The September 2016 issue of Direct Selling News is available!

Cover Story

Keys to Success part 1: Customer Acquisition

by Andrea Tortora

Of all the misinformation about direct selling, perhaps the most often repeated—even by those who work most closely in the field—is the description of direct selling as an industry. Read more…


Celebrating success is a hallmark of direct selling, and we have two opportunities for you to recognize the great work being done by your corporate teams. Read more…


Like the pink Cadillacs it awards to top sellers, today’s Mary Kay retains a classic feel while embracing innovative thinking and design. Read more…


When husband and wife team Mark and Tracy Jarvis set out to launch their own company, they had listened to numerous suggestions for the name until “zurvita” was proposed and immediately touched and won them over. Read more…


In the year 1855, Reverend J.R. Graves started a mail order company selling books, religious tracts and Bibles. Read more…


It’s another year and you’re gearing up for your convention. Read more…


Over the past decade, rapid developments in technology have fundamentally changed how direct selling organizations operate. Read more…


The speculation started immediately. As soon as the news—Herbalife Settles with FTC—began popping up on mobile alerts and news outlets early Friday morning, July 15, observers inside and outside the direct selling channel began scrambling to understand the bigger picture. Read more…


The U.S. Direct Selling Association held its Annual Meeting in Phoenix, Arizona, June 5 to 7, bringing together direct selling company executives, academics, suppliers and global direct selling leaders for collaboration and conversation about the trends shaping the channel. Read more…


The direct selling industry is at a critical juncture in its long history. Read more…


The role of the U.S. Direct Selling Association (DSA) has never been more clear: to serve as a “listening post,” a place to collect, analyze and address the aspirations and concerns of the direct selling channel. Read more…


For more great stories, please click on our subscription button and subscribe to DSN

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Taking Care of Your People So They Can Take Care of You

by Jere Thompson Jr.

 Photo above: Ambit Energy co-founders Chris Chambless and Jere Thompson Jr.


Click here to order the February 2015 issue in which this article appeared or click here to download it to your mobile device.


When I was a graduate student at The University of Texas, I spent a month in Washington, D.C., learning about the federal government and how it works. A couple of us in the program were given the incredible opportunity to visit the West Wing of the White House. James Baker, a fellow Texan and President Ronald Reagan’s Chief of Staff at the time, was our tour guide. The highlight, of course, was the Oval Office. While telling stories about President Reagan, Mr. Baker walked over to the President’s desk, opened a crystal jar and offered us some of his famous jelly beans. It was unforgettable, and so was a small brass plaque sitting next to the jar. It read, “There is no limit to what a man can do or where he can go if he doesn’t mind who gets the credit.”

To me, President Reagan was emphasizing that success is all about teamwork, about attracting and retaining the best people and giving them the recognition they deserve.

Today, Chris Chambless, my Co-Founder and our CMO; John Burke, our CIO; Laurie Rodriguez, our CFO, and I all have replicas of that brass plaque on our desks. From the very beginning we wanted to build a culture that would enable us to attract and retain the best talent. First, however, we had to decide what we wanted to focus on and what we were willing to say “no” to.  We had to narrowly target our limited startup capital and time. We kept repeating, “The main thing is to keep the main thing the main thing.”

At Ambit, we have three main things: our systems, our people and our standards.

Systems

Our entire executive team came from telecom backgrounds. In that industry, we had seen companies with great back offices and systems thrive and prosper while those with poor systems capsized, sank and disappeared forever when the inevitable data tidal wave hit them. We knew that operationally Ambit would be a data processing company. Everything we would do would involve the receipt, processing, storage, sharing, presentation and mining of data.

At first, John thought we would be able to find a vendor to supply our systems. But what we wanted didn’t exist. He told us that we would have to build our own systems because the cost and the delays of modifying off-the-shelf systems would be prohibitive. Chris and I didn’t know what we didn’t know about coding. We just shrugged and with very little empathy said, “Let’s get started.” John turned pale, but the next morning he was loyally at his desk starting to code. John built our IT organization and systems from scratch. He started alone and today has 130 people in his IT department. Our systems have been patented, and we feel they are a key qualitative difference between Ambit and our competitors.

