Monday, March 21, 2011

What About Direct Selling?

Ever since I've met Mr. Hakki Ozmorali through his blog The World of Direct Selling, I've been interested in the similarities between word of mouth marketing and this form of network-based marketing. The Avon ladies, the Tupperware parties -- can't they teach us a thing or two about sampling, experience-driven word of mouth and sales? Hakki has lead teams at Oriflame, Herbalife and LR Health & Beauty Systems as their Country Manager in Turkey, and as North American Regional Manager for the Canadian network marketing company Lifestyles in Toronto, Canada. He currently runs his own firm, DS Consulting. Here are Hakki's valuable thoughts on the opportunities in direct-selling businesses. 

What do you think is the connection between direct to consumer marketing and word of mouth? Is there an overlap?

Obviously, direct selling relies very much on word of mouth. In its network marketing form, this reliance is even stronger. Companies expect and promote network marketers to conduct their businesses in their close circles. That is, you take the word to your circle of friends and acquaintances and they take it from you to do the same in theirs. As a consequence, people enjoy the luxury of using the products they like, of referring them to the people they like, and make money from this. 

Word of mouth marketers are grappling with measurement issues. It is hard to ask for more projects without proving their worth and ROI. Any learnings you can share from direct selling?

One of the strongest aspects of direct selling is its measurability. One can keep track of all the transactions that take place between the direct sellers and the company. And those transactions expand through word of mouth. One might say here, “Hey, you talk about direct sellers. How about the end consumers?” First of all, it is very rare to see a direct seller not using the products the company he or she is affiliated with. So, a direct seller is in fact, always a consumer as well. Secondly, many direct selling companies have “preferred customer” programs where end consumers can directly buy from the company at discounted prices where you again, can measure everything. So, when a company can find the way to register the user, it can do all measurements one can think of.   

What are the best approaches and practices that work in direct selling? How does consumer experience play into these?

In time, we have learned many lessons. There are some generally accepted rules now. For instance, you need to have a meaningful product line, a solid compensation plan to reward the field, and an operation that satisfies well the needs of direct selllers and consumers. On top these, we have the Internet. A direct selling operation without serving on the Internet now, belongs to yesterday. And today, we are faced with another phenomenon called the “social media”. With that, we have the most powerful tools ever to reach out to younger generations. As a side note, younger generations have traditionally stayed not-so-close to the direct selling model. Oriflame’s “Dare to Be” that I had covered on my blog previously is a very innovative example to such efforts.

 With regards to consumer experience, I can say it is in the heart of direct selling. It is very unusaual that a direct seller who personally did not have a positive experience will go out and promote.

Where do you think the future of direct selling is going, with all the changes in social media landscape? Does powerful consumer mean powerful marketer, in your opinion?

Every single day, the industry is exploring new opportunites that the social media tools provide. If this is all about networking, now a lot of networking is going on the Internet. When you have a meaningful presence there, you can benefit a lot. So, I don’t think the advances on the Internet will challenge the future of direct selling in a negative way. Having said that, another challenge is there because those who utilize these tools better than the others will be winning. It is important to note here that Sequia Capital after investing $37 million in the direct selling company Stella & Dot said it had done so because “the direct selling industry is on the cusp of a new age, with e-commerce and social networking transforming the landscape of the traditional direct-sales approach”.

Coming to your second question,  yes, empowering consumer is actually the essence of network marketing. That is, if you have a powerful consumer, that person will be a powerful marketer for your product as long as you show him or her how to do it and compensate for doing so.

You have an interesting trail of international work. What would be your recommendation to global brands in today's communication landscape?

While there is so much going on in the direction of globalizaton, local languages, cultures, tastes, attitudes are still there. I’ll give you an example from Facebook. The Turkish people make up the fourth largest audience among Facebook users. This is not because the Turks are one of the most Internet savvy or technologically advanced society in the world. This is simply because Turks love to socialize, to network, and to share. So, when launching a marketing activity, one may choose not to utilize Facebook in a specific country, but apparently, you don’t have that luxury in the Turkish market.  

Thank you very much for your time and insights!

Posted via email from dotwom's posterous

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