It all starts with Language.
The debate about what direct selling is and isn’t continues to evolve. As a channel, we have an immediate opportunity to redefine the business model and control the narrative. But do we know what we want to say?
Direct selling has an identity crisis. And much of it is of our own making.
Since many segments of the industry started experiencing decline in 2015 (a notable exception being services), we have made attempts to reinvent and redefine the channel without actually moving the needle very much.
When the challenges are so evident and the timing so important, why have we not done a better job of righting the ship and creating a more positive, relevant reputation for an industry that has done so much for so many?
Direct selling companies are slow to change. It’s a part of the culture. The industry is steeped in positivity and optimism, and that makes recognizing and reacting to potential roadblocks challenging. “We are inherently positive in our DNA,” explained John T. Fleming, DSN Legend, DSA Hall of Fame, Researcher and Author. “We often view change as disruptive even though change, innovation and transformation can all be very positive.”
A hesitant mindset can create crippling myopia, keeping the industry mired in the past. History is littered with companies who didn’t innovate when the market demanded it. Once mighty, monolithic brands like Kodak and Blockbuster were left behind when they failed to pivot at critical moments.
O.C. Ferrell, James T. Pursell Sr. Eminent Scholar in Ethics, Auburn University, explained, “All retailers must continually innovate. As time moves on, what worked 20 years ago at Wal-Mart doesn’t necessarily work today. The same holds true for direct selling. The channel can’t expect to maintain the status quo and succeed. Direct selling companies must adapt and adopt to new technologies and recognize and accommodate the continual changes in consumer behaviors.”
Greg Marshall, PhD, Professor of Marketing and Strategy, Rollins College sees the potential for stagnation within the direct selling model to be a real barrier to future growth. “For one thing, this channel has to stop holding on so much to the past,” Professor Marshall says. “Going forward direct selling must figure out how does the market want to be served, and specifically what does the current and future consumer expect from a relationship with the direct selling channel. There’s an entire new generation of people who need and want what the channel can offer—but at this juncture the opportunity remains greatly untapped. Some leading-edge direct selling firms are in various stages of discovery on how this new generation wants to be served; others have done little. I don’t know what those firms are waiting for, but they need to stop waiting and start changing their go-to-market strategies sooner rather than later.”
Direct selling also has a lingering perception problem. While we provide exceptional products and services and a viable supplemental income opportunity that should appeal to the rising tide of gig workers, we are somehow still considered separate, outdated, predatory or even unethical in some quarters.
It’s an image that—despite the best efforts of direct selling companies, global DSAs, academics, public relations firms and participants in the channel—persists, even though the most egregious examples that define us that way are 30 to 40 years in the past.
As Gordon Hester, Chief Sales Officer, the Americas, PM-International, explained, “Direct sellers are extremely talented at marketing hope. Often that leads to ‘over promising and under delivering.’ Hope requires confirmation. If you fail to turn hope into results, you lose trust. That is the core issue driving misperceptions about our channel and opportunity. We are in a relationship business. Trust is an important element of earning long-lasting relationships.”
The problem, according to Peter Maddox, President of DSA Canada is twofold. “On one end, there is a narrative that it is easy to make significant money, when we all know that it takes effort, skill, time and focus. The opposite perception is that nobody makes any money, which is also wrong but a favorite critique of those who are vocally anti-direct selling. The industry needs to find a way to clearly communicate the reality, which, of course, falls between these two extremes. The responsibility for that falls on individual salespeople who must paint a realistic picture when recruiting. And also on companies that have the data to communicate earnings details that are both representative and encouraging.”
The opportunities are out there. The pieces of the puzzle exist. The timing is perfect. But questions remain. What falls under the umbrella of direct selling? Where do affiliate programs fit in? How do we broaden our appeal and redirect the narrative?
In many ways, this article is about these overarching questions—not about the answers. Those are for the collective industry to determine together as we move forward. But one question we are determined to address immediately is how do we best shape and sharpen our narrative focus.
The Stories We Tell
If there is one topic where everyone aligns, it’s the remarkable stories that the channel can (and should) share with the world. But compelling messaging often alludes us.
The problem started decades ago, in the ‘80s and ‘90s, when pyramids flourished, and bad actors thrived. The condemnation was swift, public and—unfortunately—lasting. Direct selling was derided as being cultish with distributors being seduced by unrealistic income claims.
