Jeunesse Reports Annual Sales of $1 Billion in 2015

Jeunesse has set a new benchmark for direct selling companies looking to achieve billion-dollar revenue. The skincare and nutrition company reports that annual sales surpassed $1 billion in 2015, its sixth year of business.

The husband-and-wife team of Randy Ray and Wendy Lewis, CEO and COO, respectively, founded Jeunesse in 2009. In 2015 the company acquired a 130,000-square-foot corporate headquarters in Heathrow, Florida, and opened a “Jeunesse West” facility in Draper, Utah, with 150 staff. Thanks to an early emphasis on building an international infrastructure, Jeunesse sells its anti-aging products—collectively dubbed the Youth Enhancement System (Y.E.S.)—through independent distributors in more than 100 countries.

“Our success is the direct result of the hard work, professionalism and dedication of our amazing network of Jeunesse Distributors around the world,” Lewis said in a statement. “I congratulate each and every one of them for helping Jeunesse reach this important milestone.”

Jeunesse is one of several young companies powering through the ranks of the DSN Global 100, an annual list of the top revenue-generating direct selling companies in the world. On the 2015 list, Jeunesse shared the No. 38 spot with home fragrance brand Scentsy, both companies having posted revenue of $419 million in 2014. The list includes just 16 companies with revenue exceeding $1 billion, half of them U.S. firms.

The Inc. 5000/500, which ranks America’s fastest-growing private companies, also served as an early indicator of remarkable growth at Jeunesse. The company made its debut on the list in 2014, breaking into the top 10 percent, known as the Inc. 500, at No. 258. In 2015, Jeunesse ranked No. 564 with three-year growth of 811 percent.

Management regularly points to the company’s technology prowess as a primary driver of growth. In the creation of Jeunesse, Ray and Lewis brought to bear their own expertise in the technology sector, including the fields of medical software and computer hardware. The company’s tailor-made technology includes the “J-World” marketing system, comprised of back office, social and mobile components to help distributors build their businesses.

“Investing in the right technological infrastructure from the beginning while expanding globally has allowed us to reach this level and positions us to continue to grow from $1 billion and beyond,” said Ray.

Advertisements

Avon Losses Widen as Quarterly Earnings Drop

An increasingly strong dollar weakened fourth quarter salesat Avon Products Inc., and the beauty company expects to feel continued negative effects in 2015. On Thursday the global brand projected that 2015 revenue will decline by 12 percentage points due to currency rates.

Fourth quarter revenue decreased 12 percent to $2.34 billion; however, Avon reported modest 5 percent growth in constant dollars. Quarterly volume fell 3 percent, while the company’s average order increased 9 percent. Active representatives were down 4 percent.

Quarterly sales fell 14 percent in the Beauty category, with a 5 percent increase in constant dollars. Fashion & Home sales fell 13 percent and rose 1 percent in constant dollars.

North America continues to pose the greatest challenge for Avon. The New York-based company saw regional sales fall 12 percent in the quarter and 17 percent for the full year. Avon posted global revenue of $8.85 billion for 2014, an 11 percent decrease versus the prior year, or relatively unchanged in constant dollars. The company reported a net loss of $331 million, or 75 cents a share, broadening its $69 million loss in 2013. Excluding one-time costs, operating profit totaled $734 million.

“While progress against our financial goals in 2014 was slower than I would have liked, I am pleased with the sequential improvements we made in several key markets and categories in the second half of the year,” said CEO Sheri McCoy. “We have stronger management teams across our key markets and better discipline in executing consistently against Avon’s core processes.”

The company also reported declining sales outside the U.S., where it generates 88 percent of its sales. Revenue fell 7 percent in both EMEA (Europe, Middle East & Africa) and Asia Pacific. Latin America, Avon’s most profitable market, posted revenue of $4.24 billion for the year, a 12 percent decrease versus 2013.

