October 24, 2014

U.S. News

This Week: Herbalife CEO Speaks, J.Hilburn Pops up in NYC

Catch up on this week’s industry chatter with these click-worthy links:

  • Los Angeles magazine interviewed Herbalife CEO Michael Johnson for its web feature, “Big Shots with Giselle Fernandez.” Johnson shares his conviction in the integrity of his company, a message to Herbalife’s stockholders, and the challenges of dealing with “knuckleheads in bathrobes who blog.”

  • On Thursday, custom menswear brand J.Hilburn launched a pop-up shop in the heart of NYC at Midtown Manhattan’s Refinery Hotel. The shop, which runs Oct. 23 through Nov. 15, offers J.Hilburn’s entire Fall 2014 collection, including made-to-measure suiting and formalwear and ready-to-wear pieces. The J.Hilburn Pop-Up Shop partnered with several brands, including Uber, Lexus, J Brand Jeans and Perrier.

  • On Tuesday, home-automation giant Vivint hosted Utah Senator Orrin Hatch; Val Hale, Director of the Governor’s Office of Economic Development; Provo Mayor John Curtis and many others at the grand opening of its new Innovation Center. Located in Lehi, Utah, the center will house 320 employees.

October 24, 2014

U.S. News

CVSL Plans $60 Million NYSE Uplisting

IPO investment manager Renaissance Capital has reported the terms of CVSL’s planned uplisting to the NYSE MKT. The direct-selling conglomerate underwent a quiet period after filing with the Securities and Exchange Commission to raise capital in its uplisting bid.

CVSL is looking to raise $60 million with an offering of 6.7 million shares priced at $8 to $10. That would place CVSL’s midrange market value at $308 million. Shares in CVSL are currently traded over the counter, with a market value of about $293 million on the OTCQX.

To comply with NYSE MKT terms, CVSL last Friday implemented a 1-for-20 reverse stock split of its common stock. Though it had no impact on the par value per share, the split reduced CVSL’s shares of common stock from 487,975,986 to approximately 24,398,800.

CVSL has built a portfolio that now includes seven direct selling or “micro-enterprise” companies across the home improvement, gourmet foods, skincare and nutrition industries. The brands operate independently of one another, while benefitting from combined expertise and efficiencies in finance, IT and the supply chain.

October 23, 2014

U.S. News

Tupperware Q3 Earnings Fall Short of Expectations

As Tupperware Brands Corp. (TUP—NYSE) released its third quarter 2014 earnings Wednesday, shares dropped in reaction to the company’s lower than expected 2014 outlook. Tupperware traded 10 percent lower at $64.23 per share. Year to date, shares have fallen 24 percent.

With reported earnings of 90 cents per share, the company missed Wall Street estimates by 1 cent. This adjusted diluted EPS of 90 cents included a 14 cent negative impact versus 2013 from changes in foreign exchange rates, which were 2 cents below July’s guidance. Analysts surveyed by Zacks Investment Research had estimated earnings of 91 cents for the quarter.

Revenue fell 2.4 percent year over year to $588.7 million, compared to the $587.9 million consensus. The company also issued a lower guidance for fourth quarter with an EPS of $1.55 to $1.60 versus $1.70. Third quarter 2014 net sales in emerging markets accounted for 70 percent of sales, achieving an 8 percent increase in local currency. Established markets were down 4 percent in local currency.

GAAP net income of $32.3 million was down 35 percent versus prior year GAAP net income of $49.9 million. Excluding foreign currency, net income was down 24 percent versus prior year.

Read the full results here.

October 22, 2014

U.S. News

Take Shape for Life CEO Named One of Baltimore’s ’50 Women to Watch’

Take Shape for Life CEO Meg Sheetz is one of 50 Women to Watch in the Baltimore community, according to an annual list from The Baltimore Sun. Maryland’s largest daily newspaper whittled down more than 250 nominations to recognize an elite group of “the area’s most intriguing movers and shakers.”

“These are women who are very invested in Baltimore, and there is a lot of good being done out there,” said Sun Editor Anne Tallent. “Whether in advocacy or the arts or nonprofits or science and technology, they are making Baltimore a better place.”

TSFL is the direct sales division of Medifast, where the late Bradley MacDonald, Sheetz’s father and former CEO and Chairman of the Board at Medifast, brought her on board in 2000 as sales administration director. The 37-year-old is now Medifast’s President and COO, in addition to running the company’s TSFL division.

“Meg’s dedication and leadership at Medifast continue to make her an invaluable asset to our company. As the weight-management industry evolves, Meg has led the charge to help expand our position in the overall health and wellness arena,” Chairman and CEO Mike MacDonald shared in a statement. “We congratulate Meg on this noteworthy achievement.”

Her work at Medifast is one of many roles Sheetz plays in the Baltimore community. She is Managing Trustee of the MacDonald Family Foundation and the Take Shape For Life Foundation, which provides grants to support educational programs for disadvantaged students. Sheetz is also a member of the Villanova President’s Leadership Circle, and sits on the Board of Directors for Stevenson University, the Greater Baltimore Committee, and Siloam.

October 21, 2014

U.S. News

How USANA Became One of America’s Best Workplaces

For the sixth consecutive year, USANA Health Sciences has appeared on Outside magazine’s list of America’s “Best Places to Work.” The Salt Lake City-based company has also been named one of “Utah’s Best Companies to Work For” six times by Utah Business magazine. That kind of employee satisfaction doesn’t happen by accident. To get an inside look at the USANA culture, DSN reached out to Mike King, USANA’s Executive Director of Human Resources for North America and Europe.

DSN: How do you carry USANA’s mission of building healthy lifestyles over to the corporate office?

MK: USANA is known around the world for its mission of providing people with the opportunity to achieve “true health and true wealth.” That mission begins with our employees, who receive active encouragement to improve their health and numerous opportunities to advance their current and future financial situation. USANA employees can also count on a fun, open and community-focused workplace, managed by people who are committed to acting on employees’ ideas and concerns.

DSN: Is there a philosophy that guides USANA’s approach to dealing with employees?

MK: When USANA rebranded itself in 2012, its motto—Everything We Do Helps You Love Life and Live it™—became the focus of everything it does, including keeping its corporate employees happy.

We know that happy employees are more likely to work harder and enjoy what they do, which is why we encourage our employees to live their lives to the fullest and do what they love. USANA continues to strive to create a positive and engaging work environment by providing employees the tools they need to lead healthy, productive lives. That includes benefits such as a fully equipped gym, wellness consulting, monthly massages and an employee café stocked with affordable, fresh food.

DSN: How would you describe your corporate culture?

MK: USANA employees make up a true community with an open and caring culture, backed by a supportive management team and numerous opportunities to make a difference in the world.

We also strongly believe in celebrating our employees for their achievements and recognizing them for their hard work and dedication to USANA through special lunches, corporate summer parties at the local amusement park, and our annual Employee Awards gala.
                                                                                     
The full interview with King will run in DSN’s 90 Days of Direct Selling print coverage.

October 18, 2014

U.S. News

This Week: Door-to-Door Disciples, Safe Makeup, and the Hispanic Avon Lady

Catch up on this week’s industry chatter with these click-worthy links:

  • Pamela Jones Harbour, former FTC commissioner and new compliance chief at Herbalife, consumed the company’s shakes for years before it came under Ackman’s spotlight. A review of Herbalife’s business, plus her own experience, made her willing to stick her neck out at the company.

  • Last week, Vivint Solar’s initial public offering raised $330 million, valuing the company at $1.3 billion. Slate shares Vivint’s door-to-door path to becoming the second-largest solar panel installer in the U.S.

  • Tyra Banks chats with Fast Company about her new TYRA beauty line, her drive to empower women and learning to delegate.

  • Beautycounter is on a mission to change the face of the cosmetics industry. This week the safe skincare company introduced its first color Cosmetics Collection, formulated without the harmful ingredients banished to the company’s Never List.

  • Bloomberg gives an in-depth look at the experiences of Isabel Hernandez, one Hispanic Avon Lady in the Texas border town of McAllen.

October 16, 2014

U.S. News

Ambit Entrepreneur Writes a Book for ‘The Ambitious Woman’

Esther Spina has spent years as a sales representative and national consultant for Dallas-based Ambit Energy, where she also coaches fellow entrepreneurs through her Ambitious Women network. The author, speaker and businesswoman is now sharing her knowledge through The Ambitious Woman, a new book designed to help women build success in every area of life.

Released through Next Century Publishing, The Ambitious Woman is a look at what true ambition requires, and how it can help women shape fulfilling careers and personal lives—without stepping on others along the way. Spina explores the subject through her own experiences, as well as the lives of women such as Mother Teresa, Dr. Maya Angelou, and American author, journalist and long-distance swimmer Diana Nyad.

Through her network at Ambit, Spina has developed a success and mentoring club that provides strategies, tips and support to women entrepreneurs. The group also gathers for an annual Ambit-ious Women Conference, where attendees can glean insights from business coaches, social media strategists, sales consultants and other women leaders.

October 14, 2014

U.S. News

U.S. DSA Endorses 13 Congressional Candidates

As Americans head to the polls for early voting in October and Election Day on Nov. 4, the Direct Selling Association is backing 13 congressional candidates who have taken a strong stance on direct selling and entrepreneurialism.

“We want elected officials to understand that economic opportunity comes in many shapes and sizes,” DSA President Joseph Mariano shared in a statement. “The candidates we’re supporting this election cycle stand with direct sellers. That’s why we’re standing with them.”

The endorsements have appeared across the country in a newspaper ad campaign funded by Direct Selling Empowers Americans, the newly formed super PAC associated with the DSA. According to the PAC’s website, its efforts focus on enabling America’s 17 million direct sellers “to run their businesses—micro-enterprises—free from government constraints.”

The DSA has endorsed U.S. Senate candidate Joni Ernst (R-Iowa) and congressional challengers Mia Love (R-Utah) and Alex Mooney (R-W.Va.), as well as the following incumbents:

  • U.S. Rep. Marsha Blackburn (R-Tenn.)
  • U.S. Rep. Tony Cardenas (D-Calif.)
  • U.S. Rep. Steven Horsford (D-Nev.)
  • U.S. Rep. Eddie Bernice Johnson (D-Texas)
  • U.S. Rep. Gregory Meeks (D-N.Y.)
  • U.S. Rep. Reid Ribble (R-Wisc.)
  • U.S. Rep. Juan Vargas (D-Calif.)
  • U.S. Rep. Marc Veasey (D-Texas)
  • U.S. Rep. Tim Walberg (R-Mich.)
  • U.S. Rep. Ted Yoho (R-Fla.)

October 09, 2014

U.S. News

Tyra Banks Reveals Her Latest Venture, a Direct Selling Beauty Brand

Not everyone can be America’s Next Top Model, but now every woman can buy (and sell) runway-ready beauty products tested and approved by Tyra Banks, creator of the hit reality show. The enterprising former model, author and television personality has rolled out TYRA Beauty, a new cosmetics line sold directly through women who join the company as “Beautytainers.”

The fully self-funded venture has been four years in the making, but Banks has honed her own makeup expertise throughout a career in modeling and 21 cycles as producer and host of Top Model. The line features easy-to-apply products based on the three pillars of the TYRA Beauty experience: the TYover, the Smize and the It Factory.

TYover products come in a stick and incorporate proprietary “TY-Glide Technology” for versatile looks on the go. The Smize—a popular term from the Tyra lexicon for “smiling with your eyes”—pillar is all about eye makeup. And finally, the It Factory is a collection of cosmetics that combine unique textures and innovative formulas.

“Without makeup, I would have never been a supermodel.  I don’t wake up with naturally sculpted cheekbones—I paint them on! I believe makeup is the great beauty equalizer,” Banks shared in her announcement.

Tyra Beauty is also equalizing its distribution method through the direct selling channel. In a model the company has dubbed “CEOYou selling,” individuals can sign on as independent contractors and receive online training through Tyra University (TyraU). Of course, it’s not a catwalk without some mood music, and Banks has also collaborated with Jingle Punks, producers Dem Jointz and Ryan Toby, and Motown artist STORi to create the CEOYou Selling anthem, Bootyful.

October 08, 2014

U.S. News

Plexus CEO Shares 4 Keys to a Successful Direct Selling Business

Photo above: Plexus’ executive team: Alec Clark, Tarl Robinson and Alfred Pettersen.


In April, Plexus Worldwide made its debut on the Direct Selling News Global 100 list of the world’s largest direct selling companies. In August, Inc. magazine ranked it No. 8 on its Inc. 500 list of the nation’s fastest-growing private companies. In a recent interview, CEO Tarl Robinson highlighted some of the strategies he feels have been key to that success.

Build a bond with your field.
Plexus prides itself in having a partnership-style relationship with its salesforce of Plexus Ambassadors. Robinson said the company relies heavily on an advisory board of seven Ambassadors, chosen by the company’s top leaders. The executive team is in contact with the advisory board at least monthly, with three in-person meetings each year.

Make quality hires internally.
Because Plexus has made a name for itself in the Scottsdale, Arizona, market as a company with good compensation and benefits packages—not to mention its alluring growth story—the company has had no lack of applicants as it has grown. “It’s a unique and exciting position to be in as a company, that we really get to be selective about who we place in a role and take a lot of time and effort and thought process around our hiring,” Robinson said.

Top people deserve top income.
Enough said.

Company culture is key.
Creating, and maintaining, a strong, positive culture is no easy task. “Focus in on what you want that to be from an internal culture of your company, an external culture of your company and a field or ambassador culture of your company,” Robinson said. “You have to buy into it 100 percent.”

For more from the DSN interview with Robinson, see the November issue.

October 07, 2014

U.S. News

Herbalife Appoints Former FTC Commissioner to Head Compliance Efforts

Herbalife is bolstering its compliance team with the addition of a Senior Vice President of Global Member Compliance and Privacy. The nutrition company has appointed former FTC commissioner Pamela Jones Harbour to the new position, reporting to Executive Vice President and General Counsel Mark Friedman.

Harbour served as FTC Commissioner from 2003 to 2010 and also spent 12 years as a prosecutor for the New York State Attorney General’s office. At Herbalife, she will oversee the development and monitoring of the company’s training and mentoring programs. Harbour—who earned the Electronic Privacy Information Center’s (EPIC) “Champion of Freedom Award” for her FTC work defending consumer privacy—will also direct the company’s global privacy and cyber security efforts.

Herbalife also tweaked its executive team in July, when Alan Hoffman filled the newly created position of Executive Vice President of Global Corporate Affairs. Having served as Senior Vice President for Global Public Policy at PepsiCo, Hoffman brought expertise in public policy, communications and government affairs.

Amid short seller Bill Ackman’s campaign against the company, and the FTC civil investigation sparked by his efforts, investors responded positively to Herbalife’s latest hire. The company’s stock rose $2.69 on Monday to $47.30. For the year, shares in Herbalife are down 40 percent through Monday’s close. Herbalife will report its third quarter 2014 financial results on Monday, Nov. 3.

October 07, 2014

World News

MonaVie Says ‘Ciao’ to Italian Consumers

MonaVie is looking to grow its business in one of direct selling’s billion-dollar markets. Last week the nutrition brand officially launched operations in Italy, its 39th market worldwide.

The European Union is home to more than 4 million direct sellers, and Italy is one of the region’s most dynamic markets. With $3.1 billion in direct sales last year, Italy trailed only France, Germany and the U.K.

“We are committed to creating a long-term relationship with our customers, end users, and distributors in Italy and across Europe,” said Dario Colagiacomo, who joined MonaVie in August as Vice President of Europe. “It is our belief that it isn’t important what we think or say to others about who we are; our reputation is made by what others think and say about us!”

Italian consumers initially have access to six MonaVie products, including the company’s flagship acai berry juices. Those juices will ship from MonaVie’s brand-new manufacturing facility in Hohenseefeld, Germany—another significant investment in the company’s European business. MonaVie previously manufactured all of its European product in the U.S.

October 03, 2014

U.S. News

BeautyCounter Sets High Standard with Safety-Conscious Products

The cosmetics counter is chock full of four-syllable ingredients the average consumer can neither pronounce nor identify, and many of those ingredients are toxic chemicals. Direct retail brand BeautyCounter launched 18 months ago to promote safe ingredients and offer high-performing personal-care alternatives. BeautyCounter Founder and CEO, Gregg Renfrew, appeared on Bloomberg TV’s Market Makers to share the company’s vision.

“We are exposed every day to toxic chemicals through our personal-care products. Those chemicals can often be linked to cancer, reproductive issues and endocrine disruption,” says Renfrew, who founded the company as a result of her own research into environmental toxins and their links to prevalent health issues.

Over the past two decades the European Union has banned or restricted more than 1,300 ingredients, while the U.S. government has banned just 11 to date. As Renfrew notes, the U.S. has not passed a federal law regulating the ingredients used in personal-care products since 1938. In the midst of that regulatory vacuum, BeautyCounter has imposed its own standards, banning more than 1,500 ingredients from its products.

The company has signed on 4,000 consultants to market its natural beauty line, which is also available through its e-commerce website. Renfrew uses the term “direct retail” to describe the company’s multi-channel approach. BeautyCounter has generated 23 percent average monthly revenue growth, with 424 percent sales growth since January 2014.

View the full Market Makers segment at Bloomberg TV.

October 02, 2014

World News

Mary Kay Canada Head Joins Government Council on Women Entrepreneurs

The Government of Canada is supporting women entrepreneurs as an integral part of its Economic Action Plan, and Mary Kay is lending its expertise through the newly formed Advisory Council on Women Entrepreneurs and Business Leaders. Lynda Rose, General Manager of Mary Kay Canada, is one of 10 members who will share advice and insights on issues affecting women in business.

Canada’s Minister of Labour and Minister of Status of Women, Dr. K. Kellie Leitch, introduced the council at this week’s Women-Owned Businesses Powering the Economy Conference in Montreal. The list includes Joey Adler, CEO of Diesel Canada and Founder of the ONEXONE Foundation; Ernst & Young Partner Martin McGrath; and Rebecca MacDonald, Executive Chairman of the Board at Just Energy Group.

Earlier this month, the federal government also announced an Expert Panel on Championing and Mentorship for Women Entrepreneurs. Both forums will work to boost women-owned businesses, which according to BMO Financial Group employ over 1.5 million Canadians. RBC Economics estimates that increasing majority-owned women’s businesses by just 10 percent over 10 years would up their total economic contribution to $198 billion—a $15 billion net annual gain after inflation.

October 01, 2014

Magazine

90 Days of Direct Selling

by Lauren Lawley Head

CELEBRATE WITH US!
September 17 to December 15


Our goal in this 90 Day campaign: fuel ongoing conversations about the positive impact the direct selling community has on people and economies around the world. As our current DSA Chairman Truman Hunt has emphasized, let’s show the world we are a force for good!

Starting Sept. 17, you’ll see us ramp up our coverage online and through social media to expand the conversation. In fact, we’re inviting the entire direct selling community to join the celebration and hope to share your stories about how you and your organization have marked 90 Days of Direct Selling.

We’ll keep this page updated with the commentary, interviews, profile posts and other information as we move through the 90 Days.

Come join the conversation!


Click on the links below to discover 90 Day content:
(more will be added each week)

- See what we’re celebrating in our October issue!

- DSN Global 100 Profiles


INTERVIEWS

- Alessandro Carlucci: WFDSA Hosts 14th Annual World Congress in Rio
- An Interview with Nu Skin’s CEO Truman Hunt

PAY IT FORWARD

- Direct Sellers Pay It Forward on Capitol Hill

RAISE THE BAR

- Industry Events Help You Raise the Bar

RESEARCH

- What 90% of Direct Sellers Say

SOCIAL MEDIA

- Use #DirectSelling90 and spread the news!

October 01, 2014

Top Desk

Focus, Focus, Focus

by Cindy and Scott Monroe

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


As our business has grown over the past several years, there has been one challenge that always seems to rear its head: focus. Even as our teachers and parents often reminded us to “focus, focus, focus” when we were children, still today, as business leaders, the ability to maintain focus in the midst of a growing and thriving business is one of the greatest challenges we face. Focus can be tough for entrepreneurs especially. Our creative desire to find bigger and better ideas creates a perfect environment for distraction if not kept in check. We believe that by being purposeful and minimizing distractions, we can maintain focus on the things that make the most impact and keep us on track toward a bright future.

Cindy Monroe: Purposeful is such an important word to us at Thirty-One that it is one of our 12 core values. We ask ourselves “why?” often. It seems elementary, but how many times have we all gotten deep into an initiative that’s just not working and found ourselves wondering why we started it to begin with? I’ve found that when I’m purposeful from the beginning and plan and get the right people around the table who work together as a team, we can determine ahead of time whether it’s going to become a distraction or not.

We should also constantly evaluate whether or not what we’re in the middle of is still on purpose. We all have to face it. Sometimes our greatest ideas that seem to start out as winners end up losing focus, losing purpose and ultimately getting off track. We have to be honest with ourselves and learn to let some things go or learn to let others be rebuilt. In the tactical execution it’s so easy to get distracted by all of the very important details and find ourselves quickly off-purpose. If you’re feeling bogged down on something in business or life, I want to encourage you to step back and examine it. Is it still purposeful? Are you focused or is it all cluttered with distractions? Are there lots of good things getting in the way of you doing great things? These are all questions we try to ask ourselves every week, and I think they’re questions we should all ask ourselves and our teams daily. Also, as top executives, it’s easy not to realize the amount of energy that executing an idea or initiative takes. Ask your team many times during the project for the amount of time the idea is taking compared to other initiatives or day-to-day core competencies.

Scott Monroe: In photography, there is the concept of depth of field. Many of the most beautiful photos ever shot have a very narrow depth of field. The subject is close and in perfect focus while everything else in the foreground and background are out of focus. It’s easy for us amateur iPhone photographers to want everything in focus but we find our all-inclusive shots, taken from a safe distance, to be distracting and uninteresting.

The same is true for our life and our business. We can have a great story with a lot of different angles and a lot of variety and possibilities. But if we don’t stay close and focused on what truly matters and what truly gets results, then we can easily end up with a very cluttered photo.

Cindy and Scott MonroeCindy and Scott Monroe

Cindy: We also have to work hard to minimize distractions. Distractions can be a lot of things. For entrepreneurs, it can be that next big idea. For business leaders, it can be new programs and incentives that we put in place hoping to get a lift in business. For individuals, it can be well-meaning people really trying to help. All of us get distracted, and I’m certain most distractions start off as good ideas. Focusing purposefully can help remove details that have become distractions.

Scott: One great distraction that seems to come our way a lot in business and in life is that of trying to be someone we’re not. That’s why another of our 12 core values at Thirty-One is authentic. The great English playwright Oscar Wilde said, “Be yourself. Everyone else is already taken.” There’s no shortage of great ideas out there, but it’s very difficult for us to always be innovative without becoming like someone else. The question we ask ourselves all the time is, “Is this us? Is this Thirty-One?” The most successful you is the real you. Be honest, no one does you better than you. When we try to be something we’re not, we are only fooling ourselves. Our consumers, distributors and peers all sense when we’re missing it. It’s important to remain purposefully focused on being true to ourselves as people and as a company.

Cindy: Even as top executives, it’s easy to get distracted with who we are supposed to be as individuals and as leaders. We watch other executives, read leadership books and see how different leaders are involved in their sales field, expansions, media/press or on the speaker circuit. Just like business initiatives can be distracting, so can comparisons or a lack of focus on your own role as an executive. Being a young executive, I can admit to the times when I have been confused about my own role. What my executive team needs me to play, what our sales field needs from me, responsibilities in our industry, president organizations and executive groups, and my desire to support board roles for philanthropic causes that I love, all begin to compete very quickly. While juggling all of these roles can be challenging, I think the real threat is getting confused with how to use your true gifts and what your role should be in your company! What are you doing that plays to your strengths and what you love to do? What are you doing out of obligation or that someone else could do better?

Scott: It’s not impossible to maintain focus. If we constantly ask the “why?” questions and remain purposeful, work to minimize distractions and stay authentic, I believe we can find our way to reaching more and more people with the powerful gift direct selling offers: an empowered life where they find financial freedom, and as countless thousands have told us, “Direct selling helped me find me.


Cindy Monroe is Founder, President & CEO, and Scott Monroe is Chief Brand Officer of Thirty-One Gifts.

October 01, 2014

DSA News

Industry Voices

by DSN Staff

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Direct Selling News Publisher John Fleming recently spoke with John Parker, Chief Sales Officer for Amway, about leadership, always learning and finding fun in everything you do.

DSN: What is the one thing you enjoy most about being the Chief Sales Officer for Amway?

JP: The engagement with our field—Amway Business Owners. At the end of the day, it’s their success that adds up to create Amway’s results. Their passion for helping other people helps make Amway what it is.

DSN: What has been your proudest accomplishment?

JP: Having been a part of teams that have seen our business through some challenging times. It’s easy to lead in good times when all is going well, but I think you add more to the team and organization when times are tough and you’re able to work together. It’s most satisfying. Sometimes the best work is done during times when results don’t show right away, but they follow.

DSN: What’s been the most fun?

JP: I enjoy learning. For me a lot of my learning came while transitioning from a smaller to a larger role. I’ve also enjoyed learning from generations younger than I am. They’re not just different in how they think, but they’re fundamentally different in their personal relationships. I can’t be effective in my role if I don’t understand that. The process of learning and trying new things is really fun and exciting. Also, the adventure of travel has been fun—having a chance to go around the world, experience different cultures, people, customs and food. You either love that or struggle with it. I love it.

DSN: What do you tell Amway Business Owners to lead and inspire them?

JP: The primary message is that our business—our whole industry—is centered around helping other people. The individuals who are the most successful Amway leaders realize at some point in their journey that it’s not about them. It’s about helping others. That’s when it becomes more fun, more rewarding; and it leads to an environment of more success as well.

DSN: You’ve held several key positions at Amway. Which one shaped your management style the most?

JP: When I was President of Amway Japan because it really forced me to reflect on my style, strengths and weaknesses, and adapt my style to be with different people and cultures. As leader it’s sometimes easy to take the mindset that I have one way of leading and communicating. But if you work across geographies and cultures, you need to be more flexible in how you lead and communicate. I think that shaped me more than anything else.

DSN: If you could relive one period of time since you’ve been at Amway, either to enjoy it again or have a do-over, what would it be?

JP: Maybe the first five years of my career, because there’s an excitement around that initial stage of learning. I had such great mentors here in the company. I’d love having the chance to go back and soak up that learning I got from them. It really was fun, too.

DSN: Is there one basic principle that governs your leadership at Amway?

JP: I really think it’s about putting the focus on others, not on yourself. Those leaders who are in it for themselves may have success in the short term, but people see through that. Over the long term you won’t develop real followership unless your focus is on the bigger cause that our businesses stand for.

DSN: Has someone ever given you a bit of really great advice you can share with us?

JP: I’ll point to my wife, who says to listen more than you talk. It’s true. If you spend more time talking and less time listening, you’ll be less effective than if you flip it around.

October 01, 2014

Company Spotlight

Gold Canyon: Turnaround Toward Growth

by Barbara Seale

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Company Profile

Founded: 1997
Headquarters: Chandler, Arizona
Executives: Managing Directors Lynae Parrott and Gail Gioffredi
Products: Scented candles and accessories


After a season of sluggish sales, the sweet smell of success seems to be returning at Gold Canyon. The scented-candle seller and manufacturer has instituted sweeping changes that have boosted both morale and sales. Led by a new management team that streamlined everything from the product line to the sales process, Gold Canyon looks like a happier, more fun version of its former self.

Earlier this year the company appointed two new managing directors, Lynae Parrott and Gail Gioffredi, who lead Gold Canyon with a combination of company experience and new eyes. Parrott has been with Gold Canyon since its early days, starting in its field sales organization. In 2000 she was asked to join the corporate staff, where she learned the full scope of the headquarters organization by holding positions in several departments before leading its marketing efforts. Gioffredi joined Gold Canyon in January 2012 after gaining expertise in several other direct selling companies. Parrott explains that while she primarily leads the company’s internal team and Gioffredi predominantly focuses on external sales, the two work in lockstep to push the company into the future and to focus on creating the best possible opportunity for the field sales organization, which it calls Fragrance Consultants.

“One of the first exercises Gail and I did was to evaluate our vision of the company, and we quickly identified that our business was overly complicated,” Parrott explains. “It needed to be more simple, more fun. That was the premise of a lot of the changes we started to implement immediately.”

Lynae Parrot and Gail GioffrediLynae Parrot and Gail Gioffredi

Simple, Substantial

They asked themselves what they wanted the company to represent and what its mission was. Their answer: to empower others to create their own destiny.

They also identified the four core values that drive the company—both now and into the future:

  1. Do the right thing.
  2. Continually improve.
  3. Give back.
  4. Have fun!

The leaders embedded their mission and values into three key projects that would turn the company around. They emphasize proudly that throughout the turnaround Gold Canyon has been profitable, even increasing its profitability each month. But they believe that its new branding, enhanced career plan and Simple Selling System™, along with improved technology, will re-launch the company toward the growth it previously was struggling to achieve. Parrott and Gioffredi initially hired consultants to develop the bones of the career plan, but the Gold Canyon team fleshed it out, along with the rest of the turnaround plan.

The first step—because it had to be in place to launch others—was rebranding the company. The new look, revealed in February, had to work hard. It needed to reflect the company’s mission and values, but it also had to attract a younger demographic of Fragrance Consultants and customers.


In June the company had 79 promotions to leader and above, as well as 27 percent sales growth.


“We wanted the new brand to be happy, open, communicative, authentic, transparent, friendly, energetic—all those words resonate differently with different people,” Parrott elaborates.

Because a brand is more than a look, it had to have the backing of employees, too. So Parrott and Gioffredi worked hard to make sure that the staff was on board and understood what the brand stood for.

“They are our brand ambassadors,” Parrott says. “For us to achieve our strategic initiatives, they must be on board. We have been very open with them about what this brand stands for. Not only have we given them presentations, but then we have made a very conscious effort to walk the talk. When we talk about being happy and communicative, we are!”

Earning Trust

Both managing directors understood that employees had heard management promise open doors and open communication in the past, but follow-through had failed. The new executives had to earn trust. To follow up on their promise, they hold management meetings every two weeks, and they also created a Culture Club aimed at breaking down barriers and opening the lines of communication throughout the headquarters organization, including manufacturing. The group has already surfaced and addressed practices that were out of alignment with the company’s vision.

The workplace, including the 250,000-square-foot manufacturing and distribution facility, got a face-lift that reflects the new branding. The playful lettering and polka dots that adorn new marketing elements are also on company walls. Employees now enjoy a social area called the Company Lounge, complete with television, Wi-Fi, a pingpong table and a coffee bar where people gather. The objective: Create happy employees who are building relationships with each other while demolishing communication barriers among functional areas. In less than a year, the small steps have yielded big results. The formerly quiet work space now buzzes with life and laughter.


Gold Canyon’s new managing directors emphasize that throughout the turnaround Gold Canyon has been profitable, even increasing its profitability each month.


The energy filters into the field, too. Happy, more engaged employees help provide better service to the salesforce, whether they’re answering calls or fulfilling orders. Fragrance Consultants experience the energetic new brand beginning with catalogs and the starter kit, which is now dubbed the Dotty Box. The energy extends through the language of everything the company does. Parties are now called Mixers, a key printed piece in the starter kit is called the Know-It-All Guide, and the annual convention is called Palooza. The fresh, modern approach has pumped up sales leaders, who help drive home the company’s messages throughout their downlines.

Complementing the rebranding is a new compensation plan they refer to as their “enhanced career plan” that Gioffredi says simply makes more sense.

“The old career plan had unnecessary levels, complexities that didn’t serve a purpose and requirements that were too difficult,” Gioffredi says. “When the field doesn’t understand something, they freeze. Sales and sponsoring stop. A consultant’s long-term happiness is achieved by growth. We get there by rewarding the right activities and getting new people to join the business.”

Show Me the Money

Because growth comes from the bottom up, the new plan increases the income of early and mid-level leaders. First, they created an initial leadership level, simply called Leader. The new compensation plan gave that group a 40 percent increase on their Level One recruits’ results. Two levels up, team leaders received a 100 percent increase on their Level One recruits’ results, as well as an increase on Level Two. In June the plan also simplified the company’s luxury car program to make it more achievable for leaders to drive their choice of Mercedes. That month alone, the company had 79 promotions to leader and above, as well as 27 percent sales growth. July growth, especially sponsoring, was also strong. The company currently has about 200,000 Fragrance Consultants.

Parrott and Gioffredi emphasize that Gold Canyon’s internal team executed a flawless launch of the plan—the first in the company’s history.

“There were absolutely no technical hiccups,” Parrott points out. “Everything transitioned perfectly. Our inside IT department has created our own genealogy and commission structure. We now own that platform, which helps us control our own destiny. We believe that’s not only our purpose in the field, but internally as well.”

The enhanced career plan is designed to support Gold Canyon’s Simple Selling System, introduced in February. Preparing for that system required the company to reduce its unwieldy product line by 25 percent. Then with a more streamlined but harder-working collection of products, Gold Canyon introduced a three-step shopping guide to help customers choose the candles and accessories that matched their personalities and home décor. Step 1: A quiz guides customers to the scent category that fits them best, simplifying the process of navigating the 100 fragrances Gold Canyon offers. Step 2: They “shop the studio,” deciding whether they want their fragrance in traditional scented candles or wickless candles, like scent pods. Step 3: They choose their own style of candle holders and accessories to embellish their products.


“We’re creating the BLT: Believability, Likeability, Trustability. And we’d rather our consultants love us than like us!”
—Gail Gioffredi, Managing Director


The system encourages larger orders, as well as increases the net proceeds from each mixer, while it creates a fun, interactive, rewarding experience for attendees and hosts. Everybody wins.

In September, the company introduced a new scent-select candle that complements the Simple Selling System. Gold Canyon produces—to order—a jar designed with the customer’s choice of pattern and filled with a candle in the specific scent the customer chooses. The combination of scents and printed patterns generates some 250 customized options for Gold Canyon Fragrance Consultants to sell.

Philanthropic Re-Focusing



Giving back came early in Gold Canyon’s history. By its third year in business, Founders Curt and Karen Waisath started the Prayer Child Foundation to make a difference in the lives of children with physical and emotional challenges. Over its lifetime, Gold Canyon has donated $2.7 million. Later the company began donating to two different organizations that support U.S. and Canadian military troops, donating $30,000 to the two groups. More recently, it partnered with the Breast Cancer Research Foundation, contributing $205,000.

The company is proud of its commitment to charitable donations and has sustained the financial flow through the sale of specific candles dedicated to each cause. As the company identified its core values, it also looked at every aspect of the company to ensure that they were reflected, including philanthropy—not to reduce it, but to be sure that contributions were being made to the organizations closest to the hearts of its Fragrance Consultants.

At the time Managing Directors Lynae Parrott and Gail Gioffredi spoke with Direct Selling News, they had just asked Gold Canyon’s field sales organization to provide feedback on its philanthropic projects. They posted an online survey asking consultants to tell them the organizations and causes that are most important to them.

“We’re going to realign with our field to make sure we are all in agreement about the type of organizations we’ll support in the future,” Parrott explains. They also announced that they want consultants to walk the philanthropic talk, giving back through volunteering, serving others or—one of the company’s core values—just bringing happiness to others. And Gold Canyon will reward their efforts.

“We just launched a new philanthropic award process that will recognize the give-back philosophy,” Parrott says. “Consultants will be able to nominate other consultants for the award. Honorees will be on stage at Palooza next year, and Gold Canyon will give a donation to the organization they support.”

For the first time in the company’s history, Gold Canyon also will incorporate give-back efforts on sales incentive trips.

The new philanthropic practices will be one more step toward aligning all of Gold Canyon’s programs with its mission and core values.

Investing in Growth

Offering all those new options required Gold Canyon to invest in some new manufacturing machinery, and the company made sure it could deliver customized products accurately and in the same timeframe that existing customers and consultants had come to expect.

“We have done lots of test runs that have been very successful to make sure we’re up to production,” Parrott says. “We anticipate no delays. In our research of customization, we learned that it usually demands a 60 percent surcharge, but we aren’t passing the customization fee on to customers. With the efficiencies delivered by our focus on technology, we kept our cost in line. The price point remains the same as other candles in the same look and feel.”

The improvements are intended to have long-term benefits in sales and recruiting by creating more committed consultants.

“We’re creating the BLT: Believability, Likeability, Trustability,” Gioffredi notes. “And we’d rather our consultants love us than like us! Those are successful company ingredients. That’s what we’re building on. If consultants are excited and happy, they’ll spread the word.”

Even though Gold Canyon launched major improvements in the first half of 2014, it announced even more to come at its August convention, Palooza. Some changes, such as redesigned outer shipping boxes, were minor, but other announcements will change the face of the company over time. For example, it announced a soft launch into the Hispanic market, starting with new Opportunity Brochures and product catalogs in Spanish.

The company also announced the next phase of its technology upgrades: updated personal websites. The websites will be milestones on a number of levels. They will continue the company’s new commitment to controlling its own destiny by building its technology internally.

“One of the attributes we’re building is being tech savvy,” Parrott says. “As a company, we don’t have a high-tech reputation. It’s probably our biggest weakness. When Gail and I came into this, we knew we needed to build our own platforms. The ones in place at that time had Band-Aid on top of Band-Aid. Long term, that wasn’t sustainable, and we’re improving our technology dramatically.”

The new websites will be enhanced with features consumers have become accustomed to, such as mobile platforms, wish lists, social media links and customer reviews.

At the same time it upgrades its technology, Gold Canyon also will upgrade its human touch. The company’s service department, called Partner Support, will have extended hours. And with the expansion into the Hispanic market, the company added its first bilingual field development manager to support consultants and leaders.

Quality Continues

The numerous changes are built on the company’s strong foundation of candle manufacturing. Gold Canyon is proud to produce The World’s Finest® scented candles, using pure fragrances that waft throughout the home; cool, food-grade wax; and self-extinguishing wicks. Having its own manufacturing facility gives Gold Canyon more than a recognizable scent in its hometown. It also gives it a competitive edge.

“It allows us to respond to what consumers ask for,” Parrott says. “Our product development team and manufacturing team work together to get new ideas for products that set us apart from the competition. And that’s a great story for our field to tell. They’re not just offering a candle that is made in some unknown spot somewhere in the world. Instead, they’re proud that what they’re selling keeps people in America employed. And our Canadian consultants love it because the wax is from Canada.”


The Simple Selling System drives up the amount of the average order, as well as the net proceeds from each mixer, while it creates a fun, interactive, rewarding experience for attendees and hosts.


The managing directors believe Gold Canyon’s strong foundation and recent improvements are setting the company up for future success. They’ll know they are successful as they see Gold Canyon become a household name. Achieving their objective business goals—sustained double-digit growth, quadruple their sales field count, and international expansion—will make that happen.

“When Lynae and I took on this awesome responsibility of providing leadership to the company, we knew that many people were relying on us, from investment groups to vendors and the sales field,” Gioffredi says. “We have to balance them all and make sure that our Fragrance Consultants are successful. If they’re successful, we will be. We’re aligning everything to create that success.”

October 01, 2014

Company Focus

Zurvita: Successful Simplicity

by Courtney Roush

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Company Profile

Founded: 2008
Headquarters: Houston, Texas
Executives: Mark and Tracy Jarvis
Products: Health and wellness


Mark and Tracy JarvisMark and Tracy Jarvis

After a rocky start, Zurvita chose the road less traveled—and built a salesforce determined to make the world a healthier place.

Though Houston-based direct seller Zurvita originally launched in 2008 as a service business with everything from cell and video phones to tech support, electricity and gas, the company arrived on the wellness scene in 2011. It was then that Zurvita introduced a suite of powerhouse products that, above all, were designed to simplify the pursuit of wellness. The company’s growth since then has been nothing short of spectacular. Annual revenue grew from $3.6 million in 2011 to $15 million in 2012 and $63 million in 2013. Revenue for 2014 is expected to fall between $80 million and $90 million. The company of 55 employees, with manufacturing operations in Dallas and Phoenix, has spent the last year greatly enhancing its information technology infrastructure to be able to support that incredible growth, and better serve the 30,000-plus independent consultants who represent the Zurvita brand.

Currently, the Zurvita independent salesforce is concentrated in the United States and Canada, primarily in small towns. According to Zurvita leadership, that surprising phenomenon is likely due to the fact that word-of-mouth travels faster in places like McAllister, Oklahoma, one of the most successful Zurvita towns, where you’ll hear the stories of farmers-turned-ambassadors (currently the highest level of the independent salesforce). And while Zurvita is working to spread the word of those powerful testimonials into larger North American cities, the company also just celebrated its expansion into five new international markets on July 1, 2014. For a direct seller that’s still a relatively new kid on the block, these milestones are impressive, indeed.


“When you give people something that changes their lives in a tangible way, they’re going to stick with you.”
—Mark Jarvis, Co-Founder, Co-CEO and President


During the early years, however, the company’s own journey to wellness was challenged with more than a few hurdles and a major detour, all of which make its present success perhaps that much more remarkable. This company is unrecognizable from where it was just six years ago.

When Zurvita launched in 2008, the company’s co-founders, Mark and Tracy Jarvis, were already power players in direct selling, having achieved seven-figure success as distributors with another direct seller. They’d taken an enormous leap of faith to walk away and attempt to build a company from the ground up, but they considered it a calling to start a direct selling business based on philosophical principles they shared: faith, humble leadership and plenty of opportunities for “wins” at every level.

But the maiden voyage wasn’t smooth sailing. Serving as an online shopping mall of sorts, “we were an unfocused, struggling company,” says Mark Jarvis, who also serves as Co-CEO and President. After losing an average of $300,000 a month during its first 42 months, it was time for the fledgling direct seller to make a radical change; the “all things to all people” approach simply wasn’t working. “By 2011, we were looking for an identity,” Mark says. “We made the decision to regroup and start over again with a single focus.”

Why wellness? Mark’s wife, Tracy, had always had a passion for the subject, but the choice was based more on the profound and tangible impact the couple knew that good health could have on people’s lives—and the power that such transformations have to influence others. “When you give people something that changes their lives in a tangible way, they’re going to stick with you,” Mark says.

Make no mistake: The transition from 11 products to one was anything but easy. “It was a courageous move on our part,” says Co-CEO Jay Shafer. Inspired by the book Good to Great by Jim Collins—who stated that behind every successful company was the pivotal decision to take a bold risk—the company reinvented itself. Quite telling was the fact that “our consultants in the field respected our decision to streamline and stayed with us,” Jay says.


One of the most interesting aspects of this company’s story is that its fastest-growing demographic comes from small-town America.


With that in mind, after extensive collaboration with scientists, physicians and researchers, the company launched Zeal Wellness, its flagship product, in 2011. Designed as an all-in-one formula of whole-food concentrates in a powder to be mixed with water or juice, Zeal is intended to deliver the body’s daily nutritional needs, promoting optimal health, a strong immune system and enhanced energy stores. Calling those days back in 2011 “a combination of faith and chaos,” though it wasn’t developed as a weight-loss product per se, Zeal Wellness was providing just that result for some, along with increased energy and, quite simply, a zest for life. Corporate leadership believed not just in the integrity of the product but also in the bang for the buck. “Above all, we wanted value for the customer,” Jay adds. “I don’t believe you can find a product that delivers what we do for less than twice the price.”

Zurvita later added three additional products: Zeal Advanced Formula Protein Shakes; the herbal and probiotic Zeal Cleanse for digestion; and a thermogenic fat burner, Zeal Burn. Consumers may purchase all four products bundled as the Zeal Weight Management Program. Those who want an extra shot of motivation during the program have the option to participate in the Zeal for Life Challenge. This support group of sorts includes regular conference calls on a variety of topics that, collectively, promote a holistic approach to wellness—one that extends far beyond mere numbers on the scale.

Product convenience is of paramount importance to the company. Every Zurvita product was designed to offer no-hassle, easy-to-take-and-share nutrition. Having witnessed the company’s exponential growth after streamlining its product line from 11 to just one, the Jarvises and Jay Shafer were committed to promoting a simple message everyone could understand: simple, convenient, economical.

One of the most interesting aspects of this company’s story is that its fastest-growing demographic comes from small-town America. “Zeal Wellness has had almost an immediate impact in these smaller towns,” Jay says. “I would love to say that was our strategy, but it wasn’t—it just happened.”


Annual revenue grew from $3.6 million in 2011 to $15 million in 2012 and $63 million in 2013. Revenue for 2014 is expected to fall between $80 million and $90 million.


Even while Zurvita embraces its small-town growth, however, company leadership is thinking beyond borders. Effective July 1, Zurvita entered the Dominican Republic, United Kingdom, Hong Kong, Australia and Singapore. Corporate team members have partnered with Zurvita ambassadors (independent distributors who have achieved the highest level of success in the salesforce) to gain traction in each of these markets.

A new representative can start her Zurvita business as a sales consultant for a minimal amount, then move up to the managing consultant level after adding her first three new team members. From there, a managing consultant can progress to the senior, regional and executive consultant levels, then national and presidential director levels, followed by ambassador. The pinnacle of success is the level of crown ambassador, which takes five ambassador organizations to reach. Although nobody’s reached it yet, Mark estimates it to be just a matter of time.

Zurvita has embraced a grassroots approach to its growth strategy, entering each market slowly, deliberately, and with one product—Zeal Wellness. Then the company introduces additional products after it has established a loyal following in that market. “There’s no fanfare at the beginning,” Mark says. “We just get people on the product. It’s a conservative approach.”


Based on the philosophy “The higher you climb, the more you serve,” the company maintains an eye on succession within the independent salesforce, teaching Zurvita ambassadors to raise up their replacements.


‘Now’ Money

The company’s training and educational initiatives are based on helping new consultants to hit the ground running, before the dust can settle, so to speak.

The Zurvita Success System is designed to teach consultants how to achieve a quick win—earning a bonus during their first 30 days in business. During their second month in business, they’re shown how to repeat those earnings—and establish a success story as early as possible that they can share confidently and enthusiastically with others. Monthly promotions and contests are designed to encourage the maintenance of that early momentum. One such promotion is “Destination Success,” in which all consultants who move up in rank qualify for a cruise.

Zurvita’s high performers also may qualify to earn the use of cars; the company’s options include Mercedes, Cadillac and BMW, giving prospective and new team members a glimpse of the potential of this business opportunity.

Zurvita ranked No. 100 on the 2014 DSN Global 100 list.

Technology Boost

To better serve its consultants and support the company’s growth, Zurvita began developing a new IT infrastructure last year. Now equipped with more data and flexibility, plans are underway for the company to introduce additional technological tools that will help develop consultants’ business acumen and product knowledge and, ultimately, drive additional recruitment. In the meantime, consultants take advantage of company-provided, personalized websites, where their customers can shop around the clock. Some 50,000 people have liked the company’s Facebook page, where the news feed contains pointers for health and wellness and consultants relay their personal success stories.

Zurvita utilizes SMS technology to send a quick and easy offer that consultants can share with potential team members. After texting “Do you have a minute?” to their prospects, consultants text an informational video link to those who agree. The video includes the opportunity for prospects to try a Zurvita product sample pack. The intent is to blend the convenience of technology and the personal, grassroots approach for which Zurvita has become known. No matter how many technological offerings it rolls out, the company remains mindful of the fact that in many of its most successful markets, parties, personal testimonials and individualized service will never go out of style.


Zurvita’s leadership team, co-founders Tracy and Mark Jarvis and co-CEO Jay Shafer, shifted the company’s focus from services to wellness products because of the tangible impact good health could have on people’s lives.

Celebrating Wins at Every Level

The spotlight is big enough for everyone at Zurvita events. “You don’t see the same people on stage at all of our events. We showcase the next man up, so to speak,” Mark says. When you consider that Zurvita’s typical consultant has had no prior experience in direct selling before starting a Zurvita business, each win is justifiably reason to celebrate. The company strives to help new consultants realize their first win right out of the starting gate—and that tangible success can empower them toward a succession of more wins.

“Our job is really to build relationships with up-and-comers,” says Tracy. “We pull them in and make them feel totally connected to the company. We just love on these people and make them feel appreciated. It keeps people engaged and moving forward.” In fact, corporate leadership is so committed to empowering “the next man up,” they join Zurvita sales support staff to work the phones until midnight during every month-end close, reaching out to representatives who are on the cusp of promotion and offering that extra shot of encouragement.

