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Q&A with Steve Wallach, Youngevity Chief Executive Officer

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This Q&A is from the December 2018 Cover Story

Youngevity is one of a few established direct selling companies who has launched a line of CBD products. We caught up with CEO Steve Wallach, who not only shares a few thoughts on their experience so far in the CBD space, but offers some friendly advice on what other companies can expect.

What was the deciding factor to launch into the CBD space?

Steve: Four years ago, we seriously started looking into CBD and got legal opinions in all directions. At the end of the day, the business decision was up to us, not the attorneys. It’s your responsibility as the executive to make business decisions based on the best information you have at the time.

Why is the confusion about hemp and CBD an advantage for our channel?

Steve: The confusion surrounding the whole hemp/CBD discussion—is it legal, will it make you high—is what I love about this product category. It gives our channel a leg up on other industries because of the educational platform built into our one-on-one nature. I believe CBD will be the greatest educational opportunity of our lifetime, in terms of a health and wellness product.

What would you say to companies looking to get into this category?

Steve: I would ask them how set in your product category mix are you? Do you have room to expand your product range? My estimation is that 85 percent of the health and wellness companies will have an entry into this product category within the next two years.

How did you discuss CBD with your distributors?

Steve: There were some who were skeptical, but the vast majority were very excited. The ones that weren’t came around pretty quickly once they became educated about the many benefits that come with CBD.

What do you tell them they can say about CBD?

Steve: Because of compliance and filing health claims with FDA, we’ve taken a proactive approach to teaching our distributors what they can and can’t say about supplements. If you can say it about calcium or vitamin C, you can say it about hemp-based products. It’s abiding by the same rules you have always abided by.

How have the products been received?

Steve: We’ve received so much interest in the products, and in the discussion on social media. We told our distributors to ask a question to their social media followers, How many people have tried CBD oil or hemp-based products? Just from that question, many distributors have received a wide array of responses. Some of our distributors were hesitant about engaging in this way, but I said “Aren’t we always looking for people to contact us? That’s what network marketing is all about.” Who wouldn’t love to have leads contacting you? Once you can start a conversation, the education starts.

Pick up the printed issue in which this article is found.

Any challenges with merchant processing?

Steve: We had heard that merchant processing could be an issue so we’ve taken a very conservative approach. Our HempFx by Youngevity is a standalone website and shopping cart. We are also using a separate, domestic merchant processor to keep everything separate. We are seeing major banks being non-committal, using a “Yes…soon…not quite there yet, but we’re with you” kind of approach at the moment. They want to be in this business as much as anyone as they are in business to be in business.

But there is a lot of misunderstanding and confusion at the banking level as many are lumping CBD and hemp oil in with marijuana products. If you’re a smaller or new company, you might have more of a challenge than the more established companies as most banks won’t allow you to process more than you have on deposit at your bank.

Any advice for other companies looking to get into this category?

Steve: Get your attorney in place first who knows about cannabis law, not because you’re going to get sued, but to make sure you are doing everything in the correct order. Make sure your labels and terminology are correct. Do all the same due diligence you would be doing in the other parts of your business. Because you will be watched from a regulatory standpoint if you go out and make a lot of noise.

CANADA: Open For Business

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With over 37 million people, Canada has excellent potential for continued development and expansion.

Given the close geographic and cultural relationship between the U.S.A. and Canada, it is no surprise that many U.S.-based direct selling companies have a long and established presence north of the border. Add a number of successful Canadian and international companies into the mix and it is easy to see why the direct selling channel continues to go from strength-to-strength in the Great White North.

The best news is that the Canadian market, of over 37 million people, is far from saturated, with excellent potential for continued development and expansion. As can be seen from the comparative WFDSA 2017 Global Direct Selling Survey data in the table below, there is definitely room for growth. The percentage of independent consultants as part of the entire population is lower than that in the U.S. (3.5 percent vs. 5.7 percent) and the average annual sales per consultant is also slightly lower ($1,538 vs. $1,882).

Combining these numbers with an upward trend in consumer confidence, a generally prosperous economy and favorable attitudes towards the direct selling model, and there has seemingly never been a better time for companies to enter the Canadian market or to expand their local operations.

Plan Carefully

It is estimated that more than 85 percent of Canadians live within 100 miles of the U.S. border, and for many American companies opening in Canada is the obvious first step into international markets. But while it appears close and inviting, it’s important that U.S. companies do not treat the Canadian market as merely a “51st state.”

History is littered with examples of one-American-size-fits-all expansion attempts, leading to hasty retreats and financial strain. The failed entry of Target Corporation into Canada is a recent and expensive instance from the retail world.

Expansion Basics to Keep in Mind

For direct selling companies, some basics to bear in mind when considering operations in Canada:

  • There are two official languages in Canada, English and French. All packaging must display both. While a majority of the country’s residents speak English, in the province of Quebec and other significant pockets, French is number one (totaling around 19 percent of the population).
  • Canadians are savvy online shoppers and price hunters. They know their products and price points, and won’t be fooled into paying more than is charged in the U.S. or into accepting a lesser product selection.
  • The Canadian direct selling industry is strongly regulated. The federal Competition Bureau closely analyses each businesses compensation plan and advertising, to ensure they meet the requirements of the Competition Act. On top of that, various provincial regulators require a mix of surety bonds and licenses for both companies and individual consultants.
  • Once you cross an international border, customs duties will have an impact and tax regimes will be different. Despite ongoing trade negotiations, which hope to minimize disruptions, careful planning is always required to ensure that products get to consumers in a timely and cost-effective manner and that business practices meet legislated standards. Decisions need to be made about customized logistics, software, payment systems and customer service practices.
“Canadians are savvy online shoppers and price hunters. They know their products and price points, and won’t be fooled into paying more than is charged in the U.S. or into accepting a lesser product selection.”

Important Trends Impacting Canadian Direct Selling

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Many of the technological and socio-economic trends that are facing Canadian direct sellers are familiar across the global industry. These include the emergence of a growing ‘gig’ style economy, the sometimes fraught line between defining employees and contractors, and the ever-looming pressure from online retailers such as Amazon and eBay.

More specifically for Canada, there are some important societal trends that should be considered by proactive direct selling companies:

  • Canada continues to be a nation of immigrants. In 2016, 22.9 percent of the Canadian population were 1st generation immigrants vs. 13.2 percent of the population in the United States. (2016 Canadian Census and 2016 U.S. Census data). New immigrants are often at the forefront of seeking out entrepreneurial opportunity.
  • New immigrants tend to wield considerable spending power. “Not only do recent immigrants represent a new and consistently growing consumer base, they are also arriving in better financial position than previous generations, reflecting the current Canadian immigration policy towards admitting skilled professionals.” (Euromonitor­—Lifestyles Report 2017)
  • The power of networking and selling via social media is strong. 34 percent of Canadian online shoppers said they would consider buying an item from a brand’s advertisement on social media if recommended by a friend or family member. (Euromonitor­—Lifestyles Report 2017)

Partner with the Direct Sellers Association of Canada

Membership of DSA Canada is an important factor for success in the Canadian market and focuses on creating value for its members via:

  • Direct Selling By The Numbers

    Public Affairs: An emphasis on being a strong advocate to government on issues that directly and positively improve the business landscape for direct selling companies and consultants.

