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Photo: New Avon CEO Scott White and President, Social Selling Betty Palm join Representatives to celebrate the finale of RepFest16, the first national conference since the North American business was bought and taken private by Cerberus Capital Management.
Founded: 1886 (New Avon 2016)
Headquarters: New York
Executives: Scott White, CEO
2015 Revenue $1.01 billion
Products: Cosmetics, Personal care
In the heart of New York City, a team of executives is working on a unique project: a $1 billion startup. The project began in December 2015, when Avon Products Inc. sold a majority interest in its North American business unit to the private equity company Cerberus Capital Management. Avon had been attempting to turn around sales in North America, which had fallen from roughly $2.6 billion in 2007 to $1 billion in 2015, while simultaneously transforming its global operations. The Cerberus transaction represented a critical turning point, immediately achieving three key things for what is now known as New Avon LLC. First, it gave the business a tight focus: achieve growth in an established, and relatively compact, geographic market. Second, it took the company private, eliminating the pressure that comes with making public financial reports every three months. And third, it brought an infusion of capital and capabilities from Cerberus aimed at rethinking the business.
The New Avon Board of Managers quickly introduced new leadership to the organization, naming former Abbott Laboratories and Procter & Gamble executive Scott White the company’s new CEO in April. In September, White and several key members of his executive team sat down with Direct Selling News for their first in-depth interviews at the helm of the company. The team has an enormous challenge ahead; if successful, they will have achieved one of the most complex turnarounds in direct selling history. The goal, White says, is simple: “It’s not about getting better. It’s about getting back to being the best.”
White became CEO April 25 but began his career with New Avon in January as a Representative, signing up while still in the interview process with Cerberus. He has been working closely with the field ever since. In his first four months on the job, White met with more than 1,000 Representatives, spending time working with them in the business. He made his formal introduction to the field in August at New Avon’s first RepFest, which drew an estimated 5,000 people to the MGM Grand in Las Vegas. White also is an active participant in Avon 39 The Walk to End Breast Cancer, completing his first two-day, 39-mile walk earlier this year and signing up to complete his second in New York City in October. His entire leadership team are also Avon Representatives, as were 22 summer interns, who made presentations to the executive team about their experiences at the end of their internships. It is a continuation of a practice that dates back to the days when tight connection between the corporate leadership and the field were generating strong sales throughout North America. “That’s the way I operate,” White says of the hands-on approach. “I love the granularity of what a business is. It helps me to understand where we are winning and where we need to do better. I’m hearing directly from our Representatives that they are motivated and excited—and that they need more and want more help growing their businesses.”
|Avon Representatives having fun at RepFest.|
Unity in Spirit
As White and his team spend time with Representatives and analyzing the New Avon business, they are mapping out a path designed to bring the company to the forefront of social selling. “It all really starts with dramatically improving our new Representative experience,” White says. “People say, ‘Oh my gosh, it’s a consumer products guy, what’s he doing in direct selling?’ What is fundamental is understanding who sells your products, who markets your products, who positions your products. That’s who I am. I’ve always been a really hands-on business owner in understanding how purchase decisions are made and what drives the business.”
One of Whit’es first hires was Betty Palm, who now serves as New Avon’s President, Social Selling. Palm began her career in direct selling as an intern at Avon and worked with a number of top direct selling companies in roles such as vice president of sales and marketing, executive vice president, and president of North America. She led the formation of direct selling divisions at Mars Inc. and Jones Apparel Group. She had served as a consultant to Cerberus prior to their purchase of the business and through the transition.
Among Palm’s first initiatives was to unveil a new onboarding experience for Representatives as they join the business. Previously, Avon’s basic starter kit cost $15 and was comprised of a basic bag and a small batch of product brochures, samples, an order book and a few other pieces of literature. There are now three kit options, ranging in price from $25 to $100, each with newly designed materials for onboarding new Representatives to the business. The two biggest changes to the kits, Palm says, are the inclusion of recruiting brochures and the addition of more product samples. “The more that you can have a customer try something and get a reaction, the more likely you are to sell,” she says. “The products that get sampled, get sold.”
Palm says the new kits dovetail with a crisper online experience for product training, more support on how to mentor a newcomer to the business and a kick-start program designed to guide new Representatives through their first 90 days. The new onboarding experience has been in development for months, with lots of feedback from the sales field during the process. It debuted at RepFest and launched officially Sept. 15, in time for the busy fourth quarter sales period.
New Avon’s starter kit received a makeover of its own—starting with the addition of recruiting brochures and more product samples, as tangible pieces of the company and business opportunity.
Commitment to Empowerment
The new onboarding experience is one sign of New Avon’s commitment to improving the business opportunity for Representatives. White says he and the executive team recognize that Avon had become a complicated business and now are focused on increasing the opportunities for Representatives to earn money through their Avon businesses while reducing the amount of time it takes to do so. Some of the key initiatives here include simplifying the portfolio of products, introducing better electronic tools for managing the sales process and, coming soon, refining the earnings program.
Two Companies, One Goal: Empower Women
Avon 39 participants, including Avon employees, Representatives and other supporters, have collectively raised nearly $590 million, along with the awareness that comes from such a walk.
While Avon Products Inc. and New Avon LLC operate as two distinct companies, both continue to support the Avon Foundation for Women.
When the Foundation was created in 1955, it operated on a modest scale; its first grant was a single $400 scholarship. Today, the foundation is a global player in two areas: the eradication of breast cancer and bringing an end to domestic violence and violence against women. In 2016, Avon and the Avon Foundation surpassed the $1 billion milestone of cumulative donations to causes for women.
