March 07, 2014
Submit Global 100 Information Now!
It’s January 2014, which means that here at DSN we begin our task of compiling the Global 100 list, based on revenue generated by our industry’s top companies during 2013. This will be our fifth year of researching and compiling this list. Your feedback has told us the Global 100 is inspiring, motivating and very helpful in educating the general public about our tremendous industry.
We are proud to be a trusted resource on information pertaining to the direct selling method of distribution of goods and services. We want everyone—customers, private equity investors, academics, consumer advocates and regulatory personnel—to know about the remarkable companies that are bringing incredible opportunities to millions of people across the globe. We are also excited about the feedback that achieving the Global 100 list is an inspiring and motivating factor for many management teams.
The online submission form is now available on our website HERE. After you’ve filled out the online submission form, you can download the Revenue Certification Form to complete and return to DSN. Companies who return the form are eligible to be ranked in the Global 100 list. Companies who do not return the form will not be included in the list.
We have already received news of new companies who will achieve the list, as well as existing companies who will move up in rank due to their great success in 2013. The new ranking will be announced and celebrated April 23, 2014, at our Global 100 Celebration Dinner, held at 7 p.m. at the Gaylord Texan Resort. The final list will be published in our June 2014 issue.
Make your plans to attend the Direct Selling News Global 100 Celebration Dinner!
April 23, 2014 • 7 p.m.
Gaylord Texan Resort
Tickets available at:
March 07, 2014
USANA Extends WTA Partnership to 10-Year Mark
USANA Health Sciences has announced the extension of its partnership with the Women’s Tennis Association through 2016. As the Official Health Supplement Supplier of the WTA’s 2,500 players, USANA continues a relationship that began in 2006.
WTA athletes Eugenie Bouchard (CAN), Madison Keys (USA), Monica Puig (PUR), Zhang Shuai (CHN), Sloane Stephens (USA), Samantha Stosur (AUS), and Zheng Jie (CHN) have signed on as USANA Brand Ambassadors. The renewed agreement also includes several USANA-sponsored WTA events worldwide, including this year’s WTA Championships in Singapore.
USANA’s likeminded philosophy has made for a successful ongoing partnership, says WTA Chairman and CEO Stacey Allaster. “In 2006, the WTA searched for a company that would fulfill a longtime request by players for nutritional supplements that are guaranteed to be free of banned substances on the WADA Prohibitive List. USANA stood out as an organization that felt so strongly about the quality and purity of its product, and we look forward to our continued partnership with this great company.”
USANA backs the purity of its products with a unique Athlete Guarantee Program, which states that any WTA athlete who tests positive for a banned substance as a result of taking USANA products will be compensated for lost revenue up to $1 million.
As a part of the partnership, USANA is simultaneously launching its “Aces for Humanity” campaign benefitting the USANA True Health Foundation. The WTA will donate $5—$10 for USANA ambassadors—to the foundation every time a player serves an ace at Premier-level WTA events.
March 06, 2014
Breathing New Life into the American Dream
by Amy M. Robinson
The American Dream is no doubt evolving. Gone may be the days when a house, two and a half children, a dog and a white picket fence were universally accepted as the be-all and end-all. But, the founding principle of this nation’s vision—the opportunity for prosperity, success and upward social mobility—remains highly sought-after, even as technological advancements, rising costs of education and economic challenges have changed the way many of us define success.
For those of us long familiar with direct selling, we understand wholeheartedly the many ways in which this industry touches the lives of millions each day. We see firsthand how mothers, recent college graduates, military spouses and post-retirement individuals pursue economic success, social networking and career advancement by way of the business opportunity. We take pride in direct selling’s ability to provide much-needed support to social causes around the world, and we experience the direct selling difference ourselves each time we stop to listen to a distributor’s success story.
While this industry presents a truly equal opportunity for both men and women, it is no secret that women have played an active role in transforming direct selling into what it is today: an industry that changes lives for the better.
Of the 15.9 million direct sellers in the United States, roughly 77 percent are women. What’s more, these 12.2 million women comprise a diverse group, not simply in terms of age or race, but also in terms of education, career experience, skills and interests. In fact, according to the DSA’s National Salesforce Study, more than half of all direct sellers have a bachelor’s or advanced degree. And, still, more than half of direct sellers have children under 18 at home.
Perhaps most telling is the fact that these numbers reveal an overlap between the two groups. Even as women in the direct sales channel pursue higher levels of education, many still balance family responsibilities and career aspirations simultaneously. These numbers not only reflect similar trends in the U.S. national workforce, but they also support recent findings regarding women’s perceptions of the American Dream.
According to a recent Forbes survey, 84 percent of working women say that staying home to raise children is a financial luxury to which they aspire either temporarily or long-term. This number is particularly astounding when one takes into consideration how the rising cost of living has made this dream more difficult to achieve.
In 2010, the Department of Commerce issued a study revealing what it would take for families to achieve the aspirations of the middle class—which it defined as home and car ownership, opportunities for vacations, access to health care and enough savings to retire and contribute to the children’s college education. The study concluded that even two-earner families today would have more difficulty achieving middle-class status than they had two decades ago.
Direct selling certainly offers a solution, which no other industry can match. Even more, countless women stand as mentors to those who follow in their footsteps, looking to provide much-needed support at home without sacrificing the opportunity to build a successful business.
These women not only serve as leaders in the field, but also at the executive level. The female perspective of the direct selling industry is widely represented by women so inspired by the opportunity that they have risen to top-level positions in efforts to provide guidance to those who look to the sales channel as a source for supplemental income, social empowerment and personal growth. These women give selflessly of their time to spark a passion for social causes, raise funding for charitable organizations and drive more people to channel their creative energy to give back to others. These women also work tirelessly to remind key policymakers and regulators about the impact of direct selling on the national economy and otherwise slow-to-improve employment rates.
Perhaps most importantly of all, they inspire us each and every day to establish our own definition of the American Dream—such that we might carve our own paths for achieving it.
Amy M. Robinson is Senior Vice President and Chief Marketing Officer of the Direct Selling Association.
March 06, 2014
Stock Watch, March 2014
March 06, 2014
Mary Kay Inc.
|Thomas S. Cho|
May Kay Inc., a top beauty brand and one of the largest direct sellers in more than 35 markets around the world, announced the appointment of Thomas S. Cho as Chief Supply Chain Officer.
In his new position, Cho is responsible for end-to-end supply chain operations including supply chain strategy, manufacturing, research and development, engineering, procurement, distribution, planning, transportation, inventory management and quality. As Mary Kay Inc. continues to expand worldwide, Cho will determine the appropriate assets, footprint and network to support global operations while making supply chain a competitive advantage for the company.
Cho joins Mary Kay Inc. from Transilwrap Company Inc. where he held the position of Chief Operating Officer. Prior to Transilwrap, he served as the Chief Operating Officer at Cosmetic Essence Innovations (CEI), a third party provider of personal-care products.
Thomas also served in the U.S. Army. In addition to English, he speaks fluent Spanish, Portuguese and conversational Korean.
With 3 million Mary Kay Independent Beauty Consultants and $3 billion in global annual wholesale sales, Mary Kay is one of the largest direct sellers of skincare and color cosmetics in the world.
Avon Products Inc.
Avon Products Inc. announced the appointment of Nilesh Patel as Senior Vice President and President, Asia Pacific Region. Patel will report to Sheri McCoy, Avon’s CEO, and will join the company’s Executive Committee.
Patel will oversee all of Avon’s Asia Pacific business. In this role, he will be responsible for stabilizing the market and strengthening and growing the Avon business throughout the region.
Patel joins Avon following a 26-year career with the Heinz Company, where he served in various roles. Throughout his tenure, he acquired deep experience across multiple functions from supply chain management to marketing, and built a solid record of success, most notably in emerging Asian markets such as Indonesia and India.
Most recently, Patel served as President, Director and Regional CEO of the Heinz ASEAN Region, where he oversaw business in Indonesia, Malaysia, Singapore, the Philippines, Vietnam and Thailand. The position was an expansion of his role as head of Heinz ABC Business in Indonesia, where Patel has been credited with turning around the business and more than doubling revenues over a five-year period.
Avon, the company for women, is a leading global beauty company, with nearly $11 billion in annual revenue. As one of the world’s largest direct sellers, Avon is sold through more than 6 million active independent Avon Sales Representatives in over 100 countries.
LegalShield, one of the nation’s leading providers of legal safeguards for individuals, families and small businesses, announced that James Rosseau has joined the company as Executive Vice President and President of LegalShield Solutions. Rosseau will be responsible for growing and expanding the brokerage and small business divisions along with affinity sales.
With over 20 years of professional leadership experience, Rosseau has a strong background in revenue generation and B2B relationship development across the financial services, healthcare and retail sectors. Prior to joining LegalShield, Rosseau served as the President of Allstate Affinity Solutions where he launched a number of unique innovative partnerships differentiating Allstate in the insurance industry, driving customer acquisitions, loyalty, and revenue growth. Earlier in his career, Rosseau served as a Senior Vice President at JPMorgan Chase Card Services, where he was responsible for Affinity & Co-Brand partner relationships.
Rosseau is the author of Success on Your Own Terms, a soon-to-be-released book providing advice for young adults on defining and obtaining success.
LegalShield offers legal service benefits plans that cover more than 1.4 million families and 3.5 million lives across North America, as well as an affordable identity theft plan. More than 34,000 companies offer the LegalShield plan to their employees as a voluntary benefit. LegalShield has dedicated law firms in 49 states and four provinces in Canada that members can call for help.
|William C. Looney|
Blyth Inc., a direct-to-consumer company and designer and marketer of health and wellness and beauty products as well as candles and accessories for the home, announced that William C. Looney has been named Chief Financial Officer of PartyLite, its direct seller of candles and accessories for the home. In his new role, Looney will direct PartyLite’s essential support services in Supply Chain and Technology in addition to overseeing the finance leaders throughout the organization.
Looney joined PartyLite in 2003 as Vice President, Worldwide Finance, and in September 2008 he was promoted to Senior Vice President, Worldwide Finance. Prior to joining PartyLite, he was the U.S. Controller for Serono Inc., a biopharmaceutical company based in Switzerland.
PartyLite is a party plan company with nearly 45,000 independent PartyLite entrepreneurs.
4Life Research announced that President Steve Tew was named the company’s CEO. Former CEO, company Founder David Lisonbee, will continue in his position as Chairman of the Board. Co-Founder Bianca Lisonbee will assume the role of Vice Chairwoman of the Board.
Tew was appointed President of 4Life in 2004 and has overseen the international expansion and growth of 4Life since joining the company in 2000. Under his direction, 4Life has opened offices in 21 countries around the world and is doing business through various business models in more than 50 countries.
As President and CEO, Tew will answer to the board of directors in all areas of growth—4Life Transfer Factor® research and development, operational proficiency, and the ongoing satisfaction of distributors and the company’s 700+ employees around the world.
Tew joined the direct selling industry in 1996. Prior to serving as President, he held positions as Chief Financial Officer and Chief Operating Officer with 4Life® and ShapeRite® Concepts, Ltd. In August 2000, ShapeRite and 4Life merged operations. He worked as a Certified Public Accountant for Price Waterhouse Coopers for six years, followed by various financial positions at retail and software development companies.
4Life has offices on five continents to serve a global network of independent distributors through science, success, and service.
|Dr. Shawn Talbott|
LifeVantage Corp., a science-based nutraceutical company dedicated to helping people achieve healthy living through a combination of a compelling business opportunity and scientifically validated products, announced Shawn Talbott, Ph.D., as new Global Chief Science Officer for the company.
Dr. Talbott is the recipient of a dozen competitive research awards and has published over 200 articles and 10 books on nutrition, health and fitness. He has served as a nutrition consultant and educator for elite-level athletes in a variety of sports, including professional triathletes, members of the Utah Jazz of the NBA, the U.S. Ski and Snowboard Association during the 2002 Winter Olympic Games, the Performance Enhancement Team for the U.S. Track and Field Association, and the U.S. Olympic Training Centers. Dr. Talbott is a Fellow of both the American College of Sports Medicine and the American College of Nutrition.
LifeVantage Corp., a leader in Nrf2 science and the maker of Protandim®, the Nrf2 Synergizer® patented dietary supplement, offers products that dramatically reduce oxidative stress at the cellular level.
Nerium International announced the appointment of Jeffrey Dahl to the position of Co-CEO. Dahl will be responsible for leading the company’s global growth initiatives to build upon the success the company has experienced in its first two years of operation.
The appointment of Dahl brings to Nerium an executive with extensive experience both inside and outside the direct selling industry. Dahl was most recently President of Latin America at one of the largest direct sellers, where he led a regional team covering 12 countries in Central and South America. Dahl has had an extensive career across Asia and Europe with Coca-Cola and Lufthansa, two of the world’s most recognized brands. As an executive, he is known for his strategic leadership, consumer marketing and global general management experience.
Nerium International™, LLC, headquartered in Addison, Texas, markets and distributes its skincare products through independent contractors (Brand Partners) and is committed to products that are rooted in real science and produce real results.
Barefoot Books, an independent children’s publisher, has announced that Jessica Kim has joined Barefoot Books as President, Barefoot Living, at a time when the company is poised for high growth as a global lifestyle brand.
Kim was previously CEO and Founder of BabbaCo. Barefoot Books recently acquired BabbaCo, the e-commerce subscription company dedicated to helping parents create fun, memorable experiences for their children.
Before founding BabbaCo in 2008, Kim was responsible for brand strategy at Kraft. Prior to that, she started Jessica’s Wonders, a baked goods company, at the age of 19 out of her college dorm room. She is also a Juilliard School trained concert violist.
Barefoot Books is an award-winning, independent children’s publisher with offices in Cambridge, Mass., U.S.A., and Oxford, England. Since 1993, Barefoot Books has created more than 600 books and complementary gifts for children. Barefoot Books are available from its grassroots community of home-based Ambassadors, in its flagship studios in Concord, Mass. and Oxford, in schools and libraries, and from carefully selected retail partners.
March 06, 2014
Financial News, March 2014
2013 Annual and Quarterly Results
Primerica Inc. (PRI—NYSE) announced financial results for the quarter ended Dec. 31, 2013. Total revenues were $327.2 million in the fourth quarter of 2013 and net income was $37.2 million, or 67 cents per diluted share. For the full year 2013, total revenues were $1.27 billion and net income was $162.7 million, or $2.83 per diluted share.
In the fourth quarter, operating revenues increased by 8 percent to $326.3 million and net operating income increased by 12 percent to $46.8 million compared with $303.4 million and $41.6 million, respectively, in the year ago period.
In the fourth quarter, net operating income per diluted share increased 22 percent to 84 cents and ROAE expanded to 16.4 percent.
For the full year 2013, net operating income declined to $171.0 million in 2013 from $174.5 million in 2012, primarily reflecting higher legal fees and expenses related to FRS. Results also reflect lower yield on invested assets and lower invested assets following the repurchase of $154.7 million of shares of common stock and warrants during the year to enhance shareholder value. Year-over-year, return of capital to stockholders drove a 9 percent increase in diluted operating EPS to $2.97 and a 70 basis points increase in ROAE to 15.0 percent compared with 2012.
As of Dec. 31, 2013, investments and cash totaled $1.98 billion compared with $1.91 billion as of Sept. 30, 2013. The company’s invested asset portfolio had a net unrealized gain of $100.0 million (net of unrealized losses of $17.0 million) at Dec. 31, 2013, down from $112.9 million at Sept. 30, 2013 due to rising interest rates.
The Primerica board of directors has authorized a share repurchase program, and the company expects to repurchase up to $150 million of common stock in 2014.
USANA Health Sciences Inc.
USANA Health Sciences Inc. (USNA—NYSE) announced financial results for its fiscal fourth quarter and full year ended Dec. 28, 2013.
2013 Fourth Quarter Results
For the fourth quarter of 2013, net sales increased by 10.5 percent to $186.3 million, compared with $168.5 million in the prior-year period. The company’s Asia Pacific and North America/Europe regions both reported sales and customer growth for the quarter. Unfavorable changes in currency exchange rates reduced net sales in the quarter by $2.9 million.
Net earnings for the fourth quarter increased to $20.3 million, a 9.9 percent improvement, compared with the prior-year period. Earnings per share for the quarter increased by 11 percent to $1.41 compared with $1.27 in the fourth quarter of the prior year. Weighted average diluted shares outstanding were 14.4 million in the fourth quarter of 2013 compared with 14.5 million in the prior-year period.
Net sales in the Asia Pacific region increased by 13.0 percent to $121.8 million, compared with $107.8 million for the fourth quarter of the prior year. This improvement was due primarily to sales growth in the Greater China and Southeast Asia Pacific regions with China and Singapore experiencing the most meaningful growth.
Net sales in North America/Europe increased by 6.1 percent to $64.5 million, compared with $60.7 million in the prior-year period. Every market in the region achieved top-line growth, with Mexico and Canada experiencing the largest increases.
2013 Annual Results
For the year ended Dec. 28, 2013, net sales increased by 10.7 percent to $718.2 million, compared with $648.7 million in the prior year. Net sales for the full year were negatively impacted by $2.8 million due to changes in currency exchange rates.
Net earnings for 2013 increased by 19.0 percent to $79.0 million, or $5.56 per share, compared with $4.45 per share in the prior year. Weighted average diluted shares outstanding were 14.2 million at fiscal year-end 2013, compared with 14.9 in the prior-year period.
Cash generated from operations totaled $99.9 million for the year ended Dec. 28, 2013. The company repurchased 414,000 shares in 2013 for a total investment of $18.1 million. The company ended the year debt-free with a remaining share repurchase authorization of approximately $13.6 million.
Avon Products Inc.
Avon Products Inc. (AVP—NYSE) reported fourth quarter and full-year 2013 results.
2013 Fourth Quarter Results
For the fourth quarter of 2013, total revenue of $2.7 billion decreased 10 percent, or 4 percent in constant dollars. Beauty sales declined 11 percent, or 4 percent in constant dollars. Fashion & Home sales declined 8 percent, or 2 percent in constant dollars.
Fourth quarter 2013 gross margin was 61.0 percent. Gross margin included a $5 million charge associated with highly inflationary accounting for the 32 percent devaluation of Venezuelan currency that occurred in the first quarter of 2013. Adjusted gross margin was 61.2 percent, 140 basis points higher than the prior-year quarter.
Operating loss was $17 million and operating margin was (0.6) percent in the quarter. Adjusted operating profit was $219 million and adjusted operating margin was 8.2 percent, down 100 basis points from the fourth quarter of 2012. The decline in adjusted operating margin was driven by the impact of the revenue decline with respect to fixed expenses.
Fourth quarter 2013’s net loss from continuing operations was $68 million, or 16 cents per diluted share, compared with a net loss from continuing operations of $36 million, or 8 cents per diluted share, in the fourth quarter of 2012. Fourth quarter 2013’s adjusted net income from continuing operations was $151 million, or 34 cents per diluted share, compared with $154 million, or 36 cents per diluted share, in the fourth quarter of 2012.
Latin America’s fourth quarter 2013 revenue was $1.24 billion, down 7 percent year over year or up 4 percent in constant dollars. Q4 revenue in Europe, Middle East & Africa was $867.7 million, down 4 percent, or down 2 percent in constant dollars. North America’s fourth quarter revenue was $370.8 million, down 21 percent, or down 20 percent in constant dollars, and Asia Pacific’s revenue was $192.4 million, down 22 percent year over year, or down 18 percent in constant dollars.
2013 Annual Results
Total revenue of $10.0 billion decreased 6 percent, or 1 percent in constant dollars. Total Beauty sales declined 7 percent, or 2 percent in constant dollars. Fashion & Home sales declined 4 percent, or were up 1 percent in constant dollars.
Operating profit was $427 million and operating margin was 4.3 percent, down 70 basis points from 2012. Adjusted operating profit was $791 million, and adjusted operating margin was 7.9 percent, up 130 basis points from 2012.
Full-year net loss from continuing operations was $1 million, or 1 cent per diluted share, compared with net income from continuing operations of $93 million, or 20 cents per diluted share, in 2012. Adjusted net income from continuing operations was $451 million, or $1.02 per share, compared with $373 million, or 84 cents per share, in 2012.
Cash flow from operations was $540 million for the 12 months ended Dec. 31, 2013, $4 million lower than in the same period in 2012.
Avon’s net debt (total debt less cash) as of Dec. 31, 2013 was $1.6 billion, down $376 million from Dec. 31, 2012. For the 12 months ended Dec. 31, 2013, the company reduced the overall debt balance by $475 million.
Nu Skin Enterprises Inc.
Nu Skin Enterprises Inc. (NUS—NYSE) announced preliminary fourth quarter results, with estimated revenue of $1.075 billion. Revenue was negatively impacted 4 percent by foreign currency fluctuations. Earnings per share for the quarter are estimated to be approximately $2.00 to $2.02.
“We are pleased with our 2013 results and are focused on sustaining growth in 2014,” said CEO Truman Hunt. “Given the current review of our business in China and our desire to provide the most informed guidance possible, we are rescheduling our full earnings release and investor call to later in the month. We look forward to discussing our 2013 results and our business plan and guidance for 2014 at that time.”
Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.
March 06, 2014
News in Brief, March 2014
Direct Sellers Support Botanical Adulterants Program
Six direct selling companies have endorsed the ABC-AHP-NCNPR Botanical Adulterants Program, a program to educate members of the herbal and dietary supplement industry about ingredient and product authenticity and adulteration. Supporters include AdvoCare, Amway, Herbalife, Nature’s Sunshine Products, Nu Skin and Shaklee.
Three leading nonprofit organizations—the American Botanical Council (ABC), the American Herbal Pharmacopoeia (AHP) and the University of Mississippi’s National Center for Natural Products Research (NCNPR)—initiated this ongoing program in 2011. Under the guidance of an editorial committee, the group publishes detailed articles focused on both accidental adulteration that may occur due to inadequate quality-control procedures, as well as intentional adulteration of plant-based ingredients for financial gain.
The ABC-AHP-NCNPR Botanical Adulterants Program is underwritten or endorsed by more than 100 natural product industry companies; independent analytical laboratories; contract research organizations; law firms; trade associations; and accredited institutions of education in natural medicine, all of which are stakeholders in the herbal dietary ingredients and supplements industry.
Avon CEO among ‘Most Powerful’ Businesswomen
Fortune recently named Avon CEO Sheri McCoy to its list of “The 50 Most Powerful Women in Business: Global Edition.” McCoy ranked No. 19, followed by Google SVP Susan Wojcicki at No. 20. Following a distinguished 30-year career at Johnson & Johnson, McCoy joined Avon in April 2012 with a focus on stabilizing the business and driving long-term growth initiatives.
The inaugural global ranking evaluated executive power from an international perspective, taking into account the leader’s standing in the worldwide business community. Other assessments included the size, importance and health of the business, as well as the leader’s career arc.
Medifast Ranked among ‘Best Diets’
U.S. News & World Report recently evaluated 32 of the most popular diets to identify and rank the best eating plans available. The U.S. News panel of diet and nutrition experts ranked Take Shape For Life parent company Medifast No. 11 among “Best Commercial Diet Plans” and No. 25 on its overall “Best Diets” list.
Take Shape For Life incorporates Medifast Meals through the 5 & 1 Plan®, which supplements five 100-calorie Medifast products with one “lean-and-green” entrée per day. The program also features a personal Health Coach and the Habits of Health System, based upon the work of Dr. Wayne S. Andersen, Medical Director and Co-Founder of Take Shape For Life.
In additional company news, Medifast was recently named a “Future 50” Baltimore Blue Chip Award winner by SmartCEO magazine. The weight-loss brand was one of five large Blue Chip companies recognized for their leadership and success in the regional economy.
Founded in 1980 and based in Owings Mills, Md., Medifast sells its products and programs via four unique distribution channels: the Web and national call centers, the Take Shape For Life personal coaching division, Medifast Weight Control Centers, and a national network of physicians.
Mary Kay Presents Dating Abuse Awareness Day
Mary Kay Inc. and Break the Cycle, a national organization specializing in teen dating abuse prevention, recently presented in partnership with Verizon a national day of conversation and awareness called NO MORE Silence: It’s Time To Talk Day (www.itstimetotalkday.org).
The first-of-its-kind event on Feb. 4 focused on educating parents, mentors, youth advocates and others to start talking to teens about healthy dating relationships and encouraging them to make this issue a priority not only during February, National Teen Dating Violence Awareness and Prevention Month, but also throughout the year.
A number of celebrities, supporters and advocates—including Olympic Gold Medalist and Mary Kay cause champion Jordyn Wieber—heard from a panel of experts about available resources to help save the lives of countless teens at the talk-a-thon event in New York’s Times Square. As part of their “Don’t Look Away” campaign, Mary Kay has granted $1 million to the loveisrespect organization to support the nation’s first and only dating abuse text message helpline.
With 3 million Mary Kay Independent Beauty Consultants and $3.5 billion in global annual wholesale sales, Mary Kay is a top beauty brand and direct seller in more than 35 markets worldwide.
4Life Receives 2013 Philanthropy Award
The Nutrition Business Journal recently named 4Life as the recipient of its prestigious 2013 Philanthropy Award. NBJ’s annual Business Achievement Awards issue features the nutrition industry’s most noteworthy business leaders of 2013.
The award honors 4Life’s global shelter and education efforts, along with its program to combat hunger by providing 3 million donated meals in 10 countries across the globe. The non-profit Foundation 4Life® and for-profit 4Life Fortify® programs were chosen to receive NBJ’s Philanthropy Award from among more than 300 entries.
4Life has offices on five continents to serve a global network of independent distributors through science, success, and service.
PartyLite Announces Jonathan Adler Collaboration
PartyLite has collaborated with renowned potter, designer and author Jonathan Adler for a line of candles, fragrances and home décor to be available exclusively through PartyLite consultants in Europe, North America and Australia.
The Jonathan Adler for PartyLite Collection will feature the designer’s bold, graphic style. Adler’s brand includes over 25 stores worldwide, an e-commerce site and a wholesale business serving over 1,000 locations globally. In addition to participating in a series of professional collaborations, Adler has authored four books. His collection for PartyLite will debut in Fall 2014, with new offerings to be introduced throughout 2015.
Based in Plymouth, Mass., PartyLite sells home-fragrance products and related candle accessories in 21 countries. The company was established in 1973 and is a member of the Blyth Inc. family of brands.
LegalShield Partners with Visiting Angels Franchisees
LegalShield, a provider of legal safeguards for individuals, families and small businesses, recently announced a partnership with Visiting Angels Living Assistance Services to offer its small business legal plan to Visiting Angels franchisees throughout North America. Visiting Angels is a home-care network with more than 450 franchises across the United States and Canada.
The partnership offers every Visiting Angels franchisee the opportunity to purchase a LegalShield Small Business Plan. The plan will give the franchisee access to LegalShield attorneys who will provide legal advice and counsel on any business legal issue, contract and document review, and more. Visiting Angels franchisees can also join the more than 34,000 companies currently offering LegalShield’s personal legal plans as a voluntary benefit to their employees.
In additional company news, LegalShield declared Jan. 28 National Will Day to heighten awareness of the need and options available for creating a will. To commemorate the day, LegalShield launched a dedicated page of its website (www.legalshield.com/willday) to provide resources for individuals to better understand the process of creating a will.
With over 4 million users, LegalShield provides legal services in 49 states and four Canadian Provinces. For one low monthly fee, members gain access to quality law firms without high hourly costs.
PM-International Acquires U.S. Company
European direct sales company PM-International AG has expanded its market presence onto the North American continent by signing for the purchase of Re-Vita Mfg. Co., LLC USA.
Re-Vita has 20 years of experience in development and production for distribution networks in the U.S. and in many Asian markets, as well as its own range of products. The company, based in Jacksonville, Fla., generates $18 million USD in sales. Re-Vita has won an excellent reputation worldwide through its development, manufacturing and sales in the “detox” food supplement category.
PM and the core group at Re-Vita will now join their two development teams and continue to operate from Jacksonville. PM also established a strategic partnership in the Mexican market in early January with an investment in traditional cosmetics company IDEAL.
Germany-based PM-International is a direct marketer of cosmetics, personal-care and wellness products. Founded in 1993, PM operates in over 35 countries through a network of 150,000 independent salespeople.
It Works! Opens in Six Additional Countries
Consumer wellness products and lifestyle company It Works! has announced plans for 2014 global expansion. The company’s skincare and body contouring products are now available in Denmark, Finland, Germany, Spain, Norway and Switzerland—putting It Works! in 18 countries total.
It Works! is also improving its systems in the 12 countries where it already operates. In the first quarter, It Works! is adding an additional warehouse in Europe so customers may receive products quickly and efficiently; Canada and Australia will receive in-country shipping from new It Works! facilities; and Australia’s economy is getting a boost with recently announced in-country manufacturing.
CEO Mark Pentecost made these announcements at the company’s annual conference in Tampa, Fla., where 10,000 people attended Freedom 2014 at the Tampa Convention Center. The conference had a $2.3 million economic impact, according to local convention bureau executives.
Founded in 2001 and based in Bradenton, Fla., It Works! offers an everyday, instant result product line starting with the one-of-a-kind It Works! Wrap contouring product.
March 06, 2014
Avon Products Inc.: Standing Together and Speaking Out
by Karyn Reagan
The Avon Foundation rallies support to raise awareness and find solutions for two causes affecting women worldwide.
The history of Avon reveals a heart for women that spans the generations. Just over 127 years ago, long before women were filling roles in the corporate world, 95 years before the first woman was appointed to the U.S. Supreme Court, and over three decades before it was legal for women to vote in the United States, Avon was offering women a way to create and manage their own businesses. What David H. McConnell started in 1886 as a door-to-door sales company with an offering of a small line of perfumes has grown to an international corporate icon continuing to offer women a chance at economic independence.
Fast-forwarding from those small beginnings into the mid-20th century provides a picture of Avon as a mature company with the same heart for women’s issues upon which it was founded. In 1955 Avon entered the world of corporate philanthropy by establishing a foundation. It serves as a perpetual reminder of the heart of the founder revealed in his quote from long ago: “to meet fully the obligations of corporate citizenship by contributing to the well-being of society and the environment in which it functions.”
According to Carol Kurzig, President of the Avon Foundation for Women, the Avon Foundation began as a small, private, corporate foundation funded by Avon Products and has grown to be the largest corporate-affiliated philanthropy focused on women’s issues globally. Since it launched the Avon Breast Cancer Crusade in 1992, Avon philanthropy has donated more than $815 million for breast cancer research and access to care programs. In 2004, the foundation adopted a second cause that women around the world told Avon was critical to them—reducing domestic violence and gender abuse. Avon philanthropy has donated an additional $57 million to organizations and projects focused on preventing partner violence and assisting victims.
“Meet fully the obligations of corporate citizenship by contributing to the well-being of society and the environment in which it functions.” —David H. McConnell, Founder, Avon
Its Breast Cancer Crusade began when Avon United Kingdom created one of the first cause-marketing programs in the world by selling pink ribbon products in 1992. By the next year the Avon campaign was adopted in the United States and in dozens of other Avon markets. Now more than 50 Avon countries support the Breast Cancer Crusade, and every October Avon introduces new breast cancer awareness programs and fundraising products.
According to the YWCA of Greater Baton Rouge, La., a grant they received from the Avon Foundation Breast Health Outreach Program made access to care available at the right time for one woman they helped. “Leisha was 41, a single mother, and starting a new job,” a YWCA staff member says. “Without health insurance and facing a diagnosis of breast cancer, she was devastated. Then Leisha found our Avon-funded ENCOREplus program. Our outreach coordinator got her the help she needed. Leisha survived her breast cancer and is now an advocate, teaching other women about the importance of early detection.”
Creating awareness in addition to raising funds for women’s causes has always been an Avon philanthropic priority. Back in 1992 breast cancer was not widely discussed. Creating awareness about the need for early detection and quality care was critical to improving outcomes in the early days of Avon’s Breast Cancer Crusade. Today, Avon-funded research brings attention to domestic and partner abuse and indicates that increasing discussions about this topic is vitally important to ending violence and teaching women and men how to build healthy relationships.
Participants in the Avon Walks for Breast Cancer join for many reasons, whether as survivors of breast cancer themselves, to support a loved one battling the disease or to honor someone who lost the fight.
Walking for the Cause
The Avon Foundation is well known in the U.S. for its Avon Walks for Breast Cancer. Since 2003 the foundation has conducted a series of Avon Walks annually, which attract tens of thousands of participants and more than a million donors. Currently, walk participants in eight U.S. events raise an average of $2,400 each and walk a marathon and a half (39.3 miles) over a two-day period.
Nancy N. has participated several times in the Avon Walk in Boston as well as the one in Charlotte, N.C. “Besides having great products at reasonable prices, I love Avon for the important causes that we support,” she says. “As a breast cancer survivor and an Avon Representative, it is very important to be as supportive to the cause as possible. To coin a phrase, I Walk [in the Avon Walk] because I can. I hope that our efforts will help save lives by early detection and hopefully eliminate this disease some day.”
According to Kurzig, each event starts off with an emotional early-morning ceremony, featuring participants telling their breast cancer stories before the walking begins. The well-planned weekend includes a small army of 200–300 volunteer crew members who camp out with the walkers in pink tents for two nights to be available to help them if needed.
“About five years ago we started a youth crew for kids ages 10–15. They must apply, write an essay and raise money to be considered for the team,” she explains. “Those selected are invited to cheer walkers on, hand out lunches and water, help set up tents, etc. Most of them are motivated by a personal breast cancer story, often a mom who is a victim or a survivor of the disease.” Youth crew teams have raised more than $25,000, and one young crew member is chosen as one of the four speakers at each Walk’s opening ceremony, along with a survivor, a family member and a member of the general crew. “There is not a single story that doesn’t bring tears to our eyes,” Kurzig says. “The spirit of community at the Walks is incredible.”
In 2005 Avon launched global walks, building on the U.S. model. About 50 Avon countries produce an Avon Walk Around the World for Breast Cancer annually. Almost 2 million walkers have participated globally, raising critical global awareness and funds, but most Avon global markets raise the largest portion of their philanthropic funds through the sale of their cause products. These Avon cause products have generated more than $370 million since 1992, and individual markets determine how to best support breast cancer and domestic violence programs in their countries with the funds they raise.
Improving Care Globally
For the 20th anniversary of its Breast Cancer Crusade in 2012, Avon launched a Breast Cancer Clinical Scholars Program. “We brought 24 doctors from countries all over the world to one of our Avon-funded medical centers to provide them with advanced training in a field of specialty related to breast cancer,” Kurzig says. “The original idea was to conduct this program in honor of our Crusade’s 20th anniversary, but the countries from which the doctors came have provided such compelling reports of the impact the training has made in their communities that we felt the need to repeat the program and will host another 24 international doctors again this year. The doctors are able to return to their countries and educate other doctors about the strategies and techniques learned, improving care for their patients and advising the Avon Breast Cancer Crusades in their home countries.”
A new Avon program in 2014 will be centered on metastatic breast cancer. “We are leading a new Metastatic Breast Cancer Alliance. Its initial project will be a study to identify and assess the services provided, treatments pursued and the gaps that exist in the care of metastatic patients,” Kurzig says. “We are collaborating with 16 breast cancer advocacy organizations and five pharmaceutical companies to look at what else can be done to better serve and treat patients whose breast cancer recurs.”
Another new initiative is the Breast Cancer Startup Challenge to accelerate production of innovative devices, tests or treatments for breast cancer. Avon is partnering with the National Cancer Institute (NCI) and the Center for Advancing Innovation to foster the creation of business plans to actualize some of the most promising research funded by Avon and NCI over the last decade. More than 60 teams have responded to the challenge to carry out one of 10 innovative projects. “Ten finalist teams will be revealed in March,” Kurzig says, “and they will work on the projects until June when one winner will be chosen to take their project to fruition.” The projects range from diagnostic tests to possible new treatments.
Sounding the Alarm
In 2004 the Avon Foundation felt it was capable of taking on a second cause. “Consulting firm McKinsey & Company provided pro bono services to us to discover what cause would resonate most with Avon’s representatives and consumers around the world,” Kurzig says. “The research indicated that domestic and gender violence and dating abuse are among the top three causes of concern to women in every Avon market.” Since this cause is consistently identified as important to women all over the world, and because Avon is a company primarily for women, the choice made sense. McKinsey also suggested that this was a cause in which Avon could make a significant difference, because, unfortunately, there are so few organizations currently providing funding in this area.
One innovative domestic violence project funded by the Avon Foundation is the Global Communications X-Change. “This is an innovative global digital library for identifying and sharing messages and campaigns focused on ending violence against women,” Kurzig says. “Materials and resources are exchanged via the X-Change website, allowing anyone to find or share materials to help create awareness and reduce violence against women worldwide.” The Avon Foundation provides grants to organizations with the best materials identified by an independent panel of judges each year from all those posted on the X-Change.
“Another 2014 project is a partnership with Vital Voices and the U.S. State Department to launch Domestic Violence Justice Institutes,” she says. “Many countries have laws against domestic violence, but often they are not well known or understood. Often they face challenges from cultural traditions, or are not well enforced.” These institutes will offer a four-day program conducted by U.S. and international experts to train and unite judges, prosecutors, district attorneys and law enforcement officers to help them better understand how to implement laws to save lives in their communities. The four countries to receive the first institutes in 2014 are South Africa, Mexico, India and Nepal.
Starting the Conversation
“The results of a recent survey we funded revealed that 70 percent of people know someone who is in an abusive relationship, but most are not talking about it,” Kurzig says. As a result of the survey findings, the Avon Foundation is funding the development of a training curriculum, including videos and role-playing that will be offered to schools, workplaces and anywhere people gather to encourage them to start talking about domestic, gender or dating abuse. These materials will be available by the end of 2014, with the goal of educating people about how they can encourage victims to feel free to talk about what they are experiencing.
Shaundre, an Avon Representative and domestic violence survivor, says she and her family experienced domestic violence firsthand. “Imagine witnessing this as a child. How do they express themselves? I want to be a voice for others. Especially now. My 9-year-old son is the pride and joy of my own life.”
Kurzig says that the Avon Foundation is continuing its efforts to bring awareness of this issue to the forefront. “In March, the results of the Annual Domestic Violence Census funded by the Avon Foundation will be released by the National Network to End Domestic Violence. The Census reports how many individuals were helped by domestic violence service programs throughout the U.S. and how many service needs went unmet due to lack of resources and funding,” Kurzig says. “Like so many of the programs we fund, the Census will increase awareness of the issues surrounding abusive relationships, which will hopefully create a basis for providing help and ultimately lead to change.”
Another important Avon Foundation initiative is providing peer counseling on university campuses in order to assist victims of abuse and help alert young women to signs of potentially abusive situations. “In response to alarming reports of abuse and violence committed on campuses, we have funded the creation of model guidelines for colleges to adopt in an effort to reduce and better respond to dating abuse and violence,” Kurzig says. The guidelines alert the institutions and students to the danger of “The Freshman 15.” That term is commonly related to the 15 pounds of weight gained in a student’s first trimester of college. “But it also relates too well to the danger to young women in those first 15 weeks of school,” she says. “New students often don’t know anyone and are vulnerable to the potential for controlling and abusive relationships.”
Taking It Personally
Kurzig notes that both Avon employees and representatives often mention Avon’s philanthropic heritage and commitment as a point of pride and a reason for joining and remaining with the company. “Direct sales is a person-to-person business and is one of the earliest models of social networking,” she says. “Many representatives report that their customers, friends or family members are touched by the two causes we support.” Since one in three women around the world will be a victim of domestic, gender or dating violence, and one in eight will be diagnosed with breast cancer in her lifetime, most women are personally affected by these causes and welcome the chance to make a difference by embracing the mission of the foundation.
Kathleen T., a breast cancer survivor and Avon Representative who participated in the Avon Walk in Boston, says she is proud to work for a company that is actively involved in women’s health issues. “The support that Avon gives to the needs of women with breast cancer is very important. As a representative of the largest corporate supporter of the breast cancer cause, I know that my contributions to the cause are part of a much more powerful support system when I walk in the Avon Walk for Breast Cancer.”
Since its inception, Avon has been forging new territory to offer opportunity and hope to women. “Avon is the company for women,” Kurzig says. “We take our commitment to women’s issues very seriously and in both causes we currently support, we are committed to working as hard as we can to find solutions that will change and save lives.”
