Direct Selling in the Classroom by Dr. Victoria Crittenden:
To me, there is nothing quite so great as leaving class on a high because students really seemed to engage with the class topic. I had such a euphoric feeling after leaving my Marketing Management class in the Master of Science in Entrepreneurial Leadership program at Babson College in mid-September. The topic for the day was “Go-to-Market Strategies.”
With approximately three-fourths of the students in this master’s program from outside of the USA, there was considerable interest in the direct selling business model as a go-to-market strategy. Several students remained after the class ended to discuss the pros and cons of direct selling as a go-to-market strategy and how the direct selling business model might be implemented in entrepreneurial endeavors in various parts of the world.
I left class wishing that I had planned in advance for a way to capture the amazing classroom interactions. Since I had not done that. however, I emailed students and asked them to contribute some thoughts that I could include in a blog post. Here are comments from two students (one from each section of the class):
Nomah Javed (MSEL ’18) said: “I feel direct selling is an amazing way to reach your end customer down to the grass roots level. Especially for burgeoning entrepreneurs who don’t have seed money to set up this network on their own or reach customers. Again, it would work best for smaller, fast-moving goods which would benefit from the interpersonal interaction and persuasion involved in the process of direct selling. I think it’s a tremendous resource for third world countries, where women are the more subjugated gender and don’t necessarily have access to the same education and job opportunities. I feel direct selling gives people a chance to create something of their own despite their limiting circumstances. It can be used as an amazing empowerment tool for women. I would definitely think of it as a very strong proponent business model for my future venture.”
Philip Cobbinah (MSEL ’18) offered these comments: (1) Partnering with consumers is the best way of becoming a household name (#cobbyquotes). (2) It is entrepreneurship at your doorstep (#cobbyquotes).
Given that I taught two sections of the course and both sections were equally great. I think it is fair to say that the topic was well-received by all. The discussions were clearly the best I had with my MSEL students during our seven-week module on marketing management. I found that direct selling as a go-to-market strategy incites interest and engagement among students who have an entrepreneurial orientation and that this is particularly true in a cross-cultural classroom environment.
DSEF’s academic partnerships serve to inform and educate students – highlighting direct selling as a go-to-market strategy and pathway to entrepreneurship and micro-entrepreneurship. DSEF has partnered with more than 75 professors over the past year, and is making significant process toward mainstreaming the channel on college campuses across the country.
DSEF will continue creating partnerships within the academic community by reaching 200 DSEF Fellows by 2019 and expanding student reach to promote deeper knowledge of direct selling as a legitimate channel of distribution and path to entrepreneurship. We are excited to welcome our newest Fellows:
Dr. Mark Bergen Associate Dean, James D. Watkins Chair in Marketing University of Minnesota
Dr. Nawar N. Chaker Assistant Professor of Marketing Elon University
Dr. Angeline Close Scheinbaum Associate Professor University of Texas at Austin
Dr. Honghui Deng Professor of Business Administration, IC2 Fellow University of Nevada, Las Vegas
Dr. Ramarao Desuraju Professor of Marketing University of Central Florida
Mary Hunt (PhD candidate) Assistant Professor of Business & Psychology, Internship Coordinator Ave Maria University
Dr. Kacy Kim Assistant Professor of Marketing Elon University
Dr. Annie Liu Associate Professor of Marketing Texas State University
Dr. James Lynch Associate Professor of Management and Law Brooklyn College
Dr. Ronald Michaels Professor of Marketing University of Central Florida
U. N. Umesh Professor of Marketing Washington State University Vancouver
DSEF recently released its newest video teaching tool, The Direct Selling Business Model: Cutting Out the Middle Man.
The new video was filmed live at the University of Texas at Arlington during DSEF’s Business Ethics Forum Campus Event. Al Bala, President and CEO of Mannatech, explains the direct selling business model in a way that business students and entrepreneurs can understand. “Eighty percent of the cost of a product in normal retail channel is in distribution. A large percentage of that is spent on advertising. Direct selling cuts out the middle man by redistributing the costs of advertising and distribution to pay independent contractors.” says Al.
The video was distributed to DSEF Fellows and is designed to be used both by direct selling companies and easily incorporated into a variety of university and community college courses, such as:
distribution channels courses
management, communications and ethics/reputation courses
DSEF’s growing bank of video content also includes the Ask the Experts series, which may be viewed on our Vimeo channel.