The company says that it is working to mitigate the impact of foreign currency rates. In the meantime Avon has announced plans to pull out of Jamaica and other Caribbean islands, the Jamaica Observer reports. A Jan. 29 email from Pablo Muñoz, President of Avon North America, informed distributors that, effective Monday, they will no longer be able to place orders to the company. Avon’s regional managers were not available to provide comment on the contents of the email.

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.

Beautycounter: Safer Products Changing Lives

by Andrea Tortora

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


Photo above: Beautycounter Founder Gregg Renfrew is committed to changing the beauty products industry for the better and getting safe products into the hands of customers.


Company Profile

  • Founded: 2013
  • Headquarters: Santa Monica, California
  • Founder: Gregg Renfrew
  • Products: Beauty and skin care

Beautycounter


Beautycounter is a content first, product second kind of company. The California-based upstart maker of safe, nontoxic beauty and skincare products is focused on advocating for public health as it defines its own way of doing business in a crowded market.

“We are not all-natural or organic,” says Founder Gregg Renfrew. “We are focused on safety. We make sure we don’t ever say we are perfect. It is about progress.”

Beautycounter defines itself as a “direct retail brand.” It sells to consumers through consultants, at beautycounter.com, and via strategic partnerships with companies such as J. Crew and Gwyneth Paltrow’s Goop.com.

Renfrew is on a mission to change the regulation of the beauty products industry, and she thinks telling the Beautycounter story through person-to-person interactions is the best way to do it. “We want to be an information first, disruptive beauty brand,” she says. Beautycounter’s mission: to get safe products into the hands of everyone.


“We are not all-natural or organic. We are focused on safety. We make sure we don’t ever say we are perfect. It is about progress.” —Gregg Renfrew, Founder


Explosive Growth

At just under 2 years old, Beautycounter is already making an impact on the $59 billion U.S. cosmetics and personal-care industry. In 2013, natural and organic personal-care products accounted for $12.6 billion in sales, according to data from Sundale Research.

Since January 2014, Beautycounter has grown over 550 percent. From its initial launch in March 2013, the company’s multi-channel strategy now claims more than 5,000 independent consultants.

Renfrew started her company with a few SKUs for essential skin and body care. Today Beautycounter offers more than 75 products for men, women and children, including face and body collections, sunscreen, and a color collection.

The company’s e-commerce channel is also booming. The Band of Beauty membership program lets direct customers earn rewards and free shipping for online orders, all while supporting Beautycounter’s push to promote safe products. Loyal clients pay a $25 annual fee in order to receive extra online discounts; $10 is donated to one of three nonprofit groups that Beautycounter supports: Environmental Working Group, Breast Cancer Fund (which coordinates the Campaign for Safe Cosmetics,) or Healthy Child Healthy World.

In addition to the consultant base and their customers, there are now more than 6,000 consumers in the e-commerce Member Program who support Beautycounter’s social mission, Renfrew says, a fact of which she is very proud. “The only way we can bring about change is to be a large movement of lots of people.”

An Eye-Opening Start

Beautycounter is well on its way, says Janet Nudelman. She runs the Campaign for Safe Cosmetics and is Director of Program and Policy at the San Francisco-based Breast Cancer Fund.

“Beautycounter is one of the first companies to ever emerge in a …

Click here to read the entire article at Direct Selling News.

 

 

Gold Canyon: Turnaround Toward Growth

by Barbara Seale

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

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:

  1. Do the right thing.
  2. Continually improve.
  3. Give back.
  4. 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.


In June the company had 79 promotions to leader and above, as well as 27 percent sales growth.


“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.


Gold Canyon’s new managing directors emphasize that throughout the turnaround Gold Canyon has been profitable, even increasing its profitability each month.


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.


“We’re creating the BLT: Believability, Likeability, Trustability. And we’d rather our consultants love us than like us!”
—Gail Gioffredi, Managing Director


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 Simple Selling System drives up the amount of the average order, as well as the net proceeds from each mixer, while it creates a fun, interactive, rewarding experience for attendees and hosts.


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.”

Billion Dollar Markets

by Andrea Tortora

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.

STRONG SUSTAINABLE GROWTH

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.


