Direct Selling: Something for Everyone

July 2, 2013 by DSN Staff Leave a Comment

Richard A. Henderson, Publisher at Home Business Magazine, recently highlighted some of the advantages that attract many modern professionals to direct selling. The Direct Selling Association reports that over 65 million people worldwide are involved in direct sales. That figure points to the increasingly diverse range of companies engaged in direct selling, even as more tools become available to the direct seller than ever before.

Perhaps the greatest advantage of direct sales, Henderson notes, is its adaptability to the demands of a digital age. In today’s constant business cycle, home-based businesses benefit from the ease of online communication and retail. For many direct sellers, online communication extends beyond traditional email to include customized websites and social media outlets, which offer countless opportunities to cultivate customer relations and promote brand awareness.

Direct selling is one of the few self-employment opportunities that does not require special equipment, business expertise or high startup costs. And with products and services ranging from essential oils to electricity, most can find an opportunity that appeals to their personal interests. As Henderson concludes, “Direct sales is an industry of global reach that offers something for everyone.”

Read the full story from Home Business Magazine.

Commonly Asked Questions about Credit Card Processors

July 1, 2013 by DSN Staff Leave a Comment

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

Direct selling companies are constantly in motion; growing, exploding or sometimes shrinking. In general, they are always moving. No other company can grow by leaps and bounds like a direct selling company. Going from $40,000 in one month to $500,000 six months later is not unusual in the direct selling world. But how do you make sure your merchant account provider will not be terrified by this growth? Good communication, that’s how.

To ensure that you receive the best terms available, consider the following when applying for an account, and also throughout the account’s existence.

The merchant account provider is 100 percent liable for every dollar processed, for at least 6 months and sometimes as long as 18 months.

When applying for a merchant account:

Be prepared and professional. Applying for a merchant account is like applying for a loan and should be treated as such. Your company’s viability will be measured, so put your best foot forward. Banks (processors) don’t like to lose money and poorly run businesses can be costly. People tend to forget or don’t realize that the merchant account provider is 100 percent liable for every dollar processed, for at least 6 months and sometimes as long as 18 months. This is a risk they don’t take lightly.

So when you apply for a merchant account, have a thorough business plan that includes projections, product information (ingredients included), production redundancies and compensation plan information. Be ready to answer questions. Qualified underwriters will want to know everything about your business. The more prepared you are, the better your terms will be. I’m not just talking rates. This also includes processing limitations, settlement delays and reserves. Being viewed as a low-risk, likely successful company will help in all areas.

Throughout the existence of your merchant account:

Risk is not only evaluated during the application process; it’s an ongoing process, which changes constantly. Consider a merchant who, during the first three months, processes $15,000. Then Month Four pops up and suddenly that volume grows to $100,000. That merchant’s risk profile has changed. The bank will need to be sure that there are enough products to meet that growth. It is against Visa and MasterCard regulations to sell products that you do not yet have. Products “on the way” or “in production” cannot be sold. That being said, showing your merchant account provider that inventory exists and can meet sales will put them at ease. To further reduce their concerns, show them a plan for the future. For example, if sales were to double, show that you are ready for it. Selling more products and growing quickly might seem like a good idea, but it can also topple a company if it’s not ready, and that’s the processor’s concern. Show them you have a plan.

Having and selling product is one thing; shipping product is something completely different. Showing your processor that product is being shipped shortly after a card is charged will go a long way in reducing anxiety. Proving that people are repurchasing the same products goes even further. It shows that they like the product and the price. Tie your shipping records to orders and show them to your merchant account provider. Your professionalism will help them help you.

If you do not sell shippable goods, you will not have records that show delivery. In this case, indicate that customers enjoy what they have purchased by demonstrating usage. Keep in mind that processors are constantly on the lookout for “money games.” To prove that you are operating within legal guidelines, show your product in action. For example, if you are selling a long-distance service, then have usage logs ready. It is important that you can demonstrate that your product is being used and enjoyed.

Paying commissions affects both a company’s ability to grow and their risk profile. It raises a red flag for processors if commissions are being paid late. To show safety to a credit card processor, submit to them an exemplary commission record. Be ready to share commission logs. It is best if you can show them that roughly half of revenue is being paid back to a strong majority of distributors. This illustrates that customers are buying product and distributors are being paid.

If you have an above-average percentage of “active” members, share that information, too. If your retention is above the norm, let them know. The banks love stability. Anything that demonstrates that people like the program and the product will prove your company is secure.

The banks love stability. Anything that demonstrates that people like the program and the product will prove your company is secure.

Over the last 10 years I have been asked every question imaginable about credit card processing. Most concern risk and pricing, which are inherently entwined. It is important to understand how banks view direct selling companies, and what can be done to reduce the sense of risk and improve the terms offered.

The following are a few of the most common questions I receive from direct selling companies of all shapes and sizes.

Q: Why do credit card processors consider direct selling companies “high risk”?

A: Processing companies consider direct selling companies to be “high risk” for a few reasons, the two biggest concerns being the type of products sold and the business opportunity. However, the ready ability for a direct selling company to experience explosive growth is also a risk factor, as we mentioned above.

It’s important to understand growth from their viewpoint in order to establish the best communication possible. Simply put, the bank wants to be assured that you won’t grow faster than you can fulfill orders, and implode instead.

Q: What do the products have to do with risk?

A: From the processor’s viewpoint, some of the products sold within the direct selling industry have similar counterparts that could be purchased at a mass retailer for less money. This raises a concern for them. You can put their concerns to rest by providing a solid business plan, and by explaining the value-added services that an independent distributor brings to the transaction. Additionally, if applicable, you can point to quality of materials, research or other points that factor into your product price.

The processing companies are run by people who might have fears about the direct selling business model as a whole, or who might know someone who had a poor experience with a direct selling company and has lumped them all together. Implementing a solid product buy-back plan and demonstrating good customer service for returns can decrease your risk profile. Processors are very sensitive to situations involving products that they perceive may increase chargebacks, which can be very expensive for them.

Q: What is a chargeback?

A: A chargeback occurs when a card holder calls their issuing bank and disputes the charge. It usually happens when the card holder is dissatisfied with their purchase or experience with the merchant. Chargebacks should not be confused with refunds because each chargeback carries an associated fee. This can be very costly to merchants. Not only does a chargeback incur a fine, but if there are too many chargebacks, the merchant can lose their merchant account. Visa has a chargeback threshold of 0.5 percent and 50 per month, which means that if you are above the threshold, you could risk losing the account.

Q: What makes the opportunity aspects high risk?

A: A business opportunity is not a guarantee, and there are many factors that can determine the success of a member.

Demonstrating to the processor that product sales—and not the opportunity—drive commission payments in your company is vitally important to reducing your risk profile.

The business opportunity can also create a perceived precarious situation for credit card processors. Demonstrating to the processor that product sales—and not the opportunity—drive commission payments in your company is vitally important to reducing your risk profile.

Q: Why do processors charge percentage fees to deposit my money into my bank account? At least, this is how it feels.

A: When one considers all of the parties and liability involved, the percentage taken isn’t much at all. Let me explain.

First let’s talk liability. As previously mentioned, the credit card processor is liable for every dollar processed, but only makes a small percentage on the total amount charged. When I say liable, I mean truly liable. If a merchant processes $100,000 a month for three months and then disappears without ever fulfilling sales obligations, then the merchant account provider will have to repay each and every person who charged their card. Now that’s a worst-case scenario, but any dollar that isn’t fulfilled becomes the responsibility of the processor. The provider considers this risk and calculates it into their processing rates.

When people think of a “processor,” they think they are referring to one company. In actuality, a processor is an amalgamation of many groups, each of whom plays a role in the process. The two major processes of a credit card transaction include both authorization and settlement components, each of which comprises multiple parties. Included in the authorization network are the gateway, front-end processor and issuing bank. In the settlement network you have the gateway, back-end processor and the acquiring bank. Each one of these parties plays a pivotal role, and the percentage fee is divided among them all.

In summary, be prepared, be professional and create a solid business plan. These simple things will create good communication with your credit card processor and enable you to focus on your business.

Scott Fitzpatrick is a National Account Executive with Pivotal Payments, a company that provides payment processing services with a wide range of industry-specific solutions.

Diversity = Opportunity

July 1, 2013 by DSN Staff Leave a Comment

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

What do age differences, ethnicity and even cultural practices have to do with your business? Everything, but only if you want to secure a thriving future.

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—more than the combined economic buying power of Brazil, Russia and India—according to Miriam Muléy, CEO of marketing consultancy and research company The 85% Niche LLC. Since almost three-fourths of direct sellers are white non-Hispanics, those statistics translate into the word that this industry loves the most: opportunity.

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.

To racial diversity, add age diversity. Since 2000, the average age of direct sellers has slowly been skewing younger, according to statistics from the U.S. Direct Selling Association. But in the last couple of years most companies report that more millennials are becoming direct sellers. They’re driven by crushing student-loan debt combined with poor job prospects. The industry has responded by providing them with everything from products to mobile apps, all designed to create an irresistible opportunity for young people—one that the traditional direct selling population is learning to love, too.

Put it all together, and you can almost envision that door to the future opening wide. The companies who spoke with Direct Selling News about how they address diversity in their salesforces offered insights and ideas on attracting and retaining this new sales field, all while integrating them with the women and men who have already made those companies successful.

Three of the companies have unique salesforces within the industry, with muscular ethnic representation that started unintentionally and then grew organically.

Princess House, which celebrates its 50th anniversary this year, has a consultant PHamily, as they call it, which is more than 75 percent Hispanic. Twelve-year-old 5LINX doesn’t track the ethnicity of its distributors, but a quick glance at the company’s website reveals that all of its Platinum Senior Vice Presidents are people of color, primarily African-Americans, and 5LINX has launched a focused effort in the Hispanic community. Belcorp USA’s field is 60 percent Hispanic—mostly women who take pride in the company’s Peruvian roots. And while PartyLite’s salesforce had a more traditional industry profile for most of its life, its vigorous support of younger recruits is changing the face of the company.

All those companies look at every facet of their business through the lens of the diversity of their salespeople. Whether it’s products, communications, events, training or any of the other elements of creating a successful salesforce, diversity is a consideration. And not just today’s diversity, but the composition of tomorrow’s salesforce, as well.

Come for the Products

Princess House says that its strength lies in its diversity, and the company goes to great lengths to ensure that it embraces diversity in all its forms. President and CEO Connie Tang notes that the company’s strategic decisions typically take consultants’ ages, cultures, backgrounds and language preferences into consideration. For example, when the company recently launched new dinner service products, it considered the needs of several audiences.

“We made sure the collection had standard white table settings, but we accessorized with tapas-style plates that are more colorful to target a younger audience and maybe single, apartment dwellers,” Tang explains. “Though tapas is Hispanic in origin, it’s becoming very popular. They all stack on the footprint of the platter, which makes them space saving. So we’ve created something that appeals to a younger age group, as well as an ethnic population. And the smaller plates might also appeal to someone a little older or who is watching her weight, because they help with portion control. So depending on who we’re talking to, we can adjust our message. From a merchandising point of view, we also show the plates with a variety of foods depending on the target audience.”

Products were the key element that attracted 5LINX’s ethnic salesforce. One of its initial product offerings was a Voice over IP Video Phone.

“We were blessed because the people who originally saw the opportunity and took it seriously happened to be people of color or from other parts of the world.”
—William Faucette Jr., Vice President of North American Sales, 5LINX

“We didn’t set out to create an overwhelmingly ethnic salesforce. We just wanted to create a successful one,” says Vice President of North American Sales William Faucette Jr., who started his 5LINX career as a distributor. “We were blessed because the people who originally saw the opportunity and took it seriously happened to be people of color or from other parts of the world. They went to people they know, who are like them ethnically and otherwise.”

