Finding opportunities in a mature market
Is the MLM industry on the decline in the US? Alan Pollard, president of PayQuicker, joins Kenny to discuss the state of the US market. He argues that the US isn’t in decline but is instead reaching maturity. The opportunity is still there for companies that are prepared to adapt. Alan and Kenny discuss the effects of technology and consumer protection efforts (it’s not bad news, folks!), and the need for a strong brand strategy, product focus, and improved customer experiences.
Kenny: Hello and welcome to the MLM.com podcast. I’m your host, Kenny Rawlins, and today we’re talking with Alan Pollard who is the president of PayQuicker. I’ve known Alan for many, many years. He’s been in and around the industry and has a lot of experience. We’re excited to talk to him. Alan how are you doing?
Alan: Fantastic. It’s good to be with you Kenny.
Kenny: Thanks for joining us. So, before we dive in, why don’t you go ahead and give our listeners a little bit of background about your experience and where you’ve been and how you got to PayQuicker?
Alan: Perfect. I’ve had a wonderful career in direct sales—always on the technology side—and really had the opportunity to cut my teeth and really understand the drivers, the behaviors, the branding, all those things started with my career at InfoTrax back in 2002 and I learned [at InfoTrax] really everything I understand about Commissions. InfoTrax is one of the leading back-office providers and certainly one of the leaders in the compensation space. So, I got to hang on Mark’s coattails a little bit and understand the inner workings of solid compensation plans. Bonuses, commissions, promotions, and incentives… it’s really well packaged. So, with that came obviously a really good understanding of the operational side, the ERP component.
From there I moved to the front end and spent time with a company called iCentris, building front-end tools and really looking at more of the communications side of [direct sales] and understanding, again, how to take the data that was coming out of the systems. You look at transactions and qualifications and all the things that go through. How do we package that up and make that usable for the salesforce? And so, we really did a lot of work in terms of understanding the career plan and the progression and how we could apply data analytics to that so that [distributors] knew what the next steps were. It wasn’t really “Go find. Go hunt.” It was actually doing the data analytics and presenting that data in such a format that they could take action on it.
So, combined with my understanding of the back end and commissions from the InfoTrax world and being able to apply that on the front end from a communication [perspective], from a marketing perspective, from the actual career plan perspective. We really had a lot of success in helping our clients deliver the analytics that their teams needed.
From there I ended up doing quite a bit of consulting work and I’ve always enjoyed that part of the industry—working closely with clients in the launch of operations, in the configuration setup of their entire infrastructure both domestic and international. Spent quite a bit of time, also with clients, just working on the nuances of refreshing a plan. The enthusiasm of a new startup. How do you capture that? How do you fine-tune that and move that into your major markets? So, I’ve spent quite a bit of time doing that.
My most recent career move has been to PayQuicker and PayQuicker is one of the leading providers of payments—mass global payments—and so it’s a little bit different than just moving money from point A to point B. We do it on a global basis. There’s a lot of requirements from a regulatory standpoint. It’s something that’s been new for me as I figured that out. But it really goes hand-in-hand you know. When you think about the tremendous risk from a data security [perspective], from a network security [perspective]… certainly as we get in we do a lot with the KYC. So that part of the business, really understanding the regulations and the security components of building a global sales force and then being able to now [focus on] “how do we pay that sales force and do it efficiently?” It’s been really a fun challenge to take that on.
So, I’ve really seen both sides of the industry, front-end, back-end, and now kind of back into the network side in terms of supporting our operational teams and delivering global payments. We do those things pretty well. It’s been a lot of fun.
Kenny: Yeah. You know, it is one of those things where I don’t think people appreciate the complexity when it comes to moving money around and the regulations that you have to be involved in and like you say the KYC regulations and things like that. I think what you guys over at PayQuicker do is an important part of what all network marketing companies are trying to accomplish which is to empower people to make a living.
Alan: It has been, I think, one of the most evolving—even rapidly evolving—pieces of the business. ACH direct deposit has been a hallmark certainly, you know, checks. But it is really a rapidly moving space on that.
