Founded: 1984
Headquarters: Provo, Utah
Top Executive: CEO Ritch Wood
2016 Revenue: $2.208 billion
Global 100 Ranking: 11
Products: Beauty and Wellness
Nu Skin Enterprises, the skincare and wellness company founded by Blake Roney, Sandie Tillotson and Steve Lund in 1984, has been able to consistently rank among the upper echelon of direct selling companies in the world because it has remained consistently focused on one tenet: innovation.
Ritch Wood
Today, in a time when worlds are colliding—in the marked differences between the wants and needs of generational cohorts and in the disruptive industries emerging—that focus on innovation has helped the Provo, Utah-based company move confidently into a new world inhabited by a millennial workforce that is driving sales and impacting how products are brought to market through social selling. The company has been able to gracefully pivot in a rapidly evolving world, embracing the newest trends without altering the integrity upon which the company was built.
“We are finding that what we have advantaged in our industry are very evolutionary entrepreneurs, and that mandates that businesses be highly innovative and constantly forward-looking,” says recently appointed president, Ryan Napierski.
The 3 P’s Strategy
The pivot in business strategy comes at a transformative time in the company’s history. Earlier this year, President and CEO Truman Hunt accepted a three-year leadership assignment with the Church of Jesus Christ of Latter-day Saints. The DSA Circle of Honor recipient had his successor in mind when he made the announcement.
Ritch Wood, now CEO, has been with Nu Skin for 22 years, the past 14 years sitting in the office next to Hunt’s in his role as Chief Financial Officer. “I was involved in the important decisions of the business but was not necessarily responsible for the growth of the business,” says Wood, who was recognized in 2010 as CFO of the Year by Utah Business magazine. He says he was more focused on the financial security of the business.
|
Now with that responsibility to continue growing Nu Skin, Wood has been focused on simplifying the Nu Skin opportunity for sales leaders to help them be successful in a world that’s changing—one changing in the direct selling channel’s favor, in his view. “We’re moving to an area where social selling, or person-to-person selling, is so easy and so well accepted,” he says. “It’s a tremendous time for us as we see the enthusiasm coming into our salesforce.”
Based on that enthusiasm, Wood wasted no time in setting his vision for the company. He developed the “3 P’s” growth drivers that focus on the company’s platforms, products and programs. The strategy calls for a platform that simplifies the ability to communicate Nu Skin’s message and expand the channel through the social selling platform, product development that allows today’s entrepreneurs to easily demonstrate products, and programs that increase the velocity of how the company builds its leaders and enables them to be successful.
“It’s a pretty simple strategy, but it requires alignment as a company and with our sales leaders,” says Wood. “We’re really excited about the direction we are going.”
Social Selling Platform
When Hunt stepped down, Ryan Napierski was named President of the company. Napierski, who had spent the prior eight years leading key international markets for Nu Skin, is now focused on aligning the organization around Wood’s growth strategy.
He says he and other company leaders refined the organization, providing independent business owners with a robust strategy to help them take advantage of current macro-trends related to millennials, the gig economy, and social media networks, as well as the impact those are having on consumer products companies.
Millennials play a rather key role in Nu Skin’s growth strategy, and with good reason. Their ability to share product and company stories through social selling is already impacting the bottom line. In the second quarter of this year, social selling helped drive company revenue growth up in the Americas by 14 percent and 1 percent in the EMEA regions.
|
However, the millennial savviness with social selling, when combined with their desire to be independent contractors, form the greatest growth opportunity for the company. Recent studies have shown that the macro-trend occurring in the workforce today—in which independent contractors are making up a larger part of the workforce—suggests that by 2020 over 30 percent of the workforce will be independently contracted.
Napierski says this trend toward the independent workforce is quite clear with the emergence of gig companies such as Uber, Airbnb, Etsy and Lyft. Their disruptive business model is driven by those who are looking for part-time income or want a more flexible schedule.
Of course this is not new for direct selling, he says, as he considers its opportunity the original gig. All direct selling companies, since the business model’s beginning, essentially provide what the gig economy is based on—freedom and flexibility.
And as direct selling is ideally positioned to play in the gig economy, social selling is simply the integration of social media channels and traditional direct selling practices. “We believe that social selling is rapidly becoming the new direct selling,” Napierski says. “It is another way of describing the future of direct selling. We believe that the guiding principles, or the key success factors of direct selling, very much apply in the social selling world. It’s still a person-to-person direct interaction. There are obviously commercial aspects to that, but it is fostering personal relationships to share an opportunity and sell products. It is an evolution of the historic direct selling model.”
Nu Skin employees, distributors and families assemble packages for those in need.
Demonstrable Products
Dr. Joseph Chang, Nu Skin’s Executive Vice President and Chief Scientific Officer, recently received a badge for 20 years of service. During those two decades, the co-founder of Pharmanex, which was purchased by Nu Skin in the 1990s, has seen much in the innovation and development of the company’s revolutionary products. What he is now witnessing is a transformative stage. That is, the history of innovation for which Nu Skin is known continues, but a social selling component to product development now enhances the sharing of company products.
