Diversity. Equity. Inclusion. Seldom have three words been packed with so much potential, yet also mired in controversy. They can be bounced around like political footballs; serve as HR “to-do” boxes aimed at maintaining a status quo; or be harbingers of real change that accelerate the success of the people, companies and industries who understand that there’s a business case to be made for DEI and widen their strategic planning accordingly.

“Diversity is real. Diverse people do things differently. Diverse means we often live differently; have different priorities; eat differently; raise our kids differently; dress differently; wear our hair differently; we even worship differently,” John Fleming, a consistent advocate of the direct selling industry with a storied, decades-long career at Avon, who also helped build Direct Selling News (DSN) as its one-time Publisher and Editor-in-Chief, explained.

Fleming’s wide-angle perspective on DEI comes from decades spent in executive board rooms, where his thinking and performance track record supplied valuable input on strategic planning and problem-solving. But he’s well aware that undercurrents existed, as typically the only African-American in the room and a looming temptation for HR to check a few “diversity” boxes.

“I passed on many invitations to be part of committees and special task forces when I knew or surmised that the real objective was to try to check a few boxes without disturbing the status quo,” Fleming said.

So, Fleming comes at DEI with a uniquely informed perspective—one encompassing his life’s work within the direct selling industry, as well as one formulated in the potential and eager anticipation of its future.

It’s with the future in mind that DSN—supported by Fleming’s expertise—rethinks DEI and pushes its evolution from a one-dimensional HR-driven program to a multi-dimensional business growth strategy. This is the first in a series of articles we’ve entitled, The Business Case for Diversity, Equity and Inclusion.

Our hope is that readers use this as a primer to better understand DEI; sort out the state of DEI in their companies; and expand their thinking about its potential in helping them meet strategic goals.

Subsequent articles in this series will feature case studies of direct selling companies who have adopted DEI as a business growth strategy. We want to look in-depth at their decision making, action plans and results. If your company is actively participating in a multi-dimensional DEI business growth strategy and would like to share with our readers, please reach out to DSN Publisher, Patricia White.

The Multi-Dimensional Potential of DEI

Often, DEI falls under the auspices of HR. It is here where programs are established to foster a welcoming work environment for under-represented groups, while simultaneously protecting the company by eliminating bias and unfair discrimination in the workplace that could constitute a violation of law.

And while those efforts are vital to employee, cultural and corporate growth as well as maintaining proper legal standing, Fleming believes DEI holds even greater potential when considered as a multi-dimensional business strategy. The business case for DEI lives not in the one-dimensional HR world, but rather in the realm of market growth potential, strategic business acquisition, customer/representative targeting and results-oriented communication, all of which drive profitability.

Going Global or Staying Home

Going global has long been the steppingstone of choice by direct selling companies seeking to make leaps forward in market growth. And it’s no wonder looking at the World Bank’s 2022 Top 15 GDP list.

To make a successful run at any international market takes commitment to research and fostering in-depth understanding of economic and cultural landscapes very different than the United States.

“It has always been interesting for me to observe that when we decide to go global for strategic growth reasons, we are actually committing to DEI. Yet, we may not be as committed when we manage the same enterprise locally,” Fleming said.

Fleming’s point is that there is intrinsic value in companies parsing out and capitalizing on the strengths and potential we have here at home when it comes to DEI. No country outpaces the US in terms of GDP, standing at $20.89 trillion. And our segmented annual purchasing power of ethnic- and age-based groups mirrors the GDPs of entire countries.

“The United States is the most diverse marketplace in the world. However, many businesses go global to access talent pools, reach new markets and hopefully activate new growth opportunities,” Fleming said.

He believes there are cost-effective growth opportunities right here at home—driven by the same DEI principles now used by companies in international expansion—without the challenges faced when going global.

“Theoretically, a new company could build a successful enterprise targeting any one of the consumer segments. Some of the segments are as large as other countries, and they are all within the borders of the United States of America,” Fleming said.

Evolving Business Growth through DEI

How then might a company take effective steps toward a multi-dimensional DEI business growth strategy here at home? The first step in making a business case for DEI is knowledge.

Fleming vividly remembers a mandatory course called “Finance for Non-Finance Managers” during his years at Avon. “It helped to change my thinking from the more emotional, optimistic mindset to a more strategic mindset.”

Such a course teaches the essence of the business model and the reasons for its existence. It focuses on how the business grows and the importance of gaining market share in the marketplace. It also teaches people how to think strategically with clarity and purpose, no matter which department is leading a conversation.

The goal, Fleming said, is to develop a keen, company-wide understanding of the financial components necessary to grow a business. It is possible to cultivate a group dynamic and mindset that is mindful of growth, regardless of proximity to sales and marketing efforts.

Who Do You Invite to the Table?

In his experience, Fleming believes there to be three steadfast rules, if not universal laws, direct selling companies should follow when strategizing about new business acquisition.

1/ It is difficult to understand the motivations of women without including women in the conversation.

2/ It is difficult to understand the nuances of ethnic groups and their cultural differences if such representation isn’t included in the conversation.

3/ Pictures and data don’t tell the whole story. Relying on data alone often results in a lack of understanding about diverse groups of people and misunderstandings about DEI and its potential.

An estimated 80 percent of consumers are more likely to buy from brands that tailor experiences to customer preferences, and emotionally connected consumers are two times more valuable than highly satisfied ones.

In the past, direct selling as a channel of distribution, was highly dependent on the field of independent contractors to lead new business acquisition. Grassroots prospecting recruited customers and distributors/consultants primarily from existing field networks.

But today, companies have more options and greater control. They use marketplace research and data to strategize new business acquisition, and then provide intermediaries in the field with the right tools, at the right time and using the right messaging to reach target markets more effectively.

So, who sits around the conference table giving input during new business acquisition strategy sessions makes a big difference.

According to Innovation, Diversity and Market Growth, a white paper put forth by researchers from the Center for Talent Innovation, teams that have one or more members who represent the gender, ethnicity, culture, generational or sexual orientation of a target market are as much as 158 percent more likely to innovate effectively for that end user.

Granted, some geographies are less diverse than others, and therefore have less diverse hiring pools. And the industry has long favored sales and marketing candidates who possess experience related to direct selling. But Fleming posits, neither is an “acceptable rationale for not pursuing diverse talent that might serve to improve every facet of the business model, especially the sales and marketing effort.”

Colleges and universities are in the business of doing this. They recruit raw talent and potential, then proceed to develop those individuals over time. Perhaps the direct selling industry would be better served if it looked at leadership recruitment in the collegiate way—discover, mentor and develop.

“It appears logical that those who represent the various segments might bring new and relevant ideas to the conversations and decision making,” Fleming said.

But as Forbes reported, “Implicit biases are driving certain employees out of leadership positions and resulting in a less diverse workforce, impacting the bottom line.”

According to the American Psychological Association, “Individuals’ perceptions and behaviors can be influenced by the implicit biases they hold, even if they are unaware they hold such biases. Implicit bias is an aspect of implicit social cognition: the phenomenon that perceptions, attitudes and stereotypes can operate prior to conscious intention or endorsement.”

“Throughout the world, we have economies that are built, developed and managed by people who do not look or think exactly the way we do, nor speak our language. They not only survive; they also thrive and compete effectively,” Fleming explained.

Choosing Who and What is Most Important

It is certainly possible to live within and operate a business in the most diverse country in the world without appealing to broader, more diverse audiences. But doing so is not without risk.

Business models without a DEI focus may limit their effectiveness in attracting broader marketplace support that stakeholders and investors expect. They may also hinder the ability of their brand partners and affiliates to expand their independent businesses in a marketplace of opportunity that is now larger than a single individual’s identity—a marketplace that is increasingly built upon numerous authentic voices coming from diverse groups of people.

“We can choose what we do and how we do it more so than our counterparts in any other nation,” Fleming said. “Therefore, we can choose to determine what matters most.”

That applies to not only consumers whose loyalty direct selling companies covet, but also the contemporary decision makers who seek effective strategies to expand available market share segments.

Perhaps, it’s time to re-frame those conversations and ask a new question: What is our effective market share within the segments that are important to us?

“Once we clearly understand the business case for being diverse in the decision-making ranks of the company, the clearer we become about the value to be gained from thinking and planning that offers a diverse perspective. To think, plan and budget effectively, how we attract diverse segments requires representation that understands the targeted segments,” Fleming said.

It is precisely what direct selling companies do when opening international markets. “Why would we ever think that we can operate differently locally, if we are intent upon growing market share?” Fleming asked.

Share Your DEI Success Story

We’d love to hear how your company adopts a progressive, growth-oriented approach to DEI. Please contact our Publisher Patricia White at pwhite@directsellingnews.com. You could see your company’s story featured in a future article in DSN.

From the January/February 2024 issue of Direct Selling News magazine.

The post The Business Case for Diversity, Equity & Inclusion first appeared on Direct Selling News.

Direct selling has become an increasingly popular avenue for individuals to start their own businesses and earn income. To gain a comprehensive understanding of the perceptions surrounding direct selling, the Direct Sales Generational Engagement Study was conducted by Bridgehead Collective and carried out by The Center for Generational Kinetics, led by President Jason Dorsey.

In this first-of-its-kind study, Bridgehead Collective chose to partner with the Center for Generational Kinetics, which has led more than 100 research studies in all major industries. Their seminal annual study, The State of Gen Z, formed the basis for the best-selling book, ZConomy and has been consistently featured in national and global media including The Wall Street Journal, New York Times, CNN and many more.

I set out to discover America’s perceptions of entrepreneurship, the gig economy and—more pointedly—direct selling. Statistical significance was of ultimate importance in this analysis, so the study represents a wide-sweeping sample that is reflective of America, with an equitable mix of genders, demographics, employment status, education levels and location that allows for a 97 percent confidence level. This study aimed to explore the attitudes, motivations, limitations and beliefs about starting a business in America, as well as uncover perceptions of direct selling, recruiting strategies, onboarding methods, distributor retention and preferred payment structures.

We designed the study to provide actionable insights across 10 key categories:

• Perception of Industry and Channel
• Recruiting and Prospecting
• Motivations and Decision Criteria
• Onboarding and Getting Started
• Training
• Compensation and Value Proposition
• Recognition
• Incentive Trips and Events
• Retention
• Duplication and Role of Team Building

In this series, we are digging deeper into each of these categories, focusing this month on all things related to Recognition.

Last month highlighted one of the more shocking findings of the study related to compensation—particularly how we market and present the “size” of the income opportunity. The most critical actionable insight was that when it comes to compensation, you really need to have targeted messages depending on your audience as not only do you risk not appealing to the right generation, but there is significant risk associated with turning them off irreparably.

