Retention Challenges Impact All Industries

Some interesting facts that will give you some context that difficulty in retaining an independent salesforce is not unique to direct selling.

A feeling of exhilaration pulses through a new recruit when they first join a direct selling business opportunity. There is the excitement of a new adventure, a spirit of optimism of future success, and they are ready to passionately carry their message out to the world.

But fear and doubt can set in quickly and put a halt to a distributor’s new business venture, sometimes even before the first week is over. When quitting the business is as simple as deciding not to share the product anymore, not to invest more time, not to face the fear of rejection, motivating people to persevere becomes an essential component of success.

Retaining salesforce members is probably the most formidable challenge a direct sales company faces. You’re working with a group of volunteers, and you may have no idea what initially brought them to your door or what will make them stay. Market segmentation research has made fantastic inroads into that enigma, but the reality is that salesforce retention is a never-ending job. You’ve done all the right things to convert a loyal customer to a distributor. Now you need to provide an effective orientation and create the conditions that encourage him or her to stay.

 Challenges of the 9-to-5 Mindset

New distributors initially draw energy from the visions of success they’ve created for themselves. These may be slightly unrealistic visions—but this is how our minds work. We tend not to think about the messy parts of learning a skill or process. We skip right to the results, imagining everything that can go right. We’re not great at planning for the reality of change. This is why fitness centers are packed every January 2 and start to empty out in February.

New salespeople don’t want to think about what it will feel like to fumble around or to hear “No” again and again from prospective customers. But the “no’s” will come, and it takes patience and the ability not to take the rejection personally. Most new distributors come from a 9-to-5 mindset and are not used to the day to day rejection that someone with an entrepreneurial mindset might be used to. Having them think differently—like a business owner—takes time, training and patience.

Even those with sales experience need time, resources and encouragement to get them over the hump. Habit change experts say it takes most people 30 to 90 days, sometimes longer, to master something new. This aligns with direct selling channel statistics that show most new distributors give up in their first three months. It’s because the learning stage is when people are vulnerable to going back to something they know and are comfortable with, despite how excited they may have been to sign up.


“We’re not great at planning for the reality of change. This is why fitness centers are packed every January 2 and start to empty out in February.”

 We Are Not Alone

The truth of the matter is every industry that has an independent salesforce struggles with keeping and retaining its salesforce. Here are a few interesting facts about other industries that will give you some context that these issues related to retention are not unique to direct selling.

AMAZON AFFILIATE PROGRAM

Sources: Yahoo.com, Wall Street Journal, Marketplace Pulse Report.

Signing up to become an Amazon seller takes just a few clicks, provided you have a business name, address, telephone number, chargeable credit card, bank account, tax information and $39.99 per month for a professional-level membership.

According to a new report from Marketplace Pulse, an e-commerce analytics company:

  • There are about 2.8 million active sellers currently doing business on the platform — a number that exceeds the population of Chicago.
  • Amazon has added an estimated 3.3 million new sellers since January 1, 2017, which comes out to more than 3,300 per day. Of that number, though, only 60 percent are currently active.
  • Often sellers become active for a day, a week, or month, but then stop. This is because Amazon often requires additional documentation (I.D., bank statements, business license etc.) after starting selling, which they fail to produce.
  • Or they get suspended by Amazon because of bad behavior, so they keep creating new seller accounts.

RIDESHARING – UBER AND LYFT

Source: Wall Street Journal.

Uber and Lyft are banking on a future where ever more riders surrender their cars and rely on ride-hailing. But that vision assumes the companies will accomplish a trickier task—finding and keeping the millions of drivers needed to whisk them around.

By relying on a workforce of independent contractors, the companies are dealing with drivers who can simply turn off their app when they want to stop working. Drivers also can toggle back and forth between services—called dual apping—depending on which offers more money.

  • Uber and Lyft have paid billions of dollars combined in incentive payments to keep drivers, helping contribute to a combined $5.4 billion in losses. Despite the incentives, drivers protested in several major cities last week to bring attention to low wages.
  • The job of a ride-hail driver is marked by high churn, or the percentage of drivers who stop using the service.
  • Among U.S. drivers, 68 percent stopped driving within six months of starting, researchers from Stanford University and Uber found, in an economics paper focused on earnings by gender.
  • “…churn will be a big challenge,” – Paul Over, Stanford Economics Professor

INSURANCE AGENTS

Source: Centric Consulting.

Courting and keeping insurance agents isn’t always easy, says Centric Consulting. Insurance companies are facing a retention crisis that has 83 percent of agents quitting within three years, and 30 percent within three months. Low retention rates can be attributed to the following:

  • Poorly designed onboarding strategies that fail to fully engage agents in the beginning, or set them up for success in the future.
  • May lack the technology to educate new hires, or expectations may vary too much across different business lines and locations.
  • By not nurturing agents from day one, or throughout their tenure, agencies face losing more and more employees, and miss out on the business they could bring to the table.

REAL ESTATE AGENTS

Source: TimandJulieHarris.com

Real estate seems like a great profession, right? You’re your own boss; you pick and choose when and for how long you want to work; you make tons of money; no one’s telling you what to do; you have ultimate freedom.

Nearly 75 – 87 percent leave within 5 years of beginning. That’s a higher attrition rate than the approximately 72 percent (figure from the National Association of Restaurants) of restaurants that close their doors within 5 years of opening.

Some of the reasons real estate agents leave within 5 years or less:

  1. Not committed to it
  2. Many don’t approach the work strategically
  3. Fear of making mistakes
  4. Not having a mentor or role model from whom to learn the in’s and outs of the business
  5. No sales swagger
  6. No metrics that analyze your efforts

All of this sound familiar?

Like direct selling, the majority of real estate agents are women, 63 percent, compared to 75 percent for direct selling.

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