The New Talk Fusion Launches with Fresh Designs, Offerings

Moving at the speed of technology, Talk Fusion has overhauled its web-based business with fresh designs, product offerings and incentives. This week the video communications company unveiled its new look—and its new “Better with Video” slogan—during a Talk Fusion Dream Builder Broadcast by the company’s Founder and CEO, Bob Reina, and Vice President of Training and Development, Allison Roberts.

“At Talk Fusion, we’re constantly innovating, we’re constantly pushing the envelope to keep our video communication products exciting and ahead of the technology curve,” Reina told DSN. “This gives our Associates a huge competitive advantage with hot technology that’s the talk of the Internet.”

Talk Fusion’s newest offering is CONNECT Video Chat, an industry-first product that utilizes WebRTC to enable real-time video communication between any web browsers. Customers can try a free product demo via one of Talk Fusion’s newly redesigned websites, which introduce the company through videos in multiple languages.

The redesign extended to Talk Fusion’s full CONNECT suite of products, which features Video Email, Video Newsletter and Live Meetings as well as the chat tool. With its video communications technology, Talk Fusion has surpassed industry giants such as Yahoo, AOL, Viacom, CBS and MegaVideo to become the eighth-largest online video content provider in the world. Now in 140 countries, the company is setting its sights higher with a fresh look and innovative product offerings.

“Ultimately, our relaunch goal is to maximize the Talk Fusion brand worldwide, which has the additional benefit of helping our Associates achieve greater financial freedom,” said Reina.

As they build their businesses, Talk Fusion Associates will have the opportunity to earn new rewards for their work. The company has also revamped its compensation plan with incentives like Rolex watches, gold and diamond rings for milestone achievements, and a purchased Mercedes-Benz.

Supply Chain Basics: Managing Third Party Logistics and Embracing Technology

by Noel Datko

Defining Today’s 3PL Relationship

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

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

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

Global Partnerships

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

Investments in Technology

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

Strategic Relationships


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


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

Important Skills for Your 3PL

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

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

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

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


Working Smart


Technology Continues to Transform Today’s Supply Chain

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

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

 

 


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

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.”

The BIG HISTORY of Direct Selling

by J.M. Emmert

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

IN THIS ISSUE:

• The BIG HISTORY of Direct Selling • 10 Things to Know • The List 
• Topping the Charts • Profiles • Celebration

BRAVO AWARDS: 
• Leadership • Growth Based on Percentage • Growth Based on Revenue •Humanitarian


DSN Global 100

This past November the History Channel’s sister station H2 aired Big History, a 17-part narrative on the history of Earth. The program culminated with a look at the critical events that shaped life on this planet, from the Big Bang to the social transformations of the modern era. Like the history of the universe, the story of direct selling reveals paradigm-shifting events and thresholds that have fundamentally changed the industry and helped to shape today’s direct seller.

So we wondered: What were those moments? What would be the “Big History” of direct selling? The following are the five thresholds we identified.

Threshold No. 1—The First Direct Selling Companies

There was no Big Bang moment for direct selling, no moment when out of nothing everything began. The industry, the oldest distribution channel in history, began appearing alongside the development of civilizations. As hunter-gatherers settled down to farm and build towns, the first direct sellers began to sell their wares across Europe, Africa and Asia.

The bartering of commodities evolved into a vast network of trade, and by the 18th century the direct-to-consumer channel of distribution had reached the United States in the form of the Yankee peddler, solitary figures who roamed the countryside bringing goods to isolated areas of the population. But it would be another century before the first direct selling company was established. In 1855, Rev. James Robinson Graves developed a business model that had young men going door to door to sell products, forming the basis of the company known today as Southwestern.

Nearly 160 years later, direct selling engages more than 16 million people in the United States and nearly 100 million people around the world, with 22 billion-dollar global markets. Direct selling companies are committed to not only bringing quality products to the global audience, but also a quality of life that can, and does, change lives.

