For a number of years now you’ve probably heard the Direct Selling Association talking about its Image Enhancement Program—an effort on an industry level to educate the public about direct selling and its benefits. The goal of DSA’s efforts has been to soften the marketplace for independent sellers so they can focus on their company’s unique selling proposition, and not on debunking the many myths associated with direct selling, networking marketing, multilevel marketing or any of many terms that may have a less than positive connotation in the minds of consumers.

While most direct selling executives would probably agree that as a whole our business model could stand to have a greater level of acceptance by consumers, many of those same executives (maybe you?) might also assert that efforts to improve the image of direct selling aren’t relevant to you because your company doesn’t have an image problem. Having heard this many times, it became clear that we need to improve the image of the Image Enhancement Program!

If there has ever been a time when it’s beneficial for direct selling companies to lock arms and sing a universal refrain, this is it. One of DSA’s most important roles in the marketplace is to find the commonalities among companies and educate consumers about them. Sure, there are many things about direct selling companies that make them different, from products to sales strategy to compensation plans to, yes, even reputation, but at the core, all direct selling companies share a fundamental ability to improve the lives of others both through the opportunities they offer and the products they sell. That is the common refrain, and your association is committed to making sure it’s one that the public understands.

One of DSA’s most important roles in the marketplace is to find the commonalities among companies and educate consumers about them.

Let’s delete the word image from our vocabulary. No one wants to believe they have a poor image, and trying to improve it always requires dredging up the reasons why one acquired a poor image in the first place. Instead, let’s focus on the many reasons why direct selling is the profession of the future. There are millions of entrepreneurial young people entering the workforce every day who don’t want traditional employment. There are a similar number of mature adults who want to leave the workforce but don’t have the financial stability to do so. There are moms who want to stay home with their children while still contributing to the family income, and there are 9-to-5ers who need some extra cash or just want to have an excuse to meet their neighbors. These people are seeking something that will change one or more aspects of their lives, and direct selling can help them do that and help them replicate that success for others.

People are seeking something that will change one or more aspects of their lives, and direct selling can help them do that.

Now that’s a positive message it would be hard for any direct selling company to disavow. And the good news? As you read this, the Direct Selling Association is in the midst of a 12-week pilot marketing campaign designed to test messages and approaches intended to have a broad impact on the general understanding of the benefits of direct selling.

What is entailed in this campaign and what are the parameters of success?

Of course, the ultimate success of an industry marketing campaign would be a dramatic increase in the number of qualified and motivated individuals pursuing direct selling and the subsequent increases in sales. But DSA believes there are many additional metrics of success that we’ll experience in the shorter term. These include:

• The development and testing of research-based message strategies that can be adapted for use in the future at both the industry and company levels
• Insights into the industry recruiting process across multiple companies and selling models, and the opportunity to develop best practices based on the campaign outcomes
• An in-depth understanding of the impact digital marketing and other tactical approaches can have in spreading messages about direct selling
• A deeper understanding of the values and ideals that motivate individuals to choose direct selling

What does the campaign look like? The campaign will use two test markets—St. Louis, Mo. and Tampa, Fla. In each market a series of targeted digital advertisements will appear in carefully selected online locations. The messaging will focus on “Creating a Better Life” through direct selling, using the themes of doing something you love, independence and flexibility, pride and recognition, personal connections and changing lives. The messaging will be supported by an invitation to explore the full range of direct selling companies via the DSA membership directory, with the ability to request additional information from one or more companies.

An additional component of the test will include the engagement of 15 member companies whose Tampa-area representatives will utilize the campaign messaging during demonstrations, parties and other aspects of their direct selling business.

Measurement and evaluation of the success of the program will include a variety of research and analytical techniques, as well as business and performance data from participating member companies on both test and control markets. We’ll no doubt uncover some key information that either supports our assumptions about the most effective ways to market the benefits of direct selling at an industry level or perhaps provides us with new and critical insights to help us shape our outreach in the future.

For better or worse, we are all in this together. For every thing that makes a company unique, there are just as many things that bind it to others in the industry. DSA’s goal is to identify and exploit these similarities for the benefit of all. The marketing campaign is but one part of this journey, and is hopefully one that will give us the tools and motivation to seek bigger and better successes in the future.

Amy Robinson is Senior Vice President and Chief Marketing Officer of the Direct Selling Association. For more information about DSA’s pilot marketing campaign, contact Robinson at arobinson@dsa.org.

Seldia Press Release

Seldia, the European Direct Selling Association, is pleased to announce that two leading German companies, LR Health & Beauty Systems GmbH and Energetix GmbH & Co. KG, joined the association as Corporate Members.

LR Health & Beauty Systems GmbH, one of the largest direct selling companies for body care and beauty products, operates in 30 countries and counts around 300,000 independent sales partners. Its success lies on products with German quality standards, a professional training and services for its sales force, a fair and transparent marketing plan as well as cooperation with celebrities such as Bruce Willis, Heidi Klum or Michael Schumacher. The company is TUV certified according to ISO 9001-2008.

Based in Bingen, Energetix GmbH & Co. KG is a market leader in direct sales of magnetic jewellery. The company designs, manufactures and markets exclusive designer jewellery incorporating high quality permanent magnets which are sold by independent sales persons in home parties and other events. Energetix is present in most of the European countries with a sales force of around 5,000 independent direct sellers.

Seldia (www.seldia.eu) is the representative body for the direct selling sector in Europe, whose members include 27 European Direct Selling Associations (DSAs), out of which 22 in EU Member States. Seldia represents directly through its 14 Corporate Members and indirectly through the national associations over 1,000 direct selling companies with annual sales in excess of 15 billion Euro and 11 million independent direct sellers.

For more information, contact Seldia at seldia@seldia.eu.

On 11 May 2011, the Direct Selling sector became the first sector in Europe with a true European Ombudsman, or mediator. On that date, Seldia, the European Direct Selling Association, appointed a mediator, Professor Jules Stuyck, to deal with complaints of consumers who would otherwise have nowhere to go due to the potential international aspects of their transactions.

“We are very pleased with the forward looking approach of our 27 member associations,” says Seldia Executive Director Maurits Bruggink. “Ethical trading has always been a top priority for our industry, but the appointment of a European mediator has given our policy some teeth. It will guarantee European consumers a dispute resolution service for every transaction. This will become even more important with the further development of a European Single Market for direct selling, which will lead to more transactions with a cross-border dimension.”

The consumer is advised always to address complaints first with the company involved, then with the local direct selling association (DSA). However, this may not always be possible, for example when a company is not a member of the local DSA. In such case, if a consumer cannot solve the complaint with the company, they could address it to the Seldia mediator. The mediator would deal with the complaint if the company is either a member of Seldia or a member of any national DSA that is a member of Seldia.

“We also offer dispute resolution to the other parties in direct selling transactions: direct sellers, direct selling organisations, DSAs and even consumer groups,” explains Maurits. “We have seen instances in the past where a company or distributor was acting in a country without respect of the Seldia Code of Ethics and by doing so, was harming the sector as a whole in that country. Our mediator service is where a local DSA can submit a complaint against such company. The Seldia mediator will pick up this complaint and address this with the company involved.”

The European mediator will not only deal with complaints, but also promote the implementation of the code by DSAs and companies and make consumers across Europe aware of the rights that the Code gives them and how they should address complaints. “For example, we must educate companies, also the smaller ones, to appoint a ‘code responsibility officer’ to deal with complaints,” continues Maurits. “At an industry conference I attended earlier this year, the obligation to appoint such person seemed to be rather unknown to many companies! We must also make sure that national mediators do not only exist as a name on the website of a local DSA, but are actually working effectively.”

The new Seldia website, http://www.seldia.eu, dedicates a whole section to the subject of ethics, which informs the European consumer what to do in case of a complaint and offers direct access to the European mediator. Prof. Jules Stuyck will speak on September 21 at the Seldia Annual Round Table Meeting on Direct Selling in Warsaw on the subject of self-regulation.

As Andrea Jung steps into the new role of Executive Chairwoman, searching for a new CEO becomes top priority for Avon. The announcement triggers the beginning of yet another era in the life of the 125-year-old direct selling giant, which exceeds $10 billion in annual revenue. Andrea Jung has been Avon’s longest-tenured CEO, as well as the longest-serving female CEO currently in the Fortune 500. In her years as Chief Executive, Jung oversaw the doubling of Avon’s revenue and salesforce. She also took the company into developing markets like Russia and China, creating a competitive edge for Avon. 

The outcomes of the recently made Board decisions will obviously be interesting to observe. As the company searches for a new CEO, it also continues to face the challenges of meeting the needs of a different type of consumer and independent contractor. As the expression goes, “Things are just not what they used to be.” The speed of change incurred in our society over the past five years surpasses that of any period in history, presenting challenges for most business models and certainly for a company that has been around for more than a century.

In a recent release which ranked e-retailers during the 2011 holiday season, Avon ranked #2, behind Amazon, but it was not clear whether the rankings were an assessment of the company efforts or the efforts of probably 100,000 or more independent contractors who now utilize the new tools of technology supported by the company. This would indicate that massive change is taking place at Avon, as the ladies are surely no longer just knocking on doors. The announcement of a new CEO search has grabbed all of the headlines, and a host of different opinions have been expressed as to what is really going on at Avon. Some of us have been witness to so many announcements over the years that we may have taken a different view.

A big concern, from a direct selling point of view, would be focused on the understanding of how the direct selling channel of distribution actually functions and what makes it thrive. Those who placed Avon right behind Amazon in their ranking probably based their findings on the numbers and, hopefully, customer satisfaction. The fact that a direct selling company ranked right behind the giant Amazon serves notice that direct selling companies are to be watched.

While we understand the relevance of Wall Street opinion to the success of a publicly held company, we also know that Avon is not the only company making changes, nor is it the only company facing challenges. When you happen to be the biggest, and are publicly traded, you obviously get the attention. The challenges that all direct selling companies are facing boil down to the company’s ability to attract, nurture and grow a sales force of independent contractors capable of serving a much more sophisticated consumer with excellent products and services in innovative consumer-satisfying ways. Direct selling depends on independent contractors who have to become effective vehicles of commerce, and the process, infrastructure, tools and support needed are far different than even five short years ago. Attracting and retaining salespeople, and developing a segment of them into sales leaders who can duplicate their efforts into others becoming organizational leaders, is the key to not only the future of Avon but the entire direct selling industry.

We have to believe that the announcement to search for a new CEO at Avon is about much more than a CEO search; in fact, we hope it is because the Avon family of consumers and representatives developed over many years deserve to have nothing but the best. The legacy of the company stands for so many positive things—contributions to women’s rights, beliefs and causes have been astronomical. As we look to the future, it is always with a brighter and more vibrant vision for what we can be.

Situation Analysis

The motivation to produce this document is very basic: There is much discussion about whether the direct selling model is temporarily challenged or simply going through what might be one of its best transformations. The new business environment is impacted by forces and competition that did not exist just five to 10 years ago. The speed of change has never been greater and its impact upon society has never been as profound.

Overall, the past four years reveal that aggregated revenues for U.S. direct selling have been slightly declining or flat. Current observations reveal some mature companies are doing very well and new growth companies are emerging, providing much optimism for the future of direct selling as a channel. However, a rapidly changing business landscape—impacted by quantum leaps in technology and major recessions in mature markets around the world—appears to have raised challenging questions for those seeking new ways to better serve an ever-evolving and much more informed consumer and prospective independent contractor.

In an effort to better plan for the future, businesses often assess their current state using an examination of Strengths, Weaknesses, Opportunities and Threats (S.W.O.T.). While we at Direct Selling News do not consider our role to be that of researcher, we do see ourselves as a catalyst to trigger awareness and share perspectives through our news stories and projects such as this analysis. We believe such projects will spur additional research by those capable of bringing the best findings to direct selling companies and the overall industry.

We see ourselves then as observers, and as a vehicle for the collection of perspectives. It is this combination that led us to the Direct Selling News S.W.O.T. Analysis and, ultimately, our redefining of the S.W.O.T. approach. We have chosen to eliminate the words “Weaknesses” and “Threats” in the S.W.O.T. methodology and replace them with “What’s important” and “The future.” No single thought or perspective determined the content of this document. Those who contributed did so because they wanted to be part of a process seeking answers important to all who choose to market their products and services through the direct selling channel of distribution. We appreciate the contributions, observations and perspectives of those within the industry who have supported individual companies through their services for many years.

Strengths

The direct selling industry can claim many strengths, beginning with its focus on products and personalized service delivered through presentations that are educational and often entertaining. Prospective recruits are offered an opportunity to engage in the free enterprise system with minimal financial investment, minimal risk, free training and the opportunity to earn in proportion to time and effort invested. No method of business stands taller than that of direct selling for what it offers people from all walks of life in terms of ease of entry into a business opportunity. This has formed the value proposition that has served direct selling companies for more than 150 years.

A product or service that is designed to be distinctly different from competitive products can be marketed more effectively when education, information and personalized presentation become the focus of the marketing and sales effort. This ability to educate and personalize a presentation to the consumer, or a prospective recruit, is what has enabled direct selling companies to thrive in spite of mass competition with products and services. This can be seen no matter what the category, be it skin care, scrapbooking, home care products, fashion, nutritional supplements and beverages, chocolate, candles or legal and financial services. All of the preceding products and services, and many more, have benefited from the personal interaction, education and presentation style used by direct sellers, whether with one-on-one or party plan/group selling methods. Focusing on this instruction and demonstration has also allowed direct sellers to overcome price objections, as well as present and exhibit specific features and benefits. The historical focus on education and presentation is definitely a major strength for the industry.