People thought we were crazy to build our own systems. Any time you do something unconventional, you get criticized. The first time I was invited to a telecom industry conference to speak on a panel, I was asked to describe Ambit. I told everyone that we were a data processing company that happened to sell electricity and used direct sales for gathering customers. There were snickers in the room. We heard them and ignored them. We didn’t want to be like them, act like them and have returns like theirs. In fact, we didn’t even want to think like them. We didn’t hire anyone from the utility industry for over four years. Any time we needed to learn about something, we Googled it. This approach had risk, but it succeeded because of talented, curious people.



People

Companies are collections of people. Their cumulative and collective knowledge multiplied by their focus and passion is what distinguishes one company from another. That’s what culture is all about. The question for us was how to begin creating a culture. There is an old saying, “First, we define our space and then our space defines us.” We set our culture in motion by moving into a 100-year-old warehouse space and tearing out all of the offices. Light immediately cascaded through the many windows onto the beautiful polished hardwood floors and red brick walls. We wanted open spaces so that we could more closely connect to the emotions of our business. We wanted to hear the excitement and concerns in voices to know what to applaud or what to address immediately. We wanted to sit in the open so that we could have hundreds of conversations a day without ever leaving our desks.

Actually, our desks are $19 fold-up tables. They, too, were unconventional, and concerns were voiced that everyone would think we had no money and little chance of success. But we explained that we were going to invest all of our capital in great people and outstanding systems, not in fancy offices and elegant furniture. We told everyone that the smart people would understand this and not to worry about anyone else. Eight years later, we are a $1.5 billion company, and our executive team still sits at those same fold-up tables, next to each other and out in the open.

If we started over tomorrow, we would do it exactly the same way. Smart, young people want a space with high energy that promotes speed, creativity and collaboration. They want to be surrounded by other smart people. We knew that only assigning IT the task of figuring out what was needed and how it should be designed, coded and then prioritized would lead to disaster. We were determined to enable companywide collaboration, believing that everyone had to be engaged in this process. Our space and open culture made that work.

Standards

The very first time Chris and I sat down to map out the kind of company we wanted to build, we talked about our reputations and the reputations of consultants who would one day join us. We knew that consultants would be putting their reputations on the line every time they approached someone about becoming an Ambit customer or Ambit consultant, and we wanted to deliver as promised—not some of the time, but all of the time. So we committed to building the finest and most respected retail energy provider in America. Those were pretty bold words for a company with a couple of customers, but we knew the opportunity was enormous. To be the finest, we had to have great systems and outstanding people. To be the most respected, we could never sacrifice integrity for growth.

Over the past few years in almost every speech I have made, I have emphasized that the only way to attract and retain the best people, whether it is inside an organization or in a consultant downline, is by maintaining high standards. We tell our people to be the finest and most respected, to never sacrifice integrity for growth and to never exaggerate. We explain that exaggeration is like quicksand, and once you slip into it, it is almost impossible to get out of. You cannot build a long-term sustainable business with a foundation built on quicksand. Build your foundation on rock. Build it on truth.

Looking back over the past eight years, we have always tried to work our hardest and do our best. We have always tried to deliver as promised. We have always tried to attract and retain the best people. We have communicated our values repeatedly, and have enforced them when necessary. And along the way, we would like to think that we have built up a certain level of trust with our customers, with our consultants and with our people. That is why we have achieved what we have achieved.

President Reagan was right. Success is all about teamwork, about attracting and retaining the best people and giving them their well-deserved credit. Everyone can do that.


Jere Thompson Jr. is Co-Founder and CEO of Ambit Energy.

Strategy Tinkering Can Stop Your Growing Business in its Tracks

by Robert Sher

Click here to order the February 2015 issue in which this article appeared or click here to download it to your mobile device.


Building a business through the direct selling channel can be a powerful strategy for rapid growth. Creating innovative products and services, along with leading-edge approaches to connecting with the field and motivating performance are similarly efficacious strategies. However, even great strategies aren’t enough to sustain success.

In-depth research has shown that there are seven silent growth killers that are particularly harmful for midsized companies (generally regarded as those with $10 million to $1 billion in revenue) that can offset the success coming from a great strategy. While each of the killers is deadly in its own right, this article will focus on the danger of “strategy tinkering at
the top.”