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 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


This most recent data clearly illustrates direct selling’s sustainable growth—especially in times of economic recovery and improved governmental policies to support entrepreneurship.


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.

POWERFUL NEW MARKETS

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.”


“Africa is a place where everyone should put a seat now, because in 15 years it will be very relevant.”
—Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA


EMERGING MARKET CONSUMERS

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.”


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.


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.

EMPOWERING ENTREPRENEURS

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.


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 YOUNGER GENERATION

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.”

SPOTLIGHT ON REGIONAL MARKETS

UNITED STATES

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.”


“Direct selling is a smart, go-to-market strategy for many products, especially those that benefit from explanation or demonstration.”
—Joseph Mariano, President, U.S. DSA


CHINA

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.


“…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.”
—Lynda Mills, Director General, U.K. DSA


EUROPE

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.

AFRICA

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.

LATIN AMERICA

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. So this makes a difference. There is flexibility and management of their own time.”
— Miguel Francisco Arismendi, Director General for the Andean area (of South America), Amway


“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, DATA WILL FUEL FUTURE GROWTH

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.

“We will be able to (and some companies now can) know who the final customer is, what their preference is, who the distributors are and how can we help them with good CRM systems and analytics,” Carlucci says.

Better information lets consultants individualize their service and marketing approach for each customer. Instead of a mass-appeal catalog, direct sellers could offer targeted online videos in an effort to deliver the right thing for the right customer. “We can skip the segmentation phase and leap frog from a mass approach to an individual approach, thanks to technology,” Carlucci says. “To me this is a revolution.”

The ability to harness technology’s benefits leverages relationships, according to Carlucci, who adds, “These efforts should also boost direct sales in mature markets because it will present newly available services.” The consumer’s direct selling buying experience could be even better than the Internet because of the product and experience support the personal connection offers.
 
The importance of the Internet, data and mobile Internet to emerging markets cannot be overstated, according to Derrick Irwin, Portfolio Manager for the Wells Fargo Advantage Emerging Markets Equity Fund. He says, “In many places it provides the only access to media and outside data that many people have.”

Consumer company models being developed in India, China and Brazil show a massive portion of advertising spend being allocated for mobile campaigns. And the marketing method is about to explode. Smart phones and 3G networks are established in China and are just beginning to take off in Brazil and India. In Africa, says Irwin, “there is no other way to talk to people. You can go to these countries where there are the poorest of the poor, and they are using mobile phones in ways that are so creative.”

In China, mobile technology is opening new markets and acting as a catalyst for the development of logistics networks into the far corners of the country’s low-tier cities, according to Leo Zhou, Deputy Director of Media Affairs at Mary Kay China. He says, “Consumers are becoming increasingly smart and are unprecedentedly connected with multiple media, being surrounded by a diversified web of information.”

The proliferation of information across the Internet, as well as easy access to it, makes it simple for any consumer to get the information and products they need and want. The rapid expansion of China’s e-commerce network into low-tier cities caught the attention of logistics companies, who brought their services to the same areas. According to Zhou, this increases product delivery speed and lowers operational costs.

All of these technology changes amount to a modernizing of the direct selling industry in the digital age. Companies should be looking at how much they are investing now to leverage the relationships they have and how they understand consumer behavior. “There are a lot of good questions we should be able to answer, and this is the time,” Carlucci says. “In 10 to 15 years we will live in a very different world. We need to take advantage of the technological opportunities now.”

Avon, Coty Fragrance Join Forces in Brazil

Avon and global beauty manufacturer Coty Inc. have inked a new agreement in Brazil, the world’s largest fragrance market. Avon, the No. 2 company in direct selling, will market select Coty fragrances through its extensive network of sales representatives.

Brazil represents Avon’s largest market, with a network of 1.5 million representatives. According to David Legher, President of Avon Brazil, the Coty partnership presents an opportunity to reach a wider audience and spur further growth. “Coty’s celebrity and lifestyle fragrances further expand our portfolio of high quality fragrances here, which will help our representatives increase their earnings and reach a broader consumer base,” Legher said in a statement.

