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November 01, 2016

Company Focus

Mannatech: Commitment to a Compliance Culture, One Product at a Time

by Heather Martin


Click here to order the November 2016 issue in which this article appeared or click here to download it to your mobile device.


Company Profile

Founded: 1993
Headquarters: Coppell, Texas
Top Executive: CEO Al Bala
2015 Revenue: $180 million
Products: Nutrition, wellness, weight-loss, personal care


nameAl Bala
nameStan Fredrick
nameJoel Bikman

Joel Bikman is a brave man.

He basically said to his boss, “Maybe you could lose a few pounds.”

Bikman is Senior Vice President for Global Sales and Marketing at Mannatech, and he was just thinking the company’s chief executive would be a powerful spokesperson for the supplement company’s new fat loss system, TruHealth. CEO Al Bala laughs and says Bikman made the pitch “in a very respectful way” and that he was eager to be the guinea pig.

Now 23 pounds lighter, 3 inches thinner and with 5 more pounds of muscle, Bala says he feels fantastic and isn’t finished with his body transformation. “I’m now at the same waist size I was when I was 18 years old,” he says. “It set me on a course for creating a lifestyle of a lifetime.”

Mannatech executives draw some obvious parallels between the physical changes Bala has experienced and the evolution in their Texas-based direct selling company during the past several years. Once hobbled by claims about its products’ curative powers, Mannatech is now focused on tactics and strategies that will keep it healthy. This means a strict diet of compliance and monitoring and stronger connections with field associates, Bala says.

International expansion and new products such as TruHealth also are major factors in the company’s growth plans, executives say. The strategies seem to be working. Mannatech ranks No. 71 on the Direct Selling News Global 100 list, with $180 million in annual revenue in 2015. And while the company reported a loss of $1.3 million for the three-month period ending June 30, 2016, net sales were nearly $49 million, an increase of $2.1 million over the same period last year and the highest in seven quarters.

The Asia-Pacific market accounted for more than half of second quarter net sales, bringing in $26 million, compared with $23.6 million for the same quarter in 2015. The number of overall associates for the 12 months ending June 30 was down 6,000 to 222,000 compared with the same period the year before; however, the company’s recruiting efforts were robust in the second quarter, drawing more than 28,000 new associates, an 11 percent increase over the number of associates who came on board in the same period last year.


Mannatech international headquarters in Coppell, Texas.

Compliance Rules

Mannatech executives believe the company has moved out from under the dark cloud that formed in 2005 when the company faced a class-action lawsuit that claimed product misrepresentations artificially boosted Mannatech stock. “We don’t have to talk about it much anymore,” says Mannatech Board Chairman Stan Fredrick. “We are determined to keep it that way.”

Mannatech is keeping it that way with an intense commitment to regulation, Bala says. “We have a new motto here, and that’s ‘Compliance is sexy.’ Compliance should be seen as very attractive—not a thing that shackles you but something that frees you.”

Bikman says that under Bala’s leadership, every department has been asked to evaluate its contribution to the compliance culture and to ensure that it supports associates instead of making them feel weighed down. For example, the legal department is now known as the Business Ethics Department, he says, and the attorneys are committed to helping salespeople make decisions that will protect their businesses.


“We have a new motto here, and that’s ‘Compliance is sexy.’ Compliance should be seen as very attractive—not a thing that shackles you but something that frees you.”
—Al Bala, CEO


Even the regulatory affairs staff—whose job Bikman says can be even more routine than that of the legal team—is energized by Mannatech’s focus on doing the right thing, which means making sure the company complies with product formulation and marketing standards in each of its 25 countries. “This is almost a pride piece for them,” he says. “They are now thinking, ‘Oh, our job really is that we serve the associates by helping make sure they have products in each market and that we can safely keep them there.’ ”

“We have our associates’ backs,” Bala says. “They can go out confidently because we’re taking care of business.”

Bikman says he knows Mannatech has turned a corner because other companies are starting to ask for advice on how to survive hard times. “A number of network marketers have reached out to us over the past few months looking for a company that’s been through some affliction and really come out on the other side much stronger. We are the model of the future.”

Mannatech

Associates First

Because Bala spent more than two decades as a direct selling field leader in the channel, one of his big priorities has been to make sure Mannatech associates feel connected to and supported by the company. When he first became CEO in August 2015, he said he was determined “to help create a company that would really fulfill all the promises that a company like ours makes” to people who sell its products.


“A number of network marketers have reached out to us over the past few months looking for a company that’s been through some affliction and really come out on the other side much stronger. We are the model of the future.”
—Joel Bikman, Senior Vice President for Global Sales and Marketing


This means making sure associates not only market Mannatech products responsibly but that they are recognized for their achievements and have the resources and training to become successful.

From social media boot camps to extensive product orientations to opportunities to build leadership skills, “almost not a day goes by that we don’t have some kind of training,” says Mannatech Director of Communications Mike Crouch. The company’s mannatechlive.com web portal offers a constant stream of live webinars, recorded training presentations and monthly company leadership meeting broadcasts.

Technology is critical to Mannatech’s recruiting and employee development efforts—especially among millennial recruits, who expect to have a robust virtual platform, executives say. To attract and retain younger associates, “we’re going to get more and more social, mobile and global than we’ve ever been,” Bala says.

A Deep-Rooted Mission to Conquer Global Malnutrition


Social entrepreneurship is as much of a passion for Mannatech as giving associates a path to physical and financial health.