The industry developed a predatory reputation and, in some cases, deservedly so. The “bikini-and-Lamborghini” narrative was off-putting to prospects and a red flag drawing the unwanted attention of the Federal Trade Commission (FTC) and Truth in Advertising (TinA). Products often seemed secondary and inconsequential. It was all about volume, downlines, residual income and mailbox money, even though that wasn’t an outcome most distributors could or would attain.
From 2000-2010, we course corrected to more appropriate income and opportunity claims. We positioned ourselves as a supplemental way to earn extra money sharing quality products that people really wanted. Our opportunity offered what people craved: freedom, flexibility and community.
Many companies that were true innovators, with groundbreaking products, chose direct selling as a great way to share their products and offer supplemental income. The channel seemed perfectly positioned to capitalize on the growing side hustle/gig economy movement that has emerged in the last 10 years.
Then those projected gains didn’t happen. There isn’t just one reason for that failure. Overly complicated compensation packages, a lag in technological advancement, antiquated payment and product delivery philosophies, the pandemic and a demotivated and demoralized distributor base are just some of the usual suspects.
But one of the more interesting and overlooked contributing factors is the tone of the messaging we use to tell our stories. The pendulum has swung so far in the other direction that some companies seem to downplay direct selling’s most attractive differentiators, rebranding their opportunity to move away from detractors rather than being proud of offering quality products and services and a solid supplemental source of income.
It’s an attitude Linda Ferrell, PhD., Globe Life Professor, Auburn University, finds perplexing. “Direct selling has done a lot of proactive things to self-regulate and move away from outdated methodologies. They should be more positive and prouder of where they are going.”
So, what are the great stories the channel could share to redefine and redirect the narrative of the channel? According to Susannah Schofield, OBE, Director General, DSA UK, the industry should highlight success stories, ethical business practices and the quality of the products being sold.
Another key point is that those success stories should be told organically and authentically by the field. As Amway’s Vice President of Reputation and Integrated Communications, Cindy Droog explained, “It is one thing to hear from a corporate executive about our industry’s relevance and value. It is quite another to hear directly the stories of everyday people—and not always those who are the most successful—who have benefited from direct selling.”
Direct selling has come a long way, but the journey is not over. The value in direct selling—and perhaps the most compelling messaging—comes when success is both aspirational and attainable and not solely focused on monetary rewards. Confidence and community are powerful drivers and pivotal parts of an important story.
The Language We Speak
Something that goes hand-in-hand with storytelling is language—and it’s another acute pain point for the industry. The language and terms so recognizable to us can feel very insular and confusing to people outside the channel.
That complexity feeds into the skepticism that plagues direct selling and fuels the conventional wisdom that we are disreputable. This is perhaps best illustrated in how we compensate our sales force. The murkiness of the language makes us appear less accessible. For an industry that is supposed to be for everyone, sometimes the language we use doesn’t seem to resonate.
As Fleming shared, “Our compensation plans have gotten so complex no one can understand them. Simplicity is what people want, and traditional compensation plans with multiple levels of recognition and achievement and all the language surrounding them are often the polar opposite of that.”
The very real danger of all this complexity lies in the fact that direct selling is no longer the only game in town. “As we all know, there are thousands of gigs out there,” according to Brett Duncan, Co-Founder and Managing Partner, Strategic Choice Partners. “In the past, when we had the supplemental income market cornered, people were willing to tolerate the complicated and confusing aspects of how we did business. Now, they don’t have to.”
Droog agreed, “We should always ask ourselves how we can tell our story in a more accessible way. Our compensation models are not complicated if you start by sharing what someone can accomplish in their first 60 days, 90 days, 365 days. That is the language we should be using—the reality that the more products you sell, the more customers you acquire, the more you can earn.”
The strong start message was reiterated by Hester, “Compensation needs to be fair and should be tied to performance. I think the mistake companies often make is going too deep in the compensation plan with new distributors. You can share the potential, but the focus needs to be on getting new people off to a good start.”
And on that front, there is positive news to share that could move the proverbial needle. As Maddox explained, “Honesty and transparency about how many people are earning what amount of money would be very helpful. The numbers are actually fairly impressive when well-presented and coherently classified.”
The UK DSA has taken a bold step when it comes to language and positioning more broadly, earlier this year announcing that it was expanding its remit to become the voice for Direct-to-Consumer (D2C) retail, thus aligning itself more broadly with the wider D2C channel in the country.
