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Striking the Right Balance at Every Stage: Balancing Brand Protection and Consultant Personality

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Click here to order the August 2013 issue in which this article appeared.

Two critical components of any direct selling organization are the brand and the consultants that represent it. The brand is the organization’s image with consumers; consultants are the volunteer army that connects consumers with the brand, establishes and nurtures the critical customer relationships and carries out the brand’s vision.

In order for both to thrive, consistent communication of the brand messaging is key. Direct selling organizations, regardless of size, need to communicate their value to customers and prospects, while also connecting directly with consultants to ensure that they have all of the information they need to be successful—such as education on new products, promotions and performance incentives. For consultants, personalized communications play a critical role in their networking efforts to drive revenue and referrals. However, if the brand message is left in the hands of the consultants alone, organizations risk noncompliance, inconsistent messaging, misrepresented or varied promotions and abandoned customers. For companies that understand that their brand is their greatest asset, this is problematic.

How can direct selling organizations protect their brands while providing consultants with a vehicle to communicate with and grow their networks as well as show their individual personalities?

One solution designed to help direct sellers attract, acquire and engage new customers and recruits is using personalized communications and newsletters.

One solution designed to help direct sellers attract, acquire and engage new customers and recruits is using personalized communications and newsletters. These regular communications, composed of brand-specific and general interest content, provide an effective tool for driving company awareness and interest while also strengthening customer and prospect relationships across their growing networks.

The challenge, of course, is that when you consider tools like email newsletters, open rates are generally much higher when consumers receive a message from someone they know versus from “company x.” In addition, having a photo and personal message from a local consultant in the body of the newsletter makes it seem more personalized to the recipient. Sending personalized messaging helps foster a closer relationship between consultants and their customer and prospect base.

In order to balance the need for personalized communications—which play a critical role in the networking efforts of consultants in direct selling organizations of all sizes to drive revenue and referrals—with brand protection, the key is making sure that the content of newsletters protects the brand and provides value to the audience while allowing the personalities of local consultants to come through in order to increase engagement.

Why Size Matters

The size of an organization brings its own unique challenges. For smaller direct selling organizations—typically composed of less than 200 consultants—the overarching business goal is to generate awareness of and interest in the brand and its product offerings. Consultants need brand credibility in order to succeed, and the brand needs to cultivate a loyal following.

With predefined e-communication templates, a smaller organization can easily add in some relevant content and distribute these branded newsletters to customers and prospects to drive leads back to their consultants. These professional communications allow the brand to build awareness and validate the company’s credibility while maximizing outreach by communicating to their consultants’ networks.

After adding a personalized message, these newsletters are automatically sent on their behalf, providing the critical consistency necessary for building brand awareness and equity. When the newsletters appear to come from the consultants with links driving sales and leads back to them, a level of trust is also built and strengthened between the consultants and corporate.

Medium-sized organizations have an established reputation already but need to maintain momentum, continue to expand mindshare and increase the number of consultants. As the consultant numbers grow, brand management remains critical and increasingly difficult to manage, but a personal touch from consultants also plays a key role in growing sales. The newsletter can play a critical role in providing a refreshing but true-to-brand perspective to re-engage with existing customers while offering appealing content that attracts new prospects and inspires purchases and new recruits.

A personalized communications strategy with brand protection at its core is instrumental in helping maintain both corporate-wide control of messaging and special offers.

For large, established direct selling organizations, brand protection is critical. A personalized communications strategy with brand protection at its core is instrumental in helping maintain both corporate-wide control of messaging and special offers. At this stage of business maturity, the ability to craft content around products and promotions while ensuring message consistency, brand messaging and CAN-SPAM compliance has global implications. With each newsletter campaign, analytics provide the organization insight into which articles and product features interested consultants, customers and prospects the most so that they can plan future campaigns and content accordingly and perhaps even product development.

It’s Not Just What’s on the Outside

As important as newsletters are to building a consultant’s business and growing brand awareness, direct selling organizations can also use newsletters for internal communications to ensure that consultants have all of the information they need to be successful. The internal newsletters serve to help train new consultants and recognize successes. As a result, consultants begin each month informed and motivated to recruit new consultants, book shows and throw successful parties.

Striking the Right Balance

Organizations must strike the balance between making the message appear as if the personal consultant sent it, and remaining true to the brand. The key is making sure the content of those messages is both consistent with the brand and embraces the tenets of effective marketing communications: Messages and offers must be targeted, personalized, relevant and measurable.

To position for growth and long-term success, protecting the brand must be part of the culture, with consultants becoming as fiercely passionate about guarding it as the organization itself. Selecting the right solution—one that enables personalization while ensuring brand protection—allows brands and consultants to experience the best of all worlds.

Michelle LarterMichelle Larter is the Worldwide Director, Direct Selling, at IMN Inc. Larter has more than 20 years of experience in sales—19 years working directly with software and 10 specifically with direct sales. She is a contributing writer to direct selling and technology publications and a frequent speaker at industry events. IMN Inc. was awarded the prestigious 2013 DSA Ethos Award for Partnership.

Letter from John Fleming, August 2013

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The strong 2nd quarter and July performance of many publicly held direct selling companies sends strong signals regarding the current state of direct selling and the future. After taking the brunt of a vicious short seller attack last year, Herbalife’s share price has rebounded significantly. At the beginning of 2013, its stock price was below $35.00. As this piece is being written, Herbalife is trading at $54.00. USANA stock has also risen dramatically. From a low of around $35.00 in January, USANA is trading over $80.00 as of this writing. Primerica’s share price also has been steadily rising all year. Nu Skin has been steadily performing as well. Nu Skin certainly captured the attention of the world on July 10 when the stock price jumped approximately $12.00 in one day after the company revised its guidance for the balance of 2013. Shares have been trading in the high $70.00 range since then. In fact, the stock just rose to $83+ behind announcements of more planned expansion in China as a result of more licenses being issued.

