This year, a number of leading direct selling companies have announced their departure from the network marketing model, including most recently Rodan + Fields and Seint. This has unsurprisingly led to significant and widespread backlash from distributors in the field who feel left behind by a culture and business they helped build.
Many direct selling companies who are committed to the multi-tier income structure of the network marketing model have released statements in response that reassure their field and affirm their commitment to the channel, including these CEOs and Founders:
Rolf Sorg
PM-International, Founder & CEO
“As a family business in the premium segment, PM-International set out 30 years ago to become the leader in our niche. Direct sales is our past, present and future. We wholeheartedly believe in this business model.
To thrive in the market, two key elements are essential: maintaining innovation and continuously adapting to new circumstances. Recently, large online players have disrupted the business world. Nevertheless, with forward-thinking direct sales strategies that emphasize hybridization and digitalization, I believe our industry is well-positioned for the future. Direct sales thrives on recognition and offers personalized experiences like no other.
However, success always happens outside the comfort zone, and we need to put in the work. I am convinced that, as an industry, we need to listen closely to our distribution partners; understand their needs; and keep providing innovative solutions.”
Jeff Olson
Neora, Founder & CEO
“I want to be the first business owner to stand up and go on record that Neora will never leave the multi-level marketing model. We are here to stay and be a part of what I believe will be one of the most exciting, growth-filled chapters of this industry.
For more than 30 years, I have been devoted to building as a business owner and field leader in direct sales. I love the business model. I love the opportunity and the transformation that it can provide.
One can only speculate why companies are making these decisions. It is likely that their business model is broken, and they cannot find a way, or do not have the courage, to fix it.
Successful companies in direct selling have found a new way to operate that rewards customer getters, as well as the business builders—and in doing so have created a world-class customer experience.
What is clear is that some companies are dedicated to growing within the model and sharing with the distributors that helped them build the business, and others are focused on maximizing profits for their owners and investors, many of whom have no experience in the industry.”
Amber Olson Rourke
Neora, Founder & President
“I truly believe we as an industry are a people business first. So, for brands to have leaders be the ones to share their products, expand their brand, make it a household name, build and develop teams and then pivot to something that doesn’t include them breaks my heart in every single way.
Anyone who actually understands this industry with any depth, understands that moving to that [affiliate-only] model is not a long-term winning strategy.
We collectively don’t want people in this industry who are just trying to use it; we want people in this industry that are willing to transform it and be a part of this next chapter that will truly be bigger than any other chapter in this space.”
Landen Fredrick
Mannatech, President & CEO
“While we carefully created a separate affiliate company approach to expand our market reach, I want to assure you that Mannatech stands firm in our commitment and belief that the MLM model is and will remain the cornerstone of our success.
Mannatech is more than just a company; it is a legacy. My father J. Stanley Fredrick, a visionary in direct selling and Mannatech’s Chairman of the Board, invested in this company 23 years ago because he believed in the model’s power. He believed in protecting and nurturing it, and as a family, we are dedicated to preserving this model. We are committed to ensuring that this business, built on the principles of Capitalism, the free enterprise system and personal empowerment, continues to flourish for generations to come.”
Gaya Samarasingha
Kalaia, Founder & CEO
“What’s the answer that many are afraid to say out loud? Every company that’s making these drastic pivots with no regard to their field leaders who have put decades of hard work into building a brand from [the] ground up are owned by private equity or non-direct selling investors. For them, commissions are a glaring 40-50 percent expense on the financials, and [the] majority of that money is going to a small percentage of top leaders. So, for them it’s an obvious decision: cut down team commissions and reduce selling expenses to increase [the] bottom line.
They are banking on these changes increasing the activity levels of majority of their database— social sellers. What they don’t understand is [that] without the leaders you don’t have the same culture. You don’t have a way to create community. You don’t have that strong relationship with the field nor the customers to keep them engaged. They forget [that] in our industry, people join people, not the company. If you are a field leader who is impacted or panicking if your company will be next, my biggest advice is make sure you are partnered with a company that’s not backed by private equity and [is instead] owned by someone who is passionate about the channel. If they are channel first, they will at least respect and care about you enough to come to the table and find a solution together instead of pulling the rug [out from] under you.”
Nancy Bogart
Jordan Essentials, Founder & CEO
“As we navigate the ever-changing landscape of the business world, I understand that some of our fellow companies have had to make the difficult decision to change their business models. While we may not know all the reasons behind these changes, I want to extend my heartfelt understanding and support.
At Jordan Essentials, we remain committed to our multi-level marketing model, which has allowed us to build a strong, supportive community and create meaningful opportunities for so many. If you or anyone you know is affected by these changes and looking for a new home in the multi-level marketing world, we welcome you with open arms.”
DSN will continue to report on the influx of private equity funds into the channel and the challenges and opportunities it brings. DSN Founder and CEO Stuart Johnson said, “I founded Direct Selling News because I believe in the transformative power of the channel. Direct selling would not exist without the hard work of the field. These leaders have not only worked so hard to build their own financial success, they have fueled the success of the companies they represent. It is disappointing to see them abandoned in favor of a better bottom line. While private equity firms provide needed cash and resources to the channel, many don’t fully understand direct selling and why it works.”
Aspen Emry
Bravenly Global, Founder & CEO
“I want to reaffirm our unshakeable commitment to the multi-tiered, team-based commission structure that defines the network marketing model.
We hereby commit that we will NEVER shift to an all-affiliate, single-level commission model. We will NEVER cut out the team commissions and incentives that are the lifeblood of our community. As owners and executives, we are entrusted with decisions that affect thousands of families’ livelihoods, hopes, and dreams. We are responsible for providing a solid foundation our brand partners can trust and count on, where their hard work and dedication will continue to be recognized and rewarded for many years to come. We take this responsibility very seriously!
Our company is solely owned and funded by our family. We are debt-free. We have NO outside investors, NO private equity. This independence allows us to be free to lead according to our values, giving utmost importance to the well-being and success of our brand partners. The primary lens through which we view, analyze, and make decisions for our company is: how will this impact our field leaders?”