At the 2017 Global Sales Science Institute (GSSI) Conference held in Mauritius in June, Julian Allendorf (Ph.D. Candidate, Institute of Marketing, University of Muenster, Germany) received the GSSI 2017 Best Doctoral Student Paper Award for his paper on “Direct Selling Distributors – Why Do They Stay or Leave!”, developed through a grant and data provided by DSEF. The prize-winning paper is based on Allendorf’s joint work with DSEF Fellows Dr. Anne T. Coughlan, PhD (Northwestern University) and Dr. Manfred Krafft (University of Muenster, Germany), and demonstrates how DSEF ‘s academic partners are producing data-driven research that validates the channel. The award was presented to Manfred Krafft by the President of the island nation of Mauritius, Ameenah Firdaus Gurib-Fakim, during a conference reception on June 8.
“Being awarded the GSSI Best Doctoral Student Paper Award for the work we have done so far feels like a great honor to us and provides the motivation for future endeavors,” said Allendorf.
In their joint research, the authors highlight similarities and differences between traditional sales and direct selling, and build on Agency Theory to develop predictions about the ways in which individuals stay in the direct selling distributorship, and what explains their intention to leave.
The authors analyzed a unique dataset of over 13,000 individual direct-selling distributors from 68 firms and asked the the “nature vs. nurture” question: does a “stayer” retain the same motivations as a “joiner,” or do distributors develop and change their motivations over time? Nurture doesn’t refer only to environment. Joiner-Stayers do indeed receive support and training from their companies and uplines, but they also learn about themselves (personal development).
The Stay-Leave decision is represented by the question, “How likely are you to continue representing the company for the next year?” Dr. Coughlan and Dr. Krafft used regression analysis to determine which factors are most likely to have a positive or negative impact on the decision to stay versus the decision to leave.
The drivers of income identified in the study, also called predictor variables, are consistent with those used in academic research and the long history of research on selling. The incremental effect, in dollars, of a change in a predicted variable – either positive or negative – is explained in the study. All effects assume that other drivers are held constant and should be interpreted for changes on the margin.
The results are consistent with the authors’ modified Agency Theory model and suggest academic, managerial and policy implications regarding direct selling investments and assessments.
The 2016 formation of the DSEF Fellows program is an important step in deepening the Foundation’s connection to academic leaders who advance knowledge of the direct selling channel in their field of study. To support and sustain these important partnerships, DSEF created Fellows Learning Journeys – a pathway for exploration and discovery through immersive experiences with executive leadership and staff – for Fellows participating in DSA’s Annual Meeting.
“I appreciated the opportunity to attend the Direct Selling Association’s Annual Meeting as a DSEF Fellow,” says Dr. Andy Gold, Business Administration and Entrepreneurship Professor, Hillsborough Community College. “It was a unique opportunity to learn about this complex and growing marketing channel. The insights from the Annual Meeting and keynote speakers will certainly help inform my students about this channel.”
The Fellows Learning Journey began with the Direct Selling Boot Camp, which provided academics with a comprehensive understanding of the business challenges that new direct selling companies face, and continued with a DSEF Fellows Workshop, in which Fellows shared their direct selling white papers and teaching successes with incoming Fellows.
Fellows also participated in networking and education tracks throughout the conference. “Throughout the Boot Camp and Annual Meeting, I saw countless examples of leaders doing the right thing, both for their companies and for their representatives,” says Dr. Bonnie Canziani, Associate Professor, Marketing, Entrepreneurship, Hospitality & Tourism Department; Coleman Fellow in Entrepreneurship at University of North Carolina at Greensboro (UNCG).
DSEF invests in dynamic partnerships with leading academics, who bring short-term impact through research and data-driven third-party validation for the channel. Seven Fellows highlighted recent and upcoming research during three business intelligence panels for executive attendees.
“It was wonderful to receive instant validation of our research from people who are living the reality of direct selling and entrepreneurship every day,” says Dr. Canziani, who co-presented with Dr. Dianne Welsh (UNCG) research comparing satisfaction rates among franchisees and direct sellers. “Our findings suggest that being aware of the field’s needs for flexibility and recognition is an important step in keeping sellers interested and motivated to maintain connections with their companies.”
To recognize the significant contributions and achievements of its valued academic partners, the Direct Selling Education Foundation created the Educator of the Year award, and presented the inaugural award to Dr. Brenda Cude, University of Georgia (UGA), during the Awards Gala, at the Annual Meeting held in Orlando in June.
