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November 22, 2014
This Week: Creative Memories Reopens, Gardening Meets Social Selling
Catch up on this week's industry chatter with these click-worthy links:
- Ahni & Zoe, the Minnesota-based scrapbooking brand that closed its doors earlier this year, has re-launched under new ownership. The company, formerly Creative Memories, supported 70,000 consultants worldwide before undergoing two bankruptcies within five years. Caleb Hayhoe, Chairman of Flowerdale Group Ltd., now owns the Creative Memories and Ahni & Zoe brands, collectively reopened as CM Group Holdings Inc.
- With a starter kit that includes seeds, compost and disposable gloves, Dallas-based Gardenuity is looking to turn a hobby into a social selling business. The young company is using a network of associates to train nongardeners in cultivating their own food. In addition to gardening tools; seeds; plants and other lifestyle products, Gardenuity has produced an app that enables associates to create a personalized garden plan for each customer.
- Digital marketing company iMakeNews Inc. (IMN) announced that it will host an upcoming Twitter Q&A on the changing face of direct selling. Hosted by Michelle Larter, IMN Worldwide Director of Direct Selling and winner of the 2013 DSA Ethos Award for Partnership, the chat will take place on Tuesday, Dec. 9.
- PartyLite is helping its historic hometown of Plymouth, Massachusetts, celebrate Thanksgiving during the America's Hometown Thanksgiving Celebration Parade. The candle company is sponsoring a special float honoring the 200th anniversary of "The Star-Spangled Banner," as well as the Plymouth 400 Illuminate mobile app, which allows people in Plymouth, Massachusetts, to engage with participants in sister city, Plymouth, England.
- An Inc. slideshow featured the "new guard of direct selling," an up-and-coming group of entrepreneurs with a modern take on the classic model.
November 21, 2014
J.Hilburn Opens Dallas Showroom to the Public
Custom menswear brand J.Hilburn is opening the doors of its Dallas showroom to the public. The newly renovated space, previously available by appointment only, showcases J.Hilburn's full collection of luxury clothing and accessories.
J.Hilburn launched in 2007, selling its trademark custom shirts at prices ranging from $99-$169. While expanding its luxury offerings, the company has kept prices low by cutting out the middle man and bringing its pieces direct from the manufacturer to the consumer. Now, customers can choose from made-to-measure pants, suits and outerwear, as well as a range of accessories.
The many customization options available are on display at the company's showroom, located near Dallas Love Field, the main hub of Southwest Airlines. J.Hilburn personnel remain on hand to assist visitors, and J.Hilburn Stylists can use the space to introduce the brand to new clients and guide them through their selections—including custom Italian fabric, collar, button, thread color and monogram options.
In a Top Desk feature for DSN, J.Hilburn Co-Founder and former CEO Hil Davis predicted that the future of retail would be "bricks, clicks and personal sidekicks"—a fusion of physical storefronts, online platforms and local brand representatives. The brick-and-mortar presence of J.Hilburn's showroom, combined with its New York City pop-up shops, direct sales model and digital tools, is a big step toward realizing that vision.
November 19, 2014
Born or Made? Amway Global Entrepreneurship Report Explores the Education Factor
If entrepreneurs are the engine of business, Amway's Global Entrepreneurship Report provides a regular check under the hood. The annual report assesses the state of entrepreneurship around the globe, and for direct selling companies the results show plenty of potential. This year's study includes a record 38 markets, where on average 75 percent of respondents expressed positive attitudes toward entrepreneurship.
The entrepreneur fever is at its highest among younger people, specifically those under 35, where positive respondents increased to 80 percent. In 37 of the 38 countries polled, a majority believed that entrepreneurship can be taught; however, one region of the world remains polarized on the question. Eighty-three percent of Chinese respondents—more than in any other market—affirmed the ability to learn entrepreneurial skills, while Japan represented the other end of the spectrum at just 40 percent. On the whole, training in basic business skills is the education people desire most.
While education is a crucial factor, location is also key to striking out as an entrepreneur. The survey asked respondents to gauge their society's attitude toward entrepreneurship based on politics, media coverage and personal experience. The responses show that Denmark is most friendly toward entrepreneurs, while direct selling's largest market, the United States, appears 13th on the list.
The insights in this year's report come from a survey of 43,000 people, ages 14-99. Amway once again partnered with Technische Universität München (TUM) and leading research firm Gesellschaft fuer Konsumforschung (GfK) to create the report. The company has also partnered with an academic advisor in each market to assist in interpreting the data.
Find more information at amwayentrepreneurshipreport.com.
November 18, 2014
Primerica Funds Scholarship Programs at Local College
Photo above: Pictured from left are The Primerica Foundation's Karen Fine Saltiel, President and Chairman; Anne Soutter, Vice President and Vice-Chairman; Margaret Halbert, Secretary; and Bill Nemetz, Treasurer; and Dr. D. Glen Cannon, President, Gwinnett Technical College. (courtesy of Gwinnett Tech)
New funding from The Primerica Foundation will assist students at a local college. Primerica Inc. has made its home in the Metro Atlanta area for nearly four decades, and the company has a history of giving back to Georgia communities. The financial services provider recently continued that tradition with a $75,000 donation to Gwinnett Technical College.
Located near Primerica's global headquarters in Gwinnett County, Gwinnett Tech has received $260,000 in donations from Primerica over the last 17 years. The latest gift will support several career-focused college programs and establish two scholarship funds, The Primerica Foundation Scholarship and The Barbara T. King Scholarship for Women. The funds will provide tuition and supplies, in the amount of $1,250 annually per student, to 40 low-to-moderate income students.
The late Barbara King was a Primerica executive, community leader and advocate of the college who served on the Gwinnett Tech board from 1997-2003. The scholarship honoring her memory provides funding for female students enrolled in a Gwinnett Tech associate degree program within the Health Sciences division.
"Primerica and Gwinnett Tech have grown up together in the same community—we have a long history of supporting the college," Karen Fine Saltiel, President and Founding Chairman of The Primerica Foundation, shared in the college's release. "We also have a vested interest in the success of Gwinnett Tech, because the students of today are the workforce of tomorrow."
Primerica contributed to the college in a different way during a recent community cleanup challenge. Employee volunteers worked with the Horticultural Department of Gwinnett Tech to plant a sustainable garden and a dozen trees on the college's campus. Primerica's participation earned it a Grow Green Award from local nonprofit Gwinnett Clean & Beautiful.
November 14, 2014
PartyLite Sponsors The Humane Society's 60th Anniversary Gala
Jonathan Adler's second collection for PartyLite will debut in December, but guests of The Humane Society of the United States will get a preview during the organization's annual black-tie gala. As a sponsor of the HSUS 60th Anniversary Gala, PartyLite is furnishing the evening's centerpieces with designs from Adler's latest collection.
More than 500 guests will attend the New York City event on Nov. 21 to raise funds for the nation's largest animal protection organization. Each table will feature PartyLite candles, candleholders and animal sculptures by Adler. Additionally, each guest will take home a pet-friendly gift, a Fresh Home by PartyLite™ Perfect Pet Odor Neutralizing 3-Wick Jar Candle.
Adler, a popular potter, designer and author, first collaborated with PartyLite earlier this year to produce a fall 2014 collection. The Gala centerpieces will feature designs from the forthcoming Jonathan Adler for PartyLite Safari Chic Collection.
November 14, 2014
World Congress CEO Panel Discusses Future of Direct Selling
A powerhouse panel of direct selling company CEOs spent nearly two hours on stage as part of the World Federation of Direct Selling Associations 2014 World Congress in Rio de Janeiro, Brazil.
Mary Kay Inc. CEO David Holl, Amway President Doug DeVos, Oriflame Cosmetics CEO and President Magnus Brannstrom, Herbalife International CEO Michael O. Johnson, Avon Products Inc. CEO Sheri McCoy and Nu Skin Enterprises CEO Truman Hunt participated in a conversation moderated by WFDSA Chairman Alessandro Carlucci. Their topic of discussion: "The Future of Direct Selling in an Increasingly Connected and Borderless World."
Their 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," Holl said. "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 sales force might not use it because it is overwhelming."
DeVos echoed that advice to keep things simple, recounting Amway's experience with its launch of the Internet-focused company Quixtar. "We got ourselves upside-down in the late '90s, in that we wanted to be a technology opportunity," he said. "We were trying to be something we weren't. …Our experience there helped us 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."
But even as each company represented on stage strives to keep their technology implementations simple, the CEOs agreed 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 said. "If it works, I'm willing to spend, but my message to the team is, 'Let's look at the return on investment, and are we driving growth through our field force?'"
Of course, technology is not the only avenue for growth in a connected, global economy. Geographic expansion is certainly another popular path, and the World Congress agenda included deeper discussion of two markets: China and Latin America. However, the panelists agreed, many companies may find opportunities for growth in their own backyards. "To me, the only place in the world where direct selling is the predominant channel to the consumer in our main categories, health and beauty, is right here," Hunt said. "Avon and Natura have done such a phenomenal job maximizing the value of our channel here in Brazil, but nowhere else is that the case. …There is so much potential in existing markets. We don't even necessarily need new markets, we need to maximize the potential of the markets we are in."
For his part, Brannstrom challenged the audience to look into the future to discover new categories for direct selling that don't exist today. Don't restrict your thinking to the way your business is today, he advised. "This personal recommendation is a profound difference between us and many others, which will take direct selling into new categories that we aren't even in."
The panel also discussed some of the challenges facing direct selling globally today, particularly around issues of reputation and government regulation. One of the key strategies to overcoming these issues, the group agreed, is demonstrating a willingness and commitment to self regulate, both at the company and DSA level. Another is to encourage the millions of independent business owners in direct selling to be more active in their communities and more vocal about their positive experiences with the profession.
"Outside this room and outside a distributor's life every day, this business is mysterious to people," Johnson said. "There is an elite group out there who gets to package our business for us, which is very unfortunate. They package it in the media and they package it sometimes at the regulatory level and they get to package it sometimes for their own self-interest, and it's easy to do because if we don't self regulate, there is going to be a victim every now and then of our business. And, unfortunately, they get a volume level that is way higher than the normal reality of our business day in and day out: people working hard, people making a few bucks, people making a few more bucks or people making a lot of bucks if they really work hard at building a huge organization."
The real message, he said, has to be local. It also will take long-term effort. "If you get your people … engaged in city councils, in nongovernmental organizations, in state and national representation, you are going to be much better off for it."
Read more coverage of the 2014 WFDSA World Congress.
November 12, 2014
Mannatech Bolsters Social Entrepreneurship Model with Nonprofit Arm
With a mission to aid millions of malnourished children, Mannatech is laying the infrastructure to support its social entrepreneurship platform. In 2013, the nutrition and skincare company launched Mission 5 Million (M5M), a movement to supply potentially life-saving nutrients to 5 million children worldwide. Mannatech has announced the formation of the nonprofit M5M Foundation to facilitate its ongoing charitable efforts.
Faced with the knowledge that an estimated 5 million children die each year from malnutrition, Mannatech utilized its real-food technology to develop supplements such as PhytoBlend, a nutrient-packed powder that can be added to any food. Since 1999, the company has purchased, donated and delivered PhytoBlend through the 501(c)3 organization MannaRelief. In 2010, Mannatech shifted away from charity model philanthropy and integrated social entrepreneurship into its business model. For every automatic order of a Mannatech product, the company donates PhytoBlend powder to orphanages and relief organizations around the globe.
Beginning in January 2015, the company's intensified distribution efforts will shift from MannaRelief to the newly formed M5M Foundation. Mannatech's Director of Human Resources, Sarah Bowen, will take on the role of executive director.
"What we've been able to accomplish by working alongside MannaRelief has laid an incredible foundation for seeing this vision realized," Dr. Robert Sinnott, Mannatech CEO and Chief Science Officer, shared in the company's statement. "The establishment of a dedicated organization whose sole purpose is to expand and enhance these efforts is a natural progression for Mannatech and the M5M cause."
November 11, 2014
WFDSA Kicks off World Congress in Rio de Janeiro
The World Federation of Direct Selling Associations kicked off its 14th triennial World Congress Nov. 10 in Rio de Janeiro, Brazil. As the first order of official business, the WFDSA's CEO Council elected Amway President Doug DeVos as Chairman to succeed Natura's Alessandro Carlucci.
DeVos will begin his three-year term as chairman at the close of the event. He has pledged to continue to support the organization's long-range plan, which encompasses four key objectives: improve processes and structures of direct selling associations and the World Federation; promote alignment of direct selling companies; promote ethics, and strengthen direct selling's image.
During a joint press conference, Carlucci and DeVos highlighted the WFDSA's recent research report, which found direct selling generated more than $178.5 billion in retail sales globally in 2013. The World Congress host country was the world's fifth-largest direct selling market last year, with retail sales of nearly $14.2 billion, a 7.2 percent increase from the prior year.
They also discussed the theme of the 2014 World Congress, "Direct Selling: the Original Social Network." It is a crucial topic to tackle, Carlucci said, because customers continue to dramatically change the way in which they prefer to buy products and services, using technology more and more. If handled correctly, this offers a huge opportunity for direct selling companies.
"It is not Natura or Amway selling a product, it is more than that," he said. "It is someone that has a name and a surname from each one of these companies who is recommending a product. They are saying, 'Look, this product is very good. I use it or I have some clients that are using it.' This is very contemporary, when we think about what is happening in social media where we are relying much more on the number of stars or referrals from our friends … than in advertising."
The theme will carry through much of the World Congress programming, including a presentation by Facebook Vice President of Global Marketing Solutions, Dan Levy, on the start of day two. The event also features sessions and workshops entitled, "New Generations: Enchanting Consumers through Innovative Relationships" and "Direct Selling: Social Engagement and Mobilization."
November 11, 2014
Bestseller: Amway Leads Global Sales of Air Treatment Systems
Amway's ATMOSPHERE brand of premium home air treatment systems is No. 1 in the world, according to new research by Verify Markets. A study of 2013 global sales revealed that Amway commands a 15 percent share of the total global market for air treatment systems.
Last year, China generated the highest demand for Amway's residential air purification systems. According to a World Health Organization estimate, 4.3 million deaths—or 7.7 percent of total mortality—were attributable to household air pollution (HAP) in 2012. The Western Pacific region of the world, including China, accounted for 1.6 million of those deaths.
Increased awareness of health issues related to air quality has boosted the company's sales, says Mitchell Urbytes, Director of Home Brands for Amway. "Through the Verify Markets research, we found the key drivers for the sales of air purification systems were poor indoor air quality and awareness about poor air quality," Urbytes shared in the company's statement.
ATMOSPHERE is not the only leading brand developed by Amway. The direct selling powerhouse has also built NUTRILITE, the world's No. 1 selling vitamin and dietary supplement brand, and ARTISTRY, one of the top five premium skincare brands in the world.
November 07, 2014
This Week: Forbes Lux Combines Cultures, Oriflame Gets Relief in Russia
Catch up on this week's industry chatter with these click-worthy links:
- The Economic Times featured a key aspect of the merger of Mumbai-based consumer durable company Eureka Forbes and Lux International, the direct selling arm of Stockholm-based Electrolux. To bring top management from both companies to the table, Eureka Forbes Chairman Shapoorji Mistry formed the Forbes Lux Centre of Excellence (FLCE), an eight-member think tank aimed at bridging the two diverse company cultures.
- The USANA True Health Foundation got into the spirit of the season with its annual USANA Turkey Trot 5K, held Nov. 6 at the company's Salt Lake City headquarters. Angie Larsen, Senior Manager of Corporate Relations for USANA, spoke to the local ABC affiliate about the event, where USANA employees donated more than 800 pounds of food to the Utah Food Bank.
- Shares in Oriflame experienced their biggest jump in more than a decade following the company's quarterly report. The Luxembourg-based brand has reported tumultuous sales in Russia amid economic and political unrest in the region. Sales stabilized in the third quarter, rising 1 percent at local currency rates, partly due to changes in the company's compensation plan.
- The U.K. entrepreneurial site Startups featured the results of a new study by the U.K. DSA, which found that the direct selling party model has gained popularity in recent years. Nearly 900,000 Britons attended a direct selling party in 2013, and the number of gatherings has grown by over 150 percent since 2009.
November 07, 2014
More Public Companies Report Q3 2014 Results
The following is a round-up of the latest publicly held companies to announce third quarter results:
At Nu Skin (NUS—NYSE), third quarter revenue was $638.8 million, down 30 percent over the prior-year period. The revenue dip partially reflects a limited-time introduction of Nu Skin's ageLOC® TR90® weight management system in Q3 2013. The personal-care company reported earnings of $1.12 per share, ahead of Nu Skin's 90 cents to 95 cents guidance for the quarter. The company expects fourth quarter revenue of $590 million to $610 million, with earnings per share of 72 cents to 77 cents.
"Our sales results are heavily impacted by our product launch schedule. Last year's second-half launch, which generated approximately $550 million in sales, provides a difficult year-over-year comparison," Nu Skin President and CEO Truman Hunt shared in the company's report. "However, excluding product launch sales, the core business has stabilized and is trending positively sequentially."
Primerica Inc. (PRI—NYSE) reported third quarter revenue of $339.2 million, up 9 percent year over year. Net income was down 3.7 percent to $41.6 million, or 75 cents per diluted share, impacted by accelerated equity compensation expenses related to retirement plan modifications and higher claims incurred in the quarter. The financial services provider lagged 8.43 percent behind the Zacks Consensus Estimate, but investors reacted positively to Primerica's results. The company's stock price gained 0.38 percent on the news to close Wednesday at $52.16.
Nature's Sunshine Products Inc. (NATR—NASDAQ) reported increased revenue for the third quarter on Wednesday, with $94.9 million, up 2.6 percent from $92.5 million in the third quarter of 2013. Results showed lower earnings though, with 6 cents per diluted common share or net income of $1 million, compared to 29 cents, or $4.9 million in the third quarter of 2013. It was the fifth consecutive quarter of record sales for the health and wellness company's Synergy WorldWide business, driven by South Korea, Japan and a return to growth in Europe.
"Sales in NSP North America have begun to improve with NSP United States and NSP Canada posting net sales growth for the first time since the second quarter of 2013 and the first quarter of 2012, respectively," said Chairman and CEO Gregory L. Probert. "We remain cautiously optimistic about the future of this core market as our new products and sales programs continue to gain traction."
Medifast Inc. (MED—NYSE) third quarter results came in ahead of expectations on Wednesday with net income of $4.9 million, or 39 cents per share. Excluding non-recurring costs, adjusted earnings came to 47 cents per share, or $5.9 million net income. The weight-loss company posted net revenue of $74 million. This was a decrease of 14 percent from net revenue of $86.5 million in the third quarter of 2013. Revenue in the direct sales channel, Take Shape For Life, decreased 11 percent to $49.9 million in the third quarter of 2014, compared to $56.2 million in the same period last year.
Guidance for Q4 revenue and EPS is below consensus, with net revenue to be in the range of approximately $69 million to $73 million and EPS in the range of 31 cents to 34 cents. For fiscal year 2014, the company now expects revenue to be in the range of $310 million to $314 million and EPS in the range of $1.59 to $1.62. As trading closed on Wednesday, shares hit $30.09, an increase of 23 percent in the last 12 months.
November 06, 2014
It Works! Brings 'That Crazy Wrap Thing' to New Zealand
It Works! has officially opened for business in New Zealand, the 19th market to offer the company's skincare and nutrition products.
Fast-growing It Works! is recruiting New Zealand "wrapreneurs"—named after the brand's signature tightening and toning wrap—to join its 90,000 active distributors around the world. The company has already expanded into neighboring Australia, Canada and select areas of Europe.
"We're eager to welcome New Zealanders to our team and help spread black, green and bling across the world," It Works! CEO Mark Pentecost said in a nod to the company's signature colors.
The 13-year-old brand has generated three-year growth of 1,565 percent, earning it the No. 290 ranking on this year's Inc. 500 list. Earlier this year, It Works! relocated to a new $10-million global headquarters in Palmetto, Florida. The waterfront property contains space for the company to increase its 100-member corporate team by half.
November 05, 2014
12 DSA Candidates Win Congressional Seats
The Direct Selling Association backed 13 congressional candidates in the Nov. 4 election who have taken a strong stance on direct selling and entrepreneurialism. Twelve of the 13 candidates won.
The endorsements appeared across the country in a newspaper ad campaign funded by Direct Selling Empowers Americans, the newly formed super PAC associated with the DSA.
"We supported candidates on both sides of the aisle who stood with direct sellers and are pleased that nearly every DSA-endorsed candidate will go on to represent our interests in Washington, D.C.," DSA President Joseph Mariano shared via email.
"We are hopeful that the next Congress will embrace entrepreneurialism and the pursuit of the American dream, and we look forward to working with members around the country to advance these goals on behalf of nearly 17 million Americans who create better lives for themselves and their customers through direct selling."
In addition to Democratic Rep. Steven Horsford of Nevada, who lost his seat to Republican candidate Cresent Hardy, the DSA endorsed the following challengers and incumbents:
- U.S. Senate candidate Joni Ernst (R-Iowa)
- Congressional candidate Mia Love (R-Utah)
- Congressional candidate Alex Mooney (R-W.Va.)
- U.S. Rep. Marsha Blackburn (R-Tenn.)
- U.S. Rep. Tony Cardenas (D-Calif.)
- U.S. Rep. Eddie Bernice Johnson (D-Texas)
- U.S. Rep. Gregory Meeks (D-N.Y.)
- U.S. Rep. Reid Ribble (R-Wisc.)
- U.S. Rep. Juan Vargas (D-Calif.)
- U.S. Rep. Marc Veasey (D-Texas)
- U.S. Rep. Tim Walberg (R-Mich.)
- U.S. Rep. Ted Yoho (R-Fla.)
November 05, 2014
Herbalife Shares Drop, but CEO Optimistic
Global health and wellness company Herbalife Ltd. (HLF—NYSE) reported its third quarter earnings on Monday after markets closed, disappointing investors with its earnings miss and a lower than anticipated fourth quarter outlook. Adjusted net income for the quarter was $125.1 million, or $1.45 per diluted share, compared to $152.1 million, or $1.41 per diluted share for the same period in 2013.
On the news, shares dropped 11 percent to $49.60 during after-hours trading, according to MarketWatch, and continued to fall to $44.26 by close on Tuesday. Wall Street expected earnings per share to come in at $1.51, up from $1.41 at the same time last year.
On a positive note, Herbalife reported net sales of $1.3 billion, reflecting an increase of 4 percent compared to the same period in 2013, and, according to CEO Michael O. Johnson, the quarter saw volume increases in two-thirds of the company's 91 countries, especially Russia and China.
Johnson sought to allay concerns about the company's forecast during its earnings call with investors on Tuesday. "While the third quarter represented a record level of net sales, our performance was below expectations, and this performance was clearly out of character for us," Johnson said. "There was a confluence of factors—some external and some internal—that had an impact on our results. The main factors were Venezuela, FX and the short-term effect of structural changes that we are making to our business."
Net income fell 92 percent to $11.2 million, or 13 cents a share, down from $142.0 million or $1.32 per diluted share for the same period in 2013. Third quarter 2014 reported net income was negatively impacted by $139.5 million in pre-tax charges, or 97 cents per diluted share after tax, related to the remeasurement of the Venezuelan Bolivar, and $17.5 million in pre-tax charges, or 13 cents per diluted share after tax, related to a legal reserve.
Guidance for fourth quarter FY 2014 included an unfavorable impact from currency rates of approximately 31 cents compared to the prior year, inclusive of approximately 22 cents from Venezuela. Guidance for FY 2015 includes a currency headwind of approximately 66 cents, including approximately 45 cents from Venezuela.
Read the full results here.
November 04, 2014
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November 04, 2014
Amway Celebrates 40 Years in Hong Kong, Opens Shanghai Business Center
Photo: Amway President and Co-CEO Doug DeVos (third from left) joins Amway China leaders at the grand opening of the company's Shanghai Experience Center.
Amway celebrated a milestone week in China, where President and Co-CEO Doug DeVos attended Amway Hong Kong's 40th anniversary celebration and the opening of Amway's first experience center in the country. Located in Shanghai, the center takes Amway Business Owners (ABOs) and customers beyond the traditional retail transaction through a high-tech, interactive experience.
Marking a relatively new approach for the company, Amway centers or plazas enable customers to sample products, view product demonstrations and learn more about Amway's science and product development. China Daily reports the company's plans to build a network of similar centers, with locations slated to open in Shenzhen later this year and in Beijing next year.
The experience center represents a big opportunity for Amway to tell its story in China, where regulations prohibit network marketing models. China ABOs can operate as representatives who earn commission solely on their own sales or as a government-authorized business, selling products through a traditional shop.
Amway has sprinkled its brick-and-mortar promotional centers across Europe and Russia. In September, Amway Turkey opened a second plaza in Ankara, the country's second-largest city. The country's first plaza, opened in Istanbul in July 2011, serves almost 10,000 visitors every month. The direct selling leader introduced the model to U.S. customers in 2013 with the launch of its Amway Business Center at CitiField.
November 01, 2014
Politics, Like Direct Selling, Is All about Relationships
by Emily Reagan
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
"Just because you do not take an interest in politics does not mean politics won't take an interest in you." Pericles made that statement in 430 B.C., but the Direct Selling Association is sending the same message today. At the DSA Annual Meeting in June, Chairman Truman Hunt set an objective to build the association as a force for good. Securing vital political influence is one step toward that goal, and the DSA's Government Relations team has held two training sessions this year—one at Nu Skin's headquarters in Provo, Utah, and one at Mary Kay's Addison, Texas, headquarters—to provide a practical approach to legislative relationship building.
The Government Relations Training Session is now available in a series of videos at www.dsa.org. The DSA is continually reaching out to officials and advancing the conversation around direct selling; however, unified action by member companies and their employees could exponentially multiply those efforts. In the videos, five speakers outline the "why" and "how" of building relationships with members of Congress.
"Unrelenting effort on behalf of each and every company, no matter its size or political acumen, is going to be required if the industry is going to be successful," says Michael Lunceford, Chair of the DSA's Government Relations Committee and Senior VP of Public Affairs at Mary Kay.
Mary Kay's VP of Government Relations, Anne Crews, outlines areas of major concern to direct selling companies, such as the independent contractor status, restrictions on door-to-door selling, labeling requirements, and onerous consumer protection laws on products and services. With a firm grasp of the issues, companies can maximize their efforts through coalition building or grassroots lobbying. Whatever the strategy might be, says Crews, effective action will require support from top-level executives.
"For a government relations strategy, you've got to have buy-in from the top," she states. "Your CEO, your president, your executive leadership team have to understand the importance and the priority of lobbying."
The session also covers the finer points of meeting and interacting with representatives. Rod Givens, District Director for Democratic Rep. Eddie Bernice Johnson of Texas, explains what to do—and not to do—when visiting a member's office. According to Givens, getting involved in the political process is all about building relationships, regardless of whether a company anticipates resistance or support on a specific issue.
"Even if you believe this might not be an issue that one party will agree with, go see them," says Givens. "One more point: When you go see them, make sure you bring a constituent. Make sure you bring someone who lives in that district."
Take Action
DSA Attorney Jeff Hanscom drives home the importance of bringing constituents into the conversation. "There is no limit to the number of touches—the number of communications—that you can have with legislators, but the biggest thing they want is to hear from their constituents," says Hanscom, who specializes in issue advocacy at the state level. "How is this going to impact them? If you have facilities in their district, if you have independent contractors in their district, they want to know that."
For companies looking to take the first, or simply the next, step in their political strategy, the DSA offers a variety of tools. The Government Relations team sends out regular issue alerts with specific calls to action. This summer, the DSA launched an online "Who Do You Know?" tool that enables companies to survey their salespeople and discover existing contacts. The Association also raises funding through its PAC and Super PAC to support candidates across the country.
"Reach out to us," Hanscom urges members. "We are working for you, and we want to make sure that we provide you with the information and give you the tools to get involved."
November 01, 2014
Avon Beats Q3 Expectations, Still Shows Signs of Struggle
The release of Avon Products Inc. third quarter results Thursday before markets opened surpassed earnings expectations while missing revenue forecasts. The company reported adjusted net income from continuing operations of $99 million, or 23 cents per diluted share, beating expectations of 16 cents, according to the Zacks Consensus Estimate, and jumped approximately 64.3 percent from 14 cents, or $60 million, for the third quarter of 2013.
"We began the year with the expectation that the second half of 2014 would show improvement relative to the first half, and Avon's third quarter results are consistent with modest improvement on both top and bottom line," said Avon CEO Sheri McCoy. "We saw good results from our EMEA region, while sluggish performance in Brazil contributed to softer results in Latin America. Despite the strong headwinds in a number of markets, we continue to make progress on Avon's turnaround journey."
Still shares dropped over 9 percent Thursday, according to Zacks, after results fell short of revenue forecasts. The global cosmetics company posted revenue of $2.14 billion in the period, down 8 percent, or up 1 percent in constant dollars, from $2.32 billion during the prior year period. Analysts expected $2.15 billion, according to Zacks. Revenue was negatively affected by weak foreign exchange rates and lower sales volume, partially offset by the favorable net impact of mix and pricing, primarily due to inflationary pricing in Latin America.
Beauty sales declined 9 percent, but increased 1 percent in constant dollars. Fashion & home sales declined 11 percent, or 4 percent in constant dollars.
Brazil is the company's largest market and Latin America is its most profitable region, yet Brazil revenue was up only 1 percent, or relatively unchanged in constant dollars. According to the company, this was partially impacted by high levels of competitive activity.
"In addition, the Brazilian economy has not recovered as anticipated after the World Cup. Consumer spending also seems to be impacted by the uncertain economic environment, the election cycle and high cost of debt," McCoy said during the earnings conference call on Thursday. "That being said, while growth may be slowing, Brazil remains a highly attractive market, and we are committed to participating in its longer-term growth."
Further results showed that third quarter 2014 gross margin was 61.9 percent and adjusted gross margin was 62.0 percent. Adjusted gross margin was 110 basis points lower than the prior-year quarter.
November 01, 2014
90 Days of Direct Selling
by Lauren Lawley Head
September 17 to December 15
Our goal in this 90 Day campaign: fuel ongoing conversations about the positive impact the direct selling community has on people and economies around the world. As our current DSA Chairman Truman Hunt has emphasized, let's show the world we are a force for good!
Starting Sept. 17, you'll see us ramp up our coverage online and through social media to expand the conversation. In fact, we're inviting the entire direct selling community to join the celebration and hope to share your stories about how you and your organization have marked 90 Days of Direct Selling.
We'll keep this page updated with the commentary, interviews, profile posts and other information as we move through the 90 Days.
Come join the conversation!
Click on the links below to discover 90 Day content:
(more will be added each week)
- See what we're celebrating in our November issue!
- See what we're celebrating in our October issue!
- Alessandro Carlucci: WFDSA Hosts 14th Annual World Congress in Rio
- An Interview with Nu Skin's CEO Truman Hunt
- Direct Sellers Pay It Forward on Capitol Hill
- Industry Events Help You Raise the Bar
- What 90% of Direct Sellers Say
November 01, 2014
It Works!: Taking It to a Whole 'Notha Level
by Jeremy Gregg
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
Photo above: The official ribbon-cutting at the new It Works! headquarters in Palmetto, Florida.
Company Profile
Founded: 2001
Headquarters: Palmetto, Florida
Executives: Mark Pentecost, CEO; Pam Sowder, Chief Networking Officer; Mike Potillo, Chief Sales Officer; Doug Nooney, CFO; Chris Burns, CIO; Don Klein, COO; Janne Heimonen, President of International Operations; Don Hamilton, Senior Director of Operations.
Products: Skincare and Nutrition
Founded in 2001, It Works! is one of world's fastest-growing skincare and nutrition direct sales companies. Ranked at No. 290 on the Inc. 500 list for 2014, the company has enjoyed an impressive 1,565 percent growth rate over the past three years.
Originally based in Grand Rapids, Michigan, It Works! recently invested over $10 million to build a new global headquarters in Palmetto, Florida. Reaching across the U.S. and into at least 17 other countries, the company has amassed 90,000 active independent distributors, supported by the 100 full-time employees of It Works!.
Of the company's 32 different products, the largest seller remains its first offering: the Ultimate Body Applicator, a non-woven cloth wrap that is infused with a powerful, botanically based formula. The company's distributors—called "Wrapreneurs"—primarily market this product through home parties that offer their friends and families a way to achieve a tightened, toned and firm body in as little as 45 minutes.
Before It Works!, Mark Pentecost was a high school teacher and basketball coach living in the small town of Allegan, Mich., with his wife, Cindy, and their three children. Around 1995, the Pentecosts had joined a home-based business in the telecommunications industry, through which Mark Pentecost had become a top-10 earner. While they did not know it at the time, the Pentecosts' success in direct selling had given them a vision for the future of It Works!.
In 2001, It Works! was founded on Pentecost's belief in the impact of operating "debt-free" as an individual, but also as a company. He embraced the opportunity to share this message with the company's distributors. "Debt Free Is the New Sexy" then became the mantra to align the field with the corporate philosophy of debt freedom.
Growing through a Tough Economy
It Works! was entering a major growth period when the economy began to fall off the cliff in 2008 and 2009. Catastrophic economic events were leading many other businesses to retreat in their expansion plans, take on enormous debt to maintain existing operations, or both. Despite these trends, Pentecost and the leadership team at It Works! were inspired to go against the grain: Pursue rapid growth while becoming debt-free.
The move paid off. Unencumbered by debt, the company grabbed a new vision for its future. It Works! achieved a 1,565 percent three-year growth from 2010 to 2013, placing it at No. 290 on Inc. magazine's annual list of the 500 fastest-growing privately held companies in America.
"I truly believe we have a great team in our field leaders and corporate," Pentecost says. "I'm confident in our strategic plans to grow both our U.S. and international markets. It Works! will be a recognizable force around the globe."
Offering a Different Kind of Incentive
In January 2012, It Works! formalized its debt-free concept with the launch of the G.O.O.D. Bonus, which stands for "Get Out of Debt." Based on performance, the bonuses have ranged from $10,000 to $75,000 on top of commission. Qualifiers are encouraged to use the money to pay off student loans, mortgages, credit cards and other debts.
Pentecost states: "The world today needs to hear about fiscal responsibility. At It Works!, we put a stake into the ground and decided to mentor our team on why getting out of debt is a good thing. It gives you freedom. We're going to model that in everything we do."
It Works! Gives Back Foundation
In 2014, It Works! launched the It Works! Gives Back Foundation to support charities that align with its values. The foundation also supports victims of natural disasters and humanitarian crises in America and around the world. CEO Mark Pentecost describes the foundation as "the heart of our company."
"We encourage everyone to start giving back, whether it is through financial, practical or emotional support," he says. "Our goal is to make a lasting difference in our communities locally and globally. Both our field and corporate team participate in various give-back events throughout the year. We believe that if everyone does a little, it will add up to make a huge impact."
The foundation has supported efforts such as The V Foundation for Cancer Research, Selah Freedom, the National MPS Society, and the Children's Cup.
Sunnier Days Ahead
In 2011, It Works! moved its global headquarters from its birthplace in Grand Rapids, Michigan, to a new home in Florida. The new corporate headquarters was located just 20 minutes away from multiple world-class beaches.
"I'm always looking for an adventure," Pentecost says. "I knew that if we were in a warm climate, people would want to visit us more often. It's easier to get people to Florida during the winter than it is to Michigan!"
Pentecost also shares that Florida offered some "very helpful" tax incentives that made the decision to move his company that much easier. The move even allowed him to achieve a long-time dream: owning his own golf course, the Stoneybrook Golf Club of Bradenton (down the road from the It Works! headquarters).
"Here in Florida, we could have it all: a waterfront property, a golf course, and a ranch to let out your inner cowboy. It's all part of the experience. It is a great place to entertain."
The facility became a major draw for leadership meetings, which always included trips to the beach and games at Stoneybrook. The new location also became home to companywide "Green Carpet Experiences," which treated distributors from all over the world to fun and fellowship with the corporate leadership. In fact, Pentecost saw such great returns from the move that he began to dream even bigger.
The Office That the Team Won't Leave
Within three years, Pentecost moved his growing company into even fancier digs: a 50,000-square-foot building in Palmetto, Florida, right along the Manatee River that leads out to the Gulf of Mexico. Opened in 2014, the building "stands out among all others," according to the local Herald-Tribune as a "five-story corporate palace, fronted with a cascading waterfall and the [It Works!] logo."
Each floor has a different feature that has been designed to encourage a fun, team-focused atmosphere. Some examples include a coffee bar on each floor, an in-house sports bar, a rooftop fire pit, a putting green, three bistros, bumper pool table… and a remarkable, 50-foot slide that carries people from the third floor to the second. The Tampa Bay Business Journal recently listed the building on its top five "Coolest Office Spaces" in Tampa Bay as well as its Reader's Choice winner.
The building cost over $10 million to purchase and renovate. For Pentecost, the investment was small compared to the long-term value that it will produce: "The It Works! culture is friendships, fun and freedom, not only in the field, but also with our corporate team. It's who we are—what we call the It Works! Way. Our office had to be an experience that makes life fun. We like to enjoy the journey!"
Pentecost goes on to say, "Our long-term vision is to continue expanding, and the office was certainly built for growth. I see us entertaining here for years to come, whether it is our top leaders, strategic partners or corporate team. It was my goal to build an office where I'd have to kick the team out at night and say 'You have to go home!' because they don't want to leave. When you walk into the building, I want you to feel the energy and passion of our team."
The approach is certainly a major differentiator for his company in the Palmetto area, but Pentecost believes that other direct selling companies should look toward including these kinds of "wow" factors more often within the physical spaces where they operate. He states: "In the direct sales industry, your salesforce has such a direct impact on your bottom line. We definitely considered how we could add an entertainment value and connection value to the space [along with] a reflection of our mindset and culture."
The new facility also contains plenty of room for growth, including enough office space for It Works! to add another 50 employees to its quickly growing team of 100.
The Rapid Growth of It Works!
It Works! began to hit its stride in 2010, when the company was first recognized by Inc. magazine as one of the 5,000 fastest-growing privately held companies in the U.S. The company has improved its ranking each year.
International Growth
It Works! has been expanding internationally since 2010, when it first launched in Australia and select areas of Europe. Today, the company has distributors in 18 countries outside of the U.S. These distributors are supported by a growing It Works! team throughout Europe that can provide dedicated support to these international markets.
Pentecost foresees significant growth for his company in these new markets. To capitalize on this opportunity, the company has adopted several important new initiatives:
- Trading in multiple currencies
- Adding local warehouses and manufacturing centers in other countries
- Expanding customer service to optimize support for different languages, cultures and hours of operation
- Launching corporate-hosted events around the globe
- Localizing its marketing tools and websites to further support international markets
The company also recently announced the hiring of Janne Heimonen as President of International Operations. With over 20 years in the direct sales industry, he will oversee operations and field management in all markets outside of the United States where It Works! currently operates. Heimonen is excited to pursue expansion.
"At It Works!, we are making it our mission to go out and build an international dream team," Heimonen says. "We will continue to build a solid foundation when it comes to our international operations and communication."
That level of disciplined focus is part of the reason why Pentecost believes Heimonen is the right fit to help spread the "It Works! Way" globally.
The Keys to Growth
As It Works! expands both domestically and abroad, Pentecost sees several common elements that his company needs in order to succeed in every market: "innovative mobile technology, staying ahead of the curve, and building a strong foundation by adding the right people to the team."
One person whom Pentecost has tasked with all three of those key elements is Chris Burns, the company's Chief Information Officer. Burns states that the company has invested "substantial" resources in expanding its IT department, including a "world-class architect and development team who deliver solutions lightning fast."
When he was building his team, Burns truly wanted to hire people "who 'get' our industry and not just a group of developers that produce software. Every line of code that is written has heart behind it, knowing it plays a part in changing someone's life."
To achieve this, It Works! created its own custom solutions for its global ecommerce website and back office tools. Rather than rely on off-the-shelf solutions, Burns believes that this approach will position the company for scalability and performance.
He says, "Enrollment and shopping experiences need to be flawless and accurate. We've accomplished that by developing a solid technical design. Our entire IT team is cross-trained to functionally support whatever is put in front of them."
The strength of that infrastructure is now helping It Works! on its quest to become a billion-dollar brand.
A Bright Future for the Industry
"We have been blessed with not only products and an opportunity that withstood the financial market of recent years, but sales that have skyrocketed from 2009 onward," Pentecost says. "We want to pour hope and goodness into people's lives through our product solutions and the It Works! opportunity, and we are honored to be able to touch more and more lives every year."
Pentecost sees opportunities for similar success across the direct selling industry. "I believe we'll see tremendous growth over the coming years in direct selling; it is one of the greatest industries," he says. "It shows you that the American Dream is still alive and well. Someone can earn freedom of time or finances through hard work and innovation. That is what we built this country on. That's what our industry does—it gives people that opportunity. With international growth, I think we're only seeing the tip of the iceberg right now. As people see the good our industry does—whether in personal development, financial freedom or giving back in the world—direct sales will only grow."
November 01, 2014
Mannatech: Social Entrepreneurship: Helping People Help the World
by Barbara Seale
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
Company Profile
Founded: 1993
Headquarters: Coppell, Texas
Executives: CEO and Chief Science Officer Robert Sinnott
Products: Naturally sourced nutritional supplements and skin care
|Robert Sinnott
For a company based on the science of nutrition, Mannatech's decision to help improve the health of malnourished children around the world through its charitable programs just made sense.
The effort started with Mannatech Founder Sam Caster and his wife, Linda. They were in the process of expanding their personal philanthropic activities as they adopted five children from all over the world. During that time they became involved in supporting a Romanian orphanage. That's when they learned that in that single organization, 35 to 40 of its children died every year from malnutrition. Their hearts broke, but Caster knew exactly what to do. Mannatech donated a year's supply of a special blend of its Real Food Technology solutions for every child in the orphanage. At the end of the year the results were astounding. Not one child had died. All were healthy. Mannatech executives made the only possible decision. Get their nutritional powerhouse products, such as PhytoBlend™ powder, into the mouths of as many malnourished children as possible.
Since Mannatech was founded in late 1993 it has been actively involved in children's philanthropic efforts, and as the company and its product line have matured, Mannatech has aligned its charitable outreach with one of its corporate strengths, the real-food technology at the core of its products. In 1999, the Casters opened MannaRelief, a 501(c)3 organization dedicated to providing life-giving nutrients to children in need around the world. MannaRelief is a separate entity from Mannatech but partners with the company to purchase, donate and deliver Mannatech invention PhytoBlend, a highly concentrated powder of vitamins, minerals and other nutrients that can be added to any food. The independent associates and employees of Mannatech and MannaRelief wholeheartedly supported the cause for the first 10 years, and with the help of charitable donations, were able to feed thousands of children in more than 80 countries.
