If necessity is the mother of all invention, we can expect a mother lode.
The direct selling industry has never faced the likes of a crisis that we are all going through with COVID-19. Still, companies are rising to the occasion—sending employees home to work virtually, conducting meetings through video conferencing, holding distance events and more, all the while continuing to provide service, support and encouragement to the distributors who depend on them. When the coronavirus finally has been contained and eradicated, we’re likely to be left with innovations that were a direct result of these unprecedented times.
Make no mistake: This crisis will leave a lasting mark on our industry. Our adaptability and innovation skills are being tested. But we can use this opportunity to examine our business practices, devise creative solutions and come back stronger. This month’s cover story explores how a variety of direct selling companies have leveraged technology to propel themselves forward in a market in which we’re sharing space with several formidable gig economy and e-commerce giants.
In January, The Wall Street Journal reported the $2 billion all-stock acquisition of Avon Products, Inc. by Brazilian cosmetics company Natura &Co. Avon is just one example of our industry’s efforts to adapt our business model to an evolving consumer landscape. Tupperware also has struggled to adapt its traditional home-based parties to a digital format. At the same time, it faces growing competition in the reusable storage container space from brands like Rubbermaid and Glad products and outlets like the Dollar Store.
Innovate, or Be Left Behind
Companies in every sector are well aware of this call to action. Still, direct sales organizations have had to walk the line between a legacy of home parties, house calls and personalized service, and a future defined by mobile devices, convenience, speed and sometimes even customer anonymity.
Relationships and technology aren’t mutually exclusive. Direct selling companies have closely monitored trends and invested the resources necessary to develop marketing and tools that blend personalization and convenience. For legacy companies, some of which count older and quite vocal distributors among their demographics, venturing into increasingly digital territory can bring growing pains. Are hybrid models the best approach, or is it best to close the door on the past and jump into the future with both feet?
“Our distributors are microinfluencers. What we need to do as an industry is build our reputation and help them develop theirs.”
—Chris Stubbs, SVP Global Sales & Operations, Nu Skin Operations, Nu Skin
Successful innovation requires a climate that allows freedom to experiment and room to fail. Here are five direct selling companies that are leading the charge in innovating for the future.
Founder and CEO Brian Underwood used to think innovation was about having the newest, the best, the fastest technology in the world—and then his perspective shifted. “The root of innovation is bringing value that people didn’t have before,” he says. “If I can educate you on something you didn’t know, I just brought value to your life without you even having to buy anything. In today’s world, the marketplace is very fickle. As consumers, we’re professional buyers, and as humans, we want value, so we focus as a company on what we can give, not what we can get.”
Sometimes that means unearthing value from something that’s already there. “Ketones weren’t leading-edge—we commercialized them and became a megaphone through community-based marketing. We don’t want to be on the bleeding edge of technology—I’ve been there before, and it’s a very slippery slope.”
A virtual company of 45 employees, Prüvit’s lean structure enables it to stay nimble and in the trenches. “Flexibility is important. A lot of companies, as they see growth, they over-employ and lose effectiveness.
We want to stay plugged into the conversations already happening with customers, promoters, and experts. That’s where collaboration and innovation should take place. We can’t innovate by theory—we have to be in conversation. Our core philosophy for the last 12 years is that collaboration is currency.
“There’s the business you’re in, and the business you’re becoming,” Underwood continues. “If you constantly manage both of those businesses, you won’t ever have to pivot because you’re always innovating. We want to use technology to improve our delivery system and provide a better product experience that addresses what consumers are looking for.”
Culture is critical to innovation. Co-Owners and Co-CEOs Orville and Heidi Thompson applied their entrepreneurial backgrounds to the creation of a direct selling company with a DNA, and a culture more agile and dynamic than its age might suggest, says Chief Marketing Officer Mark Stastny.
Orville Thompson has encouraged the concept of “yes, if,” which Stastny defines as “the understanding that virtually anything can be done if certain circumstances exist.” Sometimes those circumstances aren’t feasible, but they’re almost always worth exploring. Several years ago, for example, as the company continued to introduce new fragrances and discontinues others, it was hearing from customers who didn’t want their favorites to go away. What would have to happen for the company to continue to make those favorites available to those who loved them? Orville asked. The result was Scentsy’s “Always Get My Bar” subscription. Even after the company has discontinued a fragrance, it will keep making it exclusively for Scentsy Club members who request it in their product subscriptions.
