January 01, 2015
Tech Trends: Competing for Clarity
by Jeremy Gregg
Just 10 years ago there was no YouTube. There was no iPhone. Facebook was only a few months old. Today, these three technologies—online video, mobile phones and social media—have revolutionized nearly every industry on the face of the planet.
- 100 hours of video are now uploaded to YouTube every minute.
- If Facebook were a country, it would have the third-largest population on the planet.
- There are now more mobile phones in use (7.7 billion) in the world than there are people (7.1 billion).
These trends will certainly continue to shape our industry over the next 10 years. The future will also undoubtedly be affected by many other technologies: Text messages now outnumber phone calls by at least 2-to-1; online sales are surging while sales at brick-and-mortar stores are dropping; though first introduced less than five years ago, tablets now outsell desktop PCs by a margin of 2-to-1.
Indeed, the dominance of technology in our business lives is so prevalent, the conference theme for the 2014 World Federation of Direct Selling Associations’ (WFDSA) World Congress, held in Rio de Janeiro last November, was “Direct Selling: The Original Social Network.” The schedule included speakers from Facebook, Salesforce.com, the global service design consultancy Fjord Accenture and the market research firm GfK Group.
Direct selling companies that find ways to link the power of person-to-person sales with the power of technology will have a huge opportunity to gain market share, outgoing WFDSA Chairman Alessandro Carlucci says. “We must be prepared as an industry to offer alternatives to the customer, and the technology is only going to leverage the differentials,” he says.
Forrester Research, in its research report on tech predictions for 2015, agrees with Carlucci, according to Forbes writer Gil Press, showing that the competitive edge belongs to those who stay ahead with technology. Press recently blogged about his chief interpretation of the Forrester report, stating that “the gap between digital leaders and digital laggards will widen in 2015.” Press goes on to quote from the Forrester report: “2015 will serve as an inflection point where companies that successfully harness digital technology to advantageously serve customers will create clear competitive separation from those that do not.”
Investing for the Future
Some company executives still question how much technology to actually utilize, and how much to offer the independent representatives without complicating the business model.
At Medifast, a direct selling company marketing weight-loss products and programs, technical upgrades are underway to help the company serve a wide range of customers. “We are looking to meet people where they are, whether that’s on social, through an app or via some other technology,” says Meg Sheetz, President and Chief Operating Officer at Medifast and CEO of Take Shape For Life. “This has motivated our interest in wearable technology, virtual coaching and creating our new and improved dashboards.”
Medifast’s digital dashboards allow customers to track nutrition, exercise, meals, weight, sleep, well-being and more. Capitalizing on the trend to “wear” devices that transmit personal data such as heart rate or steps walked, Medifast has established a partnership with Fitbit®. Consumers with one of Fitbit’s award-winning activity trackers can now have their activity data linked to their personal Medifast Dashboard. But the upgrade includes a feature that the previous one lacked: a way to grant permission to health coaches (independent representatives) to view their customers’ progress in real time. This feature enables the coaches to better and more efficiently guide their clients, an investment that pays dividends for both the coach and the company.
Sheetz explains that in addition to providing the new tech tools available to the field, the investment also includes infrastructure to make it happen. Upgrading the back office and adding more business reporting tools in order to provide more data to executives for decision making is necessary, along with giving coaches more visibility to better manage their own businesses.
It’s no small cost when you are talking about creating and innovating new tools for the field and considering the internal changes the support will require. Lori Bush, President and CEO of skincare company Rodan + Fields, explains that her company faces this challenge: “We have been trying to get the balance of innovation versus core infrastructure right, which is a big challenge for a company growing as rapidly as ours. Our most recent initiatives are very focused on supporting our business to scale and globalize. This includes major re-platforming of our commerce web services and commissions-calculation engine, as well as our customer-facing applications.”
