“Building Up personal Level Relations: Case of Russian Direct

Sales and Industry”

28 Sep 2011, Saunders College of Business,Rochester Institute of Technology

Introduction and research background

• Direct selling includes person-to-person relations • Direct sales industry shows quite stable growth rates

• Modern media channels are not that frequent in certain regions (low Internet penetration rates)

Research

• Main research purpose – define most common sales practices is Direct Sales Industry

• Goals:– Identify distributor relations with customers and

motivation– Identify customer communication channels and

objectives– Identify the most common problems in relationship

development

Theoretical background

• Person-to-person connections are considered to be very important on B2C (Saxe, Weitz 1982, Beatty et al., 1996, Verbeke et al. 2011) as well as B2B markets (Singh, Koshy 2011).

• Community influence on consumer behavior (Dellarocas 2003)

• Emerging media channels use

RESEARCH DESIGN

Russian Direct Sales Industry Research project

• Data collection Feb – April 2011• Over 6500 respondents fill in the

questionnaire• Over 65 regions of Russian Federation• 16 companies

Several descriptive outtakes• Gender

Several descriptive outtakes (2)• Distributor age

MAIN RESULTS

Distributor motivation: why they do it.

Financial independence 58%Opportunity to buy products at lower prices 56%Additional income 48%Opportunity to get money for particular occasion 46%Flexible timetable 44%Own business 35%Personal development 35%Meeting new people 34%

Major problems in customer relationsMost important problem (as reported) % of respondents

Prejudice towards direct sales among significant share of customers. 43Not enough customers 35Not enough time 21Difficulties in obtaining additional financial recourses 13Lack of motivation 13Lack of training 10Not enough information about the trade mark 9

Problems in starting customer relations

High initial offer price 26%

Lack of information materials 8%

Company reputation 8%Negative attitude towards DS industry 67%

Lack of advertising 29%

Benefits for customers (perceived)

Customer communication channels

Never use it Yes, frequently

Flyers, Ads 23% 28%

Acquaintance 3% 55%

Friends 3% 55%

In-house presentations 26% 23%

Internet 52% 14%

E-mail 62% 10%

House visits 73% 4%

Phone 21% 41%

Conclusions

• Customer relations are in high priority for most distributors.

• Customer benefits are connected with relational, not transactional features.

• In general distributor performance depends on Company-consumer relations.

• Most distributors fail to use modern media and communication channels.

“Building Up personal Level Relations: Case of Russian Direct Sales and

Industry”

THANK YOU FOR YOUR ATTENTION!

Alexander Rozhkov arozhkov@hse.ru