As companies are forced to go virtual, innovation and agility become crucial
By: Stephanie Ramirez
“Before COVID-19, we were a very physical company. We had a physical salesforce, and they did things in person. The challenge was to come up with a virtual way of work that was sustainable and enjoyable.”
—Clint McKinlay, CEO, Ruby Ribbon
“We don’t like people selling to their warm markets. We try to get them not to do it. We want them to see themselves as businesspeople who own a digital marketing company.”
—Laura Hunter, CEO, Tori Belle Cosmetics
The pandemic crisis has forced individuals and companies to rapidly change how they live and work. A few months ago, most in the channel were traveling to meet business colleagues, attending large group events and shaking hands with customers. It is a new frontier, and the old way of doing things is no longer relevant. In some cases, it’s not even possible.
As a result, companies are seeking ways to manage this massive shift. As COVID-19 continues to impact the direct sales channel and the model itself, executives continue the search for effective ways to work remotely while continuing to drive sales, support distributors and remain profitable.
There are proactive steps direct sellers can take to enhance their sales efforts in order to thrive post-pandemic, according to L.E.K. Consulting, a global management consulting and research firm. Managing organizational change, promoting a digital transformation and fine-tuning communications are chief among them.
Implement Change Management and Upskill the Salesforce
According to the Harvard Business Review, nearly 58 percent of the businesses that participated in their change survey in 2020 reported that they will need to reinvent their businesses to survive. From restructuring and changes in leadership to overhauling how the business functions, a shift of this magnitude can make huge waves in the salesforce, creating unrest and resistance. This can be detrimental for any company needing to implement change.
When the country shut down, Clint McKinlay, CEO of California-based Ruby Ribbon, had to pivot and create a way to help stylists continue to sell the company’s line of women’s intimates and athleisure clothing.
Prior to the country’s shut down, selling was done through face-to-face interactions at trunk shows where stylists helped to personally fit customers with their clothing line.
“Before COVID-19, we were a very physical company. We had a physical salesforce, and they did things in person,” says McKinlay. “We have consistently found that eight out of 10 women who try on one of our items in that personal setting will buy one. So, as we transitioned from that to not being able to touch each other, we had an ‘Oh my God!’ moment for a short period.”
Ruby Ribbon and its stylists were forced to go completely virtual. The challenge then, adds McKinlay, was to come up with a virtual way of work that was sustainable and enjoyable, and actually accelerated customer conversion. “We knew it needed to be done in a way they would enjoy it and want to keep doing it week after week and month after month, and there had to be a way for them to be more effective,” he says. “So while we were a little concerned, we also knew this could be a big opportunity.”
McKinlay doubled down with his learning budget and committed to reskilling his salesforce with what he calls “home-to-home commerce,” or H2H. The company has been able to implement this shift successfully by upskilling its stylists, bringing them better training and curating the virtual trunk show so stylists can learn how to do it on their own, McKinlay says.
“We began providing weekly, corporate-funded and -produced virtual trunk shows, which last 15 to 20 minutes,” he adds. “We do them on Wednesdays and on weekends, so we have a regular cadence of virtual events that embrace this work-from-home, H2H model. We also have kept providing training for our stylists so they can be empowered and very effective as they work from home.”
McKinlay believes that the companies that have not embraced this new reality are likely having a really hard time. “Either their salesforce is lacking skills or are being resistant, or their leadership just isn’t visionary enough to understand that they’ve got to pivot away from the MLM model of decades past and get into something that’s digitally more appropriate for 2020,” McKinlay stated.
Embracing the Gig Worker: Meeting Distributors Where They Are
According to the workforce business intelligence firm Rallyware, a focus on personalization needs to start during recruiting. When direct selling companies use data to understand what motivates potential recruits, it provides key insights that lead to better outcomes, as well as the means to boost distributor retention and productivity.
McKinlay embraces this approach. He says, “I think we try to meet women where they are. We acknowledge reality, and we offer something that can work now in these conditions. So many women decide that they don’t want the big boss. Some want the big income; some want a meaningful income, something that can fill a gap or that is a merry-go-round they can get on and off when they need money for school or for vacations or for bills.”
McKinley didn’t elaborate on how many Ruby Ribbon stylists view their opportunity as a full-time gig versus those that view it as a small side-hustle, but he did share that the company’s compensation model incentivizes either position. It announced a new compensation plan July 1 and is paying everyone very differently. “We launched the plan specifically to attract a woman who knows how to sell and who wants to come in here and make money immediately and not have to be involved in the direct selling side of the business or any other recruiting at all,” McKinlay says.
