"The way to get started is to stop talking and start doing.”
Walt Disney shared this concise advice on how to get things off the ground and, given his track record, there’s obviously some truth to it. Thinking about starting a new business is one thing; actually starting one is something completely different.
In today’s world, the rules and best practices of launching a new business can seem as disorienting and thrilling as a ride through Space Mountain. So, while the “doing” is indeed the important part, there is some thinking and even a little talking that can prove to be helpful before launching a new venture.
In this article, we hope to capture a bit of thinking from some helpful resources and fans of the industry. We reached out to DSEF Fellows Dr. Sher R. Gibbs, Dr. Stefanie Boyer, Dr. Adam Mills, Dr. Linda K. Ferrell, Dr. O.C. Ferrell, and Dr. Greg Marshall, asking essentially the same question: what are the top challenges for launching a direct selling company (or any retail business) today? Their collected viewpoints provide a robust provocation for any soon-to-be founder.
Clarity and Commitment Regarding Value and Audience
The more things change, the more things stay the same. This cliché became apparent in the feedback from just about every contributor as they underscored the importance of clarity and focus on value proposition and audience targeting.
“The most common mistake new startups make is not having a crystal-clear vision of their value proposition,” shares Adam Mills. “Successful launches ultimately aren’t about cool new products or innovative services; they’re about adding value to someone’s life by filling a need, satisfying a want, or satiating a desire. Most new businesses are driven from the inside out (product-centric strategy), not the outside in (customer-centric strategy), which is why 90 percent of new businesses fail.”
Linda and O.C. Ferrell agree, noting an all-too-common mistake made by launching companies: “Not understanding the market and what consumers need and want. Just because you can source or produce a particular product does not mean there is an accessible market with the needs, means, and desire for the product.” Stefanie Boyer adds, “Another challenge is going after everyone rather than creating buyer personas and strategically selling to those profiles using different approaches. Using a one-size-fits-all approach doesn’t work.”
Targeting alone is not enough. It’s something that needs to be done correctly, as Greg Marshall explains: “One common mistake is to over-target one generational consumer base versus another. The core concepts of market segmentation are still totally valid today but can be self-limiting if implemented haphazardly. Ironically, some firms are getting trapped into a sort of Gen Z consumer worship cycle. I can tell you with high certainty that if you decide to target solely Gen Z at this point, good luck with that! Market research is just now beginning to reveal hints of what the longer-term trajectory of this generational group might look like as consumers, and it is very likely that as they evolve, even in the short term, a company’s offerings will have to work hard to keep up a high level of relevance to them.”
Sher Gibbs points out that companies must also account for diversity in their targeting, as well as their hiring, as they set out. “We live, work, and operate in an increasingly diverse world with a similarly diverse customer base. Startups should note that small businesses that value racial diversity and create an inclusive organizational climate from inception can increase competitiveness, performance, and long-term survival (Sequeira, Weeks, Bell, and Gibbs, 2018). Boycotts of brands such as Tommy Hilfiger and Dolce & Gabbana demonstrate that companies that fail to exhibit racial sensitivity will suffer dire consequences. These issues can be avoided if companies hire corporate staff and distributor salesforces who reflect their customer base.”
Clarity around messaging and audience sounds so simple, but it’s a challenge that has snagged many direct selling companies in the past. The reason? We’re an industry that relies on the emotions and motivations of a volunteer salesforce that is also marketing a tangible, feature-rich product to our chosen target audiences. “We need to stop getting hung up on minutia,” warns Mills. “It’s easy to talk about product features, bells and whistles, nuances of compensation plans, and so forth because they’re all tangible. It’s harder to talk about dreams and help someone become the person they want to be — it’s intangible, elusive, mysterious, and harder to figure out. But that is the key to conversion. It takes a lot of work that nobody wants to do.”
Technology and Social Media
Technology and social media have a massive impact on the launch of any new business. In most cases, everything that was out of reach not so long ago for a young company is now accessible. While commitment and clarity surrounding value proposition and audience targeting continue to be must-haves for long-term success, companies who best leverage the many areas of technology seem to accelerate in their launches over others.
“Twenty years ago, we had to share ourselves and our success story with one person at a time unless we wanted to host parties or events that are notably resource intensive,” explains Adam Mills.“ Today, we can share ourselves and our stories with thousands of people without even leaving the house. Social media certainly requires work, but it grants an immediate and intimate connection with other people that simply has never existed before and has critically extended our ability to connect with people we don’t know without an intermediary.”
