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When people sign up with a direct sales company, many do so with at least some level of intent to create a business. They’ve purchased a starter kit because they love a product or service and want to share it with others. Or they see extra income and possibly even career options open up for them in the new opportunity. Yet low retention of consultants continues to be a problem for companies in the direct selling channel, and often at very high rates.
Industry insiders estimate that between 70 and 80 percent of new consultants don’t take any action, including placing an order or attending a training, after they join. Some of this inaction could be due to the percentage of consultants who sign up in order to receive a discount on their own purchases. But even with that scenario taken into account, the number is simply too high to accept as “business-as-usual.”
A second generally accepted statistic—that a significant percentage of revenue for firms comes from consultants who have been in the business less than a year—also indicates a retention problem. This number can indicate a high level of enthusiasm at the beginning of the new consultants’ fledgling business. But then what happens to them? Where do they go, and why do they stop ordering?
Most new consultants have some combination of excitement and doubt when they sign up. They believed enough in the product and opportunity to spend money on a starter kit or package, yet they also could harbor serious doubts about whether or not they can be successful and wonder if they made a mistake by signing on. By rethinking the new consultants’ experiences over the first few days and weeks after enrollment, companies could remove many of the problems that contribute to that high inactivity rate. Even small increases in activity could boost a company’s bottom line. Getting new consultants off to a strong start, and thus keeping them in the business longer, also could help curb some of the criticism in the marketplace about direct selling businesses.
Similarly, if companies could extend the ordering life of a consultant further into the first year and beyond, everyone involved succeeds—the consultant has built a longer-lasting and successful business, and the company has increased its retention rates, resulting in more stable revenue.
We suggest that by integrating the following three principles companies can have a positive impact on their retention rates and raise them, both for brand-new consultants and those who drop off after their first year. These three principles are:
- Provide step-by-step strategies for success at various intervals.
- Offer constant recognition, mentoring and feedback.
- Create, embrace and live the company culture.
Principle One: Provide Step-by-Step Strategies
Providing step-by-step strategies is important for all levels of the consultant base, but particularly important for the new consultant. In fact, Paul Adams, Senior Vice President of Strategic Marketing at SUCCESS Partners, who has nearly 30 years of experience working with direct selling clients, says most companies have a significant lack of guidance for new people during their first week or two in the business. Adams says, “The new consultant wants to know ‘What should I do FIRST?’ and then, ‘What should I do SECOND?’ In my experience, this very basic information does not exist in most companies.”
WANT TO IMPROVE YOUR RETENTION RATES?
Adams goes on to say that many companies spend an enormous amount of time telling the field everything they need to know about everything all at once, and overlook the clarity and simplicity of only telling them what they need to know in the first few days and weeks. “If it’s simple,” Adams says, “then it looks doable to the new recruit. If it’s complicated, then it doesn’t.”
Sadly, this overloading of the new recruit with information is a common practice. Some feel that the new person should have all of the information the company has available—from the entire compensation path to every detail about the products, to enrollment in an online university-style course. While this may sound like good communication from the company to the new recruit, it’s actually a fatal overload. Like the frustrated individual who only wanted a modest drink but was given a fire hose, many new consultants on the receiving end of this deal walk away. It’s not that the information wasn’t good, or helpful. It’s that it was too much information, and way too soon.
It’s pretty simple: Newcomers to the business need basic, step-by-step instructions that will move them along in their journey to the next milestone. This is even more important considering that most people joining a direct selling company may have little or no sales experience. Telling them exactly what to do, and when, can help instill a sense of confidence.
When new consultants are sold on the importance of mastering one skill before advancing to the next one, a sense of trust is built between the recruit, their upline sponsor and even the company, says Jessica Magoch, CEO at JPM Sales Partners LLC and Virtual Sales Academy in Philadelphia. Magoch led teams for startup health insurance company Atlantis Health Plan and direct seller World Financial Group. She recruited, trained and managed a team that grew sales to more than $40 million in five years.
