November 01, 2016
Keys to Success Part 3: Salesforce Retention
by Andrea Tortora
She said yes!
A feeling of exhilaration pulses through both sponsor and new recruit when someone first joins a direct selling business opportunity. There is the excitement of a new adventure and optimism of future success, and both parties are in high spirits, ready to passionately carry their message out into the world. But fear and doubt, or even just a general sense of ennui, can set in quickly and put a halt to a distributor’s new business venture, sometimes even before the starter kit arrives. When quitting the business is as simple as deciding not to share the product anymore, not to invest more time, not to face fear of rejection, motivating people to persevere becomes an essential component of success.
The Direct Selling News team has been researching strategies used by leading companies in three key drivers of the channel. In Part 1, we focused on customer acquisition. In Part 2, we explored techniques for recruiting and onboarding new distributors. For our third and final part, we studied methods for retaining those individuals as members of the independent salesforce. This research included reviewing the websites and key marketing materials for the direct selling companies experiencing the fastest growth in the U.S. market, as well as conducting in-depth interviews with company executives, researchers and other thought leaders.
What we found is both easy to describe and difficult to execute. Companies retain direct sellers when they meet those sellers’ needs. The trouble is, those needs vary widely, even within a single company’s salesforce. The keys to success outlined below offer a roadmap for constructing a comprehensive program of training, rewards and recognition that will increase retention and engagement.
RETENTION STRATEGY No. 1: Help New Distributors Earn Early ‘Wins’
People join and stick with a direct selling opportunity for a variety of reasons, but there’s no question that the prospect of earning a supplemental income is one of them. When the U.S. Direct Selling Association conducted its 2014 National Salesforce Study, 48 percent of respondents said they were motivated to join by the prospect of long-term supplemental income, and 62 percent said they stayed for that reason. Many of today’s most successful companies tap into that motivation by creating a streamlined path to earning that first commission.
New Brand Partners at Nerium International, for example, can start selling right away from their kit or can quickly organize their first party, where all new customers generate a commission. A “Fast Start” program pays bonuses to new Brand Partners who sign up three team members or six customers in their first 30 days. “We focus on what is going to make sense to the new Brand Partner and what we can do to help them,” says Chief Marketing Officer Amber Olson Rourke. At the same time, Nerium also pays attention to what it can do for leaders, too, because leaders are only successful if their new Partners are successful. “That is what creates long-term success,” Rourke says.
The approach has paid dividends for the Texas-based company, which saw net sales increase 28 percent from $403 million in 2014 to $516 million in 2015, ranking it No. 38 on the 2016 Global 100 and No. 886 on the Inc. 5000 list of the fastest-growing private companies in America. At just 5 years old, Nerium already has logged more than $1 billion in cumulative retail sales.
At Isagenix, people can start earning money within a week, says Travis Ogden, President and Chief Operations Officer. The basic earnings level is the “product introduction bonus” where new distributors can earn between $10-$150 if a client buys a bundled system of products the first time it is introduced to them, and these values are doubled if they sell more than one system in the same week. “As they build their line of people, regular commissions kick in,” Ogden says. “There are various levels of bonuses they can get based on how many people are coming in and what they are buying.” The Arizona-based company saw its net sales increase 23 percent from $725 million in 2014 to $890 million in 2015, ranking it No. 22 on the 2016 Global 100.
By analyzing their own sales and commission data, savvy direct selling companies can identify key thresholds for distributor retention. That first dollar earned is important, as it demonstrates to the new direct seller that success is possible. From there, modest levels of earning often correlate with relatively long-term commitments to the business. Each company is likely to see a different pattern emerge, making the analytics important.
RETENTION STRATEGY No. 2: The Right Training at the Right Time
As those first sales ring up and new distributors begin to develop recruits of their own, successful companies know how to keep the momentum going. These firms utilize strategies that make early and continuous training the norm. In fact, businesses that focus on streamlined trainings implement classes and workshops that build upon themselves.
Corporate trainings—often accessible 24/7 online or from mobile devices—meet independent distributors where they are and let them advance at their own pace. These can include one-hour classes and three-minute videos, all designed to boost selling skills and product knowledge. At the same time, the sessions encourage salespeople to hit certain milestones by offering various incentives.
Trainings are not just about selling and knowing a product. They are about building up a distributor’s personal belief in their ability to achieve success. New distributors need support, especially as they move beyond those early, easier sales and begin prospecting and entering colder markets. Companies that provide online courses, quizzes and video trainings available 24/7 on any platform have the edge. Those that follow up with in-person trainings at regional conferences or headquarters events will excel.
