The Customer Conundrum

We’ve all got them. We call them auto-assigned customers. The question is what do we do to maximize ROI and best capitalize on them?

We, as an industry, are in what I refer to as the war of the side hustle. Ours is no longer the only game in town when it comes to capturing the attention and imagination of entrepreneurs. Everyone these days, seemingly, is competing for the entrepreneurial activity of, well, everyone. I believe if there is disruption that occurs in our industry that it’s going to come from what I refer to as blitz-scaling companies—companies like Uber, Airbnb, and Shopify and the like. Frankly, it’s already happening. At first blush, these companies—and those like them—may not seem like head-to-head competition. Still, they’re revolutionizing the way business is conducted and creating legions of entrepreneurs in the process.

We share more in common with these companies than we perhaps realize. For example, we know—most of us with firsthand knowledge—that Uber pushes customers to its drivers. As a company, we began wondering if we should do the same and drive customers to our people. So, we began experimenting. We took the artificial intelligence machine learning platform that we’ve been developing over the last several years and coupled it with our relationship with Real Salt Lake, Utah’s Major League Soccer team. As part of our jersey-front partnership, we receive radio, television, in-stadium, and other advertising perks, and, consequently, we get a steady stream of people visiting our website with interest in our company.

“LifeVantage developed a system of principles that guided how the company places unassigned customers—customers commonly referred to in the industry as “orphans”—to achieve maximum ROI.”
—Darren Jensen, LifeVantage President & CEO

You may be saying to yourself, “Well, I don’t have a relationship with a professional sports team.” Maybe not, but you do have “unassigned” customers—people interested in your products who may not yet have a distributor—coming into your company. We’ve all got them. We call them auto-assigned customers. The question is—what do we do to maximize ROI and best capitalize on them?

The First Dollar Principle

As we collect customers and take that first order, the question then becomes with whom along the distributor continuum do we place those customers as they come in? You could assign them to the most senior of distributors. You could assign them to brand new distributors. Or you could assign them anywhere in between along the continuum.

With the information that we have through artificial intelligence, we know the people who are engaged in the business—we can see the entire sales funnel. So, we came up with a series of rules about how these new customers are assigned to distributors. We also took into consideration some of our core principles that help govern our business. One of those driving principles is what we call the first dollar principle.

In analyzing this particular data set, what we found was fascinating. When distributors received $0.00 during their first seven months with the company, their activity rate hovered around 20 percent. That’s roughly industry average. But when distributors earned just $1.00 to $25.00 cumulatively during those first seven months, their activity rate jumped to 64 percent. Those earning $2,501 during their first 7 months—$357 per month on average—had a 97 percentactivity rate. When a distributor opens that first check or sees the initial deposit come through across their screen, they are a legitimate, fully-fledged business owner. At that point, it becomes official—that’s a powerful thing, and the numbers bear that out.

The Golden Window

One of the other factors we considered is what we call the “golden window.” This is the window of time between a distributor’s point of entry into the business and that distributor developing his or her first distributor or customer—and what effect the consumer sales resulting from engaging the distributor or customer has over the lifespan of the distributorship. What we found was that the earlier new distributors made a sale, the bigger their average check was throughout the lifecycle of their distributorship.

We also found that those who had achieved specific ranks during this study period made a sale very early in their business. About 35 percent of distributors who reached “Pro 1” made a sale within the first two weeks. Roughly 50 percent who reached “Pro 3” made a sale during those first two weeks. When our distributors reached the crucial leadership rank of “Pro 7”, 100 percent of them had made a sale during their first two weeks of business. We didn’t know if it was causative or correlative, but we did know that they were related.

“The earlier new distributors made a sale, the bigger their average check was throughout the lifecycle of their distributorship.”

Commitment to Build 

Lastly, we looked at the level of distributor commitment to building their business upon joining the company. New distributors who demonstrated a strong commitment to build from the outset took an average of 1.6 months to rank advance in our study versus 10 months for their less committed counterparts.

Committed distributors start working harder, and they do it faster because they want to make sure that initial investment pays off. Then that becomes cyclical. It feeds itself—distributors that are working harder and faster see success quicker, and that gives them the encouragement and confidence to keep working—which again leads to more success, more confidence, and on and on.

After applying these principles, we decided to assign these new customers to distributors that had been in our business 90 days or less. Then we began tracking them over a one-year period. We segmented them into three groups. The first group was made up of non-users of our digital artificial intelligence technology which hadn’t received an auto-assigned customer from us. The second segment was comprised of the technology users who had not received an auto-assigned customer. And the third group constituted individuals who were technology users and had received an auto-assigned customer.

Early Results 

What we found was that the first group (no customer, no technology) enrolled, on average, 1.31 people during the test period, compared to their technology-using counterparts assigned a customer enrolling, on average, 6.12 people.

We then looked at rank advancement. We began by looking at our level we call Pro 2 (~2,500 volume in their organization). Of those who didn’t use our technology and weren’t assigned a new customer, on average, only 7.3 percent achieved this rank. Conversely, nearly 30 percent of those who checked both boxes (technology user and assigned a customer) achieved the Pro 2 rank. Similar story with our Pro 3 rank (~5,000 volume per month), which we consider one of the base fundamental ranks in our business. Four times as many people were able to achieve the rank if they received an auto-assigned customer.

Those assigned customers also generated more sales volume—40 percent more. They’re sticking around longer in the short-term—90 percent of those assigned a customer and using our technology were still with the business after 6 months, compared to 49 percent not assigned a customer and not using the technology. And our algorithms are predicting they’ll stick around longer in the long-run as well.

Always Engage Early 

When it comes to driving and assigning new customers to distributors—and, specifically, newer distributors—our experience thus far is that the numbers speak for themselves. Whatever you decide is best for your business, making sure new distributors have the tools, support, and opportunity they need to make a sale as early as possible is critical.

This means helping them engage early and often. It also means reinforcing the idea of whether it’s enrolling a distributor or simply selling a product, it doesn’t matter because they are both equally as valuable. This takes time, training, and patience. But imagine the cumulative impact it would have on organizations if we saw this effect play out on a mass scale.

This isn’t just about increasing profits or building bigger organizations, however. Those are just byproducts. It’s about doing what’s right for new distributors. If we help each individual engage early, we’re helping place them on a trajectory that can change their lives.

Since being named President and CEO in 2015, Darren Jensen has transformed LifeVantage into one of the world’s leading publicly traded biohacking and nutrigenomics companies.

Please follow and like us: