Letter from John Fleming, January 2012

December 22, 2011 by DSN Staff Leave a Comment

Here we are! It’s another new year, another new measurement period and another new opportunity to dust ourselves off, reflect on the past and chart a new course toward a new vision for what can be. The brilliance of the calendar makes possible the opportunity for renewal, and for many, the opportunity to hit the restart button is most welcomed.

The last year, 2011, will be remembered for many reasons: the momentum gained, goals achieved both from the corporate and personal points of view, challenges experienced and lives forever changed. As we reflect on the stories we wrote and shared, perhaps one word seems to have emerged, used more often than any other: social. New ways to build social relationships have impacted every facet of business, leading to new ways consumers are making choices about the products and services they purchase and the extent to which others might engage in a business proposition. Traditional media is no longer the big influencer; it’s now all about social—social relationships, social commerce, social entrepreneurship, social media, social philanthropy, social everything—and this appears to be the new frontier for many. But it is a frontier direct sellers have always understood. So what does it all mean as we now march into the first phase of another new year?

Having just departed from the Direct Selling Association’s Be Connected Conference in Las Vegas, it is obvious that direct selling companies are all over the social frontier. It was the major conversation in just about every workshop I attended, including the general sessions. Most refreshing was the opportunity to observe how direct selling companies are utilizing the new tools, and how the leadership is setting the tone by equipping their sales organizations with tools not imagined a few years ago. If consumers and prospective business owners are making their decisions more and more on trust, and on the information and relationships they seek as well as quality, price and convenience, direct selling companies appear to be providing it all and are possibly about to experience their best positioning ever!

This we do know: There is a huge shift taking place in terms of who represents the new purchasing power, and consequently, the new recruits and potential leaders who will allow companies to sustain their relevance in the marketplace of today and tomorrow. Often referred to as Gen Y, they are here—and in a big way. Our Cover Story has been fascinating to pull together as this new generation of consumers and future managers and leaders will do things differently. Their emerging power has been steadily building, and now they are predicted to surpass the spending of baby boomers within the next five years.

As always, we enjoy the Company Spotlight stories we do each month. This month’s Company Spotlight has been one we have looked forward to for quite some time. Natura is one of the largest direct selling companies in the world and is the direct selling market leader in Brazil. Our opportunity to interview Alessandro Carlucci, CEO of Natura and recently elected Chairman of the World Federation of Direct Selling Associations, provides you with information and insight into this remarkable company and its leader. Alessandro also speaks to the very important role of the WFDSA and his plans to promote direct selling as an agent for economic, social and environmental change.

Joe Mariano, new President of the U.S. Direct Selling Association, takes this month’s Top Desk spot to share his message from both a global and domestic perspective.

As we look back at many of our accomplishments in 2011, we are privileged to have Scott Van Winkle of Canaccord Genuity contributing a monthly review in our Financial News section of the publication. Scott is one of the few analysts who follow a group of publicly held direct selling companies while also watching trends within the industry. His “Year in Review” in this month’s issue provides you with his point of view relative to performance in 2011 and includes his outlook.

During the month of January, you can also look forward to experiencing a relaunched Direct Selling News website with new functionality and easier access to archived information that has been published in the print magazine. The site will be accessible on tablets and mobile devices and will appear as an app in the iTunes store. We encourage you to visit and see for yourself what we have done to better serve the decision-makers who create and empower the industry as well as those who seek information.

We look forward to the work to be done and the months that lie before us. New stories will be told and one very important one is a new ranking of the Top 100 Direct Selling Companies in the World. The new ranking will be announced in April and revealed in the June 2012 issue of Direct Selling News. Once again, we will take on the task and the risk associated with identifying the companies that make the list. Certainly, we will need your help.

As we now move through another year, the positioning of direct selling companies as leaders in the utilization and inclusion of people from all walks of life—in what is definitely a new form of commerce—appears to be spot on. Many are saying that the need for training, retraining, entrepreneurship and self-reliance is more needed than, perhaps, ever! For these reasons, we look forward to continuously “serving” all of you.

Happy New Year! Enjoy the issue!

John Fleming
Publisher and Editor in Chief

Generous by Nature: How the Direct Selling Industry Creates a Culture of Giving Back

December 21, 2011 by DSN Staff Leave a Comment

Click here to order the Direct Selling News issue in which this article appeared.

One year of business in the direct selling industry means more than revenue, success and networking. Thanks to the generosity of the individual companies within the industry, one year means countless volunteer hours spent helping those in need, and millions of dollars in cash and goods given to the less fortunate around the world.

Virtually every company within the industry has their own unique charitable initiative and donates considerable amounts of time, energy and resources to their unique mission. In fact, according to the 2009 Direct Selling Worldwide Corporate Philanthropy Report, issued by the World Federation of Direct Selling Associations (WFDSA), close to three in four direct selling companies (72 percent) engage in philanthropic activities. And, according to the WFDSA Global Statistical Report, 2010, direct selling companies generated more than $132 billion in the world economy in 2010. The cash, goods, services and volunteer time donated on a global scale by 72 percent of those companies adds up to a staggering amount.

Often these initiatives involve companies that contribute to more than one organization. Such is the case with Arbonne International, a direct seller of personal care and wellness products. The company has recently donated more than $500,000 in product to both the TODAY Show Holiday Toy and Gift Drive and Look Good … Feel Better, a global program that uses donated products to teach beauty techniques to cancer patients and help them with the appearance-related side effects of treatment.

What’s more, it is commonplace in the industry for companies to go to great lengths to make a difference above and beyond their planned philanthropic activities, often reaching out to the communities where they live and work. And the companies’ independent representatives get behind the causes as well, providing momentum for each effort. “Direct selling companies offer help in pretty much every way you could possibly think of,” says Amy Robinson, Senior Vice President and Chief Marketing Officer of the U.S. Direct Selling Association (DSA). “Some support causes with cash and some have their representatives or corporate employees work in homeless shelters or build houses for Habitat for Humanity. There is such a wide range of causes—you’d be hard pressed to find something companies within the industry have not helped with at this point.”

The industry is generous by nature. Fundamentally, even the business structure of direct selling is such that, for representatives to reach their goals and ultimately become successful, they must reach out to others by sharing the business opportunity or product that has improved their lives. “That is what this business is based on,” Robinson says. “Direct selling is access to a better life for yourself, but also a better life for others as well. Not only does the business model support that idea, but the mindset of direct sellers is that they want to help anyone they possibly can. And that shows through during charitable events.”

Generosity on the Move

As each direct selling company trains and commissions its scores of representatives, the culture of generosity instilled during their training—and through experiencing the business opportunity—goes with them out into the world. For direct sellers, giving becomes a way of life.

Nancy Laichas, Director of Marketing and Communications for the Direct Selling Education Foundation (DSEF), witnessed this experience through the selfless giving of the industry’s executives and the companies they represented at Pack a Present, an annual toy drive held in Las Vegas during the U.S. DSA’s Be Connected Conference. “We asked attendees to pack a present in their suitcases to donate to the Henderson chapter of the Boys and Girls Club of Greater Las Vegas,” Laichas says. “We had participants drive in with bags and bags of toys. It is a wonderful event that gives not only the companies a chance to participate, but also individual executives and DSA Supplier Members.”

“[Pack a Present] is a wonderful event that gives not only the companies a chance to participate, but also individual executives and DSA Supplier Members.”
—Nancy Laichas, Director of Marketing and Communications for the Direct Selling Education Foundation

Throughout the three-day conference, the pile of presents continued to grow, as did the excitement in the room, until the culmination of the event, when children arrived to receive the donations. “Last year, the Boys and Girls Club bused in a group of kids between the ages of 4 and 9,” Laichas says. “We had an area cordoned off for them with artificial snow and decorations, and they were served a pancake breakfast by waiters in formal attire.”

Soon after, the jolly symbol of all things Christmas made a guest appearance. “After they started breakfast, Santa Claus walked in and all of the children gasped, and their eyes got wide,” Laichas says. After the towering piles of bicycles, puzzles, gift cards, stuffed animals and sporting equipment were officially donated to the local Boys and Girls Club, the industry attendees received a gift in return. “We have found that in every community program we have ever done, those of us who contribute always get much more out of the event than we give,” says Charlie Orr, Executive Director of the DSEF. “Those children give us a gift with their smiling faces.”

“We have found that in every community program we have ever done, those of us who contribute always get much more out of the event than we give.”
—Charlie Orr, Executive Director of Direct Selling Education Foundation

Pack a Present is just one example of how the DSEF seeks to make a difference through giving back to others. Two years ago the foundation decided to take their generosity to another level by committing to give back to the cities where they attend major functions, such as DSA’s annual meetings. “As the industry’s foundation, we want to give back to these communities we are visiting and leave them a little better than we found them,” Orr says. “We want to show the communities—and the charities we partner with—what a giving industry direct selling is.”

In the past, these outreach events have manifested through unique local efforts. One event included a clothing drive, Outfitting for Opportunity, which helped women in need prepare professional outfits for business interviews and opportunities. “We were astonished at the response,” Laichas says. “More than 8,000 pounds of clothing, accessories and cosmetics were donated by direct selling companies. It took a semi-truck to deliver it all.”

By focusing on community outreach programs, the DSEF takes the industry’s culture of giving out into the world and leaves a lasting impression on those they come into contact with, naturally sharing the benefits direct selling offers. The 2012 DSA annual meeting will be held in Dallas in June, and the foundation is already reaching out to local organizations with which to partner, and encouraging member company executives to participate.

DSA Chief Marketing Officer Amy Robinson (in white coat) discusses the industry’s contributions to the TODAY Show Holiday Toy and Gift Drive during her appearance on the show.

DSEF Executive Director Charlie Orr is interviewed as part of a journalism project during the foundation’s Y We Care event in June.

Leading by Example

By lending the industry’s culture of kindness to their own corporate identities and ranks of representatives, direct selling companies have the opportunity to impact the lives of countless individuals throughout the global community—starting with their own neighborhoods.

Scentsy owners Orville and Heidi Thompson did just that when they discovered that one out of every six residents in Idaho, where their international headquarters are located, is food insecure. Their one-month campaign in August 2011, Halt the Hunger, raised more than $600,000 for the Idaho Foodbank—the largest donation in the nonprofit’s 27-year history.

Often companies respond with aid when disaster strikes unexpectedly. After tornadoes ripped through seven southern states and left a wake of destruction in 2011, Shaklee—through its foundation, Shaklee Cares—promptly sent Shaklee Product Packs to assist with relief activities.

The generosity of many company executives has generated impressive examples of benevolence, and their willingness to embrace their communities—both globally and locally—embodies the direct selling industry’s altruistic culture. And this giving spirit is growing exponentially and is often channeled in ways not seen anywhere else in the business world.

“What I think is so different about this industry is that you can have a high-level executive from Avon, next to a high-level executive from Mary Kay, working together on a common cause and both participating,” Laichas says. “In the real world, these two companies are competitors. But they come together in a way that you wouldn’t see in another industry.”