“I was incredibly surprised and honored by this recognition,” says Dr. Cude, who serves as Professor and Undergraduate Coordinator at UGA’s College of Family and Consumer Sciences. “Serving as a member of the DSEF Board has been a great experience, and I appreciate DSEF’s support of educational programs to expand students’ knowledge of direct selling.”
Recipients of DSEF’s Educator of the Year Award demonstrate outstanding service to the Foundation through leadership, personal involvement, teaching and research.
“Brenda served two terms on DSEF’s Board of Directors, and has made immeasurable contributions as a strategic and tactical advisor to the Foundation’s Academic Advisory Council.” said Gary Huggins, DSEF Executive Director. “Brenda has also hosted multiple DSEF Campus Events, reaching thousands of students with accurate information about the direct selling channel and the industry’s commitment to ethics.”
Social entrepreneurship and corporate social responsibility are twin drivers of positive social change. Direct selling companies and the independent salespeople that represent them are a quintessential example of the power of networks as a force for social good. The Direct Selling Education Foundation (DSEF) shared that message with 300 students at the University of San Francisco during the “Putting People First: Changing the Way We Do Business” campus event on March 2.
DSEF’s “Changing the Way We Do Business” event, which also featured business innovation in the classroom, was conceived by DSEF Board Member, Dr. Elizabeth Davis, Dean of the USF School of Management and Dr. Peggy Takahashi, Associate Dean of Undergraduate Programs. The DSEF event kicked off USF’s Social Entrepreneurship and Innovation Conference and Tech4Good Startup Weekend, which brought together business leaders, investors and social entrepreneurs to discuss how socially-conscious action, innovation and education can change the world.
Shaklee Chairman and CEO Roger Barnett and Trades of Hope Founder Chelsie Antos shared their companies’ remarkable stories of service, social entrepreneurship and sustainability on panel moderated by Executive Advisor, Retired President and CEO and USF’s Executive-in-Residence Lori Bush. Many US companies have Corporate Social Responsibility programs in place, but direct selling companies are in a unique position to scale those efforts through their independent salesforce. “Wangari Maathai, founder of the Green Belt Movement and Nobel Peace Prize winner, challenged me to plant one million trees.” says Roger. “At the time, Shaklee had 700,000 direct sellers. I realized that if each person planted one tree, that’s nearly three-quarters of our goal.”
Sales networks can serve as a powerful catalyst for social change.
Trades of Hope’s hand-made jewelry is fairly-traded with women artisans in developing countries, which are then sold through “Compassionate Entrepreneurs” – or direct sellers – in the United States. “When you empower one person out of poverty, they bring three people with them,” says Chelsie. “42,000 people in developing nations are being positively impacted by the work these artisans are doing in their communities,” supported by the sale of these products by direct sellers, who can build businesses of their own.
Social entrepreneurship is also a market disruptor, given the right circumstances.
Ruby Ribbon, a shapewear company that sells products through home parties known as “Trunk Shows,” is using social entrepreneurship and innovative garment technology to disrupt the shapewear market and radically change consumer experience. Market disruption occurs when a smaller company with fewer resources is able to successfully challenge an established industry. “Our investors told us there was no way women would try on shapewear in other people’s homes,” says Ruby Ribbon Founder and CEO Anna Zornosa, “but our customers benefit from being professionally fitted by our Stylists,” in a private, rather than public, space.
Exposure to direct selling companies as real-world businesses changes hearts and minds of students and faculty. “I was impressed with the companies that visited USF,” says Dr. Sonya Poole, “DSEF’s program shifted my perception and understanding of the direct selling business model.” Dr. Vanessa Hasse echoed that sentiment, “My students shared their thoughts about the presentations and they all loved it. It was an enriching classroom experience.”
The business environment is changing dramatically. From online transactions and social media to the rise of independent work in the marketplace, the need for ethical business decision-making has never been greater. DSEF’s most recent Campus Event at the University of Texas at Arlington showcased the ethical business practices of seven direct selling companies through presentations and interactions with 700 students throughout the day.
Our nation’s universities are increasingly looking to the business community to share expertise and model practices with faculty and students. The Business Ethics Forum on October 18, executives from AdvoCare International, Mannatech, Inc., Mary Kay, Inc., Nerium International, pawTree, Stream and Zurvita led discussions that helped students understand the changing business climate, the need for ethical decision-making and effective community involvement strategies.