Kenny: It is gonna be interesting just to see… you know I just got back from a trip to India and [on the plane] one of my co-workers was sitting next to a guy who—you’re on a 15-hour flight, you’ve got plenty of time to talk—and he was trying to convince him, once he found out the industry we’re in, that InfoTrax should create its own cryptocurrency. Gone are the days where it was as simple as just cutting a check. Right? Yeah. You guys are on top of what you’re doing over there and like I say that is one of the things where I don’t think people have an appropriate appreciation of what it takes to get money from point A to point B. Because they think it just is that easy.
Alan: Yeah it really captures a lot. You know, cryptocurrency comes up on a regular basis and I think at some point in the future as those become more reliable… you know honestly crypto is just another currency. And so, when you look at the volatility of a currency, that can always present problems for global enterprises because at some point you’ve got to normalize, standardize if you will, on value for product, value for commissions. All those things go into it and so I think the day will come when the crypto piece will become a little bit more relevant. Right now, it’s a little bit early I think. A lot of volatility in those crypto markets right now. But we certainly hear a lot about those things as well.
Kenny: Yeah, yeah and I trust you guys will stay on the leading edge there. Let’s dive into the heart of what we wanted to address today. With your experience and your background, I think we’ve got a good conversation lined up. What we want to talk about is how do network marketing companies stay relevant in the US today? This is kind of an interesting topic. I know you and I have both had conversations [about this] with different people in the industry. And if you go out and look at a lot of established companies, the sense is that they’re either holding stable or declining in the US but not necessarily seeing a lot of growth. Then you’ve got the regulatory action with Vemma and Herbalife. And I’ve heard people express the question of “what’s the future of direct selling within the US market?” I’d be curious to get your take. When you hear conversations like that or when you’re a part of conversations like that, what’s your takeaway given your background?
Alan: This is a great topic and you know I’ve had some interesting conversations [about this] with young companies as well as many of our multinationals. I think the real challenge is, if I could be so bold, simply sticking with the basics. That might sound a little bit cliché, but with so much going on… you know the things that we’ve just talked about… boy. We’re talking about just the infrastructure to support a product and a field force and all of the components of product delivery and payments and commissions and communication. Those are very complex processes that many times are automated with software, etc.
Well now you compound that as you move into multiple markets, as you start to expand internationally. It goes well beyond just language and currency and location and being able to manage all that… So, my point in saying that is you look at some of our hallmark companies in the industry that have just done a phenomenal job operating in 15, 20, 30 different countries, certainly it takes time and energy and certainly where the companies end up having the most success, typically that’s where they’re going to focus their resources.
So, it takes a lot of discipline I think for our global companies to be able to manage to balance. There’s only 24 hours in a day. There’s X number of dollars, X number of resources, and so certainly companies do a great job of taking advantage of opportunities. But that may mean that in some cases there might be less focus, maybe less energy, around a particular market in a company.
I think the other thing that’s critically important—and you know we’ve chatted about this a little bit—I really think the solution to our [stagnant] US markets is… one of the great opportunities, I believe personally, is [combining] a great brand with a great direct selling model. I am very bullish on the US market. But I think what we’re seeing is the maturation of the US market in comparison to maybe some of the other international markets that frankly are probably 10, 15, maybe 20 years behind—not necessarily in terms of the infrastructure or technology, but just simply the overall direct selling business model.
When we look at the US they’ve been the leader in the direct selling space for so many years. So, I think from a certain perspective, if we looked at it from just purely a business lifecycle or a product lifecycle, I think it’s pretty clear that direct selling in the US has moved into the very mature market space. It’s not an emerging market it’s very much a mature market. So, what does that mean? Well personally I think the success that I’ve seen with clients [comes from] a laser focus on their product with a very, very specific brand. And when I say brand, that’s all-inclusive. It’s understanding the specifics of the target market that they’re serving, it’s understanding the specifics of the consumer behaviors and how they’re going to consume that product, and then being able to put a very, very compelling… brand marcom… our companies that are doing those kinds of things, we’re seeing a lot of activity.
