90 Days of Direct Selling – Day 49

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Momentis

Momentis

2013 Net Sales: $71 million

Country: USA

Momentis is an innovative marketer of energy with Independent Representatives that educate consumers about the benefits of energy deregulation and inform them of various energy solutions.

 

2012 Rank: 85
2012 Net Sales: $103 million
Sales Method: Person-to-person
Compensation Structure: Multi-level
Products: Energy
Markets: 3
Salespeople: 38,000
Employees: 20
Headquarters: Dallas, Texas
Executive: Andy McWilliams
Year Founded: 2010
Website: http://www.momentis.net

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The 1 Percent Difference: Direct Sellers Continue to Make Positive Global Impact

by J.M. Emmert


IN THIS ISSUE:

• Cover Story • 10 Things to Know • Line List 
• Topping the Charts • Profiles • Celebration

BRAVO AWARDS: 
• Leadership • Growth • Momentum


Direct Selling News, June 2013

It’s fascinating to consider the numbers: Of the 7 billion people on the planet, a little over 1 percent are direct sellers.

Just 1 percent. At first, that doesn’t sound like much. However, 1 percent actually equals over 91.5 million people worldwide who have embraced the entrepreneurial spirit by choosing to become small-business owners.

Indeed, direct selling—that microcosm of people from all walks of life and from all regions of the globe seeking new opportunities—is having a tremendous impact on the global stage.

What can 1 percent do? Collectively, it can transform millions of lives for the better, effect much-needed social change, safeguard natural resources and stand at the forefront of job creation. And it can do it all amidst challenging economic times and changing consumer attitudes.


Over 91.5 million people worldwide have embraced the entrepreneurial spirit by choosing to become small-business owners.


Impacting the Economy

Challenges always walk hand in hand with opportunities. That is the nature of any business model. And the direct selling industry has certainly faced its share of challenges.

When the global economy began its decline in 2007 there was cause for concern. How would the industry react? Would it remain stable while the economy plummeted to depths not seen since the Great Depression? When U.S. retail sales steadily declined over the four-year period from 2006 to 2009, that concern grew exponentially.

But the industry always seems to reinvent itself. It is that direct selling moxie that always prevails—that spirit and courage and boundless energy—and allows the industry to shake off the threats, pull up its bootstraps and look for new opportunities to help its people succeed.

It is the ability of established companies to embrace change, and the dogged determination of startups that contribute to the continued success of the industry.


Of the Top 10 companies on this year’s DSN Global 100 list, eight reported double-digit dollar growth over the past three years.


Of the Top 10 companies on this year’s DSN Global 100 list, eight reported double-digit dollar growth over the past three years. And if the first quarter of 2013 is any indication, the future looks promising for direct selling. Several top public companies exceeded expectations or set new records for sales growth, including Herbalife (17 percent), Nu Skin (19 percent), Tupperware (3.6 percent), Natura (5.9 percent) and USANA (9.7 percent).

Looking closely at the Global 100 list, there might be something very telling about this industry and the people who comprise it. Seventeen companies with less than 10 years in the business made their way into the DSN Global 100 list for 2012, accounting for $5.3 billion of the $72 billion the listed companies achieved in 2012. Six of those 17 companies are less than 5 years old, proving that economic uncertainty cannot keep the entrepreneurial spirit down.

And that entrepreneurial spirit is what is needed most today. An estimated 200 million people worldwide are without jobs. Last month, the International Labor Organization reported that the youth unemployment rate is expected to climb from 12.4 percent to 12.6 percent, leaving some 73 million between the ages of 15 and 24 out of work.

So where will the jobs come from? According to a recent USA Today interview with the International Monetary Fund, the global organization dedicated to fostering high employment and sustainable economic growth, unleashing creative potential and the enterprising spirit will encourage growth and lead to job creation.

And when looking for companies that show significant growth and provide business opportunities for those millions out of work, look to the direct selling industry.

Greatest Growth Percentage

Impacting Public Perception


Growth companies and not large corporations are where the action is.


When Inc. magazine released its 31st annual Inc. 500|5000 ranking of the nation’s fastest-growing private companies for 2012, it noted that, “Now, more than ever, we depend on [these] companies to spur innovation, provide jobs and drive the economy forward.” Growth companies and not large corporations, the magazine noted, are where the action is.

The Inc. ranking, which offered a comprehensive look at America’s independent entrepreneurs with substantial sales growth, included several direct selling companies: Stella & Dot (No. 57), J. Hilburn (No. 221), Scentsy (No. 516), It Works! Global (No. 662), YOR Health (No. 1220), Ambit Energy (No. 1305), Initials Inc. (No. 1555), 5LINX Enterprises (No. 2900) and Isagenix International (No. 4951).

The success of such companies is just the tip of the iceberg for an industry focused on changing public perception of the direct sales channel of distribution. The Yankee peddler image that has pervaded the consumer consciousness for more than a century is slowly giving way to a new view of direct sellers.

Today, several direct selling companies stand with the giants in the corporate world. Berkshire Hathaway, parent company of direct sellers The Pampered Chef, Kirby and World Book, ranked fifth on the Fortune 500 list of America’s largest companies. Medifast Inc. (Take Shape for Life) was ranked at No. 10 on Forbes’ list of the Best Small Companies in America.

Tupperware was ranked No. 2 in the Home Equipment category for the World’s Most Admired Companies by Fortune. And Ambit Energy and Primerica were both recognized on the 2012 Information Week 500 list of Top Technology Innovators, an annual listing of the nation’s most innovative users of business technology.

