How Digital Support Tools Drive Direct Selling Success
Last week I explained how an insufficient level of independent business support for direct selling distributors can significantly increase churn. Without the digital tools they need to handle the challenges of tracking expenses and filing taxes as a 1099-classifed worker, distributors are more likely to abandon a direct selling opportunity before they’ve seen positive results. In contrast, distributors who are well-informed and well-equipped stand a much better chance of building a successful independent business.
Kelly Thayer is Vice President of Direct Sales at Deductr, the leading developers of expense tracking applications for independent business owners. I reached out to Kelly to learn more about the tax challenges faced by direct selling distributors and find out how Deductr can reduce the frustration of 1099 tax time.
GH: What can direct selling companies do to better equip their distributors for tax time?
Many #directselling distributors have never had their own business before. Click To Tweet
KT: Companies can educate their distributors on the tax advantages available to them and provide tools to help them. When a distributor does not see the tax advantages of being an independent business owner, they are less likely to stay with that business opportunity. That’s why it’s so important for companies to provide expense management and tax time support.
Direct selling companies can try to tackle this concern in-house, or they can partner with Deductr and supply their sales force with Deductr PRO.
GH: What is Deductr?
KT: Deductr was designed to help any independent business owner minimize his or her tax deductions and eliminate tax time stress. Deductr’s web-based and mobile applications help take the guesswork out of the tax equation by automatically tracking expenses, mileage, and time—providing single-click access to everything the business owner needs when tax time rolls around. Deductr does the heavy lifting to ensure that potential deductions are never missed so the business owner can keep more of their hard-earned money.
GH: Why are digital support tools like Deductr so valuable for direct selling distributors?
KT: Many distributors have never had their own business before. They’re not accustomed to tracking their expenses and maximize their deductions as an independent business owner. One of the biggest pitfalls for distributors is receiving a 1099 tax form from their company and not understanding the implications of income without the associated expense deductions.
There are a handful of key features in the Deductr platform that provide immediate value for the distributor. For one, there’s the ability to use just one system to keep track of their business transactions, mileage, activities, and receipts. Reports are all generated automatically, which saves them time and money. Instant feedback widgets tell distributors in real-time how much money they are saving on their taxes with every entry and, with automatic alerts and reminders, distributors can stay on top of their deductions.
GH: What is the value for the direct selling companies themselves?
Distributors need independent business support from their parent company. #directselling Click To Tweet
KT: One motivation for developing this product was the number of distributors who quit their independent business before giving it time to succeed—usually because their ongoing monthly costs exceed their monthly revenues. We knew that if we could help distributors see their monthly costs of doing business offset through savings on tax deductions, it would create an incentive to keep distributors motivated until they achieve profitability.
Consider autoship—an ordering program where product is automatically shipped to distributors periodically. In some direct selling organizations, distributors are obligated to receive a certain amount of inventory every month or so to meet their sales goals. Using Deductr PRO creates the perception of disappearing autoship. As they keep track of their business expenses, they begin to see that their immediate tax savings exceed the cost of their obligated monthly autoship. This creates a bridge to help new distributors get beyond the first 90 days, which is when many of them quit.
Distributors using Deductr PRO remain committed and loyal to the company they are representing. Not only do they see their ‘Blue Bar’ of retained profit grow on their Deductr home screen—they’re also being given the support they need from their parent company to run a successful small business.
GH: Deductr and Hyperwallet can be integrated to work in unison with one another. What does that integration do for end users?
KT: Automatic and seamless importing of all Hyperwallet transactions to their Deductr PRO account. When a distributor receives a payout through Hyperwallet, it shows up on our platform in real-time. This integration reinforces the value of both Deductr and Hyperwallet to the direct selling company and its distributors.
GH: How will new technology improve expense management or tax filing for 1099 workers in the future?
KT: There are a few improvements we’d expect to see in the near future. For one, receipt capture with automatic expense recognition, which isn’t far off. There’s also the automatic categorization of expenses, as well as increased automation in mileage tracking. Those are just a handful of the technological developments we’ll be seeing soon.
To learn more about how companies can drive distributor success with digital support tools, download the comprehensive guide from the direct selling experts at Hyperwallet—Harnessing the Digital Revolution: 9 Questions for Direct Selling Companies in the New Economy.