Meet the FTC – or Else Make Your Distributors’ Social Selling Compliant. Here’s how.

Covid lockdowns and the resulting digitalization have proven to be opportunities for direct selling. Historically socially oriented, and now becoming more high-tech, the industry is among those that reported growth in 2020. The number of direct sellers is currently around 7.7 million (a 13.2% increase), creating a record 13.9% growth in retail sales over the last year.

Social selling helps direct sellers be more prolific.

According to the Direct Selling Association (DSA), 89% of direct sellers use social media, while 46% of Americans would welcome contact from direct sellers regarding business opportunities on social media.

But social media, like any other marketing communication, is subject to the principles that protect consumers against fraudulent advertising and claims. So this growing sales channel has its regulators, rules, and penalties that are designed to make companies and their distributors tell the truth about their products and services.

One of the greatest challenges for direct selling companies is ensuring that all representations comply with legal and brand standards. When companies don’t have social media guidelines or a means of controlling their message they are walking on a minefield, and they may end up in federal court.

Misleading claims draw the FTC’s attention.

Leading direct sales brands have already provided their distributors with social selling tools as part of their enablement strategy. But few of them predicted the blast of misleading earnings and product claims published on social pages after the pandemic started.

Salespeople are excellent psychologists and they understood peoples’ fears about surviving the COVID infection and preserving their financial stability. The majority of misleading statements have arisen from this fertile soil.

This behavior is considered illegal and is now attracting the Federal Trade Commission’s (FTC) attention more than ever. A single FTC contact can shake a brand’s reputation, causing a drop in new enrollments and sales. To secure their online images and good names, direct selling brands should set up rules of conduct on social media, educate distributors, and identify high-risk claims.

Below you will find a step-by-step framework to implement at your company.

7 steps to a social selling compliance strategy.

After having been contacted by the FTC in 2020, many marketers are reinforcing or updating their company’s empowerment strategy by adding compliance components to their core framework. Where to start, what to avoid, and how to train distributors? This is what your new modern approach may look like.

1. Review the Basics for Your Distributors’ Social Selling

The mission and values of your brand form the foundation that keeps the right distributors and customers with you. For this reason before updating your content enablement strategy and compliance policy, first make sure the whole team is on the same page, aligned with your brand’s core basics.

• Brand vision, mission, values. To engage with both independent entrepreneurs and customers, it’s important for direct selling companies to be authentic, share their values, constantly foster trusting relationships, and show how their products change lives. 
• Key audience. Make sure you pay attention to both of your audiences: distributors and consumers. Revise your strategy to cover the needs of both worlds. 
• Reasons to believe. Make sure all your latest research, testimonials, and proven results are available for new and existing distributors. They’re the first circle of believers who will pass their knowledge and passion for the product on to their customers. 
• The tone of voice. Be sure your guidelines are consistent across your entire network, including all social media channels.

2. Simplify Content Enablement

Marketing teams might assume a content strategy for distributors is a nice-to-have, but not entirely necessary early on. However, producing high-quality content can help direct selling companies build trust with new audiences and ultimately gain engagement with self-service buyers.

• Build a content strategy. HQ should build a plan for field empowerment based on a constant supply of different types of content (promotional, educational, lifestyle). Ensure content is easily accessible, filtered, saved, and scheduled. 
• Set up a dedicated team. Build your own or hire an external team to be responsible for creating and distributing content. This team should also define the cadence of content updates depending on your company’s goals and resources.
• Encourage distributors to post lifestyle content. Lifestyle content is essential for your distributors’ credibility and their personal brands. It adds authenticity to their social image, making their interactions meaningful. When your salespeople are authentic, they create emotional connections that last longer.
• Track content usage and top-performing content. Measure how often certain content is used by distributors and adjust your investment and production accordingly.

3. Encourage Distributors to Be Authentic On Social

Authenticity on social media is an effective way to cut through all the endless content “noise” and have meaningful interactions with consumers. The more active and authentic your company’s distributors are, the wider your online visibility gets.

• Encourage your distributors’ authenticity. The secret of direct selling success isn’t selling. It’s all about building relationships intentionally and being real. These commandments should be burned into every distributor’s memory: care, don’t jump to a sale, wait for the right time – and get better results in the long run. 

• Educate about personal branding. Authenticity is impossible without building distributors’ personal brands. HQ should explain, motivate, and train them on developing it. 
• Provide tools. Give them user-friendly software that automates routine tasks and takes the load off so they can spend less time on administrivia. Let them focus on their passion – building relationships and selling.
• Don’t limit them more than federal law does. Allow distributors to add some personal touches to branded content. Customization options and permissions can be set up by HQ according to your brand‘s policies.