By 2013 the process had allowed Mannatech to donate more than 16 million servings of PhytoBlend powder during that year. Since Mannatech began donating to nutritional feeding programs 11 years ago it has distributed more than 80 million servings of PhytoBlend to 252,468 malnourished children around the globe. As impressive as those numbers are, Mannatech executives know they're just a dent in the staggering numbers of undernourished children. Consider this: According to the World Health Organization, every year some 5 million children die from malnutrition—one child every six seconds.
Reflecting this statistic, Mannatech's mission to fight global malnutrition became expressed most recently in Mission 5 MillionSM, or M5M, a movement to nourish 5 million malnourished children through the sales of Mannatech products to 5 million people. Every time a Mannatech product is purchased on automatic order, a donation is made to MannaRelief, which distributes PhytoBlend powder to orphanages and relief organizations all over the world.
The effort isn't simply a philanthropic sidebar for Mannatech. It's at the company's very foundation. Injecting its direct selling model with a big dose of social entrepreneurship made both the company and its philanthropy more robust.
Social Entrepreneurship, Direct Selling Style
It would be easy to think that social entrepreneurship was just one more moniker adopted by a direct selling company. After all, the industry describes itself in a variety of ways: social sellers, social marketers, direct marketers, just to name three. All the names refer to the one-to-one or—with the advent of social media—one-to-many interactions that result in the sale of merchandise by a distributor to his or her warm market.
But because direct selling companies are also known for their philanthropy, combining that generosity with merchandise sales by an army of enthusiastic and mission-committed direct selling distributors gets you social entrepreneurship, direct selling style.
"Mannatech's philanthropy through social entrepreneurship is part of our core values," explains CEO and Chief Science Officer Robert Sinnott. "Our company was built around helping people; helping improve the quality of their lives and financial positions; and giving back to the community at the same time."
Through social entrepreneurship, a donation to nutritional feeding programs is made for each and every sale of a Mannatech product. That donation purchases PhytoBlend, which has a neutral flavor that allows it to be consumed in the wide variety of foods traditionally eaten in cultures around the world. That's important. The problem with malnutrition isn't simply that kids don't get enough calories. It's because the foods they eat are nutritionally poor. That nutritional neediness can lead to blindness, mental retardation or even death. For example, in many cultures throughout the world, rice is the staple food. It fills bellies but provides little nutrition. Fresh vegetables and fruits—along with the vitamins and minerals they contain—are scarce. PhytoBlend, Mannatech and social entrepreneurship turn those staple foods into mouthfuls of life-supporting nutrition.
Creating Consistency
Sinnott believes that social entrepreneurship is probably the most written-about subject in the last five years. He may be right. A quick Google search turns up 1.74 million hits. Mannatech became interested in it in 2008 when the world's economic downturn created a philanthropic crisis at the same time it created even more people in need. In fact, 501(c)3 organizations everywhere saw their donations shrink along with the economy. At the same time, joblessness grew, homelessness increased, and hunger hurt more than ever.
One of the 501(c)3 organizations feeling the pinch was MannaRelief. Mannatech's already-slumping profits were also affected. It was a tough time for both. From 2007 to 2012 Mannatech wasn't profitable. But helping others was so embedded in the company's culture that it never stopped its philanthropic programs.
"During that time we always continued our charitable giving because we had faith that through giving, you bring goodwill and blessings on the company," Sinnott explains. "We stuck to our core values, knowing that it was important and nonnegotiable."
Searching for a solution to the company's struggle, Founder Sam Caster came across several articles published by Harvard Business Review that introduced him to a business concept he thought just might work to turn things around. According to the articles, social entrepreneurship combines the resourcefulness of traditional entrepreneurship with a mission to change society. To Caster, the description captured Mannatech perfectly.
Caster did his homework, and the more he studied social entrepreneurship, the more sense it made. He saw that he was sitting on the perfect opportunity to blend the powerful results of his product with a way to make a difference globally, all without relying on the charity of individuals and organizations. He learned that there are four key factors to this kind of approach:
- Find a problem that has not been solved
- Create an innovative solution to the problem
- Tap into the passion the public feels for the cause
- Find ways to compensate those who do the mission work
Many of the elements were already in place. It was a matter of establishing an amount—off the top—of the sale of each product and directing that to provide nutrition to children who desperately needed it.
"Before you take out company expenses, you set aside a certain amount that comes from top-line sales, and that goes to your cause," Sinnott explains. "It's really a great way of handling it because it's very sustainable. For every sale we make, our associates know they're contributing to this cause, regardless of how the company is doing or how profitable we are, or of even the global economy."
Mannatech first introduced the concept to sales leaders in 2010. They embraced the vision, and Mannatech went all in. The model, blended with the company's powerful direct selling foundation, enabled Mannatech to return to profitability in 2013 and to continue providing nutritional supplements to malnourished children even during the worst of times. From 2010 through 2013 the company donated $1,478,280 to MannaRelief, to distribute nutritional supplements such as PhytoBlend to malnourished children.
With a global outreach—Mannatech does business in 23 countries—it has a unique view of the scope of malnutrition around the world. "There's a lot more need than we can fulfill, but we try to spread our donations evenly across the globe," Sinnott says. "To the extent possible, we try to aid areas with the greatest need that we have access to. For example, we have a strong business in South Africa, and we have good connections with relief organizations and feeding programs. But we're also able to reach into Guatemala, even though we have no business there, because we have a strong presence in Mexico. Guatemala is the most malnourished country in the Western Hemisphere, so we reach across the border of Mexico and are heavily involved there. In Asia, MannaRelief has been able to get some contacts in North Korea, so we've sent some shipments to that country. That's been very important to our Asian associates."
Mannatech's direct selling social entrepreneurship model also provided its associates the opportunity to help champion the company's vision and be compensated for not only helping link consumers to the needs of the world's vulnerable children, but for building their own teams who are willing to do the same.
Sinnott says that the social entrepreneurship model wasn't intended as a sales or recruiting tool, but it has turned into one of the factors people consider when they decide who to do business with.
"We have seen that social entrepreneurship, especially when it relates to childhood malnutrition, is something people relate to," he says. "It creates added value. It's a win-win-win for the company, our associates and the children."
Associates can get involved in Mannatech's most recent social entrepreneurship endeavor, M5M, in several ways. Their sales support it, of course, and they can also travel on Mannatech mission trips to visit children being served and to assist in their care.
Associates have also supported a high-profile initiative called the M5M China Run. M5M Ambassador and ultra-endurance athlete Jason Lester is running the Great Wall of China—some 2,500 miles of extremely challenging terrain—in 100 days. The feat has never been accomplished before. The Wall attracts 100 million visitors annually, so the opportunity is unique. Lester's goal is to raise awareness of childhood malnutrition and the solutions being provided. By running almost the distance of a marathon each day for 100 days, he hopes to collect enough donations to supply 50,000 children with a one-year supply of PhytoBlend powder.
Mannatech used the M5M China Run to boost its business, and therefore, its social entrepreneurship platform. It issued a 100-Day Challenge to its associates to join Lester by taking their business performance to the next level. The company provided associates with what it called proven methods and steps that, when executed on a daily basis, could lead to business growth.
Lester started the M5M China run on Aug. 1 and should complete it around the time of Mannatech's early-November sales convention. Sinnott says that at the convention, the company will honor the ways in which Lester and his singular feat have contributed to the fight against global malnutrition. Mission 5 Million has always been a key message at the convention, and this year Mannatech plans to introduce new aspects of it that will make it even more effective—new partnerships that will be meaningful to associates; new geographical areas that will be served in the near future; and of course, new goals for increasing the number of children who benefit.
As a father of three boys, Sinnott is passionate about Mannatech's fight against childhood malnutrition.
"Last year we had the opportunity as a family to visit multiple feeding centers and schools in South Africa that received PhytoBlend," he recalls. "We got to see firsthand how our product is improving the lives of children living in some of the harshest conditions in South Africa. That has become a huge driver of me as a professional and father. I believe that, within this generation, we can eliminate the major causes of malnutrition through fortification programs—ours and other similar approaches. We have a cost-effective way of getting supplementation into children's lives."
|M5M Ambassador and ultra-endurance athlete Jason Lester
He notes that Mannatech's financial improvements are inextricably linked to its ability to expand the M5M program.
"Now that we're seeing a turnaround in our business, we're also seeing an increase in the number of children we can reach in the areas we serve," Sinnott reports. "Five million sounds like a large number, but we've already done more than 12 million servings this year, so I believe it's completely doable within my tenure to reach that 5 million goal. It's no more difficult a journey than the one being taken by Jason Lester as he runs the Great Wall. He'll finish that journey because he's taking it step by step and day by day. So will we."
November 01, 2014
Executive Announcements, November 2014
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
Industry Champion Ross Creber Dies
|Ross Creber
Ross Creber, former President of the Direct Sellers Association of Canada, passed away suddenly on Sept. 26, 2014, at the age of 73.
He is survived by his wife of 49 years, Bobbie; daughter, Dawn (husband, Dan); daughter-in-law, Lara; and grandchildren Colin, Erin, Grayden, Lochlan and Knox. He was preceded in death by his son, Steven.
Born in 1941 and raised in Toronto, Creber was the only child of Frederick and Olivena Creber. He attended Malvern Collegiate and graduated from Ryerson with a degree in marketing. In 1977 he began his 38-year career in the direct selling industry with his wife, Bobbie, running a Tupperware distributorship in Calgary and was later promoted to VP Marketing for Tupperware Canada. Creber worked for several companies within the industry, but found his passion in association management with the Direct Sellers Association. He served two different terms as its President, and, in between, worked internationally with the World Federation of Direct Selling Associations. He was the recipient of the Ivan P. Phelan Award, the most distinguished honor in direct selling, and the Queen's Diamond Jubilee Medal for his commitment to the industry. Creber retired from the Canadian DSA in December 2013.
A devout Anglican, Creber attended and supported parishes in several major Canadian cities as well as London and Boston. An avid golfer, Creber was also a mentor and friend to many and will be dearly missed.
A funeral service was held on Oct. 2, 2014, at Holy Trinity Anglican Church in Toronto. In lieu of flowers, donations may be made to the Anglican Church of Canada or the Sleeping Children Around the World charity.
Herbalife Ltd.
|Pamela Jones Harbour
Global nutrition company Herbalife Ltd. announced the appointment of Pamela Jones Harbour to the newly created role of Senior Vice President, Global Member Compliance and Privacy, reporting to Mark Friedman, Executive Vice President and General Counsel. Leading a global member compliance team across 91 markets, Harbour will develop and enhance policies and infrastructure that ensure effective education, training and mentoring programs for independent Herbalife members worldwide, underpinned by robust and consistent monitoring and enforcement procedures. In addition to her compliance responsibilities, Harbour will also coordinate the company's global privacy and cyber security efforts.
"Pamela's strong leadership capabilities will motivate and inspire our members to foster a culture of compliance and mutual respect," said Friedman. "Her deep regulatory experience and expertise in consumer protection, privacy and data security are extraordinary, and I look forward to Pamela leading our efforts in these important areas."
Harbour was formerly a partner at BakerHostetler, one of the nation's largest law firms, and was Co-Leader of BakerHostetler's national Privacy and Data Protection team. In addition to her roles in private practice, Harbour has spent time in government as a Commissioner at the Federal Trade Commission from 2003-2010 and as a prosecutor at the New York State Attorney General's office for 12 years.
|Dr. WangJae Lee
Harbour was selected as one of the top lawyers of 2014, chosen by her peers as one of Washington D.C.'s Super Lawyers. Among her other achievements, she was the 2010 recipient of the Electronic Privacy Information Center's (EPIC) "Champion of Freedom Award" for her defense of consumer privacy as an FTC Commissioner.
In other news, Herbalife announced the appointment of WangJae Lee, Ph.D., M.D., an expert in immunology, to its Nutrition Advisory Board. Dr. Lee's appointment further strengthens the board members to 27.
Dr. Lee is a distinguished professor at the Seoul National University's College of Medicine. He is a member of Korean Society of Anatomists, Electron Microscopy Society of Korea, Korean Society of Immunologists and the American Association of Immunologists.
Nature's Sunshine Products Inc.
|Dr. William J. Keller
Nature's Sunshine Products Inc., a leading natural health and wellness company engaged in the manufacture and direct sale of premium-quality nutritional and personal-care products, announced that Dr. William J. Keller and Sang Geon Kim, Ph.D., have joined Nature's Sunshine Products' Medical and Scientific Advisory Board.
Dr. Keller currently serves as the Vice President of Health Sciences and Educational Services and Chief Scientific Resource Officer at Nature's Sunshine, where he has worked since April 2001. He will continue to assist the company in this capacity and will lend support to ongoing research activities as well as help educate and train distributors at various company events.
|Dr. Sang Geon Kim
Prior to his coming to Nature's Sunshine, Dr. Keller served in a variety of professional capacities. He has served as Secretary for the American Society of Pharmacognosy and has been a member of the Board of Trustees for the American Herbal Products Association. In the field of education and critical scientific review he has served on grant review panels, editorial boards and as a manuscript referee. Dr. Keller's vast experience also includes almost 30 years as a professional pharmacist.
Dr. Kim is a professor of Pharmacology at Seoul National University in Seoul, South Korea. As part of serving on Nature's Sunshine's Medical and Scientific Advisory Board, Dr. Kim will assist with research activities, educate and train Nature's Sunshine and Synergy distributors, and speak at various company events.
In 2010 Dr. Kim was honored by the President of the Republic of Korea, Ministry of Health and Welfare. Earlier that year, he was named the Scientist of the Month by the Ministry of Science and Education. Dr. Kim currently serves as Vice Director of the Research Institute of Pharmaceutical Sciences at Seoul National University. He is also the Director of the Innovative Drug Research Center for Metabolic and Inflammatory Disease (IDRC) at Seoul National University and maintains a professorship in the College of Pharmacy at the university.
PartyLite Worldwide
|Celine Monnier
PartyLite Worldwide, a leading party plan candle company, announced that Celine Monnier has been promoted to General Manager, PartyLite France.
Monnier joined PartyLite in 2011 as Area Sales Manager and was promoted to Director, Sales & Marketing. She has developed and tested new party formats and has collaborated with international peers to promote PartyLite's vision to become Europe's No. 1 social shopping experience.
"Celine has a strong knowledge of direct selling as well as a passion for supporting and developing her team," said Robert B. Goergen Jr., CEO of Blyth Inc., parent company of PartyLite, and President of PartyLite Worldwide. "Her advancement symbolizes our company's longstanding popularity in Europe and highlights the success of our unique PartyLite people-helping-people business model."
Arbonne International
|Joe Wojcik
Arbonne International LLC, a direct seller of personal-care and wellness products crafted with premium botanical ingredients and innovative scientific discovery, has announced the appointment of Joe Wojcik as Senior Vice President of International. Wojcik will be responsible for leading Arbonne's development of foreign markets, specifically international expansion into new markets, including Poland and Taiwan.
Before coming to Arbonne, Wojcik held international executive roles at two other direct sellers. He brings approximately 20 years of relevant experience to Arbonne, including international sales, strategic planning and expansion. Wojcik has extensive experience with diverse organizations, much of it specific to the direct sales industry and focused on Asia Pacific operations.
It Works!
|Jannie Heimonen
It Works!, a skincare and nutrition company, announced the appointment of Janne Heimonen as President of International Operations.
As President, Heimonen will oversee operations and field management while spreading the It Works! culture of "black, green, and bling" throughout Europe, Australia and Canada. Heimonen is developing a local team to support all international markets, while planning future expansion.
Heimonen has over 20 years of industry experience, as both a distributor and corporate executive. Prior to joining It Works!, he worked as an independent consultant assisting U.S.-based companies grow their businesses in Europe.
"It is an exciting time to be part of It Works! as we continue to add to our corporate team to support our salesforce," said Mark Pentecost, CEO of It Works!. "Janne embraces our culture, and we're confident he is the right fit to help spread the 'It Works! Way' as we grow our international presence."
Jusuru International
|Dr. John A. Giannone
Jusuru International, the company behind Liquid BioCell™, a new generation of nutraceuticals for healthy aging, active joints and younger-looking skin, announced that John A. Giannone, DVM, is the newest member of the company's Scientific Advisory Board.
Dr. Giannone is currently the Medical Director and founding veterinarian of the Newport Animal Hospital in Newport Coast, California. A member of the Southern California Veterinary Medical Association, the American Veterinary Medical Association, and the California Veterinary Association, Dr. Giannone's areas of particular professional interest include internal medicine, surgery, cardiology, critical and emergency care, and avian and exotics medicine.
"I am proud and honored to be invited to be part of such an illustrious group of physicians and equally honored to be involved with such a stellar product," Dr. Giannone said of his appointment.
MONAT Global Inc.
|Stuart A. MacMillan
MONAT Global Inc., a wholly owned subsidiary of Alcora Corp. and a U.S. based hair-care company, announced the appointment of Stuart A. MacMillan as President.
Prior to joining the company, MacMillan has held a number of senior management responsibilities across diverse functional areas, most recently as Managing Partner of IMPACT This Day, where he offered guidance to Alcora's directors on the establishment of and strategic direction for their new subsidiary: MONAT Global.
MacMillan was most recently President of another direct seller's regional business in Canada and also headed its sales strategy in the U.S.
"Stuart's support has been key since the beginning of this project and we are thrilled to welcome him now as President to lead this team," said Rayner Urdaneta, CEO of MONAT. "We are certain that his dynamism, impressive professional accomplishments, and advanced understanding of the industry will lead MONAT Global to a place of prominence in both the direct selling and hair-care industries."
Alcora also announced the following appointments to its management team: Jillian Corley, Vice President of Marketing; Javier Urdaneta, Director of Operations; Jael Weber, Manager of Latin Markets; Teresa Epps, Regional Sales Manager Southern U.S.; and Angela Orrico, Regional Sales Manager Northern U.S.
MONAT Global was founded in 2014 and is a wholly owned subsidiary of Alcora Corp., whose holdings include L'EUDINE Global, an established direct selling company specializing in premium beauty and wellness products throughout the U.S. and Latin America, and B&R Products, their research, development and manufacturing laboratory subsidiary.
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November 01, 2014
Financial News, November 2014
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
Medifast Adopts One-Year Stockholder Rights Plan
The board of directors at Medifast Inc. (MED—NYSE) has put in place a one-year stockholder rights plan or "poison pill" intended to discourage a hostile takeover from outside the company. The weight-loss company adopted the plan "in response to the recent rapid accumulations of significant portions of Medifast's outstanding common stock." Waltham, Massachusetts-based ModusLink most recently built up a significant stake in Medifast. The supply chain and logistics company acquired 9.9 percent of Medifast stock through a series of transactions in July and August.
In its Securities and Exchange Commission filing, Medifast states that the plan was not adopted in response to any specific takeover bid or acquisition proposal. The rights plan would trigger should an outside investor acquire 10 percent or more of the company's stock. Existing stockholders would then have the opportunity to purchase additional common stock at a discounted price.
Medifast markets its products through several channels, including the personal coaching division Take Shape For Life. The direct selling subsidiary is Medifast's most profitable division. Take Shape For Life generated $229 million in revenue last year to claim the No. 52 spot on the DSN Global 100.
Youngevity Acquires Restart Your Life
Growing direct selling conglomerate Youngevity Essential Life Sciences, a wholly owned subsidiary of Youngevity International Inc. (YGYI—OTC.QX), announced that it completed the acquisition of the business of Restart Your Life, a dietary supplement company and provider of immune system support products and therapeutic skin lotions.
As a result of the business combination, Youngevity distributors and customers will have access to the unique line of high-quality products from Restart Your Life. In turn, Restart Your Life distributors and customers will gain access to more than 1,000 high-quality products offered by Youngevity, including health and wellness, lifestyle products and gourmet coffee.
Joyce Cordell, CEO of Restart Your Life, said, "The Restart Your Life story is one of scientific innovation and excellence in the field of immunology. By joining the Youngevity family we have become an international company with a solid foundation backed by the stability of an established leader in the direct selling industry. This expands the Restart brand globally and we could not be more excited for our entire distributor base."
According to Steve Wallach, CEO of Youngevity, this represents Youngevity's third strategic acquisition over the past three quarters of 2014.
In other company news, Youngevity International Inc. announced that its wholly owned subsidiary CLR Roasters has completed its previously announced $4.35 million secured convertible notes and financing for a total aggregate principal amount of $4.75 million. TriPoint Global Equities LLC acted as sole placement agent in the transaction.
The Notes, which mature in July 2019, are convertible into shares of the company's common stock at 35 cents per share. The notes are secured by certain assets of the company's wholly owned subsidiary, CLR Roasters LLC, personally guaranteed by CEO Steve Wallach, and bear interest at a rate of 8 percent per year. The warrants are exercisable for five years after the closing date of the purchase agreement. For each $100,000 of principal amount of notes, the holder received a warrant to purchase up to 391,304 shares of the company's common stock at 23 cents per share.
ForeverGreen Growth Accelerates in Europe and Asia
ForeverGreen Worldwide Corp. (FVRG—OTC.BB) announced that growth is accelerating in several geographic regions, especially Europe and Asia.
"Several key indicators for Europe are trending strongly upward during the last several months. Our auto-ship orders, a key measure of brand loyalty and retention, have grown 64 percent since March. Total European sales have also grown significantly during this same time frame and now represent 36 percent of the company's overall sales. I firmly believe that ForeverGreen Europe is positioned to continue its growth both in terms of sales and customer retention. We are working on several internal initiatives to make this possible, such as local distribution and the merger of the FG and FGX models. I could not be more confident of the direction we are headed and the initiatives in place to ensure continued upward growth," stated Blake Schroeder, President of ForeverGreen Europe.
Bob Mower Steed, President of ForeverGreen Asia Pacific, has recently moved to Hong Kong to oversee the dynamic markets in the Far East.
"ForeverGreen Asia is experiencing unprecedented growth, and I jumped at the chance to play an active role in the build-out of one of the most dynamic, fast-paced regions in the world. With the product lines ForeverGreen currently has and some of those that we will be bringing to market in the near term, Asia represents a huge opportunity for us," commented Mower Steed.
ForeverGreen is also seeing companywide sales growth, with August 2014 revenue (most recently reported) exceeding August 2013 sales by more than 300 percent.
"During August 2014, our sales exceeded $5 million for the third consecutive month," said Jack Eldridge, CFO. "ForeverGreen is experiencing sales growth from every geographic region. We are continuing to meet or exceed our financial expectations and we are confident our sales will continue to accelerate quickly now that the summer months are done."
Quarterly Results
LifeVantage Corp.
LifeVantage Corp. (LFVN—NASDAQ), a company dedicated to helping people achieve healthy living through a combination of a compelling business opportunity and scientifically validated products, reported financial results for its fourth quarter and full fiscal year ended June 30, 2014.
Fourth Quarter Fiscal 2014
For the fourth fiscal quarter, the company reported revenue of $56.0 million, an increase of 8.8 percent compared to $51.5 million for the same period in fiscal 2013. Revenue for the quarter was negatively impacted $600,000, or 1.2 percent, by foreign currency fluctuation.
Operating income for the fourth fiscal quarter of 2014 was $4.8 million, generating an operating margin of 8.5 percent, compared to $200,000 and an operating margin of 0.5 percent in the same period last year. Operating income in the fourth fiscal quarter of 2013 included $3.3 million of one-time expenses.
Net income for the fourth fiscal quarter of 2014 was $2.4 million, or 2 cents per diluted share, calculated on 106 million fully diluted shares. This compares to a net loss of $200,000 in the fourth fiscal quarter of 2013, or zero cents per diluted share, calculated on 112 million fully diluted shares, including the aforementioned after tax-impact of one-time expenses.
Full Year Fiscal 2014
For the full year ended June 30, 2014, the company reported revenue of $214.0 million, compared to $208.2 million in fiscal year 2013. Revenue for fiscal year 2014 was also negatively impacted $10.4 million, or 5.0 percent, by foreign currency fluctuation.
Operating income for fiscal year 2014 was $19.5 million, generating an operating margin of 9.1 percent. This compares to operating income of $12.1 million, for an operating margin of 5.8 percent, in fiscal year 2013. Fiscal year 2013 operating income included approximately $8.3 million of one-time expenses associated with the company's product recall. The remaining $3.3 million of expenses are associated with the aforementioned one-time costs.
Net income for fiscal year 2014 was $11.4 million, or 10 cents per diluted share, calculated on 112 million fully diluted shares, compared to $7.6 million, or 6 cents per diluted share for the prior year, including one-time expenses, calculated on 123 million fully diluted shares.
The company generated $12.1 million of cash flow from operations in fiscal year 2014, compared to $10.7 million in fiscal year 2013. The company's cash and cash equivalents at June 30, 2014, were $20.4 million, compared to $26.3 million at the end of fiscal year 2013. The company repaid $16.2 million of debt during the year and throughout the year returned $46.2 million to shareholders in the form of share repurchases.
Immunotec Inc.
Immunotec Inc. (IMM—TSX VENTURE), a Canadian wellness company, released results for the three-month period ending on July 31, 2014. All amounts are noted in Canadian dollars unless otherwise indicated.
"In spite of the taxation challenges experienced by our industry in Mexico in the absence of clear laws, we are pleased to report year-to-date adjusted EBITDA of $3.8 million (US$3.4 million), reflecting continued leverage of our Canadian platform and our ability, via our direct-to-consumer model, to take advantage of significant growth opportunities in the U.S. and in Mexico," said CEO Charles L. Orr.
"In 2010, we assumed control of the distribution channel in Mexico and, as a result, we have built a growing and sustainable business in that country. While business opportunities remain significant in Mexico, more importantly, we are confident in our ability to replicate our success in other countries in upcoming years."
Revenues in the three-month period reached $22.3 million (US$20.0 million) compared to $14.4 million (US$12.9 million) for the same period in the previous year, representing an increase of 55.0 percent. The increase in revenues was due primarily to sales momentum in Mexico and the U.S. with currency-adjusted growth, respectively, of 99.4 percent and 27.0 percent.
For the three-month period, adjusted EBITDA was $1.7 million (US$1.5 million) compared to $700,000 (US$626,000) in the same period in the previous year, representing an increase of 151.7 percent over the same period in the previous year. This increase primarily reflects an improved product mix combined with operational leverage and is partially offset by higher field incentives reflecting the upfront costs related to new consultants.
Net loss for the three-month period ended July 31, 2014, totaled $4.3 million (US$3.8 million), as compared to a net loss of $100,000 (US$89,000) for the same period in the previous year. Total basic and fully diluted (loss) profit per common share for the three-month period ended July 31, 2014, was (6 cents) (US 5 cents), as compared to (zero cents) in the same period in the previous year.
Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.
November 01, 2014
Entrepreneurs Are Not Normal
by Darren Hardy
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
An excerpt from Darren Hardy's upcoming book, The Entrepreneur Roller Coaster
NOTE: Darren Hardy's new book, The Entrepreneur Roller Coaster, explores the passion and determination behind the entrepreneurial experience. Direct selling companies are often started by lone entrepreneurs who build their ideas into large companies which attract even more entrepreneurs as direct sellers of their products and services. We think you'll enjoy this excerpt.
You're a freak.
That's right. A freak. And so am I. Don't be offended—it's a compliment. Let's define freak.
freak |freek| noun: a person who is obsessed with or unusually enthusiastic about a specified interest.
If that's not a definition for an entrepreneur, I don't know what is. No doubt you have to be "unusually enthusiastic" and pretty freaky to get on this roller coaster. Most don't have the courage to even step into the car of this thrill ride. But you do, and that is exactly why they will call you a freak.
Not only are you rare in your courage, but it turns out you're unusual for even wanting to ride in the first place—only about 10% of people are entrepreneurs. That means the other 90% are "normal."
Let's define normal.
normal |nawr-muhl| adjective: conforming to the standard or the common type; usual.
Yuck! The "usual," "common type," or "standard" societal normal (that big, herd-like 90 percent) don't like it when a "freak" steps out of line. That kind of nonconformity threatens them. It challenges their choices and identity. Rather than step out themselves, it's safer for them to scorn your choices and attack you, in hopes of dragging you back into the herd so they can feel better about themselves.
So, yes. They will call you freak. They will call you crazy.
And that is good.
"Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can't do is ignore them. Because they change things. They push the human race forward. While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do." —Apple Inc. ad, 1997 after Steve Jobs returned to Apple.
So hello, crazy one! Welcome to the freak show! The good news is you don't have to catch cannonballs, swallow swords, or breathe fire in order to join this freak show. (Unless, of course, your business actually is running a circus.)
The bad news is that being a freak can be painful at first.
Beware the Crabs
I was once told about a type of crab that cannot be caught—it is agile and clever enough to get out of any crab trap. Yet these crabs are caught by the thousands every day, thanks to a particular human trait they possess.
The trap itself is simple: a wire cage with a hole at the top. Bait is placed in the cage, and lowered into the water. A crab comes along, enters the cage, and begins munching on the bait. A second crab sees the first crab and joins him. Then a third. For a time, it's crab Thanksgiving. Eventually, though, all the bait is gone.
At this point the crabs could easily climb up the side of the cage and leave through the hole. But they don't. They stay in the cage. And long after the bait is gone, even more crabs continue to climb inside the trap. Not one leaves.
Why? Because if one crab realizes there's nothing keeping him in the trap and tries to leave, the other crabs will do anything they can to stop him. They will repeatedly pull him from the side of the cage. If he is persistent, the others will tear off his claws to keep him from climbing. If he persists still, they will kill him.
The crabs—by the power of the herd—stay together in the cage. All the fisherman needs is a tiny bit of bait. The rest is easy. Then the cage is hauled up, and it's dinnertime on the pier.
When you chose to become an entrepreneur—to be different—and walk out on that 90 percent, something strange happens. Instead of encouraging and supporting you, your friends, family, and colleagues become crabby and start trying to drag you back down into the "trap."
But why do they do it? Many of these people love you. Why would they want to hurt you (emotionally) and kill your hopes, dreams, and desire for something more?
There are two key reasons:
- You make them look bad. When you step outside the status quo, you become a giant mirror that reflects the reality of their life back to them. Instead of joining you, it's easier to make fun of you, or try to convince you that what you're doing is foolish, risky, or destined to fail in the hopes that you will give up, come back to the pack, and take the mirror away.
- They simply aren't as courageous as you. What you're doing just doesn't fit their model of the world, and they aren't brave enough to follow your lead. It's easier to mock you than follow you.
What you'll soon realize, though, is that it's not about you at all. They are really saying 'no' to themselves. They're rejecting their own inner voice that prods them to do more. To step out. To be brave. To take risks… like you.
This chapter is about dealing with crabs and other dips and drops on the entrepreneur roller coaster. It's about accepting and loving your "freaky" nature. It's about facing disapproval, discouragement, and downright ridicule, and coming back stronger and more resilient than ever.
I remember a great quote from Gandhi that I think every entrepreneur needs to keep close at hand:
"First, they ignore you, then they laugh at you, then they fight you, then you win."
Darren Hardy is a successful entrepreneur, publisher of SUCCESS magazine, and New York Times bestselling author of The Compound Effect and Living Your Best Year Ever: A Proven Formula for Achieving Big Goals. His latest book is The Entrepreneur Roller Coaster. Find out more at: www.rollercoasterbook.com.
November 01, 2014
News in Brief, November 2014
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
Amway Funds Pioneering Research by Stanford University
The Amway Nutrilite Health Institute Wellness Fund has made a $10 million unrestricted gift to the Stanford Prevention Research Center. The contribution will fund The Wellness Living Laboratory (WELL), a first-of-its-kind research study to analyze how changes in diet and lifestyle can impact long-term wellness and contribute to healthy aging.
WELL will be designed, conducted, and analyzed by scientists at Stanford Prevention Research Center and, to safeguard investigative independence, will be entirely under the control of Stanford University with no involvement by Amway. The research, expected to begin in 2015, will continue for at least
five years.
Mary Kay Sponsors White House Event on Domestic Violence
Mary Kay Inc. and The Mary Kay Foundation recently sponsored a "Pillars of Empowerment" event in Washington, D.C., to recognize the past three decades of progress in domestic violence initiatives. Mary Kay partnered with the National Task Force to End Sexual and Domestic Violence Against Women in calling on lawmakers for a renewed commitment to address these crimes through new and existing programs.
Advocates and champions were recognized at a White House ceremony followed by a reception hosted by Vice President Joe Biden, who co-sponsored The Violence Against Women Act (VAWA) at its inception. Additional events took place at the National Archives and the National Museum for Women in the Arts.
In advance of Domestic Violence Awareness Month in October, The Mary Kay Foundation also awarded $3 million in grants to 150 domestic violence shelters in all 50 states, the District of Columbia, Puerto Rico and Guam. Each shelter received a $20,000 grant to maintain critical services and programs.
Direct Selling Companies Lead Home States in Growth
Arizona Corporate Excellence (ACE) has ranked Vemma Nutrition Co. the top business in Arizona on its annual "ACE Fastest-Growing Cos." list. ACE researches and compiles its list based upon a proprietary formula of accounting firm CliftonLarsonAllen LLP. The formula measures revenue growth—in both actual dollars and percentage—over a two-year period.
In Utah, Zija International leads the "Fast 50," Utah Business magazine's annual ranking based upon revenue growth and revenue generation. Vivint (No. 10), Nu Skin (No. 13), and USANA (No. 28) also appear on this year's ranking.
Since its founding in 2005, Zija has surpassed $140 million in annual sales. The company's weight management, liquid nutritionals, energy and performance, and skincare products utilize superfoods derived from the Moringa plant.
USANA Ranks among America's Best Workplaces—Again
For the sixth consecutive year, OUTSIDE magazine has named USANA Health Sciences one of America's "Best Places to Work." USANA ranked No. 53 on this year's list, which recognizes the top 100 U.S. companies helping their employees strike the ideal balance between work and play. These companies encourage employees to lead an active lifestyle, are eco-conscious, and prioritize giving back to the community.
The list is a result of OUTSIDE's rigorous eight-month vetting process in partnership with the Best Companies Group. The assessment includes employee feedback on corporate culture, role satisfaction, work environment and overall employee engagement.
For USANA's 700+ employees in Utah, workplace benefits include an annual profit-sharing program, free monthly company health products, excellent health and life insurance packages, and regular health fairs. USANA's efforts have also earned it standings on Utah Business magazine's "Best Companies to Work for in Utah" and PR News' list of "Top Places to Work in PR."
Shaklee Introduces Brain Research Grant
Shaklee has established a new program within its Shaklee Grants Program to fund research on the role of dietary supplements in supporting brain health. The brain research grant will be funded by proceeds of Shaklee's recently launched MindWorks™, a supplement developed to support short- and long-term cognitive health.
Researchers may submit brain health proposals until Nov. 30, 2014. Study questions most likely to receive funding under this program will involve evaluation of nutritional ingredients or ingredient combinations suitable for use in dietary supplements for either acute (e.g., short-term memory, concentration, reaction time) and/or long-term improvements to or maintenance of cognitive function in healthy adults.
Viridian Sustainability Initiative Takes on Fifth Continent
During its fifth annual PowerUP! Convention, Viridian Energy revealed the fifth location of its 7 Continents in 7 Years initiative. This year the Stamford, Connecticut-based company will focus its global sustainability efforts on the Central American nation of Nicaragua. In the rural, off-the-grid village of Potrero Platanal, Viridian will power 48 homes that previously had no prospects of energy supply.
Viridian's energy offerings are up to 100 percent renewable, and the company reports that its residential and commercial customers have avoided more than 4.5 billion pounds of carbon emissions. Through 7 Continents in 7 Years, Viridian staff and top-performing Independent Associates take that spirit of sustainability to a different continent each year.
Nerium, Youngevity Make Room for Growth
Growing direct-selling conglomerate Youngevity has invested $1.1 million in improvements to its Chula Vista, California, headquarters. Updates to the 59,000-square-foot facility include a revamped distribution center—with doubled storage and throughput capacity—and a new state-of-the-art R&D lab. The company also expanded its customer service department, remodeled its lobby and installed new, water-efficient landscaping.
In North Texas, Nerium International has moved to a new headquarters twice the size of its former space. Nerium leased 75,912 square feet at a facility adjacent to its Addison, Texas, headquarters. The skincare company chose to remain in the area where it launched from a 5,432-square-foot office.
Since launching in 2011, Nerium has seen record-breaking sales, earned several industry accolades, and built a customer base of millions in the U.S. and in Canada. In October, the company expanded into Mexico, its second international market.
Nerium has announced plans to open several more countries in the near future.
Mannatech Opens Singapore Business Center
Mannatech recently opened a new Associate Business Center in Singapore, continuing the expansion of Mannatech's Australasian operations in response to significant business growth in Singapore. The nutrition brand and creator of the M5M (Mission 5 Million) social entrepreneurial movement also established two new training centers in Korea in March 2014.
The Mannatech Business Center will facilitate and support Mannatech Associate activities, including meetings and training sessions. According to the Global Competitiveness Index 2013–2014, Singapore rates second only to Switzerland in economic performance among the top 10 countries globally.
Arbonne Launches in Poland
Through its subsidiary Arbonne Europe Sarl, Arbonne has officially opened its business in Poland, marking the 34-year-old company's entry into continental Europe. With the launch, Arbonne introduces its botanically based beauty, health and wellness products for the whole family.
Arbonne's continued growth is generating positive momentum to carry the company's culture, sense of community, products and opportunity into Poland. In advance of the launch, Arbonne Poland events were held in Sopot, Warsaw and Krakow—with nearly 1,200 attendees. Entry into Poland makes Arbonne operational in a fifth country, along with Australia, Canada, the United Kingdom and the United States.
MonaVie Launches in Italy
Nutrition brand MonaVie has officially launched operations in Italy, its 39th market worldwide. The European Union is home to more than 4 million direct sellers, and Italy is one of the region's most dynamic markets, with $3.1 billion in direct sales last year.
Italian consumers initially have access to six MonaVie products, including the company's flagship acai berry juices. Those juices will ship from MonaVie's brand-new manufacturing facility in Hohenseefeld, Germany—another significant investment in the company's European business. MonaVie previously manufactured all of its European products in the U.S.
ASEA Launches in Mexico
Health and wellness brand ASEA celebrated the grand opening of its Mexico market with three events across the country. The tour—featuring ASEA Founders Verdis and Tyler Norton, President Jarom Webb, and Dr. Gary Samuelson—included stops in Mexicali, Colima and La Paz.
Since launching in 2009, ASEA has expanded into several EU countries, as well as Australia and New Zealand. ASEA products incorporate the company's patented Redox Signaling technology, which supports cellular healing and replenishment.
November 01, 2014
Letter from John Fleming, November 2014
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
November is always a special month! Gratitude flows as we move closer and closer to the designated day of Thanksgiving across the United States of America. Thanksgiving was essentially a harvest-related festival, a special day to acknowledge gratitude for a successful year of planting and reaping the food so essential to the lives of the people. Though Thanksgiving is said to have originated in America, a number of other countries celebrate harvest-related festivals with different names. Therefore, even though November may not be the month to celebrate Thanksgiving in other parts of the world, we take this moment to share with friends everywhere our gratitude for your friendship and partnership during the past year. We may not be exactly like the farmers who originally selected a special day to celebrate the harvest of crops, but in many ways we share our gratitude for the abundance of so many things—friendships and business relationships, businesses that offer the opportunity of harvest through salaries and wages for employees, and the entrepreneurs who come to the direct selling business model as a way to make some of their dreams come true… the business harvest of earnings.
This November also marks a special moment in time for Direct Selling News. I have served as Publisher for 105 months and have contributed to this page 104 times. It has been nothing less than one of my life's most extraordinary pleasures! To serve with some of the greatest people I have met and publish many of the stories that needed to be told, and to be able to do it out of a commitment to be nothing less than a trusted journalistic resource that would add to the credibility and image of an industry you love so dearly…it just does not get any better! I am not leaving Direct Selling News, but the torch is being passed. Lauren Lawley Head was hired at the beginning of the year to lead the DSN effort to even bigger places and create even greater impact, not only here in America but eventually around the world. Lauren has the experience having been involved directly with business journals in major cities in the country, most recently as Editor of Dallas Business Journal. She is more than qualified. Her contributions as new General Manager, in a very short period of time, have been many! You have heard from her in previous issues, and it is now time to bring her to what I will refer to as the main stage… this page. I know you will enjoy Lauren's insights and perspectives, and I will continue to share from time to time in other parts of the magazine.
As mentioned earlier, November is always a special month! This particular November has an even greater treat in store as we are delighted to release the top-line findings from the most recent research conducted on the direct selling industry, commissioned by Direct Selling News and conducted by Harris Poll. Lauren, as a new member of our staff, took the lead position on this project, which quickly became the most extensive research project ever conducted by Direct Selling News. Back and forth we went with the researchers to develop the right questions to truly explore both consumer attitudes and those of independent contractors. Over the past several months, we finally arrived at the questions. Once the questions were finalized, we anxiously awaited the completion of the process and the resulting data that was to be derived. The day we received the first round of data, joy would be the one word I might use to describe our enthusiasm! We had real data to share that reflects the population in its entirety. Our friends at DSA were made aware of the findings immediately, and we will work together to explore the many ways this valuable information can be used for the benefit of all of you! Enjoy the cover story in this issue… it's all about the real direct selling industry!
We, like all of you, are busy preparing to close another year. It has been a good one for us because, once again, we were able to tell the stories that needed to be told. As we approach the new year, you can look forward to more from Direct Selling News. New pathways will be charted by Lauren, bringing even greater value to those we cherish and serve. Simply put… in 2015 DSN will bring you more!
Save the date, April 8, to join us in celebrating the sixth DSN Global 100 banquet! The event has grown each year with over 300 industry executives attending last year. A special and classy evening of reception and programing will also include recognition of special achievements during 2014.
On behalf of all of the DSN staff, please know that we are always grateful for the opportunities we experience in sharing the stories you create. To our supplier friends—our customers, the fuel that allows us to make it all happen—and to all of you who read this magazine, Happy Thanksgiving to each of you!
Until next month… enjoy the issue… and go Lauren!