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.	The following direct selling companies donated products to this year’s Toy Drive:
	4Life	www.4life.com
	Amway	www.amway.com
	Arbonne	www.arbonne.com
	Avon	www.avon.com
	Barefoot Books	www.barefootbooks.com
	Blessings Unlimited	www.blessingsdirect.com
	CUTCO	www.cutco.com
	DeTech	www.detech.com
	Essential Bodywear	www.essentialbodywear.com
	lia sophia	www.liasophia.com
	Neways	www.neways.com
	Mary Kay	www.marykay.com
	NSA	www.juiceplus.com
	Oxyfresh.com/21Ten	www.oxyfresh.com
	PartyLite	www.partylite.com
	Pink Papaya	www.pinkpapayaparties.com
	SeneGence	www.senegence.com
	Shaklee	www.shaklee.com
	Southwestern	www.southwestern.com
	Stampin’ Up!	www.stampinup.com
	Team National	www.bign.com
	Thirty-One Gifts	www.thirtyonegifts.com
	Vantel Pearls in the Oyster	www.vantelpearls.com
	Willow House	www.willowhouse.com

Putting Aside Competition

Linking arm in arm to make a difference is one of the industry’s distinguishing characteristics, and one Robinson has witnessed firsthand. Through an initiative she brought to the attention of industry leaders eight years ago, Robinson has the honor of collecting annual donations for the TODAY Show Holiday Gift Drive. Even she has been surprised by the generosity of the industry. “Our first year, I set a goal of collecting $1 million,” Robinson says. “It took no time at all to reach $2 million. Ever since then, we have increased the amount of donations. A lot of companies call me before I can put out the solicitation.”

Although often viewed as a toy drive, the more than 200 organizations benefiting from the TODAY Show Holiday Gift Drive also serve teenagers and parents, in addition to children. Recognizing this, participating direct selling companies have answered the drive’s request with a variety of product donations, ranging from housewares to jewelry, allowing disadvantaged children the opportunity to “shop” for Christmas presents for their parents.

Past involvement with the drive has illustrated that the joy of giving does not end once the check is written or the products are shipped. For many of the donors, it is just the beginning. “We have had a number of companies that have ultimately created longer-standing relationships with some of the organizations they have donated to,” Robinson says. Essential Bodywear experienced this when their donation to the TODAY Show Holiday Gift Drive evolved into a rewarding secondary event providing bra fittings for homeless and disadvantaged women through Women In Need Inc., a nonprofit that serves homeless families. “Their donation became another event in itself,” Robinson says.

The collaborative contributions of companies across the industry have made a surprising impact. “Over our eight years of participation, we have donated to every single organization [associated with the drive] and given a total of $85 million in products, services and cash,” Robinson says. “It has become an annual event for a lot of companies, and the drive has obviously been very thankful that the industry has taken such an interest in the project.”

While Robinson has the privilege of presenting the donations on air in New York, she is quick to pass along the credit. “The focus is not the Direct Selling Association, it is the companies that come together to give these donations,” Robinson says. “We might be the conduit for giving donations on air and coordinating the event, but it is the companies that are doing the good work.”

Achieving True Success

Despite a tumultuous economy, direct selling companies continue to make selfless contributions to a greater purpose. In a consumer landscape seeking authenticity and generosity, the industry’s philanthropic nature has organically attracted an ever-increasing customer base, resulting in steady growth for the industry. “Consumers are interested in supporting companies that have a strong stance on social responsibility,” Robinson says. “Companies that take seriously giving back to the community are what consumers are looking for and wanting. For direct selling companies, it is much more a part of their mission, more at the core of what they are doing, than it might be for other corporate entities.”

“Consumers are interested in supporting companies that have a strong stance on social responsibility.”
—Amy Robinson, Senior VP and Chief Marketing Officer of the U.S. DSA

Success in the direct selling industry takes on many forms for consultants and independent representatives. For some, it is handsome residual incomes. For others, the flexibility of a less-demanding work schedule. But enmeshed in all of those success stories is an ongoing history of giving back—to a hardworking downline, to a friend or acquaintance who could benefit from the business opportunity, to local neighborhoods and communities, and ultimately, to the entire world, launching a universal culture of generosity that touches everyone.

While there is no way to tally the countless volunteer hours that have been clocked, or accurately gauge the socioeconomic impact of the selfless donations made by companies and individuals, the industry’s leaders have exemplified how a lifestyle of generosity not only leads to success, but offers unsurpassed joy for both givers and receivers alike.

January 2012

December 21, 2011 by DSN Staff Leave a Comment

Univera Inc.

Casey Harris

Univera Inc. announced they have expanded their executive team with the addition of Casey Harris as Senior In-House Legal Counsel and Ron Billock as Chief Information Officer.

Harris joins Univera bringing experience in intellectual property, general corporate legal matters and international regulatory affairs.

Billock will be responsible for Univera’s information technology infrastructure and applications, including Univera’s web presence. He brings more than 25 years’ experience in information technology management, leading teams around the world to bring strategic competitive advantage through the use of technology.

Univera Inc. is a cell renewal-focused relationship marketing company offering nutrition products and home- business opportunity for nearly 100,000 people in North America.

4Life Research

Hajime Takayama

4Life executives announced the appointment of Hajime Takayama as Japan’s new General Manager.

Takayama is a veteran in the network marketing industry with over 25 years of experience. His career background includes positions in sales, marketing, and training and he has recently served in several senior level management positions in both Japan-based and foreign-based network marketing companies.

Takayama’s background includes the creation of strong growth markets by building and fostering strong distributor relationships through corporate marketing and field development.

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

Medifast Inc.

Medifast has announced the addition of Michelle Jones as its new Senior Vice President of Take Shape for Life. Jones joins the team with over 15 years of experience in the industry, where she focused on national training and sales development. In Take Shape for Life, she will oversee the areas of marketing, training and field operations. Her direct selling experience will serve to help implement industry best practices within TSFL, while also aligning with the complete Medifast executive team to improve growth in new health coach acquisition and retention.

Medifast Inc. is a provider of clinically proven, portion-controlled weight-loss programs. The company sells its products and programs via four unique distribution channels: the web and national call centers; the Take Shape for Life personal coaching division; medically supervised Medifast Weight Control Centers; and a national network of wholesale physicians and medical practices.

Stella & Dot

Leslie Blodgett

Stella & Dot has announced that Leslie Blodgett, Executive Chairman of Bare Escentuals, has joined its board of directors.

While at Bare Escentuals, Blodgett has been recognized as one of the “Top Entrepreneurs of the Decade: 2000- 2009” by Inc. magazine. With a background in product development, including positions at other beauty and cosmetic companies, she launched bareMinerals, an award-winning line of mineral- based products in 1995. In 2006, Blodgett took Bare Escentuals public, and later, the company was acquired by Shiseido, the Japan-based global cosmetics company. Serving on the board of Cosmetic Executive Women (CEW), Blodgett was also the first recipient of the organization’s Achiever Award in 2006 for her contributions to the industry. She was honored at CEW’s annual ‘Beauty of Giving’ luncheon in 2009 for her commitment to women.

Blodgett joins as the sixth member of the board of directors.

Founded in 2004, Stella & Dot now has more than 18,000 fashion entrepreneurs in North America offering custom designs exclusively through in-home trunk shows by independent stylists and online.

North American Power

Paul Rossi

Matt Redett

North American Power, a retail energy supplier, has hired Paul Rossi as Vice President of its new natural gas division and Matt Redett as its new Chief Financial Officer.

Rossi is former director of U.S. Natural Gas Commodity Operations for UBS Investment Bank, with 32 years of experience in the energy industry, including wholesale and retail energy commodities and regulated utilities. He was Manager of Regulatory Affairs for UIL Holdings Corp., including its principal operating subsidiary, The United Illuminating Company, and active in Northeast energy markets as Director of Natural Gas Supply for Southern Connecticut Gas Company. His experience also includes regulatory and planning matters within energy companies.

Redett has been involved with all aspects of electricity deregulation since 1997. He has built retail and wholesale businesses from the ground up multiple times. Redett was the Director of Finance for Gamesa Energy USA, wind farm development, and was Director of Finance and Operations at Juice Energy, a supplier to commercial and industrial customers in New York and Texas.

LiveSmart 360

Charles Hallberg

LiveSmart 360, a network marketing company with a full product line of advanced nutritional products, announced that Charles Hallberg has joined the executive team and is providing hands-on expertise as well as a new infusion of capital. As the company’s financial partner, Hallberg is helping position LiveSmart 360 for major growth in the coming year by funding the development and launch of a new all- natural, multi-functional, nutritional and weight-loss shake.

In his new role, Hallberg will select executives and set budgets, operational guidelines, project management schedules and financial evaluations.

Hallberg founded MemberHealth Inc., a pharmacy benefits management company, in 1998 with a small-business loan of $75,000. MemberHealth quickly grew, landing a major federal contract, which resulted in an increase of about $1 billion in revenue. In 2007, MemberHealth was No. 1 in the Inc. 500 ranking when the company was purchased by Universal American Financial for $630 million.

LiveSmart 360 sells a full range of products for home and personal care, weight loss, and added energy, with more than 160,000 Members in 93 countries.

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Please submit news of executive promotions and hires at your company to be included in the Executive Announcements section of Direct Selling News. Email pr@directsellingnews.com

Financial News, January 2012

December 21, 2011 by DSN Staff Leave a Comment

GeneLink Inc.

GeneLink Inc. (GNLK.OB—OTCBB) reported financial results for the quarter ended Sept. 30, 2011.

Financial results for third quarter 2011 comprise mainly sales from the company’s GeneWize direct selling subsidiary, which is in the process of being sold to Capsalus Corp. (WELL.OB—OTCBB). Net sales were $1.07 million compared to $1.88 million in the prior year. Gross profit margins decreased to 59 percent, compared to 66.8 percent in the prior year. Operating losses were $880,000 compared to $823,000 in the prior year.

GeneLink is a 17-year-old biosciences company specializing in consumer genomics. GeneLink’s patented technologies include proprietary DNA assessments linked to personalized nutrition, skincare and wellness applications and products.

LifeVantage Corp.

LifeVantage Corp. (LFVN.OB—OTCBB) reported financial results for the first fiscal quarter ended Sept. 30, 2011.

For the first fiscal quarter 2012, the company reported record net revenue of $20.1 million, compared to $6.4 million for the same period in fiscal 2011. On a sequential basis, net revenue increased 34 percent from the $15.0 million reported for the fiscal 2011 fourth quarter ended June 30, 2011.

Gross profit for the first quarter of fiscal 2012 increased to $17.1 million compared to $5.4 million for the same period last year, delivering a gross margin of 85 percent, compared to 84 percent for the same period last year.

Operating income improved to $3.4 million for the first quarter of fiscal 2012, compared to $300,000 in the same period last year and $2.0 million in the prior quarter. Operating income margin improved to 17 percent in the first fiscal quarter, compared to 5 percent in the same period last year and 13 percent in the fourth quarter of fiscal 2011.

Net income for the first quarter of fiscal 2012 increased to $3.7 million, compared to $700,000 in the same period last year and a net loss of $47.2 million in the prior quarter. First quarter of fiscal 2012 net income reflects the increase in revenue, leverage of operating expenses and a decrease in interest expense due to the shareholders’ conversion of convertible debentures and reduced derivative expenses.

LifeVantage, a science-based nutraceutical company founded in 2003, is the maker of Protandim®, the Nrf2 Synergizer™ patented dietary supplement, with current operations in both Salt Lake City and San Diego.

ForeverGreen Worldwide Corp.

ForeverGreen Worldwide Corp. (FVRG.OB—OTCBB) announced third quarter 2011 earnings. Sales for the quarter ending Sept. 30, 2011, were $3.68 million, as compared to $2.63 million for third quarter 2010. This is an increase of 39.5 percent. Net losses for the quarter were $39,400 or 0 cents EPS, as compared to a net loss of $76,700 or 1 cent EPS during the corresponding period of 2010.

For the nine months, sales were $9.99 million vs. $7.62 million in the first nine months of 2011, an increase of 31.1 percent. Net losses for the first nine months of 2011 were $587,700 or 4 cents EPS compared to $228,700 or 1 cent EPS during the comparable period in 2010. During the first nine months of the year cash increased $106,300 to $284,400 compared to a net decrease in cash of $199,600 to $56,600 for the first nine months of last year.

