Tips for improving the front-end user experience—and other best practices from our gig economy competitors.
At the 2019 Direct Selling Association (DSA) Annual Meeting during the Growth & Outlook Breakout Workshop, a DSA Research committee member said, “A startling statistic for our industry is that it takes a customer an average of 13 clicks to buy online from a direct sales company while a customer’s purchase with Amazon often requires as little as one click,” shared Director of Market Entry at Younique Jordan Meyer.
Why is it so hard to buy a product from a direct selling company? We can look at our business model for the reasons. Indeed, the personalized service that makes our business appealing to some consumers may, when translated for an eCommerce-based audience, actually be hindering representatives’ ability to close a sale. Many of those 13 clicks, Meyer explained, are tied to the distributor-finding portion of the checkout process. Some customers prefer not to have distributor interaction, while others are turned off by a multi-step checkout experience. Over the years, we’ve seen many direct sales companies roll out a direct-ship option that connects each sale to a distributor but does it on the back end, out of a first-time consumer’s sight. Further, new consumers may be asked upon checkout if they’d like to hear from a distributor or not.
“It takes a customer an average of 13 clicks to buy online from a direct sales company while a customer’s purchase with Amazon often requires as little as one click.”—Jordan Meyer, Director of Market Entry, Younique
In an industry founded upon personalized relationships between representatives and their customers, this evolution in the checkout process was initially a controversial one and unsettling for some. Nevertheless, the customer is king, and so we adapted, meeting them—or at least some of them—where they were. Direct selling once again found itself trying to be all things to all people. Trying to retrofit a transactional business model to a more traditional one may seem as if direct selling is straying from our original mission. Still, most of us would unequivocally agree that if we’re giving distributors the tools they need to give their customers what they want, then we haven’t strayed at all. In fact, it’s just the opposite.
The Challenge Of Cart Abandonment
Let’s get back to those 13 clicks, though. How many direct selling customers abandon their carts, and at what point in the transaction are they abandoning them? Hundreds of studies have been conducted to measure the average rate of cart abandonment across all industries. The percentages have ranged anywhere from 55 percent to between 80 and 90 percent. The Baymard Institute, a web usability research organization, estimates that abandoned carts represent $260 billion in losses across the United States and EU. Consider that a significant if not majority percentage of those industries studied likely require fewer than 13 clicks to complete a purchase.
Adding to the pressure for direct sales companies to make the checkout process easier is a behemoth called the gig economy. Darren Jensen, president and CEO of LifeVantage, spoke about the gig economy and its influence on direct selling during the 2019 DSA Annual Meeting, telling the audience that direct sellers are “in the business of going out of business. Much of what we do today is becoming less and less relevant each day.
“If we step back and question everything, have we been thinking too much about the big leader and not enough about the masses?”—Darren Jensen, President and CEO, LifeVantage
“As an industry, we’re now moving into what I call the war of the side hustle,” Jensen continued. “We’re competing with the attention of people all around the world for this side hustle. And anyone who competes against us really is our competitor. Typically, we’ve defined our competitors as the people in this room, but that isn’t who our competitors are.” Instead, we’re going up against Uber, Lyft, Airbnb, Shopify, and yes, Amazon, among others. These are companies with market capitalizations worth anywhere from $12 billion (Lyft) to $874 billion (Amazon). Worldwide, the direct selling industry generates a combined annual revenue of approximately $193 billion, according to the Worldwide Federation of Direct Selling Associations (WFDSA); U.S. combined annual revenue is approximately $35.4 billion.
What Can We Learn From Gig Economy Companies?
“We teach that our industry is very easy—you purchase, you share, and you make money,” Jensen said. “What we leave out is the Pythagorean theory and calculus that is needed to figure that all out. Simplicity is killing us—or the lack thereof. No Uber driver can say they make six figures, but they do have approximately 2 million drivers on the road today and a market cap of $50 billion or more. If we step back and question everything, have we been thinking too much about the big leader and not enough about the masses?”
If direct selling is going to compete with the gig economy giants, Jensen said, we have to make doing business with our companies easier. Why do direct selling companies and distributors still find it difficult to attract prospective customers from outside our industry? One reason, Jensen believes, is that we’re continuing to ask customers who their distributors are before they can buy. “Distributors enroll; customers check out,” he said, adding that we need to make it easy for customers who just want products to purchase them quickly and easily, without enrolling them.
The distributor experience is just as important in this equation. The timeliness of compensation attracts aspiring gig economy entrepreneurs. Consider Airbnb; guests pay hosts a portion of their rental fees upon booking and the remainder before their stay even begins. Lyft and Uber drivers can transfer payment to their bank accounts upon the conclusion of a ride.
Although relationships between independent business owners and customers are relatively transactional in nature within the gig economy, companies like Uber and Lyft excel at driving customers to the “masses,” and their strategies may be worth considering. Meyer mentioned Lyft, a company that has used “a whole litany of marketing channels to bring customers onto their platform. Several people in the industry think this is an important model that direct selling needs to adopt, pulling customers onto our platforms and performing more of a matching service. All of these channels are data-driven and optimized.”
“[Gig economy competitors are] “really pushing the boundaries of what the digital world can do. It’s clear that these companies think of themselves as technology platforms first and foremost.”— Jordan Meyer, Director of Market Entry, Younique
Direct selling companies have invested millions in customer retention efforts, including preferred customer programs. Meyer added that while more direct sales companies are engaging in segmented marketing, the practice already is becoming obsolete. Instead of categorizing groups into four or five “buckets,” we should be focused on delivering personalized experiences for the individual, based on browsing and transaction history.
Treating Technology As A Core Competency
Another clear difference between direct sellers and gig economy competitors is technology investment. At companies like Lyft and Uber, software engineers, data scientists and the like comprise a significant percentage of the workforce, while direct selling companies often outsource at least a portion of their technology. By treating technology as a core competency, Meyer said, gig economy competitors are “really pushing the boundaries of what the digital world can do. It’s clear that these companies think of themselves as technology platforms first and foremost.”
We know that direct selling offers clear points of difference that our gig economy competitors will never be able to touch, including tireless advocacy of the rights of independent business owners and a clear code of ethics. So how did our competitors get so far ahead of us in a short period of time?
One of the issues, Jensen said, is public perception of the “bikini and Lamborghini” culture—the emphasis by the few on get-rich-quick lifestyles that can hurt the earnest efforts of the masses. “From a perception standpoint, we all share the blame. We keep going back to that well time and time again. It’s this culture that really has been the reason for the ‘pop and drops’ in our industry for the last 20 years. If we are constantly operating in this gray area that allows people to masquerade as direct selling companies and come in and operate where we are, the regular public can’t distinguish between the two.
“I want to live in the sunlight in full transparency because I believe that the truth is enough. We need to be proud of the fact that direct selling is the best form of entrepreneurialism. If we’re transparent, we will thrive in this new entrepreneur economy.”