“More than 3 million Independent Beauty Consultants around the world share Mary Kay’s message of hope—‘If you can believe it, you can achieve it!’ ” says Sheryl Adkins-Green, Chief Marketing Officer of Mary Kay. “Through Pink Changing Lives®, Mary Kay has a commitment to changing the lives of women and children around the world, encouraging them to believe in themselves and pursue their dreams to transform, inspire and empower our future.”

The popularity of direct selling continues to grow. In a recent Harris Poll commissioned by Direct Selling News, nearly one-third of U.S. adults have purchased from a direct seller in the past six months, with 42 percent taking advantage of doing so online. That technology has allowed newer companies to reach more customers far quicker than the old days of walking the countryside.

“It Works! is a customer-generating machine,” says Mark Pentecost, CEO of It Works! Global. “We encourage our distributors to gather customers, and we provide a Loyal Customer Program with perks to retain customers. This opportunity forms the foundation for a business that gives everyday people hope that they can change their lives and leave a legacy for their families.”

Threshold No. 2—Women Are Welcomed

In the history of the universe, stars became the building blocks for life. And in the history of direct selling, the points of light that became the building blocks of the industry were women.

David McConnell’s decision to recruit women as sales representatives for his California Perfume Co. might have been a big, bold statement for the times. Yet it just made sense to McConnell when he saw the natural ability of women to network and market to others. Mrs. Persis Foster Eames Albee became the company’s first representative, and today more than 6 million Avon representatives are following in her footsteps, benefiting from McConnell’s belief that women could be the most important component of the direct selling channel.


“[Our Founder David H. McConnell] understood that women were natural salespeople who could easily relate to other women and passionately market beauty products.”
—Sheri McCoy, CEO, Avon Products Inc.


“In 1886, our Founder David H. McConnell recognized that women were rarely offered the opportunity to earn their own income,” says Avon CEO Sheri McCoy. “He also understood that women were natural salespeople who could easily relate to other women and passionately market beauty products. The notion that women deserve the opportunity to support themselves and their families is a cornerstone on which [Avon is] built.”

The role of women in the industry has greatly evolved from the days when the legendary Mrs. Albee traveled the Northeast by horse and buggy. Mary Kay Ash, Brownie Wise, Mary Crowley and Jan Day were strong role models whose business savvy and sincere desire to see their contemporaries succeed empowered 20th-century women and inspired a legion of today’s female leaders.

That group includes Thirty-One Gifts’ Founder and CEO Cindy Monroe, Scentsy’s Co-Founder and President Heidi Thompson, Rodan + Fields President Lori Bush, Isagenix’s Co-Founder Kathy Coover, and The Pampered Chef’s CEO Doris Christopher, who believe that being a woman is an advantage to running a direct selling company.

In fact, if you look at the Global 100 companies, you will find that nine of the 29 U.S. companies in the Top 50—31 percent—are led by women who were either co-founders or who serve as president or CEO. And it is these women who are bringing their opportunities to other women around the globe, especially in developing countries where women are expressing sentiments similar to what Mrs. Albee wrote to David McConnell 130 years ago: “I know of no line of work so lucrative, pleasant and satisfactory as this,” she said.


DSN Global 100 DSN Global 100

Threshold No. 3—The Formation of Direct Selling Associations

In 1910, McConnell’s California Perfume Co. joined with nine other companies from New York, Massachusetts and Michigan to form the Agents Credit Association, which today is known as the U.S. Direct Selling Association. It was the first such association to focus on the needs of direct sellers.

Back then, the Association was charged with collection and credit matters; today, the DSA represents 200 member companies and works to further promote the impact of direct sellers under the guidance of President Joseph Mariano.

