In 2000, when brothers Izhak and Moty Ben Shabat launched a family-run holiday business selling toys in mall kiosks, their family and friends risked everything to help.
Headquarters: Phoenix, AZ
Top Executive: Izhak Ben Shabat
2017 Net Sales: $200 Million
2018 Global 100 Rank: 72
Products: Cosmetics, Personal Care
Their parents sold everything they owned, their extended family in Israel funded their flights to the U.S., and the Ben Shabat brothers prayed that their plan would work. Each week the family would work together to make this new venture a success. Every Friday Izhak and Moty’s mother would host a home cooked meal for the family, a tradition that continues to this day. Four months and $4 million in revenue later, the entire family was ready for the next phase of the business.
Following the success of their first kiosk venture, the Ben Shabat brothers chose to focus on Israeli skincare products made from minerals, salts and mud from the Dead Sea. That strategic shift, from toys to Dead Sea skincare products, would change all of their lives.
“What we created resulted in a lot of success and through that we decided to stay (in America) and build a foundation for the business, a business based on the force of Dead Sea minerals,” says SEACRET Direct Co-Founder Izhak Ben Shabat. “That’s our heritage, that’s where we come from.”
A Different Kind of Risk Pays Off
For the first five years in business, Izhak and Moty devoted their time to enhancing the kiosk shopping experience and developing skincare solutions with immediate results. “Our products work within minutes of the demonstration,” Izhak says. “Not in ten hours, not in 30 minutes, right now. That was the entire philosophy of developing the SEACRET products.”
“The company, with its new direct sales business model and new name—SEACRET Direct—made the transition away from kiosks to individual sales.”
— Izhak Ben Shabat, SEACRET Direct Co-Founder
By 2010, SEACRET had grown to a $100 million business with retailers in 30 countries. L’Oréal was now manufacturing the full line of SEACRET products, the first time the cosmetics giant was manufacturing a brand outside of its own. But as the recession began to unfold and affect every facet of retail, malls and shopping centers began to fail. The retail industry experienced a meltdown. Izhak and Moty’s dreams of transitioning from kiosks to larger SEACRET stores suddenly seemed like a potential misstep.
“We started seeing a huge collapse of the industry around us,” Izhak says. “L’Oréal was with us and had given us all these amazing tools. We had new technologies and access to the best manufacturer in the world. But (we thought) how can we grow when the retail industry is so challenging?”
With her experience in direct sales and network marketing, SEACRET Direct Co-Founder Betty Perez saw a solution: take SEACRET out of the mall. Put the products online and transition the entire business to the direct sales/network marketing model. “Before I introduced our groups to network marketing, SEACRET was already very successful,” Perez explains. “We had great products, manufactured by L’Oréal, with so much invested in the line.”
She could see the tremendous potential for the company in the direct sales arena, though it took some time to win over the Ben Shabat brothers to this line of thinking. “Initially we were very negative about network marketing and didn’t want to pursue it,” says Izhak. Then they stumbled upon the research that Warren Buffett had done about his acquisition of a network marketing company and his outlook of what the industry is going to look like. Buffett was talking about social economy and the fact that, if you want to survive this meltdown that is about to happen, you have to create a business model that will allow your customer to share and create excitement about the brand and participate in your business model. Network marketing practices an algorithm that’s been successful for over 100 years of how to compensate people for sharing products with each other.
The company, with its new direct sales business model and new name—SEACRET Direct—made the transition away from kiosks to individual sales consultants known as “SEACRET Agents” in early 2011. Since that initial transition, as of September 2018 and net sales have doubled in those seven years to more than $200 million. The transition was clearly a successful one.
The Rare Potency of Dead Sea Minerals
Paying homage to their heritage and home, the brothers initially offered various Israeli skincare brands from their kiosks, before creating their own formulations and product line as SEACRET in 2005. Today, the SEACRET line of products boasts the power of the Dead Sea and its therapeutic salt and mud, which contain 26 essential minerals—12 of those minerals existing in the Dead Sea exclusively. SEACRET’s products include facial cleansers, creams, serums and toners, as well as a line of hair care.
“The foundation for our product line is the Dead Sea,” Perez says. “We’ve worked with the government of Israel to get more research and obtain the highest concentration of Dead Sea minerals, so our customers get immediate results. Within the direct sales space, there are no other Dead Sea mineral products out there, so there’s really no competition.”
