What are the challenges of running a direct selling company? As they launch, grow, and transition into successful enterprises, they need to conquer a myriad of challenges.
What are these challenges of running a direct selling company, and how can you overcome them?
1. Exponential Growth
Although this a good problem to have, growing pains are, unfortunately, unavoidable in direct selling. That’s because these companies aren’t built like regular eCommerce businesses. They have additional layers that make growth a double-edged sword.
Just think about that for one moment.
What would happen right now in your business if you were to grow 30 times your current your sign up rate?
How would your merchant account react when they see 30x the amount of transactions they are used to seeing? Would you be able to supply the inventory at such a demand pace? How would your customer service team adjust if they were to receive 30x the amount of calls they were receiving?
How do you overcome exponential growth in Direct Selling?
First of all, if you have this problem, congratulations, it means you are moving forward.
It has happened to me twice, we grew so fast the alarm bells were sounding loud in every department.
Here’s what we did.
We had strategic meetings focussed on isolating the problems/bottlenecks in the business to radically increase our capacity, while also keeping an eye on the company culture. The entire corporate team brought their A game and helped solve the dilemma, and that was the key to solving the issue.
2. Outgrowing MLM Software
Multi-level marketing software is critical to direct selling because it performs the core functions of the business—such as fulfillment, inventory management, and commission calculation to name a few.
The problem with such software is that it comes with limitations.
As the business grows, it might require a new set of eyes to test the new commissions. For example, a master distributor has reached your top position and the compensation plan might have overpaid or underpaid them.
Or when opening a new country and your current MLM software provider doesn’t support the new currency. These little bugs can set you back for months. Small businesses might tolerate these limitations, but larger companies can’t.
How do you overcome outgrowing your MLM Software in Direct Selling?
Changing providers is not a simple thing in direct selling. Before you do anything, talk to your current MLM software provider to see if they can customize your software to meet your needs. If not, you should investigate your options and meet with additional MLM software providers that can support your growth.
We’ve seen companies stay national only because their current MLM Software provider doesn’t the capability to manage multiple countries.
3. Inventory Delays
Factors such as bad weather and port congestion may cause delays. When it happens, it can create chaos with your distributors and customers. If this is happening, the first thing you have to do is communicate. Having timely communication with the field is critical, the more you communicate the more they will understand.
How do you overcome inventory delays in Direct Selling?
Accurate inventory recording and real-time inventory visibility can help prevent delays as well as stock-outs. Forecasting will make a huge impact and help to avoid issues like this in the future.
4. Frozen Merchant Accounts
One of the most disruptive issues that direct selling companies have to deal with is a frozen merchant account.
You can’t process sales, pay your employees, or pay your distributors when it happens.
We’ve seen it a few times. A merchant account froze the company’s funds for months because they were growing too fast. Another time, the company changed their policies and they didn’t allow MLM companies anymore.
How do you overcome frozen merchant accounts in Direct Selling?
First, always get at least two merchant accounts. ALWAYS. Did I say always? This is how critical it is.
Second, make sure they know you are a Direct Selling Company. Very few banks allow you to process payments for direct selling. This issue was brought to light when a merchant account was approved with a popular bank in California, However, the bank later found out the account that was opened was for a Direct Selling company and froze the six-figure account. It almost killed the business. The money was tied up for months and the company had so many obligations to fulfill, from commissions, inventory and payroll.
Third, let the bank know about the products you are selling… ALL of your products. Have the list of ingredients ready to show it to them. Yes, you have to go that deep. You can’t take any chances.
5. Distributors Quitting
Emerging technologies such as artificial intelligence (A.I) can help you predict who’s likely to quit the organization. Implementing an AI-driven system lets you gain actionable insights for retaining distributors.
How do you overcome distributors quitting in Direct Selling?
You don’t. That’s a part of the business.
However, there are ways you can reduce the number of people leaving the business. Using technology can help prevent distributors from quitting because you can prevent or alter behaviors. Sometimes they leave in the first month because they couldn’t understand how to use the company products, sometimes they leave because they couldn’t get a result soon enough to increase their belief system.
Technology can help you here. Even something as simple as an automated check in email to a new distributor 30 days after signing up can greatly impact their success.
Successful businesses never hide from their problems. To thrive in this ever-changing business landscape, you must be aware of the existing challenge within your space. Instead of worrying about the potential consequences, identify the problems and conquer them. Create strategic plans that will help you stay ahead of the competition.