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July 02, 2010

Company Spotlight

XanGo: Zeroing in on Explosive Growth

by Barbara Seale


Category creator XanGo has been a pioneer in so many areas that it could rest on its laurels. Instead, it’s rejoicing in a new wave of vigor, enthusiasm and growth.

With upward trends in the important areas of new sign-ups, distributor retention rates, average order size, customer numbers and even rank advancement, it’s no wonder President and CEO Robert Conlee felt confident setting a bold goal that will have exponential effects on the business: to double the number of active XanGo distributors by the end of 2012.

Will it become the first (by then) 10-year-old direct selling company to accomplish such a feat? Its record says it will. It loves being an innovator: first to market with a mangosteen product, creating the category; and the first company in America to place its name on the jersey front of a professional sports team—current Major League Soccer Champions Real Salt Lake. It was an early adopter of social media, creating XanGo TV, which lets distributors post their own videos and celebrate their successes. And it created a unique brand with just a little edge that reveals its unique culture: XanGo is a community where you can have fun while doing a lot of good and making as much money are you’re willing to work for. Together, all those factors are creating mangosteen-momentum.

“Despite the challenging economic climate of the last two years, we are experiencing a resurgence and new growth globally in 2010,” says XanGo Founder and Chairman Aaron Garrity. “There’s a real sense of renewal and increased momentum at XanGo right now.”

Gary Hollister
Gary Hollister, Founder and board member
Aaron Garrity
Aaron Garrity, Founder and Chairman
Joe Morton
Joe Morton, Founder and board member
Gordon Morton
Gordon Morton, Founder and board member
Kent Wood
Kent Wood, Founder and board member
Bryan Davis
Bryan Davis,  Founder and board member

First to Market

The journey to its historic spot in the industry started in Southeast Asia in 1997, when Joe Morton sampled a local delicacy, the mangosteen, which residents called the queen of fruits. Its flavor burst in his mouth—crisp, cool and sweet while slightly tart. Joe was no stranger to botanicals. His mother ran a health food store, and his father managed Canadian operations for a pioneering natural health company. But the mangosteen was new to him. He learned that Southeast Asian civilizations had traditionally eaten the mangosteen to combat the effects of dysentery and diarrhea. They also used it topically to treat skin disorders. Joe was intrigued, and when he returned home, he pulled together his brother Gordon and colleague Aaron Garrity to share his insights. The three immersed themselves in mangosteen research. The stacks of impressive documents and scientific studies they discovered convinced them that the mangosteen was a rich source of incredibly powerful antioxidants. Yet mangosteen products were unheard of in the United States. To the three entrepreneurs, that spelled opportunity.

“There’s only one chance to be first to market,” Joe Morton recalls. “This was it. When you’re first to market, everyone compares themselves to you, the original.”

They recruited business experts Gary Hollister, Kent Wood and Bryan Davis to help them get the company started. In September 2002, they launched throughout the United States with a single product, XanGo Juice, and soon expanded into Canada.

“Right from the beginning, we had a feeling,” Morton says. “People would show up on our doorstep wanting to know more about the product.”

Demand increased quickly. Morton remembers visiting the manufacturing facility for the first run of the product and begging for more samples just to keep up with demand. The number of distributors was growing at a dizzying rate. Soon, the founders started hearing personal stories from people who were seeing great benefits from drinking XanGo Juice.

Product Powerhouse

The testimonials increased the founders’ excitement and commitment to distributors who were making the company such a huge success. They wanted to ensure that the XanGo story was easy to learn and tell, so they kept a laser focus on their single product. That is, until spring 2008, when XanGo introduced the XANGO 3SIXTY5 vitamin pack. This complete blend of essential vitamins and minerals fully complements the daily dose of XanGo Juice and consumers’ other health and nutrition practices. XanGo utilizes “chelated technology,” which coats 3SIXTY5’s whole-food ingredients in amino acids, driving increased absorption. The chelated approach with whole food is designed to ensure greater bioavailability to better receive the benefits of a full spectrum of vitamins, minerals and essential fatty acids. Formulas featuring a xanthone-rich mangosteen-peel concentrate are available for both men and women.

