August 01, 2013
Ingredients for Success: An Interview with Nu Skin President and CEO Truman Hunt
Many publicly held direct selling companies have battled against negative perceptions created over the last 18 months by short sellers and some very vocal attacks on the direct selling distribution channel. But what seemed like a storm of negativity may now be revealing its proverbial silver lining, as many defenders of direct selling have risen to the challenge to debate the issues on Wall Street, in Washington, on the Web, and in coffee shops and conversations around the world. In recent weeks, it appears the loud and negative voices are receding. Stock prices of some of our most notable public companies have definitely rebounded. The direct selling industry is continuing to grow, here in the U.S. and globally, indicating a strong consumer and shareholder confidence.
One public company in particular, Nu Skin Enterprises, generated quite a buzz when on July 9 it released new guidance for 2013. The very next day, share prices rose dramatically, as investors and potential investors clearly responded very well to the announcement and indicated a very strong confidence in Nu Skin’s ability to sustain its growth.
DSN Publisher John Fleming sat down with Nu Skin President and CEO Truman Hunt to discuss the factors behind this confident marketplace reaction.
JF: Certainly this has been exciting for Nu Skin, but I believe it’s also exciting for the industry. The rise in stock price seems to be an indication that there is very strong confidence in what Nu Skin is doing, and that it’s all sustainable. That is good news! In my experience, growth is typically propelled by good things impacting the independent contractors in a positive way. Is this what’s happening here?
TH: Yes. In our case, those “good things” began about six or seven years ago when we had to take a hard look at our business after investing significantly in China on the prospect of changes in regulations that the country was making, which would open it to direct selling. Once they came out, they weren’t what the industry expected. Consequently, our sales tailed off as we recognized we had to reformat our business to be compliant with their new regulations. At the same time, sales in Japan—our largest market—were also tailing off, and we were going up against difficult movements in the yen, all of which worked against our top-line growth.
As a public company, we don’t have the luxury of not growing! It was time for us to decide how we wanted to create an advantage in the marketplace and put together a winning and sustainable strategy. This resulted in some fairly big business transitions. At the time, we were operating three distinct opportunities in Nu Skin, Pharmanex and Big Planet. We also had distinct management teams over each of those three divisions, and all of them were competing for the attention of our salesforce. We had become large and unwieldy in many ways.
So we reconfigured our strategy, deciding we do better when we offer a very focused presentation to our salesforce rather than sending them down multiple paths. It was a difficult time as we trimmed the corporate staff, but this change in strategy is actually when the tide turned. We started to see month-over-month growth, and then year-over-year growth, which became more reflective in our top-line growth around 2009. Since then, our growth rate has just accelerated.
JF: What would you say are the three key drivers in this process? Can you provide examples of how they work for you?
TH: The three key drivers are focus, alignment and good execution. We’ve continued to apply the principles of focus to our growth initiatives. We align ourselves internally and externally with our sales leaders, and then we make sure we don’t let people down with execution failures. And, back to China, we are obviously enjoying a huge uptick in our business in the Greater China region. Mainland China is just in full-blown momentum, and we’re thankful that Taiwan, Hong Kong, Singapore, Malaysia and South Korea are all also seeing growth.
JF: I have read elsewhere about your emphasis on the product launch process—that it’s the culmination of a process that’s been going on for months, and leads to a special moment when the product becomes official and available. Would you share that process with us?
TH: Yes, our product launch process is a big part of how the execution of our growth initiatives has changed over the years. Before, when we would launch a product, we thought it would be great if our sales leaders were just blown away by the compelling products we would reveal to them at our conventions, because they were showing up not knowing anything about what would be launched. For us, a better approach now is to start many months ahead of time—in our case, a year ahead—and bring in key leaders from around the world, then the region, then the country and align the leaders with the upcoming launch.
By getting out in front of a product launch with strategically timed messages to the field and offering the products on a limited-time basis so they could only buy at the global convention—and then not buy for several months until we launched regionally or in a country—we’re generating a dynamic and momentous response to the launch.
JF: So you are seeing value in aligning those leaders long in advance and are launching products together instead of the company doing something to them or for them?
TH: Exactly. That is exactly the point. We are focusing on a single initiative, aligning sales leaders globally behind it, and executing a limited-time offer on the new product launch in conjunction with a corporate event—and doing it all in a very efficient and effective fashion. This phase of the launch process allows us to build even greater excitement within the sales network and generate significant levels of awareness and product trial within our consumer group. These things are all combining to yield both increasingly large product launches and the dynamic business growth we are seeing today.
From an execution standpoint, another thing that has really changed for us is our product pipeline. Frankly, in the past, most of the time our product launches were a scramble. We weren’t talking about product launches in advance because we weren’t sure what they were going to be! But now, our product pipeline is literally full for at least the next five years, and we know exactly what we are going to do.
With a global footprint and very different regulatory environments in all of the countries in which we operate, having a long-term plan is very important. In some of these markets, it can take years to get a product registered for sale.
JF: Has your change in strategy created any changes in the way your consultants conduct and grow their businesses?
TH: Yes, I think one of the biggest psychological shifts for our sales leaders was that they had to become convinced about the power of alignment. They are very independent and strong-minded people who tend to want to do the business their own ways and on their own schedules. It’s taken years for us to continually inform and train our sales leaders about what’s working and how the business is most effectively executed.
We’re further ahead on this in some markets than we are in others, but it’s becoming increasingly easier for them to do that as they witness very personally the power of alignment in their commission checks. Last spring, when we did a couple of very big launches in Southeast Asia and Greater China, in one month we cut 10 record commission checks. That incentive is powerful and is helping our sales leaders align with this strategy and this approach.
JF: As we wrap up, share with us your thoughts on the future of our industry.
TH: I am passionate about our product categories and the innovation we can put into the marketplace from a product perspective, but we’re really about improving people’s lives. Frankly it’s the thing I love the most about our business. We are changing lives when we give entrepreneurs the opportunity to start a business with very, very little capital at risk, that provides them with a significant upside and the ability to control their economic future. I just don’t see a better platform anywhere for entrepreneurs to do that.
It’s become increasingly difficult for people to take entrepreneurial risk—because of the magnitude of the downside of taking that kind of risk—where hundreds of thousands or millions of dollars of capital are required to do anything of an entrepreneurial nature. That is why I think direct selling continues to have a very vibrant future. There is no other alternative that provides the downside protection and the upside benefit that our platform provides. I think that is what’s going to power us through the criticism that comes our way and what’s going to continue to enable us to grow.