John Fleming
Publisher and Editor in Chief
November 01, 2014
Do You Have Enough Gen Xers in Your Succession Plan?
by Judy Stubbs
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
When it comes to the U.S. working population, all age groups are not created equal. There are significant differences in the fundamental values and predominant work styles of different generations. That raises a wide range of talent-related issues for direct selling organizations, including how to attract, develop and retain executives at different stages of their careers. However, there is one overarching challenge today: finding and hiring executives in their mid-30s and 40s with the potential to become tomorrow's CEOs, CFOs and other C-suite executives to lead direct selling organizations into the future.
Three Generations in the Workforce
Today, the U.S. talent pool is substantially larger at the top and the bottom of the working-age demographic groups than in the middle, according to a recent report from Pew Research Center, Generation X: America's Neglected 'Middle Child.' The Pew report outlines the clear differences between the three generations now in the workforce.
At the top are the 77 million members of the baby boom generation, who are now in their 50s and 60s. In most organizations, the senior leadership team consists largely of boomers who have accumulated decades of on-the-job knowledge and experience, but are steadily leaving their careers behind. In fact, more than 10,000 baby boomers retire every single day. By 2015, over one-third of our work force will be retiring, according to a 2013 Social Security Administration report.
An even larger demographic group is now entering the nation's workforce: the approximately 83 million millennials, including a large percentage now in their 20s and early 30s. Because these millennials are beginning their careers, few of them have developed the experience necessary for the responsibilities that come with a position in the C-suite.
In between these two generations are the 65 million Gen Xers, who range in age from 34 to 49. Gen X executives are in mid-career, developing skills and experience that can be groomed to prepare them to ascend to the C-suite. However, based on demographics, direct selling organizations will face a shortfall in talent in the next decade unless they make succession planning a top priority.
Fresh Perspective in the C-suite
Even as the relative scarcity of Gen Xers creates talent gaps, it also creates new opportunities for farsighted organizations to remain close to their customers as consumer habits evolve. For example, giving Gen Xers a significant presence in the C-suite can spur the development of new sales and marketing strategies, including innovative tactics based on the growing confluence of digital, mobile and social media. It can also provide organizations with fresh ideas and perspectives on changing customer values, attitudes and behaviors.
Direct selling organizations are not the only entities facing a transition in demographics—virtually all consumer and B2B markets are undergoing similar changes. Companies whose succession plans are aimed at moving Gen Xers into leadership roles are likely to have an edge on their competitors in serving their steadily evolving markets.
Understanding Gen X
The different perspectives, viewpoints and motivators of each generation can often result in misunderstandings and missed opportunities—especially in the workplace—and can be a recipe for disaster. Yet for all the media focus on the differences between the work styles of boomers and millennials, Gen Xers have received far less attention. Direct selling organizations need to take into account the values, motivations and drivers for mid-career executives in this age band, because there are some distinct generational differences in their work styles and motivators.
As the Pew report observed, "In most of the ways we take stock of generations, Gen Xers are a low-slung, straight-line bridge between two noisy behemoths. From everything we know about them, Xers are savvy, skeptical and self-reliant; they're not into preening or pampering."
There are some common factors to consider in recruiting, hiring, developing and retaining these mid-career executives. In many cases, Gen Xers value freedom and autonomy to a greater extent than either the boomers or millennials. Like the boomers, they are hard workers while still valuing family and personal time, and like the millennials, they appreciate an enjoyable workplace along with flexible work hours and location. All three generations share the value of trust and respect.
Also common among Gen Xers is a desire for self-sufficiency. Having grown up during a time of corporate downsizing and economic and political instability, they can be less attached to their employers—particularly companies that fail to engage them on a personal level. That makes it imperative for recruiters to highlight the company's highest values and point out opportunities for senior executives to become involved in community, charitable and other causes that can make a positive difference in the world. Once onboard, these Xers need to continue to feel personally engaged and enriched in order to feel satisfied in their career.
Fortunately, most direct selling organizations have a readily available source of information about what drives Gen Xers today—their internal talent pool of managers and sales professionals in their late 30s and 40s. Online surveys, focus groups and individual interviews—as well as participation in various organizational activities—can provide invaluable insight into Gen Xers' attitudes and behaviors and play a key role in developing an effective succession planning program.
Strategies for Succession Planning
One of the first steps in succession planning for direct selling organizations is to determine the size and skill level of the internal Gen X talent pool. Are there enough potential candidates at the mid-career level to replace the boomers in the company as they move into retirement? If the answer is no, then it's time to begin a focused recruiting strategy to bring more Gen Xers into the organization. If your Gen X candidate pool is already sufficient, then you should be actively developing these young executives in order to retain them.
It's vital to consider how to prepare these future leaders for spots in the C-suite, whether they are longtime veterans or new to the organization. This development process begins with having a clear picture of your company's vision: how it can improve, how you can reach your customers better, how you can be invested more with your clients, etc.
Consider pulling together a strategic committee with executives from different disciplines who are comfortable sharing and evaluating individual ideas in order to come up with an overall vision for the future. Thinking this through can help identify who on your team would be the best fit to drive the company toward those goals.
Next, you should create a formal succession plan with a reasonable level of detail. For example, your plan might include the names of three Gen Xers who could become CFO in the next three to five years. List their strengths that make them a capable successor to the role, and also list the areas that need to be developed in order to make them successful. Be sure to specify where there are gaps in your plan that identify external recruiting needs. You should update your plan on a regular basis to reflect changes in both your organization and external market factors, and monitor the progress of these rising stars in their annual or quarterly reviews.
Once you have a succession plan in place, you can start working with your Gen Xers to develop them to ascend in your organization. These development plans can include both formal and semiformal learning settings, such as one-on-one coaching or lunch-and-learn sessions with a small group. You could also arrange to bring in a guest speaker or consultant to lead a classroom session or two devoted to specific leadership skills, such as motivating others or providing constructive feedback.
Potential Gen X leaders may also be encouraged to take educational courses that broaden their knowledge and skills. In some cases, an executive coach can provide one-on-one leadership training—an important consideration before moving someone into the C-suite.
In many cases, you can deepen an executive's commitment to the company by creating opportunities for Gen Xers to develop a higher profile both inside and outside the organization. That could include putting them on the podium at trade shows or business events, or launching a blog that aligns their personal and professional interests with those of the company.
Another strategy for building leadership skills is rotating Gen Xers through different assignments or managerial positions. These "stretch assignments" can be an effective tactic for deepening executive engagement as well as providing opportunities for them to develop new skills. It can be a key step in succession planning because it prepares a subordinate to step into the shoes of the current leader if that senior executive takes on a new role.
As with any professional development program, it's a good idea to have a before-and-after comparison to determine the impact of these career-expanding activities. Your subordinates—and their managers—could write a brief statement about how they see their current leadership skills. You can also complete a more formal baseline assessment, perhaps with the help of an outside consulting firm.
After the coaching, teaching, speaking engagement or stretch assignment, you can have your Gen Xers update their essays, and/or complete new formalized assessments. In any case, you'll have gained new insight into their ability to lead—as well as your own teaching abilities—while contributing to the strength of your organization.
As a senior executive, you can put this insight to good use by continuing the ongoing process of training, coaching and mentoring your Gen Xers in leadership skills. Not only will you be giving them an opportunity to grow and progress in their careers—and support your own succession plan—you'll also get an opportunity to examine your own skill set.
A High Priority
Succession planning should be a high priority for all sizes and scopes of direct selling organizations—local, regional, national and global. Finding the right Gen Xers and grooming them for C-level positions—while also developing the next generation to take their place—is instrumental to achieving long-term sustainability. The injection of fresh ideas and new leadership styles can propel your company forward and take advantage of today's evolving market opportunities. As you focus on the urgent daily challenges, be sure to look to the future by developing an effective succession plan.
Judy Stubbs is Vice President and a retained executive search consultant with Pearson Partners International. With previous experience as the chief human resources officer of Mary Kay Cosmetics, she has been helping her direct selling industry clients build strategic leadership teams for more than 25 years.
November 01, 2014
Stock Watch, November 2014
November 01, 2014
Groundbreaking Study Reveals the Real Direct Selling
by Beth Douglass Silcox
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
Direct Selling News Study Conducted by Harris Poll Sorts Direct Selling Fact from Fiction
In the age of 24-hour news cycles and quasi-news blogs, the direct selling industry experiences more than its share of fallout from the recirculation of misleading statements and misnomers. Noisy voices shouting falsehoods often overpower industry fact, putting the industry, its companies and sellers on the defensive. Whether these fallacies are motivated by malice or just a lack of information, one thing is clear—the direct selling distribution channel is misunderstood, and too often misrepresented.
To sort direct selling fact from fiction, Direct Selling News commissioned Harris Poll to conduct a comprehensive online study among 3,549 U.S. adults 18+ between Aug. 19 and Sept. 2, 2014 to more deeply understand the direct selling industry.
This month, Direct Selling News presents some of what we learned—gleaned from the study Harris Poll conducted on our behalf. New data not only dispels several accusations made in the court of public and online opinion; but also advances the industry's ability to apply a fact-driven, strategic, pro-active offense to better educate the public and potentially quiet industry opponents.
What we found flips five common direct selling misconceptions 180 degrees.
- When it comes to money, 93 percent of current direct sellers reported earning income in the last 12 months.
- While personal product discounts are extremely appealing to current direct sellers, 50 percent also served the needs of six or more customers in the last month.
- Most current customers (82 percent) thought their last purchase was a good value.
- Seven in 10 current customers (69 percent) are likely to speak positively about their direct selling experience.
- Despite leaving their businesses, 76 percent of past direct sellers rated their experience fair or better and 67 percent purchased from the industry in the past year.
Let's explore the findings of this survey and break down the facts behind each of these five statements.
What we found: When it comes to money, 93 percent of current direct sellers reported earning income in the last 12 months.
People join direct selling companies for a variety of reasons and people quit for a variety of reasons too. Not all of them revolve around money, but when it is their motivation (40 percent of current sellers seek supplemental income; 23 percent want to pay down debt; 25 percent want to save for the future), direct selling most certainly offers a way to earn. The study found an overwhelming majority (93 percent) of current direct sellers reported earning some amount of money in the last 12 months and only 16 percent of past direct sellers reported not making enough money as the reason for leaving their businesses.
Of course, the amount earned is up to the direct seller, their efforts and the time they dedicate to the business. The median current direct seller income was about $6,200 in the last year, with most current direct sellers showing a part-time level commitment, as 70 percent dedicate 15 hours or less each week to their businesses.
The impact of time spent working a direct selling business is typically seen in earnings, so it is no surprise that some direct sellers earn more than others. While 27 percent of current direct sellers earned less than $1,000 in the last 12 months, 51 percent reported higher earnings ranging from $1,000 to $49,999, and 15 percent exceeded $50,000.
Apply the study's 15 percent of current sellers earning $50,000 or more in the past 12 months to the roughly 16 million direct sellers in the United States, and some 2.4 million direct sellers earned upwards of $50,000 in the last year. This 15 percent of current direct sellers beat the national average salary for men ($45,188) and women ($37,076), as well as the national median annual salary for all Americans working a 40-hour workweek ($48,872), as reported by the Bureau of Labor Statistics in December 2013. (These salary figures were not provided by Harris.)
Those earning figures are impressive, but it's also worth noting that salaries reported by the Bureau of Labor Statistics are for full-time employment. Direct selling, on the other hand, tends to draw people who want part-time employment. Four in 10 current direct sellers report their income from their direct selling business is in addition to wages earned in other jobs (41 percent), while 15 percent say they are in addition to retirement, pension or disability. Therefore, it is logical to assert that current direct seller earnings reported in the study (66 percent in excess of $1,000) could be the result of part-time efforts and most often provide a second source of income to the seller's family.
What we found: While personal product discounts are extremely appealing to current direct sellers, 50 percent served the needs of six or more customers in the last month.
Naysayers of the direct selling industry depict self-consumption as a negative. With a broad brush, they denounce the existence of what they call "real" customers and minimize the efforts of millions of direct sellers who serve the needs of clients every day.
The practice of self-consumption—the ability of direct sellers to purchase products and services at a discount—is similar to membership clubs like Costco, where people pay a fee for access to discounted products.
In fact, the top financial benefit of a direct selling business, according to 84 percent of current direct sellers in the poll, is discounts on products or services. Three in 10 (29 percent) past sellers cite access to discounted products as the reason they initially launched their direct selling businesses.
The study found that current direct sellers tend to be more active shoppers than other audiences studied. They say shopping makes them feel good (71 percent) and other people seek their advice on purchases (63 percent). As savvy shoppers, current direct sellers—who are predominantly female—understand the impact discount pricing can have on the bottom line of a household. In much the same way Costco draws savvy shoppers, so too does the direct selling industry. Discounted products, whether they are purchased at a big-box retailer or as a result of a direct seller ordering from the company she represents, puts money back into the household budget.
Of current direct sellers, 50 percent served only small groups of one to five customers in the last month. While industry detractors imply these direct sellers are dissatisfied, the poll shows 85 percent of all current direct sellers depicted their experience as excellent or good. Direct sellers who choose to operate microbusinesses like these small enterprises—and whose objective is to obtain product discounts—seem to be at ease with their level of engagement with the companies they represent.
We found that the remaining 50 percent in the current seller group served six customers or more in the last month. Current customers reported making purchases on at least a monthly basis (26 percent), at least once every three months (45 percent), or at least once every six months (64 percent).
Harris Poll Methodology
Direct Selling News commissioned Harris Poll to conduct a comprehensive online study among 3,549 U.S. adults 18+ between Aug. 19 and Sept. 2, 2014 to more deeply understand the direct selling industry through the eyes of four key audiences:
The study explored attitudes and behaviors, as well as engagement and satisfaction levels. It also strived to provide a snapshot of the typical seller by uncovering goals, objectives and reasons for entering into direct selling, as well as explain why past sellers disengaged from their businesses. Results were weighted as needed for: age, gender, race/ethnicity, education, region, and household income, as well as the respondents' propensity to be online. Harris Poll applied post-weights for gender to reflect a more accurate representation of the population of current direct sellers, according to data from the Direct Selling Association.
The study explored attitudes and behaviors, as well as engagement and satisfaction levels. It also strived to provide a snapshot of the typical seller by uncovering goals, objectives and reasons for entering into direct selling, as well as explain why past sellers disengaged from their businesses.
Results were weighted as needed for: age, gender, race/ethnicity, education, region, and household income, as well as the respondents' propensity to be online. Harris Poll applied post-weights for gender to reflect a more accurate representation of the population of current direct sellers, according to data from the Direct Selling Association.
What we found: Most current customers (82 percent) thought their last purchase was a good value.
An assertion floats around cyberspace and the media that direct selling companies offer inferior products at inflated prices. Truth be told, current direct selling customers and sellers are smarter and savvier than industry critics realize. They place product quality (96 percent, current customers; 93 percent, current sellers) and price (92 percent, current customers; 88 percent, current sellers) as top considerations when making any purchase decision, and their direct sales purchases do not disappoint (majorities are satisfied with these aspects of their direct selling experience).
Current customers most recently purchased products to accentuate their beauty (14 percent), improve their skin (10 percent), simplify home life and entertaining (food and beverage, 12 percent), and present their most fashionable selves (jewelry, 11 percent; and clothing/accessories, 9 percent). They want a treat, and direct sellers provide them with an easy way to make a purchase (70 percent are extremely or very satisfied with this aspect of direct selling). Four in 10 (40 percent) have most recently purchased online, while most made their last recent purchase one-on-one, at a home party, craft show or farmer's market or at some kind of demonstration, seminar or presentation of a product or service.
The results of the product purchase questions show that customer and seller expectations about quality and price align closely with after-purchase satisfaction. Four in five (82 percent) current customers say their last purchase was a good value and 64 percent are extremely or very satisfied with the quality of their direct selling purchases. Half report being extremely or very satisfied with pricing too.
What we found: Seven in 10 current customers (69 percent) are likely to speak positively about their direct selling experience.
Happy and loyal customers drive direct selling's relationship-based business model, and current customers feel strongly about both the items they purchase and the sellers who make it happen. They find intrinsic value in supporting small business owners (89 percent), and if that small business is owned by a friend, all the better. Eighty percent like purchasing from people they know and that desire is evident for majorities of all four audiences in the study.
The poll bears out what the direct selling industry has known for decades. The relationships direct sellers cultivate with their customers keep them coming back and bringing new people to the party. Three in 10 (29 percent) current customers report knowing the direct seller extremely or very well, and four in 10 (41 percent) say they knew the direct seller as a friend or through a friend.
It is in that social business atmosphere that so many direct selling customers find the fun and pleasure in buying direct. Maybe it was a leisurely day at a craft fair or an evening at-home party with friends; perhaps it was a one-on-one coffee shop meet-up or a quick chat by cell or online; however they interacted, 87 percent enjoyed it! Not only that, but purchasing from a direct seller is perceived as easy (70 percent are extremely or very satisfied with this aspect of the experience), 61 percent are satisfied with the service, and direct sellers personally get high marks with 69 percent of current customers extremely or very satisfied with their most recent experience with a direct seller.
At the root of customer satisfaction is the human bond—the relationship between customer and direct seller. These connections are not to be taken lightly, as they have a tremendously positive impact on the consumer's future purchases. Nearly nine in 10 (88 percent) current customers are at least somewhat likely to purchase again from the same direct seller as their most recent purchase. And it seems that once past direct sellers cross status to become a current customer only, they may remain supportive. Ninety-two percent of past sellers report they would be at least likely, if not extremely or very likely, to purchase from the direct seller who sold them their most recent purchase.
Outstanding customer satisfaction fuels word-of-mouth marketing, which is so vital and effective for the industry. Direct sellers, like other marketers, seem to understand that it works well for them. As a result, seven in 10 current customers (69 percent) are likely to speak positively to others about their direct sales experiences, and two in five (39 percent) have already recommended a product or service they purchased.
What we found: Despite leaving their businesses, 76 percent of past direct sellers rated their experience fair or better and 67 percent purchased from the industry in the past year.
Opponents of the industry often try to tie seller turnover rates to misleading or broken promises made by companies, implying that disillusioned direct sellers discover some sort of hidden truth and leave their businesses and the industry as a result. We have long believed this is a false picture of why direct sellers engage and then stop engaging in their businesses. The poll indicates that past direct sellers leave their businesses for many of the same reasons people in any career make a change.
What the data makes clear is that there is no overwhelming reason former direct sellers decide to close up shop. Lack of earnings and profitability do stand atop the list at 16 percent, but 15 percent of former direct sellers said they were just too busy and the business was too time-consuming for their schedules. Twelve percent simply lost interest.
Sometimes it was the "selling" that got in the way, with 6 percent feeling unqualified, 7 percent having trouble finding customers and booking parties, 4 percent deciding it was just too difficult, and 3 percent deeming it a hassle. Others took new full-time jobs (6 percent), moved away (5 percent), or left for health reasons (3 percent).
So what does the overall snapshot of a past direct seller look like? The majority (62 percent) worked their businesses part-time—15 hours or less per week. On average, they were direct selling for nearly three years, with a median duration of one year. Two-thirds (66 percent) of former direct sellers worked with only one company.
Despite leaving their businesses, 76 percent of past sellers rated their direct selling experiences fair or better, and 67 percent of them made a purchase from a direct seller in the last year. Obviously, the implication that former direct sellers became disillusioned and then disengaged from the industry with prejudice of some kind is untrue for at least two-thirds of past sellers.
The majority (66 percent) of past direct sellers who had access to at least one kind of training during their time in the industry found it to be extremely or very valuable. In fact, majorities found their training in sales, presentation, personal development and leadership to be extremely or very valuable. The poll showed these former direct selling professionals recognized the benefits of their direct selling experiences.
A Way Forward
The poll gives the direct selling industry an unprecedented look at itself and confirms that current direct sellers are a devoted bunch. They plan to expand their customer bases (76 percent say this describes them extremely or very well) and expect to increase the amount of time they spend working their businesses (45 percent) in the coming year. Current direct sellers are also enamored by flexibility and freedom (81 percent say their direct selling business provides this a lot or a little), as well as the ability to pursue something they love (83 percent) and the feeling of success and fulfillment (82 percent) that comes with a career in direct selling.
Direct sellers' energy, enthusiasm and expertise, as well as product quality and value cultivate brand and customer loyalty. The study reveals that one in four current customers (26 percent) and nearly six in 10 current sellers (58 percent) say they are more likely to purchase the same products again from a direct seller, after having made a direct selling purchase in the past. Even those who have disengaged from their direct selling businesses remain loyal to the industry by purchasing products and services.
The attitudes, beliefs and actions explored by the study leave an overarching impression that both direct sellers and the customers they serve are happy. And, perhaps, as a result of this Direct Selling News fact-finding mission, the direct selling industry can finally find a statistical and eloquent way to tell its detractors, "We knew it all along."
Click here to order the November 2014 issue in which this article appeared or click here to download it to your mobile device.
October 31, 2014
USANA Posts Record Q3 Profit
USANA Health Sciences Inc. (USNA—NYSE) announced a record profit of $19.5 million, or $1.47 EPS, when it released its third quarter earnings statement after the market closed on Tuesday. Earnings increased by 16.4 percent, compared with $16.8 million during the prior-year period with EPS beating estimates of 10 cents, according to Zacks Investment Research. Earnings per share for the quarter increased by 26.7 percent, compared with $1.16 in the third quarter of 2013.
For the third quarter of 2014, net sales increased by 10.5 percent to $191.9 million, compared with $173.7 million in the prior-year period. This beat estimates by $1.4 million. The increase in net sales was driven by overall associate growth of 18.8 percent, which was generated by the company's Asia Pacific region.
The increase in earnings per share was attributable to higher net earnings and a lower number of diluted shares outstanding due to the company's share repurchases during 2014. Weighted average diluted shares outstanding were 13.3 million as of the end of the third quarter of 2014, compared with 14.4 million in the prior-year period.
During the quarter, the company repurchased approximately 1.1 million shares under its authorized repurchase program for a total investment of $76.6 million.
2014 guidance includes consolidated net sales between $780 million and $790 million, versus the previous outlook of between $770 million and $790 million, and earnings per share between $5.85 and $5.95, versus the previous outlook of between $5.50 and $5.65.
Read the full results here.
October 31, 2014
The Pampered Chef Names Buffett Protégé New CEO
The Pampered Chef announced this week that interim CEO Doris Christopher is passing on management of the Berkshire Hathaway unit to Tracy Britt Cool, a top adviser to Berkshire Chairman Warren Buffett. Christopher, who founded The Pampered Chef in 1980 and currently serves as Chairman, has filled the position since December 2013.
Having joined Berkshire fresh out of Harvard Business School, Cool is in her fifth year at the company. As Financial Assistant to the Chairman, she helps oversee many of Berkshire's operations—including The Pampered Chef, where for the past year she has served as an adviser to Christopher. In addition to her new role, Cool will remain Chairman of Berkshire Hathaway companies Benjamin Moore, Larson-Juhl, and Oriental Trading Company, as well as serve on the board of the H.J. Heinz Company.
"I couldn't think of a better leadership duo at the helm of The Pampered Chef," Buffett shared in a statement. "With Tracy's experience helping Berkshire companies reach their full potential and Doris' passion for both The Pampered Chef's consultants and products, I see great things in the company's future."
October 29, 2014
Jusuru Launches Charitable Partnership with Vitamin Angels
Photo above: Vitamin Angels distributes life-saving vitamins in Malawi. (©Matt Dayka/Vitamin Angels MW13)
Nutraceutical company Jusuru International has refined its charitable program through a new partnership with Vitamin Angels. The global organization supplies life-saving vitamins to chronically undernourished populations—specifically pregnant women, new mothers, and children under 5.
In the past, Jusuru has given back through a variety of nonprofits and critical causes. Now, the California-based company is focusing and growing its efforts by way of a formal partnership. Jusuru has made donations to Vitamin Angels possible through its online shopping cart. With each purchase, customers and distributors can add a $1, $5 or $10 donation, which Jusuru will match.
Vitamin Angels is a 20-year-old organization that boasts seven consecutive four-star ratings from Charity Navigator for financial health, accountability and transparency. This year, the nonprofit is working to provide vital nutrients to 40 million children in approximately 45 countries. The aforementioned $10 donation would supply Vitamin A supplements and multivitamins to 40 children for an entire year.
October 28, 2014
Immunotec Opens First U.S. Sales Office
Immunotec has bolstered its presence in the U.S. with a new Sales Office in Commerce, California. The 7,200 square-foot facility opened last week to support strong sales and distributor growth across the country's southwestern region, says Canada-based Immunotec.
The nutrition company reported Q3 revenue of $22.3 million, up 55 percent over the prior year period. In the U.S., revenue increased 27 percent in the third quarter. Immunotec now operates regional offices in the U.S. and in Mexico, in addition to its Quebec headquarters.
"Opening this new sales office in the southwestern region of the United States represents the result of the hard work and dedication of our Distributors who are investing in themselves, their families and everyone they touch as they share our mission to make Immunocal the nutritional choice of households worldwide," CEO Charles L. Orr shared in a statement.
Immunocal is the company's patented, specially formulated protein derived from whey. The immune health product, which has undergone over 40 years of clinical research and testing, played a key part in Immunotec's recent research collaboration with Dr. Franco Carli, MD, MPh, Anesthesiologist at the McGill University Health Centre in Montreal. The study recorded the impact of surgical prehabilitation (preoperative intervention) versus rehabilitation on a patient's recovery time.
"Surgical prehabilitation is a novel concept, aimed to aid patients to become stronger physically, nutritionally and mentally while waiting for an operation and therefore be in better shape to overcome the stress of surgery," said the Lead Investigator, Dr. Franco Carli.
|Immunotec's Commerce, California, Sales Office
|Immunotec's Charles Orr (left), CEO, and Juan Manuel Marín (right), Executive Diamond Distributor, cut the ceremonial ribbon
October 24, 2014
This Week: Herbalife CEO Speaks, J.Hilburn Pops up in NYC
Catch up on this week's industry chatter with these click-worthy links:
- Los Angeles magazine interviewed Herbalife CEO Michael Johnson for its web feature, "Big Shots with Giselle Fernandez." Johnson shares his conviction in the integrity of his company, a message to Herbalife's stockholders, and the challenges of dealing with "knuckleheads in bathrobes who blog."
- On Thursday, custom menswear brand J.Hilburn launched a pop-up shop in the heart of NYC at Midtown Manhattan's Refinery Hotel. The shop, which runs Oct. 23 through Nov. 15, offers J.Hilburn's entire Fall 2014 collection, including made-to-measure suiting and formalwear and ready-to-wear pieces. The J.Hilburn Pop-Up Shop partnered with several brands, including Uber, Lexus, J Brand Jeans and Perrier.
- On Tuesday, home-automation giant Vivint hosted Utah Senator Orrin Hatch; Val Hale, Director of the Governor's Office of Economic Development; Provo Mayor John Curtis and many others at the grand opening of its new Innovation Center. Located in Lehi, Utah, the center will house 320 employees.
October 24, 2014
CVSL Plans $60 Million NYSE Uplisting
IPO investment manager Renaissance Capital has reported the terms of CVSL's planned uplisting to the NYSE MKT. The direct-selling conglomerate underwent a quiet period after filing with the Securities and Exchange Commission to raise capital in its uplisting bid.
CVSL is looking to raise $60 million with an offering of 6.7 million shares priced at $8 to $10. That would place CVSL's midrange market value at $308 million. Shares in CVSL are currently traded over the counter, with a market value of about $293 million on the OTCQX.
To comply with NYSE MKT terms, CVSL last Friday implemented a 1-for-20 reverse stock split of its common stock. Though it had no impact on the par value per share, the split reduced CVSL's shares of common stock from 487,975,986 to approximately 24,398,800.
CVSL has built a portfolio that now includes seven direct selling or "micro-enterprise" companies across the home improvement, gourmet foods, skincare and nutrition industries. The brands operate independently of one another, while benefitting from combined expertise and efficiencies in finance, IT and the supply chain.
October 23, 2014
Tupperware Q3 Earnings Fall Short of Expectations
As Tupperware Brands Corp. (TUP—NYSE) released its third quarter 2014 earnings Wednesday, shares dropped in reaction to the company's lower than expected 2014 outlook. Tupperware traded 10 percent lower at $64.23 per share. Year to date, shares have fallen 24 percent.
With reported earnings of 90 cents per share, the company missed Wall Street estimates by 1 cent. This adjusted diluted EPS of 90 cents included a 14 cent negative impact versus 2013 from changes in foreign exchange rates, which were 2 cents below July's guidance. Analysts surveyed by Zacks Investment Research had estimated earnings of 91 cents for the quarter.
Revenue fell 2.4 percent year over year to $588.7 million, compared to the $587.9 million consensus. The company also issued a lower guidance for fourth quarter with an EPS of $1.55 to $1.60 versus $1.70. Third quarter 2014 net sales in emerging markets accounted for 70 percent of sales, achieving an 8 percent increase in local currency. Established markets were down 4 percent in local currency.
GAAP net income of $32.3 million was down 35 percent versus prior year GAAP net income of $49.9 million. Excluding foreign currency, net income was down 24 percent versus prior year.
October 22, 2014
Take Shape for Life CEO Named One of Baltimore's '50 Women to Watch'
Take Shape for Life CEO Meg Sheetz is one of 50 Women to Watch in the Baltimore community, according to an annual list from The Baltimore Sun. Maryland's largest daily newspaper whittled down more than 250 nominations to recognize an elite group of "the area's most intriguing movers and shakers."
"These are women who are very invested in Baltimore, and there is a lot of good being done out there," said Sun Editor Anne Tallent. "Whether in advocacy or the arts or nonprofits or science and technology, they are making Baltimore a better place."
TSFL is the direct sales division of Medifast, where the late Bradley MacDonald, Sheetz's father and former CEO and Chairman of the Board at Medifast, brought her on board in 2000 as sales administration director. The 37-year-old is now Medifast's President and COO, in addition to running the company's TSFL division.
"Meg's dedication and leadership at Medifast continue to make her an invaluable asset to our company. As the weight-management industry evolves, Meg has led the charge to help expand our position in the overall health and wellness arena," Chairman and CEO Mike MacDonald shared in a statement. "We congratulate Meg on this noteworthy achievement."
Her work at Medifast is one of many roles Sheetz plays in the Baltimore community. She is Managing Trustee of the MacDonald Family Foundation and the Take Shape For Life Foundation, which provides grants to support educational programs for disadvantaged students. Sheetz is also a member of the Villanova President's Leadership Circle, and sits on the Board of Directors for Stevenson University, the Greater Baltimore Committee, and Siloam.
October 21, 2014
How USANA Became One of America's Best Workplaces
For the sixth consecutive year, USANA Health Sciences has appeared on Outside magazine's list of America's "Best Places to Work." The Salt Lake City-based company has also been named one of "Utah's Best Companies to Work For" six times by Utah Business magazine. That kind of employee satisfaction doesn't happen by accident. To get an inside look at the USANA culture, DSN reached out to Mike King, USANA's Executive Director of Human Resources for North America and Europe.
DSN: How do you carry USANA's mission of building healthy lifestyles over to the corporate office?
MK: USANA is known around the world for its mission of providing people with the opportunity to achieve "true health and true wealth." That mission begins with our employees, who receive active encouragement to improve their health and numerous opportunities to advance their current and future financial situation. USANA employees can also count on a fun, open and community-focused workplace, managed by people who are committed to acting on employees' ideas and concerns.
DSN: Is there a philosophy that guides USANA's approach to dealing with employees?
MK: When USANA rebranded itself in 2012, its motto—Everything We Do Helps You Love Life and Live it™—became the focus of everything it does, including keeping its corporate employees happy.
We know that happy employees are more likely to work harder and enjoy what they do, which is why we encourage our employees to live their lives to the fullest and do what they love. USANA continues to strive to create a positive and engaging work environment by providing employees the tools they need to lead healthy, productive lives. That includes benefits such as a fully equipped gym, wellness consulting, monthly massages and an employee café stocked with affordable, fresh food.
DSN: How would you describe your corporate culture?
MK: USANA employees make up a true community with an open and caring culture, backed by a supportive management team and numerous opportunities to make a difference in the world.
We also strongly believe in celebrating our employees for their achievements and recognizing them for their hard work and dedication to USANA through special lunches, corporate summer parties at the local amusement park, and our annual Employee Awards gala.
The full interview with King will run in DSN's 90 Days of Direct Selling print coverage.
October 18, 2014
This Week: Door-to-Door Disciples, Safe Makeup, and the Hispanic Avon Lady
Catch up on this week's industry chatter with these click-worthy links:
- Pamela Jones Harbour, former FTC commissioner and new compliance chief at Herbalife, consumed the company's shakes for years before it came under Ackman's spotlight. A review of Herbalife's business, plus her own experience, made her willing to stick her neck out at the company.
- Last week, Vivint Solar's initial public offering raised $330 million, valuing the company at $1.3 billion. Slate shares Vivint's door-to-door path to becoming the second-largest solar panel installer in the U.S.
- Tyra Banks chats with Fast Company about her new TYRA beauty line, her drive to empower women and learning to delegate.
- Beautycounter is on a mission to change the face of the cosmetics industry. This week the safe skincare company introduced its first color Cosmetics Collection, formulated without the harmful ingredients banished to the company's Never List.
- Bloomberg gives an in-depth look at the experiences of Isabel Hernandez, one Hispanic Avon Lady in the Texas border town of McAllen.
October 16, 2014
Ambit Entrepreneur Writes a Book for 'The Ambitious Woman'
Esther Spina has spent years as a sales representative and national consultant for Dallas-based Ambit Energy, where she also coaches fellow entrepreneurs through her Ambitious Women network. The author, speaker and businesswoman is now sharing her knowledge through The Ambitious Woman, a new book designed to help women build success in every area of life.
Released through Next Century Publishing, The Ambitious Woman is a look at what true ambition requires, and how it can help women shape fulfilling careers and personal lives—without stepping on others along the way. Spina explores the subject through her own experiences, as well as the lives of women such as Mother Teresa, Dr. Maya Angelou, and American author, journalist and long-distance swimmer Diana Nyad.
Through her network at Ambit, Spina has developed a success and mentoring club that provides strategies, tips and support to women entrepreneurs. The group also gathers for an annual Ambit-ious Women Conference, where attendees can glean insights from business coaches, social media strategists, sales consultants and other women leaders.
October 14, 2014
U.S. DSA Endorses 13 Congressional Candidates
As Americans head to the polls for early voting in October and Election Day on Nov. 4, the Direct Selling Association is backing 13 congressional candidates who have taken a strong stance on direct selling and entrepreneurialism.
"We want elected officials to understand that economic opportunity comes in many shapes and sizes," DSA President Joseph Mariano shared in a statement. "The candidates we're supporting this election cycle stand with direct sellers. That's why we're standing with them."
The endorsements have appeared across the country in a newspaper ad campaign funded by Direct Selling Empowers Americans, the newly formed super PAC associated with the DSA. According to the PAC's website, its efforts focus on enabling America's 17 million direct sellers "to run their businesses—micro-enterprises—free from government constraints."
The DSA has endorsed U.S. Senate candidate Joni Ernst (R-Iowa) and congressional challengers Mia Love (R-Utah) and Alex Mooney (R-W.Va.), as well as the following incumbents:
- U.S. Rep. Marsha Blackburn (R-Tenn.)
- U.S. Rep. Tony Cardenas (D-Calif.)
- U.S. Rep. Steven Horsford (D-Nev.)
- U.S. Rep. Eddie Bernice Johnson (D-Texas)
- U.S. Rep. Gregory Meeks (D-N.Y.)
- U.S. Rep. Reid Ribble (R-Wisc.)
- U.S. Rep. Juan Vargas (D-Calif.)
- U.S. Rep. Marc Veasey (D-Texas)
- U.S. Rep. Tim Walberg (R-Mich.)
- U.S. Rep. Ted Yoho (R-Fla.)
October 09, 2014
Tyra Banks Reveals Her Latest Venture, a Direct Selling Beauty Brand
Not everyone can be America's Next Top Model, but now every woman can buy (and sell) runway-ready beauty products tested and approved by Tyra Banks, creator of the hit reality show. The enterprising former model, author and television personality has rolled out TYRA Beauty, a new cosmetics line sold directly through women who join the company as "Beautytainers."
The fully self-funded venture has been four years in the making, but Banks has honed her own makeup expertise throughout a career in modeling and 21 cycles as producer and host of Top Model. The line features easy-to-apply products based on the three pillars of the TYRA Beauty experience: the TYover, the Smize and the It Factory.
TYover products come in a stick and incorporate proprietary "TY-Glide Technology" for versatile looks on the go. The Smize—a popular term from the Tyra lexicon for "smiling with your eyes"—pillar is all about eye makeup. And finally, the It Factory is a collection of cosmetics that combine unique textures and innovative formulas.
"Without makeup, I would have never been a supermodel. I don't wake up with naturally sculpted cheekbones—I paint them on! I believe makeup is the great beauty equalizer," Banks shared in her announcement.
Tyra Beauty is also equalizing its distribution method through the direct selling channel. In a model the company has dubbed "CEOYou selling," individuals can sign on as independent contractors and receive online training through Tyra University (TyraU). Of course, it's not a catwalk without some mood music, and Banks has also collaborated with Jingle Punks, producers Dem Jointz and Ryan Toby, and Motown artist STORi to create the CEOYou Selling anthem, Bootyful.
October 08, 2014
Plexus CEO Shares 4 Keys to a Successful Direct Selling Business
Photo above: Plexus' executive team: Alec Clark, Tarl Robinson and Alfred Pettersen.
In April, Plexus Worldwide made its debut on the Direct Selling News Global 100 list of the world's largest direct selling companies. In August, Inc. magazine ranked it No. 8 on its Inc. 500 list of the nation's fastest-growing private companies. In a recent interview, CEO Tarl Robinson highlighted some of the strategies he feels have been key to that success.
Build a bond with your field.
Plexus prides itself in having a partnership-style relationship with its salesforce of Plexus Ambassadors. Robinson said the company relies heavily on an advisory board of seven Ambassadors, chosen by the company's top leaders. The executive team is in contact with the advisory board at least monthly, with three in-person meetings each year.
Make quality hires internally.
Because Plexus has made a name for itself in the Scottsdale, Arizona, market as a company with good compensation and benefits packages—not to mention its alluring growth story—the company has had no lack of applicants as it has grown. "It's a unique and exciting position to be in as a company, that we really get to be selective about who we place in a role and take a lot of time and effort and thought process around our hiring," Robinson said.
Top people deserve top income.
Enough said.
Company culture is key.
Creating, and maintaining, a strong, positive culture is no easy task. "Focus in on what you want that to be from an internal culture of your company, an external culture of your company and a field or ambassador culture of your company," Robinson said. "You have to buy into it 100 percent."
For more from the DSN interview with Robinson, see the November issue.
October 07, 2014
Herbalife Appoints Former FTC Commissioner to Head Compliance Efforts
Herbalife is bolstering its compliance team with the addition of a Senior Vice President of Global Member Compliance and Privacy. The nutrition company has appointed former FTC commissioner Pamela Jones Harbour to the new position, reporting to Executive Vice President and General Counsel Mark Friedman.
Harbour served as FTC Commissioner from 2003 to 2010 and also spent 12 years as a prosecutor for the New York State Attorney General's office. At Herbalife, she will oversee the development and monitoring of the company's training and mentoring programs. Harbour—who earned the Electronic Privacy Information Center's (EPIC) "Champion of Freedom Award" for her FTC work defending consumer privacy—will also direct the company's global privacy and cyber security efforts.
Herbalife also tweaked its executive team in July, when Alan Hoffman filled the newly created position of Executive Vice President of Global Corporate Affairs. Having served as Senior Vice President for Global Public Policy at PepsiCo, Hoffman brought expertise in public policy, communications and government affairs.
Amid short seller Bill Ackman's campaign against the company, and the FTC civil investigation sparked by his efforts, investors responded positively to Herbalife's latest hire. The company's stock rose $2.69 on Monday to $47.30. For the year, shares in Herbalife are down 40 percent through Monday's close. Herbalife will report its third quarter 2014 financial results on Monday, Nov. 3.
October 07, 2014
MonaVie Says 'Ciao' to Italian Consumers
MonaVie is looking to grow its business in one of direct selling's billion-dollar markets. Last week the nutrition brand officially launched operations in Italy, its 39th market worldwide.
The European Union is home to more than 4 million direct sellers, and Italy is one of the region's most dynamic markets. With $3.1 billion in direct sales last year, Italy trailed only France, Germany and the U.K.
"We are committed to creating a long-term relationship with our customers, end users, and distributors in Italy and across Europe," said Dario Colagiacomo, who joined MonaVie in August as Vice President of Europe. "It is our belief that it isn't important what we think or say to others about who we are; our reputation is made by what others think and say about us!"
Italian consumers initially have access to six MonaVie products, including the company's flagship acai berry juices. Those juices will ship from MonaVie's brand-new manufacturing facility in Hohenseefeld, Germany—another significant investment in the company's European business. MonaVie previously manufactured all of its European product in the U.S.
October 03, 2014
BeautyCounter Sets High Standard with Safety-Conscious Products
The cosmetics counter is chock full of four-syllable ingredients the average consumer can neither pronounce nor identify, and many of those ingredients are toxic chemicals. Direct retail brand BeautyCounter launched 18 months ago to promote safe ingredients and offer high-performing personal-care alternatives. BeautyCounter Founder and CEO, Gregg Renfrew, appeared on Bloomberg TV's Market Makers to share the company's vision.
"We are exposed every day to toxic chemicals through our personal-care products. Those chemicals can often be linked to cancer, reproductive issues and endocrine disruption," says Renfrew, who founded the company as a result of her own research into environmental toxins and their links to prevalent health issues.
Over the past two decades the European Union has banned or restricted more than 1,300 ingredients, while the U.S. government has banned just 11 to date. As Renfrew notes, the U.S. has not passed a federal law regulating the ingredients used in personal-care products since 1938. In the midst of that regulatory vacuum, BeautyCounter has imposed its own standards, banning more than 1,500 ingredients from its products.
The company has signed on 4,000 consultants to market its natural beauty line, which is also available through its e-commerce website. Renfrew uses the term "direct retail" to describe the company's multi-channel approach. BeautyCounter has generated 23 percent average monthly revenue growth, with 424 percent sales growth since January 2014.
View the full Market Makers segment at Bloomberg TV.
October 02, 2014
Mary Kay Canada Head Joins Government Council on Women Entrepreneurs
The Government of Canada is supporting women entrepreneurs as an integral part of its Economic Action Plan, and Mary Kay is lending its expertise through the newly formed Advisory Council on Women Entrepreneurs and Business Leaders. Lynda Rose, General Manager of Mary Kay Canada, is one of 10 members who will share advice and insights on issues affecting women in business.