  • Ethics & Integrity: Promotion of DSA’s Code of Ethics as the mark of trust and integrity in the direct selling industry. DSA Canada members and their consultants are recognized as the best of the best by government and consumers.
  • Communications: A communications strategy that offers members timely and valuable information, and proactively promotes the amazing opportunity that is the direct selling industry.
  • Member Events & Education: An investment in providing value for money to all members­—through events, educational opportunities, enhanced research, online resources, industry promotion and more. Attendees consistently say that the DSA Canada Annual Conference is the most informative and fun conference they attend all year.

DSA Canada also plays a role as the eyes and ears on the ground for U.S.-based direct selling companies, particular those with a limited bricks and mortar presence. DSA Canada works closely with regulators to ensure that members are first to know about issues impacting them, and that regulators and government understand and appreciate the value that the direct selling industry brings to individual Canadians and to the overall economy.

There is no reward without at least a little risk, but in Canada, those rewards can be significant. What are you waiting for?

 

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Peter Maddox is the President of the Direct Sellers Association of Canada. He has extensive experience in the association world and the marketing industry, having previously held positions with the Canadian Propane Association, Canadian Tire Corporation and Professionals Australia. Peter’s focus at DSA Canada is to promote the positive impact of both the Association and the industry.

Maskcara: A Gorgeous Dream Come True

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Childhood dreams so rarely see the light of adulthood, but when they do, they’re often unstoppable.

A young Cara Brook would tell you that her dream is to own a makeup company one day. “I noticed that all my friends’ moms had makeup, but it seemed like they all complained that they didn’t know how to use it,” says the Maskcara Beauty Founder. “I thought, ‘Someone just hasn’t made an invention that has made this easy enough.’”

With her fifth-grade science project due date approaching, Cara grabbed her modeling clay and got to work. “I form-fitted the clay to my face and then let it dry, so it became a mask,” she explains. “Then I put makeup on it at night so in the morning, all you had to do was smash it to your face. I thought that this was the best of both worlds. You can sleep in; your makeup’s done for you.”

 

Cara Brook

Cara Brook

 MASKCARA BEAUTY
Founded: 2013
Headquarters: St. George, UT
Top Executive: Cara Brook
2017 Net Sales: $15 million
Products: Cosmetics

Building the Business in Her Mind

Cara held fast to her dream, even as she discovered how hard the path to entrepreneurship could be. “You can’t just Google how to start a makeup company,” she jokes. She worked cosmetic counters, became a makeup artist and continued to build the makeup business in her mind. Becoming pregnant with her first child would be the tipping point.

“I was terrified,” Cara shares. “But I thought, ‘If I’m going to be someone’s example, I need to do this thing that I’ve always dreamed of doing.’ So even if I couldn’t do the most obvious thing (find money and have a product made), I just needed to do something. That’s when I started the blog.”

“I noticed that all my friends’ moms had makeup, but it seemed like they all complained that they didn’t know how to use it.”
— Cara Brook, Owner & Founder

From 2009 until 2013, Cara ran her blog sharing beauty tips, tutorials and product recommendations. In her day job as a makeup artist, Cara had always used highlighting and contouring, a makeup technique she calls “HAC,” to accentuate a client’s best features and give an airbrushed look. As the technique went mainstream, Cara saw what could be her big opportunity.

Right Coverage in the Right Places

“Every time I would do someone’s makeup, she would want to know how to recreate what I’d just done, and it was a really frustrating moment because I knew it was a hard thing to do—lots of products and layers of makeup,” Cara says. “I just thought, ‘We’ve got to make this easier. Why are we doing all these layers?’ That was an epiphany moment for me. I realized we just needed to put the right coverage in the right places the first time; then we can do the highlight and contouring as coverage so you don’t need foundation.”

“That was an epiphany moment for me. I realized we just needed to put the right coverage in the right places the first time.”
— Cara Brook

This lightning bolt moment inspired Cara to start mixing her own formulations with cosmetic ingredients and pigments. She was onto something. Meanwhile, the blog was garnering over 3 million hits a month, and every mainstream cosmetic product Cara would recommend would sell out on Amazon. It was time to harness her newfound selling power and apply it to her own makeup line. The dream was about to become a reality.

A Just-in-Time Family Investment

By 2013, Cara had the idea, the audience and some basic color science under her belt, she just needed capital. She’d begun a relationship with a cosmetic manufacturer but didn’t have enough funding for the first run of her product—a palette of various shades of foundation that would make contouring easy for the everyday woman.

“I’d saved $30,000. My parents had agreed to lend me $30,000. I thought, ‘Okay, we’ll probably be able to pay for the first order,’” Cara shares. “I got that first invoice, and it was $180,000, due in two weeks.”

Having already shared the product with her blog followers, Cara knew she had to find $120,000 within the next fourteen days or lose the momentum she’d built for four years. Within days, help had arrived. Cara’s father-in-law had recently retired and his 401k was worth exactly $120,000. “He said he wanted to invest,” Cara says. “I thought then, ‘If this doesn’t work, we have just bankrupted my family.’”

A Long Six Months

Cara and her family would have to wait another six months to find out whether their risk had paid off­—the makeup palettes were to be manufactured just in time for a Black Friday release. “I remember thinking, if we can just sell 100, I know we’ll sell them all,” she says. But when Black Friday arrived, Maskcara’s product release crashed their e-commerce vendor’s server and customers were staying up until all hours of the night to get their hands on the palettes. Within 48 hours of the release, Maskcara’s initial run of 12,000 palettes had sold out. The family was in the black.

Watching from the sidelines was Cara’s sister-in-law and future Maskcara Creative Director, Randi Brook. “Honestly, I’m not a super optimistic person,” she says. “I don’t think I’m a pessimist, but I’m pretty realistic most of the time. I was genuinely just so excited. I thought, ‘This is something that doesn’t exist—this is going to be such an exciting thing for people.’”

A New Business…A New Business Model

After selling out of their first product launch, Cara had to wait a year before Maskcara was ready to sell again. “We had to find a new manufacturer, so we were out of the product for a year which was terrible,” she says. “When you don’t have any clout and barely enough money, nobody really pays much attention to you.”