John FlemingWe here at DSN found it most exciting to observe the many good things happening for direct selling companies and the industry in support of the official announcements made at the DSA Annual Meeting, which indicated industry sales and recruiting were up, both domestically and globally. What further excites us about this good news being shared around the world is that it supports true education about the direct selling model. Last year, the industry was attacked, perhaps more viciously than observed in the last 10 to 15 years, by some who obviously do not understand the attributes of a channel of distribution based on the engagement of people who also attract others, all of whom enjoy the products and services offered. Billionaire investor Bill Ackman created major concerns among many with his attack on Herbalife; however, these attacks may have actually caused more people to learn about the business model and pursue the facts.

Interestingly, the companies mentioned in the first paragraph all focus on nutrition/wellness, personal care or services. We know that all of the categories mentioned are considered growth categories for the industry.

As we have done on other occasions when the news is extraordinary, we reached out directly to the source. In this case we were able to schedule an interview with Truman Hunt, President and CEO of Nu Skin, to ask a few questions about the confidence being expressed by shareholders and analysts in Nu Skin’s corporate strategy, and how their independent sales organization plays out the role of this strategy. As we had hoped, Mr. Hunt was very candid and open. We know you will appreciate the full interview found here.

Last month, updated industry data from the World Federation of Direct Selling Associations and the USDSA was released to the public. This month we are revisiting the importance of industry research in a very insightful article made possible by the corporate personnel that dedicate much of their time to this effort. If there is any one lesson we gained from the challenging experiences of recent attacks on the direct selling business model it is the need for as much quantifiable data as possible. We truly need the collaboration of everyone in the industry to engage in the processes of research and communication so that when we are called upon by the media or by an analyst—or by a disbelieving neighbor—we can tell the compelling story of direct selling, supported by the facts of hard data as well as the anecdotal testimony that comes from our heart and our passion for what we believe in.

Research is a powerful tool! It takes collective voices to ensure that the data is used as effectively as possible. Here are three things that we think all of us can do to ensure that we use the research available as effectively as possible.

  • Participate in any manner that you can. When called upon by researchers, don’t fall into that trap of thinking that you do not have time. Consider joining the DSA if you are not currently a member. Membership has its benefits, and participating directly in the research effort enables your company to benefit from all of the findings, not just those that are released to the public.

  • Read all of the research you can get your hands on to equip your own conversation and corporate communication with solid statistical facts. The WFDSA and the USDSA websites contain a lot of data.

  • Use the data. Your conversations and corporate messages will resonate much clearer and stronger, especially when conversing with the skeptics. When corporate messages consistently utilize data appropriately, the word spreads through the sales organization, which then passes the data to customers and educates the general public.

It all sounds simple; however, collectively we can eventually dispel many of the myths and promote the benefits of the world’s most unique channel of distribution!

Until next month… enjoy the issue!

John Fleming
Publisher and Editor in Chief

The Critical Importance of Industry Research

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Editor’s Note:  We recently asked the committee leaders of both the USDSA and the WFDSA Research Teams to share with us what they were doing in the area of industry research and what they hoped to accomplish with their work. Here is what they had to say.

Why Is Research So Important?

Industry Research is a topic most people don’t think much about, but in reality it is critically important to our everyday business. In fact, research provides a great many benefits, including:

  • Serving as a guidepost for strategic decisions.

  • Internally at companies, it gets everyone on the same page, both veterans and newcomers alike, by providing a common data set from which everyone can draw.

  • Providing industry benchmarks against which a company’s key performance indicators can be compared.

  • Dispelling myths and providing ammunition for fighting back against misstatements by industry critics.

  • Bringing a mission-critical understanding of the general public’s feelings and opinions on matters ranging from the personal service they get in the traditional retail environment to their trust of the direct selling industry as a whole.

Whether association and government affairs professionals are discussing the merits of direct selling with legislators, regulators and consumer protection groups, or whether communications professionals are presenting the industry to journalists, investment analysts and the general public, research is what provides the necessary data.

The diagram on this page illustrates this process. Strategy drives the research. The research informs those involved in government affairs and those involved in media and communications efforts. These and other professionals, in turn, use research and their professional knowledge to develop new strategies. And the cycle begins again.

The Challenge

DiagramIn the direct selling industry today, there are no credible syndicated sources for research, meaning market research studies conducted by a company then “packaged” and sold to multiple clients. For example, in the natural products sector, a research company called SPINS provides recurring reports on measureable key industry issues and opportunities. In the consumer packaged goods, retail and healthcare markets, a company called IRI provides a continual stream of research and analytics. This syndicated research is a critical element for driving common insights to executives in these industries. 

In fact, managers in these industries receive reams of data—on a frequent basis—from which their teams can make strategic decisions informed by research. It is not uncommon for executives who come into the direct selling industry—particularly in the areas of strategic planning, marketing, product ideation and sales force development—to express amazement with this lack of syndicated research. As research team committee leaders, this is something we intend to remedy.

Recent Research Progress

In this absence of credible syndicated research within direct selling, we have to be the experts on our own industry. This is what the research teams are working towards; but it takes time—and most certainly it takes a village.

The Global Research Committee of the World Federation of Direct Selling Associations is a professional team of 16 including company research/analytics executives, industry association representatives, and an external third-party vendor who receives and aggregates data to maintain confidentiality.

This team works to gather, vet, analyze and report annual statistical data to “size the market.” Stats are collected on sales, sales breakdown by product category and by sales method, the number of those involved with direct selling, and who they are.

Since 2009, this team has worked to establish a standardized process for data collection with standardized definitions. As examples:

  • All countries now report at estimated retail level (rather than net sales/revenue).

  • The size of the entire direct selling industry in each market is assessed, rather than just the size of DSA member companies.

Confidentiality is key. All company data is received on a confidential basis and is only reported in the aggregate.

Collaboration is essential to this annual effort.

  • 60 member direct selling associations are involved, collecting data from hundreds and hundreds of member companies.

