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February 04, 2011

U.S. News

Amway—Returning to Its Powerful Brand

by Barbara Seale

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.

Amway Brand IdentityNo 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
Doug DeVos
Candace Matthews
Candace Matthews
Glen Armstrong
Glenn Armstrong
Steve Lieberman
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.