Coty saw 7 percent volume growth in fragrance sales in its third quarter, ended March 31. During the same period the company saw a 15 percent sales increase in emerging markets. “This commercial partnership allows Coty to expand its geographical reach and strengthen our footprint in the emerging markets, with Brazil being a key driver in our growth strategy,” said Renato Semerari, President of Coty Beauty. “Avon’s extensive experience in Brazil makes the company an ideal partner, and we look forward to working together.”

Scents with Sense: A Strong Commitment to Giving Back Provides a Culture of Sustainability

by Lin Grensing-Pophal

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

Scentsy

Company Profile

  • Founded: 2004
  • Headquarters: Meridian, Idaho
  • Founders: CEO Orville Thompson and President Heidi Thompson
  • Products: Wickless candles, home décor, kitchenware, and clothing and accessories

Sometimes those closest to financial ruin are those who find a clear path out and, perhaps unexpectedly, also discover along the way an opportunity to contribute to others in a big way. That’s the place that Orville and Heidi Thompson found themselves back in 2004.

“We got into Scentsy and wickless candles because we were desperate and we needed something that could save us from financial ruin,” Orville says. At 35, the Thompsons had been working for a number of years but were not finding success in their work. It was a turning point for them, Heidi says. “That’s when we came together as a couple,” she says. “From then on we’ve been a great team.” They both acknowledge their partnership brings a solid mix of “head and heart” to the company.

They’ve come a long way in 10 years. Back in 2004, they were at the end of their ropes, concerned about where the next house payment would come from and how they would keep themselves and their family clothed and fed. They launched their company in an ocean shipping container—their first home office. They had no money, no credit, no catalog, no software and, perhaps most notably, no experience. What they did have though was a great product, a strong work ethic and the will to succeed. And they had some passionate support from others who believed in what they were doing.

Fast-forward 10 years and it’s hard to believe that these extremely successful entrepreneurs were once near despair. Their wickless candle company, fueled by the direct selling model, has grown to 120,000 consultants worldwide, with global annual sales revenue in 2013 of about $480 million.


Scentsy Inc., fueled by the direct selling model, has grown to 120,000 consultants worldwide with global annual sales revenue in 2013 of about $480 million.


Growth came quickly and challenged the Thompsons’ ability to keep up with the growth through infrastructure, policy and communication. From 2007 through 2013, the company was hiring on average one new employee every day. They grew from a 6,000-square-foot facility to nearly 1 million square feet of space in three states and two countries. There was a technology explosion to keep up with it all.

Despite the success, these were stressful times; growth, however welcomed, can be challenging. Still they persevered. And they learned that all of the space and technology in the world does not a strong company make. What really matters is culture and commitment, and that’s something that Orville and Heidi have a wealth of and something they nurture in both employees and consultants.

They don’t share the wealth of both their financial and cultural success just internally, though. In part because they vividly remember the trying years and the many people who came forward to support them, and in equal part because of their strong personal commitment to giving, the company has a strong commitment to helping others help themselves.


“As a mom I thought, wouldn’t it be beneficial to our employees if we had some programs to make things easier?”
—Heidi Thompson, Co-Owner and President


Orville and Heidi ThompsonOrville and Heidi Thompson Scentsy’s new Commons Kitchen offers meal options for employees as well as the public.Scentsy’s new Commons Kitchen offers meal options for employees as well as the public. Rally for the Ranch 2013 participants stuff backpacks for back to school.Rally for the Ranch 2013 participants stuff backpacks for back to school.