Based on the philosophy “The higher you climb, the more you serve,” the company maintains an eye on succession within the independent salesforce, teaching Zurvita ambassadors to raise up their replacements. “We’re replacing our army, so to speak,” Jay says.



Zurvita employees and consultants volunteer to build water wells in Nicaragua.


Giving to Others


Zurvita’s corporate social responsibility initiatives are relatively recent, having spent its first few years as a struggling company in search of an identity. Now beginning to reap the rewards of its hard-fought success, Zurvita is in a place to share with others. In January 2014, employees and independent salesforce members ventured on a mission trip to Nicaragua to build two water wells—an experience they’ll repeat in Nicaragua in January 2015 under the name of “Zeal for Life.” On Aug. 23, 2014, Zurvita kicked off its “Feed 500” program, which challenges employees and independent salesforce members to feed at least 500 hungry people in 24 hours. During the inaugural event in Houston, volunteers packed lunches and delivered them everywhere they identified need, whether it was a homeless man on the street or an inner-city homeless shelter. It’s an experience Zurvita plans to replicate each month in various locations throughout the United States.

Three years after relaunching on a platform of wellness, the company is reaping the rewards of its deliberate, strategic approach to market expansion and brand marketing. Whether the results are seen in Zurvita’s revenue—potentially reaching $90 million for 2014—growth of its 30,000-plus independent consultants through a small-town network, or expansion already into five new international markets, the company plans to stay around for the long term, bringing wealth and wellness to an eager audience.

October 01, 2014

Cover Story

Billion Dollar Markets

by Andrea Tortora

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Direct selling is an industry proving its mettle as it prepares to take advantage of major growth opportunities fueled by technology, increased entrepreneurial support and the new emerging market consumer.

Global estimated retail sales topped US$178 billion in 2013, up 8.1 percent from 2012, according to the most recent data from the World Federation of Direct Selling Associations (WFDSA). The worldwide salesforce also grew, up 7.2 percent to 96 million independent contractors. Both are record numbers.

In 2013 there were 23 countries with annual retail sales above $1 billion. That group accounts for 93 percent of global sales. Of special note is the industry’s 6.8 percent three-year cumulative growth rate (CAGR). The figures reinforce direct selling’s strength and show its potential, says Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA. “The opportunity this industry has to really be even more powerful is in taking advantage of the fact that we are living in a moment in our society when technology is reinforcing relationships and allowing us to do more and better business,” Carlucci says.

STRONG SUSTAINABLE GROWTH

This most recent data clearly illustrates direct selling’s sustainable growth—especially in times of economic recovery and improved governmental policies to support entrepreneurship. Among the direct selling associations reporting their data to the WFDSA Research Committee, about three-fourths of the markets show solid, sustained growth in the three-year compound annual growth rate.

Here’s why that is important: “If the year-over-year percent change represents the snapshot, then the three-year CAGR represents the video and shows the long-term change or the trend. The sustained growth of direct selling is shown in a positive CAGR,” says Amway’s Judy Jones, Chairman of the WFDSA Global Research Committee.

Data is reported using constant 2013 dollars, to remove currency fluctuations from the equation. As more companies participate in sharing sales data with each country’s direct selling association (DSA), the entire industry begins to gain actionable knowledge it can use to enable sellers to better serve customers.


Global estimated retail sales topped US$178 billion in 2013, up 8.1 percent from 2012, according to the most recent data from the World Federation of Direct Selling Associations (WFDSA).


The sales of the 23 billion-dollar markets in 2013 are familiar to those who follow this annual ranking. The top five countries account for 60 percent of direct selling’s global sales. All but one report a positive CAGR:

1.  United States, 4.6 percent
2.  China, 23.3 percent
3.  Japan, -4.4 percent
4.  Korea, 8.0 percent
5.  Brazil, 8.6 percent

China moved into the No. 2 spot for 2013. If the current rates of growth in the United States and China remain steady, China could become the No. 1 direct selling market in the next year or two.

Interestingly, the billion-dollar markets that make up the bottom five show tremendous cumulative growth, particularly in emerging markets:

19.  Australia, 2.3 percent
20.  Venezuela, 15.7 percent
21.  India, 20.0 percent
22.  Philippines, 17.8 percent
23.  Indonesia, 12.0 percent


This most recent data clearly illustrates direct selling’s sustainable growth—especially in times of economic recovery and improved governmental policies to support entrepreneurship.


The numbers reinforce trends seen in the past two years. Direct selling is growing rapidly in the Asia Pacific region and Africa—dubbed the “new frontier” by Carlucci. Africa posted just over 9 percent year-over-year sales change for 2013, trailing only Asia Pacific at 12.6 percent.

“Africa is a place where everyone should put a seat now, because in 15 years it will be very relevant,” Carlucci says.

Following closely is the Central and South American region, which also posted just over a 9 percent year-over-year sales change. Six Latin American countries—Brazil, Mexico, Colombia, Argentina, Peru and Venezuela—are billion-dollar markets. More multinational companies are starting to do business in Central and South America, where consumers embrace direct selling.

POWERFUL NEW MARKETS

The desire to improve one’s socioeconomic standing remains strong in emerging markets, which translates to excellent growth potential for direct selling. In fact, seven of the billion-dollar markets with double-digit cumulative growth rates are emerging markets, according to the WFDSA data:

  • Argentina, 28.1 percent
  • China, 23.3 percent
  • India, 20.0 percent
  • Philippines, 17.8 percent
  • Venezuela, 15.7 percent
  • Indonesia, 12.0 percent
  • Colombia, 11.6 percent

Direct selling is a very relevant marketing and sales model for emerging markets, says Derrick Irwin, Portfolio Manager for the Wells Fargo Advantage Emerging Markets Equity Fund. In many of these countries, the retail industry is not fully developed and companies cannot put products on a Wal-Mart shelf. “There is also skepticism among consumers about counterfeiting and quality products,” Irwin says. “If items are being sold by someone they trust, it is powerful. The opportunities are very, very good.”

Companies like Avon know how important international markets are for growth. The global beauty direct seller derives 85 percent of its business outside the U.S., and 75 percent of revenues come from emerging markets, says CEO Sheri McCoy. Avon’s priority? Growing its top markets, which include: Brazil, United States, Mexico, Russia, Central Europe, Venezuela, Argentina, Colombia, United Kingdom, Philippines, Turkey and South Africa.

China is also a huge market with infinite business opportunities. Leo Zhou, Deputy Director of Media Affairs at Mary Kay China, believes direct selling is a perfect match for China’s huge population, and that the interpersonal interaction at the industry’s core is quite effective in low-tier cities. He says, “It ensures that the direct selling industry could get into contact with female consumers in a faster and more precise way, thus promoting sales growth.”

Despite being a more mature market for the industry, Latin America is still a developing region with an entrepreneurial middle class that is seeking ways to maximize individual and household incomes, as demonstrated by the number of countries represented on the list, and growing activities in even more. Miguel Francisco Arismendi, Amway’s Director General for the Andean area, based in Bogota, Colombia, says, “There is no doubt that direct selling provides opportunity.”


“Africa is a place where everyone should put a seat now, because in 15 years it will be very relevant.”
—Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA


EMERGING MARKET CONSUMERS

The world’s new consumers are a diverse group. Some are affluent and ready to spend their newly robust income on fulfilling their dreams and ensuring a better life for their children. Others are just beginning to realize their buying potential as they are exposed to the wealth of available products. The new middle class in Indonesia, India, Nigeria, Ghana and Kenya are confident consumers who plan to buy more, save more and invest in education, according to research from Standard Chartered, a London-based international bank.

These emerging consumers have a wide range of incomes and a wide range of desires to follow, including such things as an appetite to travel and willingness to invest in a new car, and some can even consider buying luxury goods. In less developed markets, currency fluctuations and commodity prices impact the consumer spend. Wells Fargo’s Irwin says, “The problem in core countries is that so much of the family budget goes to food, so if those prices fluctuate that squeezes the budget for other things.”

Whereas an American will generally buy shampoo no matter what, in countries like India it may not be a regular purchase. To get around this hard economic truth, companies like Hindustan Unilever Limited offer single-use package sizes for the price of a rupee or two (2-4 US cents). “It takes creative marketing and strategies to really access these markets,” Irwin says.

Another example: In China, direct selling successfully advances the development of consumers’ personal-care habits in low-tier cities and stimulates their willingness to spend more on premium products. Consumers in fourth-tier cities spend an average of 220 yuan (about US$38) each year per capita at cosmetics stores, whereas in the direct selling channel, consumers spend 540 yuan (about US$88) each year. Mary Kay’s Zhou says, “This fully demonstrates the consumption potential of third-tier and below cities.”


The new middle class in Indonesia, India, Nigeria, Ghana and Kenya are confident consumers who plan to buy more, save more and invest in education, according to research from Standard Chartered.


As emerging market consumers flex their collective spending muscles, a preference for local or domestically based brands is becoming evident. In the past 20 years, multinational brands dominated consumer brand preferences. As locally based companies achieve scale and develop their own brand strength, they are beginning to compete with multinationals. Irwin says, “Consumers are more open to buying local brands to support local businesses and show their pride in the local market.”

In China, where consumers have long aspired to acquire products with names like Gucci, Nike and other big Western brands, local brands are gaining market share as they fill a niche in the middle ground between the luxury and inexpensive brands. China-based Belle International is one of them. The company makes mid-range women’s shoes and is like the Nine West of China, according to Irwin.

In India, the domestic Godrej Consumer Products now claims more than $1 billion in revenue, taking a stab at the more established Hindustan Unilever. “They are getting to scale, and they are creating disruptions,” says Irwin. This bodes well for direct sellers, who build their business on micro-local enterprises and interpersonal connections.

EMPOWERING ENTREPRENEURS

At the heart of direct selling is the ability to offer people the chance to feel empowered, to take control of their lives and to add value to society. This fuels entrepreneurship, self-employment and microenterprises. Research shows that such ventures strengthen a country’s economy.

Alan Finkelstein Shapiro, a researcher at the Universidad de los Andes in Colombia, finds that “economies with larger self- employment shares exhibit faster recoveries following a negative economy-wide productivity shock.”

The entrepreneurial aspects of direct selling empower women and can be attractive to those under age 35 who more often want to be their own boss while also helping others. Sandra Whittle, Managing Director for Partylite U.K. & Ireland, says a favorite quote she shares with those new to direct selling is, “If at first you do succeed—try to cover your amazement.”

Whittle says consultants must be willing to put in the work because experience cannot be bought, and it is particularly important to earn the respect of colleagues and of the field.

Just as important is harnessing the excitement of those who want to be sales leaders, says Andrea Slater, with Avon U.K. “We need to ensure that we capture that enthusiasm within a specific timeframe,” she says. “Then, we need to fan the flames and keep them motivated, engaged and rewarded.”

Mary Kay’s Zhou says that in countries like China, business startups and entrepreneurship are becoming easier to navigate on the policy front, as well as becoming more accepted forms of livelihood for the younger generation. He continues, “Direct selling can help them to fulfill their dream of initiating businesses, and to gain earning opportunities and freedom with the thinking approach and behavioral model of their own characteristics, which constitutes a career development mode catering to the ideal of modern youths.”

For women, in particular, direct selling is an opportunity to contribute money to the household and develop a degree of independence. This is especially true in rural areas and farming communities. Irwin cites Hindustan Unilever Limited as an example. The Mumbai, India-based consumer goods firm employs 65,000 women through its Shakti direct selling initiative. These women sell products in their villages, giving Hindustan Unilever and the women themselves a huge economic opportunity they wouldn’t have otherwise.


Alan Finkelstein Shapiro, a researcher at the Universidad de los Andes in Colombia, finds that “economies with larger self-employment shares exhibit faster recoveries following a negative economy-wide productivity shock.”


THE YOUNGER GENERATION

As an industry, direct selling companies recognize the importance of recruiting young people under age 35 to become consultants as well as consumers of its products. Doing this means using a technology-rich approach and being socially responsible, says Amway’s Arismendi.

In Latin America, direct selling is equipping consultants with social media tools that enhance day-to-day communications. Amway is aggressive in studying tools that promote the use of technology in the field. “This will not replace the personal touch, but it will complement it,” Arismendi says. “Direct communication and social networking can be much more effective than conventional sales and retail.”


SPOTLIGHT ON REGIONAL MARKETS

UNITED STATES

The No. 1 market for direct selling saw 2013 retail sales of $32.7 billion, up 3.3 percent from 2012. Between 2010 and 2013, the compound annual growth rate was 4.6 percent in the country. The U.S. accounts for 18 percent of worldwide direct selling sales, generating about $1 for every $6 retail dollars globally.

The U.S. salesforce also grew 5.7 percent, to 16.8 million people, which is a record high. The most prevalent sales method is face-to-face, with 70 percent of consultants using this avenue, according to the U.S. DSA.

The product groups with the strongest percent of market share are wellness and services, making up 28.5 percent and 22.9 percent of sales, respectively. New segments are also using direct selling, such as energy, says U.S. DSA President Joseph Mariano. “Direct selling is a smart, go-to-market strategy for many products, especially those that benefit from explanation or demonstration. In the case of utilities, most Americans aren’t used to having a choice in their provider, so they benefit from guidance to make an informed decision.”


“Direct selling is a smart, go-to-market strategy for many products, especially those that benefit from explanation or demonstration.”
—Joseph Mariano, President, U.S. DSA


CHINA

Given current rates of growth, China will most likely surpass the U.S. in market size for direct selling, becoming the industry’s No. 1 market. Its 2013 retail sales were $27.3 billion, up an astounding 41 percent from 2012. China also enjoys the industry’s highest cumulative growth rate at 23.3 percent.

“With the acceleration of the global economic integration progress, China promises tremendous market potential as the second largest economy worldwide today,” says Mary Kay’s Zhou. U.S. direct selling giants Amway, Mary Kay and Nu Skin are among the largest companies operating in China. Several domestic Chinese direct selling enterprises also are a noticeable force. Competition across the country is moderate, with 44 licensed enterprises.

Cosmetics consumption keeps growing at an average annual growth rate of 15 percent, despite an overall economic slowdown. China trailed only the U.S. and Japan in consumer cosmetics spending in 2012. Women play a key role in those numbers and are increasingly active in economic consumerism. “As the number of employed women increases and their status in social and economic development rises steadily, their role in consumption is also becoming more prominent,” Zhou says.

Chinese women now control 60 percent of domestic consumption and make 77.5 percent of household purchase decisions. This far exceeds the purchasing power of men and children.

As China grows and becomes a more relevant market, the WFDSA’s Carlucci believes that the industry must put more energy into “understanding how we communicate and maintain the fundamentals of the industry” in a way that can be understood regardless of the country.


“…The recent statement from Esther McVey, Minister for Employment, saying, ‘Being your own boss is as impressive as a degree,’ appears to give more credibility to self-employment than ever before.”
—Lynda Mills, Director General, U.K. DSA


EUROPE

Direct selling continues to grow at a steady pace in Europe. Retail sales topped $31.6 billion in 2013, and 12.7 million people work as independent consultants across Western, Central and Eastern Europe. “Europeans have embraced the entrepreneurial spirit and increasingly recognize direct selling as an appealing (and sometimes preferable) alternative to a traditional job,” says Marinda Chaplin, Vice President at SUCCESS Partners Europe.

As recovery continues from the economic recession, the U.K. is seeing more encouraging trends, especially in the area of self-employment. Lynda Mills, Director General of the U.K. DSA, shares that recent information from the Office for National Statistics reveals self-employment is at its highest level in 40 years with 4.5 million people. “This, coupled with the recent statement from Esther McVey, Minister for Employment, saying, ‘Being your own boss is as impressive as a degree,’ appears to give more credibility to self-employment than ever before,” Mills says. 

Mills reports that during the recent recessionary years, direct selling in the U.K. has seen year-on-year growth in a variety of demographics, and some direct sales companies are enjoying double-digit growth. With young people being notoriously risk adverse, direct selling is an ideal option for people in many age ranges and from varied backgrounds.

“We have seen more young people between 18 and 25 working in direct selling with 29 percent (75,000) of U.K. direct sellers under age 25,” Mills says. On average, 38 percent of direct sellers are over age 50, representing a rise of more than 32,000 people since 2011. 

Direct selling is also increasingly appealing to a multi-cultural audience. In a recent survey of its members, the U.K. DSA discovered that 30 percent of direct sellers (120,000 people) in the U.K. are non-British. DSA member companies attribute this to a rise in interest of people from places like Asia and Eastern Europe, according to Mills. 

People in the U.K. are turning to direct selling as a real alternative to traditional employment, with 68,000 direct sellers (17 percent) working full-time hours (more than 30 hours a week). This is up 20,000 from 12 percent in 2011. “Direct selling here in the U.K. really has entered the mainstream,” Mills says.

One factor in the sustainability of the industry is the increasingly digital nature of the world economy. Technology enhances the core aspect of direct selling. Embracing the digital age can ignite new growth in mature markets like the United Kingdom, which enjoys a 10.4 percent three-year compound annual growth rate and reported $3.3 billion in 2013 retail sales.

Germany posted a three-year CAGR of 5.8 percent. The direct selling model enjoys a positive image in the country, says Guido Amendt, Mary Kay Germany’s Director of Marketing. He adds that a sustainable increase in purchasing power per capita offers opportunities for consumers to buy high-quality products through direct selling.

In France, direct selling continues to grow regardless of the economic climate. When it comes to increasingly competitive markets such as cosmetics and jewelry, direct selling leverages innovation as a growth solution, says Jean-Laurent Rodriguez, Director of Communication and Training for the Federation de la Vente Directe, France’s DSA. In 2013, France recorded sales of $5.3 billion. The country’s cumulative annual growth rate between 2010 and 2013 was 3.4 percent.

Continued expansion in the industry is driven by several factors. France is enjoying a growing number of new companies with new brands and new products, such as textiles, shoes, home decoration, gastronomy and health care, Rodriguez says. These companies are international and national industrial groups, medium-sized companies and startup firms. Agreements between the Federation de la Vente Directe and government ministries (higher education, national defense and public institutions) ensure that direct selling is a viable option.

AFRICA

The WFDSA’s Carlucci sees Africa as an interesting continent right now for direct selling although, currently, the only DSA exists in South Africa. South Africa’s 2013 retail sales were $720 million, and its three-year cumulative growth rate is 6.8 percent. “Direct selling is very relevant here because it is a way to be an entrepreneur, and other retail channels are not developed,” Carlucci says.

Multinational companies are taking interest in the continent, says Wells Fargo’s Irwin. That’s because it is a huge market. Irwin cites Nigeria as an example. The country is home to 180 million people and just 10 supermarkets. “The rest are local markets and product distribution via trusted networks,” Irwin says.

LATIN AMERICA

Central and South America are comprised of fast-growing countries known for their entrepreneurship culture. Ernst & Young, in its G20 Entrepreneurship Barometer 2013, ranks Argentina, Brazil and Mexico as some of the best world economies for entrepreneurs. The same can be said for the region’s direct selling prospects. The industry is well established in Latin America, where customers like to buy from people they know. Additionally, it is a market with potential because retail is not well developed in many regions.

Latin America’s direct selling billion-dollar markets are:

  • Brazil, $14.2 billion
  • Mexico, $8.1 billion
  • Colombia, $3.3 billion
  • Argentina, $1.9 billion
  • Peru, $1.9 billion
  • Venezuela, $1.4 billion

In Latin America, the “family factor” is very important and makes direct selling attractive as a self-employment option. Unlike in the U.S., children look to go to college close to home and remain with their families. Many career decisions center on one’s family, which makes direct selling attractive as a source of income in addition to traditional employment.


“Direct selling is an opportunity to work but remain close to the family and to have additional income for the needs of the family. So this makes a difference. There is flexibility and management of their own time.”
— Miguel Francisco Arismendi, Director General for the Andean area (of South America), Amway


“Direct selling is an opportunity to work but remain close to the family and to have additional income for the needs of the family,” Arismendi says. “So this makes a difference. There is flexibility and management of their own time.”

Direct selling is also becoming a full-time work option, says Pio del Castillo, Mary Kay’s Manager of Corporate Communications. Brazil ranks No. 5 among the industry’s billion-dollar markets. Direct selling retail growth in the country is related to the economic recuperation of international markets, del Castillo says. The country posted year-over-year retail sales growth of 7.2 percent, making for a three-year CAGR of 8.6 percent. The number of sellers grew as well, reaching 1.3 percent, to 4.5 million.

Brazil also boasts a diverse market with access to information. One important factor boosting direct selling in the region includes traditional retailers such as O Boticario adding direct selling to their marketing efforts. Del Castillo says, “The Brazilian economy grew only 2.3 percent in 2012, but Brazil still remains one of the most important players in the direct sales market.”

TECHNOLOGY, DATA WILL FUEL FUTURE GROWTH

Technology in all its forms is an essential ingredient to the future growth of direct selling, according to industry executives and economists. “The Internet and digital technologies, mobile devices, social media and access to more robust data will allow direct selling companies to dramatically increase the level of service they offer to their salesforce and customer base,” says Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA.

“We will be able to (and some companies now can) know who the final customer is, what their preference is, who the distributors are and how can we help them with good CRM systems and analytics,” Carlucci says.

Better information lets consultants individualize their service and marketing approach for each customer. Instead of a mass-appeal catalog, direct sellers could offer targeted online videos in an effort to deliver the right thing for the right customer. “We can skip the segmentation phase and leap frog from a mass approach to an individual approach, thanks to technology,” Carlucci says. “To me this is a revolution.”

The ability to harness technology’s benefits leverages relationships, according to Carlucci, who adds, “These efforts should also boost direct sales in mature markets because it will present newly available services.” The consumer’s direct selling buying experience could be even better than the Internet because of the product and experience support the personal connection offers.
 
The importance of the Internet, data and mobile Internet to emerging markets cannot be overstated, according to Derrick Irwin, Portfolio Manager for the Wells Fargo Advantage Emerging Markets Equity Fund. He says, “In many places it provides the only access to media and outside data that many people have.”

Consumer company models being developed in India, China and Brazil show a massive portion of advertising spend being allocated for mobile campaigns. And the marketing method is about to explode. Smart phones and 3G networks are established in China and are just beginning to take off in Brazil and India. In Africa, says Irwin, “there is no other way to talk to people. You can go to these countries where there are the poorest of the poor, and they are using mobile phones in ways that are so creative.”

In China, mobile technology is opening new markets and acting as a catalyst for the development of logistics networks into the far corners of the country’s low-tier cities, according to Leo Zhou, Deputy Director of Media Affairs at Mary Kay China. He says, “Consumers are becoming increasingly smart and are unprecedentedly connected with multiple media, being surrounded by a diversified web of information.”

The proliferation of information across the Internet, as well as easy access to it, makes it simple for any consumer to get the information and products they need and want. The rapid expansion of China’s e-commerce network into low-tier cities caught the attention of logistics companies, who brought their services to the same areas. According to Zhou, this increases product delivery speed and lowers operational costs.

All of these technology changes amount to a modernizing of the direct selling industry in the digital age. Companies should be looking at how much they are investing now to leverage the relationships they have and how they understand consumer behavior. “There are a lot of good questions we should be able to answer, and this is the time,” Carlucci says. “In 10 to 15 years we will live in a very different world. We need to take advantage of the technological opportunities now.”

October 01, 2014

Publisher's Note

Letter from John Fleming, October 2014


Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


The Billion Dollar Markets are growing! One of our most popular cover stories of the year has now moved to the month of October due to the great work being done by the Research Committee of the World Federation of Direct Selling Associations. All of their information on country results for 2013 can be reviewed on their website (www.wfdsa.org). It is always our pleasure to be able to build stories around this information with additional research, interviews and insights. We know you will enjoy our quick trip around the world to showcase the billion-dollar markets.

John FlemingSeptember was also an exciting month for those direct sellers who journeyed to Washington, D.C., to participate in the U.S. DSA’s Direct Selling Day on Capitol Hill. Over 400 independent contractors from different companies joined together as one collective body to meet with elected officials from both the House of Representatives and the Senate. It was reported to have been a great day, and DSN got the story while it was happening. Kudos to the companies that selected or invited their sales leaders to participate, as these independent direct sellers, and the stories they represent, are most important for our elected officials to hear and understand.

Most unexpectedly, as this issue went to press, we received word that Avon Products Inc. had withdrawn its membership from the U.S. Direct Selling Association, the largest and most valuable of all of the associations that work to support and lobby on behalf of the common interests of the direct selling community. Throughout the year, DSA, more than any other supportive entity, keeps boots on the ground traveling to courthouses and the offices of attorneys general near and far to ensure the direct selling way of conducting business can thrive for the benefit of over 16 million independent contractors in the U.S. as well as those across the globe. Every DSA in the world is the result of what was founded and built by the U.S. Direct Selling Association.

We do not propose to understand Avon’s action in withdrawing membership from the DSA, but we do know the decision activates questions, and those questions will be many and varied as to what the decision really means. In a very unusual move, Avon posted its decision to withdraw from the DSA on its corporate website and left more questions than solid rationale. As those in boardrooms, hallways, living rooms and kitchens discuss this company’s decision to withdraw, Avon itself continues to struggle with many things. It is our hope that this unexpected action on the part of the company’s decision makers does not become another distraction from staying focused on its own house, and creating growth again. For it is a company still responsible for supporting the women we know as Avon Representatives—the women who join because of their affiliation with a company they believe can be a catalyst to make dreams come true.

The direct selling industry continues to grow, and as mentioned in this column last month industry growth means a lot of things. It certainly means a lot of things are going well—which leads me to our 90 Days of Direct Selling Celebration, kicked off on Sept. 17. The goal of the campaign is to fuel ongoing conversations about the positive impact the direct selling community has on people and economies around the world. You can follow the 90 day celebration on all of our social media and on our website.

Which leads me to another very exciting announcement—our Harris Poll has been completed, and we will bring you the results in our November cover story. DSN commissioned Harris Poll to conduct a comprehensive survey this summer on direct selling—surveying consumers on behaviors, attitudes, satisfaction and many other important factors. We will publish the information over the next few months and think you’ll be excited about the findings.

Turn the page to learn more about our 90 Days of Direct Selling Celebration. Then move on to read more about the Billion Dollar Markets… they are growing!

“With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful.
Strive to be happy.”
 
© Max Ehrmann 1927 from the poem, the Desiderata

Enjoy the issue!

John Fleming
Publisher and Editor in Chief

October 01, 2014

News in Brief

News in Brief, October 2014

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Fast Growth Propels Direct Selling Brands onto Inc. 500

Inc. magazine has announced its 2014 Inc. 500|5000, and the exclusive ranking once again features several direct selling brands. The Inc. 5000 is a list of America’s fastest-growing private companies, with the Inc. 500 representing a special ranking of companies in the top 10 percent.

Limited to U.S.-based, privately held companies, the Inc. 5000 measures revenue growth from 2010–2013. This year’s list includes direct sellers Plexus Worldwide (No. 8); Jeunesse Global (No. 258); It Works! (No. 290); North American Power (No. 476); Ambit Energy (No. 2074); WorldVentures (No. 2333); Viridian Energy (No. 2381); 5LINX (No. 2916); YOR Health (No. 3528); Isagenix (No. 3764) and Stemtech International (No. 4708). The full Inc. 500 list appeared in the September 2014 issue of Inc. magazine.


Nu Skin Ranked among Fortune’s Fastest-Growing Companies

Fortune recently published its annual roundup of the fastest-growing public companies in American business, and direct selling powerhouse Nu Skin came in at No. 68 on the list.

In a testament to America’s booming shale business, a quarter of this year’s 100 Fastest-Growing Companies represent the oil and gas industry. Household brands such as The Hunger Games and Divergent distributor Lions Gate Entertainment (No. 15), K-Cup maker Keurig Green Mountain (No. 48) and Apple (No. 88) also appear. Fortune’s ranking reflects profit, revenue and stock growth over the preceding three-year period.

Nu Skin, a seller of skincare and nutrition products, grew its business by half in 2013 alone. The Provo, Utah-based company reported sales of $3.18 billion, a $977-million increase over 2012. For 2014, the company reported quarterly revenues down 3 percent to $650.0 million in the second quarter.


4Life Announces Auburn University Partnership

A new partnership between wellness company 4Life Research and Auburn University will advance academic studies on the safety and effectiveness of 4Life products. The company recently made a $100,000 gift in support of The Molecular and Applied Sciences Laboratory in Auburn’s School of Kinesiology.

Overseen by Auburn’s Dr. Michael Roberts, Director of the Molecular and Applied Sciences Lab, the research will range from specific ingredients and how they affect physiological systems, to safety studies and new ingredient discovery. It will take place in the 58,000-square-foot, state-of-the-art kinesiology research facility that opened on Auburn’s campus last fall in Auburn, Alabama.

The Auburn partnership will support 4Life’s in-house R&D department in its commitment to innovation, substantiation and education. 4Life has developed a product line based upon its trademark Transferceutical Science, which supports the immune system in remembering and responding to potential health threats.


Herbalife, Common Threads Partner on Nutrition Curriculum

Global nutrition company Herbalife recently announced a long-term partnership with national nonprofit organization Common Threads to sponsor nutrition programs in elementary and middle schools across the country. The program gives students in over 135 schools in Illinois, Washington, D.C., California and Florida access to nutrition and cooking skills curricula.

The program is geared towards students who do not otherwise have access to well-balanced dietary options in their community or at home. The schools selected for the program are located in neighborhoods across the country that do not have access to fresh produce and other nutritious ingredients. One of the criteria for school selection is that 80 percent of the students in the school must qualify for free school lunches.

As a result of the partnership with Herbalife, Common Threads will grow its existing programs and expand into five additional Los Angeles-area schools to serve over 600 students in the first year alone. Students participating in the program will receive lessons throughout the school year in good nutrition, healthy foods from across the world, planting and harvesting from a garden to make healthy meals, and meal planning and budgeting for healthy meals with family members.

In other company news, at the upcoming Herbalife North American Innovation Conference, businesses, entrepreneurs and nutrition industry visionaries will have the opportunity to present product ideas to top Herbalife executives. The global nutrition company is scouting out novel ingredients and technologies to enhance or extend its existing product lines.

Slated for Oct. 5-6, the Innovation Conference leads up to nutrition industry expo SupplySide West. The expo is the largest gathering of its kind in the world, and this year’s event will feature more than 1,700 ingredient suppliers and finished product manufacturers.

Herbalife is partnering with Nutrition Business Advisors and Nutrition Capital Network to present the North American Innovation Conference, a format launched about three years ago. The company hosts four to five conferences annually, each in a different region of the world. Applicants undergo screening by outside facilitator Nutrition Capital Network and the internal Herbalife team before presenting their ideas.


Ambit Ranks Highest in Customer Satisfaction

As a result of its annual customer satisfaction survey, J.D. Power and Associates has named Ambit “Highest in Residential Customer Satisfaction among Retail Electric Providers in Connecticut, New Jersey and Pennsylvania.”

The J.D. Power study measures retail electric providers across five key factors: price, communications, corporate citizenship, enrollment/renewal and customer service. In Pennsylvania, Ambit performed particularly well in the communications factor, earning a total score of 718 on J.D. Power’s 1,000-point scale. The company outperformed its competitors with scores of 705 and 718 in Connecticut and New Jersey, respectively.

The survey of more than 25,757 retail electric residential customers was conducted September 2013 through June 2014. In J.D. Power’s inaugural study last year, Ambit ranked highest in customer satisfaction among New York residents.


Stream Energy CFO Receives Women in Business Award

The Dallas Business Journal has honored Stream Energy Chief Financial Officer Renée Hornbaker as one of its 2014 Women in Business.

After starting her career as a public accountant—and one of just two women at her firm—Hornbaker soon made the switch to corporate accounting, earning senior positions at Flowserve Corp., Shared Technologies Inc., Deloitte & Touche and the Phelps Dodge Corp. As CFO at Stream Energy, Hornbaker heads up a finance operation that reported $867 million in revenue last year.

Stream Energy markets residential and commercial energy services through its wholly owned direct selling subsidiary, Ignite. Ignite Associates number more than 250,000 across six states and the District of Columbia.


Epicure Launches Good Food. Real Fast. Movement

Canadian food and cookware company Epicure recently launched the Good Food. Real Fast.™ movement. The movement encourages individuals—even those who think they don’t have the time or the kitchen savvy—to cook and eat real food.

To simplify mealtimes without compromising on health or taste, Epicure has created a website dedicated to recipes, quick meal ideas, cooking tips and expert advice. The Good Food. Real Fast. community can also contribute ideas and inspiration by tagging social media posts with #goodfoodrealfast. For each person who joins the movement, Epicure has pledged to donate $1 to the Epicure Foundation, which supports grassroots food initiatives across Canada.

October 01, 2014

Executive Announcements

Executive Announcements, October 2014


Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Herbalife Ltd.

Alan L. HoffmanAlan L. Hoffman

Global nutrition company Herbalife Ltd. announced that it has appointed Alan L. Hoffman to the newly established role of Executive Vice President of Global Corporate Affairs, reporting to Michael O. Johnson, Herbalife’s Chairman and CEO. Hoffman will lead public policy, corporate communications, government affairs, community relations and philanthropy.

Hoffman brings over 20 years of public policy, communications and government affairs experience to the corporate affairs role. Previously, he served as the Senior Vice President for Global Public Policy at PepsiCo, where he oversaw policy development, external relations and government relations. Before joining PepsiCo, he served as the Deputy Chief of Staff to Vice President Joseph Biden and Deputy Assistant to President Barack Obama. Hoffman was also an attorney at the U.S. Department of Justice in Washington, D.C., and was an Assistant U.S. Attorney in Philadelphia.

In addition, Herbalife announced that Barbara Henderson will retire as its Senior Vice President of Global Corporate Communications. Henderson will assist with the transition and will remain President of the Herbalife Family Foundation.

“We are thrilled to welcome Alan to the Herbalife team,” said Johnson. “He brings an unparalleled level of experience to our senior team, and we are confident that he has the experience and credentials to help us powerfully communicate the value Herbalife brings to our consumers, members, shareholders and communities.”


Blyth Inc.

Jim WilliamsJim Williams

Blyth Inc., a direct-to-consumer company and designer and marketer of candles and accessories for the home, announced the election of Jim Williams, President, CEO and Managing Partner of Karlen Williams Graybill Advertising Inc., to its board of directors. Also Neal I. Goldman has retired from its board.

Williams will serve on the Audit Committee. He has been chief executive at Karlen Williams Graybill Advertising Inc. since 1998. In 1993, he bought an equity stake in Karlen Advertising and since taking ownership, Williams has grown KWG into one of the country’s largest independent, full-service marketing consultancies. Prior to joining Karlen, Williams served as Associate Editor of Leaders magazine.

Williams owns controlling interest in I.M Productions and the communications business Better Brand Initiatives, licensor of FYI Before You Buy™. He is a member of the Ad Club of New York and the One Club. He sits on Gerson Lehrman’s Council of Advisors and is a board member and committee chair of The Cathedral School of St. John the Divine.

“We are delighted to welcome Jim to the board,” said Robert B. Goergen Jr., Blyth’s CEO. “Jim brings leadership, strategy and a strong knowledge of marketing, social media and global consumer insight. I look forward to the new perspective that Jim brings to the company.”

Goldman, who is a member of the Compensation and the Nominating and Corporate Governance Committees, has been a director since 1991. He is the President of Goldman Capital Management Inc., an investment advisory firm.


Mary Kay Inc.

Crayton W. WebbCrayton W. Webb

Mary Kay Inc., a top beauty brand and direct seller in more than 35 markets around the world, announced the promotion of Crayton W. Webb to Vice President of Corporate Communications and Corporate Social Responsibility.

In this position, Webb will continue to oversee global media relations, reputation management and public relations initiatives for the company’s more than 35 international subsidiaries. Webb also leads Mary Kay’s corporate social responsibility efforts, Pink Changing Lives®, which focuses on transforming, inspiring and empowering women around the globe through community involvement, philanthropy and volunteerism from its employees and consultants.

Webb joined the company in 2005 as Manager of Government Relations before his promotion to Director of Corporate Communications and Corporate Social Responsibility in 2008.

“[Crayton] walks the talk as it relates to community involvement, and we know his counsel will continue to be invaluable as we grow Mary Kay’s presence and continue to enrich the lives of women around the world,” said Nathan Moore, Chief Legal Officer and Secretary for Mary Kay Inc.

Prior to joining Mary Kay, Webb was Chief of Staff for Dallas Mayor Laura Miller and Director of Communications for the United Way of Metropolitan Dallas.


Origami Owl

Sandy SpielmakerSandy Spielmaker

Origami Owl has announced that Sandy Spielmaker has joined the jewelry company as Chief Sales Officer. Spielmaker has more than 30 years of experience in sales, marketing and general management, previously serving as Vice President of Sales at a top direct seller, both globally and in the U.S. She has also served as President and General Manager within the Watercraft division of Johnson Outdoors, as well as a variety of sales and marketing roles at SC Johnson.

Spielmaker combines her experience within direct selling and consumer packaged goods to drive innovative solutions across business insights and development, training and education, key account management, compensation, recognition and leader development.


ForeverGreen Worldwide Corp.

Michelle LeSueurMichelle LeSueur

ForeverGreen Worldwide Corp., a provider of nutritional foods and other healthy products, announced the appointment of industry expert Blake Schroeder as President of ForeverGreen Europe, and Michelle LeSueur as the Director of Product Education and Development.

Schroeder brings a wealth of experience and knowledge from the direct selling industry to ForeverGreen, and for the past seven years he has served in various positions at a major direct seller. Schroeder acted as legal counsel for a short time, but was mostly involved in and responsible for growing several international businesses. During that time he lived both in Israel and Portugal.

“Blake Schroeder is the right choice at the right time to take our European operations to the next level,” said Brenda Huang, President of ForeverGreen International. “As the second-fastest-growing market behind the U.S., we’re seeing explosive growth in both sales and new leadership in the region. Europe is strategically very important to our expansion strategy, and we’re delighted to welcome Blake to the team.”

LeSueur comes to ForeverGreen to educate and train current and new distributors and customers about ForeverGreen’s product line. She has worked with many individuals with a wide variety of health issues, including weight management issues, allergies, hormonal imbalances and autoimmune diseases. She is a Certified Nutritional Counselor, Certified Sports Nutritionist and Certified Personal Trainer. LeSueur has a Neuro-Endocrine & Anti-Aging Regulation Certification as well as several other certifications in related fields.

She has served as Vice President of Health and Nutrition, Director of Health and Nutrition and Director of Product Education and Development at multiple companies, where her responsibilities included educating, formulating and manufacturing products. She is also a published author and an experienced public speaker. LeSueur will help ForeverGreen continue to commercialize new and innovative product lines and provide customers and distributors with the knowledge and benefits of each product.


Zija International

Dave AlmarinezDave Almarinez

Zija International, a health and wellness company dedicated to living “Life Unlimited,” announced that Dave Almarinez has been named its new Managing Director for the Philippines, Australia and New Zealand. Currently, his role will be to effectively expand Zija’s products and business opportunity across Asia, the Pacific and other international markets.

With an education in global strategic management and applied business economics, Almarinez also has 17 years of network marketing experience. He is very active in civic affairs in his home province of Laguna, Philippines, where he was a publicly elected board member of the Provincial Government.


Initials Inc.

Initials Inc. announced that Laurie Langill has joined the company as Vice President of Training & Field Development, and Cindy Carpenter has joined as Field Development Director. Both Langill and Carpenter come to Initials Inc. with a rich background in direct sales and understand the industry from the field and corporate viewpoints.

Laurie LangillLaurie Langill
Cindy CarpenterCindy Carpenter

As a member of the executive team, Langill will provide strategic direction for all training and field development initiatives. She has more than 30 years of experience in direct selling.

In her role as Field Development Director, Carpenter will work closely with top field directors and leaders to enhance the overall nationwide field growth and individual team development. She has been in direct sales for 19 years.

Launched in 2005, Initials Inc. is a national direct selling company whose core belief is “There’s only one you!” This philosophy is brought to life by the thousands of independent Creative Partners (consultants) nationwide who sell personalized fashion handbags, accessories, jewelry and home organization products through home parties and online.


Tupperware Brands Corp.

Tupperware Brands Corp. announced that Gavin D. Little was promoted to Group President, Tupperware Europe, Africa and the Middle East, succeeding R. Glenn Drake who will retire at the end of 2014 after 44 years with the company.

Little, currently Senior Area Vice President, Central Europe and Strategy, has developed extensive knowledge of Tupperware Brands’ business through interaction with all of its regions. After a comprehensive orientation in Asia, Latin America and Europe, he became the head of Marketing and Strategy for Tupperware Brands. Since January 2014 he has been leading a portfolio of units in Europe.

Little’s background includes 26 years of startup, turnaround and growth experience in many markets across Europe, Asia and North America. He has held senior marketing and general management roles with ICI Paints, Johnson & Johnson, United International Pictures, British American Tobacco (BAT), Reynolds American and Mattel Corp.

“I’m extremely proud to promote Gavin to Group President,” said Rick Goings, Chairman and CEO. “We are confident that Gavin will be able to build on the momentum of the growing units in our Europe, Africa and Middle East portfolio, while also making the necessary changes and leveraging their results in those business units in which improvement is essential.”


Younique

Brian GillBrian Gill

Younique, a cosmetics direct sales company dedicated to motivating and empowering women, announced the addition of Brian Gill as the company’s new Executive Vice President of Marketing.

Gill leads the marketing team responsible for brand positioning, corporate and marketing communications, public relations and digital marketing. Younique Co-Founder Melanie Huscroft previously functioned in this role, as well as product development and sales. Huscroft is now Chief Product Officer and Chief Sales Officer, in addition to her role as co-founder.

“[Brian’s] industry knowledge and marketing experience more than qualifies him to lead our marketing efforts,” said Huscroft. “I can speak to his character and creativity, and have full confidence in his abilities.” 

Gill joins the Younique family with more than 14 years’ experience in direct selling and marketing. Prior to joining Younique, Gill was vice president of marketing communications at another direct seller, where he was responsible for global marketing communication, content marketing, public relations and social media.

Younique markets and sells almost exclusively through the use of social media. Founded in September 2012, the company’s product philosophy of Nature. Love. Science. ensures that its line of cosmetics and skincare products are found at the intersection of the best that science and nature have to offer.


Please submit news of executive promotions and hires at your company to be included in the Executive Announcements section of Direct Selling News.
» pr@directsellingnews.com

October 01, 2014

Financial News

Financial News, October 2014

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Nu Skin Enterprises Inc.

Nu Skin Enterprises Inc. (NUS—NYSE) announced second quarter revenue of $650.0 million, a 3 percent decline over the prior-year period. Revenue was negatively impacted 2 percent by foreign currency fluctuations. Earnings per share for the quarter were 32 cents, versus $1.22 in the prior-year period and were impacted by a $50 million write-down of Mainland China inventory, and a $25 million charge due to a transition to the SICAD II exchange rate in Venezuela. Excluding these items, earnings per share would have been $1.13 per share for the second quarter.

The company recently restated its consolidated financial statements for the quarter ended March 31, 2014, to include a $21 million charge to Other Income (Expense) to reflect a hyperinflationary adjustment for Venezuela, and $7 million of income related to a tax rebate for the company’s China headquarters. These changes, net of tax, negatively impacted net income for the three-month period ended March 31, 2014, by approximately $9.4 million, but had no effect on cash flow.

In Greater China, second quarter revenue declined 12 percent to $229.9 million, compared to $261.2 million in the prior-year period. The region’s results were negatively impacted 1 percent by foreign currency fluctuations.

Second quarter revenue in North Asia increased 1 percent to $196.0 million, compared to $194.8 million for the same period in 2013. The region’s results were positively impacted 4 percent by foreign currency fluctuations.

Revenue in the Americas improved 8 percent to $89.9 million, compared to $83.4 million in the prior-year period. The region’s results were negatively impacted 11 percent by foreign currency fluctuations.

Revenue in South Asia/Pacific was $81.7 million, a 5 percent decline compared to the prior year. The region’s results were negatively impacted 7 percent by foreign currency fluctuations.

Revenue in the EMEA region was $52.6 million, a 14 percent improvement over the prior-year period. The region’s results were negatively impacted 1 percent by foreign currency fluctuations.

The company’s operating margin was 8.4 percent for the quarter, compared to 17.1 percent in the second quarter of 2013. Gross margin during the quarter was 76.0 percent, versus 83.4 percent in the prior-year period. Operating and gross margins were negatively impacted due to the China inventory charge.

Cash and current investments at the end of the quarter were $233.7 million. Dividend payments during the quarter were $20.4 million.

Nu Skin also announced its board of directors has declared a quarterly dividend of 35 cents per share, payable on Sept. 26, 2014, to stockholders of record on Sept. 12, 2014.


Primerica Inc.

Primerica Inc. (PRI—NYSE) announced financial results for the quarter ended June 30, 2014. Total revenue was $331.1 million in the second quarter of 2014 and net income was $49.3 million, or 89 cents per diluted share.

In the second quarter operating revenue increased by 10 percent to $330.3 million and net operating income increased by 18 percent to $48.7 million compared with $300.0 million and $41.2 million, respectively, in the year-ago quarter. Net operating income per diluted share increased 25 percent to 88 cents and ROAE was 16.3 percent on an operating basis in the second quarter of 2014.

In conjunction with the company’s plan to repurchase $150 million in shares of Primerica common stock in 2014, it completed a redundant reserve financing transaction on July 31, 2014.

During the second quarter the company repurchased $21.9 million, or 480,902 shares of Primerica common stock for a total of $35.0 million, or 763,902 shares repurchased year-to-date.

As of June 30, 2014, investments and cash totaled $2.04 billion compared with $2.01 billion as of March 31, 2014. The company’s invested asset portfolio had a net unrealized gain of $138.5 million (net of unrealized losses of $5.6 million) at June 30, 2014, up from $113.2 million at March 31, 2014.

The Board of Directors of Primerica Inc. also approved a quarterly dividend of 12 cents per share for the second quarter of 2014. The dividend was payable on Sept. 16, 2014, to stockholders of record as of Aug. 20, 2014.


Nature’s Sunshine Products Inc.

Nature’s Sunshine Products Inc. (NATR—NASDAQ) reported its financial results for the second quarter ended June 30, 2014, and declared a quarterly cash dividend of 10 cents per share.

For the second quarter of 2014, net sales revenue increased 0.7 percent to $94.3 million, compared to $93.7 million in the second quarter of 2013. In local currencies, net sales revenue increased by 1.1 percent.

Operating income decreased 25.6 percent to $5.8 million, compared to $7.8 million in the second quarter of 2013. Normalizing for one-time transaction expenses, operating income would have been $7.7 million, or 8.2 percent as a percent of net sales.

Adjusted EBITDA decreased 18.0 percent to $7.9 million, compared to $9.7 million in the second quarter of 2013. Normalizing for one-time transaction expenses, adjusted EBITDA would have been $9.8 million.

Net income was $3.2 million, or 20 cents per diluted common share, compared to $6.1 million, or 38 cents per diluted common share in the second quarter of 2013. Normalizing for one-time transaction expenses, net income would have been $4.4 million, or 27 cents per diluted share.

Cash and cash equivalents as of June 30, 2014, were $68.6 million, compared to $77.2 million as of Dec. 31, 2013. Shareholders’ equity as of June 30, 2014, was $118.2 million, compared to $105.3 million as of Dec. 31, 2013.

In NSP Americas, Asia Pacific and Europe net sales revenue decreased 8.3 percent to $49.0 million, compared to $53.4 million in the second quarter of 2013. In local currencies, net sales revenue decreased by 5.4 percent compared to the second quarter of 2013.

In NSP Russia, Central and Eastern Europe net sales revenue decreased 14.3 percent to $12.8 million, compared to $15.0 million in the second quarter of 2013, primarily impacted by the escalation of political unrest in Ukraine and the weakness of its currencies.

Synergy WorldWide net sales revenue increased 28.5 percent to $32.5 million, compared to $25.3 million in the second quarter of 2013. In local currencies, net sales revenue increased by 23.9 percent compared to the second quarter of 2013, driven by increased sales in South Korea and Japan.

As previously reported, Nature’s Sunshine Products and Shanghai Fosun Pharmaceutical (Group) Co., Ltd., a leading health care company in the People’s Republic of China, signed definitive agreements with respect to the formation of a China joint venture.

