DIRECT SELLING TECHNOLOGIES: WHERE TO START?
Deciding on the right technology in the Direct Sales Industry can be scary -- from distributor microsites, e-commerce solutions, reporting, commissions...where do you begin? Technology solutions can be especially scary for startup companies that have a great product and a desire to offer a great business opportunity for potentially millions of entrepreneurs globally. There are a few do’s and don’ts that I can offer after nearly 20 years in the industry as a Distributor, Corporate Member, and now a Supplier Member.
First and foremost, if you have not yet contacted the Direct Selling Association, I highly encourage you to do so. The DSA is the national trade association of the leading firms that manufacture and distribute goods and services sold directly to consumers. The Association's mission is "To protect, serve and promote the effectiveness of member companies and the independent business people they represent. To ensure that the marketing by member companies of products and/or the direct sales opportunity is conducted with the highest level of business ethics and service to consumers." They are very knowledgeable and are more than willing to help guide member companies in the right direction. There are approximately 200 member companies in the DSA, including many well-known brand names.
If you have already contacted the DSA, then I'll move onto second item, which is almost as important as the first. Be sure to choose a technology partner that has direct selling experience. When it comes to technology in social selling models, systems such as an e-commerce system at first glance may look like they can easily fit into a direct sales organization; however, this is not the case. Although the differences between a social selling model and traditional retail model seem small, there are changes to the core of the business model that require a unique approach. For example, a regular e-commerce system would not work for the party plan model for social selling. Additionally, the commission structures are unique for social selling companies, with upline commissions and downline recognition -- this requires a specific type of software made specifically for the direct selling industry. A technology partner with experience in direct sales understands these differences and can help guide you down the right path to make sure you don’t invest too much time and effort into a technology that won’t work for your company in the long run.
The third item to consider is your data. The key point here is that the data is yours and you must retain ownership of that data -- so make sure that is reflected in the paperwork. Before signing any contracts, be sure to find out where the data is housed, how easy is it for you to access your data, as well as how hard would it be for you to take your data with you if you transition to a new system. For example: How quickly can you get a download of all of the commissions data you have paid to your distributors? Quick access to your data can be imperative for your future business success.
Finally comes cost, and I know what you must be thinking...since when does cost not rank in the top 3? To put it simply, cost is a broad topic. There are many parts that make up costs in technology (the software itself, hosting, backup/redundancy, etc.); however, deciding on a system purely based on cost could be detrimental. You want to make sure the system you choose works for your specific business and is not a hindrance to your distributors conducting and growing their businesses. A system that is inexpensive and does not have key fundamental pieces can break your company -- even if the system you choose is specifically tailored for direct selling. When considering costs, you must consider both how much the system costs to implement and how much it costs to maintain the system. This can be a big consideration, as your options can vary drastically. You can have a custom system built for you that will cost a lot up-front (but you own it), or you can pay next to nothing up front (except for configuration fees) HOWEVER, the licensing costs in the long run can be enormous as your company grows. The best option exists somewhere in the middle where you pay some up front costs for a system that is unique for your business needs, and then a maintenance or licensing fee that is not based on your volume.
As a side note, I always advise being cautious of per-distributor costs. These may seem small when you only have 1,000 distributors, but these costs can be crippling to a company with explosive growth, which is common in the industry. It can be tough to manage growing your company 200-300% annually -- but throw in having to implement a new system because you now have over 20,000 distributors and your monthly per-distributor costs went from $8,000.00 per month to $160,000.00 per month, and it becomes next to impossible.
Finding a system is more than just looking for a great technology, you must take into consideration the company behind the technology. All technologies require up keep and maintenance, and unless you have the staff in house to accomplish these tasks, you will be joined at the hip to your technology provider. To ensure your long term sanity and success, be sure that your partner has the expertise in the direct selling industry, they are trustworthy and have a proven track record, and that they are a true partner in your success.