  • Beyond these 60 countries, the Research Committee researches the size and nature of direct selling.

  • All told, it takes some 5,500 person hours annually—that’s two and a half people, working the equivalent of more than 1 year—to produce the Research reports and country fact sheets found at http://www.wfdsa.org/about_wfdsa/index.cfm?fa=globalStats.

Additionally, the Industry Research Committee of the United States Direct Selling Association has effectively raised the bar for credible research in recent years. The team has made progress toward creating an understanding of the state of the U.S. direct selling industry, a synthesized 360-degree picture that presents statistics and attitudes of direct selling consumers, member companies, and of direct selling entrepreneurs, both part- and full-time.

A new Research Manager has joined the team. Additionally, two external third-party research partners have helped:

  • Nathan Associates, a long-time DSA research partner, offers the expert view of an economist, coupled with formal research discipline.

  • Artemis Strategy Group brings knowledge of the strategic priorities behind our efforts and expertise in both primary and secondary research.
Current Research Projects

Moving Forward

Currently Serving on the Global Research Committee with WFDSA:

*Also serving on the Segmentation Task Force

  • Amy Robinson—USDSA
  • Andre Campos—Natura
  • Arlene Sarmiento—Avon*
  • Ben Gamse—USDSA
  • Bruce Peters—Herbalife*
  • Caroline Tointon—South Africa DSA
  • Chris Stubbs—Nu Skin
  • Dora Hoan—Best World International
  • JJ LeBlanc—Mary Kay*
  • Judy Jones—Amway*; Chair of the Committee
  • Marie Lacroix—SELDIA
  • Maureen Paniagua—WFDSA
  • Paul Bourquin—Nathan Associates
  • Sean Flynn—Nu Skin*
  • Tamuna Gabilaia—WFDSA
  • Truman Hunt—Nu Skin*

Currently Serving on the USDSA Industry Research Committee:

  • Amy Robinson—USDSA
  • Anne Aldrich—Artemis Strategy Group
  • Ben Gamse—USDSA
  • Daniela Farmache—Amway
  • JJ LeBlanc—Mary Kay; Chair of the Committee
  • Judy Jones—Amway
  • Randi Neiner—Shaklee
  • Steve Raack—BeautyCounter

While we believe we have made great strides on the research front, there is much more that remains to be done. As members of the direct selling community, we need to step up our game and be more competitive than other distribution channels such as franchising, e-commerce, direct mail and others.

As an industry, we are being called on to communicate more fully, more consistently, and more transparently. In our meetings, and when we report our annual statistics, we focus on how we benefit individuals, families, communities and societies. But some would argue that the connection to that benefit can’t—and shouldn’t—be measured on market size and sales data alone. To the general public, key opinion leaders, and yes even our critics, a strong Research/Communications collaboration will apply the evidence to tell the story of the trickle-down impact of every direct selling dollar earned.

More collaborative relationships can only strengthen what we do. For instance, we envision collaboration with the Direct Selling Education Foundation (DSEF) to bring added dimension to Research efforts.

Why DSEF?

  • DSEF champions consumer protection and consumer education and works with academic researchers who seek to understand the benefits of entrepreneurship to society.

  • Academia has made amazing contributions to our success as an industry: helping us understand how consumers shop; how micro-and macro-economic trends drive our business, and the economic impact of direct selling on societies, just to name a few.

  • The deeper we can go to partner with DSEF on research objectives, the better! By understanding their existing research landscape and generating new, original research, we can more accurately portray the intense concern our industry has for the people we work with and the communities where we do business.

Taking a global view is increasingly important. It’s “one world” out there in these days of cyberspace. Our DSA collaborations will become even more important than they are now. Gone are the days of focusing on “our own market.” Moving forward, we have to coordinate all the more on a cross-country, pan-world basis. 

Only by everyone working together as one—one team, one industry, one world—do we make this vision a reality over time, and one step at a time. Because research is everybody’s responsibility.

To participate in the research process, please contact Ben Gamse for the USDSA and Maureen Paniagua for the WFDSA.

What’s Next?

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How the traditional retail world’s paradigm shift from multi-channel to omni-channel will impact direct sales forever

Traditional retail is broken. There is limited store-opening growth as middle to smaller markets cannot justify the four-wall investment. It is under attack from e-commerce competitors, customer show-rooming, social commerce models and even direct sales.

I do not believe traditional retail is going away like venture capitalist Marc Andreessen believes it will. Some retailers will get left behind—think Borders and Circuit City—and some will reinvent themselves and morph into the next-gen retailer. Regardless though, the management teams, boards and investors will require each retailer to keep a foot on the gas and pursue top-line growth through any model or channel.

And just like they did with e-commerce, they will look around at existing distribution channels and start testing them for success.

In fact, this is evident in traditional retail’s paradigm shift from multi-channel retail (bricks and mortar plus e-comm) to omni-channel. So what does omni-channel really mean? No one really knows what the final definition is, but right now what it means is traditional retail is beta-testing new growth models and shifting the cash they spend on store openings into these beta tests.

And one of those growth models is direct sales. Traditional retail is coming our way, and I think the first traditional retail presence will occur in the next two to three years. Once traditional retail experiences the power of the direct sales model, they will go “all-in.”

The future of retail is bricks, clicks and personal sidekicks!

The future of retail is bricks, clicks and personal sidekicks!

I believe the biggest benefit of this shift will be the legitimization of direct sales as a distribution channel.

This reminds me of a similar shift that took place in franchising in the late 1980s. Franchising was considered a lesser distribution channel by the consumer and the traditional business world. Then the restaurant and retail industry realized the benefits of the franchise model from the limited-to-no capex to low fixed operating costs, to highly visible and consistent revenue.

Top DeskTraditional retail embraced franchising. Fast-forward to today, and franchising is considered to be a legitimate channel and has attracted higher and higher quality operators and leaders.

