Webinar: How To Grow Your Direct Sales Company Exponentially Instead of Linearly
Krato CEO Brian Palmer was interviewed by Nicki Keohohou CEO of DSWA where he showed and explained how a direct sales company can grow exponentially and why most direct sales company grow linear.
Brian has real experience after building a direct sales company reaching 33 million dollars by the second year.
Here’s the interview:
Transcript: How To Grow Your Direct Sales Company Exponentially Instead of Linearly
B: Hello, this is Nicki Keohohou, CEO and co-founder of the Direct Selling World Alliance. Welcome to the Executive Forum. I am so thrilled today to have with me a special friend who has got a lot to share with you about how to grow your company exponentially, and why most direct sales companies grow linear. So, I would like to tell you a little bit about Brian Palmer so you know you’re talking with someone that’s been there and done that. Brian Palmer is the CEO and founder of Krato, a technology company that develops applications for the Direct Selling profession to increase revenue, reduce attrition and boost retention. Let me say those three things again, because we all know how important they are: to increase revenue, reduce attrition, and boost retention. Brian was the founder of South Hill Designs, a Direct Sales company, an enterprise that grew from 0 to 33 million dollars annually by the second year. I know a few of you on this line would like to be doing that too, and some of you have done that and even beyond. So Brian, how did you start out in Direct Sales?
T: Well thanks for having me Nicki. You know I started out in Direct Selling many years ago with my wife actually as a consultant, and we participated in a number of different business opportunities over the years and have long since had a passion for the industry. And a very unique opportunity came to us in 2012, where we came across a concept in some jewelry styles that was very powerful in the marketplace and very special to us. We knew that it would be perfect in Direct Selling, and so we took that concept and grew it – as you said – to 33 million in the second year, and we really learned a lot through that process on how to grow the business, support an organization and continue to innovate inside the company.
B: Well that is pretty exciting! So, I know that you’ve done some great things here with the business and your experience prior to Direct Sales gave you that passion and love for what you are doing, and when you got into it I’m sure you learned a few things. How was your first year?
T: Well our first year was thrilling, there were so many things that we didn’t know, that we had to learn on the fly. We were fortunate enough to have a lot of great leaders very early on that we could partner with to grow the business. At first, things moved pretty slow, but as we continued to refine our sales processes and add top leaders from the industry, what we saw is this really compounding growth at the company, and we really came across this concept around how to really take an exponential approach to our growth of micro entrepreneurs as well as the entire company, versus a linear path that we’ve seen so many others experience.
B: You know I know that on that second year it was pretty exciting; your business did take off exponentially. What do you think was the reason that you were growing so fast? And I know that you say there are two types of growth, and we want to hear more about that too.
T: You know, I think that the increase in our effectiveness of onboarding new distributors is what really propelled us to the next level in our business. When we were very early, we found ourselves onboarding new distributors because of the excitement, but too small of a percentage were actually being successful in their business and helping others be successful. So the refinement of our sales process and our coaching processes is what really put us over the top and allowed us to really move the business forward at a much faster pace.
B: Well let’s hear about these two types of growth.
T: Well great. So there was one type that is really the linear thinking if you will, and the other one where we all really aspire to be is exponential thinking or growth. So linear thinking at its most basic level is really like a one plus one equals two. So it’s having a nice little growth, you add one distributer and we work with them and they add one, and over time we can slowly grow the business, 10, 20, 30 years. The problem with that is, any bumps, or bad weather, or challenges running to the business we’re that much more susceptible to failure. And where we really want to focus on, what are the business processes, the toolsets and the real methodologies that can help us grow exponentially, meaning one plus one equals four, one plus one equals ten, one plus one equals one hundred and so on and so forth. And to really accomplish that, we have to have an innovation mindset and this idea that we need to be disruptive in some of our concepts, in some of our toolsets. You know there is always great things we can learn from the past of how to be successful in our industry, but we must not allow that to make us afraid to change process, to think of new ways to support our field and new ways to onboard people into our sales processes so that we can achieve an exponential growth. And when we do that, now we’re not just a one-to-one growth example, now we’re enabling others who participate and are shareholders of our business, to also take that disruption in innovation. And as more and more of them are enabled to do that, that’s when we see that exponential growth happening and you can only really do that through coaching and enablement.