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

Tupperware Brands Corp.

Tupperware Brands Corp. (TUP—NYSE) announced that its board of directors declared the company’s regular quarterly dividend of 30 cents per share, payable on Jan. 4, 2012, to shareholders of record as of Dec. 20, 2011.

Tupperware Brands Corp. is a portfolio of global direct selling companies, selling innovative, premium products across multiple brands and categories through an independent sales force of 2.8 million. Categories include design-centric preparation, storage and serving solutions for the kitchen and home as well as beauty and personal care products.

Blyth Inc.

Blyth Inc. (BTH—NYSE) announced that its board of directors has declared a special cash dividend of $1.50 per share on the company’s common stock, for a total dividend payment of approximately $12.5 million. The special dividend is payable on Dec. 15, 2011, to shareholders of record as of Dec. 1, 2011.

The special dividend declared is in addition to regular semiannual dividends declared and paid during the fiscal year ending Jan. 31, 2012, totaling 20 cents per share on the company’s common stock. Accordingly, inclusive of the special dividend announced, the company will declare and pay dividends of $1.70 per share, or $14.2 million, in fiscal year 2012.

Blyth Inc., headquartered in Greenwich, Conn., is a multichannel company primarily focused on direct selling. The company designs and markets home fragrance products and decorative accessories, as well as weight management products, nutritional supplements and energy drink mixes through PartyLite and ViSalus Sciences. These products are sold through the home party plan method of direct selling and through network marketing, respectively

Primerica Inc.

The board of directors of Primerica Inc. (PRI—NYSE) approved payment of a quarterly dividend of 3 cents. The dividend is payable on Dec. 9, 2011, to stockholders of record as of Nov. 28, 2011.

Primerica Inc., headquartered in Duluth, Ga. and one of the largest independent financial services marketing companies in North America, is a distributor of financial products to middle-income families in North America providing term life insurance protection, investment and savings, and other financial products.

Lightyear Network Solutions Inc.

Lightyear Network Solutions Inc. (LYNS.OB—OTCBB) announced its financial results for the quarter ended Sept. 30, 2011. Results for the third quarter of 2011 include Lightyear’s acquisition of SouthEast Telephone, which was completed on Oct. 1, 2010.

Net income of $103,000 for the third quarter 2011 compared with a net loss of $222,000 in the second quarter 2011 and a net loss of $828,000 in the year-ago third quarter.

Gross profit increased 1.2 percent, or $78,000, compared with the second quarter of this year. EBITDA improved to $515,000 compared with an EBITDA of $178,000 in the second quarter of this year and a loss before interest, taxes, depreciation and amortization of $935,000 in the year-ago third quarter.

In related news, Lightyear announced that it has completed a transaction to redeem all of its outstanding shares of convertible preferred stock.

In the transaction, the company redeemed 9.5 million shares of convertible preferred stock held by LY Holdings LLC (LYH), plus the preferred stockholders surrendered their rights to accrued dividends of approximately $2.2 million, in exchange for receivables due to the company totaling approximately $12.9 million. The convertible preferred stock redemption is expected to result in a fourth quarter, one-time, non-cash deemed preferred stock dividend of approximately $10.7 million, which will be presented in the statement of operations as a deduction to arrive at the loss attributable to common stockholders.

As a result of the transaction, the company’s common stock is the only class of capital stock that is issued or outstanding. As of Sept. 30, 2011, there were 22,089,888 of common shares issued and outstanding.

Additional information regarding this transaction may be found in the company’s Form 8-K dated Nov. 7, 2011, as filed with the Securities and Exchange Commission.

Lightyear is a provider of data, voice and wireless telecommunication services to business and residential customers throughout North America.

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.

January 2012 – A Stock Prognosticator’s Year in Review

December 21, 2011 by DSN Staff Leave a Comment

Click here to order the Direct Selling News issue in which this article appeared.

As 2011 comes to a close and corporate boardrooms reflect upon the past year, there are some wildly varied perceptions of how Wall Street treated the direct selling sector over the past year. There are likely some varied perceptions of how the economy impacted individual businesses during 2011 as well. From our standpoint of monitoring the industry at a relatively high level, we are challenged to find consistencies among the U.S. direct selling trends. In the most basic terms, it seems as though the momentum continued for many of the channel’s participants. However, this doesn’t imply that the momentum was favorable for each company. For the direct selling enterprises enjoying a wave of distributor growth as the year began, it often continued and the reverse was often true for other players.

Beyond the United States, there is plenty of regional correlation among the larger direct sellers. There was generally robust growth in many Asian markets and strong performances within South America. We can also find some correlation among the world currency markets. However, our take is that a world economy that seems to be slowly moving along, rather than materially strengthening or weakening, is an environment where success can certainly be had. It just can’t be had by all market participants or in all geographical regions. On Wall Street, we call this a stock pickers market. In fact, 2011 was undoubtedly a stock pickers market in direct selling and a market where size had more of a correlation to performance than we typically encounter, at least among the U.S. based companies.

One product correlation that we can identify across the direct selling channel is that weight management is enjoying some favorable trends. Weight loss has a history of being fraught with short-term phenomena on Wall Street. Investors often see the weight loss stocks as fad stocks. However, this has not been the case in direct selling as Herbalife is among the most associated with weight management in direct selling and has proven its longevity, consistency and global market opportunity. Herbalife put in another good year with accelerated growth that has the shares up over 60% yet again during 2011. The share price performance has added roughly $2.5 billion to the company’s market capitalization and its total equity value is beginning to approach Avon’s as Avon’s shares have underperformed. Herbalife is essentially breaking ranks with even its best performing peers in that the company is reporting almost universal momentum in every geographical region, even within its most mature markets. Of late, only a strengthening U.S. dollar has trimmed profit growth expectations. The company’s strong volume growth, expanding margins, sales leader trends, emerging market successes and investments in its supply chain have been the key attributes building on its allure with investors.

While Herbalife may be the direct seller most associated with weight management, Blyth may be the stock most closely watched by industry executives. It isn’t about candles anymore, but rather the company’s ViSalus unit and its incredible momentum that has many in the industry talking. ViSalus’ 618% revenue growth during the Q3 ended Oct. 31, 2011 was much more than needed to offset declines in the Partylite segment and deliver both strong revenue and profit growth. While the results have been strong and apparent for over a year and the share price has nearly doubled since Jan. 1, 2011, institutional investors are just beginning to truly notice the growth and opportunity. With strong momentum and some favorable trends in the weight management segment of direct selling, ViSalus is undoubtedly a company to watch in 2012.

Looking across the stock performance for 2011, we’ll highlight a few of the other positive performances that stick out in the accompanying Stock Watch. First, there were a couple of share price recoveries in 2011 that deserve some mention. Natural Health Trends shares have recovered from a swoon begun in the latter half of 2009 and with a share price below $1 the magnitude of the percentage recovery is remarkable. Nature’s Sunshine Products has also seen a marked improvement in its share price that we attribute to a recovery as investors have recognized renewed growth at Synergy Worldwide and profitability has jumped. The company appears on a more favorable track with investors than it has enjoyed in many years.

Nu Skin Enterprises is another of the most robust stock price performers in 2011 thus far. The company shook off pressure following the natural disasters in its largest market of Japan earlier in the year to post improved growth and strengthening leading indicators as the year progressed. Nu Skin undoubtedly reaped as much benefit from the strong Japanese Yen as any direct seller, but is really enjoying the benefits of an impressive new product launch at its October distributor convention. The $100 million of preorders for its most recent Age Loc product launches have set the tone for continued new product momentum that has helped deliver a fifth consecutive year of over 15% earnings growth. Investors are keenly focused on momentum in the direct selling industry and Nu Skin’s momentum, along with that of Herbalife, is a major focus.

Tupperware, which continues to deliver against investor expectations for growth and cash flow performance, has extended into a multi-year trend of general outperformance. The strong emerging market growth has expanded upon the rising investor confidence over the last couple of years. Despite the stock’s strength this year, it is still well off its most recent highs from this past summer. Tupperware, along with several of the international direct sellers, is facing currency challenges that have contributed to a fall-off from many of the late summer highs made in the sector.

To wrap up the bell-weather stocks in the direct selling industry, Avon’s over 40% decline year-to-date can be attributed to a host of challenges, some of which aren’t directly related to the fundamental performance of the business. A catalyst appears to be sorely needed to regain investor confidence with Avon. After a sharp correction in the shares this year, Avon is no longer the stock against which all other direct sellers wish to compare their valuations. Avon’s shares are now among the more cautiously valued relative to earnings forecasts among the entire sector.

In 2012, the key question for the global direct selling industry may continue to revolve around tepid global growth, international growth opportunities in promising emerging markets and a European financial crisis that seems to rise and fall almost daily.

Good sales to all in 2012!

Scott Van Winkle is a Managing Director of Equity Research at Canaccord Genuity, the global capital markets division of Canaccord Financial. Canaccord Genuity offers institutional and corporate clients idea-driven investment banking, research, sales and trading services from 16 offices worldwide. Van Winkle, based in Boston, has followed the direct selling channel since 1997.

Disclaimer: Canaccord Genuity has published research recommendations on Herbalife, Medifast, Nu Skin Enterprises and USANA Health Sciences and makes a market in shares of Herbalife, Medifast, Nu Skin Enterprises and USANA Health Sciences. Canaccord Genuity has provided non-investment banking securities-related services to Herbalife, Nu Skin Enterprises and Reliv International during the last 12 months. Past performance is not indicative of future results and these comments are not a recommendation to buy or sell the specific securities discussed.

Leading Your Salesforce to Mastery via Social Media

December 21, 2011 by DSN Staff Leave a Comment

Click here to order the Direct Selling News issue in which this article appeared.

A prominent technology executive recently shared with me his view of RIM’s (the maker of BlackBerry mobile devices) dramatically rapid collapse of market share. The critical mistake they made, according to this tech insider, was that they listened too intently to the wrong customer constituency. Instead of hearkening to what their users were saying, they listened to the customers who were making the purchase decisions for many of these users. These customers were the CIOs of large corporations who consistently reassured RIM that BlackBerry would continue to be the device of choice for the enterprise, citing that the security of data that BlackBerry provided was the key differentiator to trump all other factors. Except it wasn’t.

What soon happened is that young, talented employees began making employment decisions based on what type of phone the company supported—consistently choosing an iPhone over a BlackBerry.

More than ever, we need to better understand what motivates people, as more traditional management methods lose their effectiveness.

This example is one of many that solidify an expanding acknowledgement that we have entered into a new culture for today’s working generation. More than ever, we need to better understand what motivates people, as more traditional management methods lose their effectiveness.

Dan Pink, the author of Drive, says that today’s workforce is fundamentally motivated by:

Autonomy—“Let me figure how best to accomplish my work.”
Purpose—“I want to make a difference in the world.”
Mastery—“I want my job to give me skills and experience to really help me be successful throughout my career.”

Of course, this dynamic is old news for executives in direct selling companies. A direct selling business already does a fantastic job at giving a salesforce autonomy and purpose. The key area to strengthen is providing people the mastery they need to build their business. In fact, many of the core challenges around recruiting, duplication, retention and having a fast start are all deeply rooted in an individual distributor’s need for mastery.

Mastery for distributors can be defined as being able to enact the right behaviors at the right times.

Even though companies allocate significant resources to tackle mastery by creating sales aids, developing training, publishing success stories, hosting motivating and educational events and more, it still may not lead to success. With these resources, distributors may clearly understand what mastery entails and even believe that it’s easy enough, but too often when put to the test, they stumble. This is because mastery is most keenly required when it’s the toughest to achieve—when the distributor is alone or surrounded by nay-saying friends and family.

