How to Create Momentum in Any Organization

March 2, 2011 by DSN Staff Leave a Comment

Momentum, or The Big Mo as it is often called, is a powerful thing. It can create massive growth, incredible sales and a tremendous lift in your recruiting. But how do you create it? Most of the recent books on the subject of momentum treat it as an elusive, almost mythical creature that only a few are privileged to see. Many in our industry now regard it as the exclusive domain of startups and new ventures. But momentum is neither exotic nor proprietary to the next new direct selling venture. Momentum is simply the compound effect of a plan executed over a period of time, and nothing more. It can be achieved by any organization, but it must be created intentionally.

At Ambit Energy, we have achieved tremendous momentum since our launch in 2006, culminating in our recognition by Inc. magazine as the fastest-growing private company in America in 2009. While receiving this honor suddenly raised our level of visibility within the direct selling industry and around the country, it was not a surprise to our management team. Creating momentum at Ambit was and remains our intention.

In 2010, the year after we topped the Inc. 500, we continued our record-breaking customer and consultant growth. And in the first quarter of 2011, we expect to shatter last year’s mark for both. This has not happened because Ambit is a startup. We have momentum because we have consistently executed an intentional seven-step plan to create it, and we have remained faithful to that plan for almost five years now. Follow this plan, and you will create momentum in your company, too.

Step One: Define Momentum by Setting and Resetting Key Targets

This sounds so obvious, but many companies fail to specifically define what it is they are trying to create. Or worse, they fail to reset new targets after their initial goals are achieved. Developing the discipline to set and reset targets is crucial. The key to sustained momentum is building on previous successes by continuing to push for incremental gains over a defined period of time. There is no other way to do it.
In the early days of Ambit, we defined two key metrics we would focus on: a targeted daily average of new customer enrollments and a targeted daily average of new distributor enrollments. Every decision since has been viewed through the lens of whether or not it will move us toward those two goals. Five years later, we continue to establish new targets as they are achieved, but the goals remain the same. This consistency keeps the entire organization focused on what matters most to our business.

Step Two: Align Incentives for Every Distributor with Company Targets

Behavior that is rewarded is repeated. Behavior that is not rewarded is extinguished. Therefore, it is critical that your incentive programs reward your distributors for the behavior that will produce the results you have targeted. Leaders up and down the line must be focused on producing the same results.

Unlike many of our colleagues in the industry, Ambit does not sell a product. We sell electricity and natural gas. And while we love the recession-proof nature of the services we offer, we cannot rely on new or seasonal product introductions to provide new incentives to our channel during the year. We choose instead to align our entire channel with monthly promotions designed to reward everyone when a new distributor achieves stretch targets for customer gathering and personal recruiting in their first 28 days. By default, everyone in a new distributor’s upline is focused on their initial success.

Step Three: Include Key Field Leaders in the Planning

Nothing generates teamwork faster than including top field leaders in the planning process, and nothing produces more resentment than leaving them out of the conversation. Create a venue, especially at the beginning of the process, to communicate company goals to your top field leaders and to solicit their feedback for how those goals can be achieved. Whether you use all or any of their ideas is less important than allowing them to be part of the process.

At Ambit, we have a small group we call our Co-Founder Leadership Council. This group meets quarterly with our executive team to discuss our goals and our progress toward them. The insight is invaluable, and it creates an atmosphere of accountability among our top leaders.

Step Four: Eliminate Excuses for Failure

With targets set, an incentive plan developed and buy-in from the top achievers, implementation begins. This is where the plan moves from the idea phase to the reality phase, marked by real-time feedback from your distributors. It is important to evaluate initial feedback to determine what valid, unanticipated obstacles may be blocking progress. A biweekly conference call is a great tool to learn this in real time.
At Ambit, we have a biweekly call with a broader group of our leaders to determine what we can provide to help them execute. In many cases, a new tool or business rule modification can remove an obstacle and, in turn, an excuse for failure.

Step Five: Deliver as Promised

Nothing kills progress faster than poor execution. Whatever programs your company develops to support your plan, deliver them on time and deliver them without errors or glitches. The minute distributors have to refocus their efforts to help the company identify and solve technical failures, momentum drops and confidence fades. Plan ahead, define your business rules thoroughly and budget time to test before rolling out a new tool or system enhancement.

We have an exceptional IT department at Ambit, but we have also developed the discipline of making sure our business rules are clearly defined and our priorities are continually evaluated to ensure that the most important projects are getting the resources they need. Delivering flawless IT support allows our distributors to focus on what they need to do in order to grow their businesses and it produces a culture of confidence that accelerates momentum.

Step Six: Stay Connected Emotionally

Sustaining the efforts of a large salesforce over time requires more than monetary incentives. It requires excitement and enthusiasm. Distributors must continually be reassured that the company values their hard work and understands them. Companies must remain emotionally connected to their salesforce to create sustained momentum.

At Ambit, our annual incentive programs are always supported by a series of live events, conference calls and other opportunities to recognize individual achievements and to allow company executives to personally connect with our distributors. Seeing them gives us a charge, which in turn charges them up and keeps them motivated to continue.

Step Seven: Hold High Standards

Finally, hold your distributors to high standards of ethical behavior. Do not tolerate misbehavior that can compromise the integrity of your brand and de-motivate distributors who are doing things the right way. A well-designed plan to provide rich, targeted incentives often creates the temptation by some to attempt shortcuts. Tolerating this behavior will produce more of it and in the end will drive out real producers who resent the unfairness.

When we founded Ambit Energy almost five years ago, our first decision was to be the finest, most respected retail energy provider in the country. Even though we have become the fastest-growing private company in America, it was not our goal. We told our founding distributors that we would never sacrifice our integrity for growth. And we’ve repeated that message consistently since the day of our launch.

As a result, we have attracted outstanding people and created a performance culture that rewards hard work accomplished with high standards. Our plan to create and build momentum continues to work with surprising results. But it could never have happened without the high standards of conduct we expect of ourselves and require of our distributors. This plan will work for your company, too. But skip Step Seven, and your momentum will be short-lived.

Chris Chambless is the Co-Founder and CMO of Ambit Energy.

Letter from John Fleming, March 2011

March 2, 2011 by DSN Staff Leave a Comment

This month’s cover story is, once again, a pleasure to bring to you! One year ago we took on this project for the first time and the result was quite revealing, educational and informative. We ranked the markets that were responsible for $1 billion or more in annual revenues. The stats and facts, as always, are important, but the bigger story is the fact that each market is contributing in excess of $1 billion per year as a result of the direct selling channel. This means so much more than the revenues of the individual companies doing business in a market.

All industries impact the economies in which they do business. Most industries increase or decrease the number of jobs available. During recessionary times there are very few industries that can say they are actually increasing the welfare of the people through an increase in the number of jobs/opportunities being offered. In fact, we know that many jobs that once were will never be again. This is not only true here in the United States, but also in every mature market around the globe.

However, those engaged in utilizing direct selling as a channel of distribution can proudly boast that they are increasing the number of available opportunities for both personal and financial gain in every market where business is being conducted. Direct selling brings added value—never a decreasing value—to the economies in which business is conducted. Direct selling also provides something else that no other industry can match: the opportunity to grow personally as a result of training/development systems focused on the growth, self-confidence, self-esteem and achievement of the individual. Regardless of the product or service being offered, direct selling offers a unique training and developmental opportunity for people from all walks of life. This is an asset that the industry can be very proud of. Through this channel of distribution, people learn to shed their fears, believe in themselves, believe in goal setting and planning and, consequently, learn to understand that selling, servicing, recruiting, training and developing others is a very noble profession or choice of work. This remains one of the industry’s most valuable assets and gifts to the economies where direct selling is a channel of distribution.

In spite of the fact that the industry has experienced declining overall revenues over the past few years (direct sellers are not the only ones), direct sellers can be proud of the fact that the number of people participating apparently continues to grow. With more and more choosing to learn how to build a business and be more self-sufficient versus being dependent on typical job-based opportunities, the industry seems to be well-positioned for a strong rebound.

As you read the cover story, I am quite sure that you will be as fascinated as I was with some of the growth and movement since last year. Granted, some markets declined. Some markets moved up in the ranking and some new markets emerged, which provides insight for those of you who are thinking globally as you work through strategic expansion plans and focus. I remain most fascinated by China and India, as well as Russia and even Africa. Will the growth of other markets surpass the status of the U.S. market in the years to come? Is the U.S. market rebounding? These are the questions that will most likely determine the focus of global expansion in the years to come.

On the local front, private-equity investors are obviously paying attention to solid, growth-focused direct selling companies. The announced intent by MidOcean Partners to acquire Pre-Paid Legal Services for $650 million is another big win for the direct selling way of doing business. See our Financial Report section for more information on this story, which we will cover in more detail in the coming months.

We are proud of what we do here at DSN as we strive to fulfill our mission and purpose to bring you the best news and information, and sometimes, a bit of education through your stories and the gifts we receive from those who contribute to this publication. Like you, we are now constantly challenged to remember that the world is moving at warp speed. Communication has rapidly evolved into methods and vehicles that we could not have contemplated just five years ago. We are not quite there in how some of the tools may be utilized (we are still figuring some things out), but we are pleased to let you know that the U.S. version of Direct Selling News is now available as an iPad application, and we hope to have the European version as an app very soon.

As I reviewed our February issue, I was also reminded of the excellent job our new Managing Editor, Judith Emmert, accomplished in ensuring that our change in staffing would not interrupt the quality of the product we strive to offer you each month. My review of the last issue also reminded me of why we exist as a publication. DSA Supplier Member Companies have served the companies of this industry through the best of times, and most recently, through the most challenging of times. DSA Supplier Member Companies, especially those who continued to use our platform as a communications vehicle to reach you—the decision makers in the industry—are saluted and thanked as we continue our work to tell the best of your stories in the year to come!

Until next month!

John Fleming
Publisher and Editor in Chief

Meet DSA at the Depot—Whistlestop Tour Comes to a City Near You

March 2, 2011 by DSN Staff Leave a Comment

At the mention of the word “Whistlestop,” students of American history certainly envision the iconic photo of Harry S Truman, on the rear platform of a train, displaying a newspaper proclaiming “Dewey Defeats Truman.” The image was important not only for the historical significance of Truman’s election to the presidency, but also for the significance of his campaign travels, covering long distances over vast expanses of land by train, stopping in small cities and towns to greet the citizens.

In fact, the concept of a whistlestop refers to depots along a train route where the train only stopped if signaled to do so by a passenger.

In January the Direct Selling Association embarked on its own whistlestop tour. The concept began as an effort to reach out to members to communicate some important changes happening at the association, but quickly revealed itself to have a much deeper connection to DSA’s mission.

The original idea for the tour was simply to provide a vehicle for introducing DSA’s new staff leadership. After 40 years of dedicated service, Neil Offen will retire in June. I will have the honor of assuming the presidency on July 1, but even my 25 years with the association does not mean such a change is something to take lightly. I felt it critical not only to communicate about the changes, but to reach out to members with the reassurance the helm is secure and the future course of the association is one that will continue to support their needs.

But as we began to think about how we would convey that message at each stop along the route, I thought back to those iconic train caboose images from presidential campaigns of long ago. The train pulling into the station in the early days of the railroad was an exciting event. In addition to people, the train brought with it supplies, mail and news from places many people had never seen. In these days—long before Facebook and Twitter—making a connection was not only more difficult, but I have to believe it was also far more memorable. Each of us receives hundreds of e-mail messages each day, but sitting face to face with someone provides a context that cannot be rivaled by words on a screen. There is no group of people that should understand this more than direct sellers!

So the purpose of DSA’s Whistlestop Tour became more about making that personal connection than any one message that we might convey. Its most important mission became finding out what’s on the minds of our members as well as reminding them that while they are working every day in the cities and towns across the country and around the world, there is a support team working on their behalf, headquartered in Washington, D.C., but working wherever necessary.

The theme of this year’s Annual Meeting is “Focus Forward.” As DSA concludes the celebration of 100 years of serving its members, it is tempting to focus on where we have been—and what an exciting century it was! But as the meeting theme commands, the real focus must be on the future, a future that will be shaped by the needs of each DSA member.

As this magazine goes to print, the Whistlestop Tour is on its way to Phoenix and Dallas. We have already visited Florida and Georgia and are looking forward to stops in California, Utah, Chicago, Boston and New York. I hope every member of the DSA community will make an effort to meet us at the depot nearest to your homestead. Let us share with you what’s on the horizon for direct sellers, but perhaps more important, share with us what’s on your mind—how we can support you as we chart the course for the next 100 years.

Joseph N. Mariano is Executive Vice President, Secretary and Legal Counsel for the Direct Selling Association. He will become President of the DSA in July.

Nature’s Sunshine: Building Brilliant Businesses and Brilliant Bodies

March 2, 2011 by DSN Staff Leave a Comment

Nature’s Sunshine has helped people achieve brilliant bodies for almost 40 years with its supplements and encapsulated herbs. Now there’s a broader focus—creating brilliant businesses for its distributors.

Heroic Efforts

The mission of Nature’s Sunshine to create health and prosperity extends into some of the poorest countries in the world. That became truer than ever three years ago, when the company became the founding sponsor of the Little Heroes Foundation.

As the founding sponsor, Nature’s Sunshine has aided Little Heroes in the renovation of baby hospitals in Russia, the construction of schools in Mali and the distribution of health supplements throughout Ghana. Little Heroes has also supported other organizations, including the Boys and Girls Clubs of Utah County and HopeKids.

