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April 01, 2010

DSA News

Marketplace Trust

by Amy M. Robinson

The annual Edelman Trust Barometer is always a compelling read for me. This international survey assesses the level of trust in business and government by “informed publics” around the world. Given various high-profile financial scandals and the fragility of global markets over the past few years, there has been a lot to assess in the area of trust—or lack thereof.

What I find interesting, though, is the unspoken affirmation of the direct selling business model that the results of the survey seem to indicate each year.

For example, when asked, “How credible do you believe each of the following is as a source of information about a company?” Thirty-seven percent of respondents said “conversations with friends and peers” is an “extremely credible” or “very credible” source of information. These informed publics find their peers to be more credible than TV news, newspapers, corporate communications or advertising.

The survey also explores factors that are important to corporate reputation. Transparent and honest practices and high-quality products and services are among the top responses.

Informed publics find their peers to be more credible than TV news, newspapers, corporate communications or advertising.

While neither of the previous observations seem particularly new or surprising, the findings do underscore the enormous potential direct sellers have to gain the trust of the marketplace based on nothing more than conducting the business of direct selling in the way it was meant to be practiced—featuring personal contact and the highest ethical standards as hallmarks of a time-tested model.

The opposite side of the coin, however, is the equally large potential direct sellers have to fail the public in their expectations. If we get it wrong, there really are few other trust-building elements on which direct sellers can rely. Having a strong “word-of-mouth” presence isn’t an added luxury, as it might be for companies in some industries. Favorable personal endorsements are a core component of success for direct selling companies. Similarly, we have come to rely on transparent and honest business practices as a distinguishing factor for identifying legitimate companies. By our own definition, failure to exhibit such characteristics would put a business in an undesirable category.

The growth and success of the direct selling business model over many decades indicates we have been at least somewhat successful in the practice of our core competencies, but what, then, prevents direct sellers from consistently ranking as the most trusted businesses in the world?

A 2009 survey of consumer attitudes conducted on behalf of the Direct Selling Association provides some important insights on both challenges and opportunities in the marketplace.

Reasons for favorability toward direct selling included statements such as:

  • “I can shop in my own home and have someone there to assist me.”
  • “I enjoy the simplicity of the shopping experience. Not crowded. One-on-one service.”
  • “Getting a demonstration of a product in the comfort of the home is appealing.”

But among those who did not indicate the highest levels of favorability toward the model, 34 percent cited a reason related to feeling pressured to buy a product or become a representative as a negative, followed distantly by “not liking the model” (8 percent) and high prices (8 percent).

Interestingly, respondents who rated direct selling very favorably, as well as those providing less enthusiastic rankings, cited “feeling good about supporting a small business in my community” as a top attribute of direct selling. Those generally favorable to direct selling also found it to be a convenient way to shop and enjoyed the fact that the seller comes to them, while those less favorable toward the model found knowledgeable salespeople and the availability of in-depth product information to be key.

Direct selling represents less than 1 percent of retail in the United States. That may not seem like a lot, but to the 15.1 million U.S. direct sellers, it means things like putting food on the table, clothing their children and creating a better quality of life for their families. The fact that the building blocks of the direct selling model reflect the most “trusted” characteristics in business should, when properly managed, leave only possibilities.

The 2010 Edelman Trust Barometer indicates a slight rise in trust in our business. I believe direct sellers can not only keep pace with that increase, but also capitalize on their inherent strengths to emerge from a poor economy stronger and more vibrant than ever before.

Amy M. RobinsonAmy M. Robinson is the Vice President of Communications and Media Relations for the Direct Selling Association.<