Thanks to the worldwide connections of its salesforce, 5LINX quickly began shipping video phones all over the world. And distributors began telling their friends—people like them—about the opportunity.

With its Latin heritage, cosmetics company Belcorp USA has a keen understanding that the “Hispanic” marketplace is actually composed of several different markets.

“We don’t approach it as one block,” explains General Manager Mona Ameli. “We approach by country of origin and by the generation. For example, a first-generation Mexican is very different from a third-generation Colombian. They’re both of Latin origin, but the different countries have different cultures and different approaches. And first generations—people who are the first in their families to immigrate to the United States—are quite different from later generations who were born in this country. First generations often don’t have bank accounts, and they are not as technologically advanced, so their use of computers and the Internet is more limited. They also are more strongly identified with their husbands. But the second generations that are born, raised and educated here are very independent and will make the same use of technology as anyone else raised in this country. First-generation consultants have a high degree of comfort with a company from their home country. They buy the products and resell them. Second and third generations have more leadership, and they grow the business.”

With its Latin heritage, cosmetics company Belcorp USA has a keen understanding that the “Hispanic” marketplace is actually composed of several different markets.

She notes that product preferences are pronounced. Mexicans choose a color palette that is vibrant and colorful. Peruvians and Colombians prefer more subdued colors. Even their fragrance selections are different. And because they continue to identify with and take pride in the cultures of their countries of origin, those preferences persist across generations.

Welcome to the Diversity Party!

As much as direct sellers hope to attract ethnic distributors, many of them have an even broader view of their diversity goals and the strategies they use to achieve them. PartyLite, for example, is seeing its traditional salesforce broaden to include Generation Y and, perhaps most surprisingly, men.

More than 68,000 PartyLite Consultants hold parties to show the company’s candles, candleholders, home fragrances, accents and food from its Two Sisters Gourmet division. The company has taken a traditional approach to its business since its beginning 40 years ago. But recently, it began to modify its methods.

“Six or seven years ago we had an epiphany about what diversity is and what we want our salesforce to be,” says Vice President of Sales for the U.S. Karen Conkey. “We thought about what we offer people—the opportunity to earn income, and not a specific kind of income. At one time our approach was that people should work this as a career and earn a six-figure income. But we learned to open our thinking and position ourselves as a business where people can earn $50 or $500,000, and that opportunity is open to everyone. That’s different than thinking that we want to attract more Hispanics or Asian-Americans.”

PartyLite also recognized that as its leadership got older, it needed to attract a younger group of consultants.

“It has always been our task to be in the 25–35 age group, and we recognized that they demand a very different working environment than a 55-year-old.”
—Michael Norris, President, PartyLite Americas

“For the survival of any company, it’s essential to reach out to a younger generation,” observes Michael Norris, President of PartyLite Americas. “It has always been our task to be in the 25–35 age group, and we recognized that they demand a very different working environment than a 55-year-old. They execute sales in a lot of different ways, not just in a sitting room. They’re the drivers of our future, so we knew we needed to invest in the right tools—social media and apps for smartphones and tablets that allow for ease of doing business and provide training.”

Their overriding strategy: Be welcoming. As simple as that sounds, the strategy extends far beyond smiles and snacks to include all online activity.

“Over the last seven years, we’ve really embraced our online business,” notes Tracie Graham, PartyLite’s VP of Sales & Administration in Canada. “When we started attracting a group of savvy online users, we knew we needed to provide options for how both customers and consultants want to do business. We’re embracing the next generation of not just party plan but direct selling men and women. Ultimately, what’s exciting about PartyLite is they don’t have to pick or choose. If you want to have a party, great. But if you want to do business online, you can do that, too.”

Even the company’s language changed. They realized that “opportunity meeting” and “income opportunity” were alien words to Generation Y, so they changed their marketing jargon, tailoring it to their audience. Catalogs and online materials are now heavy on images and light on text. Customer service includes a “chat” function that is widely used by younger consultants, and communication options include Gen Y-friendly text alerts.

The strategy is paying off. In the United States, some 25 percent of its business is from people who only do an online business, and on a recent incentive trip, 40 percent of the people enjoying the rewards of their hard work were under 35 years old.

It’s still important, however, to recognize the significant portion of consultants who might prefer the traditional or “offline” approaches. For example, on the other end of the age spectrum, PartyLite is noticing more post-retirement consultants. They come for several reasons. They don’t have the income they need to live the lifestyle they want, or they’re simply not ready to settle into full retirement. Their PartyLite business gives them lifestyle flexibility, and it keeps them social.

PartyLite provides those retirees, as well as longtime consultants, with the traditional tools they need, but they also introduce them to newer ways to build their business. They’ve found that seasoned consultants and leaders have begun to embrace online opportunities as a key part of their businesses.

“I’ve been pleasantly surprised by conversations with seasoned leaders and Regional Vice Presidents about how they’re using the online space in their business,” notes Joan Connor, Vice President of eCommerce & Marketing. “The PartyLite Preferred loyalty program also has been beneficial to them. It lets hosts, guests, online shoppers or anyone who purchases at a party join the program and earn rewards on their first purchase. They can redeem the rewards exclusively online for a full-price product.”

PartyLite’s opportunity is also becoming gender-neutral. The people who invite friends into their home have universally become “hosts.” In fact, Norris noted that he recently attended a gathering of leaders in Quebec where seven of the 20 attendees were men.

Products reflect that male influence, with more masculine fragrances, diffusers and candleholders. Women buy them for the men in their lives, and men buy them for themselves. Connor says that she helped her college-age son decorate his new apartment with the most masculine candle warmer and fragrance she could find. Soon he asked for more.

Overall, PartyLite’s primary approach to diversity is to support its emerging populations, rather than to actively target a particular group. Service and their welcoming strategy cross all boundaries.

“Once you start attracting a certain type of person, they’ll attract their circle,” Connor observes. “As a company, when we start to see that trend, we support it. We acknowledge them and make sure we’re sensitive in responding to their needs.”

Taking the Next Step

When product passion transforms into entrepreneurship, even more thoughtful tailoring begins. Take recruiting, for example. 5LINX began a concerted effort to expand its Hispanic marketplace by aggressively helping its current Hispanic leadership advance to the next level. They’re targeting their efforts in the heavily Hispanic communities of Miami. They learned that while Spanish was essential, they also had to learn to speak the language of flexibility.

“It’s about leadership and who in your leadership is having success,” says Executive Vice President of Marketing Jeb Tyler. “We really focused on supporting their success by gearing marketing materials to that group’s needs. And we hired three individuals whose backgrounds reflect those of our Hispanic representatives to support that market.”

They developed a Hispanic logo, a Spanish-language company website and Facebook page, a DVD, a marketing magazine, and webinars and weekly meetings in Spanish. They also established an advisory group composed of Hispanic leaders who have helped 5LINX modify materials and processes so that individuals can envision themselves as 5LINX independent marketing representatives, whether their country of origin is Mexico, Puerto Rico, Cuba or elsewhere. 5LINX runs Spanish-only regional meetings and business opportunity meetings, and the corporation sometimes subsidizes the cost of a booth at a trade show or an important meeting.

Special events in the emerging Hispanic communities are typically shorter, start later in the day and are highly social.

“Sometimes the corporation has to help them get their feet off the ground with marketing dollars or support for that market,” Tyler notes, “whether it’s a brochure they need or a product that they really see helping that market, like our credit-card processing product.”

Special events in the emerging Hispanic communities are still packed with all the same elements that 5LINX provides at their international events, but they have their own special flavor. They’re typically shorter, start later in the day and are highly social. And leaders who usually drive the events have had the chance to teach both Tyler and Faucette a little salsa dancing!

The efforts have paid off. Last year alone, 5LINX tripled its number of Spanish-speaking leaders.

Belcorp USA’s Ameli notes that training Hispanic consultants, as well as providing them support, is as social as the events they attend. And consultants—especially first-generation—don’t hesitate to voice their concerns when their social, familial cultures aren’t practiced.

“They know someone in customer care, and they have a relationship with them,” Ameli explains. “Phone calls begin with updates on the consultant’s children and families. They really appreciate that. Occasionally I’ll get a call about a new customer service agent from a leader, who says, ‘Mona, she’s too sales-y. She goes right to business. You need to train her.’ For them, being social is part of our culture and part of their culture. It’s not just about business.”

She notes that training is often face to face. Belcorp USA has hired a field development team whose backgrounds reflect those of their consultants to deliver training and support to Hispanic consultants across the country. The company’s commitment to diversity is getting attention too. In April the National Diversity Council recognized Ameli among the 2013 Most Powerful and Influential Women in the state of California, based on the professional success and empowerment of multicultural minorities in the United States.

The Language of Flexibility

Faucette has noticed cultural diversity that is geographic in nature. For example, he says that the building block of the 5LINX business is the private business reception in someone’s home, and hotel meetings typically offer a second look at the opportunity. For regulatory and professional-presentation purposes, the company mandates that certain information is presented. But flexibility is the name of the game when it comes to style.

“In some parts of the country, you won’t see a presenter in a suit,” he observes. “He or she will have teams in T-shirts and jeans. That may differ from area to area. The amount of audience participation also varies culturally. Meeting length varies both culturally and geographically, along with the music you may hear. Some meetings are more relaxed and more of a social gathering than others. We allow all those things. At the end of the day, the leader is driving his or her business and income. As long as nothing is a poor reflection on the company or the rest of the salesforce, we’re flexible. They’re not going to do anything that they haven’t found to work.”

Connie Tang, President and CEO of Princess House, believes that the Asian community is an untapped market in the United States, particularly Filipinos and Vietnamese, who she describes as “primed for entrepreneurship.”

Hotel opportunity meetings play an important role at Princess House too, and Tang says that the nice venues create credibility—a key factor for a first-generation immigrant population. The meeting doesn’t emulate a home party, but products are on display because they’re part of the Princess House story and credibility. Support tools show that prospects won’t be in business by themselves.

“Most important is making sure you have consultants speak, not people from the corporation,” she explains. “We bring in people from that community who have been with the company for a while. They explain how they started and where they are today. In-language is important, but language is not the only factor to consider. The pictures you show in your presentation and the leaders attending are extremely important. Make sure you know and understand who you’re targeting. If you understand the leader you’re partnering with, they’ll know who will show up.”

Tang believes that the Asian community is an untapped market in the United States, particularly Filipinos and Vietnamese, who she describes as “primed for entrepreneurship.” Still, she notes that the Asian community is a difficult target market, beginning with the hundreds of languages and dialects involved. Creating supporting literature and customer support in so many languages is an economic challenge. And a party-plan company faces some inherent difficulties because culturally most Asians don’t typically invite strangers to their homes.

But Tang and other direct selling executives agreed on one core principle: Diversity is essential for the future of their companies.

“Diversity is the norm,” Tang states flatly. “Look at the schools our kids go to. Look at the shopping malls. We’re a diverse society. If you’re not attuned to it, you’ll have limited growth.”

The Business Case for Diversity

When Miriam Muléy talks about diversity in business, she cuts straight to the bottom line.

“Diversity offers a tremendous upside for growth, especially as the traditional mainstream markets begin to decline in size and begin to age,” she says. “There are multiple ways to look at the benefit of diversity, and the first is ROI. There is a huge positive impact on profit margin, market share and increased sales revenue.”

Muléy, CEO of strategic marketing consultancy and research company The 85% Niche LLC, and former General Manager at Avon Products Inc., points to a study by sociologist Cedric Herring that was published in the American Sociological Review. Herring found that companies reporting the highest levels of racial diversity brought in nearly 15 times more sales revenue on average than those with the lowest levels of racial diversity. Gender diversity accounted for a difference of $599.1 million in average sales revenue. Organizations with the lowest rates of gender diversity had average sales revenues of $45.2 million, compared with averages of $644.3 million for businesses with the most gender diversity. Herring also found that racial diversity is a better predictor of sales revenue and customer numbers than company size, age, or the number of employees at any given work location.