“It’s like the scene from the movie The Karate Kid,” Magoch says. “He waxed the car, he followed the steps and he achieved because he trusted his leader. With salespeople, if they know you have their best interest in mind, they will come to trust you.”
According to Adams, in initial materials a rule of thumb for timing is providing action items for the first 72 hours, the first week, and the first 30 days. Providing more material than this at the outset can confuse the new recruit and encourage doubts to set in.
Principle Two: Offer Recognition, Mentoring and Feedback
Not feeling valued for one’s efforts is a common complaint in any group. Employee engagement firm TINYhr surveyed more than 500 companies and 200,000 people to compile its 2014 TINYpulse Employee Engagement and Organizational Culture report. It found that only 21 percent of employees say they feel strongly valued at work, and only 33 percent say they see strong opportunities for mentorship and professional training and growth. How does this translate into direct selling?
Within the direct selling community, we pride ourselves on being excellent at recognition and spreading our positive outlook. But perhaps we too need to do a better job. New recruits need as much, or more, recognition for the basic steps as the top achievers do for their efforts. Of course, the entire upline and downline structure of a direct selling organization is built with a deliberate mentoring process in mind. We would all agree that a close relationship with an experienced leader is essential to retaining new consultants. However, the reality is that many new recruits are left on their own to figure out the process by themselves.
Putting in place a more formal mentoring process can provide a vehicle for recognition, while also strengthening the new consultant’s understanding of the company’s sales processes. This is a pattern that can be duplicated again and again.
Zach Schaefer, President of St. Louis-based consulting firm Spark The Discussion, works with companies to improve their communication to enhance performance. He advocates a “structured shadowing” program that lets the new salesperson observe and follow the best practices of a more advanced leader. This process also creates a feedback loop as the mentor, usually the upline sponsor, coaches the new consultant.
“This two-way communication is essential for the advancement of a new person as they need to continually learn about what they are doing well and what they need to work on,” Schaefer says. Given generational shifts, these issues will only stand to carry more weight as millennials come into their own. Schaefer observes, “Millennials especially need constant recognition and appreciation for what they are doing. If you can give them that, the better they will hit their goals.”
According to Schaefer, the shadowing process should occur in three phases:
- Before the shadow. The leader talks with the recruit about what to watch for and listen to. This sets up expectations and primes a new consultant to pay attention to certain interactions.
- Actual shadow. The new consultant tags along on a presentation or party, and should even participate.
- Debrief. The leader and new consultant discuss what went well and what didn’t. The debrief gives the leader a chance to analyze his or her own actions and the actions of the new consultant.
When a leader offers feedback, it can accomplish three things: show appreciation for a certain behavior, evaluate actions, and offer coaching and development.
Implementing a mentor program makes it even more important for a company to have what Adams calls “one rhythm.” Everyone involved in the company, from the boardroom to the recruiting consultant, must be speaking the same message with one voice. When there isn’t a rhythm—a cadence that everyone follows—strong field leaders have a tendency to develop their own programs and systems, and often that influence can become more forceful than that of the company. Adams says, “A mentoring culture that emphasizes one message and one way of doing things will have the advantage over a culture that allows freestyling from enterprising field leaders. That’s a hard rope to reel back in once it’s out there.”
CASE STUDY ON A SHADOWING MENTOR PROGRAM
At luxury clothier J.Hilburn, stylists provide training and shadowing for new consultants as they learn the J.Hilburn way. A private Facebook group provides real-time communication, support and recognition. On-the-job mentoring is a key component of the program, says Melissa Brisbois, Executive Vice President of Sales.
To leverage that data point, J.Hilburn’s “getting started” program pinpoints client acquisition. Sales leaders working as mentors earn bonus commissions when they collaborate with a new stylist on serving those first clients. By allowing both a veteran and new recruit to earn commissions on the same sale, J.Hilburn incentivizes teamwork.
“Part of our culture is helping others,” Brisbois says. “This approach is so successful in helping new stylists get up to speed faster.”