B: Very good point and you know I watched you do that, I watched what happened and how it went about and I can’t for you to share the learning behind that.
T: Yes, so Nicki we thought we’d put just a little example here to kind of highlight some of the challenges that we saw in growing the South Hill business. So we’re going to just use an example of Mary here, as a new consultant into our business. So meet Mary, she knows what she’s doing, she has been in the business, has been in training, achieved high levels of success, and so she has just sponsored a new distributer, we will call him Paul. Now Paul gets a lot of help from Mary early on and what he’s able to do is sponsor three new people into the business, but the challenge here is that these three new people don’t really have experience. They’re passionate about the products, maybe they love the culture, but they haven’t really done it before and they’re not quite sure how to be successful out the gate. So Mary of course, she’s a seasoned professional, she keeps recruiting and so she sponsors Madison, who does have a lot of experience and knows how to build a Network Marketing or Direct Selling organization. So, inevitably what happens is, Mary starts focusing on Madison, because she has a lot of experience, she’s going to have a lot of success and she wants to enable that seasoned consultant in their success. But the question then becomes: what happens to Paul and his organization if Mary doesn’t stay focused on them? And inevitably what happens is, they die on the vine if you will. They don’t know what to do intrinsically because they don’t have the experience in Direct Selling and they’re not getting the support anymore from their upline. And so although they love the products and they love the culture, they can get stuck very easily and then they could become part of that dreaded 80% that fall away from the business inside of six months. And so, what we need to do to really achieve exponential growth, is we need to impact that group, that attrition of people that often get forgotten about, who are just as important as all the distributors in the organization, so how do we really enable them? And what I would argue is the best way to impact this, is to take a very close look at the onboarding process. So, when we do this, we say: what are the key things that we see in onboarding processes that are critically important, and many of these will feel standard to some folks, but I would argue that there’s ways that we need to think about tweaking these to really maximize the impact. So really the first step is the distributor signs up, they’re excited about the product, they’re excited about the opportunity and they put their money down and they enroll in the company. Very important, sounds basic, but you would be surprised how many companies don’t do this, is we need to send them a welcome email as fast as possible. They´re at their highest level of excitement and we need to make sure that we fuel that excitement by giving them a welcome, making them feel part of the family and giving them some basic next step that they can follow in building their business; and that´s where we´re coming to “assign a task”. You know, it’s very common that we hear a task of: watch this welcome video from the CEO, visit the back office and some of the toolsets; at Krato we recommend a detailed path that we assign them to so that they can get started in their business right away. And then in the event of a party planning company, we want them to get out there and organize their first party as fast as possible. That way they can get comfortable, get confident and start sharing their business with others. So this is an example of an onboarding process that gets all too easily forgotten in the business. Now, I would argue Nicki that the companies that we see out there will only grow in a linear fashion, because a lot of times what we see is that they only focus on those distributors that have experience and they leave the onboarding process and toolsets alone, or don’t focus on them to really take advantage of those passionate entrepreneurs that maybe have less experience. And if someone wants to really grow exponentially, they have to find a way to help people with and without experience be successful. And what we found is, most of the approaches out there are one size fits all. And so, as an example, whether I’m a new distributor or an existing distributor, or a distributor has a lot of experience or very little, I get the exact same experience; and that’s a flawed approach because each individual needs a very custom experience that’s going to help them build and move forward. So, an example of this, if you go into most back offices or resource libraries, what we find is, all the information comes at you like a fire hose. So, every training video is posted, there’s thirty of them and they’re all super important and get out and watch all of those. And what we found with our consultants at South Hill and with those companies we work with, those distributors feel overwhelmed and they shut down, especially if they don’t have experience. So, giving someone that has very little experience in Party Plan or Network Marketing and hitting them with a 45 minute deep dive into the compensation plan is not necessarily what’s going to help them be successful and take the next step. So that’s where we really believe a heavy focus needs to be, and that’s on onboarding new members, and if we don’t have that, we’ll be stuck in a linear growth path.
B: You know Brian, I’m going to add to that because what you are saying right now is exactly what we’ve seen happen. There are companies that have these back offices that have 95 videos in there and they’re not in any order, they’re all just sort of jumbled up inside there and they just say: go study the back office and watch every video or listen to every call, or do all these things, and people get confused. We all know a confused mind does nothing, so what you’re saying is: to grow exponentially, you must put things on this onboarding in bite size pieces with a simple approach that is a clear pathway.