The company’s board of directors also approved a quarterly cash dividend of 10 cents per share, payable on Aug. 29, 2014, to shareholders of record as of the close of business on Aug. 18, 2014.


Medifast Inc.

Medifast Inc. (MED—NYSE) reported financial results for the second quarter ended June 30, 2014.

For the second quarter, Medifast net revenue decreased 17 percent to $80.9 million from net revenue of $97.1 million in the second quarter of 2013. Revenue in the direct sales channel, Take Shape For Life, decreased 12 percent to $54.1 million in the second quarter of 2014 compared to $61.4 million in the same period last year.

Operating income was $7.4 million, or 9.2 percent as a percent of net revenue, compared to $10.6 million or 11.0 percent as a percent of net revenue in the second quarter of 2013. Net income was $5.7 million, or 44 cents per diluted share compared to net income of $7.1 million, or 51 cents per diluted share for the second quarter of 2013.

Gross profit for the second quarter of 2014 decreased 17 percent to $60.4 million, compared to $72.9 million in the second quarter of 2013. The company’s gross profit margin decreased 50 basis points to 74.6 percent in the second quarter versus 75.1 percent in the second quarter of 2013.

The company’s balance sheet remains strong with stockholders’ equity of $97.5 million and working capital of approximately $66.2 million as of June 30, 2014. Cash, cash equivalents and investment securities for the second quarter of 2014 increased $0.8 million to $68.6 million compared to $67.8 million at Dec. 31, 2013. The company repurchased 451,000 shares of common stock for $14.2 million during the second quarter as part of its current share repurchase authorization. The company remains free of interest bearing debt.


Mannatech Inc.

Mannatech Inc. (MTEX—NASDAQ) announced financial results for its second quarter ended June 30, 2014.

Second quarter net sales for 2014 were $46.3 million, an increase of 3.4 percent as compared to $44.8 million in the second quarter of 2013. Net sales increased 2.2 percent in constant dollars. Net loss was $0.7 million, or 26 cents per diluted share, for the second quarter 2014, as compared to net income of $0.8 million, or 30 cents per diluted share, for the second quarter 2013.

The company took charges to the inventory allowance of $0.8 million during the second quarter of 2014, which reduced gross profit margin to 79.0 percent as compared to 80.6 percent in the second quarter of 2013. The company generated operating cash flow of $7.4 million for the first six months of 2014 as compared to $5.3 million for the same period in 2013.

For the three months ended June 30, 2014, Asia/Pacific net sales increased by $1.5 million, or 7.5 percent, to $21.4 million, as compared to $19.9 million for the same period in 2013.

For the three months ended June 30, 2014, EMEA net sales increased by $0.4 million, or 11.1 percent, to $4.0 million, as compared to $3.6 million for the same period in 2013. In constant dollars, net sales would have increased 16.7 percent to $4.2 million.

North American net sales decreased by $0.4 million, or 1.9 percent, to $20.9 million, as compared to $21.3 million for the same period in 2013.


Crius Energy Trust

Crius Energy Trust (KWH-UN.TO—TORONTO) announced its financial results for the three month period ended June 30, 2014. All figures in U.S. dollars unless otherwise noted.

Revenue was $134.0 million, a 17.6 percent increase over $113.9 million. Gross margin was $33.7 million, representing 25.2 percent of revenue, compared to $27.6 million, representing 24.2 percent of revenue. Adjusted EBITDA was $13.2 million, representing 9.9 percent of revenue compared to $10.1 million, representing 8.9 percent of revenue.

Distributions paid in the quarter of $7.9 million, representing a payout ratio of 67.5 percent based on the adjusted EBITDA, compared to $9.5 million and 110.5 percent. This represents the company’s strongest performance since its IPO in November 2012.

Total cash and availability was $46.1 million, consisting of $10.8 million of cash and cash equivalents and $35.3 million of credit facility availability. This compares to $32.1 million consisting of $18.5 million of cash and cash equivalents and $13.6 million of credit facility availability.

The Trust acquired a portfolio of approximately 38,000 electric and natural gas customers together with other assets from Superior Plus Energy Services for an aggregate purchase price of approximately $3.8 million.

The Trust also acquired a portfolio of approximately 16,000 electric customers from HOP Energy LLC for an aggregate purchase price of approximately $1.5 million.


Youngevity International Inc.

Youngevity International Inc. (YGYI—OTC.QX) reported financial results for the second quarter of 2014.

For the three months ended June 30, 2014, the company reported net revenue of $32.7 million, compared to $20.9 million for the same period in 2013, an increase of 56.6 percent. The increase in revenue is attributed primarily to the increase in product offerings as well as the number of distributors and customers. Also, $3.8 million in additional revenues were derived from the acquisition of several companies over the last year.

Gross profit for the second quarter ended June 30, 2014, increased to $18.9 million, compared to $12.7 million for the same period last year, an increase of 49.2 percent.

Net income for the three months ended June 30, 2014, decreased to $544,000 as compared to a net income of $662,000 for the same period last year. Adjusted EBITDA was $2.0 million for the three months ended June 30, 2014, compared to $1.7 million in the same period for the prior year.


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.

October 01, 2014

Working Smart

MONEYBALL: Buying the Behaviors That Bring Success

by Mark Rawlins (with research and contributions from Mitch Stowell and Kenny Rawlins)

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


For more than 30 years my company and I have provided commissions processing software for the direct selling industry. Through all those years—working with hundreds of companies—I have struggled to find a simple way to describe our basic theory of commissions. It was somewhat shocking when the answer came to me in a movie theater:

“Your goal shouldn’t be to buy players. Your goal should be to buy wins. And in order to buy wins, you need to buy runs.” —economist and statistician Peter Brand in the movie Moneyball

A lot of things immediately fell into place; it was surprising to me that professional baseball had gone through the same challenges 15 years ago that the direct selling industry is going through today. I immediately purchased and read Michael Lewis’ book Moneyball, and still recommend that all my clients read the book or watch the movie.

Moneyball tells the tale of the Oakland A’s 2002 baseball season. Due to the limited revenue brought in by their market, the A’s had only $41 million to spend on salaries that season. In order to compete with larger market teams such as the New York Yankees, who would spend over $125 million in payroll during the same period, the A’s chose to actively acquire players who were undervalued by the league. This strategy gave the A’s the building blocks for a 20-consecutive-game winning streak—the longest streak in American league history—and took them to the playoffs.

The key to the success of the A’s was to ignore traditional methods of finding and valuing players that relied on “gut instinct,” “star power,” and conventionally used statistics such as stolen bases, runs batted in, and batting average. Instead, they focused on identifying statistics that better measured a player’s ability to win games—demonstrating that things like on-base percentage were more valuable than homeruns. After identifying the specific skills required to win, the A’s began to acquire players who were undervalued in the marketplace, rather than players with the “super star” qualities often sought by other teams.

The A’s proved that statistical analytics can identify the skills and behaviors most directly responsible for success, and that the smart use of limited funds can level the playing field with more powerful competitors.

So how does this relate to the direct selling industry? I think it relates in two ways:

  • Many companies feel that in order to be successful, they need to acquire distributors perceived as “rock stars”—people with known reputations for bringing in a lot of business—or keep their existing stars without looking at their actual contributions. These stars are expensive and may or may not be able to duplicate their past successes. Like ball players, these stars have careers that span a finite number of years. And while they may seem invaluable to one company, they may fail at another.
  • Like a Major League Baseball team, a direct selling company has a limited amount of money to spend. In my experience, most successful companies spend 41–48 percent of revenue on commissions, and they continually struggle with the question of how much of this money should go to “rock stars” and how much should go to role players. (Revenue is calculated based on the method used by most network marketing companies, which is the wholesale price or the price paid by entry-level distributors.)

It’s clear that, like A’s Manager Billy Beane, we need to focus on rewarding behaviors instead of buying distributors in order to buy “wins.”

Why This Matters Now: The Evolved Business World


“We’ve got to think differently.”
—A’s General Manager Billy Beane, speaking to his scouting and management staff in Moneyball


In our industry, there has never been a time that required a more fundamental shift in thinking than right now. Why do we need to think differently in 2014 than we have for the past 30 or 40 years? It comes down to two words: Internet and economics.

The Internet: Free Agency and Inflated Valuation of Top Sales Leaders

The Internet has changed the way the world conducts business, and this is especially true of direct sales. The rise of e-commerce has been a boon to the industry—people are now accustomed to ordering all kinds of products online and having those products shipped to them. A more subtle consequence of the Internet is that it has turned distributors into what are essentially free agents. Companies are now able to identify the leaders, or dream builders, within the industry and regularly recruit them, just as a sports team would recruit players. Dream builders themselves can use Google to learn about the products and compensation structures of other companies—and how much leaders in other companies earn. More and more, they are willing to switch teams when they see a more lucrative opportunity.

This competition for dream builders has inflated the earnings expectations of industry-best sales leaders, forcing companies to walk a fine line: They must compensate their dream builders enough to keep them, but not so much that they can’t compensate sales people and emerging leaders. After all, these “role players” can also use the Internet to better understand their own value—so it is important to remember that sales people are also “free agents” and can leave for better opportunities.

Economics: The 2008 Economic Reset

The bursting of the dot-com bubble in 2000 started to dampen expectations created by the booming 1990s, but the economic reset of 2008 seemed to firmly establish a shift in what Americans thought was possible and attainable in the future.

People living in this country have always found ways to make money, whether through manufacturing, technology or investments, but during the booming 1990s, that became an expectation—along with the expectation that it wouldn’t be particularly difficult. I remember a conversation with a vice president of sales back in the late ‘90s. He told me about a promising sales person who was a package delivery driver. When he approached the driver about “going full-time” for his company, he was shocked by the response. The driver told him that he was confident his company’s 401(k) would allow him to retire with over $1 million—so he wasn’t interested. This raised the question: “How can you attract people when truck drivers feel they will become millionaires through traditional methods?” This type of pressure drove many companies to drastically increase top leaders’ compensation at the expense of the role players. And at the time, it appeared to work; people didn’t worry about making a few hundred dollars a month—they thought they had the opportunity to get rich!

The dual shocks of the bursting of the dot-com bubble and the collapse of the housing bubble have caused the vast majority of Americans to reset their expectations. Belts have been tightened, and people seem to realize they have to make money the old-fashioned way. As a result, successful direct selling companies now focus more on a balanced approach to compensation between the top leaders and the sales people.

As I talk to other industry professionals, everyone seems to intuitively understand that the industry fundamentally changed in 2008. We’re living in a new world that requires new ways of competing. One positive impact of the change is that there are now more people seeking ways to make supplemental/non-traditional income—the very thing that our industry has always been good at providing! So, how does a company go about adjusting to this new reality?

Getting the Highest Return on Your Investment


“His on-base percentage is all we’re looking at now, and Jeremy gets on base an awful lot for a guy who only costs $285,000.”
—Billy Beane, speaking to detractors on his scouting and management staff in Moneyball


Going back to my “aha” moment from Moneyball, the goal is not to buy players; the goal is to buy the behaviors that create success. But what are those behaviors, and what are the metrics you can use to measure them? One thing that helped baseball was the availability of sabermetrics, a methodology created by dedicated individuals who had studied baseball and created a precise set of metrics that could be used to identify how specific activities contribute to creating wins.

We do not have the same type of universal statistical information for direct selling; each company has to identify the behaviors that create their success and establish metrics to track them. Let’s look at a simple example of how to do this.

One thing we know from experience is that people who buy from your company break down into four basic categories. (Graph 1, below, shows the sales people category broken into two groups—regular and hyper-recruiter.)

Graph 1

  • 60–70 percent are customers who sign up in order to buy the product. They will not enroll anyone else, and their continued ordering depends on satisfaction with the product.
  • 20–30 percent are social enrollers who like the product so much that they talk about it to friends and relatives—some of whom will also sign up.
  • Approximately 10 percent are sales people.
  • Significantly less than 1 percent are sales leaders and dream builders.

Within the context of these percentages, let’s visit two behaviors and look at some simple, concrete metrics you can use to measure how effective your compensation plan is at rewarding those behaviors.

Hyper-recruiting
In Graph 1, notice that although 10 percent of your distributors are sales people, only about 20 percent of those sales people are what we call “hyper-recruiters.” On average, these hyper-recruiters account for only 2 percent of a company’s distributors, yet they recruit up to 40 percent of the people who join that company. So imagine what could happen if you could bump that number up to 3 percent.

If we define a hyper-recruiter as a sales person who recruits 10 or more people, we can use a simple x-y graph to look for a correlation between earnings and organizational volume (OV). By color coding people who exhibit this behavior versus those who don’t, we can see whether a compensation plan is rewarding the behavior of hyper-recruiting. Graph 2 compares two groups: regular sales people and hyper-recruiters.

Graph 2

The graph shows a strong correlation between earnings and hyper-recruiting, showing that the compensation plan effectively rewards this behavior.

Non-high-leg volume
Another key behavior to incentivize is non-high-leg volume, that is, the percentage of OV from all legs of a distributor’s down line except the largest one.

While OV tells you how much business a given distributor built, non-high-leg-volume tells you the ability of that person to replicate success. If a high percentage of OV comes from only one leg, it means that the distributor recruited a good person who built the business. But if the distributor has four successful legs, it shows that he or she understands how to be successful and actively build a business.

Graph 3

Again, it’s easy to create and use simple x-y graphs (See Graph 3) to find the correlation between earnings and organizational volume—color coded for non-high-leg volume—allowing you to see the effectiveness of your compensation at rewarding this behavior.

As with baseball statistics, some distributor behaviors may seem, on the surface, to be essentially the same thing. If we look at organizational volume (OV) as being analogous to batting average, non-high-leg volume would be like on-base percentage. While there are similarities, the two behaviors can produce remarkably different results.

Conclusion

Moneyball is about using metrics to identify and buy the specific skills and behaviors required to win. Because even simple metrics like those shown in these graphs can make a real difference in revenue, it’s surprising how few companies take advantage of statistical analysis to make sure they’re rewarding the behaviors that will create their success.

Unlike baseball, each company will have a unique set of behaviors/metrics that matter only to them. This prized intellectual property can be assembled over time, and should include:

  • The behaviors that are important to your company’s success
  • The metrics you use to measure those behaviors
  • The metrics you use to measure the effectiveness of your compensation plan at buying those behaviors

Remember, we’re not trying to buy perceived “super stars”—we’re trying to buy actual, measurable behaviors. And at the end of the day, distributors need to see how their efforts at providing those behaviors will translate to increased earnings.


Mark RawlinsMark Rawlins is Founder and CEO of InfoTrax Systems and author of the recently published book, From Commission Plan to Compensation Strategy: Success for Today’s MLM Enterprise. Mitch Stowell is Vice President of Commissions Consulting, and Kenny Rawlins is Director of Commissions Operations, both of InfoTrax Systems.

October 01, 2014

New Perspectives

‘All In’ for the Third Time: ViSalus Co-Founder Blake Mallen Talks

by DSN Staff

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


On Sept. 2, Greenwich, Connecticut-based Blyth Inc. announced that the company had reached an agreement to sell the majority of its ViSalus subsidiary to the founders and certain other preferred stockholders of ViSalus. They completed the transaction, which involved exchanging shares of redeemable convertible preferred stock of ViSalus for shares of ViSalus common stock, on Sept. 4. Blyth now owns approximately 10 percent of ViSalus. DSN sat down with Co-Founder and Chief Marketing Officer of ViSalus Blake A. Mallen to discuss the deal. Here’s what he had to say.


DSN: Start at the beginning for us. This is quite a transaction. How did it all come about?

BAM: Yes, it’s obviously a big move. We think the ViSalus story is made up of three big “All In” moments. In the beginning, it was definitely kind of an “All In” spirit that gave rise to the company back in 2005. Nick (Sarnicola), Ryan (Blair) and I took all the money we had back then and acquired the assets of a failing company and birthed the idea of ViSalus and our mission. We had very humble beginnings—about 18 months or so without a single paycheck.

We had developed a great relationship with the Goergen family and Blyth when Nick, Ryan and I were still young executives in our mid-20s. By 2008, we felt that joining Blyth was the best move for ViSalus in order to provide a lot of the infrastructure and the operational expertise to help us accomplish what we wanted for the long term. So we created a partnership and a great relationship.

Shortly after we announced the deal with Blyth in 2008, the economy collapsed and Nick, Ryan and myself again took our last money that we had at the time to self-fund the company, and reinvent in 2009—our second “All In” moment. The irony is that this moment gave birth to the Body by Vi 90 Day Challenge, which is the brand that made us who we are today with the meteoric rise over the last few years.

Now we’re in a rebuilding and expansion mode, and we wanted to go all in again, so we approached Blyth a couple of months ago with the idea to buy back all the remaining shares that Blyth owned, minus 10 percent. They saw our passion, and they know we’re founders and ViSalus is our baby, and running it is something we want to do for life.

This last transaction is our third “All In” moment. Most of the transaction included money owed to us in the original agreement with Blyth. Basically, we walked away from it and rolled it back into the company. We took back, between us and our field, 90 percent of ViSalus. We’re all excited to have full ownership back and a new beginning and a new birth.

DSN: So when you look at that new beginning and new birth, how does this ownership change better position ViSalus?

BAM: Focus is probably the best word to use, and regaining the ability to put our resources 100 percent into things we believe will bring value to our customer and the promoter. Right now our focus is to be aggressively expanding all over Europe, and of course creating a new energy wave all over North America, and we really want all of our energy going into what adds value.

The initial deal with Blyth created a finish line; and we just realized, over time, that we don’t want a finish line. That’s a big point to make. We’ve accomplished what a lot of entrepreneurs would hope to accomplish, yet we’re pushing it all back in to go out there and do it again because it’s what we’re passionate about.

It’s really a story of belief and commitment… Belief in what we are capable of, belief in our partnership, belief in our business, belief in our leadership and our promoters, and belief in that what we’ve done is only a small percentage of what we’re going to do, and we want to do it for the rest of our lives. So, that’s more what this move means to me on a more personal level.

I would expect to see not only a renewed energy or renewed enthusiasm between myself, Nick and Ryan, but also that radiates throughout the whole ViSalus community, just based on the feedback we’ve already gotten.

DSN: You mentioned international expansion, and we’ve seen ViSalus add three new markets this year and you are looking at adding a couple more in 2015. Does your international expansion strategy accelerate at this point?

BAM: Our expansion strategy was already well under way, and I don’t know that this has any effect on our plans. U.K. was our first market outside North America, and we waited a year in that before we opened Germany, Austria, and Ireland this year and expanded into different languages. We’re building our operational muscle, and now we can go out there and pick up the pace without diverting focus.

DSN: You have the Vitality event next week (Sept. 12-13); do you have big plans to formally announce this news?

BAM: Yes, we’re going to be really telling the story. People look at the company and they bucket it as a company or a product or a comp plan, and they don’t realize that a company is really a community of people.  So we’re going to go on stage Friday night and tell the full story of the “All In” moments and why we’re doing what we’re doing.

Bob Goergen is coming out, which will be exciting. Blyth maintains 10 percent and Bob is the Chairman, so we plan to do something special for him as a thank you for everything he’s provided to us, in terms of mentorship and grooming us as executives and teaching us how to build a global business.

Before we were in the relationship with Blyth, we were a scrappy startup. Now we have a world-class finance team, everything on operations and reporting, world-class legal, tax best practices—a lot of the true back-end and operational functions. Blyth helped us build a solid backbone behind the scenes for us to build upon.

DSN: You all went to the Blyth team just a few months ago, and this transaction came together that quickly. That seems remarkable. Were you expecting it to move that smoothly and quickly?

BAM: I don’t think we had an expectation on the time frame; it was just a win/win/win situation, so it moved pretty quickly. For Blyth, it’s a win when it comes to their shareholders—obviously the stock has jumped quite a bit in the last couple of days. It’s a win for ViSalus in terms of us being allowed to have our entrepreneurial freedom and ownership and control over our destiny. I think it’s also a big win for all of our promoters who are now able to rebuild and move forward in that new spirit.

DSN: Talk a little bit about the health and wellness sector—what trends are you watching, apart from this transaction?

BAM: Our strategy has always been to be the largest healthy fast food provider in the world. Fast food has proliferated all over the world for obvious reasons—it’s simple, it’s fast, it’s super convenient, it tastes good and it’s cheap! And people need to eat, right? Our goal is to approach the market to provide the consumer with very similar benefits—simple, fast, convenient, good taste, affordability—but to obviously do it in a nutritious, healthy way.

We’re also seeing a big, big move when it comes to nutritious, on-the-go, all-natural snacking. That’s our next move when it comes to our product strategy. We already have two meals, with our shake and our Crunch—but now we’ll be moving into what people are doing in between meals.

DSN: Is there anything else you’d like to share with our readers?

BAM: The core of the Vi foundation has always been the entrepreneurial spirit. You know, we’ve always had a bit of a disruptive approach when it comes to innovation, whether it be technology or our culture. That entrepreneurial spirit, or swagger, was what made us who we were. And I think somehow over the course of the last couple of years as we’ve become a bigger company, it’s been harder to maintain that culture. 

So, our main focus is to bring that back—the entrepreneurial spirit and that kind of disruptive attitude and infuse that back into the culture both inside the walls and outside the walls.

October 01, 2014

Stock Watch

Stock Watch, October 2014


October 01, 2014

Exclusive Interviews

Executive Connection with Lynae Parrott and Gail Gioffredi, Managing Directors, Gold Canyon


In this month’s Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Lynae Parrott and Gail Gioffredi, Managing Directors of Gold Canyon, about leadership, dreaming big and empowering others.

DSN: What is the one thing you enjoy most about being the Managing Directors of Gold Canyon?

Parrott: I most enjoy the opportunity to drive change within the organization in an effort to create positive results for our Consultants and co-workers. 

Gioffredi: I most enjoy making an impact and a difference in people’s lives… really empowering others to create their own destiny.

DSN: What has been your proudest accomplishment?

Parrott: Above all, I am most proud of my family. My husband and I have been married for a blissful 21 years, and we’ve raised three children who have grown into upstanding young citizens.

Gioffredi: I am most proud of the recent enhancements of our Career Plan. Within the first month, we helped 79 of our Consultants become new Leaders, earn more money and live happier and more fulfilling lives.

DSN: What do you tell Gold Canyon Fragrance Consultants to lead and inspire them?

Parrott: You’ve heard the adage, “Actions speak louder than words.” I don’t think it is what I say that has the biggest impact on our Consultants as much as what I consistently exemplify. I believe my passion for this company, our product and this sales channel, combined with my drive to take action, inspire success.

Gioffredi: Dream your biggest dreams, believe in yourself and your ability to achieve your dreams, and commit to making them happen.

DSN: What is your vision for Gold Canyon?

Parrott: I envision one day Gold Canyon being a household name and a brand that evokes happiness.

Gioffredi: I visualize Gold Canyon becoming a household name.

Lynae Parrott and Gail GioffrediLynae Parrott and Gail Gioffredi

DSN: If you could hit “replay” on any part of your own Gold Canyon journey, either to enjoy the moment or to do something different, what would it be?

Parrott: This is a really hard question for me because I try to live my life in the moment—to relish each experience for the good or bad, learn from each experience and to have no regrets. I suppose I would enjoy another dose of that overwhelming mix of emotions I felt at our recent Palooza. There was a moment backstage when I witnessed the unfolding of all the blood, sweat and tears of our co-workers and the pride, joy and enthusiasm of our Consultants. It was a very rewarding moment.

Gioffredi: I would enjoy the fun and spending more time with our Consultants at our annual convention, Palooza. Every year it goes by too fast!

DSN: What project or accomplishment do you consider to be the most significant in your career?

Parrott: I’ve been with Gold Canyon since its inception 17 years ago. I started in the field as a seller and later joined the home office where I’ve been a key contributor in several positions.  Undoubtedly, being promoted to Managing Director last year has been the most significant accomplishment in my career.

Gioffredi: By age 27, I had realized my passion in helping others achieve their dreams, including helping over 75 women become stay-at-home moms or first-time home owners.

DSN: Is there one basic principle which governs your leadership at Gold Canyon?

Parrott: Yes, it is two-fold. I aim to treat others the way I want to be treated and to not ask of others what I personally wouldn’t be willing to do myself.

Gioffredi: Yes, to continually improve, but have fun while doing it.

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

Parrott: As a young leader I was influenced by Stephen Covey’s book, The 7 Habits of Highly Effective People. The habit, or piece of advice, that resonated most then, and that I’ve regularly kept at the forefront of my mind, is to “Begin with the end in mind.” Interestingly, I’ve found another habit surfacing as I’ve embarked on this new position, which has been helpful. “Seek first to understand, then to be understood.” They’ve both been useful pieces of advice for me.

Gioffredi: Change is inevitable—embrace it!

DSN: What do you like to do when you just want to relax?

Parrott: This is a great question! I love to take long, hot baths to relax my muscles and let my mind unwind. This is also a time I use to recharge and get energized. I love my baths!

Gioffredi: I like to travel with my family, read inspirational books, and a little shopping never hurts!

DSN: What’s on your bucket list?

Parrott: I’m experiencing my bucket list wish right now! I have always dreamed of leading a company that would have a direct positive impact on women’s lives. This company and my position today are enabling me to empower women and men to create their own destiny! 

Gioffredi: I have had the opportunity to experience so many places and things, but with my love of travel, two places I have not had the opportunity to visit are the pyramids of Egypt and Dubai.

October 01, 2014

New Perspectives

Direct Selling Entrepreneurship Goes to Community College

by Donna Duffey

An Academic’s Journey Into The Direct Selling Industry

Student entrepreneurs at the community college level come with a variety of pathways in mind to reach their entrepreneurial dreams. Some are focused on innovation and plan to create a new product or service. Some plan to purchase an existing business and apply their entrepreneurial skills to make that business grow. Some are members of an existing family business and want that business to continue to be sustainable across generations. Others are planning to reach their entrepreneurial dream by owning and operating a franchise. Some choose to be intrapreneurs in existing businesses. We believe a missing link has been a curriculum for students seeking their niche as independent contractors in the direct selling industry.

As the academic chair for Johnson County Community College’s (JCCC) Entrepreneurship program, this realization—or the discovery of a “gap” in our program offerings—led me to start a conversation with the National Association of Community College Entrepreneurship (NACCE) and the Direct Selling Education Foundation (DSEF) during the summer of 2011 in Washington, D.C. The brainstorming session brought together both community college leaders of entrepreneurship initiatives and direct selling company executives from across the country.

The “working” objective of this brainstorming meeting between these two previously disconnected groups was to determine if educational material addressing this dynamic industry sector could be developed and delivered effectively through America’s community colleges. Our collective answer after two days of discussion yielded a unanimous “Yes, we can!”

So why should these two seemingly unconnected groups both care about the gap in entrepreneurship education in community colleges? While revenue and employment numbers are significant and growing, the direct selling industry reports turnover of direct selling entrepreneurs as a significant industry challenge. As a result, this turnover creates challenges for the maintenance and enhancement of quality customer relationships, and costs direct selling companies time and resources that can impact profit.

While entry into direct selling entrepreneurship is relatively simple and, in most cases, at minimal cost, the entrepreneur may have a great deal of passion for the product or service but not a full understanding of the business model. They may have little hands-on experience and clarity that an independent contractor actually owns their own entrepreneurial venture. As with any business enterprise, some of these independent contractors need to develop and sharpen selling skills, marketing skills, financial skills, organizational management skills, and customer relationship management skills—above and beyond the terrific training and support successful companies provide. One way to accomplish closing the gap is for colleges and the direct selling industry to develop and deliver high-quality educational programming at community colleges. The Direct Selling Entrepreneur Program (DSEP) was developed in a partnership between DSEF and NACCE and is now available nationally to all community colleges. It not only benefits students seeking to grow their direct selling businesses, but also helps students thinking about joining this segment of the workforce, and increases student knowledge.


The Direct Selling Entrepreneur Program is a 30-hour course designed to provide direct sellers—and those interested in direct selling—with the small-business management and entrepreneurship skills they need to succeed in this low-cost, low-risk, low-barrier-to-entry form of entrepreneurship.


Created to address direct sellers’ specific needs, the curriculum increases the options for entrepreneurship education in communities across the United States.

Developed for community colleges, the curriculum is divided into 10 modules and introduces the fundamental components of small-business management, including marketing, finance, legal issues, planning and ethics. In addition, course participants gain deep understanding of the wide variety of direct selling business strategies, including individual sales efforts, party plan and network marketing scenarios, online sales, and salesforce recruitment and training. (For more information, contact Nancy Laichas, Chief Marketing & Development Officer, Direct Selling Education Foundation, at nlaichas@dsef.org.)

At JCCC, I have been able to utilize this DSEP curriculum to add one three-credit-hour course, called the Fundamentals of Direct Sales, and pair this new course with several other existing courses to create an academic credential, the Direct Sales Certificate. The course and certificate met all necessary approvals, both within the institution and at the state level, to be accredited and qualifies for financial aid just like our Entrepreneurship degree and other certificates. In addition to the Fundamentals of Direct Sales course, the 15-credit-hour Direct Sales Certificate also includes Professional Selling, Business Professional Skills, e-Marketing, and Consumer Behavior.


Although DSEP was envisioned as a non-credit course that community colleges can offer through their Continuing Education or Workforce Development departments—with a committed college faculty champion—the curriculum can be adopted into the for-credit side.


Our inaugural offering of Fundamentals of Direct Sales was during the spring 2013 semester. Several students were already direct sellers—one a homemaker and direct seller, one a retiree and direct seller, and one a full-time student and direct seller. But, the largest group was of students considering entering the direct sales field. One student was seeking to learn how this industry sector operates and wanted to apply this distribution strategy to his work-in-progress on his business plan for his entrepreneurial venture. Student satisfaction was high, with comments as wide-ranging as “Wow, I had no idea how much I didn’t know about what I do” to “Wow, this really is an interesting business model.” Minds expanded, learning took place and new opportunities were created!

Johnson County Community College (JCCC) was founded in 1969 and is located in the southwestern quadrant of the greater Kansas City metropolitan area. The college serves approximately 20,000 credit students with programming for students desiring to transfer to baccalaureate institutions and students seeking an associate degree or certificate in 50-plus career fields. JCCC also delivers continuing education programming.

JCCC’s Entrepreneurship credit program began in 1992. Today the program offers 12 courses, an Associate of Applied Science (AAS) degree and five certificate programs. The department has created numerous additions, deletions and modifications to its Entrepreneurship offerings over the past 22 years. Working with the faculty team and the program advisory committee, and gathering information from graduates, it strives to keep the program current and topical, therefore consistently striving to create both learning content and a learning environment that yields successful and sustainable entrepreneurs.

Johnson County Community College has chosen the credit-based or academic pathway and recognizes that others are doing the same. We have also worked with numerous other community college leaders planning to launch the DSEP curriculum in their non-credit, continuing education, or workforce development divisions. Each community college is different and will identify where they can best serve their communities and positively impact their economies.

Now, at this critical time where a few colleges like JCCC have shown it can be done, I encourage more innovative and collaborative thought-yielding strategic partnerships between community colleges, direct selling companies and the Direct Selling Education Foundation to explore where direct selling entrepreneurship education can go in the future. It doesn’t matter who initiates the conversation, so community college leaders and direct selling company leaders need to get to know each other and let the conversations begin. The possibilities are unlimited. So, ask yourself, What can I do today?

America’s Community Colleges: What You Need to Know

  • The mission statements for community colleges focus on providing accessible and affordable educational programming leading to an educated and sustainable citizenry.
  • There are 1,132 community colleges in the United States—so there is one near you!
  • There are 12.8 million students attending community colleges. Sixty-one percent of these students are in credit programs; 39 percent are in non-credit programs—there is an abundance of students already present!
  • 49 percent of all students in America’s higher education institutions are in community colleges—community colleges are the place to be!
  • The average age of a community college student is 28, with 57 percent of students between the ages of 22–39—a perfect match for self-employment opportunities in the direct selling industry.
  • Women constitute 57 percent of the student population—this parallels participation in the direct selling industry.
  • 36 percent of community college students represent the first generation in their family to attend college, indicating that accessibility and affordability matter—community colleges are changing and will continue to change the educational (and economic) landscape of our nation. This is a shared value with the direct selling industry.
  • Community colleges embrace the ethnic diversity of their communities with a diverse student population of 51 percent White, 19 percent Hispanic, and 14 percent African-American—also a shared value with the direct selling industry.

American Association of Community Colleges’ 2014 Fact Sheet

The Direct Selling Industry: What America’s Community Colleges Need to Know

  • In 2013, the direct selling industry generated $31.67 billion in sales, yielding a 3.3 percent increase over 2012—this industry is not only sizable but also growing during a time when many industry sectors are not.
  • There are 16.8 million people in the U.S. involved in direct selling. Of the 313.9 million people in the U.S. population, this represents 5.4 percent of the population. Additionally, the percentage of households having a direct sales person as a member is 13.8 percent of U.S. households—this industry sector offers economic opportunity to many.
  • While many people don’t understand the method of direct retail sales, the 2013 data reports 70 percent of sales are made person-to-person and 23 percent of sales are generated utilizing the party-plan method.
  • Product categories offered to the consumer through direct selling methods range from aromatherapy to weight management. The primary product groupings include home and family care, wellness, personal care, services, clothing and accessories, and leisure and educational—product choices abound.

Direct Selling Association



Donna DuffeyDonna Duffey is Professor and Department Chair of the Entrepreneurship Associate of Applied Science degree program and its related certificate programs at Johnson County Community College, Kansas City, Kansas. She was the winner of the 2009 National Association of Community College Entrepreneurship (NACCE) Faculty of the Year Award.

September 30, 2014

U.S. News

Avon’s DSA Withdrawal Raises Questions

Avon Products Inc. surprised much of the direct selling community with its public withdrawal from the U.S. Direct Selling Association earlier this month.

Avon resigned its membership Sept. 9 with a letter to the DSA executive committee. It was a significant move. Avon is, after all, the world’s second-largest direct selling company (behind Amway) and an iconic U.S. brand. But the real news came three days later, when Avon posted a letter signed by Senior Vice President Corporate Relations and Chief Communications Officer Cheryl Heinonen and addressed to other U.S. direct selling companies on the media center of the Avon website attempting to explain the rationale behind its withdrawal.

“This decision came after careful consideration and more than a year of thoughtful discussion,” Heinonen’s letter says. “This decision was driven by two key issues: We believe the association’s agenda in the U.S. is overly focused on the issues of a few specific brands rather than industry-wide challenges. We believe that the U.S. DSA Code of Ethics requires updating to better reflect the current state of the industry in the U.S.”

Despite these statements, the real motivation behind Avon’s resignation remains unclear. Heinonen’s letter does not provide any specific examples of the issues on which Avon feels DSA is overly focused nor the Code of Ethics updates Avon seeks. On the second point, Heinonen’s letter emphasizes that Avon is not exiting the World Federation of Direct Selling Associations and will continue to abide by the WFDSA Code of Ethics. This distinction is a murky one, because the U.S. DSA Code of Ethics has tighter, more specific controls than the WFDSA Code of Ethics, which was constructed to serve as a model for local market DSA codes. In fact, the WFDSA code calls for companies to comply with the codes of the DSAs in the countries in which they are headquartered.

It also seems clear that Avon had not been actively advocating for change within the association prior to its withdrawal. U.S. DSA Chairman Truman Hunt, President and CEO of Nu Skin Enterprises, has said Heinonen had not raised the concerns she listed in her letter with him, nor with any other members of the executive committee nor with DSA management. In a letter to DSA supplier members, including Direct Selling News, DSA President Joe Mariano said: “The general observations about the Code which Avon described in connection with its decision have not been raised before now; nonetheless, Chairman Truman Hunt has requested further details from the company and specific suggestions that might be considered by the Ethics Committee, and if appropriate, by the Board.”

We can only guess as to why Avon really resigned from the largest and most valuable organization that works to support the direct selling model in Washington.  But by doing so in such an inflammatory way, the company has succeeded in, at least momentarily, keeping the focus on external factors as detractors look for pockets of weakness or dissent within the direct selling community. And that is a disservice to everyone involved, including the thousands of Avon representatives the company says it wants to protect.

Avon has challenges of its own. Shares in the company (NYSE:AVP) have fallen into the $13 range as it has posted net losses for the past two years and a turnaround effort has failed to reverse declining domestic sales. CFO Kimberly Ross resigned earlier in the month to take on the CFO role at the oil-field services giant Baker Hughes Inc. This spring, Avon agreed to pay $135 million to settle U.S. probes into corruption charges related to its business in China.

In our view, it is unfortunate that Avon decided to walk away from its seat at the industry table. But we remain confident that U.S. DSA will continue to work to foster the best interests of the companies and independent contractors from all walks of the direct selling life.

September 30, 2014

U.S. News

A Voice for Women: Tupperware’s Rick and Susan Goings

Photo above: The Sewall-Belmont House sits opposite the U.S. Capitol in Washington, D.C. (Photo: Library of Congress)


The Sewall-Belmont House & Museum in Washington, D.C., recently honored Tupperware Brands CEO Rick Goings and his wife, Susan, for their ongoing efforts on behalf of women worldwide.

The couple accepted the second annual Voice for Women Award during the museum’s Alice Award Luncheon, which pays homage to National Woman’s Party Founder Alice Paul. The historic party, a leader in the campaign for equal rights and women’s suffrage, owns and maintains the Sewall-Belmont House & Museum on Capitol Hill.

Along with the Goings, the museum lauded Democratic Sen. Barbara Mikulski of Maryland with its Alice Award. Both awards recognize individuals who have broken down barriers and advanced women’s progress toward equality.

Tupperware empowers women through its business opportunity and its global Chain of Confidence initiative, which Susan Goings represents as Global Ambassador. The Chain of Confidence is Tupperware’s commitment to equip women with the opportunity and support they need to thrive economically and socially.

The kitchenware company shares the vision of U.N. Women, which recently welcomed Tupperware’s CEO as a founding member of its Private Sector Leadership Advisory Council. After receiving the Voice for Women Award, Rick Goings wrote a Huffington Post piece calling for businesses and governments to unlock their economic potential by training, educating and hiring women.

September 29, 2014

U.S. News

‘Nashville’ Costume Designer Curates Exclusive Looks for Stella & Dot

Stella & Dot is partnering with veteran costume designer Susie DeSanto to bring its stylists fresh looks for fall. DeSanto’s designs currently appear on Connie Britton, Hayden Panetierre and other stars of the hit ABC country music drama Nashville. Now, DeSanto has launched her first-ever brand collaboration with four curated collections for Stella & Dot.

The fashion accessories brand is offering DeSanto’s picks in a range of ready-to-wear looks. The themed collections include Rocker Chic, Nashville Du Jour, Modern Classic and Star Power. To support its stylists, Stella & Dot has also incorporated online video with styling tips, a social media campaign and a trunk show incentive.

“Jewelry and accessories have the unique ability to transform an entire look. I’m thrilled to partner with Stella & Dot to bring this concept to life and offer a fresh, creative eye to their existing styles,” DeSanto shared in a statement. “Accessorizing can refresh an entire wardrobe making it wearable and current as well as a statement of individuality.”

DeSanto’s work has garnered three Costume Designers Guild nominations, for the film White Oleander and the first two seasons of Nashville. Her past projects include Miss Congeniality with Sandra Bullock, 13 Going on 30 with Jennifer Garner and One Fine Day with George Clooney.

September 25, 2014

U.S. News

Amway Contribution Spurs Ada Redevelopment Project

Photo above: Amway World Headquarters in Ada, Michigan.


Global direct selling leader Amway is taking part in a community-led effort to redevelop its hometown of Ada, Michigan. Amway will contribute $3.5 million in support of a plan to bring $13 million in improvements to the rural township, located on the eastern outskirts of Grand Rapids. The redesign centers on the quaint Ada Village area across the street from Amway World Headquarters.

“The community has long held hopes of further developing the small village and, since 2006, has led community planning efforts to help shape what it could become in the future,” Bill Payne, Amway Chief of Staff, told DSN. “We’re pleased to extend our support, from initially assembling land under one ownership group to speed advancement of the vision, to now offering financial support to cover a portion of public infrastructure improvement costs.”

Amway houses more than 4,000 employees at its world headquarters, which spans one mile from east to west and comprises 80 buildings and 3.5 million square feet of office and manufacturing space.

The proposed Ada Village redesign will make the area friendlier to bikes and pedestrians, improve traffic flow, and develop community spaces like a farmers’ market and an outdoor performance area on the Village’s riverfront.

“Amway is a good partner that has been a part of our community for more than 50 years,” said Ada Township Supervisor George Haga. “We are quite excited about this private-public partnership to redevelop Ada Village, and we look forward to tentatively starting the first project next spring.”

At the same time, said Payne, Amway is leading a separate community fundraising effort called Envision Ada. The initiative will contribute another $3 million to the planned improvements, with the final $6.5 million coming from the township.

“We look forward to great progress in the coming months and are excited by the efforts of the township to make the community’s vision a reality,” Payne shared.

September 24, 2014

World News

Viridian Takes ‘7 Continents in 7 Years’ Initiative to Nicaragua

During Viridian Energy’s fifth annual PowerUP! Convention last week, the company revealed the fifth location of its 7 Continents in 7 Years initiative. This year Stamford, Connecticut-based Viridian will focus its global sustainability efforts on the Central American nation of Nicaragua. In the rural, off-the-grid village of Potrero Platanal, the company will power 48 homes that previously had no prospects of energy supply.

Viridian’s energy offerings are up to 100 percent renewable, and the company reports that its residential and commercial customers have avoided more than 4.5 billion pounds of carbon emissions. Through 7 Continents in 7 Years, Viridian staff and top-performing Independent Associates take that spirit of sustainability to a different continent each year.

The initiative began with reforestation efforts in the Amazon, where the company has returned annually and planted more than 1,700 trees through its Amazon Preservation Project. In Indonesia, Viridian brought solar power and lighting to one remote village and a clean water pipeline to another. The initiative has also impacted key communities in Ghana and Fiji.

September 23, 2014

U.S. News

Morinda Generates TruAge Buzz at Emmys Style Lounge

Photo above: Celebrities learn about Morinda’s anti-aging products at the Kari Feinstein Style Lounge.

Age is a perennial topic in Hollywood, where Morinda recently brought its TruAge initiative to the Kari Feinstein Style Lounge presented by Paragon. The company’s anti-aging products created a buzz among celebrities and members of the media at the annual pre-Emmys event.

Stars from hit shows like Modern Family, Mad Men, Glee, Veep, Orange is the New Black and The Bachelor stopped by to try Morinda’s AGE Therapy Gel and TruAge Scanner. The patented scanning device, validated in over 100 published studies, non-invasively measures a person’s AGE levels. AGEs, or advanced glycation end-products, are damaging compounds that form in the body and trigger health issues and signs of aging.

“There was a lot of excitement around our TruAge area at the event because our product was the only anti-aging skincare product in this year’s lineup,” says Morinda Product Line Manager, Kira Davis, who took part in the two-day event. “People were so enthusiastic about the TruAge Scanner and discovering their TruAge that other celebrities and Style Lounge participants came over to our area to see what the excitement was about.”

After learning the TruAge of their bodies, participants had the opportunity to sample Morinda’s AGE Therapy Gel. The gel is one of several products formulated by Morinda to reduce external signs of glycation.

“There was a really positive response when the celebrities and media members tried the AGE Therapy Gel on their own skin,” says Davis. “They loved the smooth, light feel of the gel and they were also drawn to the fact that it fights aging with natural ingredients.”

Morinda’s participation in the Emmys Style Lounge, along with featured product roundups on Los Angeles television affiliates, has also given its salespeople something to talk about. The company reports positive feedback on the event from distributors sharing Morinda’s TruAge message with consumers.

September 23, 2014

U.S. News

Vemma Ranked Arizona’s Fastest-Growing Company

Photo above: Vemma spotlights the Platinum Club during its annual convention in Las Vegas.


Due south of Utah, where Zija was recently named the fastest-growing company in the state, another direct selling company is leading the field in growth. Arizona Corporate Excellence (ACE) has ranked Vemma Nutrition Co. the top business in Arizona on its annual ACE Fastest-Growing Cos. list. Scottsdale-based MT Builders ranked No. 2, followed by Phoenix transportation and logistics company GlobalTranz Enterprises.

ACE researches and compiles its list based upon a proprietary formula of accounting firm CliftonLarsonAllen LLP. The formula measures revenue growth—in both actual dollars and percentage—over a two-year period. Vemma jumped from No. 10 in last year’s ranking to claim the top spot. According to Vemma’s DSN Global 100 filings, the nutrition company increased revenue by 30 percent in 2012 and by 89 percent, with net sales of $221 million, in 2013.

“Our growth has come from a couple of different areas. Our international markets have done really well for us,” Vemma Founder and CEO BK Boreyko told the Phoenix Business Journal. “Our European markets finished at $50 million last year. This year, they’re tracking to do $100 million. New products have also done well, opening a broader range of potential customers.”

Vemma also collected accolades in the recent 12th Annual American Business Awards, commonly known as the Stevie Awards. From a field spanning public and private, for-profit and non-profit companies, Vemma received bronze awards in New Product or Service of the Year – Consumer Products, for Vemma Renew™, and in the Events App category, for Vemma All In.

September 19, 2014

World News

ASEA Launches Mexico Market with 3-City Tour

Photo above: ASEA headquarters in Salt Lake City.


Health and wellness brand ASEA is celebrating the grand opening of its Mexico market with three events across the country. The tour kicked off in Mexicali on Thursday, and will include stops in Colima on Sept. 20 and La Paz on Sept. 22.

Since launching in 2009, ASEA has expanded into several EU countries, as well as Australia and New Zealand. The privately held company has developed a breakthrough technology that replicates Redox Signaling molecules in a sustainable form outside the body. ASEA is the only company to market the patented technology, which supports cellular healing and replenishment.

“What we bring to Mexico is a groundbreaking product category and a ground floor business opportunity for those interested in owning their own business,” said ASEA CEO Charles Funke. “In the time since we opened this market, Mexico has become ASEA’s fastest growing international market.”

Funke will join ASEA Founders Verdis and Tyler Norton and President Jarom Webb to keynote the meetings, which aim to build the company’s distributor base in Mexico. The tour will also feature presentations by Dr. Gary Samuelson, an expert on ASEA’s flagship technology.

September 18, 2014

U.S. News

Nerium Doubles Office Space with New Headquarters

Nerium cultivates a familial culture at its corporate headquarters, and it looks like that family will be growing in the near future. The burgeoning skincare company, which incorporates Friday morning breakfasts for its employees, off-site recognition luncheons and complimentary chair massages at the close of each month, is moving to a new headquarters twice the size of its current space.

The home office will cover 75,912 square feet of a property adjacent to Nerium’s Addison, Texas, headquarters. The company chose to remain in the area where it launched in 2011 from a 5,432-square-foot space.

“As an employee-friendly company, we wanted to stay within three miles of our current location; we were thrilled when we found our new state-of-the-art facility, which will allow us to focus on our field as we continue to grow,” Chief Operating Officer Al Richey told DSN. “With its open floor plan, our new headquarters creates a collaborative environment that supports our ‘loving, caring, sharing’ motto.”

Having achieved annual revenue of $219 million in just two years, Nerium is now gearing up for international expansion. The company will open for business in Mexico next month, looking to build upon record growth in the U.S. and Canada. In its three-year history Nerium has maintained a laser focus on developing products backed by science and proven results. Currently, the company’s skincare line features just three products.

“Since inception we have aspired to create real products and real opportunities for our Brand Partners and our customers, and our focus remains the same as we grow,” shared Co-CEO Jeff Dahl, who joined the company earlier this year with a strong background in international expansion. “We believe launching the Mexico market creates huge opportunities for all Brand Partners to expand their businesses and exposes new prospects to the Nerium experience.”

September 17, 2014

U.S. News

Zija Ranked Fastest-Growing Company in Utah

Direct selling companies are a strong force in the Utah economy, and according to the September issue of Utah Business magazine they are also some of the fastest-growing companies in the state. Zija International leads the magazine’s annual Fast 50, a ranking based upon revenue growth and revenue generation.

Zija employs more than 200 at its corporate headquarters in Lehi. Since its founding in 2005, the company has surpassed $140 million in annual sales. Zija products, which utilize superfoods derived from the Moringa plant, span the weight management, liquid nutritionals, energy and performance, and skincare categories.

