February 01, 2017
Arbonne: Growth Propelled by Technology
by J.M. Emmert
Headquarters: Irvine, California
Founder: Petter Mørck
CEO: Kay (Napier) Zanotti
Products: Cosmetics, skin care, personal care, wellness
|Kay (Napier) Zanotti|
For direct selling companies, harnessing the power of today’s technology is critical to sustained success. Technology impacts every area of a business, from back-office operations and supply chain management to consultant training and sales and marketing.
Kay (Napier) Zanotti understood the importance of a strong technology underpinning when she took over the helm of Irvine, California-based Arbonne seven and a half years ago, although she says she did not realize the full extent of just how reliant Arbonne’s Independent Consultants were on technology tools and platforms.
“When I came into the company I really did not have a full understanding of IT,” says Zanotti. “I knew it was important, but I had never seen a business that was so totally dependent on technology. All our Consultants operate from their own computers, increasingly from their own mobile devices. They run their businesses and reach out to preferred clients, as do we, through technology. The other pieces—supply chain, shipping, manufacturing—are all technology-based.”
Arbonne, which offers cosmetics as well as skincare, personal care and wellness products, was in four markets when Zanotti began her term back in 2009—the U.S., Canada, U.K. and Australia. Her vision for the company included international expansion, but to do that successfully, she knew the company had to commit to upgrading its technology capabilities to meet the needs of both Consultants and consumers.
Embracing New Technologies
With that in mind, Zanotti brought in Guy Thier, who joined the company in 2013 and today is Arbonne’s Chief Information Officer. Thier’s background in the fitness industry, including 10 years at Bally Total Fitness, prepared him well for the challenges facing his new company. “Many of the challenges were similar in that it was a business-to-consumer environment where technology was enabling growth,” says Thier. “The technology platform that was in place at Arbonne was really near the threshold of where it could not support more growth. So being able to put in a new platform and put ourselves in a position where we could grow substantially was really the focus initially.”
After evaluating the situation and putting a plan into action, Arbonne’s technology virtually changed overnight across its global markets, which at the time of the 2015 relaunch had expanded to include Poland. The company came out with a new e-commerce platform, enhanced its back-office capabilities and greatly increased its scalability. This was done through partnerships with Thatcher Technology, an MLM software specialist; Keste, an e-business suite provider; and Amazon Web Services (AWS), which provides cloud-computing services.
“Thatcher provides support in e-commerce, the sale of products over the Internet, as well as management of the Consultants’ genealogy, compensation calculations and tools to help Consultants manage their downlines,” says Thier. “For the back office we brought in a lot of stability, creating an integration layer, which we are actively using for mobile and other products.”
The integration layer was one of the major contributions by Keste. What AWS provided was the ability to scale dramatically and quickly for the last day of the month. “Like other MLM businesses, a great percentage of our business occurs the last few days of the month, so we needed to increase our capacity five-fold within 10 to 15 minutes on those days,” says Thier.
The three partners were instrumental in getting Arbonne to the point where executives were confident they had found a great platform for growth, a great platform for international expansion and a great platform for opening alternative selling methods.
A Companywide Effort
The relaunch of the new technology platforms and tools was a concerted effort across the organization, from Arbonne’s executives to the Consultants who had to learn the new systems. Such changes within a company oftentimes can be slow to show progress or, even worse, detrimental when so much is new and untried, but Arbonne continued to grow through this period. “We never crashed,” says Zanotti. “Not that we were perfect, because we were far from it, but it’s hard to be perfect with the kind of end-to-end change that we made.”
Understandably, there was some frustration at the beginning of the launch, says Zanotti, but, in general, the Consultants have been supportive. “Change is hard, and there were some changes in the way they had to operate their business,” Zanotti says. “We were very rapid in making the changes, and everyone was heavily involved—from our customer service operations to our top executives and myself—in understanding what was less than optimal and then changing it as quickly as possible.”
Throughout it all, Zanotti tracked the effectiveness of the changes through Consultant satisfaction surveys. While the feedback is now positive, she knows that expectations run high on the future of the new platforms and tools. “I find that technology is a moving target,” she says. “The real expectation has been based largely on consumer interaction with Amazon. Our consultants are operating with e-commerce to run their businesses, so they have certain expectations that we seek to achieve by offering the speeds and functionality they get from Amazon. I think we upgraded dramatically in 2015 to get that functionality that they needed, but we’re still on that journey and things change. It’s a very dynamic area for us to be constantly providing ease of use, ease of access, the ability to place orders and access to information, from anywhere, anytime.”
Seeking Continued Growth and Future Expansion
While the end-to-end technology changes were indeed a contributing factor to Arbonne’s success over the past few years—enabling the company to react more quickly, be more agile and increase greater variety from a marketing standpoint for new product, discounts and promotions—it was by no means the only reason. New product launches, improvement in the compensation plan and providing consultants with better and easier access to information all played a role.
Yet, as Zanotti acknowledges, the technology underpinning of the company is fundamental to Arbonne’s ability to grow its business. “There have been multiple contributors to our business growth, but one thing is clear: Without well-functioning technology, we could have been in big trouble,” she says. “If the systems were to shut down for any extensive period of time, or people were unable to place orders, or there was credit card fraud, it would have been a major detriment to our business.”