In conjunction with the Little Heroes Foundation and Mali Rising, Nature’s Sunshine helped establish the Little Heroes Academy in Mana, Mali, during 2009. Mali is one of the 25 poorest countries in the world, and its people have severely limited educational opportunities. The Little Heroes Academy, which features three classrooms and two administrative offices, helps up to 200 children each year to get an education.
Part of the sale of every bottle of the company’s Sunshine Heroes products, which support children’s health, goes to the Little Heroes Foundation to further their cause. Additionally, the support of Nature’s Sunshine makes it possible for every donor dollar to go directly to support project expenses.

“We love the focus on children,” says Craig Dalley, Vice President of U.S. Sales and Marketing. “They’re our leaders for tomorrow. Improving their lives is like improving your health. We want to offer the opportunity for distributors to be involved in helping improve the lives of children around the world.”

He explains that the Little Heroes Foundation offers grants to a variety of different organizations, allowing the company to be flexible in the way it can help people. Distributors can sign up to participate and can have a donation deducted from their commission check. The company also provides direct donation opportunities at its salesforce events.
“We have distributors who have heart. They care,” Dalley says. “Nature’s Sunshine is all about sharing and caring. There are countless stories of members who give products away simply because they want to help people get well. Little Heroes takes it to a new level.”

The company plans to launch the initiative it calls Brilliant Body, Brilliant Business at its convention this month. It is intended to accelerate its historically steady growth, transforming from a respectable $350 million company into the rock star it knows it can be: a billion-dollar enterprise.

Executives, employees and distributors—called members or, at higher levels, managers—view the company’s work as a mission to help people improve their health. The focus on growth will accomplish two things. More people will learn about the health-promoting products of Nature’s Sunshine, and more of them will take advantage of the company’s unique business opportunity to improve their finances. The mission is now about to kick into high gear.

Building on Strength

Michael Dean was named President and CEO of Nature’s Sunshine in July 2010 after serving on its board of directors for just over a year. He noticed that the company’s “hardcore focus” on products and expertise was unique.

“It is clear that we have amazing fundamentals in the company, but we have a great brand that far too few people know about,” he says. “Given how great this company is and how great the products and people are, why aren’t we gigantic? The answer was that we were so focused on our niche of expertise. We needed to focus on broadening the brand to elevate the opportunity.”

But shifting into overdrive meant that company executives needed to overcome two problems that were also advantages. First, the product portfolio includes approximately 600 items. And second, seasoned distributors have gained tremendous product expertise and have developed consulting skills that let them recommend useful products to clients, creating long-term relationships. As admirable as that kind of expertise is, it’s daunting to duplicate. But when you’re on a mission, you take on big jobs.

“How do you translate these killer ingredients into competitive advantage and dramatic growth?” Dean asks. “Our plan is to launch a whole new approach to selling and recruiting that greatly helps existing managers and broadens the market to almost everyone.”

The overriding job: simplify.

Keep It Simple

Nature’s Sunshine has organized its products into four key categories—core health, weight management, energy and fitness and body systems. Within each category are two jump-start products. The simplified groupings allow a new recruit to focus on just a few products, learn about them and share them quickly. Over time, new members can gain knowledge about additional products in each category. The streamlined product focus dramatically reduces a new recruit’s learning curve.

“A challenge has been that people who want to have a Nature’s Sunshine business have a hard time duplicating what experienced managers have been doing for a long time,” explains Efrain Villalobos, Executive Vice President, Nature’s Sunshine Products, U.S. “Now it’s very easy to talk about products and sell them. Everybody can do it.

“As the conversation gets deeper into health, customers can take the Health Analysis, a questionnaire that reveals which body system is the weakest,” says Villalobos. “The person helping them can then suggest what products they can start with. We’ve created 10 unique packs that simplify helping people without having to have deep knowledge about herbs and health.”

First challenge solved. But what about amping up recruiting itself? Reorganizing products helped, but Nature’s Sunshine didn’t stop there. The company has created a new process that members use to build their businesses, taking a tip from party plan companies.

“We have always done meetings, but we have created a system, tools and collateral that our managers need to be able to do home parties successfully,” Villalobos says. “The in-home party program also will have a new compensation element that will drive the party program. It’s an overlay on top of our legacy compensation plan that allows them to be successful with parties.”

At its March convention, the company will challenge its members to begin hosting home parties at the rate of two a week. Fueled by the product reorganization and the home party focus, Nature’s Sunshine intends to show major growth by the end of 2011.

A Strong Foundation on Steroids

Executives explain that the new tools will take member businesses to a new level and make company revenues even healthier.

“We’re providing greatly enhanced tools, resources and incentives that create a more lucrative and robust business opportunity,” Dean says. “We’re rethinking everything in a way that doesn’t change who we are. We’re just putting it on steroids.”

Those foundational products and knowledge have been a priority for Nature’s Sunshine ever since the company was founded in 1972 by Gene Hughes, a Utah schoolteacher. When Hughes developed a nagging stomach condition, a neighbor suggested that he treat his stomach with something surprising—cayenne pepper. It worked! But swallowing a spoonful of cayenne pepper was awful. That’s when his wife Kristine suggested putting it into easy-to-swallow gelatin capsules. Problem solved. Her brainstorm led Nature’s Sunshine to become the first company to encapsulate herbs. Gene and Kristine soon enlisted the support of family—Dick and Pauline Hughes and Jay and Arva Hughes—to begin a small family business that sold encapsulated cayenne and other herbs and supplements to health food stores.

But the little business soon became a mission as the family realized that they wanted to touch more lives with their products. They found the perfect vehicle to make it happen: direct selling. The model allowed them to educate consumers about the vitamin supplement products and provided their salesforce an opportunity to share in the success of the company. Today, Nature’s Sunshine Products operates in 45 countries and has more than 600,000 distributors.

Quality, Quality, Quality

Still fueling the opportunity is the company’s broad product line of personal-care products, including tablets and encapsulated herbs, high-quality natural vitamins, food supplements, skin care and home cleaning products. The company manufactures most of its products in its 270,000-square-foot facility in Spanish Fork, Utah, where it also conducts its ever-expanding research and development programs. Manufacturing its own products lets Nature’s Sunshine nimbly respond to competition, but more importantly, it allows the company to ensure quality.

“No question about it, quality is our hallmark. It’s what we’re built on, and we stand behind it,” says Vice President Craig Dalley. “We spend millions of dollars every year to be sure that we have the best quality out there. We have such strict standards that we still reject about 3 percent of the raw ingredients that come into our plant.”

Nature’s Sunshine runs more than 600 quality control tests to ensure potency, accuracy of herbal content and cleanliness. Its manufacturing facility, complete with climate-controlled warehouse and cutting-edge laboratory equipment, received the NSF Good Manufacturing Certification from NSF International, a nonprofit, nongovernmental organization and world leader in standards development and product certification. To achieve the certification, the manufacturing facility passed an extensive audit by NSF staff, including an examination of production equipment and a thorough evaluation of Nature’s Sunshine policies, procedures and manufacturing processes.

The company is so proud of its manufacturing facilities that each year it brings its field managers into the plant so they can see for themselves how everything works.

“They get to see the different tests our raw ingredients and products go through and to view the manufacturing process,” Villalobos says. “When they leave, they feel very secure in talking about the quality of our products.”

Average Isn’t Good Enough

On-site manufacturing allows NSP to control product quality.

On-site manufacturing allows NSP to control product quality.

The high-quality products are typically the first attraction for the company’s distributors, who tend to be health conscious. Often they have had health challenges that the products have helped them address. The very fact that the products work so well has been one of the reasons the company evolved to be so product oriented. Company President and CEO Dean sums it up: “You can’t change people’s lives with average products.”

As Nature’s Sunshine moves forward with its revamped product presentations and recruiting processes, it expects to become an even more robust company.

“We have a very competitive compensation structure that has evolved over the life of our company,” Dean says. “It allows people to build a business for the long term, not just get rich quick. We have the lowest distributor turnover of any company in the business, I believe. And we’ve relaunched in a fresh, new way that gives us a phenomenal, perfect balance between the business opportunity and the products. It’s a real advantage when the compensation plan is aggressive and backed up with the highest-quality products in the industry to sell.”

Dean notes that the new tools and processes that Nature’s Sunshine will introduce at its convention will set the company on course for fast growth.

“We’re focused on the vision that you can’t over-resource your salesforce,” he explains. “Any dollar I spend that’s not on sales-supporting resources is not the right place to be spending. If you can help them sell, everybody wins.”

New President at the Helm

When Michael Dean became President and CEO of Nature’s Sunshine last July, he immediately fell in love with the company.

Dean is the former CEO of Mediaur Technologies, had held executive positions for ABC Cable Networks and the Walt Disney Co., and was a strategy consultant with Bain & Co. He holds an MBA from Harvard Business School. Even though he had no experience in the direct selling industry, he immediately felt comfortable that his broad experience, skills and business acumen were matched by the deep network marketing and product expertise of the employees, who he describes as “some of the longest-tenured employees of any company I’ve ever seen.” Moreover, he was impressed by their passion.

“When you’ve worked in so many businesses, you think you’ve seen everything, but coming here was such a pleasant surprise,” he says. “Everybody is so proud of what we do. For a living, you change people’s lives for the better, both from a health and financial perspective.”

He says that he “got it” when he went on his first trip for the company’s top achievers.

“I wanted to get to know our field because they drive the business,” he says. “I met a woman from Ecuador and asked her about her story and how she became part of our family.”

The distributor’s reaction surprised him. Her eyes began to fill with tears. But she collected herself and explained that she grew up working in the fields alongside her parents to support their impoverished family. She expected to work in those fields throughout her life. But as a young woman she was introduced to Nature’s Sunshine products and the opportunity they provided. She saw her future, launched into action and was quickly able to rescue her family from a grueling, painful life. She was just as proud that she can now give back to her community, and even build a school with her income. Her life had completely changed, thanks to Nature’s Sunshine.

Dean says, “Coming from a traditional corporate background, when you join a company like this, you realize that not only is it a different animal from a business standpoint, but you genuinely improve people’s lives.”

Mannatech’s Give for Real Program

March 2, 2011 by DSN Staff Writer Leave a Comment

For Mannatech, the passion and the culture of its business has always been to change people’s lives. The developer of high-quality health, weight and fitness and skin care solutions based on nutritional science has had one mission in mind since it was founded in 1994: to enhance the quality of life for those it touches through its products and Real Food Technology® solutions.

With an identity deeply rooted in the spirit of giving, the company is now using its corporate philanthropy to step up the fight against global malnutrition. In 2010 it launched the Give for RealSM program, a unique donation-through-consumption initiative designed to fight malnutrition in children.

“According to UNICEF, more than 5 million children die from malnutrition every year,” says Robert A. Sinnott, Ph.D., MNS, Co-CEO and Chief Science Officer of Mannatech. “In short, there is a dietary crisis growing for these children that demands our assistance. Our Give for Real program allows the company and our independent sales associates to optimize nutrition across the globe.”

What makes the Give for Real program work in the direct selling industry is that the lack of proper nutrition is a global problem, and not just a problem in the developing world. Mannatech can bring Real Food Technology solutions to people in industrialized nations—such as the United States, where there is a tremendous need for good nutrition—and create a funding mechanism in the developing world through orphanage organizations.

That funding mechanism is based on the concept of social entrepreneurship, which proffers new thinking on solving a variety of social and economic problems in the world. When executives realized that the company met the criteria of this new business model, they embraced it and wove it into the corporate culture.

Meeting the Challenge

The first criterion of social entrepreneurship is to identify a problem on a global scale. Mannatech had already done that. In 1999, founder Sam Caster and his wife, Linda, expanded their efforts to support orphanages by establishing MannaRelief, a charity that provides advanced nutrients to malnourished children in orphanages around the world.

The charity started with one orphanage in Romania. In the 11 years since it began, it has touched the lives of more than 109,000 children in 83 countries around the globe, with more than 25 million servings of nutritional support provided to children in need.

However, the old model of the charity did not fully engage Mannatech’s 400,000 independent sales associates and was hindered by the economic pitfalls associated with the traditional charitable fundraising model. Like many charitable organizations, MannaRelief saw monetary donations decrease as the demand to help malnourished children increased. Mannatech executives and board members felt they needed to come up with a more aggressive approach to the company’s philanthropic efforts for fighting global malnutrition without putting all the financial burden on the associates. They agreed that if they could create a sustainable funding mechanism, then they could really go out and make a difference.

Children in Mexico enjoying hearty and healthy meals containing Mannatech’s PhytoBlend powder supplement provided by MannaRelief.

So that’s what they did. Launched on July 13, 2010, Mannatech’s Give for Real program became the mechanism to help fund the company’s fight against malnutrition. For every purchase on an order containing specific Mannatech products, a donation of PhytoBlend™ powder is provided through MannaRelief to children in need worldwide. “Mannatech’s Real Food Technology solution-inspired products provide one of the best strategies for addressing [the malnutrition] crisis because the products are developed from real-food-sourced ingredients chosen from those scientifically proven to best benefit the human body,” Sinnott says.

The company’s monthly volume creates a sustainable donation base that allows Mannatech to make a real commitment to orphanage organizations. Its ultimate goal is to link millions of consumers worldwide to millions of at-risk children to reduce malnutrition.

Now armed with the second criterion of social entrepreneurship—an innovative solution to a global problem—Mannatech went about addressing the third and fourth criteria: tapping into the passion of the public and driving the social entrepreneurship movement by finding a way to financially incentivize those who were passionate about the problem.

When Mannatech executives landed on the concept of social entrepreneurship, they knew they had the technology, the passion and the purpose to take on malnutrition. They also knew that they had an associate base intricately involved in the fundraising aspects of MannaRelief, which meant they were engaged—and that they wanted to be a part of a solution. Through the Give for Real program, Mannatech is now able to provide its associates with a way to become social entrepreneurs for a global cause.