When it comes to recognition, the consequences of “getting it wrong” might not be so dire, but this category represents MASSIVE upside when we can get it right. Interestingly, the differences between men and women were just as stark as the differences between generations.

But let’s start with what we mean when we talk about “Recognition.” For the purposes of this study, recognition was really explored under the umbrella of “Motivations.” Meaning, we examined all the programs, communication, celebration and incentives that would most likely resonate for direct sellers to join, stay and thrive with direct selling companies.

The ultimate goal here was to divine what specific things we could employ to help each generation maximize our compensation plans by moving up in leadership and improve retention by having a cohesive, aligned set of programs and incentives that all work together to inspire your sellers to keep going.

If you follow this series or my podcast, you know how passionate I am about retention, often referring to it as the holy grail of our industry. Turns out, this study revealed all kinds of insights that we have been helping companies employ to specifically drive retention (with awesome results, BTW!).

The Gifts that Keep on Giving

The way we phrased the first question speaks to this retention issue. We asked all participants:

What would absolutely convince you to stay at a direct selling business after the first three months?

This question served two purposes, and we covered some of the results in our last installment about compensation. As you may remember…the first answer was definitely crafted by Captain Obvious himself (we’re all pretty sure he’s a guy, right?). Number one answer on the board—with 55 percent ranking it as their #1 answer—getting paid.

Repeat after me: duh!

But starting with the second answer things start to get REALLY interesting.

For Gen Z, the belief that they are part of a cause or a company that is creating change in the world would “absolutely convince” them to stay with a company. Absolutely convince. And this is in their FIRST THREE MONTHS.

Now, I can already hear so many of you saying to yourselves…believe in a cause? That’s not recognition. That’s an entirely different segment of our events. That’s not even part of the sales and recognition team.

Precisely. But perhaps it should be.

As we move to the Action Item portion of the article, here is your first Action Item. Since I feel like we are having a conversation now, I know what you’re thinking: ”Heather, wasn’t this very thing an action item last month? Didn’t you already advise us to tell our charitable story early, proudly and often?”

Yes. Yes, I did. That should tell you how powerful this topic is…it makes the action list for MULTIPLE categories.

Action Item: Completely rethink the role that your mission and charitable cause has in your field recognition program, making your field leaders the hero of the story, not the company.

What do I mean by that? So many of us talk about our cause, our mission, our impact, our accomplishments that we are making as a way of touting the company. Making sure we are telling others how amazing “the company” is.

What if we flip that script? What if the impact that we are making is instead framed through the lens of our field leaders. What THEY are doing to effect change. How many children THEY have fed. How many carbon units THEY have offset. How many bottles THEY have kept out of landfills. How many natural disaster victims THEY have helped.

What if we sent them a snapshot each year, Spotify Wrapped style, that pulled their specific stats and showed them the difference they were making in the world? What if that was one of your recognition categories on your monthly conference calls, social posts and annual events?

If you are targeting Gen Z or Younger Millennials, you may be incredibly surprised at the loyalty, passion and energy this change can make. And when it comes to retention—nothing is stickier than the belief that YOU matter.

Be Better, Not Boring

When you look at some of the more traditional elements of recognition that we employ in our companies, the bottom line is that most of the historical ways we recognize people, the next generations find…well…boring.

Less than 25 percent of Gen Z and Younger Millennials said that “Mentions on the Company Social Media Pages” or “Being Recognized at a Regional or National Event” would make them feel valued.

That’s not a lot, given how much time energy and expense we put into all of those…especially event recognition. So, if the question is “why,” the answer is two-fold.

One, it’s just not as cool as it once was. The next generations are increasingly looking for things that benefit their families; their communities; and the lives they are building. They are not looking externally for affirmation nearly as much as the older generations. As a commentary on society, awesome! But this shift certainly requires a few pivots as far as our recognition budgets are concerned.

But what’s the second reason? How Insta-Worthy the experience is! The what-used-to-be-ubiquitous pictures on social from all our events: walking across stage; waving flags; getting jewelry, flowers or whatever else—feel like relics from another era. What used to be Facebook fodder is considered cringeworthy by younger generations.

What do they want instead? Experiences. Moments. Magical moments that elevate their personal brand. They want to expose their community of followers to things they haven’t seen; places they haven’t been; and experiences they haven’t had.

We see that from the anecdotal comments from the study as well as the data. The study showed that two of the top three things that would make younger generations feel valued:

• Getting to Go on a Trip to Somewhere Fun and Bring a Guest
• Tickets to Events or Experiences (Concerts, Sporting Events, etc.)

These combined represent the top choice for 69 percent of all generations and 91 percent of Gen Z and Millennials.

Action Item: Scrub those recognition budgets. Reallocate as much as you possibly can to things that are experiential in nature.

So what does that mean in practice? Take a look at all those programs that you have (that used to be super successful) and re-frame them. For example, do you have a “pin program” or something similar where your leaders can earn different rank advancement jewelry, pins, necklaces, watches or jewels embedded in things that denote achievement?

We’ve all been there—and the OGs in our field will never be shy about telling us how much and how hard and how long they worked to get that next thing! Just so they could show it off. But that just doesn’t work anymore. And all too often we feel like these programs are foundational—a part of our culture and history—so it almost feels sacrilegious to think about abandoning them.

It’s not. They were created for a specific moment in time. And they worked. Now they don’t. It’s OK to change.

What if the thing they were working to “complete” or “achieve” were figurative (or literal) passport stamps. How many different states can they earn weekend retreats in? How many different countries can they see because of your company? How many different concerts? Super Bowls, the World Series…whatever it is…keep the “collection” in place—just swap out the elements for things that will resonate even more with today’s seller. And worried about those events? Still recognize…but highlight those achievements instead.

The love language of the younger generation is firmly rooted in experiences. Experiences that enrich their lives and—most importantly—that photograph beautifully. Because if you can’t share it on Instagram…did it really happen?

So that covers the first part of recognition and what makes tomorrow’s sellers feel valued, celebrated and will make them want to stay forever. Please look out for the next article where we jump into all things promotional. What works? What doesn’t? How much is too much? Each generation, as they say, has big feelings on this issue. Can’t wait to share them with you.

WANT TO KNOW HOW ATTRACTIVE YOUR COMPANY IS TO EACH GENERATION? Schedule your Generational Attraction Assessment today, complimentary for DSN Gold and Platinum Supporters.

With 20+ years of cross-functional experience in direct selling, Heather Chastain brings a solid understanding of sales, marketing, technology, manufacturing, operations and C-Suite challenges as well as a strong collaborative and relational style of leadership to the table. Heather has held executive roles at Shaklee, Arbonne International, Celebrating Home and BeautiControl. Heather also serves as the Strategic Advisor at DSN and is the Founder & Chief Executive Officer of Bridgehead Collective.

From the January/February 2024 issue of Direct Selling News magazine.

The post GENERATIONAL INSIGHTS / Recognition first appeared on Direct Selling News.

But how do you turn all of that learning into action? The key is to pin down a handful of revelations that rose to the top, and then do something with them! In an effort to help us all take action, whether you were there or not, here are the next steps I would encourage any executive to take, inspired by Fall DSU 2023. 

1 / Get Serious About the Hispanic Market

The most blatantly clear takeaway from DSU was a lot of companies growing in the US have one thing in common: a commitment to the Hispanic market. This was a key point in about four different presentations. Whether you decide to target the Hispanic market or not, every executive needs to be intentional about how you’re thinking about this market, both globally and especially in the US.

2 / Simplify until It Hurts

John Alcala, CEO of It Works!, reminded us of just how much distributors have on their plates…and that’s before we add all of our stuff (promotions, incentives, announcements, launches…) to the mix! We all talk about simplifying our business, but do we really do it? To experience the kind of simplicity that actually prompts growth and duplication, you’ve got to shed some of the secondary “stuff” that only gets in the way for the average distributor. Go find it and do something about it.

3 / Experiment, Learn and Adapt

pawTree Founder and CEO Roger Morgan walked us through a few scenarios where the company identified a problem; came up with a possible solution; and launched quickly. Some worked well; some didn’t; and some only worked within very specific circumstances, but not others. The takeaways from his specific examples were helpful, but the biggest takeaway is this: am I tracking everything I do well enough to know if it works and why? And then do I keep iterating to see the improvement?

4 / Compare Your Business to Neora

A huge perk of DSU was hearing from Founder and CEO Jeff Olson and Co-CEO Deborah K. Heisz from Neora about their journey in their case against the FTC. The work they’ve done is so vital for every single one of us—both in terms of validating what we do and also shedding light on how we should do it. But in Stuart Johnson’s words, “If you’re still doing things the wrong way, this is not a win for you!” Deb shared some of the elements of Neora’s business (like 80 percent of those who buy from them are Customers and receive no commission) that strengthened their case. It’s in no way the hard-and-fast rule that must be followed, but if you need a standard to compare yourself against, it sounds like we just got a new one.

5 / Start Using AI (whether you want to or not!)

I’ll admit I’ve been slow to jump on the AI bandwagon. It can feel a bit overwhelming to understand. And it can feel like “just one more thing,” when I’ve already got enough “things” in my life. But after listening to Blake Mallen and Brandon White talk about how they’re putting AI to use right now, I realized my excuses hold little weight compared to the unbelievable benefits that can come from incorporating AI into how I work and live. Rather than figure it all out, I’m simply dedicating 15 minutes a day to using AI in some form or fashion. It’s the only way I’ll learn it and appreciate it. Maybe you should, too.

6 / Success Is in the Segmentation

No single speaker focused on segmentation as a topic, but many alluded to it. Bridgehead Collective’s Founder and CEO Heather Chastain’s generational research certainly shines a bright light on the need for us to segment what we do. The panel on affiliate programs (and how different each program is) certainly showcases how companies are trying to segment the opportunity in new ways. We even learned of the differences among segments within the Hispanic market. We can all do a better job of segmentation. Whatever is holding you back—technology, resources, know-how, WHATEVER!—let’s make 2024 the year we do something about it.

7 / What We Do Still Matters

Vivian Mokome, Founder and CEO of Vivian Mokome Projects, shared a heartfelt reminder that direct selling changes lives…and, in her estimation, can change continents! She sees direct selling as a prominent force for change in Africa. We must evolve as a channel and respond to the market in terms of what it wants and how it wants it. But we cannot lose sight of the actual life changes that have occurred and continue to occur, no matter how tempted we may be to downplay it in the midst of so many changes. Remind yourself of the greater good your company pursues and provides regularly. There’s no other fuel like it.

Were there more takeaways at DSU? You bet!
This is just a starting place. If you were there, think back to the points above in context of your own experience and determine what makes sense for your company. If you weren’t there, this list can still prompt extremely helpful conversations for your team. And bring them to DSU 2024! DSN

Note from the Editorial Staff: We’re excited to include these insights from industry expert Brett Duncan. Look for more content from Brett in the coming months on the pages of DSN.

