Click here to order the October 2015 issue in which this article appeared.
The leadership of the direct selling industry has shifted to younger companies, and the proof is in the numbers. Case in point: Nerium International, based in Addison, Texas. A leader in the next wave of growth companies—those in the upper middle market group between $300 million and $1 billion—Nerium has an incredible story worth studying closely.
Founder and CEO Jeff Olson says there are several factors he credits for the 4-year-old company’s $1 billion in cumulative sales. Already the company is No. 12 overall on the 2015 Inc. 5000 list, which ranks the fastest-growing private companies in America, and it is the fastest-growing consumer products company on that list. It bears repeating: This company is 4 years old.
Above All, Culture
When you speak to Olson, it’s clear that if there’s one thing he’s passionate about, it’s promoting and maintaining his company’s “loving, caring, sharing” culture internally, with employees, and externally, among consultants in the field. And by no means is this just lip service. A best-selling author, founder and owner of Live Happy magazine, speaker and self-described “perpetual student of personal development,” Olson started one of the largest personal development training companies in the United States before founding Nerium International, a company charged with a mission he takes very personally: Make people better. “The best ROI comes from investing in people. To build a billion-dollar company this quickly, you’ve got to invest in the right people.”
Once that culture is fostered and travels beyond the confines of the office and into the field, it’s an incredibly powerful asset that can attract and retain others who share your values, he says. In its early days, company leaders devoted time to develop 10 core values that would not only promote happiness, but create the fiber of the company’s existence, and allow people to live their lives to the fullest. Principles like “Be Real,” “Slow Down to Go Fast” and “Pursue Constant Development of Self” are among those daily mantras. Employees within the entire Nerium organization are encouraged to spend a little time each day focusing on these core values, integrating them into all aspects of the company’s culture, communicating them to the field at every opportunity and incorporating them into business plans. With that mindset, the culture leads and defines the company.
Nerium works tirelessly to create a “one family” culture. Chief Field Officer Mark Smith describes how that translates in the field. “There are no ‘barbed wire fences’ around Brand Partners’ teams,” he says. “We’re building a company versus many small groups.”
Another way to foster the development of a rock-solid culture is by teaching consultants to keep their focus where it belongs. Recognition and prizes are, of course, an exciting prospect for any independent business owner—and we know they’re powerful motivators. But representatives would be wise not to become distracted and trip over those incentives on a journey that should always be laser-focused on the customer.
If you’re going to build a great direct selling company, Olson says, you have to have a solid, recurring and continually growing customer base, period. Consultants must be incentivized not for buying inventory but rather building a long-term business of loyal customers who purchase their products at full price. “If your compensation plan doesn’t reward customer acquisition, your Brand Partners will chase recruitment. And nobody can sustain that. It’s impossible.” He adds that, over the years, he has witnessed companies start with a recruitment-heavy focus, and then attempt to shift gears or backtrack into their product messaging. According to Olson, this approach fails because it ignores culture, the most important asset of a direct selling company during those critical, formative early years. First and foremost, “the focus needs to be on customer satisfaction and retention. That’s the litmus test for any great company.
“The thing I’m most proud of is that the vast majority of our business isn’t distributors; it’s customers,” he continues. “We’re shipping our product to them because they want it.”
To keep that customer pipeline robust, Olson says, your product has to do what you say it will do, and it has to offer a value proposition. Consider the sheer number of anti-aging products on the market, and how confusing it can be for consumers to navigate their supposed skin types and recommended regimens, many of which include multiple steps and, therefore, a significant financial commitment from customers. With that in mind, “we set out to create simplified, multifunctional products,” says Chief Marketing Officer Amber Olson Rourke. “Our goal was to fill an unmet need, to create products that could do it all.”
To help further distinguish its product offerings, Nerium controls the patents, sourcing and intellectual property for every one of its products. “We don’t launch without total control,” Jeff Olson says. “Every one of our products is the first of its kind on the market. There’s legitimate science behind each of them, and nobody can replicate it.”
The company’s return policy, too, is critical to its culture. While most direct selling companies have a 30-day money-back product guarantee, how flexible will a company be on day 31? If it gets back to a consultant that the company hassled her customer over a return, the consultant, who had been one of your biggest brand advocates, “loses her cadence, her energy and her voice,” Olson says. “You’re buying your Brand Partners’ belief in your return policy. Being a customer-friendly company is one of the biggest gifts you can give your Brand Partners. I don’t want anybody to have inventory they don’t need; it’s that simple. And then I want to give them all the value I can give in every single direction.”
Take a look at Nerium’s call center staff, and it’s easy to see the company’s “one team” culture. This close-knit group is no coincidence. Nerium has fostered that very sort of environment in an effort to sustain a world-class level of service. New agents are vetted through an intensive training program, and once in their roles, they enjoy working in a place where recognition and celebration of employees’ accomplishments are the norm. Daily briefings on “hot topics” precede each shift to prepare staff as thoroughly as possible. At month-end close, when the staff is logging 14-hour days, the company serves breakfast and dinner. The result? The average wait time during a recent month-end close was 43 seconds. Kudos come in to the call center on a regular basis, and Brand Partners know staff by name. In fact, a Brand Partner recently called to inquire about a staff member’s daughter who had been ill.
“We lead people, not processes,” says Rose Swinford, Senior Director of Customer Service and Support. “It’s so important that morale stays high. The company takes great care of our internal family, so that they can take care of our external family, our Brand Partners.”
Nerium’s Executive Leadership Team: (front row, from left) Jeff Olson, Amber Olson Rourke and Jeff Dahl; (back row, from left) Mark Smith, Tammy Smith, Dennis Windsor, Al Richey, Renee Olson, Jeff Branch, and Roy Truett.