“Social entrepreneurism works so well in our business because of the network marketing structure that brings together associates that can unite to fight this global epidemic,” Sinnott says. “The Give for Real program has allowed us to find a medium that will allow us to increase the quality of life for every individual we are able to touch.”

International Exposure

The Give for Real Program enabled MannaRelief to make its first major donation this past December, supplying more than 600,000 servings of PhytoBlend powder supplement to malnourished children in Mexico. More than 5,000 children in 52 orphanages across four Mexican states will receive the supplement through MannaRelief and its partnership with Fundacion Vamos Mexico, an organization created by former Mexican President Vicente Fox and his wife, Marta Sahagún de Fox.

Mannatech and MannaRelief presented the product to Fundacion Vamos Mexico at a press conference outside the Vicente Fox Center in Guanajuato, Mexico. “We believe this significant donation through our Give for Real program symbolizes Mannatech’s commitment toward enhancing the health of children in need through better nutrition,” Sinnott says. “The Give for Real program exemplifies the company’s philanthropic spirit and allows our independent sales associates to donate and help optimize nutrition where it is needed most across the world. We are thankful for the missions of organizations like MannaRelief and Fundacion Vamos Mexico that recognize the growing need to combat malnutrition and provide young children the proper nourishment they need.”

The second organization that aligned with the Give for Real program is one out of Springfield, Mo., called Convoy of Hope, a major international relief organization that has made a significant shift toward meeting the needs of malnourished children. Earlier this year, MannaRelief sent enough product to nourish 6,000 children in El Salvador through the organization, which hopes to help nourish 100,000 children over the next several years.

What has come from meeting with various organizations is the “feeding” versus “nourishing” debate that was brought to light a few years ago when Doctors Without Borders launched a campaign called “Food Is Not Enough.” What that debate refers to is that today’s international food aid relies heavily on enriched flour-based cereals that no longer meet the new minimum standards set by the World Health Organization for young children.

Mannatech’s strategy is to take its Real Food Technology that it patented—vitamins and mineral and phytochemicals from real food sources—and put it in a powdered blend that allows other cultures around the world to blend it into food being cooked for children. In Guatemala, another area recently visited by Mannatech representatives, that’s black beans and tortillas. What the children receive is 100 percent of their micronutrient requirements from real food sources.

And what a difference it is making. The company recently sent a video crew to Mexico to document the progress made in the orphanages that received the supplements in December. What they found is that symptoms of malnutrition—the failure to thrive, the lack of appetite, the stunted growth, the learning disabilities and the bad behavior—have been alleviated. It does not take long for a child’s body to respond to proper nutrition.

Mannatech executives now believe they have a key strategy for fighting malnutrition. The company’s patented technology provides the nourishment at-risk children need, and the direct selling model provides a sustainable donation base that allows the company to continue fundraising activities. As the company’s efforts receive more international exposure, the hope is that more organizations around the world will be willing to invest money to help fight malnutrition. What most of these organizations want is a proven strategy, and Mannatech’s Give for Real program is able to offer just that.

Looking Ahead

Mannatech is not only aligning with orphanage organizations to defeat malnutrition. In 2010, the company became the official health and wellness supplement provider to the International Sport Karate Association. Several of Mannatech’s products will be the only health supplements on the market to receive an “ISKA-Certified for Elite Athletes” seal featured on its packaging. As part of strengthening that partnership, Mannatech announced on Feb. 17 that it had formed a partnership with the North American Sport Karate Association (NASKA) to fight malnutrition. This marks the first time in its 34-year history that the association has embraced a cause.

NASKA will team up with Mannatech along its 14-city tour of martial arts competitions. “This North American tour is so much more than an elite martial arts competition. It’s about a cause to fight against malnutrition,” Sinnott says. “Together, with some of NASKA’s elite athletes, we can make a difference among the lives of people of all ages by educating them about the benefits of proper eating and a balanced diet while simultaneously working to alleviate malnutrition across the globe through our Give for Real program.”

Mannatech’s goal has always been to bring awareness and support that will inspire others to take action. Through the model of social entrepreneurship, it has created a way to engage its 400,000 associates in the cause of defeating global malnutrition. By enabling everyone to play a role, the company is able to make a real dent in this crisis.

The shift toward the social entrepreneurial way of doing business marks a huge change in how the company is able to give back to others. It is the difference between cause-based marketing and social entrepreneurism. Whereas cause-based marketing is dedicated to supporting worthy causes, social entrepreneurs are dedicated to solving problems. Mannatech has witnessed the devastating effects of malnutrition around the world and knows it has the technology to solve the problem—and it will use every resource available in the company to accomplish that goal.

The new model has also given Mannatech a better understanding of itself. “Social entrepreneurship has brought us into the fullness of who we are,” Caster says. “I think we have been a different kind of company in the direct selling industry. A lot of focus in direct sales is on the business opportunity, which it should be. It’s a wonderful business to be involved in. But because of our core technology, what we found is that a lot of people were more attracted to the ability to impact people’s lives than to just the business. So the business was sort of a side benefit to doing what we did. I think that has always been sort of the passion and the culture of our business—to change lives. And I believe if we commit ourselves to it, we’ll attract people from all over the world who are seeking a purpose-driven life.”

And that they are. Mannatech is finding that many people are interested as much in impacting the lives of others as they are in building direct selling businesses. And those new entrepreneurs fit well with a company that believes doing good business includes doing good for others.

Direct Selling’s Billion-Dollar Markets

March 2, 2011 by DSN Staff Leave a Comment

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

The story of direct selling in 2009 and 2010 is much the same as it was worldwide for all industries. Developing nations continued to rise, and China and India were standouts for significant growth. More people were clamoring for additional income opportunities, but overall direct sales numbers were generally lower than they were a few years ago. In short, less was more around the world.

In Asia-Pacific, for example, sales based on 2009 data were $49 billion, produced collectively by 13 nations. This regional total eclipsed figures for the North America region—Canada and the United States—which produced a combined tally of $29.5 billion. In Europe/Africa, the entire region’s output was $20 billion among the 33 countries. The 15 nations in the Latin American region totaled $18 billion. When you put it all together, global sales totals for direct selling was an impressive $117 billion.

Beyond the numbers, though, direct selling offered a safety net to cushion the economic crisis that hit worldwide. “[People] turn to direct selling because this is a great way that they can earn supplemental income, and work on a part-time basis, often in addition to another job they may have,” says Amy Robinson, U.S. DSA Vice President of Communications and Media Relations. “We have seen over the past year a definite increase in people who are joining direct selling companies.” The network of global direct selling also helped deliver more opportunities to up-and-comers in developing nations.

Our year-end counts show changes among those countries with more than $1 billion in sales. For the first time, we have 20 nations that have achieved the ten-plus digit mark. Australia, Venezuela and India are all new to the list; China has moved up one place; the United States managed to hold on to first place despite lower sales; and Japan is closing the gap at the No. 2 spot.

We based our findings on statistics reported by the World Federation of Direct Selling Associations (WFDSA), interviews with local Direct Selling Associations (DSAs) and third-party reporting. When we encountered discrepancies we, in most cases, defaulted to the WFDSA data. The intent of this article is to tell a story about the cumulative impact of the direct selling way of doing business in key markets around the world. It is virtually impossible to ensure statistical accuracy when approaching a project of this nature, as there is no single source that tracks individual company performance in all key markets.

Market	Estimated 2009 Sales (US$ in billions)	Previous Ranking	2008 Sales (US$ in billions)	No. Salespeople (2009)	No. Salespeople (2008)
1. United States	28.3	1	29.6	16,100,000	15,100,000
2. Japan	22.4	2	22.8†	2,700,000	2,700,000
3. Brazil	13.5	3	10.0	2,377,336	2,028,098
4. China	10.9	5	8.00	not available	>32,000,000
5. South Korea	7.84	6	7.00	3,987,933	3,089,158
6. Mexico	4.83	7	4.40	2,000,000	1,900,000
7. Germany	3.76	4	9.00‡	460,000	778,000
8. Italy	3.36	9	3.36	390,955	366,000
9. Russia	3.06	10	2.87	4,995,508	4,413,918
10. France	2.41	11	2.40‡	265,000	242,000
11. United Kingdom	2.1	8	3.56‡	400,000	419,500‡
12. Taiwan	1.7	12	1.64	4,442,000	4,111,000
13. Thailand	1.56	13	1.59	10,000,000	5,400,000
14. Canada	1.3	15	1.18	644,455	608,000
15. Colombia	1.26	14	1.50	900,000	867,000
16. Australia	1.25	*	.844	500,000	*
17. Argentina	1.15	16	1.17	731,122	714,000
18. Malaysia	1.13	17	1.03†	4,000,000	4,000,000
19. Venezuela	1.12	*	.887†	565,000	*
20. India	1.06	*	.586	2,012,940	*
NOTE: All figures provided by the WFDSA. All sales numbers are retail figures. *Not ranked in our 2010 list as having more than US$1 billion in sales. †2006 figures ‡2007 figures.

1. United States—$28.3 billion

With $28.3 billion in sales for 2009, U.S. direct selling was down almost 4.4 percent from 2008. “U.S. direct sales declined, but retailing as a whole declined 7.3 percent over the same period,” says U.S. DSA President Neil Offen. “In addition, recruiting rises as unemployment increases, with a natural drop in productivity and a counterintuitive loss of more productive members of our salesforces. But the increase in our field count will show increased sales and profits as the economy rebounds, as it has over the three previous recessions. Our 2009 versus 2008 salesforce grew incrementally by slightly more than 1 million distributors, from 15.1 million to 16.1 million.”

Expectations are that year-end results for 2010 will show a continuation of the trend: increase in salesforce numbers but generally flat or slightly negative sales. Looking forward to 2011, analysts expect that those who entered the direct selling arena as a way to make up for lost income will remain active even as the economy recovers. That trend will likely lead to higher sales for the year.

Top-selling product categories have home/family care/home durables at 23.9 percent of the market, wellness at 22.8 percent, personal care a very close third at 21.3 percent, services at 18.4 percent of sales, clothing and accessories at 10.3 percent, and leisure or educational products at 3.3 percent.
Growth in the DSA continues, as the number of those willing to become entrepreneurs takes a jump. Fifty-five new companies applied for DSA membership, and eight of those were accepted. By the end of 2010, there were 202 companies active in the DSA.

2. Japan—$22.4 billion

Direct selling in Japan has literally had its ups and downs in recent years. Between 2006 (the previous reported timeframe from WFDSA) and 2009, it lost approximately $400 million in sales. When you’re the No. 2 nation in the industry, this looks relatively small. But Japan’s economic recession has been every bit as bad as that in the United States, and economic problems began long before 2007. Government economic stimulus spending helped to move things along in late 2009 and 2010, but officials are now warning that growth will slow in 2011. The Japanese Direct Selling Association is remaining upbeat but is avoiding predictions of significant growth.

It has been too much for some direct sellers. Avon announced in November 2010 that it was selling its Japanese business. The company couldn’t justify continuing corporate support. During the November announcement, Andrea Jung, Avon’s Chairman and Chief Executive Officer, said, “While Japan is an important consumer market, our analysis indicates that we would need to commit significant additional investment in order to generate profitable growth in the near to intermediate term.”

On the other hand, some companies have stuck it out in Japan and are seeing an uptick. After bleak Japanese sales in 2009, Tupperware saw good news in the country this past year. In announcing the company’s third-quarter 2010 results, the corporation celebrated, “… double-digit growth in Tupperware Japan. Profit was up 36 percent in local currency (up 27 percent reported). Total salesforce was up 25 percent at the end of the third quarter, and the active salesforce was up 24 percent in the quarter.” Amway, too, is still counting Japan among its international markets and is even investing in iPhone apps to make ordering very convenient for Japanese customers in 2011.

3. Brazil—$13.5 billion

The direct selling industry in Brazil also had a difficult year in 2009. WFDSA figures show that annual sales fell almost $2 billion from $10 billion in 2008. The national DSA, Associacao Brasileira de Empresas de Vendas Diretas (ABEVD), however, remains bullish on its members’ performance. According to ABEVD’s figures, sales actually rose 18.4 percent from 2008 to 2009.

The ABEVD has 48 direct selling members, including Brazil-based Natura. Many of its members are the big-name multinationals known throughout the United States. They are committed to the industry, following the code of ethics and staying in business for the long term. More Brazilians found their way into business by becoming direct sellers, for a total of 2.37 million salesforce members in 2009.

Top sellers in the nation are personal care with 88 percent of sales, nutritional supplements with 6 percent, home care with 5 percent and other services accounting for 1 percent.

“In a year of adversity for most sectors of the economy, the direct sales opportunity generated income for 2.3 million people who went to fight and made the industry move billions of dollars, and helped the country in raising taxes,” says Lily Cipriani, President of the ABEVD.

4. China—$10.9 billion

China continues to be a tantalizing yet elusive market for direct selling companies. Its sales in the industry grew by almost $3 billion between 2008 and 2009, proving that companies are operating successfully within its borders. Many are founded in China; yet for multinational companies, the market remains a challenge.

Chinese DSAs offer part of the picture, but, because the industry is more loosely organized here than in established markets, it is not the definitive measure. For example, the Direct Selling Association of Hong Kong counts eight member companies on its roster: Amway Hong Kong, Best World Lifestyle, Infinitus, Herbalife, Mary Kay, Nu Life, Nu Skin and USANA. These companies enrolled more than 178,800 distributors in 2009. While they had strong sales results, it was only part of the grand tally of more than $10 billion.