So in 2009, the wellness products company started the Mission 5 Million (M5M) Foundation to distribute food supplements to undernourished children in such countries as South Africa, Guatemala and Mexico. Since then, M5M has delivered more than 95 million servings of its PhytoBlend nutrient supplement around the world. Last year alone, the foundation distributed 17 million servings to nearly 50,000 children, an effort funded by more than $1 million in donations from Mannatech.

There are no funding or food supplement delivery numbers available yet for 2016, says Mike Crouch, Mannatech Director of Communications, as the M5M Foundation provides that information only at the end of the year. “However, as we grow, the donations to the M5M Foundation will grow,” he says, because each sale of a Mannatech product triggers a donation to the foundation, allowing Mannatech associates to be a part of the big philanthropic picture.

M5M is “not a marketing gimmick,” says Mannatech CEO Al Bala. “This is in the DNA of our company. We’re going to solve malnutrition in the First World, and we’re going to solve malnutrition in the Third World.”

Zeroing in on messages, products and resources that resonate with young, modern associates was a major goal of the company’s recent rebranding efforts, Bikman says. Over nine months, Mannatech held focus groups with 500 people around the world and surveyed 3,000 of its existing associates to “get to the core of what makes Mannatech unique.” The company wanted to reframe itself for a new generation while preserving its appeal to associates and customers who’ve been with the company for years.

Mannatech also wants to continue to be as accessible as possible for new recruits. Becoming a Mannatech representative costs as little as $48 for a product pack, which can be purchased through a Mannatech associate. But making a purchase through an existing associate doesn’t commit a buyer to becoming an associate. Bala says he’s proud of the fact that Mannatech has a considerable number of customers who, for the time being, have registered through an associate simply to be able to buy the products.

Gaining Ground

It may be a fat-loss product, but TruHealth is key to the company’s growth strategy, Mannatech executives say, and it appears to be drawing a significant number of first-time buyers/potential associates. While the company doesn’t make public what percentage of overall revenue for the second quarter came from sales of TruHealth, more than 20 percent of new associates joined Mannatech by purchasing TruHealth, which rolled out in April, Crouch says.

The TruHealth system is based on whole-food nutrition, naturally sourced supplements and regular exercise. The supplements—a variety of nutritional shakes, fat-loss capsules and a cleansing drink mix—are made without gluten, soy, dairy, MSG, or artificial colors, flavors and sweeteners. But even more exciting than its ingredients, Mannatech officials say, is TruHealth’s use of a measurement called the body composition index, which is based on an individual’s ratio of fat to lean muscle, instead of the more traditional body mass index (BMI), which is the ratio of height to weight.

Mannatech Senior Global Wellness Director Dr. Steve Nugent says that using only BMI to determine the health of someone’s body composition is inaccurate and potentially dangerous. He points out that an NBA player who is 6 feet 8 inches tall and weighs 250 pounds would have a BMI of 27.5, making him borderline obese according to that scale. A healthy BMI is considered to be 18.5-24.9 but doesn’t take into account the fat-to-lean-muscle ratio. “We really can’t go on thinking that BMI or scale weight are accurate or realistic measures to long-term success for healthy weight management,” Dr. Nugent says.

Unfortunately, though, nearly 75 percent of Americans are overweight or obese, Bala says, making this the perfect time for TruHealth to come on the scene. The good news is, he continues, more and more people are educating themselves about wellness and using tools such as fitness trackers and weight-loss products to change their bodies and their lives. “Those things are exciting for us to realize—we are a unique solution in this wellness revolution.”

Bikman says TruHealth is a prime example of the kind of synthetic-free, plant-based products Mannatech will spend considerable research and development money to create. It’s worth it to the company, he says, to invest in technology, clinical trials and patents to differentiate itself from competitors. “We’re a very science-oriented company,” he says. “This isn’t a cheap thing we’re trying to do.”


Mannatech recently held a gala for its Mission 5 Million Foundation, an organization through which the company and its Associates contribute funds and product to combat malnutrition in children around the world.

What’s Next?

Like many of its counterparts in the direct selling space, Mannatech wants to invest in new markets overseas, specifically in Asia. “We’ve done very well in countries like Korea, and between now and the end of the year, we’ll be in business in China using an e-commerce model,” Bala says. “We’ll be accessing millions and millions of customers looking for wellness solutions.”

There’s no shortage of opportunity on this side of the world, though. “We believe North America is still a very strong market,” Bala says. There’s room to grow in the Hispanic market, as the company expands in Mexico and Colombia, and Latin America is on the horizon, as well, he adds. “We also know the new economy is turning people who used to be employees into microentrepreneurs. The U.S. is a ripe market for that.”


“We think our future is grand because we are going to write it—on a foundation of strong, scientifically developed products and on a senior staff led by Al (Bala)—the best leadership team I’ve ever see.”
—Stan Fredrick, Board Chairman


While attracting a younger demographic—such as “multitasking moms”—is important to the company, it’s also seeing a growing market in older buyers looking for anti-aging products, for example. “We think the baby boomers may be the next gold rush for us,” Bikman says. The underlying message that Mannatech wants to send to all potential associates is that their lives will be transformed “when they take spare hours and spend them on something they’re passionate about.”

Stan Fredrick sums up Mannatech’s future this way: “Churchill said, ‘History will be kind to me because I intend to write it.’ That’s the position we are in. We think our future is grand because we are going to write it—on a foundation of strong, scientifically developed products and on a senior staff led by Al—the best leadership team I’ve ever seen.” Keep an eye on DSN’s Global 100, Fredrick says: “You’ll see us moving up that ladder.”