Slow Down… It’s Not a Race
Nerium reached the billion-dollar ceiling in just four years, and while that kind of success may trigger the assumption that the company hit the ground running and moved into as many countries as quickly as possible, nothing could be further from the truth. Ninety-five percent of its $1 billion in sales came from the United States. Only in 2014 did Nerium go international, crossing into Mexico and Canada. A lot was happening behind the scenes, however, while the company held home court, including a $20 million investment in a global infrastructure that would serve as the foundation for all international expansion to come. That “slow down to go fast” philosophy may seem counterintuitive within an industry Olson calls “Type A on steroids.”
The company’s strategic approach to expansion means finding and training the best people long before the doors open. Take, for example, Nerium’s launch in Mexico last year. A country manager spent nine months on staff beforehand, and 40 bilingual customer service representatives spent weeks there before the company’s official opening. “It was a legitimate replication and duplication of everything we’ve done in the United States, and that’s why Mexico’s working so well,” Olson says.
One Global Rhythm
From the very beginning of any direct selling company, Olson says, corporate must assume the driver’s seat and never be tempted to hand the wheel to the field. “If corporate doesn’t lead,” he says, “then tribes begin to form in the field. You have different ways of sharing the product, different ways of training, a new operating system to learn.” Under the principles of the “Nerium Rhythm,” the company maintains one global infrastructure that promotes a seamless experience for its distributors, regardless of where they happen to be. The construction of that operating system was not only an enormous financial commitment; it required company leaders to slam on the brakes, and “it was the hardest thing I’ve ever done, to say we’re not going to do all of those ‘growth’ things—we’re going to sit here and build our platform,” Olson says.
|Brand Partners in South Korea have enjoyed success since their recent launch.|
For its global operating system, the company invested $20 million and employed 100 programmers who worked around the clock to build 2 million lines of code so that everybody would be operating on one system. “It was a very deliberate decision,” Olson says. “We didn’t want dozens of one-off operating systems. We weren’t going to race. And it seems to have worked for us.”
Al Richey, the company’s Chief Operating Officer, says, “Now that we have the foundation of a global platform we can build on it and expand. We have a really good vision of what we want to be when we grow up, knowing what we’ll be in the short , medium and long terms. If we don’t invest now, it’ll hurt the field and the company in the future.”
That patience clearly has been rewarded many times over. In summer 2015, Nerium celebrated its launch in South Korea, and in just four weeks generated $30 million in revenue. How was it possible? The Nerium Rhythm. Olson says,“If we’d gone in with a one-off operating system, we wouldn’t have seen those kinds of numbers. The proof’s in the pudding. Think of it this way: You already have a language and culture barrier. Those barriers are hard enough. Now you want to give them a systems barrier?” He adds that today, “you can go to any country in the world, and everything is done 99 percent the same way. Our distributors share products the same way and they train the same way.”
The success of Nerium’s duplicable system is largely due to its simplicity. From email campaigns to texting to conference calls, Brand Partners are dialed into the same third-party communications. And there’s no communication overload here; Brand Partners receive an average of one email per week from the company.
|A Canadian Brand Partner shares her excitement for Nerium.|
To facilitate training that’s easily replicated across borders, the company uses third-party tools. The idea is for a consultant to serve as the messenger, not the message. A third-party system encourages consistency and helps the company maintain control of what’s being said about the products and the opportunity. And, from a Brand Partner’s perspective, third-party tools eliminate guesswork and help remove the intimidation factor for rookies. “Put yourself in the position of brand-new consultants,” Olson says. “They already have jobs and families. It’s so easy to assume the business is second-nature to your consultants like it is to you. They’ll quit if the tools aren’t high quality, streamlined and easy to follow. Our tools do the work. Our philosophy is for Brand Partners to drive the system; they don’t have to be the system.”
Chief Field Officer Mark Smith says, “Third-party tools prevent ‘the void’ from happening.” In other words, when a company doesn’t provide a need, the field fills it, and they can do that with a myriad of interpretations. “We come to the field with a prepackaged plan,” Smith says. “That’s great for compliance because you can monitor your consultants’ messaging, but it also helps establish training that’s consistent in the field. How you train them is how they’ll train others.”
The company took particular care with the design and presentation of its consultant starter kit. This robust, yet simple-to-digest introduction to the company delivers the “wow” factor that reaffirms a new consultant’s decision to start his or her Nerium business. The rationale for investing significant resources on the kit was simple: When a company places value on its starter kit, so will its new consultants.
And Nerium is investing in a lot of people. The size of its corporate staff and its philosophy about hiring might surprise some. In 2014, the company nearly doubled the size of its staff. “It was a flurry of activity,” Richey says. In essence, the company has front-loaded employees, maintaining a staff of more than 450, a number Olson estimates is approximately 40 percent higher than the company needs to be at this moment, but most certainly supports its growth trajectory. Nerium isn’t a company focused on the present; it’s preparing for the future. “We were willing to take a lower profit margin to build where we want to be,” Olson says. “From day one, we wanted the infrastructure for a billion-dollar company. You’ve got to act like one to be one.”
|Brand Partners from Mexico celebrate at Nerium’s Get Real National Conference.|
“Some organizations wait until the pain is high and the work is starting to slip,” Richey adds. The company’s leadership team examined its current state versus its desired trajectory, then made the necessary investment to bridge the gap. “You don’t want to overspend, but you want to step into the future before your field does. You never want to disappoint the field and lose your momentum. You’ve got to look at the future and make sure you’re prepared.
“It takes a lot of courage to build a company this way,” he continues. “But here, we’ve had the freedom to do the right thing.”