Global Direct Sellers

Impacting Small-Business Owners

Over a century ago, Walker Agents, Fuller Brush salesmen and Southwestern representatives were among the direct sellers aided by a new invention that made it easier to reach customers: the telephone. Today, the innovative use of social media and mobile devices by technology-savvy direct selling companies has allowed would-be entrepreneurs to reap the benefits by staying closely connected to consumers.


What remains the greatest advantage is that direct selling is an environment in which all people have an equal right to success.


But technology is just one of the advantages for those testing the entrepreneurial waters in direct selling. What remains the greatest advantage is that direct selling is an environment in which all people have an equal right to success. Age, gender, religion, education or financial resources do not limit the opportunities.

For those individuals willing to put in time and energy, direct selling truly has significant earning potential. However, people get involved in direct selling opportunities for a variety of reasons, from making a car payment or paying off a debt to making a career change or building a large business. Some become direct sellers in order to purchase products or services they love at a discount. Certainly, being one’s own best customer has advantages.

And the industry—one about people and for people—makes the transition to owning a business easier. There are fewer barriers to entry, with most initial investments less than a few hundred dollars, and ongoing support is provided by their companies.

That support includes training in business skills as well as opportunities for personal development and coaching, which are unequalled in other industries.

The industry also empowers entrepreneurs to use their businesses to make a difference in the lives of others. Many direct sellers are drawn by a company’s corporate social responsibility initiatives. Direct selling, recognized as one of most charitable industries, comprises companies that have been founded on the principle of giving back to others.

In addition, many companies are focused on conservation, helping to create a sustainable environment. São-Paolo, Brazil-based Natura, the No. 5 direct seller in the world, was recently ranked the second most sustainable company on the planet by Canadian research firm Corporate Knights. Companies such as Viridian Energy, which is committed to renewable energy, and Momentis, which instituted a green energy initiative to help consumers offset their carbon footprint, are among the direct sellers striving to save natural resources.


Consumer Goods and Services Offered through Direct Selling


Impacting Consumers


Today a company is measured by its products or services as well as its behavior and respect for the community.


In today’s socially responsible culture, a commitment to others is not only a prerequisite of small-business owners, but also consumers. Today a company is measured by its products or services as well as its behavior and respect for the community.

Today’s consumers want to know the company behind the product—how it behaves and if it respects the environment. They want to feel that when they make a purchase, their money is working to help others, benefiting charities and organizations.

This change in consumer behavior—how and why people are deciding to buy—is changing consumer-supplier relationships. But what has not changed is the industry’s focus on providing quality products and services that enhance people’s lives.

Direct selling companies offer a wide variety of consumer goods, from cosmetics and wellness products to telecommunications and insurance. The most common sales method remains person-to-person, which accounts for 70 percent of sales. (The party plan method accounts for 35 percent.) According to the U.S. Direct Selling Association, 74 percent of Americans have purchased products from a direct seller.

The industry is intent on self-policing and protecting consumers by voluntarily following a strict Code of Ethics, set forth by national direct selling associations and overseen by the World Federation of Direct Selling Associations, which since 1978 has pursued the highest level of ethical conduct in the global marketplace.

If the $160 billion in global 2012 sales across the world is any indication, direct selling will continue to flourish. In fact, many companies are expanding their operations into both developed and emerging markets. Last month Amway announced plans to invest $20 million in a second manufacturing site in Vietnam. Nu Skin is expanding its operations in China, which it expects will top $1 billion in sales for 2013.


If the $160 billion in global 2012 sales across the world is any indication, direct selling will continue to flourish.


LifeVantage and Mannatech are launching in Hong Kong; Neways and Stemtech are venturing into Thailand. Jeunesse Global is opening operations in Australia and New Zealand. And Oriflame, the No. 9 direct seller, is expanding into India.


Top 10 Direct Selling Regions


A 100 Percent Difference

Whether the 91.5 million people around the globe who call themselves direct sellers have been attracted to the industry by the products or the business opportunity, one thing is clear: Direct selling empowers them to better themselves, their families and their communities.

This small minority is helping people enjoy the benefits of world-class products and services, live free from debt, join in the efforts to save the environment and reach out to those in need.

It’s clear that just 1 percent can make a 100 percent difference.


Participation in the DSN Global 100 Ranking

Direct Selling News will again host the DSN Global 100 Celebration in April 2014, based on each company’s 2013 performance. If you believe your company would qualify for the Global 100 ranking and you would like to be notified when research begins this December, please send an email with your complete contact information (name, title, company name and phone number) to editor@directsellingnews.com.

Momentis Offers Carbon Offset Program

Momentis announced the launch of JustGreen™ Lifestyle, a green energy initiative designed to educate and empower everyone—from students to families and businesses—to learn more about their impact on the planet and what they can do to curb harmful carbon emissions linked to climate change.

Available through Momentis independent representatives, JustGreen Lifestyle can help consumers reduce their energy-related environmental footprint. The program pursues clean and renewable energy solutions that support green projects across North America. These include solar, hydro, wind power and methane capture facilities. Through the program, participants have the option to allocate the carbon offsets to a green energy project that is meaningful to them.

JustGreen Lifestyle also announced a partnership with Live Nation Entertainment to make Live Nation’s concert venues more environmentally sustainable. JustGreen Lifestyle will audit 85 participating concert venues in the United States to evaluate energy use and purchase carbon offsets to bring the concerts carbon neutral.

Momentis is an innovative network marketing company promoting competitive electric power and natural gas supply, as well as environmentally responsible green energy supply solutions. Momentis is a subsidiary of Just Energy Group Inc.