China closed its doors to direct selling in 1998 and began slowly opening again in 2006. There are many regulations on companies that want to enter the market—many find it almost too challenging. Some follow the path that Syntec Nutraceuticals is treading: open physical retail stores first and then gradually empower salesforce members to go beyond the walls, selling to friends and family, once they are awarded a direct selling license. The very first company to be given a direct selling license in 2006 was Avon. The cosmetics giant has even had its challenges in China, as evidenced by a 31 percent sales loss in the third quarter of 2010.

As companies prove themselves adept at complying with Chinese laws and regulations, they are setting the stage for greater things. Nu Skin, for example, was granted permission by the Chinese Ministry of Commerce to sell in some of the country’s largest cities in Guangdong province and Shenzen city. Nu Skin President and CEO Truman Hunt has long believed that the ability to expand the direct selling model to those in Guangdong province will have a positive influence in the China market.

All eyes are on the explosive growth in China, with analysts taking bets on when it will surpass the United States and Japan. Direct selling’s role in that growth remains to be seen.

5. South Korea—$7.84 billion

In South Korea, when the doorbell rings, it could very likely be your friendly neighborhood direct seller. The country moved up one notch in our international rankings by gaining $840 million in sales in 2009, according to WFDSA.

Hong Joon-Kee, Chairman of Korea DSA and CEO of Woongjin Coway Co. Ltd, attributes much of the growth to that doorway traffic. “Both door-to-door sales and MLM were doing well. Especially increasing the rate of sales, volume of door-to-door sales was higher than MLM (door-to-door sales 16.5 percent, MLM 11.6 percent).”

The industry has approximately four million distributors and 64 members in the Korean DSA. Research shows that one-sixth of the population has been involved with direct selling at some point in their lives. The largest company in KDSA is Joon-Kee’s own Woongjin Coway, which is “a domestic eco-friendly leader in lifestyle commodities like water purifiers, air cleaners, bidets and so on.” Amway Korea has the largest salesforce, with 920,000 distributors.

Indications for 2010 final sales figures are that South Korea will hit $9 billion. The 2011 forecast for the industry is to parallel the national economy by growing 4 to 5 percent.

“Global companies like Herbalife Korea, Nu Skin Enterprises Korea and Amway Korea are booming,” says Joon-Kee. “The Korean direct selling market is one of the largest markets around the world.”

6. Mexico—$4.83 billion

Mexico rose one place in our annual list by gaining approximately $430 million in sales from 2008 to 2009. It was an increase made even more remarkable because it came during troubled economic times.

The Asociacion Mexicana de Ventas Directas (AMVD) closely tracks the activities and success of its 39 member companies. AMVD estimates that these companies account for 85 percent of the industry’s sales in the country, with growth of almost 6 percent from 2008 to 2009. (This growth is even despite the fact that Mexico’s GDP plunged 6.5 percent in 2009.) AMVD member companies sell everything from beauty products, which have mastered 41 percent of the market, to dietary supplements, footwear, fashion, home items and miscellaneous products.

Mexico had economic troubles just like its neighbors in 2009, but national GDP growth increased 5 percent in 2010. Many direct selling companies also expect to post strong year-end results for 2010. Third-quarter results for Avon in Mexico were reported as having “very healthy increases,” and the market will see Mannatech launching early in 2011.

AMVD President and Amway Mexico Director Jesus Alvarez has been in the market for almost 20 years. He notes that his company and others have had to adjust to consumer needs and changing economic and social priorities. “The business has changed in terms of product offerings, the concept and the approach. We have tailored our prices to the Latino market, keeping our quality and plan compensation consistent.”

7. Germany—$3.76 billion

Germany fell from No. 4 on our previous list, with sales decreasing from $9 billion in 2007 to less than $4 billion in 2009. The decrease from 2008 figures, as supplied by the Bundesverband Direktvertrieb Deutschland e.V, however, isn’t as drastic. “Compared to 2008 numbers, member companies’ turnover fell slowly by 1.3 percent,” says Wolfgang Bohle, Secretary General of BDD, the oldest direct selling agency in Germany. “This little fall probably results from restructuring processes within some companies. In general, the state of direct selling in Germany is good, and businesses are optimistic about the future.”

This is a prognostication supported by Christel Frank, Representative of UVDV Germany, the second-largest direct selling organization in the country: “Germany is by far still No. 1 in Europe and in the Top 10 world markets.” She says she expects 2010 results to be “very positive and growing, versus 2009.”

Looking at trends from 2010, Frank notes an increase in the number of new companies as well as more hybrid party plans. Bohle points out the success of direct selling as an emotional buying or selling experience, where people enjoy consulting along with their purchases. He adds, “Direct selling is above all feminine. Since the labor force participation rate of women increased in the past, women have more income at their personal disposal. Employed women are not only going to have more buying power, they are also explicitly more open toward modern forms of shopping like the Internet and direct selling.” Both Bohle and Frank also saw that health and wellness products are the most popular categories in Germany.

For 2011, the industry will face specific challenges. First, Bohle says that it must nurture a positive public image to help with recruitment. He believes innovation in products and selling would benefit the market; and the industry must address the impact of the Internet—its social media and Web 2.0 applications—for consumers to share information. Beyond this, Bohle says, “It will be tremendously important in 2011 to take still more care to level the playing field for direct selling opposite to other distribution channels, in particular distance selling. Direct selling and distance selling differ from each other through the different marketing of goods and services. This has to be taken into account above all in the area of legislation.”

8. Italy—$3.36 billion

Italy moved up in global rankings by one notch over last year, with an increase of $3.36 million in sales while many fellow nations dropped. The salesforce also grew, adding nearly 25,000 people to the rolls. Both increases are in stark contrast to the national economy, which had increasing unemployment and a 5 percent decrease in economic growth for 2009.

The country also now has two direct selling organizations: the long-established AVEDISCO (Associazione Nazionale Vendite Dirette Servizio Consumatori) and the 2010 upstart UNIVENDITA (Unione Italiana Vendita Diretta). With such recent success, it seems there is plenty of space for two DSAs.

“Direct selling is a mature but prominent part of the Italian economy,” says AVEDISCO President John Paolino. “It offers a real possibility of employment. We will play an increasingly important role, but this also means having to cope with greater responsibilities to protect members and consumers.”

As accountants complete their work on 2010 numbers, sales for the year are expected to be almost 10 percent higher than 2009 figures. “Italian direct selling, despite a mature industry, is the unique trade industry in continuous growth, about 5 percent in the last five years,” says Daniele Pirola, Secretary General of UNIVENDITA. “2010 sales in business premises (small shops, supermarkets, great distribution and commercial centers) increased only 0.1 percent compared to 2009!”

Both UNIVENDITA and AVEDISCO expect 2011 sales to continue the steady rise.

9. Russia—$3.06 billion

Russia increased its sales by $190 million, earning it an advancement of one spot in the rankings. The falling U.S. dollar against the Russian ruble made this change more pronounced, but the industry showed its muscle by increasing even as the national economy suffered through the economic crisis. Government rescue plans for banking and a substantial dip into national reserves pulled the country through, and things began to pick up by the end of 2009. During this period, the Russian Direct Selling Association (RDSA) noted that the number of salespeople increased by almost half a million, to 4.995 million, while company sales figures also increased.

RDSA President Tamara Shokareva reported that there are 25 members of the RDSA, and three of them were included in the top 400 list of the largest companies in Russia according to the Expert Rating Agency. Avon came in at No. 214, Oriflame at 254 and Amway at 328.

Personal care is indisputably the best-selling product category among RDSA members, at 77.67 percent of sales, with home care coming in at a distant 7.68 percent. Household, nutrition, wellness, accessories, financial service and the nebulous “other” took up the rest of the sales. The nutrition and wellness categories in particular seem ripe for growth, and Herbalife is counting Russia among its best European markets. It has even inked an agreement to sponsor Russia’s top football club, gaining prominence among Russian sports fans.

Shokareva expects 2010 results to be very positive, with increases of 5 to 10 percent in sales. She noted that sales for the first nine months of 2010 were up and the number of salespeople had crossed the 5 million mark.

10. France—$2.41 billion

France’s international rankings brought them up one level as well, from No. 11 previously. French direct sales stayed in the same $2.4 billion range from 2007 (the last period reported through WFDSA) to 2009, leaving it a winner for keeping up its pace year-over-year.

The biggest national success, however, was not just the consistency in sales. It has been the recent legal victories in working with the government and the Ministry of Economic Affairs, Industry and Employment. The Federation de la Vente Directe (FVD), France’s national DSA, was part of the ministry’s announcement to create 100,000 jobs in three years. In addition to this announcement, the industry also saw other mutually beneficial agreements. The ministry is the institution that classifies employees versus independent business owners. Thus the agreements announced in 2010 were important steps in clarifying the national definition of direct sellers as independent business operators rather than employees of corporations.

“This agreement is the symbol of the effective recognition of the sector of direct selling,” says Léa Chamboncel, Legal Representative for FVD. “The French DSA and ‘Pôle Emploi’ decided to develop their cooperation and to associate their efforts in order to satisfy the recruiting demands of the members of the French DSA (employees and independents).”

This was good news for the 188 members and 24 partners of the FVD. They also enjoy the relatively widespread familiarity of the industry in France. “[Direct selling] is a big sector that is getting bigger and bigger,” says Chamboncel. “We estimate that eight out of 10 people in France know about direct selling, and that four (out of 10) have already bought something using the channel.”

Trends in 2010 included a surge in the success of the home product/improvement category and the continued productivity of the industry in general.

11. United Kingdom—$2.1 billion

Our annual rankings saw the United Kingdom fall from the No. 8 spot last year. WFDSA sales statistics for the country show a decrease of more than half, from $3.6 billion in 2007 (rankings last year were based on 2007 data, as it was the last information reported to the WFDSA) to $1.4 billion in 2009. There were more than 400,000 salespeople working in the industry in 2009, down slightly from 2007.

owever, there seems to be a renewed optimism in the United Kingdom, with people and businesses stepping up to seize the opportunities that everyone feels sure are coming. Paul Southworth, Director General of the UK Direct Selling Association, says he saw increased recruitment and more startup companies in 2009. In fact, there are now 37 full members in the DSA and 23 prospective members. Avon, Betterware, Vie and Herbalife are the largest direct selling companies in the United Kingdom.

Expectations for the final numbers for 2010 sales are that they will be largely the same as the previous figures, reinforcing the notion that the economic recovery is quite slow. Customers, salesforce members and companies are making the best of it, though. Southworth says that party plan marketing came back into vogue, albeit customer orders were lower. Amway added a party vibe to the seemingly dismal economic year by opening a flagship “Experience Centre” in London. Part shop, part training grounds, this large space allows Amway to display all of its offerings and build an even stronger following. They’re looking forward to long-term gains of the Centre.

Southworth assures fellow leaders that all is well in his country. “[It’s the] right time to enter [our] strong, stable and established market with good consumer acceptance to direct sales.”

12. Taiwan—$1.7 billion

The island nation of Taiwan stayed in the same spot in our annual list, gaining $60 million in sales over the course of 2009. This was great news for the country, marking a 9.2 percent increase and the end of a three-year slide in sales. Shirley Chen, the Taiwan ROC Direct Selling Association (TDSA) Chairman and General Manager of Amway Taiwan Company Ltd, notes that distributor numbers were also up, increasing 8 percent to 4.4 million. The average age of Taiwanese distributors is going down also, as more people under the age of 30 join the industry. And there were more direct selling companies, a total of 302. Forty-nine of these belong to the TDSA.

While 2010 figures were not finalized at the time of this report, Chen expects them to be favorable. “The Taiwan direct selling industry will be up by 10 percent in 2010 with the macro economic growth, and the direct selling companies are making efforts on branding to enhance company reputation and product favorability.”

The top companies are still large U.S.-founded multinationals, including Amway, Herbalife, Melaleuca, Avon and Nu Skin. “The leading companies are projected to grow, continuing to dominate the market,” Chen says. “More direct selling companies are setting up a physical presence to facilitate recruitment and reputation. Nutrition products contributed more sales for the growing health-conscious consumers.”
Whether coming from a sizeable company or a small startup, 2011 promises good things. “The direct selling industry in 2011 is expected to grow continuously compared with 2010,” Chen says.

13. Thailand—$1.56 billion

Even with $30 million less in sales, Thailand remained in the same spot on our international list. These figures include sales of both Thai Direct Selling Association (TDSA) members and non-members as well. There are 10 million people selling through 590 companies, of which 29 are TDSA members. Itthisak Ampanyuth, President of the Thai DSA, believes that the 2010 figures will show almost 12 million distributors and a strong increase of 15 to 20 percent in sales numbers.

The largest direct selling company in Thailand is Amway. All its products are popular, and, since the top-selling categories are personal care and cosmetics, the company’s ARTISTRY™, SATINIQUE® and NUTRILITE™ brands do particularly well.

Ampanyuth added that trends affecting the industry are positive. Distributors and customers are gaining awareness and understanding of the channel, the government has passed favorable legislation that will help the industry, and the Thai baht currency’s increasing value is improving consumers’ purchasing power. The economy decreased 2.2 percent in 2009 but rebounded with a 7.6 percent increase in 2010.

All in all, the industry is doing well in Thailand. “We have the potential to increase dramatically due to the growth of the entire Thai market and distributors’ increasing skill and knowledge,” says Ampanyuth.

14. Canada—$1.3 billion

World economic troubles challenged Canada as well as much of the rest of the international community. Sales declined 3.5 percent during 2009 as the recession took its toll. Official numbers from the Direct Sellers Association of Canada put 2009 sales at $1.3 billion, and estimates for 2010 numbers show that the direct selling industry in Canada will decrease 6.2 percent to $1.23 billion in 2011. The bright side of the picture, however, is that recruiting increased 5.9 percent in 2009 and is expected to have a 1.6 percent increase for 2010 final figures.

