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Business Intelligence: How Data Can Lead the Way Forward

Jan 25, 2021
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Newly released 2021 Digital Transformation Report helps member companies better understand how they compare to their peers across several key areas of technology.

The Direct Selling Association is the premier resource for data on retail, salesforce, economic, and technology trends and their impact on the channel. The actionable research produced by DSA is designed to provide information that is also used to advocate on behalf of the millions of entrepreneurs who choose the direct selling channel. The unique value DSA provides companies is made possible by building strong relationships with members. Companies trust that DSA confidentially collects data and reports valuable insights in the aggregate.

Data can help to lead the way forward, and Director of Industry Insights at DSA and DSEF Ben Gamse points out that the research generated by DSA’s Industry Research Committee gives member companies the ability to strategize for the future by identifying opportunities and helping to overcome risks.

“Following the abrupt jolt from coronavirus to the overall economy, retail landscape, and direct selling channel, DSA significantly increased its industry research efforts to help companies navigate the uncertainty and the business challenges posed by the pandemic,” he said. “We now strive to be the go-to-source for the sharing of data and insights within— and outside of—DSA membership so that the direct selling channel and our community can learn from one another and emerge from this pandemic stronger than before.”

DSA’s Industry Research Committee is made up of business intelligence, insights, and strategy leaders from some of the largest companies in the direct selling channel who help to guide and oversee the research that is generated.

How Industry Research Is Managed

DSA staff work with the Industry Research Committee to plan and evaluate research projects that are aligned with DSA’s overall strategy. Collaboration with other DSA committees, the Direct Selling Education Foundation, the World Federation of Direct Selling Associations, and external research firms helps maximize knowledge and understanding.

In 2021, key research topics will include:

1) What are the main opportunities and threats facing the channel?

  • How can the channel innovate for sustained advantage?

2) What is direct selling today?

  • How large is the direct selling channel? What is the global context?
  • How is the direct selling channel evolving? 
  • How are the direct sellers in the channel segmented? What are their motivations?
  • How is direct selling perceived?
  • What is the role of social media and e-commerce in the industry?

3) What is the future of direct selling and what are the major trends impacting the channel?

  • How can DSA develop and implement strategies for future growth and strength?
  • How can DSA attract new companies and individuals to join the channel and its member companies?
  • How can companies develop and implement strategies for healthy and sustained growth?

Participation in Research

Once a survey is in the field, DSA sends an email invitation to the designated research contact at all member companies. The contact simply needs to complete and submit the survey questionnaire. Confidentiality is always maintained.

For more information on DSA’s research or to inquire about who is currently listed as company research contact, please contact Ben Gamse at bgamse@dsa.org.

2021 Digital Transformation Report

On January 14, DSA’s Industry Research Committee reported on its latest study—2021 Digital Transformation Report—during an installment of its DSA ENGAGE Webinar Series. The report shared new data and analysis developed to address key technology challenges cited by DSA members, including how social media can be used to grow salesforces and best practices for developing platforms that allow direct sellers to manage their businesses more productively.

The study was designed to help DSA members better understand how they compare to their peers as well as to innovative retailers outside of direct selling. Regardless of where they are in the digital transformation process, the study will help them improve across several areas, including social selling, successfully running virtual conferences, becoming more customer centric, online training, e-commerce/mobile commerce/ apps, payment methods/frequency, and compliance.

Digital transformation was a top priority for DSA companies in 2020 as effects of the pandemic forced many to pivot and reshape business practices. According to the study, 43 percent of DSA members considered digital transformation a significant priority and 41 percent deemed it a mission critical priority.