Brett Duncan specializes in helping direct selling companies evolve into modern social selling models while still maintaining the culture and essence of who they are and what makes them different. He is Co-Founder and Managing Partner of Strategic Choice Partners, a business development firm that helps direct selling companies take their next steps.

From the December 2023 issue of Direct Selling News magazine.

The post 7 Top Takeaways for Executives from DSU Fall 2023 first appeared on Direct Selling News.

The direct selling network is thriving and predicted to continue its growth at a compound annual growth rate (CAGR) of five percent between 2024 and 2032, to reach a value of USD 385.17 billion by 2032. Entrepreneurs have more opportunities than ever to be personally empowered to earn money selling a product that they endorse. However, the channel’s early days of door-to-door sales have evolved tremendously over the years as technology has advanced.

Over a decade ago, the Journal of Personal Selling and Sales Management began to acknowledge that the industry had been forever impacted by the progress of a digital age. In their article “An Assessment of the Use of Technology in the Direct Selling Industry,” Ferrell, Gonzalez-Padron and Ferrell stated, “The traditional notion of direct selling is of an industry that is face-to-face and people-oriented, with a focus on building strong personal relationships with consumers. While technology can improve productivity, it challenges the customary ‘high touch’ tradition in the industry.”

Today technology has eliminated much of the human-centric nature of direct selling. It has undoubtedly allowed entrepreneurs to reach more potential clients much faster and led to the development of interactive tools to benefit consumers, but that same technology allows for decreased accountability. Unfortunately, when accountability is lost, the direct selling channel becomes a magnet for nameless, faceless bad actors.

The Plague of Pyramid and Ponzi Schemes

It’s been over 100 years since Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi was arrested for mail fraud. The scheme which bears his name now recognizes any fraudulent business wherein money taken in from new investors is used to pay debt to earlier investors. In a Ponzi scheme, returns are promised at a future date, and they are paid off by those who “buy in” later.

In much the same way, a pyramid scheme relies on the recruitment of new members and usually requires purchasing products or services to pay those higher in the pyramid. The difference between the scheme and a legitimate multi-level marketing business (MLM) at first glance may be hard to distinguish. In a pyramid scheme, the investment is usually fraudulent from the outset. The investment “opportunities” may change, but the bottom line is that eventually there isn’t enough cash from new investors to sustain the growth.

Direct selling is prone to corruption within a pyramid scheme because the number of MLMs, or businesses that operate with a multi-level component, make it easy to “hide” the fraudulent element of the business long enough for those at the top to take significant profit before it collapses.

When Digital Product Sales Go Wrong

The gold standard in determining the validity of direct selling businesses is if they offer a legitimate product or service a consumer wants to buy. When it comes to digital products, however, it’s harder to gauge legitimacy and sometimes even to determine what product (if any) is being sold.

Kevin Thompson, an attorney specializing in MLM and a founding partner of Thompson Burton, believes the most important legal case that helped determine specific guidelines for legitimacy was the BurnLounge case. This early digital product and its misguided structure established a precedent upon which companies can be compared to this day. In 2007 the Federal Trade Commission (FTC) got wind of concerns with the company BurnLounge. The company proposed to offer consumers the opportunity to set up an online store where they could sell music and related merchandise. What the FTC learned was that retailers were mostly earning “credits” that could be converted to cash for an extra monthly fee that could only be earned by recruiting new members and selling music store packages.

“The promise of easy money is but a wolf’s trap laid out for sheep seeking taller grass.”

― James Jean-Pierre

There was actually very little merchandise being sold—Thompson suggested as little as three percent of revenue was from product sales—and a “significant number” of investors were losing money. Eventually, proprietor Scott Eliot settled with the FTC for nearly $118,000 in 2008. And in 2012, the California Central District Court ruled that the remaining defendants listed in the BurnLounge complaint owed $16.2 million in redress.

Among other legal standards, the BurnLounge verdict established the importance of real product being sold. And when payments and commissions driven by recruitment are the primary revenue source as opposed to sales to ultimate users, it will undoubtedly flag those companies as pyramid schemes.

The Securities and Exchange Commission (SEC) warned that potential MLM marketing programs may be pyramid schemes when there is an “emphasis on recruiting” and specifically to be skeptical if more compensation is earned for recruiting others than for product sales. A red flag is when the recruiter builds hope solely focused on opportunity—they’re usually misrepresenting what’s possible.

Crypto and MLMs

Social media platforms and messaging apps are fertile breeding ground for fraudulent investment “opportunities” involving cryptocurrency or foreign currency trading (forex). They often begin with an unsolicited pitch or an invitation to join an unfamiliar trading website.

When it comes to cryptocurrency and its promise of passive income based on recruiting and investment in a digital “product” as part of an MLM, the offering was almost destined to draw in business owners with fraudulent motives. As the cryptocurrency and forex markets exploded in the last decade (at one point Forbes suggested there were almost 23,000 cryptocurrencies), the nature of the digital currency itself makes it a prime target for a Ponzi scheme.

Investing in a digital product with a short-term rate of remarkably high returns with representatives that may have little to no education in finance or banking soliciting new investors are all signs of “bad apples.” Thompson said in a recent post, “It’s time to state the obvious: Crypto + MLM = Legally Impossible.”

It’s a sentiment shared by many in the industry. As a general rule, cryptocurrency and other digital financial product companies are not legitimate network marketing opportunities. Thousands of cryptocurrencies have failed—whether because they were a scam from the beginning or because of poor management.

One of the biggest scams was OneCoin, which, according to the US Attorney’s Office for the Southern District of New York, generated over four billion Euros in sales revenue between fourth quarter 2014 and fourth quarter 2016 operating as an MLM through which members received commissions for recruiting others to purchase cryptocurrency packages.

In reality, there was no mining of coins. Founder Karl Greenwood, a citizen of Sweden and the United Kingdom, was finally arrested in July 2018; extradited to the US; and pled guilty to one count of conspiracy to commit wire fraud; one count of wire fraud; and one count of conspiracy to commit money laundering. His business partner Ruja Ignatova has been missing since 2017 and remains on the FBI’s Top Ten Most Wanted List.

Masking the Investment in Digital Products

When there is no tangible physical product being transferred from seller to consumer, it is much easier for the company to use its own structure to mask how investors can actually earn money. One of the latest scams was OmegaPro. Founded in 2019 by Dilawar Singh, the company did not offer any physical product, rather it offered online trading services.

For a $29 investment, members could purchase different levels of licenses. The commission structure got confusing from there, which is yet another hallmark of a pyramid scheme according to warnings from the SEC. Affiliates needed to earn different rank volumes to maintain their ranks with stronger and weaker legs with downline requirements. There were three levels of leadership pools. And 30 percent of earned commission automatically went to an e-wallet; the remaining 70 percent was added to the passive wallet. Confused yet?

The main problem was that there was never any indication OmegaPro held any license as a broker or was authorized by any authority. Spain, Peru, Chile and France all issued warnings about the organization. When OmegaPro collapsed in December 2022, it issued a statement that it had sold its investor database to BrokerGroup, which has questionable roots itself. It came as no surprise that OmegaPro was run from Dubai.

Why Dubai?

A huge number of digital and cryptocurrency companies are headquartered in Dubai. In 2021 they expected to have at least 1,000 cryptocurrencies in the country by 2022, but that may now be impacted somewhat by regulatory and licensing requirements implemented earlier in 2023. Why so many in one city in the United Arab Emirates (UAE)? One reason may be because they have no extradition treaty, but they can actually claim to have oversight.

According to the International Trade Administration, “The Department of Economic Development (DED) consented to the formation of the Direct Selling Association in UAE (DSA), an official member of the World Federation of Direct Selling Associations (WFDSA), in order to promote transparency and to regulate the sector.”

The DSA was established in 2009 representing 14 direct selling companies operating in the region. Although network marketing in Saudi Arabia is expressly prohibited, in Dubai it is almost encouraged even though technically, according to the Dubai-based Fotis International law firm, “…only 14 companies are legally certified to work as direct sellers in the UAE.”

Fotis International stated, “The DSA UAE’s mission is to promote the direct selling industry in the UAE and the Middle East and safeguard consumers’ rights by adhering to the peak level of business integrity” and that “legitimate direct selling companies play a vital role in the socio-economic development of the UAE and the Middle East.”

The DSA outlines specifics regarding registration requirements, trade licenses and consumer’s rights for direct sellers. However, these are expressly spelled out for UAE citizens with little mention of the responsibilities of the company to consumers outside of the region. It appears that if they don’t target UAE residents, companies can operate without fear of regulation. Behind MLM’s anonymous author says, “Within Dubai, so long as they don’t target UAE locals, scammers are free to scam anyone from anywhere.”

Global Legal Insights points out in their analysis of bribery and corruption charges that “as a civil law jurisdiction, UAE judicial judgments are not available publicly,” making it difficult to determine if any of these direct sellers are being prosecuted within Dubai for any reason. But chances are that any hint of corruption in foreign countries is likely evidence of concern for US investors, sellers and consumers. As Thompson posed, “When you see smoke overseas is there a fire domestically?”

Getting Caught

It is difficult to keep up with the lawsuits, name changes and faces affiliated with one company that shows up again with a new endeavor. Global Wealth Trade Corporation became Opulence Global. Melius rebranded to BE. Dubli, Inc. is now Ominto, Inc.—just to name a few.

The fact that they are changing names is not necessarily a cause for concern, but it does raise questions about the reasons behind the rebranding. Sometimes the name change is because they’re setting up a parent company to buy other companies. But in other instances, the companies could be trying to “juice” recruiting and hope the new name will reach new investors. Thompson said that usually the impetus to change names is because there is negativity associated with the previous brand but reminds investors the name change “helps zero with regulatory activity” if there is any.

Regulators are, however, catching up to those who are not doing right by the direct selling channel. iX Global claimed to be the “fastest-growing self-betterment platform” as a fintech company that taught investors how to earn passive money through cryptocurrencies as well as other AI trading self-managed accounts.

In July 2023 the SEC named 18 defendants including CEO Joe Martinez in suing the company for securities fraud. According to Behind MLM, prior to launching iX Global, Martinez was a promoter of Investview’s fraudulent Kuvera Global investment scheme. iX Global’s top promoters and earners are also former Kuvera Global promoters. In response to the lawsuit, ix Global reminded investors, “We do not offer any guarantees of ROI (return on investment).”

The concerns about MLMs and digital products extend beyond cryptocurrency, forex and other derivatives. Social networks, NFTs, discount shopping, legal services and all sorts of education platforms (such as the ones claiming to educate investors in crypto) are prime targets for pyramid and Ponzi schemes—and frequently linked to cryptocurrency companies.

