Simply the Best: Drivers of High Performance of Direct-Selling Distributors

Basic data for this project

Description

Direct selling companies rely on their distributors both to generate retail sales and to recruit and mentor new distributors. Accordingly, personal income and the size of a distributor's downline are focal performance metrics in direct selling. Identifying the drivers of top performance is very useful to both direct selling firms and distributors. We use the sales performance literature to identify potential drivers and characteristics of top-performing distributors. We model top performance in income and downline size as functions of individual characteristics (skill level and motivation) and environmental/organizational variables. We estimate our models using a unique dataset of 17,005 distributors from 68 U.S. firms. We find that motivation characteristics exhibit the strongest associations with top performance. Further, distributors' effort, monthly expenses, and tenure are associated quadratically with performance, reflecting diminishing returns to these investments. Our results on motivation and skill variables imply that finding, cultivating, and retaining distributors who both are skilled, and work on maximizing the impact of their skills, is distinctively important fostering "the best" in direct selling.