Our research has shown that human beings are very quick to give up and blame themselves by saying, “I just don’t have the willpower to do this,” when the following is true:

I understand that the stakes are high. (There is no other way for me to achieve my financial goals unless this business works.)
I understand the behavior that I need to be successful. (I just have to overcome this fear of rejection.)
The behavior seems simple and it’s easy to understand. (My sponsor made it sound so easy when she gave me examples of what to say.)
I fail to enact that behavior. (I can’t believe I couldn’t do that.)

Successful distributors have been able to achieve mastery in these crucial moments of fear, self-doubt, and perhaps, a lack of sales experience, as well as understand how to master their surroundings and the circle of family and friends who may try to discourage progress.

The emergence of social media provides a remarkable opportunity for direct selling companies to deliver the trifecta of criteria that today’s generation wants—autonomy, purpose and mastery. Social media should be much more than a buzzword that helps you increase web traffic and brand awareness. It’s the platform that allows you to deliver a true mastery program across your entire global workforce.

Social media is an interactive communication platform where the content of the communication can be both generated and consumed without obstacles.

Social media is an interactive communication platform where the content of the communication can be both generated and consumed without obstacles. When web-based publishing first emerged, companies were thrilled with the prospect of scaling the dissemination of information in a remarkably faster and cheaper way. However, the major limitation was how to cater and customize the quickly growing sea of information for your audience. “Pushing” content to audiences doesn’t always work because it isn’t customized enough. Providing content for users to “pull” hasn’t always worked because there is so much information that it has been too much work for users to find what they needed.

Indeed, a person often needs different types of information at different times, but might not be willing to work hard to get the necessary information. This is particularly true for direct sellers seeking to achieve mastery of a specific behavior, as there are so many potential pitfalls in the entrepreneurship required. Let’s look at a couple of examples:

Example A: Amy is a new distributor and is excited to start on her journey. She is a mother of two young children, loves the product she is now selling, and is a natural at talking about it with her neighbors and friends. And yet, for a couple of months she has not been able to sponsor someone new. She has felt productive—in fact, she has started half a dozen projects, including writing a list of people to approach, watching a few training videos, and mentioning the products to a few friends—but her activity has not produced any tangible results. She realizes that she enjoys talking about the product but has a fear of asking friends for a commitment. If she could only know what to say when she gets in a position to ask for a commitment.

Example B: Joe has been building his business for a couple of years. He is almost at the point where he could quit his day job and take on his business full time. His greatest frustration is that too many key distributors in his downline consistently let him down. His natural reaction when this happens is to lower his head and work harder himself to be the example for his downline. However, he understands that this behavior lends itself to putting tasks over people. If he could only know how to invest in training team members when they stumble, instead of blaming them.

For direct selling executives, these examples are just a couple in the hundreds of different cases where the wrong behaviors, albeit well-intended, are getting in the way of real success. In all of these cases, executives actually know both the diagnosis and the solution! And yet, how do you make sure that the right information gets to the right individual at the right time?

Social media conquers this problem of just-in-time content. And perhaps most important, social media is accessible any time or place via web-enabled devices.

Here are just a few ways that social media can do this:

Recognizing the Right Behaviors

Too often, distributors can be blind to the success-limiting behaviors holding them back. They can also be purposefully blind, meaning that when they are told what changes they need to make they become defensive. Realizing what changes need to be made is commonly an iterative process, with the distributors gradually coming to self-awareness.

Social media provides a platform for this self-awareness to happen at the pace the distributor needs. “I can see lots of others succeeding where I am not. They don’t seem any different than me. Am I actually doing something wrong?”

Dashboards, scorecards and unedited feedback are the types of data that social media can deliver to distributors to help them see what is real, versus the false perceptions they may hold in their minds.

Developing Self-Belief

Our research has found that in order for someone to have the self-belief to enact a vital behavior, they need to be able to answer “yes” to two questions:

Can I do it?
Will it be worth it?

The best way for someone to be able to answer these questions is to live vicariously through another person, or in other words, hear or see a story of someone like them successfully enacting the behavior that is needed. “Look at Amy. If she can do it, I can do it. And there is Charles. If he can do it too, certainly I can do it!”

Social media allows this vicarious experience to happen not only once, but potentially thousands of times for distributors. And, in many instances, they can see this happening in real time, as conversations play out online. And they can see it play out in the safety and privacy of their own homes when they most need that motivation.

Practicing and Getting Feedback

Malcolm Gladwell describes the 10,000-hour rule in his book, Outliers. He basically says, spend 10,000 hours practicing anything and you can become a master. These days it isn’t practical or even possible for an apprentice to follow around a master for 10,000 hours, and we cannot expect a distributor to attend 10,000 hours of convention or training.

However, social media does allow a distributor to practice and receive real-time feedback in virtually all situations for 24 hours a day. Creating this environment is vital in scaling the already-known best practices to a global salesforce.

Even for those executives who promote mastery to the salesforce, their challenge has been one of diffusion. Until the advent of social media, there hadn’t been a platform to widely and easily spread that know-how to distributors at the very moment they need it, in the format they want it, and in a manner that is easy and simple to consume.

This has been the missing piece for direct selling companies. And as they embrace social media as the platform for mastery, they can safely declare the ideal value proposition for today’s generation:

Come run your own business and control your own destiny. (We give you autonomy.)
We have a product that changes lives and you can stand behind it. (We give you purpose.)
You will conquer the behaviors you need to be successful. (We give you mastery.)

It’s the trifecta for the contemporary and future workforce seeking greater fulfillment and success—a powerful combination that will fuel a boom for the entire direct selling industry.

Vince Han is a digital media industry executive and entrepreneur, and CEO of Change Anything, LLC.

Continuing to Advance Our Collective Vision

December 21, 2011 by DSN Staff Leave a Comment

Click here to order the Direct Selling News issue in which this article appeared.

It isn’t easy to follow a legend. I was excited and honored to be asked to take the helm of the Direct Selling Association earlier this year, and after 26 years working on behalf of direct sellers I felt I was more than prepared. Nevertheless, my predecessor, Neil Offen, had been an acknowledged industry leader and icon of direct selling for 40 years. In his office were framed publications heralding him as “Mr. Direct Selling” and a DSA Hall of Fame award that sat on a lit pedestal in a corner. So, excited? Yes, but with huge shoes to fill—and expectations to match.

Part of my confidence, however, stems from the fact that there is always a team to call on, whether that be the DSA staff in Washington, D.C. or any number of member executives around the country from whom I have gained both knowledge and inspiration. I also found enlightening a number of books and articles—including one that was sent anonymously, The First Ninety Days: Critical Success Strategies for New Leaders, from the Harvard Business Review Press. (If you sent it, please let me know!) So I was hardly alone in facing this new duty and there was plenty of assistance, advice and guidance available. Yet, ultimately, the responsibility was mine alone as President of the association. Based on input and my own experience with direct selling, business, and the association itself, I committed myself to several approaches for the new position.

Direct selling is an industry full of very smart people who have built or maintained large and successful businesses.

Build on Past Success—The advantage of having my predecessor around during a rather lengthy transition after the formal announcement of his retirement was the opportunity to engage in some real, substantive analysis of what had worked for him and the association over his 40 years here. Neil Offen was a remarkably successful lobbyist and player on the Washington scene, and his vision was a significant part of the formation of the Direct Selling Education Foundation (DSEF) and the World Federation of Direct Selling Associations (WFDSA). It became clear that DSA’s government relations and advocacy program were most successful, and that it was imperative to keep a focus on that area, and ensure continued success by maintaining or increasing the resources we devote to it. As a result, we have laid out an ambitious but concrete expanded association strategy that details reaching out to political organizations, enhancing visibility of our advocacy efforts within the industry, working with partner organizations, and being even more legislatively proactive in order to protect and enhance direct selling in the marketplace.

Notwithstanding our many successes on the legislative and regulatory front, I am committed to doing more. No organization can rest on its laurels and survive. DSA will build on the foundation of its past success to explore new programs and activities that will enhance the value of the association to its members. We are determined to clearly demonstrate that DSA is an invaluable tool in the success of direct selling companies.

Reach Out and Learn—Direct selling is an industry full of very smart people who have built or maintained large and successful businesses. I was convinced that we needed to reach out to these constituents in their roles as customers and leaders to discuss what the association should be doing, and to get their counsel on what I needed to be doing as President. These conversations have been a treasure trove. I began a series of outreach meetings with industry leaders—both old and new—even before officially becoming President. In small groups and one-on-one, I and members of DSA’s senior management team met with dozens of mid- to upper-level executives from a wide variety of DSA member companies to gauge their sense of the health of the industry and association, and to solicit their ideas about the association’s future agenda. Additionally, I undertook a “whistle-stop tour” across the country in six major direct selling centers and discussed industry concerns and association plans with almost 1,000 executives. These meetings have driven the development of the association’s work plan, as well as my own approach for the coming months and years.

Have and Communicate a Vision—It is clear that no one person controls the destiny of anything, much less a $120 billion worldwide industry with some 70 million salespeople. What a leader can and must do, however, is develop and deliver a clear and consistent message. The most effective leaders and advocates I have seen reduce their messages to the simplest formula and repeat it often and without embarrassment. I’ve taken this to heart and have attempted to deliver DSA’s message to our membership, policy-makers, the press, and anyone else who will listen. It is a message of success, optimism and cooperation that I have repeated in DSA’s weekly e-newsletter InTouch, in speeches, and in meetings: I believe our industry can double its size over the next few years, while we help people deal with this recession, and work together to ensure that government regulation encourages—not discourages—this great business model.

What a leader can and must do is develop and deliver a clear and consistent message.

Embrace Others—Our past successes as an association have been greatly dependent on a highly competent and experienced staff. Earlier this year I promoted three essential members of this staff to develop a true senior management team. All of us are intimately involved in strategy development and program implementation on a cross-departmental basis. I am confident that each one of these dedicated professionals could run the association successfully with the assistance and support of the rest of the team.

Additionally, I am committed to look past parochial competitive concerns with other organizations to explore relationships that might benefit our member companies and executives. Some associations and companies will husband their knowledge and resources, fearful that working with others or allowing others to get the credit will somehow diminish their own success. There is a variously attributed quote that speaks to the thought: “There is no limit to what can be accomplished if it doesn’t matter who gets the credit.” I believe this sentiment rings true in an association, particularly, and have undertaken a serious exploration of cooperation and collaboration with other associations, vendors and publications to benefit direct selling. As long as the goals of these organizations are consistent with the mission and objectives of DSA, we will find areas in which we can work together to serve our members.

As long as the goals of these organizations are consistent with the mission and objectives of DSA, we will find areas in which we can work together to serve our members.

Don’t Be Afraid to Succeed—It is easy for an organization with a 100-year history and longevity at the top levels of leadership to believe that it has seen and done it all. Similarly, associations—particularly established ones—have a tendency to be risk-averse and to take no action unless there is 100 percent consensus about new endeavors. Such an approach may be safe, but it limits opportunities for growth and real success. I have directed DSA staff to look for opportunities for success, and to be willing to take some calculated risks for that success. One example of a significant initiative that reflects this strategy is DSA’s new ERA initiative. Our “enhancement, recruitment and awareness” pilot program is a significant communication effort to see how and if we can affect public perceptions about direct selling in a way that will benefit member companies. There is no guarantee that the program (which will begin in the first quarter of 2012) will affect any perceptions—thus the risk—but it is clear that we will learn from the endeavor. Equally clear is that if we are not willing to take a risk and act, we definitely will have no impact, and will learn nothing. I hope the program is a model for us and our approach to new endeavors in the future. We cannot be afraid to succeed.

