Smarter Segmentation

Data leaves clues of how to better inspire your sales force.

After spending the better part of a decade in the direct selling channel industry, I’ve been witness to the onslaught of negative press that has come our way. Some of it we have earned, but it is far from deserved. I’ve seen this channel change lives for the better, it creates life-long friendships, takes ordinary people and turns them into leaders and successful entrepreneurs. So why does direct selling get such a sour response? What can be done to show how much direct selling organizations and our distributors can be a powerful force for good?

It comes down to how we treat people and the communications we promote. Let’s look at the incredibly common industry messages circulating around the internet: be your own boss, freedom from everyday constraints, win trips, cars, riches beyond dreams, joy!  While these messages are achievable, it’s often reached by only a few.

Words, Incentives Can Lose their  Luster

We attempt to motivate, but daily life responsibilities tend to get a higher priority and rightly so. We do our best to inspire with our words and incentives, yet it fades faster than we’d like—incentives are so hard to achieve and complicated to understand. We train to help, but to learn skills it requires repetition, consistency and focus. We also don’t have the time, staff or ability to reach as many as we’d like.

“What limits us from being able to inspire a larger base of superstars, of leaders who can pass their gift to others at rates we wish we could see?”

We also share conversations about our connection to our distributors, but really, for most of us it’s only the top performers whom we can call out by name. How do you think that makes someone who knows they can be a star feel? We all knew Kobe Bryant was going to be a star the moment he set foot on the NBA court for the first time. His performance was a matter of dedication, but it also included coaching to help elevate his abilities beyond what he could do on his own

So how about our field? As an industry, direct sales leads with an annual churn rate reported to be as high as 84 percent while according to the U.S. Bureau of Labor Statistics, all other industries it tracks range between 2.3 – 27 percent annually. Our churn rate has always been an issue. What limits us from being able to inspire a larger base of superstars, of leaders who can pass their gift to others at rates we wish we could see? How can we identify future performers or those who may be in their last days before they realize they are no longer interested and take care of them, so their passion remains?

Smart Segmentation Dives Deeper

The good news is, the answer is right in our face. It’s by using segmentation better, smarter. The channel has been segmentation for years to better differentiate customers from the business builders. This has been helpful to a point but we need to dive deeper. Segmenting by distributor (and their title), customer and sometimes preferred customer leaves a very narrow view of what can be done. It also hurts our ability to reduce the churn rate rarely to where it could be, because we continue to do what our e-commerce and gig economy competitors abandoned years ago: deploy a one size fits all approach for all groups. With distributors, we start everyone in a fast start program. Every leader gets the same incentives. The incentive path is hard to understand and difficult to attain. The reality is, these programs are tailored for us, the business, and don’t tap into the passions and motivation drivers of the distributors. We are training and pushing our people to do what we wish they would do versus what is actually best to maximize their experience. Sure, it works for a few, but it doesn’t address the many who don’t want to follow a path to leadership. This can create a lot of frustration and discontentment with the lower ranks, who feel slighted, not appreciated, and eventually leave the business.

What the industry needs is a better segmentation model. This is done by using AI or machine learning to better place distributors and customers into the defined target groups. We can then target those who are ready to start fast, those who are ready to push on to the next level, as well as those who are ready to emerge as your next top leader.

 Data Reveals Clues

When you’re able to use data to identify consistent behaviors, needs and styles based on how the field interacts with both your brand and teams, it can help drive a connection with your field, and they’ll bond with you because of it. Netflix, Amazon, Uber all use smart segmentation to drive results most businesses dream about. This is how they’ve achieved 500 percent more growth in the last 10 years than the direct sales industry. Using smart segmentation, you can identify groups within your distributor, preferred customer and customer groups who are on the path to becoming your next star within their first 90 days if done well. Have you calculated what a one percent retention rate each month is worth? The value of that small percentage might shock you.

After watching the AI work to cluster more than 20 million distributors in to segments, what I’ve learned is the better you can customize your communication (make it personal)—be it an email, a promotion, training, or a comp plan to what a particular person needs to hear, to feel comfortable to take the next step—the more likely they will open it, click and take action. This creates a feeling of mentorship and that you’re taking a personal interest in helping them reach their goals within your program.

Messaging to the right person with the right message at the right time when they’ll be most responsive to it can change their perception dramatically by giving them simple, actionable steps. At the end of the month, they’ll find they’re at the very top of the mountain you’re trying to get them to climb. They’ll feel accomplished. They’ll be ready to do it again.

So, what’s the bottom line?  Smart segmentation works. Personalization works.

Will Ackerman is the VP of Product at Directech Labs. Most recently he spent 4 1/2 years at JAFRA, part of the Vorwerk family of brands where he built the global digital strategies and programs which led to record growth across all digital KPIs.