Canada's Minister of Labour and Minister of Status of Women, Dr. K. Kellie Leitch, introduced the council at this week's Women-Owned Businesses Powering the Economy Conference in Montreal. The list includes Joey Adler, CEO of Diesel Canada and Founder of the ONEXONE Foundation; Ernst & Young Partner Martin McGrath; and Rebecca MacDonald, Executive Chairman of the Board at Just Energy Group.
Earlier this month, the federal government also announced an Expert Panel on Championing and Mentorship for Women Entrepreneurs. Both forums will work to boost women-owned businesses, which according to BMO Financial Group employ over 1.5 million Canadians. RBC Economics estimates that increasing majority-owned women's businesses by just 10 percent over 10 years would up their total economic contribution to $198 billion—a $15 billion net annual gain after inflation.
October 01, 2014
Focus, Focus, Focus
by Cindy and Scott Monroe
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
As our business has grown over the past several years, there has been one challenge that always seems to rear its head: focus. Even as our teachers and parents often reminded us to "focus, focus, focus" when we were children, still today, as business leaders, the ability to maintain focus in the midst of a growing and thriving business is one of the greatest challenges we face. Focus can be tough for entrepreneurs especially. Our creative desire to find bigger and better ideas creates a perfect environment for distraction if not kept in check. We believe that by being purposeful and minimizing distractions, we can maintain focus on the things that make the most impact and keep us on track toward a bright future.
Cindy Monroe: Purposeful is such an important word to us at Thirty-One that it is one of our 12 core values. We ask ourselves "why?" often. It seems elementary, but how many times have we all gotten deep into an initiative that's just not working and found ourselves wondering why we started it to begin with? I've found that when I'm purposeful from the beginning and plan and get the right people around the table who work together as a team, we can determine ahead of time whether it's going to become a distraction or not.
We should also constantly evaluate whether or not what we're in the middle of is still on purpose. We all have to face it. Sometimes our greatest ideas that seem to start out as winners end up losing focus, losing purpose and ultimately getting off track. We have to be honest with ourselves and learn to let some things go or learn to let others be rebuilt. In the tactical execution it's so easy to get distracted by all of the very important details and find ourselves quickly off-purpose. If you're feeling bogged down on something in business or life, I want to encourage you to step back and examine it. Is it still purposeful? Are you focused or is it all cluttered with distractions? Are there lots of good things getting in the way of you doing great things? These are all questions we try to ask ourselves every week, and I think they're questions we should all ask ourselves and our teams daily. Also, as top executives, it's easy not to realize the amount of energy that executing an idea or initiative takes. Ask your team many times during the project for the amount of time the idea is taking compared to other initiatives or day-to-day core competencies.
Scott Monroe: In photography, there is the concept of depth of field. Many of the most beautiful photos ever shot have a very narrow depth of field. The subject is close and in perfect focus while everything else in the foreground and background are out of focus. It's easy for us amateur iPhone photographers to want everything in focus but we find our all-inclusive shots, taken from a safe distance, to be distracting and uninteresting.
The same is true for our life and our business. We can have a great story with a lot of different angles and a lot of variety and possibilities. But if we don't stay close and focused on what truly matters and what truly gets results, then we can easily end up with a very cluttered photo.
|Cindy and Scott Monroe
Cindy: We also have to work hard to minimize distractions. Distractions can be a lot of things. For entrepreneurs, it can be that next big idea. For business leaders, it can be new programs and incentives that we put in place hoping to get a lift in business. For individuals, it can be well-meaning people really trying to help. All of us get distracted, and I'm certain most distractions start off as good ideas. Focusing purposefully can help remove details that have become distractions.
Scott: One great distraction that seems to come our way a lot in business and in life is that of trying to be someone we're not. That's why another of our 12 core values at Thirty-One is authentic. The great English playwright Oscar Wilde said, "Be yourself. Everyone else is already taken." There's no shortage of great ideas out there, but it's very difficult for us to always be innovative without becoming like someone else. The question we ask ourselves all the time is, "Is this us? Is this Thirty-One?" The most successful you is the real you. Be honest, no one does you better than you. When we try to be something we're not, we are only fooling ourselves. Our consumers, distributors and peers all sense when we're missing it. It's important to remain purposefully focused on being true to ourselves as people and as a company.
Cindy: Even as top executives, it's easy to get distracted with who we are supposed to be as individuals and as leaders. We watch other executives, read leadership books and see how different leaders are involved in their sales field, expansions, media/press or on the speaker circuit. Just like business initiatives can be distracting, so can comparisons or a lack of focus on your own role as an executive. Being a young executive, I can admit to the times when I have been confused about my own role. What my executive team needs me to play, what our sales field needs from me, responsibilities in our industry, president organizations and executive groups, and my desire to support board roles for philanthropic causes that I love, all begin to compete very quickly. While juggling all of these roles can be challenging, I think the real threat is getting confused with how to use your true gifts and what your role should be in your company! What are you doing that plays to your strengths and what you love to do? What are you doing out of obligation or that someone else could do better?
Scott: It's not impossible to maintain focus. If we constantly ask the "why?" questions and remain purposeful, work to minimize distractions and stay authentic, I believe we can find our way to reaching more and more people with the powerful gift direct selling offers: an empowered life where they find financial freedom, and as countless thousands have told us, "Direct selling helped me find me."
Cindy Monroe is Founder, President & CEO, and Scott Monroe is Chief Brand Officer of Thirty-One Gifts.
October 01, 2014
Industry Voices
by DSN Staff
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
Direct Selling News Publisher John Fleming recently spoke with John Parker, Chief Sales Officer for Amway, about leadership, always learning and finding fun in everything you do.
DSN: What is the one thing you enjoy most about being the Chief Sales Officer for Amway?
JP: The engagement with our field—Amway Business Owners. At the end of the day, it's their success that adds up to create Amway's results. Their passion for helping other people helps make Amway what it is.
DSN: What has been your proudest accomplishment?
JP: Having been a part of teams that have seen our business through some challenging times. It's easy to lead in good times when all is going well, but I think you add more to the team and organization when times are tough and you're able to work together. It's most satisfying. Sometimes the best work is done during times when results don't show right away, but they follow.
DSN: What's been the most fun?
JP: I enjoy learning. For me a lot of my learning came while transitioning from a smaller to a larger role. I've also enjoyed learning from generations younger than I am. They're not just different in how they think, but they're fundamentally different in their personal relationships. I can't be effective in my role if I don't understand that. The process of learning and trying new things is really fun and exciting. Also, the adventure of travel has been fun—having a chance to go around the world, experience different cultures, people, customs and food. You either love that or struggle with it. I love it.
DSN: What do you tell Amway Business Owners to lead and inspire them?
JP: The primary message is that our business—our whole industry—is centered around helping other people. The individuals who are the most successful Amway leaders realize at some point in their journey that it's not about them. It's about helping others. That's when it becomes more fun, more rewarding; and it leads to an environment of more success as well.
DSN: You've held several key positions at Amway. Which one shaped your management style the most?
JP: When I was President of Amway Japan because it really forced me to reflect on my style, strengths and weaknesses, and adapt my style to be with different people and cultures. As leader it's sometimes easy to take the mindset that I have one way of leading and communicating. But if you work across geographies and cultures, you need to be more flexible in how you lead and communicate. I think that shaped me more than anything else.
DSN: If you could relive one period of time since you've been at Amway, either to enjoy it again or have a do-over, what would it be?
JP: Maybe the first five years of my career, because there's an excitement around that initial stage of learning. I had such great mentors here in the company. I'd love having the chance to go back and soak up that learning I got from them. It really was fun, too.
DSN: Is there one basic principle that governs your leadership at Amway?
JP: I really think it's about putting the focus on others, not on yourself. Those leaders who are in it for themselves may have success in the short term, but people see through that. Over the long term you won't develop real followership unless your focus is on the bigger cause that our businesses stand for.
DSN: Has someone ever given you a bit of really great advice you can share with us?
JP: I'll point to my wife, who says to listen more than you talk. It's true. If you spend more time talking and less time listening, you'll be less effective than if you flip it around.
October 01, 2014
Gold Canyon: Turnaround Toward Growth
by Barbara Seale
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
Company Profile
Founded: 1997
Headquarters: Chandler, Arizona
Executives: Managing Directors Lynae Parrott and Gail Gioffredi
Products: Scented candles and accessories
After a season of sluggish sales, the sweet smell of success seems to be returning at Gold Canyon. The scented-candle seller and manufacturer has instituted sweeping changes that have boosted both morale and sales. Led by a new management team that streamlined everything from the product line to the sales process, Gold Canyon looks like a happier, more fun version of its former self.
Earlier this year the company appointed two new managing directors, Lynae Parrott and Gail Gioffredi, who lead Gold Canyon with a combination of company experience and new eyes. Parrott has been with Gold Canyon since its early days, starting in its field sales organization. In 2000 she was asked to join the corporate staff, where she learned the full scope of the headquarters organization by holding positions in several departments before leading its marketing efforts. Gioffredi joined Gold Canyon in January 2012 after gaining expertise in several other direct selling companies. Parrott explains that while she primarily leads the company's internal team and Gioffredi predominantly focuses on external sales, the two work in lockstep to push the company into the future and to focus on creating the best possible opportunity for the field sales organization, which it calls Fragrance Consultants.
"One of the first exercises Gail and I did was to evaluate our vision of the company, and we quickly identified that our business was overly complicated," Parrott explains. "It needed to be more simple, more fun. That was the premise of a lot of the changes we started to implement immediately."
|Lynae Parrot and Gail Gioffredi
Simple, Substantial
They asked themselves what they wanted the company to represent and what its mission was. Their answer: to empower others to create their own destiny.
They also identified the four core values that drive the company—both now and into the future:
- Do the right thing.
- Continually improve.
- Give back.
- Have fun!
The leaders embedded their mission and values into three key projects that would turn the company around. They emphasize proudly that throughout the turnaround Gold Canyon has been profitable, even increasing its profitability each month. But they believe that its new branding, enhanced career plan and Simple Selling System™, along with improved technology, will re-launch the company toward the growth it previously was struggling to achieve. Parrott and Gioffredi initially hired consultants to develop the bones of the career plan, but the Gold Canyon team fleshed it out, along with the rest of the turnaround plan.
The first step—because it had to be in place to launch others—was rebranding the company. The new look, revealed in February, had to work hard. It needed to reflect the company's mission and values, but it also had to attract a younger demographic of Fragrance Consultants and customers.
"We wanted the new brand to be happy, open, communicative, authentic, transparent, friendly, energetic—all those words resonate differently with different people," Parrott elaborates.
Because a brand is more than a look, it had to have the backing of employees, too. So Parrott and Gioffredi worked hard to make sure that the staff was on board and understood what the brand stood for.
"They are our brand ambassadors," Parrott says. "For us to achieve our strategic initiatives, they must be on board. We have been very open with them about what this brand stands for. Not only have we given them presentations, but then we have made a very conscious effort to walk the talk. When we talk about being happy and communicative, we are!"
Earning Trust
Both managing directors understood that employees had heard management promise open doors and open communication in the past, but follow-through had failed. The new executives had to earn trust. To follow up on their promise, they hold management meetings every two weeks, and they also created a Culture Club aimed at breaking down barriers and opening the lines of communication throughout the headquarters organization, including manufacturing. The group has already surfaced and addressed practices that were out of alignment with the company's vision.
The workplace, including the 250,000-square-foot manufacturing and distribution facility, got a face-lift that reflects the new branding. The playful lettering and polka dots that adorn new marketing elements are also on company walls. Employees now enjoy a social area called the Company Lounge, complete with television, Wi-Fi, a pingpong table and a coffee bar where people gather. The objective: Create happy employees who are building relationships with each other while demolishing communication barriers among functional areas. In less than a year, the small steps have yielded big results. The formerly quiet work space now buzzes with life and laughter.
The energy filters into the field, too. Happy, more engaged employees help provide better service to the salesforce, whether they're answering calls or fulfilling orders. Fragrance Consultants experience the energetic new brand beginning with catalogs and the starter kit, which is now dubbed the Dotty Box. The energy extends through the language of everything the company does. Parties are now called Mixers, a key printed piece in the starter kit is called the Know-It-All Guide, and the annual convention is called Palooza. The fresh, modern approach has pumped up sales leaders, who help drive home the company's messages throughout their downlines.
Complementing the rebranding is a new compensation plan they refer to as their "enhanced career plan" that Gioffredi says simply makes more sense.
"The old career plan had unnecessary levels, complexities that didn't serve a purpose and requirements that were too difficult," Gioffredi says. "When the field doesn't understand something, they freeze. Sales and sponsoring stop. A consultant's long-term happiness is achieved by growth. We get there by rewarding the right activities and getting new people to join the business."
Show Me the Money
Because growth comes from the bottom up, the new plan increases the income of early and mid-level leaders. First, they created an initial leadership level, simply called Leader. The new compensation plan gave that group a 40 percent increase on their Level One recruits' results. Two levels up, team leaders received a 100 percent increase on their Level One recruits' results, as well as an increase on Level Two. In June the plan also simplified the company's luxury car program to make it more achievable for leaders to drive their choice of Mercedes. That month alone, the company had 79 promotions to leader and above, as well as 27 percent sales growth. July growth, especially sponsoring, was also strong. The company currently has about 200,000 Fragrance Consultants.
Parrott and Gioffredi emphasize that Gold Canyon's internal team executed a flawless launch of the plan—the first in the company's history.
"There were absolutely no technical hiccups," Parrott points out. "Everything transitioned perfectly. Our inside IT department has created our own genealogy and commission structure. We now own that platform, which helps us control our own destiny. We believe that's not only our purpose in the field, but internally as well."
The enhanced career plan is designed to support Gold Canyon's Simple Selling System, introduced in February. Preparing for that system required the company to reduce its unwieldy product line by 25 percent. Then with a more streamlined but harder-working collection of products, Gold Canyon introduced a three-step shopping guide to help customers choose the candles and accessories that matched their personalities and home décor. Step 1: A quiz guides customers to the scent category that fits them best, simplifying the process of navigating the 100 fragrances Gold Canyon offers. Step 2: They "shop the studio," deciding whether they want their fragrance in traditional scented candles or wickless candles, like scent pods. Step 3: They choose their own style of candle holders and accessories to embellish their products.
The system encourages larger orders, as well as increases the net proceeds from each mixer, while it creates a fun, interactive, rewarding experience for attendees and hosts. Everybody wins.
In September, the company introduced a new scent-select candle that complements the Simple Selling System. Gold Canyon produces—to order—a jar designed with the customer's choice of pattern and filled with a candle in the specific scent the customer chooses. The combination of scents and printed patterns generates some 250 customized options for Gold Canyon Fragrance Consultants to sell.
Philanthropic Re-Focusing
Giving back came early in Gold Canyon's history. By its third year in business, Founders Curt and Karen Waisath started the Prayer Child Foundation to make a difference in the lives of children with physical and emotional challenges. Over its lifetime, Gold Canyon has donated $2.7 million. Later the company began donating to two different organizations that support U.S. and Canadian military troops, donating $30,000 to the two groups. More recently, it partnered with the Breast Cancer Research Foundation, contributing $205,000.
The company is proud of its commitment to charitable donations and has sustained the financial flow through the sale of specific candles dedicated to each cause. As the company identified its core values, it also looked at every aspect of the company to ensure that they were reflected, including philanthropy—not to reduce it, but to be sure that contributions were being made to the organizations closest to the hearts of its Fragrance Consultants.
At the time Managing Directors Lynae Parrott and Gail Gioffredi spoke with Direct Selling News, they had just asked Gold Canyon's field sales organization to provide feedback on its philanthropic projects. They posted an online survey asking consultants to tell them the organizations and causes that are most important to them.
"We're going to realign with our field to make sure we are all in agreement about the type of organizations we'll support in the future," Parrott explains. They also announced that they want consultants to walk the philanthropic talk, giving back through volunteering, serving others or—one of the company's core values—just bringing happiness to others. And Gold Canyon will reward their efforts.
"We just launched a new philanthropic award process that will recognize the give-back philosophy," Parrott says. "Consultants will be able to nominate other consultants for the award. Honorees will be on stage at Palooza next year, and Gold Canyon will give a donation to the organization they support."
For the first time in the company's history, Gold Canyon also will incorporate give-back efforts on sales incentive trips.
The new philanthropic practices will be one more step toward aligning all of Gold Canyon's programs with its mission and core values.
Investing in Growth
Offering all those new options required Gold Canyon to invest in some new manufacturing machinery, and the company made sure it could deliver customized products accurately and in the same timeframe that existing customers and consultants had come to expect.
"We have done lots of test runs that have been very successful to make sure we're up to production," Parrott says. "We anticipate no delays. In our research of customization, we learned that it usually demands a 60 percent surcharge, but we aren't passing the customization fee on to customers. With the efficiencies delivered by our focus on technology, we kept our cost in line. The price point remains the same as other candles in the same look and feel."
The improvements are intended to have long-term benefits in sales and recruiting by creating more committed consultants.
"We're creating the BLT: Believability, Likeability, Trustability," Gioffredi notes. "And we'd rather our consultants love us than like us! Those are successful company ingredients. That's what we're building on. If consultants are excited and happy, they'll spread the word."
Even though Gold Canyon launched major improvements in the first half of 2014, it announced even more to come at its August convention, Palooza. Some changes, such as redesigned outer shipping boxes, were minor, but other announcements will change the face of the company over time. For example, it announced a soft launch into the Hispanic market, starting with new Opportunity Brochures and product catalogs in Spanish.
The company also announced the next phase of its technology upgrades: updated personal websites. The websites will be milestones on a number of levels. They will continue the company's new commitment to controlling its own destiny by building its technology internally.
"One of the attributes we're building is being tech savvy," Parrott says. "As a company, we don't have a high-tech reputation. It's probably our biggest weakness. When Gail and I came into this, we knew we needed to build our own platforms. The ones in place at that time had Band-Aid on top of Band-Aid. Long term, that wasn't sustainable, and we're improving our technology dramatically."
The new websites will be enhanced with features consumers have become accustomed to, such as mobile platforms, wish lists, social media links and customer reviews.
At the same time it upgrades its technology, Gold Canyon also will upgrade its human touch. The company's service department, called Partner Support, will have extended hours. And with the expansion into the Hispanic market, the company added its first bilingual field development manager to support consultants and leaders.
Quality Continues
The numerous changes are built on the company's strong foundation of candle manufacturing. Gold Canyon is proud to produce The World's Finest® scented candles, using pure fragrances that waft throughout the home; cool, food-grade wax; and self-extinguishing wicks. Having its own manufacturing facility gives Gold Canyon more than a recognizable scent in its hometown. It also gives it a competitive edge.
"It allows us to respond to what consumers ask for," Parrott says. "Our product development team and manufacturing team work together to get new ideas for products that set us apart from the competition. And that's a great story for our field to tell. They're not just offering a candle that is made in some unknown spot somewhere in the world. Instead, they're proud that what they're selling keeps people in America employed. And our Canadian consultants love it because the wax is from Canada."
The managing directors believe Gold Canyon's strong foundation and recent improvements are setting the company up for future success. They'll know they are successful as they see Gold Canyon become a household name. Achieving their objective business goals—sustained double-digit growth, quadruple their sales field count, and international expansion—will make that happen.
"When Lynae and I took on this awesome responsibility of providing leadership to the company, we knew that many people were relying on us, from investment groups to vendors and the sales field," Gioffredi says. "We have to balance them all and make sure that our Fragrance Consultants are successful. If they're successful, we will be. We're aligning everything to create that success."
October 01, 2014
Zurvita: Successful Simplicity
by Courtney Roush
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
Company Profile
Founded: 2008
Headquarters: Houston, Texas
Executives: Mark and Tracy Jarvis
Products: Health and wellness
|Mark and Tracy Jarvis
After a rocky start, Zurvita chose the road less traveled—and built a salesforce determined to make the world a healthier place.
Though Houston-based direct seller Zurvita originally launched in 2008 as a service business with everything from cell and video phones to tech support, electricity and gas, the company arrived on the wellness scene in 2011. It was then that Zurvita introduced a suite of powerhouse products that, above all, were designed to simplify the pursuit of wellness. The company's growth since then has been nothing short of spectacular. Annual revenue grew from $3.6 million in 2011 to $15 million in 2012 and $63 million in 2013. Revenue for 2014 is expected to fall between $80 million and $90 million. The company of 55 employees, with manufacturing operations in Dallas and Phoenix, has spent the last year greatly enhancing its information technology infrastructure to be able to support that incredible growth, and better serve the 30,000-plus independent consultants who represent the Zurvita brand.
Currently, the Zurvita independent salesforce is concentrated in the United States and Canada, primarily in small towns. According to Zurvita leadership, that surprising phenomenon is likely due to the fact that word-of-mouth travels faster in places like McAllister, Oklahoma, one of the most successful Zurvita towns, where you'll hear the stories of farmers-turned-ambassadors (currently the highest level of the independent salesforce). And while Zurvita is working to spread the word of those powerful testimonials into larger North American cities, the company also just celebrated its expansion into five new international markets on July 1, 2014. For a direct seller that's still a relatively new kid on the block, these milestones are impressive, indeed.
During the early years, however, the company's own journey to wellness was challenged with more than a few hurdles and a major detour, all of which make its present success perhaps that much more remarkable. This company is unrecognizable from where it was just six years ago.
When Zurvita launched in 2008, the company's co-founders, Mark and Tracy Jarvis, were already power players in direct selling, having achieved seven-figure success as distributors with another direct seller. They'd taken an enormous leap of faith to walk away and attempt to build a company from the ground up, but they considered it a calling to start a direct selling business based on philosophical principles they shared: faith, humble leadership and plenty of opportunities for "wins" at every level.
But the maiden voyage wasn't smooth sailing. Serving as an online shopping mall of sorts, "we were an unfocused, struggling company," says Mark Jarvis, who also serves as Co-CEO and President. After losing an average of $300,000 a month during its first 42 months, it was time for the fledgling direct seller to make a radical change; the "all things to all people" approach simply wasn't working. "By 2011, we were looking for an identity," Mark says. "We made the decision to regroup and start over again with a single focus."
Why wellness? Mark's wife, Tracy, had always had a passion for the subject, but the choice was based more on the profound and tangible impact the couple knew that good health could have on people's lives—and the power that such transformations have to influence others. "When you give people something that changes their lives in a tangible way, they're going to stick with you," Mark says.
Make no mistake: The transition from 11 products to one was anything but easy. "It was a courageous move on our part," says Co-CEO Jay Shafer. Inspired by the book Good to Great by Jim Collins—who stated that behind every successful company was the pivotal decision to take a bold risk—the company reinvented itself. Quite telling was the fact that "our consultants in the field respected our decision to streamline and stayed with us," Jay says.
With that in mind, after extensive collaboration with scientists, physicians and researchers, the company launched Zeal Wellness, its flagship product, in 2011. Designed as an all-in-one formula of whole-food concentrates in a powder to be mixed with water or juice, Zeal is intended to deliver the body's daily nutritional needs, promoting optimal health, a strong immune system and enhanced energy stores. Calling those days back in 2011 "a combination of faith and chaos," though it wasn't developed as a weight-loss product per se, Zeal Wellness was providing just that result for some, along with increased energy and, quite simply, a zest for life. Corporate leadership believed not just in the integrity of the product but also in the bang for the buck. "Above all, we wanted value for the customer," Jay adds. "I don't believe you can find a product that delivers what we do for less than twice the price."
Zurvita later added three additional products: Zeal Advanced Formula Protein Shakes; the herbal and probiotic Zeal Cleanse for digestion; and a thermogenic fat burner, Zeal Burn. Consumers may purchase all four products bundled as the Zeal Weight Management Program. Those who want an extra shot of motivation during the program have the option to participate in the Zeal for Life Challenge. This support group of sorts includes regular conference calls on a variety of topics that, collectively, promote a holistic approach to wellness—one that extends far beyond mere numbers on the scale.
Product convenience is of paramount importance to the company. Every Zurvita product was designed to offer no-hassle, easy-to-take-and-share nutrition. Having witnessed the company's exponential growth after streamlining its product line from 11 to just one, the Jarvises and Jay Shafer were committed to promoting a simple message everyone could understand: simple, convenient, economical.
One of the most interesting aspects of this company's story is that its fastest-growing demographic comes from small-town America. "Zeal Wellness has had almost an immediate impact in these smaller towns," Jay says. "I would love to say that was our strategy, but it wasn't—it just happened."
Even while Zurvita embraces its small-town growth, however, company leadership is thinking beyond borders. Effective July 1, Zurvita entered the Dominican Republic, United Kingdom, Hong Kong, Australia and Singapore. Corporate team members have partnered with Zurvita ambassadors (independent distributors who have achieved the highest level of success in the salesforce) to gain traction in each of these markets.
A new representative can start her Zurvita business as a sales consultant for a minimal amount, then move up to the managing consultant level after adding her first three new team members. From there, a managing consultant can progress to the senior, regional and executive consultant levels, then national and presidential director levels, followed by ambassador. The pinnacle of success is the level of crown ambassador, which takes five ambassador organizations to reach. Although nobody's reached it yet, Mark estimates it to be just a matter of time.
Zurvita has embraced a grassroots approach to its growth strategy, entering each market slowly, deliberately, and with one product—Zeal Wellness. Then the company introduces additional products after it has established a loyal following in that market. "There's no fanfare at the beginning," Mark says. "We just get people on the product. It's a conservative approach."
'Now' Money
The company's training and educational initiatives are based on helping new consultants to hit the ground running, before the dust can settle, so to speak.
The Zurvita Success System is designed to teach consultants how to achieve a quick win—earning a bonus during their first 30 days in business. During their second month in business, they're shown how to repeat those earnings—and establish a success story as early as possible that they can share confidently and enthusiastically with others. Monthly promotions and contests are designed to encourage the maintenance of that early momentum. One such promotion is "Destination Success," in which all consultants who move up in rank qualify for a cruise.
Zurvita's high performers also may qualify to earn the use of cars; the company's options include Mercedes, Cadillac and BMW, giving prospective and new team members a glimpse of the potential of this business opportunity.
|Zurvita ranked No. 100 on the 2014 DSN Global 100 list.
Technology Boost
To better serve its consultants and support the company's growth, Zurvita began developing a new IT infrastructure last year. Now equipped with more data and flexibility, plans are underway for the company to introduce additional technological tools that will help develop consultants' business acumen and product knowledge and, ultimately, drive additional recruitment. In the meantime, consultants take advantage of company-provided, personalized websites, where their customers can shop around the clock. Some 50,000 people have liked the company's Facebook page, where the news feed contains pointers for health and wellness and consultants relay their personal success stories.
Zurvita utilizes SMS technology to send a quick and easy offer that consultants can share with potential team members. After texting "Do you have a minute?" to their prospects, consultants text an informational video link to those who agree. The video includes the opportunity for prospects to try a Zurvita product sample pack. The intent is to blend the convenience of technology and the personal, grassroots approach for which Zurvita has become known. No matter how many technological offerings it rolls out, the company remains mindful of the fact that in many of its most successful markets, parties, personal testimonials and individualized service will never go out of style.
Celebrating Wins at Every Level
The spotlight is big enough for everyone at Zurvita events. "You don't see the same people on stage at all of our events. We showcase the next man up, so to speak," Mark says. When you consider that Zurvita's typical consultant has had no prior experience in direct selling before starting a Zurvita business, each win is justifiably reason to celebrate. The company strives to help new consultants realize their first win right out of the starting gate—and that tangible success can empower them toward a succession of more wins.
"Our job is really to build relationships with up-and-comers," says Tracy. "We pull them in and make them feel totally connected to the company. We just love on these people and make them feel appreciated. It keeps people engaged and moving forward." In fact, corporate leadership is so committed to empowering "the next man up," they join Zurvita sales support staff to work the phones until midnight during every month-end close, reaching out to representatives who are on the cusp of promotion and offering that extra shot of encouragement.
Based on the philosophy "The higher you climb, the more you serve," the company maintains an eye on succession within the independent salesforce, teaching Zurvita ambassadors to raise up their replacements. "We're replacing our army, so to speak," Jay says.
Zurvita employees and consultants volunteer to build water wells in Nicaragua.
Giving to Others
Zurvita's corporate social responsibility initiatives are relatively recent, having spent its first few years as a struggling company in search of an identity. Now beginning to reap the rewards of its hard-fought success, Zurvita is in a place to share with others. In January 2014, employees and independent salesforce members ventured on a mission trip to Nicaragua to build two water wells—an experience they'll repeat in Nicaragua in January 2015 under the name of "Zeal for Life." On Aug. 23, 2014, Zurvita kicked off its "Feed 500" program, which challenges employees and independent salesforce members to feed at least 500 hungry people in 24 hours. During the inaugural event in Houston, volunteers packed lunches and delivered them everywhere they identified need, whether it was a homeless man on the street or an inner-city homeless shelter. It's an experience Zurvita plans to replicate each month in various locations throughout the United States.
Three years after relaunching on a platform of wellness, the company is reaping the rewards of its deliberate, strategic approach to market expansion and brand marketing. Whether the results are seen in Zurvita's revenue—potentially reaching $90 million for 2014—growth of its 30,000-plus independent consultants through a small-town network, or expansion already into five new international markets, the company plans to stay around for the long term, bringing wealth and wellness to an eager audience.
October 01, 2014
Billion Dollar Markets
by Andrea Tortora
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
Direct selling is an industry proving its mettle as it prepares to take advantage of major growth opportunities fueled by technology, increased entrepreneurial support and the new emerging market consumer.
Global estimated retail sales topped US$178 billion in 2013, up 8.1 percent from 2012, according to the most recent data from the World Federation of Direct Selling Associations (WFDSA). The worldwide salesforce also grew, up 7.2 percent to 96 million independent contractors. Both are record numbers.
In 2013 there were 23 countries with annual retail sales above $1 billion. That group accounts for 93 percent of global sales. Of special note is the industry's 6.8 percent three-year cumulative growth rate (CAGR). The figures reinforce direct selling's strength and show its potential, says Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA. "The opportunity this industry has to really be even more powerful is in taking advantage of the fact that we are living in a moment in our society when technology is reinforcing relationships and allowing us to do more and better business," Carlucci says.
This most recent data clearly illustrates direct selling's sustainable growth—especially in times of economic recovery and improved governmental policies to support entrepreneurship. Among the direct selling associations reporting their data to the WFDSA Research Committee, about three-fourths of the markets show solid, sustained growth in the three-year compound annual growth rate.
Here's why that is important: "If the year-over-year percent change represents the snapshot, then the three-year CAGR represents the video and shows the long-term change or the trend. The sustained growth of direct selling is shown in a positive CAGR," says Amway's Judy Jones, Chairman of the WFDSA Global Research Committee.
Data is reported using constant 2013 dollars, to remove currency fluctuations from the equation. As more companies participate in sharing sales data with each country's direct selling association (DSA), the entire industry begins to gain actionable knowledge it can use to enable sellers to better serve customers.
The sales of the 23 billion-dollar markets in 2013 are familiar to those who follow this annual ranking. The top five countries account for 60 percent of direct selling's global sales. All but one report a positive CAGR:
1. United States, 4.6 percent
2. China, 23.3 percent
3. Japan, -4.4 percent
4. Korea, 8.0 percent
5. Brazil, 8.6 percent
China moved into the No. 2 spot for 2013. If the current rates of growth in the United States and China remain steady, China could become the No. 1 direct selling market in the next year or two.
Interestingly, the billion-dollar markets that make up the bottom five show tremendous cumulative growth, particularly in emerging markets:
19. Australia, 2.3 percent
20. Venezuela, 15.7 percent
21. India, 20.0 percent
22. Philippines, 17.8 percent
23. Indonesia, 12.0 percent
The numbers reinforce trends seen in the past two years. Direct selling is growing rapidly in the Asia Pacific region and Africa—dubbed the "new frontier" by Carlucci. Africa posted just over 9 percent year-over-year sales change for 2013, trailing only Asia Pacific at 12.6 percent.
"Africa is a place where everyone should put a seat now, because in 15 years it will be very relevant," Carlucci says.
Following closely is the Central and South American region, which also posted just over a 9 percent year-over-year sales change. Six Latin American countries—Brazil, Mexico, Colombia, Argentina, Peru and Venezuela—are billion-dollar markets. More multinational companies are starting to do business in Central and South America, where consumers embrace direct selling.
The desire to improve one's socioeconomic standing remains strong in emerging markets, which translates to excellent growth potential for direct selling. In fact, seven of the billion-dollar markets with double-digit cumulative growth rates are emerging markets, according to the WFDSA data:
- Argentina, 28.1 percent
- China, 23.3 percent
- India, 20.0 percent
- Philippines, 17.8 percent
- Venezuela, 15.7 percent
- Indonesia, 12.0 percent
- Colombia, 11.6 percent
Direct selling is a very relevant marketing and sales model for emerging markets, says Derrick Irwin, Portfolio Manager for the Wells Fargo Advantage Emerging Markets Equity Fund. In many of these countries, the retail industry is not fully developed and companies cannot put products on a Wal-Mart shelf. "There is also skepticism among consumers about counterfeiting and quality products," Irwin says. "If items are being sold by someone they trust, it is powerful. The opportunities are very, very good."
Companies like Avon know how important international markets are for growth. The global beauty direct seller derives 85 percent of its business outside the U.S., and 75 percent of revenues come from emerging markets, says CEO Sheri McCoy. Avon's priority? Growing its top markets, which include: Brazil, United States, Mexico, Russia, Central Europe, Venezuela, Argentina, Colombia, United Kingdom, Philippines, Turkey and South Africa.
China is also a huge market with infinite business opportunities. Leo Zhou, Deputy Director of Media Affairs at Mary Kay China, believes direct selling is a perfect match for China's huge population, and that the interpersonal interaction at the industry's core is quite effective in low-tier cities. He says, "It ensures that the direct selling industry could get into contact with female consumers in a faster and more precise way, thus promoting sales growth."
Despite being a more mature market for the industry, Latin America is still a developing region with an entrepreneurial middle class that is seeking ways to maximize individual and household incomes, as demonstrated by the number of countries represented on the list, and growing activities in even more. Miguel Francisco Arismendi, Amway's Director General for the Andean area, based in Bogota, Colombia, says, "There is no doubt that direct selling provides opportunity."
The world's new consumers are a diverse group. Some are affluent and ready to spend their newly robust income on fulfilling their dreams and ensuring a better life for their children. Others are just beginning to realize their buying potential as they are exposed to the wealth of available products. The new middle class in Indonesia, India, Nigeria, Ghana and Kenya are confident consumers who plan to buy more, save more and invest in education, according to research from Standard Chartered, a London-based international bank.
These emerging consumers have a wide range of incomes and a wide range of desires to follow, including such things as an appetite to travel and willingness to invest in a new car, and some can even consider buying luxury goods. In less developed markets, currency fluctuations and commodity prices impact the consumer spend. Wells Fargo's Irwin says, "The problem in core countries is that so much of the family budget goes to food, so if those prices fluctuate that squeezes the budget for other things."
Whereas an American will generally buy shampoo no matter what, in countries like India it may not be a regular purchase. To get around this hard economic truth, companies like Hindustan Unilever Limited offer single-use package sizes for the price of a rupee or two (2-4 US cents). "It takes creative marketing and strategies to really access these markets," Irwin says.
Another example: In China, direct selling successfully advances the development of consumers' personal-care habits in low-tier cities and stimulates their willingness to spend more on premium products. Consumers in fourth-tier cities spend an average of 220 yuan (about US$38) each year per capita at cosmetics stores, whereas in the direct selling channel, consumers spend 540 yuan (about US$88) each year. Mary Kay's Zhou says, "This fully demonstrates the consumption potential of third-tier and below cities."
As emerging market consumers flex their collective spending muscles, a preference for local or domestically based brands is becoming evident. In the past 20 years, multinational brands dominated consumer brand preferences. As locally based companies achieve scale and develop their own brand strength, they are beginning to compete with multinationals. Irwin says, "Consumers are more open to buying local brands to support local businesses and show their pride in the local market."
In China, where consumers have long aspired to acquire products with names like Gucci, Nike and other big Western brands, local brands are gaining market share as they fill a niche in the middle ground between the luxury and inexpensive brands. China-based Belle International is one of them. The company makes mid-range women's shoes and is like the Nine West of China, according to Irwin.
In India, the domestic Godrej Consumer Products now claims more than $1 billion in revenue, taking a stab at the more established Hindustan Unilever. "They are getting to scale, and they are creating disruptions," says Irwin. This bodes well for direct sellers, who build their business on micro-local enterprises and interpersonal connections.
At the heart of direct selling is the ability to offer people the chance to feel empowered, to take control of their lives and to add value to society. This fuels entrepreneurship, self-employment and microenterprises. Research shows that such ventures strengthen a country's economy.
Alan Finkelstein Shapiro, a researcher at the Universidad de los Andes in Colombia, finds that "economies with larger self- employment shares exhibit faster recoveries following a negative economy-wide productivity shock."
The entrepreneurial aspects of direct selling empower women and can be attractive to those under age 35 who more often want to be their own boss while also helping others. Sandra Whittle, Managing Director for Partylite U.K. & Ireland, says a favorite quote she shares with those new to direct selling is, "If at first you do succeed—try to cover your amazement."
Whittle says consultants must be willing to put in the work because experience cannot be bought, and it is particularly important to earn the respect of colleagues and of the field.
Just as important is harnessing the excitement of those who want to be sales leaders, says Andrea Slater, with Avon U.K. "We need to ensure that we capture that enthusiasm within a specific timeframe," she says. "Then, we need to fan the flames and keep them motivated, engaged and rewarded."
Mary Kay's Zhou says that in countries like China, business startups and entrepreneurship are becoming easier to navigate on the policy front, as well as becoming more accepted forms of livelihood for the younger generation. He continues, "Direct selling can help them to fulfill their dream of initiating businesses, and to gain earning opportunities and freedom with the thinking approach and behavioral model of their own characteristics, which constitutes a career development mode catering to the ideal of modern youths."
For women, in particular, direct selling is an opportunity to contribute money to the household and develop a degree of independence. This is especially true in rural areas and farming communities. Irwin cites Hindustan Unilever Limited as an example. The Mumbai, India-based consumer goods firm employs 65,000 women through its Shakti direct selling initiative. These women sell products in their villages, giving Hindustan Unilever and the women themselves a huge economic opportunity they wouldn't have otherwise.
As an industry, direct selling companies recognize the importance of recruiting young people under age 35 to become consultants as well as consumers of its products. Doing this means using a technology-rich approach and being socially responsible, says Amway's Arismendi.
In Latin America, direct selling is equipping consultants with social media tools that enhance day-to-day communications. Amway is aggressive in studying tools that promote the use of technology in the field. "This will not replace the personal touch, but it will complement it," Arismendi says. "Direct communication and social networking can be much more effective than conventional sales and retail."
The No. 1 market for direct selling saw 2013 retail sales of $32.7 billion, up 3.3 percent from 2012. Between 2010 and 2013, the compound annual growth rate was 4.6 percent in the country. The U.S. accounts for 18 percent of worldwide direct selling sales, generating about $1 for every $6 retail dollars globally.
The U.S. salesforce also grew 5.7 percent, to 16.8 million people, which is a record high. The most prevalent sales method is face-to-face, with 70 percent of consultants using this avenue, according to the U.S. DSA.
The product groups with the strongest percent of market share are wellness and services, making up 28.5 percent and 22.9 percent of sales, respectively. New segments are also using direct selling, such as energy, says U.S. DSA President Joseph Mariano. "Direct selling is a smart, go-to-market strategy for many products, especially those that benefit from explanation or demonstration. In the case of utilities, most Americans aren't used to having a choice in their provider, so they benefit from guidance to make an informed decision."
Given current rates of growth, China will most likely surpass the U.S. in market size for direct selling, becoming the industry's No. 1 market. Its 2013 retail sales were $27.3 billion, up an astounding 41 percent from 2012. China also enjoys the industry's highest cumulative growth rate at 23.3 percent.
"With the acceleration of the global economic integration progress, China promises tremendous market potential as the second largest economy worldwide today," says Mary Kay's Zhou. U.S. direct selling giants Amway, Mary Kay and Nu Skin are among the largest companies operating in China. Several domestic Chinese direct selling enterprises also are a noticeable force. Competition across the country is moderate, with 44 licensed enterprises.
Cosmetics consumption keeps growing at an average annual growth rate of 15 percent, despite an overall economic slowdown. China trailed only the U.S. and Japan in consumer cosmetics spending in 2012. Women play a key role in those numbers and are increasingly active in economic consumerism. "As the number of employed women increases and their status in social and economic development rises steadily, their role in consumption is also becoming more prominent," Zhou says.
Chinese women now control 60 percent of domestic consumption and make 77.5 percent of household purchase decisions. This far exceeds the purchasing power of men and children.
As China grows and becomes a more relevant market, the WFDSA's Carlucci believes that the industry must put more energy into "understanding how we communicate and maintain the fundamentals of the industry" in a way that can be understood regardless of the country.
Direct selling continues to grow at a steady pace in Europe. Retail sales topped $31.6 billion in 2013, and 12.7 million people work as independent consultants across Western, Central and Eastern Europe. "Europeans have embraced the entrepreneurial spirit and increasingly recognize direct selling as an appealing (and sometimes preferable) alternative to a traditional job," says Marinda Chaplin, Vice President at SUCCESS Partners Europe.
As recovery continues from the economic recession, the U.K. is seeing more encouraging trends, especially in the area of self-employment. Lynda Mills, Director General of the U.K. DSA, shares that recent information from the Office for National Statistics reveals self-employment is at its highest level in 40 years with 4.5 million people. "This, coupled with the recent statement from Esther McVey, Minister for Employment, saying, 'Being your own boss is as impressive as a degree,' appears to give more credibility to self-employment than ever before," Mills says.
Mills reports that during the recent recessionary years, direct selling in the U.K. has seen year-on-year growth in a variety of demographics, and some direct sales companies are enjoying double-digit growth. With young people being notoriously risk adverse, direct selling is an ideal option for people in many age ranges and from varied backgrounds.
"We have seen more young people between 18 and 25 working in direct selling with 29 percent (75,000) of U.K. direct sellers under age 25," Mills says. On average, 38 percent of direct sellers are over age 50, representing a rise of more than 32,000 people since 2011.
Direct selling is also increasingly appealing to a multi-cultural audience. In a recent survey of its members, the U.K. DSA discovered that 30 percent of direct sellers (120,000 people) in the U.K. are non-British. DSA member companies attribute this to a rise in interest of people from places like Asia and Eastern Europe, according to Mills.
