What Really Makes a Direct Sales Company Take Off?

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1996

If you ask experts about what makes a direct sales company truly successful, they will often give you the same generic answers: A high quality compensation plan, some unique (and good) products, and a sound leadership team.

To me, this is like saying that water is wet and the sky is blue. Of course you need these things to be a successful direct selling startup! This is pretty much what every company tries to do. If you have these things in order, does that mean your new direct selling company will take off? Sure, it could, but frankly, it’s just not enough.

I want to peel back the onion and go deeper into some of the traits of successful direct sales companies that explode onto the market, as opposed to the ones that plod along or fail.

Inspirational Leadership

How passionate are you really about your products, people, and company? Do you live and die by its success and the impact it has on others? Do you have a higher vision for your business? Has this company been building steam for years, waiting for the tipping point (now)?

Your customers and distributors can feel this genuine passion and they can tell when you really care about them. Being in it for the money or fame is completely transparent. Strategies based on pure greed alone may have worked in the past, but that is simply not enough to keep a business afloat these days. Like a forced romance, people know when you’re not in it for the love.

The most successful startups tell their story. They share their trials and tribulations with the world. They put themselves out there with all their vulnerabilities. Forget the corporate formalities, forget censoring yourself. People don’t want the sanitized wall of “a professional” between them and the product. Be real and people will gravitate to you.

Leveraging the Scarcity Principle
With Your Product Strategy

Why is LuLuRoe killing it in direct sales? Ask the experts and they will have many reasons why.

From my perspective, one of the BIG reasons they are blowing up is that they brilliantly applied the Scarcity Principle to their product development cycle.

My wife loves the way their dresses fit her and she buys them up. She already knows what size and cut she likes. As LuLuRoe constantly puts out new prints and patterns, she can confidently purchase knowing it will fit just right. Here the catch, though: If she likes the print, she HAS to buy it right now because once that look is sold out, it’s gone forever. It pushes her to make a purchasing decision now and it makes her feel special knowing that the dress had a limited run and that she won’t see that same design on very many people.

LuLuLemon were pioneers in this technique of applying the scarcity principle. When you walk into one of their stores and see something you like, you have to buy it right away. Once it’s gone, it’s gone. Everything you buy from them is basically limited edition.

In my direct selling company, we totally missed the opportunity to apply this principle and we suffered mightily as the years went on. Things we created were not unique or innovative and they stayed in the catalogue for years. It quickly got boring.

If you want to stay fresh and be viewed as innovative from a product perspective, apply the scarcity principle.

True Social Media Instincts

I have come to believe that most companies really don’t understand social media at all. To them, social media is one of the many communication methods they might use with customers, where they post interesting content and hope people notice.

The successful startups don’t take this approach. They don’t care about the number of “likes,” they care about engagement. Is the audience engaging with my content? Do I have a community following who is passionate about my product? Is there a connection to the brand? Are the distributors acting as an extension of this community?

More often than not, the new startups will take a “fire and forget” approach, then encourage their distributors to do the same. Often the result is that we are simply annoying people with random, irrelevant content that they don’t want to see. People unsubscribe from this nonsense very quickly.

Knowing How to Play David to the Industry’s Goliaths

Don’t think small. Everyone will try to get you to think small. Instead, think big—or more specifically, think about how you can look big with a small budget.

More than likely, you will be swimming in a big ocean with much larger, more established competitors in the industry. Find ways to look big, while making them look small.

Yes, you can make a $100M per year competitor look small. First, make your branding and website modern—make it pop. Second, dominate social media and SEO with an aggressive community-building engagement strategy. Finally, launch with tools such as a mobile app that big companies are too slow and lumbering to adopt.

If you do this, the field—and top leaders in particular—will see you as a speed train they need to board.

One of my clients who launched a mobile app has been crushing it in the industry. They had a top leader join their company and write a lengthy post as to why she and so many of her colleagues were moving over. One of the reasons was: “A freaking mobile app… Enough said.”

I fully understand this is self-serving as I am a mobile app provider, but it’s a lesson that I have to share. This startup has had an innovative mobile app from the beginning. Their main competitor—a company doing $100M per year that has been around for over 10 years—does not. Objectively, who do you think is innovative and who do you think is looking backwards instead of forward?

In direct selling, perception is reality.

Brian Palmer
Krato CEO
http://krato.com