At J.Hilburn, most stylists are new to direct selling, so not only are they learning about the luxury brand of fine Italian fabrics, but also they must learn the high-touch techniques of direct selling, says Kristen Celko, Chief Marketing Officer.
What J.Hilburn is learning is that the retention of stylists automatically cascades down to better retention with customers. “Many efforts to build retention on both sides are complementary,” Celko says. “And we continue to learn from both.”
Brisbois adds that stylists sign up to sell a brand they are tremendously passionate about. As recruits evolve, they receive constant support from a stylist care team and a fit team. And as sales leaders develop, J.Hilburn executives make it a point to listen to their field and to customers. The company surveys both groups twice a year seeking feedback and ideas. The J.Hilburn method proves the point that retention ranks high when people know they are cared for.
“When we did the survey we saw clear opportunities to offer different concepts,” Brisbois says. “We didn’t think it was a good idea at first, but stylists asked for it and we incorporated it. When you listen and respond, and reward appropriately, that brings satisfaction up over time.”
A good mentor gives a shadow many opportunities to lead and then discusses what he or she can learn from mistakes. This is where appreciation and recognition come into play. When used to point to specific actions in an authentic way, appreciation reinforces positive sales strategies.
If a company already has a program in place, it’s important that the executives be well-connected to the field. If there are no executives who have prior field experience, the best thing a company can do is cultivate strong relationships with field leaders and learn to incorporate and listen to their perspective. While not all input will be suitable for executable programs, learning to be comfortable hearing directly from the field is invaluable to an executive team otherwise isolated from what’s actually happening.
However, providing step-by-step strategies and implementing a mentoring program that provides good recognition will not help new consultants reach their full potential if the most critical ingredient for a company’s success is missing: culture. This can be the true differentiator for any company, and can be the element that best improves low retention rates.
Principle Three: Create, Embrace and Live Culture
An authentic culture must begin at the home office, and extend out to include the salesforce; however, many companies do not see the importance of developing a great culture. Yet, Quantum Workplace, the employee engagement and research company behind Best Places to Work™, annually surveys 5,000 organizations that tell them culture matters.
In fact, culture matters so much, analysts state that the publicly traded firms recognized as Best Places to Work and known for their strong cultures outperform the S&P 500 by 2 to 1. The Talent Board, a nonprofit research organization dedicated to improving the candidate experience, reports that 41 percent of job candidates search for information about a company culture before they apply.
But additional surveys of employees indicate that not all executives understand how important the culture component can be. According to the TINYpulse survey, 65 percent of employees do not feel they are a part of a strong work culture. If strong culture does not exist at the home office for employees, it doesn’t exist in the field for consultants either.
Almost everyone agrees today that companies with great cultures have the advantage for gaining revenue, producing growth and increasing retention. But why is this true? Because an engaging and appealing culture can be “sticky,” helping individuals persevere through tough times, whether they work at the home office, or are consultants in the field.
When a new consultant can plug into not just a business opportunity but a culture that generates loyalty and excites passion that consultant will remain active and productive for a longer period of time.
A great culture also is one that provides opportunity for personal development. The TINYpulse survey revealed that 66 percent of employees feel that their opportunities for personal growth are limited in their current roles. If a corresponding number of recruits in direct selling companies feel the same way, then it will only make it easier for them to stop working their businesses, or pursue a different option that might offer more in this area.
A good personal development program can prove to be one of the best parts of a “sticky” culture. People will remain more loyal to a company when they are happy with who they are becoming. With personal development the direct selling professional often becomes aware that they can be more and achieve more than they ever thought possible. The basic skills of presentation, communication, goal-setting and time management augmented by training on overcoming adversity, gaining self-esteem and handling rejection can produce remarkable results, and increase retention rates.
There is no downside to increasing retention for anyone involved. The new consultant has an improved chance of building a better business, the company can stabilize revenue and enjoy profitability, and the customer can experience stellar service.
Companies concerned with retention would do well to review their new-consultant materials, consider implementing mentoring and feedback systems into their training, and above all, take a hard look at their culture and make building that a priority.