Exits Erode Confidence
All these pressure points have converged to cause what DSN sees as an inflection point for direct selling as several companies have left the channel recently. No two exits are the same: some came from an influx of private equity investors with no skin in the game; some were to head off the ire of the FTC; and others were the results of simple closures or a change in the business model.
The instability and uncertainty these kinds of abrupt exits bring compounds the perception and reputation problems the industry fights.
The Accountability We Need to Take
While it would be easy to look solely at forces beyond the industry’s control for the source of reputation and perception problems, the truth is far more nuanced. The global economic downturn brought about by the pandemic and the resulting supply chain issues can be considered part of the problem. But, if we are looking at the channel holistically and fairly, home office executives deserve a share of the blame, too.
Corporate executives and field leaders alike often set unrealistic expectations from both income and effort perspectives. Then, to compound the problem, they fall short of following up with a system that walks people through realistic goals in attainable timeframes.
As Heather Chastain, Founder and CEO of Bridgehead Collective, shared, “One of the things that I have been talking about lately—particularly with field leaders—is this idea that one of the primary causes of bad press in our channel has to do with the gap between what someone thought was going to happen and what actually happened. So, this area of missed expectations is critical.“
“Historically, the expectation gap has been quite large,” Chastain continued. “This creates an environment of disillusionment, disappointment and embarrassment. Those things all lead to negative perceptions of the channel. In the past, we have focused on minimizing effort required, and maximizing income potential, and the opposite needs to be true today. At Bridgehead, we work hard to close that gap in whatever way we can. Whether that’s talking about transparency in earnings; lowering the numbers of what people can expect to earn in terms of supplemental income; and highlighting the fact that this is an effort-based opportunity.”
The Pivots We Need to Make
We asked several interested parties to share the key pivots they feel the channel must address to increase relevance and improve reputation.
1 / Fully embrace ecommerce
First and foremost, Duncan believes we must take on the identity of being an ecommerce industry. Schofield agreed, “We must invest heavily in digital tools and platforms to support online sales, social media marketing and virtual customer interactions.”
2 / Double down on product
In the past, products were almost an afterthought. But in a push to be more customer focused, many direct sellers have made great strides in developing high-quality, innovative products that genuinely enhance and improve people’s lives. The industry should talk about those products proudly and loudly to help steer the narrative in a more positive direction.
3 / Tell positive stories
Professor O.C. Ferrell believes the leadership of most direct selling companies is highly ethical and focused on doing things the right way. “Most of the top companies are socially responsible and committed to giving back to their communities. That message doesn’t get out enough.”
4 / Address comp plan complexity
Schofield advocated for simplified compensation plans. “We must reduce the complexity of compensation structures to make them more attractive, transparent and understandable.” Additionally, Duncan believes the channel must determine what a healthy compensation for team building looks like, without that payout accounting for so much of the corporate budget that’s now necessary for proper marketing and brand building.
5 / Capitalize culture and community
Integrity starts at the top. Changing the public’s feelings about direct selling isn’t easy, but it is vital. “The foundation of network marketing is culture,” shared Hester. “It’s critical that we establish high standards and guide the field to uphold them. The best way to do that is by setting a good example ourselves.”
6 / Normalize the opportunity
The way we compensate is not that different from other models. As Brian Bennett, Senior Vice President, Government Affairs and Policy, DSA explained, “Group sales occur in a variety of industries. So do commission structures. If I buy a car, the salesperson gets a percentage of that, but so does the floor manager, etc.” Direct selling must drive the narrative that we are not a different, odd or “other” type of business operating on the fringes.
7 / Broaden direct selling’s definition
One point everyone agrees on is whether industries with similar commission structures should be a part of the direct selling family. The answer is a resounding yes. Real estate and financial services companies have multi-tiered commission structures. And no discussion of direct selling would be complete without addressing door-to-door sales companies like solar, power and pest control. They fundamentally utilize independent contractors, recruit others, build teams—and they SELL.
The Change We Need to See
Researchers, academics, executives, consultants, field leaders—they all have different perspectives on what the most crucial changes are. But the undeniable common denominator among all these groups is the need for change.
Professor Linda Ferrell explained, “False earnings and product claims are what hang over the industry. The question now becomes can the industry look forward enough to truly put that behind them and to recognize the opportunities that exist.”