Energizing the Industry: The Power of Direct Selling Business Models

by Rosie Blankenship


Click here to order the Direct Selling News issue in which this article appeared.


Direct Selling News • April CoverJust the phrase “energy deregulation” is enough to make the average consumer’s head spin. In the simplest terms, for energy customers it means a choice in energy providers. Usually, though, consumers are filled with questions about this process: How is this possible? If I switch, will my lights stay on? Who will take care of me in a power outage? How many bills will I have to pay? Why not just stay with my same, reliable company?

In the end, all of these unanswered questions and fear of the unknown often mean consumers stick with the status quo.

For direct selling companies, though, “energy deregulation” means big business.

Whether it’s the growing number of new potential customers as more states deregulate their energy markets, the climbing percentage of consumers switching providers or the skyrocketing growth rates direct sales energy companies are witnessing, the numbers make sense.

Direct Selling Energy Companies

Company (Parent)

Entry Year

Markets Served

Ignite (Stream Energy)

2005

Headquarters in Dallas, Texas.
Service in Texas, Georgia, Pennsylvania and Maryland, with plans to expand to several additional states.
Ambit Energy

2006

Headquarters in Dallas, Texas.
Service in Texas, New York, Illinois, Maryland and Pennsylvania.
Viridian Energy

2009

Headquarters in Norwalk, Connecticut.
Service in Connecticut, New York, Pennsylvania, Maryland, and New Jersey, with plans to add Massachusetts and Illinois.
Utility Choice International (UCI)

2009

Headquarters in Chagrin Falls, Ohio.
Service in Georgia, Kentucky, Maryland, Michigan, New Jersey, New York, Ohio and Pennsylvania.
Dynastar Ventures†

2009

Headquarters in Louisville, Kentucky.
Service in New York, Pennsylvania and Texas.
Momentis (Just Energy)

2010

Headquarters in both Toronto, Ontario and Dallas, Texas.
Service in Illinois, Indiana, Ohio, New York, California and Ontario, Canada.
North American Power

2010

Headquarters in South Norwalk, Connecticut.
Service in Connecticut, Pennsylvania and Maryland, with plans to open in New York and New Jersey this spring and expand to Ohio and Illinois by the end of the year.
ACN*

2010

Headquarters in Concord, North Carolina.
Service in New York and Canada, with plans to expand to Pennsylvania and Maryland in the spring and 11 other states later in the year.
Ampegy (Spark Energy)

2011

Headquarters in Houston, Texas.
Service will launch later this year in California, Illinois, Maryland, New York, Pennsylvania, Connecticut and Texas.
Independence Energy

2011

Headquarters in Philadelphia, Pennsylvania.
Service will launch later this year in New Jersey, New York and Illinois.
† Purchased My Affordable Energy in 2011
* Originally entered the energy market in 2001; left in 2003; returned in 2010

A Brief History of Energy Deregulation

Legitimate success in the energy industry wasn’t always possible.

In the mid-1990s, California attempted to lead the charge by partially deregulating the energy market. However, by 2000, energy wholesalers—the most notorious of which was Enron—had begun exploiting deficiencies in the system to manipulate the energy market for their benefit. Enron was ultimately revealed to be encouraging power suppliers to shut down plants, contributing to the need for rolling blackouts and wildly raising the price of electricity. Their actions led to the bankruptcy of California’s largest energy supplier, Pacific Gas and Electric Company, and the near bankruptcy of Southern California Edison, as well as a financial crisis that cost the state as much as $45 billion, by some estimates. Despite the setbacks in California, other states still were interested in energy deregulation.

Much like the deregulation of the telecommunications industry, deregulation proponents say providing retail competition in energy will benefit consumers with lower prices. The telecommunications industry was relatively unchanged for almost 100 years. Then, in the 1980s, Ma Bell was declared a monopoly and broken up by a federal mandate, and the 1996 Telecommunications Act further provided for competition in the communications industry. Deregulation happened, and a few decades later, we are holding wireless computers in our hand.

The same advances in choices, technology and price competition are hoped for with the deregulation of energy.

But how does it work?

AcEnergycording to the Texas-based Power to Choose website, there are three parts to the creation and distribution of energy: generation (the power plants or producers), transmission and distribution (often called the “poles and wires” company) and retail sales. (Texas led the way in energy deregulation following the California disaster and chose to separate the industry into these three parts. Other states have emulated this model.) The power plants create the power, the poles and wires companies get it to your home and maintain the wires to do that, and the retail companies sell you the electricity, handle customer service and bill you.

What has been opened up for competition is the retail portion of this process. And that’s where direct sales companies come in.

Energy

Direct Sales Enters the Picture

There are multiple models for the direct sales side of the energy business. Several of the direct sales companies interviewed for this article are licensed energy providers who take ownership of the customer relationship. So, when someone becomes an energy customer, they deal directly with that company and the company is responsible for purchasing energy to account for the customer’s usage. Another explanation is that the companies buy energy at wholesale prices and resell it to customers. Other companies are resellers for energy companies, so the energy company provides the customer service relationship after the sale. Still others are divisions of energy provider companies.

Ignite, the wholly owned subsidiary of Stream Energy, is the acknowledged market leader. Stream is a retail energy provider and Ignite is the network marketing distribution channel. Stream only sells energy through their independent distributors.

Ambit Energy is also a retail energy provider that made headlines last year when it was named Inc. 500’s fastest-growing company.