First, let’s start with an overview of the seven growth killers:

1. Letting Time Slip-Slide Away

Time—or rather, lack of appreciation for it—is the first silent growth killer. Midsized companies have big, complex projects they never experienced when small. As a result, projects seem to take too long, or get stuck altogether.

2. Strategy Tinkering at the Top

For midsized firms, tinkering with the business’ core strategy can be deadly, particularly when changes are made without proper research, planning and testing. Founders and entrepreneurial leaders are at risk of over-innovation, distracting the core business from scaling.

3. Reckless Attempts at Growth

In the effort to scale, organizations face increased risk and expense. If the attempt at growth costs too much and the revenue doesn’t match the expense, growth won’t materialize, but a cash crunch will.

4. Fumbled Strategic Acquisitions

Acquisitions can be vital to a growth strategy, but they can also derail an organization. Successful less than half of the time, acquisitions are less about the deal and the closing and more about selection and what happens afterward: the integration process and execution of the acquisition plan.

5. Operational Meltdown

A rapidly growing bottom line and a rigorously lean operation can be a death sentence under the cover of success. Leaders must be able to recognize early signs that an operational meltdown is looming. The magical time when the field hits the tipping point can be tarnished or destroyed when operations fails to deliver.

6. The Liquidity Crash

Running out of cash can happen to any organization—particularly those making reckless attempts at growth and those suffering financial erosion or a shock to the system.

7. Tolerating Dysfunctional Leaders

Having a strong, high-performing leadership team in place is critical to growth and to overcoming the other silent killers—or better yet, avoiding them in the first place.

These growth killers often grow out of sight and out of mind for midsized firms, and can drive even successful firms into extinction. Firms looking to survive the killers must proactively guard against them.


For midsized firms, tinkering with the business’ core strategy can be deadly, particularly when changes are made without proper research, planning and testing.


Let’s dig into the second growth killer: Strategy Tinkering at the Top. In theory, an entrepreneurial CEO is a dream-come-true. What executive wouldn’t want a boss who gets excited about good, new ideas and is willing to back them? But in reality, an entrepreneurial CEO can be a nightmare—especially for midsized companies, which simply can’t afford to experiment with too many new ideas and strategies at once.

Consider an online publisher whose CEO was highly innovative and in tune with his market. Every month, he would dream up two or more “fantastic” ideas and would order the team to give these new ideas top priority. When his staff would ask him about his previous month’s priorities, he gave them no guidance. His focus was squarely on the new idea of the moment.

This forced his team to steer from guardrail to guardrail as they tried to refocus on their new task. Of course, they couldn’t implement any of the new ideas; as soon as any headway was made, the ideas were discarded in favor of bigger, better ideas the CEO had cooked up. This is a classic case of strategy tinkering. As is typically the case with strategy tinkering, the team was demoralized, and the CEO’s most talented executives fled. The firm stagnated.

Some of his “fantastic” ideas were in fact fantastic, but due to the constant change of direction, they never got executed. While no one—not the board, the management team, or investors—should ever try to stop the CEO from generating ideas, there must be a process to select the best ideas from the CEO and test them without diverting the business’ operating team from their core mission.

Strategy tinkering becomes disastrous when the company and its leadership are driving hard toward a specific goal or mission. Complete focus on execution is required to reach the goal, and hard decisions must be made on allocating resources to this primary goal. Then comes talk of a different objective. Of a new competitive threat. Or a new opportunity. Some of the teams scatter to reconnoiter the new strategy. Another team thinks the core goal has already been replaced, so it begins work on the new one. Resentment builds when employees’ hard work feels wasted. Progress toward the core objective is slowed or stopped, and significant effort will be required to get everyone reoriented in the proper direction.

Such CEO strategy tinkering can be a bad habit, perhaps the product of an overactive urge to chase squirrels or pick up shiny objects. In addition, it may be a reaction to seemingly intractable problems like inconsistent revenue generation or low profitability.

An important indicator of CEO strategic tinkering is resistance from the executive team. Hard-headed, passionate CEOs often struggle to listen to the counsel of those around them—usually to their detriment.