“One of the most important accomplishments for DSA has been the mobilization of many different types of companies by recognizing and supporting their mutual interests,” Mariano says. “DSA can act on behalf of companies and individual sellers to ensure a fair and open marketplace. Because we determine our course of action based on the merits instead of special interests, we have a virtually unblemished record of defeating legislation that would be harmful to direct sellers, and have worked constructively with many states in passing anti-pyramid legislation that helps lawmakers identify and prosecute scams while protecting legitimate companies.”


“We will continue to help policymakers, prospective sellers and others gain a fuller understanding and appreciation of direct selling.”
—Joseph Mariano, President, U.S. DSA


According to Mariano, the DSA will continue to work collaboratively with companies to maintain unity of message and purpose in all its activities. “We will continue to enhance the high standards of marketplace behavior the public should expect from direct sellers, and we will continue to help policymakers, prospective sellers and others gain a fuller understanding and appreciation of direct selling,” he says.

Today more than 60 countries have direct selling associations. Seldia—the European Direct Selling Association—represents 27 DSAs, including those from the U.K., Germany, France, Belgium and Italy, which were the first European countries to establish national associations. Since 1968, Seldia has been an authoritative voice for direct selling in European government affairs.

“New laws and regulations are now made with input from Seldia, and a growing number of policymakers have a favorable and supportive view on direct selling,” says Maurits Bruggink, Executive Director of Seldia. “With the increasing appreciation of entrepreneurship in Europe, Seldia wants to grow the importance of direct selling in the coming years and ensure that our sector is known for the opportunities it creates for individuals of every walk of life, the wealth it generates to society, and the high level of ethics in trading.”

A decade after the formation of Seldia, which at the time was known as the Fédération de la Vente et du Service à Domicile (FEVSD), the World Federation of Direct Selling Associations was established. The WFDSA is a non-governmental entity that represents national direct selling associations around the globe and works to promote the highest global standards for responsible and ethical conduct. Alessandro Carlucci, CEO of Brazil-based Natura, is the current Chairman of the WFDSA, and has diligently worked to build the reputation of the industry.

“The WFDSA was born to reinforce ethical standards and to disseminate the positive social impact of the direct selling model,” says Carlucci. “The Federation aims to promote an ethical debate in the sector considering the significant changes happening in an increasingly connected world. In other words, we seek to be every day more in sync with the aspirations of contemporary society—more connected, more active, more social. Since the energy of our people is what moves our business model, we pursue to deeply understand them and to focus on their needs. That is what makes our advocacy efforts relevant to governments and key influencers.”

Threshold No. 4—Compensation Structure

For decades, direct sellers had been compensated on a performance-based model where earnings were tied to personal sales. Then, in the mid-1900s, a revolutionary approach for compensation was developed that would allow representatives to benefit beyond their personal selling efforts. Amway was one of the first companies to adopt the new structure.

According to Amway, many people assume that the Amway business model was introduced in 1959, when Jay Van Andel and Rich DeVos founded the company. However, the company’s roots go deeper than that. Nutrilite Founder Carl Rehnborg is often credited as the father of both plant-based food supplements and the sales plan that served as the model for Amway.

This new compensation plan was actually the invention of William Casselberry, whom Rehnborg had met in a Dale Carnegie course, and Casselberry’s friend Lee Mytinger. In 1949, Jay and Rich became two of the top Nutrilite distributors and were introduced to that compensation plan, which allowed them to earn based on their own efforts and those of others they trained as Nutrilite sales reps. Without Rehnborg, Mytinger and Casselberry, Amway might not have been guided by the business plan that has served it well for 55 years.

Today, nearly 90 percent of the 2013 DSN Global 100 companies utilize this compensation structure.