Among the 48 member companies in the DSA, 43 percent reported an increase in 2010 sales, with 26 percent reporting an increase of 15 percent or more. Party plan companies reported that 33 percent of them had 15 percent more shows; 22 percent registered increased show attendance; and 44 percent had an increase in average show sales. The success of the party plan companies reveals that consumers are looking for fun yet economical socializing opportunities.

“Direct selling continues to make significant economic and social contributions to Canadians and the nation,” says Ross Creber, President of the Direct Sellers Association of Canada. He adds that his industry generates CAN$1.36 billion of income; injects CAN$4.55 billion of sales into the marketplace; contributes CAN$815 million in taxes that impact education, health services and community growth; donates CAN$7.7 million to charities and builds an industry that touches the lives of people by giving them an opportunity to work, learn, prosper and grow.

Creber concludes, “[Direct selling] is an important industry which delivers a wide range of product offerings to the Canadian population. Through financial opportunities and social benefits, it plays an integral role in improving the quality of lives for all those associated with this industry.”

15. Colombia—$1.26 billion

Colombia’s sales were down slightly from $1.5 billion in 2008, but it kept its spot on our list. Among the 27 members of the Colombian DSA, La Asociación Colombiana de Venta Directa (ACOVEDI), several are multinationals, including Amway, Avon, Herbalife, Natura, Nikken and 4Life.

The beauty and personal care segments have dominated this market. While the national economy grew only 0.8 percent in 2009, the beauty and personal care market grew 6 percent. Skin care registered nearly double-digit growth, with anti-aging products leading the way. As reported in the EuroMonitor, “The share of non-store retailers in beauty and personal care rose from 38 percent in 2008 to 39 percent in 2009 at the expense of store-based retailing, which saw its distribution share contract slightly. This was due in part to the fact that the recession attracted a growing army of Colombians to become direct sellers, particularly those from lower-income segments, as direct selling provided an opportunity to earn extra money or create self-employment. This, in turn, boosted the number of sales made through the direct sales channel.”

WFDSA figures confirm this growth, with an increase of 33,000 salespeople, for a grand total of 900,000 in 2009. Industry experts predict that the increase in the number of salespeople will translate into an overall increase in sales for 2010 final numbers and 2011 results.

16. Australia—$1.25 billion

Australia is new to the list this year, jumping ahead to No. 16. The $1.25 billion is a substantial increase over its $844 million reported in 2008.

John Holloway, Executive Director of the approximately 70-member Direct Selling Association of Australia (DSAA), explains that the historic sales reports were possibly skewed. “The 2008 sales figures came from independent research by academics from Monash University. Prior to that, this data was collected within the DSAA, and I suspect the reporting of sales numbers may have been conservative. Nonetheless, there was obviously a productivity element. I think the performance was also affected by the global financial crisis, improved recruitment and favorable exchange rates.”

Sales for 2010 are expected to be strong but not huge. However, direct selling is performing better than the rest of the retail world in Australia. Salesforce numbers are also expected to increase slightly, and leading categories continue to be health care and personal goods.

“To my mind, the trend in 2010 was the continuing impact of online trading and the integration of direct selling models with other retail models,” Holloway says. “Our industry in Australia has overall a strong performance in a challenging retail environment.”

17. Argentina—$1.15 billion

The industry in Argentina decreased enough to bring them down one notch in our annual rankings. Sales decreased nationally by $20 million. This is hardly surprising, considering that Argentina had its own share of economic problems even before the worldwide recession. Growth in 2008 and 2009 was sharply reduced, in part because of government fiscal actions as well as the international economic crisis.

Direct sellers fared better than many industries. Companies attracted more distributors, increasing their total salesforce members from 714,000 in 2008 to 731,122 in 2009. This follows the widely accepted pattern of people looking for more ways to earn income or get discounted merchandise during a recession. Sales for direct selling cosmetics company Natura were positive for the area. Its figures, when addressing Argentina, Chile and Peru together, had 32.9 percent growth for 2009.

According to the national direct selling association, Camara Argentina De Venta Directa, it has 15 members and five partner members in the group. The most significant product category within the industry is personal care, with 72 percent of the market. Home and family care items come in at a distant second with 26 percent of sales.

The Argentinean Economic Minister Amado Boudou says he expects that the nation’s economy will show growth of up to 7 percent in 2010. Direct sellers are now well positioned to increase their revenues as new salesforce members enjoy a financial resurgence.

18. Malaysia—$1.13 billion

The direct selling industry in Malaysia is steadily growing, enjoying the benefits of more companies launching in their borders. The Direct Selling Association of Malaysia (DSAM) boasts 57 members and 4 million salesforce members. There are many Malaysian and Asia-Pacific-based companies on the roster as well as multinational, U.S.-based companies such as Forever Living, Mary Kay, Amway, Nu Skin and Shaklee. Most embrace in-person selling, but online ordering is growing.

With 21 years of Malaysian operations, Shaklee has a well-established business. Its sales rose 25 percent in the early part of 2009, when most of the world was still counting its losses. Shaklee CEO Roger Barnett says he was happy but not surprised, and spoke to the Malaysian media in 2010 about the successes. “I believe we are the closest thing to being recession-proof,” he says.

DSAM President and Amway Malaysia General Manager Paul Yee agrees that the nation’s future is bright. He says consumers are looking for food supplements that help them meet nutrition needs, and they’re intent on finding the highest quality. This suits Amway just fine. “The environment is competitive and challenging, but we believe that we have the necessary strategies in place to help us meet our objectives,” Yee says.

19. Venezuela—$1.12 billion

A newcomer to the $1 billion list, Venezuela is counting its successes. From 2006 (the latest numbers for WFDSA last year) to 2009, its collective direct sales totals rose by more than $200 million. There are 13 members in the local DSA, called CEVEDIR, including Avon, Amway, L’bel, SwissJust, Stanhome, Tupperware, Rene Desses, Herbalife, Yanbal, Naturabel, Nature’s Sunshine, Vanda and Vivo. Together they have 565,000 independent distributors.

The country’s largest revenue source is oil—95 percent of export earnings—and this helped fuel a successful overall year in 2008. During 2009, oil prices fell, government spending rose, the minimum wage increased and consumers had easier access to credit. This resulted in a national spending spree and inflation in the 30 percent range. The nation has announced it is creating a dual exchange rate system for the national currency, the bolivar, and it closed the unofficial foreign exchange market. This instability and other factors inspired Natura to close its Venezuelan operations in 2009.

Tupperware has reacted to this with a different approach—an accounting one. After experiencing double-digit growth in Venezuela in 2009, the plastics giant has decided to mark Venezuela as “hyperinflationary” and use the exchange rate upon which the company expects to pay dividends. Chairman and CEO Rick Goings says, “We have a terrific business in Venezuela with a great management team and salesforce in place. Due to the external environment we operate in, we’ve also been carefully managing our value chain, given the reality of what it costs to pay for things from outside the country, and this has allowed us to achieve a good return on sales in Venezuela. At the same time, we’ve proactively looked in 2009 to make our cash available even when we’ve needed to do that at the parallel exchange rate, which has also allowed us to anticipate the current situation and avoid disruption in our earnings comparisons.”
Such a reaction underscores how successful companies must remain flexible and vigilant for market changes in the country.

20. India—$1.06 billion

New to the list this year, India’s sales nearly doubled from 2008 to 2009. Figures for 2010 are expected to show a 20 to 30 percent growth, according to Chavi Hemanth, Secretary General of the Indian Direct Selling Association (IDSA). Forecasts call for the industry to be at $1.5 billion by 2012–2013.

Hemanth credits this phenomenal growth to an increasing number and visibility of independent sales consultants and to an increase in the revenues from Tier-II cities. “More than 3 million individuals are involved in direct selling activity across India compared to 1.8 million last year,” Hemanth says. “Revenues from Tier-II and other cities reported a robust growth, increasing from 14 percent of the overall market in 2008–09 to 38 percent of the market this year. South India remains the hub of the direct selling activity followed by west India.” Other contributing factors to India’s success are growth in consumer spending, changing value perceptions and lifestyles, and increased investment by big companies in the industry.

The largest company of IDSA’s 18 members is Amway. It is among those leading the growth as direct selling companies increase their media presence, online ordering capabilities, in-country production facilities and corporate offices/distribution centers.

Hemanth reports, “The direct selling industry has grown steadily…. This has made many multinational companies look at the Indian market more seriously…. The near future could see hectic activity in the direct selling space with market players diversifying into new and nascent product categories in a bid to capture market share. The stakeholders need to take steps to ensure that growth continues.”

Protecting Your Company’s Online Reputation

March 1, 2011 by Don Sorensen Leave a Comment

Here’s something that comes up in executive meetings all the time: “Why are people saying bad things about us on the Internet, and what can we do about it?”

This can be especially troubling to the CEO who founded the company and who has spent long years working hard to build the brand. He wakes up one day and finds defamatory remarks online about his company—not constructive criticism, but outrageous accusations and almost slanderous comments.

Worse, the negative reviews are on websites that rank high on search engine results pages, so that anyone doing a search on the company will see them. And it’s not just one negative review website, but several, causing the company’s online reputation to suffer.

As an executive, you need to be aware of your online reputation and know that you can take steps to manage it. You shouldn’t just leave it up to fate, or simply hope that people won’t post negative comments about your company. Your online reputation can have a dramatic effect on not only your brand perception, but also your company’s revenues.

A couple of years ago I met with a company that had a severe online reputation problem. When potential customers searched their company name, seven out of the top 10 Google rankings were negative. After a careful review of their rankings, and prior-year revenues, I determined that they were probably losing more than $1.5 million a year in sales due to negative search engine results. The company confirmed the fact that my estimates were indeed accurate—but low.

Direct selling companies face a unique challenge in protecting their online reputation. And because your success or failure depends on how potential customers perceive you, I want to cover the basics of managing and improving your online reputation.

1) What we mean by “online reputation”

Your online reputation is determined by the top Google rankings a prospect sees when they do a search on your company name. A prospect can quickly glance down the page of results and look for anything of interest that pops out at them. If a lot of those websites have negative reviews and complaints about your company, it will automatically diminish your reputation in their eyes. But if they see a list of websites with positive comments and testimonials, they’re more likely to sign up without further hesitation.

Because most people rarely look past the first page or two of search engine results, your online reputation is determined by the top 10 or 20 search results.

2) Where negative postings come from

Some websites specialize in letting anyone post a complaint. That makes it extremely easy for a dissatisfied customer to go online and share his or her experience with the world. And the complaint will still appear years later, even if it was a customer service issue that was quickly handled.

Websites like scam.com, ripoffreport.com and complaintsboard.com will pretty much accept postings from anyone. However, they rarely check for accuracy and are not likely to remove a posting if you request it.

These websites also tend to rank high in the search engines, so if your company is named in a complaint on one of these websites, expect it to show up on a search about you.

3) How a few complaints can hurt your online reputation

You might think that if you have thousands of happy customers and distributors, a few online complaints shouldn’t matter. But the math doesn’t work out that way.

Consider that a Google search returns 10 results on the first page. If just three of those are websites with complaints or criticisms, it means nearly a third of the search results are for negative websites. They may still be in the minority, but when a curious prospect sees a link that promises to reveal the “dirt” on a company, it’s hard to resist clicking through. After all, isn’t that what you’d do?

Even one review on a website like scam.com can have an impact if it shows up near the top of the page. Sometimes a single complaint, valid or not, is enough to scare away a prospect.

I know this sounds dire, but basic human psychology is at work here. All it takes is one negative review to give them a reason to say no to the opportunity.

4) What it takes to have a good online reputation

Fortunately, there are steps you can take to manage your online reputation so you are not at the mercy of your company’s critics. Start out right by following these three steps:

Step No. 1: Accept the fact of online reviews.

Short of outright slander or libel by the reviewers online, you really don’t have much legal recourse to make the negative postings go away. People have a right to complain, and these days it’s all too easy for unhappy customers to vent their frustrations and share their opinions with the whole world.

When you see a negative review about your company the instinctive reaction is to post a response to set the record straight. I understand the human need to respond, but you have to consider Google’s point of view. Here’s why.
Search engines rank various websites high for a few reasons, one of which is relevant content, especially when that content is updated on a regular basis.

When you post a comment on a website, you are in effect giving it new content. And if you get into a back-and-forth discussion with someone on a review website about your company, Google thinks “Ah, there’s a lot about this company here, so we’ll rank this website high for searches on their company name.”

Now when someone does a search on your company, they are even more likely to see the negative review. You want to avoid that. In fact, you want the websites with negative comments to slip further down the Google rankings so they don’t appear on the first page or two of a search. The next two steps help you with that.

Step No. 2: Focus on getting positive content.

A major part of online reputation management involves pushing the negative websites off of the first page or two of a Google search. How? By posting positive content and getting those pages to rank higher than the negative websites.

You need to direct your marketing or PR department to make online reputation management part of their regular duties. That means they should always be looking for, gathering or creating positive content that can be used to continually update your websites. Don’t put everything onto one corporate website. Instead, set up different websites for different purposes.

For example, you can have a website for new distributors, a website about your charitable giving, a website about conferences and meetings, a website for photos and perhaps individual product line websites. This gives you a nice stable of websites that you have control over.

Step No. 3: Push positive websites higher.

In the online world, your reputation is all about who owns the top-ranking results in a search for your company name. You want that space to belong to you—or at least be shared only with websites that have good things to say about you.

If you can do that, then the negative websites will be pushed off the first page of a Google search. And since very few people look past the first page of a search, those negative websites may as well not exist.