People in the U.K. are turning to direct selling as a real alternative to traditional employment, with 68,000 direct sellers (17 percent) working full-time hours (more than 30 hours a week). This is up 20,000 from 12 percent in 2011. "Direct selling here in the U.K. really has entered the mainstream," Mills says.
One factor in the sustainability of the industry is the increasingly digital nature of the world economy. Technology enhances the core aspect of direct selling. Embracing the digital age can ignite new growth in mature markets like the United Kingdom, which enjoys a 10.4 percent three-year compound annual growth rate and reported $3.3 billion in 2013 retail sales.
Germany posted a three-year CAGR of 5.8 percent. The direct selling model enjoys a positive image in the country, says Guido Amendt, Mary Kay Germany's Director of Marketing. He adds that a sustainable increase in purchasing power per capita offers opportunities for consumers to buy high-quality products through direct selling.
In France, direct selling continues to grow regardless of the economic climate. When it comes to increasingly competitive markets such as cosmetics and jewelry, direct selling leverages innovation as a growth solution, says Jean-Laurent Rodriguez, Director of Communication and Training for the Federation de la Vente Directe, France's DSA. In 2013, France recorded sales of $5.3 billion. The country's cumulative annual growth rate between 2010 and 2013 was 3.4 percent.
Continued expansion in the industry is driven by several factors. France is enjoying a growing number of new companies with new brands and new products, such as textiles, shoes, home decoration, gastronomy and health care, Rodriguez says. These companies are international and national industrial groups, medium-sized companies and startup firms. Agreements between the Federation de la Vente Directe and government ministries (higher education, national defense and public institutions) ensure that direct selling is a viable option.
The WFDSA's Carlucci sees Africa as an interesting continent right now for direct selling although, currently, the only DSA exists in South Africa. South Africa's 2013 retail sales were $720 million, and its three-year cumulative growth rate is 6.8 percent. "Direct selling is very relevant here because it is a way to be an entrepreneur, and other retail channels are not developed," Carlucci says.
Multinational companies are taking interest in the continent, says Wells Fargo's Irwin. That's because it is a huge market. Irwin cites Nigeria as an example. The country is home to 180 million people and just 10 supermarkets. "The rest are local markets and product distribution via trusted networks," Irwin says.
Central and South America are comprised of fast-growing countries known for their entrepreneurship culture. Ernst & Young, in its G20 Entrepreneurship Barometer 2013, ranks Argentina, Brazil and Mexico as some of the best world economies for entrepreneurs. The same can be said for the region's direct selling prospects. The industry is well established in Latin America, where customers like to buy from people they know. Additionally, it is a market with potential because retail is not well developed in many regions.
Latin America's direct selling billion-dollar markets are:
- Brazil, $14.2 billion
- Mexico, $8.1 billion
- Colombia, $3.3 billion
- Argentina, $1.9 billion
- Peru, $1.9 billion
- Venezuela, $1.4 billion
In Latin America, the "family factor" is very important and makes direct selling attractive as a self-employment option. Unlike in the U.S., children look to go to college close to home and remain with their families. Many career decisions center on one's family, which makes direct selling attractive as a source of income in addition to traditional employment.
"Direct selling is an opportunity to work but remain close to the family and to have additional income for the needs of the family," Arismendi says. "So this makes a difference. There is flexibility and management of their own time."
Direct selling is also becoming a full-time work option, says Pio del Castillo, Mary Kay's Manager of Corporate Communications. Brazil ranks No. 5 among the industry's billion-dollar markets. Direct selling retail growth in the country is related to the economic recuperation of international markets, del Castillo says. The country posted year-over-year retail sales growth of 7.2 percent, making for a three-year CAGR of 8.6 percent. The number of sellers grew as well, reaching 1.3 percent, to 4.5 million.
Brazil also boasts a diverse market with access to information. One important factor boosting direct selling in the region includes traditional retailers such as O Boticario adding direct selling to their marketing efforts. Del Castillo says, "The Brazilian economy grew only 2.3 percent in 2012, but Brazil still remains one of the most important players in the direct sales market."
Technology in all its forms is an essential ingredient to the future growth of direct selling, according to industry executives and economists. "The Internet and digital technologies, mobile devices, social media and access to more robust data will allow direct selling companies to dramatically increase the level of service they offer to their salesforce and customer base," says Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA.
October 01, 2014
Letter from John Fleming, October 2014
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
The Billion Dollar Markets are growing! One of our most popular cover stories of the year has now moved to the month of October due to the great work being done by the Research Committee of the World Federation of Direct Selling Associations. All of their information on country results for 2013 can be reviewed on their website (www.wfdsa.org). It is always our pleasure to be able to build stories around this information with additional research, interviews and insights. We know you will enjoy our quick trip around the world to showcase the billion-dollar markets.
September was also an exciting month for those direct sellers who journeyed to Washington, D.C., to participate in the U.S. DSA's Direct Selling Day on Capitol Hill. Over 400 independent contractors from different companies joined together as one collective body to meet with elected officials from both the House of Representatives and the Senate. It was reported to have been a great day, and DSN got the story while it was happening. Kudos to the companies that selected or invited their sales leaders to participate, as these independent direct sellers, and the stories they represent, are most important for our elected officials to hear and understand.
Most unexpectedly, as this issue went to press, we received word that Avon Products Inc. had withdrawn its membership from the U.S. Direct Selling Association, the largest and most valuable of all of the associations that work to support and lobby on behalf of the common interests of the direct selling community. Throughout the year, DSA, more than any other supportive entity, keeps boots on the ground traveling to courthouses and the offices of attorneys general near and far to ensure the direct selling way of conducting business can thrive for the benefit of over 16 million independent contractors in the U.S. as well as those across the globe. Every DSA in the world is the result of what was founded and built by the U.S. Direct Selling Association.
We do not propose to understand Avon's action in withdrawing membership from the DSA, but we do know the decision activates questions, and those questions will be many and varied as to what the decision really means. In a very unusual move, Avon posted its decision to withdraw from the DSA on its corporate website and left more questions than solid rationale. As those in boardrooms, hallways, living rooms and kitchens discuss this company's decision to withdraw, Avon itself continues to struggle with many things. It is our hope that this unexpected action on the part of the company's decision makers does not become another distraction from staying focused on its own house, and creating growth again. For it is a company still responsible for supporting the women we know as Avon Representatives—the women who join because of their affiliation with a company they believe can be a catalyst to make dreams come true.
The direct selling industry continues to grow, and as mentioned in this column last month industry growth means a lot of things. It certainly means a lot of things are going well—which leads me to our 90 Days of Direct Selling Celebration, kicked off on Sept. 17. The goal of the campaign is to fuel ongoing conversations about the positive impact the direct selling community has on people and economies around the world. You can follow the 90 day celebration on all of our social media and on our website.
Which leads me to another very exciting announcement—our Harris Poll has been completed, and we will bring you the results in our November cover story. DSN commissioned Harris Poll to conduct a comprehensive survey this summer on direct selling—surveying consumers on behaviors, attitudes, satisfaction and many other important factors. We will publish the information over the next few months and think you'll be excited about the findings.
Turn the page to learn more about our 90 Days of Direct Selling Celebration. Then move on to read more about the Billion Dollar Markets… they are growing!
"With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful.
Strive to be happy."
© Max Ehrmann 1927 from the poem, the Desiderata
Enjoy the issue!
John Fleming
Publisher and Editor in Chief
October 01, 2014
News in Brief, October 2014
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
Fast Growth Propels Direct Selling Brands onto Inc. 500
Inc. magazine has announced its 2014 Inc. 500|5000, and the exclusive ranking once again features several direct selling brands. The Inc. 5000 is a list of America's fastest-growing private companies, with the Inc. 500 representing a special ranking of companies in the top 10 percent.
Limited to U.S.-based, privately held companies, the Inc. 5000 measures revenue growth from 2010–2013. This year's list includes direct sellers Plexus Worldwide (No. 8); Jeunesse Global (No. 258); It Works! (No. 290); North American Power (No. 476); Ambit Energy (No. 2074); WorldVentures (No. 2333); Viridian Energy (No. 2381); 5LINX (No. 2916); YOR Health (No. 3528); Isagenix (No. 3764) and Stemtech International (No. 4708). The full Inc. 500 list appeared in the September 2014 issue of Inc. magazine.
Nu Skin Ranked among Fortune's Fastest-Growing Companies
Fortune recently published its annual roundup of the fastest-growing public companies in American business, and direct selling powerhouse Nu Skin came in at No. 68 on the list.
In a testament to America's booming shale business, a quarter of this year's 100 Fastest-Growing Companies represent the oil and gas industry. Household brands such as The Hunger Games and Divergent distributor Lions Gate Entertainment (No. 15), K-Cup maker Keurig Green Mountain (No. 48) and Apple (No. 88) also appear. Fortune's ranking reflects profit, revenue and stock growth over the preceding three-year period.
Nu Skin, a seller of skincare and nutrition products, grew its business by half in 2013 alone. The Provo, Utah-based company reported sales of $3.18 billion, a $977-million increase over 2012. For 2014, the company reported quarterly revenues down 3 percent to $650.0 million in the second quarter.
4Life Announces Auburn University Partnership
A new partnership between wellness company 4Life Research and Auburn University will advance academic studies on the safety and effectiveness of 4Life products. The company recently made a $100,000 gift in support of The Molecular and Applied Sciences Laboratory in Auburn's School of Kinesiology.
Overseen by Auburn's Dr. Michael Roberts, Director of the Molecular and Applied Sciences Lab, the research will range from specific ingredients and how they affect physiological systems, to safety studies and new ingredient discovery. It will take place in the 58,000-square-foot, state-of-the-art kinesiology research facility that opened on Auburn's campus last fall in Auburn, Alabama.
The Auburn partnership will support 4Life's in-house R&D department in its commitment to innovation, substantiation and education. 4Life has developed a product line based upon its trademark Transferceutical Science, which supports the immune system in remembering and responding to potential health threats.
Herbalife, Common Threads Partner on Nutrition Curriculum
Global nutrition company Herbalife recently announced a long-term partnership with national nonprofit organization Common Threads to sponsor nutrition programs in elementary and middle schools across the country. The program gives students in over 135 schools in Illinois, Washington, D.C., California and Florida access to nutrition and cooking skills curricula.
The program is geared towards students who do not otherwise have access to well-balanced dietary options in their community or at home. The schools selected for the program are located in neighborhoods across the country that do not have access to fresh produce and other nutritious ingredients. One of the criteria for school selection is that 80 percent of the students in the school must qualify for free school lunches.
As a result of the partnership with Herbalife, Common Threads will grow its existing programs and expand into five additional Los Angeles-area schools to serve over 600 students in the first year alone. Students participating in the program will receive lessons throughout the school year in good nutrition, healthy foods from across the world, planting and harvesting from a garden to make healthy meals, and meal planning and budgeting for healthy meals with family members.
In other company news, at the upcoming Herbalife North American Innovation Conference, businesses, entrepreneurs and nutrition industry visionaries will have the opportunity to present product ideas to top Herbalife executives. The global nutrition company is scouting out novel ingredients and technologies to enhance or extend its existing product lines.
Slated for Oct. 5-6, the Innovation Conference leads up to nutrition industry expo SupplySide West. The expo is the largest gathering of its kind in the world, and this year's event will feature more than 1,700 ingredient suppliers and finished product manufacturers.
Herbalife is partnering with Nutrition Business Advisors and Nutrition Capital Network to present the North American Innovation Conference, a format launched about three years ago. The company hosts four to five conferences annually, each in a different region of the world. Applicants undergo screening by outside facilitator Nutrition Capital Network and the internal Herbalife team before presenting their ideas.
Ambit Ranks Highest in Customer Satisfaction
As a result of its annual customer satisfaction survey, J.D. Power and Associates has named Ambit "Highest in Residential Customer Satisfaction among Retail Electric Providers in Connecticut, New Jersey and Pennsylvania."
The J.D. Power study measures retail electric providers across five key factors: price, communications, corporate citizenship, enrollment/renewal and customer service. In Pennsylvania, Ambit performed particularly well in the communications factor, earning a total score of 718 on J.D. Power's 1,000-point scale. The company outperformed its competitors with scores of 705 and 718 in Connecticut and New Jersey, respectively.
The survey of more than 25,757 retail electric residential customers was conducted September 2013 through June 2014. In J.D. Power's inaugural study last year, Ambit ranked highest in customer satisfaction among New York residents.
Stream Energy CFO Receives Women in Business Award
The Dallas Business Journal has honored Stream Energy Chief Financial Officer Renée Hornbaker as one of its 2014 Women in Business.
After starting her career as a public accountant—and one of just two women at her firm—Hornbaker soon made the switch to corporate accounting, earning senior positions at Flowserve Corp., Shared Technologies Inc., Deloitte & Touche and the Phelps Dodge Corp. As CFO at Stream Energy, Hornbaker heads up a finance operation that reported $867 million in revenue last year.
Stream Energy markets residential and commercial energy services through its wholly owned direct selling subsidiary, Ignite. Ignite Associates number more than 250,000 across six states and the District of Columbia.
Epicure Launches Good Food. Real Fast. Movement
Canadian food and cookware company Epicure recently launched the Good Food. Real Fast.™ movement. The movement encourages individuals—even those who think they don't have the time or the kitchen savvy—to cook and eat real food.
To simplify mealtimes without compromising on health or taste, Epicure has created a website dedicated to recipes, quick meal ideas, cooking tips and expert advice. The Good Food. Real Fast. community can also contribute ideas and inspiration by tagging social media posts with #goodfoodrealfast. For each person who joins the movement, Epicure has pledged to donate $1 to the Epicure Foundation, which supports grassroots food initiatives across Canada.
October 01, 2014
Executive Announcements, October 2014
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
Herbalife Ltd.
|Alan L. Hoffman
Global nutrition company Herbalife Ltd. announced that it has appointed Alan L. Hoffman to the newly established role of Executive Vice President of Global Corporate Affairs, reporting to Michael O. Johnson, Herbalife's Chairman and CEO. Hoffman will lead public policy, corporate communications, government affairs, community relations and philanthropy.
Hoffman brings over 20 years of public policy, communications and government affairs experience to the corporate affairs role. Previously, he served as the Senior Vice President for Global Public Policy at PepsiCo, where he oversaw policy development, external relations and government relations. Before joining PepsiCo, he served as the Deputy Chief of Staff to Vice President Joseph Biden and Deputy Assistant to President Barack Obama. Hoffman was also an attorney at the U.S. Department of Justice in Washington, D.C., and was an Assistant U.S. Attorney in Philadelphia.
In addition, Herbalife announced that Barbara Henderson will retire as its Senior Vice President of Global Corporate Communications. Henderson will assist with the transition and will remain President of the Herbalife Family Foundation.
"We are thrilled to welcome Alan to the Herbalife team," said Johnson. "He brings an unparalleled level of experience to our senior team, and we are confident that he has the experience and credentials to help us powerfully communicate the value Herbalife brings to our consumers, members, shareholders and communities."
Blyth Inc.
|Jim Williams
Blyth Inc., a direct-to-consumer company and designer and marketer of candles and accessories for the home, announced the election of Jim Williams, President, CEO and Managing Partner of Karlen Williams Graybill Advertising Inc., to its board of directors. Also Neal I. Goldman has retired from its board.
Williams will serve on the Audit Committee. He has been chief executive at Karlen Williams Graybill Advertising Inc. since 1998. In 1993, he bought an equity stake in Karlen Advertising and since taking ownership, Williams has grown KWG into one of the country's largest independent, full-service marketing consultancies. Prior to joining Karlen, Williams served as Associate Editor of Leaders magazine.
Williams owns controlling interest in I.M Productions and the communications business Better Brand Initiatives, licensor of FYI Before You Buy™. He is a member of the Ad Club of New York and the One Club. He sits on Gerson Lehrman's Council of Advisors and is a board member and committee chair of The Cathedral School of St. John the Divine.
"We are delighted to welcome Jim to the board," said Robert B. Goergen Jr., Blyth's CEO. "Jim brings leadership, strategy and a strong knowledge of marketing, social media and global consumer insight. I look forward to the new perspective that Jim brings to the company."
Goldman, who is a member of the Compensation and the Nominating and Corporate Governance Committees, has been a director since 1991. He is the President of Goldman Capital Management Inc., an investment advisory firm.
Mary Kay Inc.
|Crayton W. Webb
Mary Kay Inc., a top beauty brand and direct seller in more than 35 markets around the world, announced the promotion of Crayton W. Webb to Vice President of Corporate Communications and Corporate Social Responsibility.
In this position, Webb will continue to oversee global media relations, reputation management and public relations initiatives for the company's more than 35 international subsidiaries. Webb also leads Mary Kay's corporate social responsibility efforts, Pink Changing Lives®, which focuses on transforming, inspiring and empowering women around the globe through community involvement, philanthropy and volunteerism from its employees and consultants.
Webb joined the company in 2005 as Manager of Government Relations before his promotion to Director of Corporate Communications and Corporate Social Responsibility in 2008.
"[Crayton] walks the talk as it relates to community involvement, and we know his counsel will continue to be invaluable as we grow Mary Kay's presence and continue to enrich the lives of women around the world," said Nathan Moore, Chief Legal Officer and Secretary for Mary Kay Inc.
Prior to joining Mary Kay, Webb was Chief of Staff for Dallas Mayor Laura Miller and Director of Communications for the United Way of Metropolitan Dallas.
Origami Owl
|Sandy Spielmaker
Origami Owl has announced that Sandy Spielmaker has joined the jewelry company as Chief Sales Officer. Spielmaker has more than 30 years of experience in sales, marketing and general management, previously serving as Vice President of Sales at a top direct seller, both globally and in the U.S. She has also served as President and General Manager within the Watercraft division of Johnson Outdoors, as well as a variety of sales and marketing roles at SC Johnson.
Spielmaker combines her experience within direct selling and consumer packaged goods to drive innovative solutions across business insights and development, training and education, key account management, compensation, recognition and leader development.
ForeverGreen Worldwide Corp.
|Michelle LeSueur
ForeverGreen Worldwide Corp., a provider of nutritional foods and other healthy products, announced the appointment of industry expert Blake Schroeder as President of ForeverGreen Europe, and Michelle LeSueur as the Director of Product Education and Development.
Schroeder brings a wealth of experience and knowledge from the direct selling industry to ForeverGreen, and for the past seven years he has served in various positions at a major direct seller. Schroeder acted as legal counsel for a short time, but was mostly involved in and responsible for growing several international businesses. During that time he lived both in Israel and Portugal.
"Blake Schroeder is the right choice at the right time to take our European operations to the next level," said Brenda Huang, President of ForeverGreen International. "As the second-fastest-growing market behind the U.S., we're seeing explosive growth in both sales and new leadership in the region. Europe is strategically very important to our expansion strategy, and we're delighted to welcome Blake to the team."
LeSueur comes to ForeverGreen to educate and train current and new distributors and customers about ForeverGreen's product line. She has worked with many individuals with a wide variety of health issues, including weight management issues, allergies, hormonal imbalances and autoimmune diseases. She is a Certified Nutritional Counselor, Certified Sports Nutritionist and Certified Personal Trainer. LeSueur has a Neuro-Endocrine & Anti-Aging Regulation Certification as well as several other certifications in related fields.
She has served as Vice President of Health and Nutrition, Director of Health and Nutrition and Director of Product Education and Development at multiple companies, where her responsibilities included educating, formulating and manufacturing products. She is also a published author and an experienced public speaker. LeSueur will help ForeverGreen continue to commercialize new and innovative product lines and provide customers and distributors with the knowledge and benefits of each product.
Zija International
|Dave Almarinez
Zija International, a health and wellness company dedicated to living "Life Unlimited," announced that Dave Almarinez has been named its new Managing Director for the Philippines, Australia and New Zealand. Currently, his role will be to effectively expand Zija's products and business opportunity across Asia, the Pacific and other international markets.
With an education in global strategic management and applied business economics, Almarinez also has 17 years of network marketing experience. He is very active in civic affairs in his home province of Laguna, Philippines, where he was a publicly elected board member of the Provincial Government.
Initials Inc.
Initials Inc. announced that Laurie Langill has joined the company as Vice President of Training & Field Development, and Cindy Carpenter has joined as Field Development Director. Both Langill and Carpenter come to Initials Inc. with a rich background in direct sales and understand the industry from the field and corporate viewpoints.
|Laurie Langill
|Cindy Carpenter
As a member of the executive team, Langill will provide strategic direction for all training and field development initiatives. She has more than 30 years of experience in direct selling.
In her role as Field Development Director, Carpenter will work closely with top field directors and leaders to enhance the overall nationwide field growth and individual team development. She has been in direct sales for 19 years.
Launched in 2005, Initials Inc. is a national direct selling company whose core belief is "There's only one you!" This philosophy is brought to life by the thousands of independent Creative Partners (consultants) nationwide who sell personalized fashion handbags, accessories, jewelry and home organization products through home parties and online.
Tupperware Brands Corp.
Tupperware Brands Corp. announced that Gavin D. Little was promoted to Group President, Tupperware Europe, Africa and the Middle East, succeeding R. Glenn Drake who will retire at the end of 2014 after 44 years with the company.
Little, currently Senior Area Vice President, Central Europe and Strategy, has developed extensive knowledge of Tupperware Brands' business through interaction with all of its regions. After a comprehensive orientation in Asia, Latin America and Europe, he became the head of Marketing and Strategy for Tupperware Brands. Since January 2014 he has been leading a portfolio of units in Europe.
Little's background includes 26 years of startup, turnaround and growth experience in many markets across Europe, Asia and North America. He has held senior marketing and general management roles with ICI Paints, Johnson & Johnson, United International Pictures, British American Tobacco (BAT), Reynolds American and Mattel Corp.
"I'm extremely proud to promote Gavin to Group President," said Rick Goings, Chairman and CEO. "We are confident that Gavin will be able to build on the momentum of the growing units in our Europe, Africa and Middle East portfolio, while also making the necessary changes and leveraging their results in those business units in which improvement is essential."
|Brian Gill
Younique, a cosmetics direct sales company dedicated to motivating and empowering women, announced the addition of Brian Gill as the company's new Executive Vice President of Marketing.
Gill leads the marketing team responsible for brand positioning, corporate and marketing communications, public relations and digital marketing. Younique Co-Founder Melanie Huscroft previously functioned in this role, as well as product development and sales. Huscroft is now Chief Product Officer and Chief Sales Officer, in addition to her role as co-founder.
"[Brian's] industry knowledge and marketing experience more than qualifies him to lead our marketing efforts," said Huscroft. "I can speak to his character and creativity, and have full confidence in his abilities."
Gill joins the Younique family with more than 14 years' experience in direct selling and marketing. Prior to joining Younique, Gill was vice president of marketing communications at another direct seller, where he was responsible for global marketing communication, content marketing, public relations and social media.
Younique markets and sells almost exclusively through the use of social media. Founded in September 2012, the company's product philosophy of Nature. Love. Science. ensures that its line of cosmetics and skincare products are found at the intersection of the best that science and nature have to offer.
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October 01, 2014
Financial News, October 2014
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Nu Skin Enterprises Inc.
Nu Skin Enterprises Inc. (NUS—NYSE) announced second quarter revenue of $650.0 million, a 3 percent decline over the prior-year period. Revenue was negatively impacted 2 percent by foreign currency fluctuations. Earnings per share for the quarter were 32 cents, versus $1.22 in the prior-year period and were impacted by a $50 million write-down of Mainland China inventory, and a $25 million charge due to a transition to the SICAD II exchange rate in Venezuela. Excluding these items, earnings per share would have been $1.13 per share for the second quarter.
The company recently restated its consolidated financial statements for the quarter ended March 31, 2014, to include a $21 million charge to Other Income (Expense) to reflect a hyperinflationary adjustment for Venezuela, and $7 million of income related to a tax rebate for the company's China headquarters. These changes, net of tax, negatively impacted net income for the three-month period ended March 31, 2014, by approximately $9.4 million, but had no effect on cash flow.
In Greater China, second quarter revenue declined 12 percent to $229.9 million, compared to $261.2 million in the prior-year period. The region's results were negatively impacted 1 percent by foreign currency fluctuations.
Second quarter revenue in North Asia increased 1 percent to $196.0 million, compared to $194.8 million for the same period in 2013. The region's results were positively impacted 4 percent by foreign currency fluctuations.
Revenue in the Americas improved 8 percent to $89.9 million, compared to $83.4 million in the prior-year period. The region's results were negatively impacted 11 percent by foreign currency fluctuations.
Revenue in South Asia/Pacific was $81.7 million, a 5 percent decline compared to the prior year. The region's results were negatively impacted 7 percent by foreign currency fluctuations.
Revenue in the EMEA region was $52.6 million, a 14 percent improvement over the prior-year period. The region's results were negatively impacted 1 percent by foreign currency fluctuations.
The company's operating margin was 8.4 percent for the quarter, compared to 17.1 percent in the second quarter of 2013. Gross margin during the quarter was 76.0 percent, versus 83.4 percent in the prior-year period. Operating and gross margins were negatively impacted due to the China inventory charge.
Cash and current investments at the end of the quarter were $233.7 million. Dividend payments during the quarter were $20.4 million.
Nu Skin also announced its board of directors has declared a quarterly dividend of 35 cents per share, payable on Sept. 26, 2014, to stockholders of record on Sept. 12, 2014.
Primerica Inc.
Primerica Inc. (PRI—NYSE) announced financial results for the quarter ended June 30, 2014. Total revenue was $331.1 million in the second quarter of 2014 and net income was $49.3 million, or 89 cents per diluted share.
In the second quarter operating revenue increased by 10 percent to $330.3 million and net operating income increased by 18 percent to $48.7 million compared with $300.0 million and $41.2 million, respectively, in the year-ago quarter. Net operating income per diluted share increased 25 percent to 88 cents and ROAE was 16.3 percent on an operating basis in the second quarter of 2014.
In conjunction with the company's plan to repurchase $150 million in shares of Primerica common stock in 2014, it completed a redundant reserve financing transaction on July 31, 2014.
During the second quarter the company repurchased $21.9 million, or 480,902 shares of Primerica common stock for a total of $35.0 million, or 763,902 shares repurchased year-to-date.
As of June 30, 2014, investments and cash totaled $2.04 billion compared with $2.01 billion as of March 31, 2014. The company's invested asset portfolio had a net unrealized gain of $138.5 million (net of unrealized losses of $5.6 million) at June 30, 2014, up from $113.2 million at March 31, 2014.
The Board of Directors of Primerica Inc. also approved a quarterly dividend of 12 cents per share for the second quarter of 2014. The dividend was payable on Sept. 16, 2014, to stockholders of record as of Aug. 20, 2014.
Nature's Sunshine Products Inc.
Nature's Sunshine Products Inc. (NATR—NASDAQ) reported its financial results for the second quarter ended June 30, 2014, and declared a quarterly cash dividend of 10 cents per share.
For the second quarter of 2014, net sales revenue increased 0.7 percent to $94.3 million, compared to $93.7 million in the second quarter of 2013. In local currencies, net sales revenue increased by 1.1 percent.
Operating income decreased 25.6 percent to $5.8 million, compared to $7.8 million in the second quarter of 2013. Normalizing for one-time transaction expenses, operating income would have been $7.7 million, or 8.2 percent as a percent of net sales.
Adjusted EBITDA decreased 18.0 percent to $7.9 million, compared to $9.7 million in the second quarter of 2013. Normalizing for one-time transaction expenses, adjusted EBITDA would have been $9.8 million.
Net income was $3.2 million, or 20 cents per diluted common share, compared to $6.1 million, or 38 cents per diluted common share in the second quarter of 2013. Normalizing for one-time transaction expenses, net income would have been $4.4 million, or 27 cents per diluted share.
Cash and cash equivalents as of June 30, 2014, were $68.6 million, compared to $77.2 million as of Dec. 31, 2013. Shareholders' equity as of June 30, 2014, was $118.2 million, compared to $105.3 million as of Dec. 31, 2013.
In NSP Americas, Asia Pacific and Europe net sales revenue decreased 8.3 percent to $49.0 million, compared to $53.4 million in the second quarter of 2013. In local currencies, net sales revenue decreased by 5.4 percent compared to the second quarter of 2013.
In NSP Russia, Central and Eastern Europe net sales revenue decreased 14.3 percent to $12.8 million, compared to $15.0 million in the second quarter of 2013, primarily impacted by the escalation of political unrest in Ukraine and the weakness of its currencies.
Synergy WorldWide net sales revenue increased 28.5 percent to $32.5 million, compared to $25.3 million in the second quarter of 2013. In local currencies, net sales revenue increased by 23.9 percent compared to the second quarter of 2013, driven by increased sales in South Korea and Japan.
As previously reported, Nature's Sunshine Products and Shanghai Fosun Pharmaceutical (Group) Co., Ltd., a leading health care company in the People's Republic of China, signed definitive agreements with respect to the formation of a China joint venture.
The company's board of directors also approved a quarterly cash dividend of 10 cents per share, payable on Aug. 29, 2014, to shareholders of record as of the close of business on Aug. 18, 2014.
Medifast Inc.
Medifast Inc. (MED—NYSE) reported financial results for the second quarter ended June 30, 2014.
For the second quarter, Medifast net revenue decreased 17 percent to $80.9 million from net revenue of $97.1 million in the second quarter of 2013. Revenue in the direct sales channel, Take Shape For Life, decreased 12 percent to $54.1 million in the second quarter of 2014 compared to $61.4 million in the same period last year.
Operating income was $7.4 million, or 9.2 percent as a percent of net revenue, compared to $10.6 million or 11.0 percent as a percent of net revenue in the second quarter of 2013. Net income was $5.7 million, or 44 cents per diluted share compared to net income of $7.1 million, or 51 cents per diluted share for the second quarter of 2013.
Gross profit for the second quarter of 2014 decreased 17 percent to $60.4 million, compared to $72.9 million in the second quarter of 2013. The company's gross profit margin decreased 50 basis points to 74.6 percent in the second quarter versus 75.1 percent in the second quarter of 2013.
The company's balance sheet remains strong with stockholders' equity of $97.5 million and working capital of approximately $66.2 million as of June 30, 2014. Cash, cash equivalents and investment securities for the second quarter of 2014 increased $0.8 million to $68.6 million compared to $67.8 million at Dec. 31, 2013. The company repurchased 451,000 shares of common stock for $14.2 million during the second quarter as part of its current share repurchase authorization. The company remains free of interest bearing debt.
Mannatech Inc.
Mannatech Inc. (MTEX—NASDAQ) announced financial results for its second quarter ended June 30, 2014.
Second quarter net sales for 2014 were $46.3 million, an increase of 3.4 percent as compared to $44.8 million in the second quarter of 2013. Net sales increased 2.2 percent in constant dollars. Net loss was $0.7 million, or 26 cents per diluted share, for the second quarter 2014, as compared to net income of $0.8 million, or 30 cents per diluted share, for the second quarter 2013.
The company took charges to the inventory allowance of $0.8 million during the second quarter of 2014, which reduced gross profit margin to 79.0 percent as compared to 80.6 percent in the second quarter of 2013. The company generated operating cash flow of $7.4 million for the first six months of 2014 as compared to $5.3 million for the same period in 2013.
For the three months ended June 30, 2014, Asia/Pacific net sales increased by $1.5 million, or 7.5 percent, to $21.4 million, as compared to $19.9 million for the same period in 2013.
For the three months ended June 30, 2014, EMEA net sales increased by $0.4 million, or 11.1 percent, to $4.0 million, as compared to $3.6 million for the same period in 2013. In constant dollars, net sales would have increased 16.7 percent to $4.2 million.
North American net sales decreased by $0.4 million, or 1.9 percent, to $20.9 million, as compared to $21.3 million for the same period in 2013.
Crius Energy Trust
Crius Energy Trust (KWH-UN.TO—TORONTO) announced its financial results for the three month period ended June 30, 2014. All figures in U.S. dollars unless otherwise noted.
Revenue was $134.0 million, a 17.6 percent increase over $113.9 million. Gross margin was $33.7 million, representing 25.2 percent of revenue, compared to $27.6 million, representing 24.2 percent of revenue. Adjusted EBITDA was $13.2 million, representing 9.9 percent of revenue compared to $10.1 million, representing 8.9 percent of revenue.
Distributions paid in the quarter of $7.9 million, representing a payout ratio of 67.5 percent based on the adjusted EBITDA, compared to $9.5 million and 110.5 percent. This represents the company's strongest performance since its IPO in November 2012.
Total cash and availability was $46.1 million, consisting of $10.8 million of cash and cash equivalents and $35.3 million of credit facility availability. This compares to $32.1 million consisting of $18.5 million of cash and cash equivalents and $13.6 million of credit facility availability.
The Trust acquired a portfolio of approximately 38,000 electric and natural gas customers together with other assets from Superior Plus Energy Services for an aggregate purchase price of approximately $3.8 million.
The Trust also acquired a portfolio of approximately 16,000 electric customers from HOP Energy LLC for an aggregate purchase price of approximately $1.5 million.
Youngevity International Inc.
Youngevity International Inc. (YGYI—OTC.QX) reported financial results for the second quarter of 2014.
For the three months ended June 30, 2014, the company reported net revenue of $32.7 million, compared to $20.9 million for the same period in 2013, an increase of 56.6 percent. The increase in revenue is attributed primarily to the increase in product offerings as well as the number of distributors and customers. Also, $3.8 million in additional revenues were derived from the acquisition of several companies over the last year.
Gross profit for the second quarter ended June 30, 2014, increased to $18.9 million, compared to $12.7 million for the same period last year, an increase of 49.2 percent.
Net income for the three months ended June 30, 2014, decreased to $544,000 as compared to a net income of $662,000 for the same period last year. Adjusted EBITDA was $2.0 million for the three months ended June 30, 2014, compared to $1.7 million in the same period for the prior year.
Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.
October 01, 2014
MONEYBALL: Buying the Behaviors That Bring Success
by Mark Rawlins (with research and contributions from Mitch Stowell and Kenny Rawlins)
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
For more than 30 years my company and I have provided commissions processing software for the direct selling industry. Through all those years—working with hundreds of companies—I have struggled to find a simple way to describe our basic theory of commissions. It was somewhat shocking when the answer came to me in a movie theater:
"Your goal shouldn't be to buy players. Your goal should be to buy wins. And in order to buy wins, you need to buy runs." —economist and statistician Peter Brand in the movie Moneyball
A lot of things immediately fell into place; it was surprising to me that professional baseball had gone through the same challenges 15 years ago that the direct selling industry is going through today. I immediately purchased and read Michael Lewis' book Moneyball, and still recommend that all my clients read the book or watch the movie.
Moneyball tells the tale of the Oakland A's 2002 baseball season. Due to the limited revenue brought in by their market, the A's had only $41 million to spend on salaries that season. In order to compete with larger market teams such as the New York Yankees, who would spend over $125 million in payroll during the same period, the A's chose to actively acquire players who were undervalued by the league. This strategy gave the A's the building blocks for a 20-consecutive-game winning streak—the longest streak in American league history—and took them to the playoffs.
The key to the success of the A's was to ignore traditional methods of finding and valuing players that relied on "gut instinct," "star power," and conventionally used statistics such as stolen bases, runs batted in, and batting average. Instead, they focused on identifying statistics that better measured a player's ability to win games—demonstrating that things like on-base percentage were more valuable than homeruns. After identifying the specific skills required to win, the A's began to acquire players who were undervalued in the marketplace, rather than players with the "super star" qualities often sought by other teams.
The A's proved that statistical analytics can identify the skills and behaviors most directly responsible for success, and that the smart use of limited funds can level the playing field with more powerful competitors.
So how does this relate to the direct selling industry? I think it relates in two ways:
- Many companies feel that in order to be successful, they need to acquire distributors perceived as "rock stars"—people with known reputations for bringing in a lot of business—or keep their existing stars without looking at their actual contributions. These stars are expensive and may or may not be able to duplicate their past successes. Like ball players, these stars have careers that span a finite number of years. And while they may seem invaluable to one company, they may fail at another.
- Like a Major League Baseball team, a direct selling company has a limited amount of money to spend. In my experience, most successful companies spend 41–48 percent of revenue on commissions, and they continually struggle with the question of how much of this money should go to "rock stars" and how much should go to role players. (Revenue is calculated based on the method used by most network marketing companies, which is the wholesale price or the price paid by entry-level distributors.)
It's clear that, like A's Manager Billy Beane, we need to focus on rewarding behaviors instead of buying distributors in order to buy "wins."
Why This Matters Now: The Evolved Business World
In our industry, there has never been a time that required a more fundamental shift in thinking than right now. Why do we need to think differently in 2014 than we have for the past 30 or 40 years? It comes down to two words: Internet and economics.
The Internet: Free Agency and Inflated Valuation of Top Sales Leaders
The Internet has changed the way the world conducts business, and this is especially true of direct sales. The rise of e-commerce has been a boon to the industry—people are now accustomed to ordering all kinds of products online and having those products shipped to them. A more subtle consequence of the Internet is that it has turned distributors into what are essentially free agents. Companies are now able to identify the leaders, or dream builders, within the industry and regularly recruit them, just as a sports team would recruit players. Dream builders themselves can use Google to learn about the products and compensation structures of other companies—and how much leaders in other companies earn. More and more, they are willing to switch teams when they see a more lucrative opportunity.
This competition for dream builders has inflated the earnings expectations of industry-best sales leaders, forcing companies to walk a fine line: They must compensate their dream builders enough to keep them, but not so much that they can't compensate sales people and emerging leaders. After all, these "role players" can also use the Internet to better understand their own value—so it is important to remember that sales people are also "free agents" and can leave for better opportunities.
Economics: The 2008 Economic Reset
The bursting of the dot-com bubble in 2000 started to dampen expectations created by the booming 1990s, but the economic reset of 2008 seemed to firmly establish a shift in what Americans thought was possible and attainable in the future.
People living in this country have always found ways to make money, whether through manufacturing, technology or investments, but during the booming 1990s, that became an expectation—along with the expectation that it wouldn't be particularly difficult. I remember a conversation with a vice president of sales back in the late '90s. He told me about a promising sales person who was a package delivery driver. When he approached the driver about "going full-time" for his company, he was shocked by the response. The driver told him that he was confident his company's 401(k) would allow him to retire with over $1 million—so he wasn't interested. This raised the question: "How can you attract people when truck drivers feel they will become millionaires through traditional methods?" This type of pressure drove many companies to drastically increase top leaders' compensation at the expense of the role players. And at the time, it appeared to work; people didn't worry about making a few hundred dollars a month—they thought they had the opportunity to get rich!
The dual shocks of the bursting of the dot-com bubble and the collapse of the housing bubble have caused the vast majority of Americans to reset their expectations. Belts have been tightened, and people seem to realize they have to make money the old-fashioned way. As a result, successful direct selling companies now focus more on a balanced approach to compensation between the top leaders and the sales people.
As I talk to other industry professionals, everyone seems to intuitively understand that the industry fundamentally changed in 2008. We're living in a new world that requires new ways of competing. One positive impact of the change is that there are now more people seeking ways to make supplemental/non-traditional income—the very thing that our industry has always been good at providing! So, how does a company go about adjusting to this new reality?
Getting the Highest Return on Your Investment
Going back to my "aha" moment from Moneyball, the goal is not to buy players; the goal is to buy the behaviors that create success. But what are those behaviors, and what are the metrics you can use to measure them? One thing that helped baseball was the availability of sabermetrics, a methodology created by dedicated individuals who had studied baseball and created a precise set of metrics that could be used to identify how specific activities contribute to creating wins.
We do not have the same type of universal statistical information for direct selling; each company has to identify the behaviors that create their success and establish metrics to track them. Let's look at a simple example of how to do this.
One thing we know from experience is that people who buy from your company break down into four basic categories. (Graph 1, below, shows the sales people category broken into two groups—regular and hyper-recruiter.)
Graph 1
- 60–70 percent are customers who sign up in order to buy the product. They will not enroll anyone else, and their continued ordering depends on satisfaction with the product.
- 20–30 percent are social enrollers who like the product so much that they talk about it to friends and relatives—some of whom will also sign up.
- Approximately 10 percent are sales people.
- Significantly less than 1 percent are sales leaders and dream builders.
Within the context of these percentages, let's visit two behaviors and look at some simple, concrete metrics you can use to measure how effective your compensation plan is at rewarding those behaviors.
In Graph 1, notice that although 10 percent of your distributors are sales people, only about 20 percent of those sales people are what we call "hyper-recruiters." On average, these hyper-recruiters account for only 2 percent of a company's distributors, yet they recruit up to 40 percent of the people who join that company. So imagine what could happen if you could bump that number up to 3 percent.
If we define a hyper-recruiter as a sales person who recruits 10 or more people, we can use a simple x-y graph to look for a correlation between earnings and organizational volume (OV). By color coding people who exhibit this behavior versus those who don't, we can see whether a compensation plan is rewarding the behavior of hyper-recruiting. Graph 2 compares two groups: regular sales people and hyper-recruiters.
Graph 2
The graph shows a strong correlation between earnings and hyper-recruiting, showing that the compensation plan effectively rewards this behavior.
Non-high-leg volume
Another key behavior to incentivize is non-high-leg volume, that is, the percentage of OV from all legs of a distributor's down line except the largest one.
While OV tells you how much business a given distributor built, non-high-leg-volume tells you the ability of that person to replicate success. If a high percentage of OV comes from only one leg, it means that the distributor recruited a good person who built the business. But if the distributor has four successful legs, it shows that he or she understands how to be successful and actively build a business.
Graph 3
Again, it's easy to create and use simple x-y graphs (See Graph 3) to find the correlation between earnings and organizational volume—color coded for non-high-leg volume—allowing you to see the effectiveness of your compensation at rewarding this behavior.
As with baseball statistics, some distributor behaviors may seem, on the surface, to be essentially the same thing. If we look at organizational volume (OV) as being analogous to batting average, non-high-leg volume would be like on-base percentage. While there are similarities, the two behaviors can produce remarkably different results.
Moneyball is about using metrics to identify and buy the specific skills and behaviors required to win. Because even simple metrics like those shown in these graphs can make a real difference in revenue, it's surprising how few companies take advantage of statistical analysis to make sure they're rewarding the behaviors that will create their success.