Onyx Lifestyle reported to have in the first month of business in 2019 over 4,200 “members” (aka investors), and the company claimed earnings of over $10 million. The company offered “global banking through your personal account” in addition to membership tiers that provided a “premier membership card” that was “a key to luxury” along with exclusive access to events.

A class action lawsuit was filed in 2021. Travis Bott and Clif Braun were both affiliated with the organization and according to Behind MLM, “Travis Bott is a serial securities fraud offender. Behind MLM has attached him to multiple Ponzi schemes over the years. Travis Bott first appeared on Behind MLM’s radar in mid 2017. We tied Bott to Divvee’s illegal securities fraud offering, through Ryze AI. Bott reemerged in late 2017 with Westmyn, a shell company used to commit securities fraud through Investview’s Wealth Generators. Investview was subpoenaed and subsequently fined $150,000 by the CFTC in 2018. A year later Travis Bott went solo with Onyx Lifestyle. In mid 2021 what was left of Onyx Lifestyle was rolled into Digital Profit. Digital Profit imploded with a ‘bad trades’ exit-scam in August 2021. Investors lost hundreds of thousands of dollars.”

Behind MLM also recently reported on the bankruptcy filing of Lyoness in Europe. Stated reasons for the bankruptcy include the lingering effects of the pandemic, the ongoing energy crisis and inflation. But Beyond MLM remains skeptical of both the filing and Lyoness. As stated in their article, “Lyoness is a Ponzi scheme….Over the years, Lyoness has gone through many iterations, name changes and associated shell company registrations.”

Lyoness was declared to be a pyramid scheme and fined 3.2 million Euros in 2019 in Italy. The company ignored the ban and was fined an additional 3 million Euros in 2021. The company has been outlawed in Norway, Poland, Russia and Lichtenstein. It was revealed through the bankruptcy proceedings, the company is $110 million in debt in November 2023.

The adage “if it sounds too good to be true, it probably is” couldn’t be more applicable than when examining these schemes. “It’s amazing the BS consumers fall for,” Thompson shared.

The Threat to Legitimate Direct Sellers

Direct selling’s reputation suffers because of the actions of those who don’t play by the rules of the channel. Direct selling companies are becoming much more cognizant of how cryptocurrency schemes masquerading as MLMs threaten the identity and reputation of the direct selling channel.

Conventional wisdom calls for more self-regulation to protect sellers and consumers. The very real risk is that unethical, unsustainable cryptocurrency and forex schemes become synonymous with legitimate direct selling opportunities in the minds of consumers and entrepreneurs alike. Vigilance, oversight and transparency are all key and must be a priority for all direct selling companies and affiliated trade associations.

It’s also important that prospects exploring these opportunities exercise extreme due diligence. Fortunately, investors live in a world where they have more access to information than at any time in history. Every industry has bad actors, and every investor must do their homework and seek expert guidance to avoid fraudulent opportunities. But legitimate direct selling companies operate much differently than the bad actors discussed here.

The important differentiator for direct selling is the relationships upon which the industry is built. The channel’s uniqueness rests on the fact that there is a team of real people with real relationships driving the business.

And that collaboration is key. Maybe some of those lessons from those early door-to-door days are still applicable today. The distribution channel must be the priority, and the business is all about repeat sales and loyal customers. And if the industry continues to build on that foundation, direct selling’s future is limitless.

Top 11 Signs of a Bad Actor

Fraudulent investment schemes share some common traits that mark them as potential bad actors. They aren’t always easy to spot, and this list is in no way inclusive—but here are 11 big red flags that indicate the need for due diligence. It’s important to note how different these are from legitimate, sustainable and scalable direct selling opportunities offering tangible products and services.

1. Lack of Actual Products or Services
   Pyramid schemes usually lack a legitimate underlying business. The primary source of revenue is money collected from new investors, rather than a genuine business activity such as sales of products or services.
2. Promises of High Returns with Little to Low Risk
   Fraudulent schemes rely on unrealistic guarantees, inflated claims or the appearance of profitability to maintain trust and avoid suspicion.
3. Lack of Transparency
   Evasiveness about the specifics of the investment strategy or vague and inconsistent information about operational practices allow for deception.
4. Exorbitantly High Commissions
   High commissions paid on significant investments historically attract the wrong type of business builders. Stable, lasting companies promote steady incremental growth.
5. Unregistered Investments
   Operators often lack the necessary registrations or licenses. Legitimate investment opportunities must adhere to regulatory standards and oversight.
6. Difficulty Withdrawing Funds
   Obstacles impeding access to funds could be due to a lack of actual profits or an attempt to prolong the collapse of the scheme.
7. Payouts Funded by New Investments
   A classic indicator of an illegal scheme is when returns paid to early investors come from the contributions of new investors, creating a cycle of dependency.
8. Undue Pressure to Reinvest
   Investors can feel pressured to reinvest rather than cash out. This helps perpetuate the scheme by keeping funds within the system.
9. Recruitment Driven
   By relying on a recruitment-driven structure where participants are encouraged to constantly bring in new investors, bad actors can maintain an illusion of profitability.
10. Operational Secrecy
    The inner workings of the investment “strategy” is a closely guarded secret, discouraging investors from asking too many questions and prohibiting them from conducting due diligence.
11. Too Good to Be True
    Savvy investors should be skeptical of any opportunity that offers disproportionately profitable returns when compared to conventional investments.

The post `Ponzis, Pyramids and Schemes first appeared on Direct Selling News.

Direct selling has become an increasingly popular avenue for individuals to start their own businesses and earn income. To gain a comprehensive understanding of the perceptions surrounding direct selling, the Direct Sales Generational Engagement Study was conducted by Bridgehead Collective and carried out by The Center for Generational Kinetics, led by President Jason Dorsey.

In this first-of-its-kind study, Bridgehead Collective chose to partner with the Center for Generational Kinetics, which has led more than 100 research studies in all major industries. Their seminal annual study, The State of Gen Z, formed the basis for the best-selling book, ZConomy and has been consistently featured in national and global media including The Wall Street Journal, New York Times, CNN and many more.

I set out to discover America’s perceptions of entrepreneurship, the gig economy and—more pointedly—direct selling. Statistical significance was of ultimate importance in this analysis, so the study represents a wide-sweeping sample that is reflective of America, with an equitable mix of genders, demographics, employment status, education levels and location that allows for a 97 percent confidence level. This study aimed to explore the attitudes, motivations, limitations and beliefs about starting a business in America, as well as uncover perceptions of direct selling, recruiting strategies, onboarding methods, distributor retention and preferred payment structures.

We designed the study to provide actionable insights across 10 key categories:

• Perception of Industry and Channel
• Recruiting and Prospecting
• Motivations and Decision Criteria
• Onboarding and Getting Started
• Training
• Compensation and Value Proposition
• Recognition
• Incentive Trips and Events
• Retention
• Duplication and Role of Team Building

In this series, we are digging deeper into each of these categories, focusing this month on all things Compensation and Value Proposition.

As we shared consistently throughout this series, the news surrounding all generations is that EACH is radically different in how they want to be prospected, talked to and approached about direct selling opportunities. We have highlighted that a “One-Size-Fits-All” approach simply doesn’t work anymore, and that insight continues when it comes to compensation plans and the overall value proposition that each generation sees in direct selling.

Money Changes Everything

Last month highlighted the methods, channels and types of training preferred by each generation. The stand-out insight was the need for a clear, simple roadmap for success. Something that outlines the prescriptive steps to take—but not in any way taking away from the authenticity and spontaneity of a successful direct seller.

The insights we gleaned around compensation were likely the most shocking to me. I mean—really—of all the things I thought each generation could agree on, money would have been at the top of my list. How complicated is money?
The more, the better, right?

Not necessarily.

But let’s start first with what each generation does agree on. We chose to structure this part of the study around what each generation would need to feel like their experience with direct selling was “worth it.” We chose this language because it speaks both to overall satisfaction as well as a judgement on reward vs. effort, a key to retention.

The first question we asked was around what would absolutely convince them to stay at a direct selling business after the first three months. As you might expect…all generations agreed that the number one reason (by a landslide) was getting paid and receiving money in my account.

But what was surprising was when you start to dig into the second and third choices. That’s where the generations diverge in a practical AND philosophical way.

Lending a Helping Hand

Our youngest respondents, Gen Z (18-26), shared that the belief that they are part of a cause or movement would absolutely convince them to stay at a direct selling business after the first three months. The vast majority of this audience listed this reason as the #2 or #3 for their loyalty.

Action Item: Let your charitable light shine. So many of us have great causes at the heart of what we do, and there are entire articles to be written about the collective impact our channel has around the world. But how much do we emphasize this to our newest representatives? Before you skim to the next paragraph after mentally checking this one off in your mind as an “of course we do”….you might want to check!

We did a blind sample of 15 top direct selling companies last July—all of whom have donated more than $1,000,000 to causes they care about. Only two of them shared any information with us as part of the join flow, starter kit, welcome messages, getting started, onboarding or recognition in the first 90 days. Only two. Ensure that you are promoting your cause; celebrating the successes; and showing new folks how they can easily get involved, sooner rather than later!

Show Me the Money

So…what about our Gen Xers and Older Millennials? Well…they had a more practical affirmation for their #2 and #3 things that would absolutely convince them to stay….and it had to do with proof.

Eighty-four percent of Gen Xers reported that seeing the product or service work in their own life was a critical element to their ability to continue to represent a brand. That’s significant—and significantly more than their younger counterparts.

Action Item: Survey new representatives in the Older Millennial and Gen X category within 90 days of joining to ensure they are seeing and feeling the benefit of the product in their own lives! Sounds simple but think how powerful it is.

I’m talking one question—via text—sent asking for a scale of 1-10. Think what you could learn. Those that are 6-10 are happy with the product? You’ve just reminded them of that fact. For those who enter 1-5, think of the incredible opportunity you now have to reach out; show them how much you care; how much you believe in your product; and how important their experience is to you. And if you’re feeling under-resourced—utilize AI tools to save some execution time.

Okay, so that’s the start of the value proposition—what would convince me to stay? Again, while divided on the second and third choices…all generations were united in their declaration that money topped the list.

How much money? That’s where it gets REALLY interesting.

The Magic Numbers

Radical differences emerged when we asked all respondents “how much money would you have to make per month in direct selling to absolutely convince you that it’s worth it.” Me, in all my Gen X smugness, was pretty sure I knew the answer. After all, I’ve long preached that “if the number you’re talking about doesn’t have a comma in it, it’s not a big enough number.”

Well, turns out I was right…but not for everyone. Not by a long shot.