Digitaltransformation

Source: 2021 Digital Transformation Report

Additionally, larger companies (over $250 million) devoted significant shares (13.2%) of their overall budgets to technology development on both a proportional and absolute basis. The DSA member average spend was 8.0 percent. Eighty-nine percent of companies are either actively implementing digital tools or have already integrated such tools within their systems. Two areas of focus in the study were social selling and training. Social media is the No. 1 digital promotional tool used by DSA companies—of much higher importance than SEO, websites, or affiliate marketing, according to respondents. Ninety-three percent of members encourage their direct sellers to focus on building customer relationships on social media in addition to selling and team-building. Facebook, Instagram, and YouTube are the most used social media platforms, with Facebook and Instagram rated the most effective. Virtually all companies in the survey encourage their salesforce to build relationships on social media in addition to selling and recruiting, and three proven approaches were shared: (1) engage customers organically, (2) build a personal brand, and (3) join communities of like-minded people.

Key questions related to using social media in attracting new consumer and salesforce members are how do you empower your salesforce to become micro-influencers and use their influence to drive sales, and how can social media be used ethically and effectively to attract more people to join as a consumer or salesforce member?

Turning to training, 44 percent found on-site training to be very effective, however, this form of instruction had challenges over the past year because of the pandemic. The most used training method was online training, either through a website or other platforms. Eighty-five percent of respondents found it somewhat or very effective. Learning management systems were found to be somewhat or very effective by 46 percent of respondent—with 38 percent not using one—and mobile app training had the lowest usage and lowest effectiveness rating.

onlineTraining

Source: 2021 Digital Transformation Report

Recommended practices for online training included

  • Creating specific learning paths for direct selling audiences;
  • Establishing and facilitating online learning communities;
  • Using badges, certifications, points, and recognition to “gamify” engagement and performance; and
  • Ensuring digital learning content is optimized for online delivery to direct sellers.

Key training challenges for companies will be how to increase distributor engagement in online training and identifying best practices for running online virtual businesses.

DSA Growth & Outlook Report

DSA’s Growth & Outlook Report predicted that, based on strong growth in the first half of 2020 and anticipated sustained growth throughout the year, 2–5 percent growth is anticipated for direct selling in 2020.

According to the report, despite continued risk and uncertainty in the macroeconomic environment, strong indications point to direct selling being on the path to recovery after the initial effects related to the pandemic. Interest in entrepreneurship remains high, and people continue to value direct selling as a source of part-time or supplemental income. Research from member companies showed remarkable resilience, innovation, and digital transformations to aid direct sellers and to meet consumer needs during challenging times. In addition, the channel is diversified across several product and service categories—the wellness category is doing particularly well as consumers focus on their health during the pandemic.

Interest in entrepreneurship remains high, and people continue to value direct selling as a source of part-time or supplemental income."

The rationale for the forecast was based on retail sales starting off strong in the first half of 2020, with a 13 percent median increase across the DataTracker sample. Many publicly traded companies reported strong Q1 and Q2 earnings in the US. DSA’s QuickPulse tracking survey—created in March 2020 to show the impact of COVID-19 on the channel— showed that 64 percent of participating companies experienced a positive business impact in 2020, with the majority indicating optimism. That was a record high, and it continued a long-term trend of an increasing number of direct selling companies citing a positive impact.

Another reason for the forecast rationale was that the largest direct selling companies experienced growth throughout the past year. The twenty largest direct selling companies in the US account for 56 percent of industry sales, and the top fifty account for 77 percent. Data from DSA’s Growth & Outlook Report for 2019 showed the largest company size group (more than $300 million in annual retail sales) grew 3.2 percent compared to -0.4 percent overall. This trend continued through October 2020 based on DataTracker results, with the largest companies generally experiencing the most growth (13% increase YTD year-over-year).

One explanation for the success of direct selling companies during the pandemic is the increased focus on customer centricity. Companies that are becoming more customer-centric are experiencing growth. Among 38 surveyed companies in QuickPulse research, sales fell on average in 2019 for those companies that said they know their customers “not at all” or somewhat,” but grew on average for those who responded they know their customers “very well.”

The report also highlighted examples of the resiliency demonstrated by direct selling companies to the challenging pandemic environment. Respondents provided specific examples of how they adapted. One company reported moving their party plan business to virtual platforms and holding weekly Zoom meetings with top field leaders and weekly Zoom training calls with all consultants. Another company did a month of free shipping that was costly but helped their representatives with online sales. Another company gave 10 percent of its sales to people affected by coronavirus, a gesture that resonated with their customers.