Another great strength of the industry is company-provided basic skill training and a focus on personal growth for individuals. We would strongly argue this support makes direct selling the most viable model for anyone keen on creating not only an income but an asset as well. Each company has its own process and methodology as to how they position their products/services and opportunity; however, the common value proposition throughout the industry is not in the specific product/service being offered but in how independent contractors use these products and services to create income and build businesses.

The business model itself has been determined by this assessment to be the industry’s best strength. The potential to earn money, along with ease of entry—and the offer of “privacy of consultation” regarding products, services and the business opportunity—are the industry’s most unique features. This strength is a distinct asset and is not found in any other tried and proven business model.

What’s Important

Basic direct selling business fundamentals are vital! Our collection of perspectives led us to what remains important to the overall industry as we pursued our objective to find out what transformations might be occurring as we continue the march into the future. Not surprisingly, our interviews and the perspectives of those who participated in this assessment were virtually unanimous in their belief that these fundamentals remain critical to future success for all companies and their independent contractors. The price/value relationship relative to products and services remains important, as does the uniqueness of product as viewed by both the independent contractor and consumer. Some services, such as energy and financial planning, may not be classified as unique from a product point of view. However, they are certainly unique when people can engage in the distribution through direct selling.

The personal relationship—a traditional attribute the industry has claimed as being a competitive advantage—remains an advantage even as the definition of the selling/buying relationship changes, in some cases, dramatically.

The rewards and compensation direct sellers earn remain important as well, but we did not find a “perfect” compensation plan. A compensation plan must be tailored to the specific company and even to the country in which it operates. Differing delivery methods also affect compensation plans. For example, independent contractors who carry inventory and deliver products to their customers might receive more benefit for their personal effort and interaction than those who utilize their company’s ship-to-customer programs. Compensation plans that reward the right behaviors are the ones that appear to drive growth in both the number of new independent contractors joining and also the number of consumers of the product or service. Rewarding all of the right behaviors, such as customer acquisition, recruitment of customers and business builders, personalized service, follow-up, and engagement in training and personal development, will continue to be very important.

Historically, starter kits have been considered the key component of “first impressions”—the activator of that feeling of “starting a business” and, ultimately, starting a whole new life. We find that the first experience of the direct seller is a very important factor in the belief and success, or perceived success, of the new participant. A starter kit that exceeds in perceived value the fee for entry is considered a competitive advantage for a direct seller, especially when compared to the cost of entry to more traditional business models. When a starter kit is priced appropriately for the market, it can act as a solicitation of commitment, which actually protects the retail profit potential of the independent contractor as some individuals prefer to remain customers rather than join a business. Franchising—thought to be the great new solution to business entry 25 years ago—cannot really compare for those who desire to try their skills at building a business because of the cost of typical entry. This difference in cost to start a business is viewed as a direct selling competitive advantage that can be leveraged very effectively in overall industry strategic planning and preparation for growth.

That is where training methodologies and processes come in. Skill training is essential, but our findings reveal a focus on personal development to be critical. The growing companies that we looked into all revealed a focus on personal development as being key to leadership development within their field organizations, as well as to the development of internal staff. The companies sharing information with us also believe personal development to be the most effective tool for retention and growth. One very successful company even described itself as a personal development program with a compensation plan.

Opportunities

The direct selling industry has served millions of individuals and companies worldwide and contains strengths offered in no other business model. Additionally, most agree on the fundamentals that should remain consistent, even in ever-changing times. This leads us to discuss the opportunities that lie ahead.

Our approach to this portion of the analysis is based on interviews and observations shared by those inside and outside of the industry. We sorted our collection of perspectives into internal factors and external factors.

Internal Factors

The internal factors assessed are the overall industry value proposition and the direct selling business model. We offer that the value proposition of the industry overall may not be as clear today as it was only 10 to 15 years ago, when no other channel of distribution provided the information, education and personalized experience a direct seller could offer. The total value proposition includes the product/service proposition, the business/earnings proposition, the service proposition and the ethical standard by which all are delivered. New and different competition—and an information age where the consumer and prospective recruit can access information and the experiences of others in seconds—may be creating new perceptions and definitions regarding the value of the direct selling experience.

The great opportunity for the entire industry is a well-defined and clearly articulated value proposition. When the value proposition is considered special and personal regarding the buying experience, customers will be easier to acquire and businesses easier to grow. Growing the number of customers served will always be a key component to overall business growth. The fact that revenues in the direct selling industry have been by and large relatively flat for several years may indicate that the number of customers served may be flat. Direct selling has always had an edge on the competition when it comes to personalized service and the buying experience; however, new competition and technology have changed the game. We can no longer take this edge for granted. A close review and examination of the consumer value and service proposition compared to that of other channels of distribution will lead direct selling companies to better and even more personal ways to enhance the proposition for consumers.

The earnings proposition has always offered ease of entry along with control of time and effort invested, with no limitations to potential rewards. It is estimated that a very small percentage of independent contractors engaged in a direct selling opportunity will earn incomes that would be considered extraordinary. This continues to support the historical perception of direct selling, which has been seen as an opportunity supportive of short-term goals for income, recognition and achievement. Retention studies we referenced indicated that if distributors earn as little as $100 per month, close to 95 percent of those distributors are still purchasing product monthly at the six-month mark. As important as the preceding remains, the chance to become better recognized as the most ideal of home-based business opportunities—appealing to all segments in the population—is certainly viewed as very significant for many companies.

Unlike the earlier years of the industry where training methodologies were clear and prevalent throughout, overall there appears to be a lesser focus on business fundamentals and training systems. When we identified “what’s important,” we found training and development systems remain critical priorities to the success of any direct selling company. A huge opportunity for the industry overall is to more effectively promote the value of its training development programs, including life skills and personal development.

External Factors

External factors can activate business weaknesses and present challenges that may have been nonexistent only a few short years ago. This certainly appears to be the case when observing the external factors that may be impacting the direct selling model and contributing to the challenge of overall growth. It is quite easy to use the word recession when describing the challenges facing businesses, but the greater question is: Are there other contributing forces that need to be specifically identified as new strategies are formulated? When looking at external factors and venturing to determine impact on the direct selling business model, we find several forces obviously having a profound impact. We find technology, competition and major demographic and economic shifts changing at a speed far greater than possibly ever imagined.

Technology

The impact of technology on all business models has been enormous, and the direct selling business model has not escaped it. The Internet was first known to be a destination where information could be accessed through a website. Today, websites are more sophisticated than ever and only represent part of the Internet’s capabilities. A quick assessment of direct selling company websites indicates that direct sellers overall may be lagging behind the incredible speed of change we are experiencing relative to technology. What matters today is no longer just the website, but how capable and effective you are in delivering content through all of the new mobile applications.