Older generations are significantly more likely than younger generations to believe direct selling is worth it if they make $1,000 or more per month, but younger generations are significantly more likely than older generations to be convinced that direct selling is worth it if they make between $250-$499.

That’s it. Between $250-$499 is the sweet spot for them—vastly different than reflected in the older generations.

Further digging into the data shows that when you talk about an income opportunity of more than $1,000 per month, especially early in the business, younger generations are more than just nonplussed…they are turned off. Their “scam-dar” goes up, and they can’t get to YouTube fast enough to search “Is insertyourcompanynamehere a scam?” And guess what they find then? Nothing good. Don’t look, it will just depress you.

Action Item: Tone all discussion of income down. Way, way down. Phrases like “supplemental income” are your friends. There is no need to give anything other than a realistic picture of what they can reasonably expect to earn in their first few months…along with, of course, a fair picture of the significant effort that they will have to put forth to achieve it.

We only have things to be proud of here, fellow direct sellers! Really. Not only is a modest discussion of income—paid only through the sales of products to end customers—the gold standard of compliance right now, it has the added benefit of being the right thing to do and the shining prize of also being EXACTLY what the next generations want to hear.

What’s in It for Me?

And make no mistake the next generations are looking for additional income opportunities no matter how big or small. Throwback stat from the first in this series: 76 percent of all Americans would like to own their own businesses in the next three years.

In fact, 83 percent of those reported they would choose direct selling if they knew they could make $500 of extra income each month. Imagine if your conversion rates were 83 percent? Your retention rates? That would be needle-moving action—and all for just being transparent, realistic and honest at every opportunity.

Wow Stat: 83 percent of Americans would get involved in direct selling if they knew they could make $500 of extra income each month.

So we’ve established that money is the primary driver—not empty promises of too much money—just a reasonable amount of income for a reasonable amount of effort. But compensation is so much more than just the calculations of overrides and commissions. We have long known the power of using cash bonuses, gifts, travel, experiences and other goodies to round out the full compensation package to ensure each of our sellers feels motivated and inspired each month.

Thank You Very Much

This study probed into exactly what types of performance incentives would make them feel most valued. The top three had a wide margin of victory over all other choices.

There is a really interesting distinction. Cash bonuses for a goal-based incentive trumped “consistent and predictable selling percentage” as a topper!

Action Items: Take a look at the front end of your compensation plan. Is there a simple and easy way to break up your initial selling commission into a combination of flat selling percentage and cash bonuses for milestone achievement? A change here may be simpler and easier than you think and could help you tap into this timely and powerful motivator. Next, trips are increasingly table stakes. Ensure you aren’t overlooking the value of trips and experiences if you don’t already have them in place. And if you do, make sure you are making recognition hay out of it.

Too often, our trips become like wallpaper—rarely commented on during the actual earning period. Make sure you don’t get complacent with promotion of your incentive trips (especially if the earning period is over a year) and ensure that you are keeping those Instagram-able experiences front and center with your field. Remember…it’s only a big deal if we make it a big deal.

So that covers the compensation and “what makes it worth it.” Next month we jump into all things recognition. Bored with your recognition? Most of your field leaders are, too. We’ll share what is really motivating each generation.

WANT TO KNOW HOW ATTRACTIVE YOUR COMPANY IS TO EACH GENERATION? Schedule your Generational Attraction Assessment today, complimentary for DSN Gold and Platinum Supporters.

With 20+ years of cross-functional experience in direct selling, Heather Chastain brings a solid understanding of sales, marketing, technology, manufacturing, operations and C-Suite challenges as well as a strong collaborative and relational style of leadership to the table. Heather has held executive roles at Shaklee, Arbonne International, Celebrating Home and BeautiControl. Heather also serves as the Strategic Advisor at DSN and is the Founder & Chief Executive Officer of Bridgehead Collective.

From the December 2023 issue of Direct Selling News magazine.

The post GENERATIONAL INSIGHTS / Compensation first appeared on Direct Selling News.

Direct selling executives from all over the world gathered in Irving, Texas to learn from two days’ worth of keynotes, case studies and actionable insights delivered by 35 presenters and enjoyed networking and connecting with C-Suite leaders from the industry’s top powerhouse brands at the fall Direct Selling University 2023 event.

In addition to individual presentations from leading executives, the event featured a number of expert panel discussions that focused on practical strategies for service-based companies; vision-casting from industry legends; a behind-the-scenes guide to designing a successful affiliate program; and how to respectfully engage the massive market potential found within the Hispanic and Latinx population.

“The direct selling channel changed my life when I was introduced to it at age 15,” said Stuart Johnson, CEO of Direct Selling Partners, DSN and NOW Tech. “I love this channel. I want to see us grow and prosper, and I am optimistic about where we’re going. Founders and leaders have to be willing to experiment, to change, to try new things in order to remain relevant and prepared for the future. DSU gives us all a chance to be a student and to learn.”

The Next Leading Edge

Neora’s landmark victory against the Federal Trade Commission—announced just days before the event—was one of this year’s highlights. Deborah K. Heisz, Co-CEO, and Jeff Olson, Founder and CEO, spoke from the stage about the importance of the ruling as well as the long-term impact it will have not only for their company, but for all direct selling companies.

“I cannot tell you how excited I am that our ruling, our victory, came out right before this event so we could share it with the DSU audience,” Heisz said. “It was a privilege—believe it or not—to be part of the fight, because I believe in this industry, in our independent brand partners, and in the entrepreneurial opportunity. I know that millions of people’s lives would have been impacted negatively had we lost.”

The event also offered a deep dive into hot topics including the use of Artificial Intelligence, or AI. Billion-dollar Brand Builder Blake Mallen, host of DSN’s The Direct Selling SHIFT podcast, and Brandon White, File Finder Founder and CEO, led a workshop that gave a glimpse into the potential for how AI can be used to amplify efficiency and productivity. Their informative class showed how rapidly the AI landscape is changing and improving—and why direct selling executives need to be on the leading edge of this radical shift.

Together in forums, presentations and face-to-face conversations, executives and experts shared their unique experiences and insights to help raise the bar for the industry as a whole.

“I can’t think of another industry where executives share their strategies, best practices, challenges and opportunities with so much candor and transparency to help and benefit the entire channel,” Johnson said.

Armand Puyolt, Vida Divina CEO and President, shared his simple approach to help people learn to sell and how leaders can leverage that skill to build a multinational presence.

Blake Mallen, Billion-Dollar Brand Builder and Host of DSN’s Direct Selling SHIFT podcast, detailed AI’s potential to give companies an innovative advantage and invited leaders to listen to the SHIFT podcast where he spotlights field leaders who are not only living out the channel’s opportunity, but helping others do the same.

Brandon White, File Finder Founder and CEO, shared his expert perspective on where AI is headed and the thousands of new iterations that can make leading and growing a company more efficient and effective.

Brian Gill, 4Life Chief Marketing Officer, offered four ways 4Life is reaching the Hispanic community and how US-based companies can adjust their platforms and approaches to better meet this demographic’s needs.

David Brown, Activz Chairman & CEO, told the Activz story, explaining the purpose behind their products and how they found success within the Latinx market.

Deborah K. Heisz, Neora Co-CEO, recounted Neora’s recent victory against the Federal Trade Commission and detailed how their robust compliance efforts and commitment to following regulations kept them on the right side of the law.

Graeme Clegg, New Image International’s Executive Chairman, told the story of how he developed the New Image product line to save his own life and how science-backed products are the key to proactive healthcare.

Hanieh Sigiri, Qyral Founder and CEO, dared attendees to fearlessly experiment to find hidden potential and innovation that could help their companies grow.

Heather Chastain, Bridgehead Collective Founder and CEO, detailed the results of her cross-generational research that serves as a direct selling roadmap for how to reach customers and distributors of every age.

Jeff Olson, Neora Founder and CEO, offered a behind-the-scenes look at the David-and-Goliath-sized battle Neora recently won against the Federal Trade Commission.

Jenn Ashby, Savvi Co-Founder, defined the critical importance of community in network marketing and how to design a win-win culture of communal alignment between leaders and field representatives.

John Alcala, It Works! CEO, shared his three field-centric leadership pillars: simplicity breeds success; culture is the glue uniting distributors and corporate executives; and effective communication leaves room for listening.

Judith Sanchez Lopez, PM-International General Manager Latin America, delivered insight into the $3 trillion Hispanic and Latinx market opportunity.

Madison Mallardi, LimeLife by Alcone Co-Founder & CEO, highlighted the importance of a well-planned succession strategy and how preparing the field for change is crucial to orchestrate seasons of seamless transitions.

Nancy Bogart, Jordan Essentials Founder and CEO, encouraged attendees to recognize when their teams are operating in high stress and how setting boundaries and taking ownership can help executives lead well through adversity.

Paulo Moledo, Hy Cite CEO and President, affirmed the company’s singular commitment to the direct selling model and the growth they have experienced because of their dedication.

Roger Morgan, pawTree Founder and CEO, shared case studies of how his company has learned to fail fast in order to find quality solutions that deliver results.

Shelley Rojas, DSN’s Chief Brand Officer, shared exciting insights on what’s next for the brand as it gears up for its 20-year anniversary celebration and new plans for even bigger (and better) events going forward.

Vivian Mokome, Founder and CEO of Vivian Mokome Projects, cast vision for the market opportunities to be found in Africa and emphasized the importance of accountability for network marketing companies who choose to launch there.

Stuart Johnson and Heather Chastain hosted a panel discussion among Nancy Bogart, David Brown, Graeme Clegg and Gordon Hester, PM-International Chief Sales Officer of the Americas, to share their proven growth strategies—including developing a revenue-focused mindset; building a nimble infrastructure; fostering loyalty; hiring the right people; and taking ownership of manufacturing and research and development.

Blake Mallen and Brandon White offered a peek behind the curtain at the potential and possibilities available through the ever-evolving tools and techniques presented by AI in their masterclass workshop.

Stuart Johnson held a panel discussion with legendary industry leaders Joni Rogers-Kante, SeneGence Founder and CEO, Kevin Guest, USANA Executive Chairman and Marc Ashley, Market America Worldwide | SHOP.com President and COO, who offered their collective experiences navigating the many evolutions the channel has and is experiencing, including omnichannel and affiliate options; the progression of compensation plans; and communication and management strategies to better connect with field leaders.

Heather Chastain led a panel discussion with Lynne Coté, Princess House President and CEO, Brian Gill, Paulo Moledo and Judith Sanchez Lopez, who shared growth drivers within the Hispanic and Latinx market, including designing faster bonuses; tailoring product offerings to focus on fragrance and color; appointing Hispanic or Latinx leaders to the company’s executive and communications teams; and customizing communications to be written by Spanish-speaking content creators.