Most CEOs won’t admit it, but oversight makes us better executives. The worst cases of strategic tinkering come from CEOs with complete freedom. Boards should act to require the CEO to stay within the firm’s approved vision and mission. CEOs who understand how a strong, involved board can help them will make sure their boards are stocked with experience and talent.

Of all the C-Suite executives, CFOs have the greatest chance to reign in a tinkering CEO. They are acutely aware of the effects of distraction and bad decisions on the financial statements. And it’s the CFO’s fiduciary responsibility to sound the alarm when targets are missed. Yet most CFOs won’t sacrifice their relationship with the CEO (or their jobs) in the face of a CEO who won’t listen. In fact, almost no one (other than a strong board) can deal with a CEO who refuses to listen.


There must be a process to select the best ideas from the CEO and test them without diverting the business’ operating team from their core mission.


CFOs need to understand that they’ll never be able to completely dissuade their CEO from tinkering, but even winning a 20 percent tinkering-reduction is a big win. CFOs should be persistent, and CEOs must remember to seek the CFO’s advice and listen carefully. This will encourage the CFO to keep presenting his or her opinions, even if the CEO doesn’t accept them all.

But CEOs can help curb their own tinkering impulse in a very simple way: by putting their vision for their company down on paper. Writing it down makes it real.

I’ve sat down with over 100 CEOs and asked them what their company’s most important priorities are. Generally, they quickly can outline the crucial key performance indicators (KPIs), the critical projects that must be executed and the three to five differentiators that make their business thrive. Unfortunately, most have never shared their insights with their team in a concise written document.

These simple plans, often just one page, can create clarity and agreement. They promote focus, and make it easy for everyone to assess the company’s performance and progress each month. As targets are missed and the team focuses on achieving them, the group becomes increasingly intolerant of the tinkering that gets in the way of execution. And when the tinkering starts, the CEO will face a team that will be able to ask how the tinkering fits into the CEO’s own written plan. And, if the new ideas are truly superior to those that preceded them, they can ask what parts of the original plan should be reprioritized.

This will stop many CEOs in their tracks as they remember the conviction with which they created and wrote down their plan in the first place. Again, even if this only stops 20 percent of the tinkering, it is still a major win.

Even at startups with relatively small leadership teams, being clear about the organization’s priorities and what work should be done first is essential. Operating plans, progress tracking and prioritization do not have to be bureaucratic or cumbersome. If the CEO is to be free to innovate, he or she must know that the rest of their team is getting the right things done each day. Yet planning and organization don’t come naturally to many founder-CEOs, and that job falls to their senior leaders.

One of my clients was a self-acknowledged tinkerer. She loved spotting new opportunities and chasing them, and found running the core business to be boring. But she understood that building value in her own company required that she slow down her tinkering. In fact, she became so excited at the prospect of formal planning as a tool to limit her own tinkering that she made a large poster showing the company’s one-page plan and posted it prominently on an office wall. She reasoned that if she started to tinker, it would be clear to everyone that she was violating her own plan.

So how can CEOs and their teams find the proper balance between strategic intransigence and the alluring temptations of tinkering? No CEO and no top team should ever stop thinking strategically. But they should keep such thoughts and discussions from the execution team. Top executives should be able to discuss strategy—and changes to it—without confusing it with or negatively affecting current execution priorities. For those leaders striving to have a more transparent organization, produce a brief and very high level summary after strategic off sites, just enough to stop misunderstandings and supposition.

If the reconnaissance work to explore a new strategy requires more than discussion, a separate team should be assembled to do just that. And keep it low-key. Most strategic ideas that at first appear to be brilliant are discarded upon review and testing. It’s best that this happens in the background until one new strategy rises to the level of a roll-out.

Disciplined processes such as business planning and monthly reviews of the plans, combined with broad visibility throughout the firm, will also play a strong role in keeping tinkering at bay, and keeping midsized businesses the healthier for it.


Robert Sher is Founder of CEO to CEO and the author of Mighty Midsized Companies: How Leaders Overcome 7 Silent Growth Killers(Bibliomotion; hardcover; September 2014). A regular columnist on Forbes.com, Sher has worked with executive teams at more than 85 companies to improve the leadership infrastructure of midsized organizations.

Are We Winning?

by John Fleming

Click here to order the February 2015 issue in which this article appeared or click here to download it to your mobile device.


