June 29, 2014
The $100 Million Growth Club
by Teresa Day
Several years ago, the staff at Direct Selling News began the research necessary to create an industry list that demonstrated the impact and contribution of direct selling companies worldwide. The DSN Global 100 list has become a respected ranking, and each year the research team increases its ability to gather the necessary and relevant information. This annual list creates an opportunity to understand the significance of our industry as a whole, and showcase companies above a certain revenue threshold, which marks them as significant contributors to local and global economies.
We have been very pleased to hear that “making the list” has become a goal for many company executives as they work through their strategic planning for growth. Though the Global 100 list only presents 100 companies, we recognize that there are hundreds of smaller companies all working within our industry that offer excellent products and services, and serve both the needs and dreams of customers and representatives alike. We celebrate and salute them all!
While at work on the 2014 list (which is based on 2013 revenues), the DSN research team recognized a remarkable pattern emerging among a significant number of companies—18 companies, to be exact. These 18 companies achieved such a remarkable milestone during their course of business in 2013 that we knew we had to write about it and share this achievement with you, our readers.
In fact, the achievement appears to be so rare in the general business world that there is actually little written about it anywhere, furthering our decision to bring the information forward. The achievement is this: Eighteen companies on the Global 100 list grew by over $100 million in one year.
While we were, at first, definitely impressed as we saw this pattern and thought about these 18 companies, it was in doing further research on the growth of companies in general that turned our admiration into downright astonishment, and ultimately, extreme pride in their achievements.
Here’s why: Very few companies in any industry ever achieve a growth level of $100 million or more, much less in a single year! With that knowledge we, of course, felt compelled to call out and celebrate this achievement, and further, discover what we could about how and why these companies could reach such a milestone.
However, before we move onto the commonalities of these companies, let’s point out a few pertinent differences. These companies range in age from 2 years old to over 50 years old in operating age. These companies sell vastly differing products, from jewelry to health and wellness and from energy and essential services to cosmetics and skin care. These companies operate in one market to dozens of markets. They are headquartered all over the U.S. and even the globe—Noevir in Japan, Vorwerk in Germany and Telecom Plus in the U.K. Maybe the most apparent and extreme difference in these companies is their size—companies that grew over $100 million ranged from those producing $24 million (Origami Owl) and $37 million (Plexus) in 2012 to five companies already in the billion-dollar range.
We point out all of these differences to emphasize that remarkable growth is possible, regardless of product offered, number of markets served and even company size. In other words, remarkable growth is not only the purview of an already giant, established company.
As we considered this growth number—the $100 million threshold—we found some very interesting commentary on the validity of this number measuring something important. Paul Kedrosky, Ph.D., a senior fellow at the Ewing Marion Kauffman Foundation, contributing editor with Bloomberg Television and founding partner at SK Ventures—an early-stage venture capitalist firm—has written about and studied this $100 million number in conjunction with business growth, and his thoughts on the subject are quite revealing.
In a report issued by the Ewing Marion Kauffman Foundation in May 2013, titled “The Constant: Companies that Matter,” Kedrosky writes, “There are few constants in entrepreneurship—perhaps none. That is why when something appears to be even semi-stable across meaningful periods, it is usually worth further investigation.” The “something” he is discussing in his paper is the question of how to measure a company “that matters.” In Kedrosky’s estimation, a company that can promptly go from founding to $100 million in revenue qualifies as a company that matters. Why? Because these companies impact the economy. Because these companies create jobs and wealth for stakeholders. But primarily because so few actually do it.
According to Kedrosky’s research, which is presented in this Kauffman Foundation short paper, there are roughly half a million (552,000) new “employer firms”—those that employ others as workers—opening in the U.S. each year, every year. Since 1980, the number of those firms that reach $100 million in revenue at some point has been pretty stable, and it’s a very small number—only between 125 and 250 firms out of the entire half a million.
Let’s break that number down into a percentage. If half a million employer firms are created every year, and at the high end, only 250 of them ever go on to achieve $100 million, that’s less than one-half of 1 percent. Supporting data from the U.S. Census Bureau shows that even during a six-year window, only 175 companies out of the half a million new ones every year ever achieve the $100 million mark. No wonder Kedrosky uses this achievement to qualify a company as one “that matters.”
