Is direct selling ready to take a place as a dominant global go-to-market channel? Why haven’t we made this happen yet?
Last month I published an article outlining why I think direct selling should be the premiere go to market channel globally because of the incredible socio-economic impact it has on the world thanks to data and AI. You can read about it here.
Why is this important? For almost ten years I’ve made it my mission to take some of the technology strengthening our most powerful competitors in the e-commerce and gig economy and adapting it to the direct and social selling model. By doing this we’ve positively impacted close to 20 million direct sellers and their customers in 70+ countries with some of the largest global DS companies. What I’ve learned is, we have an incredible opportunity in front of us and now the time to seize it! Nearly 200 people have joined our mission in the last month and you can be a part of it in our fundraising campaign here, ending soon.
There is so much research that shows when our people feel cared for, they become more productive and loyal in the short term, while our brands become more robust and resilient. Most direct selling companies would immediately react to this saying “That’s what we already do!”. Yet what I see, the intention is certainly there, but the bar has been raised so high in recent years by all brands, DS companies have ways to go to catch up. The missing link here is deep segmentation. Going beyond the idea that there is one “system” or training or communication strategy that can be applied to all, and embracing the idea that there are many segments of people across customers and reps who need different (and often opposing) types of experiences in order to maximize the value they get from and give to our companies.
In direct selling we’ve only started to talk about segments recently and we talk about four of them. Customers, preferred customers, part time and full time reps. In comparison, Netflix has over 1600 segments, each of which will have a unique experience provided to them. It’s no wonder their retention is off the charts and they’ve risen up so quickly to give the biggest media companies on earth a run for their money. We simply have to evolve faster. And it’s totally doable.
At DTL we are already using 9 segments to help our customers identify different groups and start to be able to create more personalized communications, training, promotions with measurable results. As we get better, direct selling has the opportunity to blow past our competition because of the inherent network effects of the direct sales model. When our people stay loyal longer, they bring us more people, and when those people stay loyal, they bring us more people and growth accelerates exponentially. Right now, too many companies are focused on short term acquisition ignoring the medium and long term cost of massive churn which is eating away at their brand equity and revving up regulators. We have to let go of this insatiable hunger to recruit at any cost. The costs are simply too high and they don’t align with our values of taking care of our people. This may be uncomfortable to hear but the math is the math. Too many people leave our companies with a bad taste in their mouths. We now have the technology to do better. All we need is the will.
Once we accept that we have to raise the bar on how we care for people, we need to look at the process of personalization. Let’s be clear, personalization does not mean adding someone’s name to the top of an email with the same offer all 100K people on your list are going to get. Personalization means that the communication, training or promotion a rep or customer receives is at the least tailored to the behavior segment they are currently in and at the best a personalized message uniquely for them. This is happening to you from the brands you are most loyal to. THIS WORKS. ON YOU. EVERY DAY. And you may not even know it’s being done. Sending one email or having one promotion for everyone might bring you a bump in the short term, but research shows that in the medium and long term, they burn people out and increase churn, slowing growth and crushing profitability. When a company knows who is in what segment they can begin to slowly become more personalized in their approach to each segment. We automate this, one use case at a time on a one-to-one level, and empower companies to do it on the segment level with objectively measurable results.
When we communicate en masse in today’s economy, we’re essentially saying we’ll take a dollar now rather than being patient and caring to get five dollars later. Our leaders are actually increasing the already heavy burden of recruiting they need to maintain in order to stay ahead of churn and maintain their check size. That pressure then puts us in a vicious cycle which encourages predatory recruiting, false promises, and the planting of thousands of seeds of discontent. Seeds that will sprout into more compliance violations, more difficult recruiting, regulatory scrutiny and negative brand equity. And all for a dollar today instead of five dollars tomorrow? Personalization with a touch of patience is our quickest way to that five dollars.
There’s a legacy mentality about how to approach and judge new initiatives that holds so many companies back. The mentality is called “Waterfall”. It’s the idea that we work really hard to plan a big idea or initiative, spend a lot of time and effort in planning and promotion, and then it either works and we keep doing it the same way, or it doesn’t and we throw it away and go back to the drawing board for something new. But the space in the middle is where the golden breakthroughs live.
What we need is a more Lean approach. In his book “The Lean Startup” (which has become something of a bible for silicon valley, gig and eCommerce companies) Eric Reis talks about “Build, Measure, Learn”. The basic idea is that we have to go into any new product, program or initiative with the assumption that whatever our bright idea is, IT’S WRONG. Our job is to rapidly build the simplest, fastest, cheapest version of our idea (the Minimum Viable Product), get it out to the market (our reps or customers), carefully and scientifically measure the results (with real analytics as the primary guide and emotional [and therefore, bias] feedback having an important but lesser influence), learn from the analysis, develop a tweak that might improve performance, build that tweak, launch it, measure it again, learn again, tweak again. And around and around we go.
I see so many DS companies spend so much time on an initiative and then when it doesn’t go swimmingly on the first go, throw it in the trash and start all over. With a little tuning, and a few iterations, they could have had gold on their hands. Our product Distro® started with our customers converting about 3.5% of the people we were trying to retain together. A bunch of tweaks and iterations and 10 months later, we’re converting 14.8%, and our customers (who were patient and wise enough to work with us and iterate together) are earning millions of dollars each month in new revenue from people who stay and continue buying, selling and recruiting for many more months vs churning out. This rapid “Build, Measure, Learn” approach is a critical practice for our industry to test and perfect the types of personalization that are really going to move the needle and up the efficiency of the model.
At DirecTech Labs we’re bringing the practices, technology and disciplines to direct selling that will allow us to use data, analytics, AI and automation to capture the amazing opportunity in front of us. But we face a lot of legacy thinking and entrenched beliefs. That’s where you come in. If you believe in the future of the channel as we do, why not own a piece of it? We’ve been forming a coalition of industry execs, field people, venture capitalists and other investors who believe in our vision. Over 150 people invested (as little as $1K and up to $100K) in the last month or so, most via the platform, SeedInvest. New SEC regulations allow almost anyone to own a piece of our company. Those in the industry who are investing will be put on a special advisory group and will help us spread the word about what we do, make critical introductions, back us into more customers, etc.
That opportunity to join us is about to come to an end. If you are in direct selling and have a bit of your investment portfolio set aside for higher risk investments, this is one that you can have a direct impact on with an investment that can be small or large. Join our advisory panel. Have a voice in our product iterations and help us make more industry connections and spread our message. Together we’ll play our part in shaping a direct selling channel that’s upgrading the human relationships that make our channel so special. We call it Elevating Human Connection with AI. Check out the final days of the opportunity. Join a community of progressive industry execs and leaders and join us here.
Here’s to a direct selling industry 10X bigger, serving and growing more human beings around the world, free of regulatory scrutiny and lauded as the most impactful and empowering go to market channel ever created!
CEO of DirecTech Labs