“I thought, ‘This is something that doesn’t exist – this is going to be such an exciting thing for people.’”
— Randi Brook, Creative Director

Sales continued to grow, despite the wait. In its first year in business, Maskcara had $1 million in sales, which grew to $1.5 million in sales the following year. The product line evolved as well, from a pre-built palette of two colors to customized palettes of different sizes with refillable magnetic tins that can hold a variety of colors of foundation, lip and cheek colors and eye shadows. “You just pick out the colors you like, and you swap them out as you run out,” Randi explains. “I’m really pale naturally, so as I tan or as my tan fades, I can swap out my highlight and contour as needed and I don’t have to buy a whole new palette each time. It’s such a time-saver and a game-changer when you don’t have to buy a new palette every time you want new colors.”

More and more customers were trying Maskcara, sharing it on social media and trying it on their friends at impromptu makeup parties—with no financial incentive, just a love of the product. Friends and family suggested Cara consider transitioning the company into direct sales. “A lot of people had recommended it because it’s such a demonstrative product,” Cara says. “I was super against it but soon realized how incredible the direct sales model is and how the party plan was a perfect fit for us.”

Maskcara launched the direct sales side of the business in January 2017, empowering Maskcara consultants called “Artists” to share both the product line and business opportunity. The company maintained its original e-commerce site but began encouraging customers to work with Maskcara artists for personalized color matching and customer service. In its first year of operating as a direct sales company, Maskcara saw sales jump to $15 million with an anticipated $25 million in sales for 2018.

Maskcara Today

The first Maskcara Artists were simply customers who loved the product and were ready to share it. Today, there are 10,000 Artists across the country, sharing the Maskcara line of products through in-person demonstrations and home parties, as well as social media events and tutorials. New Artists can choose from a Basic Artist Kit or expanded Pro Artist Kit that include foundation shades, brushes, marketing materials and other business supplies. “We wanted the kit to be comprehensive,” Cara says. “We wanted [new Artists] to literally do anyone’s makeup in front of them or shade match anyone with their kit. I want Maskcara to be a real job, so I want people to have everything they need when they sign up.”

New Artists have access to training through the Maskcara app, as Cara and her team found that mobile training was the best fit for the company. “We try to focus everything onto our app,” she explains. “A lot of people don’t even have laptops anymore. They don’t have desktops. They don’t need the computer. They just do everything off of their phone or their iPad.”

Social media is a significant aspect of Maskcara’s success­—from the initial blog in 2009 to the online parties held by today’s Maskcara Artists. “We’ve noticed that our most successful Artists have a social media element to what they do,” Cara says. “We try to do a lot of training on becoming an influencer and growing your social media, and we find that if they share stories, share themselves, and they open up, that’s really where the connection comes in.”

Philanthropy That Hits Home

Connection is everything to Cara and her team—from nurturing relationships with her blog followers to encouraging an environment of support and inspiration amongst the Artist community. “The sisterhood we have is so strong and powerful,” Cara shares. “They’re so generous. We just don’t have a super competitive culture. We have a really generous sisterhood that they want to help each other.”

“The mood of Maskcara is such a generous, kind, loving, creative, optimistic, wonderful place to be.”
— Randi Brook

Randi echoes that sentiment. “There’s so much heart and so much genuine soul in what Cara’s doing and her vision for Maskcara,” Randi says. “The mood of Maskcara is such a generous, kind, loving, creative, optimistic, wonderful place to be.” That sense of connection and heart is also the inspiration for the Maskcara’s philanthropic side—3D Foundation.

“It’s centered around foster care,” Randi says. “Our main goal is to flip the number of homes that are open to bringing in a child in need—to overwhelm the system so that there are more homes than there are children that need to be placed.”

Maskcara offers two eye shadow colors whose profits go directly to the foundation—to date, those sales have raised $68,000, which has gone towards the production of a documentary titled Love is Never Wasted. “The film is meant to open hearts and change minds about the way foster care works and how love is never wasted,” Randi shares. “If you bring a child into your home and they end up being reunified with their families, that doesn’t mean that love you gave was wasted. It just enriches your life. That’s something we’re excited about.”

Beauty Today, Beauty Tomorrow

As Maskcara has grown, Cara, Randi and their team have taken a slow, intentional approach to expanding the product line. “We’re very picky about anything we create,” Randi says. “We have a handful of questions that we ask ourselves before we bring on something new.”

Does it improve our routine in some way?
Does it exist? If so, can we improve it?
Is it necessary?
Can it fit in a compact?
Does it multitask?

“And lastly, we always want everything we make to look pretty,” Randi concludes. “We want you to be sad to throw the packaging away. If you’re not sad to throw it away, it’s not pretty enough.”

What’s Next

So, what’s next for Maskcara, now that Cara’s dream has been realized? New products are on the horizon, along with enhanced training and incentive programs for new Artists and improved technology to keep making running a business easy. Because young Cara’s vision for fun, simple beauty is alive and well.

“It’s nice to make someone feel beautiful, but it’s amazing to make someone know that they are beautiful.”
— Cara Brook

Pick up the printed issue in which this article is found.

“It’s nice to make someone feel beautiful, but it’s amazing to make someone know that they are beautiful,” Cara says. “We believe that you can have your cake and eat it too, with enough creativity, optimism and hard work rather than compromising in your life. And that’s kind of what the makeup is. You can still look like a movie star, still look like you’re so put together and enhance all the gorgeous elements on your face, but you don’t need to take all day and a bunch of products and a bunch of money to do it. It’s about finding that third option that you never thought of.”

Mannatech: Sound Science Yields Value & Growth

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Throughout its history, Mannatech has founded its success on rock solid science and is now poised for robust growth.

Since its founding in 1994, Mannatech, Inc. has made a name for itself through product innovation and a commitment to sound science. Indeed, when you walk into the company’s headquarters in Flower Mound, Texas, the first thing you might see are white-coated scientists in a fully working lab.

Alfredo (Al) Bala

 MANNATECH, INC.
Founded: 1994
Headquarters: Flower Mound, Texas
Top Executive: Alfredo (Al) Bala, CEO and President
2017 Net Sales: $176.7 Million
Products: Health and Wellness; Skincare; Weight and Fitness

“We have a passion for science,” says Mannatech President and CEO Alfredo (Al) Bala, “Throughout its history, Mannatech has obtained more than 135 patents. Currently, Mannatech holds 90 patents in major global markets, we really pay attention to the quality of the ingredients we offer, some of them exclusive ingredients that can only be found at Mannatech.”

Value to End Consumer

Mannatech has spent more than $50 million on research and product development since the company’s inception nearly 25 years ago. According to Bala, he wants to bring to the marketplace new ideas in the science of nutrition. “We want to make sure those ideas are not only patented, but add overall value to the end consumer. At the end of the day, every company is going to rise and fall on the value they provide to an ultimate customer.”

