July 01, 2010
What Matters Most: How Direct Selling Companies Are Addressing the Needs of Recruits
by J.M. Emmert
Click here to order the Direct Selling News issue in which this article appeared.
Today more than 15 million people in the United States are engaged in a direct sales organization. While statistics from the Direct Selling Association show an annual increase in the overall salesforce growth rate over the past decade, the reality is that many of these first-time entrepreneurs will fall short of their dreams and disappear.
People are motivated by different needs—money, a passion for a product or service, a desire to improve their lives. What this means for direct selling companies is that individuals must be provided with a clearly defined business vision and the right combination of financial and personal growth guidance to ensure greater success and less turnover.
The potential for financial and personal rewards in the direct selling industry may be high on the wish list for recruits—and may be what fuels their commitment to stay—but the company vision of what is possible is the driver that draws them in.
“Helping new distributors see the potential of their young business is most important,” says Dan Chard, Nu Skin President of Global Sales and Operations. “We use a combination of several programs to nurture an affinity between new distributors and the company’s products, opportunity and culture, which leads to earlier success and better retention.”
Rob Levy, Herbalife Senior Vice President of Worldwide Distributor Sales and Marketing, believes that a keen understanding of the company and its products and services is critical. “First and foremost, we want to provide knowledge so they can ‘Use, Wear, Talk’—learn about our products and how they can help people achieve a healthier life. We encourage them to start becoming ‘a product of the products’—using the products, creating their story and becoming a brand ambassador.”
To do this, Herbalife provides recruits with an array of Web-based educational tools—including step-by-step instructions and how-tos for using various proven business methods—and encourages them to attend meetings and speak with other distributors.
“It’s also important that they begin to understand the marketing plan, since this is the framework for them growing their business,” Levy says. “In addition to the online tools and information at meetings, we also conduct promotions to help motivate people to kick off their business in a positive manner.”
Just as important as presenting the company vision is the need to listen carefully to the vision of recruits. Tastefully Simple does this by sending new consultants a survey during the first month asking why they were interested in a direct sales business, why they chose Tastefully Simple and what they love about the business.
“Ask questions,” says Darrin Johnson, Tastefully Simple Inc. Vice President of Sales. “What is most important for your new consultants? It sounds like common sense, but just ask. The answers may be a little different for every company. We ask what we could improve to make their lives easier and make their businesses more successful. The response has been amazing, and it’s given us a wealth of information to help improve new-consultant satisfaction and retention.”
The Right Combination
Most direct selling companies agree that there are three key elements for creating the right combination that will entice recruits to stay committed to the business venture—a fast-start program, training and personal development, and a strong compensation plan.
“I believe that any direct selling company that has the success of its distributors in mind will naturally understand that all three are extremely important,” says Andres Forero, Team National Vice President of Information and Technology. “They may vary in importance depending on the company, but they work together to help the distributors become successful.”
Forero believes that the compensation program must be easily understood, pay enough to justify the work involved, and drive the hope and dreams of the salesforce. “Having a fast-start program with incentives, promotions or bonuses really motivates that percentage of people that are competitive or that need that little extra ‘hope to gain’ feeling. It can fuel a frenzy of activity if done correctly. Fortunately, excitement and a burning desire go a long way; however, to sustain success training and personal development are a must.”
Vollara Founder Joe Urso agrees. “It’s a combination. In order to convert a new consultant into a successful consultant, they have to know a couple things: They have to know what to do and they have to know how to do it. There has to be an immediate recognition of success, whether it is compensation or some level of recognition that they can measure. It’s hard to train a new person quickly enough, so I think the most important thing, at the end of the day, is to have a system that has some simple actions that lead to some tangible results.”