Dr. Larry Chonko, a Professor of Ethics and DSEF Circle of Honor recipient, hosted the Foundation’s event. “As faculty, we are third parties in describing how companies conduct business – what selling practices they use, how they develop products, how they behave ethically, how they give back to their communities,” Larry says. “When representatives of those same companies come to campus they not only tell that story, they can talk about living that story, which is an invaluable experience for students.”
Mark “Bouncer” Schiro, Chairman of the Board of Stream, says campus events are a valuable experience for direct selling executives as well. “While we were on campus interacting with the students, you couldn’t ask for a better situation for reaching millennials,” Bouncer says. “I personally had more than 200 students listening to what it takes to be an ethical entrepreneur. Our time there was priceless.”
Business ethics is the pedestal on which every truly successful direct selling company has been built. One of the most fundamental business ethics issues is trust between a company and its customers. “Direct selling is a relationship marketing enterprise,” says Rick Loy, Vice President of US Sales Training and Field Development at AdvoCare, “People do business with people they like and trust.”
Developing a company culture that instills honesty and integrity in your independent salesforce is the first step, says Michael Lunceford, Senior Vice President of Public Affairs at Mary Kay and a member of DSEF’s Circle of Honor, “Never sacrifice growth and profit for integrity.” he says.
Businesses of all sectors, not just direct selling, have the responsibility to develop a framework for ethical decision-making. “People have a tendency to go along in order to get along,’” Michael says, “We have a moral obligation to say, ‘no, that is wrong.’ Just because something is legal, doesn’t make it right.”
Identifying potential ethical dilemmas and developing courses of action is a top-down business strategy. “You have to be proactive to make sure people are doing things the right way,” says Dick Laurin, Director of Business Ethics at AdvoCare, “And you have to understand the legal landscape.”
In addition, companies—and their independent salespeople—benefit from a code of ethics that every member of the organization must follow and put into action. “Whether you are a consumer, distributor or both, look for a member company of the Direct Selling Association (DSA),” says Rick. “They have a Code of Ethics and we, as member companies, must abide by it.” As a condition of membership in DSA, every applicant must agree to a comprehensive ethics compliance evaluation that takes at least one year. “We make changes to our products and marketing materials, based on this oversight,” Rick says.
When business challenges arise, direct selling companies work with their salespeople to resolve the issue. Direct selling companies closely monitor product claims on social media and are continuously work to improve their processes and communications. “At Zurvita,” says Director of Compliance, Erin McGuiness, “our policy for open communication and dialogue often results in our field coming up with the best marketing solutions.” Professor Omar Itani teaches the Social Media class in UTA business school. “We discuss social media strategies in my class, but having a real example of how one company controls its social media presence is a rare opportunity,” he says.
The event also provided a forum for direct selling executives to demystify the industry and explain the business model to students. “We were able to clarify that direct selling is a channel to market your products, not a stand-alone industry,” Bouncer says.
Al Bala, President and CEO of Mannatech points out that direct selling cuts out the middle man by redistributing the costs of advertising and distribution to pay independent salespeople. “Every time you buy a product, you pay for advertising,” he says. “As a consumer, wouldn’t you rather benefit from the opportunity and your own productivity?”
Another unique aspect of smaller direct selling companies is its immediacy. “Being connected to your customers – to 130,000 salespeople –enables us to problem-solve and course-correct in real time and results in innovations that wouldn’t otherwise be possible,” says Deborah Heisz, President and COO of Nerium.
Direct selling companies also have a positive effect on the US economy. “Mary Kay does business in 38 countries,” says Kerry Tassopoulos, Vice President of Public Affairs, Compliance and Risk Management, “but what people often don’t realize is that 60 percent of our global product line in manufactured is the Dallas-Fort Worth area.”
DSEF campus events advance knowledge of direct selling and demythify the business model to the benefit of companies, executives, professors and students. “The best way to grow a positive image of direct selling is to have executives visit with students and professors and show them, first hand, what direct selling truly is all about,” says Dr. Chonko.
The event exposed students to direct selling as a micro-entrepreneurship opportunity in what can be a competitive job market. “Many of my students are facing tough times finding jobs after graduation, so I also wanted them to understand that direct selling is a viable opportunity to work and earn income,” says Professor Itani.
