On this episode of the MLM.com Podcast, Kenny takes us on a retrospective journey through the first year of the podcast. We hear from Spencer Reese, Moy Chambers, Lynn Bardowski, and more. Listen in for some of the best insights our gracious guests have shared with us so far.
Kenny Rawlins: Hello and welcome to the MLM.com Podcast brought to you by Infotrax Systems. I’m your host, Kenney Rawlins, and for today’s episode we’re going to do things a little bit differently. This will probably be a two-part episode and what we’re doing is going back and looking at the highlights of all of the podcasts we’ve done over the past year. We’ve pulled out some of our favorite quotes and we’re going to talk a little bit about them, and hopefully refresh your memory on some of the great insights that we’ve had in the short time we’ve been doing this podcast.
Our very first episode was with Spencer Reese, an MLM attorney who brought great insights. And one of the things that he talked about is the need we have as an industry to compete with other e-commerce platforms, especially Amazon.com.
Spencer Reese: The Amazons of the world are feeding us our lunch. Our customer service systems and delivery systems—It takes two, three weeks to get products when Amazon is going to deliver anything we want overnight, free of shipping charges? Come on, folks! Let’s wake up. We’ve got to get more aggressive and creative, and we’ve got to face those challenges. So regulatory is a serious issue, and the business concerns are very serious. And I don’t see direct selling responding adequately to the Amazons of the world. A perfect example: I bought some stuff from a direct seller for Christmas gifts. My niece is a distributor for them, and I placed the order through her website. And I wanted to send the gifts directly to the recipients and put them on my credit card, well they didn’t have a ship-to address separate from the credit card address. Ultimately, I just put the ship-to address in as the credit card address, hoping that it would get there. Well, okay, it did. It got there, but there was not an opportunity in the shipping process for me to put a gift card in there, so the recipient knew who it was from. And they just show up, and there’s no gift-wrapping option, of course, and it’s just all of those things. And the order process was so confusing and confounded. Whereas on Amazon, you go, you buy something, it’s really simple, it’s streamlined, anybody can use it. We have to be able to do that kind of thing, and face all those kinds of business challenges, and we’re just not doing it.
Kenny Rawlins: One of the topics that came up over and over again throughout the last year is regulation and compliance. One of our first guests that helped us tackle this topic was Jonathan Gilliam with Momentum Factor, and I thought he had some very insightful comments on how we as an industry should be tackling problems of fraud and reputation on our own without relying on regulators to come in and tell us how to do this.
Jonathan Gilliam: I think that just all of the compliance and reputational risk areas of direct selling can be solved by us—can be solved by the channel itself. We don’t need regulators to tell us to do it. We can do it. And that’s the struggle that we’re in now, is that we have regulators fencing us in and telling us from their perspective what we should be doing. And that really limits our ability to do the great work that we do when outsiders who don’t understand our channel come in and tell us how to do it. We understand it, and so I think it’s just really incumbent upon us, upon the associations, upon the corporate entities to really put their money where their mouth is and really fight to retain the great work that we do in this channel. Again, I think right now is a critical moment, which we haven’t seen in the lifetime of this firm, and most of us haven’t seen since the 70’s. And so, I think now is the time for people to really understand what they need to do to keep the channel safe. And that’s watching our field and responding and making sure that what we do, that it’s always going to be public now that we’re all online, is of an honorable and honest nature and that appeals to the greater good.
Kenny Rawlins: Of course, as a host I occasionally do chime in on the different topics that we discuss, and so here’s a quote from myself talking about the value of the MLM space, and the power of personal recommendations and buying things from people you know, in an era where credibility has taken such a hit at a corporate level.
Kenny Rawlins: Well, in talking about disruptive technologies that then kind of work for the industry, we live in an era where just in the last 6 months, you know, ‘fake news’ has become just such a buzzword. And really what’s underneath the fake news is not whether it’s fake news or not fake news, it’s the distrust of what we hear, because with the internet you can saturate people with seeds of doubt, and more and more I think we’re going to see a return to the value of a personal recommendation, because people can manipulate ratings online. It used to be that, yeah you very much trusted the mass of people who rate a product or don’t rate a product. But I think people are more and more worried about the quality of the products they’re using especially when it comes to things their families are using, and so much of the MLM space is ‘health and wellness’ right? And that personal recommendation is going to go further and further, I think, with people.