“Mannatech has obtained more than 135 patents. Currently, Mannatech holds 90 patents in major global markets.”
— Al Bala, Mannatech President and CEO

Mannatech has conducted 17 human clinical trials that have been published, 13 of which were double-blind, placebo-controlled studies—the gold standard for product validation. The company makes a point to invest in “blood serum” clinical studies—not just those done on a product’s ingredients but on the finished product itself, and not just conducted in a test tube but on a human.

They analyze the human blood to make sure that the product is having an effect on a human, not just in a test tube. This is where Bala feels the FDA is going. “I think they’re going to be requiring that if you’re going to make any health benefit claims, that clinical study should be done on your final product, not on your list of ingredients.”

Compliance Correction

The company’s investment in science and R&D paid off with early success. From 1994 to 2007, Mannatech had an amazing growth curve, almost hitting the $450 million mark during that time.

Then, a correction came in the form of a civil suit instigated by the Texas Attorney General in 2007 alleging Mannatech had made “dubious claims about the health benefits of its products.”

“Mannatech has expanded their footprint and are now in 26 countries. Their goal is to be in 100 countries over the next five to 10 years.”
— Al Bala

“We got into a little bit of an issue with the Texas Attorney General, and that dropped our sales to below $150 million,” says Bala. “Our biggest sin is we believed the product worked, people got very excited about it, and went out and said a lot of things about the product. There was certainly over exuberance on the part of some associates. And we paid the price for that.”

Because of this compliance correction, Mannatech now goes to great lengths to maintain strict standards of regulatory compliance. Because of this issue in 2007, Bala says they took the high road and became one of the most compliant companies in network marketing. “I have a poster in my office that says, ‘king of compliance.’ So, we take compliance very seriously.”

Circumspection comes at a cost, however. Bala notes there is an inverse relationship between higher compliance and lower sales. “We went from hyper-growth to correction, and now we’re back into growth again,” he says. “So, we have done the typical S curve. It took a while to re-engineer the company, to re-engineer the message and now we’re back into the growth mode again.”

Onward March

With lessons hard-learned, Mannatech looks forward to what’s to come. The company sees an opportunity to benefit both from the pearls of wisdom gained in the past and the promise of a bright future. They have expanded their footprint and are now in 26 countries. Their goal is to be in 100 countries over the next five to 10 years.

To accomplish this goal, Mannatech has implemented several changes, including revising its compensation plan to make the opportunity more attractive to Associates. Two years ago, the company began a major initiative to strengthen their overall business opportunity starting with the compensation plan. “We wanted something that would help compete with those being offered in the gig economy, an opportunity for the millennials,” says Bala. “I believe it’s just now about to pay off.”

Instead of a wide-spectrum product strategy, which is what they’ve had since the company’s inception, Mannatech is updating its product marketing strategy by creating as many product verticals as they can. They say this will help them be more focused on direct benefits that consumers can relate to, such as this is a brain product, this is a heart product, this is an eye product.

New Technologies In the Works

To be relevant in the future, Bala says they will need to be able to leverage technology and provide the same kind of services that an Ali Baba or an Amazon are now providing. “They have set a new standard for that consumer experience that we need to match. We’re looking for that ultimate customer experience.”

“At the end of the day, every company is going to rise and fall on the value they provide to an ultimate customer.”
— Al Bala

 

One technological upgrade in the works is becoming more mobile friendly. The back-office platform is going to be very mobile-centric since that’s where business is being done today. “That is the way of the future, and that’s where we need to be,” says Bala.

Mannatech is also revamping its Associate training and other programs. From a training and onboarding standpoint, they’re focusing on teaching Associates how to present the business opportunity in an authentic way that serves the need of the prospect.

Ultimately, the goal of Mannatech’s training is to show Associates the one-of-a-kind opportunity that direct sales offers. “We want new Associates to fall in love with direct selling, fall in love with social selling, and understand the relevance of it in today’s world,” says Bala.

“We believe the network marketing or social selling model is more relevant today than it’s ever been.”
— Al Bala

Mannatech is also focusing inward to create a culture of providing excellent service and value to everybody they touch. Whether that’s the customer who uses their product, an Associate who depends on those products to create a living, or whether it’s a child that depends on it for nutritional intake. “As a publicly-traded company, we also want to deliver value to our shareholders since we are a publicly traded company,” says Bala.

Industry Outlook

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Bala is optimistic about the future, not just for Mannatech but the entire channel. He believes the network marketing or social selling model is more relevant today than it’s ever been. “More people today are joining the gig economy because they want the freedom. We see the rise of the entrepreneur movement, and this direct selling model offers a great opportunity for people who want to be entrepreneurs.”

Another factor that puts Mannatech in the sweet spot for growth is its position as a global health and wellness company in the nutrition industry. They believe that wellness is going to be the biggest, fastest growing market ever because of the baby boomers who want to look and feel good and live longer. “People are going to be more focused on wellness, and nature and science are a good combination of those two things,” says Bala.

All this bodes well for the company and the direct selling channel. “I really believe direct selling is the next trillion-dollar industry,” adds Bala. “As much as Amazon and Ali Baba will be trillion-dollar companies, I believe this industry is absolutely poised to be right there with them if we keep a laser focus on providing exceptional value for our distributors and customers alike.”

On a Mission 5 Million®

According to the World Health Organization and UNICEF, roughly 100 million children in developing countries are underweight, and over 150 million are malnourished. This can hinder brain development, reduce intellectual capacity and stunt growth.

To help fight global malnutrition among youth, Mannatech created the Mission 5 Million (M5M)® Foundation. With every Mannatech product purchase, a donation is made to the Mission 5 Million Foundation, which is used to buy and supply Mannatech’s nutrient-rich PhytoBlend™ product to children in need. PhytoBlend is a plant-based powder that provides many of the nutrients otherwise found in fruits, vegetables, meals, minerals, grains and oils.

“In M5M®, Mannatech has created what we call a social entrepreneur model, which is the concept that every product you sell automatically contributes to the wellbeing of a child somewhere in the world,” says Alfredo (Al) Bala, Mannatech President and CEO. “And it’s done from our top line, not from our bottom line. The difference is that many people give from their profits, but we give from our sales. Every product that moves creates a donation that is passed on to a child, almost like the TOMS® Shoes concept.”

From 2009 through 2017, Mannatech’s programs have generated over 122 million servings of nutritional support for malnourished children. For 2018, Mannatech set a goal to provide 16 million meal servings to malnourished children. By mid-year 2018, the company had reached 10 million servings, putting it well on track to reach the 16 million mark before the year is over.

“Mission 5 Million connects what we do every day to an effort to better the world,” Bala says. “That’s appealing to everyone but certainly to the millennial generation who likes to make sure that every dollar they spend has a butterfly effect that will create something good. And that’s exactly what you do with Mannatech.”