As ACN President and Co-Founder Greg Provenzano notes, retention is something every direct sales company is faced with; it’s simply the nature of the business. “There’s no one solution to reduce attrition. Look at it this way: What good is a fast-start bonus promotion without a lucrative, strong compensation plan to back up those promotions and fuel business growth long term? And what good is an outstanding compensation plan if you don’t have the programs in place to help train and develop your representatives so they can ultimately maximize the compensation plan? One simply doesn’t work without the others. The key to long-term representative retention is implementing a few carefully planned programs that, when combined, result in a can’t-lose business model.”
The Fast-Start Program
For many recruits, seeing money coming in during the first few months of their new business venture is most important. A fast-start, or fast-track, program is one way to help generate excitement and motivation.
ACN provides monthly promotional bonuses that help new representatives get off to that fast start, aided by a robust training and support system that allows them to go from new business owners to top leaders in the company while building thriving businesses along the way. “At ACN, we understand that helping our representatives experience some financial success right out of the gate builds momentum unlike anything else,” Provenzano says. “After all, nothing speaks louder than money in your pocket.”
All Nu Skin success programs, whether distributor- or corporate-led, tie to the Roadmap to Success that focuses on critical leadership milestones—Executive, Ruby, Blue Diamond and Team Elite—and give distributors an understanding of how to grow their business from the moment they begin. “Achievement of the Ruby, Blue Diamond and Team Elite pin titles are rewarded with leadership training and incentive trips that solidify the business partnerships between Nu Skin and its distributors,” Chard says. “New distributors can receive bonuses early on for selling special product packages that are specifically designed to grow both retail sales and sponsoring activities of new distributors.”
A fast-track program can have a significant effect on all areas of a company. At Vollara, productivity is up 25 percent and retention is up a remarkable 300 percent. “What I like about it is that it gives people a goal and a plan and it tells them what to do and shows them how to do it,” Urso says. “It usually has some system associated with it, and it usually has an end game—there’s always an element of compensation baked into it; it has that reward. The people that generally succeed on a fast-track program materially outperform and outlast people who don’t. Of course, there are exceptions to that, but of the successful people here, over 80 percent are fast-track successes.”
Fortune Hi-Tech Marketing Chief Business Officer Jeff Orberson believes that an immediate reward can assist in pushing a representative to engage and commit to their business and to higher levels of training and learning about what it takes to build a business. “Our initial objective in the representative experience is to make the process of gathering customers as simple as possible for our representatives, so that meeting customer requirements can be achieved quickly and generate commissions and bonuses.”
For some companies, the success of a fast-start program lies in the involvement of the field in coming up with promotion ideas and programs. Team National President and CEO Angela Loehr Chrysler says that one of the keys to her company’s success is that the field committees actually assist in the decision-making process. “We do a cruise promotion that allows new people—or seasoned sales members—to win a cruise with our corporate executives and our top sales leaders,” Chrysler says. “It is always a favorite amongst our sales field because they get to spend fun time with everyone.”
The Compensation Plan
Having profits/commissions to rely on, especially in these rocky economic times, is another important consideration for recruits. Like the fast-start program, a compensation plan that is easily understood and rewarding helps lower attrition rates.
“Achieving critical compensation levels is essential to maintaining healthy retention levels,” Chard says. “Nu Skin’s Wealth Maximizer feature ensures that new executives are eligible for commissions that meet retention levels of income.”
ACN’s compensation plan is, according to Provenzano, the glue that holds it all together, combining lucrative upfront bonuses with long-term, lasting residual income. “The residual income available with ACN is more than just something we talk about when promoting our opportunity,” he says. “It’s the reality of our compensation plan—and it’s impacting people’s lives long term in a big way.”
Chrysler notes that Team National’s compensation program was designed with the sales field in mind. “We understand the importance of earning an income and feeling valued for what you do,” she says. “We have found a compensation program that works for our sales field and, therefore, we only make small tweaks to it. We believe that changing the compensation program should only be to enhance it. We utilize our sales committees for suggestions before making any changes. It’s important to be cautious and considerate in this area.”