I think, Kenny, if you sit back and really look overall, we’re seeing a lot of our US companies start to embrace more of a consumer-centric brand management, even in direct sales, so that the consumer leads, the product leads, the benefits, the solution, whatever it might be, those are the lead for the direct sales force rather than [the business opportunity]. As we well know, the direct sales industry has had the ability to lead with more of the business opportunity. So, I think we’re seeing that pendulum swing and as our companies embrace this new millennium a little bit, I think we’re going to see some tremendous successes within the direct sales space but, again, I think it’s going to be led by a focus on consumer, a focus on product, a focus on that overall consumer experience. Those are the things I think are gonna really lead the up-growth in the US market.
Kenny: Yeah. I definitely agree with you and, like you, I’m pretty bullish on direct selling as a model, even within the US. And I’ve seen a lot of companies, even as startups, have a lot of success 100% domestically here in the US. One of the things I’ve seen over time is there’s a certain sense of urgency to go international because people wear it as a badge of honor and they think that it’s kind of a ticket to the big boys table, so to speak, without realizing some of the things that you hit on. That there’s a lot of infrastructure that goes into supporting even just a few markets.
Alan: And the thing that’s interesting, I think, technology while it simplifies things, Kenny, it’s actually part of the problem because technology is what’s allowing companies to expand a little bit irrationally. The technology base does allow us to support a global sales force. So, it is a kind of a catch-22 on that.
Kenny: I totally agree with you and the other thing that I think plays into that is the psychology of thinking of them in terms of countries. So, the US is one country but, as you pointed out as we were preparing for this call, there are some states within the US that have economies larger than some of the markets that people are opening up. And so, I do think there comes a point where… You talked about staying disciplined. I think there can be a lack of discipline in saying “okay well we’re going to start expanding internationally.” When really you could start expanding into the middle of the US. Especially with the data that we have, you can see what regions in the US have not taken hold. There’s a real opportunity to go there and start up without a lot of the infrastructure costs that you incur by going overseas.
But then another thing that you hit on that is big is the change of philosophy and I think a lot of this came out of the Great Recession that we had a decade ago. Leading up to that, everybody was just looking for business opportunities. And now I think we have gotten a little bit more realistic. We’ve got a better perspective as an industry and that combined with some of the regulatory actions that have come, we are now more consumer-focused and if you’re going to be consumer-focused you’ve got to be product-focused or else there is no opportunity there. And by opportunity I don’t mean in the MLM sense. So, I think those are the companies that we’re seeing really rejuvenate or really thrive within the US market is people who are product-focused, have that new mentality, and stay disciplined on saying “okay we’re gonna focus on the US until it really is time to go international.”
Alan: Well and again if you take that very sharp focus from a product standpoint you recognize that as you move your products and services from one country to the next, that’s going to require some modification to your products and services to meet the culture, to meet the target market audiences in those countries. I think maybe we view the opportunity as kind of the great equalizer. It’s the common if you will. And then we’ll do what we need to with the products. Whereas with that extreme product focus, that customer experience, again you have a much broader swath of the country. If you’re pure business opportunity, you tend to see those hotspots, if you will, where a particular region in the US or particular states in the US, just by the nature of the direct sales network marketing component.
So, I think it is an exciting time. As I’ve been through the last couple of months, I’ve had a chance to sit in on some of the regulatory meetings, some of the board meetings, some of the conferences that are dealing with this overall, and some great dialogue, great conversations, perspectives that are coming out of that. But at the end of the day, what I think is going to help all of us is to find the segments within our market that are going to work.
We’re seeing now from a regulatory spot, we just simply have to separate out customers, both retail and preferred customers. We’ve got a separate—there’s got to be a clean clear line of demarcation between those folks and our distributor force. And again, what does that mean? Well we’ve got to be a product-centric company. We’ve got to be able to provide a true product value both in terms of the cost, the delivery, all those different things.
You know one of the things that I find fascinating is the disruption that we’re starting to see with Amazon. I mean for 100 bucks a [year]… I feel bad because my wife loves Amazon. We’ve got grandkids across the country, so that two-day free shipping with that Prime membership, I mean we’re getting our money’s worth on that deal, because it’s just something that she uses on a regular basis. And she doesn’t even think about going anywhere else because shipping is free at Amazon. That’s a disruptor. And so, we’re starting to see even those kinds of basic fundamentals there where it’s not necessarily competing within the industry but it’s competing overall in the general consumer space.