March 06, 2014
Letter from John Fleming, March 2014
In our cover story for this issue, it is our honor to recognize “The Most Influential Women in Direct Selling.” The feature is focused on the role women play in the industry and the impact of their leadership. Our industry can be proud of the fact that 75 percent of the participants at the independent contractor level are women. These women are often mothers, wives, grandmothers, sisters and friends—and also leaders who impact the lives of others around the world. No other industry that actually delivers a product or service can claim as great a participation of women at the level of business transaction. Critics of the direct selling business model might serve themselves better if only they knew who really benefits from what direct sellers do. This is an industry we are proud to write about each month, especially when we have the opportunity to salute those we honor and cherish—the women!
I would also like to share that after Amway announced their 2013 results to the public on Tuesday, Feb. 4, we were eager to spend a few minutes on the phone with DSN’s currently ranked No. 1 company in the world, based on the Global 100 list. We spoke with the Amway communications team, as well as Chairman Steve Van Andel and President Doug DeVos about Amway’s reported revenue of $11.8 billion for 2013, a new record capping seven consecutive years of growth. This is, of course, a new revenue record for any single company in the direct selling industry. The largest direct seller of all time has been built over the past 55 years, from a humble beginning to a global company dedicated to making a free enterprise-based distribution system available to people from all walks of life.
What most may not remember about the Amway story are the battles they fought and won, the challenges they incurred due to negative press, the education they provided about the direct selling business model at a very critical moment in time, and the benefits gained by the entire industry. When we spoke with Steve and Doug about another year of incredible growth in 80 percent of their top 10 markets, we were not surprised with their very first comments—they both immediately spoke with reverence about the Amway Independent Business Owners (IBOs) around the world who build their businesses in pursuit of their own personal objectives, with the support of Amway brands and opportunity. Addressing a privately owned enterprise, we did not expect a conversation about margins, profits, brands (NUTRILITE and Artistry are two of the largest brands in the world), new products and increased market share; however, Amway is accomplishing all of these things while also enhancing the communities in which its people live and work.
The economic footprint that Amway is making on the world is enormous. From original office space in what was a former gasoline station to now 21,000 employees worldwide, 3 million IBOs, 15 manufacturing facilities around the world, 6,400+ acres of certified organic farmland on four farms dedicated to sustainable farming, and 75 R&D/Quality Assurance laboratories worldwide, Amway is changing lives.
In the Amway Global Entrepreneurship Report released last November (www.AmwayEntrepreneurshipReport.com), Amway researchers revealed for all of the direct selling public—and those who look to better understand the direct selling business model—why it works. The research sample included over 26,000 respondents from over 24 countries utilizing the primary research methods of face-to-face and telephone calls to collect the information. Key findings included the great potential for self-employment even though self-employment rates remain very low in most countries. The Amway report also reveals that 70 percent of the respondents (average) and 77 percent of respondents under the age of 30 had a positive attitude toward entrepreneurship. The primary challenges to involvement in entrepreneurship are related to the financial barriers to entry and the “fear of failure.” The report further points out that an interest in entrepreneurship is not all about the money. The desire for independence and “better compatibility of family, leisure time and career” is highly appreciated. The report is available to the public on the Amway website.
Another article of interest to executives in the industry as well as those who seek information about the direct selling business model is written by Ibi Fleming, Herbalife North America Senior Vice President and Managing Director. The article, a response to a question, was recently published in the Los Angeles Daily News. You can find a reference to the article in the Headline News section on the DSN website.
In summary, when you reflect on the positive attitude toward entrepreneurship around the world as well as direct selling’s pathway to entrepreneurship and its ability to eliminate major barriers, it is clear that the direct selling business model is at the forefront of satisfying a growing need around the world.
Until next month… enjoy the issue!
Publisher and Editor in Chief
March 06, 2014
Women’s History: A Tradition of Breaking through Boundaries
by Barbara Seale
Photo above: Delegates to the first International Congress of Working Women held in Washington, D.C., ca. 1919. (Library of Congress)
The long and winding road of women’s progress in society and the business world has had an amazing number of twists, turns and mountains to climb.
Viewed from today’s world, where Facebook COO Sheryl Sandberg encourages women to Lean In, the trail that women blazed in the not too distant past seems surprisingly bumpy.
On March 31, 1776, Abigail Adams wrote a letter to her husband, John—who later became our second president—urging him and the other members of the all-male Continental Congress to keep the country’s women in mind as they fought for America’s independence from Great Britain.
“I long to hear that you have declared an independency,” she wrote, “and, by the way, in the new code of laws, which I suppose it will be necessary for you to make, I desire you would remember the ladies and be more generous and favorable to them than your ancestors. Do not put such unlimited power into the hands of the husbands. Remember, all men would be tyrants if they could. If particular care and attention is not paid to the ladies, we are determined to foment a rebellion, and will not hold ourselves bound by any laws in which we have no voice or representation.”
John and Abigail’s relationship was filled with mutual trust and admiration, and they often discussed public policy. So perhaps John was teasing his wife when he replied that he could not help but laugh at her “saucy” letter. If he had been able to peer into the future, he would have known that his wife had become one of the first in a long line of American women to use any influence they had to allow themselves and other women to develop and use their full talents and abilities. If John Adams had taken his wife’s pleas to heart and convinced his fellow Continental Congressmen to extend the privileges of citizenship to all residents of the new country, including women, the history of this country and even the world might have been very different.
In Women’s History Month, it seems appropriate to reflect on how far women have come in the nearly 238 years since Abigail Adams’ letter. It would be almost two centuries before women began making their mark in direct selling, but when they did, they were as tenacious and innovative as our nation’s second first lady herself.
|These young female workers were among the first women ever to operate a centerless grinder machine in a Midwest tool factory, 1942. (Library of Congress)
Abigail was fortunate, she was educated at home. But the future first lady never had a formal education—possibly the reason she became a passionate advocate for public schools to offer girls an education that was equal to the ones given to boys. If a young woman was lucky enough to attend a school, her education focused on developing her skills at household duties and chores. In fact, an academically educated woman was unusual and considered not particularly desirable as a wife.
All but a few towns in New England specifically barred girls from town schools until the late 18th century. Even then girls were often taught separately from the boys. In the South during colonial times, the education of slaves was strictly forbidden, and South Carolina even passed a law prohibiting anyone from teaching a slave to read or write, so many female ancestors of today’s accomplished African Americans were likely illiterate. The notable exception: Phyllis Wheatley. Born in West Africa, she was sold into slavery at 7 years old to the Wheatley family of Boston. They taught her to read and write and allowed her to study astronomy and geography. Then when they recognized her talent, they encouraged her poetry. She became the country’s second published African-American poet and first published African-American woman.
Phyllis Wheatley and other American women of that time started their lives before college educations were available for women. In 1831—before the Civil War—Mississippi College became the first coeducational college in the United States to grant a degree to a woman. That year it granted degrees to two women, Alice Robinson and Catherine Hall. But the situation was so rare that one of the key demands of the Women’s Rights Convention, held in Seneca Falls, N.Y., in 1848, was for coeducation for women—not the separate and unequal institutions that were available to women at the time. Very slowly, change began in the landscape of education, and through education, women’s lives began a gradual alteration. In 1870, less than 1 percent of the female population went to college. That percentage slowly rose, and by 1900 the rate was 2.8 percent. Twenty years later it was still only 7.6 percent.
Overcoming the Odds
|Fay Hubbard, a 19-year-old advocate for women gaining the right to vote, sells suffragette papers on the streets of New York in 1910. (Library of Congress)
Women finally gained the right to vote in 1920, signifying the beginning of a new attitude toward a woman’s contribution outside the home, and the number of college-educated women continued to climb decade by decade. In fact, by the 1980s more women than men began attending college. Today’s women have advanced educationally beyond the level that Abigail Adams or Phyllis Wheatley probably ever dreamed. Now, more women than men earn an advanced degree, as well as a bachelor’s degree. While having a degree doesn’t automatically lead to ambition or success, women’s expanded societal roles did follow their advances in education. It also coincided with greater entrepreneurialism—both in traditional and direct selling companies.
It is interesting to note that through the decades, and even centuries, with or without education, women have achieved, led and innovated. As far back as 1809, Mary Kies became the first woman to receive a patent, which was for her method of weaving straw with silk—a process which then-first lady Dolly Madison called a boost to the nation’s hat industry. History is peppered with the forgotten stories of female entrepreneurs—Eliza Lucas Pinckney, who grew and exported indigo in the 1700s; publisher, printer and businesswoman Mary Katherine Goddard, who in 1789 was forced to resign after 14 years as Baltimore’s postmaster because of her gender; Bridget “Biddy” Mason, who was born into slavery in 1818, sued her owners for her freedom, and eventually became a real estate mogul and philanthropist; Elizabeth Arden and Estee Lauder, savvy businesswomen who built empires based on beauty in the 20th century; and Katharine Graham, publisher of The Washington Post and the top executive of the Washington Post Company, who became one of the most powerful women in business.
In the direct selling industry, women were initially buyers of products from the early companies such as The Southwestern Company (now Southwestern Advantage), Fuller Brush and Avon. Since many products were directed to women, they also became distributors. Fuller Brush was the first direct selling home for many of the women who moved from distributorships to the corporate ranks. Some of them were pioneers who helped shape the industry. In 1931 Catherine O’Brien, an associate with the Fuller Brush Company, teamed up with Stanley Beveridge, a VP at Fuller Brush, to launch a new direct selling company, Stanley Home Products. Initially the company sold its high-quality household cleaners, brushes and mops door-to-door, but it soon began encouraging homemakers to invite small groups of friends to their homes for a product demonstration and light refreshments. This allowed the hostess to receive a gift of choice from the Stanley dealer, who took orders from attendees.
Mary Kay Ash, Mary Crowley, Brownie Wise and JAFRA founders Jan and Frank Day were all Stanley Home Products Dealers. On the long road to success, each of them stepped on the accelerator. Wise became a Tupperware representative and was so successful selling at her home parties that Earl Tupper himself recruited her to become a corporate executive in 1951. At the time, Tupperware was sold at retail stores, but home sales soon topped retail sales and Wise’s “party plan” method took over. She also innovated many practices that today are standards at every direct selling company—rewards, recognition, sales conventions and incentives such as extravagant trips. Her success in implementing marketing styles and recognition systems that appealed to women led her to become the first woman featured on the cover of Business Week magazine in 1954.
Jan Day and her husband, Frank, combined their first names to create the moniker for their company, JAFRA, which they founded in 1956. They wanted to offer women an excellent skincare program along with an appealing business opportunity. Within a year they invented the signature product that would be the foundation of the company for years to come: Royal Jelly Milk Balm Moisture Lotion. Its formula remained unchanged for more than 50 years. Gillette bought the successful company in 1973, and then international direct selling giant Vorwerk acquired it in 2004. Today it offers its product through some 573,000 independent consultants worldwide.
Mary Crowley also put her Stanley Home Products experience to good use when she established Home Interiors and Gifts in 1957. She had moved from Stanley to a new company, World Gift, and proved her sales and leadership skills by developing a 500-person organization in the company. Its response: The owner limited the amount of commission the female sales staff could earn. That apparently didn’t sit well with Crowley, who quit to start her own home décor company. By the 1990s Home Interiors and Gifts had surpassed $850 million in sales.
Mary Kay Ash followed her friend Mary Crowley’s example, launching Mary Kay Cosmetics in 1963 after a man she had trained was promoted over her and paid twice her salary. She created a salesforce of women—unusual in the 1960s—and fueled them with pink Cadillacs, compensation plans that paid consultants for building teams and, of course, her famous phrases of wisdom and encouragement that 13 years after her death still make her one of the industry’s most quotable icons. Her formula was wildly successful. Last year Mary Kay Cosmetics had net sales of more than $3 billion worldwide.
So many female business founders have helped make direct selling the thriving, innovative industry it is today, and many more are joining the ranks. Today 10 companies on the 2013 Direct Selling News Global 100 list were founded or co-founded by women entrepreneurs.
Impressive and Puzzling
According to the National Women’s History Museum, women’s ventures have come to comprise about a third of all U.S. businesses—and growing. If you shrug when you read that, remember that less than a century ago American women couldn’t even vote. But once women had role models, they seemed to be increasingly drawn to entrepreneurship.
In 1972 women owned just 4 percent of all American businesses; by 1991, that figure had climbed to 38 percent. Additionally, since 1997 the growth in the number and economic contributions of firms owned by women of color is nothing short of remarkable. Comprising just 17 percent of women-owned firms 16 years ago, firms owned by women of color now account for one in three women-owned firms in the U.S. The total number of women-owned businesses has risen by 200,000 over the past year alone, which is equivalent to just under 550 new women-owned firms created each day. There are now 8.3 million women-owned businesses in the United States. Those businesses generate revenues of $1.3 trillion—more than the combined market cap of Apple, Microsoft, General Electric, Google and Sony. Plus, revenue has grown more than twice the amount of U.S. population growth during the same period of time.
Yet executive positions have eluded most women. As far as women have come, The Wall Street Journal (WSJ) still reported last year that women make up only 16 percent of directors at Fortune 500 companies, 4 percent of chief executives at Standard & Poor’s 500 companies and 10 percent of chief financial officers at S&P 500 companies. Even below the executive levels, salaries for women lag behind those for men. According to WSJ, women earned 76.5 cents for every dollar that men did in 2012, moving no closer to narrowing a gender pay gap that has barely budged in almost a decade. The numbers are puzzling when research also shows that companies with high gender diversity simply make more money.
Organizations with the lowest rates of gender diversity had average sales revenues of $45.2 million, compared with averages of $644.3 million for businesses with the most gender diversity.
Miriam Muléy, CEO of strategic marketing consultancy and research company The 85% Niche LLC and former General Manager at Avon Products Inc., points to a study by sociologist Cedric Herring that was published in the American Sociological Review. Herring found that gender diversity accounted for a difference of $599.1 million in average sales revenue. Put that in perspective: A company with net sales of $600 million would have been No. 22 on last year’s Direct Selling News Global 100 list. Organizations with the lowest rates of gender diversity had average sales revenues of $45.2 million, compared with averages of $644.3 million for businesses with the most gender diversity.
Given the heavy doors women have historically pushed open and their documented growth in starting businesses, it’s surprising that the direct selling industry isn’t buzzing with stories of concentrated efforts to create greater gender diversity, mentoring programs and executive development tracks for women in its corporate offices. Considering the industry’s pride and experience in its personal development programs for distributors, direct selling is uniquely equipped to fuel the power of its female corporate employees and executives.
Will your company be the industry-leading organization that supercharges its growth by unlocking the untapped talents and abilities of women? Which company will lead the caravan that’s sure to follow? We can’t wait to see.
Cover Story | Women’s History | Sheryl Adkins-Green | Claire Bancino | Lori Bush | Doris Christopher | Angela Loehr Chrysler | Kathy Coover | Shelli Gardner | Jessica Herrin | Wendy Lewis | Candace Matthews | Sheri McCoy | Cindy Monroe | Kay Napier | Joani Nielson | Meg Sheetz | Pam Sowder | Jill Blashack Strahan | Connie Tang | Heidi Thompson
March 06, 2014
The Most Influential Women in Direct Selling
by Beth Douglass Silcox
This issue of Direct Selling News is dedicated to celebrating the women of direct selling. Tenacity has certainly been a consistent trait among the women of our nation, as well as the women of the world. Always fighting to better the situation for their families, and for themselves, women have had to be tenacious to overcome all of the obstacles in their paths. Take into consideration that women couldn’t even go to college, vote, hold professional positions or practice law or medicine until our very recent past, and you will see that entrepreneurial stubbornness has been a necessity to get where we are now.
It is important to reflect on the past, in order to make the future better. It is especially important now since opportunity for women has become so much more widespread, and the daughters of this generation may struggle to even believe that their great-grandmothers couldn’t vote or have options in the professional world.
It is in celebration of all the women who fight for opportunity—those in the past and those currently fighting—that we bring you this issue. We asked 21 of the most influential executive women in direct selling questions about their specific journeys, their motivations and inspirations, and their preferences for mentoring other women along the way.
The path each woman took to the heights of direct selling corporate management is as unique as the individual. Yet all 21 are inextricably linked by the influence they have on the lives of hundreds of thousands, even millions of women across the globe who work in direct sales to enrich their families, make a difference in their communities and in the lives of others, and reach for their own dreams.
Direct Selling News selected this group of women based upon their executive leadership roles in companies that achieved inclusion in the DSN Global 100 list and the $100M Club. It comprises women who help guide our industry through their leadership and vision. There are many women hard at work in far more companies than we’ve listed here. But by proudly honoring these 21, Direct Selling News salutes every female leader—corporate or field—who strives for more, respects those who blazed the trail, and reaches out to those on the way up.
Cover Story | Women’s History | Sheryl Adkins-Green | Claire Bancino | Meredith Berkich | Lori Bush | Dr. Oi-Lin Chen | Doris Christopher | Angela Loehr Chrysler | Kathy Coover | Shelli Gardner | Jessica Herrin | Wendy Lewis | Candace Matthews | Sheri McCoy | Cindy Monroe | Kay Napier | Joani Nielson | Meg Sheetz | Pam Sowder | Jill Blashack Strahan | Connie Tang | Heidi Thompson
March 06, 2014
March 06, 2014
Regulators Respond to Senator’s Herbalife Queries
Both the U.S. Securities and Exchange Commission and the Federal Trade Commission have responded to Sen. Edward Markey’s letters concerning global nutrition company Herbalife. The Massachusetts Democrat questioned Herbalife’s business practices and requested further investigation in the wake of investor Bill Ackman’s ongoing campaign against the company.
FTC Chairwoman Edith Ramirez communicated in her letter of response that Markey’s concerns are being “carefully considered” at this time; however, rules prohibit the disclosure of any particular actions. The letter outlines the commission’s history of protecting consumers from deceptive practices, as well as the factors considered in each case. Those factors include the type of violation alleged, the likelihood of future prevention and redress, and the number of consumers affected.
Markey’s January request received a similar response from SEC Chairman Mary Jo White, who stated that the agency is giving “every consideration” to the senator’s concerns. The chairman could not comment on Herbalife, but noted that in the case of MLM companies or pyramid schemes “each investigation depends on its particular facts and circumstances.”
As veteran MLM attorney Kevin Thompson writes in his recent New Perspectives feature, the FTC’s past evaluation of particular facts and circumstances has gone beyond raw sales data, such as Markey requests, to the more complex question of buyer motivation.
March 06, 2014
March 05, 2014
Digital Tools Equip Next Gen Amway Sellers
Amway’s Australia business is at the forefront of the $11.8 billion company’s digital evolution, and Head of Sales & Marketing John Haines recently spoke to CMO about building a digital culture to empower Amway business owners and consumers.
In a recent interview with DSN, Amway Chairman Steve Van Andel noted the growing number of young entrepreneurs interested in the business. Haines points to that trend as a major factor shaping his team’s digital strategy. Amway supports 100,000 Independent Business Owners (IBOs) throughout Australia and New Zealand, and half of new distributors signing up represent Generation Y. Three years ago, the company began digitizing its resources in earnest to meet the needs of the current and next wave of IBOs.
In the first phase, Amway converted its print pieces into digital format—an initiative that reduced the company’s print costs by 70 percent. Those materials now live on the Amway Bookshelf app, which boasts 35 different publications and growing. Publications include sales toolkits, clinical research papers, and various articles and interviews highlighting R&D and manufacturing processes.
In the next phase, Amway plans to introduce new apps that will equip IBOs to better understand and manage their businesses. The “MyBiz” app set to launch in June will provide a real-time view not only of the individual’s business activity, but also that of his team. Amway Australia is currently rolling out a “check express” app to serve consumers at its business center locations. The app provides access to a video or audio presentation on each product through a simple barcode scan.
The company has beefed up regional and global staff to power its digital push, and provided training for older IBOs who are adapting to a new way of doing business. Ultimately, Haines says, the goal is to empower IBOs to reach more customers and prospects—whenever and wherever they choose to operate.
March 04, 2014
Public Companies Announce Year-End Results
Several top publicly held direct selling companies have now published year-end results. The reports summarized below are a mixed bag, reflecting some common threads as well as unique achievements and challenges within the industry. As companies continue to report, we will compile the information to rank this year’s DSN Global 100, a list of direct selling’s top revenue-generating companies worldwide.
Nu Skin has closed out a record fourth quarter with revenue of $1.07 billion, up 82 percent over 2012. The company’s annual sales increased 49 percent year-over-year to $3.18 billion. Nu Skin also increased its EPS to $5.94, up 69 percent over the prior year. In the Greater China region, where the company has temporarily suspended normal business activities to address a Chinese regulatory review, fourth quarter revenue increased 248 percent to $481.6 million.
Avon reported fourth quarter earnings down 10 percent to $2.7 billion. The company’s annual revenue decreased 6 percent year-over-year to $10.0 billion. For 2013, regional sales dipped 17 percent in North America and 16 percent in Asia-Pacific, while Latin America and EMEA (Europe, Middle East & Africa) decreased 3 percent and 1 percent, respectively.
Global nutrition company Herbalife generated record net sales of $4.8 billion for 2013, up 18 percent year-over-year. The company reported an EPS of $4.91, and an adjusted EPS of $5.37, up 36 percent over 2012. Last year, Herbalife saw the greatest sales increase in its China region, where sales were up 69 percent. Asia-Pacific generated the least sales growth, up just 3 percent over the prior year.
Tupperware reported record fourth quarter sales up 1 percent and annual net sales of $2.67 billion, up 3 percent from $2.58 billion in 2012. For the year, the company’s GAAP net income of $274.2 million rose 42 percent from $193.0 the previous year, and diluted earnings per share increased 51 percent from $3.42 to $5.17. Tupperware generated the greatest sales growth in Indonesia (33 percent); South Africa (28 percent); Turkey (24 percent) and China (20 percent), countered by negative growth in the Commonwealth of Independent States (-31 percent), Germany (-14 percent) and the U.S. and Canada (-3 percent).
Brazilian beauty company Natura closed out the year with sales up 10.5 percent over 2012. Latin American sales outside the company’s core Brazilian market have grown rapidly over the last few years and now account for 14 percent of Natura’s business. In early 2013, the company advanced its strategy to expand its presence outside Latin America with the acquisition of Australian beauty company Aesop.
With a 10 percent sales decrease in the fourth quarter, Germany-based Oriflame reported annual sales down 6 percent from 2012. The company’s sales have stalled in the CIS and Baltics region, which represents about half of Oriflame’s global business but generated -16 percent growth in the fourth quarter. The company saw positive regional growth in Latin America and Asia.
March 02, 2014
State Sees Big Return on 5LINX Investment
The New York State Common Retirement Fund has reported a nearly fourfold $6.7 million return on its investment in local company 5LINX Enterprises Inc. The retirement fund also saw an estimated 21 percent internal return rate on the investment, according to state Comptroller Thomas DiNapoli.
Based in the Rochester area, 5LINX provides residential and business clients with essential products and services, including telecommunications and energy offerings. 5LINX’s growth has earned it eight consecutive years on the Inc. 5000 list of the fastest-growing privately held companies in America.
The state pension fund invested in the company through its In-State Private Equity Program, which supplies venture capital to New York-based companies. Between 2006 and 2009, 5LINX received three rounds of funding totaling $1.7 million.
“5LINX has gone on to experience significant growth and business success culminating in a return of capital to the Common Retirement Fund with a very attractive rate of return,” Christopher O’Donnell, General Partner for fund manager Trillium Group, said in a statement.
5LINX also recently penned a strategic marketing agreement with retail energy supplier U.S. Gas & Electric. The agreement designates USG&E as the sole supplier of natural gas and electricity for new 5LINX customers in all current and future USG&E markets.
February 27, 2014
Increased Demand for Men’s Skincare in Asia
Across the Asia Pacific region, women are not the only customers driving record cosmetics sales. The Asian men’s skincare market accounted for 60 percent of global sales in 2012, making it the largest in the world.
Euromonitor International recently published a report on the growing demand for men’s skincare products in Thailand, where the market has seen double-digit year-over-year growth. Bloomberg Businessweek reports a similar trend in China, where sales of personal grooming products specifically targeted to men increased 7 percent last year.
Despite the rising demand, products tailored for men make up just 5 percent of China’s skincare market. Cosmetics giant Mary Kay is one brand poised to supply the growing beauty market. China—direct selling’s No. 3 Billion Dollar Market— is Mary Kay’s second fastest-growing market behind Brazil, generating more than $1 billion in annual revenue. Last week, The Wall Street Journal reported that Mary Kay is in talks to purchase its first office building in China, an 11-story facility in Shanghai.
February 26, 2014
Youngevity Announces Expansion into Russia and Israel
Photo above: Outside Youngevity’s corporate headquarters in Chula Vista, Calif.
California-based Youngevity International recently announced the expansion of its direct selling business into Eastern Europe and Israel. The multi-dimensional company markets nutritional and personal care products as well as gourmet coffee through commercial, retail and direct sales.
Youngevity plans to establish a presence in Russia by the third quarter of 2014 with a distribution and sales support center in Moscow and various distribution points across the region. The company has appointed industry veteran Ricardo Spilman as Director of Sales and Operations for Eastern Europe and Israel.
The company is strategically positioning itself with an eye toward rapid international growth, said Steve Wallach, Youngevity’s Chief Executive Officer. “Youngevity currently ships its products to over 60 countries, but this accounts for only 8 percent of our revenue. We believe that the global demand for our products is apparent and we are poised to make an impact internationally.”
February 25, 2014
5 World-Class Athletes Take the ViSalus Challenge
ViSalus recently announced that five world-class athletes are taking part in the nutrition company’s PROJECT 10™ Challenge. The challenge promotes a lifestyle of personal health and fitness supported by the Vi community and products.
Every week, ViSalus rewards $1,000 to 10 individuals who have lost 10 pounds or added 10 pounds of lean muscle during their Body by Vi Challenge™. As they shed pounds, participants also help the next generation live healthier lives. For each 10 pounds lost, ViSalus donates 30 Vi-Shape Nutritional Shake meals to supply a child with better nutrition through the company’s PROJECT 10 Kids program.
The latest athletes to sign on to the challenge share a successful history in their respective sports and a determination to pursue health regardless of age or circumstance. Jamaican bobsled competitor Devon Harris, whose team inspired the 1993 film Cool Runnings, joins U.S. Women’s Soccer team champion and three-time gold medalist Heather Mitts; 67-year-old National Ski Hall of Famer Suzy “Chapstick” Chaffee; hockey champion and silver medalist Nancy Drolet; and luge athlete Ann Abernathy, a six-time International Winter Games competitor for the U.S. Virgin Islands.
“I believe that being fit is a key component to successful living. Since I have been away from the rigors of competing at a high level, my fitness is not where it should be,” said Harris. “I am doing this challenge to improve my fitness level and also to inspire those with similar goals to pursue them.”
ViSalus has also announced its expansion into Germany and Austria. Co-Founder and CEO Ryan Blair says the company is taking its business overseas to tackle an obesity epidemic similar to that occurring in the U.S. “Germany and Austria share similar health and fitness demographics with North America and the UK, so our Promoters and products will deliver The Challenge at a critical time to change more lives.”
February 22, 2014
Herbalife Briefs Lawmakers on Business Model
On Friday, Herbalife executives hosted congressional staffers for a Washington briefing on Herbalife’s business model and the wider direct selling industry.
The company’s Chief Financial Officer John DeSimone, along with VP and Managing Director of Herbalife North America Ibi Fleming, offered a presentation on “Direct Selling: An American Tradition” and welcomed questions from staffers.
The outreach follows hedge-fund investor Bill Ackman’s year-long campaign to discredit Herbalife’s business practices. The activist investor’s billion-dollar short bet against Herbalife has dropped 49 percent since inception, The Wall Street Journal reports, making it the biggest loss in the decade-long history of Ackman’s $12 billion Pershing Square fund. Last year Pershing Square exited its investment in J.C. Penney Co. with a slightly lower 41 percent loss.
Ackman’s claims have prompted action by a handful of lawmakers—most notably Senate Democrat Edward Markey of Massachusetts, who recently wrote letters urging further investigation of Herbalife by the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC). On Thursday, Markey spokeswoman Giselle Barry told Reuters the senator is still awaiting responses.
Despite Ackman’s claims and the subsequent hurdles faced by Herbalife, the company reported fourth-quarter sales up nearly 20 percent to $1.27 billion. For the full year, Herbalife reported an 18 percent increase in net sales. Following fourth-quarter results, the company also adjusted its 2014 sales forecast to between 7.5 percent and 9.5 percent, down from the previous 9 percent to 11 percent; however, Herbalife raised its earnings forecast to $5.85 to $6.05 a share, up from $5.45 to $5.65.
February 21, 2014
Oriflame, WTA Collaborate on High-Performance Product Line
Oriflame has served as Official Cosmetics Partner of the Women’s Tennis Association (WTA) since 2011, and now the international beauty company has collaborated with the world’s top female tennis players to create an exclusive line of products.
The WTA Strong is Beautiful range answers a need expressed by the athletes for “high-performance personal care for daily freshness and hydration.” Oriflame’s newest line of natural Swedish beauty products includes a moisturizing shower cream, hydrating body cream and a deodorant with 24-hour protection.
“Oriflame has always been a supporter of strong women, so the WTA’s Strong is Beautiful campaign was the perfect fit,” said Michael Cervell, Senior Vice President Global Direct Sales at Oriflame.
Caroline Wozniacki, former WTA World No.1, is a fan of the WTA Strong is Beautiful products. “When you’re training hard and travelling a lot, you need products that perform. You want to feel confident—and beautiful too.”
Oriflame isn’t the only direct selling company that supports the WTA, whose 2,500+ players represent 92 countries. USANA Health Sciences serves as the organization’s Official Health Supplement Supplier. Last year, USANA and the WTA partnered on a joint Champions For Change initiative in support of the USANA True Health Foundation, which works to provide the most critical human necessities to those suffering or in need.
February 20, 2014
Vemma Recognized for Outstanding Packaging Design
BRAND PACKAGING magazine has recognized Vemma Nutrition Company in its 2013 Design Gallery. The gallery features stand-out brands that effectively communicate their story to the consumer through innovative packaging.
Vemma’s Verve Bold energy drink is one of seven products featured in the Metal category, and the company gets plenty of mileage out of its packaging, which is “designed to be sleek, hip and upscale and aims to invoke pulsating late night parties and busy college schedules while promising energy, mental clarity and focus,” BRAND PACKAGING notes.
The company’s Vemma antioxidant supplement is one of 10 in the Rigid Plastics category. The package’s white background is a nod to the company’s “clinical studies” and the “physician-formulated blend” which gives Vemma (vitamins, essential minerals, mangosteen and aloe) its name.
“The functional beverage industry is more competitive than ever. It is important to stay on trend with what consumers want in packaging and design. We are honored by these accolades and the positive feedback we have received from consumers and industry peers,” said Mark Patterson, Vemma’s Executive Vice President of Marketing and Brand Development.
February 18, 2014
Avon, KORRES Announce Latin America Partnership
Avon and Greek skincare brand KORRES recently announced a strategic partnership in Latin America, home to six of direct selling’s Billion Dollar Markets.
KORRES, established in 1996 by Greek pharmacist George Korres, has granted Avon exclusive rights to develop, manufacture and market KORRES products in Latin America. The alliance presents an opportunity for Avon to build upon its strengths; Latin America is the company’s largest business unit, generating nearly half of total revenues.
“Latin America is a growing beauty market and a major component of the Avon portfolio,” says Avon CEO Sheri McCoy. “I’m very pleased that through this strategic alliance, we can leverage Avon’s extensive network and capabilities to bring the KORRES brand and products to more women across Latin America.”
KORRES has always viewed Latin America as a unique fit to the values and philosophy behind its natural formulations, says the company’s founder. “Avon is a strategic partner that can help us start this wonderful journey.”
February 18, 2014
Russian E-Tailer Delivers Human Element
Russia’s online retail sales lag well behind those of European competitors like the U.K. and Germany, partly due to the logistical challenges posed by an expansive land mass and unreliable postal service. Internet fashion retailer Lamoda is differentiating its business with a delivery model that provides in-store service at home.
Rocket Internet, an Internet “startup incubator” based in Germany, launched Lamoda three years ago. The company has focused on developing an infrastructure centered on a 215,278-square-foot warehouse in Moscow and 20 satellite centers across Russia. Lamoda is addressing shipping challenges with an innovative take on the direct selling model. The company employs 700 couriers—equipped with a fleet of 400 cars—to deliver products to customers.
Lamoda’s couriers not only provide free delivery, but also wait while the customer tries on the clothing. Furthermore, the couriers receive training to answer questions and provide basic fashion advice to customers, much like a traditional sales associate.
The unique model has attracted investments of over $200 million over the past two years. Mikhail Burmistrov, General Director of researcher Infoline-Analitika, forecasts that the company may cross over into the black in 2014 after seeing exponential sales growth last year.
An increasing number of retailers are vying with Lamoda for a slice of Russia’s online sales, which increased 26 percent last year. ASOS, the U.K.’s largest Web-only fashion retailer, launched a Russian iteration in 2013, and eBay will open its virtual marketplace to Russian merchants this year.
February 14, 2014
Jessica Herrin Talks Stella & Dot Inspiration
Photo above: A stylist displays jewelry at a Stella & Dot trunk show.
In a recent interview for the Los Angeles Times, Stella & Dot Founder and CEO Jessica Herrin shares some of the inspiration behind her social selling business.
Herrin earned a bachelor’s degree in economics from Stanford University before dropping out of the MBA program to cofound a wedding content website that would become WeddingChannel.com—later acquired by TheKnot.com. When her next job brought her to Texas, Herrin had the opportunity to experience a Mary Kay convention during a business trip to Dallas. The passion and excitement of the women inspired her interest in the direct selling model.
Herrin, then working for the global e-commerce group at Dell, brought her tech savvy to bear in launching the jewelry business that would become Stella & Dot. She wanted to empower young women entrepreneurs, and those women had grown up with a new set of tools at their fingertips.
Stella & Dot also pays homage to an inspiring older generation of women. Herrin and Chief Creative Officer Blythe Harris named the company in honor of their grandmothers. “We wanted a name that really spoke to the spirit of the business, which is — it’s a company inspired by and created for strong women,” Herrin said.
February 13, 2014
Herbalife Exec Addresses Claims about Business Model
Photo above: The Herbalife Ltd. logo is displayed outside of the company’s corporate headquarters in Torrance, Calif.
(Photographer: Patrick Fallon/Bloomberg)
Amid the swirl of opinions that follow every fluctuation in Herbalife stock, a rare piece of commentary from one of the company’s own executives appeared recently in the Los Angeles Daily News. Ibi Fleming, Senior Vice President and Managing Director of Herbalife North America, outlines the fundamentals of Herbalife’s business model and addresses some disparaging claims about the company.
Fleming offers a response to the Los Angeles Daily News Group’s recent Question of the Week, which solicited feedback on whether Herbalife is a predator or an economic lifeline. With a product-centric retail model and extensive consumer protections in place, Herbalife’s business opportunity is “part of the thriving micro-business community in the United States,” Fleming states. She also notes that the company, whose 300-person compliance department receives an average of just 1.6 complaints for every 1,000 Herbalife members, welcomes the opportunity to address the claims of any individual citing a bad experience with the company.
Last week, Herbalife’s board of directors authorized an increased share repurchase program from the previous $653 million to $1.5 billion. The company also announced a $1-billion sale of convertible bonds to finance the share buyback, with the remaining proceeds slated for “working capital and general corporate purposes, including, without limitation, the repurchase of outstanding common shares,” Herbalife stated. The company identified Bank of America Merrill Lynch, Credit Suisse, HSBC and Morgan Stanley as the investors in Herbalife’s convertible notes.
February 11, 2014
Avon CEO among Fortune’s Most Powerful Businesswomen
FORTUNE recently named Avon CEO Sheri McCoy to its list of “The 50 Most Powerful Women in Business: Global Edition.” McCoy ranks No. 19, followed by Google SVP Susan Wojcicki at No. 20. GM’s Mary Barra, IBM’s Ginni Rometty and PepsiCo’s Indra Nooyi hold the top three spots on the list.
Following a distinguished 30-year career at Johnson & Johnson, McCoy joined Avon in April 2012 with a focus on stabilizing the business and driving long-term growth initiatives. In a third quarter report that showed revenue down 7 percent, McCoy stated that the company is nevertheless “headed in the right direction,” with progress toward its long-term financial goals. Avon will report later this week on fourth-quarter and full-year 2013 earnings.
FORTUNE’s inaugural global ranking evaluates executive power from an international perspective, taking into account the leader’s standing in the worldwide business community. Other assessments include the size, importance and health of the business, as well as the leader’s career arc.
February 07, 2014
Direct Selling Empowers Developing World’s Entrepreneurs
Last year, the U.N. reported the striking statistic that more people around the globe have access to cell phones than toilets. Six billion of the world’s estimated 7 billion people have access to mobile phones, but only 4.5 billion have access to working toilets—and 2.5 billion of those don’t have proper sanitation.
The need for greater global access to essential products—goods that help alleviate poverty and disease—is one highlighted by Chuck Slaughter, CEO and Founder of Living Goods, in a recent piece for The Guardian. Amid technological leaps forward, like that which saw much of the developing world bypass a landline telephone infrastructure with the adaption of mobile technology, Slaughter identifies four forces that could facilitate a better way of life for those who need it most.
Those forces are microfinance, direct selling, social media and mobile technology. Microfinancing has already benefitted more than 500 million individuals around the world. Direct selling’s rapidly growing business model exploits what Slaughter calls “one the most powerful forces in markets and societies—the power of human networks.” Social media multiplies exponentially the potential of human networks and with it the individual’s ability to market and provide customer service. Mobile technology instantaneously connects entrepreneurs to their customers, transforming all aspects of business.
Living Goods is harnessing these forces in the developing world to provide essential products like anti-malaria treatments, clean-burning cookstoves, fortified foods and solar lamps. By distributing its goods directly through franchisees, the company also creates a livelihood for some of the world’s underemployed, who represent a third of the global population.
February 07, 2014
Pearson Partners International
February 05, 2014
DSN Exclusive: Amway CEOs on Company’s Record Year
The industry’s top revenue-generating company for 2012 has announced another year of record sales. Amway reported its seventh consecutive year of growth with annual sales of $11.8 billion for 2013, up from $11.3 billion the previous year.
DSN spoke to the company’s Co-CEOs, Chairman Steve Van Andel and President Doug DeVos, who credit Amway’s growth to the leadership and motivation of its distributors. “It’s really their engine,” said Van Andel. “The great thing for us is that over longer periods of time, we see different groups coming into the business.”
Young people represent one group increasingly attracted to Amway’s entrepreneurial opportunity, Van Andel noted. “That bodes well for now, but it also bodes well for the future because that group will, I think, stay with us for a while and continue to have success, which contributes to the overall success of the business.”
The company’s 2013 Global Entrepreneurship Report, wherein two-thirds of the countries surveyed boasted a positive outlook on entrepreneurship, also bodes well for the future of Amway and the industry as a whole. “If people around the world support entrepreneurialism, if they support people going into business for themselves and operating their own businesses—they support our industry,” said Van Andel. “We’re very optimistic about the industry in that sense.”
The Co-CEOs expressed optimism about direct selling not only as a business opportunity, but also as a way to bring individuals into communities with a common purpose. “The people, plan and products by themselves are nice, but in Amway—and in direct selling—we have the capacity to bring them together. That’s what our industry does; it makes connections and creates community,” said DeVos.
One common purpose that Amway distributors and employees have rallied behind is the Amway One by One Campaign, which has impacted the lives of 10 million children worldwide. The organization has contributed 2.7 million volunteer hours and nearly $200 million to causes that support children in need.
The past year also saw Amway branching into a unique aspect of its business with the opening of a handful of physical locations around the world. Amway piloted its Amway Business Center model at New York’s Citi Field and most recently opened a center in Berlin, Germany. DeVos describes these physical locations as a place for people “to experience the business in a way that makes Amway real.”
February 04, 2014
February 04, 2014
February 04, 2014
Analysts Optimistic as Nu Skin Weathers China Storm
Photo above: Nu Skin’s symbol displayed outside its new global headquarters in Provo, Utah.