Why is social selling now a part of product strategy? The fact is that millennials are not only driving product sales, but they are also impacting how products are being brought to market. At Nu Skin, ageLOC has been the brand the company has been using to demonstrate its innovation and to communicate how new anti-aging products are developed, both for skin care and the nutritional supplement categories. However, millennial needs and interests are very different from what the company has seen previously from its customer base and in the historic direct selling channel.
|
Case in point: Nu Skin’s AP24 Whitening Fluoride Toothpaste has been in the product catalog for many years. Last year, a millennial leader noticed the product, used it and then shared the benefits received from it on social media channels. The result? U.S. sales of the toothpaste not only just skyrocketed, they went off the charts.
That unmistakable power of social selling made Nu Skin executives sit up and take notice. Now, to capture and ensure millennials remain in the Nu Skin business when they come through the entry door, the company is focusing a significant portion of innovation on developing products that are shareable on social media platforms such as Instagram, Snapchat and Facebook. And, as millennials are just beginning their careers, Nu Skin is focused on products that appeal to their needs.
At the upcoming Nu Skin Live event in October, many new products will be launched, including ageLOC LumiSpa, a dual-action cleansing and skin renewal device. All of the new products are a tribute to social selling, all easily demonstrable for distributors to share over social media channels. Typically, it takes Chang and his team 12 to 18 months to develop products from scratch. However, to meet the 3 P’s Strategy, they partnered with outside vendors who share the company’s commitment to product innovation.
“We are not relying on just our internal resources,” says Chang. “While innovation has always been a part of our DNA, we want to make this kind of innovation more accessible to millennials. By making these products more shareable and demonstrable, we think we can attract and keep them in the Nu Skin world much longer than before.”
Incentivized Programs
At the Nu Skin Live event, executives will also be unveiling the Program part of the 3 P’s Strategy that is geared for sales leaders and distributors. While details were not available, according to Wood the plan calls for increasing the frequency of payments and making it easier for salespeople to receive commissions more quickly, both of which will help accelerate the pace of the business.
Nu Skin Enterprises headquarters in Provo, Utah.
“What’s driving the gig economy are millennials, Gen Ys who have been in the workforce for some time and are expecting something different than a traditional employment relationship offers,” says Napierski. “What they are seeking is that flexibility, that freedom, that quality of life.”
That realization caused Nu Skin executives to look at the company’s business model and how its distributors build the business, as well as what behaviors are necessary to reward or incentivize and in what time and sequence they should occur.
Napierski says they have been working over the past two years on a global project to enhance the company’s business model, including compensation, recognition and incentives, to take advantage of Nu Skin’s historic strengths. While it has always been a leadership-driven opportunity company, he says, leveraging those strengths needs to be more effectively applied to the evolving workforce expectations of gig workers.
Next Generation Nu Skin
Nu Skin achieved $2.2 billion in annual revenue in 2016. By leveraging the power of social selling, Napierski believes the company can move much more quickly than they previously thought possible toward a goal set during Hunt’s tenure to become a $10 billion business. It was only a question of time, Napierski says. Now, the plan is to get there a lot quicker than had been anticipated before social selling.
|
That may appear to be a lofty goal considering the current challenges direct sellers are facing in Mainland China, which accounts for approximately 30 percent of Nu Skin’s revenue. In 2016, China’s overall direct selling market growth was only 1.9 percent, well below the 18 percent it had achieved for the three previous years. In addition, government regulations and a tightening on licensures are sure to affect sales growth for the market. However, in 2016, Nu Skin sales grew in China by 8 percent, and its customer base by 23 percent. For the first six months of 2017, sales growth has increased 6 percent over the prior year.
Despite decreases in its South Asia-Pacific markets for the first half of this year, growth in China, as well as the Americas (7 percent) and EMEA (3 percent), is providing Nu Skin with momentum for the remainder of 2017. Add in the new growth strategy, and the future does look promising.
“These opportunities don’t come around very often, where the trends of the world seem to be aligned with the trends of your business,” says Wood. “I think it puts us in a special place to have success.”
The $10 billion revenue goal would certainly make Nu Skin the largest direct seller in the world, but Wood is not limiting his sights on the direct selling channel alone. “All of us, as direct sellers, must have a bigger perspective of how we can play in a global economy that needs what we have,” he says. “People want to look and feel better. They want to have economic opportunities, feel confident in themselves, develop a skill set and work with a purpose-driven company that they really enjoy. This is what we offer to the world.”
|
And while reaching such goals would be tremendous achievements for the company, in today’s evolving and disruptive world, true success for Nu Skin remains in living up to its potential to impact the lives of millions around the world.
“As we look at our growth strategy in our platforms, products and programs, it’s all about transforming Nu Skin in a way that is more appealing for our independent entrepreneurs to enable them to go out and achieve their goals and their dreams,” says Napierski.
Click here to order the October 2017 issue in which this article appeared.