4. Set Up a Compliance Policy

Social media compliance means following the rules when engaging with the public via social media. The “rules” are a mix of industry regulations, federal and state laws, and company guidelines. The basic principle of consumer protection and compliance is to tell the truth.

• Establish clear rules of conduct. Representations – by direct selling companies and their distributors – must be non-misleading and substantiated. 

• Use compliance tracking software. The FTC has cautioned direct selling companies that they are obliged not only to instruct their participants but also to monitor their participants so their representations are truthful. Intelligent software is able to filter keywords at the pre-approval stage as well as monitor networks for illegal content to minimize future manual searches.
• Don’t tolerate violations. There must be no tolerance for improper ‘before and after’ photos, product testimonials, income, compensation, or lifestyle claims. Any such activity requires immediate compliance action. Distributors must know and comply with the product and opportunity guidelines.
• Craft a crisis plan. Acting fast is important. With a proactive and detailed strategy in place, the vast majority of your distributors’ social media posts will be distributed without compromising compliance status. If there is a violation, always communicate bad news to stakeholders so they act accordingly and don’t make things even worse with inappropriate announcements.

For More on How to Make Distributors Authentic Yet Compliant on Social Media watch the webinar with Kellye Drye lawyer John Villafranco.

5. Train Your Distributors

Companies should never expect their salespeople to be social media wizards and immediately know what to do. Training should be delivered via multiple approaches, such as newsletters, videos, live events, etc.  Solid education creates an expectation in the field and leads to a more professional sales culture.

• Be an example of social media authenticity. 86% of consumers say authenticity affects their brand support. People want open and honest communications about products and services. That means brands should focus on their values, create emotional connections, and have clear, consistent messages to attract and retain new distributors. As a result, your salespeople will recreate this pattern in their businesses. 
• Explain the value of social media marketing. Older social media users may not be tech-savvy or aware of the possibilities of social media for their businesses. Give them a hand with this learning curve and motivate them with success stories.
• Run webinars about how to succeed on social. Webinars are practical and easily digestible content regularly created by the marketing team (in-house or outsourced), covering the specific needs of all of your distributors and their teams. Schedule them with a fixed cadence and announce upcoming events across your channels of communication.
• Include compliance rules in onboarding. Provide your new distributors with marketing materials enriched with compliance checklists. Meaningful just-in-time learning has been proven to deliver better training outcomes. It’s better to prevent a crisis than to have to rescue your company’s reputation.

6. Get Feedback From the Field

Responding to feedback is an important part of your distributors’ success and scaling processes. It helps improve services and products, determines customer satisfaction, and unifies your distributors through a common idea.

• Create a community and connect distributors. Uniting distributors in a common casual environment helps you understand them better. It’s important not only to create a community but also to lead and manage it. Spark conversations by asking questions and posting comments.
• Share company news. Sharing company updates and research gives distributors more insights into brand values, initiatives, achievements, and differentiation. Altogether, this helps distributors communicate brand-approved information.  
• Encourage sharing of posts and results. Use psychological tactics and add some competition to distributors’ teams. When they see their team leaders flourishing, distributors might get motivated and want to follow in their footsteps.
• Feedback loops. Ask – collect – analyze – improve your HQ/distributor’s future operations by using positive and negative feedback from the field.

7. Use Technology to Post Securely and Lower Risks

A smart marketing platform, combined with proper compliance training, can protect direct selling companies from regulatory issues. Such a system won’t let users post text containing specific words.  It’ll analyze performance data to see which distributor does what at any given point in time, where they struggle, what they do wrong, etc.

Ensure that it is:

• Easy and fast to roll-out
• Enforced with automated compliance
• Mobile-friendly
• Backed with cross-network reporting
• Supported by onboarding and training

Book a demo to learn how PromoRepublic can secure and amplify your brand on social.

Takeaways: 

• Direct sales companies are uniquely positioned to serve more people than ever before with their remote working environments and social orientation.
• Marketing leaders should empower distributors to be authentic, but set boundaries, control social media activities, and apply sanctions.
• Be aware of the FTC’s willingness to go to court for non-compliant messaging. Distributors who are unaware of the FTC’s rules and regulations can go too far with their authentic content and may damage your brand’s reputation.
• 2022 is the year to focus on training your distributors on digital marketing and compliance while supporting their personal growth.