Nu Skin’s China business recently came under the scrutiny of state regulators as a result of a Jan. 15 article from China’s People’s Daily criticizing the company’s practices. China’s State Administration for Industry and Commerce said it would investigate the company’s operations, prompting a 33 percent decline in Nu Skin shares over the following two days.
In a response, Nu Skin stated that the People’s Daily article “contains inaccuracies and exaggerations that are not representative of Nu Skin’s business in China. The reporters did not attempt to verify any information with Nu Skin.” The stock rose for the first time on Jan. 22, following a prediction by Deutsche Bank analysts that the government investigation will likely conclude in less than two months, with a “modest fine” imposed upon the company.
Nu Skin has also stated that it remains “committed to working cooperatively with the government to ensure long-term, sustainable growth in this important market.” As a part of its ongoing compliance efforts, the company is conducting its own “province-by-province business review” and reinforcing business training and education. Mainland China, where Nu Skin has been operating for 11 years, generated 30 percent of the company’s $2.16 billion in revenue in the first three quarters of 2013.
Analyst Olivia Tong at Bank of America Corp. notes that network marketers such as Nu Skin “have always been questioned,” causing “outsized share price movements,” she wrote to Bloomberg. “There does not seem to be tangible evidence to validate negative claims targeted at the company thus far.”
Nu Skin is not the only business facing obstacles posed by China’s regulatory environment and state-controlled media. Last year, a report from China Central Television (CCTV) accused Starbucks Corp. of over-charging its customers. The same outlet claimed Samsung was selling defective smartphones to Chinese consumers—a charge that elicited an apology from the Korean electronics manufacturer despite its never being confirmed.
Last month, Wal-Mart Stores Inc. pledged to ramp up its vendor compliance in China after CCTV criticized the retailer’s quality-control measures. Wal-Mart has invested in a computer-based system to support compliance efforts that require the “collection, organization, filing and retention of well over 1 million documents annually,” according to the company.
China’s increasing regulatory scrutiny prompted The Economist to note last November that “it may be tough to find foreign firms that haven’t been on the receiving end of price, safety or hygiene scandals at some point.”
February 04, 2014
Executive Connection with Gregory L. Probert, Chairman and CEO, Nature’s Sunshine Products
|Gregory L. Probert
In this month’s Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Gregory L. Probert, Chairman of the Board and CEO of Nature’s Sunshine Products, about leadership, empowerment and transforming lives.
DSN: What is the one thing you enjoy most about being the Chairman and CEO of Nature’s Sunshine Products?
GP: Working with our fantastic distributors and hearing their inspiring stories of helping people transform their lives. The ability to personally connect with our distributors and customers is what inspires me.
DSN: While you’ve only been in your current position for a short time, you’ve been involved with the company for about three years. In that time, what has been your proudest accomplishment?
GP: I am very proud of the management team we have built. We have attracted many talented executives with long track records of achievement who have successfully teamed up with our veterans in the company. As with all great teams, it is more about working effectively as a team than about the skills of any one member. We have a very passionate, cohesive team that shares a vision for helping people improve their lives.
DSN: What has been most challenging?
GP: Finding ways to grow the company without changing what we stand for and staying true to our heritage of quality, service and integrity. We have a saying: It is OK to change what you do, but never change who you are.
DSN: What do you tell Nature’s Sunshine members to lead and inspire them?
GP: Never lose sight of why you joined Nature’s Sunshine—to help people live healthier, happier lives.
DSN: What is your vision for Nature’s Sunshine?
GP: To become the premier natural health, wellness and lifestyle company in the world.
DSN: Is there one basic principle that governs your leadership at Nature’s Sunshine?
GP: Empowerment. Surround yourself with great people, have a clear and shared vision of where you are going, and give people what they need to succeed and then let them shine.
DSN: Has someone ever given you a bit of really great advice you can share with us?
GP: My dad often told me, “Never ask someone to do a job you wouldn’t be willing to do yourself.” In other words, lead by example.
DSN: If you hadn’t become an entrepreneur, what career path would you have taken?
GP: Growing up in California, I was always surfing, swimming and scuba diving and would probably have become a marine biologist. My hero growing up was Jacques Cousteau.
DSN: Nature’s Sunshine has been in business for more than 40 years. What advice would you give an executive at a young direct selling company to help them achieve long-term success?
GP: Have a strong vision of what you want to be and never take shortcuts. Build a strong team; execute with excellence; and always remember that distributors are your greatest treasure and treat them that way.
DSN: What’s something that few people know about you?
GP: I love cooking and am a fairly decent chef. Perhaps my next career will be as a chef and restaurateur!
February 03, 2014
PartyLite Announces Jonathan Adler Collaboration
Home fragrance and décor company PartyLite recently announced its collaboration with potter, designer and author Jonathan Adler. Adler is teaming up with PartyLite to produce an exclusive line of candles, fragrances and home décor.
The Jonathan Adler for PartyLite Collection will feature the designer’s bold, graphic style. The modern offerings—Adler cites New York City as his inspiration—will include two new fragrances: Big Apple by Day and Big Apple by Night. “My collection for PartyLite captures the spirit of the city and will make your home vibrant and glamorous, no matter where you live,” said Adler.
Since launching his first ceramic collection in 1994 at Barneys New York, Adler has expanded his brand to include over 25 stores worldwide, an e-commerce site and a wholesale business serving over 1,000 locations globally. In addition to participating in a series of professional collaborations, Adler has authored four books. His collection for PartyLite will debut in Fall 2014, with new offerings to be introduced throughout 2015.
“The new Jonathan Adler for PartyLite Collection has a fresh, contemporary edge that we know our global audience will love. It’s an exciting opportunity to introduce Jonathan’s special brand of sophistication to style lovers worldwide—the PartyLite way,” said Rob Goergen, PartyLite Worldwide President.
February 01, 2014
Stock Watch, February 2014
February 01, 2014
Nature’s Sunshine Products: Transforming Business to Transform Lives
by Barbara Seale
Photo above: Jessica Braithwaite, Executive Vice President of Sunshine Heroes Foundation, spends time with children who are benefiting from the foundation’s support.
Achieving potential. That’s what Nature’s Sunshine Products is all about—optimal health for the consumers of its products and robust businesses for its distributors. Now it aims to power up its growth.
|Gregory L. Probert|
Nature’s Sunshine Products (NSP) has shown steady growth throughout its history, but its executives strongly believe in its potential to grow faster, and they’re investing in the company’s future.
Many elements are new in the 42-year-old company, beginning with several members of the management team. Gregory L. Probert was named Chairman in January 2013 and CEO in October 2013, after holding consulting and executive positions there since late 2010. Within the last few months the company has also hired a new chief scientific officer, a new EVP of worldwide operations and manufacturing, new VPs of Asia Pacific and Russian markets, and new heads of IT and human resources. They join Wynne Roberts, the company’s President and Chief Operating Officer, who became part of the NSP team in February 2012.
“We have spent a lot of time building one of the best management teams in the industry, including Wynne,” Probert says. “He and I worked together in a couple of other companies, Herbalife and DMX Music. We’ve been a team before, and that works well for the top two guys. We know each other’s work style, and we work together as a team very well.”
Roberts adds, “With the level of change that we’re driving in this business to realize our growth potential, the fact that Greg and I know each other well means that we can move quicker because we listen well, challenge each other’s ideas and trust each other. When you try to drive significant change, building on a strong foundation, that’s very valuable.”
It Started With a Stomachache
When Utah schoolteacher Gene Hughes developed a nagging stomach condition, a neighbor suggested a surprising treatment—cayenne pepper. It worked!
But swallowing that spoonful of cayenne pepper was almost as painful as the stomach condition. That’s when his wife Kristine suggested putting the spicy seasoning into easy-to-swallow gelatin capsules. Problem solved. Her brainstorm led the couple to start Nature’s Sunshine Products, which became one of the first companies 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.
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.
Strength in Size
NSP’s strong foundation has been built on the high-quality products that it offers through its two distinct brands—Nature’s Sunshine and Synergy Worldwide. Today the company sells these products in more than 40 countries and has some 340,000 active independent managers, distributors and customers. Probert and Roberts believe that having global presence and more than 600 products presents a strong platform and opportunity for growth, but they also know focus is key. Creating that focus to leverage that strength is their goal.
“We have a large geographic footprint, and we have to make sure we’re focused on those countries that have the greatest growth opportunity,” Probert explains.
For example, in the third quarter of 2013, the company saw sales growth in NSP Mexico, South America, Russia, Central and Eastern Europe, as well as Synergy Europe and Asia, while sales in the U.S. grew in two of the first three quarters of 2013. Probert also sees huge opportunity in China, a market it has not yet entered.
“We’re also investing heavily in research and development to further strengthen our product catalog and are developing a three-year product strategy,” Probert adds. “We’re focused on launching innovative, science-based products that are aligned with the opportunities driven by consumer health megatrends such as obesity, inflammation, insulin resistance and diabetes, joint, cardio-vascular and anti-aging.”
NSP is developing differentiated product strategies for each of its operating businesses and is overlaying those strategies with history and sales figures. In Nature’s Sunshine Products, many customers initially came to the company because they were seeking a natural way to address a health condition. But when the condition improved, they believed that they had no reason to continue to buy. So the company has developed products and programs that support everyday wellness, as well as targeted health concerns.
NSP’s 600 products address one or more of 17 broad health conditions. Six of those conditions—cardiovascular health, digestive health, immune system, general health, weight management, and mood and anxiety—generate about 80 percent of the company’s sales. To make those areas more manageable, the company groups products into one of three key areas that support what it calls the Transformational Habits of Health: nutrition that supports weight management, daily essential supplementation that supports everyday good health, and specifically targeted care. Nature’s Sunshine works hard to help distributors effectively communicate how products can help consumers support their health in each of those areas.
Synergy Worldwide had historically been focused primarily on products supporting cardiovascular health, and the company has broadened its market opportunity by launching an innovative weight-management system, SLMsmart, in 2013.
Nature’s Sunshine Products operates in more than 40 countries and has some 340,000 active independent managers, distributors and customers.
Add this to the challenge: Nature’s Sunshine distributors, which it calls members—or managers at higher levels—use a variety of methods to run their businesses. They may hold home gatherings, use traditional one-on-one network marketing methods, do Internet sales, partner with healthcare professionals or even have a retail business. Many Nature’s Sunshine Products distributors are natural healthcare consultants or practitioners. NSP supports that flexible approach to doing business, and it recognizes that each sales method has unique needs. It recently hired staff specialists to develop programs to help managers grow their business in all those areas.
“We have spent a good amount of time understanding the methods our distributors use to take products to market,” Roberts reports. “Then we identified where we had experience gaps in staffing. We set about hiring people who have expertise in practitioner consultant marketing, retail merchandising, and building networks. They have developed programs to support distributor needs in all those areas.”
For example, one of the specialists supports retail stores—some 750 NSP distributors run one—and focuses on merchandising in the stores to effectively communicate product strengths. Another works with NSP distributors who are natural health practitioners such as chiropractors, naturopaths and herbalists, and has developed a series of classes that practitioners use to help people improve daily nutrition and weight management. The programs were launched in October to the top 400 leaders, and a full national launch will take place at the company’s national convention in March. The number of groups being established is already increasing.
Those programs, along with the development of supporting products—especially daily nutritional supplements—are increasing sales and creating a stickier customer base.
“This has been a huge strategic shift in the company, in terms of building daily consumption,” Probert says. “Any successful business must have recurring sales. Add to that the targeted care that we’ve always done exceptionally well, and we have a robust formula for growth.”
Focus on Quality
Whether the product supports daily wellness, a targeted health condition or weight management, it’s probably produced in a Nature’s Sunshine 270,000-square-foot manufacturing and warehouse facility. More than 90 percent are. The advantages are numerous.
“There’s no question that we see self-manufacturing as key for speed-to-market and cost efficiency, but also for the high-quality standards we have,” Roberts explains. “All that would be hard to support if we didn’t self-manufacture.”
He notes that the company goes to extremes to build in quality throughout its process. They’re demanding when they choose raw materials, selecting only those that pass NSP’s own tests for potency and safety. Even though they are highly selective when they choose suppliers, about 2 percent of raw materials still don’t meet the high standards of Nature’s Sunshine. Once the raw product actually goes to manufacturing, scientists subject it to even more rigorous tests. For example, to detect contamination, NSP’s manufacturing facility uses an ICP mass spectrometer that can test for parts per trillion—the equivalent of one drop of water in five Olympic-size swimming pools. That’s just one of the 600 quality control tests it uses, including post-manufacture testing. Since 2009, the company’s manufacturing facility has been certified by NSF, an independent international certification company that inspects and audits the Nature’s Sunshine manufacturing facility, procedures and products twice a year.
“There’s no question that we see self-manufacturing as key for speed-to-market and cost efficiency, but also for the high-quality standards we have.”
—Wynne Roberts, President and Chief Operating Officer
“It all combines to deliver the highest quality,” Roberts says. “It means that we’re able to prove the quality of our products, not just say it.”
Probert adds, “People want to trust the products they’re putting in their body, and when they’re taking products to improve their health, there’s a high level of trust that we live up to. Our product quality supports our tagline: Pure, potent, proven.”
Keeping track of all those diverse elements that drive quality and sales growth is a herculean effort. To handle it, Nature’s Sunshine has invested $40 million in an Oracle Enterprise Resource Planning system.
“When you’re working in more than 40 countries, having easy access to information across the business—from manufacturing to sales and everything in between—easy, rapid access to information is critical,” Roberts observes. “The investment we’re making in this system ensures that we have access to data on the ground across the world so that we can grow our business. It helps us have effective manufacturing, drive costs out and create financial strategies efficiently. In sales, we can quickly identify areas where ideas, business methods and products are getting traction, so we can provide more effective support and achieve faster growth. It will really enable us to provide much more effective tools to our distributors to build their businesses.”
“People want to trust the products they’re putting in their body, and when they’re taking products to improve their health, there’s a high level of trust that we live up to.”
—Gregory L. Probert, Chairman and CEO
Nature’s Sunshine is also investing in creating brand awareness and affinity. In addition to ensuring that it and its sister company Synergy have distinct brands and messages, NSP wants to increase its overall name recognition.
“Historically, we’re one of the best kept secrets in the industry,” Probert says. “We’re a $400 million company with two distinct brands, great products and fabulous distributors, but we don’t have the brand awareness of a company our size.”
To shore up its brand foundation, the company’s chief marketing officer led it through a vigorous rebranding process, and the company is now rolling out the results both internally and to distributors.
“This company has such a great legacy of natural health and product quality and integrity in the way we do business,” Probert says. “Distributors gravitate to this company for that. We also have a culture of service to distributors and our communities. We didn’t want to change that, just clarify it. We will also do certain things to build awareness publicly, such as sports sponsorships, and we will need to activate distributors around that so we can spread the word of what NSP stands for.”
Roberts adds, “We already have a very good platform that has grown stronger in the last few years. If we do this well, five years from now we won’t have to explain to anybody what we do. They’ll know that Nature’s Sunshine is the business that improves wellness and transforms lives.”
With so much happening to fuel the company’s potential, both Probert and Roberts are enthusiastic about the company’s future. They see international expansion opportunities in countries such as China, India and Brazil, and they’re excited about the high-quality, innovative products on the horizon that address the megatrends they’ve already identified.
“If you look at the team we’ve been able to attract, we’re all here for one reason: We see such untapped potential in the company, and we’re passionate about helping people transform their lives,” Probert says. “We also see that $400 million can grow into multibillions. There’s a huge need for what we do, and we have a huge opportunity to transform people’s lives all over the world. Direct selling is an incredibly vibrant business model and the best way to take our type of products to market. Our challenge is to focus, focus, focus on doing the right things that will grow the company.”
“If you look at the team we’ve been able to attract, we’re all here for one reason: We see such untapped potential in the company, and we’re passionate about helping people transform their lives.”
—Gregory L. Probert
Nature’s Sunshine’s mission to transform lives reaches beyond its business and into its philanthropy. Many of its charitable projects have been in conjunction with the Sunshine Heroes Foundation, of which it is a founding partner. The foundation, formally Little Heroes Foundation, has reached out to the Utah community and across continents with products that have helped nearly 265,000 individuals. The foundation has also given out more than $540,000 since its inception in 2008 to support numerous organizations both domestically and internationally.
In conjunction with the Sunshine Heroes Foundation and Mali Rising, Nature’s Sunshine recently helped establish the Sunshine Heroes Academy in Mana, Mali. Mali is among the 25 poorest countries in the world, and its people have severely limited educational opportunities. The Sunshine Heroes Academy, which features three classrooms and two administrative offices, will provide a resource for up to 200 children each year to get an education.
Nature’s Sunshine has aided Sunshine Heroes in the renovation of baby hospitals in Russia; built a health clinic in Nepal that was estimated to treat 20,000 people in 2012 alone and a clean water project in Zhongwei, China, that provides safe drinking water to an estimated 30,000 children each year; and distributed health supplements to an estimated 1,000 individuals throughout Ghana.
Nature’s Sunshine donates a portion of the proceeds from the Sunshine Heroes vitamin line, supports projects and grants, provides the Sunshine Heroes Foundation with opportunities to fundraise and helps cover administrative costs so 100 percent of the individual donations will go directly to benefit children. Through their partnership, Nature’s Sunshine and the Sunshine Heroes Foundation together have impacted the lives of more than 160,000 children and 265,000 individuals in 15 different countries around the world.
February 01, 2014
Letter from John Fleming, February 2014
Optimistic is the word that comes to mind as we now anticipate collecting information from many companies, which will lead us once again to the identification of the DSN Global 100. We are optimistic that we will find substantial growth to report within the industry. Inspired is another word that comes to mind when reflecting on some of the outstanding, record-breaking growth of some direct selling publicly held companies. We are able to see those results at the end of each quarter as a result of the published quarterly reports. The public companies that we watch—the ones using direct selling 100 percent as their method for revenue generation—indicate an average increase in share price of 188.25 percent (year-end 2013 over year-end 2012). The preceding represents 19 companies that are in our primary domestic group. Five foreign direct selling companies that we follow increased share price on average 14.94 percent.
With such strong overall performance by publicly held direct selling companies in 2013, our outlook remains strong and positive for the performance of the industry overall. Such a performance provides us with many more stories that need to be told. That is why in April we have scheduled The Wall Street Journal for another insert to be distributed to its 1.2 million subscribers. This insert, unlike previous inserts, will be devoted strictly to editorial and will not include advertisements for specific companies. The story of customers satisfied and lives changed is a compelling one, and The Wall Street Journal provides a great platform to tell that story. We are grateful to all friends who have supported us in this effort, and we know you, as the industry, will be proud of the information we create and publish. Reprints will be made available to enhance the spread, life and impact of the information on the public we serve.
Our cover story this month highlights a group that is often behind the scenes but so very essential to the success and sustainability of any company. Suppliers are usually experts at what they do, and they consistently make very significant investments in their products and services. They have to do this in order to maintain competitive advantage and most importantly, to be able to provide clients with a source committed to keeping their business on pace and in front of trends and best practices. Newer companies just beginning to venture into supplier relationships will certainly appreciate the perspectives provided. We ventured into this article out of deep respect for the suppliers we have gotten to know via the publishing of this magazine. Because of them, we have gained so much knowledge about the industry and accumulated so much information. We have truly learned their value as strategic partners.
Nature’s Sunshine Products (NSP) has shown steady growth throughout its history, but executives strongly believe in its potential to grow more rapidly, and they’re investing in the company’s future. Many elements are new in the 42-year-old company, beginning with several members of the management team. Get to know them through our Company Spotlight.
Nerium International is still a young company when looking at years in business, but in that short time, the company’s impact on lives appears to be beyond measure. The company’s commitment to personal development and philanthropy represents another example of how a direct selling company can impact lives in such a positive way.
In this month’s Top Desk, Amway’s John Parker explores ideas of community and why community is such an integral part of a direct selling company’s success. In fact, John says, “Lasting communities form around causes or values—not products or brands.” This is a most interesting and valuable article contributed by the Chief Sales Officer of the industry’s top company.
Another article we think you will find interesting is the contribution by industry attorney Kevin Thompson. Here at Direct Selling News, we have not jumped into every conversation about the points of view that arose over the past year relative to some of the industry’s publicly held companies. Herbalife was the center of many conversations, and the success of the company in 2013—in spite of some very severe challenges—is another testimony to the strength of the direct selling business model, the quality of people attracted to it, the leaders developed by the company and, of course, the quality of the management team at the top of the company. Kevin points this out in his article, “Ackman’s Folly: 7 False Assumptions on Herbalife,” edited exclusively for Direct Selling News.
As we now move through the month of February and into March, we eagerly look forward to the year-end reports that will create many of the stories for 2014, and we look forward to seeing many of you at this year’s DSN Global 100 banquet. It will be quite a celebration!
Until next month… enjoy the issue!
Publisher and Editor in Chief
February 01, 2014
The Value of Developing a Strategic Partnership with Your Suppliers
by Teresa Day
Vendors and suppliers are often measured on their contribution to a company’s success on three simple factors: whether they deliver more quickly, more cheaply or more effectively. Yet many suppliers know that they have so much more to offer to companies who are willing to think outside these traditional supplier definitions. Indeed, in the rapidly changing technological environment, coupled with a challenging economic environment, a shift in perspective toward suppliers and their offerings may be a welcomed change for many company executives seeking to reconcile the balance sheet with the company’s long-term needs.
This month, DSN’s cover story takes a look at the various types of existing supplier relationships and seeks to shed light on the value of developing strategic partnerships.
Company executives know that long-term strategies, and the success hoped for in implementing them, must reach across all resources and include outside vendors and suppliers as an integral part of the whole. The shift to outsourcing parts of a business, or bringing in a specific supplier to take care of one aspect of the business—payroll for example—began many years ago and has been successful for many companies. What is the difference between those relationships with a supplier and what we are proposing here as a “strategic partnership”? Let’s begin that answer by defining the types of supplier relationships currently practiced.
Types of Supplier Relationships
Author Kevin Davis, in his book Slow Down, Sell Faster!, divides the supplier/company relationship into three levels, with each relationship having specific characteristics:
- Approved Vendor
- Valued Consultant
- Strategic Partner
The approved vendor, according to Davis, is characterized by having an acceptable price and service, and is called upon by the company for the “sole purpose of acquiring a specific product or service at a competitive price.” Within this level of relationship between company and supplier, the company is looking for a transaction-driven solution and will turn to that vendor who has a good reputation for delivering on time and on budget.
Now, there is nothing inherently wrong with being an “approved vendor.” Though nobody wants to be thought of as lowest on the totem pole, having access to an excellent provider with stellar customer service of task-based transactions is a good part of any executive’s long-range plan. There is a place in all organizations for task-oriented solutions such as payroll processing or 401(k) management, among others.
The way a vendor with a task-oriented transaction differentiates themselves from the competition would be in such areas as follow-up, account management and customer service. There should be no question here concerning the reliability, deliverability or ROI of working with a supplier. Those aspects should be apparent before a supplier makes it onto your “approved” list. The point is there may be some strictly task-oriented services outsourced to an approved vendor, and in the scope of that job they are expert craftspeople who deliver good work. It is possible, however, that within some parts of your business, you could benefit from seeking a different type of vendor relationship.
In Davis’ hierarchy, the second level of supplier/company relationship is the valued consultant—one who provides not only a product or a service, but also exchanges information and shares knowledge with the company team members. This level of supplier exhibits a more forthright interest in helping the company succeed by offering helpful hints or otherwise contributing knowledge that might be in addition to the scope of the project.
Davis says that the valued consultant supplier is “perceived as the ‘go-to’ person,” and that the “variety of potential solutions is both valued and sought-after when a need arises.” Additionally, this level of supplier understands the company’s business processes and even preferences, possibly having been a part of developing them.
The final, and highest, level within Davis’ hierarchy is the supplier who not only delivers a product or a service, but also functions as a long-term strategic partner. A strategic partner, says Davis, helps a company “see the future faster, and in a new and different way.” This supplier continually seeks to add value to every situation, in addition to the products or services provided by the contract agreement. This supplier literally partners with the company and works toward “continuous improvement.”
A strategic partner is in it with you, helps to mutually develop solutions, knows and understands your business goals, turns their knowledge into action on your behalf, is thinking about you when you aren’t there and has a long-term relationship with you. A strategic partner doesn’t attempt a one-size-fits-all approach.
A strategic partner helps a company “see the future faster, and in a new and different way.”
—Kevin Davis, sales management and training expert and author of Slow Down, Sell Faster!
Value Rather Than Cost
Many companies rank the importance of their suppliers by how much money they spend working with them, but in order to determine which type of supplier you need to work with, money actually should not be a primary consideration at all. The rank of a supplier’s importance to the company should be measured by factors such as:
- Does the supplier have a relationship with the company beyond the contract terms? In other words, is there a flow of communication?
- How integrated is the supplier with company processes?
- To whom does the supplier report? Strategic partners most often have relationships with senior or executive team members.
Judy Stubbs, Vice President at Pearson Partners International, a global executive search and talent management firm, says, “A supplier who seeks to become a strategic partner to the customer is in a far better position to build a lasting professional relationship as well as gain a more comprehensive sale for both. The conversation is now about value rather than cost.”
Does every supplier need to be a strategic partner? Not necessarily. It largely depends upon the company’s needs and vision. Strategic suppliers are often woven into the fabric of the company’s daily operating structure, acting as extensions or full-time members for a period of time.
Good strategic partners are generally prepared to invest both time and capital into the building of a successful relationship with company executives. They are invested in supporting their client companies as well as their industry, and they desire to provide the best service possible.
Benefits of Strategic Partners
If developing strategic partnerships with suppliers takes more time and effort on the company’s part, what are the benefits of investing that time and money? The three main benefits, as DSN sees them, are explained below.
Benefit No. 1: Resource Strategy
The first benefit of developing strategic partnerships with suppliers is that doing so allows the company to concentrate its effort on those things deemed most important, while allowing the strategic partner to shoulder responsibility for some other aspects. Every company, no matter how large or how small, has restrictions in some areas—these could be resources, manpower or talent—and it is executive management’s priority to plan the long-term strategies within the confines of those restrictions.
Put simply, supplier partners can focus on their area of expertise and allow the company to forgo hiring in that area. For example, instead of hiring an internal call center or a distribution center workforce in the traditional employee-based model, outsourcing these functions to a strategic partner can free up your head count and provide opportunities in other areas. Alan Pollard, Vice President of Sales at iCentris, a software design company specializing in tools for the distributor, believes that many companies can benefit from engaging a strategic supplier to be a partner from the beginning conversations.
Pollard says, “Often companies decide to do things in-house that could be better and more economically served by a strategic partner. They often may not see hidden or soft costs of doing business in-house.” Reaching out to a trusted partner to have those conversations can help a company build the right departments from the beginning.
In addition to focusing resources on other departments or projects, developing strategic partnerships with suppliers gains a company access to subject matter experts (SMEs) at a higher caliber of talent than the budget might allow for a direct hire. Their expertise can “be called upon for subject-matter expertise for navigating challenging waters,” according to Terrel Transtrum, Founder of ServiceQuest, a consulting firm specializing in distributor retention. He also adds, “The executive and supplier who get to a foundation of trust and common purpose enjoy more efficient, smarter, and potentially more cost-effective solutions. Who doesn’t want that?”
Even when a company hires a seasoned executive with a number of years under their belt and leadership at two to three companies, engaging a supplier as a strategic partner can greatly expand the realm of experience. Paul Adams, Senior Vice President of Strategic Marketing at VideoPlus, a media and marketing communications company, says, “Typically when we meet with a company, we’ve got a collective 50–60 years of experience in the room, and over 100 companies to draw from.”
Keeping pace with the speed of change has become much more challenging for all companies and their internal teams, especially in areas of technological progress. In some cases, strategic suppliers can respond with more flexibility than the company can. Scott Orlinski, President of Smart Office Solutions, a communications solutions company, says, “Suppliers have scalability of services that the direct selling companies themselves often don’t have. We consider the ability to scale to be our responsibility.”
And while it seems clear that companies in a growth spurt benefit from strategic supplier partnerships, so do established companies. Developing partnerships is an ongoing resource strategy for a company of any size. This feeling is echoed by Serena Ayscue, Co-Founder of software company ByDesign Technologies. Ayscue says, “It’s a mistake to think that once you become a big company, you have to bring everything in-house. The companies that are really successful have placed value in building their supplier relationships. In this way, the company can stay on top of the latest technologies, the newest efficiencies and new industry recommendations.”
“The executive and supplier who get to a foundation of trust and common purpose enjoy more efficient, smarter, and potentially more cost-effective solutions. Who doesn’t want that?”
—Terrel Transtrum, Founder of ServiceQuest, a consulting firm specializing in distributor retention
Benefit No. 2: Expanded Research and Development Capabilities
The second benefit of developing strategic partnerships with suppliers is that the process allows a company to greatly extend and expand their research and development capabilities. Suppliers invest in R&D in order to stay on top of their specific expertise. The cost is spread over several clients, and all companies gain the benefit of what may not have been a feasible investment for just one company.
“Suppliers can and should provide the R&D in their area of specialization so companies can keep up with growth and changing technology/practices,” Pollard says. “The internal teams at direct selling companies run the day to day, but suppliers can provide perspective on best practices and emerging trends and technologies from their involvement with many companies.”
Companies often take a “silo” approach to some of the most important components of the business model. For this reason, engaging a supplier as a strategic partner can provide great benefit, for the simple reason that suppliers have seen results from many implementations and many companies, and the learning can be passed on to other companies without infringing upon anything the company considers proprietary.
Paul Piscitelli, President at Paul Anthony Awards, an awards and gifts company, puts it succinctly: “We know what is working and what is not working in the industry. Without giving away private data, we can steer a team in the right direction while in the planning stages.”
There is also vast experience collected within the industry among suppliers who have respect for one another. The companies who engage them also benefit from the knowledge exchange among the experts in the supplier companies. Greg Fink, Vice President of Sales at Next Wave Logistics, a software development firm, explains: “There is respect among competitor suppliers. When companies look to outside suppliers that don’t know the direct selling space I cringe, because there is such a wealth of knowledge here that is being overlooked.”
In addition to addressing specific challenges within a company, engaging a strategic supplier as a trusted advisor can bring about answers to unknown questions. Kevin Griffin, CEO at software media company ROQlogic, says he has seen companies reach plateaus where they don’t know what they don’t know. “The company may not know what they are missing and that enhanced business services can be easily provided by the supplier.”
John Killacky, Managing Director of Sales at Bartha, an events and production company, agrees with Griffin. He says, “Companies sometimes overlook certain business practices that vendors just do as part of their routine and experience in their area of expertise.” In this way, Killacky believes the companies can greatly benefit from the knowledge of the supplier.
When suppliers are utilized more as “strategic partners” versus simply suppliers of a product or service, the company activates all of the resources that a supplier may have, including historical knowledge, experience and even data.
“We know what is working and what is not working in the industry. Without giving away private data, we can steer a team in the right direction while in the planning stages.” —Paul Piscitelli, President of Paul Anthony Awards, an awards and gifts company
Benefit No. 3: Having a Vested Advocate
The third benefit of developing strategic partnerships with suppliers is that the process creates an additional vested advocate in the success of the company, one who has resources and knowledge that can help the company reach its goals. The strategic supplier is motivated to bring solutions to the table. This can often include insights that spread to other parts of the business because suppliers that are embraced as strategic partners tend to offer far more than the product or service they are known for. This represents added value to the relationship between supplier and company and often results in time and dollars saved and gained.
“Many suppliers also become champions of the industry because they believe in the power of direct selling as much as companies.”
—Alan Pollard, Vice President of Sales at iCentris, a software design company specializing in tools for the distributor
But more than just providing a solution to a problem, developing a strategic partnership means the supplier is fighting for you and with you in the long-term, coming to understand your point of view, your culture, and your strengths and weaknesses, in order to better be a partner. A partner is someone who thinks about the business and engages in the goals more deeply than a non-partner. Adams says, “We’re not just trying to solve a current problem with our partner companies. We are always reaching ahead to figure out the challenges and provide the right solution for the future.”
A partner is someone who understands and aligns with the company’s core goals and strategies, and is actively working toward solutions with their own team of experts on your behalf. “Years of experience in the industry have brought us a wealth of knowledge,” Pollard says. “Many suppliers also become champions of the industry because they believe in the power of direct selling as much as companies. There are some great stories of ‘lifelong’ suppliers who have helped build the industry.”
The relationship is mutually beneficial. Stubbs says, “These partners truly want to have that kind of relationship with the client company, as that teamwork obviously benefits both in the long run. With clients who come to us outside of a search engagement to seek our advice and counsel, we have much deeper, longer term, and mutually beneficial relationships.”
Communication and Metrics
Excellent execution always needs two things to survive: communications and metrics. Communication must occur to keep all parties on task and the goal within sight, and unless a metric has been set no one will know whether the project succeeded. Developing a good course of communication between the company and the strategic supplier can be challenging, says Scott Smith, President of InfoTrax Systems, a software solutions company. When all people involved are busy with their various tasks, it takes effort to keep the communication flowing. But, he says, it’s necessary “to maintain top-level customer service.”
According to Chris Boyle, President and CEO of Access Technology Solutions, a sales and logistics company, the relationship works best when outcomes and roles are defined and communicated. He says, “Then you mutually define growth objectives, expectations, risk tolerances and measurable milestones and let each partner get things done the way they do it best.”
Setting good communication standards and clear metrics is a win-win for everyone, says Janne Heimonen, Founder at consultancy company Hyväheimo. She says, “When you make sure the deliverables are expressed in clear, sensory detail so that there is no doubt at the end of the day if the outcome was achieved or not, everybody wins. It becomes easier to check progress and to adjust the course if needed.”
Many suppliers who wish to function at the strategic partner level have a willingness to participate on committees, even advisory boards, as subject matter experts to ensure all quality measurements are designed, implemented and managed appropriately.
By taking the time to vet a supplier who is sought more as a strategic partner, companies strengthen their decision-making and their ability to execute the best solution possible. The cost of “ownership” of certain decisions versus the cost of “strategic partnership” to help with critical decisions is a new measurement that would benefit both the supplier and the company being served.
Boyle sums it up: “A strategic supplier partner helps chart your long-term future. Their focus is on transformation, not transactions. Together, you navigate unexpected currents and course-correct when industry dynamics shift. They open new doors. They help you see who you need to be, where you need to go and how to get there.”
February 01, 2014
News in Brief, February 2014
Nu Skin Presents International Fireworks Display
Nu Skin Enterprises rang in the ‘Nu’ Year with a grand fireworks display that culminated in an illuminated Nu Skin logo on Taipei’s tallest building, the 101 Tower, during an international New Year’s Eve broadcast. The Taipei 101 Tower fireworks event—named one of the top-10 New Year’s Eve fireworks displays in 2012 by CNN—attracts more than 1 million people each year and is broadcast from Taiwan’s capital to more than 25 countries around the world.
The Taipei 101 Tower display and fireworks production featured a projection of the Nu Skin logo and the phrase “Happy Nu Year” displayed through Jan. 8, as well as a 218-second fireworks display and the launch of 24,000 pyrotechnics.
The display ushered in Nu Skin’s 30th year of operations in one of its fastest-growing regions. The company will officially launch its international 30th anniversary celebration in May 2014 with its top sales leaders at its annual Team Elite incentive trip, and the festivities will continue with a grand birthday celebration in June.
Nu Skin Enterprises Inc. demonstrates its tradition of innovation through its comprehensive anti-aging product portfolio, independent business opportunity and corporate social responsibility initiatives. A global direct selling company, Nu Skin operates in 53 markets worldwide.
Herbalife Awarded for Healthy Nutrition in Russia
Global nutrition company Herbalife recently won the 2013 “Healthy Nutrition” award in Russia at a ceremony opened by the director of the Institute of Nutrition of the Russian Academy of Medical Sciences.
The “Healthy Nutrition” award is part of a wider campaign designed to raise public awareness about the importance of living a healthy and active lifestyle, including eating a healthy diet. The contest is organized by the Moscow government’s “Foundation for Social Projects and Programs.” Award winners include leading global companies that contribute significantly to the education and promotion of healthy nutrition principles.
In other company news, Herbalife has been formally recognized by the mayor of Seoul Metropolitan City for its efforts in developing and supporting child welfare initiatives across South Korea. Herbalife is the first direct selling company ever to win the award in South Korea.
Through its Herbalife Family Foundation, the company has established four Casa Herbalife programs in South Korea in collaboration with local charitable organizations to improve the nutrition and lives of vulnerable children. Through these programs, the Herbalife Family Foundation provides financial grants, fundraising, and volunteer support to assist in projects that promote good nutrition and health for children.
Headquartered in Los Angeles, Herbalife Ltd. sells weight-management, nutritional and personal-care products intended to support a healthy lifestyle. Herbalife products are sold in more than 85 countries to and through a network of 3.2 million independent distributors.
Primerica Wins 11th Consecutive DALBAR Award
Primerica recently received the 2013 DALBAR Service Award for exemplary customer service to its mutual funds clients. For over two decades DALBAR has conducted rigorous testing of service delivery. Following a full year of comprehensive evaluation, DALBAR identifies those mutual fund firms found to be above their peers in service to clients. This marks Primerica’s 11th consecutive year to receive the award.
DALBAR Inc. provides independent expertise to the financial community for evaluating, auditing and rating business practices, customer performance, product quality and service. Launched in 1976, DALBAR has earned recognition for consistent and unbiased evaluations of insurance companies, investment companies, registered investment advisers, broker/dealers, retirement plan providers and financial professionals.
Primerica Inc., headquartered in Duluth, Ga., is a leading distributor of financial products to middle-income households in North America. In addition, Primerica provides an entrepreneurial full- or part-time business opportunity for individuals seeking to earn income by distributing the company’s financial products.
USANA Extends Partnerships with Olympic Contenders
USANA Health Sciences has extended its individual partnerships with Sochi contenders U.S. freeskier Grete Eliassen and Nordic combined teammates Billy Demong, Bryan Fletcher and Taylor Fletcher through 2014. USANA now provides its NSF- and HFL-tested nutritional supplements to more than 600 world-class athletes.
Demong and the Fletcher brothers concluded last season with team bronze at the World Ski Championships in Val di Fiemme, Italy, while Eliassen secured a bronze medal at the World Championships in Voss, Norway. The accomplished skiers will continue to act as the nutritional company’s global brand ambassadors as they participate in the Winter Games.
In other company news, Utah Business magazine recently named USANA to its annual list of Utah’s “Best Companies to Work For.” The global nutrition company was recognized as one of the best employers in the state based on its unique and generous benefits, work-life balance and overall company culture. This marks the sixth time the company has made the list since 2002.
USANA has been recognized for its onsite workout facility, complimentary fitness classes, organic cafe, annual profit-sharing program and impressive health and life insurance packages, both locally and nationally. In August, USANA was recognized by Outside magazine, for a fifth consecutive year, as one of the “Best Places to Work For” in the nation.
Founded in 1992, USANA Health Sciences is a nutritional company that manufactures high-quality supplements and personal-care, energy, and weight-management products in Salt Lake City. USANA’s products are sold directly to preferred customers and associates in 18 international markets.
XANGO and AmeriCares Feed Afghan Children
Thousands of Afghan children have benefitted from a multi-year partnership between XANGO, a global wellness company, and AmeriCares, a global health and disaster-relief organization. Since 2007 the XANGO Meal Pack program has, in collaboration with AmeriCares and other partners, served more than 5 million meals in Afghanistan and more than a dozen other countries where extreme poverty, famine and political instability limit the opportunity for proper nourishment.
The calorie-dense XANGO Meal Packs contain many nutrients essential to a healthy diet for both children and adults. XANGO has partnered with AmeriCares to deliver Meal Packs to areas where they are most needed. The Meal Packs have aided in the fight against malnutrition for thousands of hospital patients and refugees in Afghanistan.
Global nutrition company XANGO LLC markets a premium mangosteen beverage to consumers worldwide. Based in Lehi, Utah, XANGO is privately owned and powered by a network of more than 2 million independent distributors in the U.S. and 40 international markets.
Amway India Develops Innovative Nutrition for Children
Amway India CEO William S. Pinckney recently told media the company will introduce a project to provide nutritional support to nearly 1.5 million malnourished children throughout the country. For the last five years the company has been developing a nutritional supplement specifically formulated to benefit children ages 4–12. The program represents one facet of Amway’s global corporate social responsibility (CSR) project focused on emerging economies.