Unlike baseball, each company will have a unique set of behaviors/metrics that matter only to them. This prized intellectual property can be assembled over time, and should include:
- The behaviors that are important to your company's success
- The metrics you use to measure those behaviors
- The metrics you use to measure the effectiveness of your compensation plan at buying those behaviors
Remember, we're not trying to buy perceived "super stars"—we're trying to buy actual, measurable behaviors. And at the end of the day, distributors need to see how their efforts at providing those behaviors will translate to increased earnings.
Mark Rawlins is Founder and CEO of InfoTrax Systems and author of the recently published book, From Commission Plan to Compensation Strategy: Success for Today's MLM Enterprise. Mitch Stowell is Vice President of Commissions Consulting, and Kenny Rawlins is Director of Commissions Operations, both of InfoTrax Systems.
October 01, 2014
'All In' for the Third Time: ViSalus Co-Founder Blake Mallen Talks
by DSN Staff
Click here to order the October 2014 issue in which this article appeared or click here to download it to your mobile device.
On Sept. 2, Greenwich, Connecticut-based Blyth Inc. announced that the company had reached an agreement to sell the majority of its ViSalus subsidiary to the founders and certain other preferred stockholders of ViSalus. They completed the transaction, which involved exchanging shares of redeemable convertible preferred stock of ViSalus for shares of ViSalus common stock, on Sept. 4. Blyth now owns approximately 10 percent of ViSalus. DSN sat down with Co-Founder and Chief Marketing Officer of ViSalus Blake A. Mallen to discuss the deal. Here's what he had to say.
DSN: Start at the beginning for us. This is quite a transaction. How did it all come about?
BAM: Yes, it's obviously a big move. We think the ViSalus story is made up of three big "All In" moments. In the beginning, it was definitely kind of an "All In" spirit that gave rise to the company back in 2005. Nick (Sarnicola), Ryan (Blair) and I took all the money we had back then and acquired the assets of a failing company and birthed the idea of ViSalus and our mission. We had very humble beginnings—about 18 months or so without a single paycheck.
We had developed a great relationship with the Goergen family and Blyth when Nick, Ryan and I were still young executives in our mid-20s. By 2008, we felt that joining Blyth was the best move for ViSalus in order to provide a lot of the infrastructure and the operational expertise to help us accomplish what we wanted for the long term. So we created a partnership and a great relationship.
Shortly after we announced the deal with Blyth in 2008, the economy collapsed and Nick, Ryan and myself again took our last money that we had at the time to self-fund the company, and reinvent in 2009—our second "All In" moment. The irony is that this moment gave birth to the Body by Vi 90 Day Challenge, which is the brand that made us who we are today with the meteoric rise over the last few years.
Now we're in a rebuilding and expansion mode, and we wanted to go all in again, so we approached Blyth a couple of months ago with the idea to buy back all the remaining shares that Blyth owned, minus 10 percent. They saw our passion, and they know we're founders and ViSalus is our baby, and running it is something we want to do for life.
This last transaction is our third "All In" moment. Most of the transaction included money owed to us in the original agreement with Blyth. Basically, we walked away from it and rolled it back into the company. We took back, between us and our field, 90 percent of ViSalus. We're all excited to have full ownership back and a new beginning and a new birth.
DSN: So when you look at that new beginning and new birth, how does this ownership change better position ViSalus?
BAM: Focus is probably the best word to use, and regaining the ability to put our resources 100 percent into things we believe will bring value to our customer and the promoter. Right now our focus is to be aggressively expanding all over Europe, and of course creating a new energy wave all over North America, and we really want all of our energy going into what adds value.
The initial deal with Blyth created a finish line; and we just realized, over time, that we don't want a finish line. That's a big point to make. We've accomplished what a lot of entrepreneurs would hope to accomplish, yet we're pushing it all back in to go out there and do it again because it's what we're passionate about.
It's really a story of belief and commitment… Belief in what we are capable of, belief in our partnership, belief in our business, belief in our leadership and our promoters, and belief in that what we've done is only a small percentage of what we're going to do, and we want to do it for the rest of our lives. So, that's more what this move means to me on a more personal level.
I would expect to see not only a renewed energy or renewed enthusiasm between myself, Nick and Ryan, but also that radiates throughout the whole ViSalus community, just based on the feedback we've already gotten.
DSN: You mentioned international expansion, and we've seen ViSalus add three new markets this year and you are looking at adding a couple more in 2015. Does your international expansion strategy accelerate at this point?
BAM: Our expansion strategy was already well under way, and I don't know that this has any effect on our plans. U.K. was our first market outside North America, and we waited a year in that before we opened Germany, Austria, and Ireland this year and expanded into different languages. We're building our operational muscle, and now we can go out there and pick up the pace without diverting focus.
DSN: You have the Vitality event next week (Sept. 12-13); do you have big plans to formally announce this news?
BAM: Yes, we're going to be really telling the story. People look at the company and they bucket it as a company or a product or a comp plan, and they don't realize that a company is really a community of people. So we're going to go on stage Friday night and tell the full story of the "All In" moments and why we're doing what we're doing.
Bob Goergen is coming out, which will be exciting. Blyth maintains 10 percent and Bob is the Chairman, so we plan to do something special for him as a thank you for everything he's provided to us, in terms of mentorship and grooming us as executives and teaching us how to build a global business.
Before we were in the relationship with Blyth, we were a scrappy startup. Now we have a world-class finance team, everything on operations and reporting, world-class legal, tax best practices—a lot of the true back-end and operational functions. Blyth helped us build a solid backbone behind the scenes for us to build upon.
DSN: You all went to the Blyth team just a few months ago, and this transaction came together that quickly. That seems remarkable. Were you expecting it to move that smoothly and quickly?
BAM: I don't think we had an expectation on the time frame; it was just a win/win/win situation, so it moved pretty quickly. For Blyth, it's a win when it comes to their shareholders—obviously the stock has jumped quite a bit in the last couple of days. It's a win for ViSalus in terms of us being allowed to have our entrepreneurial freedom and ownership and control over our destiny. I think it's also a big win for all of our promoters who are now able to rebuild and move forward in that new spirit.
DSN: Talk a little bit about the health and wellness sector—what trends are you watching, apart from this transaction?
BAM: Our strategy has always been to be the largest healthy fast food provider in the world. Fast food has proliferated all over the world for obvious reasons—it's simple, it's fast, it's super convenient, it tastes good and it's cheap! And people need to eat, right? Our goal is to approach the market to provide the consumer with very similar benefits—simple, fast, convenient, good taste, affordability—but to obviously do it in a nutritious, healthy way.
We're also seeing a big, big move when it comes to nutritious, on-the-go, all-natural snacking. That's our next move when it comes to our product strategy. We already have two meals, with our shake and our Crunch—but now we'll be moving into what people are doing in between meals.
DSN: Is there anything else you'd like to share with our readers?
BAM: The core of the Vi foundation has always been the entrepreneurial spirit. You know, we've always had a bit of a disruptive approach when it comes to innovation, whether it be technology or our culture. That entrepreneurial spirit, or swagger, was what made us who we were. And I think somehow over the course of the last couple of years as we've become a bigger company, it's been harder to maintain that culture.
So, our main focus is to bring that back—the entrepreneurial spirit and that kind of disruptive attitude and infuse that back into the culture both inside the walls and outside the walls.
October 01, 2014
Stock Watch, October 2014
October 01, 2014
Executive Connection with Lynae Parrott and Gail Gioffredi, Managing Directors, Gold Canyon
In this month's Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Lynae Parrott and Gail Gioffredi, Managing Directors of Gold Canyon, about leadership, dreaming big and empowering others.
DSN: What is the one thing you enjoy most about being the Managing Directors of Gold Canyon?
Parrott: I most enjoy the opportunity to drive change within the organization in an effort to create positive results for our Consultants and co-workers.
Gioffredi: I most enjoy making an impact and a difference in people's lives… really empowering others to create their own destiny.
DSN: What has been your proudest accomplishment?
Parrott: Above all, I am most proud of my family. My husband and I have been married for a blissful 21 years, and we've raised three children who have grown into upstanding young citizens.
Gioffredi: I am most proud of the recent enhancements of our Career Plan. Within the first month, we helped 79 of our Consultants become new Leaders, earn more money and live happier and more fulfilling lives.
DSN: What do you tell Gold Canyon Fragrance Consultants to lead and inspire them?
Parrott: You've heard the adage, "Actions speak louder than words." I don't think it is what I say that has the biggest impact on our Consultants as much as what I consistently exemplify. I believe my passion for this company, our product and this sales channel, combined with my drive to take action, inspire success.
Gioffredi: Dream your biggest dreams, believe in yourself and your ability to achieve your dreams, and commit to making them happen.
DSN: What is your vision for Gold Canyon?
Parrott: I envision one day Gold Canyon being a household name and a brand that evokes happiness.
Gioffredi: I visualize Gold Canyon becoming a household name.
|Lynae Parrott and Gail Gioffredi
DSN: If you could hit "replay" on any part of your own Gold Canyon journey, either to enjoy the moment or to do something different, what would it be?
Parrott: This is a really hard question for me because I try to live my life in the moment—to relish each experience for the good or bad, learn from each experience and to have no regrets. I suppose I would enjoy another dose of that overwhelming mix of emotions I felt at our recent Palooza. There was a moment backstage when I witnessed the unfolding of all the blood, sweat and tears of our co-workers and the pride, joy and enthusiasm of our Consultants. It was a very rewarding moment.
Gioffredi: I would enjoy the fun and spending more time with our Consultants at our annual convention, Palooza. Every year it goes by too fast!
DSN: What project or accomplishment do you consider to be the most significant in your career?
Parrott: I've been with Gold Canyon since its inception 17 years ago. I started in the field as a seller and later joined the home office where I've been a key contributor in several positions. Undoubtedly, being promoted to Managing Director last year has been the most significant accomplishment in my career.
Gioffredi: By age 27, I had realized my passion in helping others achieve their dreams, including helping over 75 women become stay-at-home moms or first-time home owners.
DSN: Is there one basic principle which governs your leadership at Gold Canyon?
Parrott: Yes, it is two-fold. I aim to treat others the way I want to be treated and to not ask of others what I personally wouldn't be willing to do myself.
Gioffredi: Yes, to continually improve, but have fun while doing it.
DSN: What's one piece of advice that you've found especially useful?
Parrott: As a young leader I was influenced by Stephen Covey's book, The 7 Habits of Highly Effective People. The habit, or piece of advice, that resonated most then, and that I've regularly kept at the forefront of my mind, is to "Begin with the end in mind." Interestingly, I've found another habit surfacing as I've embarked on this new position, which has been helpful. "Seek first to understand, then to be understood." They've both been useful pieces of advice for me.
Gioffredi: Change is inevitable—embrace it!
DSN: What do you like to do when you just want to relax?
Parrott: This is a great question! I love to take long, hot baths to relax my muscles and let my mind unwind. This is also a time I use to recharge and get energized. I love my baths!
Gioffredi: I like to travel with my family, read inspirational books, and a little shopping never hurts!
DSN: What's on your bucket list?
Parrott: I'm experiencing my bucket list wish right now! I have always dreamed of leading a company that would have a direct positive impact on women's lives. This company and my position today are enabling me to empower women and men to create their own destiny!
Gioffredi: I have had the opportunity to experience so many places and things, but with my love of travel, two places I have not had the opportunity to visit are the pyramids of Egypt and Dubai.
October 01, 2014
Direct Selling Entrepreneurship Goes to Community College
by Donna Duffey
An Academic's Journey Into The Direct Selling Industry
Student entrepreneurs at the community college level come with a variety of pathways in mind to reach their entrepreneurial dreams. Some are focused on innovation and plan to create a new product or service. Some plan to purchase an existing business and apply their entrepreneurial skills to make that business grow. Some are members of an existing family business and want that business to continue to be sustainable across generations. Others are planning to reach their entrepreneurial dream by owning and operating a franchise. Some choose to be intrapreneurs in existing businesses. We believe a missing link has been a curriculum for students seeking their niche as independent contractors in the direct selling industry.
As the academic chair for Johnson County Community College's (JCCC) Entrepreneurship program, this realization—or the discovery of a "gap" in our program offerings—led me to start a conversation with the National Association of Community College Entrepreneurship (NACCE) and the Direct Selling Education Foundation (DSEF) during the summer of 2011 in Washington, D.C. The brainstorming session brought together both community college leaders of entrepreneurship initiatives and direct selling company executives from across the country.
The "working" objective of this brainstorming meeting between these two previously disconnected groups was to determine if educational material addressing this dynamic industry sector could be developed and delivered effectively through America's community colleges. Our collective answer after two days of discussion yielded a unanimous "Yes, we can!"
So why should these two seemingly unconnected groups both care about the gap in entrepreneurship education in community colleges? While revenue and employment numbers are significant and growing, the direct selling industry reports turnover of direct selling entrepreneurs as a significant industry challenge. As a result, this turnover creates challenges for the maintenance and enhancement of quality customer relationships, and costs direct selling companies time and resources that can impact profit.
While entry into direct selling entrepreneurship is relatively simple and, in most cases, at minimal cost, the entrepreneur may have a great deal of passion for the product or service but not a full understanding of the business model. They may have little hands-on experience and clarity that an independent contractor actually owns their own entrepreneurial venture. As with any business enterprise, some of these independent contractors need to develop and sharpen selling skills, marketing skills, financial skills, organizational management skills, and customer relationship management skills—above and beyond the terrific training and support successful companies provide. One way to accomplish closing the gap is for colleges and the direct selling industry to develop and deliver high-quality educational programming at community colleges. The Direct Selling Entrepreneur Program (DSEP) was developed in a partnership between DSEF and NACCE and is now available nationally to all community colleges. It not only benefits students seeking to grow their direct selling businesses, but also helps students thinking about joining this segment of the workforce, and increases student knowledge.
Created to address direct sellers' specific needs, the curriculum increases the options for entrepreneurship education in communities across the United States.
Developed for community colleges, the curriculum is divided into 10 modules and introduces the fundamental components of small-business management, including marketing, finance, legal issues, planning and ethics. In addition, course participants gain deep understanding of the wide variety of direct selling business strategies, including individual sales efforts, party plan and network marketing scenarios, online sales, and salesforce recruitment and training. (For more information, contact Nancy Laichas, Chief Marketing & Development Officer, Direct Selling Education Foundation, at firstname.lastname@example.com.)
At JCCC, I have been able to utilize this DSEP curriculum to add one three-credit-hour course, called the Fundamentals of Direct Sales, and pair this new course with several other existing courses to create an academic credential, the Direct Sales Certificate. The course and certificate met all necessary approvals, both within the institution and at the state level, to be accredited and qualifies for financial aid just like our Entrepreneurship degree and other certificates. In addition to the Fundamentals of Direct Sales course, the 15-credit-hour Direct Sales Certificate also includes Professional Selling, Business Professional Skills, e-Marketing, and Consumer Behavior.
Our inaugural offering of Fundamentals of Direct Sales was during the spring 2013 semester. Several students were already direct sellers—one a homemaker and direct seller, one a retiree and direct seller, and one a full-time student and direct seller. But, the largest group was of students considering entering the direct sales field. One student was seeking to learn how this industry sector operates and wanted to apply this distribution strategy to his work-in-progress on his business plan for his entrepreneurial venture. Student satisfaction was high, with comments as wide-ranging as "Wow, I had no idea how much I didn't know about what I do" to "Wow, this really is an interesting business model." Minds expanded, learning took place and new opportunities were created!
Johnson County Community College (JCCC) was founded in 1969 and is located in the southwestern quadrant of the greater Kansas City metropolitan area. The college serves approximately 20,000 credit students with programming for students desiring to transfer to baccalaureate institutions and students seeking an associate degree or certificate in 50-plus career fields. JCCC also delivers continuing education programming.
JCCC's Entrepreneurship credit program began in 1992. Today the program offers 12 courses, an Associate of Applied Science (AAS) degree and five certificate programs. The department has created numerous additions, deletions and modifications to its Entrepreneurship offerings over the past 22 years. Working with the faculty team and the program advisory committee, and gathering information from graduates, it strives to keep the program current and topical, therefore consistently striving to create both learning content and a learning environment that yields successful and sustainable entrepreneurs.
JCCC's Entrepreneurship credit program began in 1992. Today the program offers 12 courses, an Associate of Applied Science (AAS) degree and five certificate programs. The department has created numerous additions, deletions and modifications to its Entrepreneurship offerings over the past 22 years. Working with the faculty team and the program advisory committee, and gathering information from graduates, it strives to keep the program current and topical, therefore consistently striving to create both learning content and a learning environment that yields successful and sustainable entrepreneurs.
Johnson County Community College has chosen the credit-based or academic pathway and recognizes that others are doing the same. We have also worked with numerous other community college leaders planning to launch the DSEP curriculum in their non-credit, continuing education, or workforce development divisions. Each community college is different and will identify where they can best serve their communities and positively impact their economies.
Now, at this critical time where a few colleges like JCCC have shown it can be done, I encourage more innovative and collaborative thought-yielding strategic partnerships between community colleges, direct selling companies and the Direct Selling Education Foundation to explore where direct selling entrepreneurship education can go in the future. It doesn't matter who initiates the conversation, so community college leaders and direct selling company leaders need to get to know each other and let the conversations begin. The possibilities are unlimited. So, ask yourself, What can I do today?
America's Community Colleges: What You Need to Know
American Association of Community Colleges' 2014 Fact Sheet
American Association of Community Colleges' 2014 Fact Sheet
The Direct Selling Industry: What America's Community Colleges Need to Know
Direct Selling Association
Direct Selling Association
Donna Duffey is Professor and Department Chair of the Entrepreneurship Associate of Applied Science degree program and its related certificate programs at Johnson County Community College, Kansas City, Kansas. She was the winner of the 2009 National Association of Community College Entrepreneurship (NACCE) Faculty of the Year Award.
September 30, 2014
Avon's DSA Withdrawal Raises Questions
Avon Products Inc. surprised much of the direct selling community with its public withdrawal from the U.S. Direct Selling Association earlier this month.
Avon resigned its membership Sept. 9 with a letter to the DSA executive committee. It was a significant move. Avon is, after all, the world's second-largest direct selling company (behind Amway) and an iconic U.S. brand. But the real news came three days later, when Avon posted a letter signed by Senior Vice President Corporate Relations and Chief Communications Officer Cheryl Heinonen and addressed to other U.S. direct selling companies on the media center of the Avon website attempting to explain the rationale behind its withdrawal.
"This decision came after careful consideration and more than a year of thoughtful discussion," Heinonen's letter says. "This decision was driven by two key issues: We believe the association's agenda in the U.S. is overly focused on the issues of a few specific brands rather than industry-wide challenges. We believe that the U.S. DSA Code of Ethics requires updating to better reflect the current state of the industry in the U.S."
Despite these statements, the real motivation behind Avon's resignation remains unclear. Heinonen's letter does not provide any specific examples of the issues on which Avon feels DSA is overly focused nor the Code of Ethics updates Avon seeks. On the second point, Heinonen's letter emphasizes that Avon is not exiting the World Federation of Direct Selling Associations and will continue to abide by the WFDSA Code of Ethics. This distinction is a murky one, because the U.S. DSA Code of Ethics has tighter, more specific controls than the WFDSA Code of Ethics, which was constructed to serve as a model for local market DSA codes. In fact, the WFDSA code calls for companies to comply with the codes of the DSAs in the countries in which they are headquartered.
It also seems clear that Avon had not been actively advocating for change within the association prior to its withdrawal. U.S. DSA Chairman Truman Hunt, President and CEO of Nu Skin Enterprises, has said Heinonen had not raised the concerns she listed in her letter with him, nor with any other members of the executive committee nor with DSA management. In a letter to DSA supplier members, including Direct Selling News, DSA President Joe Mariano said: "The general observations about the Code which Avon described in connection with its decision have not been raised before now; nonetheless, Chairman Truman Hunt has requested further details from the company and specific suggestions that might be considered by the Ethics Committee, and if appropriate, by the Board."
We can only guess as to why Avon really resigned from the largest and most valuable organization that works to support the direct selling model in Washington. But by doing so in such an inflammatory way, the company has succeeded in, at least momentarily, keeping the focus on external factors as detractors look for pockets of weakness or dissent within the direct selling community. And that is a disservice to everyone involved, including the thousands of Avon representatives the company says it wants to protect.
Avon has challenges of its own. Shares in the company (NYSE:AVP) have fallen into the $13 range as it has posted net losses for the past two years and a turnaround effort has failed to reverse declining domestic sales. CFO Kimberly Ross resigned earlier in the month to take on the CFO role at the oil-field services giant Baker Hughes Inc. This spring, Avon agreed to pay $135 million to settle U.S. probes into corruption charges related to its business in China.
In our view, it is unfortunate that Avon decided to walk away from its seat at the industry table. But we remain confident that U.S. DSA will continue to work to foster the best interests of the companies and independent contractors from all walks of the direct selling life.
September 30, 2014
A Voice for Women: Tupperware's Rick and Susan Goings
Photo above: The Sewall-Belmont House sits opposite the U.S. Capitol in Washington, D.C. (Photo: Library of Congress)
The Sewall-Belmont House & Museum in Washington, D.C., recently honored Tupperware Brands CEO Rick Goings and his wife, Susan, for their ongoing efforts on behalf of women worldwide.
The couple accepted the second annual Voice for Women Award during the museum's Alice Award Luncheon, which pays homage to National Woman's Party Founder Alice Paul. The historic party, a leader in the campaign for equal rights and women's suffrage, owns and maintains the Sewall-Belmont House & Museum on Capitol Hill.
Along with the Goings, the museum lauded Democratic Sen. Barbara Mikulski of Maryland with its Alice Award. Both awards recognize individuals who have broken down barriers and advanced women's progress toward equality.
Tupperware empowers women through its business opportunity and its global Chain of Confidence initiative, which Susan Goings represents as Global Ambassador. The Chain of Confidence is Tupperware's commitment to equip women with the opportunity and support they need to thrive economically and socially.
The kitchenware company shares the vision of U.N. Women, which recently welcomed Tupperware's CEO as a founding member of its Private Sector Leadership Advisory Council. After receiving the Voice for Women Award, Rick Goings wrote a Huffington Post piece calling for businesses and governments to unlock their economic potential by training, educating and hiring women.
September 29, 2014
'Nashville' Costume Designer Curates Exclusive Looks for Stella & Dot
Stella & Dot is partnering with veteran costume designer Susie DeSanto to bring its stylists fresh looks for fall. DeSanto's designs currently appear on Connie Britton, Hayden Panetierre and other stars of the hit ABC country music drama Nashville. Now, DeSanto has launched her first-ever brand collaboration with four curated collections for Stella & Dot.
The fashion accessories brand is offering DeSanto's picks in a range of ready-to-wear looks. The themed collections include Rocker Chic, Nashville Du Jour, Modern Classic and Star Power. To support its stylists, Stella & Dot has also incorporated online video with styling tips, a social media campaign and a trunk show incentive.
"Jewelry and accessories have the unique ability to transform an entire look. I'm thrilled to partner with Stella & Dot to bring this concept to life and offer a fresh, creative eye to their existing styles," DeSanto shared in a statement. "Accessorizing can refresh an entire wardrobe making it wearable and current as well as a statement of individuality."
DeSanto's work has garnered three Costume Designers Guild nominations, for the film White Oleander and the first two seasons of Nashville. Her past projects include Miss Congeniality with Sandra Bullock, 13 Going on 30 with Jennifer Garner and One Fine Day with George Clooney.
September 25, 2014
Amway Contribution Spurs Ada Redevelopment Project
Photo above: Amway World Headquarters in Ada, Michigan.
Global direct selling leader Amway is taking part in a community-led effort to redevelop its hometown of Ada, Michigan. Amway will contribute $3.5 million in support of a plan to bring $13 million in improvements to the rural township, located on the eastern outskirts of Grand Rapids. The redesign centers on the quaint Ada Village area across the street from Amway World Headquarters.
"The community has long held hopes of further developing the small village and, since 2006, has led community planning efforts to help shape what it could become in the future," Bill Payne, Amway Chief of Staff, told DSN. "We're pleased to extend our support, from initially assembling land under one ownership group to speed advancement of the vision, to now offering financial support to cover a portion of public infrastructure improvement costs."
Amway houses more than 4,000 employees at its world headquarters, which spans one mile from east to west and comprises 80 buildings and 3.5 million square feet of office and manufacturing space.
The proposed Ada Village redesign will make the area friendlier to bikes and pedestrians, improve traffic flow, and develop community spaces like a farmers' market and an outdoor performance area on the Village's riverfront.
"Amway is a good partner that has been a part of our community for more than 50 years," said Ada Township Supervisor George Haga. "We are quite excited about this private-public partnership to redevelop Ada Village, and we look forward to tentatively starting the first project next spring."
At the same time, said Payne, Amway is leading a separate community fundraising effort called Envision Ada. The initiative will contribute another $3 million to the planned improvements, with the final $6.5 million coming from the township.
"We look forward to great progress in the coming months and are excited by the efforts of the township to make the community's vision a reality," Payne shared.
September 24, 2014
Viridian Takes '7 Continents in 7 Years' Initiative to Nicaragua
During Viridian Energy's fifth annual PowerUP! Convention last week, the company revealed the fifth location of its 7 Continents in 7 Years initiative. This year Stamford, Connecticut-based Viridian will focus its global sustainability efforts on the Central American nation of Nicaragua. In the rural, off-the-grid village of Potrero Platanal, the company will power 48 homes that previously had no prospects of energy supply.
Viridian's energy offerings are up to 100 percent renewable, and the company reports that its residential and commercial customers have avoided more than 4.5 billion pounds of carbon emissions. Through 7 Continents in 7 Years, Viridian staff and top-performing Independent Associates take that spirit of sustainability to a different continent each year.
The initiative began with reforestation efforts in the Amazon, where the company has returned annually and planted more than 1,700 trees through its Amazon Preservation Project. In Indonesia, Viridian brought solar power and lighting to one remote village and a clean water pipeline to another. The initiative has also impacted key communities in Ghana and Fiji.
September 23, 2014
Morinda Generates TruAge Buzz at Emmys Style Lounge
Photo above: Celebrities learn about Morinda's anti-aging products at the Kari Feinstein Style Lounge.
Age is a perennial topic in Hollywood, where Morinda recently brought its TruAge initiative to the Kari Feinstein Style Lounge presented by Paragon. The company's anti-aging products created a buzz among celebrities and members of the media at the annual pre-Emmys event.
Stars from hit shows like Modern Family, Mad Men, Glee, Veep, Orange is the New Black and The Bachelor stopped by to try Morinda's AGE Therapy Gel and TruAge Scanner. The patented scanning device, validated in over 100 published studies, non-invasively measures a person's AGE levels. AGEs, or advanced glycation end-products, are damaging compounds that form in the body and trigger health issues and signs of aging.
"There was a lot of excitement around our TruAge area at the event because our product was the only anti-aging skincare product in this year's lineup," says Morinda Product Line Manager, Kira Davis, who took part in the two-day event. "People were so enthusiastic about the TruAge Scanner and discovering their TruAge that other celebrities and Style Lounge participants came over to our area to see what the excitement was about."
After learning the TruAge of their bodies, participants had the opportunity to sample Morinda's AGE Therapy Gel. The gel is one of several products formulated by Morinda to reduce external signs of glycation.
"There was a really positive response when the celebrities and media members tried the AGE Therapy Gel on their own skin," says Davis. "They loved the smooth, light feel of the gel and they were also drawn to the fact that it fights aging with natural ingredients."
Morinda's participation in the Emmys Style Lounge, along with featured product roundups on Los Angeles television affiliates, has also given its salespeople something to talk about. The company reports positive feedback on the event from distributors sharing Morinda's TruAge message with consumers.
September 23, 2014
Vemma Ranked Arizona's Fastest-Growing Company
Photo above: Vemma spotlights the Platinum Club during its annual convention in Las Vegas.
Due south of Utah, where Zija was recently named the fastest-growing company in the state, another direct selling company is leading the field in growth. Arizona Corporate Excellence (ACE) has ranked Vemma Nutrition Co. the top business in Arizona on its annual ACE Fastest-Growing Cos. list. Scottsdale-based MT Builders ranked No. 2, followed by Phoenix transportation and logistics company GlobalTranz Enterprises.
ACE researches and compiles its list based upon a proprietary formula of accounting firm CliftonLarsonAllen LLP. The formula measures revenue growth—in both actual dollars and percentage—over a two-year period. Vemma jumped from No. 10 in last year's ranking to claim the top spot. According to Vemma's DSN Global 100 filings, the nutrition company increased revenue by 30 percent in 2012 and by 89 percent, with net sales of $221 million, in 2013.
"Our growth has come from a couple of different areas. Our international markets have done really well for us," Vemma Founder and CEO BK Boreyko told the Phoenix Business Journal. "Our European markets finished at $50 million last year. This year, they're tracking to do $100 million. New products have also done well, opening a broader range of potential customers."
Vemma also collected accolades in the recent 12th Annual American Business Awards, commonly known as the Stevie Awards. From a field spanning public and private, for-profit and non-profit companies, Vemma received bronze awards in New Product or Service of the Year – Consumer Products, for Vemma Renew™, and in the Events App category, for Vemma All In.
September 19, 2014
ASEA Launches Mexico Market with 3-City Tour
Photo above: ASEA headquarters in Salt Lake City.
Health and wellness brand ASEA is celebrating the grand opening of its Mexico market with three events across the country. The tour kicked off in Mexicali on Thursday, and will include stops in Colima on Sept. 20 and La Paz on Sept. 22.
Since launching in 2009, ASEA has expanded into several EU countries, as well as Australia and New Zealand. The privately held company has developed a breakthrough technology that replicates Redox Signaling molecules in a sustainable form outside the body. ASEA is the only company to market the patented technology, which supports cellular healing and replenishment.
"What we bring to Mexico is a groundbreaking product category and a ground floor business opportunity for those interested in owning their own business," said ASEA CEO Charles Funke. "In the time since we opened this market, Mexico has become ASEA's fastest growing international market."
Funke will join ASEA Founders Verdis and Tyler Norton and President Jarom Webb to keynote the meetings, which aim to build the company's distributor base in Mexico. The tour will also feature presentations by Dr. Gary Samuelson, an expert on ASEA's flagship technology.
September 18, 2014
Nerium Doubles Office Space with New Headquarters
Nerium cultivates a familial culture at its corporate headquarters, and it looks like that family will be growing in the near future. The burgeoning skincare company, which incorporates Friday morning breakfasts for its employees, off-site recognition luncheons and complimentary chair massages at the close of each month, is moving to a new headquarters twice the size of its current space.
The home office will cover 75,912 square feet of a property adjacent to Nerium's Addison, Texas, headquarters. The company chose to remain in the area where it launched in 2011 from a 5,432-square-foot space.
"As an employee-friendly company, we wanted to stay within three miles of our current location; we were thrilled when we found our new state-of-the-art facility, which will allow us to focus on our field as we continue to grow," Chief Operating Officer Al Richey told DSN. "With its open floor plan, our new headquarters creates a collaborative environment that supports our 'loving, caring, sharing' motto."
Having achieved annual revenue of $219 million in just two years, Nerium is now gearing up for international expansion. The company will open for business in Mexico next month, looking to build upon record growth in the U.S. and Canada. In its three-year history Nerium has maintained a laser focus on developing products backed by science and proven results. Currently, the company's skincare line features just three products.
"Since inception we have aspired to create real products and real opportunities for our Brand Partners and our customers, and our focus remains the same as we grow," shared Co-CEO Jeff Dahl, who joined the company earlier this year with a strong background in international expansion. "We believe launching the Mexico market creates huge opportunities for all Brand Partners to expand their businesses and exposes new prospects to the Nerium experience."
September 17, 2014
Zija Ranked Fastest-Growing Company in Utah
Direct selling companies are a strong force in the Utah economy, and according to the September issue of Utah Business magazine they are also some of the fastest-growing companies in the state. Zija International leads the magazine's annual Fast 50, a ranking based upon revenue growth and revenue generation.
Zija employs more than 200 at its corporate headquarters in Lehi. Since its founding in 2005, the company has surpassed $140 million in annual sales. Zija products, which utilize superfoods derived from the Moringa plant, span the weight management, liquid nutritionals, energy and performance, and skincare categories.
"Since the beginning, we have had the goal of becoming a billion-dollar company. Once we decided that, our plans obviously extended beyond the next month, year or even decade," Rodney Larsen, Zija President and CEO, told Utah Business. "We have a vision of where we want to be, and we've worked hard and smart toward it from day one."
At No. 10 on this year's Fast 50 is Provo-based Vivint, one of the largest home automation companies in North America. Vivint markets smart home and business solutions with a focus on security and energy efficiency. Also headquarted in Provo, Nu Skin jumped from No. 23 last year to claim the No. 13 spot. The skincare brand reported a higher revenue increase—$977 million—in 2013 than any other direct selling company. USANA Health Sciences, based in Salt Lake City, also led the state in growth. The health and nutrition company increased net sales by 10.7 percent in 2013 to earn the No. 28 ranking.
September 16, 2014
Youngevity Makes Room for Growth with Headquarters Renovation
Photo above: Outside Youngevity's corporate headquarters in Chula Vista, California.
Youngevity is investing in future growth with $1.1 million in improvements to its Chula Vista, California, headquarters. Updates to the 59,000-square-foot facility include a revamped distribution center and a new state-of-the-art R&D lab.
The nutrition, lifestyle, and gourmet coffee company consulted with UPS on the design of its updated warehouse space. The renovation doubled storage and throughput capacity to accommodate Youngevity's rapid growth. Following 18.1 percent revenue growth in 2013, the company reported second-quarter sales up 56.6 percent to $32.7 million.
Along with warehouse space, Youngevity has expanded its customer service department and call center to double capacity. The headquarters features a remodeled lobby, complete with a new coffee and beverage bar. The company is also taking advantage of the City of San Diego's outdoor water conservation rebates with new water-efficient landscaping.
Youngevity's growth has stemmed in part from its ongoing acquisition of diverse direct selling brands, in what the company terms a "network cloud" model. In addition to a range of nutrition and lifestyle brands, Youngevity owns CLR Roasters, a gourmet coffee manufacturer marketed through the commercial, retail and direct sales channels. Youngevity also ventured into clothing and jewelry with the July launch of MK Collaborative, an e-boutique website featuring lines by celebrity fashion designer Marisa Kenson.
September 12, 2014
LifeVantage Tailors New Seminar to Millennial Entrepreneurs
Photo above: LifeVantage is hosting its young entrepreneurs at The Flamingo Hotel and Casino in Las Vegas.
LifeVantage is strategically targeting the next generation of entrepreneurs with a new event underway at The Flamingo Hotel and Casino in Las Vegas. The three-day Rules of Engagement seminar is all about training and developing young millennials, a steadily growing segment of the company's salesforce.
"Millennials represent a massive opportunity for immediate and long-term growth for our distributor family and LifeVantage as a company," said President and CEO Douglas C. Robinson. "We want to provide these young entrepreneurs with authentic and time-tested strategies to encourage success in their business lives for years to come."
The three-day event includes mentoring sessions by some of LifeVantage's top young entrepreneurs, but the agenda is not all business. Attendees can also experience a pool party and a dance party hosted at some of the city's hot spots.
LifeVantage released Q4 and full fiscal year results on Wednesday, and the healthy living company experienced a record fourth quarter. Revenue increased 8.8 percent to $56.0 million, with 12.3 growth in the Americas. For the full year, LifeVantage increased revenue 2.8 percent over the prior year to $214.0 million. Annual revenue was negatively impacted 5 percent by foreign currency fluctuations.
"As we expect revenue to grow in fiscal 2015, we also expect to improve margins and grow the bottom line. In fact, we project our earnings per share to increase by approximately 40 percent to 60 percent in fiscal 2015," Robinson told investors during the company's earnings call. "The transformation of this company over the past 12 months has been extremely exciting."
September 11, 2014
Herbalife to Invite Fresh Product Ideas at Innovation Event
Herbalife is bringing a nimble, responsive approach to product development with its upcoming North American Innovation Conference. The conference is a forum for businesses, entrepreneurs and nutrition industry visionaries to present product ideas to top Herbalife executives. The global nutrition company is scouting out novel ingredients and technologies to enhance or extend its existing product lines.
Slated for Oct. 5-6, the Innovation Conference leads up to nutrition industry expo SupplySide West. The expo is the largest gathering of its kind in the world, and this year's event will feature more than 1,700 ingredient suppliers and finished product manufacturers.
Herbalife is partnering with Nutrition Business Advisors and Nutrition Capital Network to present the North American Innovation Conference, a format launched about three years ago. The company hosts four to five conferences annually, each in a different region of the world. Applicants undergo screening by outside facilitator Nutrition Capital Network and the internal Herbalife team before presenting their ideas.
The company evaluates factors such as a product's global appeal and how many clinical studies it has undergone, according to Vice President of Worldwide Product Marketing, Dr. Luigi Gratton. Ultimately, though, the product has to pass muster with Herbalife's most important critic—the customer.
"They're the people who know the marketplace landscape really well—whether a product is too sweet, if Stevia is hot or not, what types of fibers work and so forth," Gratton explains.
Herbalife's solution has been to bring its own salespeople to select conferences and give them the opportunity to "Taste the Future." On the last day, the members test prototypes of the products and provide instant feedback.
"Ideally, that means we hear the pitch, get feedback from our members, spend the next 18 months developing it and roll it out in 2017," says Gratton. "That is rare, but it's the dream."
Herbalife's take-all-comers approach to innovation extends beyond its conferences. The company often receives product pitches from its members, as well as its employees, who can submit ideas through an internal idea bank. Herbalife processes the submissions through product lifecycle management software accessible to all employees.
"The beautiful thing about product innovation for us is that everyone's a nutrition expert, because everyone eats," Gratton notes. "At Herbalife, all ideas are welcome."
September 10, 2014
Second Annual 'Day on the Hill' Connects Direct Sellers, Policymakers
More than 400 independent direct selling consultants gathered in Washington, D.C., today for the Direct Selling Association's second annual Direct Selling Day on Capitol Hill. Representing 28 companies and 30 states, the participants met with members of Congress to share personal stories of how direct selling has helped them create a better life.
Direct Selling Day on the Hill is a part of the DSA's effort to effectively communicate the industry's positive impact and secure vital political influence—two of the objectives laid out by DSA Chairman Truman Hunt at the beginning of his tenure.
DSA President Joseph Mariano spoke to DSN from Capitol Hill, where five members of Congress, both Democrats and Republicans, had spoken with the group about independence and entrepreneurship.
"We are thrilled that these individuals are giving Congress an appreciation of people in the field, because the real point of the day is to provide a backdrop for their successes and their challenges in daily life and in their businesses," said Mariano. "We're not here today to talk about specific legislation or ask for any funding. It's about building relationships between the field people and members of Congress."
About 90 direct sellers represented the industry at last year's inaugural Day on Capitol Hill. This year's participation has edged above 435, the goal set by the DSA to match the number of representatives in Congress.
"We're bringing our own direct selling 'congress' to meet with representatives and share the ways that direct selling has personally impacted their lives," Mariano shared.
In addition to meeting with members of Congress, participants have the opportunity to sign the Direct Selling Proclamation and Compact, which helps demonstrate to policymakers the economic and social impact of direct selling.
Companies across the industry can follow up on today's initiative by encouraging their salespeople to sign the Proclamation, donating to the DSAPAC, and reaching out to their local, state and federal officials. The DSA also works with companies interested in hosting policymakers at visits to their headquarters.
September 09, 2014
Avon Stock Dips on CFO Resignation
Avon has announced the resignation of Executive Vice President and Chief Financial Officer Kimberly Ross. Ross will join Baker Hughes, a Fortune 500 oilfield services company based in Houston.
With Ross slated to exit Oct. 2, 2014, the search for a new CFO is underway at Avon. In the interim, Robert Loughran, Vice President and Corporate Controller, will serve as acting CFO. Loughran has spent the last decade at Avon, following 15 years in various financial reporting and accounting positions at public companies, as well as PricewaterhouseCoopers LLP and Deloitte & Touche LLP.
"Kimberly has been a strong leader for Avon over the past three years. I appreciate her partnership as we've worked together on Avon's turnaround journey. We wish her all the best in her new role," said Avon CEO Sheri McCoy. "We have an outstanding finance leadership team, and I have full confidence in Bob and the team during this transition period."
Some analysts have not expressed equal confidence. The team at Citigroup downgraded Avon to "neutral" from "buy" with a $15 price target, citing Ross's departure amid the company's sluggish earnings recovery. Avon stock has dipped 3.9 percent to $13.12 at 12:08 p.m.
September 08, 2014
SFGate: A Tech Take on Direct Sales
Many up-and-coming companies are successfully blurring the line between direct selling and e-commerce, and a number of those businesses call the San Francisco Bay Area home. From the region that boasts tech industry hotbed Silicon Valley, women-run brands like Stella & Dot and Ruby Ribbon are bringing innovative technologies to traditional direct sales.
To learn more about the "social commerce" powering their businesses, SFGate spoke to Anna Zornosa of shapewear and clothing seller Ruby Ribbon; Jessica Herrin of fashion and accessories brand Stella & Dot; Elenor Mak of personal styling service Keaton Row; and Lori Bush of skincare company Rodan + Fields.
"In the land of startups, where social networks have made many people a lot of money, and women are known for breaking the mold, a reimagined approach to direct sales makes perfect sense," the piece states.
September 05, 2014
PartyLite Joins Push to 'Stand Up To Cancer'
Photo above: This candleholder set will be auctioned off at 250 Stand Up To Cancer broadcast viewing parties. Throughout the year, PartyLite donates a portion of all Wild Strawberry GloLite by PartyLite® Jar Candle sales to the American Cancer Society.
PartyLite will be joining some of the biggest names in show business as they "Stand Up To Cancer" (SU2C) on Friday during one of the entertainment industry's largest fundraising events. As the biennial event airs live on 31 broadcast and cable networks, PartyLite will be hosting viewing parties and raising funds to boost cancer research.
The candle party company will auction off candle and candleholder sets at 250 viewing parties across North America. The proceeds will benefit SU2C, which supports groups of scientists collaborating to develop new treatments, as well as groundbreaking cancer research projects. Since launching in May 2008, SU2C has raised $261 million in pledges and funded 141 clinical trials. SU2C grants are administered by its scientific partner, The American Association for Cancer Research.
"For more than a decade, PartyLite has been committed, heart and soul, to the battle against cancer," Joan Connor, President of PartyLite North America, shared in a statement. "Our PartyLite independent leaders and consultants, along with customers and staff contribute in so many ways throughout the year because cancer has touched the lives of us all in one way or another. "
Friday's broadcast, which airs at 8 p.m. EST/7 p.m. CDT, will feature appearances by Gwyneth Paltrow, Reese Witherspoon, Pierce Brosnan, Halle Berry, Jon Hamm, Kiefer Sutherland, Ben Stiller and Will Ferrell. The event will also include special performances by The Who, Lupe Fiasco & Common, Ariana Grande, Dave Matthews and others.
