How Strategic Onboarding And Support Lead To Better Retention
We use to go to work at a company in our 20s and retire from that company in our 60s. Staying put was just what we did.
Things have changed. Call it restlessness, distractibility, ambition, or all of the above—the urge to move is constant among today’s workforce.
The average worker stays at his or her job for two to five years, according to the U.S. Bureau of Labor Statistics. The BLS says that annual employee turnover in 2018 was 26.9 percent, a rate that the Society for Human Resource Management (SHRM) reports will reach 30 percent in 2020. Churn among entrepreneurs is even higher: BLS data show that business failure rates increase every year after startup. For example, one in five U.S. companies that opened in 2017 closed in 2018, and half of the startups that launched in 2013 were gone five years later.
In the context of these stats, it’s not surprising that as a hybrid employment-entrepreneurial opportunity, direct selling has more turnover than most channels. According to DSA’s 2019 Growth & Outlook Report, the sales force turnover rate in direct selling in the U.S. in 2018 is 43.3 percent. Yes, direct selling can have high turnover, and this is certainly an area for improvement. But it’s important to recognize the inflation due to the seasonal and goal-oriented motivations of many direct sellers. For example, many join to make supplemental income around the holidays or to help save up for a trip. In fact, retail overall has even comparable or higher turnover rates, with 58.3 percent turnover in 2018 according to the BLS.
“There’s an internal fortitude in true entrepreneurs that determines whether or not they are going to succeed.” —Joni Rogers-Kante, Founder and CEO, SeneGence
Direct selling is feeling pressure from regulators, gig competitors and rapidly changing technology. However, many industry leaders believe that our biggest challenge is having to constantly replenish our troops. Unlike traditional retail and service workforces, our sales teams are essentially volunteers who set their own hours and effort levels. We don’t really employ them, so we have to work extra hard to keep them. This requires a comprehensive onboarding and retention strategy of training, coaching, rewards and recognition to increase engagement, performance and loyalty.
Why People Leave
Before you start designing new welcome kits and incentive plans, though, take a moment to understand why people leave in the first place.
According to SHRM, most people change jobs because they’re looking for a better career opportunity. The second most common reason is to create more work-life balance. One or both of these needs could be triggered if a distributor feels like there’s only one way to approach your company’s opportunity.
According to direct selling consultants at Direct Tech Labs, direct selling companies often fail at retention because they try to fit every distributor into the same box: the full-time, allin leader box. But most people don’t want to commit that kind of time and energy. Only one in five direct selling distributors works 30 or more hours per week, according to the latest DSA research. And of those who are interested in building a full-time business, fewer than one percent will become elite performers, says Direct Tech Labs. These numbers strongly indicate that the majority of people who come to you aren’t interested in being entrepreneurs. They’re picking up side work mostly to cover an income gap while adding some flexibility to their schedules.
Joni Rogers-Kante, founder and CEO of Foothill Ranch, California-based SeneGence, says she’s pleased with the retention rate among her company’s distributors, who number just under 200,000 worldwide. She attributes their longevity, in part, to the fact that many of them are professional makeover consultants and use SeneGence cosmetics as tools of their trade in addition to selling them.
But Rogers-Kante is also realistic about the level of entrepreneurial drive most salespeople have. During a recent period of hypergrowth at SeneGence, momentum was making it very easy for new distributors to build their downlines. “But when that hypergrowth leveled out, many of those newer distributors were not the ‘grit’ kind of distributors who dig in no matter what,” she says.
Stemming The Tide
The pool of people with the potential to be top-earning, longterm distributors is shallow—so it’s important to have practical expectations. But it’s also important to have onboarding and retention strategies and messages that give everyone the opportunity to be successful. You’ll be more likely to retain top performers while providing others the tools and support they need to reach whatever incremental goals they have. Here are some building blocks of great onboarding and retention programs.
1. Make Orientation Matter.
Whether you’re bringing an employee into the corporate office or adding a direct seller to your field team, an effective orientation program increases engagement and retention. Bestselling author and consultant Ron Carucci wrote recently in Harvard Business Review, “Organizations with a standardized onboarding process experience 62 percent greater new hire productivity, along with 50 percent greater new hire retention.”
Your orientation program should cover concrete things like how to use company resources and tools and as well as bigger picture concepts like company culture and regulatory compliance guidelines for talking about products and results.
2. Make Quick Sales Possible.
Uber drivers, Etsy handcrafters and Door Dashers are getting paid, literally, by the hour. The gig economy has transformed expectations for how fast cash flows and direct selling companies need to open up their taps.
According to GigEconomyGroup, distributors who convert a sale within 14 days of joining a direct selling company are likely to stay with that company for an average of six years—that’s two to four years longer than the average, according to BLS data. Direct selling training firm ServiceQuest says there’s a direct correlation between high retention rates like this and overall revenue growth, estimating that a 10 percent increase in retention grows revenue by 49 percent over 10 years.
