5 Reasons Why Direct Selling Companies Fail

5 Reasons Why Direct Selling Companies Fail

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Direct selling can be a tricky business strategy for inexperienced newcomers. For this reason, around 70 percent of people will fail in the first 18 months of trying direct sales. If you’re planning on shifting your business to focus on direct selling, you need to be aware of the pitfalls that people often fall into. Knowing this will help you to succeed in direct selling and make a profit off of your sales. To help you out, here are five reasons why direct selling companies often fail, and what you should do to avoid this.

Poor or Mismanaged Leadership

One of the main reasons that direct selling companies often fail is because of poor leadership. Without a good leader, direct selling cannot thrive and grow a business. A good leader can make or break a direct selling company–they act as a mentor, and guide you to make the right decisions in your business. Some of the most important qualities in a great leader are:

  • Making intentional decisions
  • Clearly communicating expectations with their team
  • Being accountable
  • Leading by example
  • Measuring performance
  • Providing feedback and areas of improvement
  • Allocating talent
  • Asking questions and problem solving 

However, if your leader does not possess these qualities, your direct selling company will ultimately be unsuccessful and cause more harm than good. If you are a direct sales leader, there are ways that you can motivate your team to do a good job that will lead to greater chances of success. 

Help Your Team Feel Successful 

Making sure that your team feels that they are valued and successful is a great way to ensure that they will do good work. If your team doesn’t feel that they are successful, they will be more reluctant to continue working in direct sales. Adversely, when your team feels that they are doing a great job, they are motivated to do even better. Consider congratulating or awarding team members who are doing an exceptional job–this mark of achievement will inspire them to continue working hard. 

Encourage Team Effort

It’s unrealistic to expect everyone in your team to reach your high goals. However, don’t make these employees feel bad for not achieving the high status that other employees have–make every team member feel valued and appreciated for their hard work. Congratulate them for their work, even if they are not reaching the same levels of other coworkers. Let them know that they are an important part of the team. Encourage them to continue making an effort–even if their sales aren’t great this time, that doesn’t mean they can’t be next time. 

Celebrate Significant Occasions

When your team member has a special event in their life, such as their birthday, marriage, or the birth of a child, be sure to congratulate them. Show your team members that they matter to you and that you care about their lives outside of a work environment. 

Talk Less, Listen More

Don’t feel like you are responsible for fixing every minor thing as a leader. Your team members may have the answer themselves, and it is important that you listen to them and value what ideas they have. Don’t feel like you always have to be telling your team members what to do–oftentimes, letting them choose their next actions will motivate them to continue doing good work. 

Cheer Your Team On

Be a cheerleader for your team. Stay positive, even if things are tough, and encourage your team to keep working hard. If you have concerns, you can acknowledge them–but be sure to focus more on the positives. Remind your team members that you appreciate their hard work, and be grateful for them. 

Lack of Funding

Funding is another big reason why most direct sales companies fail. Simply put, your company not having enough funding can lead to problems down the road in direct sales. If you are struggling with funding your direct sales business, however, this does not mean that it will ultimately fail. Look for great ways to improve your lead generation–by doing this, you will get more people interested in your company, and potentially people to help fund it. Some common problems you may run into with lead generation include:

  • Inability to generate a high volume of leads
  • Not delivering high-quality leads
  • Not having a strategy of what to do when you’re bringing in leads
  • Lead generation method is failing to bring people in

If you’re not generating leads, then you’re not getting any real funding to continue your direct sales business. Make sure that you are focusing on the most important ways to generate leads. 

Know Your Target Audience

Know who your customers are before you start looking for leads. If you’re targeting the wrong audience, then you will ultimately not generate any funding. Knowing your audience will give you an idea of what you can do to draw them into your company. 

Have a Website

Because we live in a digital world, having a digital footprint is more important than ever. To connect with people, you need to have a website. Having a presence online will help you generate leads that turn into sales, which then turns into funding and profit. 

Utilize Social Media

Using social media is one of the best ways that you can connect with your audience today. Social media gives you the chance to connect with thousands of people, and some of these people will undoubtedly turn into leads. Use social media to show potential customers why your products are unique and why they should be interested in purchasing them. 

Use Email Marketing

Using email marketing is another way to make your presence online known. Email marketing can generate tons of leads for your products, and can give you a way to direct prospective customers to your website. Having a strong email list will allow you to generate more leads.