September 05, 2014
Stream Energy CFO Receives 2014 Women in Business Award
The Dallas Business Journal has honored Stream Energy Chief Financial Officer Renée Hornbaker as one of its 2014 Women in Business.
Asked what inspires her, Hornbaker told the Journal she loves a challenge. The mother of two has faced her fair share during more than 30 years in the accounting field.
"When I started in public accounting, there was only one other woman professional in the office—and she started 5 months before me," Hornbaker said of her early career.
Hornbaker soon made the switch to corporate accounting, working her way up to senior positions at Flowserve Corp., Shared Technologies Inc., Deloitte & Touche and the Phelps Dodge Corp. As CFO at Stream Energy, Hornbaker heads up a finance operation that reported $867 million in revenue last year.
Stream Energy markets residential and commercial energy services through its wholly owned direct selling subsidiary, Ignite. Ignite Associates number more than 250,000 across six states and the District of Columbia.
Read Hornbaker's full Women in Business profile (subscribers only).
September 04, 2014
ViSalus Management Buyout Will Cut Blyth Stake to 10%
The co-founders of ViSalus will lead a management buyout of the weight-loss and fitness brand, according to a disclosed agreement with parent company Blyth Inc. Following Tuesday evening's announcement, shares in Blyth jumped during pre-open trade and rose 36 percent on Wednesday to close at $9.07 per share.
Blyth first invested in ViSalus in August 2008, when it acquired a 43.6 percent stake in the company. Blyth currently holds an 80.9 percent ownership interest, while ViSalus' co-founders and other preferred stockholders own the remaining 19.1 percent. In the announced transaction all preferred stockholders will exchange their shares for ViSalus common stock, relieving Blyth of its $143 million guarantee of the preferred stock.
ViSalus will revert to private ownership under co-founders Ryan Blair, Blake Mallen and Nick Sarnicola, as well as ViSalus employees and early stockholders, who will take on a 90 percent stake in the company. Blyth will remain an equity holder with 10 percent of ViSalus common stock.
"The co-founders and I are very excited to go 'all in' on a business that we started and the future prospects of which we believe in wholeheartedly. I am also personally grateful to the Goergens and to Blyth for nearly 10 years of mentoring and support," ViSalus CEO Ryan Blair shared in a statement.
According to a recent announcement, ViSalus' future prospects include an extensive leadership development program. The company has partnered with leadership expert, speaker and best-selling author John C. Maxwell to launch its Leadership & Influence Development (LID) program.
"I have had the opportunity to mentor ViSalus' three founders, who each have unparalleled creativity, intelligence and leadership potential," said Maxwell on the new collaboration. "It's been a real joy to be able to pour my life into the Vi founders, whom I often affectionately refer to as the Three Musketeers."
The LID program will develop top ViSalus Promoters through skills training and mentoring. The inaugural LID group, which will work directly with Maxwell and the founders over the course of a year, held its first of three annual meetings in Atlanta this June.
September 03, 2014
Medifast Deters Takeover Attempts with Stockholder Rights Plan
The board of directors at Medifast Inc. (MED—NYSE) has put in place a one-year stockholder rights plan or "poison pill" intended to discourage a hostile takeover from outside the company.
The weight-loss company adopted the plan "in response to the recent rapid accumulations of significant portions of Medifast's outstanding common stock." Waltham, Massachusetts-based ModusLink most recently built up a significant stake in Medifast. The supply chain and logistics company acquired 9.9 percent of Medifast stock through a series of transactions in July and August.
In its Securities and Exchange Commission filing, Medifast states the plan was not adopted in response to any specific takeover bid or acquisition proposal. The rights plan would trigger should an outside investor acquire 10 percent or more of the company's stock. Existing stockholders would then have the opportunity to purchase additional common stock at a discounted price.
Medifast markets its products through several channels, including the personal coaching division Take Shape For Life. The direct selling subsidiary is Medifast's most profitable division. Take Shape For Life generated $229 million in revenue last year to claim the No. 52 spot on the DSN Global 100.
September 02, 2014
Mary Kay Foundation Offers Back-to-School Tips for Healthy Relationships
Photo above: Last year at Mary Kay's Fall College Tour, students pledged to "Don't Look Away" from abuse.
One in five—that's how many women are victims of sexual assault or attempted sexual assault while in college. As students begin a new year of classes, Mary Kay and partner organization loveisrespect are providing tips to help young people build healthy relationships and recognize signs of abuse.
The Mary Kay Foundation has donated more than $31 million to combat domestic violence in all its forms. The foundation's Don't Look Away campaign offers young people education and services that support healthy dating and relationships. As a part of that effort, Mary Kay has partnered with loveisrespect as lead sponsor of a 24/7 text for help service. By texting "loveis" to 22522, individuals can communicate with a peer advocate who will answer questions or address red flags in a relationship.
Mary Kay has also partnered with the sorority Alpha Chi Omega to provide education and prevention tools to members and their campus communities nationwide. Kicking off National Campus Safety Awareness Month in September, Mary Kay and loveisrespect shared these ABCs of Healthy Relationships 101:
- Abuse can come in many forms. One in three young people will experience abuse in a dating relationship. This includes verbal, sexual, digital and emotional abuse. One of the most important things you can do for yourself is know the early warning signs of abuse.
- Having healthy boundaries can help keep your relationship secure. Set boundaries together. You and your partner shouldn't feel trapped or that there's a lack of trust. Express your feelings so that you both can feel comfortable.
- Talk about what you both want and expect out of the relationship. A relationship based on mutual respect and open communication will go so much further than one rooted in power, control and mistrust. And if you have questions and think that you or a friend might be in an unhealthy relationship, send the text "loveis" to 22522.
September 02, 2014
Amway: Rising to the Top
by Barbara Seale
Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.
Company Profile
Founded: 1959
Headquarters: Ada, Michigan
Founders: Rich Devos and Jay Van Andel
Products: Nutrition, wellness, beauty and home products
Amway watchers have many things to admire: an impressive 55 years in business, sales growth of almost $1 billion in 2012 and 2013 combined, and brands that are among the leaders in their category. The company's 2012 sales allowed it to climb to the top of the Direct Selling News Global 100 list, where it remains. Last year sales reached $11.8 billion.
Those imposing figures are just the latest in a history that includes growth in 13 of the past 14 years. The secret to its recent success? A strategy it calls Growth Through Innovation.
Now seven years into the strategy, the company has approximately doubled its size—its original goal. In fact, Amway executives can point to many successes. Most of its top 10 markets grew in 2012 and 2013, despite political turmoil and economic crises in some of them. As the company grows, its manufacturing capability grows, too. Amway is in the middle of a $332 million global expansion of it manufacturing and research and development, including four facilities in the U.S. that support the Nutrilite® brand, a new manufacturing facility in India, a second manufacturing site in Vietnam and an R&D center in China.
Amway has fueled its growth by focusing on the basics, providing products customers want to buy and creating an experience that satisfies the entrepreneurial needs of its 3 million Amway Business Owners (ABOs). Along the way, Amway has learned to customize its approach so that it creates success in many markets at the same time.
"The priority we've set around the world is on the experience of both customers and Amway Business Owners," says Amway Chief Sales Officer John Parker. "We try to ensure that we're providing the right support, tools, products and training to create an environment that helps people achieve their goals. It takes hard work, and there was no silver bullet—not one single product or initiative. Achieving growth around the world has required getting the right portfolio of strategies in place, strong partnerships in our regional organizations, and executing effectively."
|Global R&D expansion was one of the goals met by Amway's Growth Through Innovation strategy.
Cultural Customization
In China, a fairly new market where the country's unique regulatory environment requires direct sellers to adapt their traditional business models, Amway focused on brand-building, lots of training and ensuring that its products meet the unique needs of Chinese consumers, where nutrition and herbal remedies are a core part of the culture. The work is paying off. Amway earned about 40 percent of its 2013 revenue in China.
In stark contrast with China, the company's business in Japan is more developed. Parker says that some of Amway's most innovative work in the last few years has been done in Japan. Though it has been a challenge, a stagnant economy coupled with uniquely demanding, sophisticated consumers tests every company.
|John Parker
"For our business in Japan to get on a growth track, we needed to understand the unique nuances of the Japanese consumer," Parker says. "One issue is the level of service they demand. As Americans, it's hard to appreciate the service demands there, but our team there did a fantastic job of understanding where we weren't delivering against service expectations and raising the bar uniquely in Japan. Again, it wasn't just one magic bullet, but the right combination of initiatives: delivery, customer service, and the type of experience we offer in training centers and brand centers in Japan. Product launches created growth there, and the launches of skincare products that appealed to Japanese consumers have been very successful."
Amway coupled product launches in Japan with training, tools and innovative events in clubs and on beaches that focus on brand-building, but without the traditional business presentations. Many initiatives are especially focused on achieving the right combination of initiatives for ABOs, and a focus on customer satisfaction drove excitement in the under-35 demographic of consumers
and ABOs.
"At the end of the day there are certain things we'll do well at headquarters and certain things we must empower our teams around the world to do," Parker explains. "We had to figure out the formula."
Market Domination
The second half of the formula revolves around products, especially the company's star brands—Nutrilite and Artistry®—which open doors for ABOs around the world.
Nutrilite, the company's line of wellness products, pre-dates Amway itself. This year Amway celebrates the 80th anniversary of Nutrilite. In fact, Amway founders Jay Van Andel and Rich DeVos started their direct selling careers in 1949 as Nutrilite distributors. The brand was already 15 years old. Rich has said that without Nutrilite, there would be no Amway. Jay and Rich introduced the Nutrilite brand to Amway distributors in 1972 when they acquired a 51 percent interest in Nutrilite. They gradually acquired more and more of Nutrilite stock until 1994, when they purchased Nutrilite Products in full. According to Euromonitor International Limited, today Nutrilite is the world's No. 1 selling vitamins and dietary supplements brand, accounting for almost half of Amway product sales. One of the earliest wellness products, Nutrilite Double X®, is still the company's flagship nutrition product.
The company's other mega-brand is Artistry. Also according to Euromonitor, for years the product line has been in the world's top five largest-selling premium skincare brands, and among the world's top 10 largest-selling premium cosmetic brands. The product line was born in 1959, the same year Amway was founded. Today it includes 250 products that are sold in 50 countries around the globe. Some 25 percent of Amway product sales are Artistry products.
Amway founders launched the company with one of the first biodegradable products, L.O.C.™ (Liquid Organic Cleaner) Multipurpose Cleaner. Today the L.O.C. name has morphed into the LEGACY OF CLEAN® brand, which includes an extensive line of products made with naturally derived ingredients. The company also offers eSpring water treatment and purification systems—now the world's No. 1 selling brand of home water treatment systems*—as well as XS® Energy Drinks. While Amway offers all these product lines, its revenue workhorses are the Nutrilite brand of nutrition products and Artistry skincare and cosmetics. With some 450 individual products, Amway is a beauty and wellness powerhouse, offering products and the Amway opportunity in more than 100 markets around the world.
Family Features
Artistry and Nutrilite share some characteristics beyond their goliath revenue-production abilities. They're both backed by science and developed by robust research and development teams. They have the support of Scientific Advisory Boards. And they were birthed by entrepreneurial creative teams comprising the founding families at Amway and Nutrilite Products. Today their legacies continue. Dr. Sam Rehnborg, son of Nutrilite Founder Carl Rehnborg, is now President of the Nutrilite Health Institute, while Steve Van Andel and Doug DeVos follow in their fathers' footsteps, serving as Chairman and President of Amway, respectively.
A look at Amway's approach to the Nutrilite brand reflects the way it manages others in the company. It starts with Amway's commitment to innovation and quality in all of its products.
|Kanan Banerjee
"The secret is if you are true to your roots, that commitment becomes part of your DNA. It's second nature to every employee," says Kanan Banerjee, Vice President, Global Brand Management, Nutrition and Wellness. "No matter which function you talk to, it's our benchmark, as well as our legacy."
When Amway develops Nutrilite products, it ensures that they are rooted in nature, differentiated by their phytonutrient story, and best-in-class. To that foundation of plant-based ingredients, Amway adds science, which often allows products to provide a targeted benefit, such as memory support. And Amway ensures that products are relevant, conducting research into key consumer needs.
"With the number of scientists we have, the number of ideas for products can grow exponentially," explains Audra Davies, Vice President of Nutrilite Product Development and Analytical Science. "We must prioritize all those ideas, so the criteria of consumer relevance, combined with science, combined with our nature story, create a winning combination."
Part of the product-science combination includes the publishing of basic scientific research, such as a report published in August. Released by the Nutrilite Health Institute of Amway, The Global Phytonutrient Report highlights a significant shortfall in fruit and vegetable consumption in global diets, preventing individuals from receiving crucial health benefits. It reveals that the majority of adults worldwide would have to at least double their current consumption of fruits and vegetables to meet the World Health Organization's minimum recommendation of five servings per day. The vast majority of adults worldwide—60 to 87 percent across 13 geographic diet regions—fell short of this recommendation.
|Audra Davies
The research indicates a global gap between the recommended amount of fruits and vegetables and what adults are actually eating, despite a growing body of research, which suggests that eating foods rich in phytonutrients—organic compounds found in fruits and vegetables—provides a range of health benefits, such as supporting the body's antioxidant defenses and immune system.
Reports such as this one help reinforce the relevance of Amway products. Davies regularly takes the story of the science behind Nutrilite products to meetings of ABOs. She believes that they value the company's commitment to science.
"It differentiates our brand and validates our product offerings in the marketplace," she notes. "Sometimes products have gone through hundreds of thousands of tests before being launched. That gives ABOs confidence in the quality of the products, validates the health benefits of the products as part of a healthy lifestyle and helps them explain 'why Nutrilite, why Amway?' "
Amway ensures that ABOs have access to communications and sales tools that meet the needs of both the ABOs and their customers. Tools such as videos, unusual events, free training, digital apps for a variety of functions and even endorsements all increase credibility and ease the sales and prospecting process. And realizing that the under-35 demographic is becoming a larger part of the salesforce, Amway is developing new methods and frequencies of recognition.
"We haven't cracked the code yet," Parker says, "But I think we will need to adapt our recognition programs as a company to deliver more recognition earlier and in new ways—online, for example. Likewise, we need to empower leaders in the field to help them provide more recognition earlier in the Amway experience. We're thinking about how we can build recognition into social media platforms. Those things are part of the psyche of the next generation, so we have to figure out how to deliver there. It's not going to be a nice-to-have. It's a requirement."
Such efforts reflect the customization in Amway's global business these days. Parker believes that the next 10 years will see Amway focused on getting the right growth initiatives implemented in the right markets based on local entrepreneurs and consumers.
"For a big company like Amway, it would be easier if we had the same three initiatives around the world. Sometimes that will be the case, sometimes not," Parker says. "We'll meet consumers where they're at with products and messages that resonate. We measure our success based on the success of our business owners—how many people are achieving the goals they set in their Amway business each year; how compelling are the products, training and events we're doing every year; and we have to add the social dynamic into the mix as well. If we can create an atmosphere where people are enjoying what they're doing, that's an important part of the equation for our business. It might look different around the world, but the outcome is the same."
Nutrilite: Celebrating 80
Photo on left: Amway Co-Founders Rich DeVos and Jay Van Andel (bottom row, second and third from the right, respectively) pose with Nutrilite Founder Carl F. Rehnborg and his wife Edith Rehnborg, in 1956. (Amway) Photo on right: Carl F. Rehnborg in his Buena Park, California, office, circa 1950. (Amway)
Eight decades of success deserves a party, and Amway is celebrating the 80th anniversary of Nutrilite by launching the second edition of The Nutrilite Story: Past, Present and Future. The first edition was published five years ago. The update, which Amway published as an ebook, adds five chapters that chronicle the brand's tremendous growth from 2009 to 2014. That growth reflects advancements in research that drive innovative product development, investment to expand global manufacturing capabilities, and the unique global agribusiness approach that supports Nutrilite organic farms. The book also adds entries from more than 100 top-selling Amway Business Owners.
The book's author, Dr. Sam Rehnborg, is the son of Nutrilite creator Carl Rehnborg and the President of the Nutrilite Health Institute. "Dr. Sam," as he is affectionately known throughout Amway, inherited his father's passion for creating optimal health through a plant-based diet and plenty of exercise. And like his father, he recognizes that people around the world simply don't live the lifestyle needed to reach their optimal health. Supplements help fill dietary gaps. That's been the role of Nutrilite for 80 years.
"It gives me intense pleasure to see people awakening to the connection between nutrition, health, and disease prevention," Dr. Sam says. "The heart of the Amway business is exactly what my father was after—people taking charge of their lives. When you do, you take responsibility for your health, your wealth and the health of the planet."
He points with pride to the Amway sales model—also his father's brainchild—which is based on satisfied customers getting excited about the product and sharing it with others. And he is proud that the products themselves are supported by scientific research and ingredients harvested at Amway farms—over 6,400 acres in the U.S., Mexico and Brazil. Nutrilite is the only global vitamin and mineral brand to grow, harvest and process plants on its own certified organic farms.
Proceeds from the sale of the book benefit the Nutrilite Power of 5 Campaign, which partners with nonprofit organizations to provide a micronutrient supplement to malnourished children through Nutrilite Little Bits, a one-gram nutrient powder packet containing 15 vitamins and minerals that can be sprinkled onto any food.
Dr. Sam explains, "Recent research has shown that if you can provide children through 5 years of age with good nutrition, they have a chance to fulfill their potential. If they're malnourished, children will never be able to achieve their ultimate potential."
Linked to the Nutrilite anniversary celebration and the Power of 5 Campaign is a ribbon cutting and open house on Sept. 17 that will showcase the newly designed Center for Optimal Health and rooftop replica of Carl Rehnborg's historic Quonset hut, which served as his early home and lab. The ceremony is one of a series of events at more than 100 locations where Amway distributors have invited guests to donate their handprint to help in the fight against childhood malnutrition. For every handprint received, Amway will contribute $1 and match donations up to $400,000 to CARE International to support the Power of 5 Campaign.
September 02, 2014
Family Heritage: Protecting Customers for 25 Years
by Sarah Paulk
Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.
Company Profile
Founded: 1989
Headquarters: Cleveland, Ohio
Executives: Chairman, CEO and Founder Howard L. Lewis
Products: life and supplemental health insurance
|Howard L. Lewis
Direct sales has proven to be a channel that is equally receptive to service companies as it is to those that sell physical products, especially with the growth of the energy and essential services sector—so why not insurance? Selling an intangible like insurance may not provide the same glitz and adrenaline rush for customers as perhaps shopping for jewelry or home décor items might, but for Family Heritage Life Insurance Company of America, that unlikely niche is exactly where they like to be.
"Many people buy insurance through their employer," says Doug Kelly, Chief Marketing Officer of Family Heritage. "There are people whose employers do not provide supplemental insurance, people who are self-employed and people who are retired who cannot obtain insurance products this way. We provide products to this underserved market segment. It is a difficult market to reach so most insurance companies avoid it. This means the competition is not as intense in this market, and that makes it attractive."
|Family Heritage headquarters in Cleveland, Ohio.
The Evolution of Coverage
Family Heritage's life and supplemental health insurance aims to provide what families are looking for: protection. Everyone wants to know that they, along with their families, would be taken care of in the midst of a health crisis or tragic accident. And unlike traditional health insurance, supplemental insurance pays money directly to the customer.
Simplicity and efficiency are top priorities for Family Heritage, so it is no surprise that their products reflect those objectives. The company's life insurance policies emphasize an uncomplicated underwriting process, which requires no medical exam, convenient billing and immediately effective coverage. Heritage Life Extra, an innovative life insurance product, was introduced in 2006. Juvenile Life, designed to protect customers' children, was launched just this year.
Additional policies within the company's product line include accident, hospital indemnity, intensive care, and heart attack and stroke policies. Family Heritage's top seller, cancer insurance, is also its flagship product and is the company's avenue to provide relief to families who are enduring the exhausting and expensive journey that often accompanies this diagnosis.
Over the years, the company's cancer insurance has evolved to meet customers' needs and to inspire healthy choices. The addition of a wellness benefit, for example, encourages customers to get cancer screenings annually by paying benefits for examinations like mammograms and PSA (prostate-specific antigen) testing.
"As medical procedures evolve, the product is updated to reflect those changes," Kelly says. "A recent example is the chemotherapy benefit. Family Heritage has always paid a benefit for chemotherapy, but in recent years, the medical community has been moving away from toxic chemotherapy agents toward less disruptive agents known as targeted therapies. Family Heritage broadened its chemotherapy benefit to include these agents in our most recent revision."
Recruiting with Passion, Working with Compassion
Providing comfort and financial relief during crisis is the mission behind the commitment and effort of Family Heritage's team of Sales Professionals. This mission, reinforced by an unofficial motto of "work with passion and compassion," creates a relationship between Sales Professionals and their clients. As a result, customers feel comfortable calling on their personal Sales Professional in the event that a claim needs to be made. While this caring salesforce is certainly the lifeblood of the company today, it was surprisingly the company's greatest obstacle at one time.
"Over the years, recruiting a salesforce has been a challenge," says Henry Grendell, Family Heritage Vice President and General Counsel. "The leadership addressed this by developing a recruiting process that highlighted the importance and value of the products and the financial rewards that are available to Sales Professionals, and also shared best practices across sales organizations so that a robust portfolio of recruiting methods and sources were used."
The term ASAP (All Sources; All Places) was coined to describe the multifaceted approach Family Heritage relies on to recruit new team members. Active participation in job fairs and online career boards, placing newspaper ads in locations where organizations are seeking to build their teams, and field recruitment—presenting the opportunity to friends, family or customers who appear to have potential—are all proven methods that successful Family Heritage Sales Professionals use to expand their organizations.
"Family Heritage grows by finding sales leaders who want to build organizations and businesses of their own," Kelly says. "When we find an effective sales leader, sales grow in that geography."
The company's recruiting efforts continue to pay off as the number of Sales Professionals increases exponentially, from 22 agents during the company's inaugural year of business to more than 1,600 active Sales Professionals today. The company also serves over 250,000 families across the U.S. and has 127 employees at the home office. Aside from creating a healthy, large organization, the leadership prides itself on knowing that the building of a strong Sales Professional base is ultimately the fulfillment of a goal they set 25 years ago.
"The original vision was to build an insurance company in which all participants—both home office and Sales Professionals—were stockholders," says Ed Rocheck, Senior Vice President and Chief Administration Officer. "We met that goal, and many had their financial dream fulfilled."
This vision was the one that Howard L. Lewis, Chairman, CEO and Founder of Family Heritage, set himself. Having the principles of service and integrity instilled in him early on in his professional career in both the financial services and insurance industries, he felt that those who help build the company should have the opportunity to become owners of the company.
This business model has offered Sales Professionals and corporate office members alike a unique and often prosperous financial opportunity. The company's acquisition by Torchmark Corp. in November 2012 for $218.5 million has broadened that opportunity even further, offering a new stock purchase program. McKinney, Texas-based Torchmark (TMK—NYSE) is a holding company for several life and supplemental health insurance subsidiaries, including two other direct sales companies—American Income Life and Liberty National Life.
Tools of the Trade
The introduction of new parent company Torchmark brought with it new resources, including new tools to help identify viable candidates and modernized processes that use the latest Internet technology to locate and recruit new team members. As with any organization in today's marketplace, technology plays a vital role in the company's success. Social media platforms are must-haves for any company wishing to stay relevant, and Family Heritage uses them to communicate cultural aspects of the company that could be easily missed in the tone of a formal website. Those who view the company's Facebook, LinkedIn and Twitter pages will see pictures of awards Family Heritage has won, fundraising events it has taken part in, and videos of its salesforce and home office employees showing how much they love being a part of the FHL family. These platforms provide Sales Professionals and employees a place to share successes and advice, and they allow potential recruits to learn more about the culture of Family Heritage.
For Sales Professionals, the opportunity to dig deeper past the public website into a password-protected portal offers training videos and commission and sales reports exclusive to each of their individual organizations. A robust internal system nicknamed SOAR (Service, Outstanding performance, Adaptability, Reliability) is available to home office personnel, allowing them to easily access information for customers and conduct transactions on a customer's behalf.
Continued personal development is essential for success, and Family Heritage addresses that with a variety of training opportunities made available to Sales Professionals throughout their careers. Sales Academy is a Sales Professional's starting point, explaining the ins and outs of the Family Heritage products and sales process. This weeklong course uses exercises and role-playing in addition to traditional presentations to give Sales Professionals a basic understanding of the business.
Beyond Sales Academy, national sales meetings are hosted twice annually with a heavy training component, and online training videos and weekly conference calls provide continuing education and tips from successful Sales Professionals.
While technology is important, the leadership emphasizes that it is not the catalyst for success at Family Heritage. "The key to success at Family Heritage is our people who have a can-do attitude and who treat customers as if they were part of the family," Kelly says. "Technology helps them do it, but technology alone would not be sufficient."
In addition to the company's training, individuals are also required to have a state license to sell insurance. In order to receive a license, all states require applicants to pass an exam and complete an insurance application. Depending on the state, applicants may be required to attend a pre-licensing course as well. Family Heritage also conducts a background check on all applicants. Most states require that agents complete continuing education courses each year to retain their licenses.
A Bird in the Hand
Since its launch in 1989, Family Heritage has stretched its active operations into 49 states, plus the District of Columbia and Puerto Rico. While sales are greater in some areas, depending on the concentration of the salesforce, the leadership continues to set its gaze upon the horizon and how it can improve or positively affect its current program.
One of its opportunities is expansion, including geographic expansion into areas like New York and Canada. Until this expansion becomes a reality, the leadership is placing greatest emphasis on its current assets, as they see these areas as the best opportunity for growth. The key for creating growth for the company during this season, Kelly says, is continued recruitment.
Product awareness will play a strategic role as well. "The opportunity for better utilization of the existing portfolio of products is huge," Kelly says. "In 2014, cancer insurance sales represent almost 60 percent of the company's sales. With a portfolio of six products, there are tremendous opportunities for growth by offering the other products to new and existing customers. Programs have been developed to facilitate this type of cross-selling, and results to date have been favorable."
Celebrating a Silver Anniversary
Although it has faced its share of obstacles, growth has seemed to come naturally for Family Heritage throughout its two and a half decades' reign. At its launch in 1989, the company brought in a meager $5,848 in revenue. The next year, in 1990, revenue soared to $523,728. This past year, 2013, saw revenue reach $192.5 million—earning it the No. 66 spot on the DSN Global 100 list of the world's largest direct selling companies.
As Family Heritage reflects on the success of its past and prepares for the future, the company is making plans to celebrate its silver anniversary in style by awarding and recognizing the heart of the company—its sales team. A four-day celebration at the end of December will bring together 700 Sales Professionals and home office employees for an exhilarating celebration at The Rock and Roll Hall of Fame Museum in Cleveland, Ohio, its headquarters. Excellent catered food and live bands will set the mood for a weekend that leaders of the 25th anniversary committee describe as "not low-key at all."
The purpose of the event, with the theme of "the heritage of our past, the promise of our future," is to thank and pay homage to the agents who work year after year investing in and building the company. A highlight of the event allows agents and home office employees to rekindle old relationships and make new connections.
"We are proud of the opportunity we have created for our employees and Sales Professionals," Grendell says. "Prior to the sale of the company in 2012, every employee received, and every Sales Professional could qualify for, stock in the company. When the company was sold, many Sales Professionals and employees received significant payments for their stock, which permitted them and their families to improve their standard of living. Likewise, Sales Professionals receive lifetime vested renewals, and employees have an excellent benefits program. We are proud to see our employees and Sales Professionals become financially secure as a result of our success."
Family Heritage also continues to receive awards and recognition for its customer service and workplace environment. This year alone, the company received Corporate Social Responsibility Program of the Year for the second time from the American Business Awards; Customer Service Department of the Year (both through the ABAs and the Sales and Customer Service Awards several times throughout the years); and Customer Service Department of the Year by Customer Sales and Service World Awards. In previous years, it has won the World Class Customer Service Award several times by Smart Business magazine and The Plain Dealer Top Workplaces for 2010 and 2011.
The Next 25
Customer service is a dominant theme in the culture of Family Heritage. It is evidenced in even the smallest details of the business, such as their commitment to never have an automated attendant answer their phones and ensuring that all documents are scanned into the company's system and accessible when customers call in.
Helping customers in this way by dealing with their concerns with both efficiency and compassion has contributed to Family Heritage's longevity and success. "The goal for the next 25 years is to continue to grow and to make Family Heritage a common part of most American families' protection plans," Grendell says.
September 02, 2014
USANA: Delivering a Message of Health and Hope
by Lin Grensing-Pophal
Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.
Company Profile
Founded: 1992
Headquarters: Salt Lake City
Executives: Dr. Myron Wentz, Founder and Chairman; David Wentz, CEO
Products: nutrition, diet and energy, and personal care
|Dr. Myron Wentz
|David Wentz
Can you imagine a world without disease? Dr. Myron Wentz can. And, in fact, he's made it his life's mission to contribute to creating a world free from disease and focused on wellness and health products that have impacted people in countries all over the world.
A microbiologist and immunologist, Dr. Wentz is a pioneer in the development of human cell culture technology and infectious disease diagnoses. From the beginning of his career, his focus on improving people's lives has been driven by a strong interest in medical science, the development of tests for viral diseases (he developed the first commercially available test for diagnosing infection with the Epstein-Barr virus), and broad humanitarian efforts.
Commitment Leads to Action
Dr. Wentz channeled his personal passion when he founded USANA Health Sciences Inc., because he believes disease prevention is as important as disease detection, and the single most effective way to prevent degenerative diseases is proper nutrition.
"If we can nourish the human body in a comprehensive way on a daily basis with the full spectrum of essential nutrients in the right forms, amounts, and in the proper balance, we can sustain long-term health and effectively avoid degenerative disease," he says.
USANA's nutritionals provide the high-quality vitamins, minerals and antioxidants that bodies need for good health, while its diet and energy products provide meal-replacements and snacks for weight loss and energy. The company has also introduced personal-care items to cleanse, refine and replenish skin and hair. USANA's strong commitment to health and well-being even extends to the specific needs of children, with the creation of Usanimals™, a multivitamin especially designed for children in their formative years.
USANA's nutritional supplements have found a loyal customer base, and the company has expanded to new markets in North America, Europe and the Asia Pacific region. Today, USANA is a high-performing and growing organization with sales of about $718 million in 2013 (compared to about $649 million in 2012 and about $582 million in 2011), with net earnings available to common shareholders of $80 million in 2013. Sales are generated from nutritionals (80 percent), foods (11 percent) and personal-care products (6 percent), with purchases coming from associates and preferred customers. Associates are independent distributors of the company's products who may also purchase products for their own use, while preferred customers purchase products strictly for their personal use. As of the end of 2013, the company had 265,000 active associates and 78,000 active preferred customers worldwide.
Driving Change through Humanitarian Efforts
|Jim Bramble
With this success comes more opportunity for the company to expand in an area that is already close to its leaders' hearts—charitable giving. Jim Bramble, who has been with USANA for 17 years, is Chief Legal Officer and General Counsel for USANA Health Sciences and sits on the board of USANA's foundation: the USANA True Health Foundation (UTHF). During his tenure, he says, the message and commitment to "giving back" has been driven home continuously. "This comes from our founder and his son, David [the company's CEO]. They have very large hearts, and they're very concerned with the fact that we're very blessed but not everybody is."
This strong personal commitment, says Bramble, led the company to partner early on with the Children's Hunger Fund (CHF) and to join them in opening hospitals in Malawi, Uganda and Cambodia.
"We have had an amazing partnership with USANA now for 14 years," says Dave Phillips, President of Children's Hunger Fund. "Through the contributions of Dr. Wentz, USANA corporate and the USANA True Health Foundation, the USANA family has played a substantial role in our growth and impact over the years with nearly $20 million donated to provide nutrition for children and families in need."
In 2012 the USANA True Health Foundation was formed with a mission of providing the most critical human necessities—nutrition, clothing, shelter, medical assistance and health education to those who are suffering or in need. The foundation focuses on three areas:
- Area of Greatest Need: releases funding and aid for worldwide disasters where immediate help is needed.
- Children's Hunger Fund (CHF): a nonprofit organization that works to alleviate the suffering of children in impoverished regions across America and around the world.
- Sanoviv Medical Assistance: provides funding to Sanoviv Medical Institute patients who are otherwise not able to pay for their care.
The foundation is registered in seven countries where donors are able to receive tax benefits for their contributions, and it has received donations from people in 23 countries. Since its inception it has impacted more than 25,000 people, in 12 countries, through disaster relief and providing nutrition to underprivileged children and their families. About 15,000 people were impacted in 2013. One of these efforts involves a relationship with Dr. Mehmet Oz and his charitable foundation HealthCorps, which focuses on nutritional education for inner-city youth in North America.
Contributions to the foundation may be made in a variety of ways. Individuals, distributors and USANA employees may: donate a monthly amount; donate through the foundation's website at www.usanafoundation.org; participate in the annual USANA Champions for Change 5K in August; or donate Usanimals™ vitamins to the Children's Hunger Fund to help underprivileged children around the world.
In 2013, during USANA's Success on the High Seas cruise, more than 700 distributors were asked to bring items to make life better for children living in the Foyer de Sion orphanage, when the ship stopped in Haiti. Thirteen children from the orphanage met the associates and received the gifts, which included much needed diapers, formula, nutritional supplements, toothpaste, soap and many other essential items.
There are other individual efforts as well. Teddy bears are sold at USANA's Asia Pacific convention to benefit the foundation, and Philippine associates recently held a 5k to benefit victims of Typhoon Haiyan. Support is also provided to distributors who wish to hold their own fundraisers.
Serving the World
On Jan. 12, 2010, a 7.0-magnitude earthquake struck and devastated Haiti's capital city, killing 230,000 people and leaving 1.5 million homeless. Japan's epic 9.0-magnitude earthquake and subsequent tsunami occurred the following year, on March 11, 2011, killing more than 15,000 people. Bramble says the tragedies weighed heavy on the heart of USANA CEO David Wentz.
Wentz went to the management team and asked, "How can we use the incredible power of direct selling, where people network together, to harness that energy to help in situations like these?"
Because of USANA's global reach these tragedies are very personal. Says Bramble, "We have distributors who are our family in Japan, and we can't work together as an entire community of USANA to respond to disasters like this because we have nothing in place."
The USANA True Health Foundation was founded to respond to these types of situations. Through a partnership with International Relief Teams, USANA is now poised to respond when disasters strike throughout the world, especially in areas where USANA has a presence, he says.
"Our partnership with USANA True Health Foundation is invaluable," says Barry LaForgia, Executive Director of International Relief Teams. "Knowing USANA will provide funding gives us the assurance to quickly apply resources during the critical early days after a disaster when lives are literally in the balance. USANA's support also allows us to continue helping survivors, by not only enabling us to address their basic needs for temporary shelter, food and medical assistance while they are displaced, but also to help them recover through programs that restore livelihoods and permanent shelter."
Donations to support the foundation come from multiple channels, including associates, employees and preferred customers. In some countries, participation is close to 100 percent of all employees, says Bramble.
Making It Personal
USANA's efforts around the world are very personal to its employees and distributors. In many cases distributors see firsthand, not through a statistic but through the impact they individually have on others, the power of their commitment to helping those in need.
"One of our most successful markets is the Philippines," Bramble says. It's a country that has been through a lot in terms of natural disasters over the past few years, he notes. "Because we have so many distributors on the ground in that country, they've been able to participate not only in fundraising but also in donating to help their home." In addition, he says, distributors have become personally involved by actually going into the cities that have been devastated and helping to rebuild.
"One thing we do is to encourage executives and associates alike, anyone who has a lot of influence in the field, to attend yearly missionary trips that the Children's Hunger Fund sponsors," he says. "Those who have donated on their own dime go together as a group with the CHF to different areas of the world and work with their hands in that area."
Bramble himself has been directly involved in these efforts, and those experiences are very powerful, he says.
"For instance, when I went to Uganda we went to different villages in the inner city and passed out food and medicine. We went to an orphanage, and you just come back with those experiences that make it more personal—you gain a personal understanding of how you are really making a difference."
In fact, Bramble says, "It really, in a lot of ways, was one of the most defining trips of my life." That was back in 2008, but "there isn't a day that I don't at least dwell on it for a moment because it was so powerful." It was a country that he says he didn't know anything about, other than the name. He and his wife went with a group of about 30 people from the Children's Hunger Fund and other distributors who wanted to participate.
|Dr. Myron Wentz visits the hospital he founded in Uganda.
According to the International Monetary Fund, Uganda is one of the 20 poorest countries in the world, with 37.7 percent of the population living on less than $1.25 a day. This poverty has contributed significantly to the widespread undernutrition of the country's people, with 38 percent of children chronically undernourished or stunted, according to Feed the Future, the U.S Government's Global Hunger & Food Security initiative. "It's to the extent that it will cause their deaths someday," Bramble says. "It's substantial malnourishment." Most of these children are orphans because Uganda is a country that has been heavily hit by AIDS.
While in Uganda the group went to three locations. They went to the recently founded Wentz Medical Centre and Laboratory to visit and read to people suffering from malaria, to an orphanage on an island in Lake Victoria that was heavily impacted by both AIDS and civil unrest, and to the inner city, which was a place of extreme poverty. During each of these visits the team visited with people and delivered food and vitamins—the Usanimal™ vitamins that USANA produces.
"To me it was life-changing," Bramble says. "I remember one specific instance, as I think back, of seeing this little girl who was 6–8 years old, and my daughter at the time was the same age. This little girl was wearing this paper dress—literally made of paper. And I thought of my daughter and this huge closet we have full of clothes, and how she never has to wear the same dress to church twice because she has so many. And I just thought 'I need to be involved somehow to help little girls like this.' "
When Bramble returned home he went to CEO David Wentz and asked how he could become involved in more of these activities.
"That's why it might seem strange to have the General Counsel be the person on the Board of Directors for the Foundation, but that was the experience that gave me the interest and led to my involvement," he says.
How Others Can Make a Difference
Direct selling companies are businesses first and foremost. They and their distributors are interested in sales and business success. Because of that, acknowledges Bramble, there can be a hesitancy to divert the efforts of staff and distributors from selling to other activities—like charitable and humanitarian efforts.
But, he stresses, this fear is misplaced. "The truth is that it is not only the right thing to do, but it makes good business sense to involve your salesforce in charitable activities because it creates loyalty and it creates a feeling that 'I'm involved with a company that does good things.' " That, he says, "helps you with your retention; those are people who are going to stay with you—they are going to sell products longer.
"Don't be afraid of wasting resources on something other than your bottom line, because the bottom line is not as important anyway. And, in the end and over the long run, it will be better for the bottom line as well."
In addition, he advises companies to find alignment between their business and their charitable passion. But make sure that the organizations you choose to partner with or support "have a really good infrastructure, are very efficient and already know how to deliver the aid where it is needed." Direct sales companies shouldn't attempt to deliver or recreate these systems on their own. "If you try to recreate, that's a lot of dollars wasted on administration that someone else has already done." In addition, he says, "It allows you to let your donors know that the help they're providing goes directly to those who need it."
Delivering a message of health and wellness to the world is something that resonates not only with employees and distributors, but with USANA's customer base as well, Bramble says. It is through these collective efforts that Dr. Myron Wentz's vision of wellness around the globe may someday be achieved.
"Our customers are very interested in health. Their charitable activities can help increase health, and then it's a natural draw."
September 02, 2014
Controlling the Conversation: Balancing Product and Opportunity
by Lori Bush
Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.
At Rodan + Fields, when we made the decision to pivot from our department store marketing channel to direct sales, a great deal of consideration was given to protecting the brand equity that derived from our founders' legacy in the skincare segment of the beauty industry. As we looked to transform our go-to-market strategy, we wanted an independent business ownership model with low cost of entry that afforded our Independent Consultants the opportunity to compete with other industry players. The key here is what we define as our "industry." While there are many definitions for the word industry, the most relevant ones read something like this: noun \ˈin-(ˌ)dəs-trē\: a group of businesses that provide a particular product or service. By this definition, Rodan + Fields is in the beauty industry. The business opportunity derives from product leadership coupled with our sales and marketing strategy: The opportunity itself is not our principle product.
Sounds simple enough, right? But gaining buy-in and protecting and advancing this aspect of our brand equity is a challenge that requires rigor in monitoring and compliance, especially when it comes to engaging direct selling veterans as employees or as Independent Consultants. Our investment in product and brand development is materially eroded when a successful business-building Consultant is dismissive or even disparaging to those who want to engage as product ambassadors rather than promoting the business model. The worse-case scenario of this is the proclamation that "it doesn't matter what you're selling as long as the compensation plan works." Not only does this fly in the face of who we are, but it generates ill will and validates the position of those who challenge the legitimacy of our business model.
So what is direct selling to Rodan + Fields if it's not an industry? We see direct selling as crowdsourcing our marketing and sales initiatives. And with the advantages of social, mobile and web-based tools for customer acquisition, engagement and monetization, it is a highly effective, modern business model that provides individual micro-enterprises the opportunity to participate and capture market share in an important, lucrative and growing consumer products category.
Soul Searching
When we launched our current business program in 2008, we believed we had the opportunity to help shift public perception of direct selling and went as far as to bake this notion into our mission statement: "Our mission is to redefine independent business ownership with brand presence and transformational products and programs that change skin and change lives." It didn't take us long to learn that walking the talk requires constant commitment to education and compliance because, when it comes to salesforce behavior and performance, the simple fact that something works doesn't necessarily make it right.
Another part of our mission statement, the creation of "an enduring legacy for our Consultants and our employees," led us to take a deep dive into the soul of our company. To truly have a company soul requires a shared understanding by everyone who is involved as to purpose and values. Out of a deliberate exercise to define the soul of our company, a clear set of business values emerged, which we call our "True Colors," and we constantly assess our people and programs for demonstration of these values. One of these key values is Assurance.
Assurance is about brand and business integrity; it's the commitment to our Consultants and their customers that what they signed up for is what they get. If we promise a unique brand and uplifting culture one day and they show up to find a generic, hardcore moneymaking scheme the next day, our soul is eroded. "Assuring" that the Rodan + Fields brand and business models continually meet or exceed expectations requires surveillance of how our programs manifest into and through our sales organization.