Wayne Moorehead, Marketing, Brand Strategy and Direct-to-Consumer Industry Expert and Host of DSN’s Direct Approach Podcast, hosted a panel discussion with Al Bala, Mannatech CEO, Jesi Conder, ALIGN Co-Founder and CEO, Roger Morgan and Melissa Thompson, BELLAME Founder and CEO, to discuss how an effective affiliate program can help companies remain relevant to the next generation of social entrepreneurs; deliver another tool for reaching new audiences; and offer compensation options for those who want to focus solely on selling.

Stuart Johnson led an on-stage discussion with Angela Loehr Chrysler, ACN Chief Development Officer, Leo Pareja, eXp Realty Chief Strategy Officer, Eric Reisdorf, Ambit Chief Development Officer and Anthony Varvaro, inGroup COO & CFO, to discuss how their service-based companies found momentum during the pandemic era and the strategies they are using now to propel them toward the future.

From the December 2023 issue of Direct Selling News magazine.

The post Growing Forward | DSU 2023 first appeared on Direct Selling News.

One recent episode took this to the next level—and we wanted to make sure DSN’s readers had a chance to engage with this incredibly valuable information. Wayne was joined by a trio of industry experts: Paul Adams, Owner of Adams Resource Group; Bridgehead Collective Founder and CEO Heather Chastain; and Brett Duncan, Co-Founder and Managing Partner of Strategic Choice Partners.

Ever wonder what expert consultants think about the channel? These highlights unwrap that mystery, giving you and your teams priceless insights from the outside. Wayne and his guests took a deep dive into the secrets of direct selling success: key shifts in messaging; the challenges that legacy companies must navigate; identifying the channels most valuable differentiators; the magic of simplification; and the significance of the recent Neora win. They also looked inside the channel’s crystal ball to predict what the future might hold.

With decades of experience working in various roles with direct selling companies, and as leading consultants, their expertise provides an invaluable resource for all industry executives.

Key Shifts in Messaging

The consults agree: what the channel offers is something Young Millennials and Gen Z want. But it’s often packaged in a way that doesn’t resonate with them. Some of the key factors that this demographic is looking for include being able to monetize their influence on social, being a part of a community or movement and creating multiple streams of income. Sound familiar? What they don’t want is to build and manage a team. What’s inside the box remains enticing and relevant. It’s how the box is wrapped that has lost its charm. Promises of big money read as a scam—they are looking for multiple income streams and lower expectations for supplemental income.

Legacy Company Challenges

There exists within legacy companies a generational pull to not acknowledge or change to reflect the key shifts noted above. Direct selling must adapt to these changes or become irrelevant. It’s important to acknowledge that well-established field leaders found success doing things traditionally. It’s not realistic to expect them to embrace wholesale change without support and empathy. The work to facilitate this transition needs to come from the home office. It should be corporate’s role to steward this change by supporting established field leaders while still soliciting new ones. It’s also important for these established companies to own the often misguided and misleading messaging of the past and set more realistic expectations going forward.

Direct Selling’s Value Props

There is true alignment on what direct selling’s differentiators are. So what are the things that direct selling needs to lean into? Culture and community in the form of personal development, connection, mentorship and guidance. The channel has also taken huge strides in offering real products and services that people want. And sharing products with friends, family and followers is increasing in importance in purchasing decisions. Direct selling is the ultimate example of people selling to people in an authentic, organic way—free of gimmicks, scripts and pretension and full of genuine excitement and enthusiasm.

Keep It Simple

Customer experience continues to become more and more important as direct selling competes directly with DTC brands. The experience of onboarding also becomes more and more vital as aspiring entrepreneurs have multiple options on where to put their efforts. Direct selling tends to build unnecessary complexities into processes. The experts are united in their belief that those complexities come at a cost. There can be no extra steps, funnels or hoops to jump through. How to pay; how to join; how to get paid all must be streamlined and simplified.

What the Neora Ruling Really Means

The most important thing about the Neora ruling, according to the experts, was that it proves the model can be validated. The caveat to that is that if you aren’t doing the right things, this isn’t a victory for you. The Neora ruling will not lift regulatory scrutiny, but it will provide a blueprint for what companies need to achieve. Executives must familiarize themselves with the ruling and ask themselves the hard questions about whether their companies would hold up to the same scrutiny.

Future Forward

The group all agreed that more acquisitions and consolidations are on the horizon. They were also united in their opinion that FTC scrutiny will not be going away, and companies must make sure their values and practices align with the measuring stick provided in the Neora ruling. A final future insight was the need for companies to embrace the current culture and climate of change, including a laser focus on customer acquisition; offering real products with real value; and bringing new and younger people into the industry.

Listen to This!

We’ve just scratched the surface of the insights and insider tips shared in this episode. It’s an hour and a half you and your team simply can’t afford to miss. Listen to the episode in its entirety and to subscribe to Direct Approach and the full lineup of DSN podcasts.

From the December 2023 issue of Direct Selling News magazine.

The post Insights from the Outside first appeared on Direct Selling News.

Direct selling has become an increasingly popular avenue for individuals to start their own businesses and earn income. To gain a comprehensive understanding of the perceptions surrounding direct selling, the Direct Sales Generational Engagement Study was conducted by Bridgehead Collective and carried out by The Center for Generational Kinetics, led by President Jason Dorsey.

In this first-of-its-kind study, Bridgehead Collective chose to partner with the Center for Generational Kinetics, which has led more than 100 research studies in all major industries. Their seminal annual study, The State of Gen Z, formed the basis for the best-selling book, ZConomy and has been consistently featured in national and global media including The Wall Street Journal, New York Times, CNN and many more.

I set out to discover America’s perceptions of entrepreneurship, the gig economy and—more pointedly—direct selling. Statistical significance was of ultimate importance in this analysis, so the study represents a wide-sweeping sample that is reflective of America, with an equitable mix of genders, demographics, employment status, education levels and location that allows for a 97 percent confidence level. This study aimed to explore the attitudes, motivations, limitations and beliefs about starting a business in America, as well as uncover perceptions of direct selling, recruiting strategies, onboarding methods, distributor retention and preferred payment structures.

We designed the study to provide actionable insights across 10 key categories:

• Perception of Industry and Channel
• Recruiting and Prospecting
• Motivations and Decision Criteria
• Onboarding and Getting Started
• Training
• Compensation and Value Proposition
• Recognition
• Incentive Trips and Events
• Retention
• Duplication and Role of Team Building

In this series, we are digging deeper into each of these categories, focusing this month on all things Training.

As we shared consistently throughout this series, the news surrounding all generations is that EACH generation is radically different in how they want to be prospected, talked to and approached about direct selling opportunities. We have highlighted that a “One-Size-Fits-All” approach simply doesn’t work anymore, and that feedback is amplified when it comes to Training.

Clear Blueprints and Guideposts

Last month we shared some shocking insights about Getting Started and Onboarding. Most of the shock factor came from the fact that an overwhelming majority of Younger Millennials and Gen Z preferred to be onboarded in person vs. online, or even working at their own pace. This is fueled by their underlying belief that they do not possess the skills necessary for success. The manifestations of this belief carry through just as strongly to what kind of training they believe is necessary for success and confidence in their new business. However, what we see transition a bit as we move from onboarding and getting started to ongoing training programs is a marked increase in the desire for “learn at your own pace” and other forms of on-demand training.

In fact, when we asked all generations which type of training would be the best to gain experience and confidence in direct selling in the first 30 days, the number one answer, in fact the number one choice of more than half of the respondents was:

“A clear training program that provides a roadmap for success, that I can review at my own pace, on my own schedule.“

This represents a clear differentiation in the data between how people want to learn at the very beginning and how they want to engage on an ongoing basis. Now, for followers of this series, you know we are all about putting data into action so that leads us to our first Action Item on this area of insight.

Action Item: Ensure that your training programs are easily accessible online; broken up into manageable segments of no more than 20 minutes; and in a format that can be consumed and worked completely on demand.

As we probed further into precisely what type of training all generations believed was necessary to give them confidence to build their businesses, I think two of the next three responses are going to surprise you.

The second most desired training is not a surprise, focusing in on “hard skills” training like how to place orders, get paid or engage with company technology (calling Captain Obvious). But after that, we start to see some of the really interesting generational differences come into play.

Rounding out the top five answers, we have:

• Being assigned a Trusted Guide in the business for regular answers, help and support.
• Soft skills training communication, sales, how to have conversations and speak to groups of people.
• Short training videos, LESS THAN ONE MINUTE EACH, sent to you daily from your colleagues, other successful people or your trusted guide.

Fascinating, right? What’s even more interesting is that when you break it down by generation, the desire for soft skills training leapt all the way up to number one for Gen Z. That’s right—the MOST requested needs for training for the future generation of direct selling leaders were for communication; starting and holding conversations; and how to speak to groups of people. Not sure about you, but most of the companies I work with don’t include this kind of foundational training AT ALL as part of their onboarding. Sales training, yes of course! Scripted exchanges for how to close a sale? Sure. But that’s not what we are talking about here. We are talking about very fundamental basics of how to hold conversations; how to follow up; how to engage with other humans in a professional way; and how to conduct meetings or communicate in business to small or large groups of people.

The data couldn’t be clearer—Gen Z (and to some extent, Younger Millennials) are crying out for help—and we would do well to listen.

Action Item: Go back to the basics—WAY back. Implement a fundamental communication training module as one of the very first elements of your training programs. If you’re not sure where to start, use the QR code at the end of this article to request information. Bridgehead has put some energy into designing a plug-and-play module that could help.

Fast, Frictionless, User Friendly

Now let’s talk for a minute about that last bullet. The ask is straightforward. Please send me—once a day—a short training video that will fuel my success from someone who has done what I need to do. Simple, right? Well, when’s the last time anyone at a direct selling home office created ANY training content that was less than one minute long?!? Right…thought so!

This speaks to the ongoing challenge of shortened attention spans and desire to engage in a fast and frictionless way.

Action Item: Issue a One-Minute Challenge to your top leaders to gather a TON of content to share out with everyone. Give clear instructions on a simple background, lighting, etc., and ask them all to share in ONE minute or less, their top tip for someone just starting out.

Then, put this into action! Take a cohort of new distributors (pick a month) and send them all one video a day for 90 days and compare their results to their performance from other months. What do you have to lose? The whole project will take little effort (remember, these are meant to be authentic and don’t need to be super polished). And it could yield tremendous results.

Another “wow stat” that emerged with this topic is the appeal of outside experts. Turns out, that virtual, live presentations by an outside expert on information that is relevant and helpful to build their business is most appealing to older generations, with 74 percent of Older Millennials and Gen X listing it in their top three, compared to only 24 percent of the younger generations. Something super interesting to consider when choosing how to allocate your dollars most effectively.

