A once-in-a-generation opportunity is sitting within reach of the direct and social selling industry.
This is an opportunity to capitalize on a global economic and geo-political situation that people are only just beginning to understand, and for which few solutions have been proposed.
Just as the car industry is going through a massive shift towards electric vehicles, the direct selling industry is on the brink of a massive jump in social and economic impact. We can solve the biggest socio-economic challenge in a generation.
To capitalize on this moment, we’re going to have to let go of a lot of old practices that many see as fundamental to direct selling.
Soon, some will capitalize on this once in a lifetime situation and turn direct selling into a force for global unity, stability and evolution. This is what direct selling has always promised it could be: a go-to market channel empowering people, driving profits, and building up diverse communities — with minimal collateral damage and celebrated by regulators the world over.
Will your company capitalize on this moment?
Understanding the Problem
To capitalize on this issue we’ll first need to dig into the incredibly dangerous problem our world is facing right now: The use of people’s data to manipulate them and affect their buying, social, voting and other behaviors.
If you’ve been to any of our executive dinners around the country, or attended one of our talks at DSA conferences or seen this webinar, you’ll have gotten a taste of this massive problem in a few little bites. Here comes the meal.
– Start with Jaron Lanier’s Ted talk: You’ll learn the colossal mistake made at the dawn of the internet and a solid, quick understanding of the massive conundrum the world is currently facing. You’ll also get why social media addiction exists and how harmful it really is to the stability of our civilization.
– Then watch the Netflix documentary, The Great Hack. Here you’ll see more deeply into how your data is being used to influence your’s and your family’s behavior in innumerable ways.
– Are you starting to lean in now? Next, listen to Sam Harris’ Podcast with venture capitalist, early Facebook mentor and author of the new book, Zucked, Roger McNamee.
To see how much better direct selling can be for the world, first we need to understand the hidden costs of today’s ad-driven models and the tolls they are taking on society.
The Hidden Costs of Online Ad-driven Models
- Addiction: By building addiction into their platforms, social networks ensure there are lots of eyeballs for their ads and lots of data coming in to help them target us better. The cost of that is a global population of grouchy, polarized addicts who are grouped into echo chambers with little to no tolerance for dissenting, diverse opinions and backgrounds. This tears at the fabric of democracy and the stability of our societies.
- Hyper-Targeted Ads: When ads can target your psyche so acutely they can prey on your doubts, fears, secret longings, and things about our personalities we may not even be aware of… and do so at a scale of billions of people, without our knowledge or conscious consent… we are skating on very thin ice. We’re gnawing away at free will with no conscious participation from the targeted potential customers.
- Manipulation: What’s the difference between manipulation and persuasion? The conscious participation of the individual. (Starting to see our opportunity yet?)
- Economically this ad model contributes to Income Inequality: because of automation and AI, the cost to acquire customers goes up to smaller groups of white collar and already rich people. (Another clue for you…)
Here’s a catch: The social networks and our competition know about this problem. Our window is open, but it won’t be forever.
What’s the Opportunity for Direct Selling?
Consider this. If your competitors in D2C and E-Commerce want to get a customer, they’re going to be spending money on these platforms. They have to because that’s where everyone is. We find a lot of our people there too, but we don’t need social media to be free and supported by manipulation in order for our business models to work.
How is DS better? In order to see this clearly, let’s take a cue from Elon Musk (just like he did when creating Tesla) and reduce the direct selling model down to First Principles: The fundamental concepts or assumptions on which a theory, system, or method is based. To do this we have to let go of everything that doesn’t make direct selling exactly what it is and nothing more. We’ll ignore comp plan philosophy, recruiting tactics, the role of leaders, required tools, training, promotion. Everything except the roots of what it is we really do:
We make people the center of a good or service in their community (digital or analogue), giving them a meaningful economic or social mission, an opportunity to develop personally and professionally, and we pay most of our cost to acquire a customer out to these people when they generate sales.
Breaking this down as it relates to the negative points on the ad-driven model:
- Build them up vs bring them down: In order for a direct selling company to grow it must recruit a large and diverse group of representatives and customers. These people will be very diverse in almost every conceivable way. Religion, race, education, culture, language, politics and so on. Yet, in order to be truly successful, these very diverse people must form a community around a positive social and/or economic mission. (Be careful of the trap here. The economic mission part is also diverse. One system does NOT rule them all. We have the data to prove it).