While there are no direct sales competitors that offer Dead Sea products, the world of skincare and cosmetics is a crowded one. In order to stand out and deliver best-in-class solutions to customers, SEACRET focuses on products with immediate results. “We offer what our customers call ‘wow products,’ products that make people say ‘wow’ within five seconds,” explains Perez. That’s something that they consider a cornerstone of their products at SEACRET, and as they continue to create products, they first focus on quality and then product integrity so that they’re providing amazing results every time. “I believe that’s what creates great retention—people can see today a glimpse of what they’re going to see even more in 90 days,” Perez says.
Aligning Two Approaches – Leading with Product vs Opportunity
As the business model transition became SEACRET’s new normal, the executive team noticed that their SEACRET Agents in the field were building strong businesses, but building them quite differently. Some Agents were focused on customers and products, while others were more focused on sharing the business opportunity. The company’s onboarding and training programs didn’t adequately address these two distinct business-building approaches.
“The customer loyalty we have is phenomenal…it’s because SEACRET has really gone out of the way to build relevant programs for customers.”
— Betty Perez, SEACRET Direct Co-Founder
“It became a challenge for us,” shares Perez. “We had people who really just considered themselves direct sellers of the products, never wanting to be business builders and vice versa. And we had a system that didn’t necessarily fit both.”
To align these two approaches, SEACRET developed their “XO System” that’s included in the starter kits that new Agents receive when they join the company. The system consists of two workbooks; an “X Book” that focuses on the product presentation side of the business and an “O Book” that leads with presenting the opportunity. “We found a way to bridge both of these styles where it doesn’t matter which (book) you start with, says Perez. “Both are focused on the product, and the system has been very well received.”
New Agents receive a starter kit that contains an introductory workbook and links to online training videos. Following the initial kit, Agents receive the XO System books that they review initially with their upline and then dive into on their own. These hard copy training materials are referenced in the SEACRET App as well, which sends notifications to Agents to help them follow the training.
Once they’re up and running, Agents can take advantage of sharing SEACRET’s various customer programs, designed to reward frequent buyers and foster loyalty and customer retention. From VIP and Elite Customers to Hosts who hold SEACRET Experiences in their homes, the programs are specific and effective. “As a company, we’ve developed many programs to engage our customers,” Perez says. “The customer loyalty we have is phenomenal—I truly believe it’s because SEACRET has really gone out of the way to build relevant programs for customers.”
Forward-Thinking, Family-focused Culture
Today, SEACRET continues to expand both its product line and international presence but has retained its focus on family. Currently operating in the United States, Canada, Mexico, South Korea, Japan, Australia and New Zealand, SEACRET is looking ahead to launches in Colombia and Vietnam. The company’s first Asian market was South Korea, which proved an excellent opportunity for the leadership team to focus on culture.
“I will serve whether it’s the warehouse employees all the way to the executive leaders of the company. It’s an oath we took—we don’t see it as a responsibility, we see it as a joy.”
— Izhak Ben Shabat
“Korea is one the most challenging markets in the industry because it’s so highly regulated,” says Izhak. “We said ‘we don’t know the culture very well,’ so we invited every single person that signed up in the business into the office, and we conducted interviews.” They knew they needed to get people connected to their culture first, and then the product and the opportunity. They were looking at a culture that is very respectful with a very clear definition of how people treat each other. SEACRET is now in the top five skincare companies in South Korea, with over 20,000 people attending their most recent event. They are the number 6 direct selling company in Korea.
SEACRET’s product roster has recently expanded as well, with the addition of nutritional products that launched this past summer. Though only available for the past few months, the SevenPoint2 series of organic shakes, supplements and nutritional products already accounts for 20 percent of SEACRET’s revenue. But no matter how much SEACRET expands, the commitment to a family-focused culture remains.
“When these 20 people came over from Israel to help my family when we were in crisis, my family took an oath to serve our community for the rest of our lives,” Izhak says. Today, Izhak’s mother is still standing on her feet from Tuesday all the way to Thursday or Friday to cook food for everyone. She loves it because it’s her passion. And when food is being served, it’s being served by his family and by the leaders of the organization. “I am the CEO, and I will serve whether it’s the warehouse employees all the way to the executive leaders of the company,” Izhak says. “It’s an oath we took—we don’t see it as a responsibility, we see it as a joy. We’ve had a lot of success and we are very grateful for that.”