Why Direct Sellers Are Losing Millions

By April 18, 2017Uncategorized
 

Why Direct Sellers Are Losing Millions

Direct Selling Indicator Provides A Corrective Step

How much better off would direct sellers be if they treated their business like they had millions of dollars at stake?

Most people who start a direct sales business jump right in, giving little attention to their preparedness. The threshold for getting in is enticingly low, in most cases $200 or less. And, when you add enablers such as not having to warehouse inventory, not having to ship orders, no employees and no building costs, starting a direct sales business is so simple it’s more or less impulsive:

“That looks cool. I want to do it.” Boom. Done.

That’s good, because a simple business with a low entry point means it’s accessible to lots of people. But, it can be not so good, too. Direct sellers aren’t required to prepare nearly as much as someone who is, say, securing a multi-million-dollar loan to open a retail storefront. That store owner has millions at stake; you can bet he or she will be giving much thought to getting started on a good foot.

Would direct sellers take their business more seriously, would they make an effort to be better prepared if they, too, had millions at stake?

The truth is: they actually do — millions of dollars in potential profit they may never see.

But who thinks about it that way? When most direct sellers start their business, their thoughts are typically: I like the product. I see people making money doing this. I want to do it, too.

That’s about the extent of it. They’re excited and they want to get going. (And, who can blame them?!)

But, trouble looms.

Invariably, the business gets hard. They hit a wall and they can’t figure out why. What they don’t realize is that in their zeal to get going, they have completely overlooked the biggest limitation on their success: their own thinking. They’re not taking into account what limiting beliefs or knowledge gaps are holding them back.

They’re simply not thinking about their thinking.

For instance, most people who start a direct selling business have never been entrepreneurs; they’ve been employees their entire lives. They struggle to think in terms of profit instead of wages. Their thinking is stuck on trading their time for money, rather than investing their time.

Or, how about their ability to cast a vision? Success in business requires one to look into the future, to envision success before it happens. Can they imagine a distribution system that doesn’t need them and the freedom that will give them? Do they have something to hold onto when they reach the point of wanting to quit? Business owners must train their minds to do this; they must give it deliberate thought.

The biggest loss any business will ever face is the profit it fails to earn. How many direct sellers are losing huge profits because they aren’t fully prepared in their thinking?

Many? Most? We would argue that it is the latter.

And, the problem is exacerbated by the low cost of entry: it’s simply too easy to overlook one’s lack of preparation when starting a direct sales business.
How The Idea Came To Us

We believe in the direct sales business model. We believe the profession attracts good people who have a desire to create a better future for themselves and who are genuine about wanting to help others.

As we considered both the opportunity and challenges that are before direct sellers, it got us thinking: is there something we can do to help them?

Is there a way we can help them know whether or not they are — from a thinking standpoint — prepared for success?

We’re a marketing company. How, exactly, did we think we could help? Well, we’ve been doing what we do for many years now and in that time we’ve learned a thing or two about people, how they think and how they act. We’ve built lots of marketing and learning tools for lots of clients.

We began to explore ideas for the direct selling market.

We Asked The Experts: What Trips People Up?

We started by doing what we do best: asking questions. We went to some of the top earners in the direct sales profession and interviewed them. We asked them to detail the struggles they faced when building their business. We asked them what they see other others wrestling with. “Think about the last three people you’ve mentored in your business,” we asked. “What do you see tripping them up?”

Is it fear? Is it a lack of focus or desire? Not having a good understanding of business? Do weariness and discouragement play a role?

Turns out, it’s all of those…and more.

We were amazed at the consistency of the responses: each leader had pretty much the same set of qualities needed for success. And, what they listed for us were the building blocks for any successful business, whether it be direct sales or the corporate marketplace.

This was very encouraging to us in a couple of ways: 1) it was clear that the people we had selected to interview were highly knowledgeable in business, and 2) it confirmed for us that direct sales attracts quality people who are both genuine and professional.

We grouped like responses and that led us to identifying 10 core categories (or metrics) that determine success in direct sales. (Conversely, these could also be labeled as areas of limiting beliefs.) Those categories are:

BUSINESS KNOWLEDGE
Do they understand the difference between being an employee and business owner?

BUSINESS BELIEF
To what extent do they really believe in direct sales?

VISION
Do they have a WHY, a picture of how they want their life to be?

CONFIDENCE
Do they have the confidence to take consistent action?

WORK ETHIC
Do they take personal responsibility for their success? Are they ambitious?

WILLINGNESS TO LEARN
Are they teachable, open to learning new things?

PERSEVERANCE
How able are they to hang in there when things get hard?

GOALS & ACCOUNTABILITY
Do they set measurable goals and hold themselves accountable?

INTEGRITY
Do they do what’s right or what’s convenient?

SERVANT LEADERSHIP
To what extent do they see leadership as an opportunity not to manage people, but to serve them?

Now the picture was more clear. A vision was beginning to form. We had some parameters; if not a formula for success it was at least the ingredients.

We All Love To Learn About Ourselves

At the same time we had been noticing the myriad quizzes in our social media feeds: What Disney character are you? What Star Wars character are you? What vegetable are you most like? (Because who isn’t dying to know if they’re a bean sprout?)

If the preponderance of these little tests is any indication, we humans have an insatiable desire to learn about ourselves. Moreover, knowing ourselves is important. Through the ages, people like Socrates, Plato, Jung, Freud and Maslow have shown us what that means on a personal level.

But, what about in business? What if there was a way for people in business — in this case, those in direct sales — to learn about themselves?

Do they have any limiting beliefs? If they were stuck, could we help them get unstuck? What if through such learning they could become profitable? If they were already successful but capable of even greater success, could we show them what might be standing in the way?