Make sure that you are also keeping track of your inventory when you are working in direct sales. Know what you have and what you don’t, and market your products appropriately. Don’t spend too much of your money investing in a huge supply of products–this will likely be a waste.

Consider Your Supply Chain Strategy

One of the problems that may be leading to your direct sales business failing is that your supply chain strategy isn’t effective. In a direct sales business model, the supply chain reduces intermediaries to sell directly to consumers in a non-retail environment. A direct sales business model cuts off the typical steps that you would see in a supply chain model. Network marketing is important in direct sales, and involves the supply chain. Direct sales is powered by a supply network that works to meet the demands of individual consumers in an efficient way while leveraging economies of scale. One of the reasons your direct sales company may be failing is because the supply chain model is not providing visibility, control, or math-based decision making at key points during the supply chain. 

One way that you can help fix your supply chain system is by diverting inbound products at ports of entry to match up with real-time shifts in demand. This gives you the opportunity to expand your customer base; because the supply chain is always changing, it is important that you keep up with it rather than sticking to a rigid model. Remember these three things when you are planning your supply chain strategy: 

  • Scenario planning is pointless in today’s economy–no one knows what the future will look like, so don’t waste your time planning for complex scenarios.
  • Traditional forecasting will not give you an accurate forecast of the market.
  • The future is uncertain–for this reason, you need a new approach in your supply chain management to be successful. 

Keeping Up With Technology

Technology has grown to be increasingly important in the direct sales business, and not utilizing all of the technology at your fingertips may be part of the reason that you are not seeing success in your direct sales company. 

When you’re forecasting your company, always keep direct selling software in mind. Utilizing direct selling software is one of the best ways to ensure that you will see success in your company. Though direct selling is traditionally done door-to-door, this is no longer the case with the rise of technology. Some advantages of direct selling software include, but are not limited to: 

  • Optimal business performance–direct selling software can help maintain a proper procedure of planning and monitoring performance.
  • Streamlined business operations–direct selling software ensures that you will have better collaboration and coordination between everyone in the company.
  • Better integration of systems–direct selling software facilitates the integration of company systems and resources.
  • Cost-effectiveness–direct selling software is an economic solution that does not drain you of your money. 
  • Higher productivity–management facilitated by direct selling software leads to increased productivity.
  • Motivation of the sales force–direct selling software has many advantages that add up to make work easier for the company.

Aside from utilizing direct selling software that is available today, it is important to still remember to make your presence known online. Have a website and social media pages, and use these to promote your company and the products that you are selling. Email marketing is another way to ensure that you are generating leads and that you are drawing in prospective or returning customers. 

Direct selling businesses that are not using technology are putting themselves at a significant disadvantage compared to companies who are using technology. Technology is one of the most powerful tools at our disposal today, and most of your company’s leads will likely be generated through technology. So make sure that you are getting a head start when starting your company by making your online presence known–you are much less likely to fail if you do so. 

Trust and Believe in Your Company

You won’t find success in the business of direct sales if you do not trust and believe that your company is capable of using this method of selling. If you go into your direct sales business with a negative mindset, this is bound to carry over to your company’s overall performance. Keeping your hopes for the company high and your thoughts positive will give you more motivation to keep working on the company–if you go into the business with a negative mindset, you are setting yourself up for failure. 

Many direct selling companies fail because they expect that they will fail. The numbers for how many companies are successful in direct sales can be troubling, and they may be off-putting if you’re just getting into the business model. However, you cannot let these numbers deter you–doing that will only ensure that you will not find success. Even if things start off slow, believe in the strength of your business and the value of the products that you are offering. Trust that your company is good enough to be successful. Even if it ultimately doesn’t work out, you will know that you put the best effort that you could into the business. Always stay positive, no matter how dire things may seem. 

Remember, it is normal to feel discouraged when you see the numbers–but you have to pick yourself up, and not let this get you down. Trust yourself and the employees who are passionate for your company and want to see it succeed as much as you do. With the right mindset and enough effort, you can be successful in all that you set out to do.

When you are starting your direct selling company, make sure that you are aware of these common pitfalls that many businesses run into. Don’t feel discouraged because you are afraid that you will not be successful–by being aware of these factors, you can build your business up to be strong, successful, and powerful.  If you’re ready to to transform your Online Business with the right assets contact us today!.

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