DSN Global 100

Consumer Goods and Services Offered through Direct Selling

PRODUCTS

  • Arts & Crafts
  • Beauty
  • Fashion & Accessories
  • Cosmetics
  • Educational
  • Food & Beverage
  • Food Storage
  • Home Care
  • Home Décor & Fragrances
  • Jewelry
  • Kitchenware & Cookware
  • Nutritional Supplements
  • Personal Care
  • Relationship Enhancements
  • Travel
  • Weight Management
  • Wellness

SERVICES

  • Energy
  • Financial Planning & Investing
  • Health Insurance
  • Home Security
  • Legal Representation
  • Life Insurance
  • Natural Gas
  • Telecommunications

 

Threshold No. 5—Evolution of the Sales Method

The direct selling model has evolved because the world has evolved. The industry has adapted to changes because it can, as life itself can, store information, reproduce itself, pass information along and multiply.

One of the greatest changes in the industry was the party plan model, believed to have been created by Brownie Wise when she was with Tupperware. But perhaps no event in the history of direct selling has caused more of a paradigm shift than the emergence of technology. And here’s why. As Big History explained, during the era of the steam engine, it took 150 years for man’s collective knowledge to double. Today, it takes two years. By 2020, it will take 72 hours.

“We not only embrace, but innovate with the tools and technology now so abundantly available,” says Rick Stambaugh, Chief Information Officer of USANA. “The world is shifting. Mobility will prove to be the game changer, especially when it comes to prospecting. Everyone has a smartphone, which gives us a much broader reach. Apps will become a preferred means of engagement, and we are actively updating and developing several to stay ahead of the curve. In fact, for over 20 years, our focus has been on personalization. Some may say technology is contradictory to that, but it’s not. Being able to profile yourself and get answers specific to you is not only cool, but is the wave of the future.”

Stambaugh adds that as for transaction technology, the method of spending is rapidly shifting from a storefront platform to a greater web-based structure, as e-commerce becomes widely accepted and trusted. “It has certainly moved the needle on our ROI,” he says. “Then there is social media, which is less than 10 years old, but look what it has done already in the realm of awareness. These days you can’t run a successful business without being social media savvy. Even social commerce is catching on, although still in its infancy. And though the direct sales industry is becoming more high-tech, it’s still important to remain ‘high-touch’ in keeping customers satisfied and the salesforce motivated. You have to stay connected to those you serve and develop an interpersonal presence in a high-tech world.”


“Though the direct sales industry is becoming more high-tech, it’s still important to remain ‘high-touch’ in keeping customers satisfied and the salesforce motivated.”
—Rick Stambaugh, Chief Information Officer, USANA


Avon’s McCoy agrees to a certain degree. “While the biggest game changer is technology and how we use it, the backbone of our business hasn’t changed,” she says. “Our representatives continue to build relationships and have a passion for products, and our business is still high-touch, even though it’s now high-tech too. Customers can connect with their representatives in person, over the phone, via email or through social media. While the world is a different place today than when Avon started, it is the personal touch that connects our customers to our representatives.”

Adds Douglas Franco, General Manager for Belcorp USA, “I believe technology just changes the way our relationships work, but does not change their nature. It’s a trust-based purchase, which only becomes more transparent and democratic with technology.”


“I believe technology just changes the way our relationships work, but does not change their nature. It’s a trust-based purchase, which only becomes more transparent and democratic with technology.”
—Douglas Franco, General Manager, Belcorp USA


The Future

History teaches us that we have the ability to seize our evolution, and that the triumph of our collective learning is the ability to adapt. We learn to survive in the most challenging conditions. We seize the opportunities to continually move forward.

What will be the next threshold for direct selling? That remains to be seen. In the next century this industry may not even be known as “direct selling.” As new technologies and forms of communication are developed, a new term may come to apply to what it is direct sellers do, just as the term “social selling” is gaining traction today.

This year, the DSN Global 100 list revealed that 18 companies increased their 2013 revenue by more than $100 million, clear evidence that the business model can thrive in a time of economic uncertainty.

Additionally, new companies such as Origami Owl, Nerium International, Plexus Worldwide and Solavei, along with a host of others, continue to bring fresh ideas and methodologies to the marketplace. These new ideas, combined with advanced technology, placed alongside a highly successful and long-standing business model, will open up possibilities that we can only guess at today. The future is promising!