Another one of the company’s fundamental innovation philosophies: Don’t let perfection be the enemy of good. “The field learned early from us … that we’re perfectly willing to take ideas and programs and capabilities to market that aren’t perfect and haven’t been completely tested, but they’ve also learned that we’ll listen intently to them. If there are aspects of the program that aren’t working for them, we’ll work tirelessly—at times moving heaven and earth—to make it right,” Stastny says. “Ultimately, this is an industry of energy and momentum. You have to have structure around your plans and roadmaps, but your culture needs to be willing and able to listen and have the finger on the pulse of the market of your consultants and then be nimble and frankly humble enough to move and change when appropriate.”
Long before Ryan Goodwin was Chief Marketing Officer at LifeVantage, he ran his own advertising agency. Among his clients was a direct sales company reluctant to go out on a limb with innovation, the likes of what his Fortune 500 clients were embracing. Some direct selling executives, he says, are under the impression that our business model is radically different from others and that what works elsewhere won’t work in our industry. Besides, if the field seems to be doing well with their sales and recruiting efforts, why rock the boat? With that mentality, companies expect innovation to come from the field.
To compete in this marketplace, though, direct selling companies have to take ownership of innovation—and LifeVantage is focusing its efforts on two key areas: establishing a strong visual brand and enhancing distributors’ and customers’ digital experience. Driving innovation with your visual brand, Goodwin says, “sends the signal that this is an innovative company flying an innovative flag, and everyone can see it.” As for digital innovation, “we think it’s one of the biggest macro trends that direct selling hasn’t been adjusting to fast enough—and that can create a competitive advantage for us.” In a nutshell, “we want to be as close to Shopify as possible, but with no weird hoops because it’s network marketing.” The objective is an integrated strategy that makes it as simple as possible for anyone, at any age or level of technical proficiency, to start and grow a LifeVantage business.
“I think there’s lots of opportunities for direct selling companies to leverage their unique distribution channel through human beings, through unique products, and delivering those to customers in a delightful way.” – Vince Han, Founder/CEO, MobileCoach
As the basis for comparison, Goodwin points to Uber—specifically, the ease with which one may start driving for the company. “I’ve asked hundreds of people, and the answer is always the same: Have you ever wanted to drive for Uber but couldn’t figure out how to do it? Uber has used technology to tell them turn by turn how to service their customers.” The challenge for our industry, he says, is to use technology to make it as easy as possible for distributors to build relationships. Goodwin believes we can do this with the aid of machine learning and a simple interface, enabling a distributor to log into an app when she has the time, “and we tell her the next thing she needs to do to build her business. We have to crack that path—if we don’t, it’s going to be hard to keep the distributor pipeline full.” The future of direct selling, Goodwin adds, belongs to those who figure out how to leverage technology at all points in the cycle: company to distributor and company to customer, “strengthening each touchpoint as a team versus working against one another. Ultimately we all want same thing—to help people be healthier.”
The empowered customer rules the current marketing landscape. Chris Stubbs, Senior Vice President of Global Sales and Operations, defines that customer as “someone who has an abundance of choice, or the ability to get what they want, when they want it, and where they want it. The way we compete in an opportunity and gig economy landscape that is social-commerce and e-commerce enabled is by understanding our customers, focusing on what they want and meeting them where they are at.”
Perhaps that’s why social media influencers have become so, well, influential. They’ve figured out how to connect with customers on a personal level, they’re accessible, and we trust them. Here’s some great news: Direct selling companies already have built-in armies of influencers. “Our distributors are micro-influencers,” Stubbs says. “What we need to do as an industry is build our reputation and help them develop theirs, so when consumers are looking for products, they can go to one of our distributors as a trusted source who provides that personal service. One of our competitive advantages as an industry is community and relationships. With millions of micro-influencers sharing products they love with people who know and trust them, this combination is very powerful.”
“Innovation comes from data-driven insight, a clear understanding of consumers’ needs and an always-learning mindset,” says Kevin Fuller, Senior Vice President of Global Product and Brand. “If direct sellers aren’t engaged in continuous innovation for the future, they won’t have one.