Viridian Energy is a retail energy provider that originally pursued door-to-door sales, but then switched to a direct sales approach in September 2009. Additionally, Viridian purchases Renewable Energy Certifications (RECs) to back at least 20 percent of their energy supply, in support of their commitment to green energy.

ACN Inc., which provides telecommunications and essential services including phone service (such as mobile and digital phone service with video phones) as well as satellite TV, and home security, was the first direct sales company to enter energy sales in California 10 years ago.

According to Robert Stevanovski, Co-Founder and Chairman of ACN, the company decided to stop offering energy when the crisis started. ACN, which serves 23 countries and saw revenue of $553 million in 2010, is now back in the energy business; it launched energy services (provided through the company Planet Energy) in Canada in 2010 and then New York in February of this year, and plans to enter the Pennsylvania and Maryland markets in the spring and 11 other markets later this year.

Other players in the direct selling energy market include Momentis, the network marketing arm of Just Energy; North American Power; Dynastar Ventures; UCI Energy Services, the service arm of Invado International; Ampegy, the direct selling arm of Spark Energy; and Independence Energy.

All of these companies sell electricity and also sell natural gas or are planning to enter natural gas markets. More than half of U.S. states are deregulated either in natural gas, electricity or both.

Ignite and Ambit have experienced tremendous growth since entering the market. In its first year, 2005, Ignite posted $70 million in gross revenue. In 2010 revenue exceeded $900 million. Ignite expects to be a billion-dollar company in 2011.

Ambit, launched in 2006, saw revenue grow from $325 million in 2009 to $415 million in 2010. Chris Chambless, the Co-Founder and Chief Marketing Officer for Ambit, says that in 2010, “We added more customers than in the previous two years combined.” He expects the company will show revenue “in the neighborhood of $700 million in 2011 and we are fairly confident that we will go over a billion in 2012.”

Even a relative newcomer to the industry, Viridian Energy, is posting confident numbers. They launched for service in July 2009 in Connecticut and moved into direct sales in September of that year. At launch, they had 250 customers, but have acquired 150,000 as of this March.

Michael Fallquist, Founder and CEO of Viridian, said the company went from $2 million in revenue to $50 million in 2010. He said the growth is well above expectations. “It’s the marriage of a strong product with a great channel in network marketing and direct selling,” he says.

Why the Growth?

Many direct sales energy companies are seeing amazing growth due to what most of the executives describe as a natural fit between explaining deregulation and direct sales. Direct sales companies have learned they might have exactly what it takes to get customers to take note of the benefits of deregulation.

Rob Snyder, Co-Founder and Chairman of Stream Energy (marketed as the Ignite brand), was managing his family’s Dallas-based private equity firm, Snyder Capital, when he heard about deregulation in 2004. He was approached with a deregulated-related business idea from a friend. The conversation made him mad at himself.

“We were two years into the deregulation of the industry and I was only hearing it for the first time,” he says. “I had no idea Texas had deregulated its electricity market.” He started researching the topic and learned “there were 15 or 20 retailers willing to sell me electricity at 20 percent below what I was paying.” He launched Stream/Ignite not long after.

Like Snyder, many of the founders of the top companies had no direct sales and network marketing experience when they began thinking about entering the retail energy market, although they wisely brought in experts in the industry. But in considering the complexities of deregulation and customer distrust of switching providers, they all saw direct sales as a viable business model.

Fallquist was COO at Commerce Energy, which, as he says, “was in every other sales channel except direct sales.” The company eventually was sold to Ambit. “I was so impressed with them—their business model, their management team. They seemed to have something figured out fundamentally in this industry,” he says.

He took an intense look at direct sales and “everything made sense from a direct selling perspective.” He says his own lack of understanding about direct sales was an initial challenge for the company, but “it’s something I have come to love so much. … There is no more powerful channel on the planet, in my opinion.”

“I think there is some degree of education needed, especially in some of these markets where deregulation is a fairly new phenomenon,” Chambless says. “A lot of people have just been conditioned not to have a choice. You have an opportunity in a direct sales model to go out and educate people.”

Being able to communicate face-to-face with consumers allows independent distributors the opportunity to demonstrate how they can save money. “There is nothing complex about it,” Chambless says. “We already know you use the product. Can we save you money?”

Whether the growth of direct sales companies has long-term sustainability is something yet to be seen. However, the growth of these companies is grabbing the attention of Wall Street. Jaime Welch, Managing Director of Credit Suisse in the investment banking division, is paying attention—as are others.

“What we have seen is tremendous growth,” Welch says. “Right now, the question is: How big can it be?”

He describes his firm as being watchful of retail energy companies and particularly impressed by the success of the direct sales model. “This is all about people—people referring people.”

Benefits for Customers and Distributors

The direct sales industry has seen major growth in retail energy because it is an attractive product.

Doug Witt, Managing Director of Marketing for Ignite, says independent distributors see the great opportunity. “There is instant appeal because it is a service and not a product. A lot of people do not want to push or sell products. With energy, they instantly see an opportunity,” he says. “We find we attract a lot of people who have never been in network marketing.”

The fact that energy is not just a service, but an essential service for all consumers means independent distributors are really doing less selling and more educating about options.

“The huge advantage of networking a life-essential service is that energy is a monthly recurring budget item for everybody,” Witt says. “Since it is a product that has a monthly recurring billing associated with it, it creates a monthly, recurring income. Where a lot of product-based categories have a monthly recurring income, it’s only as long as the customer chooses to use that product. With energy, they are going to pay an energy bill every month, regardless.”