I recently attended a training conducted by members of our field development team and discovered that some important aspects of our program had drifted away from our original intent in response to preferences of some of our Independent Consultants. Even though these preferences could, arguably, accelerate the rate of growth of a Consultant's income, they could put the long-term value of the brand and business opportunity at risk. In a nutshell, there was an overemphasis on recruiting and building an organization without a balanced focus on engaging and servicing customers. Both aspects of the business model are important, but the training was heavily biased toward the former without first firmly establishing the brand, product experience and our overall approach to social commerce. We recognized the need to make an adjustment to our approach in order to reinforce key aspects of our value proposition.
Instilling an understanding of the rationale for our vigilance helps our internal team and our Consultant leaders appreciate the importance of governing the execution of our business programs in the marketplace. No matter how carefully we craft our compensation program and articulate our Policies and Procedures, if we promote or turn a blind eye to practices that undermine our brand value proposition, a handful of rogue players can wreak havoc and lead to significant net detractors for our products, our programs and even direct selling in general. We have a responsibility to our sales organization, their customers and the direct selling community at large to control the conversation so that it doesn't become controlled for us.
A direct selling business model enables us to collaborate with passionate micro-entrepreneurs to market compelling, innovative products and services that might never see the light of day in risk-averse brick-and-mortar retailing models. Our future is dependent on continuous introspection as to how we guide our Independent Consultants to appropriately communicate our brand and business values. The meaningful marketplace value of our opportunity is part and parcel of our compelling product proposition. If we present this the right way, the word pyramid should never enter anybody's mind, much less the conversation.
Lori Bush is President and CEO of Rodan + Fields.
September 02, 2014
Stock Watch, September 2014
September 02, 2014
Culture of Celebration
by Lauren Lawley Head
Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.
Photo above: Origami Owl Co-founders Bella and Chrissy Weems
Culture of Celebration
Whether it was a 45th birthday party for the Mary Kay Pink Cadillac or a social media-fueled fundraiser for Thirty-One Gift's philanthropic partner Ronald McDonald House Charities, celebration, personal growth and giving back were in full force at direct selling events the past few months, showcasing the powerful role this plays in business growth and development.
"For us, events is a culture function that has the sales tools to support," Origami Owl Founder and Co-President Chrissy Weems told Direct Selling News during a break at the fast-growing company's second national convention, "because we believe when you build the person holistically that the sales will come."
Herbalife Analyst Details the 'Death Blow' That Wasn't
This summer marked a significant development in the ongoing battle activist shareholder Bill Ackman is waging against one of the world's largest direct selling companies: Los Angeles-based Herbalife Ltd.
Ackman gave a three-and-a-half-hour presentation in late July designed to convince investors, journalists and regulators of the validity of his short position on Herbalife stock. He said his team spent $50 million on its investigation of more than 240 nutrition clubs.
Scott Van Winkle, Managing Director of the capital markets firm Canaccord Genuity Inc. who follows Herbalife, spoke with Direct Selling News after the presentation. "The ultimate takeaway," Van Winkle said, "is that Ackman thinks multilevel marketing is a pyramid scheme."
Though Ackman was careful not to comment on the business practices of any other direct selling companies, he didn't pull any punches when it came to criticizing people who have worked with Herbalife, including former Secretary of State Madeleine Albright and soccer star David Beckham.
"Taking those personal shots discredits the presentation," Van Winkle said. "Unless you are just simply trying to scare away Herbalife's service providers."
In the days leading up to the presentation, the price of Herbalife shares dropped as Ackman made the media rounds promising a "death blow" to the company. Investors were unimpressed by the presentation itself, sending share prices back up 25 percent. A few days later, weaker-than-expected financial results pushed the share price down again. Until the Federal Trade Commission concludes its investigation, stock volatility seems likely to continue.
"The direct selling industry needs to stay focused on whether the FTC is looking at multilevel marketing as a channel and business model more so than Herbalife specifically," Van Winkle said. "I think the reality is that if there is any outcome here for Herbalife short of the worst case scenario, all of the publicly trading direct selling companies will be valued higher down the road."
The Direct Selling Association recently approved seven new members:
Boisset Wine Living At Home
Direct-to-consumer marketing arm of Boisset Family Estates winemakers
Web: www.boissetwineliving.com
Country Gourmet Home
Direct seller of gourmet food mixes and wickless wax melts
Web: www.countrygourmethome.com
Jamberry Nails
Nail wraps for at-home application
Web: www.jamberrynails.net
Lulu Avenue
Web: ww.luluavenue.com
Magnabilities LLC
Jewelry and scarves
Web: www.magnabilities.com
MiA Bath & Body
Customized bath and body products
Web: www.miabathandbody.com
National Motor Club
Emergency roadside assistance and other services
I know that summer is supposed to be a time to relax and recharge, but this season has been packed! I'd love to hear what you and your organizations have planned for fall. As always, thanks for reading.
Lauren Lawley Head
General Manager
September 02, 2014
3 Keys to a Powerful Event Experience
by John Killacky
Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.
Another year, another convention. How will this year's event be different? What can you do to bring fresh excitement and new energy? It's not as daunting as it may seem. Take a deep breath. You got this.
When you focus on three important elements of your event, you can provide your guests (and even those who can't come) an impactful, meaningful—and fun—event experience. Let's start by identifying your event's stakeholders and what's important to each of them.
The Players
Your guests: Each consultant who registers for, travels to, and attends your event comes in search of something. Information, celebration, fun—whatever it is, they'll take it back home with them, and it will affect their business. So it'd better be good.
Your organization: You have important messaging to deliver. That means what's said, how it's said, how it looks and how it feels to the audience.
Your boss: C-suite execs want to see that the number of attendees is robust, their enjoyment is obvious, the event is polished and effective, and the budget remains intact. No pressure.
Can all those objectives be met? Absolutely, when you focus on three simple elements: pre-event prep, fabulous recognition and social media.
Plan Ahead
The importance of thorough pre-event preparation can't be overstated. Once you've determined the "skeleton" of your event—who, what, when, where—you can begin talking with production companies. You know what's most important to your company and this specific event; ask the questions that matter most, and listen carefully when they talk about their experience. Have they worked with companies in your industry? What do they bring to the table that others don't? What kind of people are they; what's their corporate culture? How do they handle changes in direction, and onsite challenges?
Ask for samples of their work and references from other clients—and then take a few minutes to call those clients. And, do a gut-check: Would you enjoy working with them? This is a big decision; you're entrusting the success of your event in large part to this company. Again, no pressure.
Let's assume now that you've chosen an event partner that fits. Congratulations! Now, make full use of the partnership—that's why you have them. Give them full access to your team and execs; being fully invested in the partnership will make your event even stronger. Ensure that they know your company, your mission and your execs (and what's important to each of them). Collaborate with your production partner to create meaningful content. In your event "skeleton," you've determined the direction, the tone and the look you want. Work with your event team to bring those concepts to life in onstage content, video and graphic support. Push them to make it everything you've envisioned. That's their job.
Rock-Star Treatment
One of the most important parts of an annual convention or an incentive trip is recognition—the sweet sound of applause (and their own name) as honorees take their walk of fame. What could be better?
Doing recognition right is so important! It's exciting for the individuals being recognized, it's aspirational for the guests watching the awards ceremony, and it's a chance for your company to truly thank and honor those individuals who make you shine. Your top achievers are the face of your company to their customers; you want those faces to be smiling and happy.
Your production company should know how important recognition is to your audience and honorees, and make it a priority in pre-event planning. Creating a memorable experience start-to-finish for each honoree is important. It can—and should—be awesome from backstage to onstage. There are very real and very important reasons that they're onstage. They've racked up incredible sales or sponsoring numbers. They've met goals, they've made new commitments or they've partnered with your organization's charitable efforts to change the world. Whatever it is, they've excelled. And their moment in the spotlight should be all excitement, and zero stress.
Make sure your event partner takes care with each honoree so that they're comfortable and know what's going to happen. Where they'll wait backstage, how they'll know it's time to walk out, who will escort them, where they should stand. The more they know, the more they can relax and enjoy the experience. And the harder they'll work to get back onstage next year!
Also there's this: Check, double-check, and triple-check that names are spelled and pronounced correctly. Amazingly, this doesn't always get checked, and it's a real downer for the honoree when that happens. Do whatever it takes to make them feel like the rock stars they are!
Pin, Post, Tweet, Share
Social media: It's not just for breakfast anymore. You've used Facebook, Twitter, LinkedIn and your company's website to drive attendance to your event. Now you're done, right? Actually, you're just getting started.
Social media can be a living, evolving, exciting part of your event, throughout the entire event experience. It seems appropriate to use a statistic now, so here it is: Nearly 75 percent of all Americans are actively engaged in social media, including your guests. Don't tell them to turn off their phones—engage them!
There are many different social media platforms, and you should know those that your consultants use the most. Just think: Each platform is a new way to directly reach consumers, consultants and event attendees. You're nodding your head. Yes, that makes sense. But few organizations use social media to its maximum advantage at their events.
Just about everything you do for event guests can also be accessed and enjoyed by those who couldn't come. They'll stay connected to the event and to your organization, and—fingers crossed—they'll make sure they attend the event next year.
Post (and tag!) photos of new products, displays, field presenters and crowd excitement on Facebook. Keep your YouTube channel up-to-the-minute current with videos of the CEO's speech, an amazing recognition segment, new product reveals and all of the excitement in the convention center hallways. You may want to consider creating an app specific to your event—for instance, the event agenda. It's hip, happenin' and green. All the cool kids are doing it.
Create a fun, interactive digital scavenger hunt in which attendees earn points throughout the event by "checking in" at different displays or sessions, or taking a selfie with a sales field leader, or scanning a product display. Draw for prizes on Twitter rather than on the stage. Have the CEO or other execs answer questions via live tweets throughout the event. Create an event-specific hashtag.
Sometimes social media is considered "anti-social" because we're all looking down at our phones, clicking and scrolling. Done the right way, it can actually create a more communal experience at your event—and well beyond.
It's a Wrap
So there you go. The three ways you can ensure a great event experience for your guests and a solid return on the investment you've made.
- Solid pre-event prep
- Rock-star recognition
- Effective use of social media
Do your homework, trust your event partner and enjoy building an event that'll leave them more excited—and more productive—than ever.
John Killacky is Managing Director, National Sales & Marketing at Bartha. Bartha is a leading provider of high-quality events, production and staging for the direct selling industry.
September 02, 2014
Solving the Challenges of Global Commission Payments
by Jeff Turney
Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.
How to break down five common cross-border payment barriers
Expanding into international markets can be a double-edged sword for many direct selling organizations. While new revenue sources are a cause for celebration, overcoming the many challenges associated with cross-border compensation plans isn't always easy.
As more direct selling organizations pursue global expansion objectives, treasury and finance departments are under increasing pressure not only to mitigate risks, but also improve efficiency, cut costs and ensure future scalability. It's a tough job, but for good reason. Payments and other transaction services, including prepaid card and incentives management, are at the core of a direct selling organization's economic and distributor relations.
Not surprisingly, this is why many of the industry's top performing organizations are partnering with professional payment providers in order to scale rapidly, ensure regulatory compliance and meet the demand for more convenient international payment options. As business models continue to adapt to global growth and expansion priorities, innovative cross-border payment products are emerging that offer greater payment flexibility and security.
The Challenges of Global Payments Distribution
Is your payments solution ready for the rigors of international expansion? The following points may be worthy of deliberation as you consider if your company should "go it alone" or work with an expert to outsource this side of your business:
1. Developing a Financial Network
While large direct selling organizations typically have multiple bank accounts in the jurisdictions where their subsidiaries operate, difficulties arise when an organization tries to find economical and efficient ways of introducing their product into a new country. In these cases, cross-border payments—SWIFT wires or international checks—are typically the only way that direct selling organizations can internally manage their payment process. The result? High fees are incurred by both the organization (upon sending) and distributors (at pick-up). On the administrative end, your accounts department will have their work cut out for them managing complex SWIFT instructions, collecting banking information from distributors and, in the case of checks, dealing with lost or delayed deliveries. Managing different payment file formats, along with account reconciliation and handling errors, can further exacerbate the process.
Partnering with a strong international payment provider will mitigate many of these costs and hassles through their existing financial networks. Now, instead of executing payments through multiple channels, you'll have the ability to manage all of your treasury needs through a single integration point.
2. Foreign Exchange Costs
Every organization has different goals when it comes to the management of their treasury department. In most cases, the focus includes eliminating foreign currency fees for distributors, as well as reducing internal processing costs.
Processing high international payment volumes can quickly throw internal accounting practices into turmoil, never mind the hassles created by foreign banking holidays, exception handling, time zones and language barriers. Partnering with a strong international payments provider can help your organization manage all of these currency complexities effectively, reducing risk and handling errors.
3. Unreliable Mail Distribution
According to Storm Trading Group, more than 14.5 million pieces of mail are lost or misplaced in the U.K. each year. And that's in a country where the postal service is professionally maintained and managed. Therefore, it's not surprising that internationally posting payments—whether they're in check, money order or prepaid credit card format—is becoming increasingly frustrating and risky.
When analyzing payment options and providers, be sure to inquire about any digital or real-time payment options. While traditional bank transfers can help to mitigate the risk of lost payments, the cost is often too much for distributors to stomach. Alternative options, such as virtual prepaid cards, mobile airtime top-ups and the ability to deposit earnings onto an already existing credit card, make it easier for distributors to access their commission payments faster and without any unexpected lifting fees or bank charges.
That being said, some payment products such as prepaid cards and checks simply cannot be delivered without the postman's help. In these instances, you'll want to work with your payments provider to mitigate unreliable mail services through the use of expedited bulk deliveries. Top providers can arrange to batch-deliver these products to local head offices using secure, tracked mail services. From there, the local office can go about delivering each individual payment in the most efficient manner.
4. Urgent Payments
Traditional payment solutions offer very little flexibility in regard to nonstandard payments, especially when it comes to cross-border issuance. From hardship payments and corporate expense reimbursements, to manual one-off or missed payments, handling these unique cases can be extremely time-consuming. While workarounds can be used to somewhat alleviate these issues, these inefficient solutions can result in poor data quality, creating additional downstream inefficiencies, errors and costs, as well as tarnishing your reputation with your distributors.
Having the ability to solve unexpected payment issues quickly will help you ease frustration and build trust amongst your new recruiting base. Remember this when it comes time to review your payment practices. If your international subsidies aren't able to accommodate urgent requests easily using instant-issue prepaid cards and real-time card loads, it might be time to consider a new approach.
5. Accommodating Underbanked Members
While the majority of your distributors may be well-served by direct bank deposits or checks, those without formal banking relationships will find these payment options to be too restrictive, if not entirely inaccessible.
When developing an underbanked payments strategy, it is important to understand what the driving factors are behind the financial decisions of your new distributors. While banks play a prominent role in North American and European nations, there are many markets where people prefer to address their financial service needs outside mainstream institutions.
In addition to providing distributors in these areas with the appropriate products and services, you'll want to make sure that every effort is made to reassure your new distributors of the trustworthiness of your payments system.
According to a 2009 study by the Center for Financial Services Innovation (CFSI), most members of the underbanked community strongly emphasize intangibles such as respect, trust, safety, security and a sense of belonging. Unfortunately, many commission payment methods can be viewed as quite intrusive, requiring rigorous identity verification in order to abide by financial institutions' overly strict interpretation of regulatory policies. These privacy requirements are often enough to discourage members of the underbanked community from joining a direct selling company. In these instances, corporate closed-loop payment services—such as corporate incentive prepaid card products that can only be loaded with funds by the corporate entity (not the cardholder)—can be used to minimize the identification verification process for payees, effectively opening up a direct selling organization's recruitment opportunity to a much wider audience.
Providing commission payments in a timely and cost-efficient manner is a major challenge that gets compounded even further when international payments are introduced. Many organizations can benefit from working with a trusted international payments provider, as it will allow them to focus their efforts on new business development rather than on financial administration.
Jeff Turney is an Account Manager, International Payments at hyperWALLET Solutions Inc. A leading global payments provider, hyperWALLET was recently awarded the 2014 DSA Ethos Award for Partnerships.
September 02, 2014
Financial News, September 2014
Click here to order the September 2014 issue in which this article appeared or click here to download it to your mobile device.
Herbalife Ltd.
Herbalife Ltd. (HLF—NYSE) announced second quarter 2014 results, with earnings falling a penny short of expectations—adjusted earnings per share of $1.55 versus estimates of $1.56. This was the first time since 2008 that Herbalife missed estimates. Despite this difference, earnings increased 10 percent compared to the prior year.
The global nutrition company reported net sales for the quarter ended June 30, 2014, at $1.3 billion, reflecting an increase of 7 percent compared to 2013. Estimates had been $1.35 billion. Second quarter worldwide volume growth was 5 percent compared to the prior year period.
Adjusted net income for the quarter was $141.4 million, compared to 2013 second quarter adjusted net income of $150.7 million. On a reported basis, second quarter 2014 net income was $119.5 million, or $1.31 per diluted share, compared to $143.2 million, or $1.34 per diluted share for the same period in 2013.
For the quarter ended June 30, 2014, the company generated cash flow from operations of $156.9 million, invested $39.6 million in capital expenditures and repurchased $581.3 million in common shares outstanding under its share repurchase program.
During the second quarter the company repurchased 9.8 million shares at an average cost of $59.41. There is currently $232.9 million remaining on the existing $1.5 billion share repurchase authorization.
Tupperware Brands Corp.
Tupperware Brands Corp. (TUP—NYSE) announced its second quarter results, reporting that sales for the quarter were $674 million, down from $688 million for the same period last year. While sales were down 2 percent (up 3 percent in local currency) versus the previous year, emerging markets achieved a 10 percent increase in local currency, accounting for 66 percent of sales. Established markets were down 7 percent in local currency, largely driven by poor results in Germany.
GAAP net income of $47.6 million for the second quarter ended June 28, 2014, includes $22.2 million from the impact of currency devaluations in Venezuela. Net income of $47.6 million was down 38 percent, or 93 cents per diluted share, from the previous year's $76.3 million, or $1.43 per diluted share. Excluding foreign currency, net income was down 31 percent versus the prior year. GAAP diluted EPS was 93 cents, versus $1.43 last year with adjusted diluted EPS of $1.47, up 11 percent in local currency.
Second quarter cash flow from operating and investing activities was $45 million, versus $49 million in the prior year, primarily reflecting planned higher capital spending.
In the second quarter the company returned $47 million to shareholders through a dividend payout of $33 million and the repurchase of 171,000 shares for $14 million. Since 2007, 20 million shares have been repurchased for $1.2 billion, with $800 million left under an authorization that runs until February 2017.
USANA Health Sciences Inc.
USANA Health Sciences Inc. (USNA—NYSE) reported financial results for its fiscal second quarter 2014, missing earnings estimates by 14 cents at $1.36 per share (according to Briefing.com the Capital IQ Consensus Estimate was $1.50).
For the second quarter ended June 28, 2014, net sales decreased to $188.3 million, down 0.4 percent compared with $189.1 million in the prior-year period. Net sales, on a comparative basis, were negatively impacted by: $7.0 million of incremental sales in the second quarter of 2013 that occurred ahead of policy changes, which included restricting Associate purchases to their country of residence; $3.3 million from unfavorable changes in currency exchange rates; and price discounts that the company implemented in 2013.
Net earnings for the second quarter were $19.3 million, compared with $24.2 million during the prior-year period. Earnings per share for the quarter were $1.36, compared with $1.72 in the second quarter of the prior year. Weighted average diluted shares outstanding were 14.2 million in the second quarter of 2014, compared with 14.1 million in the prior-year period.
During the quarter, the company accelerated its share repurchase activity by repurchasing approximately 682,000 shares under its authorized repurchase program, for a total investment of $49.1 million. Additionally, as of July 25, 2014, the company has spent $21.4 million during the month of July to repurchase approximately 285,000 shares.
Avon Products Inc.
(AVP—NYSE) Avon Products Inc.'s second quarter 2014 results still show a struggle for the beauty company, but its ongoing turnaround plan is slowly making itself known as sales improve in key regions. Avon's revenue came in at $2.2 billion, falling 13 percent (or 3 percent in constant dollars). Adjusted earnings were 20 cents per share, a penny below the Zacks Consensus Estimate, dropping 31 percent from 29 cents the previous year.
While the volume of products sold dropped 6 percent and active representatives worldwide were also in decline, average orders went up by 3 percent in the quarter. The company also reported that quarterly sales grew in the U.K. for the first time since 2010, up 11 percent, or 1 percent in constant dollars, primarily due to higher average order.
Second quarter 2014 gross margin and adjusted gross margin were 63.0 percent. Adjusted gross margin was 30 basis points lower than the prior-year quarter, primarily due to the unfavorable impact of foreign exchange driven by Latin America and Europe, Middle East & Africa.
Operating profit was $93 million and operating margin was 4.3 percent in the quarter. Adjusted operating profit was $186 million and adjusted operating margin was 8.5 percent, down 100 basis points from the second quarter of 2013.
Second quarter 2014's net income from continuing operations was $20 million, or 4 cents per diluted share, compared with net income from continuing operations of $85 million, or 19 cents per diluted share, for the second quarter of 2013. Second quarter 2014's adjusted net income from continuing operations was $91 million, or 20 cents per diluted share, compared with adjusted net income from continuing operations of $127 million, or 29 cents per diluted share, for the second quarter of 2013.
Net cash used by operating activities was $7 million for the six months ended June 30, 2014, compared with net cash provided of $70 million for the same period in 2013, unfavorably impacted primarily by lower earnings. The overall net cash used during the six months ended June 30, 2014, was $330 million, which was comparable with the same period in 2013.
Avon's net debt (total debt less cash) at June 30, 2014, was $1.9 billion, up $240 million from the year-end 2013 level, and $170 million lower than at June 30, 2013.
Avon also declared a regular quarterly dividend on its common stock of 6 cents per share, payable Sept. 2, 2014, to shareholders of record on Aug. 14, 2014.
Blyth Inc.
Blyth Inc. (BTH—NYSE) reported sales and earnings for the second quarter of 2014 with net sales for the three months ended June 30, 2014, decreasing approximately 25 percent to $157.8 million from $211.7 million for the comparable prior year period.
The results were significantly impacted by the company's Health & Wellness segment, ViSalus, which had second quarter net sales of $53.6 million versus $101.5 million for the same period last year, a decline of 47 percent, largely reflecting the reduced promoter base in North America. At the end of the second quarter, qualified independent North American promoters totaled approximately 28,700 versus approximately 57,200 at the end of the prior year's second. In the company's Candles & Home Décor segment, PartyLite, sales were $72.7 million in the second quarter versus $77.8 million for the same period last year, a decline of 6 percent.
Blyth's operating loss for the second quarter was $2.8 million this year versus profit of $1.2 million last year, largely driven by the decline in sales. Net income attributable to Blyth Inc. was a loss of $4.4 million for the three months ended June 30, 2014, compared to a loss of $1.4 million in the prior year period. Diluted earnings per share attributable to Blyth Inc. were a loss of 28 cents per share for the three months ended June 30, 2014, compared to a loss of 8 cents per share in the prior year period. Net loss attributable to Blyth Inc. common stockholders was $4.9 million in this year's second quarter compared to a loss of $3.2 million last year. Diluted earnings per share attributable to Blyth Inc. common stockholders were a loss of 30 cents per share compared to a loss of 20 cents per share in the prior year period.
Second quarter operating loss for the Candles & Home Decor segment was $0.7 million versus a loss of $0.3 million in last year's second quarter. Excluding allocated corporate expenses of $1.8 million this year and $1.6 million last year, PartyLite's operating profit was $1.1 million this year versus $1.3 million last year.
Health & Wellness second quarter segment operating loss was $1.3 million this year versus operating profit of $2.8 million last year. Excluding allocated corporate expenses of $0.7 million this year and $2.4 million last year, second quarter operating loss for ViSalus was $0.6 million this year versus $5.2 million operating profit in the second quarter of 2013.
Relìv International Inc.
Relìv International Inc. (RELV—NASDAQ), a maker of nutritional supplements that promote optimal health, reported its financial results for the second quarter of 2014.
Net sales for the quarter were $14.5 million, a 6.2 percent decrease from the second quarter last year. Net U.S. sales totaled $10.8 million, down from second-quarter 2013 net sales of $11.8 million. Net sales outside of the United States increased 1.8 percent in the second quarter of 2014 compared to the prior-year quarter, buoyed by a sales increase of 14.5 percent in Europe.
The net loss for the second quarter of 2014 was $289,000 or 2 cents per diluted share, compared to a net loss of $214,000 or 2 cents per diluted share in the 2013 second quarter. The loss from operations for the second quarter of 2014 was $475,000 compared to a loss of $222,000 in the same quarter of 2013.
Net sales in Europe increased to $2.24 million in the second quarter of 2014 compared to $1.96 million in the prior-year second quarter.
Net sales for the first six months of 2014 were $28.9 million, which represents a 15.6 percent decrease from the same period in 2013. Relìv's international net sales increased 1.2 percent in the first half of 2014 compared with the first half of last year. In the United States, net sales declined 20.2 percent.
Relìv reported a net loss of $440,000, or 3 cents per diluted share in the first six months of 2014, compared to net loss of $19,000, or zero cents per diluted share, in the same period of 2013.
Relìv had cash and cash equivalents of $4.93 million as of June 30, 2014. This amount compares to $6.66 million as of Dec. 31, 2013, and $4.26 million as of this date last year.
Educational Development Corp.
Educational Development Corp. (EDUC—NADSAQ) reported results for the fiscal first quarter ended May 31, 2014.
For the first quarter of fiscal 2015, EDC announced net revenues of $7.2 million, a 20 percent increase compared to $6 million for the same period last year and net earnings of $239,700 compared to $66,600. Earnings per share were 6 cents compared to 2 cents the previous year on a fully diluted basis.
The company made the decision in January 2012 to eliminate sales to large Internet sellers and most wholesale accounts in an effort to support its base of retail outlets and its home business division, Usborne Books & More. This decision has proven very successful as EDC Publishing finished fiscal year Feb. 28, 2014, with a record year of net revenues and the first quarter ending May 31, 2014, with a 17 percent increase in net revenues.
Usborne Books & More has also significantly benefited from this decision. This division has now recorded 13 consecutive months of revenue growth after nine years of decline. Net revenues for the last four months—February, March, April and May—have shown 20 percent plus gains year over year and the trend has continued in June with a 23 percent net revenue gain. The company has not recorded a losing quarter in 27 years and fully expects to maintain its historical dividend.
Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.
September 01, 2014
Executive Connection with John Parker, Chief Sales Officer, Amway
|John Parker
In this month's Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with John Parker, Chief Sales Officer for Amway, about leadership, always learning and finding fun in everything you do.
DSN: What is the one thing you enjoy most about being the Chief Sales Officer for Amway?
JP: The engagement with our field—Amway Business Owners. At the end of the day, it's their success that adds up to create Amway's results. Their passion for helping other people helps make Amway what it is.
DSN: What has been your proudest accomplishment?
JP: Having been a part of teams that have seen our business through some challenging times. It's easy to lead in good times when all is going well, but I think you add more to the team and organization when times are tough and you're able to work together. It's most satisfying. Sometimes the best work is done during times when results don't show right away, but they follow.
DSN: What's been the most fun?
JP: I enjoy learning. For me a lot of my learning came while transitioning from a smaller to a larger role. I've also enjoyed learning from generations younger than I am. They're not just different in how they think, but they're fundamentally different in their personal relationships. I can't be effective in my role if I don't understand that. The process of learning and trying new things is really fun and exciting. Also, the adventure of travel has been fun—having a chance to go around the world, experience different cultures, people, customs and food. You either love that or struggle with it. I love it.
DSN: What do you tell Amway Business Owners to lead and inspire them?
JP: The primary message is that our business—our whole industry—is centered around helping other people. The individuals who are the most successful Amway leaders realize at some point in their journey that it's not about them. It's about helping others. That's when it becomes more fun, more rewarding; and it leads to an environment of more success as well.
DSN: You've held several key positions at Amway. Which one shaped your management style the most?
JP: When I was President of Amway Japan because it really forced me to reflect on my style, strengths and weaknesses, and adapt my style to be with different people and cultures. As leader it's sometimes easy to take the mindset that I have one way of leading and communicating. But if you work across geographies and cultures, you need to be more flexible in how you lead and communicate. I think that shaped me more than anything else.
DSN: If you could relive one period of time since you've been at Amway, either to enjoy it again or have a do-over, what would it be?
JP: Maybe the first five years of my career, because there's an excitement around that initial stage of learning. I had such great mentors here in the company. I'd love having the chance to go back and soak up that learning I got from them. It really was fun, too.
DSN: Is there one basic principle that governs your leadership at Amway?
JP: I really think it's about putting the focus on others, not on yourself. Those leaders who are in it for themselves may have success in the short term, but people see through that. Over the long term you won't develop real followership unless your focus is on the bigger cause that our businesses stand for.
DSN: Has someone ever given you a bit of really great advice you can share with us?
JP: I'll point to my wife, who says to listen more than you talk. It's true. If you spend more time talking and less time listening, you'll be less effective than if you flip it around.
DSN: What's something that few people know about you?
JP: I want to retire to Australia someday, mostly for the golf, surfing and beaches.
DSN: What's on your bucket list?
JP: I want to play golf on every state in the country. I've probably got 25 states to go. I also want to surf in every ocean and sea in the world and to get to every baseball stadium in America.
August 29, 2014
J.D. Power Survey Ranks Ambit Highest in Customer Satisfaction
Bigger and better don't necessarily go hand-in-hand when it comes to maintaining rapid growth and superior service, but Ambit Energy is proving it can be done. As a result of its annual customer satisfaction survey, J.D. Power and Associates has named Ambit "Highest in Residential Customer Satisfaction among Retail Electric Providers in Connecticut, New Jersey and Pennsylvania."
The J.D. Power study measures retail electric providers across five key factors: price, communications, corporate citizenship, enrollment/renewal and customer service. In Pennsylvania, Ambit performed particularly well in the communications factor, earning a total score of 718 on J.D. Power's 1,000-point scale. The company outperformed its competitors with scores of 705 and 718 in Connecticut and New Jersey, respectively.
The survey of more than 25,757 retail electric residential customers was conducted September 2013 through June 2014. In J.D. Power's inaugural study last year, Ambit ranked highest in customer satisfaction among New York residents.
The news comes as Ambit Energy Consultants gather in Dallas for the company's annual AMBITION conference, running Aug. 27-30. With more than 8,000 attendees on hand, Ambit has reason to celebrate. The company surpassed $1 billion in annual sales last year, making it the No. 12 company on the DSN Global 100 and the leading energy provider in the direct selling industry.
"The power that drives the success of Ambit Energy comes from the amazing spirit of the entrepreneurs and small business owners who will be coming to AMBITION," said Co-Founder and CEO Jere Thompson Jr. "We aim to make AMBITION a springboard for our Consultants to reach greater heights and achieve greater success as they work to build their businesses and generate economic opportunities for themselves and others in their communities."
August 27, 2014
Isagenix Features Make-A-Wish Reveal at Annual Event
Photo above: As part of Isagenix's support of the Make-A-Wish Foundation, 11-year-old Ben—who recently completed chemotherapy treatment—was asked to participate in a live magic show while his mom, dad and 8-year-old brother watched him help perform the grand finale.
Over the past two years Isagenix has raised more than $1.5 million as a sponsor of the Make-A-Wish Foundation, and during the company's 2014 Celebration this week, more than 10,000 attendees got to witness firsthand one of those wishes coming true.
The event included a performance by magician Gerry Katzman, owner of Hollywood's Magic Castle. Katzman had some help from special guest Ben, an 11-year-old boy who recently completed his last chemotherapy treatment for acute lymphoblastic leukemia. Thanks to the support of Isagenix Associates and employees, Ben's wish to perform in a live magic show was granted in a big way.
"Make-A-Wish makes such a big difference in the lives of families going through hard times," Ben's dad, Ingolf, shared.
During the performance, Ben also learned that he and his family will travel to Australia to check off another item on his wish list: meeting a platypus. Australia is the only place in the world where the unique mammals remain in the wild.
"I've always dreamed to see a furry creature who is a mammal and lays eggs," was Ben's response. "I can't believe that I'm going to Australia with my entire family to do this."
Prompted by a $100,000 matching challenge from Isagenix Board Member Jim Pierce and his wife, Tammy, audience members also raised more than $200,000 in support of Make-A-Wish. To date, Isagenix has granted over 190 wishes in partnership with the foundation. The company received Make-A-Wish America's prestigious 2013 Cause Champion Award in recognition of its cash contributions, employee support and outstanding partnership internationally.
August 27, 2014
Networx Online
August 27, 2014
Direct Sellers Make up 15% of Beauty Industry's Top 100
Fashion, beauty and retail hub Women's Wear Daily has published its annual Beauty Inc Top 100, and the list shows direct selling companies are sitting pretty. The Top 100 ranks the world's largest beauty manufacturers based upon annual sales. In an industry that generated $204.61 billion in revenue last year, direct selling companies represent 15 percent of the Top 100.
"For most in the Top 100, 2013 was positive, with 77 companies posting increased revenues, 18 reporting declines and three remaining flat," WWD reports.
Generating nearly 15 percent of all cosmetics sales, French behemoth L'Oréal sustained its prominent leadership position within the industry. Avon Products claimed the No. 6 spot, despite major restructuring within its U.S. business and a dip in the company's active representative numbers. The New York-based firm reported total beauty sales of $7.1 billion in 2013.
Direct selling companies ranked on this year's Beauty Inc Top 100 include:
August 26, 2014
Executive Connection with Truman Hunt, CEO, Nu Skin Enterprises Inc.
|Truman Hunt
In this month's Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Truman Hunt, CEO of Nu Skin Enterprises Inc., about leadership, sustainability and being a force for good.
DSN: What is the one thing you enjoy most about being the CEO of Nu Skin?
TH: I love being part of a global family of like-minded, positive people. And I get to see how Nu Skin has changed the lives of so many people in different ways. For some this change has been financial, for others it has been a change in their appearance or health, and for many Nu Skin has given them empowering and wonderful ways to help make the world a better place.
DSN: What has been your proudest accomplishment?
TH: My proudest accomplishments are actually at home, where I focus my attention on six children. But from a business perspective, it's really rewarding to set challenging growth objectives and then see the organization rise to the challenge. Organizations that are aligned in purpose can produce remarkable results.
DSN: What do you tell Nu Skin distributors to lead and inspire them?
TH: One of the things that is striking about our sales leaders is that they are inherently highly talented and motivated. They are the ones who do the inspiring! However, I think continually reminding our distributors how important it is to be a force for good in the lives of all who come into contact with our business is something that inspires us in the corporate office and also inspires our sales leaders.
DSN: What is your vision for Nu Skin?
TH: Our vision is straightforward and unwavering: to become the world's leading direct selling company by generating more income for our sales leaders than any other company.
DSN: If you could hit "replay" on any part of your own Nu Skin journey, either to enjoy the moment or to do something different, what would it be?
TH: That's a tough question since we've had so many incredible moments at Nu Skin. I guess I would have to say I'd love to relive the moment when we first hit $1 billion in annual revenue. Why? Because when Blake, Steve and Sandie were first building the company, there were so many people who doubted their ability to make Nu Skin—and their vision—a success. It was really gratifying to prove to ourselves and to the world that Nu Skin was growing and thriving and making a real difference in millions of people's lives.
DSN: What's been the most fun part of the recent rapid growth at Nu Skin?
TH: The larger we become, the more people benefit. And that will always be what gives all of us the most satisfaction.
DSN: What advice would you give an executive at a young direct selling company to help them achieve strong, sustained growth?
TH: The measure of success is not whether you can reach $100 million in sales. The measure of success is whether you can sustain growth. Many startups rely on the notion of their company being a "ground floor" opportunity. But to me the measure of success is whether a company can sustain growth after it's been around for many years. The formula for doing that is simple in some ways and complex in others. It goes beyond being a "ground floor opportunity."
DSN: Is there one basic principle that governs your leadership at Nu Skin?
TH: My leadership, and the leadership of all of us at Nu Skin, is based on our philosophy that we want to be a force for good throughout the world. It was the vision of our founders, and it continues to drive every aspect of the business today. It's how we try to operate, and it permeates our culture in every way.
DSN: What's one piece of advice that you've found especially useful?
TH: One bit of advice that has stuck with me perhaps like no other was the definition of leadership offered by Jim Collins at our recent DSA annual meeting. He defined leadership as "the art of getting people to want to do the things that must be done." I think the definition hits the nail on the head. And it's why leadership of a business is probably the most challenging job in the world. It's one thing to dictate to people what to do. But real leadership is the ability to get people to want to do critical things. That's when the magic happens.
DSN: What do you like to do when you just want to relax?
TH: When I need relief from the daily pressures I usually do one of a few things: read a book, work on my really bad golf game, or play the ukulele. The uke works best because it requires total focus. It's a good way to escape for a few minutes.
August 25, 2014
Epicure Launches 'Good Food. Real Fast.' Movement
What did you eat for lunch? Who grew that food? Did you prepare it yourself? How far did it travel to reach your plate? Those are the kinds of questions Epicure Selections, a Canadian food and cookware company, is posing through its newly launched Good Food. Real Fast.™ movement.
The movement encourages individuals—even those who think they don't have the time or the kitchen savvy—to cook and eat real food. To simplify mealtimes without compromising on health or taste, Epicure has created a website dedicated to recipes, quick meal ideas, cooking tips and expert advice. The Good Food. Real Fast. community can also contribute ideas and inspiration by tagging social media posts with #goodfoodrealfast.
This is a critical time to change the way the world thinks about food, says Epicure CEO Amelia Warren. "We want to dispel the myth that cooking is hard and time consuming. To be healthy, you have to cook. We want to show you how easy, quick and delicious healthy, real food can be."
Good Food. Real Fast. is a an extension of Epicure's philosophy and product offerings, which include seasonings, sauces, condiments, meal shortcuts and timesaving cookware. The company participates in the Non-GMO Project and emphasizes clean eating, with no added MSG, fillers, or artificial flavors or colors. For each person who signs on to the Good Food. Real Fast. movement, Epicure has pledged to donate $1 to the Epicure Foundation, which supports grassroots food initiatives across Canada.
August 22, 2014
4Life Bolsters Scientific Research with Auburn University Partnership
A new partnership between wellness company 4Life Research and Auburn University will advance academic studies on the safety and effectiveness of 4Life products. The company recently made a $100,000 gift in support of The Molecular and Applied Sciences Laboratory in Auburn's School of Kinesiology.
The research will range from specific ingredients and how they affect physiological systems, to safety studies and new ingredient discovery. 4Life has developed a product line based upon its trademark Transferceutical Science, which supports the immune system in remembering and responding to potential health threats.
"Companies are always looking for ways to generate scientific credibility in their research, and this is an area where 4Life is truly committed," said Vice President of Communications Calvin Jolley.
4Life has collaborated with a number of universities in the past, but the Auburn partnership is by far the most significant. The company's willingness to invest resources in academic research was a major draw for Chief Scientific Officer Chris Lockwood, Ph.D., CSCS, who joined 4Life last year.
"Prior to coming to 4Life, I did consulting with a lot of different companies within the industry," Lockwood told DSN. "It's been great to see the support our founders, David and Bianca Lisonbee, have given to exploratory research that doesn't necessarily guarantee results."
Lockwood met Auburn's Dr. Michael Roberts, Director of the Molecular and Applied Sciences Lab, when the two worked together at the University of Oklahoma. Since then Lockwood has continued to run research through Roberts, whom he calls "an incredibly brilliant and gifted person."
The studies will take place in the 58,000-square-foot, state-of-the-art kinesiology research facility that opened on Auburn's campus last fall. "When we first visited the facility, we were shocked to realize the depth of their research capabilities across the spectrum of anything we would want or need to do," Lockwood shared.
The Auburn partnership will support 4Life's in-house R&D department in its commitment to innovation, substantiation and education. 4Life also enlists the expertise of physicians and nutrition experts worldwide who sit on its Health Sciences Advisory Board (HSAB). The board gathered last week for its annual HSAB Symposium, where members have the opportunity to share insights on product evaluation, scientific study, and technical interpretation.
August 21, 2014
Fast Growth Propels Direct Selling Brands onto Inc. 500
Inc. magazine has announced its 2014 Inc. 500|5000, and the exclusive ranking once again features several direct selling brands. The Inc. 5000 is a list of America's fastest-growing private companies, with the Inc. 500 representing a special ranking of companies in the top 10 percent.
Limited to U.S.-based, privately held companies, the Inc. 5000 measures revenue growth from 2010–2013. This year's list includes direct sellers Plexus Worldwide (No. 8); Jeunesse Global (No. 258); It Works! (No. 290); North American Power (No. 476); Ambit Energy (No. 2074); WorldVentures (No. 2333); Viridian Energy (No. 2381); 5LINX (No. 2916); YOR Health (No. 3528) and Isagenix (No. 3764). The full Inc. 500 list will appear in the September 2014 issue of Inc. magazine.
Plexus Worldwide, the highest ranking direct seller on the list, got its start eight years ago in Scottsdale, Arizona, and has since expanded into Canada and Australia. With a strong focus on weight-loss and pain-relief products, Plexus is the No. 2 health company in this year's ranking. The direct seller generated 16,458 percent growth over three years, closing out 2013 with $159.8 million in revenue.
"At Plexus, our mission is to enhance the health, wealth and happiness of our Ambassadors and employees. And we're seeing that happening across the country," Plexus CMO Alex Clark shared in a recent feature for DSN. "Eventually we'll see it happen across the world. I anticipate being here for a long time because what Plexus has is a true partnership between its executives and Ambassadors."
Based in Altamonte Springs, Florida, Jeunesse Global recorded 1,788 percent growth over the past three years. Jeunesse has expanded aggressively into 92 markets since launching in 2009. The company's personal-care and nutrition products generated sales of $224 million in 2013.
With three-year growth of 1,565 percent, It Works! ranked No. 290 in its fourth consecutive year on the Inc. 5000. The company generated revenue of $456.2 million in 2013 and recently upsized its corporate headquarters to a new facility in Bradenton, Florida. It Works! markets a line of health and wellness products anchored by its Ultimate Body Applicator, a 45-minute tightening and toning wrap.
In 2011, Forbes named North American Power to its list of America's Most Promising Companies. The U.S. energy provider has lived up to its promise with 991 percent growth over the past three years. North American Power's retail electricity and natural gas services generated $263.2 million in revenue last year.