May 01, 2011

Cover Story

Is Technology Changing Direct Selling? App-solutely!


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DSN May issue cover

by DSN Staff

Technology is greatly impacting the direct selling experience—from how companies present their messages and products to how distributors employ new tools, to how consumers react to the speed of delivery on services. In the first of our three-part series, we look at how new technologies are changing the way direct sellers work and sell.
Coming in July: The Customer Service Experience
Coming in September: The Social Media Phenomenon

Technology: Best of Times, Most Challenging of Times for Direct Sellers

With the advent of the first personal computers and creation of the World Wide Web, there was great concern on the part of some that we would become a society bogged down by information overload.

What a difference a few decades makes.

Today, the abundance of information at our fingertips is considered a blessing by many of those previous detractors. Our thinking toward technology has evolved … because technology has evolved to bring a global community closer together. The mass of confusion that once “overloaded” our brains is now a helpful aggregation of thoughts and ideas that allows us to be smarter and to make smarter decisions.

For the direct selling industry, the access to information and the technology bringing it are providing both the best of times and the most challenging of times. While companies can more quickly and easily communicate with the global community, they can also find that the information glut allows customers to switch vendors more regularly than in the past; younger consumers, in particular, go where the information takes them.

The pervasive use of new technology tools presents new and different challenges for companies, from brand protection and corporate reputation to communication strategies. Sites like Google and Bing have changed everything. While companies can more easily get their brands and messages out to the public, they can more easily be derailed by criticisms or attacks that manage to find their way to the top of search engine results.
In addition to threats on a company’s reputation, new competitive threats have emerged. New channels have taken advantage of the game-changing uses of technology to reach consumers, causing declining revenues for retailers and direct sellers alike.

Ten years ago, the e-commerce channel of distribution did not exist. Today, it is a very sophisticated model that is changing the competitive landscape. The tools of e-commerce are rapidly becoming the new benchmarks of excellence, especially in the area of customer service. It is estimated that the e-commerce channel will reach $300 billion by the end of 2012 in the United States alone.

Mobile e-commerce, in particular, will assume greater importance for direct sales. Customers may become increasingly intolerant of brands that don’t have easy means of mobile commerce. Some companies are driving technologies that aim to replace a customer’s wallet with their mobile device. Mature brands may have even more pressure in the foreseable future to accommodate mobile payments and smooth mobile shopping experiences.

The good news is that every industry has competitive threats. If direct selling companies have solid foundational businesses with value-driven products and services—and if they employ new technologies to augment the personal relationships with consumers that the industry has been built on—they should be able to withstand these threats.

The New Business Model

The Internet has enabled a new form of business model where consumers have instant access to an endless source of information; therefore, the sharing of information and education in a personalized manner is no longer a competitive advantage.

The change in the way relationships are formed and nurtured is different and far reaching. Relationships go beyond the physical with the intervention of the Internet. Relationships are no longer dependent upon physical geographical reach. Internet relationships allow people to keep in touch 24/7, accelerating the speed of updates and information transfer (positively and negatively) and impacting the pace of life.

For direct sellers, the evolving role of the sales representative must be considered. There is not much value added by a salesperson who simply makes calls to provide product information. Positive new tools for direct sellers must be leveraged effectively by companies, and the salesforce in particular. The overall industry is in its formative stage of identifying how best to use these new tools, and many distributors may be distracted by them, believing that business can be built with these Internet tools alone.

New technology has also created a shift in power from supplier to consumer. Consumers are in control today as a result of the easy access to information. Today’s consumer is an “info-empowered” consumer, negating a lot of the competitive advantage of personal information sharing. This may be impacting the value of personal interaction from a consumer perspective and the productivity of direct sellers.

The manner in which customer service has evolved in most businesses incorporates a greater use of technology versus actual interaction with the customer. When consumers and distributors have to go through layers of technology in order to resolve issues, there may be growing negative perceptions of the direct selling customer/distributor experience.

Looking Forward

Direct sales has always thrived on condensing messages into highly portable and professional storytelling mediums, and conducting the business-end with equally well-constructed business tools. So new technologies will continue to change the direct selling experience. It’s unavoidable.

Mobile devices will continue to evolve and enter the marketplace. Data networks will continue to get faster and achieve greater accessibility and availability. Consumer habits will continue to be influenced by the changing landscape of mobile web browsing technology (especially with the wave of new tablets), as will their expectations and demand. E-commerce on mobile platforms will inevitably develop along with the proliferation of mobile devices, and the direct selling industry can’t be left behind.

Distributors are already looking for technology that can augment their historical dependency on physical media. Salespeople and other road warriors across industries are turning to tablets such as the iPad to not only replace their laptops, but also to replace their order book, dayplanner and sample case (depending on their product category).

As the broader world is adopting these technologies, direct selling representatives are experimenting with social media, increased use of web-based multimedia prospecting tools (online video, audio), as well as training for their organizations, which end up being consumed on phones, iPods and iPads. Distributors are experimenting with these mediums, and are doubtless already searching the various app-stores for mobile tools they can use to augment their in-person and online business efforts. In the absence of native apps (and in addition to them), it remains likely that a company’s website and e-commerce site will be sought-after mobile resources.

Social sites like Facebook, which now has over 600 million participants, will continue to attract direct sellers who can easily connect with people anywhere, anytime. New and portable hardware, from smartphones to iPads, are “game changers” with respect to how consumers expect to be presented to and engaged. These tools will continue to impact the perceptions of prospective distributors; therefore, company research and product and tool development must keep pace, otherwise direct selling companies may not be perceived as being in tune with changing expectations and behaviors.

Technology, the Enabler

The new technology that has arrived over the last few years has helped many direct selling companies overcome boundaries of distance, equip their distributors with tools that help them more quickly address the needs of consumers—including the much sought-after younger generation—and, ultimately, add to their bottom line.

The difficulty for some companies is in understanding what is “trend” and what is “change,” as it relates to technology. It’s the difference between knowing what will help provide a competitive advantage and what will detract from the very core of direct selling: the personal experience.

Technology is, after all, an enabler of the best as well as worst practices. Direct selling can exploit the technology or be exploited by it. If a company makes the critical choice of being fundamentally sound, well-funded and able to build the business with determination, the technologies available will be adaptable and friendly to the enterprise. However, if quick success is the name of the game, the technology could facilitate rapid death.