The Right Method for the Message

OK—that’s what each generation had to say about what KIND of training they were looking for, but what about HOW they want to be communicated with.

We all know the “what communication channel to use” struggle is real. Should we email everything? Text it? Post it? Push notification it? Put it in a Facebook group? Zoom it? Teams it? Or…worst of all…choose all of the above so they tune us out completely! We have seen so many companies wrestle with this issue, so we decided to get some data to help us sort it all out.

Turns out Americans have very different and distinct opinions on HOW they want to receive different types of information. That “One-Size-Doesn’t-Fit-All” axiom shows up again and again.

When asked “how you would like to be communicated with in each of the following situations in your first 30 days,” the answers were super clear—and very different for each type of communication.

There is a lot of information in that chart, so I encourage you to spend a few minutes digesting it, but here are some top-line highlights. Depending on the situation, Americans want to be communicated with very differently during their first 30 days as a distributor in direct selling.

Email is the preferred communication method when learning or receiving information.

Text is the preferred communication method for quick questions and check-ins.

Group video chat is the preferred communication method for meetings.

One-on-one video chat is a back-up communication method for most situations.

Action Item: Reorganize your Communication Plan by slotting different types of communication into precise and distinct channels based on this data.

Not only will it simplify your internal processes, but it will drastically increase your engagement and effectiveness, so all that effort spent crafting the perfect message is read, received and put into action.

Also, pay special attention to the strong preference for two-way, text-based solutions for both quick questions as well as high fives and recognition. You may want to consider how you are using text and ensure you are maximizing its effectiveness.

So that covers the training highlights, please look out for next month’s article where we jump into the crowd favorite and lifeblood of our industry: Compensation and Value Proposition.

I may have to see if I can get more pages for that one—lots and lots and lots to unpack so look for plenty of action items including a few proven quick wins that you can get up and running in less than 30 days.

With 20+ years of cross-functional experience in direct selling, Heather Chastain brings a solid understanding of sales, marketing, technology, manufacturing, operations and C-Suite challenges as well as a strong collaborative and relational style of leadership to the table. Heather has held executive roles at Shaklee, Arbonne International, Celebrating Home and BeautiControl. Heather also serves as the Strategic Advisor at DSN and is the Founder & Chief Executive Officer of Bridgehead Collective.

From the November 2023 issue of Direct Selling News magazine.

The post GENERATIONAL INSIGHTS / Preferred Training Methods first appeared on Direct Selling News.

Direct selling is changing. The channel continues to grow, evolve and expand to include new models under the umbrella term of direct selling. Some of these innovations—like affiliate programs—offer real opportunity and welcome new participants into the channel.

But not every opportunity stands up to scrutiny. At a recent industry event, executives from over 30 direct selling companies shared their concerns regarding Master Resell Rights (MRR). MRR is a type of licensing agreement in the digital product industry. It grants the licensee the right to sell a digital product and they in turn can resell that right to others.

MRR often takes the form of online training courses focused on building lucrative online brands and businesses—an enticing pitch to aspiring entrepreneurs and influencers. And while the selling points for purchasing these courses (typically in the $500 range) are intriguing, this “opportunity” could easily be characterized as nothing more than a digital chain letter.

At first glance, it sounds like a great fit for affiliates to grow their reach and reputation by marketing an online course that teaches others how to replicate their success. But it’s far more complicated than it appears and comes with its own substantial set of concerns that’s currently creating chaos and confusion in the channel.

Because of its disruptive nature and the potential problems it presents for distributors and—in a broader sense—the channel itself, Direct Selling News reached out to attorneys that represent and advise direct selling companies as well as channel executives to better understand what MRR is; what it isn’t; and exactly what kind of havoc it can create.

Ethical Concerns

MRR is a licensing arrangement in which the holder of MRR can resell a product and often pass on the resell rights to the buyer. These products can include ebooks, software, training courses, templates and various digital goods. Although this is a relatively new opportunity being marketed to distributors, attorneys specializing in direct selling have already expressed concerns about MRR.

Brent Kugler, a Partner at Scheef & Stone whose practice focuses on representing direct selling, MLM and network marketing companies in lawsuits, arbitrations and regulatory matters, shared his thoughts on the potential pitfalls.

In his opinion, an MRR program, depending on the purchase price and how it is marketed, may violate the Federal Trade Commission’s (FTC) business opportunity rule or state business opportunity statutes. “This creates potential significant liability for the seller unless the seller adheres to the extensive and burdensome disclosure requirements,” Kugler explained. “And because MRR is essentially a one-time sale of a training module, there is no residual income element. In many MRR programs, recruitment of others doesn’t provide any opportunity for additional income.”

A more practical concern Kugler expressed was financial in nature. “Due to the cost and non-refundable nature of MRR programs, it can be anticipated that a great number of purchasers will not recoup their purchase price.” Kugler also noted that intellectual property issues related to content exist. “Most of the MRR sale terms and conditions I have reviewed do not contain language that sufficiently protects the purchaser from third-party intellectual property infringement claims.”

Katrina Eash, Partner at Winston & Strawn who concentrates her practice in complex commercial, class action and intellectual property litigation, shared her thoughts. “Distributors must understand the terms of the license they receive as those terms greatly impact how the product can be used, distributed and/or modified,” she explained. “Distributors need to understand whether, and to what extent, they’re required to credit the creator of the product. And distributors should watch out for—and avoid—creation of derivative works (if not permitted) and potential trademark/copyright infringement. These are just a few of the more prevalent intellectual property concerns surrounding master resell and private label rights. A misstep with any of them could result in costly legal ramifications.”

Considering recent wins direct selling has had against the FTC, any activity that draws the scrutiny of the agency or presents regulatory challenges can only harm the channel and the people that rely on it for their livelihoods.

False Claims, False Expectations

Another important thing for participants to understand is that the distributors who would have an audience for these kinds of training products already have a sizeable following. So, while field leaders with thousands of people in their team might pressure their downline to purchase the courses, it is difficult if not impossible for a smaller distributor to replicate that success or make any money at all. There is no one for them to sell it to that the bigger distributor hasn’t already solicited. And the longer it goes on, the less opportunity exists.

It’s easy to see why industry executives are concerned and advising their field to avoid the temptation of MRR. Amber Olson Rourke, Chief Marketing Officer at Neora said, “Selling a video course for close to $500 when you could find very similar content on YouTube for free is a risk. Is it possible to get some ‘quick income’ from this? Sure. But is the risk to your reputation and the distraction, confusion and disruption this will cause to your main business worth it?”

Aspen Emry, Founder and CEO of Bravenly Global shares Olson’s concerns. “it’s a HUGE distraction. MRR is appealing because it seems quick and easy, and distributors don’t have to do the training and teaching components of building a team. What concerns me is that the pitch often bashes direct selling by saying things like ‘If you’re tired of MLM’ or ‘Want to make quick money without MLM?’. It’s deceptive and preys on people who just need time to learn the direct selling business and build something sustainable. The kind of fast money that’s being promised is not achievable for most people.”

Taking a Stand

Many executives, concerned about the impact MRR could have on their hard-working distributors, are taking proactive measures, including amending their policies and procedures to limit the damage MRR can do. As one executive explained, “We’re adding more restrictions because we feel like it is damaging the field and preying upon them as well. It creates a massive breeding ground for cross recruiting. These courses and email chains are a real threat to distributors.”

Melissa Thompson, Founder and CEO of BELLAME, explained her company’s approach. “We allow our Partners to represent multiple brands without restriction,” she said. “Nonetheless, we’ve established guidelines to maintain our community’s integrity. Challenges for our field have been centered around unethical behaviors of those marketing the MRR—not necessarily the MRR business itself. Many Brand Partners have reported unwarranted solicitation where their upline is harassing them to invest in an opportunity to get rewarded with big money for little to no work. Our current policies and procedures have been sufficient in addressing these issues.”

For companies looking for guidance in their own policies and procedures surrounding MRR, Kugler offered the following. “A lot of companies have policies in place prohibiting the sale of non-company training/marketing materials. A well-drafted non-solicitation policy that includes MRR within the definition of other ‘direct sales business opportunities’ can also be effective.”

Danger Ahead

Affiliate marketing and MRR are distinct business models. The simplest explanation is that in affiliate marketing you act as a promoter and earn commissions, but you don’t own the products. It’s a longer-term, more sustainable opportunity. While some affiliate marketers may be intrigued by the concept of adding MRR to their businesses, there are many valid reasons to avoid them.

More Resources
Affiliates are focused on promoting for a reason—they have a loyal audience, charisma and are natural born salespeople. They are sharing products and services they know, love and trust. MRR products require more involvement in product ownership, quality control and customer support, taking time away from the critical, income-earning tasks related to promotion and sales.

More Oversight
MRR products come with reselling rights—but they also come with responsibilities. With direct selling, affiliates never have to assume responsibility for product development or quality—it’s all done for them. With MRR, they must assume that responsibility.

Lower Quality
The quality of MRR products varies widely. Some may be valuable, but many are poorly made or outdated. Customer trust is key for affiliate success. Affiliates need to promote products of consistent quality to maintain credibility and trust.

Intense Competition
Identical MRR courses can be sold by multiple people within the same community, which can quickly lead to overlap; mixed messaging; and market saturation. It can be very difficult to stand out in a crowd when these rights are sold repeatedly.

Additional Time and Tasks
MRR products may require affiliate marketers to provide customer support. Managing inquiries, issues and refunds can be time consuming, distracting and impact the bottom line.

Brand Consistency
Direct selling companies often have specific branding, marketing and product strategies affiliates and distributors are expected to follow. Introducing MRR products with different branding and lower quality standards can quickly dilute brand identity or imply endorsement.

Ethical Concerns
Direct selling companies often have a strong focus on ethical business practices and long-term customer relationships. Some MRR practices, especially those associated with low-quality or unethical products, can contradict these principles and damage reputations.

Customer Disappointment
When MRR products fail to meet consumer expectations, it can result in dissatisfaction and negative reviews, potentially harming the reputation of the affiliate/distributor and the direct selling company.

Lasting Opportunity or Passing Fad?

MRR is not the first (or last) “easy money” opportunity to distract, discourage and ultimately disappoint distributors. Many other schemes with unsubstantiated promises of big money with little effort have made an initial splash then quickly crashed and burned.

And although it hurts the companies, it hurts distributors even more—especially those just starting to build their businesses. It diminishes belief; damages reputations; depletes resources; and distracts from the legitimate, long-term opportunity direct selling represents.

As Emry shared, “I don’t see MRR as a long-lasting income opportunity. With no duplication and zero residual income off the sales of others, eventually distributors will run out of people to sell it to because the average person doesn’t have unlimited leads.” 

