How to Reduce Your Dropout Rate for Network Marketing Distributors
The dropout rate in network marketing has always been a challenge—and it probably always will be. It’s just the nature of the business.
If we’re talking about customers, the challenge is to keep them from becoming one-and-done buyers. We want them to continue to talk about our products and how amazing they are. We hope to bump them towards a recurring auto-delivery program or something similar.
If we’re talking about sales reps, our priority will be to help them understand our mission, feel the pride in making their first sale or sponsorship as soon as possible—and then continually nudge them towards fulfilling their true potential as business leaders. Whether they’re capable of generating millions in annual sales or simply want to earn enough to pay the electric bill every month (how about this recent heat wave?), we want to make their dreams come true.
If you’ve been reading this blog for a while, you probably know what we’re going to tell you to do next to help engage their lifetime value with you: segment your audience, and then personalize the messages you’re sending them in a voice they’ll understand.
Now, some of you may think you are segmenting your distributors and customers, and you do personalize your messages to these groups, but it hasn’t really lowered your consultant dropout rate.
If you’re one of them, we commend you for taking these steps. You’re on the right track if you’re segmenting your audience. And if you’re willing to get more granular with your segmentation, you can really start making a difference in your overall direct sales retention numbers.
What Gyms Can Teach Us About Lifetime Value
Anyone who’s really serious about reducing the dropout rate in network marketing can learn a lesson from the local gym.
Each year around New Year’s (for obvious reasons), the typical gym offers special membership rates. The goal is to hook people and convince them to sign up for a full year at a deeply discounted rate.
We all know what happens next. The gym is packed in January, but by mid-February, everyone has caved on their resolutions and you no longer have to wait half an hour for the treadmill.
Sounds like a great moneymaker, right? Get people to buy a lot of product but then only have to provide them with a tiny bit of it!
That’s not the point I’m trying to make. My point is about the lifetime value of each customer.
The gyms that understand the concept of lifetime value will offer their members incentives for continuing to work out throughout the year. Work out 10 times in January, get a free water bottle. Work out three days a week in February, get a free personal trainer session.
You get the idea. They’re trying to get people to form a habit. The people who do, will continue to renew their memberships year after year. And once these people have self-identified as being serious about fitness, the gym can send them more tailored offers: extended hours, nutritional supplements, access to a VIP locker room, you name it.
This kind of personalization is what it’s going to take to lower the dropout rate in network marketing.
“Up” Your Segmentation Game for Better Results
Now, I’m not sure how much time and energy the typical chain of gyms spends segmenting its audience into distinct categories. But I think they do understand the concept of personalizing offers.
We in direct selling have to take this concept even further. There’s really only one main reason people join a gym: to get in better shape.
But why do people join your direct selling company? Yes, they want to make money, but how much money are they expecting to make? And how soon?
How hard are they willing to work to get that money? How many hours per week can they devote? What does success really look like to them? And what will they do once they’ve found this success?
There isn’t a one-size-fits-all answer to these questions. But the good news is, if you have 5,000 distributors, there won’t be 5,000 completely different answers.
We at DirecTech Labs have found that if you ask your customers and distributors questions like these, their answers will place them into one of nine distinct categories.
When you take the time to segment your people into these nine categories, you can then begin to personalize your messages to them in ways that really resonate.
Not only that, but when you do this on the DirecTech platform, you’ll also receive notifications when your people are showing signs that they’re about to give up on your company. These signs are so subtle that they might escape the attention of your executives and sales reps. But we’ve learned to spot them.
So, if you’re serious about reducing your distributor dropout rate in network marketing and have tried segmentation and personalization, ask us how to take it one step further for real results.