“Since the beginning, we have had the goal of becoming a billion-dollar company. Once we decided that, our plans obviously extended beyond the next month, year or even decade,” Rodney Larsen, Zija President and CEO, told Utah Business. “We have a vision of where we want to be, and we’ve worked hard and smart toward it from day one.”

At No. 10 on this year’s Fast 50 is Provo-based Vivint, one of the largest home automation companies in North America. Vivint markets smart home and business solutions with a focus on security and energy efficiency. Also headquarted in Provo, Nu Skin jumped from No. 23 last year to claim the No. 13 spot. The skincare brand reported a higher revenue increase—$977 million—in 2013 than any other direct selling company. USANA Health Sciences, based in Salt Lake City, also led the state in growth. The health and nutrition company increased net sales by 10.7 percent in 2013 to earn the No. 28 ranking.

September 16, 2014

U.S. News

Youngevity Makes Room for Growth with Headquarters Renovation

Photo above: Outside Youngevity’s corporate headquarters in Chula Vista, California.


Youngevity is investing in future growth with $1.1 million in improvements to its Chula Vista, California, headquarters. Updates to the 59,000-square-foot facility include a revamped distribution center and a new state-of-the-art R&D lab.

The nutrition, lifestyle, and gourmet coffee company consulted with UPS on the design of its updated warehouse space. The renovation doubled storage and throughput capacity to accommodate Youngevity’s rapid growth. Following 18.1 percent revenue growth in 2013, the company reported second-quarter sales up 56.6 percent to $32.7 million.

Along with warehouse space, Youngevity has expanded its customer service department and call center to double capacity. The headquarters features a remodeled lobby, complete with a new coffee and beverage bar. The company is also taking advantage of the City of San Diego’s outdoor water conservation rebates with new water-efficient landscaping.

Youngevity’s growth has stemmed in part from its ongoing acquisition of diverse direct selling brands, in what the company terms a “network cloud” model. In addition to a range of nutrition and lifestyle brands, Youngevity owns CLR Roasters, a gourmet coffee manufacturer marketed through the commercial, retail and direct sales channels. Youngevity also ventured into clothing and jewelry with the July launch of MK Collaborative, an e-boutique website featuring lines by celebrity fashion designer Marisa Kenson.

September 12, 2014

U.S. News

LifeVantage Tailors New Seminar to Millennial Entrepreneurs

Photo above: LifeVantage is hosting its young entrepreneurs at The Flamingo Hotel and Casino in Las Vegas.


LifeVantage is strategically targeting the next generation of entrepreneurs with a new event underway at The Flamingo Hotel and Casino in Las Vegas. The three-day Rules of Engagement seminar is all about training and developing young millennials, a steadily growing segment of the company’s salesforce.

“Millennials represent a massive opportunity for immediate and long-term growth for our distributor family and LifeVantage as a company,” said President and CEO Douglas C. Robinson. “We want to provide these young entrepreneurs with authentic and time-tested strategies to encourage success in their business lives for years to come.”

The three-day event includes mentoring sessions by some of LifeVantage’s top young entrepreneurs, but the agenda is not all business. Attendees can also experience a pool party and a dance party hosted at some of the city’s hot spots.

LifeVantage released Q4 and full fiscal year results on Wednesday, and the healthy living company experienced a record fourth quarter. Revenue increased 8.8 percent to $56.0 million, with 12.3 growth in the Americas. For the full year, LifeVantage increased revenue 2.8 percent over the prior year to $214.0 million. Annual revenue was negatively impacted 5 percent by foreign currency fluctuations.

“As we expect revenue to grow in fiscal 2015, we also expect to improve margins and grow the bottom line. In fact, we project our earnings per share to increase by approximately 40 percent to 60 percent in fiscal 2015,” Robinson told investors during the company’s earnings call. “The transformation of this company over the past 12 months has been extremely exciting.”

 

September 11, 2014

U.S. News

Herbalife to Invite Fresh Product Ideas at Innovation Event

Herbalife is bringing a nimble, responsive approach to product development with its upcoming North American Innovation Conference. The conference is a forum for businesses, entrepreneurs and nutrition industry visionaries to present product ideas to top Herbalife executives. The global nutrition company is scouting out novel ingredients and technologies to enhance or extend its existing product lines.

Slated for Oct. 5-6, the Innovation Conference leads up to nutrition industry expo SupplySide West. The expo is the largest gathering of its kind in the world, and this year’s event will feature more than 1,700 ingredient suppliers and finished product manufacturers.

Herbalife is partnering with Nutrition Business Advisors and Nutrition Capital Network to present the North American Innovation Conference, a format launched about three years ago. The company hosts four to five conferences annually, each in a different region of the world. Applicants undergo screening by outside facilitator Nutrition Capital Network and the internal Herbalife team before presenting their ideas.

The company evaluates factors such as a product’s global appeal and how many clinical studies it has undergone, according to Vice President of Worldwide Product Marketing, Dr. Luigi Gratton. Ultimately, though, the product has to pass muster with Herbalife’s most important critic—the customer.

“They’re the people who know the marketplace landscape really well—whether a product is too sweet, if Stevia is hot or not, what types of fibers work and so forth,” Gratton explains.

Herbalife’s solution has been to bring its own salespeople to select conferences and give them the opportunity to “Taste the Future.” On the last day, the members test prototypes of the products and provide instant feedback.

“Ideally, that means we hear the pitch, get feedback from our members, spend the next 18 months developing it and roll it out in 2017,” says Gratton. “That is rare, but it’s the dream.”

Herbalife’s take-all-comers approach to innovation extends beyond its conferences. The company often receives product pitches from its members, as well as its employees, who can submit ideas through an internal idea bank. Herbalife processes the submissions through product lifecycle management software accessible to all employees.

“The beautiful thing about product innovation for us is that everyone’s a nutrition expert, because everyone eats,” Gratton notes. “At Herbalife, all ideas are welcome.”

September 10, 2014

U.S. News

Second Annual ‘Day on the Hill’ Connects Direct Sellers, Policymakers

More than 400 independent direct selling consultants gathered in Washington, D.C., today for the Direct Selling Association’s second annual Direct Selling Day on Capitol Hill. Representing 28 companies and 30 states, the participants met with members of Congress to share personal stories of how direct selling has helped them create a better life.

Direct Selling Day on the Hill is a part of the DSA’s effort to effectively communicate the industry’s positive impact and secure vital political influence—two of the objectives laid out by DSA Chairman Truman Hunt at the beginning of his tenure.

DSA President Joseph Mariano spoke to DSN from Capitol Hill, where five members of Congress, both Democrats and Republicans, had spoken with the group about independence and entrepreneurship.

“We are thrilled that these individuals are giving Congress an appreciation of people in the field, because the real point of the day is to provide a backdrop for their successes and their challenges in daily life and in their businesses,” said Mariano. “We’re not here today to talk about specific legislation or ask for any funding. It’s about building relationships between the field people and members of Congress.”

About 90 direct sellers represented the industry at last year’s inaugural Day on Capitol Hill. This year’s participation has edged above 435, the goal set by the DSA to match the number of representatives in Congress.

“We’re bringing our own direct selling ‘congress’ to meet with representatives and share the ways that direct selling has personally impacted their lives,” Mariano shared.

In addition to meeting with members of Congress, participants have the opportunity to sign the Direct Selling Proclamation and Compact, which helps demonstrate to policymakers the economic and social impact of direct selling.

Companies across the industry can follow up on today’s initiative by encouraging their salespeople to sign the Proclamation, donating to the DSAPAC, and reaching out to their local, state and federal officials. The DSA also works with companies interested in hosting policymakers at visits to their headquarters.

September 09, 2014

U.S. News

Avon Stock Dips on CFO Resignation

Avon has announced the resignation of Executive Vice President and Chief Financial Officer Kimberly Ross. Ross will join Baker Hughes, a Fortune 500 oilfield services company based in Houston.

With Ross slated to exit Oct. 2, 2014, the search for a new CFO is underway at Avon. In the interim, Robert Loughran, Vice President and Corporate Controller, will serve as acting CFO. Loughran has spent the last decade at Avon, following 15 years in various financial reporting and accounting positions at public companies, as well as PricewaterhouseCoopers LLP and Deloitte & Touche LLP.

“Kimberly has been a strong leader for Avon over the past three years. I appreciate her partnership as we’ve worked together on Avon’s turnaround journey. We wish her all the best in her new role,” said Avon CEO Sheri McCoy. “We have an outstanding finance leadership team, and I have full confidence in Bob and the team during this transition period.”

Some analysts have not expressed equal confidence. The team at Citigroup downgraded Avon to “neutral” from “buy” with a $15 price target, citing Ross’s departure amid the company’s sluggish earnings recovery. Avon stock has dipped 3.9 percent to $13.12 at 12:08 p.m.

September 08, 2014

U.S. News

SFGate: A Tech Take on Direct Sales

Many up-and-coming companies are successfully blurring the line between direct selling and e-commerce, and a number of those businesses call the San Francisco Bay Area home. From the region that boasts tech industry hotbed Silicon Valley, women-run brands like Stella & Dot and Ruby Ribbon are bringing innovative technologies to traditional direct sales.

To learn more about the “social commerce” powering their businesses, SFGate spoke to Anna Zornosa of shapewear and clothing seller Ruby Ribbon; Jessica Herrin of fashion and accessories brand Stella & Dot; Elenor Mak of personal styling service Keaton Row; and Lori Bush of skincare company Rodan + Fields.

“In the land of startups, where social networks have made many people a lot of money, and women are known for breaking the mold, a reimagined approach to direct sales makes perfect sense,” the piece states.

Read the full feature at SFGate.com.

September 05, 2014

U.S. News

PartyLite Joins Push to ‘Stand Up To Cancer’

Photo above: This candleholder set will be auctioned off at 250 Stand Up To Cancer broadcast viewing parties. Throughout the year, PartyLite donates a portion of all Wild Strawberry GloLite by PartyLite® Jar Candle sales to the American Cancer Society.


PartyLite will be joining some of the biggest names in show business as they “Stand Up To Cancer” (SU2C) on Friday during one of the entertainment industry’s largest fundraising events. As the biennial event airs live on 31 broadcast and cable networks, PartyLite will be hosting viewing parties and raising funds to boost cancer research.

The candle party company will auction off candle and candleholder sets at 250 viewing parties across North America. The proceeds will benefit SU2C, which supports groups of scientists collaborating to develop new treatments, as well as groundbreaking cancer research projects. Since launching in May 2008, SU2C has raised $261 million in pledges and funded 141 clinical trials. SU2C grants are administered by its scientific partner, The American Association for Cancer Research.

“For more than a decade, PartyLite has been committed, heart and soul, to the battle against cancer,” Joan Connor, President of PartyLite North America, shared in a statement. “Our PartyLite independent leaders and consultants, along with customers and staff contribute in so many ways throughout the year because cancer has touched the lives of us all in one way or another. “

Friday’s broadcast, which airs at 8 p.m. EST/7 p.m. CDT, will feature appearances by Gwyneth Paltrow, Reese Witherspoon, Pierce Brosnan, Halle Berry, Jon Hamm, Kiefer Sutherland, Ben Stiller and Will Ferrell. The event will also include special performances by The Who, Lupe Fiasco & Common, Ariana Grande, Dave Matthews and others.

September 05, 2014

U.S. News

Stream Energy CFO Receives 2014 Women in Business Award

The Dallas Business Journal has honored Stream Energy Chief Financial Officer Renée Hornbaker as one of its 2014 Women in Business.

Asked what inspires her, Hornbaker told the Journal she loves a challenge. The mother of two has faced her fair share during more than 30 years in the accounting field.

“When I started in public accounting, there was only one other woman professional in the office—and she started 5 months before me,” Hornbaker said of her early career.

Hornbaker soon made the switch to corporate accounting, working her way up to senior positions at Flowserve Corp., Shared Technologies Inc., Deloitte & Touche and the Phelps Dodge Corp. As CFO at Stream Energy, Hornbaker heads up a finance operation that reported $867 million in revenue last year.

Stream Energy markets residential and commercial energy services through its wholly owned direct selling subsidiary, Ignite. Ignite Associates number more than 250,000 across six states and the District of Columbia.

Read Hornbaker’s full Women in Business profile (subscribers only).

September 04, 2014

U.S. News

ViSalus Management Buyout Will Cut Blyth Stake to 10%

The co-founders of ViSalus will lead a management buyout of the weight-loss and fitness brand, according to a disclosed agreement with parent company Blyth Inc. Following Tuesday evening’s announcement, shares in Blyth jumped during pre-open trade and rose 36 percent on Wednesday to close at $9.07 per share.

Blyth first invested in ViSalus in August 2008, when it acquired a 43.6 percent stake in the company. Blyth currently holds an 80.9 percent ownership interest, while ViSalus’ co-founders and other preferred stockholders own the remaining 19.1 percent. In the announced transaction all preferred stockholders will exchange their shares for ViSalus common stock, relieving Blyth of its $143 million guarantee of the preferred stock.

ViSalus will revert to private ownership under co-founders Ryan Blair, Blake Mallen and Nick Sarnicola, as well as ViSalus employees and early stockholders, who will take on a 90 percent stake in the company. Blyth will remain an equity holder with 10 percent of ViSalus common stock.

“The co-founders and I are very excited to go ‘all in’ on a business that we started and the future prospects of which we believe in wholeheartedly. I am also personally grateful to the Goergens and to Blyth for nearly 10 years of mentoring and support,” ViSalus CEO Ryan Blair shared in a statement.
 
According to a recent announcement, ViSalus’ future prospects include an extensive leadership development program. The company has partnered with leadership expert, speaker and best-selling author John C. Maxwell to launch its Leadership & Influence Development (LID) program.

“I have had the opportunity to mentor ViSalus’ three founders, who each have unparalleled creativity, intelligence and leadership potential,” said Maxwell on the new collaboration. “It’s been a real joy to be able to pour my life into the Vi founders, whom I often affectionately refer to as the Three Musketeers.”
 
The LID program will develop top ViSalus Promoters through skills training and mentoring. The inaugural LID group, which will work directly with Maxwell and the founders over the course of a year, held its first of three annual meetings in Atlanta this June.

September 03, 2014

U.S. News

Medifast Deters Takeover Attempts with Stockholder Rights Plan

The board of directors at Medifast Inc. (MED—NYSE) has put in place a one-year stockholder rights plan or “poison pill” intended to discourage a hostile takeover from outside the company.

The weight-loss company adopted the plan “in response to the recent rapid accumulations of significant portions of Medifast’s outstanding common stock.” Waltham, Massachusetts-based ModusLink most recently built up a significant stake in Medifast. The supply chain and logistics company acquired 9.9 percent of Medifast stock through a series of transactions in July and August.

In its Securities and Exchange Commission filing, Medifast states the plan was not adopted in response to any specific takeover bid or acquisition proposal. The rights plan would trigger should an outside investor acquire 10 percent or more of the company’s stock. Existing stockholders would then have the opportunity to purchase additional common stock at a discounted price.

Medifast markets its products through several channels, including the personal coaching division Take Shape For Life. The direct selling subsidiary is Medifast’s most profitable division. Take Shape For Life generated $229 million in revenue last year to claim the No. 52 spot on the DSN Global 100.

September 02, 2014

U.S. News

Mary Kay Foundation Offers Back-to-School Tips for Healthy Relationships

Photo above: Last year at Mary Kay’s Fall College Tour, students pledged to “Don’t Look Away” from abuse.


One in five—that’s how many women are victims of sexual assault or attempted sexual assault while in college. As students begin a new year of classes, Mary Kay and partner organization loveisrespect are providing tips to help young people build healthy relationships and recognize signs of abuse.

The Mary Kay Foundation has donated more than $31 million to combat domestic violence in all its forms. The foundation’s Don’t Look Away campaign offers young people education and services that support healthy dating and relationships. As a part of that effort, Mary Kay has partnered with loveisrespect as lead sponsor of a 24/7 text for help service. By texting “loveis” to 22522, individuals can communicate with a peer advocate who will answer questions or address red flags in a relationship.
 
Mary Kay has also partnered with the sorority Alpha Chi Omega to provide education and prevention tools to members and their campus communities nationwide. Kicking off National Campus Safety Awareness Month in September, Mary Kay and loveisrespect shared these ABCs of Healthy Relationships 101:

Abuse

  • Abuse can come in many forms. One in three young people will experience abuse in a dating relationship. This includes verbal, sexual, digital and emotional abuse. One of the most important things you can do for yourself is know the early warning signs of abuse.

Boundaries

  • Having healthy boundaries can help keep your relationship secure. Set boundaries together. You and your partner shouldn’t feel trapped or that there’s a lack of trust. Express your feelings so that you both can feel comfortable.

Communication

  • Talk about what you both want and expect out of the relationship. A relationship based on mutual respect and open communication will go so much further than one rooted in power, control and mistrust. And if you have questions and think that you or a friend might be in an unhealthy relationship, send the text “loveis” to 22522.

September 02, 2014

Company Spotlight

Amway: Rising to the Top

by Barbara Seale

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


Company Profile

Founded: 1959
Headquarters: Ada, Michigan
Founders: Rich Devos and Jay Van Andel
Products: Nutrition, wellness, beauty and home products


Amway watchers have many things to admire: an impressive 55 years in business, sales growth of almost $1 billion in 2012 and 2013 combined, and brands that are among the leaders in their category. The company’s 2012 sales allowed it to climb to the top of the Direct Selling News Global 100 list, where it remains. Last year sales reached $11.8 billion.

Those imposing figures are just the latest in a history that includes growth in 13 of the past 14 years. The secret to its recent success? A strategy it calls Growth Through Innovation.


“[Our rigorous testing of products] gives Amway Business Owners confidence in the quality of the products, validates the health benefits of the products as part of a healthy lifestyle and helps them explain ‘why Nutrilite, why Amway?’ ”
—Audra Davies, Vice President of Nutrilite Product Development and Analytical Science


Now seven years into the strategy, the company has approximately doubled its size—its original goal. In fact, Amway executives can point to many successes. Most of its top 10 markets grew in 2012 and 2013, despite political turmoil and economic crises in some of them. As the company grows, its manufacturing capability grows, too. Amway is in the middle of a $332 million global expansion of it manufacturing and research and development, including four facilities in the U.S. that support the Nutrilite® brand, a new manufacturing facility in India, a second manufacturing site in Vietnam and an R&D center in China.

Amway has fueled its growth by focusing on the basics, providing products customers want to buy and creating an experience that satisfies the entrepreneurial needs of its 3 million Amway Business Owners (ABOs). Along the way, Amway has learned to customize its approach so that it creates success in many markets at the same time.

“The priority we’ve set around the world is on the experience of both customers and Amway Business Owners,” says Amway Chief Sales Officer John Parker. “We try to ensure that we’re providing the right support, tools, products and training to create an environment that helps people achieve their goals. It takes hard work, and there was no silver bullet—not one single product or initiative. Achieving growth around the world has required getting the right portfolio of strategies in place, strong partnerships in our regional organizations, and executing effectively.”


Global R&D expansion was one of the goals met by Amway’s Growth Through Innovation strategy.


Cultural Customization

In China, a fairly new market where the country’s unique regulatory environment requires direct sellers to adapt their traditional business models, Amway focused on brand-building, lots of training and ensuring that its products meet the unique needs of Chinese consumers, where nutrition and herbal remedies are a core part of the culture. The work is paying off. Amway earned about 40 percent of its 2013 revenue in China.

In stark contrast with China, the company’s business in Japan is more developed. Parker says that some of Amway’s most innovative work in the last few years has been done in Japan. Though it has been a challenge, a stagnant economy coupled with uniquely demanding, sophisticated consumers tests every company.


“Achieving growth around the world has required getting the right portfolio of strategies in place, strong partnerships in our regional organizations, and executing effectively.”
—John Parker, Chief Sales Officer


John ParkerJohn Parker

“For our business in Japan to get on a growth track, we needed to understand the unique nuances of the Japanese consumer,” Parker says. “One issue is the level of service they demand. As Americans, it’s hard to appreciate the service demands there, but our team there did a fantastic job of understanding where we weren’t delivering against service expectations and raising the bar uniquely in Japan. Again, it wasn’t just one magic bullet, but the right combination of initiatives: delivery, customer service, and the type of experience we offer in training centers and brand centers in Japan. Product launches created growth there, and the launches of skincare products that appealed to Japanese consumers have been very successful.”

Amway coupled product launches in Japan with training, tools and innovative events in clubs and on beaches that focus on brand-building, but without the traditional business presentations. Many initiatives are especially focused on achieving the right combination of initiatives for ABOs, and a focus on customer satisfaction drove excitement in the under-35 demographic of consumers
and ABOs.

“At the end of the day there are certain things we’ll do well at headquarters and certain things we must empower our teams around the world to do,” Parker explains. “We had to figure out the formula.”


Now seven years into its Growth Through Innovation strategy, Amway has approximately doubled its size—its original goal.


Market Domination

The second half of the formula revolves around products, especially the company’s star brands—Nutrilite and Artistry®—which open doors for ABOs around the world.

Nutrilite, the company’s line of wellness products, pre-dates Amway itself. This year Amway celebrates the 80th anniversary of Nutrilite. In fact, Amway founders Jay Van Andel and Rich DeVos started their direct selling careers in 1949 as Nutrilite distributors. The brand was already 15 years old. Rich has said that without Nutrilite, there would be no Amway. Jay and Rich introduced the Nutrilite brand to Amway distributors in 1972 when they acquired a 51 percent interest in Nutrilite. They gradually acquired more and more of Nutrilite stock until 1994, when they purchased Nutrilite Products in full. According to Euromonitor International Limited, today Nutrilite is the world’s No. 1 selling vitamins and dietary supplements brand, accounting for almost half of Amway product sales. One of the earliest wellness products, Nutrilite Double X®, is still the company’s flagship nutrition product.


Nutrilite, the company’s line of wellness products, pre-dates Amway itself. This year Amway celebrates the 80th anniversary of Nutrilite.

The company’s other mega-brand is Artistry. Also according to Euromonitor, for years the product line has been in the world’s top five largest-selling premium skincare brands, and among the world’s top 10 largest-selling premium cosmetic brands. The product line was born in 1959, the same year Amway was founded. Today it includes 250 products that are sold in 50 countries around the globe. Some 25 percent of Amway product sales are Artistry products.

Amway founders launched the company with one of the first biodegradable products, L.O.C.™ (Liquid Organic Cleaner) Multipurpose Cleaner. Today the L.O.C. name has morphed into the LEGACY OF CLEAN® brand, which includes an extensive line of products made with naturally derived ingredients. The company also offers eSpring water treatment and purification systems—now the world’s No. 1 selling brand of home water treatment systems*—as well as XS® Energy Drinks. While Amway offers all these product lines, its revenue workhorses are the Nutrilite brand of nutrition products and Artistry skincare and cosmetics. With some 450 individual products, Amway is a beauty and wellness powerhouse, offering products and the Amway opportunity in more than 100 markets around the world.



Family Features

Artistry and Nutrilite share some characteristics beyond their goliath revenue-production abilities. They’re both backed by science and developed by robust research and development teams. They have the support of Scientific Advisory Boards. And they were birthed by entrepreneurial creative teams comprising the founding families at Amway and Nutrilite Products. Today their legacies continue. Dr. Sam Rehnborg, son of Nutrilite Founder Carl Rehnborg, is now President of the Nutrilite Health Institute, while Steve Van Andel and Doug DeVos follow in their fathers’ footsteps, serving as Chairman and President of Amway, respectively.

A look at Amway’s approach to the Nutrilite brand reflects the way it manages others in the company. It starts with Amway’s commitment to innovation and quality in all of its products.

Kanan BanerjeeKanan Banerjee

“The secret is if you are true to your roots, that commitment becomes part of your DNA. It’s second nature to every employee,” says Kanan Banerjee, Vice President, Global Brand Management, Nutrition and Wellness. “No matter which function you talk to, it’s our benchmark, as well as our legacy.”

When Amway develops Nutrilite products, it ensures that they are rooted in nature, differentiated by their phytonutrient story, and best-in-class. To that foundation of plant-based ingredients, Amway adds science, which often allows products to provide a targeted benefit, such as memory support. And Amway ensures that products are relevant, conducting research into key consumer needs.

“With the number of scientists we have, the number of ideas for products can grow exponentially,” explains Audra Davies, Vice President of Nutrilite Product Development and Analytical Science. “We must prioritize all those ideas, so the criteria of consumer relevance, combined with science, combined with our nature story, create a winning combination.”

Part of the product-science combination includes the publishing of basic scientific research, such as a report published in August. Released by the Nutrilite Health Institute of Amway, The Global Phytonutrient Report highlights a significant shortfall in fruit and vegetable consumption in global diets, preventing individuals from receiving crucial health benefits. It reveals that the majority of adults worldwide would have to at least double their current consumption of fruits and vegetables to meet the World Health Organization’s minimum recommendation of five servings per day. The vast majority of adults worldwide—60 to 87 percent across 13 geographic diet regions—fell short of this recommendation.

Audra DaviesAudra Davies

The research indicates a global gap between the recommended amount of fruits and vegetables and what adults are actually eating, despite a growing body of research, which suggests that eating foods rich in phytonutrients—organic compounds found in fruits and vegetables—provides a range of health benefits, such as supporting the body’s antioxidant defenses and immune system.

Reports such as this one help reinforce the relevance of Amway products. Davies regularly takes the story of the science behind Nutrilite products to meetings of ABOs. She believes that they value the company’s commitment to science.

“It differentiates our brand and validates our product offerings in the marketplace,” she notes. “Sometimes products have gone through hundreds of thousands of tests before being launched. That gives ABOs confidence in the quality of the products, validates the health benefits of the products as part of a healthy lifestyle and helps them explain ‘why Nutrilite, why Amway?’ ”


“The secret is if you are true to your roots, that commitment becomes part of your DNA. It’s second nature to every employee. No matter which function you talk to, it’s our benchmark, as well as our legacy.”
—Kanan Banerjee, Vice President, Global Brand Management, Nutrition and Wellness

Amway ensures that ABOs have access to communications and sales tools that meet the needs of both the ABOs and their customers. Tools such as videos, unusual events, free training, digital apps for a variety of functions and even endorsements all increase credibility and ease the sales and prospecting process. And realizing that the under-35 demographic is becoming a larger part of the salesforce, Amway is developing new methods and frequencies of recognition.

“We haven’t cracked the code yet,” Parker says, “But I think we will need to adapt our recognition programs as a company to deliver more recognition earlier and in new ways—online, for example. Likewise, we need to empower leaders in the field to help them provide more recognition earlier in the Amway experience. We’re thinking about how we can build recognition into social media platforms. Those things are part of the psyche of the next generation, so we have to figure out how to deliver there. It’s not going to be a nice-to-have. It’s a requirement.”

Such efforts reflect the customization in Amway’s global business these days. Parker believes that the next 10 years will see Amway focused on getting the right growth initiatives implemented in the right markets based on local entrepreneurs and consumers.

“For a big company like Amway, it would be easier if we had the same three initiatives around the world. Sometimes that will be the case, sometimes not,” Parker says. “We’ll meet consumers where they’re at with products and messages that resonate. We measure our success based on the success of our business owners—how many people are achieving the goals they set in their Amway business each year; how compelling are the products, training and events we’re doing every year; and we have to add the social dynamic into the mix as well. If we can create an atmosphere where people are enjoying what they’re doing, that’s an important part of the equation for our business. It might look different around the world, but the outcome is the same.”

Nutrilite: Celebrating 80


Photo on left: Amway Co-Founders Rich DeVos and Jay Van Andel (bottom row, second and third from the right, respectively) pose with Nutrilite Founder Carl F. Rehnborg and his wife Edith Rehnborg, in 1956. (Amway) Photo on right: Carl F. Rehnborg in his Buena Park, California, office, circa 1950. (Amway)
Dr. Sam RehnborgDr. Sam Rehnborg

Eight decades of success deserves a party, and Amway is celebrating the 80th anniversary of Nutrilite by launching the second edition of The Nutrilite Story: Past, Present and Future. The first edition was published five years ago. The update, which Amway published as an ebook, adds five chapters that chronicle the brand’s tremendous growth from 2009 to 2014. That growth reflects advancements in research that drive innovative product development, investment to expand global manufacturing capabilities, and the unique global agribusiness approach that supports Nutrilite organic farms. The book also adds entries from more than 100 top-selling Amway Business Owners.

The book’s author, Dr. Sam Rehnborg, is the son of Nutrilite creator Carl Rehnborg and the President of the Nutrilite Health Institute. “Dr. Sam,” as he is affectionately known throughout Amway, inherited his father’s passion for creating optimal health through a plant-based diet and plenty of exercise. And like his father, he recognizes that people around the world simply don’t live the lifestyle needed to reach their optimal health. Supplements help fill dietary gaps. That’s been the role of Nutrilite for 80 years.

“It gives me intense pleasure to see people awakening to the connection between nutrition, health, and disease prevention,” Dr. Sam says. “The heart of the Amway business is exactly what my father was after—people taking charge of their lives. When you do, you take responsibility for your health, your wealth and the health of the planet.”

He points with pride to the Amway sales model—also his father’s brainchild—which is based on satisfied customers getting excited about the product and sharing it with others. And he is proud that the products themselves are supported by scientific research and ingredients harvested at Amway farms—over 6,400 acres in the U.S., Mexico and Brazil. Nutrilite is the only global vitamin and mineral brand to grow, harvest and process plants on its own certified organic farms.

Proceeds from the sale of the book benefit the Nutrilite Power of 5 Campaign, which partners with nonprofit organizations to provide a micronutrient supplement to malnourished children through Nutrilite Little Bits, a one-gram nutrient powder packet containing 15 vitamins and minerals that can be sprinkled onto any food.

Dr. Sam explains, “Recent research has shown that if you can provide children through 5 years of age with good nutrition, they have a chance to fulfill their potential. If they’re malnourished, children will never be able to achieve their ultimate potential.”

Linked to the Nutrilite anniversary celebration and the Power of 5 Campaign is a ribbon cutting and open house on Sept. 17 that will showcase the newly designed Center for Optimal Health and rooftop replica of Carl Rehnborg’s historic Quonset hut, which served as his early home and lab. The ceremony is one of a series of events at more than 100 locations where Amway distributors have invited guests to donate their handprint to help in the fight against childhood malnutrition. For every handprint received, Amway will contribute $1 and match donations up to $400,000 to CARE International to support the Power of 5 Campaign.

September 02, 2014

Company Focus

Family Heritage: Protecting Customers for 25 Years

by Sarah Paulk

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


Company Profile

Founded: 1989
Headquarters: Cleveland, Ohio
Executives: Chairman, CEO and Founder Howard L. Lewis
Products: life and supplemental health insurance


Howard L. Lewis.Howard L. Lewis

Direct sales has proven to be a channel that is equally receptive to service companies as it is to those that sell physical products, especially with the growth of the energy and essential services sector—so why not insurance? Selling an intangible like insurance may not provide the same glitz and adrenaline rush for customers as perhaps shopping for jewelry or home décor items might, but for Family Heritage Life Insurance Company of America, that unlikely niche is exactly where they like to be.

“Many people buy insurance through their employer,” says Doug Kelly, Chief Marketing Officer of Family Heritage. “There are people whose employers do not provide supplemental insurance, people who are self-employed and people who are retired who cannot obtain insurance products this way. We provide products to this underserved market segment. It is a difficult market to reach so most insurance companies avoid it. This means the competition is not as intense in this market, and that makes it attractive.”

Family HeritageFamily Heritage headquarters in Cleveland, Ohio.

The Evolution of Coverage

Family Heritage’s life and supplemental health insurance aims to provide what families are looking for: protection. Everyone wants to know that they, along with their families, would be taken care of in the midst of a health crisis or tragic accident. And unlike traditional health insurance, supplemental insurance pays money directly to the customer.

Simplicity and efficiency are top priorities for Family Heritage, so it is no surprise that their products reflect those objectives. The company’s life insurance policies emphasize an uncomplicated underwriting process, which requires no medical exam, convenient billing and immediately effective coverage. Heritage Life Extra, an innovative life insurance product, was introduced in 2006. Juvenile Life, designed to protect customers’ children, was launched just this year.

Additional policies within the company’s product line include accident, hospital indemnity, intensive care, and heart attack and stroke policies. Family Heritage’s top seller, cancer insurance, is also its flagship product and is the company’s avenue to provide relief to families who are enduring the exhausting and expensive journey that often accompanies this diagnosis.


“The original vision [of Family Heritage] was to build an insurance company in which all participants, both home office and Sales Professionals, were stockholders. We met that goal, and many had their financial dream fulfilled.”
—Ed Rocheck, Senior Vice President and Chief Administration Officer


Over the years, the company’s cancer insurance has evolved to meet customers’ needs and to inspire healthy choices. The addition of a wellness benefit, for example, encourages customers to get cancer screenings annually by paying benefits for examinations like mammograms and PSA (prostate-specific antigen) testing.

“As medical procedures evolve, the product is updated to reflect those changes,” Kelly says. “A recent example is the chemotherapy benefit. Family Heritage has always paid a benefit for chemotherapy, but in recent years, the medical community has been moving away from toxic chemotherapy agents toward less disruptive agents known as targeted therapies. Family Heritage broadened its chemotherapy benefit to include these agents in our most recent revision.”

Recruiting with Passion, Working with Compassion

Providing comfort and financial relief during crisis is the mission behind the commitment and effort of Family Heritage’s team of Sales Professionals. This mission, reinforced by an unofficial motto of “work with passion and compassion,” creates a relationship between Sales Professionals and their clients. As a result, customers feel comfortable calling on their personal Sales Professional in the event that a claim needs to be made. While this caring salesforce is certainly the lifeblood of the company today, it was surprisingly the company’s greatest obstacle at one time.

“Over the years, recruiting a salesforce has been a challenge,” says Henry Grendell, Family Heritage Vice President and General Counsel. “The leadership addressed this by developing a recruiting process that highlighted the importance and value of the products and the financial rewards that are available to Sales Professionals, and also shared best practices across sales organizations so that a robust portfolio of recruiting methods and sources were used.”

The term ASAP (All Sources; All Places) was coined to describe the multifaceted approach Family Heritage relies on to recruit new team members. Active participation in job fairs and online career boards, placing newspaper ads in locations where organizations are seeking to build their teams, and field recruitment—presenting the opportunity to friends, family or customers who appear to have potential—are all proven methods that successful Family Heritage Sales Professionals use to expand their organizations.

“Family Heritage grows by finding sales leaders who want to build organizations and businesses of their own,” Kelly says. “When we find an effective sales leader, sales grow in that geography.”

The company’s recruiting efforts continue to pay off as the number of Sales Professionals increases exponentially, from 22 agents during the company’s inaugural year of business to more than 1,600 active Sales Professionals today. The company also serves over 250,000 families across the U.S. and has 127 employees at the home office. Aside from creating a healthy, large organization, the leadership prides itself on knowing that the building of a strong Sales Professional base is ultimately the fulfillment of a goal they set 25 years ago.

“The original vision was to build an insurance company in which all participants—both home office and Sales Professionals—were stockholders,” says Ed Rocheck, Senior Vice President and Chief Administration Officer. “We met that goal, and many had their financial dream fulfilled.”

This vision was the one that Howard L. Lewis, Chairman, CEO and Founder of Family Heritage, set himself. Having the principles of service and integrity instilled in him early on in his professional career in both the financial services and insurance industries, he felt that those who help build the company should have the opportunity to become owners of the company.

This business model has offered Sales Professionals and corporate office members alike a unique and often prosperous financial opportunity. The company’s acquisition by Torchmark Corp. in November 2012 for $218.5 million has broadened that opportunity even further, offering a new stock purchase program. McKinney, Texas-based Torchmark (TMK—NYSE) is a holding company for several life and supplemental health insurance subsidiaries, including two other direct sales companies—American Income Life and Liberty National Life.

Tools of the Trade

The introduction of new parent company Torchmark brought with it new resources, including new tools to help identify viable candidates and modernized processes that use the latest Internet technology to locate and recruit new team members. As with any organization in today’s marketplace, technology plays a vital role in the company’s success. Social media platforms are must-haves for any company wishing to stay relevant, and Family Heritage uses them to communicate cultural aspects of the company that could be easily missed in the tone of a formal website. Those who view the company’s Facebook, LinkedIn and Twitter pages will see pictures of awards Family Heritage has won, fundraising events it has taken part in, and videos of its salesforce and home office employees showing how much they love being a part of the FHL family. These platforms provide Sales Professionals and employees a place to share successes and advice, and they allow potential recruits to learn more about the culture of Family Heritage.

For Sales Professionals, the opportunity to dig deeper past the public website into a password-protected portal offers training videos and commission and sales reports exclusive to each of their individual organizations. A robust internal system nicknamed SOAR (Service, Outstanding performance, Adaptability, Reliability) is available to home office personnel, allowing them to easily access information for customers and conduct transactions on a customer’s behalf.

Continued personal development is essential for success, and Family Heritage addresses that with a variety of training opportunities made available to Sales Professionals throughout their careers. Sales Academy is a Sales Professional’s starting point, explaining the ins and outs of the Family Heritage products and sales process. This weeklong course uses exercises and role-playing in addition to traditional presentations to give Sales Professionals a basic understanding of the business.

Beyond Sales Academy, national sales meetings are hosted twice annually with a heavy training component, and online training videos and weekly conference calls provide continuing education and tips from successful Sales Professionals.

While technology is important, the leadership emphasizes that it is not the catalyst for success at Family Heritage. “The key to success at Family Heritage is our people who have a can-do attitude and who treat customers as if they were part of the family,” Kelly says. “Technology helps them do it, but technology alone would not be sufficient.”

In addition to the company’s training, individuals are also required to have a state license to sell insurance. In order to receive a license, all states require applicants to pass an exam and complete an insurance application. Depending on the state, applicants may be required to attend a pre-licensing course as well. Family Heritage also conducts a background check on all applicants. Most states require that agents complete continuing education courses each year to retain their licenses.


Providing comfort and financial relief during crisis is the mission behind the commitment and effort of Family Heritage’s team of consultants.


A Bird in the Hand

Since its launch in 1989, Family Heritage has stretched its active operations into 49 states, plus the District of Columbia and Puerto Rico. While sales are greater in some areas, depending on the concentration of the salesforce, the leadership continues to set its gaze upon the horizon and how it can improve or positively affect its current program.

One of its opportunities is expansion, including geographic expansion into areas like New York and Canada. Until this expansion becomes a reality, the leadership is placing greatest emphasis on its current assets, as they see these areas as the best opportunity for growth. The key for creating growth for the company during this season, Kelly says, is continued recruitment.

Product awareness will play a strategic role as well. “The opportunity for better utilization of the existing portfolio of products is huge,” Kelly says. “In 2014, cancer insurance sales represent almost 60 percent of the company’s sales. With a portfolio of six products, there are tremendous opportunities for growth by offering the other products to new and existing customers. Programs have been developed to facilitate this type of cross-selling, and results to date have been favorable.”


“The key to success at Family Heritage is our people who have a can-do attitude and who treat customers as if they were part of the family.”
—Doug Kelly, Chief Marketing Officer


Celebrating a Silver Anniversary

Although it has faced its share of obstacles, growth has seemed to come naturally for Family Heritage throughout its two and a half decades’ reign. At its launch in 1989, the company brought in a meager $5,848 in revenue. The next year, in 1990, revenue soared to $523,728. This past year, 2013, saw revenue reach $192.5 million—earning it the No. 66 spot on the DSN Global 100 list of the world’s largest direct selling companies.

As Family Heritage reflects on the success of its past and prepares for the future, the company is making plans to celebrate its silver anniversary in style by awarding and recognizing the heart of the company—its sales team. A four-day celebration at the end of December will bring together 700 Sales Professionals and home office employees for an exhilarating celebration at The Rock and Roll Hall of Fame Museum in Cleveland, Ohio, its headquarters. Excellent catered food and live bands will set the mood for a weekend that leaders of the 25th anniversary committee describe as “not low-key at all.”

The purpose of the event, with the theme of “the heritage of our past, the promise of our future,” is to thank and pay homage to the agents who work year after year investing in and building the company. A highlight of the event allows agents and home office employees to rekindle old relationships and make new connections.

“We are proud of the opportunity we have created for our employees and Sales Professionals,” Grendell says. “Prior to the sale of the company in 2012, every employee received, and every Sales Professional could qualify for, stock in the company. When the company was sold, many Sales Professionals and employees received significant payments for their stock, which permitted them and their families to improve their standard of living. Likewise, Sales Professionals receive lifetime vested renewals, and employees have an excellent benefits program. We are proud to see our employees and Sales Professionals become financially secure as a result of our success.”

Family Heritage also continues to receive awards and recognition for its customer service and workplace environment. This year alone, the company received Corporate Social Responsibility Program of the Year for the second time from the American Business Awards; Customer Service Department of the Year (both through the ABAs and the Sales and Customer Service Awards several times throughout the years); and Customer Service Department of the Year by Customer Sales and Service World Awards. In previous years, it has won the World Class Customer Service Award several times by Smart Business magazine and The Plain Dealer Top Workplaces for 2010 and 2011.


“The goal for the next 25 years is to continue to grow and to make Family Heritage a common part of most American families’ protection plans.”
—Henry Grendell, Vice President and General Counsel


The Next 25

Customer service is a dominant theme in the culture of Family Heritage. It is evidenced in even the smallest details of the business, such as their commitment to never have an automated attendant answer their phones and ensuring that all documents are scanned into the company’s system and accessible when customers call in.

Helping customers in this way by dealing with their concerns with both efficiency and compassion has contributed to Family Heritage’s longevity and success. “The goal for the next 25 years is to continue to grow and to make Family Heritage a common part of most American families’ protection plans,” Grendell says.

September 02, 2014

Industry with Heart

USANA: Delivering a Message of Health and Hope

by Lin Grensing-Pophal

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


Company Profile

Founded: 1992
Headquarters: Salt Lake City
Executives: Dr. Myron Wentz, Founder and Chairman; David Wentz, CEO
Products: nutrition, diet and energy, and personal care


Dr. Myron WentzDr. Myron Wentz
David WentzDavid Wentz

Can you imagine a world without disease? Dr. Myron Wentz can. And, in fact, he’s made it his life’s mission to contribute to creating a world free from disease and focused on wellness and health products that have impacted people in countries all over the world.

A microbiologist and immunologist, Dr. Wentz is a pioneer in the development of human cell culture technology and infectious disease diagnoses. From the beginning of his career, his focus on improving people’s lives has been driven by a strong interest in medical science, the development of tests for viral diseases (he developed the first commercially available test for diagnosing infection with the Epstein-Barr virus), and broad humanitarian efforts.

Commitment Leads to Action

Dr. Wentz channeled his personal passion when he founded USANA Health Sciences Inc., because he believes disease prevention is as important as disease detection, and the single most effective way to prevent degenerative diseases is proper nutrition.

“If we can nourish the human body in a comprehensive way on a daily basis with the full spectrum of essential nutrients in the right forms, amounts, and in the proper balance, we can sustain long-term health and effectively avoid degenerative disease,” he says.

USANA’s nutritionals provide the high-quality vitamins, minerals and antioxidants that bodies need for good health, while its diet and energy products provide meal-replacements and snacks for weight loss and energy. The company has also introduced personal-care items to cleanse, refine and replenish skin and hair. USANA’s strong commitment to health and well-being even extends to the specific needs of children, with the creation of Usanimals™, a multivitamin especially designed for children in their formative years.

USANA’s nutritional supplements have found a loyal customer base, and the company has expanded to new markets in North America, Europe and the Asia Pacific region. Today, USANA is a high-performing and growing organization with sales of about $718 million in 2013 (compared to about $649 million in 2012 and about $582 million in 2011), with net earnings available to common shareholders of $80 million in 2013. Sales are generated from nutritionals (80 percent), foods (11 percent) and personal-care products (6 percent), with purchases coming from associates and preferred customers. Associates are independent distributors of the company’s products who may also purchase products for their own use, while preferred customers purchase products strictly for their personal use. As of the end of 2013, the company had 265,000 active associates and 78,000 active preferred customers worldwide.


Today, USANA is a high-performing and growing organization with sales of about $718 million in 2013 (compared to about $649 million in 2012 and about $582 million in 2011).


Driving Change through Humanitarian Efforts

Jim BrambleJim Bramble

With this success comes more opportunity for the company to expand in an area that is already close to its leaders’ hearts—charitable giving. Jim Bramble, who has been with USANA for 17 years, is Chief Legal Officer and General Counsel for USANA Health Sciences and sits on the board of USANA’s foundation: the USANA True Health Foundation (UTHF). During his tenure, he says, the message and commitment to “giving back” has been driven home continuously. “This comes from our founder and his son, David [the company’s CEO]. They have very large hearts, and they’re very concerned with the fact that we’re very blessed but not everybody is.”

This strong personal commitment, says Bramble, led the company to partner early on with the Children’s Hunger Fund (CHF) and to join them in opening hospitals in Malawi, Uganda and Cambodia.

“We have had an amazing partnership with USANA now for 14 years,” says Dave Phillips, President of Children’s Hunger Fund. “Through the contributions of Dr. Wentz, USANA corporate and the USANA True Health Foundation, the USANA family has played a substantial role in our growth and impact over the years with nearly $20 million donated to provide nutrition for children and families in need.”

In 2012 the USANA True Health Foundation was formed with a mission of providing the most critical human necessities—nutrition, clothing, shelter, medical assistance and health education to those who are suffering or in need. The foundation focuses on three areas:

  • Area of Greatest Need: releases funding and aid for worldwide disasters where immediate help is needed.
  • Children’s Hunger Fund (CHF): a nonprofit organization that works to alleviate the suffering of children in impoverished regions across America and around the world.
  • Sanoviv Medical Assistance: provides funding to Sanoviv Medical Institute patients who are otherwise not able to pay for their care.

The foundation is registered in seven countries where donors are able to receive tax benefits for their contributions, and it has received donations from people in 23 countries. Since its inception it has impacted more than 25,000 people, in 12 countries, through disaster relief and providing nutrition to underprivileged children and their families. About 15,000 people were impacted in 2013. One of these efforts involves a relationship with Dr. Mehmet Oz and his charitable foundation HealthCorps, which focuses on nutritional education for inner-city youth in North America.

Contributions to the foundation may be made in a variety of ways. Individuals, distributors and USANA employees may: donate a monthly amount; donate through the foundation’s website at www.usanafoundation.org; participate in the annual USANA Champions for Change 5K in August; or donate Usanimals™ vitamins to the Children’s Hunger Fund to help underprivileged children around the world. 

In 2013, during USANA’s Success on the High Seas cruise, more than 700 distributors were asked to bring items to make life better for children living in the Foyer de Sion orphanage, when the ship stopped in Haiti. Thirteen children from the orphanage met the associates and received the gifts, which included much needed diapers, formula, nutritional supplements, toothpaste, soap and many other essential items.

There are other individual efforts as well. Teddy bears are sold at USANA’s Asia Pacific convention to benefit the foundation, and Philippine associates recently held a 5k to benefit victims of Typhoon Haiyan. Support is also provided to distributors who wish to hold their own fundraisers.


In 2012 the USANA True Health Foundation was formed with a mission of providing the most critical human necessities—nutrition, clothing, shelter, medical assistance and health education to those in need.


Serving the World

On Jan. 12, 2010, a 7.0-magnitude earthquake struck and devastated Haiti’s capital city, killing 230,000 people and leaving 1.5 million homeless. Japan’s epic 9.0-magnitude earthquake and subsequent tsunami occurred the following year, on March 11, 2011, killing more than 15,000 people. Bramble says the tragedies weighed heavy on the heart of USANA CEO David Wentz.

Wentz went to the management team and asked, “How can we use the incredible power of direct selling, where people network together, to harness that energy to help in situations like these?”

Because of USANA’s global reach these tragedies are very personal. Says Bramble, “We have distributors who are our family in Japan, and we can’t work together as an entire community of USANA to respond to disasters like this because we have nothing in place.”

The USANA True Health Foundation was founded to respond to these types of situations. Through a partnership with International Relief Teams, USANA is now poised to respond when disasters strike throughout the world, especially in areas where USANA has a presence, he says.