Kenny Rawlins: Again, talking about regulation, here’s Mark Rawlins talking about the importance of distinguishing between customers and distributors. This is something that the FTC has been very, very active on in wanting to make sure that people that are pursuing an income opportunity are treated as business people, and that we distinguish them from people who are specifically getting in the space to buy product.
Mark Rawlins: The reality is I have never seen a company where more than 40% of the people sponsored anyone. So, in all of the companies I’ve ever seen that have had success of any sort, 60% of people sponsored no one. So, those people are—by definition—customers.
The problem is that because we sign them up as distributors the FTC—in the Vemma case—came down very clearly: if you’re going to sign them up as distributors, then they’re distributors! Because we tend to say “Well, they’re customers, they’re buying the product.” The FTC says “No, they are failed distributors if they don’t make any money.” So, we do have to change our business practices. So, we bring people in who are going to just buy the product at wholesale, and we bring them in and we call them customers, that’s what they are, and then we make it an easy transition. If they decide they want to start referring a few friends and becoming a distributor, then we have a transition process that doesn’t have to be an onerous process, but we do need them to pop up a page and say “Hey, I’m converting to a distributor,” you know, they sign it and off they go.
Kenny Rawlins: Hopefully all of you remember our episode with Lynn Bardowski where we talked about online parties and different tools and ways to sell. Here’s Lynn talking about how online parties will become the way of the future.
Lynn Bardowski: But there are definitely some great tools out there for a party online. One of my favorites–of course, Facebook Live is an awesome tool for online parties because nothing builds that “like, know, and trust” factor faster than live-streaming and that’s not going away anytime soon. Video content is—we are just going to be seeing more and more of it and Facebook has already said that they are already seeing that within the next two years, the newsfeed will be predominantly video. So, it’s not a matter of when or if or should I; it is pretty much happening and it is happening now.
Kenny Rawlins: Another guest we had on was Moy Chambers. Moy has extensive background in the IT space and talked about the importance of user experience and of a corporate company crafting a user experience that fits with them and their culture.
Moy Chambers: Where we’re headed is, we want to be in control of the user experience, and if that user experience needs to tie in with our product line, we’ll tie certain experiences into certain product lines. We’ll market it that way. It’s always nice to have an engine on the back end. You know… I’ve written commission programs before. I’ve written them in several languages. They’re not fun to write, and they’re not fun to maintain. You might think so, [Kenny], because you have a lot experience on commission engines. But it’s nice to be able to have these sophisticated systems on the back end that you could just interface with. And, I always tell everybody, in our industry, that people don’t understand. You know, we’ll get financial people come in say, “oh, we can hook in,” you know—whether it be AX, or Great Plains, or, J D Edwards, or SAP. But, what makes these systems, especially in direct selling really complicated is that you have a point of sale system that just runs out there and takes all these orders on the internet. And, you normally have this genealogy system. I’d say it’s like an Ancestry.com. So, you take an E-commerce and an Ancestry.com, and you shove the two systems together, and they got to be right 100% of the time, 24 hours a day, seven days a week. And, you know, cause the orders flow up the tree, you know, and you got your group volume, you got all your other stuff. And, you know, I don’t want to have to worry about that stuff. I don’t have to worry about the trees. I don’t have worry about the commissions. I just want to say, “I want to give my users the best user experience.”
Kenny Rawlins: Here’s a clip from Jared Smith, one of my co-workers here at Infotrax Systems, talking about how software development is done, and how companies should look at the feature sets that they’re trying to enact, and how they will compete in the marketplace.
Jared Smith: I’ve always liked these three buckets that Gartner has built and pushed their functionality to. And the three buckets that they have out there they call their systems of records, systems of differentiation, and systems of innovation. And so, when I look to build software, I ask myself does this particular functionality fit in one of those three buckets? How that applies for R&D also applies for companies asking themselves whether I build them myself or whether I go to a third-party. I’ll explain the differences between those three buckets.
Your system of record is the thing that everyone does—that’s the same across the board. If I have a shopping cart I have to be able to add items to that shopping cart. That’s something everyone does. Everyone expects a shopping cart to be able to do that. Everyone expects a shopping cart to be able to calculate taxes, to be able to calculate freight, be able to accept their credit card, check out. That functionality is the same across the board. There’s nothing special about that. There’s nothing that’s going to give you a competitive advantage over your competitor being able to have a shopping cart that accepts a credit card. That’s a system of record. Everyone accepts that a shopping cart does that.