Be One’s Self—One of the best pieces of advice I have received came from a direct selling CEO who took over from another industry legend. No slouch himself in the ability and personality departments, this executive advised me to be myself. “Don’t feel obligated to do things the way your predecessor has done them. Be yourself, with your style, your idiosyncrasies, and your freshness,” he advised. It seems like sound advice.

Direct selling has endured through decades of economic turmoil, social change and challenge to some of the core aspects of our business. This has been possible because an untold number of people have believed that personal empowerment and an entrepreneurial spirit are fundamental components of success. They have fought to preserve and advance direct selling, and many have become legends. I am proud to serve as but one of the warriors entrusted with the responsibility of rallying our many resources to ensure our collective vision becomes reality.

Joe Mariano is President of the U.S. Direct Selling Association (DSA).

Connecting to People, the World and the Challenges of Our Time

December 21, 2011 by DSN Staff Leave a Comment

Click here to order the Direct Selling News issue in which this article appeared.

For many years, direct sales companies have shown enormous potential for generating income and social change, stimulating entrepreneurship and promoting interpersonal relationships.

Despite all the progress and success of our industry, we know that part of society is still unaware of the relevance of our sector and that there are still negative perceptions in the public and governments. Influenced by this diagnosis and aware of our potential for change, we approved the Long Range Plan (LRP) of the WFDSA at the end of 2008.

In the coming years, we will continue to focus on these areas: strengthening direct selling’s image, improving processes and structures of the local WFDSA and DSAs, promoting ethics and strengthening integration and alignment of direct selling companies. Given the advances in recent years in ethics as well as integration and alignment between companies, we have the opportunity to give greater emphasis to the other two goals of our strategy.

Strengthening the Image of Direct Selling

We have the opportunity to show society the strength of our industry and that we can have relevance in a constantly changing world increasingly connected and impacted by social and environmental challenges. Today we live in challenging times, marked by continual financial crises, rising unemployment, famine, corruption in many nations and various environmental challenges such as global warming. In this context, we can all show the world the important transformation and mobilization role of the direct selling industry.

We can and must exercise our vocation as an agent of social change, suitably paying the network of people involved in the generation and commercialization of our products and services, promoting opportunities for the integration of people excluded from access, and developing new forms of sustainable business.

We need to show the world our power of transformation and entrepreneurship. Thus, through the strengthening of our image, we will increase our business opportunities and positive impact on the lives of millions of people.

Improving the Processes and Structure of the WFDSA and DSAs

We know that the existence of the WFDSA is subject to strengthening the individual Direct Selling Associations (DSAs), as they are the ones who represent us around the world. We need to empower our associations, improving their structures and resources. Only then will we have DSAs that are strong and legitimate representatives of our sector, respecting and fulfilling the needs of each region and company, regardless of nationality, size or sales method.

The coming years will be extremely important for this industry. More and more consumer desires are immediately brought to the forefront, determined by the need or convenience of the person buying. The Internet environment has perhaps been the biggest stage on which these new consumption parameters have been shown.

In this complex circumstance in the early stages of our understanding, direct selling companies have the challenge of transforming themselves. However, faced with this challenge we also see many opportunities. Operating within networks is already part of the essence of our industry. Therefore, in an increasingly connected world, we can create even more innovative ways of doing business within direct selling.

I think that the WFDSA can foster an environment that enables the exchange of experience between companies, so that together we can create direct selling of the future, admired and recognized by all. These will be the priorities of the WFDSA over the coming years. We have the advantage—with the active participation of a diverse group—of being part of a WFDSA deeply committed to working for the industry.

This is our commitment, and I believe that this diversity strengthens us, connecting us to people, the world and the challenges of our time.

Alessandro Carlucci is the CEO of Brazilian cosmetics company Natura and the current Chairman of the World Federation of Direct Selling Associations (WFDSA).

December 2011

December 2, 2011 by DSN Staff Leave a Comment

Herbalife Ltd.

Herbalife Ltd., a global network marketing company that sells weight-management, nutrition and personal care products, has welcomed medical experts from the United States, Chile and France to its Nutrition Advisory Board. The board comprises leading experts around the world in the fields of nutrition and health who educate and train Herbalife independent distributors on the principles of nutrition, physical activity and healthy lifestyle.

Dr. Jenny Kim

Jenny Kim, M.D., Ph.D., is an associate professor of medicine/dermatology at the David Geffen School of Medicine at the University of California, Los Angeles, and Chief of Dermatology at the Veterans Affairs Greater Los Angeles Healthcare System. Kim has been a UCLA faculty member since 2000, where she serves as a referral source for patients requiring rejuvenation for aging skin and also for patients with skin cancers. Kim is also a renowned scientist, and her research is funded by the National Institutes of Health. Kim has numerous publications and has received various awards for her research, and she lectures extensively in the United States and abroad.

Dr. Pedro Barreda Munoz

Pedro Barreda Munoz, M.D., is a pediatrician in private practice in Chile since 1989. Previously, he was a professor at several Chilean universities, including Pontificia Universidad Catolica, Universidad de Chile and Universidad de Concepcion. Barreda also serves as President of Docencia del Nino Foundation, teaching pre- and post-graduate studies throughout the country. He has written extensively on pediatric medicine.

Dr. Jacques Manic

Jacques Manic, M.D., is an orthopedic specialist in Bayonne, France. He has a strong background in sports medicine and has been the team doctor for the Aviron Bayonnais Rugby Pro since 2006, and a soccer sports instructor for the past two decades. Manic was in charge of teaching arthroscopy at the Surgery School of the Paris Public Hospitals and served as a nutrition consultant for top athletes while working at Tours University Hospital. He was a top-level soccer player in the French Professional Divisions I and II, elected best French player in professional Division II in 1977; and selected for the French Olympic soccer team between 1977 and 1981.

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Please submit news of executive promotions and hires at your company to be included in the Executive Announcements section of Direct Selling News. Email pr@directsellingnews.com

Letter from John Fleming, December 2011

December 2, 2011 by DSN Staff Leave a Comment

I am going to start this note by referring to thoughts first brought up in my “From the Publisher” piece in the December 2008 issue. We reflected there on the challenges of a recessionary economy and revisited the discussion in 2010’s December issue, focusing on whether or not the nation was actually moving toward recovery. That conversation still has relevance today as we continue to ask the question about jobs and where they may come from moving forward.

Here are my previous thoughts:

“The opportunity for direct sellers will probably be contingent upon how products and opportunity are being discussed. Consumers will certainly appreciate the Price/Value relationship of products and services when it exceeds what others are offering. The recruiting pool will certainly increase over the next 12 months so it is unlikely that shortfalls in recruiting would be forecasted unless the sales organization is buying into the negative tone of the press versus the positive tone of the company’s leaders and company communication vehicles. Our industry’s common formula for success, regardless of selling/recruiting philosophy/methods or process, has always been rather simple. When direct selling companies have more people selling and recruiting in any given measurement period versus the previous measurement period (assuming no serious impact on average order) companies tend to grow!”

As we now close another year, the words of the previous paragraph appear to still ring true. Third quarter financial reports are very positive overall, meaning that there is much good news to share. However, as we all know, challenges remain for many and the industry is still searching for understanding as well as solutions.

The thinking of the masses is often influenced by what may be the primary media topic—and the No. 1 topic at the moment is jobs. This month we chose to go after this topic in our cover story. With a limit on the amount of words we can print, we are scratching the surface of a topic that will remain at the forefront of the nation’s mindset until the economy has fully recovered. However, the bigger question might be: When will people recover? The economic recovery and job availability are actually two very different topics.

Behind the jobs conversation and rhetoric we listen to in the media is a story that may be one of the industry’s greatest assets. Training and retraining is a critical part of the jobs solution but one that is very seldom discussed in the media. The reason why training and retraining are not being discussed is basically due to the fact that no one offers free training or even retraining. Or maybe I should have said, “No traditional company offers free training or retraining.” Could this be the new competitive advantage direct selling companies boast? We think so and believe it is a story that needs to be told.

Imagine the costs associated with any traditional corporation attempting to retrain a workforce that is more and more contingent upon a need for competency and skills that did not even exist 15 years ago. Today, we do practically everything we did years ago very differently. Direct selling companies do provide free training, and the tools made available are usually state of the art, utilizing the newest and most innovative forms of technology. They come in the way of social media, smartphones, mobile devices and e-commerce, connecting people on a global scale quickly and easily. The skills learned, along with a focus on the personal development and growth of the individual, regardless of the education level—current or past experience—is actually a nontraditional approach to education and skill development that probably exceeds the return on investment one might make if choosing to invest in a more traditional training or retraining program.

This past June, Direct Selling News told a story about the uniqueness of the business model in a supplement in The Wall Street Journal, which reached more than 1.2 million subscribers. We described direct selling as “The Ultimate Social Business Model” and, right in the midst of the doom and gloom that tends to monopolize our media, a refreshing story was told. In September, we told the story a bit differently in a USA Today supplement, embracing and defining network marketing for the benefit of more than 3 million readers. Our cover theme was “The Original Social Business Model” and “Why Direct Selling Works.” Reprints of the 2011 USA Today supplement are still available at dsnsite.wpengine.com! All of the partners that advertised their companies and brands certainly aligned with positive messaging while exposing their brand to millions. They also made possible the distribution of optimistic news that is so needed when negative press is often the dominating force. We believe positive press can make a difference and we strive to deliver on that belief each month. Because of this belief, and the need for as much good news as possible, we have already reserved our spots for The Wall Street Journal and USA Today supplements in 2012. In 2012, we will continue to do our part, with your support, to tell the stories that need to be told.

On behalf of the entire staff here at Direct Selling News, we wish for all of you a most glorious holiday season! The view into the New Year is full of hope as a result of what we have been privileged to research and write about over the past year.

Until next year … enjoy the issue!

John Fleming
Publisher and Editor in Chief

Breaking the Cycle of Unemployment

December 2, 2011 by DSN Staff Leave a Comment

Click here to order the Direct Selling News issue in which this article appeared.

As 2011 ends and everyone prepares for the new year, this nation’s shortage of jobs will continue to dominate the political and social conversation. Missing from the mainstream voices, however, is the simple yet brilliant solution available in the direct selling industry—top-notch training and personal-development opportunities offered with astonishing depth, regularity and variety.

Amazing Training for Amazing Women

Belcorp USA is taking personal development to a whole new level by reaching outside of their network and training the women who need it most. Amazing Women, a groundbreaking training program from Belcorp Foundation, teaches women how to become successful entrepreneurs and agents of change in their communities. The first Amazing Women program will launch in San Francisco and be available to any low-income woman in the community who is interested in becoming an entrepreneur—regardless of whether or not she is a Belcorp Beauty Advisor.

Amazing Women was designed to train women in the areas of self-confidence, entrepreneurship, business education and social networking as well as on how to become financially independent. The training includes:

Business Planning 101
Money Management
Personal and Emotional Empowerment/Professional Image
Social/Business Networking

“This curriculum provides an excellent platform of building blocks for women who want to start a new career, reintegrate into the workforce or become an entrepreneur,” says Mona Ameli, General Manager of L’Bel/Belcorp USA.

Direct Selling News first covered these ideas in its supplement in The Wall Street Journal called The Ultimate Social Business Model, which offered up the story of direct selling companies for WSJ’s readership. DSN continues to explore these themes as the jobs crisis continues, adding its voice to the conversation by highlighting the hope and opportunity that direct selling provides.

The Bleak Reality

Some economists say the tens of millions of unemployed Americans who have lost their jobs since the dawning of the Great Recession will never again work the way they did in the past. Manufacturing has virtually vanished from the United States, and the residential construction industry continues to evaporate. Unfortunately, many of these jobs, along with positions in countless other fields, are never coming back—and unemployed workers from these industries are left floundering.

