Reevaluating the way others look at our industry can change our perspective
By Michel Bayan is co-founder and CEO of predictive analystics firm DirecTech Labs.
Different people need different experiences with our brands in order to maximize the value we get from them and the value they perceive from us.
There recently has been a lot of thoughtful talk about the evolving regulatory landscape concerning direct and social selling. One perspective important to consider is that of the Federal Trade Commission (FTC). We are inclined to dismiss those who oppose the direct selling industry without understanding their motivation and view them as “wrong.” However, it’s likely they consider their work to be noble.
It’s also entirely likely they feel they’re working to protect consumers from a business model, which from the data and anecdotes they have access to appears to have a lot of bad actors. They can be interpreted as taking advantage of the good intentions, dreams and desires of many for the benefit of the few.
While I don’t agree with the FTC’s recent actions, I do think it’s important for us to acknowledge a perspective: In comparison to other gig and e-commerce companies, few direct selling companies collect enough data to make the case that they are protecting consumers from being led down an unreasonably risky or financially harmful path.
For example, most gig companies such as Uber and Etsy are quick to collect consumer feedback on the quality of experience their independent reps are providing. Direct selling companies continue to resist this practice despite the fact that it would bring a wealth of data about how reps are representing their brands around the world.
Another perspective regulators may be showing is from frustration with the disparity between what a company promises publicly and what leaders may be promising new recruits privately. I was speaking to a large company recently that takes this seriously.
This company terminates dozens of reps per quarter for these and other types of violations. These are people most companies would be afraid to let go. Yet, they are one of the most successful companies out there and have by far the best retention rate of customers and reps I have ever seen.
Admittedly, this flies in the face of conventional wisdom in the space, which often prioritizes the business opportunity available for 1 percent of earners above the customer and modest rep experience. But the data seems to speak for itself in terms of results. Companies that have this sort of “opportunity-driven practice” are more volatile, and it’s not hard if we are willing to empathize to see how a regulator could see this practice as unethical at best.
Segmentation is another thing to consider, because working with deeper segments provides more data about what’s really happening, and leads to a happier, longer and more valuable lifecycle. It is not difficult to imagine that a regulator could view the way we “train” and communicate our income opportunities and customer experiences as a “bazooka” approach in a world where all our competitors are using lasers. Gig and e-commerce companies continue to deepen their behavioral profiles of reps and customers and reap the benefits of doing so.
Netflix is now working with 1,300 behavioral segments. Why does this matter? After analyzing six to seven years of data and the life cycles of 16 million reps and customers in 85 countries, we discovered at least nine segments that companies can put to work immediately, directly impacting how they onboard, train, promote, communicate, and motivate sellers and customers.
By taking this approach, it becomes clear that people come to our industry for different reasons and want to have very different ways of being involved with a brand. By acknowledging this, we can let go of the “one duplicatable system to rule them all,” realizing that having only one method can help some of these groups but harm others. We can then embrace what our competitors in e-commerce and gigs know: that different people need different experiences in order to maximize the value we get from them and the value they perceive from us.
By organizing, analyzing and providing more personalized experiences by specific segment, we’ll have a trove of data to show regulators we’re providing more appropriate experiences for people based on who they really are versus who we wish they would be or who a leader convinces them they should become.
Yes, these ideas require some deep changes and represent some strong challenges to the way we’ve always done business. But, these changes can begin to take shape and lead to healthier businesses, and the deep statistical proof that we are providing experiences to people based on their needs.
What reasonable regulator would want to mess with that?