January 01, 2017
The Future of Direct Selling Is Being an Entrepreneur
by Michael Dermer
According to the 2016 Growth and Outlook Survey from the Direct Selling Association, more and more Americans see direct selling opportunities as the wave of the future. But while the market for direct selling continues to expand, the direct-to-consumer environment is changing daily as more competition vies for the limited attention of the consumer.
So how do direct selling companies compete in this fast-paced and ever-changing environment? They need to act like entrepreneurs. More specifically, they need to bring new perspectives to their outreach that help them stand out from the crowd. In the past, new and different perspectives were ways that one company rose above others. Today, it is necessary to compete. So what does it mean to bring a different perspective? Here are a few examples:
Perspective No. 1: Find Playgrounds Where No One Else Is Playing
It is really hard to create a unique product or service. Even when you do create something unique, there’s no guarantee you’ll gain meaningful visibility. First you have to position it to cut through the clutter. Advertising and information overload is the norm. When you’re battling to reach consumers inundated with an endless set of choices for virtually each product or service, it is almost impossible to cut through the noise. Cutting through this clutter, even with something head-turning and new, can be difficult.
Instead of taking on the competition, why not look for a market segment in which your competition is not playing? Don’t fight them on their playground—find a playground where they are not playing. Take some of the time, effort and resources normally devoted to your product or service offering and direct them to finding the right “playground”—one where you can maneuver and gain visibility that cuts through the noise. For example, if you offered women’s high-end skincare products to newly hired lawyers, bankers and other professionals in your city, you might be the only game in town versus selling the products in home-based events like others in the direct sales channel.
Perspective No. 2: Focus on a Specific Customer Set
The tendency is to chase customers wherever we can find them. We would go to Saturn if that’s what we had to do to close a sale from a paying customer. It would seem that the opportunity to attack broad markets, and to have no limits on what markets to chase, would be a good problem to have. As companies, we chase revenue wherever we can find it, often without fully considering whether we are winning the customer base we really want or whether we are taking time away from the customers we should be chasing. There are several problems with this approach.
First, you have limited resources and your scarcest resource is time. Every minute you spend on one activity is a minute you don’t spend on another.
Second, every new type of customer you chase requires you to learn the market, find those customers, create the right marketing message, hire people with market knowledge and develop credibility in that market. Doing that for one type of customer is hard enough. Trying to do it for multiple customer types is nearly impossible.
Third, it is natural that you will encounter resistance from customers, especially if you are doing something new. It will take time to learn how to overcome objections or to help customers understand the value of your offering. If you are not committed to a path, you are likely to turn to another path when you do encounter the resistance as opposed to creatively working through it and learning what you need to about that market segment and how to tailor your approach to the market. Going after every customer opportunity, or market segment, or responding to the inquiry of the day, seems like the fastest path to revenue, but often can be a real distraction from gaining ground in a market.
Pick a market and go after it. Debate with your executive team and sales leaders what that market should be. But once you decide what it is, learn as much as you can about it and be committed to making a name for yourself in it.
Why? When you focus on a single market or customer type, you gain critical benefits:
- Market Knowledge: You develop a depth of understanding about a market that can be the difference between gaining traction and getting lost in the shuffle.
- Reputation: In a cluttered world, staking a claim and being successful in a specific market builds your reputation. Assume you could have five customers. If you have them in five separate markets, it is hard to build a reputation. If you have them in one market, you can show proof within a known segment. Once you do, you gain a reputation, and then it is easier to develop a name for yourself and bring that reputation to other customer segments.
- Expertise of Resources: You can hire or leverage sales, marketing and product resources that have experience in that market.
- Efficiency: When you chase multiple markets, you are constantly wasting effort creating and recreating a salesforce and utilizing new marketing messages and tools.
- Value Propositions: The value your product or service offers a specific market becomes second-nature that everyone in the organization understands.
- Marketing and Distribution Channels: These channels are likely linked to specific markets. Each new customer demographic you introduce requires you to manage another set of distinct channels. Focusing on one customer identity reduces the number of channels you have to handle.
- Overcoming Objections: Closer access to customer feedback, objections and purchasing patterns help you align your offering and overcome objections for ongoing success.
Here’s a simple example. Let’s assume that you are selling jewelry and decide that women whose name starts with the letter “B” are your perfect customers. When you do that, you can learn where the “B’s” hang out, where they shop, what they do at night and you can attend the annual “B” association meeting. When you meet someone whose name starts with the letter “C”, and he or she loves your jewelry, you have to resist the temptation.
Even though it will feel good to get positive feedback, or even make a sale, if you start to chase customers whose name starts with “C”, you have now created an inefficiency that is difficult to manage with scarce resources. Soon you are chasing the whole alphabet, aren’t good at any of them, and are not really sure why you chase one versus another.
Perspective No. 3: Create Your Own Rules So You Are the Only Game in Town
If a market competes on product offering, compete on price. If a market competes on price, compete on personal attention. Direct sellers usually don’t do mass marketing ads like larger retail organizations do, but rather through word-of-mouth and their independent salesforce. In order to differentiate yourself further within this channel, you must go a step further, creating your own rules for why someone buys and then be the only solution that fills that void.
For example, we advised one of our clients in DNA testing to not focus on the “process” of their service but rather on the emotional connection of why that purchase matters to the individual. Among our competitors in that arena, we became the only company to engage customers on a personal level.
The ability to think differently and to bring new perspectives to the process is a skill that must be practiced and honed, much like a golfer works on his golf game and a mother works on being a better mom. After all, being a direct selling company is not just a way to sell products or services; it is an identity. Now is the time to develop the skills that create an entrepreneur mindset, so that identity can last a lifetime.
Michael Dermer is the founder and author of The Lonely Entrepreneur, a methodology to help entrepreneurs with the struggle of starting and growing a business. He is now a professional speaker, consultant and coach for startup businesses and entrepreneurs.