The Pandemic Effect
For many direct selling companies, the COVID-19 pandemic was responsible for increases in recruiting and sales, because people were looking for ways to earn money while quarantined.
Since the world reopened, the pandemic effect is in reverse, so today most direct selling companies are seeing reductions in recruiting and sales.
The pandemic is just part of our story. What else is happening?
A Deeper Dive
Having worked with direct selling companies since 1986, I have seen our distribution channel grow in many years and face challenges in others. I am a strong believer in learning from history and observing trends. Let’s take a look at what I see.
Legal Trends
In the United States, in pursuit of customer protection, the Federal Trade Commission (FTC) waged battles on Vemma and Herbalife in 2015 and 2016.
Also in 2016, FTC Commissioner Edith Ramirez gave a strong talk on the important of real customers and while she is no longer with the FTC, the impact of her words is still with us. I recommend you read the Edith Ramirez transcript, if you haven’t yet read it.
Since then, companies have put more focus on the importance of selling to people who don’t enroll as sales representatives. When you sell good products for direct selling, this is relatively easy. Conversely, when products have little or no value outside of your network, companies struggle.
Like everything in our world, there is always good and bad. The direct selling channel is composed of good actors and bad actors.
The FTC’s headwinds from 2015 are still blowing.
Mass Resignations
You have probably heard this term “mass resignations.” As a result of the COVID-19 pandemic, many people have reevaluated whether to return to or continue in their previous lines of work, to change careers, or to stop working entirely. The result is that the general demand for labor is greater than the supply.
Independent representatives of direct selling companies are also working less. Recruiting productivity is down across most companies and many companies are seeing reduced sales as well.
The bottom line is that many people don’t want to work as much as before.
Inflation
When prices go up, the value of your money goes down. Spending on non-essential items gets cut first. The products and services of many direct selling companies aren’t essential, so the demand for these products drops in times of high inflation like now. Lower demand equals lower sales.
Affiliate Marketing
Some traditional direct selling and network marketing companies have decided it is time for their compensation plans to focus more on rewarding sales to customers and less on rewarding the building of teams of representatives who sell and recruit.
The “deleveling” of a compensation plan is a big change in strategy. Migrating from a traditional multilevel compensation plan to an affiliate model is a huge change to the business, complete with new opportunities and new risks to the business.
If you are on the Affiliate Road now or thinking about taking it, you should definitely speak with the experts at Sylvina Consulting who can guide you on what to do and not do to on your journey as you reinvent your income opportunity.
Not every representative will accept the company’s directive to focus more on sales to customers than on recruiting and teaching others how to recruit. You need to be prepared for the first innings of your new game.
New World, New Rules
Our world is constantly changing. It’s just most of the time it changes ever so slowly, so we don’t notice the changes as quickly. Today, the changes are coming at us faster than usual.
If you have a direct selling, network marketing, social selling, or affiliate company and you are struggling, as the first step, you should be looking monthly at your key operating indicators. Within them are the canaries in your coal mine. When you can see clearly the specific elements of your business that are trending downward, you will know what exactly is working well and what is not, and then you can take actions aimed at improving specific measurements.
The good news is that you don’t need to navigate choppy waters by yourself. For individual attention to your company, Sylvina Consulting stands ready to serve with 38 years of experience improving hundreds of companies.
While compensation plan consulting is one of our specialties, mentoring and growing companies are others. Our company tagline is “Even the best teams have a coach.” Do you have one?
I invite you to contact me at +1 503.244.8787 or jay {at} sylvina.com
Jay Leisner, the President of Sylvina Consulting, is a top compensation plan and direct selling expert, a trusted adviser to new and established network marketing and party plan companies. For more than 30 years, Jay has enjoyed assessing and improving network marketing, party plan and referral marketing companies across the globe.
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