Viridian positioned itself as a green energy provider, with their 20 percent commitment to renewable energy. Geographically, their business is currently focused in the northeastern states, where network marketing is not as common, meaning an initial salesforce was harder to recruit. “Finding people up here has been tricky,” Fallquist says. “But we have overcome that handicap.”

However, Fallquist feels the independent distributors who ultimately joined Viridian also were attracted to the minimum green standard. “I didn’t realize it would create such an emotional bond with our associates,” he says. “It’s about feeling good about what people are selling, at the end of the day.”

What the Future Holds

Credit Suisse’s Welch brings up an interesting perspective as an investment banker on whether current success is based on current economic conditions. Energy retailing has a troubled past.

So he considers and watches the economic impact on direct sales successes. He thinks high unemployment has led to people being interested in these opportunities—the opportunity to save on an essential bill and the opportunity to make money as independent distributors. “People can make really good money at this,” he says, but questions, “How much of this would be as it is if there was a lot lower unemployment?”

Yet, even with his questions and continued observations of direct sales energy retailers, he thinks they will continue to see growth.

“I think it will be successful. I just question about whether you will see a nationwide application with this—maybe in 10 years. We just don’t really know,” he says. “It’s just a new model.”

One challenge is that not all U.S. markets are open for business. However, with the positive example of Texas, and now with other large markets such as New York and Pennsylvania showing the same positive changes, it seems it’s only a matter of time before more markets open up.

“The fit is perfect,” Fallquist says. “This is really a category that, as more companies get into it, is driving innovation for the consumer. Ultimately, that is going to be a win for the consumer, a win for the associates and, in our case, a win for the environment. It’s a fast-moving industry and it will continue to grow more as more people come into the space and the space matures.”

Wear to Share: The Power of Branded Apparel

Wear to Share: The Power of Branded ApparelThe objective of traditional advertising is always the same—to interrupt consumers in order to create interest in a sales message. Unfortunately for the companies trying to advertise, consumers have become more and more adept at ignoring these messages. But even in today’s oversaturated advertising climate, the one sales message that can break through the clutter is the recommendation of a friend—an integral part of word-of-mouth advertising. And one very powerful medium for stimulating word-of-mouth advertising is the wearing of branded apparel.

Building a Strong Brand

Just how important is a strong brand to a company? Jonathan R. Copulsky, Principal at Deloitte Consulting LLP, in his book Brand Resilience: Managing Risk and Recovery in a High-Speed World, provides this quote from Benoit Garbe, Vice President at Millward, Brown and Optimor:

“In 1980, virtually the entire value of an S&P 500 company consisted of tangible assets—buildings, machines, inventory, etc. A 2010 study by Millward, Brown and Optimor found that today, these tangible assets account for only 30 to 40 percent of a business’ value. The rest is intangible value, half of which—30 percent of total business value—is attributable to brand. For many companies, brand is their single largest business asset.”

What can a strong brand do for your company? While volumes have been written on the topic, here are a few points to consider:

    • A strong brand makes it easier for the salesforce to sell.
      When your company’s brand is already a known and respected entity, your salesforce can tap into that equity that has already been built up. They don’t have to reinvent the wheel, so to speak, each time they make a presentation. Potential customers are more likely to already have a frame of reference.
    • A strong brand makes it easier for customers to buy. 
      As Alina Wheeler points out in her book Designing Brand Identity: An Essential Guide for the Whole Branding Team, “Compelling brand identity presents any company, any size, anywhere with an immediately recognizable, distinctive professional image that positions it for success.” By investing in establishing a strong brand identity, a company can help level the playing field with its customers, even one that may seem tilted toward its competitors.
    • A strong brand delivers a message to consumers.
      A brand stands for more than just a name, logo, product or service. It’s the gestalt, the whole enchilada, the unified concept and collection of all things pertaining to your company. Once your company has established a strong brand identity, your brand doesn’t necessarily need words to speak volumes. After all, you only need to hear that distinctive motorcycle sound for the Harley-Davidson brand to come to mind. Strong brands are able to communicate across various forms of media and to diverse audiences and cultures.

Putting It All Together

Thoughtfully designed branded apparel can play a significant role in a company’s total branding efforts and reinforce the strength of its brand. As Mark Pentecost, CEO and President of It Works! Global, can attest, branded apparel can provide a definite boost, both psychologically to distributors and to the company’s bottom line as well. His company’s newly redesigned apparel line has not only proven to be popular with distributors, but it also helps unify and strengthen the company’s centralized branding theme. “We put a lot of strategy behind it,” says Pentecost, “because we realize how important the apparel is.”

For It Works!, the company’s focused efforts have paid off in a big way, coming together to create what Pentecost calls a “perfect storm.” And he continues, “Since January of this year until now [May 31], we’re up over 400 percent.” As this company can attest, a strong brand is indeed a valuable and powerful asset.

Be the Billboard

By choosing to wear a company’s name, logo or message, you are proudly standing with that brand and what it represents. You act as a walking billboard. In fact, the choice to wear that shirt, cap, jacket or even a button can have a far greater impact than any actual words.

Branded apparel definitely drives engagements and creates inquires. For the independent distributor, wearing clothing displaying their company’s information can activate a dialog that might not otherwise occur. Robin Stevens, Ambit Energy’s Vice President of Marketing Services, says, “For our consultants, we’re always looking for a way to start a conversation. When others see their shirt or cap, they often ask, What is Ambit Energy? or, Where did you get that cool shirt?”

