The last year has been a pivotal time for direct selling in terms of its progression and resiliency. The channel experienced an influx of new customers in 2020, unleashing new growth amid one of the most tumultuous years on record. That growth has continued into this year. According to recent DSA research, in the first quarter of 2021, US direct sales increased 22.7 percent from a year ago; the number of independent contractors in the US direct selling salesforce increased 5.7 percent year over year.
The COVID-19 virus and its resulting effects certainly impacted the channel’s increased sales. In the early days of the pandemic, consumers turned to direct selling companies when empty retail shelves became the norm. When lockdowns were issued and social distancing restrictions enforced, families sought out new at-home activities to pass the time. They found several options available from direct selling organizations, such as free cooking classes, wine tasting parties, and online workouts.
The increased interest in becoming a direct seller is directly attributable to the pandemic. As businesses were forced to close, unemployment and underemployment rates skyrocketed. When the realization sunk in that millions of jobs were permanently lost, interest in the channel became greater. Displaced workers began to look for supplemental earning opportunities, and many chose to become distributors for the direct selling brands they used and trusted.
This great customer influx offers direct selling companies a tremendous opportunity to further grow their businesses. But the key to stability in post-pandemic times will be the ability to retain these new customers as well as existing ones whose expectations have changed as a result of all that has happened in the past year. Now is the time to evaluate the efficacy of their retention strategies.
Embracing Customer Centricity
When Mannatech executives committed to being a customer-centric company in 2019, department leaders were tasked with looking at each touchpoint in the customer’s journey to evaluate how it could be improved to strengthen retention. Patricia Anthe, Vice President of Customer Experience, says that as part of the evaluation process, the Texas-based company— known for its nutritional supplements, and skincare and weight management products—formed the Customer Experience Team, which she heads up. The sole goal of the team is to bring in and retain customers.
Al Bala, CEO and President, and Landen Fredrick, Chief Marketing and Sales Officer, know the importance of exceeding customer’s expectations and are leading the customer obsession culture, says Anthe.
“They saw the long-term need to become a customerfocused company. Over the last year and a half we have made significant changes in the way we have conducted business, changed our touchpoints, and made things more user-friendly. We believe the growth in our retention is attributable to those changes.”
The Customer Experience Team’s efforts, started before COVID appeared, ramped up by sending out surveys and setting up feedback channels to obtain insights from customers on their experiences in many areas. The data derived from customer feedback is helping to drive business decisions and move the company forward. An example of this is a new shipping communication process.
“When we drilled down into the customer data we learned that we were receiving many calls about shipping,” says Anthe. “We used that as a guideline to change our communication methodology. The new process empowers the purchaser to track their shipping order from the warehouse to their doorstep. The result for us is that we decreased our shippingrelated calls by 31 percent by implementing just a few things and helped to create happier customers.”
Partnering with distributors and customers in identifying where they can improve has helped Mannatech executives see the areas they need to focus on. In addition to the shipping communication process, the team identified the need for more personalized automations and messaging and has already developed a system that customizes emails for renewals, auto-shipments, and credit cards expirations. Anthe believes these simple changes have helped improve Mannatech’s sales and retention numbers.
The evaluation process has also helped the entire company become more customer-focused. “The way we look at projects, the way we look at our website design, the way we look at how we are interacting internally, the urgencies of projects— it has transformed not only our field and retention ability, but our internal culture to become more customer-focused and customer-driven,” Anthe says.
Mannatech employees and distributors try to live by the values found in its mission and vision, which is the basis for the experience they want their customers to have.
Offering Value Enhancements
Santa Monica, Calif.-based Team Beachbody has had continued success over the years with its nutrition subscriptions like Shakeology™ and Beachbody On-Demand online platform. But its significant 2020 revenue growth was in part due to the effects of the pandemic. Gyms closed their doors and more people turned to online workout programs like those offered by Team Beachbody to stay active while shuttered in.
Todd Montgomery, Executive Vice President of Customer Support & Engagement at Team Beachbody, points to new moms being a major driver of that recent growth. Women were disproportionately affected by the pandemic. Many had their jobs eliminated and others were not afforded the ability to tele-work. Still others were forced to stay home to care for their children.
We have pivoted to a new strategy we call ‘value enhancement,’ which is reinforcing a purchase decision and uncovering functionality to the user."