An Integrated Onboarding Experience: Business Launch at Hyper Speed!

by Greg Fink

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

Many companies are beginning to experience incredible results as they enrich, engage and simplify how independent contractors are running their businesses through the use of technology. Aligning cross-generational buying habits with effective sales and marketing strategies offers multiple experiences that specifically cater to individuals by personalizing those interactions.

At Next Wave, we continue to see incredible growth in mobile and social strategies and how they are impacting our industry. We’ve also become keenly aware of the importance of the “user experience” and how design and usability now start with the smallest common denominator—a finger—and regardless of device the experience must be optimized.


Aligning cross-generational buying habits with effective sales and marketing strategies offers multiple experiences that specifically cater to individuals by personalizing those interactions.


A recent article in Forbes highlights the various types of online experiences based on three of the most well-respected companies—Amazon, Google and Apple—showcasing the differing approaches they have taken in how they have grown their businesses. Amazon’s approach offers the ability to react to a customer’s engagement with personalized attention to increase overall satisfaction; in other words, buy a product/service during the month of May and you will get free shipping. Google’s approach offers the ability to draw customers in through the power of a positive experience; in other words, they offer multiple views, images, videos and pictures when using their search engine. Apple’s approach offers the ability to turn customers into raging evangelists; in other words, the iPod, iPhone, Apple TV and iTunes have arguably innovated the most flexible, simple-to-use and fluid experiences on personal devices.

One contributing factor to these companies’ success is the extraordinary experience they offer. While somewhat different in nature, direct sellers need to embrace all of these methods in order to compete at the highest level. My goal with this article is not to focus on technology so much as the idea of offering a remarkable experience through software design.

Good software design impacts the daily experiences of visitors, customers, sales reps, hostesses, guests and corporate users. The software design and engineering process should start with assessing the possible growth areas of the business, and the onboarding process for a new recruit is one of those critical areas.

Creating an Integrated Onboarding Process

One of the greatest challenges for any sales rep is recruiting new participants. Companies often assist sales reps with lead-generation tools and ways to effectively recruit and build their businesses. Sales reps work hard to educate and engage new prospects, investing significant time, energy and effort in the process. In almost every case they leave a positive impression, and new recruits are fired up and excited about their new opportunity.

So what happens after someone has made the commitment to participate in the business? Research shows there are some breakdowns in the onboarding process that a sales rep experiences, particularly in getting the digital aspects of their business up and running. Most companies provide excellent training and access to coaching and instill good support programs for their up-line leaders, but the problem is they can be at the mercy of their software, which can create barriers in launching sales reps’ businesses. As a result, these barriers can sometimes leave a negative impression with the new recruit that this business may be more difficult than they initially thought.

Consider some of the following technology tools that can be embedded into the onboarding process to create an integrated, simplified experience so new participants can quickly get their businesses up and running in four easy steps. The entire process below is benchmarked to be completed in 30 minutes or less.

 

Step 1: Enrollment Made Easy

    • The enrollment process should be device-independent, so whatever the device—a mobile phone, laptop or tablet—using a finger or mouse someone can easily sign up as a sales rep or customer with quick and easy credit card capture.
    • Based on personal interests or characteristics, suggestions for the type of kit or sample product should be automatically recommended. As an example, a skincare company could ask during the enrollment process for the applicant’s skin type: dry, oily, normal, etc., and the samples that get included in the kit are based on this personalization.
    • From start to finish the enrollment process should take less than five minutes, including capturing necessary demographic and personal data.

