Do Not Ignore These Red Flags While Running Your Business
Both direct selling company managers and network marketing leaders work in the same direction: Maximizing productivity and business volume. On the road, there are some signs and symptoms that show things are not going in the right direction. Some of the issues might be transient and do not hurt the business much, but some are critical. Differentiating the two requires close attention to the warning signs that show themselves in the numbers
Here is a list of areas where you can see significant warning signs:
Number of “New Members”
Newcomers constitute the lifeblood of a direct selling business. They boost growth. See if there is a decrease in their inflow.
Number of “Dropouts”
Some of the field members will leave the organization for a variety of reasons. This is ineiviable. However, it is not good if there is an upward trend in their numbers, especially as a ratio of the existing number of direct sellers.
New Members vs. Dropouts
As a rule of thumb, the number of those who join should be greater than those who leave at a given period. The opposite shows that the field organization is shrinking.
Activity Among New Direct Sellers
There may be a downward trend in the sales made to new members. This could be in the form of less number of orders placed or reduced average order size. The worst of all is a decline in both.
Activity Among Existing Sales Force
There may be a situation where newcomers lose their motivation after being active for a period of time. This may be due to many reasons each of which require immediate action.
Average Order Size
Within in a year at most, a statistically reliable order size gets established at new start-ups. A declining trend in this is also alarming as either the products are not as attractive or the organization is not pushing them to the market as before.
Field’s Reaction to New Catalogues or Campaigns
The field may be getting less enthusiastic to your newly launched catalogue or a campaign. This shows itself in the number of orders per member, order sizes or the number of new products ordered from that offering, as compared to the previous ones.
Activity Towards the End of a Commission Period
A flat activity throughout the period happens if the field members are not motivated by climbing the career ladder as shown in the compensation plan. As a result, they don’t work harder to close the period at a higher level. A serious situaton!
Attendance to Meetings, Webinars and Conventions
If you see less and less people attending your events, this is just another sign of lost enthusiasm in the sales organization. It is just as dangerous if you start seeing the same faces in your gatherings.
Demands from the Sales Organization
By nature, a sales organization has to be a demanding one. A decrease in the inflow of requests from the field happens when the members start losing faith.
Overall Sales Volume
This is an area that needs special attention, for sure. There might be a slowdown in growth or worse than this, a decline in sales over the months. Almost all the time, this is the end result of several weaknesses in the business, appearing most possibly following signs in the above areas.
This list has not been intended to be in any order of importance. When any of these occurs, it should be considered as an alarm bell and be taken seriously. Once a hiccup has been diagnosed, immediate action is always recommended. If the ball is let to roll in the adverse direction, after a while it might be impossible to stop, let alone to turn it to the other way.
Hakki Ozmorali is the Principal of WDS Consultancy, a consulting firm in Canada specialized in providing services to direct selling firms. He is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication. He is an experienced professional with a strong background in direct sales. Hakki was the first corporate professional in the Turkish network marketing industry. His work experiences in direct selling include Country and Regional Manager roles at various multinationals in Turkey and in Canada. You can contact Hakki here.