Later that year came Glimpse Topical Skin Nutrition, the first personal-care brand to bring mangosteen topical nutrition to a global market. The Glimpse line features premium topical facial care, mineral foundation and highly concentrated mangosteen pericarp oil products. In addition to providing a bigger product portfolio, complete with additional income opportunities, Glimpse and 3SIXTY5 did something else: They subtly transformed XanGo from a nutritional beverage company into a wellness company, with a strong emphasis on the mangosteen fruit.

Today, the line of product powerhouses also includes Eleviv, a dietary supplement capsule that works synergistically with XanGo Juice. Eleviv supports natural vigor, a scientific term that describes a balanced state of physical energy, mental acuity and emotional well-being. Eleviv’s blend of four proven ingredients is precisely formulated to restore the body’s natural balance without the addition of unnecessary caffeine, sugars or other stimulants. Driving expanded business opportunity as another XanGo category creator, Eleviv is quickly gaining market share.

Juni Family Care, the latest product from XanGo, is a gentle line of hair and body care for the whole family. Juni’s blend of botanicals can help calm, cleanse, purify and hydrate hair and body. Mangosteen and fresh lavender combine to create a soothing effect and aromatic scent for an all-natural, clean feel. The word Juni was taken from a Chinese word that means “blessed,” and XanGo developed Juni to bless families with a safe, cost-effective shampoo, conditioner, body lotion, body wash and bar.

So that distributors and consumers can feel completely assured when they use anything XanGo sells, its products have been through clinical trials with stellar results. For example, one clinical Eleviv test showed an 82 percent improvement in vigor score in just seven days. The health-promoting effect of XanGo Juice on overweight persons with inflammation was shown in a double-blind, placebo-controlled, human clinical test. The test demonstrated the ability of XanGo Juice to reduce C-reactive protein (CRP), a key marker of inflammation, at three different dosage levels, while test subjects in the placebo group actually experienced a small increase in the amount of CRP.

Combined, the effects of XanGo Juice and Eleviv have an even more dramatic and synergistic effect on measures of metabolic balance, CRP and psychological mood state. The latest research, presented at this year’s prestigious Experimental Biology conference, shows a 59 percent decrease in CRP, a clear

improvement in metabolic balance (as measured by a 421 percent increased ratio between free androgen index and 24-hour cortisol exposure), 27 percent improved vigor and 34 percent reduced tension, all deemed statistically significant changes.


Dedication to Distributors

The clinical trials and expanded product line are just two examples of XanGo’s commitment to the success of its distributors—a million-member army that executives typically refer to as their business partners.

“It’s not a corporate versus distributor mentality at all,” CEO Conlee says. “We’re all on the same team. We just have different roles.”

Distributors have extraordinary access to company executives and facilities. Each distributor actually has Conlee’s personal contact information, and distributors hold meetings and presentations at company headquarters near Salt Lake City at least three or four days a week in rooms designed specifically for that purpose.

“This building was built for our distributors,” says Scott Smith, Senior Vice President and General Manager, U.S. and Canada. The building boasts customizable meeting rooms, juice bars, and even areas with toys and activities where kids can play while their parents conduct business.

XanGo’s goal is to create “legendary experiences” for its distributors, right down to their reaction when they walk into the lobby.

The headquarters is one of three expansive buildings totaling 280,000 square feet on a 30-acre corporate campus.

“We’ve invested millions and millions of dollars in our building and infrastructure because that’s an important element of our company,” Garrity says. “We’re not renting our office. We’re here to stay. There’s no smoke and mirrors. This is a brand that’s invested over the long haul.”