“We designed a plan that would allow anyone who sells over $5,000 in a month to receive 40 percent commission, regardless of any other activity, regardless of recruiting, regardless of her team, regardless of leadership, regardless of who’s doing what on her team—things that are very common in other social selling plans.”
This decision by McKinlay to provide an opportunity for stylists to sell with less focus on recruiting and engaging in team activity comes at an auspicious time, considering that the FTC’s Business Guidance Concerning Multi-Level Marketing states a company’s compensation structure could be deemed harmful to consumers when the structure in which participants’ purchases are driven by the aspiration to earn compensation based on other participants’ purchases rather than demand by customers or ultimate users.
“We flipped the script to say selling is now a very, very important behavior, and we reward people who can sell,” says McKinlay. “We wanted to give women who have been laid off during this period, who are top female sellers from traditional retail, an opportunity to look at social selling in a new way. You don’t have to recruit everybody. You don’t have to go on Facebook and spam your sorority sisters. There’s a way to do this that is comfortable and that makes sense.”
E-commerce Is Booming in the COVID-19 Era
Direct selling is the model for the original work-from-home mindset. So why, in terms of direct selling, is digital transformation so important now? Without person-to-person contact, the rapid development of digital functionality is the only way to ensure the continued sale of products and delivery of customer service.
Nearly one-third of all U.S. 2020 holiday sales will occur online, according to new projections from software provider Salesforce Inc., tripling the 12 percent growth registered in the prior year. Post COVID-19, it is clear that customers need and even prefer digital, at-home and low-touch options.
Curt Craighead, owner of Texas-based digital and e-commerce strategy firm CDCMarketing, says training distributors to look beyond their warm circle of friends and family for customers is possible with digital marketing. He says, “For many distributors, online selling can be largely accidental. They reach out to people they know or who are similar to them, and when they run out of those people, they run out of customers.”
He says that by training distributors to employ some basic digital marketing tactics, their reach can be multiplied into circles of influence they might never have reached on their own.
Laura Hunter, founder and CEO of Tori Belle Cosmetics, agrees. Her company hosts a training academy in their back office for distributors that includes training on how to use Google Analytics, buy Google ads and even A/B test marketing campaigns.
“We don’t like people selling to their warm markets,” Hunter says. “We try to get them not to do it. We want them to see themselves as businesspeople who own a digital marketing company.”
Craighead says when both the company and the individual consultants engage in customer acquisition strategies and tactics, the reach of both can be expanded exponentially.
He says, “Compelling your distributors to leverage their social media following to attract customers is short-sighted, because their friends may or may not be interested in the product. However, identifying true end users, i.e., customers, through Google search terms, web user behavior, Google Analytics, and social media analytics, in combination with demographics and psychographics, your customer audience can be hyper-targeted.” He adds, “In this way, the company and the distributors can discover interested customers who come to them, and come to the company website.”
A few years ago, he adds, many companies were concerned that moving into the digital world to sell products would exclude the distributor and take the personal relationship out of the equation.
“Now,” Craighead says, “the exact opposite is true. The relationship can be as deep as the customer wants it to be. They can click ‘add to cart’ and have no interaction, or they can interact with the distributor and receive enhanced customer service value.”
The FTC has made it very clear that they expect company executives to know and understand exactly who their end customers are, namely, those people who purchase products but do not participate in the company’s compensation plan. The FTC’s Business Guidance for MLM’s also includes the mandate that any compensation paid by the company be based “on actual sales to real customers, rather than based on wholesale purchases or other payments by its participants.”
Craighead concludes that direct sellers may need to adopt more of a hybrid approach that incorporates the best practices of an e-commerce business with a large digital reach, while maintaining the ability to distribute leads and new customers across the consultant base. This approach, he says, allows the customer to decide how much interaction they want.
He says, “Direct selling companies can satisfy the customer that wants to engage with a consultant and receive that personal touch, while also meeting the needs of the online shopper who just wants to order their products and be done with it.”
The economic crisis triggered by this pandemic does not spell the end of entire industries or companies, but it may weed out businesses that fail to pivot to the new reality.
Link to share this article: https://socialsellingnews.com/link/direct-selling-in-a-covid-19-world-1535/