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Personalization & Mission: Direct-Selling’s Next Act

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Direct-selling organizations built successful networks one person at a time, applying personalization through two-way dialogue out of business necessity long before targeting became viable at scale for retail and online sellers. Now brands and retailers are spending heavily – as much as $19.1 billion in 2018, according to market research firm IDC – to deploy personalization in online and app-based selling environments. How will the direct-selling industry respond?

All forms of sales are changing, driven by network technology.

  • Precise use of content, sales insight, and personalization are the catalysts of customer experience and revenue. Marketing and Sales teams are collaborating to refine the customer journey in every industry, practicing micro-targeting using standardized libraries of content delivered at the right moment.
  • Sales training is happening faster across distributed networks instead of in isolated training rooms and technology has turned call preparation from a dull slow manual process into lightning-fast app-based choices that happen in real-time.
  • Sharing best practices across the entire organization, even as it rapidly evolves, is a survival imperative. Combining content management platforms with machine learning allows brands to address individual consumers with customized messages.

Direct-selling companies must counter heavy brand and retail investment in personalization with their own content-centric, mobile customer experience or face losing their historic face-to-face advantage in sales on both sides of the table. Consumers expect more attentive pre-sales engagement and young distributors gravitate to technology-enabled platforms that help them manage a business from the palm of their hands.

From onboarding to the first sale, as distributors gain more product knowledge, and direct-selling networks diversify, mastery of content delivery in support of the salesperson in the field defines success and moves revenue. The Boston Computing Group reports that companies that invest in personalized experience and “get it right” see between six percent and 10 percent revenue growth. But only 15 percent do get it right.

Personalization at scale: Every customer interaction

Consider recent investments by 49-year-old retailer Cracker Barrel, which is fighting for survival as its traditional venue, the shopping mall, fades. Cracker Barrel is losing its face-to-face engagement opportunities faster each year. Yet the retailer saw revenue climb by 9.3 percent since 2014 based on improved targeting online and in stores despite declining sales in its mall-based stores.

“We serve over a quarter of a billion people a year and the needs and interests of our vast guest base vary,” Don Hoffman, senior vice president of marketing at Cracker Barrell told AdAge in January. “Accordingly, our messaging strategies need to be highly targeted and employ greater precision. This includes our creative messaging as well as the media platforms we employ.”

Direct-sellers should heed Cracker Barrel’s experience. Personalization is an opportunity that is amplified by the one-to-one human experience distributors deliver. Thinking beyond the local meeting to connect direct-sellers to customers and potential distributor partners can blow up limitations on growth. Technology or, rather, the human augmented by technology, can support many more, geographically distributed customer relationships.

In a recent survey, Accenture found that 91 percent of consumers are “more likely to shop with brands who recognize, remember, and provide relevant offers and recommendations.” Although 83 percent of consumers will share data to get better information when making buying decisions, 35 percent complain that poorly composed automated messages can be “creepy.”

Direct-selling distributors who bring the right information and acute emotional selling skills to the consumer remove the creepy factor of automation.

A smiling human face augmented by smart tools can serve exactly the right information to the customer and close with a comfortable appropriate style that no software-only platform can match. However, without investments in content delivery and process optimization that can be shared across an entire network, direct-sellers face an existential challenge in the 2020s.

Driving retention with consistent sales activity

The direct-selling imperative to move new distributors to their first sale and accelerate the pace business growth for each independent business owner is the model’s most distinctive feature. In a technology-powered market, sales process optimization must be combined with stellar seller experience to keep a network growing.

Without rapid onboarding and early sales successes, distributors begin looking for another opportunity within six months. Younger salespeople who fail to engage with a company’s mission or feel that the organization does not respect and invest in their goals will move on even faster. The immediate gratification consumers demand is pouring into the work relationship, as well.

With as many as 34 percent of Americans now “gigging” to build additional revenue streams, direct-selling organizations that employ cloud platforms to connect with distributors and customers are poised to be the new opportunity of choice for self-starters. The critical success factor with these opportunistic workers will be educating and enabling their participation in clear, compelling selling messages based on on a strong brand. Using content served by the platform, a distributor can prepare faster for each meeting and tune messaging for each customer.

Platform tools can also help manage the sales pace and relationship capacity of each distributor, helping to maintain their optimum performance. As the economy becomes more efficient and productivity picks up even more, human experience will become the fulcrum of both the customer and the employee relationship. Young workers, who seek meaning and mission in everything they do, from work to recreation and consumer spending, will require perfect experiences at the office, in the field, and always in the palm of their hands.

Taking the direct-selling lead using automation

At LifeVantage, a GEG partner, CEO Darren Jensen has ignited distributor enthusiasm with technology investments that culminated last week with the release of the LifeVantage app. Applying a process-based What’s Next approach to each step in the sales process, the app has earned plaudits from the LifeVantage network.