Another contributing factor to growth during 2020 was DSA’s work in educating regulators on the direct selling business model. DSA continued its educational efforts with the Federal Trade Commission (FTC) and the regulatory and legislative community about the definition of pyramid schemes as well as earnings and product claim standards. DSA continues to work towards its goal of a federal definition of pyramid schemes by statute or regulation.

In addition, DSA is also seeking additional clarity on FTC’s enforcement posture through dialogue with the FTC and policymakers. DSA is working to educate new FTC commissioners on the direct selling model through academic research and data that dispels misperceptions about the channel.

Finally, the report noted that some of the positives from the forecast relate to direct selling adding value as a distribution channel for in-demand products. With some sectors of gig work hit hard by the pandemic, direct selling remains a viable means of supplemental income.

Industry Research Committee Members

Monica Wood, Herbalife Nutrition (Committee Chair)

Jeff Pocklington, Amway

Dan Schwarz, Forever Living Products

Racquel Martin, Mary Kay Inc.

Chad LaCalamita, Medifast

Neil Poulsen, Nature’s Sunshine Products

Todd Wakefield, Nu Skin Enterprises

Jesse Stamm, Pampered Chef

Greg Marshall, Rollins College (DSEF Fellow)

Kevin Kirkpatrick, Scentsy

Julie Cabinaw, Tastefully Simple

Jennie Zinchuk, Team Beachbody

David Villasenor, The Avon Company

Brian Matney, Thirty-One Gifts

Mark Menatti, USANA Health Sciences

Gordon Hester, Zurvita

Nancy Burke, DSA

Ben Gamse, DSA & DSEF

Joseph N. Mariano, DSA

Kimberly Harris Bliton, DSEF

Gary Huggins, DSEF

Consumer Attitudes Study

Research commissioned by DSA and conducted by Ipsos, the third largest research company in the world, provided an optimistic view for the future of entrepreneurship in the US. The DSA–Ipsos 2020 Consumer Attitudes & Entrepreneurship Study provided a roadmap on how to appeal to prospective direct sellers.

“We’ve observed favorable retail and labor conditions for direct selling to thrive, and with this exciting new study we now have data and actionable insights that help us better understand the American consumer and worker to help the industry grow,” said Monica Wood, Vice President of Global Consumer and Member Insights at Herbalife Nutrition and Chair of DSA’s Industry Research Committee. “We appreciate Ipsos and the teamwork they demonstrated to achieve brand new components of this study, including message testing and answering the key question of how to make direct selling the best opportunity to be an entrepreneur.”

For the first time in the US, direct selling conducted message testing to provide actionable insights into what messaging will attract entrepreneurs to direct selling. Results showed that combining four messages can boost marketing efforts and reach 84 percent of direct selling prospects.

The messages are in order of most impactful, starting on the left.

4messages

Regardless of which group is targeted, messages about direct selling business opportunities being “low-risk” and having “low start-up costs” will resonate with all Americans.

The message testing also showed interesting differences between generational cohorts. For instance, in appealing to specific generational audiences, there were variations on what was most important. For Gen Z, it was accessibility and having a positive impact on the world; for millennials, it was a sense of purpose; and for baby boomers, it was the ability to set their own schedule and the return on time investment.

As for gender differences, the top reason why direct selling was appealing to men was the fact that the harder they worked, the more they would earn. For women, it was the flexibility in setting their own schedule.

The DSA–Ipsos study found that 77 percent of Americans are interested in entrepreneurial opportunities. Interest was highest among the younger generations, with 91 percent of Gen Z and 88 percent of millennials—those most affected during the pandemic.

Another takeaway from the study is direct selling’s competitiveness with other entrepreneurial opportunities. Favorability perceptions toward direct selling and gig work are comparable—79 percent for direct selling and 81 percent for gig work, respectively. The biggest misperceptions regarding direct selling relate to risk and startup costs. These two areas were rated low by Americans. In reality, startup costs in direct selling are modest compared to some gig work, such as home rental and ride-sharing. There is obviously a need to educate entrepreneurs on these misconceptions.