“Our partnership with USANA True Health Foundation is invaluable,” says Barry LaForgia, Executive Director of International Relief Teams. “Knowing USANA will provide funding gives us the assurance to quickly apply resources during the critical early days after a disaster when lives are literally in the balance. USANA’s support also allows us to continue helping survivors, by not only enabling us to address their basic needs for temporary shelter, food and medical assistance while they are displaced, but also to help them recover through programs that restore livelihoods and permanent shelter.”

Donations to support the foundation come from multiple channels, including associates, employees and preferred customers. In some countries, participation is close to 100 percent of all employees, says Bramble.


“When I went to Uganda [during our missionary trip]… you just come back with those experiences that make it more personal—you gain a personal understanding of how you are really making a difference.”
—Jim Bramble, Chief Legal Officer and General Counsel, The Health Foundation board member


Making It Personal

USANA’s efforts around the world are very personal to its employees and distributors. In many cases distributors see firsthand, not through a statistic but through the impact they individually have on others, the power of their commitment to helping those in need.

“One of our most successful markets is the Philippines,” Bramble says. It’s a country that has been through a lot in terms of natural disasters over the past few years, he notes. “Because we have so many distributors on the ground in that country, they’ve been able to participate not only in fundraising but also in donating to help their home.” In addition, he says, distributors have become personally involved by actually going into the cities that have been devastated and helping to rebuild.

“One thing we do is to encourage executives and associates alike, anyone who has a lot of influence in the field, to attend yearly missionary trips that the Children’s Hunger Fund sponsors,” he says. “Those who have donated on their own dime go together as a group with the CHF to different areas of the world and work with their hands in that area.”

Bramble himself has been directly involved in these efforts, and those experiences are very powerful, he says.

“For instance, when I went to Uganda we went to different villages in the inner city and passed out food and medicine. We went to an orphanage, and you just come back with those experiences that make it more personal—you gain a personal understanding of how you are really making a difference.”

In fact, Bramble says, “It really, in a lot of ways, was one of the most defining trips of my life.” That was back in 2008, but “there isn’t a day that I don’t at least dwell on it for a moment because it was so powerful.” It was a country that he says he didn’t know anything about, other than the name. He and his wife went with a group of about 30 people from the Children’s Hunger Fund and other distributors who wanted to participate.

Uganda Medical CentreDr. Myron Wentz visits the hospital he founded in Uganda.

According to the International Monetary Fund, Uganda is one of the 20 poorest countries in the world, with 37.7 percent of the population living on less than $1.25 a day. This poverty has contributed significantly to the widespread undernutrition of the country’s people, with 38 percent of children chronically undernourished or stunted, according to Feed the Future, the U.S Government’s Global Hunger & Food Security initiative. “It’s to the extent that it will cause their deaths someday,” Bramble says. “It’s substantial malnourishment.” Most of these children are orphans because Uganda is a country that has been heavily hit by AIDS.

While in Uganda the group went to three locations. They went to the recently founded Wentz Medical Centre and Laboratory to visit and read to people suffering from malaria, to an orphanage on an island in Lake Victoria that was heavily impacted by both AIDS and civil unrest, and to the inner city, which was a place of extreme poverty. During each of these visits the team visited with people and delivered food and vitamins—the Usanimal™ vitamins that USANA produces.

“To me it was life-changing,” Bramble says. “I remember one specific instance, as I think back, of seeing this little girl who was 6–8 years old, and my daughter at the time was the same age. This little girl was wearing this paper dress—literally made of paper. And I thought of my daughter and this huge closet we have full of clothes, and how she never has to wear the same dress to church twice because she has so many. And I just thought ‘I need to be involved somehow to help little girls like this.’ ”

When Bramble returned home he went to CEO David Wentz and asked how he could become involved in more of these activities.

“That’s why it might seem strange to have the General Counsel be the person on the Board of Directors for the Foundation, but that was the experience that gave me the interest and led to my involvement,” he says.


“The truth is that it is not only the right thing to do, but it makes good business sense to involve your salesforce in charitable activities because it creates loyalty.”
—Jim Bramble


How Others Can Make a Difference

Direct selling companies are businesses first and foremost. They and their distributors are interested in sales and business success. Because of that, acknowledges Bramble, there can be a hesitancy to divert the efforts of staff and distributors from selling to other activities—like charitable and humanitarian efforts.

But, he stresses, this fear is misplaced. “The truth is that it is not only the right thing to do, but it makes good business sense to involve your salesforce in charitable activities because it creates loyalty and it creates a feeling that ‘I’m involved with a company that does good things.’ ” That, he says, “helps you with your retention; those are people who are going to stay with you—they are going to sell products longer.

“Don’t be afraid of wasting resources on something other than your bottom line, because the bottom line is not as important anyway. And, in the end and over the long run, it will be better for the bottom line as well.”

In addition, he advises companies to find alignment between their business and their charitable passion. But make sure that the organizations you choose to partner with or support “have a really good infrastructure, are very efficient and already know how to deliver the aid where it is needed.” Direct sales companies shouldn’t attempt to deliver or recreate these systems on their own. “If you try to recreate, that’s a lot of dollars wasted on administration that someone else has already done.” In addition, he says, “It allows you to let your donors know that the help they’re providing goes directly to those who need it.”

Delivering a message of health and wellness to the world is something that resonates not only with employees and distributors, but with USANA’s customer base as well, Bramble says. It is through these collective efforts that Dr. Myron Wentz’s vision of wellness around the globe may someday be achieved.

“Our customers are very interested in health. Their charitable activities can help increase health, and then it’s a natural draw.”

September 02, 2014

Top Desk

Controlling the Conversation: Balancing Product and Opportunity

by Lori Bush

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


At Rodan + Fields, when we made the decision to pivot from our department store marketing channel to direct sales, a great deal of consideration was given to protecting the brand equity that derived from our founders’ legacy in the skincare segment of the beauty industry. As we looked to transform our go-to-market strategy, we wanted an independent business ownership model with low cost of entry that afforded our Independent Consultants the opportunity to compete with other industry players. The key here is what we define as our “industry.” While there are many definitions for the word industry, the most relevant ones read something like this: noun \ˈin-(ˌ)dəs-trē\: a group of businesses that provide a particular product or service. By this definition, Rodan + Fields is in the beauty industry. The business opportunity derives from product leadership coupled with our sales and marketing strategy: The opportunity itself is not our principle product.

Sounds simple enough, right? But gaining buy-in and protecting and advancing this aspect of our brand equity is a challenge that requires rigor in monitoring and compliance, especially when it comes to engaging direct selling veterans as employees or as Independent Consultants. Our investment in product and brand development is materially eroded when a successful business-building Consultant is dismissive or even disparaging to those who want to engage as product ambassadors rather than promoting the business model. The worse-case scenario of this is the proclamation that “it doesn’t matter what you’re selling as long as the compensation plan works.” Not only does this fly in the face of who we are, but it generates ill will and validates the position of those who challenge the legitimacy of our business model.


Out of a deliberate exercise to define the soul of our company, a clear set of business values emerged, which we call our “True Colors,” and we constantly assess our people and programs for demonstration of these values.


So what is direct selling to Rodan + Fields if it’s not an industry? We see direct selling as crowdsourcing our marketing and sales initiatives. And with the advantages of social, mobile and web-based tools for customer acquisition, engagement and monetization, it is a highly effective, modern business model that provides individual micro-enterprises the opportunity to participate and capture market share in an important, lucrative and growing consumer products category.

Soul Searching

When we launched our current business program in 2008, we believed we had the opportunity to help shift public perception of direct selling and went as far as to bake this notion into our mission statement: “Our mission is to redefine independent business ownership with brand presence and transformational products and programs that change skin and change lives.” It didn’t take us long to learn that walking the talk requires constant commitment to education and compliance because, when it comes to salesforce behavior and performance, the simple fact that something works doesn’t necessarily make it right.

Another part of our mission statement, the creation of “an enduring legacy for our Consultants and our employees,” led us to take a deep dive into the soul of our company. To truly have a company soul requires a shared understanding by everyone who is involved as to purpose and values. Out of a deliberate exercise to define the soul of our company, a clear set of business values emerged, which we call our “True Colors,” and we constantly assess our people and programs for demonstration of these values. One of these key values is Assurance.

Assurance is about brand and business integrity; it’s the commitment to our Consultants and their customers that what they signed up for is what they get. If we promise a unique brand and uplifting culture one day and they show up to find a generic, hardcore moneymaking scheme the next day, our soul is eroded. “Assuring” that the Rodan + Fields brand and business models continually meet or exceed expectations requires surveillance of how our programs manifest into and through our sales organization.


We have a responsibility to our sales organization, their customers and the direct selling community at large to control the conversation so that it doesn’t become controlled for us.


Responsibility

I recently attended a training conducted by members of our field development team and discovered that some important aspects of our program had drifted away from our original intent in response to preferences of some of our Independent Consultants. Even though these preferences could, arguably, accelerate the rate of growth of a Consultant’s income, they could put the long-term value of the brand and business opportunity at risk. In a nutshell, there was an overemphasis on recruiting and building an organization without a balanced focus on engaging and servicing customers. Both aspects of the business model are important, but the training was heavily biased toward the former without first firmly establishing the brand, product experience and our overall approach to social commerce. We recognized the need to make an adjustment to our approach in order to reinforce key aspects of our value proposition.

Instilling an understanding of the rationale for our vigilance helps our internal team and our Consultant leaders appreciate the importance of governing the execution of our business programs in the marketplace. No matter how carefully we craft our compensation program and articulate our Policies and Procedures, if we promote or turn a blind eye to practices that undermine our brand value proposition, a handful of rogue players can wreak havoc and lead to significant net detractors for our products, our programs and even direct selling in general. We have a responsibility to our sales organization, their customers and the direct selling community at large to control the conversation so that it doesn’t become controlled for us.

A direct selling business model enables us to collaborate with passionate micro-entrepreneurs to market compelling, innovative products and services that might never see the light of day in risk-averse brick-and-mortar retailing models. Our future is dependent on continuous introspection as to how we guide our Independent Consultants to appropriately communicate our brand and business values. The meaningful marketplace value of our opportunity is part and parcel of our compelling product proposition. If we present this the right way, the word pyramid should never enter anybody’s mind, much less the conversation.


Lori BushLori Bush is President and CEO of Rodan + Fields.

September 02, 2014

Stock Watch

Stock Watch, September 2014


September 02, 2014

DSA News

Culture of Celebration

by Lauren Lawley Head

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


Photo above: Origami Owl Co-founders Bella and Chrissy Weems


Culture of Celebration

Whether it was a 45th birthday party for the Mary Kay Pink Cadillac or a social media-fueled fundraiser for Thirty-One Gift’s philanthropic partner Ronald McDonald House Charities, celebration, personal growth and giving back were in full force at direct selling events the past few months, showcasing the powerful role this plays in business growth and development.

“For us, events is a culture function that has the sales tools to support,” Origami Owl Founder and Co-President Chrissy Weems told Direct Selling News during a break at the fast-growing company’s second national convention, “because we believe when you build the person holistically that the sales will come.”


Herbalife Analyst Details the ‘Death Blow’ That Wasn’t

This summer marked a significant development in the ongoing battle activist shareholder Bill Ackman is waging against one of the world’s largest direct selling companies: Los Angeles-based Herbalife Ltd.

Ackman gave a three-and-a-half-hour presentation in late July designed to convince investors, journalists and regulators of the validity of his short position on Herbalife stock. He said his team spent $50 million on its investigation of more than 240 nutrition clubs.

Scott Van Winkle, Managing Director of the capital markets firm Canaccord Genuity Inc. who follows Herbalife, spoke with Direct Selling News after the presentation. “The ultimate takeaway,” Van Winkle said, “is that Ackman thinks multilevel marketing is a pyramid scheme.”

Though Ackman was careful not to comment on the business practices of any other direct selling companies, he didn’t pull any punches when it came to criticizing people who have worked with Herbalife, including former Secretary of State Madeleine Albright and soccer star David Beckham.

“Taking those personal shots discredits the presentation,” Van Winkle said. “Unless you are just simply trying to scare away Herbalife’s service providers.”

In the days leading up to the presentation, the price of Herbalife shares dropped as Ackman made the media rounds promising a “death blow” to the company. Investors were unimpressed by the presentation itself, sending share prices back up 25 percent. A few days later, weaker-than-expected financial results pushed the share price down again. Until the Federal Trade Commission concludes its investigation, stock volatility seems likely to continue.

“The direct selling industry needs to stay focused on whether the FTC is looking at multilevel marketing as a channel and business model more so than Herbalife specifically,” Van Winkle said. “I think the reality is that if there is any outcome here for Herbalife short of the worst case scenario, all of the publicly trading direct selling companies will be valued higher down the road.”


NEW MEMBERS

The Direct Selling Association recently approved seven new members:

Boisset Wine Living At Home
Direct-to-consumer marketing arm of Boisset Family Estates winemakers
Web: www.boissetwineliving.com

Country Gourmet Home
Direct seller of gourmet food mixes and wickless wax melts
Web: www.countrygourmethome.com

Jamberry Nails
Nail wraps for at-home application
Web: www.jamberrynails.net

Lulu Avenue
Jewelry
Web: ww.luluavenue.com

Magnabilities LLC
Jewelry and scarves
Web: www.magnabilities.com

MiA Bath & Body
Customized bath and body products
Web: www.miabathandbody.com

National Motor Club
Emergency roadside assistance and other services
Web:nmc.com


Author NameI know that summer is supposed to be a time to relax and recharge, but this season has been packed! I’d love to hear what you and your organizations have planned for fall. As always, thanks for reading.

Lauren Lawley Head
General Manager
lawleyhead@directsellingnews.com

September 02, 2014

Working Smart

3 Keys to a Powerful Event Experience

by John Killacky

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


Another year, another convention. How will this year’s event be different? What can you do to bring fresh excitement and new energy? It’s not as daunting as it may seem. Take a deep breath. You got this.

When you focus on three important elements of your event, you can provide your guests (and even those who can’t come) an impactful, meaningful—and fun—event experience. Let’s start by identifying your event’s stakeholders and what’s important to each of them.

The Players

Your guests: Each consultant who registers for, travels to, and attends your event comes in search of something. Information, celebration, fun—whatever it is, they’ll take it back home with them, and it will affect their business. So it’d better be good.

Your organization: You have important messaging to deliver. That means what’s said, how it’s said, how it looks and how it feels to the audience.

Your boss: C-suite execs want to see that the number of attendees is robust, their enjoyment is obvious, the event is polished and effective, and the budget remains intact. No pressure.

Can all those objectives be met? Absolutely, when you focus on three simple elements: pre-event prep, fabulous recognition and social media.

Plan Ahead

The importance of thorough pre-event preparation can’t be overstated. Once you’ve determined the “skeleton” of your event—who, what, when, where—you can begin talking with production companies. You know what’s most important to your company and this specific event; ask the questions that matter most, and listen carefully when they talk about their experience. Have they worked with companies in your industry? What do they bring to the table that others don’t? What kind of people are they; what’s their corporate culture? How do they handle changes in direction, and onsite challenges?

Ask for samples of their work and references from other clients—and then take a few minutes to call those clients. And, do a gut-check: Would you enjoy working with them? This is a big decision; you’re entrusting the success of your event in large part to this company. Again, no pressure.


The importance of thorough pre-event preparation can’t be overstated.


Let’s assume now that you’ve chosen an event partner that fits. Congratulations! Now, make full use of the partnership—that’s why you have them. Give them full access to your team and execs; being fully invested in the partnership will make your event even stronger. Ensure that they know your company, your mission and your execs (and what’s important to each of them). Collaborate with your production partner to create meaningful content. In your event “skeleton,” you’ve determined the direction, the tone and the look you want. Work with your event team to bring those concepts to life in onstage content, video and graphic support. Push them to make it everything you’ve envisioned. That’s their job.

Rock-Star Treatment

One of the most important parts of an annual convention or an incentive trip is recognition—the sweet sound of applause (and their own name) as honorees take their walk of fame. What could be better?

Doing recognition right is so important! It’s exciting for the individuals being recognized, it’s aspirational for the guests watching the awards ceremony, and it’s a chance for your company to truly thank and honor those individuals who make you shine. Your top achievers are the face of your company to their customers; you want those faces to be smiling and happy.

Your production company should know how important recognition is to your audience and honorees, and make it a priority in pre-event planning. Creating a memorable experience start-to-finish for each honoree is important. It can—and should—be awesome from backstage to onstage. There are very real and very important reasons that they’re onstage. They’ve racked up incredible sales or sponsoring numbers. They’ve met goals, they’ve made new commitments or they’ve partnered with your organization’s charitable efforts to change the world. Whatever it is, they’ve excelled. And their moment in the spotlight should be all excitement, and zero stress.

Make sure your event partner takes care with each honoree so that they’re comfortable and know what’s going to happen. Where they’ll wait backstage, how they’ll know it’s time to walk out, who will escort them, where they should stand. The more they know, the more they can relax and enjoy the experience. And the harder they’ll work to get back onstage next year!

Also there’s this: Check, double-check, and triple-check that names are spelled and pronounced correctly. Amazingly, this doesn’t always get checked, and it’s a real downer for the honoree when that happens. Do whatever it takes to make them feel like the rock stars they are!

Pin, Post, Tweet, Share

Social media: It’s not just for breakfast anymore. You’ve used Facebook, Twitter, LinkedIn and your company’s website to drive attendance to your event. Now you’re done, right? Actually, you’re just getting started.

Social media can be a living, evolving, exciting part of your event, throughout the entire event experience. It seems appropriate to use a statistic now, so here it is: Nearly 75 percent of all Americans are actively engaged in social media, including your guests. Don’t tell them to turn off their phones—engage them!

There are many different social media platforms, and you should know those that your consultants use the most. Just think: Each platform is a new way to directly reach consumers, consultants and event attendees. You’re nodding your head. Yes, that makes sense. But few organizations use social media to its maximum advantage at their events.

Just about everything you do for event guests can also be accessed and enjoyed by those who couldn’t come. They’ll stay connected to the event and to your organization, and—fingers crossed—they’ll make sure they attend the event next year.

Post (and tag!) photos of new products, displays, field presenters and crowd excitement on Facebook. Keep your YouTube channel up-to-the-minute current with videos of the CEO’s speech, an amazing recognition segment, new product reveals and all of the excitement in the convention center hallways. You may want to consider creating an app specific to your event—for instance, the event agenda. It’s hip, happenin’ and green. All the cool kids are doing it.

Create a fun, interactive digital scavenger hunt in which attendees earn points throughout the event by “checking in” at different displays or sessions, or taking a selfie with a sales field leader, or scanning a product display. Draw for prizes on Twitter rather than on the stage. Have the CEO or other execs answer questions via live tweets throughout the event. Create an event-specific hashtag.

Sometimes social media is considered “anti-social” because we’re all looking down at our phones, clicking and scrolling. Done the right way, it can actually create a more communal experience at your event—and well beyond.


Nearly 75 percent of all Americans are actively engaged in social media, including your guests. Don’t tell them to turn off their phones—engage them!


It’s a Wrap

So there you go. The three ways you can ensure a great event experience for your guests and a solid return on the investment you’ve made.

  • Solid pre-event prep
  • Rock-star recognition
  • Effective use of social media

Do your homework, trust your event partner and enjoy building an event that’ll leave them more excited—and more productive—than ever.


Jeff TurneyJohn Killacky is Managing Director, National Sales & Marketing at Bartha. Bartha is a leading provider of high-quality events, production and staging for the direct selling industry.

September 02, 2014

Working Smart

Solving the Challenges of Global Commission Payments

by Jeff Turney

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


How to break down five common cross-border payment barriers

Expanding into international markets can be a double-edged sword for many direct selling organizations. While new revenue sources are a cause for celebration, overcoming the many challenges associated with cross-border compensation plans isn’t always easy.

As more direct selling organizations pursue global expansion objectives, treasury and finance departments are under increasing pressure not only to mitigate risks, but also improve efficiency, cut costs and ensure future scalability. It’s a tough job, but for good reason. Payments and other transaction services, including prepaid card and incentives management, are at the core of a direct selling organization’s economic and distributor relations.

Not surprisingly, this is why many of the industry’s top performing organizations are partnering with professional payment providers in order to scale rapidly, ensure regulatory compliance and meet the demand for more convenient international payment options. As business models continue to adapt to global growth and expansion priorities, innovative cross-border payment products are emerging that offer greater payment flexibility and security.

The Challenges of Global Payments Distribution

Is your payments solution ready for the rigors of international expansion? The following points may be worthy of deliberation as you consider if your company should “go it alone” or work with an expert to outsource this side of your business:

1. Developing a Financial Network

While large direct selling organizations typically have multiple bank accounts in the jurisdictions where their subsidiaries operate, difficulties arise when an organization tries to find economical and efficient ways of introducing their product into a new country. In these cases, cross-border payments—SWIFT wires or international checks—are typically the only way that direct selling organizations can internally manage their payment process. The result? High fees are incurred by both the organization (upon sending) and distributors (at pick-up). On the administrative end, your accounts department will have their work cut out for them managing complex SWIFT instructions, collecting banking information from distributors and, in the case of checks, dealing with lost or delayed deliveries. Managing different payment file formats, along with account reconciliation and handling errors, can further exacerbate the process.


As business models continue to adapt to global growth and expansion priorities, innovative cross-border payment products are emerging that offer greater payment flexibility and security.


Partnering with a strong international payment provider will mitigate many of these costs and hassles through their existing financial networks. Now, instead of executing payments through multiple channels, you’ll have the ability to manage all of your treasury needs through a single integration point.

2. Foreign Exchange Costs

Every organization has different goals when it comes to the management of their treasury department. In most cases, the focus includes eliminating foreign currency fees for distributors, as well as reducing internal processing costs.

Processing high international payment volumes can quickly throw internal accounting practices into turmoil, never mind the hassles created by foreign banking holidays, exception handling, time zones and language barriers. Partnering with a strong international payments provider can help your organization manage all of these currency complexities effectively, reducing risk and handling errors.

3. Unreliable Mail Distribution

According to Storm Trading Group, more than 14.5 million pieces of mail are lost or misplaced in the U.K. each year. And that’s in a country where the postal service is professionally maintained and managed. Therefore, it’s not surprising that internationally posting payments—whether they’re in check, money order or prepaid credit card format—is becoming increasingly frustrating and risky.

When analyzing payment options and providers, be sure to inquire about any digital or real-time payment options. While traditional bank transfers can help to mitigate the risk of lost payments, the cost is often too much for distributors to stomach. Alternative options, such as virtual prepaid cards, mobile airtime top-ups and the ability to deposit earnings onto an already existing credit card, make it easier for distributors to access their commission payments faster and without any unexpected lifting fees or bank charges.

That being said, some payment products such as prepaid cards and checks simply cannot be delivered without the postman’s help. In these instances, you’ll want to work with your payments provider to mitigate unreliable mail services through the use of expedited bulk deliveries. Top providers can arrange to batch-deliver these products to local head offices using secure, tracked mail services. From there, the local office can go about delivering each individual payment in the most efficient manner.


Having the ability to solve unexpected payment issues quickly will help you ease frustration and build trust amongst your new recruiting base.


4. Urgent Payments

Traditional payment solutions offer very little flexibility in regard to nonstandard payments, especially when it comes to cross-border issuance. From hardship payments and corporate expense reimbursements, to manual one-off or missed payments, handling these unique cases can be extremely time-consuming. While workarounds can be used to somewhat alleviate these issues, these inefficient solutions can result in poor data quality, creating additional downstream inefficiencies, errors and costs, as well as tarnishing your reputation with your distributors.

Having the ability to solve unexpected payment issues quickly will help you ease frustration and build trust amongst your new recruiting base. Remember this when it comes time to review your payment practices. If your international subsidies aren’t able to accommodate urgent requests easily using instant-issue prepaid cards and real-time card loads, it might be time to consider a new approach.

5. Accommodating Underbanked Members

While the majority of your distributors may be well-served by direct bank deposits or checks, those without formal banking relationships will find these payment options to be too restrictive, if not entirely inaccessible.

When developing an underbanked payments strategy, it is important to understand what the driving factors are behind the financial decisions of your new distributors. While banks play a prominent role in North American and European nations, there are many markets where people prefer to address their financial service needs outside mainstream institutions.

In addition to providing distributors in these areas with the appropriate products and services, you’ll want to make sure that every effort is made to reassure your new distributors of the trustworthiness of your payments system.


According to a 2009 study by the Center for Financial Services Innovation (CFSI), most members of the underbanked community strongly emphasize intangibles such as respect, trust, safety, security and a sense of belonging.


According to a 2009 study by the Center for Financial Services Innovation (CFSI), most members of the underbanked community strongly emphasize intangibles such as respect, trust, safety, security and a sense of belonging. Unfortunately, many commission payment methods can be viewed as quite intrusive, requiring rigorous identity verification in order to abide by financial institutions’ overly strict interpretation of regulatory policies. These privacy requirements are often enough to discourage members of the underbanked community from joining a direct selling company. In these instances, corporate closed-loop payment services—such as corporate incentive prepaid card products that can only be loaded with funds by the corporate entity (not the cardholder)—can be used to minimize the identification verification process for payees, effectively opening up a direct selling organization’s recruitment opportunity to a much wider audience.

Providing commission payments in a timely and cost-efficient manner is a major challenge that gets compounded even further when international payments are introduced. Many organizations can benefit from working with a trusted international payments provider, as it will allow them to focus their efforts on new business development rather than on financial administration.


Jeff TurneyJeff Turney is an Account Manager, International Payments at hyperWALLET Solutions Inc. A leading global payments provider, hyperWALLET was recently awarded the 2014 DSA Ethos Award for Partnerships.

September 02, 2014

Financial News

Financial News, September 2014

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


Herbalife Ltd.

Herbalife Ltd. (HLF—NYSE) announced second quarter 2014 results, with earnings falling a penny short of expectations—adjusted earnings per share of $1.55 versus estimates of $1.56. This was the first time since 2008 that Herbalife missed estimates. Despite this difference, earnings increased 10 percent compared to the prior year.

The global nutrition company reported net sales for the quarter ended June 30, 2014, at $1.3 billion, reflecting an increase of 7 percent compared to 2013. Estimates had been $1.35 billion. Second quarter worldwide volume growth was 5 percent compared to the prior year period.

Adjusted net income for the quarter was $141.4 million, compared to 2013 second quarter adjusted net income of $150.7 million. On a reported basis, second quarter 2014 net income was $119.5 million, or $1.31 per diluted share, compared to $143.2 million, or $1.34 per diluted share for the same period in 2013.

For the quarter ended June 30, 2014, the company generated cash flow from operations of $156.9 million, invested $39.6 million in capital expenditures and repurchased $581.3 million in common shares outstanding under its share repurchase program.

During the second quarter the company repurchased 9.8 million shares at an average cost of $59.41. There is currently $232.9 million remaining on the existing $1.5 billion share repurchase authorization.


Tupperware Brands Corp.

Tupperware Brands Corp. (TUP—NYSE) announced its second quarter results, reporting that sales for the quarter were $674 million, down from $688 million for the same period last year. While sales were down 2 percent (up 3 percent in local currency) versus the previous year, emerging markets achieved a 10 percent increase in local currency, accounting for 66 percent of sales. Established markets were down 7 percent in local currency, largely driven by poor results in Germany.

GAAP net income of $47.6 million for the second quarter ended June 28, 2014, includes $22.2 million from the impact of currency devaluations in Venezuela. Net income of $47.6 million was down 38 percent, or 93 cents per diluted share, from the previous year’s $76.3 million, or $1.43 per diluted share. Excluding foreign currency, net income was down 31 percent versus the prior year. GAAP diluted EPS was 93 cents, versus $1.43 last year with adjusted diluted EPS of $1.47, up 11 percent in local currency.

Second quarter cash flow from operating and investing activities was $45 million, versus $49 million in the prior year, primarily reflecting planned higher capital spending.

In the second quarter the company returned $47 million to shareholders through a dividend payout of $33 million and the repurchase of 171,000 shares for $14 million. Since 2007, 20 million shares have been repurchased for $1.2 billion, with $800 million left under an authorization that runs until February 2017.


USANA Health Sciences Inc.

USANA Health Sciences Inc. (USNA—NYSE) reported financial results for its fiscal second quarter 2014, missing earnings estimates by 14 cents at $1.36 per share (according to Briefing.com the Capital IQ Consensus Estimate was $1.50).

For the second quarter ended June 28, 2014, net sales decreased to $188.3 million, down 0.4 percent compared with $189.1 million in the prior-year period. Net sales, on a comparative basis, were negatively impacted by: $7.0 million of incremental sales in the second quarter of 2013 that occurred ahead of policy changes, which included restricting Associate purchases to their country of residence; $3.3 million from unfavorable changes in currency exchange rates; and price discounts that the company implemented in 2013.

Net earnings for the second quarter were $19.3 million, compared with $24.2 million during the prior-year period. Earnings per share for the quarter were $1.36, compared with $1.72 in the second quarter of the prior year. Weighted average diluted shares outstanding were 14.2 million in the second quarter of 2014, compared with 14.1 million in the prior-year period.

During the quarter, the company accelerated its share repurchase activity by repurchasing approximately 682,000 shares under its authorized repurchase program, for a total investment of $49.1 million. Additionally, as of July 25, 2014, the company has spent $21.4 million during the month of July to repurchase approximately 285,000 shares.


Avon Products Inc.

(AVP—NYSE) Avon Products Inc.’s second quarter 2014 results still show a struggle for the beauty company, but its ongoing turnaround plan is slowly making itself known as sales improve in key regions. Avon’s revenue came in at $2.2 billion, falling 13 percent (or 3 percent in constant dollars). Adjusted earnings were 20 cents per share, a penny below the Zacks Consensus Estimate, dropping 31 percent from 29 cents the previous year.

While the volume of products sold dropped 6 percent and active representatives worldwide were also in decline, average orders went up by 3 percent in the quarter. The company also reported that quarterly sales grew in the U.K. for the first time since 2010, up 11 percent, or 1 percent in constant dollars, primarily due to higher average order.

Second quarter 2014 gross margin and adjusted gross margin were 63.0 percent. Adjusted gross margin was 30 basis points lower than the prior-year quarter, primarily due to the unfavorable impact of foreign exchange driven by Latin America and Europe, Middle East & Africa.

Operating profit was $93 million and operating margin was 4.3 percent in the quarter. Adjusted operating profit was $186 million and adjusted operating margin was 8.5 percent, down 100 basis points from the second quarter of 2013.

Second quarter 2014’s net income from continuing operations was $20 million, or 4 cents per diluted share, compared with net income from continuing operations of $85 million, or 19 cents per diluted share, for the second quarter of 2013. Second quarter 2014’s adjusted net income from continuing operations was $91 million, or 20 cents per diluted share, compared with adjusted net income from continuing operations of $127 million, or 29 cents per diluted share, for the second quarter of 2013.

Net cash used by operating activities was $7 million for the six months ended June 30, 2014, compared with net cash provided of $70 million for the same period in 2013, unfavorably impacted primarily by lower earnings. The overall net cash used during the six months ended June 30, 2014, was $330 million, which was comparable with the same period in 2013.

Avon’s net debt (total debt less cash) at June 30, 2014, was $1.9 billion, up $240 million from the year-end 2013 level, and $170 million lower than at June 30, 2013.

Avon also declared a regular quarterly dividend on its common stock of 6 cents per share, payable Sept. 2, 2014, to shareholders of record on Aug. 14, 2014.


Blyth Inc.

Blyth Inc. (BTH—NYSE) reported sales and earnings for the second quarter of 2014 with net sales for the three months ended June 30, 2014, decreasing approximately 25 percent to $157.8 million from $211.7 million for the comparable prior year period.

The results were significantly impacted by the company’s Health & Wellness segment, ViSalus, which had second quarter net sales of $53.6 million versus $101.5 million for the same period last year, a decline of 47 percent, largely reflecting the reduced promoter base in North America. At the end of the second quarter, qualified independent North American promoters totaled approximately 28,700 versus approximately 57,200 at the end of the prior year’s second. In the company’s Candles & Home Décor segment, PartyLite, sales were $72.7 million in the second quarter versus $77.8 million for the same period last year, a decline of 6 percent.

Blyth’s operating loss for the second quarter was $2.8 million this year versus profit of $1.2 million last year, largely driven by the decline in sales. Net income attributable to Blyth Inc. was a loss of $4.4 million for the three months ended June 30, 2014, compared to a loss of $1.4 million in the prior year period. Diluted earnings per share attributable to Blyth Inc. were a loss of 28 cents per share for the three months ended June 30, 2014, compared to a loss of 8 cents per share in the prior year period. Net loss attributable to Blyth Inc. common stockholders was $4.9 million in this year’s second quarter compared to a loss of $3.2 million last year. Diluted earnings per share attributable to Blyth Inc. common stockholders were a loss of 30 cents per share compared to a loss of 20 cents per share in the prior year period.

Second quarter operating loss for the Candles & Home Decor segment was $0.7 million versus a loss of $0.3 million in last year’s second quarter. Excluding allocated corporate expenses of $1.8 million this year and $1.6 million last year, PartyLite’s operating profit was $1.1 million this year versus $1.3 million last year.

Health & Wellness second quarter segment operating loss was $1.3 million this year versus operating profit of $2.8 million last year. Excluding allocated corporate expenses of $0.7 million this year and $2.4 million last year, second quarter operating loss for ViSalus was $0.6 million this year versus $5.2 million operating profit in the second quarter of 2013.


Relìv International Inc.

Relìv International Inc. (RELV—NASDAQ), a maker of nutritional supplements that promote optimal health, reported its financial results for the second quarter of 2014.

Net sales for the quarter were $14.5 million, a 6.2 percent decrease from the second quarter last year. Net U.S. sales totaled $10.8 million, down from second-quarter 2013 net sales of $11.8 million. Net sales outside of the United States increased 1.8 percent in the second quarter of 2014 compared to the prior-year quarter, buoyed by a sales increase of 14.5 percent in Europe.

The net loss for the second quarter of 2014 was $289,000 or 2 cents per diluted share, compared to a net loss of $214,000 or 2 cents per diluted share in the 2013 second quarter. The loss from operations for the second quarter of 2014 was $475,000 compared to a loss of $222,000 in the same quarter of 2013.

Net sales in Europe increased to $2.24 million in the second quarter of 2014 compared to $1.96 million in the prior-year second quarter.

Net sales for the first six months of 2014 were $28.9 million, which represents a 15.6 percent decrease from the same period in 2013. Relìv’s international net sales increased 1.2 percent in the first half of 2014 compared with the first half of last year. In the United States, net sales declined 20.2 percent.

Relìv reported a net loss of $440,000, or 3 cents per diluted share in the first six months of 2014, compared to net loss of $19,000, or zero cents per diluted share, in the same period of 2013.

Relìv had cash and cash equivalents of $4.93 million as of June 30, 2014. This amount compares to $6.66 million as of Dec. 31, 2013, and $4.26 million as of this date last year.


Educational Development Corp.

Educational Development Corp. (EDUC—NADSAQ) reported results for the fiscal first quarter ended May 31, 2014.

For the first quarter of fiscal 2015, EDC announced net revenues of $7.2 million, a 20 percent increase compared to $6 million for the same period last year and net earnings of $239,700 compared to $66,600. Earnings per share were 6 cents compared to 2 cents the previous year on a fully diluted basis.

The company made the decision in January 2012 to eliminate sales to large Internet sellers and most wholesale accounts in an effort to support its base of retail outlets and its home business division, Usborne Books & More. This decision has proven very successful as EDC Publishing finished fiscal year Feb. 28, 2014, with a record year of net revenues and the first quarter ending May 31, 2014, with a 17 percent increase in net revenues.

Usborne Books & More has also significantly benefited from this decision. This division has now recorded 13 consecutive months of revenue growth after nine years of decline. Net revenues for the last four months—February, March, April and May—have shown 20 percent plus gains year over year and the trend has continued in June with a 23 percent net revenue gain. The company has not recorded a losing quarter in 27 years and fully expects to maintain its historical dividend.


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.

September 01, 2014

Exclusive Interviews

Executive Connection with John Parker, Chief Sales Officer, Amway


John ParkerJohn Parker

In this month’s Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with John Parker, Chief Sales Officer for Amway, about leadership, always learning and finding fun in everything you do.

DSN: What is the one thing you enjoy most about being the Chief Sales Officer for Amway?

JP: The engagement with our field—Amway Business Owners. At the end of the day, it’s their success that adds up to create Amway’s results. Their passion for helping other people helps make Amway what it is.

DSN: What has been your proudest accomplishment?

JP: Having been a part of teams that have seen our business through some challenging times. It’s easy to lead in good times when all is going well, but I think you add more to the team and organization when times are tough and you’re able to work together. It’s most satisfying. Sometimes the best work is done during times when results don’t show right away, but they follow.

DSN: What’s been the most fun?

JP: I enjoy learning. For me a lot of my learning came while transitioning from a smaller to a larger role. I’ve also enjoyed learning from generations younger than I am. They’re not just different in how they think, but they’re fundamentally different in their personal relationships. I can’t be effective in my role if I don’t understand that. The process of learning and trying new things is really fun and exciting. Also, the adventure of travel has been fun—having a chance to go around the world, experience different cultures, people, customs and food. You either love that or struggle with it. I love it.

DSN: What do you tell Amway Business Owners to lead and inspire them?

JP: The primary message is that our business—our whole industry—is centered around helping other people. The individuals who are the most successful Amway leaders realize at some point in their journey that it’s not about them. It’s about helping others. That’s when it becomes more fun, more rewarding; and it leads to an environment of more success as well.

DSN: You’ve held several key positions at Amway. Which one shaped your management style the most?

JP: When I was President of Amway Japan because it really forced me to reflect on my style, strengths and weaknesses, and adapt my style to be with different people and cultures. As leader it’s sometimes easy to take the mindset that I have one way of leading and communicating. But if you work across geographies and cultures, you need to be more flexible in how you lead and communicate. I think that shaped me more than anything else.

DSN: If you could relive one period of time since you’ve been at Amway, either to enjoy it again or have a do-over, what would it be?

JP: Maybe the first five years of my career, because there’s an excitement around that initial stage of learning. I had such great mentors here in the company. I’d love having the chance to go back and soak up that learning I got from them. It really was fun, too.

DSN: Is there one basic principle that governs your leadership at Amway?

JP: I really think it’s about putting the focus on others, not on yourself. Those leaders who are in it for themselves may have success in the short term, but people see through that. Over the long term you won’t develop real followership unless your focus is on the bigger cause that our businesses stand for.

DSN: Has someone ever given you a bit of really great advice you can share with us?

JP: I’ll point to my wife, who says to listen more than you talk. It’s true. If you spend more time talking and less time listening, you’ll be less effective than if you flip it around.

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

JP: I want to retire to Australia someday, mostly for the golf, surfing and beaches.

DSN: What’s on your bucket list?

JP: I want to play golf on every state in the country. I’ve probably got 25 states to go. I also want to surf in every ocean and sea in the world and to get to every baseball stadium in America.

August 29, 2014

U.S. News

J.D. Power Survey Ranks Ambit Highest in Customer Satisfaction

Bigger and better don’t necessarily go hand-in-hand when it comes to maintaining rapid growth and superior service, but Ambit Energy is proving it can be done. As a result of its annual customer satisfaction survey, J.D. Power and Associates has named Ambit “Highest in Residential Customer Satisfaction among Retail Electric Providers in Connecticut, New Jersey and Pennsylvania.”

The J.D. Power study measures retail electric providers across five key factors: price, communications, corporate citizenship, enrollment/renewal and customer service. In Pennsylvania, Ambit performed particularly well in the communications factor, earning a total score of 718 on J.D. Power’s 1,000-point scale. The company outperformed its competitors with scores of 705 and 718 in Connecticut and New Jersey, respectively.

The survey of more than 25,757 retail electric residential customers was conducted September 2013 through June 2014. In J.D. Power’s inaugural study last year, Ambit ranked highest in customer satisfaction among New York residents.

The news comes as Ambit Energy Consultants gather in Dallas for the company’s annual AMBITION conference, running Aug. 27-30. With more than 8,000 attendees on hand, Ambit has reason to celebrate. The company surpassed $1 billion in annual sales last year, making it the No. 12 company on the DSN Global 100 and the leading energy provider in the direct selling industry.

“The power that drives the success of Ambit Energy comes from the amazing spirit of the entrepreneurs and small business owners who will be coming to AMBITION,” said Co-Founder and CEO Jere Thompson Jr. “We aim to make AMBITION a springboard for our Consultants to reach greater heights and achieve greater success as they work to build their businesses and generate economic opportunities for themselves and others in their communities.”

August 27, 2014

U.S. News

Isagenix Features Make-A-Wish Reveal at Annual Event

Photo above: As part of Isagenix’s support of the Make-A-Wish Foundation, 11-year-old Ben—who recently completed chemotherapy treatment—was asked to participate in a live magic show while his mom, dad and 8-year-old brother watched him help perform the grand finale.


Over the past two years Isagenix has raised more than $1.5 million as a sponsor of the Make-A-Wish Foundation, and during the company’s 2014 Celebration this week, more than 10,000 attendees got to witness firsthand one of those wishes coming true.

The event included a performance by magician Gerry Katzman, owner of Hollywood’s Magic Castle. Katzman had some help from special guest Ben, an 11-year-old boy who recently completed his last chemotherapy treatment for acute lymphoblastic leukemia. Thanks to the support of Isagenix Associates and employees, Ben’s wish to perform in a live magic show was granted in a big way.

“Make-A-Wish makes such a big difference in the lives of families going through hard times,” Ben’s dad, Ingolf, shared.

During the performance, Ben also learned that he and his family will travel to Australia to check off another item on his wish list: meeting a platypus. Australia is the only place in the world where the unique mammals remain in the wild.

“I’ve always dreamed to see a furry creature who is a mammal and lays eggs,” was Ben’s response. “I can’t believe that I’m going to Australia with my entire family to do this.”

Prompted by a $100,000 matching challenge from Isagenix Board Member Jim Pierce and his wife, Tammy, audience members also raised more than $200,000 in support of Make-A-Wish. To date, Isagenix has granted over 190 wishes in partnership with the foundation. The company received Make-A-Wish America’s prestigious 2013 Cause Champion Award in recognition of its cash contributions, employee support and outstanding partnership internationally.

August 27, 2014

Networx Online


August 27, 2014

World News

Direct Sellers Make up 15% of Beauty Industry’s Top 100

Fashion, beauty and retail hub Women’s Wear Daily has published its annual Beauty Inc Top 100, and the list shows direct selling companies are sitting pretty. The Top 100 ranks the world’s largest beauty manufacturers based upon annual sales. In an industry that generated $204.61 billion in revenue last year, direct selling companies represent 15 percent of the Top 100.

“For most in the Top 100, 2013 was positive, with 77 companies posting increased revenues, 18 reporting declines and three remaining flat,” WWD reports.

Generating nearly 15 percent of all cosmetics sales, French behemoth L’Oréal sustained its prominent leadership position within the industry. Avon Products claimed the No. 6 spot, despite major restructuring within its U.S. business and a dip in the company’s active representative numbers. The New York-based firm reported total beauty sales of $7.1 billion in 2013.

Direct selling companies ranked on this year’s Beauty Inc Top 100 include:

6. AVON PRODUCTS
15. MARY KAY
17. AMOREPACIFIC CORP.
18. NATURA COSMÉTICOS
19. ALTICOR (AMWAY)
21. BELCORP
22. ORIFLAME COSMETICS
24. POLA ORBIS HOLDINGS
26. LG HOUSEHOLD & HEALTH CARE
31. NU SKIN ENTERPRISES    
46. JAFRA COSMETICS INTERNATIONAL
49. TUPPERWARE BRANDS CORP.
62. NOEVIR HOLDINGS CO.
88. FABERLIC
99. HERBALIFE

August 26, 2014

Exclusive Interviews

Executive Connection with Truman Hunt, CEO, Nu Skin Enterprises Inc.


Truman HuntTruman Hunt

In this month’s Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Truman Hunt, CEO of Nu Skin Enterprises Inc., about leadership, sustainability and being a force for good.

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

TH: I love being part of a global family of like-minded, positive people. And I get to see how Nu Skin has changed the lives of so many people in different ways. For some this change has been financial, for others it has been a change in their appearance or health, and for many Nu Skin has given them empowering and wonderful ways to help make the world a better place.

DSN: What has been your proudest accomplishment?

TH: My proudest accomplishments are actually at home, where I focus my attention on six children. But from a business perspective, it’s really rewarding to set challenging growth objectives and then see the organization rise to the challenge. Organizations that are aligned in purpose can produce remarkable results.

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

TH: One of the things that is striking about our sales leaders is that they are inherently highly talented and motivated. They are the ones who do the inspiring! However, I think continually reminding our distributors how important it is to be a force for good in the lives of all who come into contact with our business is something that inspires us in the corporate office and also inspires our sales leaders.

DSN: What is your vision for Nu Skin?

TH: Our vision is straightforward and unwavering: to become the world’s leading direct selling company by generating more income for our sales leaders than any other company.

DSN: If you could hit “replay” on any part of your own Nu Skin journey, either to enjoy the moment or to do something different, what would it be?

TH: That’s a tough question since we’ve had so many incredible moments at Nu Skin. I guess I would have to say I’d love to relive the moment when we first hit $1 billion in annual revenue. Why? Because when Blake, Steve and Sandie were first building the company, there were so many people who doubted their ability to make Nu Skin—and their vision—a success. It was really gratifying to prove to ourselves and to the world that Nu Skin was growing and thriving and making a real difference in millions of people’s lives.

DSN: What’s been the most fun part of the recent rapid growth at Nu Skin?

TH: The larger we become, the more people benefit. And that will always be what gives all of us the most satisfaction.

DSN: What advice would you give an executive at a young direct selling company to help them achieve strong, sustained growth?

TH: The measure of success is not whether you can reach $100 million in sales. The measure of success is whether you can sustain growth. Many startups rely on the notion of their company being a “ground floor” opportunity. But to me the measure of success is whether a company can sustain growth after it’s been around for many years. The formula for doing that is simple in some ways and complex in others. It goes beyond being a “ground floor opportunity.”

DSN: Is there one basic principle that governs your leadership at Nu Skin?

TH: My leadership, and the leadership of all of us at Nu Skin, is based on our philosophy that we want to be a force for good throughout the world. It was the vision of our founders, and it continues to drive every aspect of the business today. It’s how we try to operate, and it permeates our culture in every way.

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

TH: One bit of advice that has stuck with me perhaps like no other was the definition of leadership offered by Jim Collins at our recent DSA annual meeting. He defined leadership as “the art of getting people to want to do the things that must be done.” I think the definition hits the nail on the head. And it’s why leadership of a business is probably the most challenging job in the world. It’s one thing to dictate to people what to do. But real leadership is the ability to get people to want to do critical things. That’s when the magic happens. 

DSN: What do you like to do when you just want to relax?

TH: When I need relief from the daily pressures I usually do one of a few things: read a book, work on my really bad golf game, or play the ukulele. The uke works best because it requires total focus. It’s a good way to escape for a few minutes.

August 25, 2014

World News

Epicure Launches ‘Good Food. Real Fast.’ Movement

What did you eat for lunch? Who grew that food? Did you prepare it yourself? How far did it travel to reach your plate? Those are the kinds of questions Epicure Selections, a Canadian food and cookware company, is posing through its newly launched Good Food. Real Fast.™ movement.

The movement encourages individuals—even those who think they don’t have the time or the kitchen savvy—to cook and eat real food. To simplify mealtimes without compromising on health or taste, Epicure has created a website dedicated to recipes, quick meal ideas, cooking tips and expert advice. The Good Food. Real Fast. community can also contribute ideas and inspiration by tagging social media posts with #goodfoodrealfast.

This is a critical time to change the way the world thinks about food, says Epicure CEO Amelia Warren. “We want to dispel the myth that cooking is hard and time consuming. To be healthy, you have to cook. We want to show you how easy, quick and delicious healthy, real food can be.”

Good Food. Real Fast. is a an extension of Epicure’s philosophy and product offerings, which include seasonings, sauces, condiments, meal shortcuts and timesaving cookware. The company participates in the Non-GMO Project and emphasizes clean eating, with no added MSG, fillers, or artificial flavors or colors. For each person who signs on to the Good Food. Real Fast. movement, Epicure has pledged to donate $1 to the Epicure Foundation, which supports grassroots food initiatives across Canada.