There’s no doubt that a carefully designed message worn on your person can serve to attract others and help start conversations. Consider, for example, the success Herbalife experienced early on with its button, Lose Weight Now—Ask Me How. This single message conveyed the Herbalife brand, offered hope to those struggling with their weight and actually provided them with the question to ask the wearer. This button literally propelled Herbalife to the forefront of the weight-loss world and into the collective consciousness of Americans everywhere.

The attraction of wearing something that “advertises” a brand also speaks to one of the big problems direct sellers face—rejection. Starting a conversation out of the blue can be a difficult skill for a newcomer to master. But when someone is asking about your T-shirt or button, they are making the first move, and are much more likely to be receptive to your message. They may even tell you of someone else they think might be interested, thus generating another powerful form of word-of-mouth advertising—a personal referral.

Many companies have come to understand the importance of their branded apparel and take the design of these items quite seriously. Several whose representatives spoke with DSN recently note that they are in the process of redesigning their clothing. Not only do they want their clothing to be up to date, but they also wish for it to reflect very positively on the company and be in line with their company’s growth.

Blake Mallen, Co-Founder and Chief Marketing Officer for ViSalus, says, “We’re growing so fast right now that we’re a different company today than we were six months ago, just as we’ll be a different company six months from now. As we work toward becoming a billion-dollar company, we want our clothing to reflect that.”


“We’re growing so fast right now … we want our clothing to reflect that.”
—Blake Mallen, Co-Founder and Chief Marketing Officer, ViSalus


Advertising by way of consumer wearables is common across all industries for the simple reason that it works. Consider how many items carry the Coca-Cola brand image. Coke even recently premiered its Coca-Cola Clothing 2013 Spring/Summer Collection at Fashion Rio in Brazil. Clearly, consumers are willing to spend their money on items that share the brand in the most personal way—by wearing it.

Companies have also come to realize they need to have clothing designed to flatter females and appeal to feminine tastes, as women make up the majority of independent representatives. Stevens notes, “We’ve had a big demand from our top women consultants for more of the ‘blingy’ Ambit wear. They don’t want to wear a guy’s polo with the logo on it particularly; they want something that’s more feminine.”

It Works! has also made a concerted effort to update its apparel and frequently incorporates bling in the design. With approximately 70 percent of its distributors being women, Mark Pentecost, CEO and President of It Works! Global, received another bit of feedback: Not only has the company’s clothing proven to be popular, but the women, in particular, have told him they like not having to worry about their wardrobe. The clothing is well designed and flattering, so they don’t have to think about what to wear. They can just put on their “black, green and bling” and go.


Ambit Energy
Ambit Energy
Beachbody
Beachbody
HerbalifeHerbalife

Serves as a Powerful Marketing Tool

Branded apparel has indeed proven to be a versatile and powerful marketing tool. DSN called on several companies recently and asked them to share the advantages they have realized from their use of branded apparel.

Leverages Other Marketing Efforts

Beachbody started using infomercials over 12 years ago and with them has built tremendous brand awareness. As a result, Beachbody coaches often gain instant recognition when they wear their company’s branded apparel.

Getting the proverbial “foot in the door” is typically the hardest part of making a sale. Beginning a conversation with a stranger can be awkward for all parties involved. Wearing a brand slogan creates business-building opportunities for independent representatives. “The clothing has been a huge benefit for our coaches,” says Denise Needham, Beachbody’s Senior Director of Training and Field Development. “When they ‘Wear and Share’ their P90X cap or shirt, people respond. It usually sparks a conversation with a stranger.” Because their apparel is often able to play off the company’s other marketing efforts, Needham notes, “Sometimes all our coaches have to do is just be ready!”

Creates Company Awareness and Corporate Identity

Ambit Energy provides residential and commercial customers with energy. Because the company sells a service, there are no physical products with which its consultants can identify. And because the company only services deregulated markets, the states in which it operates are scattered: Texas, New York, Illinois, Maryland, Pennsylvania and New Jersey. So, for the company’s 150,000 plus consultants who are likewise scattered around the country, Ambit’s branded apparel helps establish for them that sense of corporate identity that might otherwise be lacking.

Ambit’s branded apparel also helps create awareness for their company. Stevens says, “To expand our reach and give credibility to our brand name, and also to make our consultants feel a part of the team, we use a lot of branded apparel.”

Ambit uses so much branded apparel and other branded items that the company recently hired a full-time merchandise manager. As Stevens explained, they want their branding to remain consistent, and they want to make sure that their inventory is both fashionable and readily available in the company’s store. And with the company’s rapid growth, the demand by its consultants is expected to increase even more.


Momentis
Momentis
ViSalus
ViSalus
It Works! Global
It Works! Global

Promotes the Company Culture

With more than 150,000 people joining the Body by Vi 90-Day Challenge each month, ViSalus expects to pass its one millionth customer mark soon. In introducing these newcomers to the company, ViSalus uses its branded clothing to reflect the culture of the company.

“Our company offers a lot of apparel,” says Mallen. “We try to offer more of a high-end fitness apparel line called Vi-Gear.” He also notes that the company plans to introduce a more fashion-oriented line of higher-end casual fitness clothing. Creating fashionable branded clothing actually fulfills a dual purpose—the distributor is rounding out his or her wardrobe as well as promoting their business. They are much more likely to keep wearing an item that makes them feel good as well.

ViSalus has attracted a number of celebrities to its company, so projecting the culture of its company through its clothing is doubly important. Always with an emphasis on quality, Mallen notes that the company seeks to offer fashionable, cool-looking clothes that people would want to wear anyway.

Fills a Marketing Void

Although there are some notable exceptions, the vast majority of direct sales companies sponsor very little, if any, traditional advertising done from the corporate level. As Douglas Braun, USANA’s Vice President of Marketing and Recognition, points out, branded apparel can help fill that void.