That’s how we got the idea for DS Indicator: We would build a tool that helps direct sellers know the strengths in their thinking, but also any gaps or weaknesses. We had built similar learning tools many times before and felt confident we could produce a solution for the direct selling profession.

Building The Tool

The next step was to use what we learned from our interviews to draft some success profiles:

  • How do you describe someone who has a competent understanding of business?
  • How do you describe a person who is confident?
  • Someone who perseveres?
  • Has integrity?
  • Is a wholesome leader?

Once we had the profiles outlined, we turned toward developing the questions that would reveal a person’s thinking.

Our first inclination was to be rather cryptic in our questions. Our argument was that hiding the real intent of the questions would ensure genuineness in the responses. (After all, when people can easily answer in a way that makes them look good, how can you ensure valid results?)

We turned to a professional, degreed counselor with application in Psychometrics. (Doesn’t that just have an uber legit ring to it?) He advised us against disguising the intent of our questions; rather, we should be very straightforward and trust that people would be honest.

“The best way to get valid results is to have this be a self-assessment,” he said, adding “when assessing how people think, there’s no better expert than themselves. You just have to trust people to be honest with themselves.”

Wow, that makes sense! we thought. Thank goodness for professional, degreed counselors with application in Psychometrics!

Execution Is Alway Simpler On Paper

With our counselor friend’s help, we crafted questions that were straightforward but would also make the subject really think. Initially, we set a goal of 200 to 250 questions. Along the way, we realized that researching and writing that many questions is NOT easy. Moreover, it would have made the assessment onerous for the user.

We settled on 95 questions, with the format being a combination of multiple-choice and Likert Scale. We found that most people could complete the assessment in 15 to 20 minutes while also being thoughtful in their responses.

Next was to write the feedback for each of the 10 categories. For people who did well in a category, we wanted to show them how their thinking was sound and conducive to success. Conversely, for those who scored low our aim was to show how their thinking could be holding them back.

What we discovered next is that executing on this would be no small feat. Developing written feedback that is accurate, comprehensive and encouraging — the last thing we wanted was to leave people dismayed — took months of research, writing and editing.

This was a huge challenge, by far the most difficult part of the project. It’s one thing to know what best practice is; it’s quite another to write detailed feedback about it.

Making It A Tailored Experience

Then there was the customization. When it came to actually building the tool, we wanted the feedback to be as meaningful and relevant to the user as possible, and to that end we added numerous “if:then” statements to the report architecture.

For instance, if the user was an employee who had never owned a business — that’s most people — we would show them how that work experience could be a potential roadblock. Could they be waiting on someone to tell them what to do when instead they should be developing a strategy, goals and a plan of action?

If the user had previously been a supervisor, they would see completely different feedback. For instance, they need to guard against trying to manage people who are in business with them, but who do not report to them.

We also wanted the ability to tie multiple categories together. For example, if the user had a low score in a category which could be relevant to their result in another category, we made that connection for them. Say someone had a low Business Belief, Vision or Confidence (or maybe all of these); it would not be surprising for them to also see a low score in Perseverance. We wanted people to see that correlation.

Beta Testing

When Direct Selling Indicator was finally ready for beta testing, we looked at the calendar: it had been a year (almost to the day) since we kicked off the project.

It’s funny how when you put a year of your professional lives into something, you are both excited and fearful: excited to actually birth it, to have it be a real thing; fearful that your “thing” will flop and go on the trash heap with the rest of your great ideas that never bore fruit.

We had dozens of people beta test the product and from that we learned a couple of very important things:

  1. We had a winner!
  2. We had more work to do.
One of the first comments was: The (DS) Indicator is phenomenal! This really read my mail. I was especially surprised with the tailored analytics and videos. Nicely done!

We also got some (very helpful) criticism about how we couched the user’s results. One beta tester voiced concern about showing “Your Highest Scores” and “Your Lowest Scores” at the very top of the report.

Right off the bat, we were labeling people, he said. Particularly for the low scores, it might appear that we were saying the user had no Confidence, no Vision, no Integrity, etc. Clearly, that was not our intent.

So, we changed those labels to “Your Top Strengths” and “Your Top Growth Opportunities.”

Of course, some will argue that we’re in danger of joining the Everybody Gets A Trophy movement. (You know, the argument about it having ruined the Millenials.) We disagree with that notion; we think the new labels are rightfully encouraging. Besides, our customized feedback is very frank where necessary. (We’re not afraid to make the user uncomfortable when it’s in their best interest.)

Having the validation and feedback we needed, we set our sights on taking DS Indicator to market.

Launch & Next Steps

As we launch DS Indicator, we’re excited at the opportunity to help the direct sales profession, to provide a tool that really makes a difference.

One opportunity we already see is for follow up: now that the user has this valuable feedback, what can they do with it? DS Indicator identifies incorrect or incomplete thinking; it points out the need for corrective action. But, it’s not prescriptive; it doesn’t provide the solution.

We see several options for next steps:

  1. Users can engage with professional business coaches who can help them work through their limiting beliefs;
  2. Coaches (or upline mentors) can help users map out a plan of action and hold them accountable to implementing it;
  3. The assessment can provide key discussion points for team leaders as they mentor their downline and do leadership conference calls;
  4. Direct selling companies can provide more targeted training based on the results of their people’s assessments.

We will update this post in the coming weeks with additional lessons learned from this venture. See you soon!

LEARN MORE

Photo: Link Humans [CC BY 2.0], via Flickr

Rod Brandt

Author Rod Brandt

Rodney Brandt is a lifelong storyteller who helps others find their voice, tell their story, and inspire others.

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