A Philosophy of Helping Others Help Themselves

Summer Giving: A Tradition Since 2009

Since 2009, Scentsy Inc.’s Summer Giving program has impacted a broad range of local organizations and individuals. Here is a summary of these activities:

“Contribute” (2009)

  • Helped 40 small, family-owned businesses in Idaho’s Treasure Valley
  • Each employee got $100 to spend (and kept their purchases)
  • $100,000 was spent in a cash mob in a single day

“Six Pack Give Back” (2010)

    • Susan G. Komen Race
  • 2,200 racers
  • $171,000 donated
    • Paint the Town
  • More than 120 employees, consultants and friends participated
  • 1,000 hours of time donated
    • Vein Ambition
  • Red Cross blood drive
  • 140 pints of usable blood was collected
    • Fashion Forward
  • Clothing drive for Women’s and Children’s Alliance and Dress for Success
  • Several hundred pounds of clothing was donated
    • Change Challenge
  • Spare change for Wednesday’s Child adoption
  • $16,000 was raised
    • Contribute 2010
  • Employees were given $50 to spend at 20 businesses
  • $50,000 was spent in the community

“Halt the Hunger” (2011)

  • Idaho Food Bank matching donation of $300,000
  • The money raised provided 1.9 million meals in Idaho
  • Raised $638,973—exceeding the goal of $600,000

“Spending Spree for Refugees” (2012)

  • Community/Employee/Consultant Cash Mob
  • Consultants in more than 20 states took part
  • Idaho employees shopped at refugee vendor fair
  • Generated $30,000 in sales

“Rally for the Ranch” (2013)

  • Mentoring day with Idaho Youth Ranch YOUTHWORKS! Program—hosted 10 trainees for a day with employees and executives giving them work ideas and skill sets
  • Stuff the Truck—employees donated clothing and household items to IYR
  • Back to school backpacks—employees stuffed 50 backpacks for at-risk youth in transitional housing

The ability to experience both significant financial highs and lows has provided a perspective that shapes the Thompsons’ approach to giving. Unlike many, their focus is not on “giving back.” It is on “contributing more than you take.” As Orville notes: “What if someone had come to me in 2004 when we were $700,000 in debt and feeling broken as businesspeople and given us a winning lottery ticket for $1.5 million, and what if we took that ticket and cashed it in and paid off all of our debts? Would we have had what it took to build Scentsy? How many people would have been hurt because we did not go through the experience that we went through because we were given a handout to solve our problems, instead of a hand up to solve our problems?”

The Thompsons say their experience weighs on them every time they decide how to spend extra resources on others—they ask themselves if what they’re doing is actually contributing to someone’s benefit or forfeiting a better opportunity to get resources or experience that would provide greater gain in the long run.

That philosophy is reflected in the way they give. It’s a philosophy built around the core principles of Simplicity, Authenticity and Generosity, with Generosity meaning “contribute more than you take.” Heidi points to a favorite quote from Thomas S. Monson, an American religious leader and author: “He who gives money gives some, he who gives time gives more, and he who gives of himself gives all.” The Thompsons have all bases covered.

In 2009 they founded the Scentsy Family Foundation and, since that time, have embarked on a strategic, comprehensive and multifaceted approach to giving that involves employees and consultants. The Foundation offers philanthropic support through a combination of scholarships, direct donations toward individual efforts and community-based causes, and charitable cause products.

Each year the Foundation’s charitable cause products involve consultants in the nomination of a charitable cause or organization to support through the creation of a distinctive new product in honor of that cause. In Spring 2014, the “Charitable Cause Buddy” is Roosevelt the Rabbit, created to support the March of Dimes imbornto® campaign; from the sale of each Roosevelt the Rabbit, $6.50 is contributed to the March of Dimes in the United States and $7.50 to the Starlight Children’s Foundation in Canada.

But, importantly, Orville and Heidi recognize that without strong support from their employees and consultants the success they have achieved and now share would not be possible.

Giving Back from the Inside Out

It all starts from within. From 2004 to 2009 much of the company’s focus was on managing the growth they were experiencing, building an infrastructure to support that growth, and ensuring that employees and consultants had the resources and support they needed.

Importantly, during this time, there was also a strong focus on defining, refining and reinforcing the culture they desired.

“Authenticity is very important,” Orville says. “We are who we are, and we don’t try to be somebody we’re not.”

Perhaps because of their own early struggles, the Thompsons recognize the unique challenges that employees often face as they attempt to navigate both the challenges of work and family life—and they have taken steps to ease some of those challenges.