It took radio 38 years to reach an audience of 50 million. Television took only 13 years. The Internet took only four years, iPods had that many users in less than three years and Facebook had them in only two years. MySpace has over 200 million registered users, but Facebook added that many users last year alone. In 1992 there were an estimated 1 million Internet-capable devices and today that number exceeds 1 billion. Google was founded just 13 years ago and today is recognized as the No. 1 search engine. Each month there are over 31 billion searches on Google. The second most active search engine is YouTube, providing not only written information but vivid visuals of whatever the subject might be. Clearly, we are living in fast-moving times relative to the exponential advancements in technology. More information is available at a click than what many of us could have found in months of research just a few years ago.

Today, 50 percent of the world’s population is under 30 and 96 percent of all millennials are estimated to have joined a social media network. If anyone thinks this is a younger generation fad, one need only observe the fact that the fastest-growing segment of Facebook users is females 55 to 65. Social media represents a permanent shift in the way people communicate and form relationships. Over 200,000 bloggers are also becoming the “new journalists” and approximately 35 percent post opinions on products, brands, services and even opportunities. Still more interesting is that 25 percent of all searches on the world’s top brands are linked to user-generated content. We uncovered research indicating that 78 percent of consumers trust peer testimonials and only 14 percent trust advertisements. This means that online communicators are being perceived as experts until proven otherwise.

The Internet has created the “self-empowered consumer,” enabling an individual to actually remodel business. The same thought could be extended to the prospective distributor who can quickly gain access to the information, reputation and experiences of those who have been part of the company. Direct selling companies that monitor and manage their Internet presence will benefit from the speed at which information now flows. Those who do not will find that others will manage their brand for them. Then they will be competing with the world’s new journalists, who include anyone with a device capable of accessing the Internet and allowing for social media participation.

In fact, developing strategies around online relationships is playing to the strengths of direct selling. The combination of social media technology and the direct selling business opportunity, packaged in smart tools and applications, remains a huge opportunity for attracting new distributors and customers.

New and portable hardware, from smartphones to iPads, are game changers with respect to how consumers expect to be presented to and engaged. These tools are also impacting the perceptions of prospective distributors; therefore, company research as well as product and tool development must keep pace. Otherwise, direct selling companies may not be perceived as being in tune with changing expectations and behaviors.

The pervasive use of new technology tools and their global reach present new and different challenges for companies, from brand protection and corporate reputation to communication strategies. Knowledge engineering is a term emerging in academia. Those who master their communication skills through the new technologies will be the new knowledge engineers. This new speed in the transfer of knowledge can have both a positive and negative effect, and direct selling companies appear to be well-positioned to capitalize on the positives.

Social media functionality makes it possible for companies to utilize a new way of communicating with both their consumers and those who represent their products and services. Virtually every major traditional company can be found on Facebook, including all branches of the U.S. military. When visiting Second Life, another virtual community, we also found all major corporations and the military to be present as well. Career pathing, tours, meetings and training can all be conducted in a totally virtual environment, yet with the look and feel of participation in a live event.

The question becomes, What does it all mean for direct selling companies and the way business is conducted? We contend that the definition of personal interaction has changed, but the value of personal interaction remains the same—or becomes even more important. This is where direct sellers can gain new competitive advantages. An iPad may enable a more effective presentation delivered over the Internet, which increases the speed of communication and extends the reach of the user of the tools. However, a great presentation delivered electronically, or with the support of an incredible application, still needs the personal skill, ethics, trust and respect of the presenter to be most effective. This is where direct sellers appear to have a huge opportunity.

To become and remain most effective, direct sellers must match their great strength in developing relationships with new technologies. This combination will enhance the personal connections so critical to satisfaction, recruitment and retention of both the consumer and the seller. The importance of ethics in the selling relationship relative to a presentation of the business model, and/or the product or service, has been a longstanding focus of the industry and may well become one of its most important and valued competitive advantages.

Competition

The new competition for direct selling may very well be e-commerce from online retailers. The expansion of e-commerce has changed the selling landscape. It is estimated that e-commerce will top $300 billion in revenues in the United States alone in 2012. Market share is shifting from traditional forms of commerce such as retail stores to more online forms that challenge everyone engaged in the marketing of a product or service. Procter & Gamble, long known for its commitment to its retail store partners, launched its e-commerce business (direct to the consumer) in April 2010, which is certainly considered a game changer. E-commerce allows anyone to have much of the look and feel of a direct-to-consumer relationship. Those utilizing e-commerce as their exclusive channel of distribution are setting a new customer service standard and becoming the new benchmark. Tony Hsieh, CEO of Zappos.com Inc., has been quoted as saying, “We strive to put your order on your doorstep in 48 hours but do not be surprised if you get it in 24.” Zappos also offers free shipping, even when goods have to be returned for any reason. We see this new form of personalized service as a wake-up call for direct selling, and a tremendous new opportunity as the new tools are embraced and implemented in creative ways.

Personalized service has always been one of the greatest distinctions associated with direct sellers. A new and more sophisticated form of personalized service is the fresh opportunity for direct sellers that the e-commerce competition is unlikely to match. A company can never provide the personalized service that an army of independent contractors who are closest to consumers can provide. The definition of personalized service is changing, but its importance remains a potential competitive advantage, and we believe this to be a great opportunity for the direct selling model.

External competition, as fierce as it may be, will not determine the future of direct selling. Direct selling companies, we believe, have the opportunity to more clearly establish the direct selling model as being the best blend of people, technology, personal communications and relationships. In one interview, we found that a direct selling company had actually acquired an e-commerce company for the purpose of learning how to better utilize technology, not specifically for the purpose of diversification or revenue increase.

Competitors, whether mature or new, appear to invest far more than direct selling companies into research and alignment with predictors of the future. This appears to be another great opportunity for direct selling. Any individual company, no matter how large, may find it difficult to take on research to any significant degree by itself. The questions are many and we cannot see any one company being able to come up with all of the answers.

Collaborative efforts among companies would appear to be one of the great opportunities for the industry overall. As difficult as this may sound to direct selling companies—all of whom take pride in uniqueness of product, service, compensation plan and even culture—the common value proposition is the uniqueness of the business model. No different than the franchise industry, which found a way to collaboratively promote the basic attributes of the model through the International Franchise Association, direct selling companies might benefit from an even stronger collaboration in support of the business model. With the business model, prospective customers and independent contractors can choose from the most diverse products and services offered by any proven business model in existence.

Major Shifts

New opportunities for growth also come from major shifts impacting the industry. The shift in power from supplier to consumer is a result of the vast amount of information consumers can now access so easily. This new info-powered consumer still needs to feel their source of information is trustworthy, is concerned about their desire for personal satisfaction, and desires a relationship in addition to the product or service being purchased. Direct sellers will experience a competitive advantage far greater in the new world of tomorrow if, through the use of these new tools, they are able to remain steadfast in their commitment to deliver the highest standard of ethical behavior and trust, and a relationship far more personal than that of any company.

