Think Another Loyalty Program Will Curb Turnover? Think Harder - DirecTech Labs

Are you looking for reliable ways to reduce turnover among distributors in your direct selling business? Maybe you’ve considered implementing a loyalty program—or enhancing an existing one.

The typical loyalty program operates according to some simple, clear principles: Your products are good. Your best distributors are your most enthusiastic customers. Everybody loves a discount. If you give your best distributors incentives for continuing to purchase your products, they’ll continue to be customers. And, they’ll recruit other good customers from among their circles of friends.

Loyalty programs usually offer discounts to faithful customers based on their purchasing behavior. Some programs allow distributors to earn points with purchases and redeem them for additional discounts, or other perks.

So far, so good, right? Everything here sounds like it would work—and to some extent, it does.

But if you are looking to increase retention among your distributors and your only answer is to launch a loyalty program, you’re likely to be disappointed. Here’s why.

Why Discounts Don’t Always Prevent Turnover

You may believe that the vast majority of your distributors joined your company because they love your products. And you may be right about that. But that doesn’t mean their number-one motivator for staying on as distributors is to get discounts on your products.

There are probably all sorts of complex reasons why distributors stay with your company. Yes, some are mainly after the discounts and don’t care about building their business beyond the couple of close friends they may sell to.

Others are thinking a bit bigger—they want to be the go-to distributor for your products throughout their social circle. And giving them a discount is probably just throwing money away.  They would happily buy anyway.

Still, others have specific financial goals that revolve around selling your products. They want to generate, say, $1,000 to $2,000 per month as a second income. A discount for a loyal distributor like this is also unnecessary. And still, others have every intention of making your products their main source of income, even if they’re nowhere near reaching that goal at the moment.

The product enthusiasts among your distributor base will gladly participate in your loyalty programs. They’ll tally up their points, redeem their discounts, and thank you for all the money you’ve helped them save. Though the question remains: how many of them really needed a discount to stay active?  How much margin is being given away unnecessarily? And are these discounts training people not to buy in anticipation of a special promotion?

“After designing, running and analyzing hundreds of promotions, I haven’t seen any promotions based on discounts that had a long-term positive impact on retention or growth.” – Vice President Analytics and Promotions at a large direct selling company

But the rest of your distributor base? Though they may appreciate discounts, they need a different kind of help from you. They need training. Mentorships. Personal development resources. Cash bonuses for reaching new levels of sales.

Fail to deliver what they need, and they’ll continue to jump ship. The first step towards delivering what they need is to understand them better. That’s where artificial intelligence (AI) brings in a whole new depth of understanding your people and what moves them as individuals.

Find Hidden Motivators with Artificial Intelligence

Look—we’re not saying loyalty programs don’t have their place. But the main reason they’re not the be-all, end-all solution to retention problems is that they’re too “macro.” They seek to give every distributor nice perks, rather than finding out what really motivates a person at the moment they actually need that motivation.

You can identify these motivators using artificial intelligence. With AI, you can spot the hidden patterns in your distributors’ behavior. You’ll identify why certain types of people stay with your company and why they leave. You’ll get the actionable data you need to offer all your distributors the individualized support they crave—rather than just another “macro” loyalty program.

Sound intriguing? We’d love to tell you more about DISTRO®, our retention engine. Contact us with your questions.

Want to read more? Check out the article: How to Increase Customer and Field Retention

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