About 60 years ago, two industries really began to flourish in the United States. Both industries contain a variety of products and services that we all use. Both industries have faced incredible regulatory scrutiny and have led lengthy battles to convince people of their legitimacy. One has over 18 million people involved in it and the other has approximately 16 million. Part-time involvement characterizes the majority of both industries. One has grown to approximately $100 billion in revenue globally while the other easily exceeds $1 trillion.
I’m comparing our own direct selling to the world of franchising. Clearly the franchise model is a much larger revenue producer and more widely accepted than the direct selling model.
Why the comparison of these two business models? I think direct selling companies can learn a lot from the franchise world.
Perhaps nothing is more important than the focus franchises have on creating systematic success for each person that enters the business. It’s not up to the individual franchisee to determine “how” to run the franchise business. The systems are provided to everyone who satisfies the criteria for entry. Franchise owners are expected to succeed. Any failure in the franchise world is considered a negative reflection on the overall brand of franchising as a way of doing business. The direct selling model can learn from the franchising model in that franchisees are never allowed to operate the business without the benefit of training and an understanding of how the system works.
The direct selling industry might benefit from a collective viewpoint where individual failure is considered a serious reflection on the overall industry versus the one company involved. We can be assured that each person that fails in direct selling tells someone—probably several people—about their experience. Unfortunately companies do not get second chances to emphasize the fact that adherence to training, personal development and a system provides a better chance for success. Those who choose the franchise model are not allowed to open the business until this is crystal clear.
We know there is a huge difference in terms of investment and commitment between the two business models. For one, franchises require a net worth of hundreds of thousands of dollars or more while someone with $50, or even less, might find entry into a direct selling company, which allows the commitment level to remain rather low. Ninety-seven percent of all franchises are still open after five years and 85 percent of all franchises are owned by the original franchisee after that same period of time. Clearly, their commitment level is very high. Is the success of the typical franchise owner so very high because of the financial commitment? Often, a franchise owner has their life savings on the line, but the difference in success metrics may be related to something else direct sellers can benefit from.
The parent company of a franchise does not rely on people who know nothing about its franchise concept to come up with their own way of succeeding. Every franchise owner is provided with a systematic approach to building the business. Franchise owners may make such large commitments because they have visions and dreams of success, but they do not rely on those visions and dreams alone. They learn the systems associated with the business because the parent company is conscious of the need to breed success, not failure. Direct selling companies can, I believe, do the same thing.
Like franchises, we should focus on developing more systems to cover more parts of our businesses. Can you imagine a new franchise owner being taught how to train customer service people but not taught how to handle inventory or advertising? That simply wouldn’t work.
So what systems do we need to provide for new independent business owners in direct selling to have them reach maximum success?
It all starts here. There are numerous articles on the subject of recruiting systems. Whatever your systems look like and however you teach them, they must be usable by the person who signs up in your organization today. This new person is excited! Show them a way to share their excitement with someone they know as quickly as possible. Also, the systems should continue to support them as they grow and gain experience in your business.
I think most of us have this one right. You have a way to place orders and a way to accept them online. We need to make sure we are encouraging people to participate the way we want them to. For example, a nutrition company might advocate an autoship package that should be purchased each month. Perhaps there are certain tools that should be purchased each month or a specific time when orders should be placed. All of these actions need to be taught as part of a larger system.
Direct selling remains an event-driven industry. Businesses are built through event attendance and the excitement generated there. Do you have a systematic process to encourage your independent business owners to attend your next major event? What about the events between events? It is important to build a systematic approach that will help your local/regional events grow as well. The excitement that happens in events is irreplaceable. You must teach best practices so as many people as possible are exposed to the often life-changing enthusiasm that occurs at events.
Perhaps the most overlooked part of most companies’ plans for growth is their investment in their people. The old saying is true: “People join because of what they can earn, and what they believe, but stay because of what they become.” Don’t overlook personal development as a program, and don’t allow it to be haphazard. A systematic approach is crucial if you hope to grow a sustainable culture of leadership.
This is a new topic but a critical one that needs a systematic approach. First of all, have you looked at what your IBOs are saying about their businesses on social media? If not, I encourage you to do so. Check out Facebook, YouTube, and other popular sites—and be forewarned that what you find will likely surprise you. Providing IBOs with the necessary education and tools so they use all media properly and not jeopardize the integrity of your business is critical to the success of your company in today’s tech-savvy world.
Is it fair to compare our success to that of franchises? Maybe not. But the basic concepts are definitely fair to compare. I believe direct selling companies can probably do even better. Technology is providing the industry with new capabilities and we can create more systems and better systems so that the average person has the greatest opportunity to achieve goals and represent the industry—and your company—much better than ever before.
I encourage you and your team to evaluate everything you are providing to your field. Build systems to support each crucial business element and initiative you have and set expectations with your field. Show them they should expect to succeed. We would all agree that success is not accidental. More often than not, success is the result of following a proven system. I truly believe we can impact the industry’s overall success rate dramatically if we collectively do a better job of building a systematic approach to success throughout our organizations.
Paul Adams is Senior Vice President of Strategic Marketing for Video Plus.