A Small Change in Retention Can Have A Profound Impact. Here’s why…

We talk to companies about direct selling retention nearly every day. Churn is a major pain point across categories, verticals, demographics—you name it. The ubiquitous nature of this affliction is made all the more troubling when we ask these companies the following question:

“What does retention mean to you?”

It’s shocking how varied the responses are. For such a prevalent issue, there’s no clear definition of the end goal and no clear metric to stay on track. On the other hand, these companies have a 100% clear definition of recruiting, along with a list of strategies to scale and improve their recruitment efforts. 

So let’s establish some clarity around customer retention. 

Defining Direct Selling Retention 

Does retention mean reactivating those who’ve become inactive? Or does it mean keeping more customers past their first 90 days? What are the metrics to determine this and why are they meaningful? And, furthermore, why is it important to focus on retention?

What retention means is inherent to its importance, so here are three trackable definitions of that importance to your organization:

1. First and foremost, retention is about business efficiency. The lifetime value we get from a new customer or rep should offset the time, money, and effort we spent to recruit them in the first place.
2. In direct selling, retention is particularly valuable because of the network effects it has on a multi-level compensation plan; retaining one customer or rep can yield exponential results. 
3. Finally, keeping customers active impacts every business KPI—recruitment, net active reps and customers, rank advancements, leader creation, continuous ordering, and (again) lifetime value.

Retention, put simply, values the customers you’ve acquired as much as—or more than—new ones. When a representative loses 20% of their customer base every month, that has a far more negative domino effect than a 10% loss. So, metric-wise, retention means giving value first in order to reduce churn.

Now that we know what direct selling retention is, the next step is to discover what happens when we keep both a customer and a rep for longer.