Amway India plans to partner with sponsors, including its network of 1.4 million distributors in the country, to provide essential nutrition to children in need—a project that aligns with the company’s One by One Campaign for Children global initiative.
Amway’s latest CSR initiatives in India have also included establishing four computer centers for the visually challenged and working with nine orphanages in the eastern region of the country. Amway India and industry body FICCI also recently conducted a fashion show for the children of the National Association for the Blind.
Founded in 1959 by entrepreneurs Rich DeVos and Jay Van Andel, and based in Ada, Mich., Amway offers consumer products and business opportunities through a network of more than 3 million distributors in more than 100 countries and territories worldwide.
The Pampered Chef Aids Midwest Storm Victims
The Pampered Chef recently partnered with Feeding America and Peoria Area Food Bank to aid victims of massive storms that hit the Midwest in late 2013. The cookware company provided $127,000 worth of kitchen supplies to help residents replace what they lost to the natural disaster.
Pampered Chef volunteers in Washington, Ill., distributed bundles containing more than $125 worth of essential items, such as utensils, plates and can openers. The relief effort is a continuation of the company’s longstanding partnership with Feeding America, the nation’s largest domestic hunger-relief organization. Since 1991, The Pampered Chef has contributed more than $21 million to Feeding America.
The Pampered Chef is a direct seller committed to developing multipurpose kitchen tools, providing expert cooking tips and creating simple recipes that enhance shared mealtime and suit busy lifestyles. Founded in 1980, The Pampered Chef was acquired by Berkshire Hathaway in 2002. The company operates in five markets through its network of over 65,000 independent salespeople.
Organo Gold Launches in Singapore
Organo Gold, the global gourmet coffee company that caters to consumers’ active lifestyles, recently announced that it has expanded its Asian presence with the opening of operations in Singapore. Sunny Ooi, Regional Vice President Southeast Asia, will manage the company’s activities in the country.
Singapore marks Organo Gold’s sixth Asian market. Organo Gold Global Master Distributor and Co-Founder Shane Morand visited Singapore on Jan. 4–5. The weekend included leadership training for current OG Distributors and income opportunity training, which was open to guests.
Founded in 2008, Organo Gold seeks to bring the treasures of the earth to the people of the world through its Ganoderma-enhanced coffee and other products. Headquartered in British Columbia, Canada, the company operates in 30 markets worldwide through its salesforce of 150,000 independent distributors and sells to consumers through its Coffee Connoisseur Club.
February 01, 2014
ASEA: Building a Legacy
by Jennifer Workman Pitcock
Photo above: ASEA headquarters in Salt Lake City.
When Verdis Norton retired at 57, he had held high-level executive positions at multiple iconic food companies, most recently as Vice President of Strategy at Kraft Foods. He had created enough wealth and success that he would never need to work again. But as much as Norton loved to golf, he wasn’t content to spend all his time relaxing. Soon after his retirement, he went to work for a biotech company. When he retired from that job four years later, he still wasn’t ready to become a full-time retiree.
So when his son Tyler introduced him to another biotech company, he agreed to sit on the board. He was particularly fascinated by a technology the company owned. Using salt water, the technology created redox signaling reactive molecules identical to those found in the human body. These molecules are necessary for life; they allow cells to communicate with each other. They help with immune system function and cellular repair-and-replace mechanisms.
What makes this technology so unique is that there is no other method to create these molecules outside the body. And as a person’s body ages, they create fewer and fewer of these molecules. Norton recognized that if the redox signaling molecules could be used by the human body, they had great potential health benefits. Though he was skeptical at first, Norton studied the company’s research on the technology and found that the science was good. He was intrigued.
Using salt water, ASEA’s technology creates redox signaling reactive molecules identical to those found in the human body. These molecules are necessary for life and become fewer as a person ages.
The ASEA Story
When Norton attended the first board meeting, he discovered that the biotech company was out of money. In fact, they were about $1 million in debt. He made an effort to raise money for the company, but it eventually folded. Still, he wasn’t ready to give up.
Norton had made friends with a man who had moved to Park City, Utah, from New Hampshire, Jim Pack. Pack had retired at 43 from a very successful career in the communications industry. The two men enjoyed golfing together.
Pack says that he soon realized that Norton was something special. “I made the decision on the golf course as we golfed week after week that I was going to do something with this guy,” says Pack. One day they were golfing on the Park City municipal golf course. Norton started to tell him about a terrific product he’d been using. But the company was mismanaged. He told Pack he was going to put together an investment company to acquire this product.
“Jim pulled the golf cart over on the fairway,” Norton recalls, “and he reached in his back pocket and pulled out a folded check that was blank, and he said, ‘You got a pen?’ I handed him a pen, and he wrote a very big check and said, ‘Let’s go do this together.’ ”
Once they acquired the technology after further research to better understand why the product worked, the two men focused on stabilizing the redox signaling molecules. They knew that in order to sell the product they needed to extend its shelf life exponentially. They hired a team of scientists, including Dr. Gary Samuelson, and charged them with the task.
After months of work, the team succeeded. This was a huge breakthrough.
Finding the Right Channel
Once the product was stabilized, the possibility of selling it became a reality. Early on, the founders had the opportunity to sell the product to a global pharmaceutical company. But they ultimately decided not to. “ASEA is a foundational product,” says Executive Vice President Kurt Richards. “The fear was that if we sold the technology, rights, patents and all the research to a pharmaceutical company, it would either take years to bring to market, or they would never bring it to market at all.” The founders also worried that even if the pharmaceutical company did bring the redox signaling molecules to market, the product might be a specific treatment for one ailment. Then the general population would never reap the benefit.
“Because of the complexity of our product, there was the realization that
the product had to be sold with the story.”
—Chuck Funke, CEO
Ultimately, that’s what made the decision for Norton. He didn’t need to make more money or have more success. But he did want to make his mark. “I feel like this is my opportunity to make a difference that will last beyond my lifetime,” he told Richards.
Norton and Pack examined all possible distribution channels. “Because of the complexity of our product, there was the realization that the product had to be sold with the story,” says Chuck Funke, CEO. “And that’s how we got into network marketing.”
The Saltwater Challenge
Though the founders knew they had a great product, the science behind it was complex. How would ASEA convince customers that what they were selling wasn’t your garden-variety salt water—especially when those two items were the only ingredients on the label? Both because they wanted to bolster credibility and better understand how the product works, ASEA’s executive team has put a great deal of effort and capital into researching the product. A study conducted by the David H. Murdock Research Institute in 2012 confirms the presence of redox molecules in ASEA.
ASEA also increases the body’s production of natural antioxidants, glutathione and SOD by over 500 percent. This was discovered in an in vitro study performed by Pacific Northwest Institute in early 2009.
Perhaps one of the most promising studies was conducted by researchers at Appalachian State University and presented at the 2012 Experimental Biology Conference. The study results surprised even the researchers. After study subjects drank ASEA daily for a week, researchers discovered that ASEA had caused a significant metabolic shift in 43 metabolites, including fatty acids. This suggests that ASEA makes a person’s own fatty acids available to them, allowing users to burn more fat—especially the type that clusters in the belly and hips.
To date, ASEA has spent over $5 million on safety studies alone. All have shown the product to be completely safe for consumption.
Though explaining the product remains one of ASEA’s biggest challenges, it hasn’t held the company back. Six months after prelaunch, the company was already profitable. ASEA is completely debt-free. That’s due in part to the company’s strong customer base. “The product is so strong and the preferred customer program works so well that we have a very large base,” says Richards. “That means a stronger financial foundation.”
In fact, just three years after its official launch in 2009, ASEA expanded into Europe. It has been in Canada since 2010 and will open in Mexico later this year. Though this may seem quick, ASEA’s expansion has been done very cautiously. “Before we went into Europe, we spent eight to 12 months getting the product approved in Europe, getting all the proper registrations, setting up the proper companies, so that once we opened the market we wouldn’t have to worry about whether ASEA would have issues with regulators,” says Richards. “We waited until we had enough cash in the bank and enough dedication to make sure we did it properly.”
Today the company has nearly 30,000 active associates and is growing rapidly. A new initiative called the Triple A Plan is having a big impact. Following this plan, new Associates can build a lucrative business in 90 to 120 days.
Product in Demand
In order to support the company’s steady growth, ASEA opened a new $1.5 million production facility in August 2013. Its 33,000 square feet house offices, testing labs and a production floor. Storage and fulfillment take place in the warehouse portion of the building. The new facility will produce about 15,000 cases of product each week. That is only about 30 percent of the facility’s capacity, allowing plenty of room to grow as demand increases.
“Getting the facility online and doing that very quickly was an incredible moment for us,” says Vice President of Marketing Noah Westerlund. “We’ve been able to scale up our production and meet the market demand.”
“One thing we’ve always tried to stress is that your ego drive and your economic drive have to be underneath your principle drive.”
—Kurt Richards, Executive Vice President
Focus on Personal Development
Part of ASEA’s ethos is helping the company’s associates realize their potential. “Everything we do at ASEA is guided by a singular commitment to the personal development and education of our associates,” reads ASEA’s website. “One thing we’ve always tried to stress is that your ego drive and your economic drive have to be underneath your principle drive,” says Richards. With this in mind, Verdis and Tyler Norton share principles of their proprietary strategic and operational planning system, StrategicLink, in the training they give their associates. “At lower levels, we teach principles in general terms. As they increase in rank, we bring more of the steps in,” says Richards.
This training takes place in many ways, including the usual conference calls and webinars. But ASEA also does more intensive trainings for those who show promise at various ranks.
If associates hit certain ranks in a specified period of time, they’re invited to special events where this training takes place—boot camps, leadership summits and diamond retreats. They are shown what an average healthy business looks like at their rank. “It helps us to develop a road map for them. There are certain key metrics that we’ve identified, and then we train on those key metrics, leveraging our internal resources and our experienced field leaders. To give an example, one key metric is personal enrollment. Healthy associates at any rank have twice the personal enrollment of those who are not,” Westerlund says.
Finding a Voice Using Social
ASEA is committed to strengthening its social media. Recently, ASEA has stepped up its use of social media to connect with associates. “For us it’s not just a messaging channel,” Westerlund says. “It’s a conversation channel. As important as it is for us to post information, we want to follow others and get their reaction to us. We want to engage in those conversations and really give them a sense of who we are and make them feel included.”
One step that ASEA took was hiring Tyler Gray to manage the company’s social media platforms and grow ASEA’s online presence. Though he has only been at ASEA a short time, he’s already seeing progress. Within two months of his arrival, the company’s Facebook likes were up 12 percent.
“For us [social media’s] not just a messaging channel. It’s a conversation channel. We want to engage in those conversations and really give [associates] a sense of who we are and make them feel included.”
—Noah Westerlund, Vice President of Marketing
“Our TAT, or ‘talking about this,’ score is a solid 2.5 percent. The TAT is a good metric to see how current and engaged you are with your audience. If you have a lot of likes and no one is talking about you, it doesn’t say much,” says Gray, Marketing Communications Specialist. “But if you are a small company that has a high percentage, it means that your posts and communications are having a good effect.”
Since coming on board, Gray has tried to make social media more active, answering questions and engaging with people on social media frequently. Right now he’s working on finding the right “voice” for the company. “A big goal of mine is to communicate our culture—who we are,” he says. “But since I’m new, we’re still trying to find that voice. And as a growing company, it’s going to evolve.”
Creating a Legacy
As ASEA grows, its executives are beginning to consider how they can tweak their message. “Right now our messaging is so much about explaining the science. As we look forward, we’re beginning to focus more on the opportunity,” says Richards.
Funke agrees. “One of the primary initiatives we have for 2014 and beyond is to raise our opportunity message to match our product message,” he says.
One thing will not change: ASEA is committed to being a legacy company. “We seek longevity,” says Richards. “A lot of the decisions we make today reflect the fact that we’re thinking decades down the line.”
“That means we’re actually as concerned about controlling growth as creating it,” Funke says. “We’re all about consistency.”
Richards adds, “We want to provide distributors the opportunity to create a business that they can and will pass on to their family members. We plan on surviving well into the future to provide ASEA’s benefits to future generations.”
February 01, 2014
Avon Products Inc.
Avon Products Inc. announced that its board of directors has elected Sara Mathew to the board. Mathew’s election increases Avon’s board to 11 Directors.
Mathew retired this year from her position as Chairman and CEO of The Dun & Bradstreet Corp., where she led a transformation of that company from a data provider to an innovative digital enterprise.
Mathew joined Dun & Bradstreet in 2001 as Senior Vice President and Chief Financial Officer. In 2007, after increasing roles of responsibility, she was named President and Chief Operating Officer, and in 2010 she was named Chairman and CEO. Prior to Dun & Bradstreet, she spent nearly 20 years with The Procter & Gamble Co.
Mathew is a member of the Zurich International Advisory Council and a director of Campbell Soup Company and Freddie Mac.
Avon, the company for women, is a leading global beauty company, with nearly $11 billion in annual revenue. As one of the world’s largest direct sellers, Avon is sold through more than 6 million active independent Avon Sales Representatives in over 100 countries.
Global nutrition company Herbalife announced the appointment of Maria Otero to the company’s board of directors. Otero has spent her career tackling poverty and empowering those less fortunate around the world, and she will bring this leadership, experience and insight to the Herbalife board.
Otero joins as an independent Director. She currently serves on the Council on Foreign Relations and serves on the boards of Kresge Foundation, Public Welfare Foundation and Development Alternatives Inc.
Born in La Paz, Bolivia, Otero came with her family to the U.S. when she was 12 years old. After studying economics in college with the intention of tackling global poverty, in 1986 Otero joined Accion International, one of the first micro-lending organizations in the world. She was later named President and CEO.
In 2000, President Bill Clinton appointed Otero to the board of the United States Institute of Peace. In June 2009, she was nominated to serve as Under Secretary for Democracy and Global Affairs, which made her the highest-ranking Hispanic official at the State Department, and the first Latina Under Secretary in its history.
On Jan. 17, 2012, Secretary Hillary Clinton named Otero as Under Secretary for Civilian Security, Democracy, and Human Rights.
Otero was recognized by Newsweek in October 2005 as one of the United States’ 20 most influential women, and by Hispanic Business magazine in its “Elite Women of 2007.”
Herbalife Ltd. is a global nutrition company that sells weight-management, nutritional and personal-care products intended to support a healthy lifestyle. Herbalife products are sold in more than 90 countries to and through a network of independent distributors.
Viridian Energy has announced it has strengthened its management team through recent appointments.
Meredith Berkich was promoted to the role of President of Viridian Energy. Berkich was also appointed an Officer of the Trust. Berkich brings 20 years of experience in leadership and expertise in direct selling and will work to grow Viridian’s field sales systems. She will partner with field leaders and the executive team to strategize, build and enhance their growth through compensation, sales incentives, training programs and events.
Cami Boehme was promoted to the newly created position of Chief Strategy Officer. In her new role, Boehme will oversee strategic product innovation and help plan the overall strategic direction of the company. Prior to her promotion, Boehme served as Senior Vice President Marketing and Brand Strategy for Crius Energy. Previous experience includes being Partner and Brand Director for a Utah-based creative services firm, as well as the Founder of Digital Slant, a Utah-based brand consultancy.
Chaitu Parikh was appointed to the position of Chief Operating Officer. Parikh has 16 years of experience in the retail energy industry, most recently serving as CEO/President of MXEnergy.
Also, Pradeep Tiwari was appointed to the position of Vice President of Information Technology. Tiwari has nine years of experience in the retail energy industry with energy retailers including MXEnergy and Constellation.
Located in Stamford, Conn., Viridian Energy is a socially responsible retail energy supplier offering customers the opportunity to make a difference by choosing affordable green energy for their home or business. Viridian is owned by Crius Energy Trust.
Regal Ware Inc.
|Jose Luis Oropeza|
Regal Ware Inc. has announced the appointment of Jose Luis Oropeza as President of its Kitchen Fair® Division. In this role, he will lead Kitchen Fair’s internal and external management teams and be responsible for all components of the business. The Kitchen Fair Division of Regal Ware is located in Arlington, Texas.
Oropeza brings more than 25 years of direct selling experience in North and South America, with an emphasis in sales and marketing. He has held senior-level management positions and most recently headed his own consulting services company in Orlando, Fla.
Regal Ware is a U.S. direct seller and manufacturer of high-quality stainless steel cookware and cast aluminum cookware with a history that dates back to 1911. Kitchen Fair is a unique line of superior-quality cast aluminum cookware sold through a traditional home party plan.
|Daisuke (David) Nakajima|
Organo Gold, a global gourmet coffee company that caters to consumers’ active lifestyles, announced that Daisuke (David) Nakajima has joined Organo Gold as the Managing Director for Organo Gold Japan. Nakajima will oversee all facets of OG’s Japan business.
Nakajima brings over 25 years of experience in sales, marketing, finance and operations for such global brands as Nike, Adidas and Foot Locker. Most recently, he served as Vice President of Sales and Japan Director for another direct seller.
Founded in 2008 and celebrating its fifth anniversary, Organo Gold is a direct seller of Ganoderma-infused coffee and other products. Organo Gold offers its products through more than 150,000 Independent Distributors in 32 countries.
Zrii LLC announced that Matt Ward has been appointed Vice President of Global Sales. He will be responsible for driving a new marketing message and play a major role in building the field.
As a nine-year veteran of direct sales in both the field and corporate side, Ward was previously a top distributor at another direct seller. Before that he served as Marketing Director for the American Grand Prix.
Zrii, a maker of all-natural nutrition and wellness products, was founded in 2008. Zrii partners with the world-renowned Chopra Center for Wellbeing, headed by Dr. Deepak Chopra, to create premium health products that integrate ancient wisdom with modern science. Zrii products are sold through a network of Independent Executives throughout the United States, Canada and Latin America.
Vidacup International, a marketer of a line of healthy coffee and functional beverages, announced the appointment of Carrie Ruelle as its new Vice President of Operations.
Ruelle began her direct sales career in 1995 and within two years rose to the top-ranking position in her first direct selling company. Over the next 10 years she obtained valuable experience as a successful field leader within the industry. Ruelle spent the following years as an instrumental partner in the creation of two successful healthy coffee direct sellers that have produced multimillions in sales and global expansion in over 50 countries.
Vidacup International is the exclusive distributor of an enzyme extraction of the Agaricus blazei mushroom super-strain.
Software and web marketing company Empower Network named Jonathan Cronstedt as the company’s new CEO.
Cronstedt will manage the company’s growth and development as well as its brand and product development. He has experience leading direct marketing and Internet-based companies and previously served as the CEO of Digital Marketer. He is also the Chairman of Prodigy Consulting Group, a full-service finance and consulting organization.
Empower Network Co-Founder David Wood, who previously served as the company’s CEO, now becomes the company Chairman.
Empower Network offers six unique business and marketing software products and tools, including its signature product, a viral blogging system. Headquartered in St. Petersburg, Fla., and founded in 2011, Empower Network’s products are sold through 38,000 affiliates and 80,000 members.
Univera Inc. announced two new additions to its board of directors. Ken McDonald and Tom Zimmer join Univera’s board as independent members. McDonald retired from another direct selling company after decades in senior management positions, including Senior Vice President/Managing Director of the Americas. Zimmer also held senior positions within the industry, having served as President and Chief Operating Officer and Senior Vice President/Managing Director of North America.
Univera’s board of directors also includes Chairman and Owner Bill Lee, retired finance executive Barbara Anderson, ECONET President and CEO HY Sung, and Univera President and CEO Randy Bancino.
Univera Inc. is a direct seller in the natural products industry, delivering high-quality health products to hundreds of thousands of customers across North America. A part of the ECONET family of companies, Univera is fully integrated from farm to family.
February 01, 2014
Financial News, February 2014
Global nutrition company Herbalife (HLF—NYSE) announced that PricewaterhouseCoopers LLP, Herbalife’s independent registered public accounting firm (PwC), has completed its re-audit of the company’s consolidated financial statements for the fiscal years ended Dec. 31, 2010, 2011 and 2012, and the audit of the effectiveness of the company’s internal control over financial reporting as of Dec. 31, 2012.
The company filed an amended 10-K/A for the fiscal year ended Dec. 31, 2012, following the completed re-audit of the company’s 2010, 2011 and 2012 financial statements. Additionally, the company filed amended 10-Q/As for each of these quarters of 2013 following the completion of SAS 100 reviews of those periods by PwC. With these amended filings, the company is now up to date with its SEC periodic filings. There were no material changes to the company’s audited 2010, 2011 or 2012 financial statements included in the amended 10-K/A or to the company’s first, second or third quarter 2013 financial statements included in the amended 10-Q/A, compared with the company’s previously filed financial statements for and as of each of such periods.
As previously announced, the change in the company’s independent auditors to PwC, and the corresponding need to perform re-audits, was the result of the resignation of Herbalife’s former independent auditor, KPMG LLP, due to the impairment of KPMG’s independence resulting from its now former partner’s unlawful activities. As previously publicly stated by KPMG, their resignation was not related to Herbalife’s financial statements, its accounting practices, the integrity of Herbalife’s management, or any other reason.
Herbalife Ltd. is a global nutrition company that sells weight-management, nutritional and personal care products intended to support a healthy lifestyle. Herbalife products are sold in more than 90 countries to and through a network of independent distributors.
AGF Investments Inc., PFSL Fund Management Ltd., and PFSL Investments Canada Ltd. announced the six-year extension of their Fund of Funds relationship agreement. The two organizations have been working together since 1986.
Under the extended agreement, in which both parties have been operating since 2006, PFSL, the trustee and investment fund manager of Primerica Concert Funds, will continue to invest directly in a tailored group of AGF Funds. The AGF-Primerica relationship was also strengthened by an additional agreement solidified in October 2012, which supports the Primerica Common Sense Funds. AGF will continue to support the needs of over 10,000 of Primerica’s representatives.
For more than 55 years AGF has remained one of the largest independent global investment management firms. With similar company roots, Primerica, the largest independent financial services marketing company in North America, shares in AGF’s mission of helping Canadian investors reach their financial goals. With the reaffirmation of this agreement, both AGF and Primerica will continue to deliver on their commitment to providing investment management excellence and superior client service.
Primerica Inc. (PRI—NYSE), headquartered in Duluth, Ga., is a leading distributor of financial products to middle income households in North America.
Crius Energy Trust
Crius Energy Trust (KWH-UN.TO—TORONTO) announced its financial results for the three-month period ended Sept. 30, 2013. All figures in U.S. dollars unless otherwise noted.
Revenue for the third quarter was $145.6 million. Revenue was driven by customer growth in the strategic marketing partnership and network marketing channels and seasonally higher electricity volumes. Gross margin was $30.0 million, representing 20.6 percent of revenue.
Adjusted EBITDA was $10.5 million, representing 7.2 percent of revenue and was impacted by $5.0 million due to weather variation from historical norms in July and August. Normalizing for weather impacts, Adjusted EBITDA for the quarter would have been $15.5 million.
Total cash and availability was $33.9 million, consisting of $16.8 million of cash, no long-term debt and availability under the credit facility with Macquarie Energy of $17.1 million as of Sept. 30, 2013.
Crius expanded its product suite to include residential solar energy products and services through a reseller agreement with SolarCity, a full-service solar provider in the U.S. Viridian Energy also started offering natural gas products in Maryland, Virginia and the District of Columbia.
The company’s Viridian Energy brand added both customers and independent contractors during the third quarter. Sales efforts for the network marketing channel ramped up in September at Viridian Energy’s annual convention, PowerUp!®, in Washington D.C. Management sees the higher-usage, higher- retention Viridian marketing channel as a key source of long-term revenue growth, and the addition of solar products and services will further promote long-term customer relationships within the channel.
LifeVantage Corp. (LFVN—NASDAQ), a company dedicated to helping people achieve healthy living through a combination of a compelling business opportunity and scientifically validated products, reported financial results for the fiscal 2014 first quarter ended Sept. 30, 2013.
For the first fiscal quarter ended Sept. 30, 2013, the company reported net revenue of $51.3 million, compared to $52.9 million for the same period in fiscal 2013. Revenue for the quarter was negatively impacted 7.4 percent by foreign currency fluctuation.
Gross profit for the first fiscal quarter ended Sept. 30, 2013, was $43.5 million, compared to $45.1 million for the same period last year, delivering a gross margin of 84.8 percent, compared to 85.2 percent in the prior year period.
Operating income for the first fiscal quarter of 2014 was $5.1 million, compared to $6.9 million in the same period last year. Operating margin in the first fiscal quarter of 2014 was 9.9 percent, compared to 13.1 percent in the prior year period.
Net income for the first fiscal quarter of 2014 was $3.3 million, or 3 cents per diluted share. This compares to net income in the first fiscal quarter of 2013 of $4.2 million, or 3 cents per diluted share.
The company’s cash and cash equivalents at Sept. 30, 2013, were $28.0 million, compared to $26.3 million as of June 30, 2013. The company generated $4.9 million of cash flow from operations in the first fiscal quarter of 2014 compared to $0.9 million in the first fiscal quarter of 2013.
In the first fiscal quarter of 2014, the company completed its $5 million stock repurchase program that was implemented in the fourth quarter of fiscal 2013. In the first quarter of fiscal 2014 the company repurchased 1.1 million shares for $2.9 million.
LifeVantage Corp., a leader in Nrf2 science and the maker of Protandim®, the Nrf2 Synergizer® patented dietary supplement, is a science-based network marketing company. LifeVantage was founded in 2003 and is headquartered in Salt Lake City.
Natural Health Trends Corp.
Natural Health Trends Corp. (NHTC—OTC.BB), a direct selling company that markets premium-quality personal care, wellness and “quality of life” products under the NHT Global brand, announced financial results for the quarter and nine months ended Sept. 30, 2013.
For the third quarter, total revenues were $14.2 million, up 52 percent compared to $9.3 million for the third quarter last year, and up 34 percent sequentially from the $10.6 million for the second quarter this year. This was the third consecutive sequential quarterly increase in revenues.
Operating income was $1.3 million, an increase of 68 percent compared to $789,000 last year, and an increase of 40 percent sequentially compared to the $948,000 in the second quarter this year. Net income was $1.3 million, or 12 cents per diluted share, compared to $747,000, or 7 cents per diluted share last year.
Cash and cash equivalents increased to $9.1 million as of Sept. 30, 2013, from $4.2 million at Dec. 31, 2012, and $6.7 million at June 30, 2013.
Total revenues for the nine months ended Sept. 30, 2013, increased 14 percent to $33.4 million from $29.4 million in the same period last year.
Operating income for the first nine months was $2.6 million compared to $2.2 million in the same period last year. Year-to-date net income increased 20 percent to $2.5 million, or 22 cents per diluted share, compared to $2.1 million, or 19 cents per diluted share, in the same period last year.
Natural Health Trends Corp. is an international direct-selling and e-commerce company operating through its subsidiaries throughout Asia, North America and Europe. The company markets premium-quality personal care, wellness and “quality of life” products under the NHT Global brand.
ForeverGreen Worldwide Corp.
ForeverGreen Worldwide Corp. (FVRG—OTC.BB), a leading provider of nutritional foods and other healthy products, announced Q3 2013 earnings, for the quarter ended Sept. 30, 2013.
For the third quarter, sales increased to $4.8 million from $3.1 million for Q3 2012, a 56.6 percent increase. Gross profit reached $1.5 million, compared to $974,562 during Q3 2012, a 56.7 percent increase. Net income for the quarter was $326,929 or 2 cents EPS, versus a net loss of $107,585 or 1 cent EPS loss during the comparable period during 2012.
For the nine month ended Sept. 30, 2013, sales increased to $11.5 million from $9.8 million for 2012, an increase of 17.5 percent. Gross profit increased to $3.7 million from $3.0 million last year, a 22.5 percent increase. Net income for the nine-month period increased to $110,090 or 1 cent EPS, compared to a net loss of $273,248 or a 2 cents EPS loss for the first nine months of 2012.
ForeverGreen Worldwide Corp. develops, manufactures and distributes an expansive line of all-natural whole foods and products to North America, Australia, Europe, Asia, South America and Africa.
Medifast Inc. (MED—NYSE), a U.S. manufacturer and provider of clinically proven, portion-controlled weight-loss products and programs, announced that, as of Dec. 9, 2013, it had completed the repurchase of 786,000 of its common shares under its existing 1.13 million share repurchase authorization at an average price of $25.46.
The company purchased the shares in the open market using cash on hand. The balance of 339,000 shares under the authorization remains open until May 29, 2014.
Medifast sells its products and programs via four unique distribution channels: the Web and national call centers, the Take Shape For Life personal coaching division, Medifast Weight Control Centers, and a national network of physicians. Medifast was founded in 1980 and is located in Owings Mills, Md.
Educational Development Corp.
Educational Development Corp. (EDUC—NASDAQ) announced their quarterly cash dividend. The board of directors has authorized an 8 cents-per-share cash dividend. The dividend was payable on Dec. 20, 2013, to shareholders of record Dec. 13, 2013.
Educational Development Corp. sells children’s books, including Usborne Books and the Kane/Miller line of international children’s titles, through a multi-level sales organization of independent consultants, through 5,000 retail stores and over the Internet.
Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.
February 01, 2014
Ackman’s Folly: 7 False Assumptions on Herbalife
by Kevin Thompson
Editor’s Note: Direct Selling News contacted Kevin Thompson directly and requested a condensed version of a longer article he recently wrote. We reprint his point of view because we feel it is a perspective that should be shared with our DSN audience.
The full article is also available on Thompson’s website at www.thompsonburton.com.
It’s been almost a year since Bill Ackman announced his short position on Herbalife (HLF—NYSE). With much media fanfare, he gave a 300+ slide presentation explaining the validity of his thesis. On Bloomberg, he confidently declared, “This is the highest conviction I’ve ever had about any investment I’ve ever made.” To the casual onlooker, it appeared that all hope was lost for Herbalife. But those of us who benefited from a little more context knew better. We’ve seen this movie before with convicted criminal, Barry Minkow. Admittedly, Bill Ackman is different than his felon predecessor. While Minkow concealed the fact he was paid for his attack (fraud), Ackman made his position clear from the start. And really, that was the only difference. They both relied on the same worn-out anti-MLM arguments. They both stitched together various quotes and articles, most of them out of context, in an effort to stretch the truth and create an appearance of filth.
They both ultimately failed. As I’ve watched the debate unfold over the past year, I’ve been greatly puzzled by the amount of effort Ackman has expended to kick down this “unsustainable pyramid.” While I don’t think he’s a bad person, I think he’s obviously crossed a line and gone from an objective fund manager to a mean-spirited fund manager. It can happen to anybody. I tell all of my children, “Thompsons control their emotions.” I started reciting this maxim when I noticed my 4-year-old daughter making poor decisions during one of her fits. Under the influence of strong emotions, we all make mistakes. Ackman is clearly under intense emotions when he says things like,
“This is not a trade for me, we are going to take this… to the end of the earth.” He’s ignoring basic fundamentals and investing purely on ego. At some point, he got off track. I’m calling the game. It’s over for Ackman’s bet, no matter how hard he postures. Herbalife is not going to be shut down as a pyramid scheme. I can count seven assumptions made by Ackman that have all turned out to be faulty. It was his reliance on these assumptions that led to his reckless confidence.
1. He Assumed Bigger Means Better
Central to Ackman’s thesis is a legal report prepared by someone at Sullivan & Cromwell. To this date, Ackman has not provided this report, though he still falls back on it when pressed about his thesis. Sullivan & Cromwell is an enormous law firm based out of New York. With over 800 lawyers and $1 billion in revenue, it’s safe to place them in the “big firm” category. But bigger is not always better. While Sullivan touts a number of reputable brands as clients, they’ve likely advised zero clients regarding their sales in a network marketing format. I represent network marketing companies, and I know the competitive landscape of lawyers in my space. Candidly, Sullivan & Cromwell is completely off the map. With MLM law, being a generalist is a plan for failure. If someone at Sullivan & Cromwell told Ackman that Herbalife was a pyramid scheme, he or she lacked meaningful experience to know better.
2. He Assumed He Could Hypnotize the Market
Ackman assumed that with the awesomeness of his initial PowerPoint presentation, the market would panic resulting in a massive selloff. And truthfully, the market did panic for a couple of weeks before growing immune. Bob Chapman and I published the first article that challenged Ackman’s position. (Chapman is the Founder of Chapman Capital LLC, a Los Angeles-based investment company, and was an activist versus Herbalife following the death of Herbalife Founder Mark Hughes in 2000.) Two weeks after Ackman’s initial presentation, when the wound was still fresh and the stock was trading in the low $30s (it’s now at $75 per share), we pointed out that the emperor had no clothes. Ackman did not anticipate large fund managers betting against him. As other funds began doing some due diligence, they all started piling on the long side based on the realization that Ackman’s only shot was government intervention. As the market sobered up, Ackman’s presentation was placed under a microscope and found to be grossly inadequate for purposes of finding illegality.
Bottom line: He assumed the market would follow his “well-researched” logic. He thought wrong. The most notable of long investors are Carl Icahn, George Soros and Bill Stiritz. Notable investors in Ackman’s camp: zero.
3. He Assumed the Salesforce Would Collapse
When I first saw Ackman’s presentation last year, I thought to myself, “There’s no way Herbalife distributors can build with this kind of negative publicity.” They surprised me, and they surprised Bill Ackman. Ackman’s presentation was almost a self-fulfilling prophecy. If the salesforce were rendered inert, the stock would tank, thus proving his theory that Herbalife is a volatile pyramid destined to collapse. While the collapse would have been directly tied to Ackman, he would have attributed it to the volatile nature of pyramid schemes. As stated earlier, the stock bounced back. As for the salesforce, they trudged forward, producing significant results under tremendous pressure quarter after quarter. It’s hard enough to build a network without impediments. If there’s negative press, it only compounds the difficulty. Somehow, the Herbalife distributor found a way.
4. He Assumed He Could Confuse the Public about Market Saturation
This is somewhat related to Assumption No. 2 where Bill Ackman expected to mesmerize the market with his logic. Ackman assumed that his argument regarding market saturation would actually fly. In theory, it seems to make sense. At some point, assuming everyone is successful at recruiting Herbalife distributors, the market would be exhausted. In Ger-Ro-Mar, the FTC tried to make this “geometric progression” argument and failed. In that case, the company was in the business of selling women’s lingerie. The court cleverly wrote, “We find no flaw in the mathematics or the extrapolation [presented by the FTC] and agree that the prospect of a quarter of a billion brassiere and girdle hawkers is not only impossible but frightening to contemplate, particularly since it is in excess of the present population of the Nation, only about half of whom hopefully are prospective lingerie consumers. However, we live in a real world and not fantasyland.”
In an article online, MLM consultant Len Clements said it best when he wrote, “I wonder, how many more years does a 32-year-old company like Herbalife have to exist, and continue to grow, before this notion of the MLM company succumbing to ‘inevitable market saturation’ becomes folly.” In his first presentation, Ackman asserted that Herbalife was running out of markets; thus, doomed to experience “market saturation.” Keep in mind, Amway is 22 years older than Herbalife, operates in 20+ more countries and has over three times the sales revenue of Herbalife—and they have yet to “saturate the market.” But I digress.
5. He Assumed He Could Confuse the Issue of Internal Consumption
Bill Ackman assumed he could stitch together an argument that criminalized heavy internal consumption. As a recap, “internal consumption” is a term used to describe the act of paying commissions on downline consumption/sales. If distributors buy the product for personal use (distributor = “internal”), commissions are triggered. The criticism of internal consumption: It can lead people to buy things they never would buy while they’re under the influence of a pay plan, i.e. “opportunity driven demand.” This issue is the main source of criticism of network marketing, and Ackman seized on it. First, the conclusion: It’s legal to pay commissions on internal consumption. The debate has always revolved around the appropriate amount.
Given the low cost of entry into network marketing companies (oftentimes less than $100), this sort of black-and-white standard is intellectually disingenuous. Since it’s so easy for distributors to join a program to “give it a shot” or save money on product, it blurs the line between retail sales and distributor volume. In an oft-quoted FTC advisory memo in 2004, the FTC said, “In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme.” The key is motivation: What’s driving the consumption? If it’s opportunity driven demand, the motivation is misplaced. In its rebuttal presentation on Investor Day (Jan. 10, 2013), Herbalife released some data that put this issue to rest. Based on its objective data, 31 percent of all orders are drop-shipped to non-participants (found on page 50 of the presentation). This at least indicates that the products have legitimate value and are not merely token items. As for the issue of distributor motivation, 73 percent of all distributor orders are made by participants that are not qualified to receive commissions (page 59). As if that’s not enough, Herbalife commissioned Nielsen to conduct a study on the penetration of Herbalife distributors and end users in the United States. The results: Herbalife has over 7 million customers in the U.S. alone, which dwarfs its distributor numbers by 6.5 million. The verdict: The products have value.
Bottom line: Ackman is clamoring for the wrong piece of data. He’s asking that Herbalife reveal their retail sales data. The key factor is “motivation,” and motivation is not easily quantified. And given the low cost of entry for all network marketing companies ($60 for Herbalife), this piece of data is not the determining factor with respect to pyramid allegations. Does Herbalife have this data? Yes. Are they obligated to provide it? No. They’ve already shown some compelling statistics, and they’re tightening the screws with respect to distributor compliance. Going forward, I suspect Herbalife will do a better job of distinguishing its customers from business-builders.
6. He Assumed He Could Launch a Surgical Strike on Herbalife
Ackman likely assumed that he could keep the pressure solely on Herbalife without agitating the rest of the direct sales industry. Keep in mind, the direct sales channel represents approximately $167 billion in global revenue, according to the World Federation of Direct Selling Associations. When he relied on common arguments used against all network marketing companies, he brought the entire industry into the melee. Initially, he was careful. On Bloomberg after his initial presentation, he said, “I’m not saying that companies like Amway are pyramid schemes.” Now, his arguments are growing broader with each presentation. With this in mind, every company in the industry benefits from his failure. It’s led to a more unified direct sales industry and bolstered support for outreach efforts. And quite candidly, it’s made the space better.
7. He Assumed He Could Refute the Value of the Buyback Policy
The value of Herbalife’s 12-month buyback policy cannot be understated. When I see former distributors crying foul about the money they’ve lost, I care, but I wonder if they knew about the return policy. Herbalife offers a 12-month refund on all unused/unsellable inventory (without a restocking fee). When people are upset about money lost, it’s clear that the issue is regret. They regret using the product. But they still used it and derived value from it. The 12-month buyback policy, which is adopted by Herbalife and strongly encouraged across the entire industry, is the ultimate consumer safeguard. It’s designed to help distributors get their money back on unsellable and unwanted inventory when they decide to exit.
When you factor this element with the 31 percent drop-shipping statistic + the 73 percent statistic of orders from non-qualified distributors + the 12-month buyback policy + the 0.2 percent return rate + the minimal amount of consumer complaints, it paints a clear picture: The products have legitimate value, and the consumer safeguards are sufficient.
Ackman’s gamble is over. This is not false bravado. I’m calling it now like I called it with Bob Chapman weeks after Ackman’s first presentation. Ackman can waste his investors’ money as long as they’ll allow. It does not change the fact that Ackman’s argument was premised on several assumptions, all of them faulty. It took little skill to craft an argument and seem convincing to those unfamiliar with the issues. The MLM space is murky, to say the least. But Herbalife has never taken ranks with the companies on the bottom rung. Ackman knew this, relied on an undisclosed legal report from a firm with zero experience in the category, relied on several other assumptions, took a gamble, and failed. Recent statements from Ackman seem to be coming from a man with a bruised ego, leading with his emotions and not his head. Herbalife is not a pyramid scheme, and with each passing day they evolve into a better company.
+Kevin Thompson is an MLM attorney with extensive experience in helping entrepreneurs to launch their businesses on secure legal footing. He is a founding member of Thompson Burton PLLC and a Supplier Member of the Direct Selling Association.
February 01, 2014
Direct Selling Cannot Be Defined by Words or Numbers Alone
In some respects, there has been an unprecedented amount of attention focused on direct selling by media and the financial community lately. This has also been a unique time for in-depth research undertaken by the Direct Selling Association in an effort to quantify many aspects of the business model. Beginning with the Consumer Attitudes Survey in late 2012 and continuing in 2013 with the annual Growth & Outlook Survey, National Salesforce Survey and Sales Strategy Survey, DSA took a 360-degree look at the sales channel.