At Maryland-based Take Shape For Life, the company is now attracting more people who are interested in making money by using Take Shape For Life as their primary source of revenue, rather than just being mission-focused, says President Mona Ameli. To meet this growing need, she says, the company retooled its training programs in partnership with the field to make sure the strategy is shareable across the entire organization. The process eliminated duplication and generated training materials that can be used on numerous technology platforms in ways that allow Take Shape For Life coaches to customize the materials as needed. “As you grow within the organization there are different needs and different supports that come to you so that you are not overwhelmed,” Ameli says. “We want to give people what they need at the time that they need it. As they grow, they get access to more. It’s a steppingstone process.”
Take Shape For Life’s methods are working. The business, which is undergoing a rebranding initiative that will result in the new identity of Optavia, accounted for 80 percent of parent company Medifast’s $71.1 million second quarter revenue. With net sales of $57.4 million, Take Shape For Life grew 10 percent, the sixth quarter of year-over-year growth for the division. The second quarter also marked Take Shape For Life’s highest level of year-over-year growth in three years.
Training in a variety of topics—especially in the use of social media—leads to companies that are more successful at developing the right skills among their salespeople in the field, according to researcher Victoria Crittenden, a professor and Chair of the Marketing Division at Babson College. Crittenden has studied the direct selling marketplace for years. Her current research is focused on how salespeople use social media to sell products and how women are using social media in direct selling to attain empowerment.
“In essence, it is that ability to be self-sustaining, to be out on their own, to engage in a workplace that maybe they could not engage in previously,” Crittenden says. “Maybe they took time out to be home with their kids and now they are re-entering the workforce, and social media enables them to reach potential customers and to build a network of support.”
Direct selling companies should provide opportunities for social media training because the tools allow independent distributors to build their social capital and their network. Personal development material, such as audio and video training modules to inspire confidence, goal setting and action plans, also is helpful in fostering retention along a person’s career path as a direct seller. These messages can bolster a seller’s morale during a tough period, giving him or her the determination to keep going in the face of rejection.
“When a salesperson is a stronger person and feels better about himself or herself, they will be a stronger salesperson,” Crittenden says.
RETENTION STRATEGY No. 3: A Unified Message
Another common theme among growing companies is the use of a unified strategy across all markets and all platforms in an effort to build consistency and more measureable achievements. This “omni-channel approach” can be a key driver of success in the direct selling channel. Research published in the March 2016 issue of the Journal of Research in Interactive Marketing describes the approach as creating a unifying message that works seamlessly across all platforms through which customers learn about, interact with and share information about a brand. Companies must think about crafting a message that works well on mobile devices, desktop computers, social media, in printed material and in person. This is important, as customers can access multiple platforms at any given time or place and on a number of devices.
Omni-channel marketing can improve how salespeople interact with customers and prospects and it can provide new strategies for managing the salesforce, say researchers Shannon Cummins and James Peltier at the University of Wisconsin-Whitewater and Andrea Dixon at Baylor University.
The depth and breadth of technology also is fueling shifts in the ways we communicate. There are changes in the timeliness of communications, the ability to be mobile in the field, how we control the source of the message and the nature or character of the communications. All of these variables point toward a more interactive sales relationship—and one that more often is initiated by the consumer instead of the seller, such as when someone asks a question about a product featured on Facebook.
That’s why it is so important for companies to own their story and ensure they craft it in a clear way that can easily be duplicated, says Crittenden.
May Kay does this well. When the story about how “one woman can” succeed and make a difference gets retold on social media, in person and in print, it is powerful and salespeople buy into it. Why does Mary Kay’s story work? “It’s a true story, and buried in the story itself are the self-efficacy issues, and the idea that one’s belief in his or her capacity to do something and to use available resources to find success resonates with people,” Crittenden says. “Salespeople can put themselves in Mary Kay’s shoes and see that they can do it, too.”
As salespeople sharpen their messaging and learn new techniques through training, companies will see a return on the sales side by default.
RETENTION STRATEGY No. 4: Show Some Love
Direct sellers pour their hearts and souls into building their businesses. Recognizing their achievements at all stages along their entrepreneurial journey and rewarding them for their loyalty pays off in longer retention. When they achieve milestones of success, these entrepreneurs thrive on recognition. Effective programs come in many shapes and sizes and include rank advancement programs, public recognition at large corporate events, incentive travel, cash bonuses, and awards and gifts such as pins, watches, jewelry and other high-end items.
