Working Smart

Fuel Your Business with Autoship
by Jay E. Leisner

Direct selling companies need momentum to propel themselves forward. Momentum is generated from an engine that is fortified with people, products and purchases. For many companies, autoship can fuel the business to drive forward faster.

What Is Autoship?

Autoship is an automatic ordering program whereby representatives or customers of a direct selling company receive shipments automatically on a periodic basis (usually monthly).

What Can Autoship Do for My Business?

Autoship accomplishes several company goals:

• It encourages the placement of orders on a regular basis by sales representatives.
• Since effort is required to cancel an autoship, representatives will order products over a longer period than they otherwise would.
• Sales representatives don't need to remember to order to meet their personal sales volume requirement.
• When offered to customers of representatives, autoship increases the income of the representatives by providing recurring sales.
• Autoship can be used to help balance the volume of orders to be packed and shipped throughout the month.
• Autoship helps increase the rates of retention of sales representatives and customers.
• When a company knows the percentage of its sales attributable to autoship, it can predict next month's sales volume more accurately.

What Types of Products Can be
Sold through Autoship?

Products offered through an autoship program ideally should be those consumed within one month, so when the month is over and the next month arrives, another autoship order is needed.

Autoship can also be used to ship a series of products over time. One could receive Item A this month, Item B next month, Item C the following month, etc. Collectible products, wine, books, home décor items, clothing-all of these items that would not be ordered identically each month could be ordered through an autoship series program.

Autoship can be used to provide representatives with the first opportunity to sample new products. As products are introduced periodically (perhaps monthly or quarterly), representatives who signed up for the new product autoship can receive these items first before they are available to others in regular orders. It's easiest to offer an autoship program when selling nutritional products, since they are typically packaged for a month of daily use.

Autoship can also be used to provide busy representatives with an easy way to meet their personal sales volume requirements and help solve the problem of their missing the placement of a qualifying order to earn bonuses or advance in rank. Each representative can choose what they would like to order monthly.

Some direct selling companies issue catalogs or magazines on a regular basis. To encourage distribution to their customers, representatives pre-order the catalogs or magazines through an autoship program. The publications are sold in bundles of multiple copies, but each representative determines the number of bundles to be shipped.

Companies can offer more than one type of autoship program concurrently. Representatives can have more than one autoship order generated in the same month. For example, if a company offers a new-product autoship program and a monthly autoship program, a representative might enroll in both programs.

Representatives and customers should be offered the ability to change the items ordered, so if they wish to add an item to their autoship order (for one month or for all future months), they can do it easily and quickly. The best way is to provide your sales representatives and their customers the ability to modify their autoships both online and by telephone.

To reduce customer service demands, companies should also offer distributors and customers the option to put an auto order on hold for a month or longer to account for vacations and other reasons they might wish to skip a shipment.

How Can Companies
Encourage Autoship Orders?

Companies can promote their autoship programs in many ways:

• Discounted or free shipping can be offered on autoship orders.
• Lower prices can be provided for items ordered through autoship. You can choose to extend autoship prices to all orders placed that month or limit autoship prices to items ordered on an autoship order.
• All of your products can be available through autoship or only a select group can be ordered on autoship.
• Groups of products that are company-defined or selected by the person ordering can be made available for ordering only through autoship.
• A special incentive can be offered for those who enroll in autoship-perhaps a free product of choice on a second or third monthly shipment.
• Autoship can be promoted as an insurance program in which an autoship order is created only if the representative does not have enough personal monthly sales volume by a specific date in the month. Autoship orders would be created only to ensure the personal sales volume requirement of a sales representative is met for bonus eligibility.
• Bonuses can be paid differently on the first autoship orders to sales representatives, each of whom must also have an active autoship order.
• Different activity requirements can be established for personal sales volume-for example, a lower volume requirement for autoship volume than for volume created from regular orders.
• Autoship volume can be required for bonus eligibility for some or all bonuses.
• Customers of representatives can be offered an opportunity to purchase at prices lower than retail, but higher than the representatives' price when they, too, enroll in autoship.

While there are many options available, it isn't practical to implement all of them. Just like pickles and ice cream, some combinations don't work well.

How are Autoship Orders Paid?

Credit cards are most often used to pay for autoship orders. Some companies also accept bank drafts and Automated Clearing House payments.

In any given month, a percentage of autoship credit card payments will be declined (due to inadequate credit, canceled cards and other reasons).

When payments are declined, direct selling companies call or e-mail their representatives and customers to request a replacement form of payment. If another credit card number isn't obtained, an autoship order isn't shipped. As a result, representatives may not have sufficient personal sales volume to receive commissions or bonuses.

To minimize the impact of declined credit cards on a company and its salesforce, an alternative form of payment should be requested at the time of autoship enrollment so it can be used if the preferred form of payment isn't successful.

What Is a Successful Autoship Program?

A successful autoship program is one that produces these results:

A higher rate of order placement from sales representatives and customers. At the time of enrollment, representatives have more than one reason to set up an autoship order. The percentage of the company's sales attributed to autoship is significant and growing. The rate of retention of sales representatives is high relative to businesses selling similar products without an autoship program. The shipment of autoship orders does not cause a fulfillment bottleneck.

Conclusion

When designed and marketed appropriately, autoship can be used effectively to promote and sell many types of products. For direct selling companies searching for innovations to stimulate growth, consider autoship. It can fuel your business.

Jay Leisner is president of Sylvina Consulting (www.sylvina.com) and has 20 years' experience working with direct selling companies. Sylvina provides business-development and technology-consulting services to network marketing and party plan companies. They work with startups at the concept stage, young and established companies and large multinational firms. Jay can be reached at jay@sylvina.com

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