I believe direct sales will undergo the same transition as traditional retail embraces direct sales’ low fixed operating costs, limited-to-no capex, and visible and semi-consistent revenue. The churn is where they will struggle, but I see this declining as the channel is “legitimized” in the consumer’s mind.

This will create a significant growth opportunity for current and potential direct sales companies driven by the possible number of customers and distributors direct sales can reach. Think of all the markets that direct sales can reach but a traditional retailer cannot due to lack of ROI.

I think there will be an exciting and powerful fusion between the two worlds. Direct sales will bring knowledge about how to successfully tap into and scale people’s behaviors and motivation, while traditional retail will bring operating scale and discipline, world-class marketing/branding, and massive technology investments.

I have always believed and said that direct sales is the most powerful business model in the world. It is like franchising on steroids. Yet there are very few billion-dollar direct sales companies, which has never made sense to me because there should be more billion-dollar companies in direct sales than traditional retail.

I think the infusion of the best of breed traditional retail practices and their mass-market appeal with the people knowledge of direct sales will propel direct sales to the next level of growth.

I think the infusion of the best of breed traditional retail practices and their mass-market appeal with the people knowledge of direct sales will propel direct sales to the next level of growth.

Just think of the power of local plus social from direct sales wrapped around the brand and marketing of a traditional retailer with physical stores to support the distributor.

Now add a layer of tablet technology in the home, plus the data that can be captured and mined to deliver a very curated and personalized customer experience: in person, online or at the store. Retail will never be the same.

Direct sales is the last mile to the home. Every brand and every retailer wants to own this last mile. Direct sales already does.

A marriage between traditional retail and direct sales will solve both industries’ needs. Retail needs growth and wants to own the last mile. Direct sales needs customer legitimacy, world-class branding and marketing, and major technology investments.

This marriage is not a 1+1=2 outcome; rather, the outcome is exponential. The addition of direct sales to traditional retail creates a fusion of all the distribution channels, creating an omni-channel approach.

Most importantly, this changes the customer experience from a channel-driven industry mentality to a holistic customer experience.

Retail becomes agnostic to the channel. Retail becomes customer-centric, leveraging all the channels, online and offline, to deliver a highly curated and personalized customer experience.

Hil DavisHil Davis is Co-Founder of custom clothier J.Hilburn.

A Driving Force for Innovation

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DSA

It is often said that small business entrepreneurs play a critical part in the revival of the U.S. economy. Given that more than half of all working Americans either own or work for a small business, there is little reason to wonder why President Obama once referred to the small business community as “the backbone” of the U.S. economy and “the cornerstones of our communities.”

While talk of the decline of American entrepreneurship permeates business and financial news coverage on a daily basis, analysts and media commentators often debate the cause of this regression. Many believe the decline is linked to another category in which the U.S. has presumably lagged behind foreign competitors in recent decades—innovation.

A quick Google search will reveal countless editorials about the biggest factors contributing to an alleged decline in U.S. innovation. The evidence cited ranges from a rise in the number of U.S. patents filed by foreign inventors to a slowdown in research spending across a number of industries. But even if the U.S. has suffered from an overall decline in innovation in the last decade, something unique has happened in the direct selling industry in the same time frame—innovation has thrived.

Direct selling is often considered an example of U.S. innovation at its finest. After all, countless direct selling companies rank among the top overall businesses in the U.S. in categories such as health and wellness, personal care, financial services, clothing and accessories, and educational products. But to say the direct sales channel stands as an example of innovation in America is an understatement; rather, direct sellers remain a driving force—a critical component—of the rebirth of U.S. innovation. Even more, direct sellers provide evidence that innovation is not a figment of the past. In fact, the spirit of innovation—as well as entrepreneurship, modernization, creativity and vision—is what has powered the direct selling industry to enjoy tremendous success, even as other industries continue to struggle.

Not only does direct selling support both globalization and the growth of U.S. small businesses simultaneously in ways no other industry can, but the industry also breaks through seemingly insurmountable barriers such as the rising costs of education and business training and the resulting achievement gap. And while many of today’s leading direct sellers have stood as household names since the mid-20th century, direct selling companies of all shapes and sizes have rolled out unmatched products and services, transformed what it means to promote eco-friendly practices, and even incorporated top-of-the-line technologies to provide distributors and employees alike with invaluable business tools and education, free of charge.

Earlier this summer, the Direct Selling Association released its 2012 Growth & Outlook Survey Report to survey participants. According to the report, the share of sales for two categories—Wellness (including weight-management products, nutritional supplements, health foods and beverages) and Services (including utilities and financial products)—has steadily increased over the last several years. Additionally, energy deregulation has contributed to the rise in sales in the Services category, as a number of energy companies have chosen a direct sales approach.

What does this mean?

Put simply, it means direct selling is flourishing—and not just in one or two product categories. Rather, direct selling companies have made a tremendous impact on industries that are commonly viewed as the biggest influencers behind economic growth and recovery in the U.S.—clean energy, business services, health and wellness education, telecommunications services, and Internet technologies.

While the country awaits a resolution for slow-to-improve employment rates, rising costs of sought-after education and streamlined access to skills training demanded by companies across the board, direct selling has quietly provided an answer to all of the above. By offering both men and women equal opportunities to launch independent businesses in any field of their choosing, the direct selling industry has empowered millions, including many who have felt discriminated against because of their lack of access to higher education or expensive job training, or their inability to adhere to a fixed employment schedule due to family or personal obligations.

With U.S. direct sales totaling $31.6 billion in 2012—a 5.9 percent year-over-year increase from $29.87 billion in 2011—it’s clear that innovation is not a term to be defined and studied in U.S. history books. It is, instead, alive and well and embodied by countless direct sellers across the country.

Alyssa WoliceAlyssa Wolice is Communications Specialist at the U.S. Direct Selling Association.