The result will be an enhanced ability to address misstatements and misinformation in the marketplace that can so easily cloud the perception of a sales channel that relies primarily on word-of-mouth instead of catchy advertising jingles and expensive retail shelf space.
But at the heart of all of the averages, percentage breakdowns and statistical analysis remain the stories of 16 million Americans—and millions more around the world—who look to direct selling to fulfill a particular need, whether financial or otherwise. While we stock our arsenal with facts and figures, we must not lose sight of the personal, human stories that form the basis of direct selling.
The following are but two examples of real stories that bring DSA’s research to life:
What the numbers say:
Fifty-seven percent of direct sellers report having signed up with their company to get the products at a discount, while 62 percent report continuing as a direct seller for this reason. Forty-eight percent of direct sellers report becoming a direct seller because they were seeking long-term supplemental income, but 62 percent report continuing as a direct seller for that same reason. Further, 23 percent of sellers said they started in direct selling hoping to make it a career, but 41 percent of sellers report continuing with direct selling as a career.
What sellers say:
Anita R., Battle Creek, Mich.: “I joined to get the discount, and what I found was a full-time job!”
What the numbers say:
Seventy-eight percent of direct sellers say direct selling has met or exceeded their expectations, and nearly the same percentage of direct sellers say they are likely to recommend that a friend or family member become a direct seller.
What sellers say:
Suzy F., Hudson, Wis.: “My experience with direct selling/network marketing has been nothing less than positive. I must admit that I was skeptical at first. However, I decided to educate myself about the industry and have determined it is a worthy profession that offers many personal and professional rewards.”
These findings and the complementary “real person” stories are of little surprise to those who have seen and experienced firsthand how direct selling changes lives. Numbers alone may be able to accurately describe some industries, but for a sales channel that is defined by so much more than profits, to omit the personal anecdote is to remove the essence of the direct selling experience.
Perhaps this is one of the reasons direct selling is so often undervalued and criticized by Wall Street, while 16 million people and their customers embrace it on Main Street. To this end, DSA is committed to a proactive campaign of pairing recent research findings with the real-life stories of those whose lives have been changed by direct selling, including highly influential legislators, regulators and business community leaders who support the channel.
Direct selling cannot be described with words or numbers alone. Each provides context for the other. We are all well-served to share these stories, to represent the men and women who rely on their independent direct selling businesses for income and personal achievement. It is our job to understand their needs and to recognize that, for so many, the intangible benefits of a career in direct sales mean so much more than the tangible rewards. And so often those intangible benefits go unreported and unappreciated. We hear so much about earnings statements, stock ratings, and recruitment and retention figures that we lose sight of what makes this industry so special. In 2014, join DSA in its efforts and rededicate yourself and your company to telling the story of direct selling.
Joseph N. Mariano is President of the U.S. Direct Selling Association.
February 01, 2014
Nerium: Making People Better—Together
by Karyn Reagan and DSN Staff
Photo above: Nerium Brand Partners celebrate during a recent incentive trip to Cabo San Lucas, Mexico, in 2013.
Nerium’s rapid growth and success is also activating a commitment and responsibility to serve. The company is still young—two full years in business—and already becoming a significant force in mentoring and changing lives.
What nobler mission could there be than to better the life of another? When the founders of Nerium International were pouring the philosophical foundation of their new company they were influenced by their own life experiences. They had learned that lifting others up often results in one’s own life becoming richer, and they desired to transfer that concept to all aspects of their new company.
It is this philosophy and unwavering belief in the importance of people to the success of the entity that brought the founders together to form, not only a solid company, but also a community of entrepreneurs who would embrace such a culture.
Jeff Olson, Founder and CEO, had written a very popular book—The Slight Edge: Turning Simple Disciplines Into Massive Success—that laid the groundwork for the principles and values upon which to build the company. Renee Olson, Co-Founder and Corporate Liaison, would take on the responsibility of ensuring that this philosophy would be communicated to the field where relationships could grow and the concept could be cultivated. Dennis Windsor, Co-Founder and President, would integrate these values into the sales plan designed to attract people from every walk of life possible. To complete the team, Amber Olson Rourke, Co-Founder and Vice President of Marketing and Culture, would take on the responsibilities associated with the marketing of the products, and most important, the Nerium Culture. The mission of the company became quite simple: Make People Better.
Nerium markets two products focused on anti-aging. The marketing philosophy is built upon simplicity and results. Rourke explained the two-prong strategy: “Simplicity is addressed by offering one product for night use and one product for day use instead of a regimen of products. We share results actually through the excitement of Nerium customers. We knew this product worked and decided that the best way to share its impact is by showing before and after photos.”
Instead of providing pictures from the corporate office produced by a professional photographer, Nerium’s leadership asked users to provide their own photos, taken on their phones. This bold marketing tactic, in conjunction with the company philosophy of Nerium Gives Back, has played a major role in the company’s extraordinary success.
Windsor does not speak in traditional sales language when he discusses how Nerium Brand Partners actually build their businesses. He emphasizes the importance of understanding the value of serving, giving of one’s self, and making a positive impact on someone else’s life, family, neighbors and community. The company becomes a role model for giving and serving by making it possible for all Brand Partners to qualify for free product through performance. This ignites company giving, which in turn allows Brand Partners to “give through sampling” via their interactions with potential customers and prospective Brand Partners. Active customers who are purchasing regularly also have the opportunity to earn free product when they refer other customers who become active users. Rarely do Brand Partners have to invest in product to build their businesses. Their performance can qualify them for free product, which is the foundation of the sampling strategy.
|Amber Olson Rourke|
The company consistently looks for more and more ways to give and demonstrate their commitment to their people. Olson personally created a unique way to communicate this commitment by starting what he believes will evolve into a worldwide movement. The purpose of a newly introduced “Live Happy” project is to share with others the importance of personal responsibility, especially in the area of purposefully living a happy life. Live Happy magazine is completely separate from Nerium marketing material. The magazine is approximately 80 pages and does not contain Nerium branding or advertisement. It is entirely devoted to editorial that supports turning positive psychology into applicable life steps and why happiness should be thought of as a choice rather than a result. Scientific research has proven that happiness is a precursor to success, great relationships, health and more. The magazine is on newsstands and is unique in that it contains nothing of a negative nature. Most unique is that it is given free to all active Brand Partners and all active Nerium customers of Brand Partners.
Olson speaks with enormous pride and unflappable enthusiasm when he speaks about Live Happy. He sponsored The Positive Education Summit recently held at 10 Downing Street in London, which attracted some of the most notable thought leaders, educators and scientists on the subject of happiness. International Day of Happiness, sponsored by the United Nations, is March 20, and Live Happy staff is a participant in the planning.
|As part of its Nerium Ripple movement, the company recently donated $300,000 to Big Brothers Big Sisters with the help of employees, Brand Partners and customers.||During the BBBS signature fundraising event, Bowl for Kids’ Sake, people rallied at local bowling centers across the nation raising awareness of the challenges some children face.||A Nerium workshop for young people based on the book SUCCESS for Teens.|
Growing with a Heart
In 2012, Nerium closed its first full year with $100 million in revenues, achieving the Direct Selling News Bravo Award for Growth that year, and it is on track to have another record-breaking year when 2013 numbers are released. “We always knew we would be a great skincare company and a great financial opportunity, but our real goal has always been around making people better,” Olson says.
He reveals that a vast majority of Nerium Brand Partners have never been involved in direct selling. For Nerium’s leadership team this fact presents an opportunity to provide training to individuals hungry to learn the best way to build a Nerium business. “Our training is comprehensive, with resources for every level of knowledge,” Olson says.
As part of the training program there is a Fast Start Kit, online training for both new and experienced Brand Partners, monthly regional training meetings, corporate seasonal events, weekly corporate and field leadership conference calls, and an entire Nerium University in the form of topic-specific webinars. Most unique is the fact that 50 percent of all content is focused on personal development of the individual—and now on Live Happy. In support of this, Renee Olson ensures that the field sales organization experiences a feeling of having joined a family—one that believes in each other and believes a spirit of sharing is critical and essential to mutual success. She is admired by the sales organization and, along with the Brand Partner Relationship Team, devotes a lot of her time to interaction with Nerium Brand Partners and customers.
Nerium also retained an esteemed leadership coach for its leaders. The coaching is not just about business building but most importantly about how to achieve life goals and work-life balance.
Jeff Olson says, “The focus on the importance personal happiness has on one’s life is simply smart business, and there is a predicted impact on both recruitment and retention. The concept of personal development is usually understood, but it often takes time to experience the personal benefit. However, when one understands that they can take control of their personal level of happiness, benefits can be derived in less than 30 days.”
In the midst of record-breaking growth, the leadership of Nerium implemented its plan to give back to the community—a concept dear to the hearts of those at the helm. Olson says: “We know we have a responsibility as a successful company to give back, so we searched for an organization with the same core values and mission as ours. A few key considerations rose to the top of our list, such as a focus on mentorship, dreaming big, the power of relationships and the importance of focusing on one person at a time. All of these concepts are at the core of the relationship-building philosophy we encourage while training Brand Partners. These principles and values that we teach and stress are very important to us.”
The organization that rose to the top was Big Brothers Big Sisters (BBBS). For more than a century BBBS has been partnering children and teens (Littles), ages 6 through 18, with adult volunteers (Bigs) for the purpose of offering positive relationships that have a direct effect on these young lives. According to BBBS’s website, the Big Brothers Association was formed in 1904, and many years later it partnered with Big Sisters International, an organization of Catholic Sisters following the same plan as Big Brothers. Eventually, the partnership formed what is now BBBS. “Their philosophy of helping make people’s lives better perfectly matches what we strive to achieve at Nerium,” Olson says. “Their mission statement is essentially the same as ours.” At BBBS the mission is to provide children facing adversity with strong and enduring professionally supported one-to-one relationships that change their lives for the better, forever.
Nerium’s commitment to the national Big Brothers Big Sisters movement earned them the prestigious Big Brothers Big Sisters Community Impact Award in June 2013 for the great energy and generosity the company demonstrated. The award is given annually to a company whose generosity greatly impacts the community of the mentoring organization. Every day Nerium Brand Partners reach out through Big Brothers Big Sisters to offer their support in hometowns across the United States. Olson explains that most of the children in the BBBS program come from single-parent or low-income households or from families where a parent is incarcerated or serving in the military. Once they are paired with an adult mentor, or Big, that relationship is for their entire childhood. The results have been proven to be extremely positive. A national research study of BBBS conducted by Public/Private Ventures, an independent Philadelphia-based national research organization, found that after spending 18 months with Bigs, children were:
- 46% less likely to begin using illegal drugs
- 27% less likely to begin using alcohol
- 52% less likely to skip school
- 37% less likely to skip a class
- 33% less likely to hit someone
“[Big Brothers Big Sisters’] philosophy of helping make people’s lives better perfectly matches what we strive to achieve at Nerium. Their mission statement is essentially the same as ours.”
The Nerium Effect
Hundreds of Brand Partners have become Bigs, according to Nerium. Big candidates are vetted by BBBS and then selected based on completion of the application process. “Brand Partners are excited to be involved with an organization that makes such a positive impact on individuals and communities. It’s what we call the Nerium Ripple in action,” Rourke says. The Nerium Ripple was introduced at the 2013 annual conference as Brand Partners were encouraged to individually take responsibility and collectively change the world. At its core, the movement strives to create positive ripples in everyday life. She continues, “Partnering with BBBS is a very real way that we encourage Brand Partners and Nerium employees to create ripples in their communities. If one positive act can create a ripple effect that can change a life, imagine the impact that hundreds and thousands of positive actions can make on future generations.”
In addition to becoming Bigs to the BBBS Littles, Nerium employees and Brand Partners raise funds throughout the year to donate to the organization. Fundraisers are held at local, regional and national events. “Our partners have raised over $400,000 in just one year,” Rourke says. “Over $100,000 of that amount was raised at the BBBS signature fundraising event, Bowl for Kids’ Sake.” Half a million people rally at local bowling centers across the nation raising awareness of the challenges some children face.
“From the very first day that we announced Nerium’s support of BBBS, the Brand Partners have embraced the cause,” Rourke says. “They easily recognize the value of changing lives for the better.” In addition to becoming Bigs and participating in corporately sponsored fundraisers, the Brand Partners have creatively raised funds on their own and truly taken ownership of the cause. “Giving to this cause is part of our corporate culture. That’s very exciting because every $1,000 raised basically supports another Big and Little match,” she says.
Each Nerium starter kit contains information about BBBS and prepares new Brand Partners for fundraisers included at regional and corporate training events under the direction of BBBS Vice President of Corporate Sponsorship Lowell Perry. “It is very exciting when two organizations committed to personal enrichment lock arms around a common cause,” Perry says. BBBS provides a vehicle for Nerium Brand Partners to make a huge “ripple” that will support the mentorship children need regardless of current socioeconomic status or family situation. BBBS’s CEO Charles Pierson also took the opportunity to comment on Nerium’s impact. He says, “Nerium’s support and creativity are transforming how we carry out the service to our youth in communities around this country.”
Nerium’s workshops, based on the book SUCCESS for Teens, teach children how to get where they want to go in life, how to bolster their own self-esteem and how to develop the kind of leadership skills that will help them recognize opportunities and meet their goals.
|Kids learn about self-esteem, life goals and leadership during a Nerium workshop.
Nerium International also brings personal development to young people. Based on the book SUCCESS for Teens, workshops are conducted in conjunction with all major events. Brand Partners bring their children along with their friends. “It’s a very special workshop because it shows kids that every day you can get 1 percent better,” says Victor Palomares, a high school literature teacher who leads the workshops. The workshops teach children how to get where they want to go in life, how to bolster their own self-esteem and how to develop the kind of leadership skills that will help them recognize opportunities and meet their goals.
Return on Giving
Nerium International falls into the new company category when looking at years in business. However, the company’s impact on lives appears to measure beyond its chronological age. The company commitment to give goes beyond dollars and cents and represents another example of why the culture of a direct selling company can have such a positive impact on lives.
So where does a company that has made such an impact go from here? Nerium’s plans for the future include creating a global presence, continuing to be a major corporate sponsor and provider of Bigs in support of BBBS, and growing their business by adhering to the three words of the mission statement: Make People Better.
February 01, 2014
We Don’t Need to Change Or Do We?
by John Parker
We’ve all heard that it’s lonely at the top, or that leadership is the other side of the coin of loneliness. Many have embraced this notion, but I would invite them to closely study—and experience—how direct selling really works. It just might change their minds.
Entrepreneurship in our industry is far from a lonely proposition. In fact, it’s just the opposite. As insiders, we know that. But when a well-respected business professor and author on global entrepreneurship recently asked me about it, I realized we still have a lot of work to do to prove it. She said, “I spend every day with students, both in the U.S. and abroad. If there is one thing they seem to have in common, it is a desire for work that is meaningful above and beyond what it pays them. They want their careers to leave a positive impact on society. How is your industry changing to prepare for them?”
My first thought was: Changing? But we don’t need to.
Direct selling companies are unique in how we create an environment where communities naturally form. If we were a sport, we would be a team, not an individual sport.
But here’s what I think is tough for us to grasp as industry executives: Lasting communities form around causes or values—not products or brands. In fact, some of the most successful organizations at Amway have discovered that what identifies them as a team is not the dietary supplements or anti-aging creams they offer. It’s about a shared value system and the “something bigger—achieved together” the professor was asking about.
In 2013, two legendary Amway leaders passed away. As we mourned, we also reflected on this very concept. We focused on the legacies they left in the world, not as entrepreneurs, but as people. Their legacies were about helping others, whether it was building orphanages together, ensuring no one who needed a wheelchair in one country went without, eradicating hunger in a rural school system, or raising millions of dollars for Easter Seals families.
They are two reflections of the many real and powerful stories that prove what direct selling—communities with a common purpose—can do. These stories have little to do with product or compensation plans.
The opportunity we have as leaders in this industry is to respond to and state our support for the desire that people—especially young people—have to leave a mark on the world. It’s an opportunity to meet their needs as a community without attempting to define and manage them at every turn.
We have the ability to do that. We can talk to prospects about their aspirations to leave a legacy, and about the platform direct selling gives them to do it. We can teach them to find others with similar passions. We can give people an opportunity to dip their toes in the water of entrepreneurship and economic freedom—all while building lasting relationships, developing others, and providing hope and change on a very large scale.
What better foundation than direct selling is there to make a lasting difference like this in the world?
The more I think about it, the more I realize this might make us uncomfortable because, as corporate employees, we exist outside of these naturally formed communities. We help them via our unique products, compensation plans, and support, but they live and breathe for each other, not for us. We’re not shy when it comes to talking to the media, or other influencers, about the unique “product + people + plan” equation that makes direct selling tick, but have we done our job describing our communities—and their passions—as fully as possible?
I believe the answer is “no.” Otherwise, questions like the one I was asked by that professor, and those by other outsiders, wouldn’t come our way.
We can start by reminding ourselves that “people” and “social networks” are not the same thing as “community.” Much like teams in sports, communities have a goal in mind and will not rest until it’s met. People are still individuals. Social networks allow people to communicate, but they don’t always inspire people to act on a common purpose or passion.
Communities share a common belief. Our industry community exists with the shared belief that individuals can control their futures and that raising up entrepreneurs is an important contribution to society. So we are a community, and we provide community. Great, but how do we help our next generation of independent representatives understand and embrace this?
Maybe it starts with less focus on independence. Perhaps our message should be: If you’re looking for a community in which you can make a difference, direct selling is already here! We allow and support you to make your mark on the world.
We need to use our time, treasure and talent to talk about the common-purpose communities that live within our businesses. Yes, it’s a little scary because those are the very communities we don’t always directly control. But it proves to others that direct selling is one very exciting, very doable, very legitimate route to working with others to achieve that “something bigger.”
In 2014, I challenge all of us to find the communities of direct sellers within our businesses making an impact that resonates with the next generation of entrepreneurs—to show prospects that we’re businesses that don’t exist for selfish reasons, but who work to solve the problems of one person, or one community, or one country.
Speak out about how direct selling communities are a unique way to pay it forward, and how direct selling embodies optimism, which is the first thing a person needs to change the world.
Show people that direct selling will help them make a difference in ways they can’t even imagine because of the sheer number of people they would be able to meet and energize around any cause they choose.
In other words, modify the conversation about direct selling. Focus on how we have and how we will serve and better entire communities. Use a new communications formula that every time includes product + people + plan, just as before, but adds “passionate purpose.”
Let’s prove that no one understands people’s desires to start socially conscious businesses better than we do, and let’s remind everyone that with a career in direct selling it’s never lonely at the top—or in any position along the way.
Before we know it, smart people won’t be asking us if we’re doing anything to prepare for a new wave of worker. They’ll be asking how they can follow in direct selling’s footsteps.
John Parker is Chief Sales Officer at Amway.
February 01, 2014
The Promise of Digital Payment Systems for the Globally Unbanked
by Natalia Yenatska
The direct selling industry has always provided a means for ambitious individuals to gain career independence and achieve higher financial goals. Direct selling organizations have enabled individuals from all walks of life to simultaneously change their income levels, work lifestyle and profession. For these reasons, millions of people choose to embark on a career within this promising community, and as such the industry continues to grow year after year.
However, there is still a group within our worldwide community that has traditionally not been able to gain access to the opportunities that the direct selling industry provides. These individuals are the globally unbanked, and according to the World Bank’s Global Findex 2012 database, they account for over half of the world’s adult population, representing nearly 2.5 billion people.
The majority of unbanked individuals report that they do not have a bank account due to the lack of financial infrastructure within their respective countries. However, financial exclusion is not limited to the developing world. High banking fees, lack of steady income, and availability of alternative services, such as check cashing and walk-in bill pay also create this dynamic in more developed countries. For many, the lack of financial structure or costly banking represents an inefficient reality.
Historically, it has been nearly impossible for anyone to participate in global business without having a bank account. In fact, most global companies, including direct sales organizations, require sales representatives to have a personal bank account as a prerequisite for employment. This is not only a challenge for the unbanked, but it is also a missed opportunity for direct selling organizations. Given its entrepreneurial spirit and increasingly global scope, the direct selling industry could benefit from tapping into ambitious unbanked resources. The key to unleashing this economic potential can be found in digital payment systems.
Digital payment systems are forever changing the way global commerce is conducted, and direct selling companies are benefiting from this advanced form of transacting.
A big challenge for the unbanked is their limited ability to transact. Unbanked individuals are often unable to easily purchase products within the global market, as they rely solely on cash transactions. Digital payment systems remove the need for a bank account while providing individuals with flexibility in how they withdraw or use their funds. The best systems will also provide additional options for depositing and retrieving funds. Digital payment systems that provide both options to an organization and its members are called closed loop systems. These systems allow direct selling organizations to safely and efficiently transact with their members while giving these individuals the flexibility to use their funds as and when they wish.
Conversely, direct selling companies need a secure way to accept and pay out funds to unbanked members globally and in multiple currencies. Providing payroll and commissions to unbanked individuals can cost an organization millions in transaction and transfer fees alone. Closed loop digital payment systems give organizations of any size the ability to tightly control and manage pay-in and payout transactions, while providing members flexibility and consistency in the way they manage their funds. In our experience at i-payout™, our clients often find that by utilizing our closed loop digital payment system, they are able to safely expand their global member base into previously untapped markets.
i-payout™ has seen a sharp rise in the rate at which direct selling companies have increased membership among the unbanked and especially in developing countries where banking infrastructure is limited.
Given that 91.5 million people worldwide are members of the $160 billion direct selling industry, the introduction of digital payment systems could prove to be a powerful catalyst for increasing their prosperity and general standard of living. The trajectory of technology is moving toward a more economically independent global population that is no longer bound by distance, banking inefficiencies or a lack of financial infrastructure, and digital payment systems are paving the way.
Natalia Yenatska is the Chief Financial Officer of i-payout™, a provider of global payment solutions. She has experience in overseeing all aspects of business operations and speaks English, Russian and Ukrainian.
February 01, 2014
Considering a Mobile Point of Sale Solution? Six Key Questions to Ask Vendors
by Tim Thomas and Brad Bohn
Under a direct sales model, the success of any customer engagement hinges on two prime capabilities: ensuring a high level of customer confidence and gathering all of the information needed to close the deal at the point of sale. Even at Southwestern Advantage—the oldest direct seller in the U.S. and a trusted brand—we sometimes faced these dual challenges in the past, as customers were nervous about sharing credit card information with our college-aged representatives.
While nearly all direct sellers now accept credit and debit cards, until recently most Southwestern Advantage dealers still wrote out credit card information on paper forms for processing later. It’s a common practice, but we found that it sometimes led to lost sales, not only from those nervous customers but also from transaction declines due to incorrect or incomplete account numbers on forms and transaction chargebacks.
The solution to this problem for direct selling companies is implementing a mobile point of sale (mPOS) solution. We recently piloted such a solution, and based on the success of that pilot we are now in the process of rolling it out to our 2,500-plus dealers. We predict that we’ll save tens of thousands of dollars per year on processing fees by taking advantage of card-present rates and greatly reduce declines and chargebacks. Because most of the cost associated with our mPOS solution is variable, the more business we do, the more we’ll save.
We learned, however, through our vendor evaluation and pilot that not all mPOS solutions are created equal. If you’re a direct seller considering a move to mobile POS, here are some key questions to ask vendors once you start your journey.
1. What kind of up-front investment is required?
At Southwestern Advantage, our sales model relies on entrepreneurial college students who offset their educational expenses by running their own business selling educational products to families in the communities they serve. We work to keep the investments our sellers make low and wanted to provide each with a mobile card reader for a small security deposit; unfortunately, some vendors required an investment of hundreds of dollars per reader. We wanted a solution provider with flexible pricing and ideally one that required a minimal up-front investment.
2. Is your product PCI compliant?
This is a must for mobile POS. The main problem when cardholder information is gathered manually is that, in spite of a seller’s best efforts, there is really no way to ensure it is completely secured. Paper forms are by their nature not a particularly secure form of communication.
In our search for an mPOS solutions provider, PCI compliance was a major consideration. Ensuring that cardholder information would be encrypted before it entered the mobile device was vitally important. Be sure your provider offers end-to-end, strong encryption, robust data protection for all payment transactions and full compliance with regulations such as PCI.
3. Can we keep our current credit card processor?
Let’s face it, changing credit card processors is a labor-intensive, time-consuming process—one you shouldn’t have to undertake without a compelling business reason, which was why the ability to keep our current processor factored into our decision-making process. The solutions provider we selected was “processor agnostic,” allowing us to maintain our existing merchant processing relationship, an option not offered by all vendors. This benefit eliminated the hassle and expense of making a transition.
4. Can your solution integrate seamlessly into our existing infrastructure?
Like Southwestern Advantage, your organization has likely made major investments in a customer relationship management system or mobile commerce platform. You should focus your mPOS search on solutions providers that offer APIs (application programming interfaces) to support seamless transaction and reporting integration, whether a salesperson is transmitting cardholder data, checking inventory or tracking delivery. You’ll get so much more value out of mPOS if it’s the final step in a broad mobile commerce strategy, with capabilities such as branded receipts and the ability to review transactions from existing enterprise systems.
You should also ensure that your new mPOS solution will be compatible with all types of mobile devices. Southwestern Advantage supports more than 2,500 independent sales representatives who seem to rely on nearly as many different iOS or Android smartphones and tablets. Many mPOS solutions only support iOS.
5. Can we speak with some existing customers?
In our evaluation process, we discovered real advantages to working with a solutions provider with a proven track record in the payments space—and with a portfolio of clients already using their mPOS solution. We were able to leverage their advice and best practices during our pilot and implementation to make the rollout as smooth and seamless as possible.
6. Is your solution global-ready?
Every country has different rules and regulations, and obviously many have different currencies. If your organization is global, or thinking of expanding globally, it’s absolutely vital that your payments infrastructure—including any mobile POS tools—be global as well. One simple example is whether or not the system supports chip and PIN cards, chip and sign cards (used internationally), and the magnetic stripe cards used in the U.S. If it doesn’t, and global expansion is important to you, move on to the next vendor.
Mobile point of sale technology offers real promise for the direct selling industry, but the quality of solutions varies widely, and we found through our evaluation many are not truly enterprise-ready—they are designed for micro-merchants rather than large, established companies. To capitalize on the promise of mPOS, most effectively, you need a strong partner. Ask these six questions to help you arrive at the right one.
|Tim Thomas is Director of Marketing, and Brad Bohn is IT Senior Business Analyst, both at Southwestern Advantage.|
January 30, 2014
Medifast Ranked among “Best Diets” by U.S. News & World Report
U.S. News & World Report recently evaluated 32 of the most popular diets to identify and rank the best eating plans available. The U.S. News panel of diet and nutrition experts ranked Take Shape For Life parent company Medifast No. 11 among “Best Commercial Diet Plans” and No. 25 on its overall “Best Diets” list.
Take Shape For Life incorporates Medifast Meals through the 5 & 1 Plan®, which supplements five 100-calorie Medifast products with one “lean-and-green” entrée per day. The program also features a personal Health Coach and the Habits of Health System, based upon the work of Dr. Wayne S. Anderson, Medical Director and Co-Founder of Take Shape For Life.
Medifast was also recently named a “Future 50” Baltimore Blue Chip Award winner by SmartCEO magazine. The weight-loss brand was one of five large Blue Chip companies recognized for their leadership and success in the regional economy.
“As we look ahead over the next five years, we plan to expand to new markets domestically and globally, capitalize on our multi-channel approach, and introduce new products and programs to help more people in new places reach their weight and health goals,” said Medifast Chairman and CEO Mike MacDonald.
January 30, 2014
USANA Backs Nearly 200 Winter Games Athletes
Photo: USANA’s brand ambassadors and U.S. Nordic combined teammates Billy Demong, Taylor Fletcher and Bryan Fletcher.
Health and wellness company USANA Health Sciences supports more than 600 elite athletes worldwide. Nearly 200 of those sponsored athletes have been selected to contend in next month’s Winter Games.
The 2014 Games, held in Sochi, Russia, will feature 12 brand-new events, including the luge team relay and women’s ski jumping. “Team USANA” sponsored athletes, which hail from 11 organizations in four countries, will compete in 11 separate sports. They include former Game participants and current USANA brand ambassadors Meaghan Mikkelson-Reid (Women’s Canada Hockey), Billy Demong (U.S. Ski and Snowboard) and Taylor Fletcher (U.S. Ski and Snowboard).
The number of athletes representing Team USANA has doubled over the Vancouver Games in 2010. The contenders will be eligible for 82 of the 98 medal events held in February. USANA also supported more than 60 athletes at the Summer Games in London.
Read the full announcement from USANA.
January 29, 2014
USANA Backs Nearly 200 Olympic Contenders
Photo: Sochi 2014 Organizing Committee
Health and wellness company USANA Health Sciences supports more than 600 elite athletes worldwide. Nearly 200 of those sponsored athletes have been selected to contend in next month’s XXII Olympic Winter Games.
The 2014 Games, held in Sochi, Russia, will feature 12 brand-new events, including the luge team relay and women’s ski jumping. “Team USANA” sponsored athletes, which hail from 11 organizations in four countries, will compete in 11 separate sports. They include former Game participants and current USANA brand ambassadors Meaghan Mikkelson-Reid (Women’s Canada Hockey), Billy Demong (U.S. Ski and Snowboard) and Taylor Fletcher (U.S. Ski and Snowboard).
The number of athletes representing Team USANA has doubled over the 2010 Vancouver Games. The contenders will be eligible for 82 of the 98 medal events held in February. USANA also supported more than 60 athletes in the 2012 London Games.
January 28, 2014
Retailers Shift to Fewer, Smaller Stores
As the first quarter of 2014 commences, the retail industry is undergoing a wave of store closings following a lackluster holiday season.
Retail giants Sears, J.C. Penney, Macy’s and Target have all announced cuts this month. Sears recently announced that its flagship location in downtown Chicago will close its doors in April—the latest of about 300 store closings since 2010. The announcements point to a larger trend of increased technological investments and diminished traffic to physical stores, triggering a “tsunami of store closures across the U.S.,” Belus Capital Advisors analyst Brian Sozzi told CNBC.
Though retail sales hit below expectations over the holidays, online spending via desktop devices increased by 10 percent. Amid growing e-commerce traffic, businesses are favoring a smaller network of stores, and those stores are smaller in size than their inventory-loaded predecessors. Fulfillment centers answer the need for storage at a lower price tag than commercial real estate.
These trends point to what Starbucks CEO Howard Schultz calls a “significant sea change” for the retail industry. “I would not want to be a traditional bricks-and-mortar retailer that did not have mobile payments, that did not have social and digital media. Those companies are going to find themselves significantly challenged in 2014 and beyond,” Schultz told CNBC.
January 27, 2014
4Life Receives 2013 Philanthropy Award
Photo above: 4Life Founders David and Bianca Lisonbee participate in a foundation service project in India.
Health and wellness company 4Life Research recently received the Nutrition Business Journal’s 2013 Philanthropy Award, in recognition of its efforts to supply nutrition, shelter and education to children around the world.
The NBJ awards honor companies that promote healthy, educated consumers and sustainable business practices. From a pool of more than 300 entries, 4Life stood out for its nonprofit Foundation 4Life® and for-profit 4Life Fortify® programs. 4Life employees and distributors participate in a variety of service projects through Foundation 4Life, which develops long-term partnerships with orphanages and childcare centers.
The company’s 4Life Fortify nutrition program supplies meal packs that combine high-quality ingredients with a nutritional complex of vitamins and minerals, as well as 4Life Transfer Factor. 4Life facilitates donations of purchased meal packs to nonprofit partners such as Feed The Children. Through the program, the company has undertaken to provide 3 million donated meals in 10 impoverished countries around the world.
January 24, 2014
Move over, Cadillac: Mary Kay Rolls out Black BMW
(Photo courtesy of Mary Kay Inc.)
Since the first pearlized pink Cadillac hit the streets in 1969, the distinctive luxury car has represented a symbol of achievement to generations of Mary Kay consultants. This month the 50-year-old company unveiled a new look with the latest addition to its Career Car program, a sleek black BMW 320i.
More than 10,000 women roared their approval during the reveal at Mary Kay’s annual Leadership Conference held in New Orleans. The luxury car replaces the Mary Kay Ford Mustang the company has offered top-performing Independent Sales Directors since 2011.
“When you think of BMW you think of sophistication, luxury, safety and class but overall, you think of performance,” said Sara Friedman, Mary Kay’s Vice President of U.S. Marketing. While the Bimmer won’t replace the classic Cadillac, it symbolizes “a new kind of elegance and style” for the company. Read more on Mary Kay’s Career Car program and some of the industry’s other four-wheeled incentives.
January 23, 2014
Study: Online Exports to Grow Fivefold by 2020
Amid what the Economist Intelligence Unit calls “the rise of the customer-led economy,” many businesses are expanding e-commerce offerings as consumers increasingly turn to online shopping. These e-commerce customers without borders generated an estimated $25 billion in online exports for 2013, according to research conducted by London-based management consultancy OC&C and Google.
The study of six top e-commerce markets—including the United States, Britain, Germany, the Nordics, the Netherlands and France—found that cross-border online trade will grow fivefold by 2020, reaching an estimated $130 billion. The report parallels a recent study by Mintel that estimates online retail sales in Europe will double over the next five years.
Britain’s advanced e-commerce market generated an online trade surplus of more than $1 billion, the highest for 2013. The U.S. was next in line with a surplus of $180 million. The study identifies retailers operating as pure e-commerce brands—led by eBay and Amazon—and traditional brands accelerating international expansion through e-commerce. Swedish furniture retailer IKEA led the latter group, followed by fashion retailer H&M and Avon.
January 22, 2014
Q&A: Direct Sales Success at Rodan + Fields
During a recent Rodan + Fields Leadership Summit in Nashville, one of the company’s top 10 markets, Chairman Amnon Rodan and President and CEO Lori Bush shared insights on the company’s evolution and business model in a Q&A for The Tennessean.
When Drs. Katie Rodan and Kathy Fields launched their eponymous company in 2002, the clinical skincare brand became a top seller in high-end department stores. The founders recognized that product sales were largely being driven by word of mouth—a fact that led them to exit department stores and adopt a direct sales model in 2008. Rodan calls that shift “the best decision we’ve made.”
As the economy weathered the 2008 financial crisis, a strong, validated product and attractive business opportunity enabled Rodan + Fields to grow by leaps and bounds. The company, which now supports a network of 50,000 consultants, reported revenues of nearly $200 million in 2013, up from $108 million in 2012.
January 21, 2014
Public Direct Selling Companies up 188 Percent in 2013
Despite the challenges direct sellers faced in the past year, the industry’s publicly held companies concluded 2013 on a very optimistic note. Those U.S.-based, public companies which generate revenue solely through direct sales saw share prices rise an average of 188.25 percent over 2012.
By contrast, the Dow Jones, S&P 500 and NASDAQ Composite shares ended the year up an average of 31.47 percent over 2012. Click on the table below to view each index, as well as a side-by-side comparison of each company’s year-end prices for 2012 and 2013.
January 16, 2014
Smithsonian Magazine Features All-in-One Thermomix
German household products manufacturer Vorwerk introduced its original multi-function Thermomix kitchen appliance—the VM 2200—in the 1970s. Smithsonian magazine takes a look at the machine’s modern iteration and its rising popularity among European consumers.
The Thermomix is a culinary workhorse, packing the capabilities of multiple kitchen appliances—from chopping and kneading to steaming and emulsifying—into one ergonomic design. The quick and versatile machine has gained a following in Europe—particularly in Italy, Spain and Portugal. Last year, Portuguese consumers bought more Thermomix machines than high-end iPad tablets.
Though Vorwerk representatives have marketed the Thermomix to U.S. consumers in the past, the company has not operated in the U.S. since 2004. In addition to several European markets, Thermomix has gained popularity following an unconventional entry into Australia, where product sales topped the $80 million mark in 2012.
January 15, 2014
Reliv Supplies Ongoing Aid to Haitian Orphans
Photo above: Haitian boys who participate in the Reliv Kalogris Foundation feeding program.
Reliv International’s charitable arm, the Reliv Kalogris Foundation (RKF), recently announced the opening of the St. John the Baptist National School, a milestone in its ongoing work with orphans in Petite-Anse, Haiti. The RKF supplied funds to repair damages to the structure caused by the devastating 2010 earthquake.
Following the earthquake, the RKF collected donations to supply aid to the country’s orphans—a population which had swelled to approximately 500,000 as a result of the disaster. With the initial $100,000 in donations, raised within just two months, the Reliv Kalogris Foundation built a children’s home in the northern town of Cap Haitien.
The addition of the newly upgraded school building will enable RKF to provide education and vocational training, as well as feed and house the children. In addition to the 40 children that RKF houses, 200+ children from the surrounding neighborhood will also attend the school, where they will receive daily nutritional shakes formulated by Reliv. RKF currently supplies nutrition to over 12,000 children in 47 schools, orphanages and clinics across the island nation.
January 13, 2014
Brits Embrace Dieting, Forgo ‘Diet’ Foods
Over half of Britain’s population tried to lose weight last year, according to a recent report by market research firm Mintel. However, the desire to shed excess weight has not equated to strong sales of diet food products, which increased just 7 percent over the last five years.
A keen consciousness of size and diet amid Britain’s rising obesity levels prompted 65 percent of women and nearly half (44 percent) of men to pursue a healthier lifestyle. For the majority of those surveyed, that meant increased exercise and a low-fat diet rich in whole foods like fruits and vegetables, instead of “light” or “diet” products.
With regard to nutritional quality, just 32 percent of consumers indicated a positive perception of diet brands. The majority (59 percent) expressed concern about the ingredients and artificial sweeteners characteristic of diet food offerings. Approximately the same number (60 percent) of consumers said they place greater emphasis on exercise than on dietary restrictions.
January 10, 2014
Indian Direct Sellers Seek Legislative Reform
Though India’s direct selling industry saw about 12 percent growth during the last fiscal year, direct sellers face an uphill slog amid the country’s unfavorable economic conditions and regulatory climate.
Groups such as the FDCI—a joint forum for direct selling companies, distributors, consumers and manufacturers—have petitioned the government to provide a legislative framework distinguishing legitimate companies, which derive their profit from the ongoing sale of products and services, from schemes that profit largely from individuals buying in to the opportunity for rewards.
India’s present law banning money circulation schemes lacks clear definitions of direct selling and what qualifies illegal operations. The country’s ambiguous legislation has prompted government probes, and even arrests, at various direct selling companies.
A report produced by the PHD Chambers of Commerce and Industries and the Indian Direct Selling Association (IDSA) projects that the industry will see continued growth even in the face of market challenges. “Keeping the current trend, we will continue to aim high despite regulatory or economic hurdles and, as per the report, the industry will grow approximately at 20 per cent year-on-year,” IDSA Secretary General Chavi Hemanth told the Business Standard.
January 08, 2014
Report: Marketing to the Socially Networked Mom
In the U.S., women represent about 80 percent of direct sellers. In a new report titled Marketing to the “Likeable” Mom, SheKnows and Harris Interactive provide insight into the online behaviors of that core demographic.
The research examines attitudes and behaviors through the lens of age as well as employment, grouping respondents according to their status as working, stay-at-home, Millennial, or Generation X mothers. The resulting profiles vary widely with regard to how women view technology—particularly social media content—and integrate it into their lives.
In terms of follower count, working moms represent the greatest presence in online communities; however, Millennial moms most actively cultivate their online identities. Whether Millennial women enjoy this constant connectivity is another question. Among respondents, 56 percent of Millennials confirmed that constant social connectivity overwhelms them, in contrast to 43 percent of their Gen X counterparts.
Millennial moms also reported a high degree of brand interaction—22.5 brands on average—via social networks. The average among Gen X moms was a considerably lower 13.7 brands. Though they interact with more brands, the Millennial group also proved most likely to consider how a brand makes them feel before following. Millennial moms are 23 percent more likely than members of their generation as a whole to choose brands that connect to their personal identity.
As to why women seek out brand interaction in the first place, both working and stay-at-home moms said their primary reason for visiting a brand’s page is to find deals. Research was cited as a close second among working moms, but a more distant second among stay-at-home mothers.