The shift in power from men to women can be a new advantage as well. Unlike 20 years ago, today there are more women in the workforce than men, and there are more women who are breadwinners in the family. The industry is still composed of approximately 82 percent women, but they are time-starved as a result of being responsible for family, household and often career. The opportunity for the industry overall may be in becoming more appealing to men while continuing to support the needs of those who have been the foundation to the business model for over 150 years. Ironically, the first direct sellers were men exclusively.

Demographic shifts are certainly increasing the pool of potential recruits for those who identify with ethnic segments in an authentic manner. All segments in the marketplace are becoming more complex. Companies have to deal with the older generation, boomers and now Gen Y, requiring well-thought-out succession plans.

The upside of the U.S. recession for direct sellers may be in its severity. Since the 1960s, the U.S. economy created between 17 million and 20 million jobs each decade—up until the 2000s. Clearly this job creation activity is no longer happening; in fact, the job pool is shrinking. All segments of the population have been impacted. Seniors have lost much of what was thought to be a secure retirement, triggering a renewed interest in what opportunities are available. The middle-aged unemployed are looking at never being employed again in the traditional manner, and the youngest in the population are looking at a continuing shrinkage of jobs over the next several years.

The U.S. market may also be perceived as challenging in that many mature direct selling companies are experiencing their strongest growth in other markets around the globe. This may create a perception, among some, that the direct selling model is better suited to Third World markets where socioeconomic norms are more like the U.S. market of 20 to 25 years ago. We found this perception to be very interesting, especially when we look at the traditional marketing strategies of major brands. The major brands maintain a strategic focus on the U.S. market and do not appear to waiver even though technology dictates the use of new methods for reaching targeted audiences.

We also found what may be a shift in the role of the direct seller. Many independent contractors who prefer to use the networking term have taken advantage of the business model because it makes possible the consumption of products and services desired at a discounted price. The networking version of the business model also rewards and compensates for recruiting others who desire the products and services of a particular company. This activity is not a “selling” activity as we might have described direct selling 15 years ago, and it is becoming more and more popular with all direct selling companies, even those generally categorized as personal selling or party plan. This, we believe, contributes to a “blurring” of any specific categorization of a direct selling company and provides the overall industry with new ways to engage more people, especially those who may think they have an aversion to selling. Even the basic definition of selling is changing.

The Future

Based on our findings, the future and success of direct selling as a way of distributing goods and services looks very promising. The business model is not easily compared to any other. The more than 150 years of growth and evolution may be just the beginning. Providing individuals with an opportunity to take products and services directly to the consumer—with the support of a parent company—is perhaps more desirable today than in any other time in history.

During the past 12 months, the U.S. unemployment rate has fluctuated between a high of 9.9 percent and a low of 8.8 percent. The most recent breakdown (men, 8.6; women, 7.7; teenagers, 24.5; whites, 7.9; African Americans, 15.5; Hispanics, 11.3; and Asians, 7.1) has remained rather consistent.

None of the preceding stats include the number of new people opting for the direct selling business model. Could this model be the one that now emerges as the ideal solution to the needs of people from all walks of life—a way of life where people learn new skills, grow professionally and earn in accordance to time, effort and effectiveness? Mary Kay Cosmetics recruited 125,000 new consultants in the month of April alone. This is a most powerful statistic that represents 125,000 people who not only have an opportunity to engage in the distribution of products and services but also have the freedom to set their own parameters with the support of company-supplied marketing, training and tools. Mary Kay is only one company of an estimated 2,000 using the direct selling business model in the United States. The top 20 companies are estimated to have started in excess of 500,000 new independent contractors during the month of April.

Could the external factors impacting the pace of life and the financial security of so many people be the very forces that will redefine the importance of the direct selling business model? History reminds us of another business model that found its moment in time. That model is called franchising. During the 1930s, the model began to attract many entrepreneurs who desired the support of a parent company and proven systems that would lead to quicker success. It worked, and today franchising is a business model used in more than 70 industries, generating over $1 trillion in U.S. sales alone.

The current environment is challenging the franchise model, where the entry fee can be anywhere from a few thousand dollars to over $1 million, which is hardly the investment opportunity the average person can make. Direct selling, however, has historically invited all segments within the population to a business opportunity. There are no great barriers to entry, and the direct selling company one might select provides the training and guidance needed to achieve success. Well-defined skill training with a focus on personal development ensures the growth, confidence and self-esteem of the participant, which is essential to success in sales and organizational development.

In summary, the core value proposition is the business model. The potential to earn money, along with ease of entry, the opportunity to have a relationship with the business owner and the offer of “privacy of consultation” regarding products and services are the industry’s common features. Collectively, these features combine to provide a perfect example of how a free-enterprise opportunity can be offered to the masses.

The opportunity to attach to causes embraced and promoted by most of the companies becomes another reason for choosing direct selling. Many of the products and services sold by direct sellers generate financial support for great causes, including breast cancer awareness, childhood obesity, hunger, and so many other causes. In fact, direct selling companies may be the leader in charitable statistics of companies that give back in significant proportion to revenue generated. Direct selling is truly an industry with a heart and the companies that give back so graciously are also providing their independent contractors with another opportunity not easily found in traditional business models—the chance to affiliate with a good cause.

In recognizing the DSN Global 100 for 2010, the top 100 companies alone represented over $66 billion in wholesale revenues, and $100 billion in customer value delivered through 43 million persons who have chosen direct selling. The business model thrives when those who participate build businesses and share with others how they too can do the same thing, creating a positive social and economic impact on families and communities.

The training, personal development, income possibilities and values gained from building a business using the direct selling business model are needed more than ever. In spite of a shrinking job base and the negative conversations so prevalent in the media about our nation’s debt , people from all walks of life still hold to that hope and dream of freedom—freedom to become whatever one’s vision might be. This is what the direct selling model offers. Perhaps the business model of direct selling is simply on the threshold of its greatest moment.

We think so.

We acknowledge the contributions of the many thought leaders and business experts who have assisted in the creation of this document. We would like to specifically recognize the following people for their substantial commitment and involvement in both time and insight.

ACADEMIA
Dr. Larry Chonko
Thomas McMahon Professor in Business Ethics
The University of Texas at Arlington

CONSULTANTS
Tony Jeary
Owner/Founder
Tony Jeary International

Mark Rawlings
CEO
InfoTrax Systems

Bob Woodward
Founder & President
Bob Woodard, Inc.

Paul Adams
Senior Vice President
Strategic Marketing
Video Plus

INDUSTRY
Judy Jones
Insights, Lead Consumer and Market Insights, Amway Corporation Chair, USDSA Industry Research Committee

Charlie Orr
Executive Director
Direct Selling Education Foundation

John Fleming
Publisher
Direct Selling News

Nearly $16.5 Million Goes to TODAY Show Toy and Gift Drive

The Direct Selling Association kicked off the 18th Annual TODAY Show Holiday Toy and Gift Drive in November 2011 by presenting the direct selling industry’s donation live in Rockefeller Plaza in New York City.

