Getting on the Right Side of Compliance in the

Direct Sales Industry

Daniel Morton Product Marketing Manager

MarkMonitor

Agenda

Challenges

Education

Visibility

Action

Unique Challenges Facing

the Direct Selling Industry

Very Unique Business Model…

Manufacturer Manufacturer Manufacturer Manufacturer

Consumer Consumer Consumer Consumer

Retailer

Retailer

Supplier

Distributor

Access to New Customers…

Your reps are your sales team, marketing team, and brand evangelists all rolled into one.

Growing Salesforce

Number of direct sellers globally in 2014

Amount of direct global sales

Annual sales growth in direct selling

Source: World Federation of Direct Selling Associations

100M

$182B

8.3%

$3.7B

Founded 1963

Enthusiasm Can Build Empires …

Numbers represent 2015 annual revenues.

Mary Kay

$4.4B

Founded 1980

Herbalife

$6.1B

Founded 1886

Avon

$9.5B

Founded 1959

Amway

But these SHOULD make you CRINGE…

“I made $10k my first month!”

“Just bought a new car… in cash!”

“Never need to worry about money again!”

“Obtain financial freedom – in your spare time!”

Caution Ahead

Thousands of enthusiastic

(but inexperienced) salespeople

Fast growth Lack of resources to keep up with

issues.

Incomplete visibility

Believe all is well on surface.

• Liability & Regulatory Exposure

• Brand Erosion

• Lost Sales

• Increased Costs

• Channel Conflict

• Customer Service Issues

Inadequate education

Compliance isn’t emphasized.

Enthusiastic Reps Are Great …

… but how do you…

Preserve brand consistency?

Impart realistic customer

expectations?

Stay on the right side of regulators?

Prevention Starts with Education

A Professional Sales Culture

Companies should never expect their sales people to immediately know what to do. They need to be taught...

Solid education creates an expectation in the field and leads to a more professional sales culture.

_ Kevin Thompson

Thompson Burton PLLC Executive Q&A, February 2016

“ ”

Education is Key

• Company Policy Agreement • New Rep Onboarding Video • Training Handbook • Monthly Newsletter • Quarterly / Annual Events • Email Announcements Focusing

On Specific Problem Areas.

Compliance trainings should be fun and accessible!

People can forget 40% of what they learned in 20

minutes and 77% of what they learned in six days!*

Typical Venues for Compliance Topics

*Hermann Ebbinghaus’s “Forgetting Curve”

Hermann Ebbinghaus

The Forgetting Curve

Photo Source: Wikipedia Source: peakmemory.me

Veered Off Course… Now What?

Even after they have been properly educated, distributors can veer off course in their quest to promote your product…

Visibility.

Without it…You’re Blind

When the World was Simpler…

Life before the internet ...

The Power of One

… and now.

Options Abound

Source: DigitalSapiens

Facebook 1.6 Billion

YouTube 1 Billion

Google + 440 Million

Instagram 430 Million

LinkedIn 429 Million

Tumblr 230 Million

Pinterest 110 Million

Twitter 325 Million

A New Channel Every Day

Unmetric SpaceTag WeChat Frilip Kenshoo

Social Quicket Bubbly Line Heard Wanelo Shots

Hyper YikYak …

The challenge of Social Media is often deciding where to look next:

Using technology you can automate the scanning and collection of millions of data points.

How Do You Keep Track

Monitoring – Your Eyes and Ears in the Field

• Utilize Technology for Online Violations • Enable the Field to help you – Create a Hotline and

Separate Email Address • Monitor Individual Distributors • Secret Shopper at Local Distributor Meetings • Audit Distributor Material

Take Action to Protect Your Brand (and the Industry)

Herding Cats

Have An Escalation Strategy

Communicate specific examples, paired with Policy violation

Personal follow up (phone call) to communicate policy violations.

Withhold Commission or Other Punitive Actions

Your best “Sheriffs” will

be those that got caught…

Did you know… ?

Someone is Watching…

A rising tide…

… lifts all boats.

Q&A

Thank You!

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