The best way to accomplish this is by performing search engine optimization on the positive websites to make them rank higher. Carefully review your websites’ content and the meta title tags to be sure they contain your company name. And most important, you’ll need to create plenty of back links to your positive websites so they are seen as more popular by Google. The magic of ranking higher in Google is relevant content and gathering a substantial number of links from other websites that point to your websites. These links are anchored by your company name.

The goal of getting all the positive websites to rank higher than the negative websites can be a hard one to reach. But considering how important your online reputation is, achieving this goal is well worth the effort. This is not always easy, and it can take many months of steady effort to achieve. Still, consider that the alternative is to let the complaints and negative reviews dominate the search results and trash your online reputation.

Of course, there are even more details to managing your online reputation, but the above steps give you the basic outline of what needs to be done. Just keep in mind that these days your company’s online reputation is one of the most important factors in determining its success.

Don Sorensen is President of Big Blue Robot, a firm specializing in corporate online reputation management. For more information visit, www.bigbluerobot.com.

Rodan + Fields: Exit Retail, Enter Direct Sales

March 1, 2011 by DSN Staff Leave a Comment

Support for Consultants

The Rodan + Fields Solution Tool is a Web-based consultation tool developed by the doctors to help consultants with skin problem identification so they can provide customers with the right products.
The Nurse Connection is a one-of-a-kind program that links customers directly to a nurse to get their individual skincare questions answered directly and personally.
Educational programs give consultants the training needed to deliver personalized skincare advice.

Rodan + Fields Dermatologists skincare line launched in high-end department stores in 2002 and quickly became a top seller. In 2003, The Estee Lauder Companies Inc. realized Rodan + Fields’ value and bought the brand, which continued to thrive. By all measures, Rodan + Fields exemplified success. So why did this company decide to pull its products from department stores and re-launch the brand as a direct sales company?

The answer is simple. Rodan + Fields founders Dr. Katie Rodan and Dr. Kathy Fields saw a trend among consumers who were unknowingly doing their own brand of marketing for the company. With that boost, Drs. Rodan and Fields seized the opportunity to reach the public in a more meaningful way. And the people responded, developing an even greater personal connection with the products and the company.

A Storied History

Dr. Katie Rodan and Dr. Kathy Fields bring their science-backed skincare directly to the public, becoming the first prestigious skincare brand to exit retail and enter the direct sales market.

Drs. Rodan and Fields met as dermatology residents at Stanford more than 20 years ago. Rodan + Fields Dermatologists is actually their second business venture together. The two women are the co-creators of Proactiv® Solution, one of the most successful skincare brands in the United States.

When Drs. Rodan and Fields went to pitch Proactiv to companies, executives were impressed. However, as Allan Kurtzman, then President and COO of Neutrogena, explained to them, Proactiv wasn’t going to work on a mass-market shelf. He told them “you can’t put a $40 regimen next to a $6.95 spot treatment and have it sell.” He also told them they needed a way to communicate and connect with their audience, and suggested an infomercial format.

That turned out to be brilliant advice. Through infomercials, the women were able to come into people’s homes and explain the brand, appealing on an intellectual and an emotional level. Proactiv quickly became a top-selling acne treatment that has won numerous awards in the beauty industry by following that marketing strategy.

From House Call to Wakeup Call

Drs. Rodan and Fields began Rodan + Fields Dermatologists because they felt this approach to skincare should be extended beyond acne to treat other common skin conditions. They launched the line in department stores because they believed the products could best be explained to customers one-on-one. Stores were delighted with Rodan + Fields’ numbers. However, the doctors weren’t seeing the kind of adoption they believed the products merited.

“The doctors were finding that the majority of people who were coming in for the product weren’t coming in because of anything the department store did,” explains Rodan + Fields President and General Manager Lori Bush. “It was word-of-mouth that was sending people in for the products. The doctors began to believe that there was much more potential if they could break out from behind the glass counter.”

In 2006, a PR initiative demonstrated that direct sales could be the perfect vehicle for the company. So Rodan + Fields held a “House Call” event in a Southern California home. Attendees were thrilled to have a better understanding of the products. They liked the brand’s message so much that many wanted to become more personally involved.

Then a local television affiliate ran a piece on the House Call. “The phones lit up at the station,” says Bush. “But callers weren’t merely interested in where they could buy the products. They wanted to know how they could hold one of these events. They were asking, ‘How can I get involved?’ ”

Dr. Rodan acknowledges that the company was reaching out to attendees in a way that crossed the usual seller-buyer boundaries. “People loved the product and philosophy so much that they wanted to be part of the team,” she says. “Because of this passion and enthusiasm, our customers literally pulled us out of department stores and into the direct selling business.”

The doctors approached Estee Lauder about transforming Rodan + Fields into a direct marketing company. Estee Lauder was interested in the idea, but ultimately determined that they didn’t have the infrastructure to allow the brand to realize its fullest potential. So Estee Lauder sold ownership rights back to Drs. Rodan and Fields while retaining a vested interest in the brand.

In 2008, Rodan + Fields became the first prestigious skincare brand to exit retail and enter the direct sales market.

Philosophy and Products

So what is it about Rodan + Fields that created a desire in its customers to partner with the company?

The company’s philosophy—that great skin can make a real difference in people’s lives—resonates with its users. “Our best advertisements are our consultants because the beautiful results are literally written all over their faces,” says Dr. Rodan. “I’ve yet to meet a person who didn’t have some issue with her skin at one point or another, especially with age. With less than one dermatologist per 30,000 people in the population, successful self-treatment can be difficult to achieve.”

The company’s level of credibility also turns users into consultants. Drs. Rodan and Fields are highly respected dermatologists in the beauty industry and in the field of dermatology. “As practicing dermatologists we have hands-on knowledge of the needs of our patients and formulations required to impact skin. We fill those needs by offering products that combine medicines with elegant skincare to both heal and prevent future skin issues,” says Dr. Fields.
Mimi Field, who handles the company’s PR, agrees. “It’s great that I’m not just talking about the products to editors. I also have these wonderful resources in the doctors,” she says. “They’re called upon because of their authority as dermatologists. So that is helpful to the consultants in establishing the products’ credibility.”

Furthermore, Rodan + Fields maintains a relationship with beauty magazines, which is unusual for a direct sales company. But because of their exposure with Proactiv and their establishment as well-known experts in the field of dermatology, the doctors were able to develop that connection. “We’re in contact with the beauty press all the time,” Field says. “We meet with them several times a year to showcase new products.”

Like many high-end department store lines, Field estimates that Rodan + Fields is featured at least once a month in magazines—in effect receiving free advertising and increasing the brand’s visibility.

But even more than the brand’s credibility, Rodan + Fields’ effectiveness has made consultants out of its users. “Our Rodan + Fields products are packaged in simple straightforward regimens, each designed to fix a specific problem,” Dr. Rodan says.

The four regimens—ANTI-AGE, REVERSE, SOOTHE and UNBLEMISH—all provide clinically proven solutions that provide real, visible results. For each skin issue, the doctors have formulated a step-by-step proprietary system called Multi-Med Therapy. Each regimen is designed to deliver the right medicines in the right order to have a transformative impact on skin.

ANTI-AGE combats wrinkles, enlarged pores and loss of firmness. REVERSE takes on brown spots and skin dullness, while working to reverse skin damage. SOOTHE helps calm sensitive, irritated skin and redness. UNBLEMISH addresses acne through healing, prevention and diminishing post-acne marks.

In addition, ESSENTIALS includes additional products such as vitamins that help maintain healthy skin, and ENHANCEMENTS can be added to the various regimens to achieve optimal results.

In October 2010, to enhance the ANTI-AGE regimen, Rodan + Fields introduced the AMP MD system. The AMP MD roller is a bio-delivery, micro-channeling tool. Embedded with surgical grade, acupuncture-type stainless-steel micro needles, the roller painlessly creates micro-channels in the uppermost skin levels. It helps the skin to increase absorption of up to 500 percent. After using the roller, the ANTI-AGE Night Renewing Serum is applied. Using the serum in combination with the roller produces noticeably more effective results. Recently on NBC’s Today show, Allure named AMP MD one of the best new anti-age products of 2011.

A Different Kind of Consultant

More than 1,000 consultants signed on to Rodan + Fields before its official launch. But the company soon found that its distributer base wasn’t typical. Rather than seasoned network marketers who saw a new opportunity and signed on, most had no history in direct sales.

“Therein lies the really interesting dynamic,” Bush says. “We’d put together an MLM business plan that has a robust earning potential and discovered we were attracting people who didn’t know what to do with it. Because of our positioning and strong brand premise, we thought we’d be attractive to seasoned network marketers. Instead, people who appreciated the product proposition and the brand equity were joining.”

This provided Rodan + Fields with its first challenge. “We had to figure out how to take this passionate interest in being entrepreneurial in this category and turn that into success in direct sales,” Bush says.

One issue was brand strength. “There was the expectation that the doctors’ Proactiv legacy was going to make consultants successful just by signing up,” Bush says. This assumption was partly true; consultants had no problem creating a consumption base. “They were extremely successful in signing people into the customer loyalty subscription, but they weren’t building downlines. They were making a little bit of money, but most weren’t building the organizations that would allow them to fully capitalize on the way the plan was modeled.”

The result was a lack of dynamic leaders providing training for the company. So Rodan + Fields stepped in. “We were able to bring in some leadership from the world of direct sales and, at a company level, almost act as the upline,” Bush explains. “We know that one day they won’t want us serving in this role anymore, but in the early days, they embraced company leadership in helping them establish the how-to’s of doing the business.”

Technology Tools

Along with leadership, Rodan + Fields developed technologies—and used existing ones—to solve some of the direct selling issues. They were especially interested in getting consultants off to a quick start. “We feel that those first 24 to 48 hours are critical. If they can get a conversation going with their personal network right out of the blocks, there’s more likelihood they’ll continue down that path,” Bush says.

The desire to get consultants off to a great start was the impetus for creating the Pulse Start-Up Wizard, which won the DSA’s Excellence in Salesforce Development Award in 2010. The moment a new Rodan + Fields consultant finishes her electronic application to join, the wizard takes her into the back office. The wizard requires the new consultant to schedule appointments and send out introductions. It asks the consultant to establish her “why” for joining the business. “Consultants have to recruit themselves every day,” Bush says. “So from that point forward, every time consultants log into the back office, their ‘why’ is staring back at them.”

Along with typical components like a personal website, storefront and back office, new consultants also get what Rodan + Fields calls a social networking widget. Consultants can use it to do things like tag and post items to their social networking sites—for instance, the weekly video vignettes put out by the doctors called Skinpact News, which are mostly product-related. “Consultants can put them out on any social networking site and introduce their network of friends to the doctors,” she says. “They’re tagged so that when someone clicks on ‘learn more’ or ‘contact me,’ it sends the inquirer back to the consultant’s personal website.”

With a year-over-year growth rate of 250 percent and a consultant base that has grown to more than 12,000, Rodan + Fields is certainly deserving of another honor the DSA bestowed upon them: the Rising Star Award. “We’ve won all kinds of awards in the beauty community, but to be recognized by the DSA was real validation that we’re on the right track,” Bush says.

Targeted Growth

Rodan + Fields plans to expand internationally, but first the company plans to focus on creating a solid domestic base. “We’ve done a prospectus on where we believe we should be going globally, but we’re not going to extend our footprint geographically until we feel like we’ve developed the United States to its fullest extent,” Bush says.

And Rodan + Fields is taking full advantage of every technological advance to do just that. Plans include building a studio in the corporate office for streaming webcasts, which will allow Drs. Rodan and Fields and other executives to beam themselves into meetings around the country.

When it comes to expanding product lines, though, Rodan + Fields will be driven by utility, not the bottom line. “The doctors are not going to create a new line because it’s spring and they feel the need to beat last year’s numbers,” Bush says. “They’re not trendy. They’re addressing real needs.”

Dr. Fields adds, “We’re proud to be the only dermatologist line in direct selling. Through our line we offer people a way to not only change their skin, but also change their lives.”

March 2011

March 1, 2011 by DSN Staff Leave a Comment

Amway

Justin Rose

Russ Evans, Executive Vice President and Chief Financial Officer for Amway, passed away suddenly at his home on Jan. 29 from natural causes.

Evans was responsible for Amway’s worldwide finance function, including treasury, all accounting functions, taxes, financial reporting, forecasting, financial planning and insurance.

The company’s co-CEOs, Steve Van Andel and Doug DeVos, said: “Since joining Amway in 2008, Russ Evans was a constant source of new ideas, insight and inspiration. His tremendous knowledge and experience made Russ a trusted colleague; his easygoing, approachable style made him a friend. Our prayers and thoughts are with Russ’s wife, Marie; his son, Michael, and their family.”

Immunotec Inc.

Stuart A. MacMillan	Robert Henry
Rod Milne

Immunotec Inc. announced the appointment of Stuart A. MacMillan as President of the Corporation.

Prior to joining the company, MacMillan held a number of senior management responsibilities across diverse functional areas, most recently as President of Arbonne Canada from 2006 to 2010 and Sales Lead of Arbonne USA from 2008 to 2010. Prior to Arbonne, he was formerly the President and CEO of the Canadian Operations of Weber Shandwick Worldwide, one of the largest public relations firms, and held other senior positions with Bell Canada Enterprises Inc. and ACC Telenterprises Ltd.

To further strengthen its management team, the board of directors also approved the following appointments: Robert Henry is assuming the additional role of CEO in addition to his current Executive Chairman role. Robert Felton was appointed as COO. Rod Milne was appointed as Vice President, Field Development and Marketing.

4Life Research

Jason Gough	Tyler Rasch
Rich Decker	Andy Weeks

4Life President Steve Tew announced the following promotions:

Jason Gough has been named Vice President, Marketing. After 11 years at Tahitian Noni International, Gough joined 4Life in October 2008 as Director of Marketing. He has a wealth of marketing expertise with an emphasis on editorial, Web, brand, sales tools and product-line management.

