How to retain distributors

I am not a typical movie-goer. In fact my movie buddy assumes that if I pick a movie, he will not like it. This is not a simple gender bias for “chick flicks.” It’s more that I just like odd things. One of the best movies I have seen in years is “Little Miss Sunshine.”

When I recommend a movie to friends or family, they first warily ask me, “What is it rated?” because, apparently, I never seem to notice the rating. Next, they insist on knowing specifically why I liked the movie and am recommending it to them. Obviously, I have a reputation for creating expectations that are not typically fulfilled. In other words, there is a disappointing gap between the set expectations and met expectations.

In the MLM business, this gap poses a problem in the retention of recruits. In 1990, Wotruba and Tyagi (Professors, Marketing Dept., San Diego State University) conducted a study on how met expectations influence retention of distributors in direct selling companies.

The met expectations concept centers on the idea that if expectations are set too high and those expectations are not met, individuals are more likely to be dissatisfied with their situation, their job, etc. For example, someone in an MLM company may tell you that if you become a distributor, they will build your downline for you, or no selling is required, or you’ll earn up to $10,000 a month. And then, when you get in, you find out that in reality; you must do your own recruiting; you are required to sell, and you earn about $300.00 a month! Over time, you get discouraged after you realize that although those initial statements may have been true for someone, they are not true for you.

Wotruba and Tyagi surveyed 461 new recruits (31% response rate) from Mary Kay, Saladmaster, Tupperware, and United Consumers Club. Out of the 461, 195 had already become inactive by the time they received the survey letter, leaving only 296 still active. The second stage of the study was to survey the 296 who were active. 175 of the 296 responded to the second questionnaire. Of the 175, only 71 were still active. The survey asked 25 questions that can be grouped into four categories:

1. Outcomes and Rewards
2. Interpersonal Relations
3. Conditions of Work
4. Job Challenges

The interesting finding was that met expectations alone do not correlate with turnover in the future. However, change in met expectations does correlate with turnover. What that means is that if you have a low expectation and your experience is low, then you are still satisfied, and you stay with the program (or vice versa). Problems arise when individuals have a high initial expectation that later changes to a low expectation of direct selling.

The problem associated with met expectations is not encountered only in direct selling (or with movies). It exists in the health, accounting, retail, and sales industries as well as the military. How many of us left a traditional nine-to-five job because it did not meet our expectations?

In the movie Little Miss Sunshine, just about everyone suffers from a gap between what they expected and what they have experienced in life. One of the saddest cases is Dwayne, a teenage boy who had always dreamed of becoming a pilot. Towards the end of the film, he discovers he is color blind, so his dream is shattered. That is when Dwayne does a reality check, realizes that he has hurdles to cross and understands that his family will be there for him throughout the process.

There are two morals here. First, in recruiting, it is important to set realistic expectations for your new recruits. Second, as they experiences difficulties that are normal, help them understand how you made it past that barrier and how you will help them past the barrier as well. In other words, the key appears to be to set realistic and encouraging expectations.

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Wotruba, T.R. & Tyagi, P.K. (1990). Met Expectations and Turnover in Direct Selling. Journal of Marketing, 55, 24-35.