May 01, 2016
Fresh perspective Brings Energy Boost to LifeVantage
by Lin Grensing-Pophal
Headquarters: Salt Lake City, Utah
Top Executive: President and CEO Darren Jensen
Products: wellness, anti-aging, weight loss and energy
2015 Revenue: $190 million
A wonder kid of sorts that exploded onto the direct selling scene in 2009, LifeVantage has seen its fair share of exponential growth and powerhouse performance of its products. But momentum could become short-term unless a company reinvigorates its strategy and purpose, and that’s where LifeVantage was in 2015—it had a track record of growth but was losing traction. The company stock was at an all-time low and was in danger of being de-listed from the exchange. Furthermore, turnover was high and the field appeared to have lost confidence.
But the beginnings of a turnaround were being put into motion. New leadership, new products and a refocus on core competencies would rejuvinate this resilient company.
LifeVantage had seen its share of growing pains. In November 2006, the company formerly known as Lifeline Therapeutics Inc. was still trying to find its identity when it announced a name change at its annual meeting. As then-CEO Stephen K. Onody said: “…our new name better articulates the company’s vision and dedication to helping people reach their health and wellness goals with science-based natural solutions.”
The company had a lot going for it. LifeVantage’s signature product, a nutraceutical called Protandim, was backed by compelling science—its natural, indirect antioxidants signal the body’s genes to increase production of antioxidant enzymes that work together as the body’s first line of defense against free radicals. This was made possible through the research of Dr. Joe McCord, a scientist and former Chief Scientific Officer with the company. Originally sold through retail stores, the product was removed from those cluttered shelves in 2009 when the company chose to move forward with a direct sales model.
The ensuing years saw additional transitions as the company worked to gain a foothold. It expanded into more countries, and is now in nine markets with the most significant growth in the U.S. But while sales surged at times, the growth was hard to sustain. Then, in 2015, a new CEO arrived—Darren Jensen, a 25-year veteran of direct sales who came to the company from his most recent position as President of the Americas and Chief Sales Officer at a company showing significant growth in the channel.
|LifeVantage corporate headquarters in Salt Lake City, Utah.|
Since then, the company has been orchestrating a turnaround for LifeVantage. “The last nine months were really about applying certain principles and tactics to successfully manage a downturn in business and return it to growth,” says Jensen. Throughout his years in the direct sales industry, Jensen says he’s seen many examples of what he calls “pop and drop” companies: those that rise to significant success rapidly, but then fail just as rapidly. “As an industry, we need to be focused on sustainability,” he says.
Jensen didn’t know he would be taking the helm at LifeVantage when he attended SUCCESS Partners University in 2015. There, he says, he was inspired by a presentation given by Cindy Monroe from Thirty-One Gifts. Monroe, he says, talked about the whitewater that businesses sometimes need to navigate in order to move into a predictable success base. Jensen says he was definitely in whitewater when he assumed the role of CEO. He says: “The first thing that I was facing was a pending delisting from the Nasdaq.” Stock price must remain about $1.00, he says, or a company gets put on probation. The second challenge was an identity challenge. The company’s top executives didn’t seem to have alignment on what the company existed to do.
Jensen discovered this during an interview with the board. He gave them an assignment. In 30 seconds, or less, and in 20 words, or fewer, he asked them to write down what their message to the field was, and then he asked each board member to read his or her message out loud. “It was rather funny,” he recalls. “In general, they said that we were a product company—we did this, we did that, but there was nothing that distinguished us.” Jensen knew he needed to not only get everybody sharing the same message but also ensure that this message effectively distinguished the company and its offerings from the competition.
There were other challenges:
- The leadership team needed some adjustments to move the company forward, Jensen decided. “I did a complete turnover of the executive leadership team, which happened within just a few months.”
- The company had a heavy, and singular, focus on just one product. That, he felt, put the company at risk.
- The field leaders appeared to have lost confidence and trust in the organization.
- Public conversations were impacting the industry, which, says Jensen, “began to muddy the waters as to what was acceptable and what was not.”
- “We were facing an issue of sustainability,” Jensen emphasizes.
Chief Sales Officer Justin Rose addresses the audience at a recent LifeVantage event.
A Focus on the Core
In an effort to turn the company around, executives began to identify what the core assets of LifeVantage were. Solidifying these would provide the scalability that is critical to a company’s sustainability. “As you begin to grow, you don’t want it to implode,” Jensen says. A number of core assets were identified:
- The intellectual property that existed in the form of patents and scientific studies
- The distributor field and leaders
- The corporate executives
- A trio of concepts that Jensen refers to as T3: “tools, training and technology”
- Operational excellence
- The ability to tell a compelling story and communicate it to the masses
- Building a trust network
All were important, but the company would need to focus to regain success. It was doing too many things at once, and losing sight of what the field needed. Jensen says, the company knew that it had lost the confidence of its field leaders. One of his first moves was to fly in the field leaders to speak to them directly.
“I laid out a series of eight steps and the timeframe I was going to implement them. I knew I had to form a trust network with these people,” Jensen says. But, the message wasn’t a slam dunk. Many, he says, sat back and said, “We’ve heard this before.” He knew he had to prove himself. And he did.
“Basically, we were able to implement all of those eight steps within just a matter of a few weeks to a couple of months,” Jensen says. That really began to restore the confidence of field leaders.