Tyler Rasch was promoted to Vice President, Information Technologies. Rasch came to 4Life in 2010 and has more than 20 years of management experience, 15 in the world of IT. He recently completed a master’s degree from the University of Utah’s Executive MBA Program.

Rich Decker was named Vice President International, Latin America. Decker is responsible for the operations and field support for 4Life markets in Mexico, and Central and South America. During his 14-year career in network marketing, Decker has worked with distributors in North America, Southeast Asia and India.

Andy Weeks was promoted to Senior Director of Software Development. Weeks has been with 4Life for more than 10 years, eight spent in the IT department. He has managed the Software Development team for three years and recently took on the back-end development for 4Life’s website.

Herbalife Ltd.

Andrew Shao

Herbalife Ltd. announced that Andrew Shao, Ph.D., has joined the company as Vice President, Global Product Science and Safety. Shao joins the company from the Council of Responsible Nutrition (CRN), a trade association representing dietary supplement manufacturers and ingredient suppliers, where he led scientific and regulatory affairs.

Before serving at CRN, Shao was Senior Scientist at General Nutrition Corporation and previously in research and development at Kemin Health (formerly Kemin Foods). He is the author or co-author of more than 30 peer-reviewed articles and abstracts. He is the 2010 recipient of the Tufts Friedman School of Nutrition Science and Policy Alumni Association Award in the Leadership Category for his work within the field of nutrition.

Nuriche

Kevin Larson

Manuel Ramirez

Nuriche announced the appointment of seasoned marketing executive Kevin Larson as its new Vice President of Marketing to oversee the company’s strategic marketing needs.

In his new position, Larson will develop and implement key marketing strategies to establish Nuriche as a global brand and support the expansion of its growing national and international business. He will also work with Nuriche’s product development team to create and promote new product lines. In addition, he will direct corporate events and manage the company’s website.

Nuriche also announced the appointment of seasoned network marketing executive Manuel Ramirez as its new Vice President of Latin America, charged with overseeing the company’s expansion into key Hispanic markets in Mexico and Central and South America.

Ramirez has more than 17 years of network marketing experience. A native of Mexico, he is fluent in both Spanish and English and has extensive experience in the Latin American markets, where he has overseen the development and implementation of business plans, managed operations, directed sales, marketing and communications initiatives, and worked closely with top distributors to achieve success. A skilled bilingual trainer and presenter, Ramirez has motivated thousands of distributors at conventions, regional events and product launches.

Lifemax Inc.

Jonathan Ducos

Lifemax has announced the appointment of Jonathan Ducos as Lifemax Vice President of Operations & Information Technology. Having serviced all internal and external technology needs since joining Lifemax in early 2008, Ducos will continue directing the company’s global technology advancements while taking a more active role in international operations and expansion.

Leveraging his information technology background, Ducos will oversee the ever-growing technological infrastructure at Lifemax. In addition to coordinating domestic and global logistics, including manufacturing, order-tracking and shipping between 13 countries, Ducos’ immediate plans include streamlining internal processes and increasing external efficiencies by implementing integrated software solutions.

Ducos comes to Lifemax with a background in Web development and marketing. Ducos holds a bachelor’s degree in Information Technology from the University of Central Florida and is the co-founder of Visual Design Network LLC, a Web development company specializing in the creation of print and Web media.

SeneGence International

Tonette Orihu

SeneGence International, a direct sales company specializing in long-lasting cosmetics and anti-aging skin care, announced Tonette Orihu as the new Manager of Distributor Development.

Orihu brings more than 18 years of direct sales management experience to the company. In her new position, she will be responsible for managing the career success of new and experienced independent SeneGence distributors in the United States.

Oxyfresh Worldwide Inc.

Tom Lunneborg

Coeur d’Alene-based Oxyfresh and 21TEN named Tom Lunneborg Vice President of Product Development and Distribution. The new position was created to reflect Lunneborg’s expanded role following the highly successful launch of Life Shotz, an all-in-one nutritional supplement from Oxyfresh’s sister company, 21TEN. In his new role, Lunneborg will continue to develop new products for both companies and will help the companies scale as they expand production capabilities.

Submissions
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

Stella & Dot Receives $37 Million Investment from Sequoia Capital

February 4, 2011 by DSN Staff Leave a Comment

Stella & Dot’s product line includes boutique-style designer necklaces, bracelets and rings.

Founder and CEO Jessica Herrin has Stella & Dot poised to make direct selling history.

When the news broke on Jan. 10 that Sequoia Capital, one of the most influential venture-capital firms in Silicon Valley, had invested $37 million in Stella & Dot, more than a few eyebrows were raised. Many wondered why a firm that, by some estimates, is responsible for nearly 14 percent of the value on NASDAQ—funding such technology and Internet giants as Apple, Google, YouTube and Zappos—would be interested in a direct seller of boutique-style designer jewelry.

According to Alfred Lin, former COO of Zappos.com and now partner at Sequoia Capital, the decision to pursue Stella & Dot was fueled by the belief that the direct selling industry is on the cusp of a new age, with e-commerce and social networking transforming the landscape of the traditional direct-sales approach. Sequoia believes Stella & Dot is poised to be a “billion dollar opportunity” due to the innovative “social selling” approach of Founder and CEO Jessica Herrin.

“Sequoia rarely sees a business built so strong, with such little capital,” says Lin. “We pursued Stella & Dot based on the performance of the company, the strength and track record of the team, and the tremendous potential for this brand.”

Stella & Dot did not need nor was it seeking capital. However, Lin and Sequoia partner Mike Moritz were able to convince Herrin that they truly wanted to be involved in creating a game-changing company for generations to come.

“It’s exciting to be part of a brain trust that has guided the growth of so many successful companies,” says Herrin. “Alfred’s passion for customer service and company building acumen meshes perfectly with our team. I believe you build a truly special company by bringing together the right group of passionate people to lend their DNA to your cause.”

Strong Performance

That cause is helping woman successfully balance career and family. When Herrin first founded the company out of her living room in 2004 as Luxe Jewels, she envisioned a new approach to traditional direct-sales ideas. She focused entirely on learning the sales channel by doing trunk shows. She wanted to combine the best of direct selling with the ease of e-commerce and social networking to create a flexible and lucrative home-based business that would appeal to the modern woman and offer professional-level earnings per hour.

“With Stella & Dot, I‘ve paced the growth of the company around becoming a mom and raising two kids,” says Herrin. “Though we passed a million in annual sales, I wasn’t ready to kick it into high gear until after my youngest was born in 2006. Then I began to build a team and really grow our field. In March 2008, our Chief Creative Officer, Blythe Harris, and I rebranded the company as Stella & Dot, after our two grandmothers.”

Herrin adds that she wanted to create a mission-driven company that was truly transformative and special. “I have bootstrapped this company and built it very differently,” she says. “The people around the table are here for the long haul, building the company the right way, for the right reasons. We have an incredibly high bar for hiring—we’re looking for missionaries, not mercenaries.”

While Herrin’s business strategy incorporates new technology to drive sales, the most important business component for Stella & Dot remains the focus of the company’s sellers, known as “Stylists,” on cultivating personal relationships with customers at in-home shows and one on one.

The combination of old and new practices has paid off. Stella & Dot has seen impressive revenue growth. The company had sales of $33 million in 2009 and $104 million in 2010—impressive numbers when sales figures in the direct selling industry as a whole have remained flat, or as some suggest, even declined, over the past four years.

“None of this would have been possible if we didn’t design irresistible products people love and deliver with incredible customer service,” says Herrin. “The credit goes to the amazing team of talented individuals who’ve joined our home office team. They work tirelessly to continually surprise and delight our Stylists and customers.”

Strong Leadership

Herrin is no stranger to success. A serial entrepreneur, she’s been recognized for her business savvy in The Wall Street Journal, New York Times, Forbes and O, The Oprah Magazine.

After earning a degree in economics from Stanford, Herrin worked for two tech startups before enrolling in the Stanford Graduate School of Business. At age 24, she launched her first company, the WeddingChannel.com, which is now part of the world’s leading wedding site, The Knot.

Now, with Stella & Dot, Herrin employs the same proven leadership skills that made WeddingChannel.com a success, although, as she admits, the two experiences are very different now that she is a mother of two.
“I co-founded WeddingChannel.com in the go-go-go days of the dotcom boom,” she says. “It was a 24/7 activity, with much of the world focused on an IPO instead of sustainability and profits. It bred a ‘flip it’ mentality in so many investors and employees.”

With Sequoia Capital as a supportive partner for the long haul, Herrin looks to growing Stella & Dot. “When people ask me my exit strategy, I tell them I plan to exit very old, on a stretcher with an air tank. This is my last gig,” she says.

Strong Potential

Stella & Dot may be the first gig for many women entering the direct selling industry. The company is becoming a viable opportunity for women of all walks of life, including a higher demographic with higher expectations around earnings. The company has a diverse group of independent business owners finding success with the company, including doctors, lawyers, stay-at-home moms and college students.

“Our business has proven to work just as well for the single girl in Manhattan as it does for a work-at-home mom in Texas, a newlywed in Boulder or a retiree in Miami,” Herrin says. “Our business model really works for our Stylists. Their success and happiness is attracting others who want to do it and are looking at it as an alternative or supplement to a corporate job. They love the income, flexibility, professional development, fun and community Stella & Dot offers.”
Stella & Dot stylists average over $1,000 per show in sales generated by selling necklaces, bracelets, rings and other jewelry and accessories. What’s interesting to note is that the earnings are not due to higher prices for the products. The average price point of Stella & Dot products is comparable to others in the industry—about $50.

“Stella & Dot is just filling a unique style need,” says Herrin. “In terms of price points, our line is accessible luxury, with half of our styles under $50. It’s not that we’re more expensive; it’s that our customers like our products so much that they are buying more of it.”

While the strong potential for earnings has attracted many, Herrin also believes that one of the secrets to the company’s success is the sustainable focus and balance between family and career.

“Our ‘work’ is so incredibly inspiring, creative and rewarding, it hardly feels like work at all,” she says. “As much as we are about enabling flexible jobs for women in our sales field, we are also incredibly ‘love your life’ friendly at the home office. We want people to thrive at Stella & Dot. Our goal is to be a place people love to come to work, where they feel challenged, balanced and like they are growing.”

With the success of its first three years and the support from Sequoia Capital, Stella & Dot is positioned well for the future. But can it make direct selling history by becoming the first direct seller to reach $1 billion in five years?
Herrin replies with a confident “Yes.”

Amway—Returning to Its Powerful Brand

February 4, 2011 by DSN Staff Leave a Comment

Employees lined up both sides of the street leading to Amway’s World Headquarters in Ada, Mich., to welcome distributors from all over the world who came to celebrate the direct-selling giant’s 50th anniversary in 2009.

A brand is more than a company name. It’s more like the company’s heartbeat.

No company understands that better than Amway, the 52-year-old direct seller that began the transition back to its original name three years ago. As it lived through the conversion, the Amway management team and independent business owners experienced just how much difference a strong, well-thought-out brand can make.

The Amway name is one of the most well-known in the direct selling industry, but the company faced challenges. In the late 1990s, the company made an important shift toward e-commerce as a major part of its business model. To signal the new business day being created on the Internet, it began doing business—only in North America—as Quixtar and phased out the remaining Amway business in North America in 2001.

By the end of the first year, Quixtar reported revenues of $448 million plus another $70 million from Quixtar Partner Stores. Success grew with record-breaking numbers and peaked in fiscal year 2006 with Quixtar sales reported at $1.12 billion.

However, while Amway sales in China and other parts of the world increased, U.S. sales declined, and the company faced reputation issues, which it addressed head on. It invested to improve business training in North America as well as worldwide, and it set realistic income and work-hour expectations for first-time entrepreneurs. At the same time, Amway made the heart-wrenching decision to sever its ties with some independent business owners (IBOs) who did not adhere to the company’s rules of conduct.

Flexing Its Brand Muscle

Doug DeVos

Candace Matthews

Glenn Armstrong

Steve Lieberman

But despite its promising launch, the Quixtar name never really gained traction. Surveys showed that even after 10 years, the Amway name was much better known. Many top IBOs had international businesses, so operating under two separate names was a bit awkward. And during that decade, almost every company engaged in e-commerce, so the Quixtar designation no longer differentiated the company’s Web-based business. Company leaders believed that they could achieve much stronger growth than their modest forecasts predicted. So in 2008 they hatched a plan to develop a global culture of innovation that would support double-digit annual growth. Part of the plan was to leverage their brand strength and return to the Amway name in North America.

To be certain that they executed the transition in the most professional way possible, they muscled up their management, hiring executives with specialized expertise and championship business pedigrees. Three key new leaders were Chief Marketing Officer Candace Matthews, Chief Sales Officer and Vice President of Business Innovations Glenn Armstrong, and Vice President and Managing Director for Amway North America Steve Lieberman. The three led a major global initiative to ensure that the new Amway brand became entrenched both outside and inside the company.

Matthews had experience at L’Oreal USA, Procter & Gamble and Coca-Cola. Armstrong joined Amway by way of Wm. Wrigley Jr. Company, Whirlpool Corp., Quaker Oats Company and General Mills. Lieberman spent much of his career at S.C. Johnson & Son and held top executive positions at Pearle Vision and Enzymatic Therapy Inc.

Amway President Doug DeVos and Chairman Steve Van Andel purposely looked outside the direct selling industry for executive talent to lead the brand transition.

“We had great talent in direct selling, but we hadn’t worked on building our brand,” DeVos says. “We felt we needed to be innovative and get better at brand building to get into the marketplace and talk about who we are.”