Twenty-four direct selling companies donated a total of nearly $16.5 million in products and cash to the Toy Drive. In its eight years of participation, DSA member companies have donated more than $85 million in products, services and cash to the Toy Drive.

Participating companies donated items from books, stuffed animals and fashion accessories to clothing and toiletries for children and families across the country.

“Participation in the Toy Drive is a natural fit for direct selling companies,” says Amy Robinson, U.S. DSA Senior Vice President and Chief Marketing Officer. “Every day, direct sellers help others achieve their goals through the products and opportunities they offer, but their involvement in charitable and philanthropic activities reinforces the positive impact direct selling has on millions of lives each year.”

The TODAY Show Toy Drive is a project of the Today Show Charitable Foundation Inc., a 501(c)3 nonprofit organization.

In this month’s Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Alessandro Carlucci, CEO of Natura, about leadership, building relationships and the relevance of direct selling throughout the world.

DSN: What is the one thing you enjoy most about being the CEO of Natura?

AC: What motivates me the most is to see that I’m part of a group of people that want to do business and, at the same time, contribute to the well-being of people, society and the planet.    

DSN: What has been your greatest challenge?

AC: The greatest challenges in my career were always and continue to be related to the development of leaders.   

DSN: What do you tell consultants to lead and inspire them?

AC: First of all, I’d like to reiterate that I’m very inspired by the work and the engagement with our consultants. I always renew my energies meeting our consultants, and at such opportunities I tell them to focus their activity on well-being and that the transformation we want to see in the world starts in them.  

DSN: What is your personal vision for Natura?

AC: I believe that we have an opportunity to show society the force of our industry and the relevance that we can have in a world in constant transformation, increasingly connected and impacted by different socio-environmental challenges.   

In this sense, I see that the international community, increasingly concerned with these challenges, will recognize more and more the initiatives of companies committed to building a new model of development.   

Thus, I believe that we will evolve our desire to make Natura a global brand recognized by its corporate behavior, the quality of the relations it establishes and its products and services, as well as by the community of people committed to building a better world.  

DSN: Is there one basic principle which governs your leadership at Natura?

AC: Relationships. Building quality and genuine relationships is what has mobilized my experience at Natura.    

DSN: What’s one piece of advice that you’ve found especially useful?

AC: I’ve learned that we should recognize that we do not know everything and that we can always learn from others.    

DSN: Which other direct selling company or person do you admire the most and why?

AC: I have always admired Neil Offen, ex-President of USDSA and Secretary of WFDSA. With his entire life dedicated to our industry, Neil has defended and strengthened the image of our industry around the world, as well as captivating everyone with his charisma. Neil is an example for future generations of leaders in direct sales.  

DSN: What do you like to do for fun?

AC: I like to get together with family and cook for everyone. 

Few businesses do what Natura does—intentionally integrating environmental concerns and social responsibility into business decisions, all while achieving enviable growth, even in a sluggish economy.

In the first nine months of 2011, Natura’s consolidated net revenue increased 9.5 percent over the same period of 2010, and the number of consultants selling the Brazil-based company’s cosmetics and toiletries increased by more than 16 percent.

When Natura reports its results to shareholders—its stock trades on Brazil’s BOVESPA stock exchange—it doesn’t stop with finances. Annual reports and quarterly press releases also discuss the company’s social and environmental performance. For example, by the end of the second quarter of 2011, Natura reported that it had reduced greenhouse gas emissions by 5.2 percent from a year earlier. When it lags behind on one of its commitments, it reports that, too. It hoped to reduce water consumption, but fell short of that goal. The company reports those shortfalls because of its commitment to transparency.

It all ties back to the company’s Reason for Being: to create and sell products and services that promote well-being and being well. That’s not just a clever turn of a phrase. Natura CEO Alessandro Carlucci explains that well-being is the relationship people have with themselves and their bodies, while being well describes relationships with other people and also with nature.

“When we share our results in an annual report or presentation, we show many kinds of results,” he says. “Our main objective is to offer opportunity for our salespeople. If you read our beliefs—what we value as a company—you see that we believe that our results depend on the value that our whole business generates. Our responsibility is not only to shareholders. We take our economic results into consideration, but also socioeconomic results. We try to align all of them. It’s in the DNA of the company.”

Guided by Beliefs

It all started in 1969 when Antonio Luiz da Cunha Seabra opened his Natura store and laboratory in São Paulo. It launched its first line of men’s products in 1970 and expanded into women’s cosmetics and fragrances two years later. Because direct selling reflected the company’s belief in the importance of relationships—and because it made good financial sense—the company soon settled on the direct sales model and started gathering consultants. In a pioneering move that heralded its commitment to environmental conservation, Natura began offering product refills in 1983. Today about 20 percent of sales come from refills of body creams, perfumes and other products, reducing the product’s environmental impact by half. Customers save money, too—20 to 30 percent. Everybody wins.

Since the beginning, Natura executives have recognized that the company’s environmental, social and business interests were intertwined. So to them, the only way to run the business has been to set clear goals for each. The objectives in each area of emphasis aren’t always in exact balance, Carlucci says, but he views the struggle as a huge motivation to innovate.

Take product development, for example. Before Natura launches any new product, it considers all the criteria any company would—customer demand, gross margin and economic benefits to consultants, for example. But it also factors in the product’s environmental impact. Natura requires that any new product have less environmental impact than existing products have. For example, the CO² emissions generated during the manufacture and delivery of a new lipstick must be lower than the average of the existing products in its category. It’s a stringent requirement, but it’s absolute. If a new product can’t live up to requirements, it won’t become part of Natura’s product line. But the company has refined its processes so well that it frequently launches new or improved products.

For example, a highlight of 2011’s third quarter was the launch of the new product line VôVó, which celebrates the bond between grandparents and grandchildren with an “Album of Memories” product to encourage storytelling and the creation of a family tree—reflecting the company’s focus on being well. In the third quarter Natura launched 69 new products. Combined with the 40 products launched in the first six months of the year, the number of product launches in the first nine months of 2011 totaled 109. Included in that number was the beginning of the relaunch of the Natura Ekos line, which features improved formulas and packaging that strengthen the connection the products enjoy with Brazil’s biodiversity. The relaunch of that line was on schedule to be complete by year’s end.

Natura headquarters in Cajamar, São Paulo, Brazil.

Natura sources many of its products from the Amazon and surrounding areas.

Respectful Relationships

Many Natura products use ingredients from the Amazon rain forest. In fact, when any product includes Amazonian ingredients, the company strives to source other ingredients from the Amazon as well. And true to form, Natura doesn’t just take from the forest. It gives back. Through its Amazon Program, it supports sustainable development of the ingredients it uses as well as ongoing economic benefits to the local residents who grow them.