It’s Not What You Do, It’s Who You Are

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I believe you’ve got to get up every day, keep moving and tackle what’s in front of you.

In some ways, I was lucky. I wasn’t born wealthy. I didn’t come up through any kind of Ivy League or high-powered business dynasty. I didn’t know anything about big-city life and was relatively unsophisticated in the ways of the world. But I did have very positive and supportive parents who were excellent role models. In baseball terms, let’s say, I was born on first base. It wasn’t like I had to hit the ball and run to get there. My parents, community and upbringing gave me that kind of solid head start. I’ll always be grateful for that.

You Can’t Change Your History

I’ve known people who grew up with wealthy, highly educated parents and all kinds of other advantages. You know the ones I mean: people who were born on third base and think they hit the triple themselves. And I’ve known people with a mountain of misfortune to overcome in life—bad background, abusive parents, no money, no advantages—people born swinging at the plate with two strikes already against them.

“I think what’s important is to know what’s important. The main thing in life is to know what the main things in life are.”

But all of that is completely beside the point. It’s all past; none of us is going to change any of it. You can’t change your history. Things that are outside of your control are outside your control. Do circumstances matter? It would be naive to say they don’t. Of course, where you’re born, where you grow up, who your parents are or aren’t, where you’re fortunate enough (or unfortunate enough) to go to school, all these circumstances, and many others, play a role. But they’re not what matters most. What matters most is what you do about it.

The Word of Business Tends to Reveal Your Character

You may not be able to map out everything you’re going to do in life. But you can decide what you believe in. You can find those things that you know are true, that you know you’ll follow no matter what. The world of business tends to reveal your character. Sometimes you’ll see smart and talented people burst on the scene like a shooting star, and then a few years later you’ll wonder why you’re not hearing about them anymore. You’ll notice everyone saying, “Hey, whatever happened to so-and-so?” I’ll tell you what happened to so-and-so. Their character caught up with them. I’ve seen this scenario replay itself over and over again, more times than I can count. You probably have, too.

Words are truly cheap. Anyone can talk a good line, and a good line may influence people for a time. But not for the long haul. Ultimately people don’t follow your words. They follow your integrity, your spirit. They don’t follow what you say. They follow what you do and who you are.

We are Human Becomings

No matter who your parents were, where you grew up, what happened to you or didn’t, the bottom line is that what kind of person you turn out to be is your decision. I don’t mean a decision you make in one big burst of clarity on your 18th birthday, in an explosion of light with angels singing. It’s a decision you make again and again, every day—in fact, dozens of times a day. We describe ourselves as human beings, but I think the truth is more like this: We are human becomings. Being the kind of person others look up to and are glad to be around, the kind of person others will follow, isn’t something that happens to you. It’s something you decide, something you work on. It’s not a gift. It’s an ongoing project. And it’s more than worth the effort.

“No matter who your parents were, where you grew up, what happened to you or didn’t, the bottom line is that what kind of person you turn out to be is your decision.”

When I graduated from Newton High School in 1975 a friend of my dad’s gave me a copy of Great Expectations. Inside on the flyleaf, he had written an inscription: “To Johnny Addison, for whom I have great expectations!”

Pick up the printed issue in which this article is found.

What Kind of Behavior Do You Emulate?

Well, that made one of us. I sure appreciated the vote of confidence, but as for me, I didn’t know what kind of expectations I had. If you’d asked me at the time what were my big goals in life, I probably would have said, “Um…” and who knows what would have come out next. The only things I did know were who I admired and what kind of behavior I wanted to emulate.

When people know from an early age what they want to do with their lives, I think that’s awesome. But I don’t believe it’s the most crucial thing. I believe what’s more crucial than what you do is how you go about doing it. I think what’s important is to know what’s important. The main thing in life is to know what the main things in life are.

John AddisonJohn Addison, author of Real Leadership: 9 Simple Practices for Leading and Living with Purpose, Leadership Editor for SUCCESS magazine, and President and CEO of Addison Leadership Group, engages and inspires audiences with his relatable messages. Most recently, he served as Co-CEO of Primerica Inc., a company he joined more than 35 years ago.

The Power of Association

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As is true with any membership, you get what you put into it. You reap the richest value from organizations when you become an active participant.

Association membership works exactly the same way: DSA is a crucible in which relationships are fused and ideas forged. The return on a company’s membership investment can only grow when members make the most of the opportunities DSA puts forth.

Pick up the printed issue in which this article is found.

Companies from across the direct selling spectrum have been involved in shaping the industry’s new Direct Selling Self-Regulatory Council that will be launched in 2019, and the association’s work to protect the independent contractors that are our businesses’ lifeblood impacts party plan, one-to-one sales and big-ticket companies alike.

The value DSA creates through its programs and social networks is realized through the invaluable knowledge shared between colleagues. Company executives who led their organizations through a challenge step forward to help others. Companies looking to expand have found optimal strategic partners with DSA staff. DSA members who have been lent a hand in the past repeatedly “pay it forward” and help others as they were once helped.

Regional Councils

Four regional councils—the Coastal, Mountain, Capital and Cactus Councils—convene top direct selling executives on a quarterly basis to share information, learn about industry trends and participate in the policies and actions of the Association.

DSA Learning-on-the-Go

These quick, convenient and highly-mobile educational videos enable executives at DSA member companies to glean valuable insights from those that are bringing forth tomorrow’s innovations.

Direct Seller Primary Contact Directory

The whole is greater than the sum of its parts, but it’s the individual executives who comprise the whole of the DSA membership that are of the greatest importance to one another. This directory, available in 2019, will empower members to not only strengthen relationships, but also engage with their colleagues and peers in new ways.

Communications Toolkit

Empowering member companies with the full range of communications resources to tell the direct selling industry story has always been a focal point for DSA, and today’s increasingly competitive climate makes these materials critical. DSA encourages all member companies to incorporate these materials into their communications initiatives.

Career Center

Executives engaged with their industry’s associations tend to be more involved and interested in their careers—those are the individuals our Career Center attracts. DSA’s Career Center connects our member company executives with a pool of the most qualified and experienced direct selling executives in the channel.

Engagement Dashboards

A roadmap for helping you increase your engagement with DSA, these are made available to member companies with their customized 2018 dashboards in Q1 2019, and we invite you to explore new engagement opportunities.

These are just a few of the ways that you can realize a greater return on your DSA membership. In today’s disruptive market climate, marked by emerging app-based gig economy players and online retailers, standing together is the key in maintaining direct selling’s strength.

We are America’s original entrepreneurs, and we urge you to make the most of your DSA membership in 2019.Become an active participant in your Association and take full advantage of what is being offered.

Nancy M. Burke is the Vice President of Membership for the Direct Selling Association (DSA).

Inboxed

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When used properly, email may be more powerful than ever for growing a direct sales business.