It’s hard to keep a scorecard on the direct selling industry! Those who tend to look for a way to criticize can always find something. Those of us who see within the industry and have the opportunity to interact with industry decision makers gain much insight and perspective. And this is a time of year to reflect. The corporate scorecard will be the year-end financial statements that will recap the business of the previous year. Businesses will win or lose depending upon the bottom-line numbers of profit or loss and the top-line number of revenue generated in comparison to the prior measurement period. But the question for those of us affiliated with the direct selling industry might be: What is the industry scorecard? Are we winning or are we losing?

Some scorekeepers like Bill Ackman, the hedge fund manager who has specifically targeted Herbalife with venomous attacks on the company’s method of conducting business (direct sales), completes his scorecard based on a set of very personal criteria that leads to an accusation and attack on, in this case, Herbalife in particular. However, this type of scorecard has implications for the entire industry. Direct selling, as a channel of distribution, is executed in many different ways, from what we often refer to as party plan to network marketing, social entrepreneurship, social selling, and social commerce, or even simply person to person. Today, the actual definition of direct selling is so very broad that direct sellers utilize online methods for delivering messages and transacting business as effectively as any channel of distribution.

In response to a scorekeeper like Bill Ackman and his staff, we remind such scorekeepers of the fact that the industry has a formal code of ethics as well as an informal code of ethics. The industry code and the more stringent company codes of ethics serve to govern the manner in which those who utilize the direct selling channel engage both employees of the company and the independent brand partners representing the company’s products, services and business opportunity. Independent contractors are also consumers as it simply makes sense to be your own best customer.


Today, the actual definition of direct selling is so very broad that direct sellers utilize online methods for delivering messages and transacting business as effectively as any channel of distribution.


The formal Code of Ethics is provided by the U.S. Direct Selling Association, and this code is public information. Members of the U.S. DSA pledge to abide by the U.S. DSA Code of Ethics. Many non-members of the U.S. DSA (direct selling companies) have created their own company codes and often use the DSA Code of Ethics as their benchmark. In either case, the direct selling industry overall has done a good job of policing itself and has grown as a channel of distribution to over $30 billion in U.S. revenue and $150 billion in worldwide revenue, generated by approximately 16 million U.S. independent contractors and 90 million worldwide independent contractors.

Every organization and every business has some type of scorecard for reflection on previous-year results and the planning of the new year. It is part of our nature to desire a scorecard to determine if we are winning or losing. Each winter, the NFL hosts the ultimate scorecard in professional football, the Super Bowl, where thousands will witness the final score that determines the best football team of the year. The same process holds true for all professional sports teams and leagues wherever they are located in the world. Hundreds of millions watch these events on television.

Direct Selling News created a scorecard for the direct selling industry when we first published the Direct Selling News Global 100 listing in 2009. Each year, this enormous research project serves to identify the top 100 direct selling companies in the world who certify their revenue performance by submitting the DSN Revenue Certification Form and complete a profile of their company. This process results in the publishing of perhaps the most important scorecard on the industry issued by anyone.

However, there is more to score on a company-by-company basis, and we offer on this page a potential scorecard profile that we believe tells even more of the story about an industry that shows such diversity in its representation of people from all walks of life. Direct selling as a method of distribution provides people with hope and with training to learn the basic knowledge and skills to be able to build a business. This could be a small part-time effort or a more serious effort that not only develops customers but also provides the opportunity to recruit and train others to do this, resulting in a much larger business opportunity. Because a scorecard is so important, we encourage each direct selling company to submit your Global 100 information and profile, as in so doing you participate in a valid process for scoring an incredible industry.

In going through the scoring process, we remain optimistic that we will have experienced another year of overall growth with respect to the first two categories on the scorecard pictured. Within the growth, there will always be those companies that did not grow, and the reasons for that are many, some of which are mentioned below and are also being researched by Direct Selling News.

Continue to Direct Selling News to see the scorecard and find out if we are winning or not.

 

 

Supply Chain Basics: Managing Third Party Logistics and Embracing Technology

by Noel Datko

Defining Today’s 3PL Relationship

Meeting the demands of an ever-changing global marketplace is a challenge for many of today’s businesses. Changes in the transportation landscape, advancements in technology and globalization are pressing business leaders to analyze their operations and achieve new efficiencies to minimize risk. As a result, top companies around the globe are increasingly leaning on third party logistics companies to manage their supply chains.