This data says that ever reaching $100 million in annual revenue marks you as a company that matters; a company that has significant staying power; a company that puts you in the top quartile of companies within your industry, no matter what it is. But we feel that this stunning statistic makes our $100 Million Growth Club even more of an outstanding achievement for these companies, because not only have they achieved and exceeded a mark that less than one-half of 1 percent ever reach, but they have duplicated that effort in a one-year time frame! We again salute and celebrate these 18 companies for a truly remarkable achievement.
Of course, the natural next question is how on earth did they do it? So we took a hard look at this group of remarkable companies, and though they are incredibly diverse, we found that they did, in fact, have some best practices substantially in common.
- They have tremendous focus on their brand and product.
- They utilize tools for their salesforce.
- They invest in customer acquisition.
- They emphasize personal development in their culture.
- They focus on developing strong leaders.
Focus on Product/Brand
Staying focused has the natural result of bringing things into alignment, and since you can’t be focused on multiple things at once (focus just doesn’t work that way), staying focused automatically generates simplicity.
Peter Drucker, hailed as the father of modern management, very precisely puts it this way: “There is nothing so useless as doing efficiently that which should not be done at all.” In addition to identifying what should be done, focus helps identify those things which should not be done.
Staying focused requires discipline and attention. It can be difficult; it can feel ”boring”; it can feel like putting a straitjacket on creativity; it can feel too simple; it can feel that opportunities are passing you by as you focus on one main thing; however, those companies that have been able to do this have reached this remarkable achievement. Their leaders would tell you that the benefits of the discipline far outweigh any opportunity that would have distracted you.
It Works! is one of the 18 companies in our $100 Million Growth Club, and CEO Mark Pentecost is one executive who set his sights on “making the Global 100 list” a couple of years ago. Prior to this decision, it’s important to note that It Works! had been a successful company for nine years, and had grown at a respectable rate each year to $45 million in 2011. Placed against the data presented in this article, It Works! had already achieved success. But Pentecost wanted more, and he knew that by creating a simple message and staying focused upon it, his team could achieve it.
Pentecost says, “I’ll never forget that day near the end of 2011 when I met with members of our team—both corporate and in the field—and we made one decision that will forever be a milestone in our company history. We set a goal to double the company in 2012. That was a big goal. That meant we would create over $100 million in sales in the next 12 months.”
With singular focus, the small, respectable company truly exploded into growth. In 2013, the company debuted on the Global 100 at No. 56 with 2012 revenue of $200 million. This year, it moved up to No. 26 with 2013 revenue of $456 million.
“Anyone can complicate things,” Pentecost says. “It takes genius to simplify it. We had one message from the top down, and we worked hard to stay focused. We said no to anything else that came up.”
Researcher and celebrated business author Jim Collins writes about the “Stop Doing” principle, something he learned from a grad school professor at Stanford and has applied ever since to his own thinking. He writes, “… the ‘stop doing’ list became an enduring cornerstone of my annual New Year’s resolutions—a mechanism for disciplined thought about how to allocate the most precious of all resources: time.” Collins also incorporated the Stop Doing List into his criteria of what makes a company great in his celebrated book Good to Great, giving examples of great leaders who were able to make big decisions about what to stop doing in order to achieve the greatness they were capable of.
Nu Skin President and CEO Truman Hunt and his team utilized the “Stop Doing” principle when they scaled back their products and brands to one anti-aging line, AgeLoc. The focus has clearly paid off. It was however, a very big decision. Nu Skin had expanded its operations to include three distinct opportunities: Nu Skin products, Pharmanex and Big Planet. Different management teams ran each division, and they competed with one another. Hunt decided to focus the opportunity on one path.
Hunt says, “We took advantage of that moment in time to evaluate all business issues. There were no sacred cows, and it resulted in an overhaul of our organization and strategy. The process was not without pain, but it was also clearly a key point in the growth of our company.”
Two companies among the 18 are exceptional primarily because of their extreme focus on offering one product in one market. Interestingly, the two companies couldn’t be more different—one is skin care, and one is energy. Nerium achieved over $200 million in revenue in its second full year with only one product in one country. Ambit has been the fastest company to achieve the billion-dollar threshold—within seven years—in only 14 states in the U.S. with one product. Focus clearly has played a central role at both of these companies.
Tools for Salesforce Support
Applying disciplined focus to your product line and brand will only get you so far if you don’t also carry that focus into your field support and training. No matter what product or service is being sold, every sales field needs simplicity and clarity in order to achieve the kind of growth our 18 companies achieved. It’s important to remember that those entrepreneurial souls who are your brand ambassadors are also very creative. In the absence of simple, clear and duplicable tools and systems, creative salespeople tend to create their own processes and selling methods. While this may produce enormous success for one or two individuals, it does not translate across the field to everyone. In order to achieve uniform success across the entire salesforce—which is necessary to generate $100 million achievements—the field needs simple and duplicable systems.