According to the Bureau of Labor Statistics (BLS), as of September 2011 there were 14 million Americans out of work and the unemployment rate held at 9.1 percent. However, the jobless situation may be even bleaker than we realize.

“We now have 20 to 30 million people not working,” says world-renowned economist, author and adjunct professor at New York University Paul Zane Pilzer. “However, the U.S. Department of Labor doesn’t count all of them because the Department of Labor says they aren’t looking for a job. Of course they are looking for a job!”

When calculating unemployment rates, the BLS does not count workers who are forced to take on a part-time job because they cannot find a full-time job. Nor do they count the millions of unemployed people who are “marginally attached” to the labor force—the folks who have become so discouraged that they’ve stopped actively searching for a job. Economic experts say if you throw all these people into the mix, it brings the grand total closer to 25.8 million jobless Americans, hiking the unemployment rate to a whopping 16.8 percent.

“The question now is not economic recovery but employment recovery,” Pilzer notes. Surprisingly enough, while throngs of unemployed workers are scouring the nation for jobs, approximately 3.2 million U.S. jobs remain unfilled. What gives? It all comes down to one glaring problem: a lack of training. Employers cannot find workers with the proper skill sets required for these jobs, a phenomenon known as the “skills gap.”

“The question now is not economic recovery but employment recovery.”
—Paul Zane Pilzer, economist, author and adjunct professor at New York University

In theory, the solution seems crystal clear. In order to become productive contributors again, millions of unemployed Americans must undergo training and develop new skills. Yet in reality, it’s not quite that simple. The majority of the unemployed cannot afford to go back to school, especially considering the skyrocketing cost of college. According to the College Board, average in-state tuition and fees at four-year public universities increased by 8.3 percent in 2011, and the cost of a full credit load has surpassed $8,000—an all-time high. When you add in room and board, the average list price for a state school exceeds $17,000 a year.

To make matters worse, most corporations won’t pay to train professionals who do not currently work for their company. It all comes together to create a vicious, cyclical problem.

“When [these unemployed professionals] went to school, they had a specific job in mind, but those jobs are gone,” Pilzer says. “I’ve been saying for 30 years there should be no unemployment paid after 90 days without mandatory job retraining. If your job hasn’t come back in 90 days, it’s not coming back. Functional skills need to be retrained.”

But how can these millions of unemployed workers obtain the training they so desperately need? Many of them are turning to direct selling. “The direct selling model will allow these people to get retrained while they are unemployed,” Pilzer says. “This model is outstanding because it gives people a break when no one else will.”

A Brilliant Solution

The direct selling industry is putting a dent in the unemployment cycle for numerous professionals. In fact, direct selling companies are some of the only organizations that offer significant, substantial training to the people who need it most—those who are currently unemployed—for little to no cost.

“The direct selling industry is the solution to this growing problem, and that’s one of the reasons I love this industry so much,” enthuses Jon McGarry, Vice President of Sales with LifeVantage. “Network marketing is the wave of the future. It’s becoming mainstream for a reason—because it’s a business model that works.”

“Regardless of age, race, sex or education, direct sales provides the opportunity to learn new skills and to create more income.”
—Tony Petrill, Vice President of Sales with LegalShield (formerly Pre-Paid Legal)

Robert Kiyosaki, author of the best-selling personal finance book of all time, Rich Dad Poor Dad, has a lot to say about the value of the direct selling industry. In his book The Business of The 21st Century, a collaboration with DSN Publisher John Fleming, he writes that direct selling is the “business model of the future. Why? Because the world is finally starting to awaken to the reality that the Industrial Age is over.” This sentiment echoes Pilzer’s statements that the jobs that have been lost are not coming back. Kiyosaki goes on to say that direct selling “gives millions of people throughout the world the opportunity to take control of their lives and their financial futures.”

Glenn Williams, President of Primerica, a financial services marketing company, agrees, saying he believes direct selling is the ideal solution for unemployed workers looking to earn an income and simultaneously develop priceless skills. “We have always said that the training experience you get when you join Primerica, in and of itself, has value,” he says. “In our unique business situation, we are teaching people financial principles so they can use them to go out and sell and build a business … but obviously those are also applicable to them and their own family. Even for those who choose not to pursue Primerica as a business or a career, the training they receive is helpful to them personally, and it’s also transferable to other careers they may have in the future.”

The opportunity to receive low- or no-cost training is more valuable than ever in today’s tough economy. “Regardless of age, race, sex or education, direct sales provides the opportunity to learn new skills and to create more income,” says Tony Petrill, Vice President of Sales with LegalShield (formerly Pre-Paid Legal), a direct selling company that provides professional legal counsel to its members.

Consumer Segments Served by the Direct Selling Industry

Direct Selling companies offer products and services to consumers in a large variety of segments, including:

Products

Personal Care
Beauty, Cosmetics and Fragrance
Nutrition, Wellness and Weight Management
Food
Coffee and Tea
Jewelry
Handbags and Accessories
Clothing and Shoes
Home Décor and Home Fragrance
Kitchenware and Cutlery
Home Appliances
Home Cleaning and Care
Pet Care
Arts and Crafts
Travel

Services

Telecommunications
Electricity and Natural Gas
Home Security
Computer Support
Financial Planning and Investment
Insurance
Legal Representation
Real Estate

Closing the Gap

It should come as no surprise that the direct selling industry can help close the massive skills gap for today’s out-of-work professionals. Long before the economy took a nosedive, direct selling companies had earned a reputation for top-notch training and personal-development opportunities. “As an industry, direct selling has always been heavily involved in training, motivating and helping people develop skills they never knew they had,” says Noah Westurland, Vice President of Marketing with Agel. “If you look at the industry as a whole, the re-education/ training processes that we employ allow millions of people all over the world to provide a nice, comfortable living for their families.”

Another reason unemployed workers flock to these companies is that direct selling opportunities do not come with a laundry list of qualifications. “We don’t require a certain amount of education or experience to get started in network marketing,” says Gina M. Murphy, Vice President of Sales with Arbonne. “Our opportunity is available for anyone who wants something more out of life—whether it’s more income, freedom, flexibility, recognition, you name it. I feel the training and development in the industry that we offer is the icing on the cake.”

“What’s brilliant about network marketing is that we’re so willing to share with one other.”
—Gina M. Murphy, Vice President of Sales with Arbonne

Mona Ameli, General Manager of L’Bel/Belcorp USA, echoes that sentiment. “One of the easiest, most attractive areas of opportunity for those who join the direct selling industry is that unlike corporate positions, becoming an independent distributor for any direct selling company does not require any specific degrees, qualifications, experience, previous trainings or references,” she explains. That’s because once a person joins a direct selling company, he or she gains access to a world of training and development opportunities.

And because direct selling leaders never hesitate to share ideas, tips and success stories, Murphy says the industry offers some of the best professional development available in the business world. “What’s brilliant about network marketing is that we’re so willing to share with one other,” she explains. “It’s not like corporate America where everyone has their secrets—it’s a very open community, and that’s part of what makes it so special.”

“Will Work for Training”

Perhaps the most appealing aspect of direct selling is the fact that these companies provide training and personal-development opportunities at an extremely low cost—and sometimes free of charge. In fact, the vast majority of direct selling companies offer immediate, extensive training as part of their sign-up package.

For example, it only costs an individual $99 to join Primerica. Once a representative pays this relatively small one-time fee, he or she gains access to the company’s unparalleled training benefits. What makes Primerica training so valuable? Most notably, the company’s representatives have the option to become life insurance licensed—and if they qualify, they also have the opportunity to become securities licensed at no additional cost.

“That is a huge value because that cost, depending on your state or province, could be several hundred dollars for the life insurance license and it could be twice that much for the investment license—all provided for the $99 to join,” Williams explains. “So our representatives get the benefit of the knowledge and experience of obtaining those licenses, but then they’re licensed … and that license in and of itself has enormous value.”

Ameli points out that ease of entry is also a value add and just the beginning when it comes to benefits. “You can become part of a direct selling company by signing up with a limited investment fee ($70 for Belcorp USA), which you can easily recoup within a short amount of time once you start building your business,” Ameli says. She adds that direct selling companies typically provide prompt training for their distributors to help them quickly expand their businesses and become successful business partners. “At Belcorp USA, we start our training with our new Beauty Advisors the day they join our company.”

Murphy points out that training is completely free of charge to Arbonne consultants. “At Arbonne, we believe training is an investment in our consultants, and it shouldn’t be a profit center,” she says. “If we equip our consultants with the right tools and knowledge, that investment and training will pay off time and time again.”

Combatting Unemployment by Training Entrepreneurs

Ryan Blair, CEO and Co-Founder of ViSalus Sciences, a health and weight-management direct selling company, believes so strongly in the value of entrepreneurship and personal development that he has made the teaching of it a core part of his company. Blair told a recent audience, “One of the things I’m a firm believer of and why I love this industry and am passionate about it—and will do it for the rest of my life—is that we teach entrepreneurship. That is not taught in school systems. We are more of a force as the direct selling industry for entrepreneurship than the universities are or anything else.”

He backs up his word with a remarkable emphasis on entrepreneurial skills training and education through the ViSalus Academy, which includes an online training site, exclusive events, as well as webinars and training phone calls for Body By Vi Promoters. The company’s emphasis on developing first-time entrepreneurs and empowering them through education is definitely paying off—the company reports almost 3,000 new members per day are joining the Body by Vi Challenge, creating an unmatched growth curve in the industry today.

Blair describes his company’s work as an “educational effort,” adding “we’re all here for the same reason. We want to help others, mentor others. At ViSalus personal growth isn’t something we do, it is something that we are.”

Training Wheels

Of course, each unique direct selling company offers its own distinctive brand of training and personal development. However, most of these companies start with the basics: how to sell, how to present, how to dress for success, how to host a party, how to recruit other reps as well as essential communication and organizational skills.

“In the beginning, the basics are most important,” says Peggy Davidson, Vice President of U.S. Sales Force Communications and Education with Mary Kay Inc. “Learning to have skin care and color events, selling products and sharing the opportunity with others are critical elements to our business. However, inherent in our training are soft skills such as communication, time management and customer service. As an Independent Beauty Consultant progresses along the career path, leadership plays an important role in success and is an important part of building a strong business.”

Murphy says that Arbonne also begins the training program by teaching consultants the basics before they graduate to more advanced skills. “We offer everything from basic skill-based training, like how to schedule, how to sell and how to sponsor—the fundamentals of any good network marketing company—to product knowledge to personal and professional development,” she says. Arbonne training programs are developed with input and guidance from the company’s top leaders and made available online to the company’s consultants. “We fully understand we’re working with a volunteer army here. So how do you motivate and get your people to actually want to get up and do Arbonne every day? It’s very step by step: getting people started, giving them a process and showing them how to set and reach goals.”

Obviously, direct selling professionals must also absorb tons of knowledge about the actual product or service they are selling. As part of product training, direct selling reps learn how to use, demonstrate and display their product—whether they’re selling cosmetics, home décor items, an advanced scientific wellness product, legal services or a debt management system.

Product training is particularly important at LifeVantage, a science-based nutraceutical company where distributors are selling products designed to reduce age-related symptoms on the cellular level. “Some of the benefits associated with our product do seem complex,” says Ryan Thompson, Senior Vice President of Sales and Marketing with LifeVantage. “For that reason, we offer significant training not just on the benefits of the product, but also on the science, research and development behind it.”