Email marketing is dead, right? Far from it. More and more direct sellers are using email marketing to grow their businesses and build a following online. However, the focus is not on selling or promotion. They’re finding the most effective strategy is to bring value, educate and share compelling stories with their subscribers.

Top direct selling and network marketing industry trainer Ray Higdon says that email is still the No. 1 source of income for his coaching business. A 2017 study by Magnetic showed that 44 percent of North Americans check their email one to three times per day, while 18 percent check it four to nine times per day. Those aren’t surprising numbers considering most people can access their email anytime from

their smartphone.

“The 2018 survey conducted by adobe revealed that email was the preferred contact method for receiving offers from brands.”

According to a 2018 survey conducted by Adobe, personal email usage was up 17 percent over 2017 for people who owned smartphones and worked in an office. The survey also revealed that email was the preferred contact method for receiving offers from brands. 39 percent of respondents said the No. 1 thing they would change about brand emails is to make them more informative rather than promotional. 27 percent said that what they wanted most is for emails to be more personalized.

So, more informative and more personal. Sounds pretty simple, right? Those results are fantastic news for direct sellers who want to use email to grow their business and personal brand. They don’t have to be a seasoned salesperson to communicate with email subscribers effectively.

Direct Selling Email Strategies that Work

Email is a terrific way for direct sellers to maintain consistent communication with their customers, prospects and fellow team members. Communicating with hundreds or thousands of people with the push of a button is powerful. Email allows direct sellers to build a loyal following that looks to them as a trusted authority. The key is to communicate value.

Emails that constantly try to sell often get lost in the noise. Providing value means educating, answering questions, solving problems and telling compelling stories. As the Adobe survey revealed, it means being informative.

In his book Jab, Jab, Jab Right Hook: How to Tell Your Story in a Noisy Social World, online business-building expert Gary Vaynerchuk says that content is most effective when it brings value. “A story is at its best when it’s not intrusive when it brings value to a platform’s consumers, and when it fits in as a natural step along the customer’s path to making a purchase,” he says.

The title of Vaynerchuk’s book sums up this philosophy. The “Jabs” are the bits of valuable content you provide your customers. The “Right Hook” is when you ask for something, such as a sale or an invitation to view the business opportunity. His point is to have more jabs before you ever go in for the right hook. There’s no universal jab-to-right-hook ratio, but the approach applies perfectly to direct selling email strategies.

For example, someone in the health or weight loss industry might email five tips on how to avoid late-night sugar cravings or an email about their favorite high-fiber foods. If the email subscribers have questions about these things or need help in these areas, it opens up a nearly endless amount of valuable content topics. Then, an email might be sent about the specific product the person used to help lose 20 pounds. A genuine success story can be built around the results of the product. The audience is much more likely to listen and pay attention because they have already been given so much value and helpful advice.

“Emails that constantly try to sell often get lost in the noise. Providing value means educating, answering questions, solving problems and telling compelling stories.”

Pick up the printed issue in which this article is found.

The focus on genuinely helping and serving is what makes the transition to selling (or asking) simple and natural. Many seasoned direct selling leaders espouse writing emails in a personal, natural tone as if you were simply writing a letter to a friend. Some do not even include images in their emails, and others rarely include more than one link, which can be seen as “salesy” if done too often.

Tracking Results

Another major benefit of email marketing for direct sellers is the ability to track results such as open rates and click rates. Emails can drive people to an informative blog post, educational or entertaining YouTube video, a training webinar, a Facebook Live interview, or an exclusive discount on a replicated website. Knowing who opened an email or clicked on a link reveals valuable data for direct sellers. Follow-up emails can focus on only those who opened the previous email, helping narrow the target audience.

Another major benefit of tracking results is separating subscribers based on interest. Some subscribers might only be interested in being a customer at first, while others might be interested in the business opportunity. Identifying the differences helps tremendously in getting the right message to the right audience, and at the right time.

CBD’s Current And Future Impact On Our Channel

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If you haven’t heard about it yet, where have you been?

I’m talking about Cannabidiol, or CBD, the ingredient being credited with a growing list of health benefits and, as a result, is rapidly transforming much of the consumer product landscape. Both Dr. Sanjay Gupta and Dr. Mehmet Oz are just a few mainstream medical professionals praising CBD’s wellness impact.

Companies from virtually every consumable category, including beverages, dietary supplements, skin care and pet products, are actively exploring the opportunities, including our own direct selling channel. Our own research shows that direct selling companies will sell $300 million worth of cannabidiol-related products in 2018, making direct selling the largest channel of distribution for the growing CBD product sector.

The trends indicate that global direct selling sales of CBD products could exceed $1 billion by 2020. Established companies, as well as a growing number of startups, have begun announcing their entry into the market.

Pick up the printed issue in which this article is found.

Our cover story, by Sarah Paulk, describes the unique history that hemp/CBD has played in the United States, it’s recent rise in the media, and how direct selling companies are taking the lead not only in sales but in helping educate consumers on its wellness benefits.

With an ingredient that is as misunderstood as CBD, the direct selling channel may prove to be the perfect fit for companies seeking channels of distribution. Direct sellers are known for their one-on-one training and education methods that can meet the consumer on a personal level even if it’s the first time they’ve heard of CBD oil. That personal connection and ability to address specific misconceptions has the potential to create a loyal customer base.

We are excited to share with you a two company spotlights, Mannatech and Maskcara Beauty. Since it’s founding in 1994 Mannatech has made a name for itself with its commitment to innovative products and sound science. President & CEO Al Bala says sound science is obviously important, but will only take you so far. “At the end of the day, every company is going to rise and fall on the value they provide to an ultimate customer.”

From 2009 until 2013, Cara Brook ran her blog sharing beauty tips, tutorials and product recommendations. In her day job as a makeup artist, Cara had always used highlighting and contouring, a makeup technique to accentuate a client’s best features and give an airbrushed look. As the technique went mainstream, Cara saw what could be her big opportunity, so with her $30,000 in savings coupled with some family investment Maskcara Beauty was born. But that is just the start of this amazing entrepreneurial story. Be sure to read it in its entirety starting on page 50.

Save the Date—10th Annual Global 100 Celebration Event—April 24, 2019.

Before your calendars get too full, be sure and circle April 24 on your calendar, and better yet head to https://dsndev.wpengine.com/global-100/ and register you and your team, or even sponsor a table. We will continue to share more details as they become available.

All the best,

Todd

Seldia Recognizes Mary Kay Europe as “Best Company of the Year”

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Seldia, the European Direct Selling Association, recently recognized Mary Kay Europe as “Best Company of the Year” at its 2018 Astra Awards.