Van Andel adds, “Their talents were critical at leading this charge and clarifying the path. We needed leadership to identify the stages of how we executed that plan, and we hadn’t developed that talent in years past.”

Creating Worldwide Wow

Matthews immediately understood the challenge. Amway hadn’t been exactly front-of-mind for her, and one of the biggest and most pleasant surprises was the company’s size and breadth. The $8.4 billion company has more than 3 million IBOs in more than 80 countries and territories around the world.

“I had no idea how global this company truly is,” she says. “I’ve worked for major global companies, but Amway is truly global and highly regarded. During my first trip to Asia, I walked up to a building and saw the Amway name across the entire outside of the building. I recall speaking with someone and mentioning that I worked for Amway, and they brightened and said, ‘Ahhhhhh, Amwayyyyy.’ For me, that was a reference point—the feeling of admiration we want to make everyone feel, whether they’re a distributor or a consumer.”

Matthews’ major job has been to gain global alignment to the Amway brand. That task required much more than simply returning to the Amway name in North America. It encompassed four areas: consistent global use of the Amway name; the business opportunity; enduring relationships with consumers, independent business owners and employees; and purposeful citizenship that makes a difference in people’s lives around the world. Driving each of those areas was the Growth Through Innovation mantra.

“It was important to make sure that people understood Amway,” Matthews says. “We started with the ‘Now You Know’ campaign that explained what Amway is. Those commercials talked about the areas where we operate, focusing on beauty and nutrition.”

In addition to mass-media commercials, Amway invested in massive website improvements; social media sites; sponsorships of sports teams and concerts; development of celebrity spokespersons; and the traveling Mobile Brand Experience, where staff members highlight the company’s major product brands—Nutrilite® and Artistry®—while giving IBOs a venue to expose prospects and customers to the company’s innovation and excitement.

Innovation: Standard Operating Procedure

Lieberman notes that all those actions raise awareness of the real Amway—a company where cleaning and home care are only 10 percent of the business and where dedication to innovation, quality and the consumer leads the way.

“The return to the Amway name in North America sparked us to dispel the bias of what people thought Amway was and introduces them to what it really is today,” he says. “They didn’t know that we had the No. 1 vitamin and mineral business in the world in Nutrilite or that we own one of the top five cosmetics brands in Artistry. Amway had been investing in new products throughout its history—big international brands—and we continue to do that.”

Last year, Amway North America had its two most successful product launches ever when it introduced Crème LuXury anti-aging cream as well as Artistry Light Up Lip Gloss. In January 2011, it launched its first memory-support nutritional product.

Lieberman says that for years such innovation was accomplished almost in secret—not because the company had anything to hide, but because continuous improvement was business as usual. For example, Nutrilite’s Double X multivitamin and mineral supplement, which was created by Nutrilite founder Carl Rehnborg, has been the company’s nutrition flagship since 1948. Rehnborg’s key philosophy was always that the best way to provide optimum nutrition was through a balanced supplement. So as scientific knowledge advanced over time, its ingredients were modified. Since 1983, Carl’s son Sam has led Nutrilite and carries on his father’s driving passion for innovation. Amway’s investments in such product endorsers as football great Kurt Warner are making that innovation more visible in North America. Rehnborg sees the Amway and Nutrilite brands as a great marriage.

“I tell distributors that you’re dealing with the two greatest assets people have—health and wealth,” he says. “The business opportunity in Amway evolved originally from the sale of Nutrilite products. The two are perfectly linked together. One deals with health: Nutrilite. The other deals with wealth: Amway.”

Reaching Key Constituents

Nutrilite’s Health Institute and Center for Optimal Health provide top-notch venues for Amway IBO leaders, bureaucrats, regulators, legislators and the media from all over the world to learn more about Nutrilite, Amway, the products and how they’re produced, and the clinical studies that back them up. Rehnborg says that the 12,000 Chinese leaders who came through the facilities recently, while an exceptionally large contingent, were just one of the groups from all over the world who visit the facilities every week.

“I look at it as a great corporate university that’s focused on the things that keep us great as a company,” Rehnborg says. “It is specifically focused on our message of optimal health and it’s a repository of information on optimal health. It’s also where we’re doing the research that keeps us No. 1, with exciting new ingredients and clinical studies—everything it takes to make sure our products are the best. And finally, it’s about education and training.”

Training has been a big focus for Amway throughout the brand transition in North America. Since 2007 the company has invested heavily in training of all kinds, including online and face-to-face. In the last three years, some 1.3 million IBOs have attended live training, and 120,000 have attended product spotlights held in convention centers and other large venues to receive training on product features and benefits. Since Amway began online training in 2007, about 800,000 IBOs have taken advantage of it.

Conquering the Great Divide

Training obviously creates knowledge, but, along with other steps taken during the brand transition, it has also done something else remarkable at Amway. It seems to have melted the divide between corporate staff and field. Lieberman says that there is now a closer partnership with IBOs. He points to the company’s annual Achievers Conference as proof.

“Three years ago it was a 100 percent company-driven meeting, with employees onstage doing training and recognition,” he says. “This year’s meeting was 50-50. We had key IBO leaders onstage, and when we went to training sessions, they were led 100 percent by IBOs. It’s a clear sign that we’re all on the same page. The line between company and business owner has been eradicated.”

Some of those same IBOs work closely with the corporate staff to test whether new messaging resonates with particular groups, such as young moms or sports fans. IBOs literally test ways to take a conversation on a likely topic and naturally blend information about a product or the opportunity into the discussion. They make sure that all messaging is on target for the Amway brand and for product brands Nutrilite and Artistry.

“Anything we do in sales or innovation, we do because that’s what the brand stands for,” says Glenn Armstrong, Chief Sales Officer and Vice President of Business Innovations. “[CMO Candace Armstrong’s] group comes up with positioning statements and brand propositions. We help understand how they’re going to resonate with distributors. They’re our primary customer.”

Keeping close relationships with those primary customers means finding ways to make the opportunity and products more attractive. That led Amway to such innovations as smaller packaging with lower prices in India, and developing physical locations in China that serve as training centers, brand reminders and locales that IBOs can use for business building—steps that might not have been considered a few years ago. Those ideas provide a springboard to introduce similar concepts in other areas. Such creative thinking has become the new norm and is carrying Amway to a future that is becoming less international and more global.

“We’ve grown nine of the last 10 years,” Van Andel says. “That’s one of the reasons that got us to try to double the business. We’ve done a lot geographically, but we think we have a few markets to expand into. Ninety percent of our business is outside the United States. We’re a player in China, India and Russia, and our U.S. business was up in 2010. We’ve come a long way. When you shift from being international to becoming a more multicultural business, suddenly you get new ideas, such as physical presence and small packs. You think about what works in different parts of the world, and you stop just shipping out ideas from the United States. It’s a huge advantage.”

With more than half a century in business, Amway’s top leaders are excited about the future.

“We just had our 50th anniversary, and we spent a lot of time talking about our heritage, our corporate values, and our cause of helping people have business opportunities,” DeVos says. “That’s our foundation for the future, but everything else about the way the company operates has to change because the market is different today. Being more present with consumers in the marketplace, brand building, and more savvy use of technology—you’ll see us doing more and more of that.”

An International Amway

Amway Center in Orlando, Florida, home to the NBA’s Orlando Magic, opened last October.

A strong brand identity is a big plus, no matter where in the world a
company does business. While it returned to its Amway roots in North
America, the company made sure that it seized every opportunity to build
its brand and business globally.

As the company shoots
commercials, it conducts what it calls “global shoots,” using models of
10 different ethnicities in the same situations. The tactic allows Amway
to uniquely tailor the commercial to the needs of its affiliates around
the world, while maintaining the same consistent message.

While
the Amway name is consistent around the world, so are the names of its
key products, such as Nutrilite® and Artistry®. That consistency allows
it to leverage plans either globally or in a geographic region. For
example, when Olympic champion Chinese skaters Shen Xue and Zhao Hongbo
married, the Chinese government wanted to create an international
celebration for them, calling it Artistry on Ice. Amway had developed
such strong relationships with Chinese officials that they approached
the company to ask if Amway would like to sponsor the event, which
created exposure throughout Asia.

Back in the USA, the company
has lined up numerous opportunities to create awareness of the Amway and
product brands. Artistry is the Official Skin Care and Cosmetics
Provider of the 2010 and 2011 Miss America Pageants; Nutrilite just
signed NFL and Super Bowl MVP Kurt Warner to a multi-year endorsement
agreement; and Amway holds several professional sports sponsorships,
including exclusive rights to placing its logo on the official Detroit
Red Wings hockey team’s practice jerseys as well as dasher board signage
during Wings home games. Amway also is the presenting sponsor of Major
League Soccer’s San Jose Earthquakes.

Its biggest and most
prestigious brand coup came when it scored naming rights to Orlando’s
new sports and entertainment complex, now known as the Amway Center,
which is home to the National Basketball Association’s Orlando Magic
(owned by the DeVos family). The Amway name is prominently displayed on
the building’s exterior, painted on the roof, and featured throughout
the complex via a premium digital signage program. It appears on the
tallest HD scoreboard in an NBA venue, measuring 42 x 41 x 41 feet. The
Amway Center features more than 1,100 high-definition screens and a
state-of-the-art digital signage network for fan interaction, ads and
sponsorships. Amway will be able to target its message on the screens to
the audience in the complex. Amway also plans to team up with the
Orlando Magic throughout the season on special events to benefit
children as part of Amway’s global One by One charitable program.

Inside
the Amway Center, the new Nutrilite Magic Fan Experience will offer
visitors an innovative introduction to Amway’s Nutrilite brand and the
new corporate Amway brand identity. Linked through a common theme, The
Power Behind the Team, the Nutrilite Magic Fan Experience features
interactive and informational displays about Orlando Magic players, as
well as corporate citizenship projects that support the health and
well-being of local children and their families. Volunteers from Amway
and the Orlando Magic will partner to build a new KaBOOM! Playground for
the Orlando community in April.

“It’s a big way of spreading our
brand around the globe,” Chief Marketing Officer Candace Matthews says.
“NBA basketball is a very big sport around the globe, and Orlando is a
global destination. Amway Center is a major family entertainment venue,
just like Disney World and Universal Studios.”

The center has
already announced two major events that will provide brand
opportunities: the Lady Gaga concert in April and the NBA All-Star Game
in February 2012.

Executive Connection with Ryan Blair, Founder, CEO, ViSalus Sciences

February 2, 2011 by DSN Staff Leave a Comment

In this month’s Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Ryan Blair, Founder and CEO of ViSalus Sciences, about leadership, inspiring distributors and the challenges facing the direct selling industry.

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

RB: Seeing a person become a full-time entrepreneur. I love to focus on people who are replacing their income and are able to do ViSalus full time. It’s great knowing that they’ve been able to allocate more time to themselves and their families and to become a success.

DSN: What has been your proudest accomplishment?

RB: The turnaround we did in 2010. In 2011, we hope to double that accomplishment. We will have taken the company from a difficult situation and turned it into a massive success in a year’s time. Outside of being an entrepreneur, my greatest accomplishment would be raising my son.

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

RB: I tell them the truth—what I’ve gone through to become successful, the things I’ve been able to do personally, the struggles I’ve had, and the lessons I’ve learned. We share ourselves authentically with our distributors. There’s lot to be said for that. We don’t just put our best faces forward. We show all of ourselves. Through that, they realize that they can, too. My story is unique. I came from the worst environment possible. I share with people what I’ve been able to do with my life. It helps people believe that they can, too.

DSN: What is your vision for ViSalus?

RB: To be the No. 1 weight loss company in the world, and the most innovative.

DSN: If you could relive one period of time—a year, a week, whatever—since starting ViSalus, what would it be? You could choose a great time to relive or a period where you’d change something.

RB: I would have come up with the Body by Vi business model the day after the economy fell apart, not in July 2009! It would have strengthened our lead in this space.

DSN: What was the most important thing you learned in the process of starting the company?

RB: Focus. Don’t try to do too much. I’ve taken a lot of insights from what Steve Jobs has done at Apple. Focus is saying no. That will be my mantra for the rest of my entrepreneurial career. It’s one of the key reasons why we’re so successful in this day and age. We say no. There are a lot of good ideas, but we are just as proud of the products we haven’t launched as we are of the things we have.

DSN: Is there one basic principle that has governed your leadership at ViSalus?

RB: We’re focused on adding customers. We literally have a customer-to-distributor ratio that’s nearly 10 to one. We provide incentives to customers. We are focused on customers unlike any other company out there. As a result of that focus, you have a distributor opportunity that’s very unique and that everyone can feel good about.

DSN: What do you see as our industry’s greatest challenge?

RB: Adaptation. Direct selling companies that are massively successful fear change more than any other industry I’ve ever seen. Resistance to change is going to create a lot of disruption to our industry. New models, new companies, new ways of doing business, new ways of communicating are emerging every day. The direct selling industry is slow to embrace it. I see a channel that is ripe for innovation. There’s a lot of opportunity to innovate in the direct selling channel.

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

RB: Bob Goergen gave me a quote when he first invested in ViSalus. He said, “I’ve just made you a wealthy man. Now realize there is no finish line.” It’s a quote that is short on words but intense with meaning. The race is just begun. There’s no end in sight here.

DSN: What’s something that few people know about you?

RB: I’m more introverted than extroverted. If you see me on TV or in the media, you suspect that I’m a complete extrovert. I’m completely the opposite. I like to go away for retreats by myself where I bring every book I haven’t read. I read and do a lot of critical thinking for two weeks in a row. Several times a year I get away for a couple of weeks. I think that people get overwhelmed by so many different messages that they don’t take the time to think. You need to make that time to think, particularly when you’re an entrepreneur.

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