T: Exactly! And I love that you say bite size Nicki, because that’s really the key for all of us. We think about how we learn and how we’ve educated ourselves from very young childhood to the things we learn as adults, is getting things in bite sized chunks makes it so much easier to really comprehend and digest that information. A lot of listeners might be thinking: hey, of course, onboarding new members, we all know that that’s critically important; we need to do that, but how? So I’m going to talk about just three things we can focus in on now to improve our onboarding process and improve retention. I would like to share this stat all the time Nicki, which is a 1% improvement in retention of your sales force equals a 5% increase in your revenue. So even having a small impact on the retainment and enablement and coaching of your sales force can have a huge impact to your top and bottom line. So the first three, or really the three most important areas to focus on we’re going to cover here is: having an action plan for onboarding new members; some thought processes around the experience with the business kit; and then communication. So the very first thing is an action plan, and this is a very specific action plan that’s easy to follow and simple to understand. So we want to get, we want to really break ouT: what are the key activities or tasks that a new distributor needs to do within the first 24 hours, within the first week, within the first month, and within the first three months. You know there’s a number of different things that are very common, you know things like making a contact list, but how do we help them make that contact list? Who should be on that list? If we want to encourage them to start reaching out to their network, do we give them scripts, text or email examples to make it simple and easy for them? And then also, how do we articulate to them how to create a rhythm for their business. I would love to share the story about the 20 mile march, and it’s so critical when you’re building on an action plan folks, is to think about the 20 mile march. Where this concept came out of is in 1911 the South Pole, a human had never reached it before. So, two different explorers had set out to be the first to reach the South Pole and it was a very interesting concept of success and failure that we can incorporate into our businesses. So the first one was a gentleman by the name of Amundsen and the second one was a gentleman by the name of Falcon, and they set out just weeks apart for the South Pole. One of them was able to do the 1400 mile journey successfully, which is basically like New York to Chicago and back, and be hailed as a hero. The other one in his expedition came up short and they all perished on the journey. Many people wonder why two different explorers could’ve set out at the same time, with a task in mind, with one failing and one succeeding. It really came down to this concept of a 20 mile march. Amundsen had basically said that no matter what happens, sunny weather, bad weather, freezing cold or a better day, they were always going to march every single day, 20 miles on their journey. Now the other explorer, what they would do is on really good days they would get out there and they would march 40 miles and they’d really push, and then on horrible days with horrible weather, they would hunker down for days, waiting for the weather to get better. You could see this actually in the men’s journals when they wrote about the journey. Amundsen said it was a terrible day but we pushed forward with our 20 mile march, and you can look at the exact same journal day for Falcon, and it was: we hunkered down, the weather was terrible, there is no way you can move, no human can move forward in this. And the idea here is, how do you create an action plan where you don’t run out when you’re super excited the very first week when you sign up and take every training and try to get everything done, as opposed to doing that, we want to create an action plan that does it in a rhythm, where every day or every week, or every month we consistently do the following activities that we know are going to build the business. And so, what I would encourage you to do is to think about the action plan for the new distributors in that mindset of the 20 mile march; which is, how do I create a consistent path that gives all the different tasks, all the different coaching an enablement that in a consistent rhythm, in bite size chunks as opposed to giving them the entire fire hose. And what inevitably happens is when I’m excited I’ll do a lot and then when I’m not or I got a rejection then I’m going to shut down. So the more we can keep them consistent in their enablement, the more we’re going to keep them successful and engaged with our company.
B: And Brian, I’m going to tell you that you are on the money. That was a great analogy because so many people come into the business and they just run out with their hair on fire and talk to everybody and do all those things, and they get a few no’s and then they just come to a screeching halt or they get burned out. I just talked with someone in a skincare company this week and she said: Oh, you know I just started but I saw 30 people and I did this and I did this and I did; I’m exhausted, I need a vacation. Holy smokes, so the idea is consistently, every day, doing something on their business and that there’s a plan of what those income producing activities are. So, I really liked your analogy.