And social media is no longer just a tool to reach the younger generations. Greg Marshall adds, “The very word ‘direct’ selling obviously has historically implied face-to-face in some way or the other. But you’d better believe that it’s not just the younger generations that have strong preferences toward doing business with providers through social media channels. ALL generations of consumers are increasing their use of these modalities. A big part of training future direct selling reps must include blended approaches to their customer strategies.”
Stefanie Boyer is a creator of RNMKRs, a tool that helps train large groups of people to sell by speaking directly with an AI bot for immediate feedback. Based on her expertise in this area, she recommends a few other important areas of technology that companies must consider. “Technology helps companies understand and predict customer behavior, make immediate decisions with real-time data, and get sales teams up to speed. Technology tools to analyze large, real-time data sets are available to help companies make informed decisions. In addition, an omnichannel strategy is more important than ever before. Your marketing and sales need to speak to each other across social channels, websites, and in-person touchpoints.”
New companies today actually have the advantage of not looking at the world through an “in-person vs. virtual” reality. If the pandemic has proven anything, it’s that these worlds have all merged together. “There’s really no need for ‘virtual’ in air quotes anymore; it’s just the world,” adds Mills. “It’s digital, but there’s nothing virtual about it. For better or worse, there’s no longer a separation between our digital and analogue lives.”
New companies aren’t just embracing these digital tactics for digital’s sake; they’re seeing that the personal connections we crave and celebrate as a channel can still thrive via these new methods. Linda and O.C. Ferrell capture it well in their own experience: “As college professors who now teach most of our courses online and virtually, we have found a greater connection to our students via remote learning platforms, Zooms, emails, etc. We have more personal communication on a one-to-one basis than we have had in parallel classroom settings. There is more fluidity in our communications . . . not limited to a meeting or class time. The same applies to direct selling.”
Pandemic Shifts and Adjustments
Beyond the use of social media and technology, the pandemic and life “two years later” have created new opportunities and challenges for companies. And these challenges and opportunities are morphing at more accelerated rates than ever before.
Greg Marshall captures the spirit of post-pandemic considerations well: “The obvious 800-pound gorilla is the set of sociological impacts that a global pandemic brings. How folks experienced the pandemic will no doubt alter aspects of their core roles as consumers of goods and services. Not that the game plans in marketing and sales have to be totally rewritten to accommodate this, but there’s little doubt that both of these functions of a business will change in important ways as consumers settle into their post-pandemic preferred approaches to engaging with companies. This can be an advantage for new companies. A new launch can build its go-to-market model from scratch based on the revised consumer engagement model, while existing firms will have to muster maximum adaptability and alter or give up some of the old ways in order to compete in the new marketplace.”
The pandemic era highlights the importance of training and access to training for our salesforce. Stefanie Boyer says, “Companies across the board who do not invest in their sales training and strategy suffer the most. Often, companies want to cut costs, and sales is not the place to do it. Teach them how to find customers outside of their immediate friend and family groups. Explore the opportunity to learn and grow as they start their businesses rather than focus on earnings. Your training is a benefit to them, like taking college credits for free. Use technology to provide training at scale to help your new contractors find success.”
A Commitment to Compliance
Of course, today’s direct selling environment requires a keen eye and careful attention toward compliance and regulations. A new company is setting the foundation for their company’s attitude toward compliance, whether they know they’re doing it or not. Smart companies will take this into account from day one.
Linda and O.C. Ferrell were contributing authors of Direct Selling: A Global and Social Business Model, a book that provides an overview of a good approach to ethics and compliance programs within direct selling. “In the pandemic-era, the actions of businesses are being challenged more and more while facing greater skepticism. Many companies are not mindful of how business is scrutinized by the legal and regulatory community. Understanding the concerns of the relevant regulatory bodies of your product can help you understand potential challenges you may face in launching with the FDA, FTC, state attorney’s general offices, etc.”
Is there more to launching a new business? Of course. But whereas some components are table stakes for certain ventures, our academic colleagues have shined a light on areas where successful launches will focus and leverage while others potentially miss out on the opportunities of the moment.
The most certain takeaway is that best practices don’t stay that way for long. Transition is occurring at an accelerated pace. At the end of the day, a new company will be successful because they are successful at adapting to the rapid contextual changes and adopting new methods thoroughly and swiftly.