The Critical Importance of Industry Research

Click here to order the August 2013 issue in which this article appeared.

Editor’s Note:  We recently asked the committee leaders of both the USDSA and the WFDSA Research Teams to share with us what they were doing in the area of industry research and what they hoped to accomplish with their work. Here is what they had to say.

Why Is Research So Important?

Industry Research is a topic most people don’t think much about, but in reality it is critically important to our everyday business. In fact, research provides a great many benefits, including:

• Serving as a guidepost for strategic decisions.
• Internally at companies, it gets everyone on the same page, both veterans and newcomers alike, by providing a common data set from which everyone can draw.
• Providing industry benchmarks against which a company’s key performance indicators can be compared.
• Dispelling myths and providing ammunition for fighting back against misstatements by industry critics.
• Bringing a mission-critical understanding of the general public’s feelings and opinions on matters ranging from the personal service they get in the traditional retail environment to their trust of the direct selling industry as a whole.

Whether association and government affairs professionals are discussing the merits of direct selling with legislators, regulators and consumer protection groups, or whether communications professionals are presenting the industry to journalists, investment analysts and the general public, research is what provides the necessary data.

The diagram on this page illustrates this process. Strategy drives the research. The research informs those involved in government affairs and those involved in media and communications efforts. These and other professionals, in turn, use research and their professional knowledge to develop new strategies. And the cycle begins again.

The Challenge

In the direct selling industry today, there are no credible syndicated sources for research, meaning market research studies conducted by a company then “packaged” and sold to multiple clients. For example, in the natural products sector, a research company called SPINS provides recurring reports on measureable key industry issues and opportunities. In the consumer packaged goods, retail and healthcare markets, a company called IRI provides a continual stream of research and analytics. This syndicated research is a critical element for driving common insights to executives in these industries. 

In fact, managers in these industries receive reams of data—on a frequent basis—from which their teams can make strategic decisions informed by research. It is not uncommon for executives who come into the direct selling industry—particularly in the areas of strategic planning, marketing, product ideation and sales force development—to express amazement with this lack of syndicated research. As research team committee leaders, this is something we intend to remedy.

Recent Research Progress

In this absence of credible syndicated research within direct selling, we have to be the experts on our own industry. This is what the research teams are working towards; but it takes time—and most certainly it takes a village.

The Global Research Committee of the World Federation of Direct Selling Associations is a professional team of 16 including company research/analytics executives, industry association representatives, and an external third-party vendor who receives and aggregates data to maintain confidentiality.

This team works to gather, vet, analyze and report annual statistical data to “size the market.” Stats are collected on sales, sales breakdown by product category and by sales method, the number of those involved with direct selling, and who they are.

Since 2009, this team has worked to establish a standardized process for data collection with standardized definitions. As examples:

• All countries now report at estimated retail level (rather than net sales/revenue).
• The size of the entire direct selling industry in each market is assessed, rather than just the size of DSA member companies.

Confidentiality is key. All company data is received on a confidential basis and is only reported in the aggregate.

Collaboration is essential to this annual effort.

• 60 member direct selling associations are involved, collecting data from hundreds and hundreds of member companies.
• Beyond these 60 countries, the Research Committee researches the size and nature of direct selling.
• All told, it takes some 5,500 person hours annually—that’s two and a half people, working the equivalent of more than 1 year—to produce the Research reports and country fact sheets found at http://www.wfdsa.org/about_wfdsa/index.cfm?fa=globalStats.

Additionally, the Industry Research Committee of the United States Direct Selling Association has effectively raised the bar for credible research in recent years. The team has made progress toward creating an understanding of the state of the U.S. direct selling industry, a synthesized 360-degree picture that presents statistics and attitudes of direct selling consumers, member companies, and of direct selling entrepreneurs, both part- and full-time.

A new Research Manager has joined the team. Additionally, two external third-party research partners have helped:

• Nathan Associates, a long-time DSA research partner, offers the expert view of an economist, coupled with formal research discipline.
• Artemis Strategy Group brings knowledge of the strategic priorities behind our efforts and expertise in both primary and secondary research.

Moving Forward

While we believe we have made great strides on the research front, there is much more that remains to be done. As members of the direct selling community, we need to step up our game and be more competitive than other distribution channels such as franchising, e-commerce, direct mail and others.

As an industry, we are being called on to communicate more fully, more consistently, and more transparently. In our meetings, and when we report our annual statistics, we focus on how we benefit individuals, families, communities and societies. But some would argue that the connection to that benefit can’t—and shouldn’t—be measured on market size and sales data alone. To the general public, key opinion leaders, and yes even our critics, a strong Research/Communications collaboration will apply the evidence to tell the story of the trickle-down impact of every direct selling dollar earned.

More collaborative relationships can only strengthen what we do. For instance, we envision collaboration with the Direct Selling Education Foundation (DSEF) to bring added dimension to Research efforts.

Why DSEF?

• DSEF champions consumer protection and consumer education and works with academic researchers who seek to understand the benefits of entrepreneurship to society.
• Academia has made amazing contributions to our success as an industry: helping us understand how consumers shop; how micro-and macro-economic trends drive our business, and the economic impact of direct selling on societies, just to name a few.
• The deeper we can go to partner with DSEF on research objectives, the better! By understanding their existing research landscape and generating new, original research, we can more accurately portray the intense concern our industry has for the people we work with and the communities where we do business.

Taking a global view is increasingly important. It’s “one world” out there in these days of cyberspace. Our DSA collaborations will become even more important than they are now. Gone are the days of focusing on “our own market.” Moving forward, we have to coordinate all the more on a cross-country, pan-world basis. 

Only by everyone working together as one—one team, one industry, one world—do we make this vision a reality over time, and one step at a time. Because research is everybody’s responsibility.

To participate in the research process, please contact Ben Gamse for the USDSA and Maureen Paniagua for the WFDSA.