Professor Greg Marshall agreed. “As an industry, direct selling has been talking about change for five or ten years, but not very much has actually happened. There needs to be a heavy priority on change—change that assures that oncoming generations of potential consumers via the direct selling channel clearly recognize the value proposition of such engagement. I’m an optimist by nature, but the conversation in five years likely will be very different (less opportunistic) if substantive, strategic change in how direct selling firms create and deliver value in the marketplace doesn’t happen soon.”
At DSN, we believe in the power of direct selling, and we celebrate the positive stories and innovative ideas that we see companies achieving every day. Our goal in doing this story was not to sound alarm bells. Rather, our goal was to encourage action. To spark a conversation that could ignite lasting, positive, prolific, powerful change.
That conversation revolves around if we could change the narrative, if we could course correct, if we could stop declining and start growing again—what would it take, what would it look like—and most importantly—what are we waiting for?
No examination of direct selling would be complete without insights from the distributor base who does the hard work each and every day. We reached out to leaders from Color Street, LifeWave, Modere and pawTree to get their perspective on today’s volatile direct selling landscape.
1 / How can corporate best serve both leadership and new team members when it comes to training and education?
“We are in the digital era—it’s critical companies keep up with the demands of younger generations. Having access to simple, user-friendly, attention-grabbing trainings at the click of a button is key. Put these trainings into a learn-to-earn video game experience for new teammates, and I bet the investment would more than pay off. —Tamara Sweasy / Color Street
“I love the Law of Navigation in John Maxwell’s book The 21 Irrefutable Laws of Leadership. “A leader is one who sees more than others see, who sees farther than others see, and who sees before others do.” Being ahead of the times and leading through change will empower both new team members and the leadership team as well. —Trisha Deming / pawTree
2 / What do you believe are the top three things new distributors are looking for in a direct selling opportunity?
“One of the key things people are looking to gain is financial freedom from the supplemental income they can create in this industry. Additionally they’re looking to connect with a community of like-minded people and increase the quality of relationships within their lives. And lastly they’re looking for an opportunity to completely change their lives. —Onyx Coale / LifeWave
“Stability and simplicity when it comes to compensation, values-based leadership, inclusive culture, preservation of the team-building model, relevant systems/practices for promoting and recruiting, dynamic customer marketing/retention strategies as well as enhanced customer experiences. —Andrea Gebhardt / Modere
3 / Why did you choose direct selling over other gig opportunities?
“I loved the scalability of a direct sales business. In my previous career I couldn’t find a way to scale it without adding a tremendous amount of hours to my existing workload. I love the ability in this business to learn, grow and scale in a step-by-step process. —Trisha Deming / pawTree
“There is no denying the flexibility of direct sales is fantastic. But the real kicker for me is the fact that I don’t have to think twice about what product to market next. I don’t have to create beautiful assets or time-consuming videos. My company does that for me along with multiple other tasks. —Tamara Sweasy / Color Street
4 / What two or three things would you tell corporate they could do to make your job easier?
“Incorporate more marketing and social media marketing based on trending mediums and proven strategies. Stay ahead of the curve in product offerings and adjust compensation to keep it competitive, fair and novel. Lastly, I would suggest that corporate continually ask for feedback and insights from its most valued asset—its people. —Andrea Gebhardt / Modere
“Listen to the field, listen to the field, listen to the field. Sales drives this business, not fancy websites or great marketing material or highly paid executives. It’s sales—and that’s your field. —Onyx Coale / LifeWave
Even in times of upheaval, the most knowledgeable minds in direct selling remain positive. We asked several of them if they are ultimately hopeful about the future of the channel. Here’s what they had to say.
“The people in direct selling I’ve had the pleasure of interacting with are some of the brightest, nicest, most diverse people I know. They are in the business for the right reasons. My optimism lies with the people I know working the business. — Linda Ferrell, PhD. / Globe Life Professor, Auburn University
“Yes, I am hopeful overall, but the challenges right now seem daunting. Overall, a bolder spirit is necessary from the collective. —Brett Duncan / Co-Founder & Managing Partner, Strategic Choice Partners
“Yes—but we need to recognize that shifts are happening, and adaption is needed. I don’t think that means fully abandoning the model, but reframing what it means. Companies that do that will be successful. —Brian Bennett / Senior Vice President, Government Affairs & Policy, DSA
“Absolutely I am optimistic. The reasons are simple: the values that underpin our industry and the people who power it. The belief in entrepreneurship as an engine of individual and national success has remained as powerful today as it ever was. —Cindy Droog / Vice President of Reputation & Integrated Communications, Amway
From the September 2024 issue of Direct Selling News magazine.