Cost and ROI are ever-present topics in the CEO’s mind. During the World Congress, Carlucci, who is also former President and CEO of Brazil-based Natura Cosméticos, moderated a panel discussion comprised of CEOs from seven of the top 10 companies represented on the DSN Global 100, representing a combined $38.5 billion in revenue. Mary Kay Inc. CEO David Holl, Amway President Doug DeVos, Oriflame Cosmetics CEO and President Magnus Brännström, Herbalife International Inc. CEO Michael O. Johnson, Avon Products Inc. CEO Sheri McCoy, and Nu Skin Enterprises CEO Truman Hunt expressed surprising consensus on the subject of technological development. Even in trying to keep technology implementation simple, these industry-leading CEOs agree that doing so requires a significant financial commitment. To that end, McCoy underscored the importance of testing new technologies on a small scale before an enterprise-wide rollout. “As we are trying to learn more, more experimentation and testing differing things in different markets is more important to me than the amount of money,” she says. “If it works, I’m willing to spend, but to me my message to the team is, ‘Let’s look at the return on investment and are we driving growth through our field force?’ ”
“Our most recent initiatives are very focused on supporting our business to scale and on globalizing. This includes major re-platforming of our commerce web services and commissions-calculation engine, as well as our customer-facing applications.”
—Lori Bush, President and CEO, Rodan + Fields
What Comes Next?
Many companies are directing a lot of their attention to social media and have an active presence on YouTube, Twitter, Instagram, Pinterest and Google+, with Facebook seeming to be the most critical part of their communication strategy. More than 1.3 billion people are on Facebook every month, and a staggering 800 million of them access the platform every day, Facebook’s Vice President for Small and Medium Business Dan Levy told the WFDSA audience.
In Facebook COO Sheryl Sandberg’s opinion, just as Facebook has become an important tool for direct selling, direct selling has become important to Facebook. “Direct sellers mastered personalized marketing before Facebook even existed, and we’ve learned a lot from the way direct sellers have always run their businesses, reaching consumers where they are, understanding what consumers care about and providing people with relevant products,” Sandberg states in a video message delivered to the audience at the WFDSA World Congress. “Facebook can help direct sellers scale this experience by enabling you to reach customers online and especially on mobile with the same personal touch and relevance you provide door to door…. Our business grows when we help you grow your business.”
Levy says, “This is about extending the relationships they already have with real people face-to-face into the digital world and to extend those relationships to make them even more real.”
“Direct sellers mastered personalized marketing before Facebook even existed, and we’ve learned
a lot from the way direct sellers have always run their businesses.”
—Sheryl Sandberg, COO, Facebook
The rise of OTT (“Over-the-top”) messaging apps like WhatsApp presents an extremely cost-effective alternative to traditional SMS texts. OTT refers to delivery of messages—which can include audio, video and other media—over the Internet rather than through a cellular network, which means the service does not carry the cost of traditional texting. For direct selling companies, which need to maintain regular communications with a salesforce that is many times larger than that of a traditional business, such technology could be used to develop “private label” apps to facilitate OTT messaging across the field.
Additionally, this type of delivery system has been adopted by the sales fields of direct selling companies such as SwissJust. WhatsApp allows representatives to exchange information and communicate internationally at very low cost. In fact, the description on the WhatsApp page in the Google Play Store reads “Once you and your friends download the application, you can use it to chat as much as you want. Send a million messages to your friends for free!”
This technology seems to present a largely unexplored territory for many companies. For direct selling companies, which rely on massive networks of connected distributors and customers, the prospects are particularly interesting. We foresee 2015 as a year that could bring great innovation within this area.
Collaboration Key to Success
How does one reconcile the enormous investment in IT and development with keeping a balanced offering of tools for the independent representative? A joint collaboration could be a way to stay competitive with new technology, and keep pace with rapid growth, while tapping into the motivations that compel the best types of sharing of information.
A recent study by Kleiner Perkins Caufield & Byers (KPCB), a Silicon Valley venture capital firm, spearheaded by Partner and analyst Mary Meeker, cited that two-thirds of the “digital universe’s content” is now consumed or created by customers themselves. Much of this is being led by the growth in social media and blogging.