Orberson believes the most important driver for a new representative is getting them paid as quickly as possible. “It is critical to reward their activity immediately in order to instill in them the belief that the business model works,” Orberson says. “Most people who get involved in our industry have some level of doubt or reservation that it can work for them. Like every other type of business, a positive early experience helps develop a long-term relationship between us and our salesforce. Once someone sees that this can work, and is willing to dedicate their time to education, training and self-improvement, we feel true long-term relationships develop and retention rises. We utilize incentives and promotions to drive performance from those who are committed to building a business.”
While fast-start programs and compensation plans can help recruits realize financial success, most executives agree that long-term achievement is dependent on training and personal development. Helping recruits with time management, goal-setting and overcoming obstacles will help them develop business skills that can translate to their daily lives, enabling them to realize success in all areas of their lives.
“Personal-development programs, such as The Success Formula, help distributors better understand the company’s culture and values, which is also key to improving retention,” Chard says. “The program focuses on mindset and success principles, helping distributors adopt helpful habits to guide them through the ups and downs of owning and building a business.”
Herbalife encourages recruits to set firm goals and offers a combination of tools, training and communication they need to achieve them—all part of a concerted effort to make them feel welcome, confident and motivated to be part of the company. Levy also notes that while personal development is something that often happens organically as distributors move up the marketing plan, Herbalife supplements that development with online and offline resources, such as a library of materials by business philosopher and motivational speaker Jim Rohn.
“As they grow their businesses, they find themselves using the same core skills to present to growing audiences,” Levy says. “Ultimately, they may even appear onstage at our major events presenting in front thousands of people. It’s quite remarkable to see the development over the years from being a new distributor to an inspirational distributor leader.”
Chrysler strongly believes that personal development is one of the keys to helping recruits achieve success. “We promote personal development from the top down. It is an attitude that is part of our core beliefs. So, we support it and recommend it in many ways. We have the Success Club, an awesome personal-development and learning program. It has great content that we make available. We also have conference calls, newsletters and event trainings where we discuss the importance of continuing to grow and learn. We also invest in personal growth leaders to train our field and our office.”
“I think people want to improve their lives; they’re here with us because they want to improve,” Urso says. “Personal development helps encourage people to keep themselves fresh and excited and optimistic and feeling good about life, and feel like they are making progress in their lives. The use of it, whether it be in terms of managing business expectations or being able to mentally overcome objections, is a big thing. If you can learn those skills with us, in this industry, I think it makes your whole life a lot better.”
Helping Recruits Overcome Fear of Failure
While companies may do all they can to provide recruits with a clear vision, rich financial rewards and comprehensive training, one obstacle in fighting high attrition rates will always remain: a recruit’s fear of failure.
“I think we all face that in this industry, the need to overcome the flaming arrows that get shot at us every day,” Urso says. “Part of the business is being able to deal with rejection, and I think that is the reason why people don’t stay with this partly—people don’t like rejection. There is an inherent negativity in our industry because not everyone is going to want to do what you want them to do. It’s a big challenge to keep people positive in the face of that negativity.”
So how do you overcome that? “It’s a matter of leadership,” Urso says. “It’s a matter of system advising. Some get off to a good start and then fail and taper off, and then there are some who never get started at all. Hard statistics back up that some never, ever get off the ground.”
There are several reasons why recruits fail. Some lose their enthusiasm. Some are disillusioned—they expected one thing and found another. Some find it takes more time than they originally thought.
“All those things factor in, so I think having a system that bridges them beyond that first burst of energy and success and that keeps them connected is important,” Urso says. “We try to do three things: train them, recognize them for little wins, and keep them connected through conference calls and leadership training. If you fail to do those things, the probability of people falling off is materially higher.”
JAFRA believes that the key to combating the inherent fear of failure is to have a solid plan in place that removes the initial fear faced by recruits. “We have it laid out in a weekly plan so they know their first four weeks ‘Here’s what I do,’ ” says Diane McKeon, JAFRA Vice President of Sales. “We take away the worry and wonder, the ‘How do I do’ and ‘When do I do.’ We take all of that fear away. Because it’s laid out over four weeks, it does not look daunting and it does not look like it’s not achievable. It looks extremely achievable.”