So, I’ve seen many of our clients that are really taking a good hard look at “okay what is the expectation for a consumer, customer experience?” And it’s not just about the product and the price but it’s also again about the delivery mechanisms, about the customer support as well as the price that goes into that, so again clean, clear segmentation between our [distributors and] customers—both retail and preferred—and then providing that opportunity.
I believe as we move through this “trough,” if you will, I think we’re going to emerge much stronger because again if you look at the hallmark of a successful distributorship, what is it? Well it’s retention. It’s being able to keep the folks that I bring into the business and that I’m not having to replace those on an annual basis. So those companies who have truly mastered that product component and that customer experience—while it does take energy, and it does take effort, and it does in fact take costs away—what we’re finding is that the retention rates of those companies are much, much stronger.
So, several of the clients that I’ve talked to [ask]—you know back in the day you and I would have this argument—about “What is the right commission plan? What is the right commissionable amount?” And what we’re starting to see is that commission is being divided up a little bit differently in this world because some of those funds that may have gone to our salespeople, to our team leaders, to our executives… What we’re seeing is a little more investment in the customer experience. And so, as we talk about promotions and incentives, frankly, one of the big number-one item is the shipping component. So how do we, again, incentivize and create retention utilizing a free shipping program and how do we pay for that? Those are all the things that the clients I’ve been working with are wrestling with and there’s some great solutions to it.
Kenny: That is a good point, especially you know bringing it back to the area where I spend most of my time—commissions. I think you are going to see, as you kind of alluded to, a continual evolution of how commissions are divided up. One of the things that I really liked in the way that I’ve seen things going is using some of those resources to create good loyalty programs, to create things like you’re talking about where, “Okay well how do we go and compete with Amazon?” “Is there a model where we can do a free shipping type thing?”
Going back to your comment on Amazon, I’ve had people talk to me and say “with the internet like it is, is there really a place for direct sales?” And I actually think if you look at the way that the internet and e-commerce is evolving (and even Amazon is evolving), there is value in having somebody you know and trust recommend something. There’s so much information and counter information and counter-counter information out on the internet.
You pointed this out yesterday when we were talking about the direction we wanted to go on this podcast. You do start to get skeptical over reviews. If something’s got a hundred reviews, how many of those are employees who are encouraged to go give a promising review?
And you’ve seen it even culturally. People are questioning data sources. Fake news is probably the term of 2017 and probably going to continue to be so for quite a while. When so many of the sources of information are continually being questioned, one of the things that people do appreciate still is that personal relationship and that willingness to share things personally and that’s where I think referral programs play into what you’re talking about. In a lot of ways, as an industry, I think we are going to come out of this better off because I think it’s going to highlight more of the value of the education component of direct sales, and the personal referral aspect of direct sales.
Alan: And I think that fits beautifully into an overall brand management strategy. It’s interesting to look at some of the dominant brands. There’s almost a cultural following. There’s clearly an audience, a user group if you will, that share a lot of similar traits. Culturally there’s a willingness to share, a willingness to get together. Boy, those are the hallmarks of the direct sales team.
If I’m a corporate executive and looking at my distribution options, there’s really only four. I’ve got my retail component, which we’ve seen the struggles and challenges of that. Ecommerce has become so crowded, so busy, and frankly so competitive. That’s a cutthroat side of the business that our brick and mortar teams are worried about as they’ve launched online. Then we’ve got the pure e-commerce play. There is a lot of competition in that space and because of that we’re starting to see most products get commoditized so quickly because it just comes down to that lowest common denominator. Then you’ve got Amazon and some folks may say “well goodness Amazon they’re in e-commerce.” No. They’re kind of the 800 pound gorilla. They have disrupted so many industries and have done to ecommerce what Walmart did to retail 25 years ago. It’s really interesting to see these models play out a little bit.
The fourth one, that I think again has such tremendous possibilities, is our direct model. It is our ability, again, with a strong brand management strategy to attract a very specific segment of users. I think that’s where a lot of our companies are going. I think many of our companies had the luxury 5-10 years ago to take a more general swath, a more horizontal swath of a particular market. I think really what we’re seeing in today’s world, and again in a mature market, when you look at the availability of products that are almost endless, it really requires a strong focus on that target audience with a great brand strategy wrapped around that.