When companies make investments that engage their salesforce, highlight success stories and deliver positive recognition, sellers feel empowered and are more likely to stay with a company as they pursue their next-level goals. That’s because when recognition programs are done right, they build stronger emotional connections between distributors and the company. Top direct selling firms roll out the red carpet (literally, in some cases) for the people who sell their products. They say “Thank you!” and “Good Job!” in many different ways, whether it’s through something as inexpensive as a personal note or phone call from a corporate executive, or something as elaborate as incentive travel that includes the entire family.
At Xyngular, the Passport Program travel and rewards system is designed to recognize leaders while also creating a bonding experience among the group. As distributors hit certain milestones, they and their spouse or partner are invited on trips that focus on the business as well as having a little fun, too.
“Part of retention is feeling like you are a part of something and that is very consciously built into our company, and it is something we foster all the way through,” says Marc Walker, Xyngular’s President and Co-Founder.
Leaders first earn their passport and a metal luggage tag. Next is a trip to Xyngular’s company headquarters, which includes a side trip to Sundance, Utah. Workshops focus on good business practices and ways to maximize volume. Spouses and partners sit in on these sessions, too, so that they gain a better understanding of the business, Walker says. Later, depending on the season, the group will ski, hike or zipline together. Leaders also earn a $500 cash award.
“The trips start to bond people together, and they get to know each other and form what we call the Xyngular family,” Walker says. “People start to look forward to seeing each other at these events and they work to help each other and share best practices.”
Next up is a Director Invitational to Park City, Utah, where leaders can meet one-on-one with Xyngular executives to discuss their business, ask questions and gain leadership development skills. Group activities and dinners follow, plus a cash award of $1,000.
The next reward level is a seven-day cruise for the leader and his or her spouse and children. Walker says it’s a great way for families to get to know one another. Other reward and incentive trips include a Business Building Trip for just the leaders. Xyngular corporate will cover the costs of a plane ticket, hotel and $600 in spending money for a leader to visit another city and begin setting up a team there.
One key part of Xyngular’s plan is a component that rewards leaders for ensuring that people who joined after them also are achieving success and qualifying for rewards, too. Distributors who rise to the higher levels of sales earn trips to such places as Bora Bora and Dubai and Mediterranean cruises. Xyngular executives crafted a financial model that “accrues the costs of reward trips the minute they are earned,” Walker says. He says it’s about protecting the long-term viability of the company. “This is designed so that people get to do things in their lives that they never thought they would,” Walker says. “We want to give them that richness that they may be missing, to see new places and experience new cultures.”
As the direct selling channel’s leading firms become more savvy at collecting data and leveraging it in new ways, they also become more adept at being able to uncover what truly motivates the field. A handful of the direct selling channel’s leading companies are taking deep dives into new loyalty marketing programs with distributors. It’s a smart move as loyalty marketing is measureable marketing, says Bill Hanifin, CEO at Hanifin Loyalty, a loyalty marketing consultancy. “You can measure it and prove it over time and see what the results are,” Hanifin says.
What makes loyalty programs work? It’s all about the emotional bond between the distributor and his or her company. Successful loyalty programs are those that find a person’s emotional connection to the brand and develop a relationship around that connection. Companies can provide opportunities for people to rationalize their emotional choice. For example, a distributor might build a collection of watches earned through a rewards program because it is a visual illustration of hard work that pays off. Or a distributor might push himself to keep meeting higher sales goals thanks to a desire to travel the world, which he can achieve through incentive travel rewards. Even payment methods can be used to drive loyalty by offering additional rewards tied to the use of branded payment cards for commissions.
Putting It All Together
Direct selling is a powerful channel of distribution for unique, high-quality products and services. It also is an effective pathway to entrepreneurship, offering people from all walks of life an opportunity to start their own businesses with little overhead and plenty of support along the way. But as we know all too well, that doesn’t make it easy—for companies or for independent business owners.
To make it to the top of the direct selling space and secure a place as one of the best in the channel, great companies must excel at customer acquisition, recruiting and onboarding new distributors, and building a sense of loyalty strong enough to retain the salesforce.
The best practices outlined in our series are critical for companies to achieve prosperity. Taken alone, each can shore up a company’s business model. Deployed together as part of an overall strategy, these keys to success let a company present itself as a powerful force that will drive change and set the standards in the direct selling space.
When salespeople become invested in themselves they gain more than the ability to earn income and build a network of customers and distributors. They gain the ability to become self-empowered, to change their lives and to improve the lives of others through hard work, dedication to a cause, and the ability to leverage a collective social capital network.