Muléy explains that the concentration of ethnic populations varies tremendously from one region to another, so she suggests that company leaders think locally. Companies can support distributors in those heavily ethnic markets with training materials or even connections with grassroots organizations where they can build trust.

“If companies do not get their arms around diversity and the opportunity it presents for enhanced ROI and incremental sales to a vibrant segment of the consumer and distributor market, they are leaving money on the table,” she predicts. “Geographic areas where consumers are largely diverse are a huge opportunity for incremental business. Added to this is the fact that diverse consumer groups, especially Asians and African-American women, are better educated than ever. U.S.-born Hispanics are increasingly well educated also, providing an opportunity for direct sellers to reach a discriminating buyer and seller at the same time.

Growth is so fast in ethnic populations that Muléy refers to them as the “emerging majority.” And they often shatter the myths about their incomes and buying habits. For example, Muléy reports these traits:

4.2 million African-American, Hispanic and Asian households earn at least $100,000 annually.

There are 1.3 million multicultural millionaires.

The buying power of women of color is $1.5 trillion and will grow to $1.7 trillion by 2017.

Apparel purchases by this emerging majority of women are 3.5 times more than by non-ethnic consumers, and personal-care purchases are three times more.

A disproportionate amount of beauty products, as well as health and wellness products, are purchased by Latina, African-American and Asian consumers.

Muléy says, “This opportunity is too large for corporations to overlook or tiptoe into. A proactive, sustained commitment to growth is needed to compete and win with emerging majority consumers.”

“This opportunity is too large for corporations to overlook or tiptoe into. A proactive, sustained commitment to growth is needed to compete and win with emerging majority consumers.”
—Miriam Muléy, CEO, The 85% Niche LLC

Her advice for recruiting in ethnic communities: Look at every tool you use and ensure that it reflects the face of America. From websites to catalogs, and from opportunity presentations to parties, integrate the cultural considerations of the populations you want to attract. For example, when you invite family-oriented Hispanics to meetings or parties, don’t be surprised when they bring their children. And if necessary, have a translator. Food is always welcome at direct selling events, as it sets a tone of “family” and sharing among diverse groups. In addition, she notes that role modeling and mentorship are important to retention, including field leadership as well as staff and management teams.

“To the extent I can see myself reflected in the leadership of the organization,” Muléy says, “I will believe it’s possible for me to make it and even exceed that level of performance.”

Letter from John Fleming, July 2013

July 1, 2013 by John Fleming Leave a Comment

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

Coming out of a DSA annual meeting in Phoenix gives one the feeling of having completed a most enjoyable full-course meal. As always, there were many takeaways.

The two keynote speakers, noted bestselling author Dan Pink and National Geographic award-winning photographer Dewitt Jones, delivered potent messaging focused on business process and potential. As always, industry C-level executives such as Michael Johnson of Herbalife, Kay Napier of Arbonne, Jere Thompson of Ambit, Brett Chapman of Herbalife, Orville Thompson of Scentsy, Truman Hunt of Nu Skin and John Parker of Amway, shared perspectives for the benefit of all who are on the same journey to build opportunities utilizing the direct selling business model. We also received a very positive report and outlook from the message delivered by DSA President Joe Mariano.

I always enjoy the many workshop topics, and once again, it was hard to make decisions on which workshop to attend. Most enjoyable is the opportunity to interact with the many DSA Member Suppliers who put so much effort into displaying their services and being available to the annual meeting attendees. Incoming DSA Chairman for this year Scenty CEO Orville Thompson, in his welcome to this year’s exhibitors, shared his story of how important suppliers were to the growth of Scentsy. As I walked the aisles of this year’s exhibitors, it was obvious that the products and services being provided touch every critical component of a direct selling company’s needs. Technology providers appear to be growing, which is also good news for an industry that is now using technology as well as any industry. Tools to enhance customer acquisition, convenience and retention will certainly serve the industry well.

In fact, direct sellers are so state of the art that companies can boast a certain level of quality, only a vision a few short years ago, in the types of tools being deployed and the support extended to their sales organizations. The impact of the best tools and support the industry has ever experienced will definitely continue to fuel an attraction to the business as individuals realize there may be no better way to embrace an entrepreneurial opportunity than through the vehicle of a direct selling company and the arsenal of support offered.

On my plane ride to Phoenix I thought about how I looked forward to the meeting and the many people I would have the pleasure of meeting or being in conversation with. The opportunity to network and converse with like-minded leaders of the many companies within the industry is about as precious as it gets. I wondered what Michael Johnson, CEO of Herbalife, would have to say about the challenges his company faced in 2012 from unwarranted attacks and criticisms by a hedge fund manager who was obviously intent on creating financial gain at the expense of the company—not to mention its thousands of employees and hundreds of thousands of independent contractors who have chosen Herbalife’s products and opportunity. Mr. Johnson basically responded with: “Those attacks and criticisms, regardless of how unfounded they were, have made us better!” It was a very positive response to a most serious challenge one company endured and, as we know, the attack on Herbalife was another attempt to attack the entire direct selling business model.

I also went into the DSA Annual Meeting anxiously anticipating the highlights of the industry report for 2012. Here at Direct Selling News, our own research and the compilation of the DSN Global 100 had already indicated that the industry is doing well. Mr. Mariano’s presentation/industry report and perspective confirmed what we had anticipated. Retail sales in the U.S. climbed to $31.6 billion, and the total number of independent direct sellers was announced at 15.9 million. This is testimony to the growing satisfaction of the overall customer experience provided by direct sellers. The new stats certainly supported the theme of the DSA Annual Meeting… Celebrate! Read more about the stats in the DSA Update by DSA President Joe Mariano.

The industry, overall, did very well in 2012—proof to the validity of the business model and the positive economic impact direct selling opportunities have on those who choose to engage. With the type of support companies now have, as witnessed by that journey through this year’s exhibit hall, one has to believe that the industry is headed for its “best of times.” When a brand-new independent direct seller can activate a business without typical business investment levels of expense and access the tools equivalent to those of the most sophisticated distribution channel, one has to be extremely optimistic about the future!

Don’t forget, we are now in digital format in both the Apple Store and the Google Play Store. If you are already a subscriber to DSN, your download is free. Enjoy reading the stories on your tablet or mobile device and share the stories with others who need to know what this industry is all about: how and why it does business the way it does. Celebrate because you and those who support you do it so well!

Until next time… Enjoy the issue!

John Fleming
Publisher and Editor in Chief

DSA Annual Conference 2013 Held in Phoenix

July 1, 2013 by DSN Staff Leave a Comment

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

The conference theme “Celebrate” had wide-reaching application during the DSA Annual Meeting, held June 9-11 at the JW Marriot Desert Ridge Resort in Phoenix. Author and speaker Dan Pink opened the first general session with the great news that technology has not eliminated sales people, as was the prediction a dozen or so years ago. National Geographic photographer Dewitt Jones enthralled the audience with a spectacular keynote on creative thinking.

U.S. DSA President Joe Mariano announced that the industry grew in the U.S. in 2012 to $31.63 billion, an increase of 5.9 percent. The number of direct sellers in the U.S. also increased from 15.6 million to 15.9 million. Orville Thompson, DSA Annual Meeting Chairman and CEO of Scentsy, summed up the good news with the statistic that about 13.8 percent of households in the U.S. have direct sellers among them.

The Awards Gala was held Tuesday night, and the elegant celebration announced and honored the seven ETHOS Award winners. These seven winners were selected from more than 130 entries submitted by almost 40 companies. They are:

Scentsy for Marketing and Sales Campaigns
Creative Memories for Product Innovation
Initials Inc. for Salesforce Development
IMN for Supplier Partnership
Amway for Technology Innovation
Rodan + Fields Dermatologists for Vision for Tomorrow
Jeunesse Global for Rising Star

The gala also celebrated the 40th anniversary of the Direct Selling Education Foundation. Dr. Raymond (Buddy) LaForge, Professor of Marketing for the University of Louisville, was announced as the newest recipient of DSEF’s esteemed Circle of Honor award.

July 2013

July 1, 2013 by DSN Staff Leave a Comment

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

Avon Products Inc.

Doug Conant

Avon Products Inc. announced the appointment of Pablo Munoz as Senior Vice President and President, North America. Munoz will report to CEO Sheri McCoy and join the company’s Executive Committee.

Munoz will oversee Avon’s business in the United States, Canada and the Caribbean. In this role, he will be responsible for executing the turnaround of Avon’s North American business and returning it to a solid and profitable position.

Munoz has extensive experience in direct selling in both housewares and beauty. He joins Avon from another direct seller, where most recently he served over Latin America and North America and developed turnaround plans for both regional businesses.

In related company news, Avon announced that Doug Conant, who currently serves on the board of directors, has been elected to the position of non-executive Chairman to replace the previous Chairman. Conant is Founder and currently serves as the CEO of Conant Leadership.

Kimberly Ross, Chief Financial Officer of Avon, was also appointed to the board in order to maintain the minimum number of directors required by Avon’s bylaws. It is the board’s intent that Ross will step down once a new independent director has been appointed.

Avon, the company for women, is a leading global beauty company, with nearly $11 billion in annual revenue. Avon is sold through more than 6 million active independent Avon Sales Representatives, and products are available in over 100 countries.

Nature’s Sunshine Products Inc.

Nature’s Sunshine Products Inc., a natural health and wellness company engaged in the manufacture and direct selling of nutritional and personal care products, announced the appointment of Matthew Tripp, Ph.D., as Chief Scientific Officer. Dr. Tripp has extensive senior-level R&D experience in consumer product manufacturing for major consumer goods companies, and he will play a significant role in the development, manufacturing and quality control of Nature’s Sunshine Products’ broad range of nutritional products.

Since 2000, Dr. Tripp has served as Vice President, Research and Development, at Metagenics, a developer, manufacturer and distributor of high-quality dietary supplements and medical foods. He has also concurrently served as Senior Vice President, Research and Development, at KinDex Therapeutics, a biotechnology company created by Metagenics.

Nature’s Sunshine Products markets and distributes nutritional and personal-care products through a global direct salesforce of over 340,000 active independent Managers, Distributors and customers in more than 40 countries.

Mannatech Inc.

Al Bala

Bo Short

Mannatech Inc., an innovator and provider of naturally sourced supplements based on Real Food Technology® solutions, announced the promotion of Al Bala to Executive Vice President and Chief Sales and Marketing Officer. In this new position, Bala will oversee Mannatech’s global sales and marketing efforts in various arenas, including field development and training.

Bala joined Mannatech in 2007 as Senior Vice President of Global Sales. In 2011 he became Executive Vice President of Sales and Marketing, where he was able to utilize his 30 years of sales and marketing experience in the direct sales industry.

Mannatech also announced the appointment of direct selling expert Bo Short as President of Business and Field Development, North America. Short’s experience in direct selling has spanned 23 years. He is also a best-selling author of both Living to Win and The Foundation of Leadership.

Mannatech develops high-quality health, weight and fitness, and skincare products that are based on the solid foundation of nutritional science and development standards. Mannatech’s proprietary products are available through independent sales associates around the globe.

4Life Research

Nao Lau

David L. Vollmer

4Life executives announce that they have named Nao Lau as the new General Manager for Colombia, where he will relocate with his family to oversee operations from the company’s offices in Bogota.

Lau began his career at 4Life in 2005. Since that time, he’s served as a Manager, Director and Senior Director, International. Lau has worked closely with 4Life Vice Presidents to execute field communications and marketing initiatives, and oversee operations and logistics.