“Back in the early days,” Heidi says, “when we worked long hours, ate a lot of macaroni and cheese and ramen and things you could microwave, I remember thinking ‘I wish there were some way that you could quickly make dinner and have the time to sit down as a family, because we were missing that.

“As a mom I thought, wouldn’t it be beneficial to our employees if we had some programs to make things easier?” As they celebrate their 10th anniversary, Heidi says: “It’s a dream come true to offer this convenience to help busy families like ours.”

Their new facility includes a kitchen—the Scentsy Commons Kitchen, operated by Guckenheimer, offering staff- and family-friendly food options, including ready-made dinners and sack lunches that parents can pack for their children. The programs are designed for the company’s 750 Idaho-based employees and are also available to the general public.

Besides a prepared dinner option, employees—and the public—also have the ability to visit the cafeteria to create “packed lunches,” choosing from ready-made sandwiches, apples and other nutritious items. For those employees whose children go to schools without hot lunch, or who prefer to bring their own lunches, this is a convenient and cost-effective option. A buffet of child-sized portions of entrees, sides and drinks is set up Monday through Thursday afternoons so that parents can pack their kids’ lunches for the next day at a cost of about $2, depending on the items selected.

In addition to building in-kitchen facilities, the Thompsons took advantage of their new construction to introduce a number of energy efficient options, and they’ve been recognized for their efforts.

Respecting the Environment

The newly constructed Scentsy Campus consists of seven buildings on 73.35 acres in Meridian, Idaho. In addition to the on-site corporate restaurant, the campus includes an outdoor amphitheater, more than 8,000 square feet of outdoor patios and three miles of walking paths.

Construction followed the standards of efficiency, energy conservation and environmental sustainability held by the Green Globes Initiative, including the use of sustainable, recycled products, a high-efficiency HVAC system, low-flow plumbing, drought-tolerant landscaping and an LED lighting system that adjusts based on the availability of natural lighting.

For their efforts, Scentsy was recently awarded “Four Green Globes” for the campus’ office tower—the highest designation possible—by the Green Globes Initiative. They are one of only 12 facilities in the country to achieve this honor. The Scentsy Distribution Center was awarded “Three Green Globes,” and the campus received an American Society of Landscape Architects Merit Award for the beautification of the grounds and the use of sustainable design features.

Scentsy’s respect for the environment and initiatives to ensure that it is conserving energy and preserving green space represent just the beginning of the company’s commitment to community and efforts to ensure that it is a good corporate citizen.

Building Community

Scentsy Inc. and its employees are strongly supportive of their local community of Meridian, Idaho, through programs like Summer Giving (established in 2009).


“Authenticity is very important. We are who we are, and we don’t try to be somebody we’re not.”
—Orville Thompson, Co-Owner and CEO


In 2009, the Summer Giving program “Contribute” provided $100 for each employee to spend, positively impacting 40 local, family-owned businesses. In what may have been one of the first-ever “cash mobs,” Scentsy contributed $100,000 to the local community and provided a cash infusion to small businesses during the peak of the recession. Since then, a wide range of activities have connected Scentsy, its employees and the community in creative and impactful ways.

For example, in 2012 Scentsy organized a Spending Spree for Refugees event. Idaho has been a refugee settlement community since 1975 and every year receives hundreds of refugees from many regions of the world. The economic downturn was particularly hard on this population. With this event, Scentsy set up an outdoor market on its campus and encouraged employees and community members to buy from local refugee-owned businesses.

Scentsy Consultants are also engaged in these efforts. Incentive trips incorporate opportunities to interact with various communities while providing services that impact those communities in positive ways. In 2014, Scentsy Consultants will have the opportunity to help out at a school and a senior citizen facility in the Bahamas. These types of activities have been organized since 2008 in settings like Cancún and the Dominican Republic.

While all of these initiatives certainly have a positive impact on the organizations and communities served, Scentsy and its employees and consultants benefit as well, according to the Thompsons.