T: Yes, it’s so important, it builds confidence in good times and bad, and it’s so important. So really, the second component of a successful enablement strategy is the business kit, and the business kit is so critical to the initial reaction that they’re going to have to your company. It’s the first impression and we simply can’t afford to disappoint them. And so, the first thing is, we need to make sure that that thing ships out as fast as possible. I recommend making sure that your warehousing department or if you have third party or a 3PL doing it, make sure that they can get that thing out within 24 hours. Because when they sign up online, they have the excitement, we want to continue to fuel that excitement and I would encourage you to make sure a welcome letter is included that articulates what your culture is about, what your mission of the company is about, some business tools that can get them started, business guides, catalogs, technology access so that they can begin on their path, and of course don’t forget the action plan, the 20 mile march.
B: You know I’m going to say something to that too, because a lot of people they send out the 90-page binder of information of what all they’re supposed to do, and what is really important there is just to have that “get started” that quick start, or fast start, or whatever that is. That being in there, it doesn’t seem like so much, and then they download the guide later and that has been very effective for a lot of our clients to do it that way.
T: Yes, that makes perfect sense Nicki. The third critical aspect to a good onboarding strategy is communication. This is absolutely critical because we want to make sure that we take this time – when a new distributor has signed up – to really get them bonded to the company, and we do that through communication, to get them feeling part of the business and part of the family. We talked about a welcome letter, things like a welcome email are critically important. We have some customers that use a series of emails that come out after they have signed up. We advocate also doing push notifications through mobile devices that are welcoming them, giving them reminders about why they signed up, giving them reminders about different revenue generating tasks that they could be engaged in. We communicate the action plan and every step of it, and we try to do that in a time sensitive manner. And then we’re really trying to connect distributors to our selling system, because as they sign up, they’re really signing up for a passion of the product and the opportunity, but also because we have a great system that they can follow and be successful. We got to be able to communicate that system consistently to them to help them be successful. And some ways we could do that is weekly calls, live presentations, and events are additional ways into – in addition to technology – that we can really do that. We also want to help them to communicate with the world around them, because communication isn’t just us communicating with the field, it’s also: how do we help the field to communicate with the world. So ways that we can do that is providing branded content, marketing content that they can share as them on social media. So it’s coming from them, sharing it to the world. We can give them pre-canned marketing materials or texts, whether emails or text messages that they can be using to introduce themselves to the world, introduce their products, introduce their opportunity. So that’s a really important concept. We often focus on corporate to field, and sometimes we forget how to help the field communicate to the world, so I encourage you to think about that. And then the final thing, the final point here, is it’s got to be simple. So, all the communication we give has got to be easy for them to digest and then also easy for them to share and leverage. If it’s simple, then anyone can do it, then we know we’re very fast getting towards exponential growth.
B: And Brian, I’m going to add to that but, you know on our elite certification course that we provide for companies we teach about how to create community, and the biggest component of creating community is communications. And you said it very clearly, it’s not one way. So, it’s methods for the company to communicate with the field, methods for the field to communicate with their customer base and their teams, and methods for the field to communicate with the company. Communication is critical to building a sense of community; people want to belong, they want to feel part of this. And I know that you did a great job of that in your previous company and people felt that sense of belonging and communication is the key to it.
T: Yes, it’s like each company, like South Hill had a soul, and the field wants to connect and feel part of that and connect to the soul of the company, and communication, without it you can never truly connect. And you know Nicki, you asked me at the beginning of this webinar: how did you guys achieve exponential growth? What was it that really triggered that incredible avalanche of growth? Looking back on that experience, onboarding truly was the key factor in it. So, when we really figured out how to onboard new members, that’s what triggered exponential growth for our company. That’s why I think everyone on this call could benefit greatly by going back, looking at their onboarding process very critically on how they can improve that experience. Sometimes it feels hard, I know it sounds like a hard task, but with a proven marketing automation system every company can accomplish incredible onboarding and thus exponential growth.
B: You successfully sold your company Brian, and then you founded a technology company. I just want to ask, why a technology company and what made you decide on Krato?
T: Yes, so with technology, I had spent my whole life building unique toolsets from a technology perspective, and when we looked at this challenge of onboarding and keeping people engaged, we really wanted to set out to impact that. So that’s really what Krato does, we created something called the Journey Mobile App and the mobile app seeks to solve this very problem that we’ve been talking about, which is: how do we improve the onboarding and improve the ongoing engagement between corporation and their field, to help the individual micro entrepreneur be successful and thus driving profitability and revenues for the company. And we knew that a great way to do that exponentially, if you will, or to really scale that, is to give everybody a virtual coach, a virtual mentor to help them understand what’s the very next thing they need to do in their business. What is the next bite size piece of information or task that they need to accomplish. And then also enable the company to do these other things around communication and keeping people engaged. And so that’s, we’ve set out to solve this very problem Nicki.