August 22, 2014

U.S. News

4Life Bolsters Scientific Research with Auburn University Partnership

A new partnership between wellness company 4Life Research and Auburn University will advance academic studies on the safety and effectiveness of 4Life products. The company recently made a $100,000 gift in support of The Molecular and Applied Sciences Laboratory in Auburn’s School of Kinesiology.

The research will range from specific ingredients and how they affect physiological systems, to safety studies and new ingredient discovery. 4Life has developed a product line based upon its trademark Transferceutical Science, which supports the immune system in remembering and responding to potential health threats.

“Companies are always looking for ways to generate scientific credibility in their research, and this is an area where 4Life is truly committed,” said Vice President of Communications Calvin Jolley.

4Life has collaborated with a number of universities in the past, but the Auburn partnership is by far the most significant. The company’s willingness to invest resources in academic research was a major draw for Chief Scientific Officer Chris Lockwood, Ph.D., CSCS, who joined 4Life last year.

“Prior to coming to 4Life, I did consulting with a lot of different companies within the industry,” Lockwood told DSN. “It’s been great to see the support our founders, David and Bianca Lisonbee, have given to exploratory research that doesn’t necessarily guarantee results.”

Lockwood met Auburn’s Dr. Michael Roberts, Director of the Molecular and Applied Sciences Lab, when the two worked together at the University of Oklahoma. Since then Lockwood has continued to run research through Roberts, whom he calls “an incredibly brilliant and gifted person.”

The studies will take place in the 58,000-square-foot, state-of-the-art kinesiology research facility that opened on Auburn’s campus last fall. “When we first visited the facility, we were shocked to realize the depth of their research capabilities across the spectrum of anything we would want or need to do,” Lockwood shared.

The Auburn partnership will support 4Life’s in-house R&D department in its commitment to innovation, substantiation and education. 4Life also enlists the expertise of physicians and nutrition experts worldwide who sit on its Health Sciences Advisory Board (HSAB). The board gathered last week for its annual HSAB Symposium, where members have the opportunity to share insights on product evaluation, scientific study, and technical interpretation.

 

August 21, 2014

U.S. News

Fast Growth Propels Direct Selling Brands onto Inc. 500

Inc. magazine has announced its 2014 Inc. 500|5000, and the exclusive ranking once again features several direct selling brands. The Inc. 5000 is a list of America’s fastest-growing private companies, with the Inc. 500 representing a special ranking of companies in the top 10 percent.

Limited to U.S.-based, privately held companies, the Inc. 5000 measures revenue growth from 2010–2013. This year’s list includes direct sellers Plexus Worldwide (No. 8); Jeunesse Global (No. 258); It Works! (No. 290); North American Power (No. 476); Ambit Energy (No. 2074); WorldVentures (No. 2333); Viridian Energy (No. 2381); 5LINX (No. 2916); YOR Health (No. 3528) and Isagenix (No. 3764). The full Inc. 500 list will appear in the September 2014 issue of Inc. magazine.

Plexus Worldwide, the highest ranking direct seller on the list, got its start eight years ago in Scottsdale, Arizona, and has since expanded into Canada and Australia. With a strong focus on weight-loss and pain-relief products, Plexus is the No. 2 health company in this year’s ranking. The direct seller generated 16,458 percent growth over three years, closing out 2013 with $159.8 million in revenue.

“At Plexus, our mission is to enhance the health, wealth and happiness of our Ambassadors and employees. And we’re seeing that happening across the country,” Plexus CMO Alex Clark shared in a recent feature for DSN. “Eventually we’ll see it happen across the world. I anticipate being here for a long time because what Plexus has is a true partnership between its executives and Ambassadors.”

Based in Altamonte Springs, Florida, Jeunesse Global recorded 1,788 percent growth over the past three years. Jeunesse has expanded aggressively into 92 markets since launching in 2009. The company’s personal-care and nutrition products generated sales of $224 million in 2013.

With three-year growth of 1,565 percent, It Works! ranked No. 290 in its fourth consecutive year on the Inc. 5000. The company generated revenue of $456.2 million in 2013 and recently upsized its corporate headquarters to a new facility in Bradenton, Florida. It Works! markets a line of health and wellness products anchored by its Ultimate Body Applicator, a 45-minute tightening and toning wrap.

In 2011, Forbes named North American Power to its list of America’s Most Promising Companies. The U.S. energy provider has lived up to its promise with 991 percent growth over the past three years. North American Power’s retail electricity and natural gas services generated $263.2 million in revenue last year.

August 20, 2014

Cover Story

The Changing U.S. Market: A $4 Trillion Opportunity

by DSN Staff

Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


It’s every marketer’s dream—a growing market, consumers ready to buy, with money in hand. Trillions of dollars, in fact. But are all direct selling companies aware of this growing, ready and willing group? Even more, are their executive teams and salesforces knowledgeable about how to reach them to influence those trillions of dollars they are willing to spend?

Perhaps, the most startling numbers on these graphics are those representing the jump in buying power between 1990 and 2017 among all four of these minority groups. The Asian-American percentage change in buying power shows an increase of nearly 800 percent between 1990 and 2017, increasing from $115 billion to $1 trillion.

Close behind these staggering numbers is the Latino buying power, increasing almost 700 percent in the same years, from $210 billion to $1.7 trillion. Also breaching the trillion-dollar mark, the African-American buying power will climb to $1.3 trillion by 2017. And beyond that? The U.S. Department of Commerce projects steady increases in these numbers, expecting minority purchasing power to exceed $4 trillion in a few short years.

Emergence of the Total Market

America has long been called the melting pot of the world—a term referring to the various ethnic and racial heritages of over 300 million individuals who live here. The truth is that unless one is a Native American, every U.S. citizen has ancestors that have come here from somewhere else.

For the last five or six decades, the term General Market has referred to the group that makes up the largest percentage of customers in the U.S. marketplace. This group has been mostly represented by what the U.S. Census Bureau refers to as “non-Hispanic whites,” also commonly called Caucasians or “Anglos.” This General Market has been mostly constructed of descendants of Eastern, Western and Southern Europeans.

Entire sales and marketing structures have been built over the generations geared toward this General Market. Other segments of the population—large Chinese and other Asian communities, Hispanic families, and African-American populations—in commercial terms have long been considered sub-groups to the General Market. These sub-groups might have been completely overlooked in the construction of sales and marketing budgets, or more likely, allocated dollars in accordance with their population percentage. In other words, a company might have determined a specific amount for their sales and marketing budget and, having checked the U.S. Census Bureau data, had specific percentages of that budget allocated toward Hispanic, African-American, or Asian-targeted marketing. From a company standpoint, this has worked fairly well; however, it won’t for much longer.


The U.S. Department of Commerce projects a steady increase in minority purchasing power, expecting total dollars to exceed $4 trillion in a few short years.


This approach is becoming increasingly outdated because the face of America is literally changing. Through marriage and family building across ethnic and racial lines, as well as continued immigration, the General Market and its sub-groups no longer fit into distinct categories. This is evidenced by the fact that Americans are finding it more difficult to identify themselves within one single category.

In 1977, the U.S. Census form had only five categories of race: Indian, Asian, Black, White or Hispanic. Only one box could be checked. According to an article by Jens Manuel Krogstad and D’Vera Cohn published by the Pew Research Center in March 2014, U.S. Census official Nicholas Jones is quoted as saying, “Increasingly, Americans are saying they cannot find themselves on census forms.”

The Bureau is attempting to address this issue, and its complexity is plainly visible on the form, as there are now 15 options that make up five race categories—white, black, American Indian/Alaska Native, Asian, or Native Hawaiian/Other Pacific Islander. A separate question asks whether individuals are of Hispanic, Latino or Spanish origin.

The Census Bureau statistics simply indicate we have moved into a time in which multi-culturalism isn’t just an idea, or a marketing plan, but the reality of most Americans. And this reality is changing the way companies do business.


To see this graphic larger Click Here.


Language Shifts

The substantial changes in demographic makeup have led many in the marketing world to talk about shifting the language that describes customers. The idea of a dominant General Market with a few sub-segments is no longer a viable marketing description of consumers. Marketers are increasingly looking for new and better ways to reach consumers, and are embracing new labels to more accurately describe the buying public.


The largest contributing group to the multicultural expansion is the Latino population, which will triple in size and account for most of the U.S. population growth through 2050.


In the graphic below, you can see the changing face of the U.S. market by age segment, most clearly indicated by those in the under-40 and youngest categories. These young people will be the customers, consultants and corporate employees of tomorrow. Marketers are increasingly aware that their messaging needs to match up with what these populations consider to be important in order to best leverage their strategic plans. The largest contributing group to the multicultural expansion is the Latino population, which will triple in size and account for most of the U.S. population growth through 2050.

The transition from viewing the consumer landscape in segments to viewing the total landscape as one made up of varied cultures is now so marked that some believe the time has come to dismiss race altogether as a useful social indicator. Instead, companies should focus on strategies that will appeal across the multiple cultures, and layer on strong, engaging and connective ethnic values. In other words, focus on the human elements and find commonalities across all segments, thus delivering marketing content that is engaging and appropriate.

New marketing terms—such as Total Market, New Mainstream and others—are working their way into the lexicon of business executives who are attempting to manage these ideas into workable strategies.



Capturing Market Share through Content

Here at DSN, we’ve been writing about the importance of content marketing for some time. Marketing entrepreneur and blogger Seth Godin, along with author and social media guru Gary Vaynerchuk and others, has convinced us that outreach to customers in the social network and digital age is all about content, content, content.

But now, the message of that content is ever more important because the audience that is receiving it is changing as well. Joe Pulizzi, founder of The Content Marketing Institute, says, according to his website, that the content of your message delivers “information that makes your buyer more intelligent. The essence of this content strategy is the belief that if we, as businesses, deliver consistent, ongoing valuable information to buyers, they ultimately reward us with their business and loyalty.”

It will not do a company any good to produce marketing messages and advertising content for their goods and services that do not connect with the intended audience. Even if those messages have connected in the past, the profile of the customer is changing so much that even that success may no longer count. So what does matter?

According to Cuban-American entrepreneur and author Glenn Llopis, who heads up the Glenn Llopis Group business consultancy, culture is the new universal language of marketing. In a Forbes article on capturing the Hispanic Market segment, Llopis writes, “Cultural intelligence must replace the misguided notion that simply translating English copy into someone’s native language is all you need to do to reach them. Embracing cultural sensitivity has become critically important to the design of new business models, leadership development and the relationships that brands earn with their consumers.” Llopis makes the point that brands don’t necessarily need to communicate in a language to reach ethnic consumers, but they do need to communicate in the language of the group’s culture.



The Messages

Translating existing English copy into various languages has been a common business practice in the past. That practice may never have been the best solution for the targeted market, but the expansion of cultural practices across the broader market is making it more and more outdated, not to mention embarrassing.

Take for example, the translation of the California Dairy Board’s very popular “Got Milk?” campaign into Spanish. Because they didn’t take the time to consider cultural nuances, the Dairy Board created a campaign that asked, “Are you lactating?”

Similarly, General Motors wanted to market the Chevy Nova to Latin American customers. They didn’t pay attention to the fact that “no va” in Spanish means “no go.” After much wasted time and effort, they renamed the car for that market.

Mistakes as blatant as these are not happening every day; however, any misfire created by a lack of understanding is wasted effort. How exactly will all this affect your company’s bottom line in recruiting, sales, and even hiring employees? Well, it’s difficult to draw dramatic conclusions, but it does seem clear that companies seeking to understand the market changes that are occurring will benefit more in the acquisition of customers, consultants, and general brand approvals.

Some of the cultural messages that are moving to the forefront of the total market might seem simple, but including them in your marketing messages can create a deep resonance in the market. For example, the number of households containing extended family—whether that is two or more generations living together, or includes cousins and aunts and uncles—is growing rapidly. Those companies whose marketing messages value these family relationships are more likely to engage these consumers.

Securing a place among these multiple trillions is, or should be, the goal of any modern marketer. Though the cultural messages and nuances are vital to any successful campaign, it is useful to remember that everyone, regardless of background or heritage, seeks quality and authenticity in the goods and services they utilize. With that as the starting point, those companies who strategically plan to reach the total market and all of its diversity will certainly gain a competitive edge.

August 20, 2014

Publisher's Note

Letter from John Fleming, September 2014


Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.


It’s Fourth Quarter!

Conventions and annual meetings have served to inspire. A few hundred thousand lives have been personally touched by the many corporate events of the past few months. Last month, in this column, we provided an optimistic outlook on 2014 direct selling industry performance based on our collective observations and views.

John Fleming On July 28 the research team supporting the World Federation of Direct Selling Associations posted their worldwide results for 2013. Total global retail sales were $178.5 billion for 2013, up 8.1 percent from 2012’s total of $165.2 billion. The number of independent contractors globally rose as well, up 7 percent to 96.2 million. (To see the full global statistics go to www.wfdsa.org) This data also confirmed our outlook—direct selling is growing as a channel of distribution around the world! We should really expect no less. Any channel of distribution that can serve to engage people from basically all walks of life has to be considered for its relevancy during times of growing interest in entrepreneurship. The strengths of this most unique channel of distribution are many, and over the past year much more attention has been directed toward the industry. Therefore, as we now move through the final quarter of the year, projections for year-end results will begin to set the stage for reflections on what we have learned from 2014 in particular. We certainly believe the number of media impressions about direct selling is probably up over prior year. There is always a mix of opinions, and there is no way to quantify the balance between positive and negative press—there is always some of both. Local and niche media have actually done an excellent job on many occasions of publishing some very impressive and positive stories. And, I might add, DSN published an excellent insert that was distributed in The Wall Street Journal (reprints are still available).

As we (DSN) reflect on this past year, in particular, the following thoughts appear to be noteworthy:

  1. Journalists covering direct selling need to be encouraged to keep an appropriate balance between the stories that are a reflection of the best of the industry and those that show concern about the direct selling business model and how it is being utilized and promoted. This is an industry that self-regulates probably better than any other and one that has available a very strong code of ethics developed by the Direct Selling Association. We must simply find more ways to advocate the best of what the industry stands for. Better balance is essential, and each player has the opportunity to influence what gets reflected in the media. Ultimately, better balance will negate the perception that the media only desires to cover the negative.

  2. Every company using the direct selling model in any of its many variations, regardless of the label being used, is an actor/actress on the big stage. The big stage is the global marketplace where the audience tends to recognize the direct selling industry as “ONE,” regardless of the label being used. ONE was actually the theme of this year’s Direct Selling Association’s Annual Meeting, a very appropriate theme for an industry that is searching for its redefinition of who we are and what we do. Regardless of how we are defining ourselves individually, the audience tends to see ONE; therefore, it behooves us to realize even more so that the audience is always there. The audience is often learning, enjoying the play, and marveling at its uniqueness, it’s symphony of talent, its mix of ingredients and the results of the production. Some in the audience are simply there to report, and what they report can often be what they see, not what they understand—meaning all characters in the play are quite important. Therefore, it’s our duty to pay attention to all characters.

  3. Industry growth means a lot of things are going well and a lot of people are finding success! Growth should support an ever increasing positive perception of what the industry does and how it accomplishes so much through a channel of distribution based on engaging people from all backgrounds. As the cast continues to develop—the many companies who are utilizing and growing through use of the direct selling model—the cast will find itself performing before a larger and ever growing audience that is informed and often equipped to share their observations and experiences quickly and effectively. Each of us can ensure that the play is one of the finest productions ever brought to stage by simply playing our unique roles well and with authenticity! And as we do, we will capture the imagination of the audience and deliver on the promise of a better future! No need to overpromise… this industry provides opportunity like no other!

One of the ways we can leverage the cast is to celebrate what we have accomplished and what we will accomplish as we now work toward the close of 2014. There are fewer and fewer days left in this year. On the next pages, Lauren Lawley Head will unveil DSN’s 90 Days of Direct Selling, and how we plan to celebrate our great industry!

Enjoy the issue!

John Fleming
Publisher and Editor in Chief

August 20, 2014

Executive Announcements

Executive Announcements, September 2014


Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Medifast Inc.

Medifast Inc., a manufacturer and provider of clinically proven, portion-controlled weight-loss products and programs, announced the addition of three new members to its Scientific Advisory Board: Simon Barquera, M.D., Ph.D., Susan Barr, Ph.D., R.D, and Steven Heymsfield, M.D.

With the recent additions, Medifast’s Scientific Advisory Board now comprises nine medical and scientific experts in the food science, nutrition, and weight-management arena.

“What sets us apart from other weight-loss companies is that our products and programs are rooted in medicine,” said Michael MacDonald, Chairman and CEO of Medifast. “The addition of these esteemed health professionals reinforces that commitment and demonstrates our dedication to evolving with medical advancements.”

Simon Barquera, M.D., M.S., Ph.D., is a medical surgeon and public nutrition researcher at the National Institute of Public Health in Mexico City. He has been a consultant for the WHO, the Pan American Health Organization, the World Bank, the International Food Policy Research Institute and the International Association of Agricultural Economists in the fields of nutrition, obesity and chronic diseases. Barquera is also President of the Nutrition Board of Professors at the Mexican School of Public Health as well as Director of the Nutritional Epidemiology Division at the Nutrition and Health Research Center.

Susan Barr, Ph.D., R.D., is a professor at the University of British Columbia, where she teaches human nutrition. She has served as chairperson of the Institute of Medicine’s Subcommittee on Interpretation and Uses of Dietary Reference Intakes and as a member of Health Canada committees working on revision of Canada’s Food Guide and on dietary sodium reduction. She is a Fellow of the Dietitians of Canada. Her research focuses on associations between nutrition, physical activity and bone health in women.

Steven Heymsfield, M.D., is the George A. Bray Chair in Nutrition and professor at Louisiana State University’s Pennington Biomedical Research Center. He has both academic and industry experience and formerly served as President for The American Society of Clinical Nutrition and The American Society of Parenteral and Enteral Nutrition, and he now serves on the Council of The Obesity Society. Heymsfield is well known for his expertise in basic science, clinical and population science related to weight and energy balance, and dietary supplements.


USANA Health Sciences Inc.

Kevin G. GuestKevin G. Guest

USANA Health Sciences Inc. has announced that Kevin G. Guest has been promoted to President of USANA worldwide. He will focus his efforts on sales growth, customer growth and salesforce development. Guest has been with the company since 2003 and has served in a variety of leadership positions there over the last 11 years. Most recently, he has served as President of the Americas, Europe and South Pacific since October 2012, where he has designed and executed initiatives that have generated growth in these regions.

“Kevin has been extensively involved with USANA since the company was founded more than 20 years ago,” said CEO David Wentz. “His vision for the business, dedication to customers and employees, and overall integrity and leadership have been and will continue to be invaluable to our organization.”


LegalShield

Jeff BellJeff Bell

LegalShield, one of the nation’s leading providers of affordable legal plans and identity theft solutions for individuals, families and small businesses, announced that Jeff Bell has joined the company as CEO. Bell succeeds Rip Mason, who will now serve as Executive Chairman of the Board.

Bell comes to LegalShield with over 20 years of corporate leadership and consumer marketing experience for global brands including Microsoft, Chrysler, Ford and NBCUniversal. While serving as Corporate Vice President, Global Marketing, Interactive Entertainment Business (Xbox) for Microsoft Inc., Bell saw tremendous success, leading the business to its first profitable year in its existence. In addition, he led the growth of Xbox LIVE from 4 million to 12 million members in two years, including the addition of Netflix. After serving as Vice President of the Chrysler and Jeep Divisions for DaimlerChrysler, in 2012 he was called upon to lead NBCUniversal’s marketing efforts in the health and fitness market. There he developed the “Challenge America” campaign, which became the theme for “The Biggest Loser” television show. In addition, Bell has been the recipient of Advertising Age’s “Interactive Marketer of the Year” in 2005 and was named the Advertising Age “Entertainment Marketer of the Year” in 2007.

“Having Jeff join LegalShield is a great step forward for the company as we continue to raise awareness around the need for affordable legal protection,” said Rip Mason, Executive Chairman of the Board for LegalShield. “Jeff’s ability to raise consumer awareness and lead the industry’s best sales and service team will allow LegalShield to address one of the most important challenges our society faces—ensuring affordable and quality legal counsel for every American.”


Mary Kay Cosmetics Ltd.

Lynda RoseLynda Rose

Mary Kay Cosmetics Ltd. (Mary Kay Canada), a top beauty brand and direct seller, announced that Lynda Rose has been named General Manager, following the retirement of Ray Patrick after 34 years of service. Rose formerly served as Vice President of Sales & Marketing and has worked at Mary Kay for 16 years.

With more than 25 years in sales, sales education and sales management in the cosmetics field prior to joining Mary Kay in 1998, Rose started her Mary Kay career as Director of Sales Development and by August 2001 was promoted to Vice President of Sales Force Support and later Vice President of Sales & Marketing.

Along with close involvement with the Direct Sellers Association of Canada (DSA), and direct selling as a whole, Rose has provided her leadership as Chair of the DSA Board, and as a result, in 2010, she was honored with the Ivan P. Phelan Award. She was also one of four Mary Kay employees who received the distinguished Queen Elizabeth II Diamond Jubilee Medal for their significant contribution to the direct selling industry. Today, Rose serves on the boards of the DSA, the Canadian Cosmetic, Toiletry and Fragrance Association and its Foundation.

She says, “I’m excited and ready to assume this new role because of Ray’s perpetual and positive leadership, and because the company has an amazing independent sales force that believes in the product and the Mary Kay opportunity. Together, we can accomplish anything.”


MonaVie

Beau CoplinBeau Coplin

Direct selling company MonaVie announced that Beau Coplin has been promoted to Vice President of IT, and joins the company’s executive management team.

As Vice President of IT, Coplin works directly with key markets and leaders to ensure MonaVie’s systems meet the needs of its distributors worldwide. He also directs the company’s global technology strategy and provides guidance relative to emerging technologies that will improve processes, increase efficiencies and provide high-quality solutions for MonaVie distributors and corporate users worldwide.

Dan ZhuDan Zhu

Coplin has 20 years’ experience in the Information Technology field within several industries. Since joining the MonaVie family in 2008, he has excelled in a variety of key roles, and was instrumental in setting up operations and IT infrastructure for MonaVie’s international markets.

MonaVie has also announced the promotion of Dan Zhu to President of Asia Pac and the addition of two new members to the Scientific Advisory Board, Mark Macdonald and Diane Miles.

Mark MacdonaldMark Macdonald

Previously, Zhu had been serving as President of Greater China for MonaVie. His responsibilities are expanding to include the following markets: Australia, New Zealand, Malaysia, Singapore, Thailand and Korea. Zhu has 18 years of leadership experience in the direct selling industry and has successfully launched and developed markets throughout Asia at other successful direct selling companies. He joined MonaVie in 2010 as Vice President of Greater China and has spearheaded the launches of MonaVie Hong Kong (February 2010) and MonaVie Taiwan (September 2010).

Diane MilesDiane Miles

Nutrition and fitness expert Mark Macdonald joined MonaVie’s Scientific Advisory Board (SAB) after being its nutrition and fitness expert since 2011 and having been influential in helping formulate MonaVie’s RVL and CORE line of products. The addition of Macdonald will add expertise to support current product development plans and necessary substantiation for research and development.

Cosmetics industry veteran Diane Miles joined the SAB to help round out the company’s science and research with her skincare and beauty product expertise and will play a key role in helping guide product development efforts into potential new market segments for MonaVie. Miles brings more than 25 years’ experience to MonaVie within the prestigious skincare, makeup and fragrance sectors. She has exceled in a variety of key roles at renowned companies, including as CEO of skincare company Perricone, MD; president of Bare Escentuals; and CEO of Benefit Cosmetics.


CVSL Inc.

Roy DamaryRoy Damary
Bernard IvaldiBernard Ivaldi

CVSL Inc. announced that Roy G.C. Damary and Dr. Bernard Ivaldi have been elected to the company’s Board of Directors.

“We are delighted that Roy Damary and Bernard Ivaldi will be bringing their long and distinguished international experience in business and academia to CVSL’s board of directors, particularly their understanding of the dynamics of global commerce,” said John Rochon, CVSL’s Chairman.

Roy Damary combines a wide range of academic activities with global business experience. He began his professional career as a research engineer at the Battelle Institute in Geneva, Switzerland, and later created and headed the MBA program at Webster University’s Geneva campus.

He is President of the INSAM Foundation in Geneva; head of business studies at Robert Kennedy College, Switzerland; and is an honorary professor at the Ural State Forest Engineering University of Ekaterinburg, Russia. He owns Technomic Consultants SA, and is a British citizen residing in Geneva. He is a member of the board of directors of CVSL AG and JRJR AG, in Luzern, Switzerland.

Bernard Ivaldi, Ph.D., has for more than 40 years held a variety of senior positions in business, law and academia in the United States and Europe. A French citizen and a resident of Switzerland, Dr. Ivaldi serves as Chairman of Tatiana Faberge SA (Switzerland). He has broad experience in the fields of administration, financial management, personnel management and training, and he is a former chairman of the International Schools Association, an international NGO with consulting status to UNESCO and ECOSOC.

In 1994 he founded BI Conseil and Associates. He is currently President of FEBP, a Swiss foundation promoting business ethics. He is a member of the boards of CVSL AG and JRJR AG in Luzern, Switzerland.


Please submit news of executive promotions and hires at your company to be included in the Executive Announcements section of Direct Selling News.
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August 20, 2014

News in Brief

News in Brief, September 2014

Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.


Mary Kay Sponsors Emmy-Nominated Project Runway

Mary Kay is the official beauty sponsor of season 13 of Lifetime’s Emmy-nominated hit series, Project Runway. The show’s celebrity makeup artists will exclusively use Mary Kay products on the show as aspiring designers compete for fashion’s top spot.

The iconic beauty company will take center stage in front of a weekly, national audience as a new group of up-and-coming designers finish their runway looks in the Mary Kay Color Design Studio in every episode. Fans of the hit show will get a behind-the-scenes look and learn how to achieve runway-inspired looks at home.

The show, which concludes in October, features budding designers going head-to-head during weekly challenges in order to leave a lasting impression on Emmy winners Heidi Klum and Tim Gunn, in addition to well-known guest judges. While this is Mary Kay’s first sponsorship of the flagship series, Project Runway, the company also served as the official beauty sponsor of Project Runway All Stars Season 3 in 2013 and will continue the partnership for Project Runway All Stars Season 4 later this year.


Herbalife Announces China Manufacturing Expansion

Global nutrition company Herbalife Ltd. recently announced plans to expand its manufacturing capabilities in China, in preparation for anticipated growth in this strategically important market. Herbalife has existing manufacturing facilities in Suzhou and a botanical extraction plant in Changsha.

Herbalife has selected an existing, newly built facility in Jiangning High-tech Industry Park (JHIP), Nanjing, as the site of its new facility. Herbalife will invest up to US$40 million in a first phase of development, to bring the facility up to the highest operating standards. This first phase is expected to be complete and the facility operational by the end of 2015, with the potential for a second phase of development.

The new facility will ultimately provide up to 65 percent of the company’s total product requirements in China. Herbalife received its first direct-selling license in China in March 2007 and now has licenses for the company to conduct its direct-selling business in 25 provinces, municipalities or autonomous regions.


Stella & Dot Foundation Aligns with Every Mother Counts

Fashion and accessories brand Stella & Dot recently re-launched its foundation in partnership with Every Mother Counts, a campaign dedicated to making pregnancy and childbirth safe for every mother. The Stella & Dot Foundation was created in 2010 to further the company’s mission of helping women style their own lives.

Every Mother Counts currently operates in Indonesia, Haiti, Uganda, Malawi and the United States. The organization was founded by Christy Turlington Burns, a model, entrepreneur and activist named one of TIME’s 100 Most Influential People of 2014. Burns directed the documentary No Woman, No Cry to raise awareness of the women dying—287,000 every year—due to largely avoidable complications during pregnancy.

To kick off the new partnership, all net proceeds of the Stella & Dot Foundation’s new Enlighten Bracelet will benefit Every Mother Counts. At Every Mother Counts, 100 percent of every donation goes to programs supporting its mission around the world.


Tomboy Tools Unveils New Name and Products

Tomboy Tools recently unveiled a new name and logo, new products, new categories and new marketing initiatives. The company will now do business under the name Project Home™, with the tag line, “Making your vision real.” 

The company will continue to use the brand name Tomboy Tools for its line of tools designed especially for women. The brand’s revamped product categories include safety and security; beautification (painting, picture hanging, cabinet hardware); organization; outdoor; Tool School™ and home maintenance. 

Tomboy Tools was founded in 2002 with a mission of building confidence and empowering women through education, quality products and an independent business opportunity. Its products are sold by its more than 1,000 Home Consultants in the United States and Canada through home parties, using hands-on education that is fun and practical. The company moved its headquarters from Colorado to Newark, Ohio, last year.


Medifast Awards $100,000 Cancer Research Grant

Medifast Inc., a manufacturer and provider of clinically proven weight-loss products and programs, recently announced a $100,000 grant to The V Foundation for Cancer Research, one of the nation’s leading cancer research funding organizations.

The grant is the product of a multi-faceted partnership between Medifast and The V Foundation, to explore links between obesity and cancer and the impact of healthy living on preventing cancer. Clinical research will be led by Parveen Bhatti, Ph.D., from the Fred Hutchinson Cancer Center in Seattle, Washington.

Founded in 1980 and based in Owings Mills, Maryland, 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.


Ahni & Zoe Closes Its Doors

After emerging from its second bankruptcy in five years, Ahni & Zoe—formerly Creative Memories—announced it would close its direct selling business in August. The St. Cloud, Minnesota-based scrapbooking company terminated contracts with its consultants Sept. 3.

Calling the decision “disappointing and disheartening,” CEO Chris Veit informed consultants of the company’s agreement to sell the assets of the Antioch Liquidating Trust (formerly Creative Memories) and Ahni & Zoe to Flowerdale Group Limited of Hong Kong.

Flowerdale Chairman Caleb Hayhoe informed consultants of the group’s plans to relocate to a new manufacturing facility in St. Cloud and invest in a new business that builds and improves upon the existing product line. Under the Creative Memories brand, the company employed as many as 1,100 people and supported 70,000 consultants worldwide.

Ambit Energy Launches Power Payback Program

Retail energy provider Ambit Energy recently introduced its Power Payback program to reward Texas customers who reduce energy use during periods of extreme electricity demand. The program provides users with bill credit if they reduce their consumption during designated time periods.

Under the program, customers in Texas who have Smart Meters will receive advance notification of an impending period of extreme electricity demand. They then have the opportunity to cut back on their electricity use during the specified time. If their electricity usage during this time is lower than their average during that period, they receive a bill credit of $1 for every kilowatt-hour saved.

Based in Dallas, Ambit Energy provides electricity and natural gas services in deregulated markets across the United States, primarily marketed through a direct sales channel of more than 150,000 independent consultants.


ViSalus Sponsors American Youth Football

American Youth Football & Cheer Inc. (AYF) recently selected weight-loss and nutrition company ViSalus as its Official Nutrition and Wellness Sponsor. In this year’s fundraisers, AYF athletes will cash in on personal health goals by selling ViSalus nutrition products.

AYF works within communities to train children in football or cheer, with a strong emphasis on positive traits like self-confidence, teamwork, self-discipline and community involvement. The organization, which often establishes programs where children cannot access them through the school system, serves more than 1 million members nationwide.

ViSalus offers its users an added weight-loss incentive through the PROJECT 10 Kids program. The company’s trademark PROJECT 10 Challenge encourages customers to lose 10 pounds of fat or add 10 pounds of lean muscle. Every time a person meets the challenge, the company donates 30 of its Vi-Shape Nutritional Shake Meals to a child in need.


DSA Canada Announces Industry Honors

The Direct Sellers Association of Canada announced its 2014 award recipients at the association’s 60th Annual Conference held in Halifax, Nova Scotia. DSA Canada represents over 700,000 Canadian independent sales contractors who generate nearly $2 billion per year in sales. The following individuals were honored for their contributions to the direct selling industry:

  • Ivan P. Phelan Award—Joan Lee, DSA Canada
  • Mark of Distinction Award—Yali Ma, Nu Skin
  • Community Spirit Award—Mark Ma and Xueyun Lin, Amway; Kathryn Wall, lia sophia
  • Making a Difference Award—The Arbonne Charitable Foundation
  • Industry Innovation Award—Amway Canada
  • DSEF Circle of Distinction Award—Janice Gerol, The Pampered Chef
  • Distinguished Service Award—Angela Abdallah, Amway Canada; Dahna Sanderson, The Pampered Chef; and Tracie Graham, PartyLite Gifts

DSA Canada also awarded five $1,000 scholarships to either deserving children of active Independent Sales Consultants (ISCs) of DSA member companies, or ISCs who themselves are students. This year, the DSA also awarded one new scholarship in the amount of $1,000 to a deserving child of a DSA member company employee. The six recipients of the 2014 DSA Academic Scholarships are:

  • Madeleine Assiniwe, Mary Kay Cosmetics
  • Joanna Lai, Amway Canada
  • Naomie Levesque Savoie, Scentsy Canada
  • Andrei Purcarus, USANA Health Sciences
  • Jessica Rempel, PartyLite Gifts
  • Alexandra Smith, Mary Kay Cosmetics

Grants for educational initiatives are made possible through support from the Direct Selling Education Foundation of Canada (DSEF). The DSEF is a not-for-profit organization established by the Canadian DSA in 1994. The foundation promotes public awareness of the direct selling industry in Canada and serves the public interest through educational programs and research into direct sales and micro enterprise.

 

August 20, 2014

U.S. News

Nu Skin Ranked among Fortune’s Fastest-Growing Companies

Fortune recently published its annual roundup of the fastest-growing public companies in American business, and direct selling powerhouse Nu Skin came in at No. 68 on the list.

In a testament to America’s booming shale business, a quarter of this year’s 100 Fastest-Growing Companies represent the oil and gas industry. Household brands such as The Hunger Games and Divergent distributor Lions Gate Entertainment (No. 15), K-Cup maker Keurig Green Mountain (No. 48) and Apple (No. 88) also appear. Fortune’s ranking reflects profit, revenue and stock growth over the preceding three-year period.

Nu Skin, a seller of skincare and nutrition products, grew its business by half in 2013 alone. The Provo, Utah-based company reported sales of $3.18 billion, a $977-million increase over 2012. With industry-leading growth in 2013, Nu Skin earned DSN’s Bravo Growth Award based on revenue and the No. 7 ranking on the DSN Global 100. For 2014, the company reported revenues down 3 percent to $650.0 million in the second quarter.

August 18, 2014

U.S. News

Tomboy Tools Unveils New Name and Product Offerings

Direct seller Tomboy Tools has revamped its brand with a new name and logo, as well as expanded product categories and marketing initiatives. The company now operates under the name Project Home, with an approach reflected in its tag line, “Making your vision real.”

CEO Janet Rickstrew and CTO Mary Tatum founded Tomboy Tools in 2002 to supply women with tools designed specifically for them. The company’s unique offerings and home parties earned it a spot on Entrepreneur magazine’s 100 Brilliant Companies list in 2010. In October 2013, Tomboy Tools joined the CVSL Inc. family of companies, a lineup of direct selling brands that includes The Longaberger Company, Your Inspiration at Home, Agel and others. CVSL’s strategy of distinguishing itself through company acquisitions has brought rewards of significant growth. Just last week, CVSL reported second quarter 2014 results with a 19.5 percent increase in gross revenue compared to the second quarter of 2013. CVSL had gross revenue of $24.6 million, compared to gross revenue of $20.6 million in 2013.

The newly unveiled Project Home will offer the company’s signature pink Tomboy Tools under one of six product categories. The brand now encompasses Safety and Security, Beautification, Tool School, Organization, Outdoor and Maintenance. Project Home parties provide education and products tailored to one category, Rickstrew shared in an email to DSN.

The Beautification party, for example, addresses projects customers can do around the home to beautify their surroundings. “This would include painting—we offer several painting tools and a paint partner through which our sales consultants can sell and earn a commission—and projects such as changing or installing window coverings and changing cabinet knobs,” said Rickstrew. “Generally, we show which tools you need and how easy it can be. We combine tools with applications.”

“Do it yourself” projects of all kinds are increasingly ubiquitous, thanks in part to popular web service Pinterest. Dubbed a “visual discovery tool” by its creators, the site allows users to curate and share collections of visual bookmarks or “pins” from around the web. Rickstrew says Pinterest is already a popular tool with Project Home Consultants, and it’s a platform the company plans to tap into on a corporate level as well.

The new name and initiatives enable Project Home to reach a much larger market, and according to Rickstrew initial feedback from the company’s consultants has been enthusiastic. “Some women had no interest in picking up a tool on their own,” she said. “With the new categories, it resonates with a much larger group and expands into the all-inclusive home. I don’t believe there is anyone that doesn’t care about the safety and security of their family and home.”

August 15, 2014

U.S. News

ForeverGreen Reports Record Q2 Sales, up 253%

ForeverGreen Worldwide Corp. (FVRG—OTC.BB), a provider of nutritional foods and other healthy products, reported Thursday record Q2 revenues of $14.1 million, an increase of 253 percent from $4.0 million for Q2 2013.

For the quarter ended June 30, 2014, the company achieved its fifth consecutive quarter of operating profitability and second consecutive quarter of growth in operating and net income.

Gross profit rose to $11.2 million compared to $2.9 million during Q2 2013, a 294 percent increase. Gross profit margins increased to 79.5 percent versus 71.1 percent during the comparable quarter during 2013. Operating income was $412,360 compared to $92,653, a 345 percent increase. Net income totaled $454,856 or 2 cents EPS versus a net loss of $5,383.

“Gross margins, operating margins and net profit margins all continue to improve,” said CFO Jack Eldridge. “We believe during the next 12-18 months our operating margins will improve to 12-15% and our net margins will increase to 7-9% as we continue to benefit from overall efficiencies and lower COGS. We remain on track to meet or exceed our previously announced revenue guidance of $41-50 million, anticipating net margins of 4-7%. We will continue to develop ForeverGreen into one of the largest and most diversified global companies in our industry.”

Read the full results here.

August 15, 2014

U.S. News

Blyth Appoints KWG Chief to Board of Directors

Blyth, parent company of direct selling brands PartyLite and ViSalus, recently made some changes to its board of directors. The Greenwich, Connecticut-based company announced the retirement of Neal I. Goldman and welcomed Jim Williams as its newest board member.

Goldman, President of investment advisory firm Goldman Capital Management, served as a Blyth director for 23 years. Williams is President, CEO and Managing Partner of Karlen Williams Graybill Advertising (KWG), whose clients include a number of Fortune 500 companies and some of the nation’s fastest growing business startups. He also owns a controlling interest in I.M. Productions and the communications business Better Brand Initiatives, licensor of the televised mini-show FYI Before You Buy.

“Jim brings leadership, strategy and a strong knowledge of marketing, social media and global consumer insight,” Blyth CEO Robert B. Goergen said in a statement. “I look forward to the new perspective that Jim brings to the company.”

Blyth operates in 21 countries through PartyLite, a designer and marketer of candles and accessories for the home, health and wellness brand ViSalus, and a handful of brands sold through the catalog/Internet channel. The company reported a rocky second quarter as sales continued to wilt, decreasing approximately 25 percent from the prior year period to $157.8 million. The weak performance was largely a result of declining salesforce numbers at ViSalus North America, said Goergen.

“ViSalus management is focusing on rebuilding the North American market through leadership development programs while right-sizing the cost structure in North America to regain profitability, as well as building their international business,” Goergen shared in the company’s financial release. “In the second quarter, ViSalus continued its geographic expansion initiatives, opening in Ireland, with two additional markets planned to open this year and an additional seven markets in 2015.”

August 15, 2014

Credit Card/Payment Processing

PacNet Services Ltd.


August 14, 2014

U.S. News

New LegalShield CEO Talks ‘Equal Access to Equal Justice’

Equal access to equal justice—it’s nearly unimaginable in many countries, and it’s what attracted new chief executive Jeff Bell to LegalShield. Bell joined the legal services provider this month following the three-year tenure of Rip Mason, who now serves as Executive Chairman of the Board.

At first, Bell told DSN in an interview, he deemed the company’s $20-a-month prepaid legal plan too good to be true. Across North America, LegalShield employs over a thousand lawyers dedicated solely to serving its members. The Ada, Oklahoma-based company also retains 6,000 referred attorneys who can take on member cases. Unlike many of its competitors, who vie for spots on various rosters of providers, LegalShield takes its plans directly to consumers through a network of Sales Associates.

Jeff Bell

In a July LegalShield survey of more than 500 Americans, 30 percent of adults reported facing an issue where legal services should have been enlisted but were not. Nearly half (44 percent) stated that hiring a lawyer is intimidating. People need access to simple, affordable legal services, notes Bell, but they also need someone to walk them through the details. That’s where the company’s Sales Associates come in.

“LegalShield is a beautifully disruptive model in an age where products and services, as well as opportunities like direct sales, are changing the way Americans do business and interact in the marketplace,” says Bell.

Though new to direct selling, Bell has honed his marketing and leadership skills at brands like Ford, Microsoft, Chrysler and NBCUniversal. As Vice President of DaimlerChrysler’s Jeep and Chrysler Divisions, Bell launched the Chrysler 300 and marketing initiatives that included the Dodge “Grab Life by the Horns” campaign. During Bell’s tenure at DaimlerChrysler, Advertising Age named him “Interactive Marketer of the Year” in 2005. In the role of Corporate Vice President, Global Marketing, for Microsoft’s Interactive Entertainment Business (Xbox), Bell received the Advertising Age “Entertainment Marketer of the Year” title in 2007.

His decision to join LegalShield, Bell says, hinged on the integrity of the product itself—universal access to quality law firms without the high hourly costs. The company has a salesforce over 100,000-strong, ranging from full-time Associates to those seeking a supplemental income, and serves well over 1.5 million members. “My question,” Bell submits, “is why don’t we have 15 million?”

For someone who led Xbox to its first profitable year ever and managed a growth spurt that took Xbox LIVE from 4 million to 12 million members in just two years, it’s not a flippant question. Bell is also quick to point out that he is building upon a solid foundation at LegalShield.

“I have nothing but the most profound respect for the sales organization that has been developed, and the founders and co-founders of this incredible business,” he shares.

Making quality legal services accessible to all is, as Bell describes it, a rare opportunity to do well while also doing good. “We have a chance to create a better future and better opportunities for the next generation, and that’s what motivates us.”

August 06, 2014

Company Spotlight

Nu Skin Enterprises Inc.: 30 Years of Innovation for an Anti-Aging Giant

by Barbara Seale

Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


Company Profile

Founded: 1984
Headquarters: Provo, Utah
Executives: Truman Hunt, President and CEO
Products: Comprehensive anti-aging portfolio including both skincare and nutritional


Nu Skin Logo

Truman HuntTruman Hunt
Joseph ChangJoseph Chang

When a company reaches its 30th anniversary, it can bask in its maturity. But while 30-year-old anti-aging company Nu Skin Enterprises celebrates its decades of success, it revels in its history of innovation.

Innovation isn’t easy to achieve consistently, but it’s one of the key elements of the Nu Skin culture. From its forever-young business opportunity to its science-based approach to the development of its robust anti-aging product line, the company defies any stereotypes that getting older equals slowing down. It even had a jaw-dropping 49 percent annual revenue increase in 2013—a cool $977 million in growth, placing it in the No. 7 spot on the Direct Selling News Global 100 list.


Joseph Chang, Ph.D., Chief Scientific Officer and Executive Vice President, Product Development, believes that the company’s strategic focus on anti-aging has been the most significant product decision in its history.


All that innovation has helped the company succeed in one of its key areas of focus: increasing commissions to distributors. In its 30-year history, the company has paid more than $10 billion in total commissions and sales incentives. It is proud to offer what it calls one of the most rewarding commission structures in the industry, with 45 percent of revenue paid out in sales compensation and promotional incentives in 2013.

So how does it achieve such laudable success? President and CEO Truman Hunt, who this year alone received the Direct Selling News Bravo Leadership Award and was elected the new Chairman of the U.S. Direct Selling Association, points to three keys.

Secrets to Success

First, he notes that the company has worked hard to continually renew the vibrancy of its business opportunity throughout its 53 countries.

“We were one of the first companies in direct selling to offer sales leaders the opportunity to do business globally and be compensated for sales volume in their home market through our seamless global compensation program,” he recalls. “It’s a reflection of our commitment to innovation.”

Second, its anti-aging product line includes both skincare and nutrition product lines, and revenues are equally strong from each. In fact, Joseph Chang, Ph.D., Chief Scientific Officer and Executive Vice President, Product Development, believes that the company’s strategic focus on anti-aging has been the most significant product decision in its history.

“From a product perspective, we built a bridge between the two categories so that we have a single story and a single common thread that goes through skin care and supplements,” he explains.


“When people know what product is coming down the pike and can get behind it, we find we get more impact than when sales leaders show up not knowing and we surprise them. There’s great power in alignment.”
—Truman Hunt, President and CEO


Finally, the company’s unique product launch process has driven sales leaders and revenue growth. Nu Skin calls it their Limited Time Offer. Distributors learn about a new product a year in advance, rather than in a surprise convention announcement. That lets them get personal experience with the product, build a testimonial on it and align their teams around it. Then when Nu Skin launches the new product formally, it gets great attention and helps leaders move forward.

“With every launch we’ve learned new things that help us launch products with increasing impact,” Hunt says. “Perhaps one of the most critical insights we’ve gained is that it’s based on the power of alignment. When people know what product is coming down the pike and can get behind it, we find we get more impact than when sales leaders show up not knowing and we surprise them. There’s great power in alignment. We’ve always known this from a corporate perspective. To be able to transition that same principle has produced the magic of executing a great product launch.”


Nu Skin EmployeesIn June employees participated in Nu Skin’s annual Force for Good Day by volunteering to assemble school supplies for local students. ce President, join Truman Hunt, President and CEO, for the company’s 30th anniversary celebration. Nu Skin ProductsNu Skin founders Steve Lund, Executive Chairman of the Board, Executive Director of Nourish the Children, and Sandie Tillotson, Executive Vice President, join Truman Hunt, President and CEO, for the company’s 30th anniversary celebration.

Those launches are built on commitment that started 30 years ago with the company’s founders—Blake Roney, Sandie Tillotson and Steve Lund. They decided to build a company that would combine innovative personal-care products with ingredients that subscribed to the philosophy of “all of the good, none of the bad.” They were concerned that many artificial ingredients found in traditional skincare products weren’t actually good for the skin when used continuously. Some of the then-new company’s first products became so cherished by users that they are still being sold today in updated formulas.

“Historically we know that natural ingredients are good for the skin without causing potential side effects,” Chang notes. “Natural ingredients are still our major focus, and we couple that focus with additional insights through scientific studies.”

Nu Skin’s commitment to products backed by scientific research and testing is a key method for maintaining product innovation. It’s also one of the main reasons Chang became part of the Nu Skin management team. He was an executive at Pharmanex when Nu Skin acquired it in 1998. Previously he had served as both President and Chief Science Officer at Binary Therapeutics and at OsteoArthritis Sciences Inc., not to mention that he held various executive research management positions at Wyeth-Ayerst, Rhone Poulenc Rorer and other biotech companies with numerous articles, reviews and books to his name. With his impressive credentials, he could have worked anywhere in the world if he had decided to make a change. But Nu Skin’s commitment to science convinced him to stick around.

“The promise they made was that Pharmanex would be a great strategic fit with Nu Skin because of its robust research and development organization and the scientific engine we had built to support products. That engine would be equally applied to the skincare line, as well,” Chang recalls. “That promise was what drew me, and the company has always kept that promise. The R&D budget and investment have always gone up. When an acquirer makes a promise, it often dissipates over time, but Nu Skin hasn’t gone back on its word. That’s critical, because to innovate you need to do R&D.”

A Foundation of Goodness



When Vice President of Public Affairs Ruth Todd joined Nu Skin Enterprises Inc. in January, she had heard the company’s mission statement, “to be a force for good.” But when she experienced it herself, she was dazzled.

“Our commitment to being a force for good is baked into every decision on every level,” she says. “As a new person, it was impressive to see that the commitment lives in the company from day to day.”

While that culture permeates the company’s actions, nowhere is it more front-and-center than in Nu Skin’s philanthropic projects. From the Force for Good Foundation to the Nourish the Children initiative, Nu Skin reaches out with its money, its products and its efforts to make life better—to create smiles, as they affectionately say—around the world.