Then, as you pointed out, the power of the network, the power of the personal relationships, the belonging component of feeling like the product, the company that I’m a part of is more than just a great product experience. They believe the same things and I believe. They support and focus on the same things I believe. We start to see all of those things playing out in a traditional brand strategy and I think that’s where our companies are going to be fantastic. And again it’s going to take a little bit more focus, and a little more brand strategy around that, but as those things continue to evolve I believe the sky’s the limit.
Kenny: I’m totally on board with you there and I think to your point on brand management… I mean that is the thing about the internet and social media today. Your reputation can take a hit, and it can take a hard hit, quickly. But likewise if you take care of your customers and if you keep your nose clean, so to speak, you can have the power of that brand get out very quickly. That is another area where I think we’re gonna see people harness technology more and more. It’s always a reactive type thing. People harness new technology and then companies try to figure out how to live within that space. And protecting your brand and really having brand in mind, I think, is going to be key to thriving within the United States. We’ve seen that with a number of companies but the ones who have a good name, that can spread like wildfire as well.
Alan: Yeah. Really true. And some of that obviously has been driven by a little more focus from the FDA in terms of product claims, advertising claims. There’s certainly a number of organizations that have jurisdiction as well as just a genuine concern for consumer protection. And technology. What does that mean [for the industry]? Well boy I’ll tell you, if you don’t have a strong brand that you can use to train, educate, and keep your sales team—and for that matter your preferred customers and customers—keep them focused on what really matters, well it can create all kinds of problems. That’s what we see when the regulators step in. Because of technology, social media, boy it doesn’t take much for them to identify potential violations of consumer protection. And then obviously on the business side, we’ve got to worry about, again, income claims and those kinds of things.
To me, that’s the direct benefit of strong brand management, because as folks buy in—whether that is from the customer, retail, preferred customer side or whether it’s from our consultants or distributors—those are things that again we get great alignment between the product valuation and the business opportunity. When those things are aligned, those potential violations or those errors or those omissions (whatever we want to call them) are dramatically reduced when the true value of the product and the opportunity get to shine.
It’s in those areas—and this is where I think companies have struggled a little bit—it’s in those areas where there’s not a strong value proposition on the product, or there’s not a clear target audience for that distributor or consultant to pursue, that all of a sudden we find that we have to tell more of a story, or we have to talk more about potential benefits than we should need to. Again, that’s where I think the responsibility falls back onto our corporate marketing and brand management teams because as those things align and we get that crystal-clear laser focus on the product value, the target audience, those things just seem to align. And a lot of those fringe problems of being able to sell the benefits of either the business or the product, I think those really get minimized the stronger that that messaging and branding is.
Kenny: I absolutely agree with you and I think we’ll end it right there. I think you’ve really brought to light some key thoughts and some key insights. I will say, I started the podcast off leading in on the US, but I think these are principles that we’ll see translate overseas and internationally. But it’s really about having that deliberate and disciplined approach that’s going to make you succeed in any market. But I think, to summarize what both of us have said, there’s nothing that I would point to—and tell me if you disagree—that would say that people should be afraid of the health of the US market.
Alan: I think the beauty of the free market is we learn from our mistakes, we learn from a loss. When we’re always winning and things are going well, sometimes it’s tough to self-evaluate. But the companies, the executive teams that I’ve worked with… just fantastic teams, fantastic people, great brands. We’re resilient. We’re gonna learn from a downturn and I think we’ll come back with flying colors.
Kenny: I 100% agree. Alan, thank you so much for your time. We look forward to having you on the show again soon.
Alan: Thanks so much Kenny. It’s good to be with you again.
Kenny: And that concludes today’s episode. Thanks for joining us on the MLM.com podcast. Again I’m your host Kenny Rawlins and I want to give a special thanks to Alan Pollard of PayQuicker for his time today. I also want to thank Adam Holdaway and Jana Bangerter for production support. We hope you’ll join us again next time.
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