“It’s not necessarily a void for connecting with potential new customers,” he explains. “Our associates are doing that, and the branded apparel does play a role there.” But Braun goes on to explain, “Branded apparel helps fill the void that traditional advertising fills for current customers and current associates in connecting them with the brand. Advertising is really directed at both audiences. That’s the part I think we miss the most in not doing traditional advertising—the furthering and strengthening of that relationship and connection with the customer and the associate to the brand.”

As these and many other companies can affirm, thoughtfully designed branded apparel can serve many purposes. It has proven to be a valuable asset as well as a powerful marketing tool. As a form of word-of-mouth advertising, the messages it can convey bypass the traditional media forms of advertising and help the company break away from the pack.


What Are the Most Popular Promotionals?

Calendars were, for many years, the top item that companies used for promotional purposes. They are still popular, and for good reason—calendars keep the company’s name in front of people for the whole year. But according to data provided at the website of the Promotional Products Association International, wearables accounted for the greatest percentage of the industry’s sales in 2011, as they have for a number of years now. These items include shirts, aprons, uniforms, blazers, caps, headbands, jackets, neckwear, footwear, and more.

Why Do Companies Purchase?

Companies purchase promotional items for a number of reasons. It may come as no surprise that Brand Awareness garnered the top slot in program initiatives for 2011.

Chart

USANA sponsored the 2011 Snowboardcross Cup held at Telluride, Colo.USANA sponsored the 2011 Snowboardcross Cup held at Telluride, Colo. Photo credit: Oliver Kraus


Have you ever taken a tour of a stadium or arena? With all the fans gone, you can actually hear someone yell at you from the top row. But when the game begins and everyone starts to cheer, individual noises simply blend into the roar of the crowd. It becomes harder and harder for any one person’s voice to be heard above so many competing noises.

For companies marketing their goods and services today, it’s much the same. They find themselves entering an already packed arena, competing for air time or billboard space and struggling to create a method of presentation that somehow allows their message to be heard above the ever-increasing advertising noise and clutter.

But what if a company sponsored one of the teams down there on the field? What if the company’s name was associated with athletes who capture every eye in the arena, on whom every camera is focused, whose images are being beamed into living rooms around the world? Or what if the company had its name on the arena itself? Several direct sales companies have employed this big thinking with their marketing, and with good reason.

“One of the advantages of sponsoring athletes or an event or putting your name on a stadium or arena is that you address one of the biggest issues in marketing, which is advertising noise or clutter,” explains Dr. Paul S. Busch, Professor of Marketing at Texas A&M University’s Mays Business School. Granted, there may be other advertisers present, but the company’s name stands above the crowd.

Another reason companies consider sponsorships is that sports provide an almost universal appeal, around the country and around the world. That’s because sporting events offer entertainment, and an association with sports is generally viewed positively. And, as Busch points out, it’s one of the very few forms of intergenerational entertainment that we have. Consider that you often see a variety of age groups attending such events together, sitting side by side enjoying each other’s company and creating wonderful memories. Few other activities hold such broad appeal for all generations.


One reason companies consider sponsorships is that sports provide an almost universal appeal, around the country and around the world.


Herbalife sponsors over 150 teams and athletes, including the Los Angeles Galaxy soccer team pictured here, home of superstar David Beckham.
Herbalife sponsors over 150 teams and athletes, including the
Los Angeles Galaxy soccer team pictured here, home of superstar David Beckham.
Rising NASCAR star Austin Dillon stands with the legendary No. 3 race car, displaying AdvoCare’s sponsorship front and center.
Rising NASCAR star Austin Dillon stands with the legendary No. 3 race car, displaying AdvoCare’s sponsorship front and center.

Providing Powerful Marketing Opportunities

Whether it’s with individual athletes, an entire team or a sports stadium or arena, there’s no doubt that an association with athletes can create very powerful marketing opportunities. Particularly for companies that provide nutritional products, an endorsement by athletes helps validate the effectiveness of those products. And, with certain organizations suggesting that athletes not take any nutritional supplements due to the possibility of contaminants or banned substances, it speaks to the trust the athletes have placed in these companies and their products.

USANA sponsors a number of both individual athletes as well as entire teams. Knowing that these athletes are placing their careers and reputations on the line when they take the company’s supplements, USANA executives say they take the trust of these athletes very seriously. In return for the trust that their sponsored athletes place in USANA, the company essentially provides a guarantee of up to $1 million if an athlete tests positive for a banned substance. USANA knows if they can gain the trust of athletes, even Olympians who may have only one shot in their lifetime to go for the gold, they will gain the trust and confidence of thousands of others as well.

With sporting events being enjoyed by millions worldwide, the interest in sports is almost universal. Sports sponsorships tap into that popularity and provide companies with a way to greatly extend the reach of their marketing efforts. Team 4Life is an elite group of world-famous athletes who endorse 4Life Transfer Factor® products. Members include Super Bowl Champion Sam Madison, World Series Most Valuable Player Edgar Renteria, World Golf Hall of Famer Johnny Miller, powerlifter Brady Stewart and others. Calvin Jolley, Vice President of Communications, says, “Branded apparel gives our All-Stars an opportunity to express their commitment to 4Life products, which empowers our independent distributors to begin conversations about our company. And when customers have questions about efficacy, our field can point to individuals who excel in their disciplines and are willing to endorse the value of our science by wearing our logo.”