In 2013 alone, the nonprofit Force for Good Foundation and its charitable partners contributed nearly $5 million to improve the lives of children throughout the world by offering hope for a life free from disease, illiteracy and poverty. The foundation is funded by Nu Skin distributor and employee donations, as well as by 25 cents from the sale of each Nu Skin Epoch product. Nu Skin covers all administrative and overhead costs, allowing 100 percent of donations to be used for humanitarian and charitable causes.

Its Nourish the Children initiative recently surpassed 350 million donated meals. Since its inception in 2002, Nourish the Children has been supported by a steady stream of VitaMeal purchases and donations from generous Nu Skin employees and distributors. Nu Skin produces VitaMeal, specially formulating it for malnourished children and their families.

The efforts of the Nu Skin Force for Good Foundation and the Nourish the Children initiative converge in Malawi, Africa, where in 2007 the School of Agriculture for Family Independence (SAFI) was founded. Many residents were small-scale farmers, and the drought drained the natural resources they relied on to survive, creating a crisis for families who were forced to travel from village to village just to find food. SAFI initially recruited mothers and fathers from 30 families, housing them and their families on an acre of land in the SAFI village for a year, and teaching them agricultural techniques, animal husbandry, and nutrition information that helped them better use the natural resources available to them. During that year, their children attended school. The experience and knowledge they gained completely changed the families. When they returned home, they were able to improve their agricultural yields by as much as 700 percent. Just as importantly, they now teach others the techniques they learned.

Nu Skin then collaborated with government agricultural workers to develop Brighter Future, an extension of the original program, which teaches many families at one time in villages throughout the region.

“We partnered with locals and asked, ‘What do you need and how can we be helpful?’ That set us apart from the beginning,” notes Kara Schneck, Nu Skin’s Senior Director of Corporate Communications. “Where Nu Skin is especially strong is in its direct selling model that helps people run a business and then turn around and help others do the same. We’ve used a similar model in Malawi as we help families learn life-saving agricultural skills and then empower them to share their skills with those in their community.”

Nu Skin philanthropies are as far-reaching as its 53 markets, and the future is unlimited.

“Going forward, we have a great foundation and a company with a great mission,” Todd says. “When you talk about the circle of entrepreneurship, what’s unique about it at Nu Skin is there is a consistent level of charitable donations. The economy may be up or down, but we have a very giving, compassionate group of distributors and sales leaders who are able to be a force for good and help children around the globe.”

Innovation = Growth

Today the company’s full team of in-house scientists conducts research on the ingredients that go into Nu Skin products. They collaborate closely with the Nu Skin marketing team, which keeps tabs on trends and consumer needs. When marketing identifies a need in a particular product category, they bring that need to the scientists.

“That type of collaboration between marketing and scientists has driven us to focus on the anti-aging category,” Chang points out. “That has led us to be a leading anti-aging company, both in skin care and supplements.”

The most visible result of that collaboration is Nu Skin’s ageLOC family of skincare and weight-management products and supplements. The science behind the products—a genetic approach to product development—combined with the company’s brilliant product launch process created the company’s most successful product launch ever. Since the line was introduced in 2008, the ageLOC family of products has delivered $3 billion in sales. Customers are so committed to ageLOC and other Nu Skin products that many subscribe to them through auto-ship. The predictability is good for the publicly held corporation and equally as good for distributors.

Culture of Integrity

If innovation is Nu Skin’s muscle, its mission to be a force for good throughout the world is its heart and circulatory system.

“It’s so much a part of our culture that sometimes we take it for granted,” Hunt says. “It’s how we define our very existence. It’s our mission statement. Those elements really have been part of our DNA from the very beginning. Our founders were people of such strong character and values that we have always wanted to make sure that when people encounter Nu Skin, they have a good experience and come away a better person. Whether through our product integrity, the opportunity we offer or the culture we promote, we try to be a force for good.”

He adds, “I recall a quote by one of our founders Blake Roney: ‘Being a force for good may be only 5 percent of what we do on a daily basis, but it’s 95 percent of who we are.’ That whole notion of ultimately overcoming skepticism by being people of sound character and values is part of what has enabled us to survive and thrive for 30 years.”


If innovation is Nu Skin’s muscle, its mission to be a force for good throughout the world is its heart and circulatory system.


And indeed, Nu Skin has thrived. The company announced 2013 revenue of $3.177 billion, a 49 percent year-over-year improvement. So how did it celebrate those impressive accomplishments on its 30th anniversary? How else? By doing good things around the world. Starting at this year’s annual sales convention, a gala attended by sales leaders raised $2.2 million for the Force for Good Foundation, Nu Skin’s philanthropic organization. Then on June 5, Nu Skin celebrated its official 30th Anniversary and annual Force for Good Day by donating children’s books and assembling school supplies into learning kits to benefit local schools with high percentages of disadvantaged children. Throughout June, distributors around the globe continued the celebration, individually and collectively doing everything from picking up trash to raising funds for worthy causes. Just a few of the projects: In Southeast Asia distributors continued their long-term support of the Children’s Heart Fund by raising funds for heart surgeries for children whose families don’t have the means to pay for the surgeries; in Russia they helped in an orphanage; in Malaysia distributors took gifts to children in hospitals; distributors in Northern Europe raised 32,000 Danish Krona (US$5,800) to buy 30 beds for a Romanian orphanage; and Canadian distributors made lunches for homeless families. (See sidebar for more information on Nu Skin’s philanthropic efforts.)

Whatever projects employees or distributors chose, each reflected their pride and gratitude in being part of a company that has provided opportunities and a better life for people around the world for 30 years.


“We at Nu Skin don’t feel we’ve arrived yet where we want to be, even though we’ve enjoyed record levels of growth, commissions paid to the salesforce, and the good we’re doing for society through our corporate social responsibility initiatives.”
—Truman Hunt


“We at Nu Skin don’t feel we’ve arrived yet where we want to be, even though we’ve enjoyed record levels of growth, commissions paid to the salesforce, and the good we’re doing for society through our corporate social responsibility initiatives,” Hunt says. “Our ambition is to be the world’s leading direct selling company by generating more income for our sales leaders. We have the goal of being a $10 billion company by the year 2020. That will enable us to pay between $4 billion and $5 billion to our salesforce. As we look at the environment, we believe that we can generate that level of success.”

August 06, 2014

Company Focus

Stemtech International Inc.: Pioneering a New Technology

by Jennifer Workman Pitcock

Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


Company Profile

Founded: 2005
Headquarters: Pembroke Pines, Florida
Executives: Ray C. Carter Jr., President and CEO;
Christian Drapeau, Chief Science Officer
Products: stem cell nutrition


Ray C Carter Jr. Ray C. Carter Jr.
Christian Drapeau Christian Drapeau

In the eight years since its founding, Stemtech International Inc. has seen amazing growth, having brought its unique stem cell technology to market, backed by scientific research. Pioneering a brand-new category of healthcare products, the company has already launched in 30 countries worldwide.

With only about 10 percent of its 200,000-plus Independent Business Partners (IBPs) based in the United States, Stemtech expects to see the U.S. market grow exponentially as interest grows in the role that adult stem cells play in the body’s daily repair.

Known as the Stem Cell Nutrition Company®, Stemtech has also garnered national and industry recognition in a short time. It made Inc. magazine’s list of fastest-growing private companies based in the United States for the second time in four years in 2013 with a 2012 revenue of $58.1 million—it first entered the list in 2010. It had already been recognized by the Direct Selling Association as one of three finalists for the DSA’s prestigious Rising Star award in 2009.


Stemtech made Inc. magazine’s list of fastest-growing private companies based in the United States for the second time in four years in 2013 with a 2012 revenue of $58.1 million—it first entered the list in 2010.


The Stemtech Story

Though Stemtech got its start less than a decade ago, botanical researcher and neurophysiologist Christian Drapeau, MSc, began researching the science the company is founded on during the 1990s. Having learned of the health benefits people experienced when eating nutrient-rich algae known as Aphanizomenon flos-aquae (AFA), Drapeau and fellow scientist Dr. Gitte Jensen began examining how AFA supports health. In their research, Drapeau and Jensen discovered that AFA supports the body’s release of adult stem cells. Soon Drapeau developed a nutritional product based on these findings.

Around the same time, Ray C. Carter Jr. took a position with a direct selling company. He was brought on to increase the company’s U.S. market and then take over as president. With a bachelor’s and MBA under his belt, Carter also had decades of industry experience in direct sales and marketing. He understood the business from the distributor side, having built a successful organization with a telephone reseller as well as with other direct sales companies before becoming an executive.

Carter began seeking a product that would breathe new life into his company. His search led him to Drapeau, who had recently secured a patent for a new nutritional product that supported the body’s renewal system by increasing the number of adult stem cells available to repair the body’s organs and tissues.

Drapeau was looking for a home for his product, and Carter found him. Both men were elated when Carter’s company gave the green light to begin the process of acquiring it. But a month later, Carter was called in by the board, who informed him that they had decided to pass on Drapeau’s stem cell technology. Carter then left the company to help Drapeau find a home for the product. Despite significant interest among some of the major direct selling companies, months of negotiations and red tape kept the technology from reaching the market.

“In hindsight, I can see that trying to pioneer a new dietary supplement product category based on stem cell science was too risky for an established company at that time,” Carter says. “It was more suited for a new startup company.” So in the summer of 2005, Carter and Drapeau co-founded Stemtech, with Carter as President and CEO and Drapeau as Chief Science Officer.

“Three months later, we were in business, and we did nearly $1 million in sales our first month,” Carter says.

Stemtech Products

Growing Globally

Within the year, Stemtech was receiving inquiries from all over the world. People wanted Stemtech’s products and opportunity to be made available in their countries.

“Ray was smart,” says Don Karn, Stemtech’s Vice President of North American Markets. “He put a focus on not just growing North America, but on growing internationally.”

Carter began placing vice presidents in various regions of the world, and soon the company’s global growth was outstripping domestic growth. With such robust international sales, the company was unscathed by the 2008 recession.

Now active on six continents, Stemtech continues to expand as demand for Stemtech’s products increases globally.

A New Home

This summer, Stemtech moved its headquarters from San Clemente, California, to Pembroke Pines, Florida. The move is part of Stemtech’s global growth strategy. The company currently employs over 200 people in over 20 countries.

“Florida is a very friendly state to do business in,” Karn says. “And the proximity to Miami International Airport gives us the opportunity to easily grow the international business.”

The company’s headquarters is located in the historic Miami Herald Building, which has been renamed Stemtech Square. Stemtech’s research and development lab and manufacturing facility will all be housed in the same complex.

“In addition to executive offices and international activities, we have all of our North American activities there, and we have distribution for half of the United States coming out of our new offices,” Karn says.

The move will create 90 jobs, which will help support the local economy.

Ongoing Research and Development

When Stemtech launched, the company had a single product, StemEnhance®, created with the purpose of enhancing the body’s production of adult stem cells. Since then Stemtech has added products, but the company has not lost focus. “We have stuck to our mission to be the Stem Cell Nutrition Company®,” Karn says. “All the products we’ve released are related to stem cell nutrition. And we intend to stay focused on these types of products.”

In 2011, Stemtech launched an improved version of StemEnhance, SE2®. Additionally, Stemtech’s product line includes other items that work in conjunction with the company’s flagship product. As its product line has grown, Stemtech has continued its scientific studies to demonstrate the products’ effectiveness. The company has participated in many studies, which have been published in peer-reviewed medical journals such as Cardiovascular Revascularization Medicine and Cell Cycle.

Commitment to Giving Back

For Stemtech, giving back continues to be important. The company has its own 501(c)3 organization, The Stemtech Global Foundation, and it is committed to supporting the less fortunate in each country where it does business. “In each country we go into, one of the first tasks of the GM is to find a charity we can support that serves children, animals or the environment,” Karn says.

Choosing the direct sales channel to market Stemtech’s products is also based on the co-founders’ commitment to improving the lives of others. Stemtech’s mission is to spread wellness and prosperity around the world.

“We do business through a model that does not bring all the income into our pockets,” Drapeau says. “We actually share it through the direct sales model. What we try to do in our company is to bring both health and wealth to people.”

Carter agrees. He wants to use his income from Stemtech to help support charities worldwide. “In my view, the definition of wealth is how many people you can help. You become ‘wealthier’ by helping more people,” he says.

Training Leaders

As the economy continues to improve, Stemtech expects to see significant growth inside the United States, as well as continued global expansion. With that in mind, Stemtech has invested in state-of-the-art training tools. Not only do Independent Business Partners have their own website available in their native language (and 14 others), but Stemtech is also making it easier for IBPs to complete training, track their sales and monthly progress, and share with others.

Whether they are sponsored by a dynamic leader or a friend who joined the previous day, Stemtech wants to ensure that all IBPs get the training they need. In 2015, the company will launch new tools in their back office. “They’ll have online business training—not only training videos but also an email responder and a list where they can track which of the five most important things to do every day they’ve already completed. Leaders can set up fun competitions, and IBPs will be able to see themselves compete with others on their team in real time in Back Office,” says Chris Simonian, Vice President of Global Marketing.

Additionally, IBPs will be able to share materials and track how many exposures it takes before potential customers take the next step to buy or join. “Everything will be mobile-driven,” Simonian says. “IBPs can send a video to your phone or iPad, and the system will indicate if you watched it—or even how much of it you watched.”

The company will also use online training to make sure their IBPs are aware of compliance issues. Simonian says, “Companies are being held more accountable for compliance. What we’re talking about is something like a certification program. IBPs will complete a training session online and then test on what they may and may not say about the products.”

The new tools will not take the place of other proven methods of training. Along with conference calls, webinars and videos, Karn has recently added new staff to help train and lead meetings. Two are Spanish-speaking, as one of Stemtech’s initiatives for growth is to create diverse, ethnic markets in the United States. “We already have Spanish-speaking and Chinese markets outside the U.S.” says Karn, who believes Stemtech’s multilingual tools, along with the company’s sensitivity to individual cultures, will give the company a “leg up” on building these ethnic markets inside U.S. borders.


“The most valuable information you can own is what people think about you.”
—Chris Simonian, Vice President of Global Marketing


The company is also focusing on another frontier—social media. Stemtech has both an internal and external team focused on raising the company’s profile on social media. Along with communicating with IBPs using social media, Stemtech will train IBPs to better utilize the platform to grow their own businesses. “With that in mind, Stemtech will be implementing a very targeted training on social media,” Simonian says.

Building a Brand

So far, Stemtech has focused its energy on the science and the products themselves. As the company has matured, it has become increasingly focused on branding. Simonian believes the best way to find out how people perceive Stemtech is to ask them. “The most valuable information you can own is what people think about you,” he says.

That means interviewing people both outside and inside the company and zeroing in on who the company says they are and how that lines up with people’s perceptions. “Branding is much more than a color or logo change,” Simonian says. “A brand is a promise that when you go to buy a product or a service, that product or service is going to deliver on exactly what it tells you it’s going to do.”

As part of its branding, Stemtech intends to ramp up its recognition of IBPs. “We want to show people that we value them at Stemtech,” Simonian says. The company plans to do more to showcase IBPs’ accomplishments in Stemtech magazine articles, on the website, in conference calls and in other media, as well as continue to build a solid recognition program.

The company hopes that its recognition and rewarding of IBPs becomes one of Stemtech’s hallmarks. “When people think of our brand, we want them to know us as a company that really cares about its distributors,” Simonian says.

Stemtech knows crafting their brand will take time. Creating a brand is like constructing a giant puzzle of elements, including the brand’s promise, the emotions the brand inspires, and the way the products look and feel. “When all the pieces start to fit, then it becomes a beautiful picture,” Simonian says.


““Our long-term goal is to touch as many lives around the world as possible.”
—Ray C. Carter Jr., President and CEO


The Future of Stemtech

Carter knew Drapeau really had something special when he took a risk on Drapeau’s pioneering technology. His bet was a winning one. This year alone, the company expects to see 50 percent year-over-year growth from 2013. “Many markets around the world are breaking records every month. We just opened two more major markets, Russia and Indonesia, and we have inquiries from over 100 other countries around the world,” Carter says.

But for Stemtech’s co-founders, the company’s most important contribution goes far beyond the financial. “Our long-term goal is to touch as many lives around the world as possible,” Carter says. “We want to give an opportunity to those who currently have limited options to improve the quality of their lives.”

August 06, 2014

Working Smart

Stepping Out with Social Public Relations

by Joyce Elven

Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


The Way It (Almost) Wasn’t

Back in 2009, when PartyLite first stepped out with social media, Facebook for business was only a little past “new.” Our Facebook page was opened despite some normal, internal executive skepticism: “We don’t have the people or internal resources for that!” and “That’s just for college kids, isn’t it?”

But we believed that somewhere in the midst of pet photos and personal opinions, we could utilize the user power of sharing what Facebook and other social media inherently possessed. We didn’t want to wait for the internal skepticism to die down before attempting to harness some of that power. As Director of Communication I became the needed internal resource, and with the help of a social media strategist the PartyLite social media program took off. We developed our Facebook page first. Then our YouTube channel. Twitter feed. A blog we named PartyLite Magazine. Pinterest. Instagram. LinkedIn. We wanted to utilize social sharing through every vehicle we could find.


“Perhaps in the same way that someone, one day, somewhere, decided to put chocolate and peanut butter together, we thought, “Oh, social media + public relations.”


In the early days, we measured success with fan counts and click-throughs. We were quite thrilled that, within the first year, the PartyLite Facebook page became the top referring source to PartyLite.com. We were stoked over our early social media success! But we also knew that our public relations outreach wasn’t as robust as we wanted. It wasn’t exactly on life support because we popped an occasional nitro tablet—in the form of press releases and outreach to editors—to keep the ticker going. However, we decided to merge social media and public relations.

And Then, a Flash of Light

Perhaps in the same way that someone, one day, somewhere, decided to put chocolate and peanut butter together, we thought, “Oh, social media + public relations.” Immediately we created our social public relations program with a fresh way of looking at both disciplines—together! For the last couple of years, our social media strategist, public relations consultant and I have become the closest of colleagues.

To beef up our PR efforts within this new context, we knew that we needed effective web release services in both the United States and in Canada, where we operate a significant business. At first, we hoped to find just one affordable, bilingual service for both countries. Ultimately, we came to understand that finding just one service for both countries was not going to happen.

My strategist persistently pursued conversations with services and helped us zero in on exactly what we needed: separate services for the United States and Canada. Today, we engage all of North America, not just the United States, with our combined efforts.

When we send a web release, we share it across social channels, too. The result is what I call “exponential resonance.” Our efforts have increased traffic to our U.S. and Canadian websites, but one of the best benefits of the combined social media and PR efforts—along with the expanded e-commerce team’s SEO and banner ad efforts—has been that we’ve pushed down some very old negative and/or untrue “stuff” that used to come up in a search. I’m talking “way old” negative stuff. Now, a basic Google search brings up newer, fresher, positive results about PartyLite, like web releases, social channels and other positive information. That is a huge win.

Last fall, we wanted to focus our social public relations on holiday entertaining and how to spruce up a home with candles. Big message, small budget. The solution was a satellite media tour—a dynamic public relations tool with a follow-up social strategy. For less than $20,000, live interview placements on 369 news programs and 275 radio stations garnered an audience of a whopping 10.3 million people—and that’s not even counting the follow-up social reach on Facebook, Twitter, YouTube, our PartyLite blog and more! This campaign truly created the exponential resonance we’ve come to expect with our social public relations strategy.

SEO Expands the Reach

With the help of an SEO manager at PartyLite, we’re integrating even more digital expertise into our strategy and are excited to see even greater results ahead. Although we were convinced internally that combining all of these efforts was the right course of action, it was validating to come across a blog post by Jessica Maccio, head of PR for a digital marketing agency.

“PR is moving away from operating in isolation from the digital team to becoming an integrated function that aligns closely with brand, content, social media, and SEO efforts,” Maccio says. “The simple truth is that each and every piece of content that you share and communicate is going to play a greater role in affecting how people in your online audience find and engage with your brand.”

Maccio’s post was one more confirmation that, by integrating PartyLite social public relations with all supporting marketing plans, we are moving in the right direction.


In essence, the medium is not the message. The message is the message.


After All, It’s Still About Relationships

In essence, the medium is not the message. The message is the message. Smart public relations messages travel to their intended audiences faster, sooner, more affordably, more personally and more effectively when we utilize social media. Ultimately, whether it’s a formal press release or a captioned Facebook photo, or a 140-character Tweet, or a new product on Instagram, content remains king.

At the same time that we were redefining the channels for our messaging, PartyLite was redefining its party. What exactly is a party in 2014? Many things! It’s still often a traditional gathering at a host’s home. But it’s also a few people in a restaurant for lunch, or meeting for a drink after work or just a simple online relationship between a customer and a consultant who becomes her or his own personal shopper—even if they’ve never met. It’s not “where” that matters, it’s “what.” And the “what” is, of course, the relationship—which begins when communication about PartyLite makes an impression and grows through ongoing messaging in social media.

The combined efforts of PR and social media work best when we want to reach a large number of key people with a targeted message that also functions as growing public awareness of our brand. For example, we’ve pushed out the following communication through our social media channels and had great response:

  • New fragrances are like fashion items—what’s hot now?
  • Decorating advice—how to create groupings and centerpieces, great ideas for outdoor entertaining, expressing your own personal style, making a big design statement without redecorating.
  • Seasonal gift ideas for holidays, weddings, Mother’s Day, Father’s Day, graduation, Valentine’s Day.
  • Working for a direct selling company—questions to ask, sources for good information, assessing your earning potential.

Still it is perhaps the personal stories—those times when individuals share their experiences through their own channels and we pick them up and share them—that create the most compelling of all social public relations messaging. Given that we are the ultimate relationship business, this is not surprising.

We are very excited about continuing our combined efforts in social public relations. As new channels and ways to share our brand and products continue to expand, we plan to be in the middle of it all!


Joyce ElvenJoyce Elven is Director of Communication and Social Media at PartyLite North America.

August 05, 2014

U.S. News

New Orleans Saints Kick off Training Camp at New AdvoCare Center

The National Football League’s (NFL) annual training camps are underway across the country, and Dallas-based AdvoCare International is getting in on the action. The health and wellness company recently secured naming rights for a new professional sports facility that will serve as the training grounds for the New Orleans Saints.

Located in West Virginia, the AdvoCare Sports Performance Center at The Greenbrier is not the company’s only link to the New Orleans franchise. Saints quarterback Drew Brees is an AdvoCare national spokesperson who also collaborated with the company last year on its DB9® Signature Series products.

“AdvoCare is very proud to give its name to this new training facility that New Orleans football players, coaches and fans will call home for the next few weeks,” AdvoCare CEO Richard Wright said in a statement. “We are excited for the exposure AdvoCare will receive as a result of the crowds the facility will attract in the next month, as well as down the road.”
 
A purveyor of nutrition, weight loss and sports performance products, AdvoCare has inked sports sponsorships on both the local and national level. AdvoCare is the first-ever jersey sponsor of Major League Soccer’s FC Dallas team and a sponsor of college football’s Texas Bowl and Cowboy Classic games.

The company has also established a multi-year primary partnership with NASCAR’s No. 6 Ford car, owned by Roush Fenway Racing. AdvoCare has signed on as title sponsor of the car, piloted by 2011 Daytona 500 winner Trevor Bayne, for the upcoming Sprint Cup Series season.

August 01, 2014

U.S. News

Profits Drop for Avon Products during Second Quarter

(AVP—NYSE) Avon Products Inc.’s second quarter 2014 results still show a struggle for the beauty company, but its ongoing turnaround plan is slowly making itself known as sales improve in key regions. Reporting before markets opened Thursday, Avon’s revenue came in at $2.2 billion, falling 13 percent (or 3 percent in constant dollars). Adjusted earnings were 20 cents per share, a penny below the Zacks Consensus Estimate, dropping 31 percent from 29 cents the previous year.

While the volume of products sold dropped 6 percent and active representatives worldwide were also in decline, average orders went up by 3 percent in the quarter. The company also reported that quarterly sales grew in the U.K. for the first time since 2010, up 11 percent, or 1 percent in constant dollars, primarily due to higher average orders.

“As anticipated, our second-quarter results were tough,” said Avon CEO Sheri McCoy. “While Avon’s turnaround remains challenging, we are putting the people and processes in place to lay the foundation for returning Avon to sustainable, profitable growth. As we move to the second half of the year, we continue to expect improved performance.”

Second quarter 2014 gross margin and adjusted gross margin were 63.0 percent. Adjusted gross margin was 30 basis points lower than the prior-year quarter, primarily due to the unfavorable impact of foreign exchange driven by Latin America and Europe, Middle East & Africa.

Operating profit was $93 million and operating margin was 4.3 percent in the quarter. Adjusted operating profit was $186 million and adjusted operating margin was 8.5 percent, down 100 basis points from the second quarter of 2013.

Second quarter 2014’s net income from continuing operations was $20 million, or 4 cents per diluted share, compared with net income from continuing operations of $85 million, or 19 cents per diluted share, for the second quarter of 2013. Second quarter 2014’s adjusted net income from continuing operations was $91 million, or 20 cents per diluted share, compared with adjusted net income from continuing operations of $127 million, or 29 cents per diluted share, for the second quarter of 2013.

Net cash used by operating activities was $7 million for the six months ended June 30, 2014, compared with net cash provided of $70 million for the same period in 2013, unfavorably impacted primarily by lower earnings. The overall net cash used during the six months ended June 30, 2014 was $330 million, which was comparable with the same period in 2013.

Avon’s net debt (total debt less cash) at June 30, 2014 was $1.9 billion, up $240 million from the year-end 2013 level, and $170 million lower than at June 30, 2013.

Avon also declared a regular quarterly dividend on its common stock of 6 cents per share, payable Sept. 2, 2014, to shareholders of record on Aug. 14, 2014.

Read the full results here.

August 01, 2014

Software/Technology Solutions

Xirect Software Solutions


August 01, 2014

Stock Watch

Stock Watch, August 2014


August 01, 2014

U.S. News

Thirty-One Gifts Conference Brings Spirit of Giving to Columbus

Thirty-One Gifts welcomed more than 14,000 attendees to Columbus, Ohio, for its National Conference July 22-25. The annual event made a big impact on the local community, well beyond the estimated $17.5 million economic footprint it left behind.

At this year’s conference, Thirty-One launched the #Share31 movement to celebrate its host cities and its hometown of Columbus. The fashion, accessories and home decor brand, which takes its name from the Bible’s Proverb 31, encouraged its salespeople to pay it forward with random acts of kindness throughout the community—whether by picking up a stranger’s tab, giving up a parking spot or leaving a 31 percent tip.

Individuals could then share each act of kindness on social media using the #Share31 hashtag. For each post, Thirty-One made a 31 cent donation to its philanthropic partner, Ronald McDonald House Charities. The company maxed out its goal of $10,000 in donations to both the Ronald McDonald House of Central Ohio and of Denver, where Thirty-One held another Conference event two weeks earlier.

The company fully anticipates its consultants will continue to build the movement as an ongoing effort, says Wendy Bradshaw, Thirty-One Director of Community Relations & Philanthropy.

“In the end the campaign surpassed our expectations and allowed us to walk into our host cities with our heart on our sleeve,” Bradshaw told DSN. “…It created an amazing energy around the hotels, restaurants and convention staff as we interacted during the week.”

Approximately 60 percent of the crowd that filled Columbus’s Nationwide Arena were first-time conference attendees. The company rolled out its fall product line and celebrated its salesforce, which generated revenue of $763 million in 2013. The conference also included a tribute to retiring President Andy Neri.

With Founder Cindy Monroe at the helm, Thirty-One is the fastest-growing woman-owned company in the world and the No. 17 company in direct selling. The company employs more than 1,400 at its warehouses and supports more than 118,000 independent sales consultants in the U.S. and Canada.

August 01, 2014

Commission Payment Services

Chexx Inc.


July 31, 2014

World News

Amway Leaders Express Relief at India CEO’s Release

After two months in detention, Amway India CEO Bill Pinckney was released on bail Monday.

According to The Times of India, Pinckney was arrested May 26 at Amway India’s headquarters and is accused, along with the company, of financial irregularities by Amway.

Chairman Steve Van Andel and President Doug DeVos issued a joint statement expressing their relief at the news.

“We are thankful that after these many weeks he is finally able to be with his family, yet profoundly dismayed that this unnecessary detention occurred at all, and are even more troubled that it lasted so long,” they said. “Our focus is squarely on efforts to ensure that nothing like this happens again.”

Amway remains committed to the India market and is working with the various governing bodies there to craft clear legislation that distinguishes legitimate direct selling businesses from frauds. It continues to invest in the country and has a new manufacturing facility in Tamil Nadu that is scheduled to come online later this year.

The company also plans a vigorous defense of the charges that led to Pinckney’s arrest, said Samir Behl, Regional President, Europe, South Africa & India.

“We have much work to do to define specific legislation which regulates the activities of the direct selling industry in India,” Behl said in a written statement. “In the absence of such legislation, some authorities have, on a mistaken understanding of the direct selling model, taken the view that direct selling companies are covered under the Prize Chits and Money Circulation Schemes (Banning) Act. This act does not distinguish between genuine direct selling companies and illegal schemes, nor was it intended to. In fact, this act was never intended to cover the distribution of real products and services and is being misapplied against genuine direct selling companies like Amway.

“We are a legitimate direct selling company, which sells more than 140 daily use products across categories like nutrition, beauty, personal care and home care through individuals who make personal recommendations regarding the use of distinctive high quality products and earn commissions only on the sale of Amway products. Amway products are widely recognized and appreciated for their quality and value. The Amway business costs nothing to join, and all Amway products are backed by a money-back guarantee for 100 percent satisfaction of use.

“The business community in India has supported us in this hour of crisis and pledged its continuing support in our pursuit of fair legislation that also protects Indian consumers. Leading industry associations like FICCI, IDSA, Amcham, CII, USIBC and the Kerala Chamber of Commerce openly support our cause. We are thankful to them.”

July 30, 2014

U.S. News

USANA Reports Second Quarter, Growth in Associate Numbers

USANA Health Sciences Inc. (USNA—NYSE) reported financial results for its fiscal second quarter 2014 after the markets closed on Tuesday. While missing earnings estimates by 14 cents at $1.36 per share (according to Briefing.com the Capital IQ Consensus Estimate was $1.50), the company reaffirmed net sales and earnings guidance for 2014.

For the second quarter ended June 28, 2014, net sales decreased to $188.3 million, down 0.4 percent compared with $189.1 million in the prior-year period. Net sales, on a comparative basis, were negatively impacted by: $7.0 million of incremental sales in the second quarter of 2013 that occurred ahead of policy changes, which included restricting Associate purchases to their country of residence; $3.3 million from unfavorable changes in currency exchange rates; and price discounts that the company implemented in 2013. The number of active Associates for the second quarter increased 11.4 percent year-over-year, and 6.8 percent sequentially, largely as a result of the initiatives implemented by the company in 2013.

Net earnings for the second quarter were $19.3 million, compared with $24.2 million during the prior-year period. Earnings per share for the quarter were $1.36, compared with $1.72 in the second quarter of the prior year. Weighted average diluted shares outstanding were 14.2 million in the second quarter of 2014, compared with 14.1 million in the prior-year period.

During the quarter, the company accelerated its share repurchase activity by repurchasing approximately 682,000 shares under its authorized repurchase program for a total investment of $49.1 million. Additionally, as of July 25, 2014, the company has spent $21.4 million during the month of July to repurchase approximately 285,000 shares.

“USANA generated solid results during the second quarter, notwithstanding several factors that created a challenging year-over-year comparable,” said Dave Wentz, USANA’s CEO. “As we execute our 2014 strategies, we are confident that our performance will continue to accelerate during the second half of the year and we will deliver another year of record results in 2014.”

The company reaffirmed guidance for fiscal year 2014 with earnings per share between $5.50 and $5.65 (versus $5.66 Capital IQ Consensus Estimate) and consolidated net sales between $770 million and $790 million (versus $784.99 Capital IQ Consensus Estimate).

Read the full results here.

July 30, 2014

U.S. News

Origami Owl Sees Double Attendance for Second Annual Conference

Photo above: Origami Owl Co-Founders Bella and Chrissy Weems celebrate the company’s second annual conference, highlighted by record attendance, exciting new product launches and recognition of charitable giving.


One of the fastest-growing companies in direct sales, 4-year-old jewelry company Origami Owl, held its second national conference July 24-26.


O2 Grow Experience pulled 4,400 designers to the Phoenix Convention Center, near the company’s Chandler, Arizona headquarters. A year ago, the conference had approximately 2,200 attendees. With a large portion of out-of-town delegates, the convention center estimates the 2014 event generated more than $4.3 million in direct spending for the area.

Origami Owl Founder and Co-President Chrissy Weems said the growth in attendees felt unfathomable.

“It really speaks to our mission and who we are as a company and our genuine intention to make a difference in the world,” she told Direct Selling News. “…More than anything, we’re just unbelievably blessed.”

Origami Owl had $233 million in revenue in 2013, earning it the No. 50 spot on the DSN Global 100 list of the world’s largest direct selling companies. That was an 870-percent increase—the largest gain of any company on the list—from $22 million in 2012, its first year using the distribution channel. This financial feat also secured the company this year’s DSN Bravo Growth Award Based on Percentage.

During the convention—between a schedule packed with inspiration, new product announcements and learning—Chief Operating Officer Kevin Raulston shared from the stage some of the improvements the company has made in managing its supply chain and customer service. Since last year, Origami Owl has seen an 84 percent increase in orders and a 128 percent increase in call volume. Yet, it has improved order accuracy from 85 percent in June 2013 to more than 97 percent in June 2014, decreased backorders from 30,000 to zero and reduced the speed of answer in its call center from an average of 62 minutes to just 41 seconds.

“Managing growth has been a challenge all along the way,” Weems said. “We really have been guided to the right people. Finding the right talent, with the right cultural fit, to really help our organization and bring in expertise. We might not have certain knowledge, but there is someone out there who does, and for some reason they always find their way to us.”

Among the newest hires is Chief Sales Officer Sandy Spielmaker, who brings with her nearly seven years of experience in direct selling as well as marketing, sales and management experience with other consumer product companies. She introduced herself to the Origami Owl designers from the convention stage just three days into her new role. Another recent hire is Vice President of Information Technology Mike Green, who brings more than 13 years experience in IT for direct selling companies. And Tricia Chiodo, who joined the company in January, has taken on the role of Co-President while she remains acting CFO.

“As we’ve grown, we meet the critical needs when they come about,” Weems said. “With Sandy in particular, we needed a chief sales officer. We’ve grown to that point where we need her expertise, but more than that, we need someone who can lead us into the future. She has global experience, and so it’s a game-changer for us.”

As the company grows, so too does the array of benefits available to its independent salesforce. Origami Owl announced a partnership with Plano, Texas-based benefits company Agentra to give designers access to health insurance plans. And the company also unveiled an online education platform built with help from San Francisco, California-based 6connect and leadership consultant Casey Reason. Dubbed O2 Academy, the program includes professional and personal development modules as well as access to college credit through a partnership with Grand Canyon University.

Don’t expect to see Origami Owl slow down anytime soon, Weems said.

“I really, truly believe Origami Owl is in the infancy of our growth,” she said. “We’re just barely getting started, and we’ve done exceptionally well, but we have a much more grand vision than where we are now—and that is to be a global force for good.”


Founder Chrissy Weems
Photo Above: At this year’s conference, Founder Chrissy Weems introduces Origami Owl’s newly launched collection of elegant crystal embellished jewelry, made by the world-renowned crystal brand, Swarovski.

July 29, 2014

U.S. News

Herbalife’s Second Quarter Earnings Weaker Than Expected

Herbalife Ltd. (HLF—NYSE) announced second quarter 2014 results after the markets closed on Monday with earnings of $1.55, falling a penny short of expectations. According to the Wall Street Journal’s Money Beat, analysts polled by Thomson Reuters expected Herbalife to report earnings of $1.56 a share. This was the first time since 2008 that Herbalife missed estimates. Despite this difference, earnings increased 10 percent compared to the prior year.

The global nutrition company reported net sales for the quarter ended June 30, 2014, at $1.3 billion, reflecting an increase of 7 percent compared to 2013. Estimates had been $1.36 billion. Second quarter worldwide volume growth was 5 percent compared to the prior year period.

Adjusted net income for the quarter was $141.4 million, compared to 2013 second quarter adjusted net income of $150.7 million. On a reported basis, second quarter 2014 net income was $119.5 million, or $1.31 per diluted share compared to $143.2 million, or $1.34 per diluted share for the same period in 2013.

“Herbalife has once again delivered strong results in sales and profitability while demonstrating our continued ability to enhance our earnings per share,” said Michael Johnson, Herbalife’s Chairman and CEO. “Our performance is a testament to the enthusiasm our millions of consumers and members have for our products. Additionally, our independent members are successfully executing numerous growth strategies to further develop customer loyalty and encourage individuals across our network to lead healthier, nutritious lives.”

For the quarter ended June 30, 2014, the company generated cash flow from operations of $156.9 million; invested $39.6 million in capital expenditures; and repurchased $581.3 million in common shares outstanding under its share repurchase program.

Herbalife’s guidance for third quarter EPS is a range of $1.49 to $1.53, and full-year EPS is a range of $6.17 to $6.32.

During the second quarter, the company repurchased 9.8 million shares at an average cost of $59.41. There is currently $232.9 million remaining on the existing $1.5 billion share repurchase authorization.

Read the full results here.

July 25, 2014

U.S. News

Stella & Dot Foundation Now Partnering with Every Mother Counts

This week, social seller Stella & Dot re-launched its Stella & Dot Foundation in partnership with Every Mother Counts, a campaign dedicated to making pregnancy and childbirth safe for every mother. The foundation was created in 2010 to further the fashion and accessories brand’s mission of helping women style their own lives.

“We are committed to making a difference in women’s lives,” Stella & Dot Founder Jessica Herrin shared in a statement. “It’s important for us to extend that mission to impact the lives of women and their families, at home and around the world through the Stella & Dot Foundation.”

Every Mother Counts currently operates in Indonesia, Haiti, Uganda, Malawi and the United States. The organization was founded by Christy Turlington Burns, a model, entrepreneur and activist named one of Time’s 100 Most Influential People of 2014. Burns directed the documentary No Woman, No Cry to raise awareness of the women dying—287,000 every year—due to largely avoidable complications during pregnancy.

“Every Mother Counts is excited to partner with Stella & Dot’s mission-driven community to help us achieve our goal to make pregnancy and childbirth safe for every mother,” said Burns. “We know we can’t do this work alone and are always reassured that there are others who want to contribute in meaningful ways.”

To kick off the new partnership, all net proceeds of the Stella & Dot Foundation’s new Enlighten Bracelet will benefit Every Mother Counts. At Every Mother Counts, 100 percent of every donation goes to programs supporting its mission around the world.

July 24, 2014

DSA News

Direct Selling Tops Record

by Lauren Lawley Head


Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


When you’re busy running your business, it can be tough to keep abreast of developments around the rest of the direct selling community. I hope you enjoy this snapshot and take a moment to appreciate the power of what we achieve together.


QUOTABLE

“If the CMO of a company has only one responsibility, it is to keep it relevant. I don’t mean trendy, but relevant.”

— Doug Braun, CMO, USANA


U.S. consumers bought more product through the direct selling channel in 2013 than ever before—an estimated $32.67 billion in retail sales—new data shows.

The figures, published by the Direct Selling Association, quantify the size, scope and continued strength of direct selling. Retail sales were up 3.3 percent from 2012 and 15.3 percent from 2009.

“Direct Selling has much to celebrate, and this most recent data from 2013 gives us even more reason,” said DSA President Joe Mariano. “We continue to be a robust, growing and important part of our communities. The increase in sales and salespeople is further evidence of what we already innately understand, we are a force for good creating better lives for all Americans.”

In coming weeks, the World Federation of Direct Selling Associations is expected to follow suit with updated global statistics. Watch for more coverage in an upcoming issue.

Source: Direct Selling Association
Note: Estimates were based on survey data and extrapolated from secondary sources.


WHERE TO BE

European Direct Selling Conference
Who: Seldia, the European Direct Selling Association
When: Oct. 4
Where: Radisson Blu Royal Hotel, Brussels, Belgium
Registration: www.directsellingconference.eu

Global Regulatory Summit
Who: Direct Selling Association
When: Oct. 15 to 16
Where: The Fairfax at Embassy Row, Washington, D.C.
Registration: www.dsa.org

World Congress XIV
Who: World Federation of Direct Selling Associations
When: Nov. 10 to 12
Where: Rio de Janeiro, Brazil
Registration: www.wfdsa2014rio.com


Author Name
Lauren Lawley Head
General Manager
lawleyhead@directsellingnews.com

July 24, 2014

Top Desk

Making Direct Selling a Dynamic Force for Good

by Douglas C. Robinson

Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


The challenge is out there: Make direct selling a Dynamic Force for Good. Truman Hunt, newly seated Chairman for the Direct Selling Association, put forth this mantra when he outlined his vision for the coming year during the 2014 DSA Annual Meeting in Orlando earlier this summer. So, how can we act on that vision and put those visionary words to work? Here are just a few things we could all do to act upon Chairman Hunt’s vision, and in doing so, make a very positive difference, not only in our industry but also in our world.

First, regardless of your roles and responsibilities, and regardless of the company that you work for or represent, personalize this challenge. Ask yourself, “Am I a Dynamic Force for Good? Am I making a difference—for the good? What did I do to make a difference in my company, in my community, and more broadly, in the direct selling industry this past year? What can I do to improve upon that this year? How can I make a bigger difference in my company, my community, and the direct selling industry this coming year?” Formalize your goals—otherwise the year will get away from you, and you likely won’t accomplish all that you set out to do. Include a personal statement with respect to this mantra of transforming yourself into a Dynamic Force for Good.


Let’s look beyond our fantastic products and the incredible opportunity, and connect with our true purpose.


Second, conduct yourself with the highest ethical standards. Again, regardless of where you find yourself within your company, work hard, be honest and be transparent. Go about your everyday routine looking for positive solutions to the challenges you face—look for reasons why you should do something versus focusing on the reasons why you shouldn’t do something. Simply put, when you aspire to make a positive difference, you will. And, in doing so, good things will happen.

Third, connect with your purpose. As involved as we all are within the direct selling industry, it goes without saying that we are all selling something—products as well as the business opportunity itself. But let’s look beyond our fantastic products and the incredible opportunity, and connect with our true purpose. And that purpose will be different for each of us because what drives us to do what we do is different.

A good friend of mine from Austin, Texas, Roy Spence Jr., focused on this concept perfectly in his book, It’s Not What You Sell, It’s What You Stand For. We all sell something. So, what differentiates those who are truly working toward being a Dynamic Force for Good from those who are not? Roy would suggest it is those who are driven by purpose, and I would wholeheartedly agree. Connect with your purpose and allow yourself to be driven by it. In doing so, you will absolutely be a Dynamic Force for Good.

I love the industry of direct selling. Done properly, it changes lives for the better. I’ve only been a part of this incredible industry for nearly five years. I spent the first 25 years of my career in health care—namely within strategic consulting to the Fortune 100. I was first introduced to the direct selling industry when I was asked to join the Board of Directors of LifeVantage in the fall of 2009, just a few months after the company began selling its products in the network marketing channel. Previously, the company sold its flagship dietary supplement product, Protandim, in the retail channel. About 18 months later, after an extensive search for a new president and CEO, I was honored to be asked to assume that role for LifeVantage. And over the course of these last three and a half years, I believe we’ve touched many people’s lives for the better by going about our business, realizing that we can and should be a Dynamic Force for Good.


I believe we’ve touched many people’s lives for the better by going about our business, realizing that we can and should be a Dynamic Force for Good.


LifeVantage will be a steward for all that Chairman Hunt is espousing, not only in the communities and countries where we currently conduct our business, but also in all those countries where we are laying the groundwork for expansion in the months and years ahead. Our employees and independent distributors connect with tens of thousands of people every day. They can and should be doing so with the mantra of being a Dynamic Force for Good.

It’s a great time to be in this industry. Years from now, I am confident that we will look back upon these times and see less of the challenges and attacks against our great industry and more of the difference we made in millions of people’s lives by connecting them with great products and business opportunities that profoundly improved their lives and their health.


Douglas C. RobinsonDouglas C. Robinson, President and CEO of LifeVantage Corp. (LFVN—NASDAQ), was recently elected to the Board of Directors for the Direct Selling Association (DSA). His term began on June 2, 2014, and will last three years.

Robinson’s nomination expands his involvement with the DSA, where he has served as a member of the World Federation of Direct Selling Associations’ CEO Council since 2013.

July 24, 2014

New Perspectives

The BurnLounge Court Decision Clears the Air on Many Issues

by Kevin Thompson

Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


Editor’s Note: On the publication of the Ninth Circuit Court of Appeals’ opinion on the BurnLounge case, attorney Kevin Thompson published an article on Seeking Alpha detailing the decision and what each aspect of the Court’s opinion meant for the direct selling industry as a whole, and Herbalife in particular. This article contains excerpts of Thompson’s longer article, which you can access on SeekingAlpha.com or Thompson’s website.


On June 2, 2014, the Ninth Circuit published its long awaited BurnLounge Opinion. Within hours, both sides of the Herbalife (HLF—NYSE) battlefield issued statements claiming victory about the decision. One thing is clear: The gray space in MLM law separating legitimate direct selling companies from pyramid schemes has been minimized considerably.

BurnLounge was held by the court to be a pyramid scheme. In its opinion, the Ninth Circuit clarified a lot of contentious issues surrounding the industry. The factors assessed in reaching that determination are informative for long and short investors going forward. And of course, the factors are informative for the industry as a whole. While the people betting against Herbalife have argued that the entire industry has been propped up with bubble gum and duct tape over the years with clever interpretations of case law, this opinion clears the air considerably.

Thoughtful Analysis Regarding the Definition of “Ultimate User”

The Court dedicated an entire section to the definition of “ultimate user.” Before diving into the law, it’s important to understand the basics: The practice of paying commissions on purchases made by distributors for self-consumption and/or resale is known as “internal consumption.” The opposite is when distributors buy primarily to qualify for bonuses, i.e. buy things they would never buy at prices they would never pay without the financial opportunity. In BurnLounge, the Court held that participants in the plan can be counted as “ultimate users” provided that the participants bought the products for legitimate “internal consumption,” i.e. personal use.

The Court held, “BurnLounge is correct that when participants bought packages in part for internal consumption, the participants were the ‘ultimate users’ of the merchandise and that this internal sale alone does not make BurnLounge a pyramid scheme.” (BurnLounge Decision, p. 19). The Court went on to say, “Whether the rewards are related to the sale of products depends on how BurnLounge’s bonus structure operated in practice.” Bottom line: Factors need to be weighed when assessing whether commissions are driven by “ultimate users.”

What Is an “Ultimate User”?

In this regard, the Court looked to the FTC’s 2004 Staff Advisory Opinion for guidance. The section quoted by the court reads, “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 critical question for the FTC is whether the revenues (that support the commissions) are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in the money-making venture,” (emphasis mine).

BurnLounge was held to be a pyramid scheme because “the rewards BurnLounge paid were primarily for recruitment, and (distributors) were clearly motivated by the opportunity to earn cash rewards from recruitment.” (BurnLounge Decision, p. 3-4). The Court weighed several factors in reaching its conclusion that the majority of the rewards were tied to recruitment, not legitimate product sales to “ultimate users.”

Retail vs. Non-Retail

It’s now a moot point. Up until this case, critics argued that the majority of a company’s revenue must come from retail sales, i.e. sales to customers outside of the network. Their rationale: Rewards via internal consumption were “recruitment rewards,” thus, the majority of revenue must come from customers instead of participants. While external sales remain a strong indicator of product value, it’s not a bright-line, determining factor. More importantly, it’s not a requirement.

In its opinion, the Court made itself clear that purchases made by the participants can be counted as legitimate sales PROVIDED… and this is key… there’s legitimate consumer demand for the products. In other words, the Ninth Circuit affirms the idea that there are essentially two categories of purchases: (1) those by ultimate users inside or outside the network, and (2) those derived via opportunity driven demand, i.e. people inside the network buying to qualify for commissions, otherwise known as “channel stuffing,” “garage qualifying,” “inventory loading,” etc.