In just two remarkable years, Nerium has developed an expert ability to provide its salesforce with simple and duplicable tools. By so doing, they have maintained incredible consistency for their independent representatives in the form of support tools, training materials and back-end support, enabling even brand-new IBOs with no experience the ability to set up shop quickly and dive right into their businesses.
Each new representative receives the same starter kit, which includes a DVD that trains the individual on company business practices, along with other standardized materials to get them and keep them on the right track. From their first day in business, each representative has access to online support tools that are personalized for them. Every representative has the same experience, and every customer has the same experience, enabling the company to present a uniform, and clearly successful, approach to the business.
With two decades’ worth of experience in creating back office systems for other direct selling companies, Randy Ray and Wendy Lewis were well-versed in tech support tools when they decided to launch Jeunesse, the anti-aging skincare company, which grew from $126 million to $267 million in 2013 (growth of $131 million) and was seated at No. 46 on the Global 100 list. Their prospecting system easily allows a distributor to share a video on any social media platform, and the viewer can immediately request a free sample (paying only shipping). The company’s extensive tools support allows a distributor to enter the business and share products from almost anywhere in the world.
Most, if not all of the 18 companies on our list use consistent and simple tools to support and train their sales field such as DVDs, magazines and brochures, mobile apps and websites. Herbalife’s President Dez Walsh told DSN that he believes the continued use of systemized training methods to support distributors is a primary reason for his company’s sustained growth.
Investment in Customer Acquisition
Though in our industry many distributors are also customers, a business can’t grow to the levels we are discussing without creating a strong customer base.
In looking at our 18 growth companies, we found they had various means of reaching new customers, including investing in technology and reaching out to Gen Y, expanding physically into new markets and territories, and reaching out to new customers through sports sponsorship programs.
In all customer acquisition strategies, it is imperative that the company follow the customer. A company can no longer insist that a customer follow them; the balance of power has shifted, and it is now necessary for the company to meet the customer where they want to be met, whether it’s on Facebook or literally in a new market.
For example, Vemma has developed a customer acquisition strategy targeted at the very tech-savvy 80 million Generation Y’ers, the oldest of whom are now in their mid-30s. According to a study produced by Oracle on Gen Y’ers’ banking habits, their annual spending next year is projected to be $2.45 trillion. They don’t read newspapers, they don’t pay attention to TV advertising and they pretty much disregard anything that isn’t digitally produced. Vemma has captured their hearts and minds by tailoring the message and the messenger to be exactly what they want. Once these young people got their own revolution going at Vemma (YPR—Young People Revolution), they propelled an already somewhat successful company onto the Global 100 list at No. 81 with $117 million in revenue; and then skyrocketed the company to No. 53 on this year’s list with over $100 million in growth.
When Herbalife came to understand in some of their markets that people don’t shop the way Americans do—by stocking a pantry and large refrigerator with days’ and days’ worth of food—they made an effort to understand what was happening, and why. As a result of understanding their customers’ habits, they created a daily consumption model that mirrored the way people actually behaved in those markets.
The daily consumption and nutrition club model has also revealed additional benefits for Herbalife that have aided in their sustained growth. A social aspect has developed around the clubs, producing more and more frequent customers; and customers go to the distributor—rather than the distributor going out to them—which creates great efficiencies for the distributor.
AdvoCare puts its brand in front of millions of fans of NASCAR racing, professional soccer, and both college and pro football through its sports sponsorship programs. AdvoCare is the first-ever jersey sponsor for the Major League Soccer team FC Dallas—prominently displaying the company logo at every match, including those broadcast on national television. Other sponsorships include the No. 6 AdvoCare Ford Mustang in the NASCAR Nationwide Series in 2014, driven by the youngest-ever winner of the Daytona 500, Trevor Bayne. Drew Brees, quarterback of the New Orleans Saints and MVP of the Pro Football World Championship Game, is AdvoCare’s official National Spokesperson and helps lead the AdvoCare marketing efforts.
Expansion of the customer base is a foundational practice of each of the 18 companies on our list, regardless of their product, markets or even methods.
Emphasis on Personal Development
Today, personal development is an integral component of most direct selling companies, and its roots can be traced way back to the inspirational and motivational leanings of David McConnell, Mary Kay Ash, Mary Crowley and others who forged our industry.