Now, Zanotti and her team can look confidently into the future. The new technology gave Arbonne the capability to expand into two additional countries last year—New Zealand and Taiwan—and the company does plan to capitalize on the strong foundation to further expand.
“We are certainly looking at potential expansion in Asia,” Zanotti says. “However, we’re not the type of company that moves quickly on international expansion because we want to make sure we are successful wherever we go. We’re very proud of our record of sustainable and consistent growth. So we are not on a rapid expansion, but by the same token, we believe international expansion is a key tenet of future growth.”
Zanotti has every reason to believe the company will be successful in other parts of Europe and particularly in Asia, where discerning consumers appreciate Arbonne’s focus on pure, safe and beneficial products. “[Asian consumers] buy into our positioning very strongly, and they have extremely high standards for products, as do we,” she says. “Our research indicates that our products continue to be extremely well received, and we really upped the game in terms of removing any ingredients that we believe have the potential to be harmful.”
Arbonne has made a committed effort to develop products for the Asian market—defining what products should be in the market as well as a marketing and sales plan; building relationships with Taiwanese prospects; and perhaps most importantly, using the new technology to develop Experience Centers, which are storefronts not typical in its Western markets.
Rounding Up Donations
Arbonne also is expanding the company’s mission to make an impact on the world, specifically, today’s youth. In April 2012, the company established the Arbonne Charitable Foundation to provide support for programs and opportunities that promote the development of self-esteem in teenage boys and girls.
As of today, the foundation has raised over $4.2 million, already distributing over $2.5 million to help more than 155,000 teens from around the globe develop increased confidence through such projects as the North London Youth Project; the Annual Healthy Girl Festival in Laguna Beach, California; and the Breakthrough Miami LEAD Program.
“I am proud of the Foundation and particularly proud of the fact that the money raised can only be given as a grant to one of our Independent Consultants’ or one of our employees’ organizations that they support,” says Zanotti.
Grants are typically between $3,000 to $8,000, and that money goes directly back into the community where that consultant or employee plays a role. While most of the money is raised through events and the contributions by consultants and employees, the company has utilized its new e-commerce capabilities to increase donations. “As part of our e-commerce platform we have a step in the checkout process that talks about the foundation and asks for a donation by rounding up to the next dollar,” says Thier. “A large percentage of the funds are raised via the website and checkout process.”
Still More to Come
Throughout the changes across its business systems, Arbonne never skipped a beat in reaching new revenue heights. The company eclipsed the $400 million in 2013, and by 2015 had reached the half-billion dollar milestone, with revenue of $502 million. For 2016, each of the company’s markets will show revenue numbers have climbed; North America was up 8 percent; Poland, 90 percent; the U.K., 24 percent and Canada, 13 percent.
For the new year, Arbonne executives will focus their attention on four additional initiatives, three of which will seek further improvement of technology capabilities. The first focus involves product formulation. Now that the company has stability in the back office, Arbonne will fine-tune its processes and tools to help bring new products to market faster, increasing the speed from concept to introduction.
Another focus will be the refinement of its e-commerce business tools. “Now that we have a pretty solid e-commerce platform, we are looking at techniques used by other retailing companies for companion products, marketing within the shopping cart, and giving our consultants CRM-like tools for them to market specific messages to specific constituencies of their market base,” says Thier.
The third initiative will relate to building a base of substantial end-consumers through social media channels, which Zanotti sees as a real opportunity for growth. As with other direct selling companies, Arbonne had a preferred client base in which many of the Consultants were wholesale buyers. “Now we have a very strong preferred client base of close to 700,000 people, which is about three times the size of our Consultant base, who buy our products strictly for their own use,” she says. “We believe there is a huge opportunity in continuing to grow that base, so we all are working collaboratively to drive it through technology and social media and tie it back to our Consultants to provide a greater degree of reach-out to more of the world’s consumers.”
This initiative will include creating a greater synergy between the Arbonne corporate voice and Consultants’ personal networks on platforms such as Facebook, Pinterest and Instagram. “Some of what we are going to be doing this year is putting in some techniques to expand the network beyond the Consultant’s immediate network to the Consultants’ customers’ customers,” says Thier. “We’re really focused on expanding our reach in the social media arena, and there is some technology we are putting in place to make it easier to share information, make it easier to purchase off social media and give Consultants feedback on what is working and what is not working within their social media networks.”
The final major focus is one that is generating much excitement in the company: the Arbonne Intelligence Genius Ultra. Introduced last year, this new product is a patent-pending skincare device that uses safe and effective ultrasound technology, allowing Arbonne skincare topicals to work smarter and optimize skin care performance. “We launched in April of last year and it sold out immediately,” says Zanotti. “It’s quite a game-changing product for us. We have never had any kind of skincare electronic tool and it’s clearly an increasing area of growth in our existing markets as well as in Asia.”
With a solid technology foundation, a popular new product, plans for future expansion and a focus on continued enhancement of its business tools, Arbonne is poised to make 2017 another very successful year. “It’s a big world and it is changing very rapidly,” says Zanotti. “We want to leverage everything that technology has to offer in getting the message out about our products, so there will be more to follow.”