Once the company began to improve its outcomes and generate momentum, the challenge would become maintaining that momentum. “In my experience, most companies talk about moving into momentum,” he says. “But once you’re in momentum, they don’t do anything because they don’t want to fall out of momentum.” To combat this potential, LifeVantage created a framework to define, monitor and score momentum. After analyzing field activities and results, executives created a score to give to specific groups, as well as individuals, to value their momentum. Then the leadership team was able to look at the company as a whole to view the momentum shifts that occurred.
The company also began to focus on field data, looking closely at the lifecycle of distributors. In the direct selling industry, between the time people first enroll and when their first order is placed, a lot of them fall off or go into a significant period of inactivity. So the company began to quantify this lifecycle to improve retention. They defined a “month zero” as the month the first order is placed and months one, two, three, etc., as the months thereafter. “We wanted to maximize strategies to make our distributors more productive, so we began focusing some of our tactics on improving retention between month zero and month one,” Jensen says. In addition, he says: “We wanted to get money in the hands of distributors as quickly as possible. We knew that if they were making money, that it would prove that the business worked.”
To drive the momentum, LifeVantage put in place a number of programs and incentives. As a result, in just two months, distributors doubled the average purchase of when they joined the company. Retention also increased dramatically.
However, amidst the momentum, challenges in the channel emerged that required new thinking about incentive packages and compensation. In response, LifeVantage made a number of large and small changes to its comp plan.
Through it all, though, one key focus was rebuilding the trust network—showing field distributors and leaders that the company executives meant what they said and that they would deliver on the promises made.
Telling the Story
Another critical area of focus was creating and telling a compelling story. Jensen says, “We knew that we had to refine our message, and we knew that it had to be ‘repeatable, relevant and emotionally compelling,’ as one industry expert would say.” In this process LifeVantage reached out to a vendor partner in the industry with expertise in all forms of communication and branding. “They were critical allies for us in refining that message, helping us determine who we were and telling that story to create something that our field could rally around,” he says.
Ryan Goodwin, Chief Marketing Officer with LifeVantage, says the process of re-energizing the brand was “very near and dear to my heart because I come from a branding background.” The initiative had already been started when he joined the company, and it focused on telling the company’s story. The focus was twofold: the belief that it is the distributor’s, or individual’s, growth that is the path to future success, and positioning the company and its products as science-based. “We used both of those stories to base all of our decisions,” Goodwin says.
Unlike other rebranding initiatives Goodwin has seen, this one was a resounding success with the field. The discovery process, broad involvement and input likely played a role in that, he says. Stakeholders, including staff, customers and field members, were interviewed, culminating in the creation of a 100-plus-page document to encapsulate their input. Too often, Goodwin says, branding initiatives are created “in a bubble” and then introduced to an understandably less-than-excited field. He calls that “launching from the stage” and says, “That’s just not the way to do it.” Instead, the field was included in the process. In addition to the interviews, once some concepts had been developed, focus groups were held so the field could see and react to prototypes.
“Including field leadership at the right time and showing them, specifically, how you’re telling a better brand story, and then finding out how well they think you’re doing and communicating design decisions is absolutely critical,” he says. “When we do that, I find that you’ll get 97–100 percent approval ratings from your leadership.”
The Field: Building a Trust Network
Justin Rose, Chief Sales Officer with LifeVantage, worked with Jensen when both were with another major company. “We kind of jumped into it right when they were experiencing some tremendous growth and really started our career there,” he says. Both went on to other direct sales organizations before finding their paths leading back to each other at LifeVantage. Rose started just a few months after Jensen. His first day on the job involved attending the company’s leadership Elite Academy, an event that drew about 5,000 people to Kansas City, Missouri.
“It was the first opportunity that Darren and I had to meet our leadership and, more importantly, their first time to meet us,” says Rose. “It was an opportunity for Darren to share with them his vision, and I can tell you that it was immediately adopted by our leadership.” It was a critical point for the company, he notes. “The thing that had been probably one of the biggest challenges here at LifeVantage was just the field’s belief that we truly have a management team that has their best interests in mind, and that are here for the long term.”
The ability to get that group on board, and believing in the ability of the management team to move the company forward, was a must do, Jensen says, and it was done starting at that event in Kansas City. “When you get that belief, you start to see your leaders re-engage,” he says.
A key component of generating this engagement was the introduction of new products. Historically, the company had focused on one product—Protandim, a dietary supplement protected by six U.S. patents and made of five potent botanicals. But executives believed that the company’s sustainability would depend on the ability to introduce new product offerings. Today, LifeVantage offers a wider range of products, including a TrueScience line of facial products; PhysIQ, a line of weight-loss products; Axio energy supplements; and even Canine Health supplements for dogs.
The strategy was to take its hero product and create a family of products around it, and LifeVantage will continue to expand those lines, integrating core aspects of other product lines that have value within the channel.
LifeVantage has taken some innovative approaches to new product introductions, straying from the traditional direct sales method of introducing products at distributor meetings. In December, they introduced their weight-loss line through a cyberlaunch, which Rose says was, “a tremendous success.” As a result, December was one of the best months the company has seen so far. He says, “To close a year with that kind of momentum just kind of carried everyone into and through the holidays, and they had a fantastic start to the new year.”
The hard work has paid off. “Over the last eight months, our stock went from a low point of $1.40 up to as high as $10.55,” Jensen says. “Right now, we’re averaging somewhere in the $8-9 range.” Up through the end of December, only a few months into their new initiatives, the company saw its first growth cycle in six quarters, he says, for the first time in eleven quarters in Japan.
“I believe the biggest thing for our distributors to really get them into action and engaged is the fact that they have a leader who’s leading with purpose,” Jensen says. “Someone who is following through on the things that he’s committed to them.”