As the saying goes, word of mouth is the best form of advertising. After experiencing that truth firsthand, one recent startup turned to direct sales to harness the power of personal promotion.

Jasmina Aganovic began developing skincare company Bona Clara with the intention of selling products through retail outlets like Sephora. However, she soon found that the primary drivers of the business were the women who shared the line of anti-aging products via word of mouth.

With that realization, the 26-year-old MIT grad began to explore direct sales. “This was not the direction that I thought the brand was going to go in,” Aganovic said. “But someone suggested I look into it, and as I looked into the history, I started to get excited.”

The women who used the products would largely refer friends to the company’s website. To integrate these unofficial brand ambassadors into the business, Bona Clara offered the opportunity for representatives to earn a 30 percent commission on all orders processed through their individual websites.

“This had everything to do with the women who were selling the product,” Aganovic said. “I wanted to thank them and give back to them because they were helping to grow the brand.”

Read the full story from The Boston Globe.

As new companies bring an innovative approach to direct sales and existing companies evolve, consumers and investors alike are taking note of the industry’s momentum and adaptability to the demands of a digital age.

A recent Crain’s New York Business article highlights some up-and-coming direct sellers who are building their brands with a strong focus on technology. Chloe + Isabel and Ruby Ribbon—both two-year-old startups—generate much of their business through a strong online presence. Launched this year, style advice site Keaton Row uses social networks to connect women to one of its trained and vetted personal stylists.

As the writer points out, these newcomers are not “your grandmother’s Avon Ladies.” However, today’s Avon Ladies are not those of your grandmother’s day either. Avon more than holds its own as the No. 2 direct selling company in the world, with $10.7 billion in revenue in 2012. As she begins her tenure at the 100-year-old brand, CEO Sheri McCoy has committed to invest $200 million in updating the company’s information systems and cultivating digital platforms.

Recent startups have brought valuable innovation to direct sales, but the core of the business model remains something your grandmother’s Avon Lady would recognize: social connection. Industry sales rose 6 percent in 2012, and that number will continue to increase as more companies enrich their business model through digital tools.

Read the full story from Crain’s.

Mannatech has announced plans to transition the entirety of its business into a social entrepreneurship model. The overhaul supports the company’s Mission 5 Million (M5M)—a commitment to fight global malnutrition by offering nourishment through Mannatech’s Real Food Technology supplementation, while also empowering and rewarding those who support the cause.

In last year’s “Doing Good Is Good for Business” feature, DSN highlighted the switch Mannatech made in 2010 from charity model philanthropy to social entrepreneurism. With 5 million children under age 5 dying of malnutrition every year, the nutrition company saw a need and opportunity to face the challenge head-on.
 
Mannatech created PhytoBlend powder using its glyconutrient, food-based nutritional supplements technology. Since 2010, more than 12 million servings of the supplement have been donated to children in 15 different countries through Mannatech’s Give for Real program, which raised funds through the purchase of designated products.

The company’s new model shifts M5M from a philanthropic effort to the focus of its core business. With every purchase of a Mannatech product, the company will donate PhytoBlend to a child in need.

“Being able to financially reward people that champion our cause enables us to accelerate our mission to achieve an even greater impact. The ability to change YOUR world and THE world at the exact same time is a powerful and significant paradigm,” said Bo Short, President of Business and Field Development. The transition will officially occur at Mannatech’s national MannaQuest Branson event in August.

Read more on Mannatech’s new business model.

As a result of its annual customer satisfaction survey, J.D. Power and Associates has named Ambit Energy “Highest in Residential Customer Satisfaction with Retail Electric Service in New York.” The Dallas-based energy supplier also received the second-highest ranking in Connecticut. The 2013 Retail Electric Provider Satisfaction Study surveyed more than 14,800 retail electric residential customers of 71 retail electric providers in eight states.

At Ambit’s inception in 2006, co-founders Chris Chambless and Jere Thompson Jr. wrote their vision on a whiteboard: To be the finest, most-respected retail energy provider in America. The company’s dedication to excellence earned it a 642 on J.D. Power’s 1,000-point scale—with high points for price, communications, enrollment/renewal and customer service factors.