—Todd Montgomery, Executive Vice President of Customer Support & Engagement, Team Beachbody
“We have a lot of new moms—that is a big customer focus of ours,” says Montgomery. “Many are at home, need a flexible schedule, want to stay healthy and lose weight, and are thinking about how to make some extra money.”
When the pandemic first began, Beachbody created programs for parents and kids to work out together, offering them free on YouTube. It was a way to introduce people to the company and showcase results of the Team Beachbody experience—before and after photos of people who physically transformed their lives. The offering brought in new customers.
While the on-demand platform boasts a 96 percent monthly retention rate, the company’s subscription plan for nutritional products has had cancellations. As Montgomery explains, that is really a result of the overall program’s success: Once people have attained their weight goals, they don’t necessarily want to continue paying for nutritional supplements every month. In the past, when customers called to cancel, Beachbody would try crossselling. But Montgomery and his team have come up with a new engagement strategy to ensure customers are fully committed to their purchases.
“We have pivoted to a new strategy we call ‘value enhancement,’ which is reinforcing a purchase decision and uncovering functionality to the user,” says Montgomery. “We have a lot of new subscribers each month and it is important that we reinforce their decision to buy and keep using our products or become a coach.”
Beachbody’s reinforcement plays on the value of the product or business opportunity. For instance, if the customer signed up for the fitness program, the value of his or her subscription is that it also includes access to nutrition, meditation, or yoga programs. If the purchase was for Shakeology products, the value is the variety of flavors that they offer or tasty recipes with the simple addition of fruit or nut butters. What is important, says Montgomery, is that any commitment doubt is replaced by excitement about a new fitness program or nutritional program or the prospect of running a small business— helping others achieve their goals while earning supplemental income.
“It feels more customer focused to get the customer to get the full value out of their product,” Montgomery says. “It’s more of an engagement strategy than a retention strategy because if you use a product regularly, you are going to stick with it; if you are not using it regularly, there is no reason to keep up your subscription. We feel like it is a better strategy, and if people are seeing good results, they will not only want to be lifetime customers but also share it with their friends.”
Creating Customer Loyalty
While companies are developing retention initiatives for their field organizations, more and more companies are investing in their brands in ways that create loyalty among the end-users, who are the ultimate consumers. They are focusing on building strong brands that generate market demand for the products distributors sell.
In fact, the emotions that a brand elicits—those that key into the hallmarks comprising a brand’s marketplace differentiation—give consumers an additional reason to stay loyal. Companies that build brands in ways that create consistent interactions with consumers understand the importance of remaining top-of-mind. Remaining relevant requires constant awareness of a customer’s mindset, and this orientation—one that always strives to ensure that customers feel understood, valued, and rewarded across their journey—is central to customer centric thinking.
Team Beachbody’s On-Demand online platform boasts a 96 percent monthly retention rate.
Organizations that make retaining their products’ end-users the top priority do so by examining all levels of their business. They understand the importance of looking beyond the creation of systems that gather, analyze, and manage consumer insights.
Such customer-centric thinking, when used as a consumer retention strategy, requires buy-in and a desire for transformational action from all levels of a business. When companies begin by asking the right questions of the data gathered, they can key in on the insights that matter and take actions that make a difference.
Roxana Epps, Director of Integrated Marketing for Young Living, says that the essentials oils company has worked diligently to understand its customers and the journey they are on. “We have worked hard to understand their ‘why,” she says. “We try to be agile in our approach and implement new strategies and tactics quickly and efficiently. We also pay attention to data, which helps us to know what is happening, why it is happening, and predict what may happen in the future. All of this helps us to be in the driver’s seat and be of service to our customers.”
Epps, who just joined the company last August, says the company’s focus on customer retention resulted in the implementation of several new strategies last year, during which they had “phenomenal” yearover-year growth.
“A top initiative over the past year for Young Living has been to sharpen our focus on long-term customer loyalty,” says Epps. “We’re making it easier to do business with us by enhancing our website, improving our customer programs, and updating our digital tools. With a new state-of-the art digital platform underway, our customers will have more flexibility while shopping. Our business builders will be equipped with more tools to share the Young Living mission. These platform changes will also enrich our marketing retention tactics as it will allow for precision to share the right offer, at the right time, at the exact moment (channel/touchpoint) of a consumer’s journey.”
Over the past few months, Young Living has also implemented several preemptive retention tactics. Epps’ team partnered with the business intelligence team to develop a model that predicts which first-time customers are unlikely to place a second order. The information allows the company to adjust its incentives, recognition, and awareness to entice those customers to place a second order.