This user-generated content is largely visual. In fact, Meeker states that about 1.8 billion photographs are uploaded and shared on the Internet and mobile devices daily. Companies who can collaborate with their salesforce and tap into this enormous opportunity can stand out amid the competition. Social media is inherently collaborative and sharable.
“Social media is one of the most collaborative endeavors in digital marketing,” says John Keehler, the Director of Digital Strategy & Emerging Platforms for The Richards Group, a Dallas-based advertising agency. A professor at the University of Colorado, Southern Methodist University, the University of Texas at Dallas, and BDW design studio, Keehler is one of the nation’s leading authorities on technology trends that affect business. “Fortunately, there are many software solutions to help organizations collaborate while still allowing them to maintain brand standards. Collaboration also enables easier coordination around important events or campaigns.”
Arbonne has developed a Digital Asset Management (DAM) database to control workflow, version control and single updates to multiple interfaces. According to Lisa LaCourte, Director of Online Marketing for Arbonne, “Our goal is to provide our field with a complete Digital Toolkit. This will include assets and training on how to optimize social media to drive brand awareness and sales. It is more authentic, and the sheer power of numbers will be more impactful and drive SEO [Search Engine Optimization] and brand consistency.”
Other collaborations between company and independent representative are less formal. Much like the celebrated ALS ice bucket challenge individual videos spread, representatives create and upload their own content showcasing products or recognizing their sales stars. Heather Chastain, Senior Vice President and Chief Sales Officer at Arbonne, says that the simplicity of production that technology brings to consultant-generated videos can pay off big. “Consultant-produced videos can be more genuine and relevant than highly produced videos. Prospects and consultants are often more inspired and can relate better to them,” she says.
At Rodan + Fields, video also plays an important role. Kylie Fuentes, Vice President of Digital Product Management, says that “video allows us to demonstrate product efficacy in really meaningful ways and reach a mass audience at low cost. Micro-video is a really interesting trend that we’re experimenting with. Instagram and Twitter’s VineApp have disrupted video consumption by tapping into the insight that people don’t have the time—or attention span!—for long-form viewing. Bite-sized videos force marketers to be very impactful with their messages, and I think this is going to lead to some innovative content strategies.”
Fuentes says that Rodan + Fields has evolved the approach to social over time, and it continues to grow; her approach to shaping the company’s social media strategy takes into account the inherent nature of social sharing. She says, “Naturally, we use Facebook to communicate brand messages and engage our community, but one of its biggest benefits is its virality. We invest in creating share-worthy branded assets that our consultants can amplify through their own social networks to spark conversations about our products.”
LaCourte says that her goals for social media at Arbonne have been to drive positive sentiment throughout social channels as a way to drive brand awareness and “improve the perception of the direct selling industry.” LaCourte has seen that their most effective social communiques relate to new product introductions and before-and-after efficacy results. These particular campaigns drive the largest engagement numbers and most positive sentiment. She says that the company’s 2015 goals include an increased emphasis on social selling that leverages the voice of the customer.
Yet even the most valuable of these social posts has an ever-decreasing shelf life. According to KPCB’s Meeker, social distribution on these platforms happens quickly. The average article reaches half of its total social referrals in 6.5 hours on Twitter and 9 hours on Facebook. The need to keep generating content is immense.
This short shelf-life is why Rodan + Fields put an emphasis on repurposing content across many social profiles. The team runs dedicated “test and learn” programs to optimize the content strategy. Fuentes says, “We’re defining a clear role for each social platform and profile and delivering much more channel-specific content. Our testing allows us to identify what’s working hard for us and focus on the things that drive engagement.”
One way to continue this drive for engagement is to integrate “sharability” in company initiatives. This has included incorporating the hugely popular Reddit AMA. Reddit is a social networking site that is basically a collection of entries submitted by its registered users, sometimes compared to a giant electronic bulletin board. In 2009, Reddit added a member feature called “AMA,” which stands for Ask Me Anything. The feature is something of a virtual press conference, where questions can be asked by users and answered by the poster. The format has become popular among celebrities and has garnered AMAs from singers, actors and even politicians. Dr. Katie Rodan and Dr. Kathy Fields decided to take advantage of this very popular network and post their own AMA for distributors. Utilizing this channel, as well as developing specific hashtags for events and promotions, has put Rodan + Fields at the forefront of companies willing to step into the future.
