Expert opinions, TECHNOLOGY

Direct sales go digital

Narek Sirakanyan, President, Freedom International Group

Digital Darwinism era (as marketing expert Brian Solis defined the phenomenon occurring when the rates of change in technology and society are faster than organizations can adapt) is never unnoticed for direct sales companies. The direct selling model is now seen as quite obsolete due to the communication processes’ global digitalization. Businesses find themselves in a controversial situation. On the one hand, they are the very same businesses which maintain with the customers the closest, face-to-face, contacts based on personal contacts. On the other hand, the advancing technologies of online marketing usually exclude any personal communication. The players in the direct sales market face an uneasy dilemma of not losing the magic of personal communication while enhancing it through the magic of technologies.

Digital is not just a definition of relationships with customers. It is digital technologies that can attract younger generations to the businesses, since most of the present-day distributors usually are aged people. The direct sales industry needs dramatic changes and new approaches.

Digital transformation of business makes direct sales market participants go for launching mobile applications and new IT solutions – which requires dramatic adjustments to mentality and communication. A growing number of direct sales companies is introducing SMM technologies and plan to have the future training of distributors based specifically at communicating via social networks. That will be a key distinction since initially direct sales were about directly communicating with customers. For this sector, employing Internet capacities for both developing relationships with existing customers and for finding new customers is the main contemporary trend, as in this regard it is lagging behind other markets.

Developing mobile applications for games and integrating them within the direct sales system is becoming more pressing as it allows to fully optimize the customary structure of the model itself. This is a most promising area of the IT advancement in the industry, because it allows to swiftly train distributors in a game format, teaching them new skills. Freedom International Group has invested in developing Bing HAN Garden mobile game $300K. Company’s overall investments in IT have reached $5 mio. It intends to actively develop in 2018-2019 mobile educational games for the entire direct sales industry here investments are expected to reach over $500K.

One of the new trends which we observe in the process of digital transformations is creation of a high quality original content for social networks. Distributors are not capable of creating and adequately promoting their visual content which can undoubtedly contribute to a successful communication with customers. Nowadays, many companies in the industry teach their distributors these skills and allow them to actively use their social media accounts, arrange special training courses and webinars.

We see major prospects ahead and a trend toward new changes. The direct sales market keeps growing. According to Russian Direct Selling Association, over first nine months of 2017 the market grew by 7% as compared to the same period of the previous year, and reached RUR 93.2 billion ($1.6 billion). The forecast for 2017 is RUR 128 billion which means a 10% growth.

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