The system of differentiation is the thing that gives you that competitive advantage. That thing that you do better than your competitor does. Sticking with the shopping cart analogy, for example, Amazon, their 1-Click® buy now—you can hit that button and buy the product and have it shipped to you. That is something that they do, they have a patent on. They do that better than anyone else. That gives them a competitive advantage. That is a system of differentiation functionality that they have. Another example would be the ability to buy a book on Kindle and have that immediately sent to your Kindle. That’s something that’s unique to them, that they do well, that’s different than anyone else in the industry. That’s a system of differentiation item that they have.
And then of course the system of innovation that’s something that I specialize in, being in R&D. That’s the thing that does not exist yet, that no one has even thought of. That is something that you build. So, you come up with the idea, you’re not quite sure how it looks, you start going into the agile process and going into sprints and working and failing fast and coming up with this new product until finally you discover what that is and its brand new and no one else has it… and you release it and it gives you this huge advantage. Of course, that’s a system of innovation type functionality.
And so, when you’re sitting down—if I was sitting down as the head of an MLM business and I said, “Okay, in order for me to be successful in my business the first thing I need is a shopping cart.” I’m not going to build that myself. There are lots of shopping cars out there that do everything that I need. That’s a system of record. To me that’s a no brainer. Integrate.
Kenny Rawlins: One of my favorite topics that we address here on the MLM.com podcast is the benefits of the MLM space and the important things that it can bring that other channels of distribution don’t bring. Here’s Gretchen from Trades of Hope talking about how direct sales is uniquely suited to both provide great products and great income but also help to address social causes.
Gretchen Huijskens: Well, we just had a big event in Nashville, our annual event. One of the talks that I gave there was just basically how we are completely head over heels in love with the industry itself. You know we were in love with Trades of Hope for a long time, but the more we have learned, and the journey that we have been on, and the more people that we have come into contact with… it’s just shown what a supportive, positive environment that the industry is all on its own really. We went to DSA for the first time thinking that it would be, you know, kind of cutthroat and competitive and everyone was open and friendly and supportive, and CEOs go out of their way to support other CEOs, and it just is an amazing family, loving environment, actually. Within Trades of Hope, I’m just so blown away. We really didn’t anticipate or even really get to think about the power of the sisterhood. Our culture within Trades of Hope is very uplifting and positive and celebratory. I mean where else in the world can you go start your own business and you get all of that, right? Most of the time you are kind of like an island. But the sisterhood… and seeing 500 compassionate entrepreneurs last weekend come together, it’s like a big family reunion. They are just so supportive of helping each other build their businesses in practical and just emotionally supportive ways as well. I mean I just don’t know where else in the world you would get something so powerful.
Kenny Rawlins: Well, much of the regulation in the talk today in the industry is about differentiating customers and products from sales opportunity in entrepreneurship and putting more emphasis on the products and the customers which we fully support. We do have to remember that this still is a channel that provides people an entrepreneurship opportunity and we are giving people a mechanism to create livelihoods for themselves. Here’s Steve Hooper talking about the responsibility that MLM companies have as they are giving people that opportunity.
Steve Hooper: Again, we sell product, but we also market a hope, a dream of someone having a home-based business. In some ways, you could say we’re dream merchants or some of the companies are because they’re showing people what they can do. But that’s where we’ve got to be careful because we have to be good stewards over those dreams. We’re too casual, we throw out terms that it’s simple, it’s easy… It’s not easy to make five hundred dollars a month. We can say it is but these are people going out and they’re working in their warm market, they’re out on social media, they’re doing things trying to create this [dream]. So, we need to do everything that’s within our power to support them and we need to create loyalty architectures and show them why they’re associated with us as a company.
Kenny Rawlins: That does it for part one of our Year in Review Podcast. I hope that these quotes have been helpful and thought-provoking. I’d like to thank all of the guests who have been on over the past year and have brought their expertise and insight. I’m your host Kenny Rawlins, and of course, we’re always grateful for production support from Jana Bangerter and Adam Holdaway. Join us again next week to hear the rest of our Year in Review Podcast.