January 06, 2014
Natura Pursues Growth through Online Sales
A recent Bloomberg report highlighted Natura’s interest in expanding its business, still largely centered in Brazil, into additional Latin American markets. The cosmetics company is simultaneously refining its digital strategy to equip Natura consultants as social connections increasingly occur online.
“We are sure that in 3-5 years our business is going to change significantly,” CEO Alessandro Carlucci said of the company’s outlook in a recent interview for CNN.
The company’s efforts to cultivate a greater online presence have focused particularly on Facebook, where—as noted in our January cover story on Tech Trends for 2014—the world spends an average of 20 billion minutes per day. Natura has conducted a successful pilot program enabling consultants to sell their products to consumers via Facebook, and the company plans a comprehensive rollout of sales via social media in the first half of this year.
Watch the full video from CNN’s Global Exchange.
January 03, 2014
Amway Korea Supports Local Small Businesses
Since 1998, Amway Korea has been partnering with small and medium enterprises (SMEs) through the One for One program. One for One connects domestic SMEs to consumers by allowing them to sell their products through Amway’s extensive global networks.
The Korea Times reports that the company recently launched a sister program dubbed the One for One Kind Shop, which partners with green product designers and manufacturers. Amway will offer select environmentally friendly products and donate all proceeds from the sales to charity. The first of these products is the “Original Green Cup” by Ecojun, a design that has garnered three major awards.
As one component of Amway’s Global Development Project, the company has also provided R&D consulting services to local Korean think tanks. The project furthers Amway’s investment in developing local SMEs and promoting economic opportunity in Korea.
January 03, 2014
January 03, 2014
Elite Java Branding
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International Payout Systems Inc.
January 02, 2014
Infographic: The World in 2014
Euromonitor International, a leader in strategy research for consumer markets, recently posted an infographic featuring some key statistics to understanding consumer behavior as businesses orient themselves to the realities of a new year.
Euromonitor reports that the Asia Pacific region will account for half of the estimated 138 million births in 2014. Despite population growth, the average age globally will exceed 30 years for the first time, with Eastern Europe representing the oldest population and the Middle East and Africa at the other end of the spectrum.
This year is also expected to usher in accelerated real GDP growth, along with a 3 percent real increase in global consumer spending. The number of households worldwide will reach an unprecedented 2 billion, and 89 percent of that growth will occur in emerging markets. Read more on these up-and-coming markets in our recent Billion Dollar Markets update, which explores The Great Potential: Unlocking the Power of Emerging Markets.
January 01, 2014
Innovative Longevity: Oriflame’s Sustainable Success as a Global Beauty Leader
by Beth Douglass Silcox
Laughter arose from the crowd some 15 years ago when a well-seasoned direct seller made a seemingly strange prediction: “One day people will look back at these times and laugh, saying how fun it was when people were shopping in stores.”Magnus Brännström, CEO and President of Oriflame, remembers very clearly watching the video of this executive and the people’s reaction. He says, “It seemed like such a crazy idea that we would not buy in stores, and now I cannot stop believing that he will be right.” Back then, Brännström was new to Oriflame, a global stronghold within direct selling’s beauty category, with corporate offices in Luxembourg and Switzerland.
But technology was changing everything and amping up an impending change in consumer expectation about how they would purchase products. Today’s consumer demand for convenient, online access to products was foretold all those years ago. “The future is in the hands of direct sellers and new technology,” Brännström says.
Oriflame, like so many others, is working to marry online shopping with traditional direct selling through a web-based, content-driven pilot program that extends the reach of the company’s international network of independent consultants. The goal is to capture market growth, and Brännström heads the effort as the company’s chief executive.
“We truly believe in the future of direct selling and all the technology we have, and of them joining seamlessly in the way we look for customers or consultants and representatives. It is also a winning team for producers and companies,” Brännström says.
Longevity’s Wide-Angle Lens
With a tremendously successful 46-year history operating in the world arena—yet not the U.S. marketplace—Oriflame’s reputation is one of longevity and sustainability. So it’s little wonder the company looks to advancing technologies through a wide-angle lens. “It’s a long-term game,” Brännström says.
Oriflame creates first-class e-commerce stores for more than 3 million independent consultants in 60 markets around the world. Consultants reach out to people they know through social media or physical meetings and offer them online shopping experiences. Sounds familiar, right? But Oriflame differentiates itself by taking their online relationship with consumers a step further.
“We believe that the home page needs to offer something more than just a product and a price, so we have our journalists working with us on beauty and on trends and so forth,” Brännström says.
Putting Oriflame products in the context of a magazine-style feature article on a home page ultimately benefits the product by making it more interesting. Consumers are more likely to buy an interesting product, and they will revisit the page looking for inspiration time and again. “That helps in the recruitment of consultants, and it shows you’re inviting someone to a leading beauty brand. That’s a big and important strategy for us going forward,” Brännström adds.
Paradise Eau de Parfum
The intention of integrating this journalistic content is to focus on the broader goal of becoming a trusted source of information on beauty with quality advice on products and lifestyle, which is a long-range marketing strategy. While it supports Oriflame’s products and business opportunity to improve recruitment and sales over time, short-term recruitment could be an added bonus. Consultants are able to direct prospects to the content-driven site in order to validate the company and what it has to offer.
“It’s not doing anything for the business short-term. The consultants you have, they have already reached out to their friends and made contact with their customers,” Brännström says. “But going forward with new people, we believe it’s the way to go.”
Growing Up Together in Sweden
Once upon a time—think pre-1967—cosmetics and skincare products were an elusive and confusing upper-class luxury in Sweden. “Retail in Sweden in those years in beauty could be very intimidating with very beautiful women in the store,” Brännström says. “Many consumers felt uneasy about walking in and asking those very beautiful retailers how to use a product. But when direct selling brought those products into homes with friends, then it was easy and more Swedish women started enjoying the whole concept of beauty.”
In many ways, the Swedish beauty market and Oriflame grew up together thanks to the efforts of brothers Jonas and Robert af Jochnick and their friend Bengt Hellsten. They combined a Harvard Business School education about a new distribution model called direct selling and a little experience at Electrolux and beauty products with a Swedish twist.
“From the beginning, the founders understood if they wanted to be successful selling beauty products, they had to be unique. For them, the uniqueness became natural Swedish cosmetics,” Brännström says.
Oriflame became famous for not only respecting nature by eliminating product testing on animals—a common beauty industry practice at that time—but also using natural ingredients from fruits, flowers and plants to produce functional, simple and elegant products. “Sweden stood for quality, honesty and good values,” he says.
Fast-forward several decades and those natural principles still hold true, but Oriflame now interjects the best science has to offer as well. Recent products like Ecollagen [3D+] targets wrinkles using tripeptide complex, hyaluronic acid, plus natural oils. This innovative product recreates skin’s natural collagen. And last fall, Oriflame began investing in pioneering plant stem-cell technology that will culminate in the production of powerful, sustainable and 100 percent traceable anti-aging ingredients for use in their products.
The company employs over 100 scientists in its Global Research and Development Center and operates six fully owned production units in Sweden, Poland, China, Russia and India. It has over 7,000 employees worldwide with annual sales of €1.5 billion annually and is publicly traded on the Nasdaq Nordic Exchange.
Oriflame is still primarily a company aimed at women. But unlike the once reluctant Swedish women that eased into the beauty market in 1967, today’s independent consultants are dreamers with goals of financial independence and careers that fit. With high concentrations in Europe and the former Soviet Union, Oriflame consultants are now found the world over.
Tender Care multi-purpose skincare
“I think we are the answer to what people are looking for,” Brännström says. “Our biggest challenge is being able to explain it in a way that is compelling and that people understand, especially for women to understand that Oriflame is for their freedom and is a way for them to do everything. And we are proud of the fact that you don’t have to put in anything to have a go at it.” The only investment needed is “commitment and passion,” according to the company’s website.
Low financial risk pairs with cravings for social interaction and extra income, making Oriflame an ideal direct selling match for women and some men who dream of cultivating individual beauty, as well as career goals, no matter where they call home.
Togetherness, Spirit and Passion Online
“There are too many people around the world wondering why the grass is greener with the neighbor, instead of being happy about the grass being greener for the neighbor,” Brännström says. Oriflame helps its consultants figure out how to be happy for the success of others and be a center for positive energy that can propel them toward their own success.
Theirs is a corporate culture that promotes togetherness, spirit and passion. “It’s about believing that if you do it together with someone else or in a group, you will actually achieve more than just doing it by yourself,” he says.
Oriflame’s culture takes a wide-angle view of personal responsibility and passion and what both mean to the company’s overall journey to become the No. 1 beauty company in direct selling. “It’s challenging yourself and your colleagues to do slightly more, slightly better; trying new things, being innovative and not being afraid of risks,” Brännström adds.
Oriflame’s passion for teaching people to look at the world and recognize opportunity translates into any language. “We have people from all religions and parts of the world, so we express our culture in all our communications. Sometimes it’s about the values, sometimes our products, sometimes what we believe,” he says.
Technology, like Skype, social media, and specially created tools that support consultants and leaders in business management, personal development and e-learning/training, allows Oriflame to traverse continental, cultural and language boundaries. Customization of this technology varies by region, as the company’s Internet landing page lists no fewer than 60 optional home pages tied to countries in Europe, Asia, Latin America and Africa.
Nearly 90 percent of Oriflame’s orders are placed online, where the company has garnered a respectable 4 million Facebook likes. There followers converge to let their diverse voices be heard and partake of the company’s in-depth journalistic offerings about lifestyle, beauty, wellness and how to live well.
Oriflame is tapping into the potential of the online beauty market and giving that potential to their consultants. “We are a direct selling company that uses modern technology to reach more people around the world. The principles are the same, even though the model is obviously adapted to account for the interactions of local habits and infrastructure,” Brännström says.
Internationally Nimble Marketing
The international scope of Oriflame’s business requires agility beyond their expert use of modern technology. In the emerging world, customer service activities, consultant interactions and even product delivery takes a pliable plan. In some countries lacking infrastructure necessary for product delivery, consultants and customers pick up parcels from service centers that resemble retail outlets, but are still dedicated to direct selling.
This nimble style allows for long-term, innovative marketing strategies that keep Oriflame growing and succeeding. In addition to magazine-style website pilot programs, the company has a two-year sponsorship as an official global partner of the Women’s Tennis Association, offering unique branding opportunities for each organization.
This mutually beneficial relationship extends beyond a previous sponsorship that covered Europe, Russia and the Commonwealth of Independent States, the Middle East and Africa. Oriflame catalogs and social media in the Americas and Asia-Pacific also now include WTA branding, in exchange for Oriflame branding on WTA’s multi-language websites and social media channels.
Women’s professional tennis combines the perfect balance of athleticism and glamour, and through the example of hard work and dedication Oriflame believes these professional athletes inspire all women to be the very best they can be, work to fulfill their dreams and do so while looking great.
In Russia, where Oriflame is one of the biggest beauty brands, innovative brand awareness marketing arose from a television soap opera storyline. As Russian families were reeling from economic turmoil, art mimicked life when an on-screen soap opera heroine supplemented her income by selling Oriflame cosmetics door-to-door. The unconventional marketing move introduced Oriflame products and the business opportunity to a largely uninformed mass market in Russia and shocked its fiercest competitor.
In the end, everything that Oriflame does leads to the dream—the dream of outward beauty, inner confidence, financial independence. “We try to take a holistic picture or view of ordinary people who live an ordinary life, but who would like to know more about the life they don’t live,” Brännström says. And he admits Oriflame has its own corporate dreams as well. “We would love to be in the U.S. because that is the home country of direct selling.”
“The American Dream is the symbol of what we want to achieve,” Brännström says. “It’s where every person, regardless of where she comes from, can make a profound difference in her own life. That’s why we would like to be in the U.S., but we have no such plans today. But when we do enter, we’ll be sure to tell you all about it.”
Royal Philanthropy – World Childhood Foundation
Supporting At-Risk Children the World Over
Few companies can claim true “royal” partners in their charitable endeavors. Even fewer invite the Queen to a 45th anniversary party, to which she comes. But Oriflame can and did.
Her Majesty Queen Silvia of Sweden co-founded World Childhood Foundation with Oriflame and the Af Jochnick Foundation, the company’s philanthropic organization, in 1999. Together they work on behalf of children at risk for abuse and exploitation, by funding and running prevention, intervention and education efforts in 17 countries. More than 100 projects are operational at any given time through the combined efforts of SOS Global Villages and United Nations-associated organizations.
These projects are made possible in part through special Oriflame product sales. Money from these products goes to the World Childhood Foundation or designated local programs that ease the transition from adolescence to young adulthood for children who have grown up in orphanages. Education and mentorship programs help young women avoid the dangers of prostitution, human trafficking and teen pregnancy and give young men alternatives to the lure of the criminal world.
“Oriflame is very proud of helping young people avoid those paths in life,” Magnus Brännström, CEO and President of Oriflame, says. “The World Childhood Foundation has really prepared a lot of young people for life as adults with a prosperous future.”
Michael Cervell, Senior Vice President Global Direct Sales, tells the story of one young man whose life was completely changed as a result of Oriflame’s charitable efforts in the Baltics.
This young man wanted to live a normal life but was living at risk without family until he earned an internship with Oriflame. He worked hard offering assistance at conventions and obtained further educational training. “Now he is a regular employee in one of our Baltic companies,” Cervell says. “He transitioned from being at-risk to making a life for himself that includes a great career.”
It is the hard work and dedication of more than 3 million independent Oriflame consultants around the world that prompted HM Queen Silvia of Sweden to join the celebration in 2012. “That happens almost never, ever for a corporate business to have royal partners or royals visiting a corporate event. It was an incredible joy to our consultants and to our leaders and to our founders,” Brännström says. But he also believes, “It was a sign to the rest of the community in Sweden that Orfilame is a very respectable company that is doing very good things, not only for themselves and the people directly involved but also for people at-large and society, and the country and the world. And for that we were very, very proud.”
January 01, 2014
Video Vision at Talk Fusion
by Barbara Seale
It has been said that the most successful companies fill a need in the marketplace. Maybe that’s why 7-year-old Talk Fusion has grown so rapidly. Talk Fusion Founder and CEO Bob Reina got a personal glimpse of the market’s needs while he was on vacation in North Carolina in 2004. He toured a vacation home and considered purchasing it. He took a video of the home and tried to email it to friends. No go. The 10-second video file was too large for AOL to carry.
Reina began to think of how many other people had probably been faced with the same frustrating experience. And as he did, his inner entrepreneur kicked into high gear. He realized that he was looking squarely at a business opportunity that could have massive appeal. When he returned home, he talked with a friend he calls “an IT genius.” The friend figured out how to create video email, and Reina figured out how to turn the idea into a business—not just any business, but a direct selling business. In his mind, there was barely any choice. For years he had supplemented his income from his day job as a deputy in the Hillsborough County Sheriff’s Office with a substantial secondary income as a distributor in several direct selling companies. Reina had fallen in love with the industry, and he had learned to build large organizations. He knew direct selling’s power and potential, and he saw a match between the excitement of cutting-edge video technology and the reach of thousands of enthusiastic, hard-working distributors. In 2007, he launched Talk Fusion, offering its initial product to both individuals and businesses.
Since that launch, Reina’s vision for the future of video has proven correct. Just check out these numbers:
- 92 percent of mobile video viewers currently share videos with others.
- Online video now accounts for 50 percent of all mobile traffic and up to 69 percent of traffic on certain networks.
- People now watch about 6 billion hours of YouTube videos per month.
- Video communication is poised to make up 90 percent of all online traffic by 2015.
- Online video users are expected to double to 1.5 billion in 2016.
In just seven short years, Talk Fusion has become a leader in video emails and video newsletters, and it is the eighth-largest online video content provider in the world—surpassing respected industry giants such as Yahoo, AOL, Viacom, CBS and MegaVideo, Reina says proudly. But it also offers social media tools, video auto-responders, mobile applications, video conferencing and more.
“Six or eight years ago, people laughed at this idea,” he recalls. “They said video would never catch on, that it was a short-lived trend. But now the whole world is continuing to move more and more toward video, and we’re continuing to develop cutting-edge video technology for today’s marketplace—both personal and business.”
Mass Appeal Made Easy
Video has become widely used today, and Talk Fusion is part of the movement. That’s partly because it continues to develop new video technology applications, but it’s also because it abides by the direct selling mantra: Keep it simple. Talk Fusion makes its products easy to demonstrate and use. The combination makes Talk Fusion’s products attractive to customers and creates a magnetic opportunity for the company’s army of independent associates.
Even though millennials love video, Talk Fusion seems to appeal to every segment of the population. Reina believes video was an inevitable part of the evolution of communication mediation, beginning with the spoken word on radio, then moving pictures on television, then email carrying the written word—and now email, smartphones and tablets that carry video. He believes that nothing helps people or businesses communicate better than video.
“One of the challenges when I started the company was what vertical market to target,” Reina says. “The answer was: none. Any business or any person can be considered a prospect—both product-wise and opportunity-wise.”
Talk Fusion has made it easy for individuals and businesses to get started. Every product is web-based. Customers register online, instantly get an ID and password, log on to the video communications center and start using their product of choice immediately. Product tutorials are available in more than a dozen languages, and the products themselves are translated for the market where they’re sold.
Associates and customers quickly become experts and find new reasons to use the services. Families who traditionally sent their holiday newsletter as a story typed into an email message may morph it into a video newsletter. Proud parents may mark their child’s special birthday or graduation with a video documenting everything from birth to the big day. Realtors can promote new listings through video email or send a quick home tour to their clients’ smartphones. A broad range of large companies such as Norwegian Cruise Line, Applebee’s Restaurants, DHL and CIGNA Insurance Co. all use Talk Fusion products to reach and connect with online customers using the power of Talk Fusion’s email marketing. So does West Point Military Academy and numerous police departments and charities.
The range of uses and applications is one of the key attractions for Talk Fusion prospects. “The irony is that our associates are not necessarily into technology,” Reina notes. “Our products are fun and easy to use. They appeal to people of all ages, from very young to older, so the marketplace for our associates is vast. We’re proud that every product is designed to be simple so that the average person can use it.”
Instant Service, Instant Pay
And since people usually join direct selling companies to earn extra money, the Instant Pay feature of the company’s compensation plan gets their attention. The company deposits compensation into its associates’ Talk Fusion-branded Visa cards or electronic bank accounts. When an associate makes a sale, the customer can begin using their product immediately, and the associate’s commission is loaded to their account within three minutes. Binary, matching bonuses and almost every other element of compensation is paid instantly. And because each service has a monthly subscription rate, commissions are recurring, providing associates with a regular, reliable monthly income.
“We developed Instant Pay because what gets rewarded gets repeated,” Reina explains. “It gives people money for pressing needs. We’ve been doing this for about two years. It validates the business, speaks to the financial strength of the company and also creates an excitement factor that people are attracted to when they consider becoming a Talk Fusion associate.”
The lure of Instant Pay is also tempered with practicality. In Talk Fusion’s recruiting materials Reina makes a point to set realistic expectations for any prospective independent associate. He is upfront, saying that direct selling is only an opportunity. Hard work, diligence, leadership and the willingness to learn and then teach others are all required. Even then, he says, a new associate should expect to work their business consistently for 7–10 hours a week for at least a year before they can realistically evaluate their prospects for long-term success. That straight talk gives Talk Fusion street cred, and the company works hard to maintain that trust.
“In our culture we’re very transparent,” Reina says. “Because I was in the field so long, I know what it takes to become successful. I don’t want anybody to become disappointed. If people put hard work into it, they have an opportunity to become successful. But if someone isn’t willing to work hard, I tell them please don’t join.” He adds, “That advice doesn’t eliminate the get-rich-quick idea, but they know where we stand on the matter. I think it’s important for Talk Fusion and for the reputation of the industry as a whole.”
Fast Forward to the Future
That hard-working culture has produced a fast-growing company, and Reina is bullish on its future. Talk Fusion already does business in more than 140 countries and, though Reina didn’t share revenue numbers, he says the company grew in 2012 by 42 percent over the prior year. While the domestic market continues to expand, growth is gaining momentum in international markets, especially Mexico, Brazil and other Latin American markets. Reina laughs that translations are one of his largest budget line items. The company’s global reach gives associates a virtually unlimited marketplace in which to build their business.
The company is poised to introduce a series of new products and technology in the immediate future. Talk Fusion CONNECT, a powerful three-in-one live broadcasting, video conferencing and desktop share product, was launched late last year. Its users: primarily businesses. Reina describes it as the first of its kind and predicts that it will become the company’s flagship product.
His goal for Talk Fusion is to keep changing as many lives as he can and to continue developing cutting-edge products. That means staying ahead of the fast-moving technology curve—not an easy task. But the company keeps tabs on industry, consumer and business trends, and it already has technology development offices in two states.
“We’re growing as a technology company, and we own and develop our own products,” Reina says. “We’re debt-free, and we’re growing in revenue and in marketplaces. This is the most exciting time ever for us.”
A Culture of Generosity
Talk Fusion’s Founder and CEO Bob Reina believes in sharing the fruits of his labor, and he encourages the company’s independent associates to follow his example.
“With great success comes greater responsibility,” he says.
Talk Fusion’s success—it has expanded to operate in 140 countries over its seven years and grew more than 40 percent last year—has allowed Reina and his company to support a variety of causes in its home state and beyond.
Bob Reina presents a $45,000 check to SPCA Florida to support animal welfare.
Reina is an animal lover who shares his home with several pets and on most days also shares his office with at least one. Many of his philanthropic efforts support animal welfare, including his quest to help build the Humane Society of Tampa Bay Animal Health Center sponsored by Talk Fusion, which has become a reality. Reina and Talk Fusion made a $1 million donation, followed a few months later by a $100,000 donation that represented $1,000 for each of the Humane Society’s 100 years of saving animal lives. Those donations inspired additional contributions from Talk Fusion associates from more than 30 countries. Other animal organizations, such as the SPCA Florida and no-kill shelter Critter Adoption and Rescue Effort (C.A.R.E.), are also beneficiaries of Talk Fusion’s support.
Humans benefit from Talk Fusion’s generosity, too. The company has supported programs that help at-risk youth and athletic programs for young people in nearby communities, and has helped individuals in crisis. In addition to its financial support, Talk Fusion lends its video capabilities to nonprofit organizations to help them with marketing and fundraising efforts.
Talk Fusion and its associates also take care of each other around the world. During a recent sales convention in Russia, Reina and Vice President of Training and Development Allison Roberts reminded the sold-out crowd of Talk Fusion’s commitment to giving back, telling the story of a Ukrainian associate whose young son suffers from debilitating spina bifida. They announced that Talk Fusion was working with Russian charitable organization RusFond to help raise awareness of the needs of children with spina bifida. Then they donated $40,000 for the child’s much-needed surgery. Talk Fusion associates from around the world immediately followed their example, giving a total of more than $80,000.
The company’s major gatherings routinely include an opportunity to give back. In Indonesia, associates who attended a sales conference were so inspired by the announcement of $100,000 to build a local orphanage that they donated an additional $30,000.
In another instance, when a gold-level associate became seriously ill, Reina, on behalf of Talk Fusion, surprised the associate with a check for $10,000 to help defray her medical expenses. Upon hearing the news, associates everywhere quickly moved to show their support, raising a total of more than $22,000.
“Sometimes worthwhile causes choose me,” Reina observes. “There’s a need that’s brought to my attention, and if I can help, I try to. I also encourage associates, as part of their growth process, to care about others more than themselves. It’s neat to watch what happens to people.”
Philanthropy is so important at Talk Fusion that one of Reina’s goals is to develop a foundation to handle the company’s charitable involvement. It already raises awareness of philanthropic gestures and needs through its dedicated website, TalkFusionGivesBack.com.
January 01, 2014
Origami Owl: A Company with Heart
by Jennifer Workman Pitcock
Like most seniors in high school, 17-year-old Bella Weems is weighing her options. “I’m definitely going to college,” Bella says. She has yet to choose a school or a major, but she’s excited about the possibilities. “Wherever my journey takes me will be an amazing opportunity,” she says.
Her journey has already taken her places most people don’t go in a lifetime. Just three years ago, she was a typical 14-year-old. When she told her parents she wanted a car for her 16th birthday, they said she would have to buy it herself. They suggested she start a business, which she did and named Origami Owl.
Bella’s parents matched the $350 she had saved in babysitting money, and with the funds she purchased some clear lockets and charms to go inside. Her goal was to earn $3,000–$6,000 to buy a used truck. But Bella’s Living Lockets caught on. Wherever she took them—to house parties, church bazaars, and eventually a kiosk in the mall—people couldn’t get enough. She was making thousands of dollars, and there was no end in sight to the demand for her lockets.
By 2011 the Weems realized Bella’s Living Lockets were more than a passing fad. They adopted a direct sales model to help them grow the company in a way that aligned with their mission: to be a force for good. Rather than providing people with minimum-wage mall jobs, they could offer people the opportunity to own their own businesses and achieve their own dreams.
Since then, Origami Owl has grown exponentially. In a little more than a year, the company has gone from fewer than 5,000 designers with a waiting list to join to over 60,000 designers. They’ve moved their fulfillment into an 80,000-square-foot building, and the corporate office will follow. Their earnings for 2013 are projected to hit the $250 million mark.
So how did this small family-run company so quickly become a force in the direct sales industry? About a year ago Bella’s mother and Origami Owl’s co-founder, Chrissy Weems, saw that Origami Owl was outgrowing its family management team. She contacted Robin Crossman, who has extensive industry experience, having worked with a roster of well-established companies.
Crossman began consulting, and within six months had joined the company as its CEO. Immediately, she began adding expert staff to help manage the company’s rapid growth. Crossman also began working to get Origami Owl’s infrastructure and processes in order. “We’ve recently opened a state-of-the-art distribution center, and our throughput increased threefold immediately with an accuracy rate of 99.7 percent.”
Supporting the Field
Once Origami Owl’s infrastructure was in place, the company was able to let all the designers-in-waiting officially join Origami Owl. As the numbers grow rapidly, the company now has the necessary resources to support them.
One of Crossman’s hires was Ann Raulston, Vice President of Field Sales. Her plan for continued growth and retention of the field includes the addition of regional directors. “Currently we have a team of four, and their job is to model and mentor leaders in the field,” Raulston says.
This takes many forms: team meetings, larger meetings with team field leaders, individual meetings with leaders to help them maximize the career plan, and supporting them as they’re moving forward through the career plan. The regional trainers have a minimum of 10 years’ experience in that corporate role. All have been distributors at some point as well.
“It’s very important to have walked the talk, because then you have the heart and understanding to walk alongside these leaders,” Raulston says.
Additionally, Origami Owl recently upgraded to a new back office system. Along with the usual training videos, the back office has tools that enable designers to improve their businesses. “They now have access to a back office ‘coach’ that helps them to understand how they can maximize their earnings every month, and that’s motivating them,” Raulston says.
The company also is planning to roll out a mobile app soon.
For Raulston, there are two important keys to keeping the field engaged. The first is to keep the field in touch with the mission and culture of the company. Every week in her webinar, Raulston makes sure she’s not only giving updates and information, but also focusing on how the field is connecting to the heart of Origami Owl: “I try to make sure that I highlight a leader or designer who is exemplifying the ‘force for good’ model,” Raulston says.
The second is to spend time in the trenches and really listen to the field. “I’ve seen it before, where you get so engrossed in the corporate machinations and in where you are going as a company that you lose touch,” she says. “We can’t forget that our field is who we are. We have to go out and listen to their stories and ask, ‘How can we better help you?’ ”
“One thing I’ve talked about [with young entrepreneurs] had to do with building your brand and being able to stand out in your community not only for dressing well and looking good, but also for being a force for good.”
—Bella Weems, Founder
Owlettes Ambassador Circle
A unique feature of Origami Owl is its focus on developing young entrepreneurs. Girls ages 14–17 may join the company with a parent or other trusted adult as a partner. These young teen designers are called Owlettes and are part of the Owlettes Ambassador Circle (OAC).
This program is especially dear to Bella, who leads it. Once each month she connects with these girls on a training call that lasts 30–60 minutes. The goal of the program is to inspire the girls to be strong leaders within their peer groups and schools. It teaches them finance, how to run their own businesses, how to be confident and successful, and to realize that, like Bella, they can reach their dreams.
“We’re training them by our mission statement,” Bella says. “Every call has a theme. One of the last ones that I did was about confidence and building your brand. One thing we talked about had to do with building your brand and being able to stand out in your community not only for dressing well and looking good, but also for being a force for good.”
Mother’s Day Challenges
With Origami Owl’s rapid growth, there have been some bumps along the way. As an example, nothing could have prepared the company for Mother’s Day. That week, the company received double the orders it had in the previous year. “I’ve worked with the finest forecasters in the field of direct sales, and no one could have predicted that. We were in trouble with our IT, and we crashed our server,” Crossman says. “We were backordered on products as well. Our team reacted quickly and was able to implement a new party tab in record time.”
Origami Owl also stopped adding new designers for a few weeks, and when they began adding again, they did so slowly to make sure that they were supporting the growth. “Never underestimate the power of the field,” she says. “And make sure you have extra capacity beyond what you dreamed you might need.”
A Product with Heart
Origami Owl has added a TAGGED line that utilizes tags and dangles in addition to the lockets, and it recently launched a bracelet line. But the Living Lockets remain the company’s most popular products.
Taryn Gosch, Origami Owl’s Public Relations Director, thinks that’s because of what the lockets symbolize. “We have a product that allows people to create their journey in a piece of jewelry that’s their own legacy, that they can proudly wear,” she says. People choose charms that represent them—from birthstones to tiny fashion item like shoes and purses, to hobby items like a tiny football or knitting needle. There are literally hundreds to choose from.
“We’re not asking people to come to a jewelry bar and buy a piece of jewelry. We’re saying, ‘Come experience a jewelry bar and create a piece that’s going to inspire you or others.’ That’s why I believe it does so well,” Gosch says.
This desire to inspire others is at the heart of the company and its culture. “Origami Owl’s culture is what drew me to the company,” Gosch says. “We take culture so seriously that we actually have a VP of Culture, Yvette Dickson. Her team’s main job is to make sure that employees are well taken care of and inspired to live out the Origami Owl mission.”
Raulston agrees. “It doesn’t matter what position you hold within the company, there’s this incredible warmth and joy and thrill about being a part of it. You come through the door, and you feel it.”
She says, “The desire to share this culture with the field is so strong that members of the culture team are part of our training. We call it ‘Love From the Nest.’ It’s a very important part of retention and keeping people connected.”
Country Music Awards
It’s not unusual to hear someone singing as you walk through the headquarters of Origami Owl. Bella loves to compose, sing and play her own music, and that has permeated the company culture. Origami Owl just culminated a yearlong partnership with Big Machine Label Group. During the course of the year Origami Owl created limited-edition tags for two of the label’s bands, Rascal Flatts and The Band Perry as part of their TAGGED collection.
And in November, Origami Owl co-sponsored Big Machine Label Group’s after-party at the Country Music Awards in Nashville. At the party, stars were invited to make a personal keepsake locket for themselves, as well as one to give to a child in the hospital. The following day Bella went to Vanderbilt Children’s Hospital and donated 250 necklaces, accompanied by handwritten notes from celebrities.
A Force for Good
That culture of giving, of paying it forward, comes naturally to Bella. She didn’t spend her 17th birthday celebrating with friends but rather chose to spend the day giving back. She took toys to a couple of centers for abused children, then went to a local children’s theater and spent time with the children there, pledging to help provide for the program for the next six months. After that, she sought out a designer who shared her birthday and surprised her at her home with a gift. “She’s somebody who thinks about others all the time,” Gosch says.
This spirit of giving is such a part of the company culture that Origami Owl is constantly seeking ways to be generous. “Origami Owl is so blessed, and we want to share with others, especially those in need,” she says.
While this has included lots of opportunities for employees and designers to give within the community, the company wants to give back in a much bigger way. “In the new year we are excited to announce a new charity partnership with a national organization where we will be able to make a very big impact,” Gosch says. “It is important that we continue to be a force for good and spread the love.”
Already, Origami Owl is beginning to receive recognition for its success. The company was recently honored by Chandler’s Chamber of Commerce and, more notably, ranked No. 35 on Inc. magazine’s Hire Power List for creating 341 jobs in the past 18 months. They expect to break into the 2014 DSN Global 100, as well. In the future, Origami Owl plans to expand into other countries.
And what about Bella? As she looks ahead, she sees herself with Origami Owl. “Or maybe I’ll be helping other businesses grow,” she says. “I know that I definitely love being in business and I love direct sales, so I see myself in the direct sales industry for a very long time.”
January 01, 2014
The Evolution of Direct Selling
by Teresa Day
The current of misconception and mistrust in the general public around the terms “network marketing,” “MLM” and “direct selling” may run too deep for the industry to reshape its image by using the same terminology going forward. Additionally, this current terminology may not sufficiently describe who and what we are and what our business model accomplishes.
Where might we begin in order to explore a naming change? This article presents one approach.
Though we might have called it different names throughout history, we’ve always sold things to each other, and we’ve always been social in our interactions, including those involving commerce. Indeed, it could be stated that the history of commerce is the history of humanity. The purpose of this article is to take a closer look at the history of selling and social interaction and apply that history to the consideration of a possible change in naming conventions within the direct selling industry.
Historical records of commerce in merchant colonies reach as far back as the 19th century B.C., but this only means that’s as far as recorded history goes. The true beginning of the exchange of goods and services began when the first group of people needed something that someone else could produce. Simply put, people have always “sold” things to one another—long before any legal or formal infrastructure existed, goods and services changed hands in barter and in one-on-one transactions.
Author David Schmidtz speculates in his 2010 book A Brief History of Liberty that the chief reason Neanderthals died out and Homo sapiens flourished is that Neanderthals never moved beyond the small groups in which they developed. There isn’t much evidence of cooperation or of their purposefully overcoming their isolated living conditions. Homo sapiens (that would be us), on the other hand, almost immediately developed what Schmidtz calls “the propensity to truck and barter.”¹
According to Schmidtz, Neanderthals disappeared because they “were not entrepreneurs.”² In contrast, Homo sapiens seem to have very early on embraced the ideas of division of labor, long-distance trade, and creating and managing a surplus of goods. In other words, commerce. Of course, there is no written record to support these ideas; however, archeological finds—tools made in one area found hundreds of miles away, segmented living and working quarters, and other evidence—give it validity.
What this means is that trade—the making available of goods and services and the purchasing of said goods and services—coincides with the emergence of modern man. To put it in a nutshell, the history of commerce is the history of humanity.
The archeological record also indicates basic crafts began developing about 10,000 years ago—such things as spinning thread from flax, wool and silk to make clothing and rugs; baking clay in kilns to make pottery for cooking and storing food; and weaving grasses together to form mats and baskets, among other things. Needles have been found in Europe from this time that are small and thin enough to indicate horsehair as the preferred thread, which means people could now sew articles with more complexity and even visual interest. Felted and woven rugs graced the floors, though “home” might have been a cave.
And, as truly as they do today, individuals would have emerged with special skill or flair in the making of these items, causing others who might have admired the work to ask, “How can I get one like that?” And so a transaction would take place, and a happy “customer” would go home with a new basket.
The next day, a neighbor might see the customer using her new basket and inquire about it. “Where did you get that basket? It’s beautiful.” “Oh, Geta made it, and I traded some bread for it.” “Do you think she would make one for me?” “Sure, what have you got to trade that she wants? By the way, she also makes beautiful woven rugs.” A relationship between buyer and seller is established, and by virtue of word-of-mouth exchanges the seller’s customer base grows. What was true 10,000 years ago is still true today.
There is another way in which selling has remained unchanged throughout the centuries. Some anthropologists have argued that this close exchange of goods and services without the use of “money” actually strengthened the bonds between people in the community. That is to say, the act of “buying” and “selling” goods without the use of money cannot really be separated from the value of the goods themselves, nor from the value of the relationship between the people making the exchange. Anthropologist Stanley Diamond calls this idea the “primitive exchange.”³
It is our opinion that the bond created in this transaction was not merely due to the absence of “money” to complete it, but rather the exchange itself that occurs between two (or more) people who live, play and work in close proximity. It is the nearness of the relationships—the “warm circle,” to use modern terms—that connects the buying and selling of the item with the value of the relationship between the people making the exchange. In other words, it is the relationship between the buyer and the seller that begins, completes and supports the transaction—what we today call “network marketing” or “direct selling.”
Frankly, the exchange of goods and services for something other than hard currency lasted well into the 20th century when, for example, doctors would take chickens for payment from patients who simply had no cash. Texas Tech University in Lubbock, Texas, has memorialized the original barn structure on its campus where students during the 1920s could bring their own dairy cows, which were milked there during the day to “pay” for the students’ tuition.
In truth, it is really only in the past 60 years with the rise of the monolithic corporation that our age-old selling and buying practices—closely aligned with our social relationships—have dramatically changed. In our current day, the commerce we experience and engage in on a daily basis is occurring on such a large scale that it is difficult to compare it to when cottage industries dominated the commercial landscape. And, in fact, as new generations are born and raised, fewer living individuals would have grown up in a time when they could even experience smaller-scale commerce.
We believe that it is actually today’s practices that represent the anomaly in commerce. Modern practices have removed all semblance of the “relationship” that used to exist between buyers and sellers. This is precisely why so many marketing firms today are selling services that revolve around “relationship marketing.” People are becoming aware that big business has lost something valuable along the way to corporate domination. Direct sellers, however, have always known this.
Just as people have always bought and sold goods and services, people have always been social. We build communities. We build cities. We find reasons to join clubs and to be with other people, and usually our affiliations center on those things we have in common. In social interchanges, we share those things that appeal to us, those things that have helped us, and even those things we want to share with others just because we like them.
Indeed, sharing things we love with our friends and family is such a natural part of our daily lives that we might not even notice how often we engage in this behavior. So pay attention next time to the co-workers who can’t stop talking about the movie or the restaurant they went to over the weekend and how you should go, too. Or the neighbor who recommends his brand of lawnmower or the friend you can ask about a doctor or dentist. We are constantly utilizing our networks to share the things we love and to help us make decisions about purchasing goods and services.
It is clear to us that the direct selling industry, as we know it today, is a marketing and distribution system that has codified the two natural human behaviors of buying and selling products and living and operating in tight-knit social networks.
In fact, these human tendencies are so strong that they have become codified as a marketing strategy called “word-of-mouth” marketing. Today, even with the amazing gains in technology, it’s still considered the best form of marketing. People do not trust corporations, but they do trust their friends and peers—their social network.
Certain human tendencies are so strong that they have become codified as a marketing strategy called “word-of-mouth” marketing.
While we have made a strong case that all aspects defining the channel of distribution known today as “network marketing” or “direct selling” have been in existence for centuries, the more formal understanding of the channel as opposed to other methods of retail selling began to emerge in the 1880s. This was when David McConnell first recruited Mrs. P.F.E. Albee to sell his perfume in her town and the Southwestern Company refined its door-to-door approach of selling books. Developing over the last 150 years into a more systematic type of approach—and having been refined by legal input, consumer responses and technological advances—many other remarkable companies have followed in their footsteps to continue the thriving channel we now call the direct selling industry.
Shifts in technology, ideas about business models, and other things that have impacted the industry and the times are all simply circumstances that surround the fundamental human activities of social sharing and economic transactions. We may feel that we’ve come a long way from living in a cave with a felted rug on the ground and a new basket in our hands. But honestly, how different is that from someone sitting in their two-story red-brick house in the suburbs, visiting with a friend who is showing them a new necklace she bought from a neighbor, prompting the other person to go online and order the same one from that consultant? Not different at all. Social sharing still leads to social commerce.
Schmidtz introduces the first chapter of his book with this quote: “The greatest threat to and the best hope for a better life, in the long run, comes from other human beings. Historically, trade has been a great liberator.” 4
This quote resonates in our time, but even more so in the direct selling model, for we continually see evidence of this truth. Our business model is not only thriving and creating real opportunity in emerging markets, but also here in the U.S. with the economy shrinking and little chance of the return of eliminated jobs. Our business model has liberating properties because it is based fundamentally on human nature: We are social. We seek out those goods and services we want and need. We trust our friends and their friends. This is direct selling, regardless of time or circumstance.