Factors the Court Used in Finding that BurnLounge Lacked Sufficient “Ultimate Users”

It’s now reality beyond debate: Revenue from participants inside the network must be carefully considered when assessing a company’s legitimacy. The resulting commissions from internal consumption cannot be blindly treated as “recruitment rewards” as critics would prefer.

What are the factors that the Ninth Circuit used?

  • Purchasing patterns
  • Lack of value
  • Requirements to buy to qualify
  • Lack of consumer safeguards
  • Emphasis of the marketing

While these factors were not centrally located, they were referenced in various locations throughout the opinion. They’re discussed more fully below.

Purchasing patterns: The Court was disturbed by the fact that 95 percent of distributors bought the premium products while only 35 percent of non-distributors (customers) bought the same. (BL Decision, p. 14). The Court said, “If package purchases were driven by the value of the merchandise included in the packages rather than by the opportunity to earn cash rewards, one would expect to see comparable numbers of (distributors) and (non-distributors) buying the same packages.”

Lack of value: The Court held that the BurnLounge products had limited value, thus, the primary motivation leading to the purchases was NOT for legitimate product consumption. (BL Decision, pages 10, 19). Instead, the BurnLounge distributor was motivated to enhance earning potential. The Court held, “In practice, the rewards BurnLounge paid for package sales were not tied to consumer demand for the merchandise in the packages; they were paid to (distributors) for recruiting new participants. BurnLounge, through its recruitment efforts, created its own synthetic market.”

Requirements to buy to qualify: In BurnLounge, participants were REQUIRED to buy the premium packages to qualify for deeper commissions. Since the motivation driving distributor consumption is crucial in pyramid scheme analysis, BurnLounge was immediately dead in the water when it required distributors to buy. The Court held, “The district court found that because purchasing a package was required for participation as a Retailer or Mogul, and because Moguls earned cash for selling packages, (distributors) by default received compensation for recruiting others into the program.” (BurnLounge Decision, p. 10). Plus, distributors had to recruit several additional participants to qualify for the basic bonuses (“concentric retail bonuses”). Without question, the plan forced people to focus on recruitment and buy items they never would have bought at prices they never would have paid but for the income opportunity.

Lack of consumer safeguards: This is a point that’s more nuanced. While the Court did not reference the “Amway Safeguards” specifically, they did note that Amway was found to be legitimate due to its policies. As a recap, the FTC held Amway to be a legitimate enterprise largely because of its consumer safeguards. Specifically, Amway had a 70 percent rule (where 70 percent of all purchases needed to move to other people), the 10 customer rule (where distributors had to certify that products went to at least 10 customers each month) and the buyback rule (where distributors had 12 months to return sellable inventory). These safeguards were not specifically referenced in the opinion. However, in response to BurnLounge’s argument that it was just like Amway, the Court said, “Though Amway created incentives for recruitment by requiring participants to purchase inventory… it had rules it effectively enforced that discouraged recruiters from ‘pushing unrealistically large amounts of inventory onto’ recruits.”

In my opinion, the 70 percent rule and the 10 customer rule are no longer relevant. Those rules are vestiges from an era that pre-dates direct fulfillment. In those days, the “directs” had to purchase inventory on behalf of their entire organizations and fulfill the orders; thus, warranting rules that ensured the inventory was moving to “ultimate users.” Today, unique orders can be shipped to individual homes. The risk of inventory loading is greatly reduced provided that there’s a robust, easy-to-understand and clearly communicated buyback policy.

The Court held that BurnLounge had zero policies to prevent bonus buying. Once bought, the products were non-refundable.

Emphasis of the marketing: The Court held that BurnLounge participants focused primarily on recruitment over product value. The Court wrote, “The district court also found that BurnLounge’s marketing focus was on recruiting new participants through the sale of packages.” (BurnLounge Decision, p. 10). In BurnLounge, the pay plan literally required participants to recruit several people to achieve the basic levels in the plan. Plus, the products had minimal value, leaving distributors with little choice but to focus on the financial opportunity.

What Does This Mean Going Forward?

Network marketing companies will get more intelligent in delineating between “ultimate users” and everyone else. The market is already moving toward preferred customer programs where people can receive product discounts as preferred customers WITHOUT joining the business. Since we know these are metrics the courts want, it’s important to show clean data. Absent clear delineation, we have the factors provided in the BurnLounge case to help. Currently, when people join to save money on product (as my friend recently did with an essential oils company), short sellers treat them as “victims” or “failures” for purposes of beefing up the failure rate and finding a pyramid scheme. As the BurnLounge opinion makes clear, it’s not proper to make such distinctions without carefully considering the motivation driving the sales.


KevinKevin Thompson is an MLM attorney specializing in working with direct selling companies, large and small. He is a founding member of Thompson Burton PLLC and a Supplier Member of the Direct Selling Association.

July 24, 2014

Working Smart

Incentive Travel That Pays

by Anne Hamilton

Photo above (center): Distributor Denise M. has daughter Samantha work to earn a spot on an incentive trip with her mother.


Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


Learning what motivates performers—and non-performers—is key to maximizing ROI.

Incentives have been at the heart of direct sales since before the days of the pink Cadillac. And much like the exhilaration of earning a car bonus, incentive travel brings with it endless bragging rights and a lifetime of memories.

While the program design is the frame of the car, the award is the sizzle, the chassis. The trip—by definition, an experience they could not create on their own, regardless of how much money they have—is what they’re buying into.

“With independent or direct sales reps, you don’t have the same levers for motivation as you do with an internal employee,” says Melissa Van Dyke, President of the Incentive Research Foundation. “The trip serves a dual function because often it’s the only time the reps get to meet face-to-face with the people they work with all year. They don’t have the opportunity to create that relationship like you would if you were in an office.”

Travel Matters

Yet few companies consult with their most important stakeholders—their salesforce—about their program design or destination decisions. The exceptions tend to be an obligatory end-of-program survey, which only offers feedback from participants, not from the people who didn’t qualify for the trip.

In a four-part study by the Site International Foundation and the Incentive Travel Council of the Incentive Marketing Association, researchers explored 1,000 participants’ (as well as non-earners’) views on incentive travel. What they found was that the length of the trip and variations in the destination appeared to be as important to some participants as the destination itself. In fact, 85 percent said they would be more motivated by longer trips (despite the trend over the past few years of shortening trip lengths by up to a full day), and 70 percent said they’re motivated by having more choices of destinations.

Economic times have forced many companies to shift from international to domestic destinations, with little negative response from the qualifiers. The big winners have been the warm weather destinations, such as Florida and California, which consistently top the lists of incentive destinations. Hawaii’s appeal is timeless; in the financial services industry, there are companies that have been using it as a biennial destination for years. Orlando is also a popular repeat choice. With always-evolving attractions and venue options, it has been used by many direct sales companies.

Whatever the destination choice, highly driven salespeople who have been living the 24/7 lifestyle are looking to be whisked away for a few days spent at a more relaxed pace. The vast majority of respondents to the site survey (75 percent) said they would be motivated by having more leisure time and fewer mandatory functions (70 percent). The good news is that those two strategies can cut trip costs—and increase ROI.

Incentive design is all about gathering insights on what matters most to potential qualifiers. This includes things like the length of the trip, type of hotel, whether or not to invite families, and what side trips and activities to offer. Drilling down to demographics—such as age and gender—helps further determine what types of trips will have the greatest ROI.


Incentive design is all about gathering insights on what matters most to potential qualifiers.


For example, do younger, single attendees dream of a sun-and-fun location? Do working parents prefer to travel with their children to family-friendly places, where they can carve out a family vacation at the same time as the company trip? What motivates a 50-year-old single woman could be very different from what motivates a father of three with a working spouse.

The youngest generation of workers, Gen Y (ages 18–33), will compose half the workforce by 2020 and 75 percent of the workforce by 2025. So it’s impossible to talk about incentive travel without considering this group.

The average job tenure of millennials is only 1.8 years, and 76 percent of them plan to leave their jobs as the economy improves, according to Dr. Bob Nelson, one of the world’s leading experts on employee recognition and rewards. “Companies need to hold onto this group, and one way to do that is through incentive travel,” he says. “But what appeals to them is not their father’s incentive trip, where they go to Hawaii and play golf half the time. They’re looking for the REI trip to Peru, where they are with other people of their own age and truly have an adventure, then go home and brag about it on Facebook to their friends.” Instead of sitting around a bar, he says, “Take them bungee jumping.”

This is also a socially conscious generation, but they’re not interested in CSR trips that just scratch the surface for an afternoon; they want to do something aligned with their values—to address a real-world need, such as global warming, or the lack of clean water. “Physical labor for a day would just be the opening ante for this age group,” Nelson adds. “Meaningful incentives geared toward their work, such as visiting their colleagues at their plant in Germany—perhaps with some fun thrown in, like cycling along the Rhine—would be more on target.”


“People need to be incented at every level of success, and there’s always that next level to reach for, with the top being travel.”
—Melissa Van Dyke, President, Incentive Research Foundation


Program Design

Just as it is essential to tailor your travel program to what motivates your direct sellers, it’s equally important to design objectives that are harmonious with your company’s culture, that motivate the middle and not just top performers, and that don’t end up creating unwanted behaviors among salespeople.

For example, in “Direct Sales Case Study: ROI of Incentives,” the Incentive Research Foundation explored the program structure at one company where some of the top performers were holding back on booking sales until the start of each year’s contest. This, in turn, was discouraging other reps. By adding additional awards, the company created an additional incentive for them to sell throughout the program period.

The key here is that the company realized the design was not working. Sometimes, incentive programs create unintended consequences and behaviors—that’s why they must be continuously monitored and adjusted.

One of the three tenets of a successful incentive structure is that the goals are attainable. Programs often fail when they are designed around what the organization wants, rather than around what is actually achievable and realistic for the sales team in the current economy and competitive landscape. Equally detrimental are programs that are too complicated or include or introduce exceptions that create frustration among participants.

A second tenet is that people need to understand what is expected of them. At the same time, if the communications about the program lack clarity, this will have the same consequences.

“When you’re designing incentive programs for direct salespeople, the key is to make the plan very simple and straightforward,” Van Dyke says. “People need to be incented at every level of success, and there’s always that next level to reach for, with the top being travel.”

Programs with the greatest ROI engage participants on many fronts: a web portal with all the program details, emailed progress reports, social media and e-newsletter updates, pep rallies at live meetings, destination promotional pieces mailed to the home.

Timing is a third tenet. It is very important. It has been proven that the sooner after a success you offer reinforcement, the more engaged people will be in the program. That is why many companies are adding gamification elements to engage, inform and reward participants throughout the cycle.


According to an Oxford Economics study based on interviews with 300 executives, it is estimated that incentive travel can increase individual performance by 22 percent and group performance by 44 percent.


Does Incentive Travel Pay for Itself?

Since incentive trips are paid for by the incremental revenue they create, program cost is a portion of profit.

Ask these questions: What is the incremental profit you will gain from the program? What is the trip cost if 20 percent of participants make the trip?

Don’t leave out the intangible benefits in your analysis. In the site survey, 86 percent of respondents stated that earning motivational travel “makes me feel recognized by my company and peers.” Feelings of increased loyalty and trust toward the company and a sense of appreciation are quite real for the participants—regardless of their generation.

It’s not just the incentive industry touting the ROI of incentive travel: According to an Oxford Economics study based on interviews with 300 executives, more than 70 percent of respondents indicated that incentive travel has a significant impact on employee performance, and the study estimates that it can increase individual performance by 22 percent and group performance by 44 percent. To achieve the same return as incentive travel, it concluded, employee base compensation would need to be increased by 8.5 percent.

Numbers like these—combined with the intangible benefits—reflect the significant ROI that incentive travel brings to companies that use it thoughtfully and consultatively.

The Biggest Payoff

Denise M. of Orland Park, Illinois, has spent the past 11 years earning incentive trips at one direct selling company. A team mentor, she and her husband have traveled to Mexico, Arizona, California—all over. She always qualifies for one trip a year, but this past year, she qualified for four. “I’m a total carrot chaser,” she admits. “The biggest perk of direct sales is that you can win these trips and go on vacations you might not normally have gone on.”

So it’s no surprise that, growing up around this, her 11-year-old daughter Samantha would want to go on an incentive trip, too. What was surprising was what she decided to do to qualify.

One afternoon, when Samantha expressed that she felt she does even more to help her mom than her dad does (“So why does he get to go on all the trips?”), Denise decided to make it a teachable moment. “I explained what was expected of me to qualify for a trip, how I earn points, how many parties a week I have to have and how many sales. We sat there together and did the math.”

Denise told her to devise a plan of how she might earn a spot on the next trip, a cruise. Samantha came down the stairs a couple of hours later with a complete presentation on poster board, with charts listing the grades that she needed to earn in different subjects, which would give her a certain number of points.

She will continue working toward the trip when she enters sixth grade in the fall. Says Denise, “For my family, this opportunity has been such a blessing. My children have learned to set goals because they’ve watched me with my boards and stars, and moving my ladder up as I achieve my own goals.”

With attainable goals, good communication and the setting of expectations, and proper attention to timing, planning an incentive trip can encourage a company’s sales field to repeat desired behaviors and provide a lasting and motivational experience.

Where will you go next?


Anne HamiltonAnne Hamilton is Vice President, Resort Sales and Services, Disney Destinations.

July 23, 2014

U.S. News

Tupperware Brands Sales Slow in Second Quarter

Tupperware Brands Corp. (TUP—NYSE) joined a wave of public companies as it announced its second quarter results today, reporting that sales for the quarter were $674 million, down from $688 million for the same period last year. While sales were down 2 percent (up 3 percent in local currency) versus the previous year, emerging markets achieved a 10 percent increase in local currency, accounting for 66 percent of sales. Established markets were down 7 percent in local currency, largely driven by poor results in Germany.

Rick Goings, Chairman and CEO, commented, “While sales results slowed this quarter, we were still able to achieve adjusted EPS in our guidance range. Overall, the business continued to grow, with several markets achieving 20%+ local currency sales increases, including Brazil, China, Italy and Turkey. Both businesses in our North America beauty segment also showed significant sequential sales improvement.

“Having said this, the quarter was challenging in several aspects,” he said. “We were up against strong comparisons from prior year when we had our strongest quarterly local currency sales growth at 8%, as well as some external and internal challenges, particularly in Germany. However, our 2.9 million sales force members continue to operate their businesses and earn income to help support their families.”

GAAP net income of $47.6 million for the second quarter ended June 28, 2014, includes $22.2 million from the impact of currency devaluations in Venezuela. Net income of $47.6 million was down 38 percent, or 93 cents per diluted share, from the previous year’s $76.3 million, or $1.43 per diluted share. Excluding foreign currency, net income was down 31 percent versus prior year. GAAP diluted EPS was 93 cents, versus $1.43 last year with adjusted diluted EPS of $1.47, up 11 percent in local currency.

Second quarter cash flow from operating and investing activities was $45 million, versus $49 million in prior year, primarily reflecting planned higher capital spending.

In the second quarter, the company returned $47 million to shareholders through a dividend payout of $33 million and the repurchase of 171,000 shares for $14 million. Since 2007, 20 million shares have been repurchased for $1.2 billion, with $800 million left under an authorization that runs until February 2017.

The company also lowered its full-year earnings guidance, down to between $5.40 and $5.50 per diluted share from its previous outlook of between $5.66 and $5.81 per diluted share.

Read the full results here.

July 23, 2014

Executive Announcements

Executive Announcements, August 2014


Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


Amway

Gary WilliamsonGary Williamson

The Nutrilite Health Institute, a worldwide collaboration of experts dedicated to helping people achieve optimal health, announced Gary Williamson, Ph.D., has joined its Scientific Advisory Board. The Scientific Advisory Board provides guidance on new and emerging nutrition science and technology, public health issues, product development and strategic direction for Nutrilite, sold exclusively by Amway and the world’s No. 1 selling brand of vitamins and dietary supplements.

“We’re honored to welcome Professor Williamson as an esteemed colleague and advisor to our board of scientific leadership,” said Keith Randolph, technology strategist for Nutrilite. “He is one of the premier thought leaders in the field of food science and nutrition.”

A biochemist and enzymologist, Williamson is a professor of Functional Food in the School of Food Science and Nutrition at the University of Leeds, U.K.

He has published more than 350 refereed scientific publications and book chapters, and is ranked by the Institute for Scientific Information as a highly cited author in Agricultural Sciences.

His scientific discoveries include major advances in understanding dietary polyphenol bioavailability, including the structures of metabolites, their metabolic pathways and biological activities.


Primerica Inc.

 Beatriz R. PerezBeatriz R. Perez

Primerica Inc. announced the election of Beatriz R. Perez to the company’s Board of Directors. Perez has been employed by The Coca-Cola Co. since 1994. She has been Chief Sustainability Officer for Coca-Cola since July 2011. Prior to her current position, Perez held the positions of Chief Marketing Officer for the North American Division of Coca-Cola; Senior Vice President, Integrated Marketing for the North American Division of Coca Cola; and Vice President, Media, Sports and Entertainment Marketing.

Perez also is the Chair Emeritus of the Grammy Foundation. She has served on the boards of HSBC Finance Corp., HSBC North America and HSBC Bank Nevada, N.A.

“We are thrilled to have Beatriz join our Board,” said D. Richard Williams, Chairman of the Board and Co-CEO of Primerica. “She brings extensive marketing experience and a clear understanding of consumer behavior that will be very valuable to our board and management team.”


PartyLite Worldwide

 Joan M. ConnorJoan M. Connor

Blyth Inc., a direct-to-consumer company and designer and marketer of health, wellness and beauty products, as well as candles and accessories for the home, announced that its PartyLite division, the world’s largest direct seller of candles, candle accessories and premium home fragrance products, has promoted Joan M. Connor to President, PartyLite North America.

Connor, who joined PartyLite in 2010, was most recently Vice President, Marketing & eCommerce, collaborating with the sales and technology teams to complement the core business model of home parties with technology-driven initiatives to enhance the customer and PartyLite consultant experience.

Robert B. Goergen Jr., CEO of Blyth Inc. and President of PartyLite Worldwide, said of Connor, “Her digital marketing know-how, along with her understanding of operations and technology, should provide the ideal underpinning to improving the overall customer and consultant experience, ultimately leading to profitable sales growth in North America.”

Connor joined PartyLite in 2010 as Senior Director, eCommerce. She was promoted to Vice President, Marketing & eCommerce in 2011.


Mannatech Inc.

Alfredo BalaAlfredo Bala
 Chris SimonsChris Simons

Mannatech Inc., a pioneer of nutritional glycobiology and innovator of naturally sourced supplements based on Real Food Technology® solutions, announced the appointment of Alfredo (Al) Bala as President of Mannatech Inc.; Chris Simons as Regional President, EMEAA; and Patrick Park as Regional President, Asia.

Bala has served in the direct sales industry for more than 35 years and joined Mannatech in October 2007 as Senior Vice President, Global Sales. He most recently served as Chief Sales and Marketing Officer. Prior to his time at Mannatech, Bala served as a field leader in the industry for 28 years, culminating in the position of Chief Operating Officer for another direct seller.

Patrick ParkPatrick Park

As President, he will oversee all global field development, sales, marketing and general management efforts for all Mannatech markets as well as focus on expansion of the company’s Mission 5 Million movement.

Chris Simons joined Mannatech in 2008 as Director of Sales, South Africa. He most recently served as Regional Vice President, EMEA. Prior to his time at Mannatech, Simons spent 19 years in the direct sales industry as a field leader and business manager for another direct selling company. Over his career, he has played an integral role in launching many new markets.

Patrick Park joined Mannatech in 2009 as General Manager, South Korea. More recently, Park served as Regional Vice President for Asia, leading the company’s overall operations in Japan and Taiwan, and was crucial in the launch and oversight of the Hong Kong market in 2013. Prior to joining Mannatech, Park served 13 years in the direct sales industry. Over his career, he has played a key role in expansion into new markets.


LifeVantage Corp.

 Jeffery Bean Jeffery Bean

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 it has appointed Jeffery Bean as its new Managing Director in Japan. Bean brings 15 years of network marketing experience to LifeVantage, having worked in management positions for other direct selling companies during his career. He will be based in the company’s Tokyo office.

Douglas C. Robinson, President and CEO, said, “Our Japan market is very important to our overall business. We are excited to have Jeff join our team in Japan and we believe he will add a great amount of stability and value to our Japan market. Jeff brings a wealth of experience in the network marketing industry, particularly in Japan.”

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 founded in 2003 and headquartered in Salt Lake City.


Univera

 Tom Zimmer Tom Zimmer

Univera, a leader in the natural products industry, announced that it has named Tom Zimmer as President and CEO. Zimmer replaces Randy Bancino, who recently announced his retirement.

“We are excited to have Tom join the day-to-day management of Univera and to lead us further toward success,” said Bill Lee, Univera Chairman and Founder. “Tom is an accomplished executive with over 40 years of in-depth work experience that covers a broad spectrum of industries, cultures, and distribution channels. He is recognized as a highly skilled general manager with exceptionally strong motivational skills.”

During his career, Zimmer has demonstrated his ability to solve complex business issues with results-oriented strategies, financial acumen and passionate leadership. He has held positions as President, Chief Operations Officer, and Senior Vice President & Managing Director for several companies within the direct selling industry. He also held an executive-level position with Bloomingdales.


Youngevity International Inc.

 David Ori David Ori

Youngevity International Inc., a global direct marketer of nutritional and lifestyle products and also a vertically integrated producer of gourmet coffees for the commercial, retail and direct sales channels, announced the appointment of David Ori as the Vice President of International Development
for Youngevity®.

David Ori is an executive with nearly 20 years of direct selling industry experience and a proven track record of growth and sales in emerging and established markets, especially in Eastern Europe, Asia and Asia Pacific. Ori joins Youngevity from another direct seller, where he was the VP of International Expansion since 2011 and established new offices for the company in China, Hong Kong and Taiwan. Prior to that appointment, he was a managing director at another direct seller from 2000 to 2011, where he was a member of the board of directors, established the company in Israel and was responsible for thousands of distributors with operations in Israel and Eastern Europe.

“We are very pleased to welcome David Ori to the Youngevity executive team,” said Steve Wallach, CEO of Youngevity. “David’s significant international direct selling experience makes him an ideal addition to our team and fortifies our strategic global expansion strategy.”


RBC Life Sciences Inc.

 Steven E. Brown Steven E. Brown

RBC Life Sciences Inc. has announced that the board of directors has appointed Steven E. Brown to serve as Chief Financial Officer following the departure of Richard S. Jablonski, who resigned. Brown will serve in this capacity in addition to his current position as President. The appointment to Chief Financial Officer is an interim measure until a permanent replacement for Jablonski is found.

Brown previously served as Chief Financial Officer from May 1994 until being named President in June 2012 and as Executive Vice President from June 2011 to June 2012. He has also served as a director of the company since May 1994.

RBC Life Sciences develops, manufactures and markets high-quality nutritional supplements and personal-care products to a growing population of consumers seeking wellness and a healthy lifestyle.


LyfeStart International

 David L. Katz David L. Katz

LyfeStart International announced David L. Katz, M.D., MPH, FACPM, FACP, as the founding Chairman of the LyfeStart Medical Advisory Board. Dr. Katz is a leading medical expert on obesity in the U.S.

Dr. Katz is the founding Director of Yale University’s Prevention Research Center, a two-time diplomate of the American Board of Internal Medicine and a board-certified specialist in preventive medicine/public health. He is President of the American College of Lifestyle Medicine, and Founder and President of the nonprofit Turn the Tide Foundation, committed to reversing trends in obesity and chronic disease.

Dr. Katz is an active contributor to media and a prolific author. He has been featured on ABC News/Good Morning America and has written for a number of print and online publications. He is also Editor in Chief of the journal Childhood Obesity and has published nearly 200 scientific articles and textbook chapters.

Launched earlier this year, LyfeStart is a socially conscious, global network marketing company committed to providing sustainable solutions to the dual crisis of global obesity and worldwide hunger. LyfeStart empowers people to create change in their lives, so they can improve their health, achieve their potential, and provide nourishment for a child in need. For every Nourish Nutritional Protein Shake the company sells, LyfeStart provides a meal for a hungry child. LifeStart products are available in the United States and soon in Mexico.


Please submit news of executive promotions and hires at your company to be included in the Executive Announcements section of Direct Selling News.
» pr@directsellingnews.com

July 23, 2014

Financial News

Financial News, August 2014

Click here to order the August 2014 issue in which this article appeared or click here to download it to your mobile device.


A.M. Best Affirms Primerica’s Strong Credit Ratings

Primerica Life Insurance Co. has received another round of superior ratings from global credit rating agency A.M. Best. The agency affirmed its A+ financial strength rating and aa- issuer credit rating (ICR) of Primerica Life and its affiliates in New York and Canada.

Declaring a stable outlook for all ratings, A.M. Best also affirmed the strong a- ICR of holding company Primerica Inc. and positive ratings of the company’s debt and preferred stock. Primerica (PRI—NYSE) met earnings expectations for 2013 with annual GAAP net income of $163 million.

On the Canadian side of the business, Primerica recently expressed opposition to the government’s proposed overhaul of the country’s life insurance licensing program. Canada represents approximately 10 percent of Primerica’s total life-licensed representatives.

The implementation, which would take place in early 2016, would “create unnecessary barriers” and “negatively affect access to life insurance products by middle-income Canadians,” Primerica told the Atlanta Business Chronicle.


ForeverGreen Sales Growth Increases over 300%

ForeverGreen Worldwide Corp. (FVRG—OTC.BB), a provider of nutritional foods and other healthy products, announced that June 2014 revenue exceeded June 2013 sales by more than 300 percent.

“During June 2014, we had another record sales month,” said Jack Eldridge, CFO. “We remain on track to meet or exceed our previously announced revenue guidance of $13 million to $15 million. While many companies are experiencing sluggish sales during the summer months, we continue to grow our revenues for the summer and the remainder of 2014. We are very pleased at how our company message is being received in the marketplace.”

In other company news, ForeverGreen recently opened its new global headquarters in Pleasant Grove, Utah, known as “Utah’s City of Trees.” The company’s new 50,000-square-foot facility combines offices with space for warehousing and manufacturing the company’s health, wellness and home-care products. The headquarters also includes film and recording studios, and a “family room” that allows the company to host up to 300 people at a time.

“This new building allows us to bond in an unprecedented way with our employees, customers, distributors and the community,” CEO and Founder Ron Williams said. “This milestone provides a platform to grow into the company we have always envisioned.”

In a congratulatory letter marking the grand opening, Utah Governor Gary R. Herbert commended ForeverGreen Worldwide for raising the bar of corporate citizenship through its generous giving and involvement in community projects.


Crius Energy Trust Announces Partnership

Crius Energy Trust (KWH-UN.TO—TORONTO) announced that Crius Energy LLC and Frontier Communications Corp. (FTR—NASDAQ) have further expanded their strategic marketing partnership to offer natural gas to Frontier residential and commercial customers in California. The natural gas offering, through FTR Energy Services, one of Crius Energy’s best-in-class energy brands, extends its current energy offerings in California of solar energy products.

“The addition of natural gas in California through FTR Energy Services—the first Crius Energy brand to offer natural gas in the state—further demonstrates the significant potential of our strategic marketing partnership channel,” said Michael Fallquist, CEO of Crius Energy. “Importantly, our new gas offering, like all of our FTR Energy Services offerings, is expected to benefit from the efforts of hundreds of Frontier call center agents who are actively selling FTR Energy Services products.”

The new offering will contribute to the increased diversification of Crius Energy’s business by both product and geography. Recently, Crius Energy began offering Frontier customers in California solar energy products through its Citra Solar™ brand.

“In addition to our recently announced acquisitions, we continue to execute on our multi-channel strategy to grow organically,” added Fallquist. “Unique to Crius, our strategic marketing partnership channel, which also includes relationships with Cincinnati Bell and FairPoint Communications, provides us with access to large customer bases that have established, trusted relationships with their telecom providers. These are customers that tend to use more energy and stay with us longer, providing more value to Crius Energy over their lifetimes.”

FTR Energy Services will provide natural gas at affordable rates plus 5 percent cash back on customers’ energy use. Frontier Communications customers can make their choice using either an easy online tool or by speaking to a trained FTR Energy Services customer representative who will help guide them through the enrollment process.


Quarterly Results


Nature’s Sunshine Products Inc.

Nature’s Sunshine Products Inc. (NATR—NASDAQ), a leading 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 first quarter ended March 31, 2014.

Net sales revenue decreased 0.8 percent to $95.8 million, compared to $96.5 million in the first quarter of 2013. In local currencies, net sales revenue increased by 0.3 percent.

Operating income increased 3.3 percent to $7.2 million, compared to $6.9 million in the first quarter of 2013. Adjusted EBITDA increased 3.5 percent to $9.5 million, compared to $9.2 million in the first quarter of 2013.

Net income was $9.7 million, or 58 cents per diluted common share, compared to $4.9 million, or 30 cents per diluted common share in the first quarter of 2013, reflecting a one-time tax benefit related to intercompany dividends.

Cash and cash equivalents as of March 31, 2014, were $71.5 million, compared to $77.2 million as of Dec. 31, 2013. Shareholders’ equity as of March 31, 2014, was $114.6 million, compared to $105.3 million as of Dec. 31, 2013.

For NSP Americas, Asia Pacific and Europe net sales revenue for the first quarter decreased 4.6 percent to $50.7 million, compared to $53.1 million in the first quarter of 2013. For NSP Russia, Central and Eastern Europe net sales revenue decreased 6.8 percent to $15.0 million, compared to $16.1 million in the first quarter of 2013. For Synergy WorldWide net sales revenue increased 10.4 percent to $30.0 million, compared to $27.2 million in the first quarter of 2013.

The company’s board of directors approved a quarterly cash dividend of 10 cents per share, payable on June 2, 2014, to shareholders of record as of the close of business on May 21, 2014. On Aug. 8, 2013, the board of directors authorized a $10 million share repurchase program to be implemented over two years.


Medifast Inc.

Medifast Inc. (MED—NYSE), a U.S. manufacturer and provider of clinically proven, portion-controlled weight-loss products and programs, reported financial results for the first quarter ended March 31, 2014.

Operating income was $8.7 million, or 10.0 percent as a percent of net revenue, compared to $8.6 million or 8.9 percent as a percent of net revenue in the first quarter of 2013.

Net income was $6.0 million, or 45 cents per diluted share, compared to net income of $5.9 million, or 43 cents per diluted share for the first quarter of 2013.

For the first quarter ended March 31, 2014, Medifast net revenue decreased 10 percent to $86.5 million from net revenue of $96.0 million in the first quarter of the prior year. Revenue in the direct sales channel, Take Shape For Life, decreased 4 percent to $57.0 million in the first quarter of 2014, compared to $59.4 million in the same period last year. The decrease in revenue for Take Shape For Life was driven by a slight decrease in the number of health coaches and revenue per health coach.

Gross profit for the first quarter of 2014 decreased 12 percent to $63.9 million, compared to $72.4 million in the first quarter of the prior year. The company’s gross profit margin decreased 150 basis points to 73.9 percent in the first quarter versus 75.4 percent in the first quarter of 2013.

The company’s balance sheet remains strong with stockholders’ equity of $105.2 million and working capital of approximately $72.8 million as of March 31, 2014. Cash, cash equivalents, and investment securities for the first quarter of 2014 increased $9.6 million to $77.4 million, compared to $67.8 million at Dec. 31, 2013.


LifeVantage Corp.

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 its fiscal 2014 third quarter ended March 31, 2014.

For the third fiscal quarter, the company reported net revenue of $55.1 million, an increase of 9.3 percent compared to $50.4 million for the same period in fiscal 2013. Revenue reflects a slight decline of 1.4 percent in sales in the America region, offset by an increase of 29.8 percent in the Asia/Pacific region due to growth in Japan and Hong Kong. Revenue for the quarter was negatively impacted $2.3 million, or 4.6 percent, by foreign currency fluctuation.

Gross profit for the third fiscal quarter ended March 31, 2014, was $46.6 million, compared to $43.5 million for the same period last year. Gross margin for the third fiscal quarter of 2014 was 84.6 percent, compared to 86.4 percent in the prior year period. The year-over-year decline in gross margin was primarily due to a $500,000 insurance claim benefit in the prior year related to the company’s 2012 product recall.

Operating income for the third fiscal quarter of 2014 was $4.5 million, for an operating margin of 8.1 percent, compared to $3.9 million, or 7.8 percent in the same period last year.

Interest and other expense in the third fiscal quarter of 2014 was $1.3 million, compared to interest and other income of $100,000 in the same period last year. The expense incurred in the current quarter is due to interest payments made on the company’s term loan, which did not exist this time last year.

Net income for the third fiscal quarter of 2014 was $2.5 million, or 2 cents per diluted share, calculated on 107 million shares outstanding. This compares to net income in the third fiscal quarter of 2013 of $3.4 million, or 3 cents per diluted share, calculated on 125 million shares outstanding.

The company’s board of directors has approved up to $4 million in stock repurchases in combination with a $12 million accelerated debt repayment. It expects to fund the $16 million through cash on hand and future cash flow from operations. The company recently completed the $6 million program it previously announced by using $3 million to repurchase 2.1 million shares.


CVSL Inc.

CVSL Inc. (CVSL—OTC.QX) reported financial results for the first quarter ending March 31, 2014. For the quarter, CVSL’s gross revenue was $26.7 million, compared to $4.3 million in the same quarter a year ago, more than a sixfold increase.

In the first quarter the company paid down its existing lines of credit from $9.8 million to $8.4 million. CVSL sold a manufacturing building in Ohio for nearly $1.4 million and paid off its term debt entirely.

The company noted that costs related to its ongoing integration of its acquired companies, as well as work related to potential future acquisitions, is a significant cost category and that it believes both represent a crucial investment in CVSL’s future growth.

CVSL said it continued to make good progress reducing excess inventory levels. The company’s overall inventory balance at the end of the first quarter was $1.2 million less than at the start of the quarter.

CVSL acquired its seventh micro-enterprise company during the quarter, signing a definitive agreement to acquire Uppercase Living. Salt Lake City-based Uppercase Living offers an extensive line of customizable vinyl expressions for display on walls. Its independent salesforce sells throughout the United States.


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 gourmet coffees for the commercial, retail and direct sales channels, reported financial results for the first quarter of 2014.

For the three months ended March 31, 2014, the company reported net revenue of $26.4 million, compared to $20.8 million for the same period in 2013, an increase of 26.8 percent. Gross profit for the first quarter ended March 31, 2014, increased to $15.8 million, compared to $12.4 million for the same period last year, an increase of 27.5 percent.

Net Income for the first quarter of 2014 was $427,000, compared to a net income of $993,000 for the first quarter of 2013. Adjusted EBITDA was $1.7 million for the three months ended March 31, 2014, compared to $2.2 million in the same period for the prior year.

Cash and cash equivalents increased to $6.7 million as of March 31, 2014, compared to $4.3 million as of Dec. 31, 2013. Net cash provided by operating activities increased 45.0 percent to $2.7 million, compared to $1.8 million for the three months ended March 31, 2013.


Educational Development Corp.

Educational Development Corp. (EDUC—NASDAQ) reported results for the fiscal year ended Feb. 28, 2014, along with their quarterly cash dividend.

For the fiscal year 2014, the company reports net revenue of $26 million, an increase of $609,500 when compared to $25.5 million for the previous year, and net earnings of $357,600, compared to $802,900. Earnings per share were 9 cents, compared to 20 cents the previous year on a fully diluted basis.

The increase in net revenues for the company represents a significant turnaround. The publishing division, EDC Publishing, registered its largest sales year in history, even after sales to Amazon were discontinued. The sales increase came from existing and new customers who have shown support of this decision.

The home business division, Usborne Books & More, has also greatly benefited from that decision. The Usborne Books & More division responded by posting an annual net sales increase, reversing nine years of sales decline, and has now recorded 12 consecutive months of sales increases compared to the previous year.

The earnings per share were impacted by two significant items, an additional reserve to recognize potential losses in consignment inventory, and to completely reserve nonperforming assets. With these reserves, overhead reductions made during the year, and the anticipated continuation of the sales increase, fiscal year 2015 has begun on a stronger note.

The company continues to operate with minimal debt, has not had a losing quarter in 27 years, and fully expects to maintain its historical dividend.

The board of directors has authorized an 8-cents-per-share cash dividend. The dividend was payable on June 20, 2014, to shareholders of record June 13, 2014.


Natural Health Trends Corp.

Natural Health Trends Corp. (NHTC—OTC.BB), a direct selling company that markets premium quality personal care and wellness products under the NHT Global brand, announced record financial results for the quarter ended March 31, 2014.

Total revenues were $23.2 million, up 168 percent compared to $8.7 million in the first quarter last year and up 21 percent sequentially compared to $19.1 million for the fourth quarter last year. This was the fifth consecutive sequential quarterly increase in revenues.

Operating income was $3.1 million, up 968 percent compared to $292,000 last year, and up 88 percent sequentially from $1.7 million for the fourth quarter last year.

Net income was $3.1 million, or 26 cents per diluted share, compared to $283,000, or 3 cents per diluted share, last year and $1.6 million, or 14 cents per diluted share, for the fourth quarter last year.

Cash and cash equivalents increased to $23.3 million as of March 31, 2014, from $14.6 million at Dec. 31, 2013.

The board of directors also declared its second consecutive quarterly dividend. The declared dividend included a cash dividend of 2 cents per share on outstanding Series A preferred stock, which represents the accrued unpaid dividends through the declaration date, and a cash dividend of one-half cent per share on common stock outstanding, totaling aggregate dividends of $60,000, payable in cash on June 4, 2014, to stockholders of record on May 27, 2014.


Immunotec Inc.

Immunotec Inc. (IMM—TSX VENTURE), a Canadian wellness company, reported second quarter revenues for the three-month period ended April 30, 2014, reaching CAN$19.1 million (US$17.8 million), reflecting an increase of 50.9 percent as compared to the same period in the previous year. Net profit for the three-month period was CAN$800,000 (US$745,500) compared to CAN$700,000 (US$652,300), reflecting an increase of 16.8 percent, as compared to the same period in the previous year. Total basic and fully diluted profit per common share was 1 cent.

Adjusted EBITDA for the second quarter was CAN$1.4 million (US$1.32 million) or 7.4 percent of revenues, versus CAN$900,000 (US$838,600) or 7.4 percent for the same period in the previous year.

Mexico is the company’s largest geographic market, representing 54.6 percent of total revenue for the six-month period ended April 30, 2014. Mexican Network sales for the three- and six-month periods ended April 30, 2014, reached MXP 125.2 million (US$9.6 million) and MXP 224.1 million (US$17.5 million) increases of 98.2 percent and 72.8 percent compared to the same periods in the previous year.

The United States is now the company’s second largest geographic market, representing 24.1 percent of network sales after six-month period ended April 30, 2014. United States Network sales reached US$3.8 million and US$7.2 million, increases of 32.4 percent and 26.9 percent, compared to the same periods in the previous year.

Canada is now the company’s third largest geographic market, representing 17.3 percent of total revenue after the six-month period ended April 30, 2014. Canadian Network sales for the three- and six-month periods ended April 30, 2014, accounted for CAN$2.8 million (US$2.6 million) and CAN$5.7 million (US$5.3 million) or decreases of 8.7 percent and 8.5 percent of total revenues.


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.

July 23, 2014

News in Brief

News in Brief, August 2014

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Direct Sellers Win Big in Stevie Awards

The prestigious Stevie Awards have announced the first round of winners in the 12th Annual American Business Awards. A ceremony held June 16 in Chicago revealed winners in the categories of customer service, human resources, corporate communications, marketing, live events, publications and videos. A second event in San Francisco on Sept. 12 will honor winners in all new product and technology-related categories.

A panel of 240 executives nationwide selected this year’s winners from more than 3,300 entries. Gold Stevie Award winners included Brandon Scott, CMO of Jeunesse; Allie Henderson, Public Relations Specialist at USANA; and BK Boreyko, Founder and CEO of Vemma. The following is a list of the direct selling companies honored in this year’s Stevie Awards.

  • Isagenix International—1 Silver, 5 Bronze
  • Jeunesse Global—1 Gold, 2 Silver, 3 Bronze
  • LIMU—5 Bronze
  • USANA Health Sciences—1 Gold, 6 Silver, 9 Bronze
  • Vemma Nutrition Co.—1 Gold, 1 Bronze

Avon Launches Global Reforestation Initiative

Avon recently announced a new global reforestation initiative, Healthy Forests, Beautiful World. The new program will continue Avon’s ongoing global commitment to the environment, raising funds through the sale of special products by Avon Sales Representatives and on Avon’s e-commerce sites to help end deforestation.

Avon has donated more than $6.8 million for global reforestation since 2010 to The Nature Conservancy and World Wildlife Fund to support the rain forests in Brazil and Indonesia, two of the most critically endangered ecosystems. In 2013 alone, Avon donated $1.3 million raised in more than 50 countries.

In additional company news, Avon has been named one of Interbrand’s Best Global Green Brands of 2014. The global brand consultancy ranked Avon No. 42 of the 50 companies leading the way in sustainability.

The New York City-based company is an industry leader in its reduction of greenhouse gas emissions. Between 2005 and 2012, Avon reduced water use by 200 million gallons and achieved an overall recycling rate of 83 percent at its manufacturing and distribution centers. Interbrand also noted the company’s environmental award-winning manufacturing facility in China and its new R&D Center in Shanghai, which has achieved LEED Platinum certification.


Tupperware Joins UN Women’s Leadership Council

Tupperware Brands recently announced its participation in U.N. Women’s new Private Sector Leadership Advisory Council. As a founding member of the Council, the kitchenware company has committed financial and human capital and cause-marketing support to further economic and political empowerment for women around the world.

As a part of the Council, Tupperware has made a $500,000 contribution to U.N. Women’s initiatives and plans to partner with the organization through cause-marketing efforts in key regions. The partnership will also extend to Tupperware’s salesforce, which will have the opportunity to impact U.N. Women’s programs worldwide.

Other founding members of the Council include Jean-Paul Agon, Chairman and CEO of L’Oréal; Dominic Barton, CEO of McKinsey & Company; and Muthar Kent, Chairman and CEO of The Coca-Cola Co.


Amway Brings Business to Bulgaria

Amway recently announced the opening of its newest affiliate, Amway Bulgaria. The nation joins more than 100 other countries and territories that are served by Amway Independent Business Owners worldwide.

Amway Bulgaria will offer several product brands, highlighted by Nutrilite™, the world’s No. 1-selling vitamins and dietary supplements brand; Artistry™, one of the world’s top five largest-selling premium skincare brands; and Amway Home™, in addition to various personal-care products.

Amway reported global sales of US$11.8 billion in 2013 and is in the midst of a $332 million manufacturing and R&D expansion to support continued growth.


Nature’s Sunshine China to Launch in Joint Venture

Nature’s Sunshine Products has announced plans to enter China in a joint venture with Shanghai-based Fosun Pharma. The agreement outlines a multichannel approach that places Nature’s Sunshine products in Fosun Pharma retail locations across the country and markets the company’s Synergy brand through a direct selling model.

Fosun Pharma will acquire a 15 percent stake in Nature’s Sunshine in a deal valued at just over $46 million. As a part of the agreement, Nature’s Sunshine will appoint one Fosun Pharma director to its board. The investment in Nature’s Sunshine will also fund a special $1.50 per share cash dividend to be paid out at closing.

The joint venture, Nature’s Sunshine Hong Kong Ltd., will be owned 80 percent by Nature’s Sunshine and 20 percent by a wholly owned subsidiary of Fosun Pharma. Pending regulatory approvals by the Chinese government, the venture will be capitalized initially with $16 million from Nature’s Sunshine and $4 million from Fosun Pharma.


Organo Gold Opens New International Headquarters

Gourmet coffee company Organo Gold recently announced the opening of its new global headquarters in Richmond, British Columbia. The 26,000-square-foot building boasts an eco-friendly design and houses approximately one-third of the company’s global staff.

The ribbon-cutting ceremony was attended by the Honorable Neil Frank Ferrer, Consul General for the Republic of the Philippines; the Honorable Sutthiluck Sa-ngarmangkang, Consul General for the Republic of Thailand; and Mr. Hyng Suk Lee, Consul for the Republic of Korea. Canada was equally represented, as the Honorable Linda Reid, Speaker of the Legislative Assembly of British Columbia and Member for Richmond East, joined in the festivities.

Founded in 2008, Organo Gold markets Ganoderma-enhanced coffee and other products. The company operates in 30 markets worldwide through its salesforce of 150,000 independent distributors and sells to consumers through its Coffee Connoisseur Club.


Herbalife Sponsors Events DC Nation’s Triathlon

Global nutrition company Herbalife is partnering with Competitor Group Inc. to sponsor the Events DC Nation’s Triathlon, one of the premier Olympic-distance triathlons in the United States. Herbalife will be the title sponsor of the “Herbalife Recovery Zone,” which will provide athletes with Herbalife nutrition products, nutrition tips and best practices to assist participants in training for this and future events.

The 9th Annual Events DC Nation’s Triathlon benefits the Leukemia & Lymphoma Society, the world’s largest health organization dedicated to funding research and providing patient education and services in the field of blood cancer. The Triathlon will take place on Sunday, Sept. 7, 2014, in Washington, D.C.

As part of the Triathlon, Herbalife will also sponsor the Herbalife Congressional Challenge, open to all Capitol Hill-based federal employees, including those who work for Administration offices and the White House. Participants may also compete in a race-within-a-race, including a Military Challenge and a Commander-in-Chief Challenge, open to military academy student participants, and the Tri Club Challenge, for triathlon club members.


SimplyFun Donation Supports Foster Care Programs

SimplyFun LLC, a developer and direct seller of award-winning games, was recently honored for donating $100,000 of product during National Foster Care Month to support the My Stuff Bags program.

The My Stuff Bags Foundation provides new belongings, comfort and hope to thousands of children across the U.S. who have been rescued from abuse, neglect and abandonment. By rallying widespread individual and corporate involvement through the My Stuff Bags program, the foundation addresses the immediate physical and emotional needs of rescued children, and helps support the agencies caring for them.

Founded in 2004, SimplyFun produces games designed for educating kids and connecting families. The Washington-based company markets its games through a network of Playologist consultants.


Regal Ware Sells Water Purification Business

Cookware company Regal Ware recently announced the sale of its home drinking water purification business unit to The Legacy Companies of Fort Lauderdale, Florida.

According to Jeff Reigle, President and CEO, the sale supports long-term growth initiatives being put in place by Regal Ware. No jobs will be lost as a result of the sale. Employees will be redeployed into other positions within the company.

The news comes on the heels of an announcement that Regal Ware was awarded low-interest loans from both Washington County and the City of West Bend for investment in their $5 million project to invest in new, highly technical equipment for their West Bend, Wisconsin, manufacturing facility. The new equipment will allow Regal Ware to improve efficiencies, expand production capacity and improve competitiveness with foreign producers.


USANA Joins Canadian Health Trade Organization

On a mission to advocate supplement regulation and the health industry on a global scale, USANA Health Sciences Inc. has joined the Canadian Health Food Association. There are currently more than 41,200 active USANA Associates and preferred customers operating in Canada.

CHFA represents the interests of thousands of natural health and organic product manufacturers and distributors in Canada. Its mission is to lead, empower and support its members. It also promotes the growth and advancement of the organic and natural health product industry, while working closely with government and regulatory bodies to ensure fair regulations.


AVA Digital Awards Honor Direct Sellers

Direct selling companies collected 43 awards in the 2014 AVA Digital Awards, an international competition recognizing excellence in digital communication. With the speed and flow of information through new technologies, audio-visual professionals are constantly innovating to engage audiences and communicate effectively. The AVA Digital Awards honor the people who are ideating, directing, designing and producing the best in digital media.

The Association of Marketing and Communication Professionals administered and judged 2,100 entries in this year’s competition. Entrants included production companies, web developers, advertising agencies, PR firms, corporate and government communication departments, and a slew of independent creative professionals.

Gold Awards honor companies for exceeding the high standards of industry norms, and Platinum Awards recognize excellence in terms of quality, creativity and resourcefulness.

Direct selling companies among this year’s AVA winners include:

  • ACN—7 Gold, 10 Platinum
  • LIMU—2 Gold, 4 Platinum
  • Origami Owl—2 Gold, 3 Platinum
  • USANA—9 Gold, 6 Platinum