“We think that the pandemic has driven our customers to become more digitally savvy,” Epps says. “At the same time, our customers have realized the business opportunity that Young Living offers is attractive. We believe some of our recent growth can be attributed to these two factors, and we want to make sure that we have systems in place to support and sustain that growth.”
The Company’s Role in Customer Retention
It is important for companies to understand that a customer-centric mindset will empower the field for success. Those that assume the field will do all the work in acquiring and retaining customers fail to embrace their responsibility to lead. When companies put the brand and the consumer experience first—and when they provide distributors with the marketing tools and training they need to succeed—retention tends to follow.
There is an evolving movement toward direct selling companies becoming more involved in the customer journey process. Companies are more engaged with customers. They are still working with the field, but they don’t have 100 percent dependence on the field to cover all customer touchpoints. The reality is that companies have the resources and the expertise to improve retention that the field doesn’t necessarily have.
An important conversation to have at the company level is what type of company you are. Are you really looking to drive the business to the opportunity? Or are you moving in the direction of being more customer-centric? Ultimately, the culture is what people want to be a part of and the opportunity and product live within that; however, depending on which direction your company is going, it changes how customer acquisition and customer retention strategies are approached.
Young Living’s marketing and business intelligence teams partnered to develop a model that predicts which first-time customers are unlikely to place a second order.
“Through this process over the last year and a half Mannatech has evaluated who we are,” says Anthe. “What is our goal? What is our mission? What is our vision? What are our values? In any organization that is the foundation that drives customer obsession. That is the foundation for how we conduct business. We are really trying to live by those values in our mission and vision, as they are the foundational building blocks of the company, our North Star.”
Anthe says Mannatech tries to be transparent with its field leaders and this approach is building more cohesiveness with the field. She believes the strategies the company has implemented have made Mannatech a better company—its internal culture as well as its customer base and associates.
“It’s important to look at what we are doing in the corporate office to make sure we are projecting the right messaging, the right mission, vision, and right values outwardly,” Anthe says. “So while we thought it was only related to the retention of our customers and associates, it does impact the overall company culture and our ability to drive the results that we want.”
The Role of the Field in Brand Building
It is critical to ensure that the field understands the importance of the company and customer relationship. Sometimes that education is about shifting mindset, especially if the field tends to be heavy on the opportunity side. Educating the field creates continuity in business processes and it creates buy-in, that unity around how the company grows together and how stability is built in the business.
“When it comes to educating the field, it’s really important for companies to lead with the importance of the end-consumer—create training, programs, tools, and resources that help build quality relationships and provide those who are sharing our products with others with direction on how to successfully follow up to create long-term customer loyalty,” says Epps.
Epps says that while corporate is providing tools to help members be better business builders, they also play a major role in creating the seamless customer experience. When products arrive on time, consumers have a great online shopping experience, where it’s easy to check out and easy to enroll or subscribe.
“They have sound understanding of the mission, the product training, and usage information they need,” Epps says. All of that enhances and reenforces that end-consumer relationship. It’s the win-win relationship for corporate and the field.”
When companies articulate the importance of the consumer experience throughout every salesforce education opportunity, the field develops a customer mindset. If customer-centric thinking is a part of salesforce training, distributors develop an instinct for following up and maintaining their business. The field comes to care about the consumer and value the relationships they create.
How can companies train distributors to sell their products or services with a customer-centric mindset? The field must understand the value of growing its consumer base. Doing so will fortify their business and position it for future growth. This attitude is cultural; executives at every level of the organization must embrace the concept. If recruitment is an organization’s focus, then brand building to end-consumers can languish.
When it comes to educating the field, it’s really important for companies to lead with the importance of the end-consumer."
—Roxana Epps, Director of Integrated Marketing, Young Living
As important, the distributor–customer relationship must be continually strengthened through honest communication between the company and its salesforce. Mannatech has made this a top priority in its customer-centric approach.
“We have an internal ‘Open Mic’ meeting for top leaders, which we feel has helped in retention and customer satisfaction,” says Anthe. “It enables the executive leadership team and Customer Experience Team to hear issues and wins. We’re listening to them. We’re hearing them. And we’re taking all that into action.”
Recapturing Inactive Customers
While the major focus of a retention strategy is to ensure customers remain loyal customers, companies typically have detailed tactical approaches for recapturing lost distributors and customers.