Compared to other entrepreneurial opportunities, direct selling seemed to have a strong advantage during the past year over gig workers, who were not only affected by public health restrictions limiting their work opportunities, but also by competition from employees laid off or furloughed because of the pandemic.

“What do we take away from this?” asked Mark Stastny, Chief Marketing Officer at Scentsy and Chair of DSA’s Communications Committee. “That direct selling offers stability in a rapidly changing marketplace, and if you ask direct sellers if they want to trade places with someone doing DoorDash or being a Lyft or Uber driver, most will say, ‘No, thank you. We are doing quite well.’”

Included in the findings was that direct selling has a broad and diverse appeal. Demographics of potential direct sellers generally match the US population and makeup of current direct sellers: 35 percent were millennials, 31 percent were Gen X, and baby boomers and Gen Z represented 17 percent each.

Interestingly, the study showed men were as interested as women in becoming direct sellers—48 percent for men to 52 percent for women—although men currently represent only about 25 percent of current direct sellers.

The DSA–Ipsos study provides credible insight to DSA member companies, regulators, legislators, and the public related to the workforce and consumer environment and their implications for direct selling.

“I’m pleased that we have new data-driven insights to help us better understand the increasing need in our labor market for entrepreneurial opportunities and the unique benefits that direct selling provides to all involved,” said Joseph Mariano, CEO and President of DSA.

Industry Research Data and Insights

NOT AVAILABLE ELSEWHERE

DataTracker

This quarterly KPI tracking survey reports on net sales, new recruits, order size, and orders processed data; comparisons between direct selling’s results and selected US economic indicators such as overall retail and unemployment rates; and the impact COVID-19 is having on sales and recruiting. NEXT AVAILABLE: February 2021

QuickPulse

Created in March 2020, with seventeen waves currently available, this tracking survey helps companies better understand the business impacts from COVID-19. It addresses timely questions on a rotating basis and provides examples of tactics and strategies companies are using to successfully navigate the challenges posed by the pandemic. NEXT AVAILABLE: February 2021

“DSA Insights” Newsletter

This new email newsletter launched in October 2020. It synthesizes vast amounts of DSA data and analysis to provide members with relevant, easily digestible insights on direct selling, retail, and the broader economy. NEXT AVAILABLE: Q1 2021

DSA Growth & Outlook Report

This annual market-sizing report provides insight on the current size and scope of the direct selling industry in the United States, as well as its growth rate from year to year and operating benchmarks to measure marketplace effectiveness. NEXT AVAILABLE: June 2021

Consumer Attitudes & Entrepreneurship Study

This study captures the awareness and perceptions of direct selling among the public and direct selling consumers. Research is conducted every three to five years.

National Salesforce Survey

This study provides information on the demographics, motivations, and experiences of the people involved in direct selling. It assesses the demographic profile of direct selling representatives and describes their current attitudes and opinions toward direct selling. Research is conducted every three to five years. AVAILABLE NOW

Management Compensation & Benefits Survey

This survey provides direct selling companies with employee management compensation benchmarks to enable companies to offer competitive salaries and packages to attract and retain high-quality managers. 2019 SURVEY AVAILABLE NOW

2021 Digital Transformation Report

This survey helps DSA member companies better understand how they compare to their peers within direct selling and to innovative retailers outside of direct selling across several key areas of technology. It also shows companies how to improve regardless of where they are in their own digital transformation. AVAILABLE NOW

Socio-economic Impact Survey

This study, done in partnership with DSEF, quantifies the full societal and economic benefits of direct selling in the US. Research is conducted every three to five years. AVAILABLE NOW

FIND DSA RESEARCH ONLINE

DSA Research is available online. Go to dsa.org/statistics-insights to browse available DSA research data and insights. If your company has not participated in a survey, you may purchase it through DSA’s online store after a six-month embargo period.

Tags:
  • Features
  • January 2021