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DSA Hall of Fame Perspective: The Shift from Physical to Digital Brings New Opportunities

Jun 5, 2021
By John Fleming, DSA Hall of Fame Recipient, 2016

My perspective on customers is based on my experience as a direct seller and direct selling executive, along with recently conducted study and research to better understand the gig economy phenomena. All point to the importance of channels of distribution that focus on connecting customers with products and services through the influence of independent contractors.

Customers are foundational to the success, growth, and sustainability of all businesses. We have always known this. However, a marketplace competing for consumer loyalty and mindshare has resulted in more consumer choices and raised the bar of consumer expectations. We now shop online. Technology provides consumers with the ability to easily research their potential choices and make price-value comparisons in seconds through their smartphones. Consumers can easily check when the product or service will be delivered, and this information factors into most consumer decisions.

A Special Moment in Time for Direct Selling Companies

Direct selling companies have taken notice and, consequently, are creating opportunities unparalleled to anything we have historically experienced. The shift from “physical” to “digital” allows for a more personal approach to marketing products and services. A direct seller who adds a caring personality to the information and education a customer receives provides added value to a digital platform. Direct sellers can activate digital and virtual contact with a customer at any time and there are no geographical constraints. Personalized presentations can be conducted at 10 a.m. or 10 p.m. and include participants joining from different geographies and time zones, all able to place their orders while the presentation is taking place. This was never possible in the physically focused world. However, today it is commonplace.

The digital world is also more cost-effective, increasing profits and reducing expenses for all involved. This makes direct selling, perhaps, more appealing than ever before. The possibility of aggregating and serving customers without any form of constraint has never been greater or more profitable when analyzing potential return on the investment of time. A virtual home party supported by compelling and exciting digital assets can accommodate more guests than any room in the average home, and refreshments are unnecessary.

What Matters Most When Focusing on Customer Acquisition and Retention?

Legacy systems can stand in the way of creating new strategies and pathways for the future. New direct selling companies are starting with customer focus at the forefront of growth strategies. Legacy and maturing companies may face more challenges. Investments in technology and the data warehouse— central repository optimized for analytics—must be at the forefront of corporate growth strategies.

In the new world of opportunity for direct selling companies and direct sellers, customer segmentation is critical. Customer segments are defined by purchase volume, purchase frequency, and types of products purchased. All new customer-focused metrics must also be segmented by independent contractor and their level of performance. The average number of customers served per active independent contractor is the beginning of the process of understanding the effectiveness of a customer acquisition and retention strategy.

Digital Platforms Are the Primary Customer Acquisition Tools

When potential customers go to direct selling platforms, they are introduced to a brand, the mission and purpose of the brand, its products and services, and the reasons why these products and services should become preferred choices. Mastery of the digital platform is the new opportunity for all direct selling companies and will lead to more effective customer acquisition techniques. There is power in consistency combined with the personalization and care that can be added by the direct seller. Digital presence must be coordinated across many platforms and all need to be branded to create instant appeal.

From the consumer perspective, coming into a digital platform is like coming into a shopping mall or unique store. If it’s easy to get lost in the mall and not find what matters most to us, we easily become disappointed in the experience. Unlike the behavior of going back to our cars and going to another store, we simply “click out” and, in seconds, we go someplace else. Therefore, the digital platform of the direct selling company and direct seller must be visually inviting, help new prospective customers quickly find what matters most to their introductory experience, see what products are recommended for purchase, and understand why the products or service should be purchased. What formerly might take an hour or so of presentation must now be accomplished in seconds.

A consumer-friendly, engaging, and action-focused digital presence is critical to success in the new marketplace. The potential customers that we attract, as well as those we engage, tell us a lot when we have the analytics. Big brands like Amazon incorporate the use of artificial intelligence, which supports the online shopping experience, often making it easier for customers to make decisions and evaluate choices. Direct selling companies must emulate this type of experience to equip their direct sellers with the tools they need to compete effectively. The objective is to make consumers feel important, as quickly as possible, and show them how we can make their lives better. Short video clips of a few seconds support the direct seller in their efforts to attract, engage, and retain customers. Mastery of the customer-focused digital platform experience is the new opportunity for direct selling companies to support their direct sellers.

