join the YouEconomy—our channel can and should help shape many of the important discussions that continue to come out of this movement.