The Dark Side of Promotions in Direct Selling

2
3279

Product promotions can create an explosive momentum in sales as well as an influx of new members—but, as with anything else, there is a downside.

If you’re not careful, product promotions can destroy the morale of your existing members.

Why?

When you discount your products too heavily or for too long, you can devalue your brand.

Think about it…

People use price as a rough gauge of the value of something. Consider the price of shoes. Sometimes you can get a pair of sneakers for $50 and they’re just as good as certain pairs that sell for $200, in terms of quality. Try telling that to the general population, though; they will still value the $200 sneakers more.

Isn’t it irrational? Yes. This is the nature of consumerism, though. People’s buying decisions aren’t always rational—but you still must cater to them if you want to be a success.

It comes down to the brand and how people view it. If it’s a “good brand,” people expect it to be more expensive than a “discount brand.” Human beings simply like to use mental shortcuts, and they assume that if it’s more expensive, it’s better. This in turn creates a feedback loop, where the price is justified by the brand name, and the brand name is solidified by a high price.

Needless to say, you don’t want to fall into the trap of a “discount brand,” because then you’ll be competing on price.

Creating a product promotion
for direct selling companies is an art

It is more than just saying:

“We have an excess of inventory of this product; we should make a promotion to get rid of it.”
“We need to reach our sales quota for the month; let’s run a promo to hit the right numbers.”
“We haven’t done a promotion in awhile; it’s about time we give people a discount.”
“Company XYZ is doing a promotion; we should do something similar.”

If you approach promotions in direct selling with any of the above mind-sets, then you might get temporary results here and there. However, you are shooting yourself in the foot over the long run. You are creating permanent damage to your organization if you end up implying to your customers that you are a discount brand who thrives on “deals” over quality.

Product Promotions Should
Work In Your Favor

Never promote a product at a loss. Sometimes dropping your price to bottom-of-the-barrel low will help you undercut your competitors temporarily, but you will also attract the worst kinds of customers. Believe it or not, the customers who complain, return products, and generally cause you headaches are mostly found at lower price points than higher ones. If you’re not careful, you’ll attract a bunch of them during promotions.

Instead, offer promotions that still make you a profit—or offer a product for free with some other purchase. Be fair with yourself. Most of all, make a plan and stick to it. Don’t panic if you see that sales don’t pick up right away, and then make the mistake of lowering your prices even more. This signals desperation to the market.

Here are some tips you should follow:

1. Create a Promotion Calendar

Make your promotion for a limited time, and don’t extend beyond that for this promotional period. Send the signal that your promotions really are limited. People aren’t stupid. They will notice if you have a “limited-time deal” every week.

2. Use a Question Checklist

Ask yourself the important questions ahead of time, such as how you’re going to run the promotion and how you think your distributors and customers will react.

3. Re-Frame Your Offers

Make sure that your offers are framed in such a way that makes your brand seem valuable, not devalued.

Let’s take a look at these tips in more detail:

Create a Promotion Calendar

When you have a calendar with a series of promotions for the year, you can see the big picture of your business. There is no guesswork and you’ll be running promotions because you planned them that way, not because you were desperate to move product.

For example, you can have in your calendar:

Anniversary Promotion in September
Black Friday Promotion in November
Christmas Promo in December

Assuming a simple schedule like the one above, let’s say that in August you’re falling a bit behind on the sales goal. With this “bird’s eye view,” you know that there’s no need to run a desperate promotion because in September there will be a major offer and you can make it up.

Distributors know when the company is running a promotion just to reach a sales goal, and they can also tell when they are planned and logical. The former erodes trust, while the latter is just business as usual.

Don’t fall into the trap of running a promo just to hit the sales of the month. Don’t become so obsessed with the numbers that you forget your image and the human element of your business. Most of the time, you just end up devaluing a product that a customer was about to buy the next month at full price.

Use a Question Checklist

Once you have a tentative promotion for the next couple of weeks, do a quick question checklist:

How will your distributors react?
How will your customers feel when they see this new price?
Will this promotion affect next month’s sales?
Is the company benefiting from this promotion?
Is this a good promotion for distributors over the long run?
Will this promotion affect their future earnings?
Is the company losing money?
What is the goal with this promotion?

The idea is to get into the minds of your customers and distributors and try to anticipate their needs. Create your own questions, but always think of the effect the promotion can have on your team.

We’ve seen companies run promotions that destroyed distributors’ paychecks. Needless to say, it’s counterproductive to hurt the commissions of the very distributors who are expanding the company.

Re-Frame Your Offers

How do you communicate an offer that creates excitement? How do you show that your company is full of vitality and movement, rather than weakness and desperation?

For example, let’s say that your marketing material says:

“2 Shakes For the Price Of 1! Only $50.”

In the mind of the distributor, you may as well be saying: “Each shake really costs $25.”

In other words, you’ve devalued the product. This can have implications when the promo is over.

Instead, if you re-frame the offer to show strength, you can relay the same basic message but with much more powerful connotations:

“Buy One Bottle for $50, Get One FREE.”

If you’ll notice, the product maintains the real price, which is $50 dollars per bottle, but this time, the distributor can argue that the company is giving away something that is worth $50 as well.

Unless you’re Groupon, we don’t recommend running promotions every week. Distributors can pick up your pattern and you might end up incentivizing them to postpone their current purchases at regular price in anticipation of a promotion.

Whatever you do, just make sure that you maintain the integrity of your brand. Never send the wrong signals about your product by offering too deep of a discount or running a promotion for too long. Promotions have their place, but they must be done mindfully, for the good of you, your distributors, and your customers over the long run.