“When we are developing new products, we have around 30 communities consisting of 2,000 to 3,000 families there already supplying Natura with local ingredients,” Carlucci notes. “We want to increase their profits, so we continue to use them. We contact them and ask for authorization to study the ingredients where they live in the forest. Then, when we develop products, we buy from them, pay a fair rate for the ingredients and share some of the profits from the products.”

Profit sharing supports a sustainable project in the community, and residents must extract ingredients in a sustainable way to continue to be eligible. Introducing local populations to ways to preserve the forest while also making a good living is a major shift; people traditionally cut down trees to sell for wood or to clear land for cattle. These widespread practices have contributed to the rain forest shrinking over the years. By contrast, Natura’s program teaches a sustainable alternative that is good for both the forest and its inhabitants.

“It’s a way to generate profit for them and also show them that the trees and forest have value beyond wood for furniture,” Carlucci says. “We are giving them the opportunity to use their surroundings in a way that is good for the environment.”

Some of the major beneficiaries of Natura’s focus on sustainability are the company’s consultants. Last year their numbers grew throughout the business, reaching 1,362,000, up 16.3 percent from a year earlier. In Brazil, the company’s largest base, consultants numbered 1,131,000 strong, an increase of 14.9 percent over the previous year. In international operations, the base grew by 23.2 percent to reach 230,000 consultants.

Those consultants stick around, too. Many top sellers have been with the company for more than two decades, and consultants report a remarkable 95 percent satisfaction rate. Carlucci believes that many factors contribute to retention, but two are at the top.

“First, customers want to buy our products,” he says. “We offer good value, so they are easier to sell than other products from our competition and provide consultants with a nice profit. Second—and most important to me—our consultants feel they really belong to a community, that they are part of a company that wants to offer excellent products and generate value for society, the environment and their community. They are engaged with the philosophy of the company. We try to treat them as people, not just numbers.”

Consumer-Consultant Connection

Natura consultants can decide to sell products only, or they may choose to both sell products and recruit, train and coach new consultants. Natura supports them as they build their business. Both types of consultants typically sell one-on-one. Carlucci notes that they may show products at parties, but they are trained to show products to individuals.

The corporate office works hard to support relationships among consultants and customers as it provides information on the company and its products. Consultants have embraced its investment in e-commerce sites, placing some 90 percent of orders over the Internet. But Carlucci believes the technology door has barely been opened.

“We are only touching the potential in the use of technology,” he says. “It will be our main area of investment in the next five years. First, we will invest in digital and mobile technology. We think we have huge potential if we can connect our customers and consultants with mobile technology. We also want to invest in social media technology to enhance the relationships. We all belong to a community, though we are not always connected. Facebook and other social media sites offer a huge opportunity.”

Natura’s strategic vision to support society and the environment as it creates economic opportunity and a good return for investors has created consistent growth and a strong presence in its marketplace. Carlucci says that Natura is the largest Brazilian manufacturer of personal hygiene products, perfumes and cosmetics. It leads the direct sales sector in Brazil and ranks third globally. In financial terms, it ended 2010 with net revenues of R$5.1 billion, an increase of 21.1 percent over 2009. In Brazil, some 49 percent of consumers say they prefer Natura cosmetics. And the brand holds a 23.6 percent share in its target market.

Products from the relaunched Natura Ekos line.

Expanding Environment

Brazil currently produces most of Natura’s results; nevertheless, the company continues to invest internationally.

“We have developed our management systems, completing the international leadership framework at both our regional headquarters in Buenos Aires, Argentina, and in other countries where we operate,” Carlucci reports. “In this scenario, Latin America has gained increasing importance in our results. To meet our expansion plans in the region, we decided to start local production through partners in Argentina, Colombia and Mexico.”

Besides enhancing service to consultants and improving the margin of international operations, this new production and distribution system will reduce CO² emissions by 70 percent. This means a reduction of almost 2 percent in total Natura emissions.

Carlucci adds, “All manufacturing will respect Natura sustainability principles. It is important to mention that the selection process for these new suppliers used not only technical and economic criteria, but also social and environmental criteria.”

Carlucci is bullish on the company he leads. He believes that as the corporate staff, consultants, customers, vendors and society work together, they can achieve great things in the world.

“It is with great happiness that I can say that, with the numbers we have achieved, we realize that the work we do every day is going well on three pillars on which our business is based: the social, the environmental and the economic,” Carlucci says. “Of course this does not only depend on us—on Natura. We have such a strong and significant network of relationships with our stakeholders that, step by step, day by day, we reach the objectives of all those who share the same values.”

Leadership Profile

Alessandro Carlucci, the Personification of Natura

In a perfect world, the personal values of executives are seamlessly aligned with those of the companies they lead. Alessandro Carlucci, CEO of Brazil-based Natura, seems to have found that perfect match.

Soon after he was named CEO, one of the company’s top executives described Carlucci as “a great guy, and very Natura.”

It isn’t surprising that Carlucci would reflect Natura’s corporate values so closely. He joined the company in 1989 right out of business school as a member of the company’s sales and marketing organization. Over the years, he coordinated sales in Argentina, Chile and Peru. Then in June 2002 he became Commercial Vice President.

When he was named CEO in 2005, he was the company’s first top executive from outside its three controlling stockholders. At that time, the company’s Founder, Luiz Seabra, along with Guilherme Peirao Leal and Pedro Luiz Passos, moved out of day-to-day operations but remained co-chairmen of the board of directors. After running the company for 30 years, and just a year after the company went public, they signaled their trust in Carlucci by passing the torch to him—a man who was virtually synonymous with Natura.

Clearly, their trust was well placed. Since he became CEO, Natura sales in Brazil—the company’s largest market—have surpassed even Avon. In December, Carlucci told the Financial Times that part of his success in this female-oriented business has come from getting in touch with his feminine side. He says it has made him a better manager.

“Having developed a feminine soul today is not just a pleasure, it’s an opportunity,” he told the publication. “The business world is normally a more rational world, more objective, more straight to the point, and so more masculine. It’s not that men are all like that, but if you have to separate the male soul from the female one, well … . It’s just that we have many women here. The emotional, intuitive, caring side is more present, and so I learned to work in a company where things like that are valued.”

Asking the Right Questions

Carlucci clearly shares the same commitment to the environment and social initiatives as the company he leads. Answers to questions about them, or any other question about Natura’s actions, often begin with “Here at Natura, we … .” So when he talks of company programs, his comments aren’t only those of a company spokesman. He actually seems to personify the company. For example, the company’s dedication to both sustainability and society is a basic element of the way it manages its business. Even as it delivers shareholder value, it safeguards the Amazon rain forest—the source of many of the ingredients in Natura’s products—and works hard to improve the lifestyles of the populations both within and outside the forest.