They say supporting good causes in communities builds camaraderie and reinforces that contributing more than you take is not only part of Scentsy’s culture, but it’s also fun to do and makes life more enjoyable.

As Scentsy celebrates a decade of service to customers, communities, employees and consultants, it can look back on some significant ways that its activities have provided a hand up for literally thousands of people in communities located many miles away from the small community of Meridian, Idaho, where it all started. It was there that the Thompsons, aided by those who offered them a hand up, were able to realize their dreams through hard work, persistence and the commitment to a sustainable philosophy of contributing more than they take.

The Road to $1 Billion

by J.M. Emmert

DSN Cover, April 2014

When Inc. magazine named Ambit Energy America’s fastest-growing private company in 2010, the then 4-year-old company’s annual revenue already had reached $325 million, making it one of the 40 largest direct selling companies in the world.

A year after the Inc. article appeared, the revenue number had doubled to $664 million. And 24 months later, Ambit did what very few direct selling companies have been able to do: break the billion-dollar barrier.

Hitting $1 billion in revenue is a milestone for any business, and to do so in seven years puts Ambit’s growth on a trajectory in line with some of the most recognizable brands of the past few decades: Apple (six years), Facebook (six years), Amazon (four years), eBay (seven years) and Google (five years).

Technology certainly helped. Co-Founders Jere Thompson Jr. and Chris Chambless have pointed to the company’s data processing technology as a key factor in Ambit’s rapid expansion. And Ambit, like all modern direct sales companies, leverages the connectivity afforded by the Internet as well as social media platforms in its sales strategies.

Yet despite the ubiquitous nature of technology, the billion-dollar milestone remains elusive for many direct sellers. In order to better understand what it takes to break through that barrier, we decided to study some of the members of direct selling’s Billion Dollar Club: six from the United States—Ambit, Amway, Avon, Herbalife, Mary Kay and Nu Skin, as well as Germany’s Vorwerk, Brazil’s Natura and Peru’s Belcorp.

What is it that makes them billion-dollar companies? What do they have that other companies are still trying to learn and to possess? In our review, we identified four key drivers behind the members of the Billion Dollar Club.


Growth Comparison ($0-$1 Billion)


1. They were founded by outstanding leaders.

Which one would you invite to dinner: the visionary, the revolutionary, the dream-builder, the groundbreaker, the risk-taker, the mover, the shaker or the history-maker? In the Billion Dollar Club, you’ll find them all sitting at the table.

Take Amway’s Jay Van Andel and Rich DeVos, for example. Van Andel was a firm believer in and fierce advocate for free enterprise, and DeVos was among the first proponents of teaching distributors to start with believing in themselves.

“We were just two guys from Ada, Michigan, USA, who wanted to have a business of our own,” DeVos says on the company’s website. “We were two kids (it still feels like that sometimes) who were hungry for success and who wanted to give others the chance to be in business for themselves, too.”

The current generation at Amway is building upon that foundation. Co-CEOs Steve Van Andel and Doug DeVos have led the company to record sales growth marked by continued global expansion to more than 100 countries and territories.

Avon offers a similar lesson in the power of strong foundational leadership. As a salesman in the 19th century, David McConnell was far ahead of his time in recognizing that women could be successful sales professionals. Beginning in 1886 with Mrs. P.F.E. Albee, he tapped the power of a female salesforce to go door-to-door extolling the virtues of products from the California Perfume Company, the forerunner of Avon. By 1920, he had built a $1 million business, which adjusted for inflation would be nearly $12 million now.

Today, CEO Sheri McCoy, whom Fortune magazine ranks as among the 50 most powerful women in business, exemplifies McConnell’s vision of building the company for women. She joined the Avon team in April 2012, bringing with her 30 years of experience with Johnson & Johnson, and now leads a $10 billion business with more than 6 million independent sales representatives.

2. They offer distinctive, high-quality products or services.

Having bold, visionary leaders is critical to building a billion-dollar company. So, too, is creating products that bring true value to the marketplace. The club members reviewed here have done just that.