Seldia represents 28 national direct selling associations and 20 member companies throughout Europe. Its mission is to promote the interest of national direct selling associations and direct selling companies in the European footprint. “Best Company of the Year” recognizes the corporate member that best raises awareness of the direct selling method of distribution, promotes the method’s socio-economic benefits and demonstrates a strong commitment to supporting the mission of Seldia.

“We were honored to award Mary Kay Europe ‘Company of the Year,’” said Marie Lacroix, director of Internal Affairs at Seldia. “Mary Kay’s commitment to the direct selling industry and its impact on our member direct selling associations across Europe cannot be overstated. They set excellent standards in the direct selling sector and are a great example for the industry.”

“At Mary Kay, we are focused on our mission of enriching women’s lives around the world,” said Tara Eustace, president of the Mary Kay Europe Region. “Receiving the Seldia Astra Award for ‘Company of the Year’ validates that endeavor and increases our resolve to champion women’s empowerment and entrepreneurship.”

“We believe market leadership was instrumental in Mary Kay Europe being awarded this prestigious recognition,” said Eustace. “Many of our market leaders in Mary Kay Europe play an active role in their local direct selling associations, some even serving as president. We believe in this industry and the impact we make in the lives of women and their families through it. We’re grateful for Seldia’s continued efforts in direct selling education and promotion.”

DSA Fall Conference 2018 Recap

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Earlier this month, DSA Fall Conference 2018 welcomed more than 300 direct selling leaders to share the latest innovations, ideas and insights for today’s competitive market.

The conference, held in Arlington, Va., allowed attendees to gain valuable insights on sales and marketing strategies, leveraging technology to fuel growth and brand value, independent contractor classification issues, recent legal and regulatory trends, communications and, industry self-regulation.

“Creativity is the response to uncertainty, and DSA Fall Conference 2018 was a look at where direct selling is today, and what we can do to ensure that direct selling’s independent contractors and companies have everything they need to compete in today’s shifting market climate,” said John Fleming, DSA Hall of Fame and DSEF Circle of Honor recipient.

Highlights of the event included appearances by U.S. Secretary of Labor Alexander Acosta, who praised the contributions of direct sellers to the fabric of the American economy, and Lois Greisman, associate director of the Division of Marketing Practices, Federal Trade Commission (FTC), who lauded the establishment of the Direct Selling Self-Regulatory Council (DS-SRC).

For the full recap of the DSA Fall Conference 2018, click here.

Lessons for Motivating A Volunteer Salesforce

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Direct selling companies and non-profit organizations face a similar dilemma: How to motivate a salesforce made up of volunteers.

These salesforces do not have quotas like typical sales teams. Their sales leaders have no hire or fire authority. Yet they have both been successful in aligning sales goals and motivating growth. How do they do it?

A recent article in Forbes offered insight and advice on best practices for companies trying to motivate a volunteer workforce.

Keep it Simple

Businesses cannot compel volunteers to do anything. The only thing they can do is simplify the message and model the behaviors. That is, make things simple. Duplicable.

Look for Inspiration Everywhere

Look outside of direct competitors for inspiration on how to engage, educate and inspire your salesforce. Research companies that do a good job of the tasks and motions you want your sellers to demonstrate.

Recruiting and Onboarding Can Make All the Difference

New sellers need to get early momentum. It’s an indication of later success and helps the seller know they are on the right track. This is a matter of good recruiting and onboarding while understanding your differentiation and the value you bring to your employees.

Recognize and Appreciate the Choices People Make

People have choices. To work for your company or organization. To spend their time with target accounts. To read emails from the marketing organization or utilize CRM to manage their contacts. Respect the choices people are making every day to invest in your company, to support your campaign and to solve problems for customers. Show gratitude.

To read the full article, click here.

Direct Selling vs. The Gig Economy

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What used to be friendly territory is now a battleground.

The gig economy is no longer an outlier. According to a recent McKinsey Global report titled Independent Work: Choice, Necessity and the Gig Economy found that 162 million people in Europe and the United States—or 20 to 30 percent of the working-age population—engage in some form of independent work.

Working from home or a café, clocking regular hours or nights and weekends only, these workers have more control over their schedules and their earning potential. Herein lies the beauty of the gig economy: It can be whatever a person needs it to be.

For the direct selling industry, all of this sounds very familiar.

So, Who’s Winning?

While companies like Uber, Airbnb and TaskRabbit may have made the gig economy sexy, direct selling lays claim to being the first to plant the flag. Long before it was normal to rent out a spare bedroom to strangers, direct selling was the go-to opportunity to make additional income without the cubicle or office hours.

Even though direct selling was here first, it is the flashy new influx of companies within the gig economy that have offered increased credibility to direct selling. Freelancing and side hustles are now more attractive and accepted than ever, and customers have been conditioned to make purchases in nontraditional ways, like through their phone, on an app, or from a friend.

“It’s not a competition. But if it were, it seems the gig economy might be winning.”

All these positives have created a symbiotic relationship between the two, leading the direct selling industry to praise all that the gig economy represents. But are direct selling and the gig economy really the same? What if the two were treated as separate entities; which one would come out on top?

It’s not a competition. But if it were, it seems the gig economy might be winning.

Digging Into the Numbers

In 2015, direct sellers numbered 20.2 million and brought in over $36 billion in sales according to the Direct Selling Association. By 2017, that number had fallen to 18.6 million representatives and $35 billion in sales. In just two years, sellers and sales dropped nine percent. The gig economy, on the other hand, encompasses more than three times as many workers as direct selling, and Intuit, the owner of TurboTax, expects the number of gig workers to increase to 43 percent of the workforce by 2020.

Digging deeper, the numbers reveal that of that 18.6 million U.S. direct sellers, 4.1 million have been classified as either discount buyers or have no intention of selling the products to others. And nine million have gone inactive. When the DSA’s 2017 numbers were revealed at their Annual Meeting in June, the following observations were given regarding the drop-in people involved in the channel for two straight years:

  • Companies who have yet to restructure or segment their base of distributors from discount buyers to preferred customers.
  • It is a market correction after years of significant growth
  • Pressure from Amazon and gig economy opportunities

The first two may indeed be valid contributors to the decline, but it is our opinion the last one most likely is the culprit and will continue to be well into the foreseeable future. Our channel’s attention has been laser-focused on what to do with the 800-ton gorilla that is Amazon—and rightfully so—they will do more in revenue in 2018 than our entire channel will do globally.

But the stealth threat from gig economy opportunities has been slow in developing over the years, lurking in the shadows, and it’s time to shine the spotlight on the effect it’s having on the channel.

So Where are Direct Sellers Going?

It is not just important to understand what alternative incomes people are now pursuing, but it’s equally important to understand the people who are participating in them.

Gig Economy Participants

Of direct selling’s 18.6 million U.S. distributors, most were Caucasian millennial women. Major players in the gig economy, on the other hand, are predominantly male, like Uber, with female drivers only making up 18 percent of the company. However, that number was 14 percent in a 2015 survey.