Even beyond the headquarters building in Utah, call center staffers are working 24 hours a day, seven days a week somewhere around the world.

“We try to provide service that our distributors will remember,” Smith says. “We want our distributors to feel like we have treated them better than any other company in the world.”

Goal: Maximum Success

In addition to its distinctive product line, unique culture and attention-getting branding program, XanGo shows its commitment to distributors by providing them with a compensation plan that delivers a true 50 percent payout on every product. They expand on that commitment in tangible ways every year. The result: XanGo now does business in 34 countries, has created several dozen millionaires and has generated nearly $2 billion in cumulative revenue.

The experience gained in achieving those impressive results has taught the company’s management a lot of lessons and has made them really good at launching new markets, Morton says. He cites Portugal’s nearly 500 percent growth during the last six months of 2009.

“With a great compensation plan, great products, strong branding and, most important, incredible distributor leaders who are visionary and united, XanGo has an enormously bright scope for the future,” Morton says.

Eleviv Brand Bonus

Coca-Cola, Apple, Tiffany, Google, Harley-Davidson. They’re all brawny brands known around the world. Whether or not you speak the language, in almost any country, you can order a Coca-Cola. That’s the kind of mindshare XanGo has targeted since its birth.

And it’s well on its way. XanGo’s six founders recognized right away that, although their initial success would be based on the mighty mangosteen, it takes more than one ingredient to build a brand. The founders wanted to create a lifestyle, a look and a culture that would be unmistakably XanGo. So they developed an ever-evolving family of brand elements that includes colors, shapes, practices and sponsorships that open the door to the elite club of companies with well-known brands like Google and Harley. They developed sleek, unified and sophisticated product bottles; attention-getting marketing materials; and distributor kits with a distinctive look. All of them deliver a can’t-miss message that says, We’re something special!

“That was part of our lead into the marketplace,” says XanGo Founder and Chairman Aaron Garrity. “We wanted our company to have a little sex appeal. From the presentation of the business opportunity to the way we do our meetings, that’s all innovative marketing that wasn’t happening almost eight years ago when we were founded.”

The unifying visual force: the vibrant orange color that has become XanGo’s signature. It represents the color worn by monks in Southeast Asia—the keepers of the book of remedies that has been handed down for generations, and the go-to guys for centuries when anyone got sick. Undeniably, the cheerful color helps the company stand out. Founder and Board Member Gordon Morton recalls a convention in Salt Lake City when the company handed out orange XanGo-branded umbrellas to distributors. Guess what? It rained. And 8,000 enthusiastic attendees turned the city streets orange as they made their way around town.

Becoming a household name is so crucial to XanGo that in 2006, the founders figured out one of the company’s many “firsts.” It became the first company in America to place its name on the front of a professional sports team jersey. The three-year sponsorship with the Real Salt Lake soccer team splashed the XanGo name onto television screens all over the world, offering great brand visibility. Garrity recalls wearing a XanGo shirt on a trip to Norway. The shirt prompted a stranger to tell him that they had seen the XanGo name during a soccer match on TV. The current Major League Soccer champions, Real Salt Lake, were seen by tens of millions of viewers last November when the club donned the XanGo logo across its chest and hoisted the Anschutz Cup as league champions.

“This sponsorship is front and center wherever the team plays and provides opportunities for our distributors to engage in conversations about what the name on the jersey means,” Morton says.

The company’s branding efforts paid off, and fast. When the company was only 5 years old and still had only one product, an independent survey found that 4.25 percent of Americans had heard of XanGo. That’s two times better recognition than high-definition TV had in its first eight years of business. The company believes it’s well on its way to boosting its name recognition to its 10 percent goal.

XanGo executives promise that their brand-building efforts are still in their infancy.

“You haven’t seen anything yet,” Garrity says. “We’ve got some pretty great ideas that have been brewing for a long time. It’s hard not to just do them all, but at the same time, we can’t sunburn the market.”