Blurred Lines: Generation C’s Power and Promise Beyond Boomers, Gen X and Gen Y

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DSN Cover

Direct selling is a pliable industry. Network marketing or party plan, direct selling can be what distributors need it to be at any given life moment, equally meeting the needs of retiring baby boomers and 20-something moms.

Few industries can boast this flexibility. Yet to stay relevant and competitive, direct selling companies must expand their understanding of a customer and distributor base that’s morphing before their eyes.

Generational lines are blurring and a new era of the connected consumer—Generation C—is at hand. “The connected consumer is the stranger you must get to know, and in contrast to the customers of the past, this group is only growing and it’s traversing demographics,” says Brian Solis, new media thought leader and author of What’s the Future of Business: Changing the Way Businesses Create Experiences.

“Nowadays, age ain’t nothing but a number. It is how people embrace technology—from social networks to smartphones to intelligent appliances—that contributes to the digital lifestyle that is now synonymous with Gen C,” Solis says.

“Nowadays, age ain’t nothing but a number. It is how people embrace technology that is now synonymous with Gen C.”
—Brian Solis, author and new media thought leader

It matters little to which traditional generational demographic these connected consumers were born. What’s more important is they behave differently than their traditional counterparts. There are now two very different sets of baby boomers fretting over dwindling retirement accounts, and while the majority of Gen X and Gen Y are connected, “pencil and paper” girls still exist outside the digital majority.

For direct selling, these connected consumers are not only customers but also distributors. To better understand the opportunities created by their arrival, it’s important to sample the industry’s current distributor demographics.

Baby Boomers, Gen X, Gen Y

Generationally, baby boomers, Gen X and Gen Y all bring something different to the direct selling table. Maturity, stability and experience make boomers terrific mentors, while Gen X brings an energy and tenacity for finding new ways to do things. Gen Y is out for adventure and understands the hip factor associated with branding.

Company distributor demographics vary based on product offerings as well as the market itself. Some companies skew older, some younger, but across the board direct selling appeals to the full generational spectrum.

Baby boomers, roughly age 48–66, make up the middle of Univera’s North American distributor bell curve, with Matures (over 67) and Gen X (33–47)/Gen Y (under 32) on either end, says President Randy Bancino. Univera’s average distributor age is 52.

A focus on health with Univera’s metabolic fitness products skews the company’s distributor base older. However, an opportunity to make a better future is also in the mix for Matures and baby boomers.

“We have a combination of people who are thinking about how much money they have for retirement and are looking for ways to supplement that nest egg, and people who are reinventing themselves. It’s kind of the second act of their career life. Our business allows people to explore that without jumping off a cliff,” Bancino says.

J.Hilburn’s stylist demographic, on the other hand, straddles Gen X and the baby boom. Co-Founder Hil Davis points out that custom men’s clothing is not a self-consumable product, which sets J.Hilburn up uniquely in direct selling. Their average stylist, between 35 and 55 years old, is first and foremost a salesperson, earning $20,000 a year in revenue by servicing 30–40 personal clients, which typically skew older due to product price point.

Jeunesse, a rapidly growing promoter of healthy living, also occupies this demographic. “We’re right there on the border of Gen X, and then depending upon the market we’re heading into the early years of the baby boomers,” Chief Visionary Officer Scott Lewis says.

But Jeunesse is a global company, and distributor trends vary by market. “In the U.S. we haven’t tapped into Gen Y. But in Thailand, for example, we have our youngest Diamond Director ever, and he is just 29 years old,” Lewis says.

Gen X and Gen Y are Initials Inc.’s “sweet spot,” says Britney Vickery, Co-Founder of the direct seller of personalized handbags and accessories. In fact, 95 percent of their Creative Partners are 25 to 45 years old. They are new to direct sales, and 86 percent have kids younger than 9. “It’s that former professional woman. It’s the one who might still have a job outside of the home. It’s one who might be looking for a job to stay home with children,” Vickery says.

Shifting Young: Is Gen Y the Answer?

While Gen Ys are often the go-to solution for growth there’s more to this demographic than just youth, and understanding why they behave as they do is the only way to truly see the wider opportunities at hand.

“It’s a natural thing to say, ‘How do we get young people?’ ” Bancino says. “But you have to be true to who you are. It depends on what product you are selling and your value proposition. You can’t appeal to a younger generation by just repackaging something that’s not really in their wheelhouse.”

Gen Ys, or the millennials, grew up in a precarious time for the United States. Suddenly terrorism was within arm’s reach inside the country. China breathed down our proverbial necks, altering global competition forever. Then the 2008 worldwide financial crisis pitted large-scale, traditional financial institutions and employers against Main Street and Mom and Dad. Unemployment rose sharply, career optimism shrunk and Gen Y absorbed it all.

Collectively, Gen Y responded in ways baby boomers didn’t understand. Those in this segment put their heads down and their fingers to work on smartphones, laptops and iPads, as cheap computer power let them share goods and information at record speed. They began idolizing the “geeks”—Steve Jobs, Sergey Brin, Mark Zuckerberg—who made it possible for them to depend less on corporate America and more upon themselves. Pretty soon Gen Y’s social connectivity—the ability to find, create, share, provide and get feedback—rose in value. They turned authenticity into virtual currency and began to influence the way people of every generation lived.

To misunderstanding eyes, Gen Ys look perpetually distracted. They have no focus. Noses buried in screens all day long, they play on Facebook, Twitter and Instagram. So an “us versus them” mentality surfaced among baby boom bosses who just didn’t get millennials. “This ‘us versus them’ mentality actually misses the entire point of the opportunity. What ‘they’ do is a shaping of behavior based on how behavior is evolving,” Solis says.

Disruptive technology like social media permeates the lives of Gen Y, and until companies better understand its impact on all customers and prospects, it will remain an “us versus them” expression.

