Control the message and own your mistakes. Reputation is everything.
It’s the “It Factor” behind the most beloved and profitable brands, the vibe that lets customers feel confident spending their hard-earned money, and the set of standards that builds fruitful relationships with suppliers and vendors.
A good reputation is the intangible but key ingredient for any company seeking to drive growth. And while it can’t be purchased, companies who fail to heavily invest in building it won’t survive.
Like a bank account, reputation is constructed through individual investments that are rarely made in lump sum deposits but rather amassed through individual integrity-filled choices over the lifetime of a company. A company that curates those positive actions, responses and decisions over the years will have the credibility necessary to survive and even thrive in the event of a public relations crisis.
“There will be times in business when you have to withdraw from that account,” says Kevin Guest, Chief Executive Officer of USANA and Chairman of the Direct Selling Association (DSA). “If you don’t have that account built up with things you have done that are positive, and the first time you’re thinking about reputation is when you’re faced with an issue that can hurt your reputation, it’s too late.”
Direct Selling’s Own Reputation Crisis
While the DSA’s 2020 Consumer Attitudes & Entrepreneurship Study shows that the vast majority of people (80 percent) hold a favorable impression of direct sales, the industry has a history of battling criticism and the consequences of a negative public perception.
“We have seen inflated insurance rates,” Guest says. “It’s gone up double-digits, and we were told straight-up it was because we are a direct seller.”
This cost inflation is known in the industry as the “direct selling tax,” and it’s attributed to the wake of distrust left behind by the handful of bad apples who damage the market landscape for everyone else.
“It’s almost guilt by association,” Guest says. “Even though you might be a pristine company that does everything right, you’re still part of an industry that is questioned by a lot of naysayers out there who are constantly pumping out negative information.”
Million-Dollar Decisions with Billion-Dollar Consequences
In previous decades, a dissatisfied customer would have to publish their thoughts in a letter to the local newspaper or catch the attention of the evening news. Today, every single customer has a digital megaphone at their disposal with the potential to virally influence thousands or millions of other customers.
In the direct selling industry, this risk to reputation damage is higher because there are hundreds of thousands of distributors who function as spokespersons not only of their company but the entire channel as well.
But Guest believes there is an antidote to the reactive management style that causes embarrassing fumbles in the media and creates bad word-of-mouth advertising among disgruntled customers online. A set of standard operating procedures put in place before a crisis happens ensures everyone—from distributors to c-suite executives—stays true to the company’s core values. It’s a method Guest has implemented and witnessed the efficacy of firsthand at USANA.
“We’re focused on putting the customer first at USANA, and an example of that would be a few years ago when we had a batch of product test positive for microbes,” Guest says. “We had a choice to make. We could sell the product as is, and most likely no one would ever find out; we could nuke the product to kill the microbe and cause degradation of the product; or we could throw the product away and cost the company millions of dollars. We had a standard operating procedure in place, so the manager knew he had to throw it out.”
USANA’s protocols empowered an employee at the manager-level to make a multimillion-dollar decision without it ever hitting an executive’s desk.
“We didn’t have to debate what it would do to our profit margins,” Guest says. “The decision was already made because product quality is what we live and die by. We’re a thirty-year-old company, and that could have ruined our reputation, which is worth billions, for the sake of saving a few million dollars.”
A New Approach to Compliance
Companies focused on building outstanding reputations are taking a fresh look at how they present themselves to the world, like Amway, who became the first direct selling company to create the role of Chief Reputation Officer within its executive team. Candace Matthews, who now holds that title, encouraged direct selling leaders not to shy away from difficult conversations, complicated histories and lessons learned through past failures during her speech at the 2021 Direct Selling University event in April.
“[It] will take all of us to impact change,” Matthews said. “[We] must include all people and all perspectives to create a culture where we learn and grow from each other.”
While policing is still a vital element to maintaining a lawful and compliant organization, the new focus will be to devote resources to teaching distributors how to run their businesses with integrity, stay true to the company’s message and then provide tools that help them replicate proper behavior. Systems that encourage and enforce honesty and transparency are now gaining popularity in place of systems that reactively monitor and keep tabs on distributors and their claims.
“We changed the name of our compliance department to an ethics department,” Guest says. “I want to train people how to do things right versus catching them doing things wrong. We certainly do police and correct, but in today’s digital world, reputation is all about controlling the message.”
Part of controlling that message, Guest says, is shouting from the rooftops all the positive things direct selling companies are doing, including sustainability efforts, scholarships for diverse groups, programs that support women in business, philanthropy and, of course, entrepreneurship. Also important is busting the common myths and stigmas that haunt the industry, like inventory loading and high participation fees–none of which are allowed by the DSA.
“The great thing is that we are a legitimate business that offers products that have a demand in the marketplace by real consumers,” Guest says. “So many people are talking about us as a scam, but it’s much harder for them to do that when they understand that we are giving back to the community, that we have a global foundation in place, and that we do have legitimate products that customers have been using for decades.”
“Replacing the messages spread by critical voices with the reputation-building positive stories that result from sticking to a strict code of ethics will be an essential step in counteracting the negative opinions that still float through the marketplace,” Guest describes. “When a crisis of reputation does arise, operating in a trustworthy manner will be crucial for mending and repairing those broken public perceptions.”
“If something goes wrong, my personal opinion is you have to own it, be transparent, and then make it right,” Guest says. “Timing is everything. If you’ve already decided your core values and who you are, it’s not a problem to act quickly. You already made the decision, long before the crisis ever happened.”
Q&A With DSA Chairman Kevin Guest & WFDSA Advocacy Chairman Ryan Napierski
Direct Selling News spoke with Kevin Guest, USANA Chief Executive Officer and incoming chairman of the Direct Selling Association (DSA), and Ryan Napierski, Nu Skin CEO and Advocacy Chairman of the World Federation of Direct Selling Associations (WFDSA), about their collaborative global reputation campaign.
What is your vision for the industry?
Kevin Guest: My vision for the industry would be for us to have a broader digital footprint outside of our own audience. That’s an area we haven’t placed a lot of focus on, but I think it’s very relevant in today’s world.
How will that emphasis on expanding the industry’s digital presence impact its reputation?
Kevin Guest: What difference would it make if a bad article is published in a magazine that might have 40-50,000 followers when we have six million distributors in the U.S.? It’s all about digital, SEO and how we can help raise all the boats in the harbor. I’m hoping I can take the unification of all of these companies that are in some ways competitors and have us working towards one goal: owning our message.
How is the WFDSA working to improve the industry’s reputation?
Ryan Napierski: I see the WFDSA’s role broken into four key deliverables: branding and messaging, behaviors and standards, training and compliance, and advocacy and outreach. The WFDSA Advocacy Committee consists of direct selling CMOs and CCOs who will lead the global work, partnering with local DSAs to localize and execute the work.
What should be the priorities for direct selling distributors and executives as they seek to improve the industry’s reputation on both a domestic and global scale?
Ryan Napierski: There are three key practices. First, who we are matters—we are companies that are a force for good, empowering people to find a better version of themselves. Second, what we do matters to the world—providing amazing products through a uniquely empowering channel that lifts lives. Third, how we do it matters—we do it with integrity, honesty, and sincere intent to benefit all whom we serve, customers, affiliates, and employees.
From the July 2021 issue of Direct Selling News magazine.
