Messaging and comp plan strategies that empower new distributors and engage long-term leaders—and why companies must find the right balance between the two.
The direct selling industry often talks about “the field” as if it is neatly defined by some universal direct selling parameters.
And maybe there was a time when the fields of direct selling companies were more static and uniform, but now the diversity in their makeup from one company to the next is as unique as the motivations of the people who fill their ranks and the strategies needed to engage them.
Today, direct selling fields are disparate groups defined internally by the cultures, brands and messaging of the companies they represent. They are always evolving and always a challenge. Productive field engagement takes hard work and diligence on the part of companies, as well as a good measure of finesse when marketplace challenges dictate change.
In the current marketplace, direct selling companies continually need to do more with less in order to reach revenue growth and profitability goals. There’s a clear through line from those goals to field productivity, so figuring out how to keep all levels of the field tuned in and turned on over the long-term is a multi-faceted industry challenge worth mastering.
An Engaged Critical Mass Drives Growth
A direct selling company’s engaged critical mass—customers, distributors, retailers and leaders—determine that company’s size and success. Together, they drive growth. Customers buy; distributors and retailers build solid customer bases; and leaders build customer bases and downline organizations. But key is keeping each of these groups engaged and productive for as long as possible.
So, companies work hard to retain customers through innovation, product selection, auto ship…you name it. They develop marketing campaigns and evolve how they define affiliation to entice distributors and retailers to engage with their brands; promote and sell products; and earn money. And they spend inordinate amounts in both time and money on field leaders, through leadership events that motivate with training, storytelling and recognition, not to mention compensation plan earnings.
Hungry junior leaders typically drive growth. They tend to be newer to the company and very much in production mode. If a company is growing junior leaders, that company is likely growing.
“We start by setting clear and realistic goals with new Energy Advisors (EAs), ensuring they have a set direction and purpose,” Lauren Valdes, Director of Think+, Think Energy said, about growing and engaging new leaders.
Think Energy’s EAs are trained on a digestible, duplicatable 5-3-5 system that lets them set early goals without being overwhelmed by the intricacies of the compensation plan. As their motivations naturally shift toward team building and mentorship, inclusivity becomes a priority.
“We understand that junior leaders bring their own unique perspectives to the table, and we work hard to cultivate an environment where all levels are welcome to share ideas, observations and feedback directly to us…We’re creating a space where everyone feels valued, appreciated and connected,” Valdes said.
“We believe if we can bring the leader on the journey with us, no matter the change, they feel like they have their voice heard…They help us lead as much as we lead them,” Amanda Moore, Co-Founder and Chief Growth Officer, Red Aspen, said.
“There’s a difference in all levels of leaders because every person has their own situation. In our business, that’s why we talk a lot about culture and relationships because part of that relationship is understanding why someone joined; why they stayed; and what motivates them now. That changes throughout their journey with Norwex,” Brian Dill, Vice President of US Sales, Norwex said.
Keying into the personal realities of field organizations could offer direct selling companies innovative engagement solutions that also meet their long-term, corporate productivity needs.
QuiAri, for instance, understood what was most important to people who represent their brand, so they developed the fastest promoter payout in the industry with 5-Minute Pay. Norwex’s compensation plan pushes greater percentages of compensation toward product commissions. So regardless of the time spent with the company, all field representatives earn the same 35 percent on selling products.
Think Energy taps into their associates’ competitive spirit and harnesses it alongside a distinctive compensation plan structure. “We’ve specifically crafted our compensation plan, so teams formed at higher ranks hold greater financial value. This approach naturally motivates our leaders to continue to build with each rank advancement, ensuring their personal success is tied to the growth of our organization as a whole,” Valdes said.
“In addition to higher compensation, as a leader grows in rank we provide better perks and communication with each level of leadership,” Genie Reese, Co-Founder and Chief Strategy Officer, Red Aspen explained, about forming the connective tissue that binds their transparent culture.
“We overcommunicate with our leaders; this is key to connectedness. Our goal is for leaders to always feel ‘in the know’ and prepared. At the end of the day, leaders can only do their best job if they are fully equipped with knowledge and details,” Moore agreed.
“Genie, Amanda and I each attend over 10 events across the country each year to connect with leadership in the field. This is in addition to the corporate events and the incentive trip we host. Through these individual team visits, we are able to connect, build relationships and collect valuable, personalized feedback and ideas from our leaders throughout the country,” Jesse McKinney, Co-Founder and Chief Executive Officer, Red Aspen, said.
“Recently, we have been working to improve our corporate event strategy. We have seen firsthand how successful events can be in building the bonds between us and our leaders,” Red Aspen’s Chief Operations Officer, Matthew Kuzio, added.
“For us, in an industry where change is constant and innovation is paramount, nurturing open communication and collaboration allows us to navigate changes and challenges more effectively,” Think Energy’s Valdes said.
Remaining Competitive and Relevant
Change is a constant, but not all people or companies are equally pliable. The rigidity or flexibility of a company dictates their ability to meet challenges, which in turn, affects their marketplace competitiveness and relevance.
To thrive and grow in this modern, competitive, gig-oriented, customer-centric business landscape depends a great deal on better understanding what individuals in the field need, in order to effectively engage them at all levels for longer.
For instance, a direct selling company’s field messaging may focus on building a full-time career and leading a team, but that may not connect with the gig-oriented associate who is only looking for an extra $300 a month. Meeting that realistic personal goal will keep this individual happy and engaged with the brand, while leadership messaging may fall on deaf ears. So, a deeper look at the pragmatic needs of the field may be one path toward new engagement opportunities.