“This is a big challenge because direct selling is often a very traditional business, similar to many traditional business models,” Solis says. “They can still look at demographics, and they may tend to look at trends like technology very reluctantly. But business as usual won’t thrive in an era dominated by ‘business unusual.’ ”

Gen C = Business Unusual

It turns out this younger generation was really just the catalyst that prompted the “business unusual” era. It’s the fast-approaching, multigenerational surge of connected consumers known as Generation C that wields even more potential power.

Fair warning to direct sellers: Disregarding or underestimating this different type of customer who lives online and is always connected will be bad for a company’s health.

Fair warning to direct sellers: Disregarding or underestimating this different type of customer who lives online and is always connected will be bad for a company’s health.

Generation C is “anyone who places increasing emphasis on technology as part of their daily routine. In many ways, their behavior mimics that of millennials, and as a result, they prove elusive or immune to traditional marketing and service,” says Solis, who coined Gen C in his book The End of Business As Usual.

Gen Cs use smartphones to compare prices online while shopping in stores; browse products through websites or apps on their iPads while watching television; search for online reviews, coupons, and retail locations; and even scan barcodes for product and price information.

Look to Nielsen for proof that Gen C is upon us. Between 2002 and 2012, U.S. Internet access doubled from 132.2 million to 274 million. Smartphones dominated and laptops surpassed desktops for the first time.

IBM’s connectivity sampling of 1,056 people predictably lists Gen X and Gen Y leading, but baby boomers don’t lag far behind. Eighty percent report social-site online accounts. Regardless of age, people are connected to media sharing, microblogging and blogging sites, spending 81 billion minutes there in 2012, according to Nielsen.

“Boomers are, in many cases, as tech savvy as Gen X guys,” Bancino says. “Univera’s boomers are more likely to use email where Gen Xers text. They are all using technology, especially social media. I have more baby boomers on Facebook. I have more Gen X on Twitter. The technology is spreading across all of the groups.”

The Connected and the Not-So-Connected

Connectivity is the essence of Generation C, and for direct selling companies that are paying attention this is where everything begins to change. “You start to see that your customer actually is multidimensional and your customer isn’t just one audience anymore. You have the traditional customer, and now you have this connected customer. Where they go, how they talk, how they communicate, what they value is different in so many ways. You’re having to appeal to two different customer sets,” Solis says.

Amber Olson Rourke, Vice President of Marketing and Culture at Nerium International, says, “Traditional ways of doing things are not conducive to reaching all demographics. You have to be able to meet the needs of many types of customers today. You can’t just communicate by email and phone calls anymore. You have to change the format. Younger generations like to receive text message updates. They like to get blogs and podcasts and things they can digest easily when they have a few minutes of downtime.”

“Boomers are, in many cases, as tech savvy as Gen X guys.”
—Randy Bancino, President, Univera

Vickery agrees: “The major shift we’re seeing, particularly within our demographic, is to electronic: Facebook and text messaging. They just want some things quickly.”

Never before has the customer journey been so complex, especially within the direct selling industry, where customer and distributor journeys run parallel. Direct selling companies must deliver product and business opportunity information in compelling fashion for connected consumers, while keeping their eye on an already existing traditional demographic. And that can get muddy.

“The better you can hone in to find who you are, the better your ability to go out and grab people who are attracted to that,” Vickery says. “Look at who you are, what you are trying to accomplish in the company. What is that vision you want to grow?”

Solis adds, “That’s a philosophical discussion, and that’s a discussion that takes vision and leadership qualities to just press pause and say, ‘How can we do all of this better?’ ”

“It’s not about millennials versus boomers versus Gen X. It’s about a series of profiles of customers. What they value, how they think, how they interact, where they interact.”
—Brian Solis

A metamorphosis is necessary for companies to engage both traditional and connected consumers. “This isn’t easy. This is really complicated stuff because what you’re starting to do is essentially change the very model of your organization and at the same time not completely upset it, but expand or augment it,” Solis says.

The first step is acceptance. Things are not as they used to be. Gen C and disruptive technology may have upset the status quo, but that is where opportunity lives. The second step is introspective analysis and digging deeply into the demographics of the connected consumer.

“When you start to profile your customers, you realize it’s not about him or her. It’s not about millennials versus boomers versus Gen X. It’s about a series of profiles of customers. What they value, how they think, how they interact, where they interact. You start to see they actually paint a series of personas that require product innovation, service and sales innovation, and marketing innovation because no one way reaches them and no one product appeals to every one of them,” Solis says.

The third step is finding the components to attract new customers and distributors in the smartest ways for both traditional and connected consumers.

Digital Darwinism

A real fear for companies across all segments of business is falling victim to Digital Darwinism—where technology and society evolve faster than the ability of business to adapt.

Direct selling companies were some of the first to reimagine disruptive technologies like social media as tools for business growth. “It suited us. It suited the industry. It suited the way we did business. Our people figured out ways to utilize it to enhance their relationships and business-building activities,” Bancino says.

But Solis warns, “Businesses tend to think that they’re adapting because they are seeing an inflowing of social media strategy or they’re creating an app or trying new things. But the challenge here is in thinking technology is the solution.”

A real fear for companies across all segments of business is falling victim to Digital Darwinism—where technology and society evolve faster than the ability of business to adapt.

Vickery agrees: “I’m not going to be able to forge a great relationship with you if all we ever do is text, right? I need to be with you. I need to know who you are. I need to understand where you want to go with your business. You’ve got to teach people how to use technology smartly. You can’t hang out on Facebook all day and grow a successful business. You just can’t.”

But when business objectives are clear, properly harnessed social media tools are a competitive advantage. Jeunesse has a unique, patented sampling technology tied to social networking. “Literally right within Facebook, in the window where a free sample video is posted, it has an open shopping cart where consumers can enter their credit card info for shipping costs only and a shipping address,” Lewis says.

“It allows us to tap into any difference in generational groups because it can be offered through really any social media platform.” Facebook, Twitter, Instagram, YouTube and any number of international social media sites are all compatible.