Helping Recruits Enjoy the Ride
While most of the direct selling executives interviewed for this story agree that three basic concepts—a fast-start program, excellent tools and training for encouraging personal development, and a strong compensation plan—contribute to a recruit’s success and help reduce attrition rates, finding the right combination of the three to achieve company and personal goals will always remain a challenge.
Approach and execution will vary over time as new communication tools are introduced and utilized. High-tech gadgets such as Apple’s iPad and the evolution of social media networking will undoubtedly play a larger role in how information and guidance are provided to independent business owners in the future.
For now, what companies will continue to do is motivate and encourage recruits. “Starting a direct sales business is always an exciting new adventure,” Johnson says. “We believe in doing whatever you can to help new consultants get into high gear, move forward and simply enjoy the ride.”
Where Does Technology Fit?
The direct selling industry has developed a tools culture. The use of personalized CDs, DVDs and magazines has enabled companies to share vital corporate messages with their field and introduce their business opportunities to prospects.
Now, technology is taking those tools to a new level. New high-tech applications, streaming video and social networking sites are connecting companies, fields and prospects like never before.
Launched in 2004, Facebook has become one of the most popular social networking sites on the Web. Many direct selling companies have established a presence on the site for the ability to provide news and tools to distributors and keep in touch and engaged with prospects.
“Direct selling is all about the relationship between the field,” says Vollara CEO Joe Urso. “When you can build that bridge on the foundation of great products and technologies, you have a winning combination. Social media is one of our ‘bridge’ points. Facebook is our ‘Ground Zero,’ and we try to strictly control outside use of the Vollara brand as part of the title for third-party fan pages. Let’s face it—400 million people is too big of a group to not have a substantial presence in.”
While considered a social network, Twitter may be best described as an information service. Created in 2006, it allows users to communicate brief messages through its website and external applications, such as smartphones. Vollara believes that its company presence on Twitter is one of the keys to its success. All of its executives have live and active social media identities and often tweet from various locations.
Another popular Web tool is a blog. Team National uses several blogs to connect with its salesforce. Vollara supports its field with information for their blogs as well as direction for those who wish to jump into social media for the first time. “Each week we host a social media strategy call, giving our distributors additional support to feel comfortable with social networking as part of their marketing and communication strategies,” Urso says.
In October 2009, YouTube reached a milestone shared by few on the Web: 1 billion hits per day. The wildly popular site has become the place for companies to create their own channels to share videos on business opportunities, executive messages, forums and compensation plans. Nu Skin is one such company with its own channel. In 2009, the company created a viral video series for prospective distributors to look more closely at the Nu Skin business opportunity. The series received an overwhelmingly positive response and quickly became the No. 1 video on the company’s YouTube channel.
New applications for smartphones, such as the iPhone, are also allowing companies to instantly communicate and access vital information. Herbalife recently introduced a mobile application for its U.S. independent distributors to help them conduct business wherever they are. Nu Skin has created a mobile application for the iPhone that features a video in a split-up format for simplified sharing that can be easily sent to prospects. The application, which is free and available on Apple’s iTunes store, had 3,500 downloads in its first two months.
A Winning Combination
While time-tested tools, such as CDs, DVDs and magazines, remain viable choices to help an organization share its messages with its field and prospects, the latest online tools and applications can provide an instant connection to a far greater number of people.
“We believe that person to person is the best approach in our business, but social media allows us as a company to connect in a fun, informal way with thousands of reps in an instant,” says Team National President and CEO Angela Loehr Chrysler.
However, as Herbalife SVP of Sales and Marketing Rob Levy cautions, a well-thought-out plan should be in place before launching any such initiatives. “A company should be realistic in what they expect to accomplish, and be sure they have resources to plan, execute and monitor,” he says. “Social media isn’t something you can step in and out of. It has to make sense for your business, and you have to be able to support it.”