4Life also announced the appointment of David L. Vollmer, Ph.D., as the company’s new corporate Senior Director of Quality Control and Analytical Services.

Dr. Vollmer will be responsible for ensuring that 4Life’s analytical laboratory complies with all current Good Manufacturing Practices and other regulatory agency requirements for dietary supplements, nutritionals and cosmetics testing. Additionally, he will oversee contract manufacturer and third-party analytical service audits and qualifications.

Dr. Vollmer comes to 4Life with more than 15 years of experience in quality control and analytical laboratories management, primarily in the pharmaceutical industry.

4Life has offices on five continents to serve a global network of independent distributors through science, success and service.

It Works! Global

Chris Burns

It Works! Global, home of the It Works! Wrap, announced that Chris Burns, a technology executive, has been named Chief Information Officer. Burns has been a member of the It Works! team for five years. In his new role, Burns will oversee all software and business systems global strategies and play a critical role in developing software and integrations with an emphasis on emerging mobile and social media technologies.

Prior to It Works! Global, Burns was a lead technical analyst at Pfizer. He was part of the manufacturing division and led the company through a system of data migration and merging, including software enhancements and support.

It Works! Global emphasizes a debt-free philosophy. The It Works! system is based upon the It Works! Wrap that tightens, tones and firms any area of your body in as little as 45 minutes.

Longaberger

Michael Trempe

Tami Longaberger, CEO of The Longaberger Company, announced that Michael Trempe, a 12-year veteran of the company, has been named Longaberger’s President and Chief Operating Officer.

Trempe will report to Tami Longaberger. He has been at The Longaberger Company since 2001, most recently serving as Vice President for Operations. After joining Longaberger as a business analyst, he rose through several executive positions, serving as Manager of Manufacturing Operations and then as Director of Operations. He was named Vice President of Operations in 2011.

Trempe has led the company’s initiative, which was announced by Longaberger last summer, to transition to becoming a fully American-made company.

Founded in 1973, The Longaberger Company is an American maker of handcrafted baskets, and offers a variety of other home and lifestyle products, including pottery and other tableware, wrought iron and fabric accessories, through a network of approximately 25,000 consultants.

Vivint Inc.

Alex Dunn

Vivint Solar™, a provider of simple, affordable solar solutions, announced that Tanguy Serra has stepped down as CEO. He will remain involved in an advisory capacity. The company also announced that its board has appointed Alex Dunn as interim CEO.

Dunn currently serves as President for Vivint Inc. and has been with the company for seven years. He was previously Chief Operating Officer, where he oversaw the company’s daily operations, financial activities and business processes.

Vivint Solar was first introduced in October 2011. Vivint Solar designs, installs and maintains cost-effective solar energy systems, allowing consumers to enjoy the benefits of solar with little to no up-front costs.

Rena Ware International

Benjamin J. Zylstra

Rena Ware International has announced that Benjamin J. Zylstra will succeed his father, Russell J. Zylstra, as CEO of the company. Russ Zylstra will remain as Chairman of the Board of Rena Ware.

In his new role as CEO, Ben Zylstra will be responsible for the development of the company’s policies, programs, and sales and marketing strategies, along with members of the senior management team.

He joined Rena Ware in 1998 in the position of Sales/Marketing Assistant. His promotion to CEO marks the fourth time that a member of the Zylstra family has been at the helm of Rena Ware International, a company founded in 1941 by Dutch immigrant Fred Zylstra and his spouse, Rena Zylstra.

Rena Ware is a privately owned, family company headquartered in Bellevue, Wash. Their product line includes top-quality, stainless steel cookware and other complementary products for the kitchen, as well as juice extractors and water and air filters. Rena Ware maintains markets in North America, Asia and Latin America.

Lulu Avenue™

Michelle Jones

Charles & Colvard Ltd. announced the appointment of Michelle Jones as President of Charles & Colvard’s newest Direct Sales Division, Lulu Avenue™.

Jones has 17 years of experience in direct sales. Most recently she served at a direct seller where she led sales, training, marketing and operations and was responsible for the development and implementation of its long-term growth strategies and initiatives.

Charles & Colvard Ltd., based in the Research Triangle Park area of North Carolina, is the global sole source of moissanite. These gems are incorporated into fine jewelry sold through retailers as well as Lulu Avenue.

Zrii

A.K. Khalil

Zrii LLC announced the appointment of A.K. Khalil as President. In his new role, Khalil will guide the development and implementation of training and sales technologies, as well as strategic analysis, sales events, online marketing, new product launches and expansion into international markets. He will report to William F. Farley, Founder and CEO.

Khalil has more than 15 years of direct selling experience in a variety of sales and business roles. He has worked with both large and small network marketing companies to optimize sales, streamline operations and increase profitability.

Founded in 2008, Zrii formulates all-natural energy, nutrition, weight-loss and detox-cleanse supplements that are sold through a network of independent executives throughout the United States, Canada and Latin America.

ForeverGreen Worldwide Corp.

ForeverGreen Worldwide Corp., a provider of nutritional foods and other healthy products, announced that Rick Bazzill was hired as International Field Director for ForeverGreen Worldwide. Bazzill has nearly 40 years of sales experience.

He began his direct sales career in 1976, and at his most recent corporate job, served as head of sales for another direct seller, where he drove the company from $15 million to $985 million in annual sales over a five-year period.

Bazzill has spent the last several years as a lecturer and world traveler. He is an author and salesman who has spoken worldwide. His experience includes a wide variety of products with a concentration in nutritional and healthy lifestyle brands.

ForeverGreen develops, manufactures and distributes an expansive line of all-natural whole foods and products to North America, Australia, Europe, Asia and South America.

Submissions: Please submit news of executive promotions and hires at your company to be included in the Executive Announcements section of Direct Selling News.

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Young Living Essential Oils: Growing by Returning to its Roots

July 1, 2013 by DSN Staff Leave a Comment

Photo above: Young Living’s lavender fields at the Mona, Utah, farm

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

Company Profile

Founded: 1993
Headquarters: Lehi, Utah
Founder: Gary and Mary Young
Products: Essential oils for nutrition, wellness, personal care and home care.

With 250,000 distributors worldwide and an even bigger consumer base, Young Living Essential Oils is a well-established and respected global direct sales company. The company has grown in the double digits each year since its founding. Recently, though, this 20-year-old company has seen an uptick in revenues—more than 27 percent growth in 2013. What’s behind this sudden surge?

Key Changes

“I don’t think you can pin our recent growth on any one thing,” says Young Living’s Chief Operating Officer Travis Ogden. And he’s quick to point out that the company has lways grown 10 to 12 percent, even in a weak economy. “It’s really a testament to our consumer base. They’re very loyal to our products. They’re effective, so customers continue buying them.”

Travis Ogden

Jared Turner

Several changes have worked together to energize the company. One change is new and improved products. Most notable is a top seller—the company’s NingXia Red. Reformulated in the fall of 2012, this antioxidant-rich drink is based on the wolfberry, grown in Ningxia, China. “The new formulation has seven times more essential oils. And you can add additional oils to the NingXia Red based on what you need for your health,” Ogden says. “So it’s a fun and easy way to consume the oils.”

The executive team expects two new products, introduced at the International Grand Convention in Salt Lake City this June, to add to the momentum: NingXia Red Nitro and healthy chocolate. “NingXia Red Nitro is an energy shot,” says Chief Global Sales Officer Jared Turner. “It gives you an extra energy boost in a healthy way. It’s got some naturally occurring caffeine in it.”

The source for the chocolate is the company’s farm in Guayaquil, Ecuador. “It’s infused with essential oils,” Turner says.

The executive team believes some tweaks they’ve made to the compensation plan are also fueling growth. The addition of fast-start bonuses has both galvanized existing distributors and brought in new people. Another draw is the Rising Star Team Bonus Pool, a new aspect of the bonus plan. How much a distributor makes depends on the number of shares he or she earns. “As the global pool grows, everyone benefits,” Turner says.

Mary and Gary Young

Clean Sweep

Perhaps the most significant change has been an overhaul of the executive team. The company’s founders, Gary and Mary Young, moved to Ecuador in 2005 to establish the company’s farm there. When they returned in 2011, as Mary says, “We discovered that not everyone had the same interest in the company or shared the same vision that Gary and I did.” Over the course of the next year, they replaced the entire executive team. The new executives’ drive, dedication and fresh ideas have energized the company. Mary believes that dedication filters down through all the employees to the distributors. And the new team members genuinely like one another. “We laugh, we joke and we enjoy growing Young Living together,” she says.

The importance of having Gary and Mary back at the helm cannot be overstated. “No one can replicate Gary’s knowledge of the oils,” Ogden says. “To have him available and speaking to the distributors has been a big factor in our increased growth.”

“No one can replicate [Founder Gary Young’s] knowledge of the oils. To have him available and speaking to the distributors has been a big factor in our increased growth.”
—Travis Ogden, Chief Operating Officer

Young Living’s DNA

For Chief Marketing Officer Craig Aramaki, Founder Gary Young and his story are at the core of the company. He believes that, for much of its history, the company has done well on the strength of its products, not a strong, coherent brand or message. His goal is not to change the company’s direction, but rather to get back to the company’s core DNA and to market Young Living in a much better way. “We have so many great stories about why we are who we are and the success we’ve had, but we haven’t done a great job of telling them,” he says.

The most important story is Gary’s. As a young man 40 years ago, Gary suffered a crippling injury in a logging accident. For two years he couldn’t walk, and it was more than a decade before he regained full health and mobility. Unhappy with traditional treatments, he began studying alternative medicine. This led him to essential oils, which aided in his recovery. Gary spent the next several years traveling to three continents and a dozen countries to study essential oils. During that time, he also received a doctorate in naturopathy. He has since published several books and scholarly articles on essential oils.

In 1989 he began cultivating plants on a small plot in Spokane, Wash. He built his own distiller by welding two pressure cookers together with copper. Soon he was producing essential oils of the highest quality.

In 1993 Gary and Mary launched their own company, Young Living Essential Oils. “Gary’s overarching goal is to make a positive difference in the world,” Aramaki says. “He’s done that by building Young Living and making sure that all of the processes, from the planting to the cultivation to the bottling, were all done to create the purest product available. That’s the core of Young Living and it always has been.”

Young Living Essential Oils products.

Young Living’s quality control laboratory in Spanish Fork, Utah.

Celebration at Young Living’s 2012 convention.

A Vision and a Mission

“I would like to see people become more independent in researching their healthcare choices.”
—Mary Young, Founder

Young Living’s stated vision is “to bring Young Living Essential Oils into every home in the world.” The founders consider the oils a gift from nature. “I would like to see people become more independent in researching their healthcare choices,” Mary says. “My greatest reward is when a new user has an ‘aha’ moment using our products.”

Gary and Mary Young believe so strongly in their mission that they have literally devoted their lives to it. For Gary, it’s this belief that sets Young Living apart. “We have invested millions of dollars into the research of essential oils, our farms and testing labs,” he says. “We thoroughly research the products and plants. From the depths of Ecuador to the island of Tasmania, we scour the world in search of plants with healing qualities and share them with the world.”

From Seed to Seal

The Youngs’ vision informs the way they live their lives. “The Youngs are 100 percent in this business to help people by bringing the products to them. They’re not in it for the money,” Ogden says. “Even though we’re a company with several hundred million dollars in sales every year, they drive cars that are not as nice as those driven by many of their employees.” Instead, they plow nearly 100 percent of the profits back into the company.

So what is Young Living using the profits to accomplish? The Youngs believe that to ensure the highest-quality products, as much as possible the company should grow its own plants. The result spans several continents and adds up to more than 4,500 acres. Young Living has six farms: three in the United States and one each in France, Ecuador and Oman. Young Living has plans to expand even further this year with two more farms, one in Israel and another in Peru.