In this month’s Top Desk, Chambless provides a look at Ambit’s “Roadmap to $1 Billion”—six key decisions that propelled the company to $1 billion in revenue in just seven years. According to Chambless, the most important decision the company made was “to never sacrifice our integrity for growth.” That commitment has brought Ambit both significant revenue and recognition.

Read more on Ambit’s customer satisfaction ranking.

Mary Kay in Dallas and Thirty-One Gifts in Columbus, Ohio, have both been crowned local winners in the second annual Social Madness competition. Social Madness is a contest hosted by The Business Journals, a media organization that includes 40 publications covering business news from a local, regional and national perspective.

Social Madness determines winners based upon votes on bizjournals.com as well as social engagement—defined as likes, comments, and shares of a company’s posts by their followers—on LinkedIn, Facebook, Google+ and Twitter. In addition to showcasing their social media savvy, companies compete to win a $10,000 donation to their designated charity.

The inaugural competition last year attracted nearly 4,000 participating companies, which generated a combined 14 million new Facebook likes, 2.2 million new Twitter followers, and more than 202,000 new LinkedIn Connections.

This year’s local competitions kicked off on June 3, with categories determined by the size of a company’s collective social following at the start of the contest. Mary Kay and Thirty-One Gifts will go on to participate in the national competition, which begins July 16. Both the local and national contests take their cue from college basketball’s March Madness tournament, with the top eight in each category advancing to the bracket rounds.

Read the full stories from Dallas Business Journal and Columbus Business First.

Shares in Nu Skin rose 19.2 percent yesterday, posting the largest percentage increase of the day at the close of the New York Stock Exchange. The stock started the day up 79 percent since the start of 2013, and its $79.36 closing price marked an all-time high for the company’s shares.

Earlier this week, we reported on the momentum Nu Skin’s business is experiencing in Asia. The Utah-based personal-care company has also announced improved quarterly and full-year outlooks. Wednesday’s stock gain reflects Nu Skin’s strong performance as well as investors’ confidence in the industry as a whole.

On Tuesday, Nu Skin raised its outlook for the quarter all the way from $0.91-$0.95 a share to $1.20, saying it now expects revenue of about $680 million—$100 million more than its previous projection. Earnings (EPS) projections for the full year are now $4.85-$5.00, up from $4.18-$4.30. Nu Skin will report second-quarter earnings on Aug. 1.

Would you like to see 9 out of 10 consumers recommend your brand? New research from the UK’s IAB Social Media Council, conducted by Marketing Sciences, found that 90 percent of consumers would recommend a brand after interacting with it on social media.

The research, conducted over a period of eight weeks, measured the return of investment on social media campaigns from three FMCG (fast-moving consumer goods) brands: Heinz, Kettle and Twinings. Four fifths of the study’s participants reported greater inclination to buy a brand more often in the future after being exposed to its social media presence. A slightly higher 83 percent said they would go on to trial the brand’s product.

As discussed in our February feature on what lies ahead for the industry, social media is a particularly powerful tool in the hands of direct sellers. It is essentially “the digital expression of what the direct selling model has always been about: a personal relationship between the supplier and the customer, whether that is the independent rep or the end consumer.”

The personal element of direct selling has an opportunity to shine through social media. Kristin Brewe, Chair of the IAB’s Social Media Council, says building brand loyalty through social media does not require flashy campaigns, as many marketers think. “It’s quite simple: showcase what people love about you. Provide a platform where they can also share what they love about you,” said Brewe.

Read more on building brand loyalty through social media.

Provo, Utah-based Nu Skin Enterprises has seen Greater China, including Hong Kong and Taiwan, surpass Japan as the company’s top market. Operations in 53 countries netted the company $2.2 billion in sales in 2012, with 78 percent of revenue coming from Asia. Nu Skin CFO Ritch Wood projects that 2013 revenue will total just over $2.5 billion.