“Here at Natura we believe that well-being should be felt and experienced by everybody.”
-Alessandro Carlucci

“Most important is not to guarantee that we are balanced, but that we are asking ourselves, What are the economic, social and environmental impacts of everything we do?” he says. “The question is more important than the answer. No one knows the right balance, but we include those things in all initiatives.”

Social impact extends to Carlucci’s view of the company’s products, as well. He explains that each of the company’s 600 products is important for building brand value. He takes a personal interest in the products, too. He has tried them all, so he is confident in their quality and that they enhance the lives of customers, delivering what Natura calls well-being.

He says, “Here at Natura we believe that well-being should be felt and experienced by everybody.”

Expanding the company’s impact on environmental sustainability and social improvements is part of the reason the company plans to expand further in Latin America.

“Here at Natura, we believe that the value and longevity of a company is measured by its ability to promote the sustainable development of society,” he says. “Moved by this belief, we continually invest in the identification and understanding of the environmental challenges of our time in order to turn them into business opportunities that generate and distribute benefits to all.”

Global Impact

Carlucci has the opportunity to promote those ideals throughout the world, not only through Natura’s growth, but in his new role as Chairman of the World Federation of Direct Selling Associations (WFDSA). He assumed that post in October and will hold it for three years. Carlucci has been an entrepreneur since adolescence, and he says he looks forward to promoting the entrepreneurial opportunities of the direct selling industry, reinforcing it as an important economic opportunity, and shining a light on its ability to contribute to social transformation.

In his first address to WFDSA members, he rallied them around his lifelong mission, saying, “We must, and we can, with the contagious enthusiasm that the world needs, exercise our vocation as agents of economic, social and environmental change by creating social inclusion opportunities and new, sustainable forms of business. Let’s show to the world our transformation and entrepreneurship capacity. Thus, through the strengthening of our image, we will increase our business opportunities and the positive impact on the lives of millions of people.”

“What motivates me the most is to see that I’m part of a group of people that wants to do business and, at the same time, contribute to the well-being of people, society and the planet.”
-Alessandro Carlucci

His WFDSA chairmanship is a natural extension of his role at Natura, the world’s third-largest direct selling company. It lets him continue to pursue his passions on a global scale. After all, what he values most at Natura is the same thing he will pursue at WFDSA.

“What motivates me the most is to see that I’m part of a group of people that wants to do business and, at the same time, contribute to the well-being of people, society and the planet.”

In a perfect world, the personal values of executives are seamlessly aligned with those of the companies they lead. Alessandro Carlucci, CEO of Brazil-based Natura, seems to have found that perfect match.

Soon after he was named CEO, one of the company’s top executives described Carlucci as “a great guy, and very Natura.”

It isn’t surprising that Carlucci would reflect Natura’s corporate values so closely. He joined the company in 1989 right out of business school as a member of the company’s sales and marketing organization. Over the years, he coordinated sales in Argentina, Chile and Peru. Then in June 2002 he became Commercial Vice President.

When he was named CEO in 2005, he was the company’s first top executive from outside its three controlling stockholders. At that time, the company’s Founder, Luiz Seabra, along with Guilherme Peirao Leal and Pedro Luiz Passos, moved out of day-to-day operations but remained co-chairmen of the board of directors. After running the company for 30 years, and just a year after the company went public, they signaled their trust in Carlucci by passing the torch to him—a man who was virtually synonymous with Natura.

Clearly, their trust was well placed. Since he became CEO, Natura sales in Brazil—the company’s largest market—have surpassed even Avon. In December, Carlucci told the Financial Times that part of his success in this female-oriented business has come from getting in touch with his feminine side. He says it has made him a better manager.

“Having developed a feminine soul today is not just a pleasure, it’s an opportunity,” he told the publication. “The business world is normally a more rational world, more objective, more straight to the point, and so more masculine. It’s not that men are all like that, but if you have to separate the male soul from the female one, well … . It’s just that we have many women here. The emotional, intuitive, caring side is more present, and so I learned to work in a company where things like that are valued.”

Asking the Right Questions

Carlucci clearly shares the same commitment to the environment and social initiatives as the company he leads. Answers to questions about them, or any other question about Natura’s actions, often begin with “Here at Natura, we … .” So when he talks of company programs, his comments aren’t only those of a company spokesman. He actually seems to personify the company. For example, the company’s dedication to both sustainability and society is a basic element of the way it manages its business. Even as it delivers shareholder value, it safeguards the Amazon rain forest—the source of many of the ingredients in Natura’s products—and works hard to improve the lifestyles of the populations both within and outside the forest.

“Here at Natura we believe that well-being should be felt and experienced by everybody.”
-Alessandro Carlucci

“Most important is not to guarantee that we are balanced, but that we are asking ourselves, What are the economic, social and environmental impacts of everything we do?” he says. “The question is more important than the answer. No one knows the right balance, but we include those things in all initiatives.”

Social impact extends to Carlucci’s view of the company’s products, as well. He explains that each of the company’s 600 products is important for building brand value. He takes a personal interest in the products, too. He has tried them all, so he is confident in their quality and that they enhance the lives of customers, delivering what Natura calls well-being.

He says, “Here at Natura we believe that well-being should be felt and experienced by everybody.”

Expanding the company’s impact on environmental sustainability and social improvements is part of the reason the company plans to expand further in Latin America.

“Here at Natura, we believe that the value and longevity of a company is measured by its ability to promote the sustainable development of society,” he says. “Moved by this belief, we continually invest in the identification and understanding of the environmental challenges of our time in order to turn them into business opportunities that generate and distribute benefits to all.”

Global Impact

Carlucci has the opportunity to promote those ideals throughout the world, not only through Natura’s growth, but in his new role as Chairman of the World Federation of Direct Selling Associations (WFDSA). He assumed that post in October and will hold it for three years. Carlucci has been an entrepreneur since adolescence, and he says he looks forward to promoting the entrepreneurial opportunities of the direct selling industry, reinforcing it as an important economic opportunity, and shining a light on its ability to contribute to social transformation.

In his first address to WFDSA members, he rallied them around his lifelong mission, saying, “We must, and we can, with the contagious enthusiasm that the world needs, exercise our vocation as agents of economic, social and environmental change by creating social inclusion opportunities and new, sustainable forms of business. Let’s show to the world our transformation and entrepreneurship capacity. Thus, through the strengthening of our image, we will increase our business opportunities and the positive impact on the lives of millions of people.”

“What motivates me the most is to see that I’m part of a group of people that wants to do business and, at the same time, contribute to the well-being of people, society and the planet.”
-Alessandro Carlucci

His WFDSA chairmanship is a natural extension of his role at Natura, the world’s third-largest direct selling company. It lets him continue to pursue his passions on a global scale. After all, what he values most at Natura is the same thing he will pursue at WFDSA.

“What motivates me the most is to see that I’m part of a group of people that wants to do business and, at the same time, contribute to the well-being of people, society and the planet.”