Does Direct Selling Still Work?
Let’s talk about the elephant in the room: Does the direct selling model have a future?
It’s a reasonable question we need to weigh carefully. Consider AdvoCare’s announcement in May that it would drop the MLM channel from its business. The message boards lit up with stunned distributors who were blindsided by the decision. If a company of that size decided the model no longer made sense, what does that mean for the rest of us?
1. Context matters.
AdvoCare faced a serious legal challenge in the form of a Texas class action filing. Failure to update its arbitration clause in the distributor agreement left it open to this issue. At the same time, AdvoCare also found itself in the FTC spotlight, something no MLM company enjoys. Given the confidential nature of those discussions, we’ll probably never know precisely why AdvoCare felt like it was “the only viable choice,” but it leads to the next point.
2. You and your company are not AdvoCare.
Humans really, really, really like the idea of certainty. So, we tend to look for patterns or signs to help us predict the future. There is zero evidence that AdvoCare’s decision points to the death knell of a business model. That said, we shouldn’t ignore that things are changing in direct selling. In fact, during our October workshop, Dan Jensen will tackle current challenges and how to best navigate these different issues successfully as part of your broader business strategy. But what should you be doing in the meantime?
3. Pick the low-hanging fruit.
Few things are more frustrating than seeing smart companies make silly decisions or ignore easy fixes that come back to haunt them. Case in point: How long has it been since you’ve reviewed your distributor agreement? Does it still do what it needs to do for your company and your distributors? Who knows what AdvoCare’s decision might have been if there weren’t dealing with a class action AND the FTC.
I’m also a strong advocate for taking steps to keep yourself off the FTC’s radar in the first place. For instance, how well are your tracking earnings claims? Are you holding distributors accountable? Are you holding your sales team accountable? Are you being realistic about what people can expect when they choose your company?
Look, I’m the first one to appreciate how simple all this advice sounds on the surface, and you may already be doing all of it. If so, excellent job. But here’s the reality. A lot of what separates the good companies from the great companies are the non-sexy things. And in direct selling, these non-sexy things can determine whether your direct sales channel has a future.