“We say, ‘Keller Williams is a training and coaching company that just happens to be in the business of real estate.’ ”
—Mark Willis, CEO of Keller Williams

Although the products may seem complicated, McGarry adds that LifeVantage representatives don’t need to have a degree in cellular biology. “The great thing about our company is that you don’t have to be a junior scientist to understand and explain the benefits and health-promoting capabilities of our products,” he says. “We provide training in the form of personal mentoring, monthly training calls with members of our Scientific Advisory Board, quarterly printed materials and information on the science behind our products, and by holding quarterly training meetings featuring the science that validates our products and the products we offer as well. It’s a chance for our distributors to meet the man behind the original science, Dr. Joe McCord—also our Chief Science Officer—who not only provides product training, but also offers his perspective on the latest research and developments of today.”

Keller Williams Realty also offers advanced training programs to its associates. Because each associate is already a certified REALTOR®, the company offers some exclusive personal-development opportunities. “We say, ‘Keller Williams is a training and coaching company that just happens to be in the business of real estate,’ ” explains Mark Willis, CEO of Keller Williams. He says that Keller Williams approaches training and coaching systematically and that training is focused on teaching sales associates how to become business owners.

“We see our agents as falling into three distinct communities: the mega agent, the intermediate agent and the new agent,” Willis says. “We build our curriculum and coaching for each of these different groups—moving them along the path toward becoming a mega agent if that’s the direction of their goals and vision for their career.” He adds that education has always been Keller Williams’ most powerful asset when it comes to helping agents succeed. “We have Keller Williams University (KWU), our MAPS Coaching arm and a specialized focus on technology, with award-winning products like our lead-to-close business solution eEdge.”

Out of the Classroom, Into the Streets

No matter what type of training program a direct selling company has to offer, one thing is certain: Representatives will most likely learn the most important lessons on the job. “When most people think of training, they think of something that takes place in a classroom,” says Williams with Primerica. “But the most valuable training, especially in a business like ours, is the on-the-job training—watching a successful person in action doing the business, providing the solutions directly to the client, observing and participating on almost an apprentice basis so you can develop those selling and closing skills.”

After all, no one is going to tell you “no” in a classroom. “A big part of learning this business, especially a sales and recruiting business, is that you’ve got to learn how to convince people to say ‘yes’ or to accept it when they say ‘no.’ And that just cannot be duplicated in a classroom,” Williams explains.

While Primerica takes an educational approach like many other direct selling companies, Williams says the company is still a sales business. “We have a low-pressure process and an educational approach, but in the end if people aren’t saying ‘yes’ and buying something, you don’t have a business—you have a nonprofit educational institution,” he adds.

The Gift That Keeps On Giving

When compared to practically any other field, there is no question that direct selling companies offer unequaled training and personal-development opportunities. The lucky individuals who join this industry gain access to a vast reservoir of training—and they stand to reap the benefits now and well into the future.

“The professional training that LegalShield delivers will help all of our associates become better at building relationships, listening to the concerns of others and problem solving,” Petrill explains. “These and so many other skills learned through direct sales can help our associates for years to come—in both their business and personal life.”

To top it off, the priceless skills direct selling professionals learn could easily transfer into other fields as well as further aspects of their lives. “In any business you need to know how to build relationships, how to invite people to change, how to follow up and how to develop and build a business,” says McGarry with LifeVantage. “The skills we teach are useable in everyday life and applicable to any business.”

Williams with Primerica agrees that the skills professionals take away from the direct selling industry will certainly open new doors for them. “Our goal is not to train people for the rest of the industry, but there is value that you take with you no matter where you go from the Primerica licensing experience,” he says, and adds that the sales skills Primerica representatives develop are absolutely invaluable. “We’re all selling all the time, and we’re always in the business of convincing others to see things our way,” Williams says. “All of those skills are universally applicable not only in business but also in life.”

“In any business you need to know how to build relationships, how to invite people to change, how to follow up and how to develop and build a business.”
—Jon McGarry, Vice President of Sales with LifeVantage

Westurland says the personal-development skills team members learn at Agel also spill over into all areas of their lives. “One of my favorite testimonials is from an individual in Ohio who built a very modest business as it relates to Agel, but he is very passionate about our products and the personal development he’s received from our company,” he says. “He owns his own business outside of Agel and has seen that business improve to three or four times what it was before his involvement with our company. He attributes this to the time management, presentation skills and overall personal-development training he’s received from Agel. When someone succeeds with us or in their life away from Agel because of the training they receive from us, it’s very gratifying and reinforces why we are involved in this great industry.”

This is precisely why economists like Pilzer believe that direct selling can open up a world of opportunities to professionals who are trapped in the vicious unemployment cycle. “I love direct selling as much for the business opportunity as for the personal growth,” Pilzer says. “If you want to give someone charity today, give them a job opportunity. Don’t give them a fish; teach them to fish.”

A Cloud of Opportunity

December 2, 2011 by DSN Staff Leave a Comment

Click here to order the Direct Selling News issue in which this article appeared.

When race horse owners breed two champion thoroughbreds, they hope to produce the next Secretariat. In direct selling it’s no different for companies. In fact, the merger of two fast-growing companies this summer, plus the infusion of the genes of yet a third, may have conceived this industry’s next version of that Triple Crown winner.

AL International Inc. headquarters in Chula Vista, Calif.

Networking Know-How

As every networker knows, sometimes what counts most is who you know. The management team at Javalution knew John Rochon.

Today, Rochon is Founder and Chairman of Richmont Holdings, a private investment and business holding company, and a significant investor in Javalution. What’s more, he is the former Chairman and CEO of Mary Kay Inc. and at one time was the largest shareholder in Avon Products Inc. His direct selling expertise runs deep.

As the head of Javalution’s investment committee, Rochon brought Javalution and Youngevity together, resulting in their merger and the creation of AL International Inc. He now sits on AL International’s board of directors.

When the merger was announced, Rochon was enthusiastic about the new company’s future and the synergy each company offered the other.

“We believe this merger is a brilliant move and that the way to generate impressive sales growth for coffee is to penetrate multiple sales channels,” he said in a press release. “By teaming with Youngevity, JavaFit coffee gains a much larger presence in a powerful channel, direct sales. I know firsthand the power of this channel. It’s common sense that the more people [you have] selling your product, the more your sales will grow.

“Coffee is the second most popular beverage in the world, behind water—almost everybody wants it and JavaFit coffee has a unique twist. Coffee doesn’t conflict with any other direct sales product, so anyone should want to participate. Combine all that with an established and growing direct salesforce and you have something really potent. This remarkable team has an exciting vision and this merger is a major step toward achieving it.”

AL International CEO Steve Wallach values Rochon’s involvement.

“He is someone who will help us grow bigger and better,” Wallach notes. “He was a significant shareholder in Javalution. When someone is willing to introduce their own money into a company, it shows at a high level that he believes in where we’re going. He cast a vote of confidence with his dollars. When it comes to strategizing, he brings additional resources through Richmont Holdings—planning, business strategy, connections. All those things are at our disposal. As we’re entering new markets, developing new products, considering partnerships or acquisitions, he has unique and great insights—as do his key staff members. Having that safety net as we make decisions is great.”

AL International Inc. was created on July 11, 2011, through the merger of Youngevity® Essential Life Sciences and Javalution Coffee Co. But unlike Secretariat, neither of them had to come from behind to be winners. Youngevity had a history of double-digit direct selling growth, and Javalution stacked up big contracts and record sales in its wholesale and retail coffee division, CLR Roasters, while it created the functional coffee category through its direct selling division, JavaFit®.

Then on Aug. 15, Youngevity joined with Financial Destination Inc. (FDI), a nationwide direct seller of financial, telecommunications, and health and wellness services, bringing approximately 100,000 new customer contacts and nearly 10,000 active marketers to the fold. FDI’s Founder, President and CEO William J. Andreoli became President of both Youngevity and AL International after the merger.

This triple threat produced impressive third quarter results. Revenues increased 1,400 percent, with gross profits of $7.7 million. The company is on track to produce $50 million in annualized revenue by the end of this year. And just like Secretariat’s pace, profitability is accelerating.

Dr. Joel Wallach

Steve Wallach

All the expansions add value to the growing family of companies now known as AL International Inc. Youngevity’s executives have always looked for other companies that could bring value to the corporate clan and to their direct selling distributors. Javalution’s JavaFit was a good match for that model, and Youngevity’s international reach could help it grow more quickly. At the same time, Javalution was a publicly traded company and offered stock and stock options to its direct selling distributors as an element of its compensation plan—something that was on the wish list of Youngevity Co-Founder and Chairman Dr. Joel Wallach and his son and CEO Steve Wallach. The marriage between Youngevity and FDI—a highly successful company with a strong corporate team, robust product line and formidable salesforce—expanded the happy family.

The company is on track to produce $50 million in annualized revenue by the end of this year.

Family Pedigree

Youngevity Essential Life Sciences grew out of the passion of Dr. Wallach, a renowned nutritional researcher, veterinarian and naturopathic physician. A staunch advocate for the dietary supplement industry, he has made it his mission to provide the average consumer with accurate, timely health information and resources. Dr. Wallach and his wife Dr. Ma Lan started American Longevity in 1997. It later changed its name to Youngevity. Under the leadership of Steve Wallach, Youngevity grew organically and through numerous acquisitions and strategic alliances. Youngevity “relatives” include such names as Tidal Wave™, a wellness and skincare company; DrinkACT™, the world’s first “feel good energy drink” company; ProJoba™ International and its flagship product PollenBurst™; Youngevity Healthy Chocolate; Suzanne™, the party-plan company founded in 2006 by entertainment icon Suzanne Somers; Soul Purpose LifeStyles; antibacterial pioneer PureWorks™; and OvatioN™ LifeStyles Inc. This year alone, in addition to FDI, Youngevity has partnered with R-Garden, Bellamora and Adaptogenix International.

Flagship products developed under the Youngevity Essential Life Sciences brand.

On the other side of the newly grafted family tree, former Wall Street investment banker Scott Pumper and leading research advocate in performance nutrition Jose Antonio, Ph.D., founded Javalution Coffee Co. in 2001. Eventually Javalution would become sole owner of coffee producer CLR Roasters, create a new category of functional gourmet coffee by launching the JavaFit brand into the direct sales channel, and begin trading under the stock symbol JCOF-PK. It continued to grow by making inroads into the restaurant industry and contracting with 14 cruise lines, retail giants Wal-Mart, Winn Dixie and Aldi Grocery Stores, and others. In August, CLR Roasters—now AL International’s retail and wholesale coffee company and maker of JavaFit—leveraged the Javalution name by introducing two new retail brands, Javalution™ and Josie’s Java House™. At the time of that announcement, Steve Wallach, now CEO of AL International, said that CLR Roasters was on track to double revenues in the third quarter.

He says he believes that AL International’s traditional business brands, combined with the strength of its direct selling brands, will further drive growth and increase shareholder value over the long haul.

“When distributors [from small companies] come into a bigger environment where they have more support, infrastructure, or product categories, their sales increase and they make more money.”
—Steve Wallach, CEO

A sampling of AL International coffee products under the JavaFit brand.

Cloud Concept

AL International’s expansion strategy is based on what executives call the “Network Cloud,” a concept that describes the corporation’s approach to acquisitions and strategic partnerships. They look for win-win situations where, for example, a young company with a great product is growing too fast for its infrastructure. As part of the Youngevity family, that company can gain the infrastructure it needs to thrive while its unique product gets far greater exposure by the distributors of all its new siblings.