“Knowing that top professionals rely on AdvoCare products on and off the field affirms AdvoCare products are safe, effective and they work.”
—Richard Wright, President and CEO, AdvoCare


AdvoCare also sponsors athletes for similar reasons. AdvoCare President and CEO Richard Wright says, “When people see a top sports figure wearing an AdvoCare logo, it brings awareness to the brand while elevating the company. Knowing that top professionals rely on AdvoCare products on and off the field affirms AdvoCare products are safe, effective and they work. It is also powerful reinforcement of our brand statement—Use It. The Pros Do.”

Herbalife implemented a total sports strategy about 10 years ago as part of their effort to more fully brand the company. As Rob Levy, Executive Vice President of Worldwide Sales and Marketing for Herbalife, says, “We wanted to create an identity out there in the sporting community.”

One of Herbalife’s biggest deals early on was to sponsor the Los Angeles Galaxy, a Major League Soccer team. As luck, or in this case, fortune, would have it, shortly after their sponsorship began, David Beckham came to play for the Galaxy. Because he is arguably the most famous soccer player in the world, Beckham’s Galaxy jersey—with Herbalife’s name prominently displayed across the front—has become one of the biggest-selling jerseys in any sport of all time. Says Levy, “We’ve seen that jersey in countries all over the globe.”

Herbalife now sponsors over 150 teams and individual athletes, with several athletes set to compete in the upcoming Olympics in London. The company’s sponsorships extend to a wide variety of sports, including tennis, badminton, cricket and boxing. Other top teams Herbalife sponsors include FC Barcelona, with its world-class player Leo Messi having a personal sponsorship agreement. Most recently, the company announced it will again sponsor the 2012 World Football Challenge in the summer. This soccer exhibition tournament last year drew over half a million attendees.

Realizing the importance of continuing its relationship with the Galaxy, Herbalife made this statement in a March 16, 2012 press release:

“The 2011 MLS Cup Champion LA Galaxy and Herbalife announced today a record 10-year extension to their existing agreement that will see the global nutrition company continue as the official presenting sponsor and jersey sponsor of the Galaxy. The landmark extension to the partnership will run through the 2022 MLS season and is valued at over $44 million, making it the single largest and longest sponsorship agreement for an MLS club in League history.”

With Herbalife’s name to continue to appear prominently on the front of the club’s jersey and with Herbalife remaining the Galaxy’s official and exclusive nutrition partner, the impact of this sponsorship alone will be enormous. Herbalife has indeed created a distinctive and enviable identity in the sporting community.


The 2011 MLS Cup Champion LA Galaxy and Herbalife announced a record 10-year extension to their existing sponsorship agreement, which is valued at over $44 million.


Liezel Huber is the No. 1 doubles tennis player in the world and USANA Brand Ambassador.
Liezel Huber is the No. 1 doubles tennis player in the world and USANA Brand Ambassador.
The Amway Center, a multiuse facility for entertainment, sports and other city events, opened in 2010 in Orlando, Fla.
The Amway Center, a multiuse facility for entertainment, sports and other city events, opened in 2010 in Orlando, Fla.  Photo credit: Ben Tanner
Edgar Rentería, five-time MLB All Star and the 2010 World Series MVP, uses and endorses 4Life products.
Edgar Rentería, five-time MLB All Star and the 2010 World Series MVP, uses and endorses 4Life products.

Capitalizing on a Prime Destination Spot

Amway is another company that has gone big with its marketing efforts. By locating its new arena in Orlando, Fla., the company is well-positioned to capitalize on an already popular destination area. This versatile facility has been designed to host a variety of events, such as concerts and ice shows, in addition to sports of almost every kind and is home to the NBA’s Orlando Magic. To learn more about the Amway Center, DSN called upon Amway Chief Marketing Officer Candace Matthews, who had this to say:

“When we cut the ribbon at the Amway Center in 2010, it became the first high-profile venue to showcase our new brand identity. Amway is the official vision partner of the Center, but this is much more than placing our name on the building; it’s a true partnership with the community and city to create a one-of-a-kind experience for guests. Part of that experience is the technology used in the LEED-certified building, from 1,200 LED screens that can be tailored to each event at the Center to the LED ‘ribbon’ that allows 360-degree messaging around the inside of the center. The technology, experience and service recently earned the Amway Center honors as the 2012 Sports Facility of the Year.

“Of course, you can see the Amway name from the air, on the ground from blocks away, and throughout the complex, including center court and the scoreboard. That bigger-than-life exposure brings our identity to hundreds of thousands of Amway Center visitors each year.

“The Amway Center is also a big way of spreading our brand across the globe. Many of our distributors are huge NBA fans, and some of our distributor leaders even traveled internationally to Orlando to attend the 2012 All-Star Game. Orlando is a global destination and Amway  Center is a major family entertainment venue, just like Disney World and Universal Studios. And when events at the Amway Center are broadcast to a global audience, they bring our name to potential customers and inspire pride in our distributors all over the world.

“For those who attend events at the Amway Center, the Nutrilite Magic Fan Experience, which features interactive Nutrilite displays and a history of the Orlando Magic, provides an opportunity to get to know the world’s best-selling nutrition and wellness brand, Nutrilite.

“The partnership has been a win-win for Amway. It’s a smart investment, innovative, and we’re proud to have our name on this state-of-the-art, award-winning facility.”

As these and other companies have found, big branding, particularly when associated with sports, can produce almost exponential rewards. They are able to powerfully amplify their marketing efforts and extend their reach to almost every corner of the world, far beyond what they would otherwise be able to do. Rather than being just another voice in the crowd, they actually transcend the crowd.