Typically, online free samples open up a new URL once clicked, but consumers stay put with this Jeunesse technology. Keeping users glued to a familiar online environment makes social media companies happy and it makes life a little easier for consumers as well.

J.Hilburn’s online closet technology keeps its customers and distributors on the cutting edge of men’s fashion. “We build closet features where, as a customer, you go online and it builds outfits based on what you’ve bought in the past. Our customers always see what’s going to be relevant to them,” Davis says.

For J.Hilburn, the customer value proposition drives every decision. “It’s our first goal,” he says. “The benefit of direct sales is going directly to the customer so you can offer a better value proposition because you’re theoretically cutting out the distributor—the middleperson—and passing the savings along to the customer.”

They build customer relationships based on that strong customer value proposition. “The product is so compelling. Tell a guy he can get a custom-made tie and shirt for $89 and it sells. Where are you going to find that anywhere else in the world?” Davis says.

Where Belly-to-Belly Meets the Share Button

Ever advancing connectivity changes people from traditional consumers to connected ones, and as behavior changes so too must the direct selling approach to relationship building. Belly-to-belly relationships will always have a place in this industry, but the opportunity to instigate and nurture relationships in the online world has infinite advantages too; after all, direct selling’s power lies in sharing.

“Just think about how younger generations are growing up. I mean, they are growing up with the ‘share’ button,” Davis says. “They are actually able to find true like-for-likes, someone who pairs with their needs and their wants very well. The Internet makes that very, very achievable. It connects people that you wouldn’t normally have access to, and it serves up all the different things you can do in the world.”

Vickery says, “The majority of who we serve are women, and they are master mavens.” She loves identifying Initials Inc.’s Creative Partners as “mavens” because they so precisely meet author Malcolm Gladwell’s definition in The Tipping Point. “They connect people,” she says. “They can’t go shopping and get a good deal on something and not go home and tell five friends about it, right?”

“Just think about how younger generations are growing up. I mean, they are growing up with the ‘share’ button.”
—Hil Davis, Co-Founder, J.Hilburn

The same thing happens online, but results are exponentially larger in a networked economy of connected consumers. “It’s this influence that changes the game for how consumers and organizations connect in the future,” Solis says.

Not that long ago, Univera’s baby boomers lamented their lack of digital savvy, but Bancino told them, “I frankly have never in all the years I’ve been in this industry seen anybody build a business by sitting at home in their jammies at their computer. It’s still a relationship kind of business, and technology has enhanced relationships, but in no way has it ever replaced relationships.”

Solis says, “This is actually, I think, a big moment in time where every business could go through an exercise to find greater relevance and meaning in what it is that they’re doing. As millennials arrive, and Generation Z behind them, and more everyday people just become more and more connected, it creates a sense of urgency.” He adds, “It’s not too late, but we are on the cusp of going into full-blown crisis mode, where we’re going to have to change from the inside out in order to not just stay in business, but grow in business. This is not an overnight thing. No one is threatened imminently, but ultimately, everybody’s threatened. “One of the inherent values of a direct selling organization is its focus on relationships from people to people because that is where technology is really going,” Solis says. “Technology is making us all a little bit more human even though it’s making us more digital at the same time. Direct sellers have that naturally built into the model. Now it’s just a matter of adapting that into a modern and constantly evolving era.”

Irish DSA Reports Surge in Young Direct Sellers

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According to new figures from the Direct Selling Association of Ireland, the number of direct sellers under age 25 spiked 60 percent in 2012. The under-25 segment now makes up 13 percent of Ireland’s 16,000 direct sellers.

As the DSAI has already reported, the number of individuals signing up as distributors increased 121 percent between 2008 and 2012—amid otherwise lethargic economic conditions. Industry sales in Ireland more than doubled within that same time period.

The latest numbers suggest that young people find the opportunity and flexibility of direct selling appealing, particularly in the midst of Ireland’s 26.7 percent youth unemployment. The statistic from Ireland doubles figures recently released by the UK Direct Selling Association, which show that distributors in the same under-25 demographic had increased by nearly a third (29 percent) in 2012. These young people now represent 19 percent of all UK direct sellers.

“Despite the difficult jobs market, there is a real desire among many young people in Ireland to run their own business and make a very successful career. Direct selling offers just that to everyone, regardless of age or background, alongside a chance to gain highly valuable entrepreneurial skills and work experience,” said Lynda Mills, Director of the DSAI.

Read more on the surge of young direct sellers in Ireland.

Herbalife Stock Up Following Record Q2 Profits

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Shares in Herbalife reached a 52-week high of $66.23 on Tuesday, following Monday’s announcement of double-digit sales growth in the second quarter. The global nutrition company reported a 29 percent jump in profits over the prior year, marking Herbalife’s 18th consecutive earnings beat.

In addition to posting record second-quarter profits, Herbalife raised its full-year earnings forecast from $4.83 to $4.95 per share. The company set its third-quarter earnings forecast at $1.09 to $1.13—slightly more conservative than the $1.16 projected by analysts in a recent Thomson Reuters poll. Through Monday’s close, Herbalife stock had risen 84 percent in 2013.

The boost comes as Herbalife continues to refute investor Bill Ackman’s critiques of the company’s business model. Since launching his billion-dollar short sell on Herbalife in late 2012, Ackman has refused to drop his case against the company despite his increasingly unfavorable position on Herbalife stock.

According to CNN Money, Herbalife shared in a Tuesday conference call with analysts that it will continue to strive for transparency by distinguishing between “members,” or customers seeking to buy Herbalife’s products at a discounted distributor price, and “distributors” actively marketing the products.

Herbalife President Des Walsh told Reuters that the company signed up a record number of 80,000 new distributors in the U.S. in the second quarter. “Now, more people who are aware of what’s happening have taken time to understand our business, and with that comes an acknowledgment of the legitimacy of our products,” Walsh said.

Read the full press release from Herbalife.