It’s the lifeblood of direct selling, in my opinion. The products and services we offer have to be top shelf to inspire both the distributor force and the consumer.” He adds that consumers can see right through ‘innovation for innovation’s sake’. The difference is that real innovation is highly relevant because it connects with real needs. “Real innovation is messy and takes time—there’s no such thing as a 100 percent success rate,” Fuller continues. “Top management needs to embrace that, then the tone at the top will filter through the culture. If your innovation teams feel like they’re not allowed to fail, they will never deliver game changing products or services. It will drive them to be inherently conservative because they will work only on what they are certain they can deliver. It’s easy for non-visionary management teams to deprioritize the substantial, consistent investment that real innovation requires.” DSN
Technology’s Disruption to Direct Selling
Vince Han founded Mobile Coach, a Provo, Utah-based technology platform for designing, deploying and managing chatbots, or computer programs that simulate human conversations.
Last year, Han penned a guest blog post, “How Technology Will Disrupt Direct Selling—Are You Ready?,” in which he stated “incumbents and established entities are blind to what’s coming until it’s too late.” The trends on the horizon that direct sellers should be watching carefully—if not leading the charge—he says, include frictionless (read: fast with minimal clicks or delays) user experiences, multisensory user experiences, and artificial intelligence and chatbots. So what’s stopping some of us? For starters, some basic human psychological biases:
- CONFIRMATION BIAS: seeking out proof to confirm the validity/effectiveness of our current strategies)
- SUNK COST LOSS AVERSION: sticking to your guns because you’ve already sunk so much money into your present strategy
- GREED: robbing the future to pay for the present, or reaping everything you can at the moment without concern for where you should be headed
- HERD MENTALITY: the assumption that because nobody else is doing it that way, you shouldn’t try it
This isn’t to imply that embracing innovation should be easy for direct selling companies. “Amazon is a tech company first, and everything else second. The challenge for direct selling companies is that they haven’t had a legacy of technology first. From my observation, even for the ones trying to embrace technology, there’s a learning curve,” Han says.
While it might seem as if legacy companies face a steeper learning curve than younger organizations, however, “I would put my money on legacy companies,” he continues. “They’ve got a brand and a loyal customer base and the time, if they chose, to implement technology in the right way by leveraging that bank account of trust that they have with their customers.”
To gain the support of their distributors and customers, Han adds, companies must be transparent with their plans and timetable, “and I think their customers would embrace that.”
All of this said, many legacy companies have legacy technology. Han uses a term called “technical debt” to describe how even the best companies cut corners because of business pressures. Some of those larger legacy companies have incurred a huge amount of technical debt, “so that even the simplest change on a website takes a Herculean effort.” Newer companies, meanwhile, are relatively unencumbered with debt and can debut with a slick website.
It Should Always Be Day One
Jeff Bezos wrote his shareholders a letter in 2017 in which he declared that it would always be “Day 1” at Amazon. In other words, Amazon would maintain the optimism, nimbleness and focus of a first-day startup, always thinking ahead, and refusing the temptation to slide into Day 2 complacency. One of Bezos’ core philosophies in support of that mantra was that decisions should be made with 70 percent of the information; waiting for 90 percent would put you behind in the race.
Over the last decade, technology organizations have taken that mindset to heart—and it requires an openness to failure as a natural step toward learning and improvement. Take, for example, agile development, an incremental, sprint-style approach to software development that replaces a traditional cycle that required months in product requirements, followed by months of writing code. By the time organizations would deploy their sites one or two years later, their requirements were already out of date. With Agile, developers are pushing out new features every couple of weeks, Han says, and while it’s a great way to mitigate large-scale failure, “you’re still going to fail—you’ll still be late, you’re going to have bugs. You need an executive team committed to technology—a technology roadmap, being transparent about it, and being able to attract the talent needed to handle it … it’s important to have someone with technology chops at the table making the decisions,” Han says.
There’s an important distinction between innovation and innovation theater. Innovation theater is focused on creating buzzwords, but there’s no real substance behind the scenes—and consumers can tell the difference. Ultimately, they’re going to go “where it’s most frictionless, and where things are most private, solid and secure and that’s stuff that you can’t theater away—that’s real infrastructure you have to understand how to put in—and it’s also something you can’t do overnight.”
Whether our industry will ever be able to compete with the speed of Amazon delivery remains to be seen. In the meantime, what we do know is that our distributors are our greatest strength—and perhaps the best innovation will come from determining how to capitalize on their service and the convenience of technology.
“I don’t know if anyone’s really cracked the code yet,” Han says, “but I think there’s lots of opportunities for direct selling companies to leverage their unique distribution channel through human beings, through unique products, and delivering those to customers in a delightful way. Amazon really can’t duplicate that. I think there can be lots of wonderful innovations that have yet to be discovered.”