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A well-established strategy built around recruiting and retaining distributors and customers is key to any company in this industry. Making your distributors feel part of a flourishing business, increasing brand awareness, creating new opportunities through product innovation, and distributor training are all crucial aspects.
As part of this strategy, it is imperative to make it easy for distributors to do business with your company. Buying products and receiving commissions are the core activities that link your company to your “sales ambassadors” on a day-to-day basis. More than in any other industry, an efficient flow of funds is vital to keep your business going. A well-established payment strategy will help you retain your distributors and customers, increase your revenue, and cut costs. A direct selling company can turn its payments cost center into a revenue-generating department with the help of an experienced service provider.
Many direct selling companies have embraced the Internet to help distributors manage their businesses. An online shop offers efficiency in finding and buying products and enables a much faster turnaround time to deliver goods, thus increasing sales.
With this “new commerce” ability, a vast array of opportunities has arisen for direct selling companies. The introduction of online ordering also gives access to an entirely new range of payment options. Accordingly, a direct selling company can significantly increase its international market share by providing its distributors and customers with the ability to pay with their preferred local currency and payment method. The ease of payment is what will make your distributors return to the online portal, moving away from the often cumbersome and inefficient mail or telephone order processes traditionally in place.
There is a vast choice of payment options: Apart from standard international credit cards (such as Visa, MasterCard, AmEx and JCB), you will find domestic (national) cards (like Maestro UK, CartaSi Italy and Discover U.S.), direct debits (like ELV in Germany), wire transfers, real-time wire transfers (including iDEAL in the Netherlands, Giropay in Germany and Secure Vault in the United States), cash equivalents (like Western Union), e-wallets (like PayPal, WebMoney), prepaid cards, checks, and other alternative payment methods. So how do you choose the strategy that will work best for you?
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Establishing a supporting payment strategy to increase your business revenue depends on four factors:
There is a proven correlation between the number of localized payment methods offered and increased customer conversion rates. However, thinking global and acting local is easily said but can be a challenge in such a diverse and complex industry.
Many direct selling companies operate a recurring billing model, often referred to in the industry as “auto-ship.” Payment methods, like credit cards and direct debits, in particular, are very well-suited to the recurring billing model. In the online shopping environment, recurring billing offers an additional advantage to create a smooth check-out process. Distributors can create a profile on your Web site that stores their credit card or bank information; this way, your distributors can log in at any time from anywhere in the world and place orders with the credit card or bank account on file used to charge
the order.
While Cutting Costs Listen to your distributors about what payment options are most popular and, perhaps, unique in their country or region. Adapting this strategy of diversification may seem expensive, but you will soon find that it can actually be very cost-effective.
Broadly speaking, transaction fees are calculated two ways: Credit and debit card charges are calculated as a percentage of the transaction amount. Alternative payment methods are generally charged as a set fee, regardless of the transaction value. So, in countries where alternative payment methods are very popular, a company can realize significant cost savings by offering a number of noncard payment methods to its distributors and customers. For example, let’s say your average credit card charge for an online purchase is 3 percent. On a $200 order, that equates to $6. An alternative payment method, like a real-time bank transfer or direct debit, has a fixed charge of approximately $1, regardless of the transaction amount. If you think about this scenario in relation to your company’s expansion plans, you can easily see how cost savings can be realized.
Entering a new market will present your company with a number of new challenges, such as handling foreign currencies, local legislation, a new banking landscape and distributors with a different culture. Rather than finding your own way through those tricky waters, consider centralizing your collections and payouts with the help of a global payment service provider.
While many providers limit their service to a technical link with payment acquirers, a full-service provider offers its clients a portfolio of additional services—like information about local regulations, area customs and cultural payment preferences.
Your distributors rely on you for their monthly income. So the process of making commission payments to distributors and associates has to be efficient, on-time and accurate. An experienced service provider enables you to fully automate this process and transfer money electronically to your distributors or associates. Plus, payouts can be pre-funded in single or multiple currencies. All that is required is the bank account data of the recipient to validate the account information and transfer funds.
Lenny Crotty is Business Development Manager of International Payment Systems for direct selling companies at GlobalCollect. He is based in San Francisco, California. GlobalCollect has opened the door to global online payment processing for some of the world’s leading direct selling companies.For more information, visit www.globalcollect.com.