“We started partnering with companies years ago and in a variety of ways,” Steve Wallach explains. “We would acquire the best parts of some smaller direct selling companies—products, brands, trademarks. Those smaller companies might not have the money to build infrastructure such as customer service, distributor support, or product development. Or maybe they couldn’t afford market expansion. Maybe they were growing but understaffed or undercapitalized. We were able to bring the resources to bear to better the situation for the founders of the companies and their distributor groups. When distributors come into a bigger environment where they have more support, infrastructure, or product categories, their sales increase and they make more money. The day-to-day challenges of a smaller company are greatly relieved or eliminated. We’ve been a solution for a lot of companies.”

Distributors for companies in the AL International network cloud can sell any of the 400-plus products from any company’s product line.

Most of these companies offer nutrition and wellness products, and they also benefit from the commitment to science and health education that has been a hallmark at Youngevity. It is the only direct selling company to achieve an authorized health claim through the Food and Drug Administration. For those that know the mineral selenium may reduce the risk of certain cancers and that the essential fatty acids in fish oils can protect the heart, they can thank Youngevity and Dr. Wallach, who went to battle with the Food and Drug Administration for their right to have that information.

Distributors for companies in the AL International network cloud can sell any of the 400-plus products from any company’s product line. With only one exception, the compensation plan is seamless. And with the merger of Javalution and Youngevity, the cloud compensation became even more attractive.

“When we were introduced to Javalution, they had already created the opportunity for their JavaFit distributors to earn stock options,” Steve Wallach recalls. “There’s only so much a company can pay out in compensation from revenue. From Day One, we paid at the higher end of what we could pay out, and we made the commitment among ourselves that if we ever became public, distributors would have the opportunity to have a part of it. We saw the merger with Javalution as a way we could get it done. We also wanted a healthy coffee line—coffee is the second most consumed beverage after water—and from a stock standpoint, we could compensate distributors at a higher level. It made a lot of sense.”

Opportunity Fuel

Mergers and acquisitions are helping the company grow, but they’re only part of the story. Organic growth was up 49 percent year over year, Steve Wallach reports. He says that distributors were among the first to recognize that economic pressures were causing their friends and neighbors to look for new opportunities, so they actually asked the corporate office to provide more support materials to help them introduce the business opportunity.

“For years we led our discussions primarily with our products,” he says. “We believe strongly in the products, but at the same time there are hundreds of millions of people around the world who need opportunity more than ever. We’ve always seen growth from people who knew that they needed to take better care of themselves, and now we’re also seeing growth by introducing the business opportunity.”

To meet demands from distributors who want to build by recruiting, AL International designed a new business presentation and began holding more business-building calls and supporting personal presentations with the help of corporate staff. The company’s public websites now put more focus on the business opportunity, and distributor online back offices offer more opportunity presentation tools.

“We not only want to be in the DSN Global 100—and we’re on track to achieve that sometime in this next year—but we want to get into that exclusive Top 10 club.”
—Steve Wallach

In addition, one of FDI’s executives, Steve Schulz, became AL International’s Vice President of Training. He travels the world doing business presentations for large groups of distributors, helping them recruit and do initial training for new recruits. Those newbies—who join one of Youngevity’s companies for as little as $10—learn how to run their businesses from their upline, and their company instantly sends them an email that outlines the first few steps they should take to activate their websites and explore their back office. It also offers suggestions that help them introduce people to their business. Moreover, they can take advantage of ongoing training and business-opportunity calls to learn and to grow their businesses.

Global Growth

International expansion is also fueling growth. Youngevity has been an international company for several years, and its experience often helps new acquisitions ramp up their international presence.

“What it comes down to is the world is still a big place,” Schulz says. “Where interest shows up, we pay attention. We’re looking for key people in key markets around the world. We already send products to more than 60 different countries, and we have staff on the ground in a half dozen markets. We intend to increase that dramatically in the next year or two.”

The most recent step in international expansion took place in July, when Youngevity opened an office in the Philippines to support sales and recruiting in South Asia. At the company’s first pre-launch meeting of regional salesforce leaders, four times as many guests attended the meeting as the company expected, and early sales exceeded expectations.

Diversification on so many levels—international, products, companies, even business models—will keep the company strong and help it grow, Steve Wallach believes.

“We don’t live or die by any specific product or concept,” he explains. “That’s important in the business world. We not only want to be in the DSN Global 100—and we’re on track to achieve that sometime in this next year—but we want to get into that exclusive Top 10 club. That won’t happen in the next year or two, but that’s our goal. No company can get there just selling coffee, chocolate or any single product. Our wide range of offerings captures people’s interest, imagination and purchasing power.”

While AL International has a long way to go to achieve the Secretariat-style goals the Wallachs have set, Steve Wallach notes that his company’s efforts are already paying off. Web traffic and sales are increasing, product shopping is becoming simpler, and the business opportunity is reaching more people every day. To support those efforts, the company is translating marketing materials into more languages, ensuring that products stay scientifically up to date and enhancing distribution and shipping methods.

Steve Wallach notes that when his father founded Youngevity, he wanted it to be a legacy company that would become a source of generational health and wealth.

“We have a significant base in the United States,” Steve Wallach says of the company’s potential. “Our international markets are still relatively small, but they represent a big opportunity. Outside the United States, networking is a primary profession. Our goal is to get much bigger, and we’re going to introduce our business opportunity and product benefits to more people. We’re just scratching the surface.”

Growing Family

An eye for acquisitions and partnerships has been a hallmark at AL International, as well as one of the keys to its growth. But executives are calling its largest and most recent move a game changer.

On Oct. 27, AL International subsidiary Youngevity finalized its merger with Financial Destination Inc. With its pharmacy discount card that offers discounts at major pharmacies, FDI creates new synergies with the wellness products already offered through many Youngevity direct sellers. In addition, it offers financial and telecommunications services.

But while its services were an attractive addition to the 400-plus products that Youngevity distributors can offer, FDI’s full management team joined Youngevity and brought with it some key business components that are already benefiting all Youngevity distributors in its network cloud.

“FDI’s distributor training and recognition programs—regarded as second to none in the direct selling industry—are already beginning to take our company to the next level,” says AL International CEO Steve Wallach.

The new relationship mirrors the benefits that the distributors at all AL International companies enjoy, according to William J. Andreoli, Founder of FDI and now President of Youngevity and AL International.

“Youngevity provides a strong and aggressive marketing group plus exceptional products and solid infrastructure,” he notes. “The FDI team now has access to their gourmet coffee line, hundreds of consumable products, and international marketing opportunities. Consumers are looking for ways to simplify their lives, stay healthy and achieve financial stability. Working with Youngevity, we believe we can offer solutions to what today’s consumers are looking for.

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Generosity on the Move

“[Pack a Present] is a wonderful event that gives not only the companies a chance to participate, but also individual executives and DSA Supplier Members.” —Nancy Laichas, Director of Marketing and Communications for the Direct Selling Education Foundation

“We have found that in every community program we have ever done, those of us who contribute always get much more out of the event than we give.” —Charlie Orr, Executive Director of Direct Selling Education Foundation

Leading by Example

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

Putting Aside Competition

Achieving True Success

“Consumers are interested in supporting companies that have a strong stance on social responsibility.” —Amy Robinson, Senior VP and Chief Marketing Officer of the U.S. DSA

Univera Inc.

4Life Research

Medifast Inc.

Stella & Dot

North American Power

LiveSmart 360

GeneLink Inc.

LifeVantage Corp.

ForeverGreen Worldwide Corp.

Tupperware Brands Corp.

Blyth Inc.

Primerica Inc.

Lightyear Network Solutions Inc.

Click here to order the Direct Selling News issue in which this article appeared.

Click here to order the Direct Selling News issue in which this article appeared.

More than ever, we need to better understand what motivates people, as more traditional management methods lose their effectiveness.

Social media is an interactive communication platform where the content of the communication can be both generated and consumed without obstacles.

Recognizing the Right Behaviors

Developing Self-Belief

Practicing and Getting Feedback

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Direct selling is an industry full of very smart people who have built or maintained large and successful businesses.

What a leader can and must do is develop and deliver a clear and consistent message.

As long as the goals of these organizations are consistent with the mission and objectives of DSA, we will find areas in which we can work together to serve our members.

Click here to order the Direct Selling News issue in which this article appeared.

For many years, direct sales companies have shown enormous potential for generating income and social change, stimulating entrepreneurship and promoting interpersonal relationships.

Strengthening the Image of Direct Selling

Improving the Processes and Structure of the WFDSA and DSAs

Herbalife Ltd.

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Amazing Training for Amazing Women

The Bleak Reality

“The question now is not economic recovery but employment recovery.”—Paul Zane Pilzer, economist, author and adjunct professor at New York University

A Brilliant Solution

“Regardless of age, race, sex or education, direct sales provides the opportunity to learn new skills and to create more income.”—Tony Petrill, Vice President of Sales with LegalShield (formerly Pre-Paid Legal)

Consumer Segments Served by the Direct Selling Industry

Products

Services

Closing the Gap

“What’s brilliant about network marketing is that we’re so willing to share with one other.”—Gina M. Murphy, Vice President of Sales with Arbonne

“Will Work for Training”

Combatting Unemployment by Training Entrepreneurs

Training Wheels

“We say, ‘Keller Williams is a training and coaching company that just happens to be in the business of real estate.’ ”—Mark Willis, CEO of Keller Williams

Out of the Classroom, Into the Streets

The Gift That Keeps On Giving

“In any business you need to know how to build relationships, how to invite people to change, how to follow up and how to develop and build a business.”—Jon McGarry, Vice President of Sales with LifeVantage

Networking Know-How

The company is on track to produce $50 million in annualized revenue by the end of this year.

Family Pedigree

“When distributors [from small companies] come into a bigger environment where they have more support, infrastructure, or product categories, their sales increase and they make more money.”—Steve Wallach, CEO

Cloud Concept

Distributors for companies in the AL International network cloud can sell any of the 400-plus products from any company’s product line.

Opportunity Fuel

“We not only want to be in the DSN Global 100—and we’re on track to achieve that sometime in this next year—but we want to get into that exclusive Top 10 club.”—Steve Wallach

Global Growth

Growing Family

An eye for acquisitions and partnerships has been a hallmark at AL International, as well as one of the keys to its growth. But executives are calling its largest and most recent move a game changer.

“[Pack a Present] is a wonderful event that gives not only the companies a chance to participate, but also individual executives and DSA Supplier Members.”
—Nancy Laichas, Director of Marketing and Communications for the Direct Selling Education Foundation

“We have found that in every community program we have ever done, those of us who contribute always get much more out of the event than we give.”
—Charlie Orr, Executive Director of Direct Selling Education Foundation

“Consumers are interested in supporting companies that have a strong stance on social responsibility.”
—Amy Robinson, Senior VP and Chief Marketing Officer of the U.S. DSA

“The question now is not economic recovery but employment recovery.”
—Paul Zane Pilzer, economist, author and adjunct professor at New York University

“Regardless of age, race, sex or education, direct sales provides the opportunity to learn new skills and to create more income.”
—Tony Petrill, Vice President of Sales with LegalShield (formerly Pre-Paid Legal)

“What’s brilliant about network marketing is that we’re so willing to share with one other.”
—Gina M. Murphy, Vice President of Sales with Arbonne

“We say, ‘Keller Williams is a training and coaching company that just happens to be in the business of real estate.’ ”
—Mark Willis, CEO of Keller Williams

“In any business you need to know how to build relationships, how to invite people to change, how to follow up and how to develop and build a business.”
—Jon McGarry, Vice President of Sales with LifeVantage

“When distributors [from small companies] come into a bigger environment where they have more support, infrastructure, or product categories, their sales increase and they make more money.”
—Steve Wallach, CEO

“We not only want to be in the DSN Global 100—and we’re on track to achieve that sometime in this next year—but we want to get into that exclusive Top 10 club.”
—Steve Wallach