Eyes on the Prize
Particularly for innovative companies that are growing rapidly, alluring new technology can become a major distraction. Chasing the latest and greatest trend without a specific strategy can become a black hole, pulling in a tremendous amount of time, energy and especially money. If a new technology comes along that can facilitate a company’s existing core strategy, its pursuit can be a win.
The old marketing standard of the four P’s—product, price, promotion and place—is giving way to “the Three C’s—content, community and commerce,” coined by Partner and Analyst Mary Meeker of Kleiner Perkins Caufield & Byers.
The old marketing standard of the four P’s—product, price, promotion and place—is giving way to Meeker’s updated “Three C’s—content, community and commerce.” Meeker has labeled her three C’s “the Internet Trifecta.” She recommends that brands use these three C’s as the focus of their technology investments. She reasons that relatable content, especially when it connects with a consumer’s daily life, results in sales of products that solve problems for the customer. This, of course, is the goal, and when used well, technology can aid this process. But throwing everything against the wall to see what sticks can be an expensive (and potentially fruitless) process.
Tech authority Keehler warns that he sees companies spread themselves too thin trying to have a foot in too many digital channels. “The real opportunity,” he says, “is to focus on executing a few channels really well.”
This topic has been regularly explored by direct selling companies as they expand their capabilities in technology and grow with their customers. And it was recently reiterated by the CEO panel at the WFDSA meeting. Carlucci expresses his opinion that technology is not an end unto itself, but rather a means of leverage. The CEOs agree on a common message: Each company must choose the right technology, at the right price and right time, and then provide the right training in order to maximize the return. At the same time, it is important to remember that direct selling, at its core, is not about technology at all. It is about one person sharing a product or opportunity with another.
“One of the things that I have championed, and people who have come before me I think have championed as well, is to keep this business simple,” Mary Kay’s Holl says. “You can come up with a lot of technology. In my opinion if you let the IT department lead you down that path, it will be great technology but the salesforce might not use it because it is overwhelming.”
Amway’s DeVos echoes that advice to keep things simple, recounting his company’s experience with its launch of the Internet-focused company Quixtar. “We got ourselves upside-down in the late ’90s when we wanted to be a technology opportunity,” he says. “We were trying to be something we weren’t. Our experience there helped us to say, ‘We’ve got to figure this out in a different way.’ It’s about people. It’s about keeping it simple. It’s about the right pace to have technology be empowering and enabling to our salesforce.”
Keep a Watchful Eye
The frenetic pace of technological development is only going to increase, according to publications that follow tech trends. Robotic innovations in picking and packing orders have most recently captivated the largest fulfillment business of all, Amazon. Previously a client of Kiva Systems—a company whose scuttling robots can organize, pick, pack, ship and track orders in giant warehouses—Amazon decided they would rather just buy Kiva and bring those operations in-house. Amazon CEO Jeff Bezos says the number of picking and packing robots on warehouse floors will increase from 1,000 to 10,000 by the end of the year. Bezos is also planning on future tech developments to fulfill his dream of having drones deliver orders to a customer’s door within 30 minutes of ordering. The possibilities are staggering for all businesses that deliver goods to customers.
Indeed, more and more robots are doing things we consider to be in the domain of human activity. Some robots have embedded sensors that allow them to turn to you and smile at the touch of a shoulder. How might these “human” qualities allow for the delivery of training or other presentations to a sales field?
It’s spectacularly hard to imagine what other innovations are just around the corner. Keeping an open mind and preparing a budget for change seem to be the best course of action. And again, technology, and all that implies, is just the vehicle put in place to enhance the distributor-customer relationship and bring it successfully into the future, with companies better prepared to compete in the marketplace.