Amway North America Ranked No. 1 in Web Sales

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In the 10th annual Internet Retailer Top 500 Guide, Amway North America has once again landed the No. 1 spot in the Online Health & Beauty Sales category. Propelled by its best-selling NUTRILITE® and ARTISTRY® brands, the direct selling giant has held the top honor for the 10 consecutive years since the ranking began.

The evaluation—based upon 2012 web sales, research conducted by Internet Retailer and some information provided by the retailers—also ranked Amway North America No. 32 for overall 2012 web sales. Internet Retailer estimates that web sales for Amway North America amounted to $1 billion in 2012. Amway reported a total of $11.3 billion in worldwide sales last year, making it the No. 1 direct selling company in the world.

Tanios Viviani, Amway’s Regional President of The Americas, says the ranking testifies to the dedication of Amway’s Independent Business Owners (IBOs), as well as the appeal of the company’s business model. “Amway offers a low-cost, low-risk opportunity for people to get into business for themselves by selling high quality products and sponsoring others to do the same.  Our model is clearly relevant in today’s e-commerce world, moving more health and beauty product than any other online retailer,” said Viviani.

Read the full press release from Amway.

ACN Announces Venture into Merchant Services

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The world’s largest direct seller of telecommunications, energy and other essential services is now adding merchant services to its product portfolio. American Communication Network (ACN) has announced the launch of its new merchant services program through a partnership with Anovia Payments LLC.

With the company’s newest offering, ACN’s Independent Business Owners (IBOs) have the opportunity to promote a service their small business customers use every day: credit card transactions. “With Anovia Payments, we can continue to provide small businesses essential services they need offered by an IBO they know and trust,” said ACN Chairman and Co-Founder Robert Stevanovski.

Dallas-based Anovia Payments has assembled a leadership team with over 75 years of combined industry experience. The provider launched in the U.S. this month, with plans to expand into Canada before the end of the year and into select European countries in 2014.

As the Direct Selling Association highlighted in its Annual Growth & Outlook Survey, Services represent one of two categories that have generated steadily increasing sales over the last several years. ACN’s expansion into the merchant services segment presents an opportunity to significantly increase its footprint within the Services category.

Read more on ACN’s merchant services launch.

ViSalus Expands Focus on Hispanic Consumers

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ViSalus

Health and fitness company ViSalus has unveiled a major effort to improve programs and materials geared toward its Hispanic consumers. The company behind the Body by Vi 90-Day Challenge recently announced the expanded strategy at its national Vitality convention.

Collaborating with more than 5,000 of the company’s own independent promoters of Latino Heritage, ViSalus has taken a comprehensive approach to expanding its focus on the Latino market. The company’s new offerings include updated promotional materials to cross cultural and language barriers, a convenient cash payment solution, and plans to launch a multi-city Spanish-only Challenge Tour in Q3 2013.

Our July cover story explores the many ways that “Diversity = Opportunity” for today’s direct sellers. DSN spoke to Miriam Muléy, CEO of marketing consultancy and research company The 85% Niche LLC, who points out that “the Latino, African-American and Asian populations are responsible for more than 90 percent of the population growth in the United States, with annual buying power of almost $4 trillion.” That amounts to more economic buying power than Brazil, Russia and India combined.

ViSalus is tapping into a large segment of this potential buying (and selling) power with a greater focus on the 50 million U.S. citizens of Hispanic descent. The effort aligns the company’s commitment to helping people lose weight with an at-risk population.

“Hispanics are 1.2 times more likely to become obese than non-Hispanics,” said Nick Sarnicola, Co-Founder and Global Ambassador of ViSalus. “This is an important constituency for us, and we are excited to bring the Body by Vi Challenge to them to change more lives that are truly at risk.”

Read the full press release from ViSalus.

IBD Reports Beauty Industry Growth and Trends

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Sales in the beauty and personal care industry totaled $68.7 billion in the U.S. and $433.4 billion globally in 2012. According to a Euromonitor International forecast, the U.S. industry will reach $81.7 billion by 2017, with 3 to 4 percent annual growth over the next five years.

Much of the industry’s growth is occurring in emerging markets. According to Procter & Gamble’s 2012 annual report, the industry leader has seen its emerging markets average 14 percent annual growth over the past decade. That number will likely grow, as P&G estimates a 10 percent, or 700 million, increase in world population from 2010 to 2020—with 95 percent of that growth occurring in developing countries.

Investor’s Business Daily, which tracks 197 industries, reports 32 percent collective growth among its beauty and personal care group, ranking the industry among the 30 best gains so far this year.  Major drivers of that growth include two of the world’s largest direct sellers— cosmetics giant Avon and anti-aging and nutrition company Nu Skin.

Research by Connecticut-based Global Information identified Avon as one of the biggest players in the “cosmeceuticals” sector. Avon launched 15 new beauty products last year and has experienced a 56 percent stock gain thus far in 2013. Cosmeceuticals, which combine cosmetics and pharmaceuticals to formulate multi-tasking products, generated approximately $30.5 billion worldwide in 2011. It currently represents the industry’s fastest-growing niche, on track to grow nearly 8 percent annually between 2012 and 2016.

Nu Skin saw Q1 sales rise 88 percent year-over-year in China, where the company plans to triple its stores and sales support centers by 2017. By contrast, Nu Skin’s Q1 product sales dropped 3 percent in Europe and rose just 7 percent in the U.S.

Nu Skin generated $840 million in sales last year with its ageLOC line of anti-aging products, and the company hopes to build upon its growth in Asia with this year’s weight-control system launch. According to Deutsche Bank research analysts, the weight management category in the region has experienced almost 11 percent growth over the last five years, and they estimate that in the next five years that number will increase at a 7 percent CAGR (compounded annual growth rate).

“Globally, weight management across channels is a $13.3 billion industry while consumer health care direct selling is a $22 billion market, further highlighting the opportunity if Nu Skin can get its fair share of either pie,” the report said.

Read IBD’s full industry snapshot for wider beauty trends and outlooks.