According to an Armstrong & Associates report, 86 percent of domestic Fortune 500 companies use 3PLs for logistics and supply chain functions. Initially, companies outsourced these functions in order to increase in-house efficiencies and reduce their overall logistics spend. Next was the need to expand to foreign markets, reduce waste and answer to a growing number of impatient customers. Today, technology plays a much larger role in the operations of successful 3PLs, and is integral to the success of their clients.

What does this modern-day third party relationship look like for your business? Here are a few things to consider when selecting a provider.

Global Partnerships

Going global is complex and presents many hurdles for businesses. Unfamiliar sources of supply, transportation and economic regulations, advanced security processes and international compliance issues are all considerations when doing business internationally. Successful 3PLs are able to leverage global partnerships to provide the resources, expertise and infrastructure necessary for expanding your global reach.

Investments in Technology

Companies looking for a 3PL to help expand their market should look for providers with advanced technical capabilities and solutions. The diversity of technology required to track products from manufacturer to consumer, particularly with international supply chains, is costly and prohibitive for many businesses. A truly global 3PL makes regular investments in technology to support the unique supply chain strategies posed by different regions of the world.

Strategic Relationships


A modern day 3PL should be committed to providing value to the customer and looking out for their best interests.


Partnerships in today’s environment are becoming more consumer-centric. A modern-day 3PL should be committed to providing value to the customer and looking out for their best interests. This requires an emphasis on building long-term relationships and offering ways to transform and collaborate. By communicating on a regular basis to talk about the client’s business and how it’s being impacted by changing market conditions, both parties will achieve greater success, and the partnership grows.

Important Skills for Your 3PL

Your 3PL partner is crucial to your success in the industry; evaluation of potential partners needs to go far beyond basic cost, to look at what skills and knowledge your 3PL can truly offer.

Consider these five skills when you’re evaluating potential new partners.

  1. Adaptation and Evolution. Your 3PL must demonstrate a commitment to continuous improvement right out of the gate. Look at things like how many continuous improvement projects your potential partner has in the works, how many they initiate and how many they complete. Consider also whether they invest in formal training programs, how many Six Sigma Black Belts they have on staff, and any industry awards they’ve received for their continuous improvement projects and innovations. If your potential 3PL doesn’t have the ability, and the drive, to not only keep up with industry standards but exceed them, your relationship is set up for failure.
  2. Visibility. One of your biggest challenges is gaining and controlling supply chain visibility—especially as supply chains go global and processes become even more complex. You need insight into every stage of the supply chain, including lead times, landed costs, inventory carrying costs, and obsolescence costs, as well as the quality of your 3PL’s customer service. Can they give you that kind of visibility? Do they have the technology and skills in place to provide real collaboration, or are you likely to be left groping in the dark while they try to get their act together when you need information?
  3. IT Innovation. Why do companies complain about the length of time it takes their 3PL to make or enable process changes? Over and over it’s the fact that their 3PL uses an old, outdated, slowly dying IT infrastructure. The 3PL you choose should show that they are up-to-date with their software, and that their staff, both in the server room and on the floor, is familiar with technology innovations and can keep pace as they continue to evolve.
  4. Smart Hiring and Smart Retention. There’s a shortage of supply chain and logistics talent. Is your potential 3PL facing that issue? Or do they invest in hiring smart and fostering talent internally? Do they focus on developing their employees’ communication and relationship management skills? Do they understand the importance of having skilled and knowledgeable people at every level of the organization, who understand your industry thoroughly?
  5. Business Intelligence and Insights. Your 3PL needs to offer more than just access to business intelligence dashboards. Every piece of software nowadays offers that. What you need from your 3PL is insight. They should be staying on top of leading industry practices and trends, plus be able to offer networking and knowledge-exchange possibilities with other shippers. They should have the ability to conduct extensive market research and both share and implement their findings. If your 3PL has a dashboard but no idea how to leverage it, in the end you’re gaining very little from that relationship.