- Manipulation vs Persuasion: While recommending any product or service requires some form of persuasion, the individual being persuaded is doing so as an active and willing participant. People trust others in their community and word of mouth has and always will be the best form of marketing. And then there’s training. In order for most direct sellers to capitalize on the opportunity they’ve accepted, they must become something more than they were when the signed up. They have to grow into better communicators, develop more empathy and learn how to overcome objections, present evidence persuasively, and overcome the fears and doubts potential customers and team members can express. (Of course, there are those in the space who have opted for manipulation in an effort towards short-term gains. We should know better than to allow this. We’ll address in the next section.)
- Counters income inequality: Rather than spending massive marketing budgets on agencies and automation (money which ends up in the pockets of already well-off people), direct selling companies pay $.40-$.50c on every sales dollar to the communities that generate the sales. Most of these people are lower on the socio-economic ladder and that bit of extra money is extremely meaningful in their lives.
To put it simply, it comes down to a lack of quality information: Until recently, having a massive, decentralized, global salesforce with their own customer accounts made it impossible to collect enough useful data. And the technology to turn that massive amount of data into useful information simply hasn’t been there. So we’ve been faced with some problems:
- Human beings must have answers! Our brains simply cannot live in mystery. They require answers! What they DON’T require is correct answers. Emotion, anecdote and subconscious bias have had far too much power in decision making. All the while, companies have been building massive databases used for only one purpose: Calculating commissions. When properly analyzed, this and other data can lead to new information. Information often counters traditional ways of thinking and can be PROVEN to be accurate. Absorbing and working with this information is a massive challenge to the most experienced amongst us because it challenges beliefs we have held for a long time. Too often we see companies faced with a choice, believe the data, or believe the feel good anecdotal evidence. This is a type of decision that is particularly difficult in direct selling because there is such an emotional charge to much of what we do. This charge can be very powerful. But it must be focused with the information from good data science and analysis and with the basic principles of behavioral science. Today’s successful direct selling executive must have an extremely high EQ (Emotional Intelligence) and be able to balance the strong emotions with the empirical data presented to them. EQ is not fixed. It can be developed and improved at any point in life! To capitalize on the opportunity in front of us we must have our biases, emotions and information in check.
- We must target our customer and rep experiences more acutely. Access to quality information allows us to do what our e-commerce competitors have been doing for years: Deep segmentation. When we understand our people at deeper and deeper levels we can provide experiences like training, promotions, etc. that are far more relevant and satisfying to them. When we do, we keep our people around longer and the network effects of the model take it from there. Plus, when they do eventually leave, most will do so with a positive sentiment of our brands, making it easier to win them back or acquire new customers in their community in the future.
- Empower your reps to be better communicators: If your sellers had a fraction of the behavioral data Facebook has about them and their friends, how much better care could they offer their teammates and customers? Collect and lever this information to maximize our real competitive advantage: Human Relationships. A simple yet extremely personal tip here and there can make a big difference in the quality of the communication your reps have with customers and each other every day. When people are communicating and “clicking” well, they are more motivated, and their affinity towards your community grows.
Big software companies are trying to get into our space, but they are expensive square pegs (built for e-comm and retail) squeezing themselves into round holes.
If our industry is going to reach its potential it must be led from within. From those who know and understand its uniquities. And it’s going to take a coalition. No one company can do it alone. That’s where DirecTech Labs comes in. We’re building a coalition of executives, leaders and clients in the space who believe better information is the key to unlocking the potential of our business model.
DTL gets the industry…
We have the technology and we’re committed to using it for good – To help the industry achieve more of its potential with good information and hyper targeted tools:
- Increase the quality of the communication direct sellers have with their customers and teammates.
- Help build smarter compensation plans that allow people to market in different ways and stably earn at different levels of activity based on desire and capacity.
- Inform smart promotions, don’t pull on margins only to increase churn 90 days later
- Support the creation of more personalized training, so leaders can become leaders and casual builders don’t get burned or intimidated away.
- Makes sure customers and reps are getting more personalized experiences to keep them on board longer with good things to say about the brand experience when they leave.
If you’re beginning to feel the same passion and belief for the future of the space that we do, consider joining the team! We’re using equity crowdfunding to let anyone in the industry own a small piece of our company for as little as $1000. We’ve already got several of the industry’s most notable leaders on board. When the opportunity closes in mid September, we’re going to form our group of industry supporters into an advisory council which will give us regular product feedback, networking opportunities and play a direct role in shaping the future of an information-empowered direct selling industry. We’ve been called one of the hottest companies in crowd-funding today. Check out our progress here!