2021: A Year of Chance, Change & Challenges

When I think about our firm’s 2021 plans, these lyrics to Garth Brooks’ hit “The Dance” keep running through my thoughts…

“Our lives are better left to chance.

I could have missed the pain,

But I’d have had to miss the dance.”

The Element of Chance

And boy, what a dance it’s been lately! I’ve been in direct sales for more than 40 years, and no other year has been as difficult to forecast as 2021. The element of chance dominates our planning as never before. The biggest 2021 chance factors are:

 WHEN will safe COVID-19 vaccines become available to all?

 WHAT percentage of the population will actually take the vaccines to avoid being infected?

 And then, WHAT degree of normalcy will the vaccines allow us to resume, compared to pre-COVID times?

 

Regardless of when it happens, our return to normal activities and schedules is likely to have significant impact on our sales and inventory forecasts.

Here’s why:

The negative impacts of COVID are many. Death, illness, job and income loss have had catastrophic effects on the lives of millions. Just as profound—the effects of isolation, i.e., “hunkering down at home.” For close to a year now, social distancing has dictated a culture of not doing things. We’re not going out, not attending meetings, not going to sporting events and church services. If there’s a silver lining to any of this, it’s the fact that three extremely significant opportunities have emerged for direct sellers.

1. People, especially women, have been at home, day and night, in percentages not seen since the 1950s. For that reason, virtual selling events using Zoom and Facebook are now drawing large audiences—much larger than they might have attracted earlier in the pandemic. People have been at home for months now; they’re more likely to be available for virtual selling events regardless of how much notice of the event they receive.

2. The loss of jobs, again, especially among women, has been staggering. Jobs in retail and restaurants have disappeared in the millions. Many women, and to a lesser extent, men, have been faced with a choice: Stay at home to help their children with remote learning, OR find work to help pay the bills. For that reason, many have been willing to consider joining a direct selling company to help with family finances. Simply stated, more people than ever are at least willing to listen to our part-time income opportunities.

3. Direct selling has another important competitive advantage over other gig economy options. Independent direct sellers can do their business online and make money while never having to leave home. No travel time required. No child care needed. Direct sellers can safely socially distance, hunker in and keep their families safe. Unlike other members of the gig economy (Uber drivers, shoppers, delivery people), there’s no need to go out into the world and be potentially exposed to infection. Direct sellers can avoid all of the expenses of these other gig opportunities and stay safe for their families as well.

Again, our forecasting difficulty arises because of the big “when” question—When will vaccines enable us to return to some level of pre-pandemic activities? When that finally happens, some of the advantages direct sellers have enjoyed since March will be significantly reduced or go away altogether. We need to be ready for our new normal.

The Impact of Change

It’s hard to imagine a year of greater change for direct sellers than 2020. The basic takeaway is this—all the negative side effects of COVID—unemployment and the need for replacement income, social distancing, isolation, the need for child care and home learning and reduced in-store shopping—have actually worked to the benefit of retail-focused direct sellers.

Prior to the pandemic, direct sellers had to compete for the time and attention of potential customers. Once people started staying at home and hunkering-in, they became available to take an online appointment or attend an online group product demonstration event.

Along the way, we’ve adapted even more by switching to online conventions and meetings and making greater use of smartphones and computers as direct selling tools.

So yes, we’ve seen a lot of change in 2020.

But here’s the big news—2021 may bring even more changes than this year has.

Challenges Facing the Industry in 2021

One of direct selling’s traditional strengths has been the fact that most company founders and senior sales executives came out of the field. Now that’s changing. Going forward, solid experience in “traditional” direct selling basics could become less of an asset and more of a challenge.

But now the field has been forced to find their way to success using online sales events, social media and customer acquisition tools. They’ve had to create their own new methods or learn from others who successfully made the change. For the most part, these new techniques have been developed by field leaders using trial and error rather than experience.

In recent months, I have had senior sales executives admit in private that they have no idea how to lead, train and motivate an entirely online independent sales force. Those are the smart executives; they’ve already accepted the situation. However, other executives seem to be in denial. I know some of my Strategic Choice Partners colleagues have experienced significant pushback from corporate sales leaders who simply do not know how to lead in this increasingly unfamiliar environment.

Finally, take those concepts and turn them into company-provided training materials and supportive technology tools.

It’s significantly easier for traditionally retail-focused direct selling companies. Because they focus on sales to ultimate consumers who are not part of the compensation plan, it becomes a question of managing the margins and providing the sales force with appropriate product promotions. BOGOs and free shipping options keep them competitive with e-commerce sellers and other gig economy opportunities. In some cases, margin issues and shipping expenses may impact the array of products that the direct seller can offer.

On the other hand, companies with a traditional consumption-based marketing and compensation plan have a very tough transition to manage. Binary and matrix compensation plans especially depend more on structure than volume. The result can be a senior field leader culture that’s difficult to change. Transitioning to a more retail-focused company will require shifting some portion of the current payout from the top of the plan to the bottom. That alone becomes a huge challenge for management.

The bottom line—change is inevitable. It might be nothing more than moving from in-person meetings to virtual meetings. Or it could involve a major compensation plan restructuring. Regardless, here are some basic change management actions that will help if the company practices them:

1. Be sure everyone involved understands the changes that are taking place in the market environment. That includes corporate staff AND senior field leaders. Education and transparency are key, especially where your field is concerned. That’s because…

2. Your senior field leaders are usually the least helpful source of good ideas regarding change. Sure, they probably helped drive the company to its current size and volumes. But for the most part, the only system they know is the one that got them to the top of your plan. Even if they had experience at other companies, they usually lack deep knowledge about the industry, the market and regulatory forces that drive change.

3. Compare the company’s key performance indicators (KPIs) against competitors that are growing. What factors are making other direct selling companies successful? You may need to engage outside expertise to help you obtain and understand certain KPIs that the company may not have been tracking.

4. Test your proposed changes in the field. Pay particular attention to how successful your first-level leaders and new recruits are using the new programs.

Yes 2021 is going to be a significant year of chance, change and challenges that will tax every direct selling company management team. Most companies will survive by implementing the needed changes, but some will not.

So, embrace the best change management practices. And educate your senior field leaders fully and transparently. You’ll need their help not only to recognize your common challenges but also to implement your corporate response. Hopefully, at this time next year, we can all say that 2021 was indeed a year of challenges and changes. But we made the changes and are looking forward to 2022!

Together we can make 2021 a great year! 

W. Alan Luce is Senior Managing Principal of Strategic Choice Partners, LLC, (formerly Luce, Murphy Fong & Associates, LLC) a consulting firm dedicated to providing services to direct sellers and specializing in guidance for established and start-up organizations.