That sentiment is echoed by Kugler. “MRRs are bright shiny objects for distributors to be attracted to (and distracted by) only because they feel they can generate income from the sale to their downline participants. This is a fad, and it will pass. But—in the meantime—companies can adopt policies to prohibit the promotion of MRR within the sales network or enforce existing policies that prohibit the sale of marketing programs to other participants.”

Ultimately, these measures protect both the field and the companies they represent. While MRR sounds like a great opportunity to build an affiliate’s sphere of influence and make money quickly, any success found from selling MRR is likely short-lived and disruptive to the community and the channel.

In many ways it flies in the face of the time-honored strategies and philosophies that lead to long-term direct selling success. As Olson Rourke summarized, “Those chasing instant gratification are robbing themselves of the sustainable success that comes from disciplined daily action.”

Key Distinctions

It’s important to understand the structural and philosophical differences between affiliate marketing and MRR. We’ve highlighted three components of both.

Affiliate Marketing

1. Commission Based
   Affiliates earn commissions by promoting and selling products or services owned by other companies. Their role is to drive traffic, generate leads and facilitate sales. They are often given additional perks for sales goals and provided ongoing support from the companies to achieve those sales goals.
2. Promotion and Marketing Focus
   This model allows affiliates to capitalize on their existing strengths and assets to focus on promotion and marketing. By leveraging their existing blogs and social media presence, affiliates attract customers to the brands they have chosen to partner with—brands that clearly align with their existing values and interests.
3. No Ownership or Oversight
   Time-, labor- and resource-draining components of doing business such as product development and customer service and support are handled by the parent company. Affiliates can concentrate on what they do best—making sales (and commissions).

Master Resell Rights (MRR)

1. Product Ownership
   Participants own the product (within the bounds of the licensing terms). Specific terms and conditions vary from one product to another, and it can be difficult for participants to fully understand their limitations and ramifications.
2. Questionable Quality
   The quality of MRR products varies dramatically. Because this is a one-time purchase and not an ongoing relationship, participants cannot influence the quality or type of products being produced. It’s up to them to find the right fit for their audience, which can be a time-intensive process.
3. Market Saturation
   MRR creates chains of reselling rights, which can quickly result in over saturation if not managed properly. There is no opportunity for residual income, and the market for these products diminishes over time as many people in the same circle are selling the same one-time opportunity.

The post Too Good to be True? first appeared on Direct Selling News.

Identifying and understanding market opportunities around the world.

Taking a brand international is a big step for any company. New markets mean new customers, expanded audiences and unique opportunities to try out products that might not be a fit for the original hometown fans. Not to mention, exposure to new cultures and ways of life can be inspirational for product development teams eager to serve the needs and wants of new demographics. Gaining ground internationally can add revenue and stockholder value and build traction abroad that can bolster the domestic team when sales at home turn stagnant. These benefits come at a steep cost, however, for brands who don’t do their homework.

“You really only get one chance to launch a market,” said Wayne Moorehead, marketing expert and host of DSN’s Direct Approach Podcast. “If you don’t launch it right, a lot of times you can’t swing back around to fix it. You have to walk away for a while and let the dust settle.”

Ex-Pats Provide Added Value

Building a global brand name that carries an honorable reputation and a healthy balance sheet requires commitment, staying power and an understanding of the unique expectations and regulations within each country and specific region. What’s more, brands need to have an appreciation and respect for the local culture and take into account how their presence could have a positive or negative impact on the people there. That means investing in local talent who can serve as a boots-on-the-ground guide for the home office, while also skillfully leading the international headquarters.

doTERRA Chief Executive Officer Cory Lindley points to the importance of having a home office leadership presence in newly planted markets to synthesize the brand’s mission and values with the needs and ideas of international satellite locations. This is a vital component to a healthy international launch. Investing in an ex-pat is an expense that many companies tend to shy away from, Lindley says, but sending them to help launch the brand abroad, then supporting them when they repatriate, is a key component to doTERRA’s global expansion success.

“Now, our office back here at corporate after 15 years is full of people who have lived and worked in various markets around the world and who understand the cultural sensitivities and how to support those markets,” he said.

Five Global Market Opportunities

As executives consider making the leap into new international markets, Direct Selling News considered five regions—North America, South America, Africa, Asia and Europe—to assess the opportunities and challenges presented in each, taking into account the trends, dynamics and statistics provided by the 2022 World Federation of Direct Selling Associations (WFDSA) annual publication.

1 / North America

The United States continues to be the largest direct selling market opportunity in the world. Last year, direct selling in the US brought in sales exceeding $40 billion, an amount that represented almost two-thirds (62%) of all sales in both North and South America combined and just shy of a quarter (23%) of sales worldwide.

For companies founded in the US, having a healthy customer base domestically may seem obvious, but it is an essential ingredient to an international strategy.

“You need to have a strong US presence,” Lindley said. “So many companies run international before they’ve really strengthened their home market presence. You have to be successful in your home market. doTERRA operates around the globe, but the US is still by far our largest market and twice as big as any international market for us.”

In Canada, where revenues reached $2.5 billion in 2022, the opportunity is similarly inviting and one that Direct Selling Association (DSA) Canada President Peter Maddox describes as very similar to the US.

“Canada is a consistent and strongly performing direct selling opportunity and will reward companies that prepare well and operate ethically,” Maddox explained. “As with many other markets around the world, Canadians are seeking extra income to counter the effects of high interest rates, high inflation and stagnating wages—direct selling is perfectly positioned to capitalize on this need.”

The Canadian market has a relatively high regulatory requirement, and Maddox cautions leaders to pre-plan their entry and to tap into local expertise to avoid pitfalls, including the complex logistics of serving a relatively small population (40 million people) across a vast landmass.

In 2024, Maddox predicts Canadians will be eager to embrace the use of video live shopping tools and affiliate and influencer programs, but advises US companies against the temptation to copy and paste their product lines into a Canadian launch.

“Although there are similar tastes and expectations, entering Canada with the same products and marketing as those utilized in the US rarely works well,” Maddox said. “Some level of Canadian-ization is recommended.”

2 / South America

As in the US and many other markets, ecommerce giants like Amazon (Mercado Livre) have provided significant competition for independent distributors in South America, resulting in flat sales for Brazil, the second-largest market in the Americas.

There were standout countries, like Argentina, a region that saw a 58 percent increase in 2022 over 2021. This boost must be tempered, however, with the fact that inflation in the area was near 100 percent as well. Colombia, Peru and Argentina all saw sales exceeding $1 billion and local experts say that distributors who are willing to branch out into relying on digital tools and embrace a new way of reaching audiences will see more success than those who do not. Similarly, companies who support their distributors through smart supply chain management and on-time product delivery fare far better than competitors who put this region on the back burner.

3 / Europe

For companies looking to establish or grow their presence in Europe, Jerome Freytag, a consultant for direct selling companies in Europe, says France should be the most logical next step. Although the country holds a complex regulatory environment, France’s legal ecosystem is generally favorable toward direct selling, and the DSA in France (Federation de la Vente Directe, or FVD) is a powerful resource for newcomers.

“France has the strongest DSA in the world, with 130 members,” Freytag said. “It is a great place to share best practices and learn fast. The team at FVD do a fantastic job promoting the industry.”

There are a number of peculiarities about working in the direct spelling space in France, including the requirement of a specific status called Vendeur à Domicile Indépendant, or VDI, which requires direct selling companies to be in charge of applicable tax withholdings for their independent contractors. But even this complexity has a benefit in that it is an attractive recruiting tool.

“While French direct selling companies attract a lot of distributors, they are immature on numerous aspects,” he said. “Companies from abroad will likely outperform them.”

As for what products are expected to be hot in France in 2024, Freytag says travel services, CBD-infused products and nail art top the list.

4 / Asia

The Asia Pacific region is a billion-dollar market powerhouse, boasting almost half of all billion-dollar markets in the world. Overall, this region saw estimated retail sales of $71.5 billion in 2022, of which South Korea and China make up a significant portion.

“Asia is a significant part of our business currently and will continue to be a growing part of our strategy moving forward. Asia remains one of the most robust and fastest growing regions in the world for direct selling. We plan to continue to play a big part in this growth,” shared Rod Taylor, CEO of New Image International.

These markets are not without challenges and the lingering effects of the pandemic and government-enforced lockdowns led to eight of the region’s markets to decline last year. China, in particular, saw an eight percent decline last year, with retail sales reaching $15.8 billion.

5 / Africa

While the continent of Africa is not home to any billion-dollar markets, overall, Africa and the Middle East experienced retail sales of $1.4 billion dollars. The last few years have been difficult for the region and sales were down by 13.3 percent, but local experts believe the horizon for the region is full of opportunity.

“Direct selling is still relatively new in the African market,” said Vivian Mokome, entrepreneur, founder and global speaker in South Africa. “It is only now that people are slowly warming up to the business model. We now have numbers that show the model works, and Africans are generally aggressive when it comes to an idea that is working.”

Mokome points to Nigeria and South Africa as being particularly receptive to the direct selling opportunity, and products in the categories of skin care and weight loss are moving well. The challenge in this region has more to do with logistics, customs and shipping issues creating significant road blocks. Once established, however, these obstacles subside.

“The regulations are not as strict in comparison with Europe and America,” Mokome said. “And we have numbers here: six out of ten people are living in poverty. Young people are unemployed and looking for job opportunities. Direct selling is a real option for them.”

AI-Powered Launches

Getting the details right can sound daunting, and while an international branch is not a project to take on lightly, there are new digital hacks that can help lower cost and risk. With AI-powered technology, executives can discern potential target audiences, key marketing strategies and product categories that might be trending in an international area. One quick search in ChatGPT can generate product pitches in a brand-specific voice translated for international markets or deliver information regarding regulatory laws in unfamiliar regions.

For instance, a ChatGPT search asking if CBD products would sell well in South Korea returns information about stringent laws surrounding the level of THC in products; import/export regulations; and important licenses and permits necessary for distributors. In one minute, executives have crucial information about the barriers to entry for free. Add to that AI-backed resources like Craiyon, a free AI image generator, and executives can create stock imagery for international markets without ever leaving the home office.

International Staying Power

Every unique culture deserves its own customized launch, and there is no one-size-fits-all approach or guidebook for opening up in a new market. That’s why it’s critical to make the effort beforehand to understand the nuances of a location before making the leap. And while AI can smooth that process and even make it more cost-effective, there are no shortcuts for long-term commitments.

“A key element for us to be able to succeed globally is that we take a long-term approach,” Lindley said. “We’re not the same level of success in every market around the world, but once we enter, we’re there for the long-term. I think that’s the attitude you need to take. Are you ready to stand behind this for the long-term? If not, you really shouldn’t be going to that market.”

From the October 2023 issue of Direct Selling News magazine.

The post Going Global first appeared on Direct Selling News.