How do you overcome the requirement of having to rely on part-time people? You create simple systems that anyone can follow.
Most of us like to hear and want to believe that people are the most important asset of a company. It seems like I was taught in my very first business class that good people are the key to success in business. We hear experts like management consultant James Kerr say, “The people in your company will ultimately determine the success or failure of your business,” and we begin nodding our head in agreement.
This fact was drilled so deeply into my management mind that it came as a jaw-dropping, head-scratching shock to learn that McDonald’s was founded based on the McDonalds brother’s virtual surrender to their belief that they wouldn’t be able to consistently hire good people.
Franchisers have learned that you can scale with great systems faster than you can scale with great people.
The Birth of McDonald’s System
According to Michael Gerber’s account of the founding of McDonald’s in his book The E-Myth Revisited, Richard and Maurice McDonald realized that they could not attract excellent workers to help them in their restaurant. So they closed down their first restaurant and started over. This time they redesigned their operations to allow below-average employees to produce consistently high-quality products. Ray Kroc eventually discovered the brilliance of that philosophy, and the golden arches have become one of the most recognizable brands in the world.
The idea of creating systems that others could duplicate to deliver a consistently high-quality product gave birth to the franchise industry. That industry, built on the effective use of systems, has grown to account for approximately 3% of the U.S. economy, producing an impressive estimated annual output of $787.5 billion (in 2019) in the U.S. alone. The success of franchising is even more noteworthy when it is compared to the $35.4 billion in direct selling output reported for 2019.
If there is any industry or channel that needs great systems, it is direct selling. Why? Because they encourage new distributors to start part-time while they are focusing full-time on another job and often living a full life outside of work.
There are many variables that account for the significantly higher output of franchising, but one of the key variables is the industry’s focus on using systems to make success in their business predictable. Franchise businesses use systems for almost everything they do. Systems are deployed to create a perfect Big Mac and to ensure marvelous marketing and to assure accurate accounting. Franchise owners and their independent franchise entrepreneurs are equally committed to producing and perfecting systems that are good enough to make even teenagers successful. They’ve learned that perfect systems can make below-average people extraordinarily successful.
Franchisers know that you can plug anyone into a great system, and they will succeed. Because great people are hard to find and harder to afford, franchisers have learned that you can scale with great systems faster than you can scale with great people.
Focus on Products… and Great Systems
Too many direct selling companies focus on great products, excellent compensation systems, and eye-popping marketing and neglect the difficult work of making their customer acquisition system something that is simple enough to ensure the success of below-average distributors. Don’t take your eye off my point by assuming I’m encouraging you to ignore great people or not even aspire to have great people. That is not the point. The point is that you need systems that great people can leverage and scale their success and that below-average people can also use to run a profitable business.
I think you will agree that even amazing people have a tough time sustaining extraordinary results when they are not able to focus on just one thing. How do you overcome the requirement of having to rely on part-time people? You create simple systems that anyone can follow.
Remember that during periods of growth, a majority of the distributors that belong to a company are likely relatively new. These new distributors are at the peak of their excitement but have no skills and no experience to assure success. The key to overcoming this paradox is the use of a system and/or tools that reduce the need for significant training or skills. Great tools allow a brand-new distributor to produce as though they were an expert with years of experience.
A 30-Year Journey
I began my career in direct selling in 1990 as a young executive for Melaleuca, Inc. Since that start, I’ve had the opportunity to serve as a senior executive for six companies, to consult for several more and to study dozens of successes and failures. However, it took me nearly thirty years to discover the eight systems outline in my most recent book Systems Scale: Eight System That Ignite Growth.
I believe that every great success in direct selling can be traced to the use of a simple system
I actually learned the power of systems as we grew Beachbody’s direct selling business by 10x in just three years and then to nearly a billion dollars in the next three years. Despite the success we had employing systems at Beachbody, I made the mistake of thinking that a single system was sufficient—it was certainly sufficient for those years of hypergrowth. I now realize that assumption was a limiting mistake.
I believe that every great success in direct selling can be traced to the use of a simple system. Some systems are based on a short-term truth— “we are growing like crazy”: others become worn out and the field becomes fatigued by their constant use. Systems have different life cycles, and sales results tend to follow those life cycles, but the thoughtful student of direct selling history will be able to attribute systems to success.
In a phone call with the CEO of a struggling direct selling company, I asked her what the company’s customer acquisition system was during the company’s peak growth. “That’s the problem,” she said. “We don’t have a system and never have had a system!”
I knew this company had experienced significant growth, and I now know that growth doesn’t happen without a system. I didn’t take the time that afternoon to convince this CEO of that fact that her company had once grown with the help of a system. However, I do hope to convince you in this book that your company has or should have eight systems, and they shouldn’t be a secret to you or to any member of your staff.
Companies Creating Success with Systems
Here are just a few examples of companies who are seeing success today because of excellent systems they have in place for their field:
It Works!™ – became one of the fastest-growing companies in direct selling when it used “Wrap Parties” to introduce customers to its hero wrap product. However, when sales slowed, the company pivoted to health and wellness products and discovered a new hero product, a fat-burning coffee brew. The company introduced it with the support of a simple sampling pack and an innovative APP that makes sending samples and following up super simple. This APP driven sampling pack was such a great system that it even includes the words distributors need to start a conversation: “does your coffee make you skinny?”
Is it any wonder that It Works!™ began to see double-digit growth again after it introduced their new customer acquisition system?
MONAT Global’s “Meet MONAT”— “Join us for a meetup at (wine bar, bistro). If you have been looking for a great hair care line or opportunity, then join me!”
Total Life Changes — Chief Operating Officer John Licari described the company’s system for new distributor success in a webinar aired by SUCCESS Partners. Licari described their system in three steps:
- Send Out Ten Samples
- Find Five Customers
- Find Two Customers to Join You as a Distributor
Here are the eight systems I’ve come to believe are essential for all direct sellers:
The Eight Systems That Ignite Growth:
- Customer Acquisition
- Distributor Upgrade/Acquisition
- New Distributor Training System
- Distributor Advancement System
- Convention Attendance System
- Communications System
- Leadership Development & Training
- Recognition System
While I’ve come to believe there is great value in understanding and methodically implementing all of these systems, it is my experience that growth can take place by effectively focusing on the first one: customer acquisition. In fact, I believe that one of the major issues legacy companies face today is that they have grown by focusing first on acquiring distributors.
While they know they need to become a product-first company, they haven’t taken the time to reinvent their systems and to replace their distributor acquisition system with a customer acquisition system.