A Look Ahead: 5 Trends That Will Drive MLM Growth in 2020
Looking back provides a great perspective to look ahead. As 2019 draws to a close, it’s time to assess the year’s highlights, lowlights, and surprises in the Multi-Level Marketing (MLM) industry. More importantly, how will current events and trends shape the opportunity for growth in 2020?
Here’s our look at what will drive growth for Direct Selling Organizations (DSOs) in the year ahead.
1. Sustainable success through compliance.
No surprise. Compliance will stay top of mind as companies continue to evolve to ensure their emphasis is on product sales first. Based on FTC judgments and guidance over the past few years, simplifying compensation structures makes sense. Along with ensuring the emphasis is on paying commissions on retail sales, companies must also solidify their recordkeeping and payment processes.
Technology makes sales easier to track and commissions easier to calculate and pay. And innovative MLM software continues to become more accessible and affordable for MLM companies of all sizes. Through automation, companies not only demonstrate consistent alignment with regulatory requirements, they also gain efficiencies that help drive growth.
2. The gig economy goes mainstream.
MLM representatives were the trailblazers of the “side hustle.” Now, the rest of the world is catching up. Today, nearly one in four Americans earn income through “gig” work, and the number of people whose primary income comes from this type of freelance work is growing. (Source)
With the growth of the gig economy, MLM representatives have more options. In an increasingly competitive environment for recruiting and retaining the best representatives, the tools and resources a DSO offers are critical. MLM companies that make starting and growing a viable business easy for representatives create a differentiator in the market. Essential tools include training – both product and sales – as well as innovative marketing and cutting-edge payment processing options.
Another opportunity for DSOs to stand out in the battle to attract representatives comes through streamlining how commissions are paid so the money gets into the representative’s hands more quickly. MLM software can automate the calculations and payments so they’re nearly instantaneous – while ensuring all applicable sales tax is collected and paid.
3. Recognizing the power of the targeted niche.
The era of mass-market products is over. More than ever, selling is about listening to the needs of specific types of buyers and crafting messages that address those needs. Successful representatives go beyond the “people they know” approach to create communities – whether online or in-person – made up of a defined target customer. These communities are based on shared interests that tie back to the solutions provided by the product or service.
In other words, marketing in 2020 is about having a deep understanding of a niche and how people within that segment buy. Rather than leading with product features, effective marketing messages focus first on the buyer’s challenges and how the product addresses them.
4. The buying experience rules.
Buyers today have choices. Often these choices include access to the same or similar products and services available through different channels. As Amazon drives down delivery timeframes and traditional retail struggles to reinvent itself, MLM companies have an advantage. By definition, direct selling has the ability to differentiate the buyer’s experience and create an authentic seller-buyer relationship.
MLM companies have expanded beyond traditional party events to deliver that same feeling of community online through live selling or social selling. Today, MLM software enhancements are significantly improving the representative’s ability to sell live online as well as the buyer’s ability to make purchases without having to leave the live event. In 2020, as Facebook continues to crack down on online selling within its own marketplace, the live selling capabilities of MLM software platforms will become even more important.
5. Corporate social responsibility is a given.
Millennials – and Gen Z right behind them – are continuing to drive an increased focus on corporate social responsibility. As consumers, these generations are more likely to factor a company’s contribution to social causes into their buying decisions. Ninety percent of Gen Z buyers say they’re more willing to purchase products that offer a social or environmental benefit. (Source)
Many DSOs are already aligned with this trend – and not because it’s trendy. As an industry, MLM companies have a long tradition of social responsibility, including donating a percentage of sales or dedicating sales proceeds for specific products to a worthy cause. In fact, many MLM companies are built around philanthropic missions. However, authenticity is crucial for younger consumers. If they perceive a company is capitalizing on a social cause solely for marketing purposes, they are likely to leverage social media to disparage and potentially damage the brand. MLM growth comes in many forms. But, staying up to speed – and positioning your company to get ahead of these five growth trends will have a positive impact on your 2020 bottom line. Luci can help. Take a look at Luci’s innovative MLM software capabilities and what they can do for your business. To learn more, please contact us to get a free demo.