Click here to order the December 2017 issue in which this article appeared.
In This Issue:
The Most Influential Women in Direct Selling
Bringing Gender Parity to Direct Selling
Advocating for the Direct Selling Community
Navigating the Millennial-Driven World
Sticking to a Winning Business Model
Leading with Passion and Commitment
Launching New Products and Segments
Recruiting and Retaining the Field
Direct Selling Icons
The role of direct selling leaders encompasses more than simply executing business strategies. In addition to overseeing their employees, independent representatives and customer base, modern executives are the voices of the business model itself.
The commonly praised elements of direct selling include a low barrier to entry, flexibility and earning potential that have given millions of people a path to entrepreneurialism. And there is much to champion, now that direct selling has grown into a $183 billion-a-year global business.
Still, nearly 165 years after the first U.S. direct selling company, Southwestern, was established, and although at least 10 U.S. direct selling companies are currently billion-dollar global brands, the channel continues to be plagued by misconceptions of its business model. The misleading past practices of a few bad actors have had a lingering effect, making some would-be first-time distributors wary of the segment and leaving some consumers suspicious of the business model. The U.S. Direct Selling Association requires all member companies to adhere to the DSA’s Code of Ethics, a prescribed code of conduct. The Code outlines behaviors ranging from complying with all pertinent laws to spelling out specific measures such as inventory buybacks. Cindy Monroe, Founder and CEO of Thirty-One Gifts, a handbags and accessories brand, believes that protecting consumers from bad actors in the channel should begin with the companies themselves. “For those companies that struggle to align with the DSA Code of Ethics and the requests of the FTC,” Monroe says, “industrywide legislation can help educate and bring awareness to best practices.”
Traci Lynn Burton, Founder and CEO, Traci Lynn Jewelry Traci Lynn Burton founded the Fort Lauderdale, Florida-based jewelry company Traci Lynn Jewelry, which she began in 1989 in Philadelphia and expanded into a national direct selling company in 2008. |
However, at the federal level, there currently is no legislation that defines a pyramid scheme, though many states have taken their own measures. That is why in August, Rep. Marsha Blackburn (R-Tenn.) and Rep. Marc Veasey (D-Texas) introduced the Anti-Pyramid Promotional Scheme Act of 2017. This bipartisan bill will better define the difference between a legitimate business opportunity and an illegitimate one.
Federal Legislation
Is federal legislation the best way to ensure a commitment to ethical business practices and, as a result, the protection of consumers? For Traci Lynn Burton, Founder and CEO of Traci Lynn Jewelry, the answer is yes. “We need to make sure that we have teeth in every policy, and you only get teeth when enforcement happens,” she says.
Burton says she believes that to get the bill enacted, direct selling needs to not only have a caucus, but also bipartisan support on Capitol Hill. This is particularly important in relation to minority communities. “We’ve got to engage all the caucuses, particularly the Hispanic caucus and the Black caucus, because in some instances pyramid schemes are in the minority communities. So we need to make sure that all of the players whose communities are hit hardest have a seat at the table.”
Cindy Monroe, Founder and CEO, Thirty-One Gifts Cindy Monroe launched Columbus, Ohio-based Thirty-One, an accessories company, from her basement in 2003. Now Monroe’s creation has grown to encompass nearly 1,000 employees and 65,000 consultants throughout the U.S. and Canada. |
Burton, who is Vice Chairman of the DSA Board of Directors, also notes that the DSA itself is currently looking at enforcement policies. “It’s not always enforcing ‘you’re the bad guy’; it’s ‘let us help you correct it so you’re the good guy,’ she says. “We can help with corrective measures before we go to enforcement.”
Another DSA Board Member, Angela Loehr Chrysler, President and CEO of membership savings company Team National, says she believes ethical business practices take more than legislation: It takes training, commitment and dedication by direct selling companies. “As an industry, we need to unify around the positive aspects of this legislation to protect consumers and our independent reps,” she says.
Reputation Is Everything
The education of independent representatives, consumers and, most important, direct selling watchdogs is a key part of protecting the reputation of the channel.
“Educating our consumers and sales consultants on the differences in a healthy, ethical direct selling company and one that avoids best practices is required before we will be able to change the perceptions of the business model,” Monroe says. “We must continue to shift the negative perceptions to business practices and specific companies.”
Angela LOEHR Chrysler, President and CEO, Team National Angela Loehr Chrysler took over at the helm of Davie, Florida-based services company Team National, the family-owned business, in 2007, and leads nearly 500,000 customers and distributors. |
Chrysler says she believes that if you are only interested in short-term success, sound business practices can often be the first things sacrificed. When that occurs, Burton adds, old stereotypes can gain momentum.
“When something happens, everybody knows about it,” Burton explains. “It gets attention, and then it goes to the minds of those who were skeptical: ‘I knew it. I knew it was a pyramid scheme all along. Yes, this confirms it.’ So then it confirms some of the old thinking about the industry.”
To prevent against such instances, Burton says she believes each company needs to take a stand—not just with executives, but with the field—to ensure standards are properly maintained. That includes taking a hard look at incentives, and stressing that the company stands for integrity.
“We need to make sure we are always encouraging the right behavior in the field. That’s how our reputation stays intact, that’s how we grow our reputation,” she adds. “If we can make sure our voice is always heard, even at the grassroots level, then people will say ‘you know what, there’s always a bad apple out there, but on the whole I know my company does this and it was a great experience.’ ”
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Portraying the Channel
Chrysler says she believes it is important for executives to model, teach and lead in ethical behavior, and to continue to share the positive contributions direct selling companies and programs make to the economy and in entrepreneurship in general. “Direct selling is a valuable part of making and keeping America great for all people of any age, race or background. We need to share often what we do and the difference we make,” Chrysler says. “We need to share that message regularly.”
She also adds that direct selling companies need to support the efforts of the DSA and the Direct Selling Education Foundation (DSEF) in sharing the positive messages and information on direct selling. DSEF currently is partnering with professors to teach direct selling entrepreneurship in their classrooms.
“We can help professors teach positive aspects of direct selling at a very young, impressionable age,” Chrysler says. “I was a DSEF guest speaker at the University of Greensboro in South Carolina recently. It was a terrific experience and the college kids asked great questions about our opportunities, our products and how they can participate.”
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Burton also believes that businesses and organizations can have significant impacts on the image of the segment by sharing the opportunities of direct selling to younger generations of women. In the meantime, she will continue to work toward seeing the bipartisan legislation pushed through Congress.
“Being a voice of the industry means that I support ethical legislation and that I am going to go to Capitol Hill,” Burton says. “I’m going to send my people to Capitol Hill, and I am going to financially contribute to what needs to happen so that we can make sure as we build our political muscularity it gives us the teeth to correct and enforce.”