B: That’s exciting! And do you think that most Direct Sales companies take full advantage of technology and using the tools?
T: Well, in our space in Direct Selling it’s interesting, most people would say that we’re laggards when it comes to technology, that we see a lot of innovation outside of our industry and it comes very late to us. And I’ve been asked many times: why do you think that is? And I believe because our needs are so specialized in Direct Selling, we’re very different than other industries because we are a family of micro entrepreneurs, of people building their own businesses, attracted to the products and the opportunity; our needs are different. From things like replicated websites and supporting the individual entrepreneur, our challenges are different. On top of that, if you look at Direct Selling companies, each one of them is like a fingerprint, they’re totally unique. And so it’s very difficult to find a one size fits all type of offering, no matter what you’re looking at in the technology space. And so that’s why I think a lot of times what we find is that we’re slow to adopt some of the newer technologies in Direct Selling than what you see in other industries.
B: Interesting, isn’t it?
T: So, the thing I’ll say is just remember, if we want to grow our companies exponentially we’ve got to connect with people that have experience, but also who don’t have experience. You know, we’re naturally going to gravitate to people that have come to us as leaders or experienced Direct Sellers, but we’ve got to find a way to connect and enable those that don’t have the experience, because those are our future leaders, those are the ones that five and ten years from now are going to be the experienced leaders. But if we don’t enable them now, we lose them forever.
B: It’s sad that sometimes we bring people in and they flounder. We used to count on always having the leader take care of the people, but many times the leader is not and so the company then has no direct connection with the people and it becomes a challenge because the people don’t stay. It’s exciting to see what’s possible with the use of technology and how it might support the company and particularly support the field. So what do you see is the future for Direct Sales with the current technology disruption that is taking place?
T: Well there’s a lot of interesting things happening out there and I think that one of the biggest things is: how do we enable the field to truly become micro entrepreneurs at a much larger scale than they are today. So how do we enable them through the use of social media, in other web technologies, to touch way more people than they used to but yet still blend that with the traditional things that we know will make people successful like having in-person opportunity meetings or having in-person parties. And so kind of blending of the two worlds and the things we’ve learned that we know to be successful in our business, the foundational activities, but then adding in this web and social media aspect to really allow people as micro-entrepreneurs themselves to grow exponentially. Where they would be confined to the past in maybe one geographic area, now they can expand globally much faster and I think technology enables that because now we can communicate with far more people, we can share our story much easier and much faster, and we can gain customers and support them from much farther distances. All that would’ve been impossible without the technology. So, the question that I have is: how do we smartly layer on technology to help that transition happen, that transition happen? And those companies that have been able to accomplish that, those are the ones that we see having one plus one equals one hundred growth in our business.
B: You know you said something early on and I have a lot of notes here from our conversation but you said: 1% of improvement in retention equals 5% increase in revenue. That is pretty dramatic, just 1% improvement. So by communicating effectively with our people, with our sales force, by communicating and educating them, and teaching them how to be successful, by giving them an action plan and a how-to, increases that whole retention piece. I would say if you can keep a person even a month longer, what a difference that can make in the overall success of the company. So Brian, what you’re doing is very meaningful and can make a big difference for people. I see there that you have how to contact you firstname.lastname@example.org and the website is www.krato.com. Do you have anything else that you would like to share Brian before we wrap this up today?
T: No Nicki, thank you so much for having us, it has been an honor to partner with the DSWA and your team. Thank you so much for having us, it has been a real pleasure to be here today.
B: Well thank you everyone and be sure to check out Krato and reach out to Brian if you have any questions at all. We’ve gone through the program, looked at it and I think you will appreciate having a guided tour through what they’re up to. Take care everyone and have a great day!
The Direct Selling Women’s Alliance is dedicated to providing a community of like-minded entrepreneurs the resources, tools and training to build their business big! http://dswa.org/
Krato builds intelligent tools for direct sales companies to increase their revenue, reduce attrition and increase retention. http://krato.com