Re-energizing Growth, By Re-thinking Crises
Something not altogether good was brewing in direct selling in late 2019. The Direct Selling Association reported flat-line global sales performance of $35.2 billion, down slightly from 2018. China’s 100-day reviews of nutritional products halted companies from selling in China, surprising everyone. Continued compliance pressures in China clearly stressed sales in the channel. The domestic regulatory environment brought new challenges as well. And for many companies, sales just weren’t where they needed to be for continued market expansion. Pressure everywhere was building, but no one could foresee what was around the corner.
C-suite strategic planning, course corrections, realignment of corporate spending, new compensation structures, and the like were underway throughout the industry when pandemic struck in early 2020. COVID-19 could have compounded lingering 2019 circumstances, but that is not what happened for these seven direct selling companies.
With the benefit of time and distance, 2020 sales numbers and some hindsight, these industry leaders take a short, retrospective look inside their companies during a year like no other. In so doing, they help the direct selling industry re-think crises while telling the stories of how their teams met disruptive challenges and leveraged 2020’s new business reality to create a renewal that re-energized their field organizations and helped solidify their growth trajectories for 2021 and beyond.
COVID-19 could have compounded lingering 2019 circumstances, but that is not what happened for these seven direct selling companies.
This industry leader takes a short, retrospective look inside USANA during a year like no other.
Founded / 1992
Top Executive / Kevin Guest, CEO
Products / Health & Wellness, Personal Care, Cosmetics
As USANA moved into 2020, the year started strong. A surprise, 100-day nutritional supplement review by the Chinese government had slowed their business in 2019. Still, they realigned their operational spend, invested in IT infrastructure, devised a new road map focusing on new categories, and started building momentum in their non-China markets.
By late 2019, business was normalizing and in the first-quarter 2020, CEO Kevin Guest leap-frogged internationally—China, Korea, Mexico, The Philippines, Italy and Romania.
“I was actually in China when news of the pandemic there began to break, and our team began to contingency plan in late January and early February for this [COVID] to have a more wide-ranging impact,” Guest says.
Guest found himself one step ahead of country lockdowns amid pandemic and in a race to get back to the U.S.
They were fortunate to learn from their China and Korea operations early in 2020, which helped the U.S. team act more swiftly once the health threat arrived. “Still, I don’t think anyone could have predicted the magnitude or speed of what we’d face here and in each of our markets around the world,” Guest says.
USANA maintained a crisis communications and action plan, so that’s where they started. They didn’t overanalyze, instead they got to work and created global COVID task forces with authority to move forward, bypassing bureaucracy. Daily shifts and changes in-country could be life and death. USANA had to be a very nimble global organization.
“The COVID task force approach helped us get away from the silos and helped the efficiency of our decision-making processes tremendously,” Guest says. “I delegated a lot of the decision making to other officers in the company and other general managers around the world, so that they could feel empowered to make these huge decisions and follow through on them. And I’m so glad that I did.”
Prioritizing employee and customer safety, USANA immediately purchased employee laptops and kicked into a work-from-home environment. They even set firm dates to revisit the policy, which gave employees clarity and security about planning for childcare.
Supply chain concerns mounted as demand for health products grew. They increased inventory load to assure continued manufacturing and sought contingency suppliers of raw materials and ingredients. They found sources equal in quality and less expensive.
“This time last year was all-hands-on-deck, and we always seemed to be a few steps ahead of what was going on, fortunately,” Guest says.
“What happened for us in 2020—because of where we were in 2019—accelerated our strategic objectives versus disrupting them, which was very, very helpful for us as a company,” Guest says.
With a whole host of predictive analytics at their disposal, USANA knew momentum was on their side as early as Q4 2019. Trends indicated markets outside China were strengthening too. When Q1 2020 hit—before the full effect of the pandemic—they knew where they were headed from a sales/momentum perspective. After Q2 2020, USANA felt more confident, and the publicly-traded company raised its financial outlook to the street.
“From that point on, momentum continued to build, our sales results accelerated, and we ultimately delivered $1.135 billion in sales for the year, or 7 percent sales growth compared to 2019, which to me is an unbelievable year, especially given the continued challenges from the pandemic,” Guest says.
There were curveballs, like the effects of the U.S. banning the WeChat platform used so widely in China, and the necessity to shift 19 remote in-person training centers in China to 100 percent online. And some pandemic related challenges linger—as ships still languish offshore due to customs slowdowns in some ports.
But the pandemic highlighted USANA’s strengths and has driven positive change. They launched and accelerated many global digital initiatives in 2020, including an improved mobile platform, expanded payment options, quick and simple product education, ways to capture and respond to consumer voices, improved SEO, and easier ways to share USANA experiences with others.
The ability of USANA’s field to utilize these tools and move to more social media-focused selling, to take advantage of additional company-sponsored promotions and incentives did a lot to drive the company’s results.
“For us, we, fortunately, have a very strong business with a lot of customers that love our products, and we had that base—regardless of what happened at the beginning of 2019—that carried us through this unprecedented year of 2020,” Guest says.
Sustaining a growth trajectory in 2021 will include production and launch of a new health drink line, as well as looking at international expansion as a continued growth strategy. But meeting new challenges, like even more intense cybersecurity and normalizing an in-person and digital hybrid event management strategy, is vital too.
Looking back, Guest is grateful for USANA’s culture and the core values of its employees that had, in the normal course of business, intuitively created systems that served them so well in crisis. That culture, he says, is too valuable to lose and with more than 100 new employees, who have never come to work in USANA’s world headquarters and he has never met or seen personally, Guest worries.
“I’m glad we had this great culture which got us through really, really potentially challenging times, but my worry now going into 2021 is, ‘How do I, as the CEO of the company, how do I maintain that culture on a global basis that took us 28 years to create?’ ” Guest asks.
He, like so many other CEOs, is not alone in this worry.
Excerpt from the Direct Selling News May 2021 Cover Story: “Renewal, Re-energizing Growth, By Re-thinking Crises.”