Including a personal development program for representatives actually provides the company with great benefits. Mary Crowley, Founder of Home Interiors & Gifts in 1957, said, “If you grow your people, you will grow your business.” Many executives can testify to the truth of this statement. The 18 companies on our extraordinary growth list all pay attention to the personal development and growth of their salesforce.
Giving your salesforce access to personal development materials can take many forms, including utilizing tools, speakers, systems and opportunities to create a culture based around personal growth and awareness. It’s a cultural mindset and requires investment—just as product development and marketing efforts require attention and investment. Access to personal development material should be a critical part of the new representative’s first experiences. This can be accomplished by including CDs, DVDs, reading material such as magazines, or access to subscription services for personal growth.
Personal development and culture development can also be facilitated by your event strategy. Great events on consistent rhythms create great cultures. Great companies have powerful cultures. In fact, it’s that unique culture of your company that attracts the people you want in your organization and keeps them there.
ACN’s large-scale quarterly events represent an essential component to the company’s success system, which is why event after event, year after year, IBOs turn out in droves for its events. Almost 20,000 of them from around the world flocked to ACN’s hometown of Charlotte, North Carolina, for the company’s International Training Event last September, and they continue to host sold-out events quarter after quarter.
“It’s not a coincidence that the top people in ACN never miss an event,” observes Greg Provenzano, President and Co-Founder. “We hold them quarterly and they truly provide the motivation and fuel our IBOs need to build their businesses. For a brand-new person, there is nothing quite as powerful as walking into an arena of 20,000 excited, supportive IBOs. It truly is the best way to be exposed to our opportunity and to see the big picture of ACN firsthand.”
Vemma and It Works! recently went from a one-event-a-year system to four events a year. Many of the other growth companies are having at least two events a year on a national basis, plus regional and leadership events. These companies are creating consistent local, regional and national rhythms with their events as they try to build their culture and build their companies. By staying in front of your people, you can keep them engaged, keep them motivated, keep them fired up, keep them going when they don’t feel like it. We all know great events and great rhythms build great cultures. They also create an emotional attachment between your salesforce and the company—and the salesforce among themselves.
Focus on Developing Strong Leaders
Great cultures also create great leaders. The 18 companies in the $100 Million Growth Club all adhere to one final best practice: They create positive environments where people, particularly women, have the ability to grow into strong leaders capable of successfully replicating their business opportunities through others.
That positivity derives from the shared belief that anyone has the potential to succeed in direct selling. Two of the Global 100’s top 10 companies—one a network marketing company and the other a party plan company—have proved over the last half-century that focusing on leadership skills strengthens not only the individual but the business itself.
The No. 1 direct seller in the world, Amway, was founded by Rich DeVos and Jay Van Andel with the core belief that people, not products, were the greatest resource. The company, which recorded $11.80 billion in net sales in 2013, embraces “diversity of opportunity” which, according to current Amway President Doug DeVos, “enables stronger global expansion and [helps] manage change and opportunity.”
Amway IBOs are provided with leadership skills training upon joining the company and as they climb through the different levels of the organization: Platinum, Ruby, Sapphire, Emerald, Diamond and Double Diamond. They are also provided with the assurance that leaders in their upline maintain the highest levels of honesty, integrity, responsibility and accountability. “They can count on these values to be placed front and center when it comes to ensuring products are safe, individuals are reliable, compensation is fair, training is effective, and support and guidance are readily available,” Doug DeVos states.
Mary Kay, which broke into the Global 100’s top five this year with $3.60 billion, has since its inception been an organization that has grown exponentially because of its development of female leadership. Of course, such skill training was of the utmost importance to its founder, Mary Kay Ash, who in a 1985 Inc. interview stated, “I feel like I’m doing something far more important than just selling cosmetics. I think we’re building lives.”
Today the company’s beauty consultants can count on leadership training as they progress from consultants to sales directors and national sales directors. “You cannot keep a determined person from success,” Mary Kay once exclaimed. “If you place stumbling blocks in her way, she will take them for steppingstones and will use them to climb to new heights.”
The Clues of Success
The 18 companies that achieved over $100 million in growth in a single year did something so remarkable that very little is written about it. We hope this brief article showcasing these companies and sharing some of their common strategies will inspire many more to focus on a similar achievement for themselves. These companies have not been successful by accident; they have left clues for everyone else to see and follow.
We expect that next year even more companies will achieve the remarkable milestone of growing $100 million or more!