“Our newest farm in Salalah, Oman, will include the planting of more than 400,000 frankincense trees over the next 10 years,” Gary says.

Impressively, all of this growth and expansion has been entirely self-funded. Even so, because of high demand, the company partners with other farms to provide ingredients for Young Living products. Young Living ensures the quality of these outside materials by holding outside farms to the same stringent testing standards Young Living applies to its own products.

The company recently completed a major upgrade of its quality control laboratory in Spanish Fork, Utah. The lab doubled its staff, which includes Ph.D.’s, chemists, scientists and microbiologists. The lab has also added some new high-tech equipment: a gas chromatograph and a gas chromatograph-mass spectrometer. This equipment breaks down the components of the oils, allowing the company to identify the oils’ purity and strength. It also identifies any contaminants. As an added precaution, Young Living uses third-party audits to ensure the oils’ quality.

Overseeing the entire growth and bottling process—from planting the seed, to cultivating, distilling, testing and sealing the product—is the hallmark of Young Living. “The ‘seed to seal’ story definitely sets us apart,” Ogden says. “And it helps us to stay at the forefront of essential oil products because we own distilleries in different climates throughout the world. Gary is able to grow a wide variety of crops and distill them and analyze their properties. It helps us to stay fresh.”

Overseeing the entire growth and bottling process—from planting the seed, to cultivating, distilling, testing and sealing the product—is the hallmark of Young Living.

Making a Difference

The Youngs run a 503 (c)(3) nonprofit organization, the D. Gary Young Foundation. Its mission is “to Educate, Awaken, and Inspire individuals to love, honor, and live a healthy lifestyle.” The foundation has donated products and money to various altruistic causes, such as Hurricane Katrina, tuberculosis prevention and medical mission trips.

The foundation’s current project is building and supporting a school near the company’s farm in Guayaquil, Ecuador. “The Youngs would drive past this little school every day,” says Public Relations Specialist Robyn Valentine. “It was dilapidated and falling apart.” With the foundation’s support, the school has nearly quadrupled enrollment, and the foundation is currently raising money to build a new high school for the students. With this educational support, the children in this area will experience a far different future for themselves.

Young Living’s Ecuador farm.

Refreshing Technology

According to Public Relations Specialist Robyn Valentine, one of the biggest launches of the year for Young Living is designed to support the field: an improved website and a proprietary program designed to help distributors expand their social media presence.

“We’re going to take a giant leap forward in the next few months. We’re creating the technical infrastructure and optimizing it for digital context with different digital devices like tablets and smartphones,” Aramaki says. Additionally, Young Living is developing a relational database for their products, which will make them much easier to search. Individual products will be accessible by ingredients, benefit and other categories.

While the company has a strong corporate social media presence, the company also wants to better support their distributors as they share Young Living using social media. “A lot of our distributors didn’t grow up with social media, so they’re not experienced in that space,” Aramaki says. “They will be able to go online and sign up. We take them through a process where they can create their own Facebook page.”

The page will then be sent automatic updates that appear in the distributor’s news feed. The content will be different from the corporate posts, specially geared toward that particular audience. Eventually distributors will have the option to customize the content, picking and choosing what they share in their feed.

At 20, Young Living is beginning to see a second generation of distributors who have grown up using the products. These legacies, along with other young distributors, are contributing to a younger demographic. “As we’re getting more young distributors coming on board, social media is becoming increasingly important to us. And its importance will continue to grow,” Aramaki says.

Global Reach

While the United States is still Young Living’s biggest market, the company’s global expansion is a key factor in its growth. The company’s fully open foreign markets include Ecuador, Peru, Mexico, Canada, Europe, Australia, Singapore, and Japan. And these markets are growing rapidly. When Canada opened in March, it exploded. “That month, it became our second-biggest single company market,” Turner says. “Grand openings translate into big revenue gains.”

In May, Young Living opened in Germany. They will open in Hong Kong in September, and they plan to open in Malaysia this year too.

A Promising Future

“The company is experiencing unprecedented growth and with each passing year, new goals for increased wellness and abundance are set and surpassed.”
—Gary Young, Founder

So what’s next for Young Living? If you ask Gary, he’ll tell you he’s never been more excited about Young Living Essential Oils. “The company is experiencing unprecedented growth, and with each passing year, new goals for increased wellness and abundance are set and surpassed,” he says. In turn, he believes it is the responsibility of Young Living to ensure that this increase in prosperity is met with increased commitment to spreading the company’s message and products across the globe. “I have spent most of my life researching the powerful effects of essential oils,” Gary says. “The strict product standards Young Living follows have helped ensure both continued growth and production of the highest-quality, therapeutic-grade essential oils in the world.”

Financial News, July 2013

July 1, 2013 by DSN Staff Leave a Comment

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

Avon Products Inc.

Avon Products Inc. (AVP—NYSE) reported first quarter 2013 results. For the first quarter of 2013, total revenue of $2.5 billion decreased 4 percent, but was relatively unchanged in constant dollars.

First quarter 2013 gross margin was 62.1 percent. Adjusted gross margin was 62.5 percent, 160 basis points higher than the prior-year quarter, primarily due to lower freight costs, as well as lower material costs, including the benefits from productivity initiatives.

Operating profit was $172 million and operating margin was 6.9 percent in the quarter. Operating profit was negatively impacted by $20 million associated with costs to implement (CTI) restructuring and $13 million associated with the highly inflationary accounting for a 32 percent devaluation of the Venezuelan currency. Adjusted operating profit was $206 million and adjusted operating margin was 8.3 percent, 450 basis points higher than the first quarter of 2012.

During the first quarter 2013, as part of the company’s refinancing activities, the company prepaid the $535 million of outstanding private notes plus a make-whole premium. Additionally, the company repaid $380 million of the outstanding term loan principal. These repayments resulted in a $73 million pre-tax loss on extinguishment of debt.

First quarter 2013 net loss was $13 million, or a loss of 3 cents per share. Adjusted net income was $112 million, or 26 cents per share.

The overall net cash provided in the first quarter was $279 million, which compares with the use of $30 million in first quarter 2012, and this was primarily due to proceeds related to the issuance of debt, partially offset by debt repayment and cash used for operations.

Avon’s net debt (total debt less cash) for the first quarter of 2013 was $2.1 billion, up $160 million from the year- end level.

First quarter 2013 revenue in Latin America was $1.14 billion, unchanged year over year, or up 7 percent in constant dollars. Q4 revenue in Europe, Middle East and Africa was $733.1 million, up 1 percent, or up 3 percent in constant dollars. North America’s fourth quarter revenue was $406.2 million, down 15 percent year over year and in constant dollars. This was negatively impacted by a decline of 21 percent in Silpada revenue compared to the previous year. Asia Pacific’s revenue was $200.0 million, down 10 percent, or down 12 percent in constant dollars.

In other news, Avon declared a regular quarterly dividend on its common stock of 6 cents per share, payable June 3, 2013, to shareholders of record on May 14, 2013.

Avon, the company for women, is a leading global beauty company, with nearly $11 billion in annual revenue. Avon is sold through more than 6 million active independent Avon sales representatives in over 100 countries.

AL International Inc.

AL International Inc. (JCOF—OTC.BB) announced its financial results for the first quarter ended March 31, 2013.

For the quarter ended March 31, 2013, AL International’s consolidated revenue increased 30.8 percent to $20.8 million, compared to $15.9 million for the quarter ended March 31, 2012.

Al International’s gross profit for the current quarter increased 37.8 percent to $12.4 million, compared to $9.0 million recorded in the prior quarter. Operating expenses increased only 14.6 percent to $11.0 million, compared to $9.6 million for the quarter ended March 31, 2012.

The company reported a net income available to common stockholders of $1.06 million for the current quarter, compared to a net loss available to common stockholders of ($855,000) for the quarter ended March 31, 2012.

Adjusted EBITDA was $2.2 million in the current quarter compared to ($134,000) for the quarter ended March 31, 2012.

As of March 31, 2013, the balance sheet showed cash of $4.1 million, working capital of $2.1 million and total assets of $28.8 million.

AL International Inc. is a company that offers a wide range of consumer products and services, primarily through person-to-person selling relationships that comprise a “network of networks.” AL International was formed after the merger of Youngevity Essential Life Sciences and Javalution Coffee Co. in the summer of 2011.

Computer Vision Systems Laboratories Corp.

Computer Vision Systems Laboratories Corp. (CVSL—OTC.BB) Chairman John Rochon announced that the company has filed a Schedule 14C with the Securities and Exchange Commission with the decision to amend CVSL’s Florida Articles of Incorporation to change its name to CVSL Inc. and to increase its authorized shares of common stock. Rochon stated that having additional authorized shares available was necessary to pursue its acquisition strategy in the direct selling industry.

At the same time, Rochon announced that Rochon Capital Partners, Ltd., CVSL’s majority shareholder, intends to defer receipt of the previously approved additional 504,813,514 shares that it would receive promptly following the increase in the number of CVSL’s authorized shares.

CVSL is a development-stage company with plans under way to make it the platform for a brand strategy of acquiring multiple privately held direct selling companies.

Herbalife Ltd.

Herbalife Ltd. (HLF—NYSE) reported first quarter net sales of $1.1 billion, reflecting an increase of 17 percent compared to the same time period in 2012 on volume point growth of 13 percent. Adjusted net income for the quarter of $137.4 million, or $1.27 per diluted share, compares to 2012 first quarter net income of $108.2 million and EPS of 88 cents, respectively. On a reported basis, first quarter 2013 EPS of $1.10 increased 25 percent, compared to the 88 cents reported in the comparable quarter last year.

For the quarter ended March 31, 2013, the company generated cash flow from operations of $137.6 million, an increase of 14 percent compared to 2012; paid dividends of $30.9 million; invested $24.9 million in capital expenditures; and repurchased $162.4 million in common shares outstanding under the share repurchase program.

In regional results, for the first quarter volume points increased in all regions, and ranged from a 4 percent increase from the previous year in North America to 33 percent increase in South and Central America. The number of average active sales leaders also increased in all regions. The lowest percentage was in North America, with 9 percent. The highest came out of South and Central America, with 28 percent.

The company also reported that its board of directors has approved a dividend of 30 cents per share to shareholders of record May 14, 2013, payable on May 28, 2013.

During the first quarter, the company repurchased 4.0 million shares at an average cost of $40.61. There is currently $787.6 million remaining on the existing $1 billion share repurchase authorization.

Herbalife Ltd. is a global nutrition company that sells weight-management, nutritional and personal-care products intended to support a healthy lifestyle. Herbalife products are sold in over 80 countries through and to a network of independent distributors.

Medifast Inc.

Medifast Inc. (MED—NYSE), a manufacturer and provider of clinically proven, portion-controlled weight-loss products and programs, reported financial results for the first quarter ended March 31, 2013.

For the first quarter, Medifast net revenue increased 8 percent to $96.0 million from net revenue of $88.9 million in the first quarter of the prior year.

Revenue in the direct sales channel, Take Shape For Life, increased 12 percent to $59.4 million in the first quarter of 2013, compared to $53.0 million in the same period last year. Growth in revenue for Take Shape For Life was driven by increased customer product sales.

Gross profit for the first quarter of 2013 increased 8 percent to $72.4 million, compared to $66.8 million in the first quarter of the prior year. The company’s gross profit margin increased 30 basis points to 75.4 percent in the first quarter, versus 75.1 percent in the first quarter of 2012.

Operating income was $8.6 million, or 8.9 percent as a percent of net revenue, compared to $6.1 million, or 6.9 percent as a percent of net revenue in the first quarter of 2012.

Net income was $5.9 million, or 43 cents per diluted share based on approximately 13.9 million shares outstanding, compared to net income of $4.0 million, or 29 cents per diluted share, for the comparable quarter last year.