“The Avon brand has always been for beauty and innovation and optimism, but also the empowerment of women,” says Jill Surdyka, Director, Community Engagement, for the Avon Breast Cancer Crusade. “Through the efforts of the foundation, we’re really able to bring those two issues to light and out into the public dialogue.”
The foundation and the charitable work it represents has become a part of the culture at Avon’s corporate offices as well as in the salesforce. For example, more than 220,000 people have participated in Avon 39, the Walk to End Breast Cancer since that project began in 2003. Participants, which include Avon employees as well as Representatives and other supporters, have collectively raised nearly $590 million, along with the awareness that comes from a two-day, 39-mile walk. The companies and the foundation also work together on cause marketing products and other corporate social responsibility initiatives to bring the purpose-driven company message home.
“It’s something that everyone’s really proud of from the corporate side, with our Associates, but also our Representatives around the world,” Surdyka says. “We have breast cancer walks happening around the world, domestic violence initiatives happening around the world, and our Representatives know that and see that and it’s a big source of pride for them.”
“We certainly want to invest more in training,” Palm says. “Training up and down all levels of the sales organization, not only the new Representatives from product knowledge and basic selling skills and how to acquire customers, but also for new leadership and then even the higher ranks of leadership.”
While Avon had experienced several years of declining sales and a declining salesforce in North America, Palm says the company was able to retain a lot of leaders at the top of the sales organization. She’s currently focused on the opportunity to improve retention rates at the lower levels by promoting a simpler message about how to advance along a New Avon career path. “I think you can imagine when you are a 130-year-old company, there were a lot of legacy systems and processes built into the business,” Palm says. “We are taking a startup mentality and challenging a lot of old processes and ways of doing business.” This includes experimenting with new ideas and piloting initiatives to test them, learning from those tests and then making the best decisions for the wider business.
There also is a strengthened commitment to building a sense of community with Avon Representatives, including hosting sales meetings and developing training for Representatives that, though long a part of the Avon culture, had been reduced or eliminated in recent years. Sales meetings provide Representatives with an opportunity to get together with their teams every two weeks for recognition, business plan development, peer-to-peer learning and inspiration, as well as new product introductions.
The company also is building the Avon Representatives’ ability to be successful social sellers by providing digital tools to run their Avon business and transact with customers. Each Representative receives an eStore to use to sell to customers online, and New Avon provides a daily stream of ready-made content through a Social Media Center that Representatives can share. The content includes advice and tips on how to use product, as well as behind-the-scenes content with Avon ambassadors such as Lucy Hale and Sofia Vergara. The Social Media Center, led by Director of Social Media Jess Goon, has helped propel the brand to among the most talked about in direct selling on social media. The focus, Goon says, is always on expanding business opportunities for Representatives. “I find that there’s no other job where you can have an idea and then immediately you are helping 300,000 women earn an income,” she says.
New Avon also has made a big investment in overhauling the company’s call center in Springdale, Ohio. The call center, now known as the Customer Insights Center, plans to hire 70 additional workers this fall, including those with the skills to provide customer service via social media and other digital channels.
Innovation at the Heart
The changes at New Avon also will extend to the customer base, which will be introduced to the new brand image with the launch of the company’s first advertising campaign in years on Oct. 7. The company will license many of its products from the global Avon Products Inc. and will build a portfolio that is designed to be highly relevant to its customers in the U.S., Canada and Puerto Rico. The company is looking to expand its offering, including a move into the health and wellness category.
In addition, New Avon is working with outside vendors to develop products exclusive to its portfolio. The company invited several skincare and color companies to present ideas for new products during a series of Innovation Days, with a group of New Avon Representatives and Associates on hand to provide immediate feedback Shark Tank style. The company created a short list of potential new products from the event and four are currently under development. It is part of Chief Innovation Officer Helene Rutledge’s philosophy of open innovation, in which a company can expand the walls of its research and development practice to encompass the entire world. This network of scouts can even extend to the salesforce. “It’s really knowing that when people have an idea we can give them the tools and training to bring that to us. Then we can understand an unmet need or give somebody the opportunity to take their entrepreneurial spirit that they are using in their business as a Representative—and they are experts in their products and what their consumers want—and cultivate that,” Rutledge says. “It’s a beautiful potential source of innovation, in addition to the external partners that we are looking to work with.”
She says she looks for external vendor partners that fit well with the Avon culture, are absolutely honest about development timelines and are open to innovation. Her goal is to create a collaborative ecosystem of product development in which all participants benefit—and ultimately consumers and Representatives as well. She also plans to more strongly promote the science behind many of the company’s products, including its sun care, skincare and color products, as well as expand the size of its scientific advisory board.
The product brochure has been a staple of the Avon sales process for generations, and White says that will continue, though with adjustments. Digital will play a bigger role moving forward, as will the way in which products are featured. The company already has introduced some brochures under the Avon Living banner that read more like a lifestyle magazine than a catalog. “We’re evolving more into storytelling and seeing products in context,” White says. “It’s important that we share a compelling product proposition and a benefit, at a fair price point.”
There’s a lot that’s new at New Avon, but White and his team say they are mindful that they are building on a 130-year-old legacy. Avon Founder David McConnell was one of the founders of the direct selling channel in the United States, but he also was one of the first American business leaders to promote opportunities for women to build businesses with no glass ceilings.
“As much as we are changing as a company, our commitment to our Representatives remains the same. Our Representatives are at the center of every business decision made at New Avon,” he says. “What’s new is that we are combining our brand power and our decades-long purpose-driven mission with a renewed commitment to investing in growth and building long-term brand value.”