As smaller, evolving businesses, like Etsy (where women rule the day with an 86 percent female labor force), continue to gain more attention and market share, the pressure is building for direct selling leaders. If any of the female-dominated companies gain a significant amount of momentum, the hurt direct selling is experiencing will only intensify.

The Female Factor

With digital platforms like Upwork making independent work easier than ever, the number of people who can operate as independent workers is growing. The same McKinsey study reported that 27 percent of the U.S. working population–68 million people—are engaged in the independent workforce. Over half of those independents, 51 percent, are women.

“In an industry where women make up 73.5 percent of its sales force, losing any more its female base to other gig opportunities will be a devastating blow.”

Don’t blame the shift on changing household roles or economic instability either; they’re showing up by choice. Of those workers, 72 percent chose the independent model to earn a primary or supplemental income, while only 14 percent did so out of financial necessity.

In an industry where women make up 73.5 percent of its sales force, losing any more its female base to other gig opportunities will be a devastating blow. Getting to the starting gate first doesn’t guarantee a win. With direct selling numbers dropping and gig economy numbers rising, it’s becoming difficult not to connect the dots. Is the gig economy pulling workers and profits away from direct selling? What will the future of direct selling look like if the trend continues? It’s a brewing storm no one within the industry is anxious to talk about publicly–yet.

The Conversation is Changing

Industry insiders are beginning to sound the alarm that direct selling must now find the ways it’s different or, more importantly, the ways it’s better.

Co-Founder of Strategic Choice Partners, a consulting firm specializing in the direct selling industry, Alan Luce recently wrote, “The growing competition to attract people back to direct selling and away from the opportunities of the gig economy presents the biggest challenge that our industry has faced in the last 40 years.”

As people migrate away from direct selling, there is a quiet groundswell among leaders to urgently differentiate and position direct selling as a separate, unique and more attractive opportunity than what the growing gig economy has to offer. What’s always worked for direct selling may not be enough anymore.

Direct selling has long been the opportunity that allows individuals to be a part of a community that offers support every step of the way, a flexible schedule, and no boss to report to at the end of the day. These perks have been the big draw for the direct selling industry for quite some time. And it’s worked.

Upping the Ante with Incentives & Benefits

But the gig economy has taken that sales pitch, made it its own, and added icing to the cake: no startup fees and leads that come to you in Uber and Lyft’s case. Behind closed doors, industry analysts have begun referring to these alternative income opportunities that do the heavy-lifting of providing customers for its workers to appear as menacing as Amazon’s free shipping has been to the channel.

The shift toward independent work is bringing more flexibility and income opportunities for sure, but there are still questions surrounding benefits, income security mechanisms, and other worker protections the mainstream wants answers to. And many Gig economy companies are already starting to address these.

On-demand food delivery service Caviar and online survey software provider SurveyMonkey have started offering its gig workers insurance benefits, but Uber recently announced in 2019 it will be taking its perks to a whole new level.

Much like customers love to unlock the Gold Level on their Starbucks app, Uber drivers can unlock status–gold, platinum and diamond–by driving frequently and providing great service. For drivers who meet these status requirements, Uber provides fuel and auto repair discounts and will cover the cost of tuition to Arizona State University’s online program–not just for drivers, but also tuition for their children, spouses and parents.

Other big-name brands like Walmart and Amazon have been footing the bill for a portion of the costs for its employees’ educations for a while. The difference? Uber drivers are not traditional employees. The commitment isn’t cemented after an application process and job interview or attached to assigned shift work; it happens through dedication and loyalty to the brand. For Uber drivers, this new program means all they need to do is show up–when they want to, of course–and perform well for the customers Uber provides. No lead generation, no backend invoicing, no team building. Just turn on your phone, show up for waiting customers, and be courteous. That’s it.

Gig Trends to Watch

Some companies are launching their own spin on the side hustle, like Vitalibis, a cannabis-based health and wellness company, and Teami Blends, a health and wellness loyalty company–trend makers in their own right–who recently launched companies with a twist on the traditional platform by combining e-commerce, social selling and affiliate marketing. For these companies, referrals, not recruits, are the goal.

“To thrive, our channel industry must apply its outside of the box creativity to popular gig economy trends as well. The conventional founding model has value, but tradition alone won’t save it from becoming obsolete.”

UK company Verve has positioned itself to become Gen Z’s preferred affiliate marketing company by capitalizing on the younger demographic’s love for entertainment and discounts. Partnering with reputable entertainment companies like Live Nation, MGM Resorts International, Marriott International and integrating directly with ticket providers like Ticketmaster and Eventbrite, the company allows its advocates to share buzz about events and then earn non-traditional rewards, like backstage passes or VIP treatment, when others buy tickets through their unique referral link.

Creating product trends is one of direct selling’s greatest skills (like bringing ingredients mainstream that were previously obscure to the western world, such as acai berries) but to thrive, our channel industry must apply its outside of the box creativity to popular gig economy trends as well. The conventional founding model has value, but tradition alone won’t save it from becoming obsolete.

Threat or Opportunity?

Direct selling has been the frontrunner when it comes to providing perks it gives its distributors when they meet certain qualifications, including car programs, complimentary exotic vacations and large residual bonus checks handed out on stage.

So it should be no surprise that the gig economy has taken a page from our playbook. But what the gig economy has proven—and what direct selling companies would be wise to heed—that it’s not just about a car bonus or even the potential to earn a sizable income that will compete for today’s worker. They want an opportunity that allows for a little extra income on demand, and the option to choose from several levels of income and effort, with minimal investment required. The influx of emotional capital that comes from working with a company that brings the customers to you (Uber & Lyft) can’t be ignored either.

How Will Our Channel Innovate & Lead?

And yet, what poses the greatest threat could also be direct selling’s greatest opportunity. Is it in the realm of possibility that we could take a page from the gig economy’s playbook and get leads from our customers, or make our customer and distributor sign up process easier and frictionless? Can we make onboarding our distributors so simple and seamless where all they have to do is turn on their phones to be told what to do next? And finally, are we going to focus on changing lives or do we pivot to changing their incomes first before changing their lives?

“Industry executives can either continue with head-in-the-sand thinking and pretend this trend won’t affect the future of direct selling, or they can take a step back and allow themselves to hear the alarm bells and make changes before it’s too late.”

Direct selling remains a leader, but it’s possible it is now leading from behind. Industry executives can either continue with head-in-the-sand thinking and pretend this trend won’t affect the future of direct selling, or they can take a step back and allow themselves to hear the alarm bells and make changes before it’s too late.

Generations of entrepreneurs have turned to direct selling to help improve their lives. Without some type of course correction, more people might leave the channel altogether, and it’s possible they’ll call Uber to get there.