The Direct Selling Company Is Now Key to the Customer Acquisition/Retention Strategy

While direct selling companies once left the customer acquisition and retention strategy to the direct seller to decide (party plan selling, group selling, one-on-one), the digital economy now requires that the company control how the brand, products, and services are offered. This leads to the most coordinated marketing effort in the history of the direct selling model and will provide direct sellers with a competitive edge that can be leveraged further by individual personalities.

The digital marketer may not have been on the direct selling corporate organizational chart a few years ago. Today, this may be the most important C-level executive in the development of effective customer acquisition and retention strategies. However, no one person is the solution to tapping into amazing opportunities. A digitally focused team, including communications specialists, are critical players in the mix. The company creates the conversations that influence and shape the behaviors of the culture and community of independent contractors and their customers.

New Metrics Are Critical to Customer Acquisition Strategies

Measuring the average number of customers per active independent contractor is a starting point. Beyond averages are specific segments that are critical to understand. Customer acquisition and retention effectiveness are dependent upon the collection of data. New metrics will identify those who influence customer acquisition, retention, frequency of purchase, and average order size. For example, the behavior of segments who acquire and retain less than five customers during a measurement period is different from the behaviors of those who influence ten customers, greater than twenty-five customers, fifty customers, or one hundred or more. Incredible technology and digital tools now make the possibility of aggregating the value and benefits associated with influencing the acquisition and retention of customers an exciting attribute of the direct selling model. Carrying personal inventory and making personal deliveries is part of our history in terms of how direct sellers once served customers but is not envisioned to be integral to our future.

The rank achievement recognition, an attribute in the programs offered by direct selling companies, is expected to recognize those who have personally influenced the number of customers active during a specific measurement period. Today, we can accomplish more with less and we can do it faster, more effectively, and more profitably. We can create sustainable benefits that cannot be matched by other similar gig-type income opportunities.

Customer Acquisition and Retention Strategies Must Be Relevant to the Customer

Critical to customer acquisition and retention strategies is understanding that labels are not strategies. Using labels such as Preferred Shopper/Customer and enrollment in the company auto-ship program does not mean the company has a strategic focus on customer acquisition and retention in support of its independent contractors. Labels are important; however, it is the education, information, communication, and service direct selling companies provide to those with labels that are more important. Recognizing the motivations behind the labels being used is also important to avoid treating all labels as if they have a common motivation.

There is nothing we need to learn other than reducing some of the complexity to simplicity and becoming stronger advocates of a “less can be more” approach to strategic planning and execution."

Elite pricing strategies to support complex compensation plans may become problematic to effective customer acquisition and retention strategies. Elite product pricing is not a reference to “high-ticket” items sold through a direct seller such as home products and appliances. However, elite pricing does activate the necessity to market “quality” as an “exclusive.” More important is the following question: When offering lower-ticket consumables, is the market for elite pricing large enough to access a consistent flow of customers and passionate advocates/influencers/direct sellers who desire to share their experience with others? Depending upon product category, elite pricing strategies may be harder to sustain in a consumer-focused marketplace where the consumer can easily compare and make decisions faster than ever before. Communication of the price/value relationship becomes a critically important component of the customer acquisition/retention strategy.

Combining Historical Strengths with Customer Centricity

Direct selling companies can become the market leaders in how customers are served through independent contractors. One could easily hypothesize it is our destiny. As the customer-centric focus becomes the core of every component within the strategic plan, we will realize our destiny because of our new opportunities. We already know how to make available a unique form of compensation, how to create and offer quality products and services, and how to recognize and inspire others to do what they never thought or believed they could do.

We know enough about compensation planning, quality, incentives, and recognition to be a preferred choice. There is nothing that I observe that we need to learn in these areas other than reducing some of the complexity to simplicity and becoming stronger advocates of a “less can be more” approach to strategic planning and execution. Applying what we’ve already mastered to a more customer-centric approach in support of the independent contractor— never to circumvent the independent contractor but to serve them and their customers with quality, love, and care that is so superb—is the new opportunity.

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  • Highlights
  • June 2021