The United States has the largest cosmetics industry in the world, with estimated revenue of nearly $55 billion. Amway, Avon, Mary Kay and Nu Skin are all able to thrive because they continue to be at the forefront of scientific research, developing new products designed to enhance the lives of customers.

Nu Skin, for example, spent more than $46 million on research from 2011 to 2013 and has made several key acquisitions that brought new technology into the company. Its Pharmanex health supplements product line comes from the acquisition of Simi Valley, Calif.-based Generation Health Holdings Inc. in 1998. Since then, Nu Skin has gone on to purchase substantially all of the assets of Madison, Wis.-based LifeGen Technologies LLC in 2011 and Malvern, Pa.-based Nox Technologies Inc. in 2012, which added more anti-aging technology to the Nu Skin portfolio.

Avon significantly upped its research and development game in 2002, announcing plans for a state-of-the-art R&D center and a $100 million increase in research spending from 2002 to 2005. The company has continued that commitment, spending $67.2 million on research and development in 2013 and launching more than a dozen new products.

Unlike its personal consumer product peers, Ambit is using direct sales to introduce customers to a relatively new product category: energy. Deregulation in many utility markets is giving consumers a choice when it comes to purchasing their retail electric and gas services.

Since its launch in Texas in 2006, Ambit has used direct selling to spread the word. Co-Founder Jere Thompson Jr.’s mother and father were the company’s first customers, and received the first bill. Today, Ambit has more than 1 million active customers.

3. They target growing markets.

In order to hit the $1 billion mark, choosing where to sell can be just as critical as choosing what to sell. Of the nine companies in our report, six of them have a presence in more than 35 markets around the globe. Only Belcorp (16), Natura (seven) and Ambit (one) have managed to make the Billion Dollar Club with less.

According to a September 2013 DSN report, advanced markets—the United States, Japan, Korea, France, Germany, the U.K., Taiwan, Italy, Canada and Australia—accounted for $89 billion in retail sales in 2012. Emerging markets such as China, Brazil, Mexico, Malaysia, Russia, Colombia, Thailand, Venezuela, Argentina, Peru, Indonesia, India and the Philippines accounted for $65 billion. Those markets, however, are home to 85 percent of the world’s population; gaining a foothold there now establishes a foundation for future growth.

Take Brazil, for example. Natura has established itself as the biggest cosmetics company in its home country. The No. 2 cosmetics name in Brazil? That was U.S.-based Avon, which counts Brazil as one of its largest markets and where it keeps some research and development operations.

4. They invest in their people.

In the end, while leadership can create a desired path, quality products can help establish a business, and new markets can help bring a company’s story to a worldwide audience, it all comes down to the people who say yes to the opportunity to represent the brand.

The nine companies in this report have more than 20 million salespeople combined across the globe. Those salespeople are of every age and ethnicity, with diverse educational backgrounds and diverse reasons for wanting to be an entrepreneur. In fact, according to the U.S. Direct Selling Association, most people who join direct selling come for one of five things: supplemental income, recognition, rewards, social connections or product discounts.

Six of the nine companies currently have more than 1 million salespeople who, for the most part, are compensated on a multi-level structure. The most-frequently used sales method is person-to-person, which accounted for 80 percent of sales in 2012. Vorwerk, Mary Kay and Belcorp employ the party plan method as well.

The founders and leaders of the Billion Dollar Club companies recognize and value the diversity among their salesforces. Family men like Belcorp’s Eduardo Belmont and the brothers Carl and Adolf Vorwerk have shown that fostering a culture of love and respect brings in the greatest returns on investment. Motivators like Herbalife’s Mark Hughes and Natura’s Luis Seabra set out to help people change themselves so they could, in turn, change more lives for the better. And Nu Skin’s Blake Roney, Sandie Tillotson and Steve Lund are among the many philanthropists in direct selling who have reached out a helping hand to those in need.

A key to becoming a billion-dollar company is to have people talking about it. So whether the talk comes from the standpoint of a 150-year-old legacy or a new, spirited startup that has re-energized the industry, happy salespeople translates to happy customers; and happy customers is always a winning formula.