Every step the company takes to enhance the brand is another demonstration of its commitment to help distributors build their businesses. Having the status and support of a successful brand makes every conversation about XanGo easier.

“At the end of the day, what we do facilitates the distributors’ work,” Garrity says. “There’s a young, fresh and aggressive approach that carries over into everything we do. There’s not another company out there like us. We’re determined to carve out the path in this new generation of network marketing.”


Seasonless Smiles

On any given day, you’ll find XanGo employees and distributors involved with one of their favorite things: creating smiles.

Whether it’s a mission to a foreign country to support medical volunteers performing cleft lip and cleft palate corrective surgeries, distributors buying XanGo Goodness Meal Packs, or some of the company’s 500 employees spending time volunteering for their favorite causes, philanthropy is in the company’s DNA.

It’s all part of the company’s charitable program, known as the XanGo Goodness Movement, a unique program allowing everyone in the company—from top executives and employees to distributors and consumers—to be part of XanGo’s commitment to giving back. The XanGo Goodness Movement actively supports service initiatives with charitable partners around the world. Last fall, the initiative grew, as XanGo launched the XanGo Goodness foundation, a public 501(c)(3) charity. The foun

dation raises money to supplement the company’s ongoing efforts, which are funded through a significant portion of net profits of product sales.

Beginning in XanGo’s early days, before the effort was so well organized and known by name, company founders were committed to charitable giving that would grow as the company grew.

“We were like most startups with very humble beginnings,” says Founder and Board Member Gordon Morton. “But the charitable contribution has always been hard-wired into our company.”

The company’s flagship effort is Operation Smile, a worldwide children’s medical charity dedicated to helping improve the lives of children born with cleft lips, cleft palates and other facial deformities. This spring, XanGo and Operation Smile initiated a series of joint missions to Mexico, Thailand and Russia that, when finished, will have provided life-changing surgeries to some 350 children. So far, XanGo founders, executives, staff members and local distributors have pitched in on-site to comfort children and families awaiting surgery and to help wherever they can.

The missions demonstrate just how hands-on XanGo’s charitable efforts are. People dig deep to make donations, but they also roll up their sleeves to do everything from build schools and sanitation facilities in Ghana to rebuilding a Thai fishing village decimated in the 2004 tsunami.

Even distributors who can’t journey around the globe to help out can participate in the company’s meal pack program, which has been active for almost three years. Donations from nearly 10,000 XanGo distributors provide the meals in extremely poverty-stricken areas of the world, such as Cambodia, El Salvador, Ghana, Haiti, Kenya, Myanmar and Zimbabwe. Each meal pack consists of a dry-powder formulation for the severely malnourished and is distributed by AmeriCares, a nonprofit disaster relief and humanitarian aid organization. XanGo distributors have donated some 1.5 million meals in just two and a half years and are expected to reach the 2 million mark by the end of this year.

Charity starts at home, and last fall, XanGo’s home office in Utah sponsored its fifth annual Best Buddies Day, held on the company’s seventh anniversary. Through a 5K run/1K walk, employees and distributors teamed up to raise more than $8,000 for a nonprofit organization dedicated to enhancing the lives of people with intellectual disabilities. Students from the local Best Buddies chapter partnered with a XanGo employee “buddy” for a day to learn about their job and spend some quality time together. That initial introduction often leads to relationships that last for years.

Full-time XanGo employees at the home office are encouraged to spread XanGo Goodness through a program called Taking Time 2 Care, which reimburses them for two hours a month spent volunteering for their own favorite causes.

“It’s very rare to go through a day here at XanGo without some mention of a mission or a charitable project that people are working on—and I like that,” Morton says. “It makes for a really great balance of business and humanities.”

At home and around the globe, XanGo has donated many millions of dollars and countless man-hours to a wide variety of charitable causes over its almost eight-year life span. And as its number of distributors and volume of sales increase, XanGo will have an even greater global impact.