The company also announced it has paid off the remaining value of its outstanding long-term notes and is now completely debt-free.

The loans, initiated in September 2007, were originally taken out to consolidate debt associated principally with the Owings Mills, Md. manufacturing facility and the Ridgely, Md., distribution center.

Medifast was founded in 1980 and is located in Owings Mills. It sells its products and programs via four distribution channels: the Web and national call centers, the Take Shape For Life personal coaching division, Medifast Weight Control Centers, and a national network of physicians.

Nu Skin Enterprises Inc.

Nu Skin Enterprises Inc. (NUS—NYSE) announced record first quarter results with revenue of $550.1 million, a 19 percent improvement over the prior-year period. Revenue was negatively impacted 3 percent by foreign currency fluctuations. Earnings per share for the quarter were 90 cents, a 22 percent year-over-year improvement.

In regional results, first-quarter revenue in North Asia was $188.2 million, compared to $182.2 million for the same period in 2012. In Greater China, revenue increased 90 percent to $175.7 million, compared to $92.6 million in the prior-year period. Revenue in the Americas improved 15 percent to $76.5 million, compared to $66.3 million in the prior-year period. U.S. revenue grew by 7 percent during the quarter.

Revenue in South Asia/Pacific was $67.2 million, a 13 percent decline compared to the prior year. Excluding the prior-year’s product launch sales, revenue would have been up 8 percent. Revenue in the EMEA region was $42.4 million, a 3 percent decline over the prior-year period.

The company’s operating margin was 15.0 percent for the quarter, compared to 15.5 percent in the prior year. Gross margin during the quarter was 83.6 percent, consistent with the prior year.

Dividend payments during the quarter were $17.5 million, and the company repurchased $14.6 million of its outstanding shares.

Nu Skin also announced that its board of directors has declared a quarterly dividend of 30 cents per share, which was payable on June 12, 2013, to stockholders of record on May 24, 2013.

Nu Skin Enterprises Inc. has a comprehensive anti-aging product portfolio and operates in 53 markets worldwide with more than 900,000 active distributors and preferred customers.

Relìv International Inc.

Relìv International Inc. (RELV—NASDAQ), a maker of nutritional supplements that promote optimal health, reported its financial results for the first quarter of 2013.

Relìv reported net sales of $18.9 million for the first quarter of 2013, compared to net sales of $19.7 million for the first quarter of 2012. U.S. net sales declined by 4.2 percent for the quarter, compared to the same quarter in 2012. International net sales for the quarter declined 5.7 percent, with the continued growth in Europe of 26.6 percent offset by declines in Asia and Australia of 55.3 percent and 17.0 percent, respectively.

The company reported net income of $195,000, or 2 cents per diluted share, for the first quarter of 2013, compared to net income of $532,000, or 4 cents per diluted share, for the first quarter of 2012. Income from operations for the first quarter of 2013 was $435,000, compared to $914,000 in the same quarter of 2012.

Relìv also announced that the board of directors has declared a dividend of 2 cents per share to all shareholders of record as of May 20, 2013, to be paid on or about May 30, 2013. Relìv currently pays dividends twice a year, and this represents the company’s first dividend in 2013.

Relìv International, based in Chesterfield, Mo., produces nutritional supplements that promote optimal nutrition along with premium skincare products. The company sells its products through an international network marketing system of independent distributors in 16 countries.

Tupperware Brands Corp.

Tupperware Brands Corp. (TUP—NYSE) reported first quarter 2013 sales and profit, with sales of $662.9 million, compared with $639.5 million in 2012, up 4 percent in dollars and up 6 percent in local currency.

GAAP net income for the quarter was $58.2 million, or $1.06 per diluted share, compared with 2012 first quarter GAAP net income and diluted EPS of $58.3 million and $1.02 per share, respectively. Adjusted diluted earnings per share of $1.18 in the quarter was 15 cents, or 15 percent, better than 2012 in U.S. dollars.

The company repurchased in the open market 1.28 million shares for $100 million in the first quarter of 2013.

According to Rick Goings, Chairman and CEO, sales in emerging markets were up 13 percent, in local currency, in the quarter and comprised 62 percent of sales. Established markets of Western Europe (including Scandinavia), the United States, Canada, Australia and Japan were down 3 percent in local currency.

Tupperware also announced that its board of directors declared the company’s regular quarterly dividend of 62 cents per share, payable on July 8, 2013, to shareholders of record as of June 19, 2013.

Tupperware is a portfolio of global direct selling companies, selling innovative, premium products across multiple brands and categories through an independent salesforce of 2.7 million.

USANA Health Sciences Inc.

USANA Health Sciences Inc. (USNA—NYSE) announced record financial results for its fiscal first quarter ended March 30, 2013.

Net sales for the first quarter of 2013 increased by 9.7 percent to $169.1 million, compared with $154.1 million in the prior-year period.

Net earnings for the first quarter increased to $17.8 million, an improvement of 29.3 percent, compared with the prior-year period. Earnings per share for the quarter increased by 42.2 percent to $1.28, compared with 90 cents in the first quarter of the prior year. Total diluted common shares outstanding as of March 30, 2013, were 13.9 million, compared with 15.3 million as of March 31, 2012.

Net sales in Asia Pacific increased by 9.9 percent to $104.9 million, compared with $95.5 million for the first quarter of the prior year. During the first quarter of 2013, net sales in North America/Europe increased by 9.4 percent to $64.2 million, compared with $58.6 million in the prior-year period.

Founded in 1992, USANA Health Sciences is a nutritional company that manufactures high-quality supplements and personal care, energy, and weight-management products in Salt Lake City. USANA’s products are sold directly to preferred customers and associates in 18 international markets.

Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.

Top Desk with Ambit’s Chris Chambless: The Roadmap to $1 Billion

July 1, 2013 by DSN Staff Leave a Comment

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

Ambit Energy began its seventh year of operation this past March by celebrating the completion of a goal we set at our launch in 2006; we passed $1 billion in annual revenue. Naturally, our rapid growth garnered the attention of our colleagues within the direct selling industry, but I think it surprised our competitors in the energy industry. Now, when I discuss Ambit’s success with my industry peers, what I find surprises them even more is how we did it.

It’s usually the first question I am asked at a conference or event: How did Ambit get to a billion dollars in sales in only seven years? I don’t think people actually expect me to tell them, but I do. And when I give them the list of the six decisions my co-founder and I made before we had a single customer, they often walk away with a puzzled look on their faces. Here they are:

Be the Finest, Most-Respected

During our first planning session in a conference room we were borrowing from his brother, my partner wrote our vision on the whiteboard: To be the finest, most-respected retail energy provider in America. After agreeing to make that our foremost objective, the next five decisions were easy.

Know Who You Are

My co-founder, Jere Thompson Jr., had finance and operations experience. Our CIO, John Burke, was an expert at building customer-care and billing systems. Sales and marketing were my expertise. All three of us had come from the telecommunications industry, and none of us had any experience in the energy industry—which turned out to be a good thing because the second decision we made was to be a data-processing company instead.

Chris Chambless

People scratch their heads when we tell them that, but it has made all the difference and is a key reason we have grown so rapidly. Consider the fact that we have no products. We sell electricity and natural gas, so we don’t need to store, manage or ship inventory from a warehouse. We utilize a direct sales model to attract customers, but all our orders are submitted online. So we live and breathe data.

We utilize a direct sales model to attract customers, but all our orders are submitted online. So we live and breathe data.

We decided to become experts at managing, transmitting, storing, sharing and crunching data. This dictated that we create an in-house IT team to build our own systems from scratch without relying on vendors to do the work for us. Keep in mind, this cost more and took longer than we had planned, while we continued to fall further and further behind our competition.

Today, our IT systems—we call them BlueNet because our CIO was faster at building them than our CMO was at naming them—are the envy of the energy industry and have their own patent. They have also allowed us to expand rapidly into new markets.

Knock Down Your Walls

The third decision we made focused on our corporate culture. We wanted an open, inviting atmosphere that encouraged accountability and fun. So before we had a single customer, we leased 22,000 square feet in a warehouse in the West End of downtown Dallas and tore down all the walls. In one corner, we set up six $19 foldout tables from Wal-Mart, which our executives—including me and Jere—still sit at today.

We didn’t lease elegant office furniture or create a corporate façade. We put our money into people, systems and commissions and let the empty warehouse scare off everyone who didn’t get the difference between surface and substance. The smart ones got it, and today we have over 650 exceptionally talented employees and an army of enthusiastic Independent Consultants moving us forward.

Define Your Targets and Align Your Incentives

The fourth decision we made keeps the entire organization focused on what matters most. The two most important metrics in our company have been, and continue to be, our daily average Consultant enrollments and customer enrollments.

Everything we do internally to reward employees ties back to one of these two numbers. Any project that requires a capital expenditure or human resources must first be measured by how it will impact new customer enrollments or Consultant enrollments. If it won’t then we don’t.

Every commission or bonus we pay externally to an Independent Consultant is earned for doing one of two things: enrolling a personal energy customer or helping a new Consultant they sponsor to do the same thing. No other activity generates compensation, and everyone in the downline is paid for the same thing.

Challenge Conventional Wisdom

The fifth decision we made as founders was to never be restricted by what other people said we should or should not do. At heart we are entrepreneurs, and we decided early on that we would test any idea to see if it had merit. Here are a few of the winners:

People in the direct selling industry told us we couldn’t advertise our service directly to consumers because it would alienate our sales channel. We believed we could increase our Consultants’ effectiveness by creating name recognition through mass media. Our first test increased Consultant sales by 35 percent in the markets where we advertised.

People in the energy industry told us we couldn’t guarantee our customers a savings and generate a profit. We rolled out our Guaranteed Savings plan in New York in 2007 and have been sending our annual savings letters to customers ever since.

People also told us not to focus on trying to get referrals from our customers. It’s too complicated, they said. Today, over 10 percent of our sales come through one of our customers’ referral websites as part of our Free Energy program.

My point is a simple one: Trust your instincts and be willing to take a risk. Our business has grown faster as a result.

Never Sacrifice Integrity for Growth

The two most important metrics in our company have been, and continue to be, our daily average Consultant enrollments and customer enrollments.

Finally, the most important decision we made before we launched Ambit was to never sacrifice our integrity for growth. The thing that surprises people most is when I tell them we could have grown even faster than we have.

We could have looked the other way and allowed our field leaders to exaggerate their incomes in the early days when there was more belief than proof, but we didn’t.

We could have allowed commissions to flow faster by reducing the number of non-Consultant sales required to trigger them, but we wouldn’t.

We could have sat by silently when we identified Consultants who were taking shortcuts during the sales process when no one would have known otherwise, but we refused to.

Trust your instincts and be willing to take a risk. Our business has grown faster as a result.

A business built on gimmicks, shortcuts and exaggeration is not sustainable. The very growth those things create ultimately collapses the weak foundation it was built on.

We believe that the only way to succeed in business is to work hard, do the right thing and hold everyone to a high standard. It’s harder. It’s slower. But in the long run it’s more than worth it.

Celebrating the Resilience of Direct Sellers

July 1, 2013 by DSN Staff Leave a Comment

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

As DSA’s recent Annual Meeting showed us, we have many reasons to celebrate. Entrepreneurship, empowerment, leadership and innovation are all hallmarks that describe what’s right about direct selling.

But following the U.S. economic crisis of 2008 and the recession from which we are still emerging, there is yet another trait we can celebrate—resilience.