“What is important to realize with a company’s inactive audience is that it costs significantly less to re-engage them before they’re gone,” notes Epps. “So looking at those at-risk groups is key. With the right promotional marketing and nurture campaigns, companies can win those customers back and create new activity and new growth.”
One suggestion is for companies to implement a net promoter score for inactive distributors. A qualitative scale, in its simplest form, has ratings with a sliding scale. Inactive customers are asked to share feedback and insights, and then the net promoter score helps identify those individuals on the higher end of the scale who can be reengaged. By the same token, respondents with the lowest rankings provide companies with the opportunity to see their business in a new light.
Another approach is involving all departments of the company to assistance with recapture efforts. For instance, Mannatech incentivizes its call center representatives to contact inactive customers and get them to reengage.
“We have a successful program—called CARE—that is a cost-neutral program that creates a win for our associates, a win for our call center advocates, and a win for our company,” Anthe says. “Our call center advocates actually reach out to past customers with a come-back offer if the customer hasn’t ordered in 2-3 months. If a call center rep is able to secure a new order, that rep shares in the commission of that initial order. We also try to gain information as to why the customer stopped ordering so we can evaluate how we can improve and clear the way for future orders. Continuous improvement is the key to our customer obsession strategy.”
Offering new products and services has also been a way to entice inactive customers back into the fold, whether it is new additions to an existing product line or, in the case of Beachbody, an acquisition that brings additional benefits to the company–customer relationship.
This past February, The Beachbody Company announced it intends to acquire Myx Fitness, an at-home connected fitness platform that competes with the likes of Peloton and SoulCycle. The acquisition will help Beachbody capture the increased demand for at-home health and wellness offerings that spiked last year. While the cost for the Myx Fitness bike is $1,300, the merger unlocks synergy across the Beachbody brands. Montgomery believes it will spur further engagement, including interest among lost customers, and help with retention going forward.
“I personally think that when you make an investment like that, it’s a commitment,” he says. “Once you have bought a piece of expensive hardware, once you’ve made a bigger upfront commitment, you are more likely committed for a longer term. You’re more likely going to pay the monthly or annual fee for our streaming service, so I think that will help our retention.”
Retention and Comp Plans
For many years, direct selling compensation plans were designed to reward the people getting overrides and not necessarily the people selling the product. That caused a lot of churn in the industry. Statistically, about 80 percent of direct sellers will never build a team. What the industry is seeing in comp plans now is a reallocation of commission so that the part-timers can stay and be properly compensated for the work they put in.
“While creating a memorable brand experience is key, companies cannot forget to provide value to part-time users and earners,” Epps says. “What’s really important is to look at your lowerlevel builders and see if they feel recognized and rewarded for the time that they put into their business. Customer relationships are important, but the more they see the result of their work, the more they want to put it in.”
The question to ask is about the amount of money an individual needs to earn in order to stay. For many, it is not a high-dollar amount. People who have a stable income, keep a customer base, and train a small team of people to do the same are more likely to remain with their direct selling businesses.
Beachbody is testing a new component to its sales plan that includes a retention element. Its subscription-based business offers a Total Solution Pack where a customer can sign up for streaming service as well as nutritional products like Shakeology or Performance Line. However, when their goal is met, the commitment to the program slackens. So the company is trying to provide some incentive for people to stay.
“We are trying to shift people’s perspective from a short-term way to achieve a goal to more of a lifestyle commitment,” Montgomery says. “Naturally, people want to focus on bringing in new customers, so there is a lot of focus on acquisition. We are trying to ensure there is a balance, with as much focus on engagement and loyalty.”
Awareness Brings Customer Loyalty
As companies develop their customer retention strategies, it is important to remember that doing so requires much more than just a focus on numbers. It requires a wider awareness of marketplace changes and consumer behaviors, as well as the more diversified field now represented in direct selling.
Companies must understand that retention is impacted by the customer experience, the quality of the engagement and interaction at various touchpoints throughout the journey. Those interactions determine if the engagement is positive and meaningful—and most importantly, if it creates hope for the customer.
To retain customers, companies must deliver on that hope. They must deliver on expectations. That means magnifying a consumer’s core beliefs and basing the relationship on value-adds as opposed to trying to control a customer’s purchase interaction. Having a truly customer-centric connection will build trust and loyalty—and increase retention.