When most of us think about Direct Selling churn, we understandably focus on the financial damage it causes.
We at DirecTech Labs have analyzed about 16 million direct sales lifecycles. And we’ve found that when someone leaves an organization, about 50 percent of their downline also leaves the company within 30 to 60 days.
What’s scary is that most firms only seem to care when it’s a leader who’s leaving. “Doug’s quitting? But he’s a $200,000-a-month guy! That’s a huge hit!”
Yeah? Well what about Doug’s downline? Chances are, those folks are collectively doing even more business than Doug. Lose half of them, and that’s another huge bite out of your bottom line.
But I don’t even want to talk about money today—or at least I don’t want to focus on it exclusively. I want to talk about your brand. Direct Selling churn hurts your bottom line, but it also damages public perception of your company in ways you may not have considered.
All Direct Selling churn represents some kind of dissatisfaction. It’s someone who had an experience—with your products or your people—that didn’t align with their initial expectations.
Your organization is going to pay the price when that person quits. But your distributors are going to pay the price somewhere down the line.
Every time someone gets fed up and leaves a direct selling organization, they don’t keep it to themselves. They may go on Facebook or Twitter and trash you. Or they may be more low-key about it and simply roll their eyes every time someone mentions your company in the future. But either way, there will be a detractor working against you.
That detractor could create dozens or even hundreds more detractors through their cynical comments over the months and years to come. The resulting negative buzz will not only make it harder to attract new sales reps, but could also make customers less inclined to buy your products: “I do like their clothes, but I hear their whole organization is totally psycho!”
Is it any surprise the FTC seems to be cracking down harder than ever on direct selling firms? The industry is getting a bad rap.
Look, Direct Selling churn is inevitable. But it’s not inevitable that your ex-customers and ex-sales reps will trash you. Here’s how to prevent that from happening.
As you aim to reduce Direct Selling churn, aim also to ensure that the people who do leave your organization are doing so with a good taste in their mouths. Here are two approaches that should help:
1. Give exit surveys to all your departing sales reps. This is absolutely essential. If you’re not asking your sales reps why they’re leaving, you’ll have no idea how disgruntled they are, what they’re upset about, and how you can change your company for the better.
For example, what if you collected surveys and discovered that most sales reps were recruited with the promise they would replace their full-time income in a year—but in the end, most of them only made a few hundred bucks per month? You would then know it’s time to talk to your upline distributors about making realistic promises in their recruitment efforts.
2. Focus on the lifetime value your people get from your sales reps—not just how much you get from them. You can reduce Direct Selling churn by forming symbiotic relationships with your distributors. By creating satisfying experiences for them. By meeting their needs.
When someone comes into your organization with specific income goals, your focus should be on helping them meet those goals—and then perhaps to bump up those goals over time. At no point should they be handed a list of different goals generated by one of your leaders.
Someone who comes into your organization with million-dollar potential is probably going to go after it no matter what you do. Someone who doesn’t have that potential is going to love the sound of a million bucks. But they’re never going to do the work it requires—and then when they fall short, they’ll blame it on you.
So why not listen to that person’s goal of making an extra $200 a month to cover their car payment, and then help them achieve it? Sure, they’re only generating $200 per month. But by giving them a satisfying experience, you can increase their lifetime value and extend their lifecycle from four months to 40. You’ll not only pull in more revenue from them in the long run, but also help ensure that they leave saying nothing but good things about your organization.
How can you gain a deeper understanding of your sales reps and customers so that you can give them a satisfying experience that reduces Direct Selling churn? Learn more about Distro, our artificial intelligence robot!