Just as the world is constantly evolving and changing, so are your logistics needs. A modern-day 3PL will rise to the challenge and apply their supply chain expertise and resources to enhance your business operations. If you are ready to expand your market or make investments in new technology, reach out to an expert who can reduce costs, improve service and achieve better visibility of the components that drive a global supply chain.


Working Smart


Technology Continues to Transform Today’s Supply Chain

Today’s business leaders are faced with the task of creating more efficient processes while keeping costs down. In order to stay competitive in a digital age, they need to stay aggressive in transforming their supply chains, and budget remains a barrier for many. Even during economic slumps, however, companies continue to invest in technology with the goal of improving business processes and increased profitability when times improve.

A recent Gartner’s user survey reveals supply chain managers are fighting for … Click here to read the full article on Direct Selling News.

 

 


Noel Datko is Marketing Director at IntegraCore LLC, a company that offers outsource turnkey fulfillment center and distribution warehousing services.

Note from the General Manager, December 2014

by Lauren Lawley Head

Click here to order the December 2014 issue in which this article appeared or click here to download it to your mobile device.


2014: A Year of Growth

LaurenI’m writing this letter from my hotel room in marvelous Rio De Janeiro, home to the 2014 World Congress of the World Federation of Direct Selling Associations. The event has brought together approximately 400 people from companies based around the world, all united for one purpose: supporting the direct selling path of entrepreneurship and the opportunity it presents to people from all walks of life. It also serves as time to reflect on the state of our community today: the challenges we face, the lessons we’ve learned and the opportunities ahead.

There’s no question that direct selling is enjoying a period of growth. Direct selling companies generated combined revenue of $180 billion worldwide in 2013, with the World Congress host country alone reporting 7.2 percent growth. As writer Judith Emmert explores in our cover story, beginning on page 16, more than a dozen U.S. companies have surpassed $500 million in annual revenue this year and are continuing to climb toward the $1 billion peak. During the reporting for the cover story, USANA President Kevin Guest told us, “As we knock on the door of $1 billion, most of our challenges have related to becoming a $1 billion organization before we actually hit that level of sales. This means that we need to think, act and behave like a $1 billion organization before we can become one.”

Here at Direct Selling News, 2014 included a number of significant initiatives designed to support growth throughout direct selling. First and foremost was our groundbreaking survey work conducted with the team at Harris Poll. We began the relationship by commissioning Harris Poll to conduct a survey in the spring answering the question: How prevalent are direct selling products in the United States. (The answer: Very! Two-thirds (66 percent) of adults—an estimated 156 million people—have ever made a purchase from a direct seller. One-third (34 percent) have done so in the past six months.) In late August, we went back to the field with a more in-depth study examining both direct selling consumers and distributors, and we look forward to continuing to bring you more in-depth analysis from this exclusive research. During the year, we also published a special insert in The Wall Street Journal, crafted to communicate the positive attributes and dynamic nature of direct selling with the Journal’s high-level audience, and a special edition during the U.S. Direct Selling Association’s Annual Meeting, highlighting the event’s content and awards.

It was my privilege to join the Direct Selling News team in February, and I look forward to continuing to expand our work as we head into 2015. I could not have asked for a more gracious welcome and am particularly thankful for the continued support and guidance of Publisher and Editor in Chief John Fleming. The stories of companies dedicated to serving as beacons of hope and opportunity through direct selling throughout the world are captivating.

Until next time, I wish you and your teams a holiday season filled with joy.

All the best,

Lauren Lawley Head
General Manager

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.


By 2015, over one-third of our work force will be retiring.


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 … Click here to read the full article at Direct Selling News.

 


Judy StubbsJudy 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.

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 http://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

  • Bring policymakers to your facilities to better understand direct selling.
  • Promote the Direct Selling Proclamation and encourage your field members to sign it.
  • Send your salespeople to DSA’s Direct Selling Day on Capitol Hill.
  • Encourage your salespeople to share their political connections with you—and with the DSA.
  • Engage in and support the DSA’s new political action effort, Direct Selling Empowers Americans.

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.”

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.


John FlemingNovember 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

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 … Read the rest of the article at Direct Selling News

 

 


Author NameDarren 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 isThe Entrepreneur Roller Coaster. Find out more at: www.rollercoasterbook.com.