Month: May 2020

U.S. Direct Selling companies added millions of customers and distributors in April – but can they keep them?

Mousehole Cornwall England UK

Last month we made the call that the direct selling industry was entering a Renaissance period. April results are in and the industry has indeed seen a tremendous burst of growth. Our clients, collectively, have seen the best month since the turn of the century.  While this explosive growth has not been universal, it is certainly widespread across the direct selling space. Not every company has participated equally in this renaissance, and those that have not should ask themselves what they could do right now to take part in this period of growth for the industry.

For direct selling companies enjoying a period of renewed growth during this Renaissance period, it’s becoming clear that this will be a marathon and not a sprint.  U.S. direct selling companies added millions of customers and distributors in April, and direct selling has entered a new era. We know very little about coronavirus, but we do know that it will cause an extended period of disruption in our society.  This disruption will work in favor of companies that can support the personal selling efforts of independent representatives with an excellent online shopping experience and outstanding customer service.  The coronavirus pandemic will radically alter the face of retail stores in the U.S., and as we begin to see a recovery there will be excellent opportunities for direct sellers to build their brands and market share through partnerships with existing retail stores and, potentially, a limited retail footprint of their own.

Direct sellers, as an industry, have historically had trouble balancing direct to company consumers, sales at retail outlets, and the relationship with their direct selling representatives.  eCommerce efforts typically incur a high cost of acquisition for customers with limited interest in loyalty, while breeding distrust between a direct selling company and its independent representatives.  Flash sales and consumer promotions aimed at driving eCommerce volume generate one-time sales volume, but often hurt the value of a company’s preferred customer programs and their distributors’ businesses.  Retail partnerships have often resulted in a deterioration of the company’s relationship with their direct sellers, while producing disappointing revenue gains.

Having worked with direct sellers for nearly three decades, we have learned that the secret to success across multiple channels is to subscribe to the idea that A Rising Tide Lifts all Boats.  The photo at the top of this blog post is from a small village on the south coast of England where I enjoyed spending time before coronavirus brought international travel to a standstill.  It was so peaceful to sit there on the shore, watching the tide come in and float all the boats that had been laying on the sand.  The same simple principal applies to growing omni-channel businesses – build your strategies and manage your execution so that the rising tide lifts business in each channel.

Many people believe that business in e-commerce, retail, and direct selling channels can all be managed independently. We have found that this is not true.  Retail, eCommerce, and direct selling are really boats on the same stormy sea.  Consumer don’t care what “channel“ they are buying through, and direct selling companies need to be aware of the power of driving a rising tide.  We have helped clients drive retail sales through their own outlet stores and through initiatives with retailers ranging from regional specialty stores to Walgreens to Target, while generating increased recruiting and strengthening the business opportunity for their independent distributors. We have helped clients forge relationships with subscription box services and eCommerce companies to build their brand, sell to each other’s customer lists, and generate online product sales – while using the revenues and other benefits from these partnerships to enhance the experience and earnings of their direct sellers.  We have helped clients implement highly successful preferred customer programs that build customer loyalty and purchasing across multiple channels.   Millions of direct U.S. consumers are members of preferred customer programs we have helped design, and each of those programs is unique, tailored to the products and culture of the direct selling company that sponsors them.

Direct selling is one of the most successful long-term work from home industries.  The Renaissance has begun, and the direct selling channel will continue to see strong growth for the foreseeable future.  Companies that consciously build omni-channel strategies that provide a rising tide to lift business across all channels will be the winners in this Renaissance period.  The will keep and build on the growing base of consumers and distributors that join their company during this period.  eCommerce, or direct to consumer, is substantially stronger when supported by an army of direct sellers sharing products they love and believe in.  A selective retail strategy can strengthen a company’s direct selling base and their eCommerce initiatives.

It’s always better to make strategic changes from a position of strength and now is the time to chart a course for the next two years. Direct sellers should develop strategies that can drive a rising tide for their business.  They should manage the growth in their online and direct selling channels now, and be ready to execute on solid retail plans later this year.

We have helped direct selling companies build and implement growth strategies, supply chain solutions, and information technology in more than 25 countries.  We have helped some of the largest direct selling companies in the word build strategies and align their investments to drive billions of dollars in growth.  We also work with start-ups every year, and our strongest start-up clients have grown to achieve more than $300 million in sustainable annual sales by their 5th year.  For more information on how our firm can help your company drive a rising tide, contact Doug Hepfer (dhepfer@hepferassociates.com)