This incredible spirit of fortitude that has defined direct selling was not simply made evident through encouraging sales and growth figures as the U.S. economy experienced its darkest days in decades; rather, resilience has also stood as a defining characteristic personified by the countless men and women touched by direct selling’s global reach. As U.S. job offerings became fewer and farther between in the early 2000s, increasing numbers of men and women found economic opportunities and empowerment through direct selling. In fact, in the year immediately following the economic downturn, the number of people involved in direct selling in the U.S. increased by 1 million individuals!

For those who have always understood the industry’s unparalleled potential to touch and transform people’s lives, this spirit of resilience comes as no surprise. How, then, do we increasingly make known our ability to create better lives? What incontestable proof can we offer skeptics who, without evidence to the contrary, still question the validity and sustainability of the direct selling model?

During the DSA’s Annual Meeting last month, direct selling executives and members of the financial community alike spoke often of two of the greatest defenses against misperceptions and inaccuracies concerning the direct selling industry—sound research and personal success stories.

The good news is—we have both.

Less than a month ago, the DSA Growth & Outlook Survey Report figures were announced, and the findings are not simply reassuring—they’re inspiring. Year-over-year, U.S. direct sales increased 5.9 percent in 2012 from $29.87 billion to $31.63 billion, outpacing the overall U.S. economy as measured by Gross Domestic Product. Perhaps more telling, in 2012, there were 15.9 million people involved in direct selling in the U.S., an increase from 15.6 million the prior year. Seventy-six percent of direct selling companies with annual retail sales totaling less than $3 million saw growth in 2012, with an average sales increase of about 22 percent. While wellness products continue to represent a major segment in the direct selling industry, there has also been a rise in the sale of services, largely aided by energy deregulation and the sale of energy through the direct selling model.

With this rise in service-oriented sales, the direct selling industry has made yet another testament against the long-outdated—and often misguided—stereotypes aimed at taking away from what it truly means to be a direct seller in a rapidly changing marketplace. Today’s direct sellers, both male and female, are offering a host of competitive products and services in every category imaginable. They’re using the latest and greatest technologies to tap into new markets, develop both leadership and business skills, and grow their sales organizations. Even more, they’re experiencing both sales and recruitment growth unhindered by rising education costs and fluctuating job markets.

The strong performance of direct selling in the United States and around the world continues to underscore the economic and social relevance of this business model.

As for what matters most—direct selling’s ability to create better lives—the success stories are plentiful. The vast majority of today’s direct selling representatives say their businesses have met their expectations, and another 40 percent say they have far exceeded them.

In recent months, DSA launched a platform on DirectSelling411.com titled, “The Faces of Direct Selling.” Through this web page, the association has collected and published an assortment of success stories from men and women across the country who first turned to direct selling for a wide variety of reasons. These men and women offer their narratives without company affiliation or reimbursement. Rather, they come forward to share with others how this industry has made a difference in their lives. From wholesale buyers and full-time sellers to military spouses and those drawn to the social opportunity, these individual profiles represent just a handful of the countless motivations and achievements direct sellers celebrate today.

It is often said that the best defense is a good offense. As leaders of the direct selling industry, we have both facts and individual success stories on our side. The key now is to take the initiative in spreading the word.

Joseph N. Mariano is President of the U.S. Direct Selling Association.

Relìv International: Nourishing Our World

July 1, 2013 by DSN Staff Leave a Comment

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

Company Profile

Founded: 1988
Headquarters: Chesterfield, Mo.
Founder: Robert L. Montgomery
Products: Nutritional supplements and personal care

Hungry children worldwide are given hope for the future due to the generosity of Relìv distributors.

She was 2 years old, weighed 8 pounds and was found living in a garbage dump in the mountainous Manggahan area of the Philippines. Gaunt flesh stretched over her fragile bones and life ebbed away from Rosemarie’s tiny, starving body. Her mother struggles to care for seven children in a place where life means fighting for survival and young children often succumb to malnutrition. But for Rosemarie, the outcome has been much different due to the caring hearts of Relìv distributors around the world.

The foundation has distributed over $34 million in nutritional support since it was founded in 1995.

According to Scott Montgomery, Chairman of the Relìv Kalogris Foundation (RKF)—named in honor of Dr. Theodore Kalogris, who created what became the first product of health and wellness company Relìv International—their charitable efforts reach into nine countries with 270 feeding programs. The foundation has, in fact, distributed over $34 million in nutritional support since it was founded in 1995. The program provides a powder that when added to water creates a highly nutritious shake. This power-packed beverage is provided to over 42,000 children per day around the world. “Volunteers at each of the 270 locations distribute the shake to needy children,” Montgomery says. “Sometimes those volunteers are parents who have seen the miraculous results in the health of their own children. Others are people who want to make an impact for good in their world.”

The volunteer efforts also come from the participation of select distributors, who receive an all-expenses-paid trip from Relìv to help with the mission work in some of the poorest areas of the world. It is just one way that Relìv has put forth effort to increase awareness of its charitable undertakings and to spur growth of the foundation.

Scott Montgomery, Chairman of the Relìv Kalogris Foundation (RKF), visits children who are part of RKF’s feeding program at Ecole Sacre-Coeur de Limonade, a school in Northern Haiti.

Small Beginnings Form a Strong Foundation

The RKF was formed as a result of a couple of Relìv distributors in Australia who wanted to do what they could to help when they learned of some children in the Philippines in dire need of food. The couple approached the leadership of Relìv about providing some relief to the hungry children, and Relìv has been responding ever since.

“For the first 10 years of the foundation we stayed small, but in 2005 we decided to start sharing the stories of success in children’s lives at events and conferences, on Facebook and through videos because we realized that we could and should do more,” Montgomery says. “And the results have been huge. The number of children helped and the follow-up with their results, the organization of the process, and the public awareness have been greatly improved, resulting in increased donations.” He adds that the impact of the foundation’s work has given distributors another reason to talk to new contacts about their business, resulting in growth of the company.

And it has all been accomplished with the Relìv mission statement as its fuel. It reads: “to nourish our world in body, mind and spirit.” The body is nourished through Relìv’s nutritional products, the mind is nourished by allowing for personal growth through a business opportunity, and the spirit has an opportunity for reaching new levels when individuals become involved in the charitable efforts of the foundation. The Relìv logo illustrates the mission, with the circle representing the world and the three flags representing body, mind and spirit.

“The number of children helped and the follow-up with their results, the organization of the process, and the public awareness have been greatly improved, resulting in increased donations.”
—Scott Montgomery, Chairman, Relìv Kalogris Foundation

Distributors who understand the heartbeat of the foundation and want to support it financially are encouraged to do so in several ways. Relìv will automatically deduct a specified amount from a distributor’s paycheck, memorial donations are accepted by RKF in honor of a loved one, and one-time donations are also received. Distributors even have the opportunity to set up their own Network to Nourish events as a way to raise funds, or they can participate in the Rally for the Mission during Relìv’s annual international conference. Montgomery explains that the foundation is registered as a 501(c)(3) in all 50 states in order to facilitate accepting donations from anyone who wants to give but may not be a Relìv distributor.

The philosophy of nourishing children with Relìv’s own product instead of raising funds for an outside organization has served the company well. “The donations we receive are used to purchase NOW—an acronym for Nourish Our World—the Relìv product used as a supplement for children both in the United States and around the world,” Montgomery says. “Area coordinators are used to organize the over 270 stations and keep the program running. They then report the results to the RKF.” The foundation also has a small staff of three full-time employees with offices at the Relìv headquarters in Chesterfield, Mo.

These children, ages 3-5, are part of a feeding program and school held at the RKF House in Cavite, Philippines.

A 250-acre section of Manila, Philippines, that is home to 60,000 impoverished people, was dubbed Welfareville.

The RKF Nutrition Center was recently dedicated in Welfareville and also serves as a school, church and medical facility.

Progress in the Philippines

Two of the nine countries being impacted by the RKF are the Philippines and Haiti. There are a total of 150 feeding programs in the Philippines and seven of them are in a 250-acre section of 42 blocks in the center of Manila dubbed Welfareville. According to Montgomery, most of the 60,000 inhabitants of this impoverished slice of the city are unemployed or underemployed. If the men work, they are often taking whatever construction job they can find, and women will scrounge a meager subsistence by doing basic tasks such as laundry for others.

Parental irresponsibility is prevalent, and many young children work at any job they can find out of necessity because they are more agile than their parents. They will often gather items they think they can sell from garbage dumps in order to help with basic needs. “The living conditions are terrible. There is overcrowding and filth causing ill health, and most of the community cannot afford medical treatment,” Montgomery says. “Such conditions lend themselves to kids who want to escape their environment in search of a better life. Some end up running away to the inner city, where they discover the challenges are the same or worse.”

Since the arrival of RKF, nearly 200 of the children in Welfareville have been given daily nutrition, which has literally translated into hope for the future for many of the recipients. Montgomery is pleased to say that the area coordinators, Pastor George and Blessie Padilla, have worked hard to bring a sense of acceptance to these individuals. In May of this year, he says he was privileged to be a part of the dedication of a new building within the community that serves as a central location for the seven feeding stations, and as a school, a church and a medical facility.

The new building also provides a place to practice for the Himig Pag-asa Children’s Choir, made up of children who are part of the feeding program and residents of Welfareville. They were chosen to participate at the Paskong Pinoy Choral Competition 2012 and ranked in the top 16 of all children’s choirs in the competition.

Bringing Hope to Haiti

Nearly 10,000 miles and half a world away, volunteers are feeding hungry children growing up in the battered nation of Haiti. Already suffering severe poverty and the challenges that come with it—including a large orphan population—the country was struck with a catastrophic earthquake in 2010 that made a bad situation more difficult. Before the quake, there were over 100,000 orphans. According to Kathy Brawley, RKF Haiti Area Coordinator, after the dust settled, approximately 500,000 children were without parents or a place to call home. Due to a presence in the country already, RKF was able to respond quickly by helping some of the children with nutritional support.

“In the north part of the country a doctor, Emmanuel Mareus, known as Dr. Manno, was already using Relìv’s product to treat various health issues with great success,” Brawley says. “When the body is receiving proper nutrients, the immune system can do its job.” Donations to RKF are used to purchase product, which is then shipped to Dr. Manno. “Haiti is so poor and has such great needs that there are no intense government regulations to overcome when an organization is bringing help to the people of the country,” Brawley explains. She has been working closely with Dr. Manno and others to help the children of Haiti for over 30 years. “I’ve lived there at two different times in my life and have contacts that have assisted in the efficiency of the charitable work that RKF does in that country,” she says.

“Haiti is so poor and has such great needs that there are no intense government regulations to overcome when an organization is bringing help to the people of the country.”
—Kathy Brawley, Haiti Area Coordinator, Relìv Kalogris Foundation

Brawley explains that, in addition to the loss of life, one of the reasons the devastation from the earthquake was felt so intensely by the hundreds of thousands of affected citizens is due to the fact that they generally build their houses one piece at a time. “As they can afford another piece, they build, and it often takes years,” Brawley says. “Therefore, it could take a lifetime to rebuild.”

After the quake, which took place in the southern part of the country, there was a northward migration of orphans desperate for help. “In response to the dire need, RKF set up a special account specifically for donations designated for Haiti,” Brawley says. “Within two months over $100,000 came in.” She explains that they used the money to build a children’s home in the northern town of Cap Haitien. “We formed a partnership with a committee from The Catholic Cathedral of Cape Haitian, since they also wanted to get as many of the orphans as possible off the streets.” Some of the children were as young as 2 years old.

The home, known as the Relìv Kalogris Foundation Home, has been operational since June 2012. “There are three house parents and 38 kids who like to watch out for each other,” Brawley says. “The youngest resident, Okenny, who is 3 years old at the time of this writing, has been at the home since it opened, and is making remarkable progress.” One young lady is 17 years old and lost her parents and all eight of her siblings due to illness. She now finds purpose for her life by helping care for the younger children in the home.