New economies are being created in the wake of large business and government failure to sustain growth. Smaller, more personal economies with greater chances of survival are replacing large, monolithic economies that simply no longer fit the pattern of the new world. Entrepreneurialism is the current buzzword appearing in countless magazine articles and flowing from the lips of politicians.
But traditional routes to entrepreneurial endeavors generally include high barriers: the need for capital, the need to pay people salaries, the need to develop marketing materials and spend advertising dollars, the need for computer infrastructures in both hardware and software, and so on.
Direct selling remains the best path to entrepreneurialism available to any one individual, without regard to a large bank account or access to one, without regard to educational background or training, and without regard to experience. Wisely choosing a product and a company to become associated with, the direct seller has access to everything necessary to build a successful and sustainable business. In fact, with the advancements of technology available to everyone, for the first time an individual has the capacity to compete at a much higher level with far more established enterprises.
Indeed, tech advancement has in no way hampered the experience of the direct seller; it has only and in every way improved it, thus ensuring the business model will survive and continue to grow in the future. This thought brings us to the underlying question raised by this article: Is the current lexicon used in our industry (“network marketing” and “direct selling”) serving us well, and will it continue to serve us well in the future? Is it time to consider redefining ourselves with new terminology?
Certainly, a few companies in the industry have already started to do so. A very successful jewelry company defines itself only as a “social seller,” not using any of the traditional language in their materials or training. Utilizing technology to leverage the consultants’ social networks, this company focuses on teaching its consultants to “sell” socially. They are not alone—other companies have focused on consultants creating online “boutiques” and using their social media contacts as their customer base, avoiding the terms “network marketing” and “direct selling” altogether.
The rationale behind such decisions is really twofold. First, companies that make the decision to avoid the terminology of direct selling and yet still engage in the business model are clearly distancing themselves from the negative press, bad actors and general public misunderstandings about the manner in which the model operates, not the model itself. Second, the companies are linking their sales and marketing language to the language of the present—the use of social media dominates every other manner of communication among humans.
The two constants are what we’ve delineated in this article: We share stuff with our friends and family, and in that interchange we also sell stuff. Social sharing leads to social commerce.
As an industry, it’s time to consider whether a new approach, one already utilized by many companies, may bring value. The end goal appears to be to further the validity of the model and to increase sales for the consultant. It seems that the companies already changing their terminology believe these things must be connected in today’s world. In other words, they believe sales will increase and more people will be interested in engaging in the opportunity if and when the opportunity does not seem to be connected to the old versions of “network marketing” or “direct selling.”
Considering the case we’ve made in this paper that commerce and social activity are inextricably linked and have forever been, and the fact that the general public calls the newest technology that allows us to stay connected “social media,” it makes sense that adopting these terms in sales and marketing uses could attract a wider audience. It also makes sense to use the general public’s current acceptance of social media as a way to engage in a wider conversation about our opportunities.
In the wake of so many misconceptions and basic misunderstandings of the direct selling business model that continue to surface, we believe it is definitely time for the industry itself to become more proactive in the public conversation. As Neil Offen asked in his recent article in DSN, “Do we let our critics define us or do we take steps to make sure we better control our own reputation?”5
Teresa Day is the Editorial Director of Direct Selling News.
- David Schmidtz and Jason Brennan, A Brief History of Liberty (West Sussex, UK: Wiley-Blackwell, John Wiley & Sons Ltd, 2010), 31.
- Schmidtz and Brennan, 33.
- Stanley Diamond, In Search of the Primitive, (New Brunswick, NJ: Transaction Publishers, 1974-2009), 134.
- Schmidtz and Brennan, 30.
- Neil Offen, “The Great Equalizer and Opportunity,” Direct Selling News, October 2013, 58.
January 01, 2014
The Reputation Imperative for the Direct Selling Industry
by Anthony Johndrow
Direct sellers have been engaged in social marketing for generations, but the relevance of having your mission, vision and values front and center in everything you do has never been more important than in today’s age of Internet-enabled consumers and unbridled social media, activist investors and short-sellers. At the same time, since the 2008-2009 global financial crisis, perceptions of an organization (why you exist and how you behave) matter more than perceptions of your product/services (what you do). In fact, these corporate perceptions now explain over half of consumer recommendation behavior towards companies in general and even more for direct sellers—58 percent, in fact, here in the U.S. (from Reputation Institute’s annual global corporate reputation study).
Direct sellers are well-positioned to take advantage of this “reputation economy,” by telling a holistic story that blends company purpose with product features and benefits. In today’s world, where what you stand for can be a source of competitive advantage, the time has come for the direct selling industry—individually and collectively—to embrace active reputation management.
Humans form perceptions about organizations through three primary experience points: direct experiences with an organization, what an organization says about itself, its products or services, and third-party opinions (think traditional and social media). Based on that individual’s exposure to those various touchpoints, advanced analytics can now quantify the emotional connection (the degree of trust, admiration, esteem and good feeling) as well as the rational drivers of an organization’s reputation.
Across thousands of companies in dozens of industries and countries around the world, we have found that seven rational dimensions explain the “reputation pulse” of an organization:
- Products & Services
Armed with this insight, we can also measure and predict the amount of supportive behavior an individual is capable of giving—or withholding from—an organization (think recommendation, saying something positive, investing in or giving the benefit of the doubt in a crisis). Ultimately, these reputation metrics and supportive behavior indicators can be used to cut through the complexity—enabling corporate leaders to match up the right message with the right channel, aimed at the right stakeholder group.
It’s hard to overstate the importance of changing the narrative and being more proactive in the public conversation. Think about Big Pharma or Big Oil for a minute. Do you think of either industry as home to innovative workplace culture or game-changing investments in STEM education? Thanks to years of third-party conversations around those toxic frames, the answer is probably no. But that has not stopped both industries from taking collective action—as well as forming individual corporate platforms around patient empowerment or energy self-sufficiency through shale gas—in ways that are starting to pay off in terms of preserving and even expanding their license to operate. This is defined as the ongoing approval of a project within a local community and among other stakeholders or the broad social acceptance of a company’s operations, which must be earned and maintained and cannot be purchased.
Finding Your Voice
Leading companies have invested in building their reputation management capability, but most organizations are still working to improve across four competency areas: business rationale (integrated company purpose, defined stakeholder ecosystem and leadership alignment); intelligence/strategy (systematic evaluation, priorities and success metrics, corporate reputation strategy, corporate narrative); management/accountability (collaboration and relevance, planning and simulation, cross-functional management and executive accountability); and integration (activation, embedding the corporate story across touchpoints, sustainable advocacy and transformational investments).
In the 2013 Annual Reputation Leaders study, 313 senior executives from 290 global companies told Reputation Institute that their top reputation priorities for the year ahead were:
- Differentiation: Product-driven campaigns are providing lower returns at higher costs. To avoid commoditization, how do we establish competitive positioning that’s based on the company’s purpose and values? How does an enhanced corporate narrative impact marketing and communications efforts?
- Integration: For an organization to succeed, reputation must be everyone’s responsibility. How do we make sure that all stakeholders are brought “into the room” when decisions are made?
- Growth: If customers—and the people who influence them—are making decisions based on perceptions of the company, what strengths can we leverage to impact go-to-market strategies and drive growth? How does this underleveraged insight help us decide where to invest scarce resources across messages, touchpoints and channels?
The good news for the direct selling industry is that you can benchmark yourselves against those leaders through a diagnostic tool that looks at your company’s reputation management landscape and focuses on ways of crystalizing corporate reputation and prioritizing importance. It is also helpful to “know before you go.” Taking a look at existing research and organizational capabilities with a reputation filter helps many organizations see the forest from the trees in building out a compelling corporate story.
Click to view larger image.
We’ve learned throughout our nearly two decades of advising global organizations that every company finds itself somewhere along a 5-Phase Reputation Management Journey—whether Exploring reputation for the first time (Phase 1) or Integrating cross-stakeholder reputation insights into business-planning and enterprise strategy (Phase 5). (See infographic)
- Exploration and Business Rationale
- Management and Measurement Framework Development
- Business Planning Integration
- Cross-Functional Implementation and Accountability
- Full Integration into Long-term Strategy and Investments
To be fully prepared to navigate in today’s “reputation economy,” companies must harness a thorough understanding of their corporate ecosystems in order to drive behaviors that will lead to sustainable growth.
Once an organization understands the business rationale for active reputation management, it can move beyond playing defense and start playing to win with its reputation:
- Put points on the board through direct experiences (find ways to let them get to know you) and marketing channels that give all audiences a reason to believe that the whole of who you are is greater than the sum of the parts.
- Keep detractors at bay by preserving your license to operate through communication channels that present your side of the story in an authentic and credible voice.
- Use employee and distributor ambassadors to boost community engagement and benefit of the doubt, which in turn gets third-party conversations focused on the positive things direct selling has to offer.
Stand and Deliver
The art and science of corporate storytelling has real commercial implications for the direct selling industry, especially when sentiment on Main Street can be influenced by activist investor commentary from Wall Street. This is not a time for victimization—in fact, the best defense is often a good offense.
Over 50 years ago, President John F. Kennedy challenged the nation in a September 1962 speech at Rice University to accept the challenge of putting a man on the moon before the end of the 1960s. This was at a time when the Soviets were the clear leader in manned spaceflight:
“We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.”
Reputation management is not easy, but the direct selling industry is in a position to answer that challenge as one that they are willing to accept and one they are unwilling to postpone.
Anthony Johndrow is a Managing Partner at Reputation Institute, a member of the global leadership team, and responsible for the North American Advisory practice. Johndrow leads a team of consultants who help leading companies manage, measure, and strengthen relationships with their stakeholders. His experience has spanned the world as well as numerous industries, and he has spent the past 18 years in a combination of brand management, general management and corporate communications roles.
January 01, 2014
The Science of Business
by Robert A. Sinnott
What can science possibly teach us about business? I believe that a healthy dose of the scientific method is good for business. The scientific method requires thinking through the challenges or opportunities that are yet unrealized then applying focus, careful planning and execution to push forward the frontiers of knowledge.
According to Peter Drucker—who was considered by many to be the creator of modern management—two of the most important roles of the CEO are to constantly think through the business and set clear objectives and metrics to guide the business forward. This is analogous to designing a good series of science experiments. It requires having a firm grasp of the present situation, making sure that the variables are changed in a controlled manner, and ensuring that the results of each project build on each other in a logical fashion.
There are many scientific concepts such as entropy, specialization, natural selection, synergy, innovation and validation that apply clearly to our direct selling and network marketing business model. For example, many of the principles of money flow in economics are similar to how energy flows in thermodynamics. The person designing a compensation plan must understand that the bulk of energy will eventually find the path of least resistance. It is as inevitable as gravity and quite perilous to ignore. A related thermodynamic principle of entropy clearly applies to our business structures. We know that if energy is not continually put into an organization there will be inevitable decay to nothingness. Entropy applies to individuals as well as departments, business units and whole organizations. Personal development and continual training overcomes the effects of entropy, which is why so many successful direct selling companies have strong personal development cultures. They are effectively inputting energy to promote continual growth and prevent decay of the structure.
Also, it is not coincidental that today’s most efficient business organizations are comprised of highly specialized and compartmentalized functional areas, like the organelles within a cell. Specialized structures allow a cell to do things very efficiently, such as maximize energy output, shorten supply chains and recycle waste. Businesses are always seeking to improve in these areas as well. It’s not by chance that structures from small, simple cells to multinational corporations are composed of scalable units. Recognizing this gives useful insight when diagnosing a problem or designing improvements to capitalize on new opportunities to grow your business.
Some of the same models and formulas that describe behavior in complex ecosystems can be applied to highly networked business organizations, such as our independent distributor organizations. There are complex psychological and environmental factors at play similar to those that govern natural selection in the wild. Understanding these underlying natural laws helps us craft strategies for maximizing growth during good times and ensuring survival when the environment turns rough, which it periodically does. How do we redirect our resources during a periodic economic downturn? How do we get back out of hibernation mode and back to full productivity when the conditions turn favorable again? What are the signs of the changing seasons that we need to be paying attention to? We can learn a lot by observing how nature handles these same challenges.
Another scientific concept that is widely touted in business today is synergy. Synergy occurs when two or more forces join together to provide an effect that is stronger, sometimes much stronger, than simple addition would predict. The scientific concept of synergy underlies the notion that in business there can be win-win situations. Synergy is well proven in the laboratory, notably in physics and chemistry. The concept has also been applied as a way to create additional value for both a business and its customer. In the case of synergy, science teaches us that sustainable win-win-win situations are completely possible where the business, the customers and society as a whole can benefit through properly structured relationships.
A relatively new type of business model called social entrepreneurship restructures corporate philanthropy to be more tightly interwoven with the core business. It replaces charitable handouts with a share of the top-line sales revenue to create a durable win-win-win situation. Mannatech is currently operating our Mission 5 Million (M5M) social entrepreneurship program globally to great satisfaction for our customers and the company. The really cool thing is that according to science, the number of “winners” that can be structured into a relationship is infinite. It is limited only by creativeness of the structure. Wherever there are mutual interests, there is the potential of creating synergy. Direct selling and network marketing business models are particularly rich with potential synergies just waiting to be tapped. Successful companies in our industry often break new ground or power through to the next stage on their growth curve by tapping into new business synergies.
Well-managed science can power innovation, help a company secure market share, and help protect a company from regulatory risks. Two extremely important areas these days for many of us are scientific validation and creation of intellectual property. Mannatech has been a pioneer and innovator in the dietary supplement industry for almost 20 years and counting. To date, we have amassed a global patent portfolio of over 90 issued patents, with many more pending. This decision to invest in a robust intellectual property (IP) portfolio has given us protected space in several key areas of human nutrition. It has protected us from having to claw it out with commodity-priced products that most retailers offer.
Well-managed science can power innovation, help a company secure market share, and help protect a company from regulatory risks.
Particularly in the direct selling and network marketing industry, where companies come and go regularly, the lifespan of a venture can be cut considerably short by a competitor moving in and selling an uncomfortably similar product at Costco or Wal-Mart. This has led to the quick decline and death of several industry ventures. Neither the company nor the independent sales associates benefit from having their business undercut and collapsed this way. Companies that plan on staying around a while need to invest in meaningful IP development at an early stage. At Mannatech we have benefitted from the issued patents on our flagship products and have been able to shut down illegal competitors in court when necessary. The protected area around our flagship products gives us some nice blue ocean space in which to operate and grow. Finally, having well-developed IP also protects us from critics attacking our products as “commodity items,” which has unfortunately become an increasingly common accusation in our industry this past year.
So what makes a scientist a good candidate for leading a business? Ideally, good business leaders and good scientists both possess creativity, intuition, innovation and the ability to analyze data and spot trends. They have “prepared minds” that can spot opportunity for increased efficiency within complex structures. As it turns out, the origins of a company’s CEO can tell a lot about the organization’s underlying structure and priorities. Our company, Mannatech, is engaged in the business of science so it is fitting that a scientist, with requisite experience across functional areas, could follow a path to end up as CEO. Mannatech has done very well working the fertile ground where science and business converge. It has certainly helped that the person at the helm knows the feeling of accomplishment that comes from taking a new product all the way from the laboratory, through prototyping and commercialization, through manufacturing and marketing, to place it in the hands of a new customer.
It is also important that the CEO know that not every opportunity is as sexy as a new product launch. Financial discipline and organizational efficiency aren’t sexy topics, but they are required for sustainable growth. Also, particularly in our industry, sustaining the unique culture of the organization is irreplaceable. At Mannatech we have challenged ourselves to look at our business from a fresh and scientifically objective viewpoint. It has been deliberate and effective.
Robert A. Sinnott, Ph.D., is CEO and Chief Science Officer at Mannatech Inc.
January 01, 2014
News in Brief, January 2014
Amway Releases Global Entrepreneurship Report
During Global Entrepreneurship Week, Amway published the Amway Global Entrepreneurship Report 2013 (AGER), a major report that studied people’s attitudes toward self-employment, revealing information about global views toward self-employment, including specific insights on the United States.
In partnership with the United States Chamber of Commerce, Amway also hosted a panel discussion on “The Future of Entrepreneurship in America and Abroad,” in Washington, D.C., which explored this year’s findings and their application to public policy and debate.
Amway once again partnered with the Technische Universität München and GfK, one of the world’s leading research companies, to publish the report. While the report affirms that entrepreneurial spirit is still strong in the U.S., participants around the world identified education, training, financing options, and government and familial support as crucial requirements to encourage independent business ownership and entrepreneurship.
For more information on the AEGR 2013, follow the conversation on social media using #AmwayEntrep or visit the report’s website (www.amwayentrepreneurshipreport.com).
Founded in 1959 by entrepreneurs Rich DeVos and Jay Van Andel, and based in Ada, Mich., Amway offers consumer products and business opportunities through a network of more than 3 million distributors in more than 100 countries and territories worldwide.
Thirty-One Partners with Ronald McDonald House Charities
Thirty-One Gifts recently announced it has chosen Ronald McDonald House Charities (RMHC) to support as a national philanthropic partner. Through their Thirty-One Gives philanthropy initiative, the organization will provide financial support, product donation and sales consultant volunteer involvement.
Thirty-One’s support will include a $450,000 monetary donation over three years, and 150,000 welcome bags for families staying at all Ronald McDonald Houses in the U.S. A new product in Thirty-One’s spring 2014 line will provide a portion of the proceeds from each unit sold to RMHC.
A major focus of the partnership will be the involvement of Thirty-One’s more than 120,000 independent sales consultants with local RMHC Chapters. RMHC’s outreach supports the entire family by providing stability and vital resources to help them focus on what’s most important: their child. These family-centered programs are offered at 78 percent of the top children’s hospitals in the world.
Thirty-One Gifts is a Columbus, Ohio-based direct seller offering products that work with everyone’s lifestyle, from stylish and functional purses and totes to home organization solutions and much more, most of which can be personalized.
Direct Sellers Receive 2013 MarCom Awards
Several direct selling companies took top honors in the 2013 MarCom Awards, one of the largest creative competitions in the world. The international competition recognizes outstanding creative achievement by marketing and communication professionals, spotlighting the best in print, visual, audio and web materials and programs.
The competition evaluates about 6,000 entrants per year, a pool ranging from corporate marketing and communications departments to freelance creative professionals. Less than 20 percent of entrants ultimately receive a Platinum Award—the competition’s highest honor.
Direct selling companies among this year’s honorees include: Vemma (6 Platinum, 5 Gold); Mary Kay (4 Platinum); ACN (3 Platinum, 6 Gold); USANA (3 Platinum, 3 Gold); Amway North America (3 Platinum, 1 Gold); and Origami Owl (1 Platinum, 2 Gold).
Mary Kay Receives Industry Excellence Award
Oracle recently presented a 2013 Oracle Consumer Goods Industry Excellence Award to Mary Kay Inc. at the Oracle OpenWorld 2013 exhibition. The awards program recognizes consumer goods companies that use Oracle technology solutions and deploy industry best practices to help them drive innovation and grow their businesses.
Oracle recognized five regional and global consumer goods companies for their achievement across five different awards categories. Mary Kay received the Consumer Goods Industry Excellence Award for Product Innovation Management.
In additional company news, Mary Kay recently announced a $50,000 sponsorship of Girl Scouts of Northeast Texas. The two organizations partnered to create two new participation patches that showcase the life skills that many young girls will need as they grow into successful women.
The Mary Kay Entrepreneurial Leadership patch and the Mary Kay Healthy Relationships patch are designed to inspire the next generation of female leaders, encouraging girls from kindergarten through high school to develop entrepreneurial skills and to understand healthy choices for a balanced life. The Entrepreneurial Leadership patch program launched in November, and the Healthy Relationships patch program will launch this spring.
Mary Kay is one of the world’s largest direct selling companies with more than $3 billion in annual wholesale sales worldwide. Founded in 1963 by Mary Kay Ash, Mary Kay today sells its cosmetics and personal-care products in more than 35 countries around the world.
Youngevity Acquires Biometics International
Youngevity Essential Life Sciences, a wholly owned subsidiary of Youngevity International Inc., recently announced that it has entered into a definitive agreement to acquire certain assets and assume certain liabilities of Biometics International, a unique health company and an innovator in advanced liquid nutritional supplements.
As a result of this business combination, Youngevity distributors and customers will have access to Biometics’ unique line of liquid health products. In turn, Biometics distributors and clients will gain access to more than 500 high-quality, technologically advanced products offered by Youngevity.
Biometics’ pharmaceutical-grade products are manufactured in a Current Good Manufacturing Practice (cGMP) approved facility in the United States and within the guidelines of Good Manufacturing Practices as set forth by the Food and Drug Administration. Biometics’ liquid multivitamins and supplements use a proprietary advanced liquid technology called biocellular micellization aimed at increasing absorption of essential vitamins and nutrients to the body.
Youngevity is a California-based company that markets health and wellness products in five countries through its network of 100,000 salespeople. Publicly traded parent company Youngevity International was formed after the merger of Youngevity and Javalution Coffee Co.
Medifast Expands Weight Control Centers
Medifast Inc., parent company of Take Shape For Life, recently announced plans to expand its products and programs across the United States. The manufacturer and provider of clinically proven, portion-controlled weight-loss products and programs, announced formal agreements with its current franchise partners to add 37 Medifast Weight Control Centers in six states nationwide over the next three years.
Medifast Weight Control Centers’ trained counselors help members design a personal program based on their lifestyle. Together, the counselor and member determine an achievable weight-loss plan based on an individual profile assessment and body composition analysis. Medifast Weight Control Centers offer the Medifast Program, which has been recommended by over 20,000 doctors since 1980. The Centers offer clinically proven weight-loss designed not only to help members lose weight, but also teach them how to maintain a healthy weight.
Founded in 1980, Medifast is located in Owings Mills, Md. It sells its products and programs via four unique distribution channels: the Web and national call centers, the Take Shape For Life personal coaching division, Medifast Weight Control Centers, and a national network of physicians.
January 01, 2014
Financial News, January 2014
Nu Skin Enterprises Inc.
Executives and employees from Nu Skin Enterprises Inc. (NUS—NYSE) visited the New York Stock Exchange on Wednesday, Nov. 20, 2013, to celebrate the company’s record growth. In honor of the occasion, Truman Hunt, President and CEO of Nu Skin, rang the NYSE Opening Bell.
“Nu Skin has achieved record revenue this year, highlighted by the introduction of ageLOC TR90, our new weight management system, as well as strong growth in sales leaders and consumers and solid results in all of our regions,” said Hunt. “It’s a privilege to celebrate these achievements with managers from around the world by ringing the bell at the New York Stock Exchange.”
Nu Skin Enterprises Inc. has a comprehensive anti-aging product portfolio and operates in 53 markets worldwide with more than 900,000 active distributors and preferred customers.
Primerica Inc. (PRI—NYSE), a distributor of financial products to middle income households in North America, announced financial results for the quarter ended Sept. 30, 2013. Total revenues were $319.5 million in the third quarter of 2013 and net income was $43.2 million, or 78 cents per diluted share.
In the third quarter of 2013 operating revenues increased by 8 percent to $319.9 million compared with $295.2 million in the third quarter of 2012. Results were driven by strong Investment and Savings Products performance and growth in Term Life net premium offset by a lower invested asset base from share repurchases over the last 12 months. Net operating income per diluted share increased 9 percent year-over-year to 78 cents for the quarter ended Sept. 30, 2013 and returns were strong with net income return on stockholders’ equity of 14.8 percent (15.8 percent on a net operating income and adjusted stockholders’ equity [ROAE] basis). Net operating income was $43.5 million in the third quarter of 2013 compared with $45.1 million in the year ago period.
As of Sept. 30, 2013, investments and cash totaled $1.91 billion compared with $1.88 billion as of June 30, 2013. The company’s invested asset portfolio had a net unrealized gain of $112.9 million (net of unrealized losses of $14.0 million) at Sept. 30, 2013, consistent with June 30, 2013.
Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio was estimated to be in excess of 480 percent as of Sept. 30, 2013, well positioned to support existing operations and fund future growth. Its debt-to-capital ratio was 23.9 percent Sept. 30, 2013.
The board of directors of Primerica approved payment of a quarterly dividend of 11 cents per share for the third quarter of 2013. The dividend was payable on Dec. 10, 2013, to stockholders of record as of Nov. 22, 2013.
Nature’s Sunshine Products Inc.
Nature’s Sunshine Products Inc. (NATR—NASDAQ), a natural health and wellness company engaged in the manufacture and direct selling of nutritional and personal-care products, reported its consolidated financial results for the third quarter ended Sept. 30, 2013.
For the Third Quarter of 2013 net sales revenue increased 1.3 percent to $92.5 million, compared to $91.2 million in the third quarter of 2012. In local currencies, net sales revenue increased by 2.4 percent.
Adjusted EBITDA decreased 18.4 percent to $8.5 million, compared to $10.4 million in the third quarter of 2012. Net income was $4.9 million, or 29 cents per diluted common share, compared to $6.4 million, or 40 cents per diluted common share in the third quarter of 2012.
Cash and cash equivalents as of Sept. 30, 2013 were $76.6 million, compared to $79.2 million as of Dec. 31, 2012. Shareholders’ equity as of Sept. 30, 2013 was $104.8 million, compared to $115.6 million as of Dec. 31, 2012.
For NSP Americas, Asia Pacific and Europe net sales revenue decreased 2.4 percent to $50.6 million, compared to $51.8 million in the third quarter of 2012. In local currencies, net sales revenue decreased by 0.7 percent compared to the third quarter of 2012. For NSP Russia, Central and Eastern Europe net sales revenue increased 10.5 percent to $14.6 million, compared to $13.2 million in the third quarter of 2012.
For Synergy WorldWide net sales revenue increased 4.0 percent to $27.3 million, compared to $26.3 million in the third quarter of 2012. This marks the highest quarterly sales in the segment’s history. In local currencies, net sales revenue increased by 4.6 percent compared to the third quarter of 2012.
The company’s board of directors approved its regular quarterly cash dividend of 10 cents per share payable on Nov. 18, 2013 to shareholders of record as of the close of business on Nov. 29, 2013.
On Aug. 8, 2013, the board of directors authorized a $10 million share repurchase program to be implemented over two years. During the three months ended Sept. 30, 2013, the company repurchased 107,722 shares of its common stock under the share repurchase program for $1.9 million. At Sept. 30, 2013, the remaining balance available for repurchases under the program was $8.1 million.
Mannatech Inc. (MTEX—NASDAQ), a leader in nutritional glycobiology and innovator of naturally sourced supplements based on Real Food Technology® solutions, reported net sales for the third quarter of 2013 were $44.4 million, an increase of 3.3 percent as compared to $43.0 million in the third quarter of 2012 and a net loss of $0.8 million, or 30 cents per diluted share, for the third quarter ending Sept. 30, 2013, as compared to a net income of $2.2 million, or 83 cents per diluted share, for the third quarter of 2012.
During the third quarter of 2013, the company implemented a global loyalty program for its associates and members who purchase products using a qualified automatic order. During the third quarter of 2013, the company deferred net sales of $2.5 million due to the loyalty program.
Net sales for Asia/Pacific increased 23.6 percent to $22.0 million as compared to $17.8 million in the third quarter 2012. Net sales for North America declined 9.7 percent to $18.7 million as compared to $20.7 million in the third quarter of 2012. Net sales for Europe, the Middle East and Africa declined 17.8 percent to $3.7 million as compared to $4.5 million in the third quarter of 2012.
Youngevity International Inc.
Youngevity International Inc. (YGYI—OTC.QX), a global direct marketer of nutritional and lifestyle products and also a vertically-integrated producer of fine coffees for the commercial, retail and direct sales channels, announced financial results for the third quarter of 2013.
For the three months ended Sept. 30, 2013, Youngevity International’s revenue increased 3.0 percent to $21.2 million compared to $20.6 million for the same period in fiscal 2012. The increase in revenue is attributed primarily to revenues of $0.5 million from Heritage Makers, Inc., acquired on Aug. 14, 2013.
Youngevity International’s gross profit for the three months ended Sept. 30, 2013 increased approximately 3.2 percent to $12.9 million compared to $12.5 million recorded in the same period last year.
For the three months ended Sept. 30, 2013, net income was $516,000 as compared to $236,000 for the same period in the previous year. The increase of $280,000 was attributable to the increase in income before income taxes of $366,000, offset by an increase in income tax provision of $86,000.
As of Sept. 30, 2013, the company’s cash and cash equivalents were approximately $4.4 million and working capital was approximately $1.5 million as compared to cash and cash equivalents of $3.0 million and working capital of $1.4 million as of Dec. 31, 2012.
Tupperware Brands Corp.
Tupperware Brands Corp. (TUP—NYSE), a portfolio of global direct selling companies, selling innovative, premium products across multiple brands and categories, announced record third quarter 2013 operating results.
Third quarter 2013 net sales were $603 million. Emerging markets, accounting for 69 percent of sales, achieved a 13 percent increase in local currency, driven by large populations, penetration of unserved and underserved consumers and emerging middle classes. Established markets were down 8 percent in local currency.
GAAP net income of $49.9 million versus $47.5 million in the prior year was up 5 percent in dollars and 17 percent in local currency. Adjusted diluted EPS of $1.00 included 9 cents of negative impact versus 2012 from changes in foreign exchange rates, which was 4 cents worse than assumed in July’s guidance.
September year-to-date cash flow from operating activities net of investing activities was $92 million, $21 million ahead of the same period last year.
In the third quarter, the company returned $132 million to shareholders through a dividend payout of $32 million and the repurchase of 1.21 million shares for $100 million. Since 2007, 19 million shares have been repurchased for $1.1 billion, with $872 million left under an authorization that runs until February 2017.
In the Europe market segment, sales were down 7 percent versus last year reported and down 6 percent in local currency. In Asia Pacific sales for the segment up 4 percent reported and 13 percent in local currency, driven by the emerging markets up 17 percent in local currency. Tupperware North America sales were up 2 percent in reported and in local currency. Beauty North America sales were down 12 percent reported and 13 percent in local currency.
Fuller Mexico sales were down 11 percent in local currency. BeautiControl sales were down 20 percent, largely a result of lower sales force size. South America sales were up 27 percent reported and 38 percent in local currency, primarily as a result of continued growth in Brazil that was up 36 percent in local currency driven by a larger sales force size.
Tupperware announced that its board of directors declared the company’s regular quarterly dividend of 62 cents per share, payable on Jan. 6, 2014, to shareholders of record as of Dec. 18, 2013.
Reliv International Inc.
Reliv International Inc. (RELV—NASDAQ), a maker of nutritional supplements that promote optimal health, reported its financial results for the third quarter of 2013.
Net sales for the quarter were $16.5 million, an 8.3 percent increase from the third quarter last year. Net U.S. sales totaled $13.2 million, an increase of $1.1 million, or 9.0 percent, compared to third-quarter 2012 net sales. Net sales outside of the United States rose 5.4 percent in the third quarter of 2013 compared to the prior-year quarter, led by the European market where net sales increased by 21.3 percent.
Income from operations for the third quarter of 2013 increased to $402,000 compared to a loss of $32,000 in the same quarter of 2012 due to the increase in net sales in the United States. Net income for the third quarter of 2012 included a one-time after-tax gain of approximately $247,000 resulting from a discounted balance due on a purchase agreement entered into in a previous year. As a result, net income for the third quarter of 2012 was $287,000 or 2 cents per diluted share, compared to net income for the third quarter of 2013 of $293,000 or 2 cents per diluted share.
Growth in Europe continued with net sales of $1.7 million in the third quarter of 2013 compared to $1.4 million in the prior-year third quarter.
Reliv also announced that the board of directors has declared a dividend of 1 cent per share to all shareholders of record as of Nov. 16, 2013, to be paid on or about Nov. 26, 2013. Reliv currently pays dividends twice a year, and this represents the company’s second dividend in 2013.
CVSL Inc. (CVSL—OTC.BB), an innovative public company pursuing a strategy of gathering together multiple companies in the direct selling, or micro-enterprise, sector, announced financial results for the third quarter. CVSL recorded revenues of $23.7 million for the quarter, an increase of $3.6 million, or 18 percent over the second quarter.
A highlight of the quarterly results was a marked improvement in the financial performance of The Longaberger Co., which is the largest company owned by CVSL during the quarter. CVSL’s operating results improved by $2.1 million compared to the previous quarter. Most of the improvement is the result of increased revenues at Longaberger, combined with cost containment initiatives that were launched at Longaberger during the second quarter and which began to have a positive effect during the third quarter. Another accomplishment during the quarter was continued significant progress toward reducing debt at The Longaberger Co.
CVSL’s combined annualized revenue from Longaberger, Your Inspiration At Home, Tomboy Tools and Agel Enterprises exceeds $140 million. CVSL continues to aggressively pursue additional acquisitions.
January 01, 2014
Direct Sellers Donate to TODAY Show Gift Drive
The Direct Selling Association (DSA) helped ring in the holiday season by presenting the direct selling industry’s collective donation to the TODAY Show Holiday Gift Drive on Nov. 25 at NBC Studios in Rockefeller Plaza in New York City.
Twenty-six direct selling companies donated a total of $14.9 million in products and cash to the Drive. Of the 26, seven were featured in their own spots on the TODAY show during the holiday season. In its 10 years of participation, DSA member companies have donated more than $110 million in products, services and cash to the Drive.
The TODAY Show Holiday Gift Drive is a project of the TODAY Show Charitable Foundation Inc., a 501(c)3 non-profit organization. Donations are matched with the needs of more than 200 organizations with which the TODAY Show Charitable Foundation works. As part of this year’s Drive, DSA member companies sent items to dozens of organizations in states from California to New York.
DSA is the national trade association of the leading firms that manufacture and distribute goods and services sold directly to consumers. Among its more than 240 active and pending members are companies selling both via a party-plan method and in the traditional person-to-person style. In 2012, U.S. direct sales were more than $31.6 billion with nearly 16 million direct sellers nationwide. The vast majority are independent business people—micro-entrepreneurs—whose purpose is to sell the product/service of the company they voluntarily choose to represent. Approximately 90 percent of direct sellers operate their business part-time.
The following direct selling companies donated products to this year’s Toy Drive: 4Life, All Dazzle, Amway, Arbonne, Avon, Bona Clara, Clever Container, CUTCO, DeTech, Initials Inc., Jewel Kade, Jusuru, lia sophia, Living Fresh Collection, Mary Kay, Nu Skin, PartyLite, Princess House, SeneGence, Shaklee, Southwestern Advantage, Stampin’ Up!, Team National, Thirty-One Gifts, Vantel and Yor Health.
For more information on direct selling, DSA and its Code of Ethics, visit DSA’s website, www.dsa.org.
January 01, 2014
Letter from John Fleming, January 2014
Happy New Year! A great year is behind us, and a promising year lies before us. Much was accomplished during 2013. Independent direct sellers throughout the world—approximately 15 million in the U.S. alone and approximately 90 million throughout the world—continued to be the defining force for what can be accomplished through a business model that engages people from all walks of life to represent its products and services. And here at Direct Selling News, we celebrate 10 years of bringing you their stories and sharing the important news of our industry. We’ll be celebrating this achievement by adding our 10th Anniversary seal to the cover of the magazine each month in 2014.
Those who choose a direct selling company do so because of motivations that are as diverse as their socio-economic profiles. The opportunities they choose satisfy personal interest in products or services as well as help them to build businesses based upon reasonable investments in time, capital and education. This is true for free people all over the world, and it is the strength upon which direct selling businesses are built. As a result of this strength, many companies have experienced a very good and growth-filled year! The growth is global in nature, and once again we now look forward to the compilation of the Direct Selling News Global 100 list for 2013.
We wrote many stories during the past year, and some will repeat with frequency in the new year. Technology remains a hot topic and is featured in our cover story this month. The possibilities continue to yield greater and greater opportunities at a rate of change unlike any other in history. Whereas a few short years ago, there seemed to be some concern about the impact technology would have on the industry overall, last year represents a quantum leap for direct selling companies. New technology has enabled sophisticated enhancements to back office systems, introducing simplicity and convenience associated with customer acquisition and retention, along with the expanded use of social media platforms to support a new communication style. All of the preceding becomes new competitive advantages for direct sellers. They are well positioned to capture more market share because not only are they equipped with the best of tools in many cases, but also they bring the added value of caring, compassion, advice, education and the very appreciated asset of a relationship.
Our company spotlight this month takes us to European company Oriflame. In 2012, Oriflame was ranked No. 9 on the DSN Global 100 list at $2.2 billion (U.S.) in annual revenues. Oriflame is not currently conducting business in the United States, but their global presence is notable, especially when reviewing how they are effectively using social media to expose the brand. We think you will enjoy the insight we gained from the conversations held with Oriflame executives about their strategy to expand through effective utilization of technology.
We welcome the contribution from Anthony Johndrow in his article, “The Reputation Imperative for the Direct Selling Industry,” in addition to our recent White Paper on “The Evolution of Direct Selling.” This is the first of a series that will continue during the year. Thanks also to Mannatech’s CEO, Dr. Robert A. Sinnott, for his thoughtful insight in our Top Desk article, “The Science of Business.”
Save the date, April 23, 2014! We look forward to hosting the fifth DSN Global 100 banquet and recognizing the top 100 direct selling companies in the world. The event has grown each year, with over 500 industry executives attending last year. A classy evening of dinner and programming will also include recognition of special achievements during 2013.
Submission forms can be accessed at dsnglobal100.com, as well as ticket and table reservations for the banquet on April 23. Our keynote speaker this year truly defines the word leadership. He has led his company to record levels of success inclusive of extraordinary corporate and humanitarian accomplishments. Truman Hunt has been President and CEO at Nu Skin since January 2003. During his tenure the company has grown exponentially. Indeed, the growth during 2013 led all publicly held direct selling companies. We look forward to this special day in the year for Direct Selling News, as we recognize the industry-leading companies and honor those who have achieved in an extraordinary manner.
When we first decided to take on the project of identifying the top 100 direct selling companies in the world, we settled on a basic objective: Serve the industry by recognizing those companies that lead the way for the close to 100 million independent direct sellers around the world who found an opportunity to satisfy personal motivations.
We hope to see you on April 23! On behalf of all of us affiliated with Direct Selling News, we wish for you a Happy New Year and… we hope you enjoy the issue!
Publisher and Editor in Chief
January 01, 2014
Stock Watch, January 2014
January 01, 2014
Bobbie Creber Retires
Bobbie Creber, who has developed broad experience during her 40 years in the direct selling industry in Canada, both in the field and in senior executive capacities, is retiring.
Creber most recently served as Managing Director of lia sophia Canada LP. Her industry career began at Tupperware, where she became one of the company’s top Canadian distributors and managers. This led to her position as President of the Direct Sellers Association of Canada from 1987 to 1992 during the development of the Competition Act amendments and the creation of the GST Direct Sellers Alternate Collection Mechanism.
Formerly with PartyLite, in President and Senior Vice President capacities for Western Europe, Canada and Worldwide, she led product development and market research, among other areas. She later joined Creative Memories, where she also took on the role of President of North America.
Creber has cultivated specialized skills, particularly in new market development, field sales training, and operational management, creating strong teams and consistent results.
Along with her husband, Ross—a direct selling leader in his own right as retiring President of the DSA of Canada—she was honored as the 1997 recipient of the Ivan P. Phelan Award for outstanding contributions to the advancement of direct selling in Canada. Creber was responsible for the establishment of the award, first presented in 1988. She was also a recipient of the Queen Elizabeth II Diamond Jubilee Medal this year. She was elected to the Direct Selling Education Foundation of Canada Board of Directors in May 2005, where she served as Chair from 2007 to 2011.
|Robert B. Goergen Jr.|
Blyth Inc., a direct-to-consumer company and designer and marketer of health and wellness and beauty products and candles and accessories for the home, announced that Robert B. Goergen Jr. has been named CEO and elected to its board of directors. He will remain President, PartyLite Worldwide, a position he has held since January 2012, and continue to oversee all facets of the party plan direct seller. He will also continue to serve on the ViSalus board of directors and to oversee Silver Star Brands, Blyth’s catalog and Internet retailer.
Goergen joined Blyth in 2000 and over the next decade championed the initiatives to expand Blyth’s direct-to-consumer presence, leading Blyth’s entry into the Catalog and Internet channel with the acquisitions of a series of general merchandise and health and wellness brands. While overseeing the expansion of direct selling, he oversaw the divestitures that completed Blyth’s strategic transformation to a direct-to-consumer business. He also served as Blyth’s President and Chief Operating Officer for the past year.