The popularity of Nu Skin’s personal-care and nutritional products has benefitted from the one-on-one, word-of-mouth marketing possible through direct sales; however, the company’s China market—where multilevel marketing is prohibited—is unique. Nu Skin employs a single tier of distributors who operate through retail outlets.

“We’ve enjoyed a great growth cycle in Asia,” said Nu Skin CEO Truman Hunt. “There’s a very strong entrepreneurial spirit there. People are hungry for opportunity.”

Hunt also addressed recent questions concerning the validity of the multilevel marketing model used by companies like Nu Skin and Herbalife. “More than 70 percent of the revenue we generate is generated by purchasers who are not participating in Nu Skin sales networks,” said Hunt. With only 15 percent of customers expressing interest in developing their own business, the company’s core profit comes from product users rather than resellers.

Read more on Nu Skin’s rapid growth in China.

When Bill Ackman of Pershing Square Capital Management launched his attack against Herbalife at the close of 2012, he apparently hoped to make a fortune and at the same time take down a very large, very successful company that he alleged was using a questionable business model. As a result of his actions, he may have accomplished just the opposite, thanks to the direct selling industry itself and its supporters.

In the first half of 2013, Herbalife has proven itself stronger than the $1 billion short sell of one activist investor. In March, Herbalife’s stock rose with the announcement that Ackman rival Carl Icahn had bought a 13.6 percent stake in the company. Following record first quarter earnings, Herbalife saw its shares rise above pre-allegation prices in May.

In the wake of Ackman’s accusations, Wall Street embraced not only Herbalife but other direct selling companies as well. USANA initially rose 107 percent and Nu Skin 70 percent—with both companies reaching all-time highs despite starting the year at depressed prices following Ackman’s short.

Forbes contributor Richard Levick asserts that the key to Herbalife’s stability goes beyond the company and its financial backers to the direct selling industry itself. The standard of transparency and compliance permeating the industry makes these companies secure buys as well as financially appealing ones.

The Direct Selling Association sets the tone of the industry with its stated mission to “ensure that the marketing by member companies of products and/or the direct sales opportunity is conducted with the highest level of business ethics and service to consumers.”

We have shared the perspective of DSA leadership about the industry’s response to those who attempt to discredit it. You can find examples here and here. In its efforts to educate the public about the industry, the DSA also recently launched directsellingfacts.com, a site featuring industry facts and stats as well as video messages from both government officials and academics who share their knowledge and perceptions of the direct sales channel.

The industry’s efforts to regulate itself have caused government regulators to take notice. Levick quotes one such regulator, Bob Paul, who claims the DSA Code of Ethics is “one of the best that I have seen.” According to Paul, any company that abides by such a code “should never have a problem with the Federal Trade Commission.” It seems that the industry’s investors would agree.

Read the full piece from Forbes.

At the ongoing 2013 Aspen Ideas Festival, Thomson Reuters released a new global survey titled, “The Professional Revolution.” The survey—which polled more than 1,000 professionals in Brazil, China, India, the United Kingdom and the United States—explores the current professional environment, as well as expectations for the future workforce.

The data, according to Thomson Reuters, “reveals a workforce that is unified by their power of curiosity and global connectivity rather than by their race, class, gender or age.” The desire for global connectivity is evident on the technological front. A staggering 90 percent of professionals who telecommute at least once a day use at least one social media platform. The survey also reports 19 percent higher job satisfaction among professionals whose organizations allow them to participate in online groups and/or chat rooms, than among those whose organizations prohibit such activity.

According to the survey, today’s professionals crave a sense of purpose and impact in their work. A majority (56 percent) said they want to work for a company that makes a positive impact on the world, even if that means accepting slightly less monetary compensation. When asked what defines a person as a professional, 77 percent said knowledge—followed by skills (76 percent) and work experiences (65 percent).

“Our research findings demonstrate that today’s professionals desire more than a paycheck—they are in search of a meaningful and purpose-driven professional life,” said Peter Warwick, Executive Vice President and Chief People Officer at Thomson Reuters.

Read the full press release from Thomson Reuters.