RKF Children’s Home in Petite-Anse, Haiti.

Scott Montgomery (pictured in green) accompanies Papa Noel and two Relìv distributors (Tony P. and his wife, Joni S.) who won a trip to visit the children in Haiti.

The RKF feeding program provides a nutrition shake for children who attend Ecole Evangelique Baptiste School in Haut-Limbe, Haiti.

A Life-Changing Gift for Givers and Recipients

And although some of the children have heard of Santa Claus, or Papa Noel as he is known in Haiti, none of them had ever been visited by him until he surprised them last Christmas. He was accompanied by some Relìv distributors who had entered a letter-writing contest offered by Relìv. The grand prize was a trip to Haiti to visit the children who are recipients of Relìv’s charitable efforts, as well as to see the home. Tony P. and Joni S. share the impact that the trip had on them in a video released by the foundation in February. “We didn’t want to go to Haiti but we had to go,” they said. “We knew the experience would touch some places within us that we may not want to touch.”

They are speaking of the abject poverty that they knew they would have to face and then be compelled to deal with, like the garbage in the streets they walked around when visiting various feeding stations.

“These are real kids and their lives are tremendously better because of the foundation.”
—Jennie Santhuff, Director, Distributor Service Center

But as other children received what might be their first-ever Christmas gift from Papa Noel, the smiles on their faces were also described as something the people on that trip will never forget. Jennie Santhuff, Director of the Distributor Service Center, shares the experience of watching a little girl open a gift she had brought to Haiti, and Santhuff’s face is nearly as bright as the child’s. “What she saw in the box wasn’t much compared to our standards, but to her it was everything she ever wanted in life,” she says. “These are real kids and their lives are tremendously better because of the foundation.”

The distributors on that trip say they now feel that it is their duty to tell as many people as possible about the difference in the lives of the children who are receiving Relìv’s nutrients. “We could see the difference,” Joni S. says. “No, we didn’t want to go face that hardship, but we now know the importance of every dollar that comes in to save a child. We must get the word out.”

According to Brawley, there are 48 sites in Haiti that use the NOW for Kids product. They consist of clinics, orphanages and approximately 40 schools. Kids often arrive at school having had no breakfast, causing them to be lethargic and unable to learn well. “I could go on and on about the teachers who report that those same kids who had no energy before Relìv are now filled with energy and look healthier,” Brawley says. “Over 11,000 children receive NOW at those 40 schools every day in Haiti.”

The RKF leadership’s heart for hungry children around the globe can be heard in their words. “Our No. 1 goal for the future of RKF is to tell the stories of the children whose lives have been saved in order to raise more funds to provide necessary nutrition to more starving children,” Montgomery says. “We have increased donations from $200,000 to $1 million in seven years, and we are now working toward $2 million annually to double the number of kids we can save. The hardest thing for the volunteers to do is to look into the eyes of a hungry child and tell him there is not enough for him.”

Amway’s Sandy Spielmaker: Using Analytics to Improve the Business

July 1, 2013 by DSN Staff Leave a Comment

Photo above: Sandy Spielmaker, Vice President of Sales for Amway U.S., shares her thoughts on problem solving at VideoPlus University in April.

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

Editor’s Note: This article has been adapted from a presentation given by Amway’s Sandy Spielmaker at VideoPlus University on April 4, 2013.

The human head weighs 8 pounds. But so what? Who cares? What really matters is what’s going on inside.

According to the theory of left-brain versus right-brain dominance, both parts of our brains control different ways of thinking. The left side is logical, analytical and objective. The right side of the brain is intuitive, thoughtful and subjective.

At Amway, as a company we have really excelled at right-brain development. We’re really good at imagination, expression and understanding the EQ or the emotional intelligence of the business.

For the past few years we’ve embarked on a different journey, which is to exercise and build our left-brain thinking skills. So we’ve strengthened logic, data, fact-based and problem-solving skills. And as we embarked on this journey, we looked to a well-known problem solver for inspiration: Albert Einstein. He was once asked what he would do if he had just one hour to solve a problem that was going to save the world from a terrible fate. His answer was that he would spend 59 minutes studying the problem, and just one minute solving it.

We’re really good at imagination, expression and understanding the EQ or the emotional intelligence of the business.

We’ve embraced this method of problem solving. When you have complete clarity on what the problem is, and the issues surrounding it, it actually becomes quite easy to solve.

So how do we study the problems? We collect the data generated in our business and then study it in lots of different ways. This practice is also known as analytics—the science of studying data. Two professors at MIT have been studying the impact of analytics on companies, and what they’ve shown is that companies that inject data and analytics into their operations grow productivity and profitability over companies that don’t. And, in fact, those numbers are 5 to 6 percent greater.

We’ve also discovered that by utilizing the data and helping our leaders to do the same, distributors have actually become more productive. The partnership between the distributor and the company is strengthened, and we feel we add more value for them.

And then finally, reputation improves, because with data we’re very specific about what the expectations are for those getting into the business. We’re very specific on how the distributors perform along the way. And we’re very specific on what they need to do to continue to develop and achieve the dreams that they’ve set for themselves.

So how do we do this? We start in our customer service area, where every year we have millions of contacts coming through, and we mine all that data.

We also have thousands of interactions every year with our distributors in a variety of ways, whether at events or out in classrooms. We have hundreds of conversations that we capture among distributor panels that we’ve set up to talk about a variety of different subjects.

And, of course, we have a very large database, as you can imagine, because we’re capturing all the transactional data that is occurring for our distributors—what they’re buying, what they’re selling and how they’re prospecting.

Data mining allows us to dig really deeply into understanding and getting clarity on what our problems are and the issues we are facing.

What does all this data do for us? It allows us to dig really deeply into understanding and getting clarity on what our problems are and the issues we are facing. We take all this data, and we study it. We cut it by age and by ethnicity. We cut it by time in the business, by level of success and by behavior. We’re able to look at the distributor and see whether it’s Day 5 in the business for them, Day 500 or Day 5,000.

We also look at all of this in terms of the patterns. We look at what’s happening on a global basis, but we also look at it in terms of what’s happening in specific markets, all the way down into cities like Newport Beach, New Orleans, or even into the heart of New York City.

In fact, when we talked to families in New York City, we uncovered an opportunity for us. We found out that we had a really large contingent of distributors in the area, but we were underdeveloped in that market relative to how we were doing in other markets. And when we dug in deeper we could understand why. Basically, there was a gap in how we were providing the support and services that they needed to find success in the business.

After learning this from studying the data, we opened the Amway Business Center in New York this year. It’s located in Flushing, right in the heart of where all these distributors live. This center is a place where training, product information, compensation information, and even some recognition is available to distributors. There’s also an area to buy product. Distributors can bring prospects and customers to the center. The new center is providing credibility, and all the training that they need to find success.

A second example I want to share with you is the learning that we’ve received in talking to and mining data about young people. The main opportunity for us with young folks is in mentorship. They want to succeed, but they need to connect with someone who can help them do that. We encourage people in both directions—for the older people to reach out to the younger people to mentor them, and for the younger people to reach out to the older ones and ask to be mentored. It can make a huge difference to have someone who’s willing to be a partner and guide others through not only the business processes, but also through life.

A third example of our analytics is that when we mine the data and look into those transactions, we can identify which distributors are most profitable, and which ones aren’t as profitable. And we can dig again really deeply and understand them better. What are the best practices, what’s happening among that healthy group that we should teach everybody else? But also, what’s happening in the group that isn’t so profitable, and how can we do some retraining?

And so one thing we’ve done as a solution is to simply expand our training. We realized we needed to offer a wider variety of courses, we needed to offer them in many different languages, and we needed to offer them in the ways that were convenient and easy for people to learn best—whether that’s a webcast, or online through live training, or out at an event.

As we spent time with our leaders in the business, what was very, very clear was that we have an incredibly rich history and heritage of paying it forward.

The fourth example I’d like to share with you comes from a lot of conversations about our behavior. As we spent time with our leaders in the business, what was very, very clear was that we have an incredibly rich history and heritage of paying it forward, of offering a helping hand in our communities. What we found is that as distributors do well, they do good—for others and for their communities.

As a result, we wanted to recognize them not just for their accomplishments in the business, but for their accomplishments in life. And so we created the Amway Hero Awards.

As we’ve been building out this left-brain thinking, we’ve grown as a company. But we’ve also been able to grow our distributors, of course. Because what happens with our distributors is that, as we’re giving them facts and figures, they, in turn, are educating their downlines.

I want to share with you a quote from one of our leaders in the field. He said, “The process of looking at data in my business has re-energized my leaders and helped my team understand a healthy business. People’s volume is increasing, and the level of excitement is off the charts.” Right, because we’ve shown them the way and how to be successful, and that’s really what they’re looking for.

But these analytics and the solutions don’t just provide distributors credibility and excitement. They are also providing credibility for our own internal sales folks. And here’s a quote from one of our sales leaders internally. He said, “Access to distributor data has given our team credibility. They look to us to understand what successful distributors are doing to build a long-term business that’s sustainable.”

Using analytics is making a difference in so many ways. One of our field leaders summed it up this way:

“It’s been amazing to see the unity between the field and the Amway corporation, just the connection and the respect for understanding: We don’t do what you do and we don’t want to and we can’t, and you don’t do what we do and you don’t want to and you can’t. And I think there’s such a strong foundation when we respect what we both bring to the table and appreciate that. And it’s nice to see that partnership. It really makes me more comfortable, as we have many, many years ahead, and this is our career.”

So, yes the human head does weigh 8 pounds. But who cares? What really matters is what’s going on inside. Having a balanced business and balanced thinking—between left brain and right brain, between the analytics and the intuition, and between the IQ and the EQ—is what has really made a difference in our business. I believe it can for yours as well.

Sandy Spielmaker is Vice President of Sales for Amway U.S.

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The merchant account provider is 100 percent liable for every dollar processed, for at least 6 months and sometimes as long as 18 months.

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Trust your instincts and be willing to take a risk. Our business has grown faster as a result.

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The foundation has distributed over $34 million in nutritional support since it was founded in 1995.

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The human head weighs 8 pounds. But so what? Who cares? What really matters is what’s going on inside.

We’re really good at imagination, expression and understanding the EQ or the emotional intelligence of the business.

Data mining allows us to dig really deeply into understanding and getting clarity on what our problems are and the issues we are facing.

“We were blessed because the people who originally saw the opportunity and took it seriously happened to be people of color or from other parts of the world.”
—William Faucette Jr., Vice President of North American Sales, 5LINX

“It has always been our task to be in the 25–35 age group, and we recognized that they demand a very different working environment than a 55-year-old.”
—Michael Norris, President, PartyLite Americas

“This opportunity is too large for corporations to overlook or tiptoe into. A proactive, sustained commitment to growth is needed to compete and win with emerging majority consumers.”
—Miriam Muléy, CEO, The 85% Niche LLC

“No one can replicate [Founder Gary Young’s] knowledge of the oils. To have him available and speaking to the distributors has been a big factor in our increased growth.”
—Travis Ogden, Chief Operating Officer

“I would like to see people become more independent in researching their healthcare choices.”
—Mary Young, Founder

“The company is experiencing unprecedented growth and with each passing year, new goals for increased wellness and abundance are set and surpassed.”
—Gary Young, Founder

“The number of children helped and the follow-up with their results, the organization of the process, and the public awareness have been greatly improved, resulting in increased donations.”
—Scott Montgomery, Chairman, Relìv Kalogris Foundation

“Haiti is so poor and has such great needs that there are no intense government regulations to overcome when an organization is bringing help to the people of the country.”
—Kathy Brawley, Haiti Area Coordinator, Relìv Kalogris Foundation

“These are real kids and their lives are tremendously better because of the foundation.”
—Jennie Santhuff, Director, Distributor Service Center