Blyth’s founder, Robert B. Goergen, will continue to serve as Executive Chairman of the Blyth Board and Chairman of the ViSalus Board of Directors, which oversees Blyth’s Health and Wellness segment.
Blyth Inc., headquartered in Greenwich, Conn., is a direct-to-consumer business focused on both the direct selling and direct marketing channels. Its products are sold through PartyLite and ViSalus.
JAFRA Cosmetics International
JAFRA Cosmetics International announced that Mauro Schnaidman has joined the company as President and CEO. As a seasoned Brazilian global executive, Schnaidman brings with him a wealth of knowledge from over 20 years of international expertise within the business world. His diverse experience has spanned various industries and has extended across several continents. From his early executive days at Pepsi to his management roles within Revlon and AOL, to his most recent position as President of Sara Lee Coffee and Tea Southern Europe, Schnaidman has contributed to major expansion and growth within top Fast-Moving Consumer Goods companies in Latin America, the U.S. and Europe.
Schnaidman, who is now based in JAFRA’s U.S. headquarters, will lead the management team as they work to build JAFRA’s sustainable growth.
JAFRA Cosmetics was founded in Malibu, Calif., in 1956 by Jan and Frank Day. In 2004, the privately held JAFRA joined the Vorwerk Group, a Germany-based, multibillion-dollar international direct sales company. JAFRA products are sold globally through 550,000 independent consultants in 18 countries.
Amway announced that Naveen Anand has been promoted to Global Marketing Director of Core Nutrition. Previously he served as Senior Vice President of Marketing, Amway India.
He will relocate to Amway headquarters in Ada, Mich., where he will be responsible for the development and execution of the global nutrition marketing strategy.
He began his career at Amway India almost 16 years ago as a marketing manager and was instrumental in building the Amway India business to approximately $400 million in sales. Under his leadership, Nutrilite garnered a 23.8 percent market share in the vitamin and dietary supplements category and Artistry acquired a 59.3 percent share of the premium facial-care market in 2012.
Anand has also been a member of the global CMO Council for over five years. In this role he contributed significantly toward the strengthening of global marketing brands both in Amway India as well as across the globe.
Founded in 1959 by American entrepreneurs Rich DeVos and Jay Van Andel, Amway offers consumer products and business opportunities through a network of more than 3 million distributors in more than 100 countries and territories worldwide.
Relìv International announced the appointment of Bernie Birch to Sales Manager, Relìv Asia Pacific. In his new role, Birch will now be responsible for driving sales in all of Relìv’s Asia Pacific markets, including the Philippines, Singapore and Malaysia.
In his position of Australia and New Zealand Sales Manager, Birch was instrumental in developing the Ignition Strategy for sales promotion and provided opportunity training, marketing and social media strategies. As the Relìv Asia Pacific markets expand he will help implement these strategies across the entire region.
Birch joined Relìv in December 2012, bringing over 15 years of extensive experience in sales and management within the direct selling industry.
In other news, the Relìv board of directors has elected Robert M. Henry to hold office as an independent director until the next annual meeting of shareholders or until his successor shall have been elected and qualified.
|Robert M. Henry|
Henry was appointed as Chairman of the Audit Committee and as a member of the Compensation Committee and Nominations and Governance Committees of the Board of Directors.
He had been a member of the Board of Directors of Registrant from May 2004 through May 2011. He is currently a private investor and business consultant. Henry previously served as Executive Chairman of the Board of Directors at another direct seller and most recently served as CEO and Chairman of the Board for that company.
Henry served on the Direct Selling Association board of directors from 2002 to 2008.
Relìv International, based in Chesterfield, Mo., produces nutritional supplements that promote optimal nutrition along with premium skincare products. The company sells its products through an international network marketing system of independent distributors in 16 countries.
A maker of Fucoidan-infused nutritional products, LIMU has announced the promotion of Lance Reese to the position of Chief Operating Officer. Reese was formerly the company’s Chief Information Officer and has over 20 years of management and leadership experience.
As COO, Reese will have responsibility for business development, marketing, creative services, web development, research and development, operations, customer service, information technology and human resource functions. He will work closely with the experienced LIMU management team to lead LIMU’s business strategy and expansion efforts.
Prior to joining LIMU, Reese had a wide variety of career positions, having founded his own software company at age 16 and served as COO and CIO of global corporations over the past 20 years, including as CIO of a $1 billion direct sales company for five years. Focused on organizational improvement, Reese is an author of numerous articles and has been regularly quoted in publications including Inc., E-Commerce Times and Datamation, to name a few.
Led by industry veteran and CEO Gary J. Raser, LIMU is located in Lake Mary, Fla., and provides a home-based business opportunity that is helping people enjoy the LIMU experience around the world.
Beachbody, the Santa Monica, Calif.-based developer of popular fitness brands INSANITY® and P90X® and direct selling division Team Beachbody, announced the hiring of Marc Washington as President and Chief Operating Officer. In this newly created position, he will be responsible for the company’s operational infrastructure to enable immediate and long-term growth strategies and will report to Beachbody CEO and Co-Founder Carl Daikeler.
Washington will work alongside current President, Co-Founder and Chief Marketing Officer Jon Congdon. Washington’s duties will include developing and implementing operating strategies and processes to drive company efficiency and future scalability.
With more than 16 years of business experience primarily in the consumer product industry, he joins Beachbody after spending nine years at Roll Global, most recently as Chief Financial Officer. During his tenure at Roll Global he led and managed numerous functions, including global sourcing and supply chain management; financial planning and analysis; accounting; customer service; treasury; mergers and acquisitions; risk management; sales and human resources.
Founded in 1998 by Carl Daikeler and Jon Congdon, Beachbody LLC, operates Beachbody.com and TeamBeachbody.com. Beachbody has expanded its support system through TeamBeachbody.com, its direct selling division that includes 100,000 independent Coaches as well as an online support and fitness community.
LifeVantage Corp., a company dedicated to helping people achieve healthy living through a combination of a compelling business opportunity and scientifically validated products, announced that David Phelps has been named Chief Sales Officer.
Phelps brings broad domestic and international network marketing experience to LifeVantage. He has extensive involvement in North America, Europe, Latin America and nearly every major market in Asia. Phelps has worked with a broad array of companies within the industry, where his senior executive assignments have included roles in sales, marketing, international expansion, business development and training. His focus is on leadership development and distributor-first management.
LifeVantage, the maker of Protandim®, is a leader in Nrf2 science and sells anti-aging products to reduce oxidative stress at the cellular level. The company was founded in 2003 and is headquartered in Salt Lake City.
ViSalus, the company known for the Body by Vi™ 90-Day Challenge, a 90-day weight-loss and fitness transformation platform, announced the appointment of Dr. Silvia Uribe, Ph.D., as Vice President, Research & Development. Dr. Uribe will be responsible for providing strategic direction, planning and leadership for the formulation, licensing and regulatory management of the company’s global product portfolio. She will report directly to Todd A. Goergen, Chief Strategy Officer of ViSalus.
Dr. Uribe was most recently Technology Director at Sigma Alimentos. Prior to that she served as the Baking Innovation Center Research and Development Director for PepsiCo Americas Foods. Dr. Uribe also worked for over 13 years at the Kellogg Co. in several roles, ending her tenure as Senior Director of Technology Transfer and Intellectual Asset Management.
Founded in 2005 with headquarters in Los Angeles and Troy, Mich., ViSalus champions personal victories and entrepreneurship through a social marketing model, premium products, and support community. ViSalus is majority-owned by Blyth Inc.
January 01, 2014
Tech Trends for 2014: Don’t Get Left Behind
by Marilynn Hood and Teresa Day
Navigating the complexity of current tech evolutions can become quite daunting, making the recent past seem so simple. In fact, it wasn’t that long ago that the direct selling industry was having an internal debate about High Tech vs. High Touch and the importance of not losing sight of relationships in the business transaction. There was even a time when the argument could be made that there was a choice between fully embracing technological developments or not.
My, my, how times have changed. Consider for a moment these staggering statistics:
- 91 percent of adults in the U.S. own a cell phone.
- Since 2009, 40 billion apps have been downloaded, and
- This number is expected to grow to 70 billion app downloads in 2014 alone.
- On average, the world spends 20 billion minutes on Facebook per day.
With the start of a new year, various organizations have published their lists of tech trends for 2014 and beyond. Some predicted outcomes seem to materialize straight out of a science fiction novel—intelligent personal assistants that can “learn”; more advisors smarter than Siri; autonomous vehicles; and 3D printing capabilities that can manufacture nearly everything and anything, including car parts, a hand-powered generator, prosthetic limbs and even living tissue, something called “bioprinting.”
And forget about gigabytes and terabytes, those newish terms that describe how much storage space is needed for all the virtual data created and communicated. IT networking company Cisco, in their ongoing initiative called the Visual Networking Index (VNI) which measures the way people utilize the Internet, uses terms like exabyte, zettabyte and even brontobyte!
IT networking company Cisco predicts that in 2017 information equal to every movie ever made will cross the Internet every three minutes!
So many more people will communicate so much more data across the Internet in the next few years that Cisco predicts in 2017 information equal to every movie ever made will cross the Internet every three minutes! Just a few short years from today, this incredible amount of information will be communicated from 19 billion devices connected to the Internet—on average, 2.5 networked devices per person on Earth.
It is quite remarkable to think about every person on Earth owning a cell phone; however, it’s even more remarkable in light of a United Nations report. In 2013, the U.N. found that of these 6 billion people who have mobile phones, only 4.5 billion of them have access to toilets! The Pew Research Center has stated that, by every measure one can think of, the cell phone has been the most quickly adopted consumer technology in the history of the world.
Within the retail goods sector, and more specifically within the direct selling industry, what’s important to focus on in this dizzying explosion of technology? More devices, more software, more choices? And we haven’t even mentioned the cloud or Big Data! How can one ever keep up, let alone stay ahead and make the right choices?
The Economist Intelligence Unit (EIU) recently released a report on “The Rise of the Customer-Led Economy,” based upon its global survey of 1,300 executives representing 90 countries and 19 industries. Their report analyzes the evolving dynamic between large companies and their digitally connected customers. In its summary findings, EIU reported “A large majority of companies are fundamentally rethinking their strategies for engaging individual customers.” The rethinking comes along the lines of shifting focus from traditional push marketing and advertising (website, email) to more emphasis on customer interactions and engagements.
Additional data in the report revealed that most companies (51 percent) are still relying on their website as their main communication tool, followed by email (40 percent). Only 23 percent are using social media, with just 10 percent using mobile apps. That mix will change over the next three years. Companies in the survey say social media will become their No. 1 channel (43 percent) and their use of apps will leap fourfold.
All this data can help pinpoint a starting place for company executives wondering what to do next. There is a stark contrast between the number of consumers engaging in social media and utilizing apps, and the underwhelming number of businesses that are doing likewise. Investment and expansion in the areas of social media engagement and app development seem to have the best potential to support companies, distributors and customers, and ultimately bring more success to all. In order to make that happen, companies may have to invest in technological advancement and even consider thinking differently about the roles of their marketing and tech professionals, which are starting to overlap.
“[Consumers] expect full functionality and are not thrilled to find a company’s ‘lite’ version when using their phone.” —Doug Braun, Chief Marketing Officer, USANA
Back in September 2011, in our cover story “The Social Media Phenomenon,” we wrote that Facebook boasted more than 750 million active users and the average user had 130 friends. Twitter had 200 million users generating 350 million tweets per day. YouTube received more than 3 billion views per day, and LinkedIn had more than 100 million registered users. Google+ had just debuted and accrued 20 million users very quickly.
Today, at the beginning of 2014, the numbers have grown dramatically. (See chart below)
From the beginning of humanity, people have been social creatures who share things with other people. Facebook just makes it easy! In fact, so easy that companies are missing a huge opportunity if they are still resisting the need to develop a Facebook page and engage their distributors and customers.
Social media guru and author Gary Vaynerchuck believes that every company can benefit in both the long-term and the short-term by engaging its customers on social media platforms. In his book The Thank-You Economy, he writes, “Embarking on one-to-one customer engagement offers significant long-term rewards, but the company will also experience immediate benefits—greater brand awareness, stronger brand loyalty, increased word of mouth, improved understanding of customer needs, and better, faster consumer feedback—and suffer very few drawbacks.”
Vaynerchuck also has a warning for companies who haven’t yet adopted a strong social media presence, writing, “Meanwhile the drawback to resisting social media engagement is clear: The longer you wait, the further the competition can pull ahead.”
Social media has proven to be a wonderful tool in so many ways, particularly in helping distributors build their businesses and keeping every level within a company connected. Most importantly, it fosters that sense of community and furthers the one-on-one engagement for which the direct selling industry is known.
Many companies, including Mary Kay, Stella & Dot and USANA, have very robust Facebook pages where they not only post company information and products, but also have pictures of their salesforce enjoying life and utilizing their products. These pages include company information, links to training, and other pertinent information for the salesforce, but also create a personality for the company that can then be shared with others.
Rod Larsen, President and CEO of Zija International, attributes much of his company’s rapid growth to social media. As he explains, “It only made sense to dive right in and leverage this phenomenon that has completely changed communication as we know it!” Zija’s Facebook page not only includes product information and links to training information, but it also functions as a recognition vehicle for distributors who win contests and prizes. Additionally, the company posts before-and-after pictures and success stories from distributors and their customers, providing a very personal level of engagement.
Connecting with people is foundational to the direct selling industry. By easily crossing international borders and time zones, social media has helped people around the world connect in ways that simply were not possible before. USANA has created Facebook pages specific to its international markets, truly building many smaller “local” communities while maintaining the overarching “parent” identity as well. For example, the USANA Australia/New Zealand Facebook page mirrors the primary corporate page in messaging and in branding, but it posts messages and information specific to that market.
Many companies do a great job of engagement, or what Vaynerchuck calls “heart and soul.” He says, “If your organization’s intentions transcend the mere act of selling a product or service, and it is brave enough to expose its heart and soul, people will respond. They will connect. They will like you. They will talk. They will buy.”
Primerica illustrates this principle in the friendly content that it also posts on Facebook, which has nothing to do with its products. An infographic with “10 Holiday Shopping Strategies” and other basic consumer tips make the page feel comfortable and homey. The company doesn’t feel the need to make every post a call to action, which generates more trust for the overall brand among its visitors.
According to an article by Mikal Belicove, published on Entrepreneur.com, creating and maintaining a good Facebook presence can benefit your business in at least the following ways:
- Drives traffic to your website
- Allows you to engage with your community easily and more freely
- Strengthens customer relations
- Provides a platform for your brand evangelists (perfect for direct sellers!)
Each of the above is reason enough to devote time and energy to social media engagement. And where would social media be without mobile devices?
Direct selling has always been a mobile industry in the traditional sense, with the top leaders in any organization during any decade going out to the people to sell products, recruit and train others, and build relationships. Over the last several years, numerous companies have pursued mobile device technologies to empower their salesforce, and this has helped leverage the opportunity that already existed, and in a very powerful way.
Progress brings more innovation, and the types and kinds of devices will certainly continue to grow. How independent representatives and even customers access a company’s website—whether by smartphone, tablet or PC—is beyond anyone’s control, now more than ever, and who knows what could be next? Questions of type of device (remember “PC or Mac” commercials?) are a thing of the past.
So what is important? First of all, mobile is here to stay, no matter what device is used. Again citing Cisco’s VNI report, globally in 2017, smartphones will account for over 27 percent of all device connections, and for over 67 percent of total traffic on the Internet. To look at that from the other side, within four years only about 30 percent of all worldwide Internet traffic will come from a desktop or laptop computer!
So if not the device, what should a company focus on? Flexibility, responsiveness, nimbleness and adaptability—these intangibles become increasingly important. And the creation of apps for use by the consultant and the customer can satisfy some, if not all, of these intangibles.
A simple but often overlooked area to begin with is the company website. With such increased usage of the Internet from mobile devices, companies face additional challenges in how they present their websites. Doug Braun, Chief Marketing Officer at USANA, points out that consumers now expect to be able to access the same information, whether it’s from their computer or handheld device. “They expect full functionality and are not thrilled to find a company’s ‘lite’ version when using their phone.”
To ensure optimal viewing and function on all devices, designers are increasingly using responsive web design (RWD) techniques. The idea is to create a basic site for the phone first and then provide enhancements for viewing with a tablet or computer, rather than designing the site for the computer’s larger screen and then trying to degrade the images and resize the text for the phone.
However, what if a company has already developed an app? If that’s the case, it seems that making the main website mobile-friendly wouldn’t be necessary. As Michael Kopp, a technology strategist at Compuware APM Center of Excellence, points out, that would be a mistake. Although consumers tend to prefer using an app, depending on the situation they may also use the website on their mobile device, sometimes switching between the two.
The importance of developing websites for optimal viewing on various devices and creating robust shopping apps has certainly grabbed the attention of several big retailers. According to a recent Associated Press article, the likes of Target, Kohl’s, Wal-Mart, American Eagle and home-shopping network QVC have all opened technology test labs in the San Francisco area in order to stay competitive. By hiring top tech talent, these giant retailers seek to replicate the creativity and nimbleness of startups.
Mobile commerce is now mainstream commerce, and it cannot be ignored by any company.
More Apps, Better Apps!
In 2007, Apple introduced the iPhone to the world and fundamentally changed the cell phone from a talking device with a camera into a multi-function pocket computer. Once Apple equipped its new device with an operating system that supported third-party applications and threw the door wide open to creative minds, the simultaneous explosive growth of the “app” began. Primarily recognized by the square icon that appears on the device screen after download, an app is a small piece of self-contained software that has been designed to function in a very specific manner on a mobile device.
First used for such things as playing games, reading The New York Times, placing a bid on eBay or checking the weather, the app development world soon started churning out mini-software programs of great value. Direct selling companies often led the way.
The point of sale, or POS, innovations have been enthusiastically embraced by distributors from many companies. An app, along with a card-reading device that attaches to a tablet or a smartphone, can transform any party, meeting or one-on-one into a storefront opportunity. A distributor can sell a product and take immediate payment anywhere.
The app integrates payment processing with order management and the distributor’s virtual back office. Distributors can avoid “card not present” fees and eliminate the headaches of bad cards and transposed numbers written hurriedly on sales receipts. Many companies support their salesforce with this sort of technology, allowing their distributors to conduct business wherever they are.
It is critical to note that when something becomes second nature or common practice for consumers, the expectation spreads to all companies and all products and services in their world. In other words, your average consumer will come to expect his or her experience with your company to mirror or at least compete with their expectations of other retailers, even if they are not direct sellers. Mobile commerce is now mainstream commerce, and it cannot be ignored by any company.
With the amazing variety of apps that have been developed, many companies have actually changed the way they conduct their business. Instead of being stuck in an office filling out paperwork, people can complete business transactions with apps on their phone and spend much more time out in the field interacting with potential customers. Primerica has been developing leading-edge apps from the beginning, eliminating mountains of paperwork and taking their sales field mobile.
For so many direct selling companies, apps have become powerful tools, allowing them to do business, in many cases, 24/7. Also, customers are afforded more options in how they access information and make purchases. For distributors, apps enhance the personal service for which the direct selling industry is known and free up more time for them to build their business. Health and wellness companies such as Nu Skin, USANA and Vemma have used apps to bring personal trainers directly to the customer’s home and provide a daily coach that can track calories and exercise and even offer motivational advice.
Many direct selling companies have developed apps that allow their distributors to complete basic business functions on the go, such as new distributor enrollment, access to back office functions, coordinating messages to prospects, and even ordering samples at the touch of a button. Zija International’s new app for distributors includes all of the above, as well as a GPS-based exercise tracker and a built-in social wall for networking with other Zija distributors.
The specialized app that custom clothier J.Hilburn designed allows its stylists to carry an entire store as well as a showroom in their iPad. The style board portion of the app allows them to create a high-end shopping experience for a customer in his own home or office, similar to what he would experience at the more exclusive stores. In the same way that salespeople would have pulled various clothing items and had them ready when the customer arrived for his appointment, the stylist preselects items based on the customer’s taste and exhibits them on her style board. The app, coupled with real fabric swatches and the expertise of the stylist, allows men to avoid going to a store and enduring the protracted selection process, which many may find tedious.
With the rise of mobile apps, the push for social media, and a company’s marketing messaging becoming more and more intertwined with technological expertise, a wholesale change for IT departments seems to be coming.
So how have these tech tools worked for J.Hilburn? Veeral Rathod, Co-Founder and President, reports that their sales volume is about 30 percent higher when stylists use their iPads than when they use traditional methods. Men tend to be more visually oriented, and they usually respond well when tech devices are employed. As an added bonus, the iPad helps their stylists cross-sell and up-sell. They can show the customer how the shirt he just ordered would look in other colors or fabrics, or when paired with a blazer or suit. This visual gives the customer the confidence to go ahead and order more shirts or other garments.
The Tech Investment Imperative
Technological investment has been critical to growing companies for decades, as witnessed by the change in title and importance of the person in charge of the equipment—from Facilities Director to IT Director to the current C-level Chief Technology Officer. The reasons for larger investments and elevated titles have varied, though until recently most have had to do with scalability, supply chain improvement, development of efficient business processes and networking throughout the enterprise.
With the rise of mobile apps, the push for social media, and a company’s marketing messaging becoming more and more intertwined with technological expertise, a wholesale change for IT departments seems to be coming.
Apparently, this crossing over of priorities and marketing’s need to drive IT functions has caused some friction between CIOs and CMOs that didn’t exist before. In a 2014 report, titled “Top Technology Trends for 2014 and Beyond,” Forrester suggests that in this scuffle for driving strategy and taking control of business intelligence, collaboration between traditionally distinct roles will have to occur.
USANA is ready for the challenge. Braun says, “One of the most exciting and important trends that is developing is the blurring of lines between the Chief Information Officer and the Chief Marketing Officer. I see the two of them becoming a team where before they were separate departments in an organization.”
Developing a collaborative and integrated approach between IT and marketing is critical simply because a great digital customer experience is no longer an option for any company, even a direct selling company that focuses on relationship building. When consumers move seamlessly between their digital and physical worlds, they expect customer service and the customer experience to be consistent across all their chosen channels. The digital experience for a customer is now a concrete part of a company or product’s brand statement for that customer. The old adage, “You never get a second chance to make a first impression,” surely applies to a company’s digital experience for their customers.
The C-Suite of executives—CEOs, CIOs, CMOs and CSOs—may have to reinvent themselves and their roles in the enterprise in order to stay on track in the rapidly evolving technological world. Rather than a separate department focused on managing software and hardware, IT services could become the empowering force behind a marketing strategy.
While trends, devices and approaches change and will continue to change—probably with more rapidity than we would even dare to predict—the end-game for all of it remains the same: How can I make it easier for my distributors and customers to learn about my company and buy my products more often?
J.Hilburn’s Rathod plans to keep an eye on future customers and how they use the Internet. He asks, “Our current customers may be in the 30–50 age range, but what about our up-and-coming customers in their 20s? How are they using the Web and digital world? What are their shopping habits, and how will we connect with them?”
Good questions! The next wave of distributors and customers will soon enter the primary market range, so prepare to meet them on their terms.
December 31, 2013
TODAY: Avon Opportunity Transforming Lives in Africa
Avon calls itself “the company for women,” and a recent NBC feature provides one example of how Avon offers women more than just a pretty face. Dr. Nancy Snyderman, NBC Chief Medical Editor, spoke to Avon business owners in some of the poorest townships in South Africa, where entrepreneurism has empowered women to break the cycle of poverty—and share the same opportunity with others.
For Alice and her associate Anna, two women in Diepsloot, life has changed dramatically since they first began selling Avon. Alice previously cleaned houses, but has now recruited hundreds of other Avon women and developed her business to 10 times her former earnings. Anna’s business provided the means to extricate herself from a violently abusive marriage.
The impact of Avon’s business opportunity extends beyond these women to the next generation. Alice has achieved her hope of enrolling her children in a private school. Anna’s daughter has opened a beauty shop using the money she earned through her Avon business.
Businesses like Avon supply these women not only with products, but also with business skills such as computer literacy and goal-setting. With that empowerment comes the possibility of self-sufficiency in a society where few women have the means to rise above poverty and attain independence. As Alice says, “It puts food on your table and mascara on your face.”
Watch the full video from NBC’s TODAY show.
December 31, 2013
Atlantis Paradise Island
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Pro Star Fulfillment
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December 30, 2013
Oriflame East Africa to Double Sales by 2016
Oriflame Cosmetics projects that sales across East Africa will double from 2014 to 2016, in accordance with a three-year strategic plan the company is implementing in the region.
The Swedish beauty company began East African operations in December 2008 with its launch in Kenya. Five years later, Oriflame East Africa expects to generate sales of Kshs600 million (approximately US$6.95 million) in 2014, and increase that number to Kshs1.2 billion (US$13.90 million) in 2016. The company plans to fuel this growth by consolidating its East African operations and expanding beyond Kenya, Uganda and Tanzania over the next three years.
At the core of Oriflame’s business is its regional salesforce, which it expects to grow from 20,000 to 50,000 over the same period. The company continues to focus on product innovation as it seeks to attract more distributors and customers. Oriflame recently expanded its product offerings to include a line of professional hair-care products—HAIR X—which provides natural care solutions for all hair types.
December 27, 2013
ViSalus Celebrates World’s Largest Giving Day
In the spirit of the season, ViSalus recently celebrated its second annual World’s Largest Giving Day. The healthy lifestyle company mobilized its promoters, customers and employees to participate in a day of giving to those in need in their communities.
ViSalus coordinated the immense effort through its ViCares philanthropic platform. On Dec. 14, members of the ViSalus community took part in 92 events across the U.S. and Canada. Giving manifested in many ways, from assembling and donating baskets of nutritious ViSalus products to conducting clothing and toy drives.
Leading up to its World’s Largest Giving Day, the company held a Green Friday promotional challenge in late November. Green Friday donations provided a total of 252,000 Vi-Shape shake meals through the ViCares Community Challenge matching program. All told, the annual giving event supplied substantial donations to over 264 charities.
Read more on the second annual World’s Largest Giving Day.
December 26, 2013
Forbes: Why Leaders Need Emotional Intelligence
Robert Plutchik’s Wheel of Emotions (Photo credit: Wikipedia)
Skill and intelligence are important leadership tools, but these alone do not a leader make. As Forbes Contributor Meghan M. Biro writes, effective leaders go beyond the rational and intellectual in connecting with others. Like all other human relationships, leading requires engagement on an emotional level.
To cultivate that emotional connection, a leader must actively focus the relationship on his team members rather than himself. A good leader is one who has created an environment where others can confidently and creatively exercise their talents. That seamless dynamic arises when a leader has come to know his team members as human beings—recognizing their abilities, apprehensions and aspirations.
Leaders, too, are human beings who are learning and growing. Some innately possess greater emotional intelligence than others; however, all can—to a degree—hone the ability to inspire others on an emotional level. Biro highlights important tools such as honesty, kindness and respect, as well as the ability to contextualize a situation and to know when to let go and get out of the way.
Read the full feature from Forbes.
December 23, 2013
Watkins Expands Offerings amid Growing Retail Sales
Before the “Avon Lady” there was the “Watkins Man,” or so customers dubbed independent consultants who began selling J.R. Watkins Co. products in 1868. Nearly 150 years later, the company’s spices and extracts are now vying for increasing space on retail shelves.
Since J.R. Watkins began selling his Watkins Original Liniment Oil, the eponymous company has expanded to offer a range of natural, environmentally friendly personal and home care products. Watkins is currently developing its food business with a focus on growing online, grocery and other retail sales.
Chicago-based research firm IRI reports that Watkins claimed a 5.4 percent share of the U.S. extract market over the last year. Spice giant McCormick & Co., which has long dominated the market, garnered 52 percent. Watkins is looking to continue growing market share and duplicate that retail success with its spice offerings, a line the company introduced in 1895.
In 2012, Watkins edged further into the $2 billion-and-growing spice market by adding a gourmet spice line to its conventional offerings. The company will also release its own dry seasoning mixes this fall.
Read more on Watkins’ evolving distribution strategy.
December 20, 2013
Primerica Receives 2013 DALBAR Service Award
Primerica Financial Services was recently named a recipient of the DALBAR Mutual Fund Service Award, alongside firms such as Deutsche Asset & Wealth Management, JPMorgan Funds and Putnam Investments. The award recognizes mutual fund firms that have proven themselves industry leaders in customer service.
DALBAR has established longstanding expertise in the financial community as an independent evaluating, auditing and rating organization. Its yearlong, systematic customer service testing includes measurements of appreciation and respect for the investor, aptitude in facilitating discussion and setting appropriate expectations for the client, and consistently superior delivery.
“These award-winning organizations understand that when all things are equal, service is a powerful differentiator and creates loyal customers as well as strong advocates,” said Kathleen Whalen, Managing Director at DALBAR.
Since DALBAR introduced the Mutual Fund Service Award 24 years ago, Primerica has received it 11 times. Read more on Primerica’s standard of excellence and its focus on the future in our recent Company Spotlight, Primerica: In It for the Long Haul.
Read the full announcement from DALBAR.
December 18, 2013
Infographic: 2013 Supplement Business Report
The Nutrition Business Journal recently published its annual report on the supplements market, a dynamic sector that generated $32.5 billion in sales last year. The 2013 Supplement Business Report tracks major trends and developments across the industry.
An infographic outlining the report’s findings notes that whole-food supplements have outpaced the rest of the market for the last several years. The report estimates that sales of food-based supplements will grow at twice the rate of other supplement sales by 2015. The report also indicates that the Vitamins, Minerals, Supplements (VMS) industry will undergo a major shift in the next few years as big business interests continue to gain market share.
Though 29 percent of survey respondents said they have “No idea what it is,” personalization is receiving increased attention from supplement companies and ancillary industries. The report notes that personalization—using nutrition as a “true therapy for lifestyle-based illness”—represents the forefront of medical research and the future of healthcare.
View the full 2013 Supplement Business Report infographic.
December 17, 2013
Natura Cultivates Regional Growth as Brazilian Market Slows
As Natura Cosméticos faces a stagnating economy and a growing field of competitors in the Brazilian market, the eco-friendly cosmetics and personal-care brand is targeting strategic growth across Latin America.
Despite the Brazilian government’s attempts to bolster the economy, consumer spending dipped from 1 percent in the first three quarters of 2012 to an average of 0.4 percent in the same period of 2013. The country saw inflation jump 5.8 percent in November, further diminishing the prospect of increased buying power among consumers.
In Brazil, Natura’s third-quarter sales grew just 5.5 percent in comparison to 40 percent in all other Latin American markets, which amounted to 15 percent of revenue. As it enters 2014, Natura is optimistic about the dynamic economies in the region. For example, estimates place Peru’s economy at 5.1 percent growth and Colombia’s at 4 percent for 2013, versus Brazil’s 2.5 percent increase.
According to CEO Alessandro Carlucci, Natura is looking to outpace the competition with innovative products across a wide price range, supported by faster delivery and an array of payment options. The company is also eyeing strategic acquisitions, such as the 65 percent stake it acquired this year in Australian company Aesop.
Read the full report from Bloomberg.
December 16, 2013
UPDATE: Direct Sellers Support Philippine Relief Efforts
Last month, Typhoon Haiyan—the deadliest Philippine typhoon on record—left thousands in the country dead and over 1 million people displaced. As our December News in Brief reports, several direct selling companies took action to aid relief efforts in the days immediately following the disaster. Since then, several additional companies have marshalled their resources to support those displaced and often in need of the most basic necessities.
Tupperware Brands has announced relief donations totaling nearly $1 million, including supplies of food and water; 10,000 family packs containing products for storing food, water, clothes and other valuables; and a monetary donation to the American Red Cross in support of its crucial aid to storm victims. The company has also urged its salesforce and customers worldwide to donate—with a pledge to match every dollar given, up to $30,000—to the American Red Cross through Tupperware’s Chain of Caring Program.
Isagenix International has partnered with Stop Hunger Now, an international hunger relief organization, to provide nutritious meals to survivors of the storm. The global health-and-wellness company has supplied 15,000 boxes of its IsaLean® whey protein meal replacement shake to the organization, which will provide 210,000 high-protein, nutrient-dense meals to people across the region.
In addition to operating in the Philippines, Reliv International was already providing quality nutrition to thousands of children daily through its 100+ Reliv Kalogris Foundation (RKF) feeding programs in the country. Most of those programs survived the storm undamaged, and the RKF is currently distributing 1,500 cases of its Reliv Now® for Kids daily nutritional supplement. The RKF has furthered its outreach in the region by partnering with Convoy of Hope, an international disaster response organization. With the addition of all RKF donations made online in November, Reliv contributions have amounted to $576,000 in nutritional products and over $25,000 in cash.
Germany-based PM-International AG has supported relief efforts through its established partnership—PM members worldwide have sponsored 550 children—with aid organization World Vision. PM and its distributors participated in a charity campaign that raised $224,400. The funds, which World Vision CEO Christoph Hiligen called “the largest donation to World Vision for the Philippines” to date, enabled the purchase of 15 children’s shelters. The large supply tents will provide protection and care for up to 3,000 Filipino children.
Organo Gold is also responding to the needs of its members in the Philippines, some of whom have lost homes and loved ones. OG has coordinated with people on the ground to ensure that relief packages from its business hub in Cebu reach OG members in need of assistance, particularly in remote areas most affected by the storm.
Jusuru International launched a company-wide campaign to raise funds for the Philippines through its Global Giving website. The company matched all donations made through Nov. 30, raising thousands in support of relief efforts.
UPDATE: Since we posted this report, additional companies have provided details of their ongoing support for the Philippines. The report reflects these updates.
December 11, 2013
Bloomberg: Herbalife Pulls Strategy from Ackman Playbook
Photo above: The Herbalife Ltd. logo is displayed outside of the company’s corporate headquarters in Torrance, California.
(Photographer: Patrick Fallon/Bloomberg)
A recent Bloomberg report indicates that Herbalife executives have been taking notes amid Bill Ackman’s year-long campaign attacking the company’s business model and lobbying federal agencies to investigate its practices. According to the report, Herbalife is partnering with investment bank Moelis & Co. to approach select Pershing Square clients and urge them to pull out as the investor’s “risky and irresponsible” bet persists.
People with knowledge of Herbalife’s strategy told Bloomberg that Moelis has reached out to New Jersey’s $76.7 billion pension fund, which has invested with Ackman to the tune of $207 million. The company also reportedly has plans to meet with hedge fund advisors at Cliffwater LLC, a California-based firm. None of the parties involved responded with comment to Bloomberg.
“Activism on the short side is a relatively new phenomenon so there are also new strategies for companies under attack to fight back,” said Brad Balter, whose Boston-based Balter Capital Management oversees hedge fund investments for its clients.
Bloomberg also reported last week that Carl Icahn, the company’s largest investor, has no intention of selling the stock now that the lock-up provision on his shares has expired. The provision, in accordance with insider-trading regulations, restricts when Icahn can buy and sell the stock. “The company has spoken with Mr. Icahn, and he has no present intention to sell,” Herbalife spokeswoman Barbara Henderson told Bloomberg in an email.
Herbalife stock, which has climbed more than 100 percent this year, received another bump last week following a favorable ruling passed down by a Belgian appeals court. A lower court ruling in 2011 said that the company operated an illegal business model, but the appeals court determined that the company stands “in full compliance with the law.”
Read more on Herbalife’s latest strategy from Bloomberg.
December 04, 2013
Report Indicates Shift to Customer-Led Economy
The Economist Intelligence Unit (EIU) recently released a report on “The Rise of the Customer-Led Economy,” based upon its global survey of 1,300 executives representing 90 countries and 19 industries. The report analyzes the evolving dynamic between large companies and their digitally connected customers.
Technologies like social media and cloud computing enable brands to interact with consumers on an unprecedented level. Conversely, these platforms make it easy for consumers to relate their experiences and thereby influence brand perception. The report found that a large majority of companies are comprehensively redefining their strategies for connecting to individual customers. The customer-led economy is largely a result of emerging technologies that enable an omni-channel approach to customer engagement.
Of the companies surveyed, most (51 percent) rely primarily on websites to connect to customers; just 23 percent reported utilizing social media; and 10 percent use mobile apps. However, 43 percent indicated that social media will become their primary channel over the next three year. For more than 80 percent of the executives polled, better connections between customers, employees, partners and products will amount to an enhanced customer experience.
Gary White’s recent Working Smart feature for DSN prompts executives to embrace The Technological Disruption of Direct Sales and develop a digital strategy that will benefit both them and their customers. “We’ve reached a stage in business where it’s no longer possible to ignore technology or steadfastly stick to old-fashioned ways of working. Technology innovation is here to stay, and those who don’t prepare to embrace it are only preparing to fail,” said White.
Read more on “The Rise of the Customer-Led Economy” from the EIU.
December 03, 2013
Direct Sales Draws Gen Y Entrepreneurs
In a job market where formulaic career opportunities prove scarce, Generation Y’s entrepreneurial spirit is flourishing in less conventional work environments. Direct selling companies are witnessing this trend firsthand, as a growing number of young people pursue the open-ended opportunity available through direct sales.
Amway, the No. 1 direct selling company in the world, has witnessed a steady rise in interest among the Gen Y demographic. In 2005, millennials represented about 10 percent of Amway’s global salesforce. That number climbed to nearly a third in 2012.
Australia’s Business Review Weekly recently featured Amway Australia’s growing number of Gen Y distributors. The company has been actively pursuing a digital strategy to cultivate “deeper and richer communication” with its Gen Y audience.
Amway, which previously distributed print magazines every month in Australia and New Zealand, is successfully gleaning data and connecting to young people through digital publications. Transitioning to digital platforms—Amway Australia currently has 35 active publications—has enabled the company to easily update and enrich the material.
Amway’s strategy for connecting to a younger generation also encompasses several social media platforms, particularly Facebook. “The sort of business we are in is very much dependent on word-of-mouth referrals, and in many ways it’s a hand-in-glove fit with social media,” said Michael Coldwell, General Manager of Amway Australia.
Cosmetics giant Mary Kay has also focused on online tools to connect to younger consumers and salespeople. The company’s success is apparent in its U.S. distributor base, half of whom are under 35. In Canada, where The Globe and Mail recently reported that young workers are discovering a fresh opportunity in direct sales, millennials represent over 20 percent of the company’s salesforce.
“They have a very strong entrepreneurial spirit,” said Lynda Rose, Vice President of Marketing at Mary Kay Canada. “They’re saying, ‘We want to travel with our business and we want to have it at our fingertips.’ … Their income is reflective of the amount of effort they put into their business, and they love that.”
Read the full story from The Globe and Mail.
December 02, 2013
Teacher Turned Entrepreneur Shows How It Works!
Photo above: Mark Pentecost (left), Founder and CEO of It Works! Global, accepts the Bravo Momentum Award from DSN Publisher and Editor in Chief John Fleming.
In the early 1990s, Mark Pentecost was teaching math and coaching varsity basketball in Grand Rapids, Mich. Today, he is putting his number-crunching and coaching skills to use as President and CEO of It Works! Global.
Pentecost, who co-owns It Works! with his wife, Cindy, began his sales career in the early 1990s with Excel Communications, reselling long-distance deals for landline phones. His natural skill as a salesman soon became apparent, and just two years later Pentecost quit teaching to work his business full time.
During his time at Excel, Pentecost developed an enthusiasm for entrepreneurship in general and direct sales in particular. That enthusiasm reignited in late 2000 when he became aware of the instant-result toning wraps that now anchor the It Works! product line. It Works! launched in 2001, but gained traction slowly. The pace changed when the company hit profitability in 2005 and growth began to come in leaps and bounds. It Works! paid all its debts by 2008 and rocketed from sales of $46 million in 2011 to $200 million in 2012.
At the DSN Global 100 Celebration in April, Pentecost accepted the Bravo Momentum Award in recognition of the company’s significant growth, as well as its achievement of the most significant first-time ranking on the DSN Global 100 (It Works! debuted on the list at No. 56). This year, Inc. magazine ranked It Works! No. 436 on its Inc. 500 ranking of America’s fastest-growing private companies.
Read the full feature from Forbes.