Thought Leadership

The Big Churn: Reducing Attrition with Distributor Support

TL;DRMany distributors don’t have the knowledge to make the most of their tax process, and it’s easier to quit than ask for help.

Entering the world of direct selling is a thrilling time for new distributors. The flexibility, the opportunity—distributors are excited to pursue their professional and financial goals on their own terms. But despite that early motivation, many distributors fizzle out before they’ve really gotten started. Why?

Often, new direct sellers don’t have all of the knowledge they need to be successful in this new environment. Most are accustomed to the role of a traditional employee: all their adult lives, they’ve worked for company that have handled the behind-the-scenes business operations that are necessary to keep an organization functioning. But as independent business owners, that support structure goes away. Suddenly, distributors are responsible for all sorts of ancillary tasks that they’ve never had to deal with before. They get overwhelmed, and it’s easier to quit than to ask for help. Sure, you can always recruit more distributors—but unless you address the underlying issues that cause representatives to drop out, you’re bound to keep losing them.

The Big Churn.

Want to know why your attrition numbers are so high? Maybe your distributors aren’t prepared for the realities of independent business ownership.

The Realities of Independent Business Ownership

Consider the secondary responsibilities that distributors need to worry about as independent business owners. Depending on the country they’re operating in, they need to ensure that they have all the appropriate registrations, business licenses, insurances, and so on. To top it off, there’s taxes. In an average job, companies automatically deduct mandated taxes from an employee’s pay: things like federal income tax, state income tax, and taxes for social programs (e.g., Medicare and Social Security in the United States). When they’re enrolling in a direct selling opportunity, many new distributors don’t realize that they’ll be responsible for calculating these taxes themselves. Come tax time, they may not have put aside enough of their income to cover the amount owed, which can leave them scrambling just to keep themselves afloat. Even seasoned direct sellers—those who have been in the industry for years and have already filed taxes as an independent business owner—may not have the knowledge to make the most of their tax process.

For #directselling distributors, it's easier to quit than to ask for help. Click To Tweet

Small businesses can claim a wide range of expensive when it comes time to file: home office costs, insurances and utilities, car mileage, and so on. For newcomers and veterans alike, it’s difficult to keep track of the expenses that can be deducted from their tax bill. If distributors aren’t fully aware of all the costs that can be claimed they can’t maximize their income, and that can make the difference between success and failure in the direct selling industry.

How Can Companies Support Their Distributors?

What can you do to better support your field and reduce churn related to distributor unpreparedness? A big part of it is just education. Making resources on independent business ownership accessible online—or, better yet, making it part of a mobile-enabled training process—is a great way to prepare distributors for the challenges of the direct selling industry.

For some distributors, though, just having the knowledge isn’t enough. Organizing tax information for an independent business is no small burden: distributors need to hold onto receipts for anything bought with cash, and retrieve credit and debit records for expense paid electronically. They need to manually log car mileage and keep tickets to company conferences. Curating all of this information can prove to be a second job of its own.

Many #directselling reps don't have the knowledge to make the most of their tax process. Click To Tweet

Providing distributors with digital support tools can better equip your field to handle the behind-the-scenes responsibilities of independent business ownership. For example, Deductr provides 1099-classified workers with a mobile platform to track their receipts, transactions, mileage, and so on. Hyperwallet has integrated tax services that help distributors prepare, file, and maintain important tax documents. In short, the tools available. It falls to direct selling companies to recognize the importance of independent business support and take steps to offer it to their fields.

The Benefits Are Clear

Distributors who are well-informed and well-equipped stand a far better chance of building successful direct selling careers. The benefits to the direct selling organization are manifold: distributors who take their responsibilities as independent business owners seriously are more inclined to see their direct selling endeavor as a career opportunity, rather than as a secondary source of income. They’re happier, more dedicated to the company, and better able to educate their downline.

Of course, tax services and tracking features aren’t the only way to support your independent business owners. Download our free guide—Harnessing the Digital Revolution: 9 Questions for Direct Selling Companies in the New Economy—for expert insight into the digital tools distributors need to be successful.

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