Step 2: Bringing Personal Marketing Site to Life

    • Once enrolled, it is important to quickly get the new participant’s online marketing site and business hub going. This can be done by streamlining the creation of the online marketing site setup by having scripts, suggestions and access to website templates available for guiding them through the process.
    • Offer some personalization, like uploading a photo, but keep personalization to a minimum so they don’t get sidetracked with too many options. A really convenient feature is one that offers a preview of the online marketing site as the user is creating it, which shows them what it will look like before the site is actually published. That way they can see their layout and design in motion.
    • Each sales rep’s online marketing site should have a personal URL for their individual site, suggesting a site name so they don’t have to figure it out. The personal URL has huge benefits related to posting promotional messages on social sites. If a “friend” clicks on a post from their wall they are automatically driven right back to the sales rep’s online marketing site to purchase, sign up, host an event, or browse and shop. A personal URL makes certain that social networks are directly connected to the sales rep’s online marketing site. The challenge is some systems offer the ability to log into a shared portal without a personal URL, and when a social media post occurs it drives the individual to the company’s corporate site and not the sales rep’s online marketing site. This can cause the sales rep to lose confidence in their ability to utilize their social media outlets to their advantage.
    • The entire online marketing site creation should take only a few minutes.

Step 3: Integrated CRM Marketing and Communications

    • Once the sales rep’s online marketing site is published, it’s time to communicate to their network of contacts. The challenge is most people have contacts stored with multiple providers, and CRM becomes an arduous process for managing and communicating to those contacts. Well-designed software provides tools that can fully automate this process for importing friends, family and colleagues pulled from multiple providers like Outlook, Yahoo, Gmail and others, eliminating rekeying names, phone numbers and email addresses. The end result creates a centralized contact address book within minutes. These contacts can then be grouped by various categories, like potential recruit, hostess and customer, so online promotional campaigns can be targeted to those individual groups. Effective CRM tools and communications increase relevancy, ensuring better relationships.

Step 4: Digital Marketing Campaign Tools (Game-Changer)

    • The final step in the integrated onboarding process is the impression a new sales rep makes by effectively communicating to their network of contacts (now located in the centralized contact address book), reaching as many potential buyers as possible and maintaining those relationships through effective communications. The challenge is that salesforces are often lacking effective integrated marketing and communications tools. By equipping your salesforce with an online promotion tool, the ability to quickly execute cost-effective communications using corporate-branded content is just a few clicks away.
    • The promotion tool should offer a sales rep the ability to select from a gallery of various types of campaign templates for introducing the company, the product line, a company newsletter, hostess specials and more. After selecting the campaign template, sales reps optionally can create a personal message to their targeted audience. Personalization offers the ability to build deep brand relationships tailored to their contacts and makes online communication relevant to the interests of the targeted audience.
    • Once the contacts are selected from the address book based on the type of campaign, the online promotion is sent. The entire process for creating and sending out the online promotional campaign should take less than a minute. Facebook and other social sites can also be informed of the online promotion based on campaign relevancy.
    • Each individual sales rep can then track the effectiveness of their online promotional campaigns by monitoring who opened it, who forwarded it to a friend, who responded directly to their marketing site and what interested them.

In Summary

Having an excellent onboarding experience for the new sales rep is vitally important to ensuring greater salesforce activation and engagement and reaching higher rates of retention. Attrition is costly and can become a momentum killer for any company. The above steps may seem fairly obvious, but the secret sauce is “packaging” them in a fully integrated system, making it streamlined, efficient and easy. The goal with this entire four-step onboarding process is to keep accelerating and carrying momentum from the excitement gained during the recruiting process and getting sales reps activated through having an extraordinary experience. The end result is ultimately getting a sales rep’s business up and running quickly so they can get focused on sales revenue-generating activities.


Greg FinkGreg Fink is Vice President of Sales at Next Wave Logistics, a provider of web-based software and services for the direct selling industry.

by Beth Douglass Silcox

Order reprints of Sheri McCoy’s profile here.


Avon Products
Avon


Sheri McCoy
CEO, Avon Products Inc.

Leaders must know their business. They must know what products meet consumer need, what the selling cycle is and how best to market, and Sheri McCoy says, “You also have to know your people. You need to understand your teams and what motivates them. You have to be able to help them stretch and also know what might derail them.”