What’s the key to scoring a win in two weeks? Industry experts say people need tools that make selling simple as well as immediate compensation and other rewards. More and more direct selling companies are embracing this imperative.
New Brand Partners at Neora (formerly Nerium International) can start selling right away from their starter kit or can quickly organize their first party, where all new customers generate a commission. A “Fast Start” program pays bonuses to new Brand Partners who sign up three team members or six customers in their first 30 days.
Perfectly Posh pays in less than five minutes from the time of sale, at no additional cost. “Someone could host a party in the morning, get paid and go shopping or out with their friends that same afternoon,” says Perfectly Posh Founder and CEO Ann Dalton.
“We’ve made significant improvements to our compensation strategy in order to compete in the gig economy,” says Nathan Larsen, Vice President of Field Development at Sandy, Utah-based 4Life. The company offers a Rapid Rewards program, which pays distributors a 25 percent commission on certain sales to new preferred customers within 24 hours, and a Builder Bonus program, which rewards distributors for activity that drives new recruits into the compensation plan’s first significant rank, Larsen explains.
“Most distributors come to you with zero sales experience and have no idea what it’s like to depend on a “yes” for their income.
3. BE TRANSPARENT.
While you’re managing your own expectations, keep them real for new distributors, too. Their excitement about selling a product they love will get them in the door, but you’ll be doing them a favor in the long run if you’re honest about what it takes to achieve and sustain certain levels of performance and income.
Be authentic about what the average distributor earns. Our industry has, fortunately, gotten increasingly away from selling the rags-to-riches story. Those stories are too rare. Most distributors won’t make multimillion-dollar incomes with your opportunity. The compensation plan at Lehi, Utahbased Xyngular, for example, clearly states that nearly 80 percent of its distributors earn $67 a month.
And don’t forget that not all new recruits want to build a downline. Some just want to purchase products they love for themselves at a discount and make some money selling those products to other retail customers. “Our compensation plan is devised so that a woman who just wants to build a customer base can make a handsome living just doing that,” Rogers-Kante says. “She doesn’t have to build a distributor base if she doesn’t want to.”
Be upfront about the rejection they’re going to face, too. Most distributors come to you with zero sales experience and have no idea what it’s like to depend on a “yes” for their income. Let them know that rejection is inevitable but coach them to see it as a learning opportunity, not a personal judgment. Mentoring from successful business builders and personal development that builds objectivity can help new distributors use rejection as fuel for improvement.
4. SUPPORT SUCCESS AT EVERY STEP.
Having the right mindset and realistic goals are foundational for new distributors, but they also need a tangible business starter kit that includes enough to get them to that first sale quickly while not being overwhelming. Effective starter kits include such items as
- product samples;
- testimonials for products and the business opportunity;
- steps to take in the first 24 to 48 hours, like “Give product samples to three potential customers”; and “Share business opportunity information with one potential distributor”;
- steps for connecting with a company mentor; and
- access to tutorials on using technology (social media platforms, the company’s sales app, etc.) to make contacts and sales.
Help new distributors get grounded and build confidence, and then offer more sophisticated training materials and challenges. Many will be satisfied with moderate accomplishment. A few will be driven to keep rising in your ranks. These performers will become your core, says Rogers-Kante. They’re the ones who thrive on overcoming obstacles and setting new standards. Give them recognition, rewards and elite training opportunities—like the monthly sessions Rogers-Kante holds in her homes—but remember that you are merely facilitating their success. “I don’t believe you can motivate anyone to do anything,” she says. “There’s an internal fortitude in true entrepreneurs that determines whether or not they are going to succeed.”
“Our sales teams are essentially volunteers who set their own hours and effort levels. We don’t really employ them, so we have to work extra hard to keep them.”
Even the most self-motivated individuals need a lift sometimes, though, executives say. This means that personal development is as or more critical than skill development. “If we focus only on the business side, we’d be missing a big part of the sales forces’ lives,” says Team National CEO Angela Loehr Chrysler.
“At our training, we talk a lot about our families, social responsibility and personal development,” adds Rogers-Kante. “We focus on topics that create the whole person so that a woman can live a balanced life without devoting her entire life to work.” This multidimensional approach is paying off for SeneGence, which recently surveyed its sales force to ask why they stay with the company and nearly 30 percent responded that it’s because of the culture.
“EASY” DOES IT
Direct Selling News has examined and analyzed hundreds of onboarding and retention programs in our industry, and what we’ve discovered is easy to describe and difficult to execute: Companies retain direct sellers when they meet those sellers’ needs. Trouble is, those needs vary widely, even within a single company’s sales force. Listen to your distributors and customers; watch their behavior, and tailor your program so that it meets and engages people where they are.
If there is a universal truth, though, it’s this: People want to work for a company where they can experience success and feel supported—whether they’re knocking the ball out of the park or struggling to find their footing. You’re more likely to keep people if you make it easy for them to stay.