“Revolutionary is what this company is about,” said one distributor days after the launch of the LifeVantage app. Another reported that on the first day they used the app, it reminded them to follow-up with a lead that they had forgotten. The platform’s ability to scan sales activity, raise calls to action for the distributor to consider, and provide meticulous computational attention to the state of sales relationships can propel a salesforce to scale new heights.

Distributor excitement will engage new LifeVantage participants and the What’s Next process will get them to their first sale faster, increasing distributor retention rates and revenue for the company.

See you at DSA 2018

Gig Economy Group and LifeVantage will be presenting at the upcoming Direct Selling Association 2018 Annual Meeting in San Diego, June 17 through 19. We look forward to meeting you at the event, where our team will be exploring critical questions about the future of direct selling. Schedule a demo or reach out to meet and talk at our suite during the event.

We would also appreciate your joining our blog team for a discussion at the event about the challenges facing the industry. We will be writing about direct-selling in the weeks before DSA 2018 and would like to include your thoughts in our reports. Send email to schedule an interview.

See you in San Diego.

Marketplace Fees Under Pressure: Uber Settles With Drivers, Again

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Uber headed off a class action lawsuit by 2,000 New York-area drivers this week, with a promise to pay $3 million to end a dispute over the fees it imposes on those drivers. It is evidence that marketplaces will see more pressure to lower fees in order to retain workers.

The ridesharing company has settled many similar suits and appears headed for many more settlements. We think the underlying signals point to a decline in the advantage marketplaces had over workers which allowed fees of up to 30 percent to be deducted from fares.

On-demand companies should be prepared to thrive on margins similar to retailers, such as Amazon and WalMart. Where a 25 percent or greater fee is deducted from a driver’s or a housekeeper’s earnings today, the on-demand market his headed for a sub-10 percent fee structure over the next decade.

Two factors will accelerate this trend:

1.) As purpose-specific marketplaces mature, such as ridesharing, workers will diversify their listings, making themselves available on many systems. This is true of Uber and Lyft drivers, who typically use both apps simultaneously to get work. This means workers will be arbitraging work opportunities across many marketplaces. Purpose-specific markets will respond by consolidating related markets, which presents significant brand challenges. “Uber” has become a verb denoting ridesharing, but not housecleaning; It would have a very difficult time extending its brand into home-services. Price is the manageable factor in consolidating markets.

2.) Information efficiency favors the consumer, not the marketplace. As more data is applied to the problem of anticipating demand, consumers and workers alike will move to low-cost marketplaces in pursuit of better prices and pay rates. These twin demands put the marketplace in a lurch. In order to lower consumer costs while retaining an attractive workforce, the marketplace must lower its fees charged to those workers.

As workers diversify, marketplace providers will compete for labor supply, lowering their fees charged to workers who focus on their service categories. Likewise, consumers will embrace marketplace brands that solve many in-home and on-demand needs, leading to greater optimization within those marketplaces and lower fees charged to workers.

Ford & Postmates tackle local business services

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Ford today announced a partnership with Postmates to expand on-demand services for small business at CES. Postmates reports that SMBs joining its network see “4X revenue growth” and claims it has the most extensive on-demand delivery fleet in the U.S. A variety of companies will enter this space in 2018, among them HERE Technologies which announced a competing service that aggregates on-demand mobility options yesterday.

“Expanding access to smaller, local merchants is at the core of our business,” Vivek Patel, Postmate’s vice president of Business Operations, said. “We view self-driving vehicles as another potential tool that can level the playing field for these businesses, and ensure that geography alone does not equal destiny.”

We applaud the focus on small business. It is where the on-demand economy can take root and develop opportunities in every community.

Delivery without people remains problematic, as it is the last few yards or flights of stairs that presents the most significant barrier to automated deliveries. Sure, a car can get to the curb in front of an address, but how to get the package inside with the appropriate brand experience, requires a human. Postmates will likely utilize Ford autonomous vehicles to streamline its workers’ travel. The companies are working together on how to support the last-yard fulfillment, as well as improve consumer discovery of, and purchases, through automated deliveries.

Didi diversifies with Bluegogo

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Here’s the problem with building a purpose-specific marketplace, such as a consumer mobility platform like Uber, Lyft, or Didi Chuxing: Once the platform is saturated, it’s necessary to diversify. In the case of China’s Didi Chuxing, the ridesharing company is adding management of a bike-sharing service, moving into an adjacent, though painful, market with its platform.

Didi customers will get access to Bluegogo bikes in Chinese markets. Didi is taking a chance with Bluegogo since the company has already failed. In fact, all Didi is doing is acquiring Bluegogo’s abandoned bike inventory, hoping to earn back the cost by increasing revenues from existing customers.

As on-demand evolves, the apparently explicit delineation (rides on demand versus, for example, housecleaning) between one consumer market and another will become a barrier to expansion. Markets are more efficient when they include many products and services than in any dedicated marketplace. Early leaders in transportation may find that adding any non-mobility service proves difficult.

Didi customers may consider taking a bike instead of a ride. But not all those customers will be interested in bike options, so expansion into bike-sharing could produce little incremental additional spending by Didi customers.