Roger Morgan, Founder and CEO of pawTree agrees, “We had the opportunity to speak with hundreds of students who are already in the job market and help these students see direct selling as the powerful and viable selling channel we all know it is,” he says. “We appreciate the DSEF providing these opportunities to raise awareness and respect for our entire industry.”
To provide DSEF Fellows and other Academic Partners with relevant teaching content to use in their classrooms, the Foundation has produced two 10-minute videos designed to educate students about business trends such as big data analytics and the sharing economy, and to advance their understanding of the direct selling channel. Tools such as these allow DSEF to reach thousands of students beyond those who attend our campus programs and other events.
Earlier this year, DSEF held a Campus Event on Micro-Entrepreneurship and the Gig Economy at Belmont University, featuring Lori Bush, retired President and CEO of Rodan + Fields, and Will Reinhart of the America Action Forum. Through the video teaching tool based on the day’s discussion, students will learn how direct selling is an effective, modern, go-to-market strategy, as well as a mainstream form of micro-entrepreneurship.
In June at DSA’s Annual Meeting, DSEF featured a general session panel, “What Big Data Can Do for You.” The new classroom video based on the panel discussion — and featuring Dr. Liz Davis, University of San Francisco; John Parker, Amway; Bill Schmarzo, EMC; Frank Perkins, Saleforce.com; and Brian Hopkins, Forrester Research — will help students understand how successful companies turn data into actionable business strategies.
Every day, direct selling companies and the independent salespeople that represent them make a difference in the lives of their customers and their communities. The Direct Selling Education Foundation (DSEF) shared that message nearly 1,000 students and their 13 professors at the University of Georgia(UGA) and Athens Tech during the “Entrepreneurship and Social Responsibility: We Can Make a Better World” multi-campus event on February 23.
To bring our industry’s commitment to social responsibility and entrepreneurship to the classroom, DSEF partnered with Dr. Brenda Cude, Professor and Undergraduate Coordinator in UGA’s Department of Financial Planning, Housing and Consumer Economics (and DSEF Board Member) and Jared Bybee, Director of ThInc UGA.
ThInc is a celebration of innovation and entrepreneurship through events that engage, inspire and transform ideas to reality. “This campus event was an invaluable opportunity for students and their professors to see companies putting into practice ideals of social responsibility—in the company’s own business model in the case of Trades of Hope and through 4Life Research’scommunity outreach programs,” says Brenda.
Trades of Hope Founders Chelsie Antos and Elisabeth Huijskens shared their companies’ unique story of service, empowerment and compassionate entrepreneurship. The hand-made products designed by women artisans indeveloping countries are then sold through “Compassionate Entrepreneurs”—or direct sellers—in the United States. “Women want to be financially self-sustaining; charitable donations dry up over time,” says Elisabeth. “Only compassionate business can give women in poverty a job.”
4Life Research Founders David and Bianca Lisonbee created immune health supplements for optimal living built on the principles of science, success and service. Today, the Foundation 4Life focuses on child nutrition, shelter and education in 24 markets in the world. “Brand lives in the mind of the consumer,” says Calvin Jolley, 4Life’s Vice President of Communications. “Lots of companies sell supplements, but we differentiate ourselves through service.”
For professors, DSEF Campus Programs provide access to leading industry executives on important issues and business solutions. “The speakers presentations fit well with the concepts we’re studying in class – marketing, branding and how corporate social responsibility influences customer perception,” says UGA Professor Diann Moorman, who teaches an Introductory Consumer Economics class.
In a changing economy, people are more interested than ever in independent work, entrepreneurship and finding fulfilling career opportunities. “We interacted with educators, administrators, and approximately 1,000 students,” says Calvin. “These types of exchanges between our industry and higher education provide an invaluable opportunity to raise awareness, impact perception, and instill a sense of credibility for our businesses among an important cross section of the general public.”
Chelsie agrees, “We love DSEF and its mission to educate America about the direct selling business channel. Together, we are inspiring the next generation of entrepreneurs.”
DSEF’s next Campus Program will be held March 30, 2016, at Belmont University in Nashville, TN. Linda Ferrell, DSEF Board Member and Belmont University’s Distinguished Chair in Business Ethics, will host and moderate a panel discussion on Ethical Leadership in the Gig Economy.Speakers include Lori Bush, Rodan + Fields; and Will Reinhart, American Action Forum. For more information, contact Kimberly Harris Bliton, DSEF’s Director of Academic Initiatives.