How to Best Use the Internet to Fulfill Your Overall Corporate Mission

by Mark Rawlins

To understand how a direct sales company can best use the Internet to fulfill its overall corporate mission, I think you must look back at what traditionally makes a direct sales company successful, and then see how the Internet can help a company do those things better.

One of the pioneers of modern direct sales was the Kirby Vacuum Company. Why did they sell via direct sales rather than through the established retail channel? Unless a housewife saw a demonstration of the vacuum cleaner, she would never believe that a vacuum cleaner could clean her floors and rugs better than sweeping or "beating" them. It certainly wouldn't be worth the money she would have to spend. Product demonstration was the way. They were simply going to have to prove it, one housewife at a time.

I believe that times have not changed. The basic paradigm of direct sales is still the same. The products best suited to direct sales distribution are those products that require a significant explanation. This concept is brilliantly explained in the book "The Next Trillion," written by the economist Paul Zane Pilzer. He argues that the sales and distribution process involves two basic functions. These are "intellectual distribution" and "physical distribution." Physical distribution is simply the act of getting product in the hands of the consumer. Intellectual distribution is the process of educating the consumer about all aspects of why he or she needs the product and how to use it. Companies succeed by being known for lowering the cost of physical distribution, or by improving the quality and effectiveness of intellectual distribution, but not for both.

Sam Walton was one of the first to understand this when he created Wal-Mart. He created the discount superstore store concept and concentrated on lowering the cost of physical distribution to rock bottom. He did not sell any items that required a significant amount of intellectual distribution. The concept of the discount superstore has been wildly successful at lowering the cost of everyday items. However, this success has left a tremendous opportunity for companies to sell products that require intellectual distribution.

I believe almost all successful direct sales companies are built on product lines that require some form of intellectual distribution. I think there are 4 types of intellectual distribution specifically applicable to this industry:

Motivation
Products like diet products and other health and fitness products that are more effective if the recipient is and continues to be motivated.

Education
Consider a truly new type of product, like the Kirby vacuum, where the consumer needs to be educated about this new technology and its benefits.

Training
A product that the consumer already knows how to use but the company can show them a better or more efficient way with their products. For example, consider a new type of cookware.

Support
This is the basic concept of the product party, such as home decorating parties or cooking parties. These parties validate choices, give people new ideas, and provide social interaction in a fun, non-threatening environment.

If a product does not require some form of intellectual distribution, the product will eventually be sold at the Wal-Marts of the world. Since the superstores are never going to use intellectual distribution, that becomes our industry's ace in the hole.

There is a problem. Most direct sales people are part-time workers. If a product requires a LOT of intellectual distribution, then it could not be sold by direct sales because of the logistical and cost nightmare in training a part-time sales force. The window of available products for direct sales companies has been relatively narrow. A company needs product that requires some intellectual distribution, so as to keep it off the shelves of Wal-Mart, but not so much that it overwhelms their part-time sales force. Clearly a better way needs to be found to allow companies to sell a broader range of product.

I believe allowing direct sales companies to distribute products that require greater intellectual distribution or doing a better job of intellectual distribution of existing products is the greatest untapped potential of the Internet today. Web tools like webconferencing, online learning libraries, and downloadable documents can help the sales people. A company can make best use of their top motivators, best trainers, and best educators to educate. Internet products can mean distributors no longer have to wait until they feel comfortable with the entire presentation before talking about product.

Why is the Internet uniquely suited to this task? Because it allows the delivery of customized information to individuals, based on their own unique needs and on a very cost-efficient basis. There has never been anything like the Internet. A company can create hundreds of presentations, product sheets, etc., and design their Internet site to only show a distributor those items they are interested in, based on what they have ordered, a survey they have filled out, or both.

Can this work? Of course it can. Over the years we have seen audio tapes, video tapes, conference calls, voicemail, and computer CD's each take on a small portion of intellectual distribution. All of these technologies have driven the industry to new heights, and none of them have even one tenth of the potential for giving companies a low-cost solution for quality and affordable access to the intellectual distribution of their products that the Internet does.

The great competitive advantage direct sales has is intellectual distribution. As an industry, we pay a tremendous amount in sales commissions for that advantage. So just like Sam Walton, who was relentless in improving his competitive advantage by perfecting the physical distribution model, we as an industry must be relentless in improving the intellectual distribution model. And now, for the first time in the history of the direct sales industry, the Internet gives us almost the perfect tool to do it.