Recruitment and leadership will always be a part of the direct selling equation. But another field engagement consideration could be to foster a culture that defines success by productivity and not title. The promise and messaging of direct selling has leaned heavily on ranks and lifestyle for a generation of leaders and, in some cases, established politically-based field cultures, that can be averse to change and create division.
But by centering success around productivity, companies could motivate and engage their fields with a new kind of success story, one that better aligns with current industry goals. For example, a new focus on productivity could reward leaders with 2,000 customers on auto ship. The goal is for distributors to build businesses based on successful customer acquisition and retention through enhanced service and product sales. So, companies should start empowering and encouraging new recruits to build customer-centric businesses from Day One. This automatically incentivizes the distributor to remain productive as they advance in leadership ranks. It also allows companies to meet their long-term field engagement and growth targets.
The Next Big Unlock
Re-engagement is perhaps the next big unlock that direct selling companies face, and this is where things can get sticky.
There comes a time in the cycle of many field leaders where team management eclipses all else because their downline hasn’t been built to a point of independence. And Gordon Hester, Chief Sales Officer of the Americas, PM-International, believes there’s inherent danger in this management stage because the further from production these leaders get, the less they understand what it takes to build a business now.
“Time becomes a problem because at some point they’ve not been building for so long, they don’t know how anymore. They don’t know what’s going on in the marketplace and how to be competitive and relevant,” Hester said.
These successful, long-term leaders often represent what is possible within a direct selling business. Historically, they are the business builders that built the largest customer bases and teams. Often, they play significant roles in a company’s overall success. That being said, over time—sometimes decades in the case of legacy companies with 30+ year leaders—more and more compensation gets paid out to these legacy leaders, who are no longer building or actively in production.
Those once sustainable payouts look different when business climates change with declining revenues and rising expenses. That leads companies to dig into spreadsheets looking for ways to cut back and right size internal costs.
“Right now, that rightsizing has a lot of focus on these legacy leaders. The simple reason is that for a company to be profitable, they can’t continue to pay out huge sums of money where they aren’t getting production,” Hester explained.
The struggle for companies is set between the loyalties they have to these leaders and the high costs they will pay in honoring them—worst-case scenario: the future of their companies. This reality is driving a focus on compensation plan changes, which require both a reduction in total compensation plan payouts and moving more commissions to retail commissions vs. overrides to leadership, Hester outlined.
Heather Chastain, direct selling industry consultant, believes generally there are a couple of ways companies can approach the challenge.
Historically, field incentives, promotions, trips and recognition have been title/rank driven, rather than performance driven. Activity/performance requirements would be a good way to increase recognition of up-and-coming leaders and drive growth. But communication with legacy leaders about requirement changes prior is essential, explaining the company’s desire to provide a playing field for everyone and reiterating that in today’s world it is important to lead by example.
An honor-based approach would create a new level, status or circle that provides ongoing recognition, respect and reverence for all leaders who have been loyal to the company. “Typically, when entered in that type of a program, that group is no longer eligible for certain incentives or programs, but they do have a clear list of things they will receive, particularly at events. You can also provide different compensation for that level, if appropriate within your compensation plan,” Chastain said.
Some legacy companies are looking to re-engage and motivate their top-level leaders, often with cash, creating dangerous ripples that can be felt industry wide. Other older companies are taking an even more problematic, short-sided approach. “Some legacy companies are skirting the true intentions of direct selling and buying leaders from other companies. That’s their main focus because they are trying to keep up and create growth through others versus creating growth through their organizations,” Norwex’s Dill said.
Furthermore, companies that are 5-10 years old are diverting from traditional direct selling altogether and adopting single-tier, no-recruiting, no-leadership-development business models that won’t require large leader payouts in the future.
But no company can remain in perpetual rightsizing or flux for too long. Ultimately, the only option is to get revenue growing again. And accomplishing that will require change.
The Path Forward
Nothing is certain or uniform about how this will play out, as some companies wrestle with the reality that they need to pay legacy leaders less, all while coping with the fear, possibility and fallout of those legacy leaders leaving and taking their teams with them.
Their current struggles highlight the need for direct selling companies of all sizes and ages to dig deep in terms of effective, long-term field engagement and develop strategies that balance the needs of the field with the needs of the company aiming for perpetual growth.
“Many of the initiatives we’ve implemented—including promotions, adjustments to our compensation and details regarding incentive trips and conventions—have been directly influenced by our field. Think+ is driven by their insights, and we’re fortunate to have a passionate group offering perspectives that we in corporate roles may not always see firsthand,” Valdes said.
Younger companies, perhaps because their messaging, cultures and compensation structures reflect a different marketplace, seem to be safeguarding themselves as best they can from the productivity impacts of future legacy leaders.
And those like Norwex, who aren’t suffering ill effects, believe prevention is paramount. “That’s the goal. That’s what we guard against every day. How do we remain true to who we are and focus on where we are going,” Dill said.
No one can pretend to have all the answers or the secret sauce, but hope may lie in the form of field organizations and companies with cultures that are amenable to change, transparent and share information readily, as well as messaging and reward systems that prioritize customers and productivity and that lead to engagement at all levels. It might take hard, introspective conversations and listening to experienced voices to deepen C-Suite thinking and proactively plan for the day their companies succeed in all the ways they aspire to.
Regardless, engaging and empowering the entire direct selling field—from the newest recruit to the most honored legacy leader—so that everyone finds success is a challenge that direct selling companies and this industry is ready to meet.
From the May 2024 issue of Direct Selling News magazine.