One of McCoy’s greatest challenges happened early in her career when she was passed over for a promotion. “My work was better, my results consistent,” she says. “When I asked what I should have done differently, the feedback I got was that I was too focused on the work and I was not spending enough time developing relationships with peers or building my team’s skills and experiences. It’s critical to know your business, but just as important to know the people around you.”

Today, she surrounds herself with diverse opinions and seeks input from direct reports, peers, mentors and Associates at various levels within the Avon organization. “I have built a network of people who think differently than I do and who are courageous enough to share their opinions. I listen, carefully, to all points of view before making decisions,” she says.

“I’ve learned not to just solve the issue immediately in front of me, but to have the insight to anticipate future impact and have the courage to make difficult decisions now that will have the longest lasting effect,” McCoy says.

Sheri McCoy, CEO,  Avon Products Inc.With McCoy’s guidance, Avon undertakes three strategic priorities in 2014. “The first priority is executing our growth platforms, which include innovating the consumer proposition to ensure our customers have the right products; transforming our Representatives’ experience; and optimizing our geographic footprint. The second priority is to drive simplification and efficiency to get cost out, and the third is to improve our organizational effectiveness in terms of capability and talent,” McCoy says.

Because Avon proudly identifies itself as “The Company for Women,” it focuses on leadership and personal development within its ranks. This mission resonates on many levels with McCoy, who remembers a time when so few women held leadership positions in corporate America that it was difficult for young businesswomen to find mentors. That is no longer the case; many women hold senior executive positions at Avon, and seven sit on their 11-member board of directors.

“It is so important to have mentors, both women and men, because mentors are people who can help develop you and many times they see something in you that you don’t see in yourself. I think it is the responsibility of all leaders to be role models and mentors; we must reach behind us to bring up the next generation of leaders,” McCoy says.

To that end, last year Avon created an internal network for women called Avon Women Empowered (AWE) made up of community outreach, STEM (science, technology, engineering and math), networking, career paths, mentoring and workplace committees. AWE events, workshops, and seminars engage and support women in their career development and help Avon retain talented and promising leaders. Female Avon board members and senior leaders talk about work-life balance and share their career paths regularly.

Sheri McCoy on personal development…

“I am constantly pushing myself outside of my comfort zone and challenging myself to learn.”

Sheri McCoy on her favorite job responsibilities…

“I started my career in R&D, so I’m always drawn toward roles where there is a customer orientation, and where I can have an opportunity to drive innovation and be hands-on in product development. Equally important to me is my role in motivating people and teams. I feel that it is critically important in all aspects of the business to bring people together and work toward aligned goals.”

Avon Products Inc.

Avon, “The Company for Women,” was founded in 1886 by traveling salesman David H. McConnell after female clients showed more interest in his free perfume samples than the books he was selling. Soon he recruited women as sales representatives, encouraged their natural abilities to network and market products to other women, and gave them employment options never before available. The Avon earnings opportunity was a revolutionary concept in its day.

Today, Avon is one of the world’s largest direct selling companies, with beauty, fashion and home products available in over 100 countries. More than 6 million active independent Avon Sales Representatives sell Avon products.

Of late, Avon has faced business challenges and to curtail some of them, the company announced late last year a $400 million, multi-year cost saving initiative to reduce costs and improve organizational effectiveness.

The Avon Foundation for Women is a mighty philanthropic entity, raising millions of dollars for breast cancer research each year through walking events all over the U.S. In the fourth quarter of 2013, they awarded more than $10 million to breast cancer and domestic violence organizations. Also last year, Avon launched 16 Days of Activism Against Gender Violence, a human rights-based movement to educate bystanders and victims on the signs of domestic violence and how to safely intervene or seek help.

In 2012, Avon generated $10.7 billion in sales, placing them at the No. 2 spot on the Direct Selling News Global 100 for 2013.

Order reprints of Sheri McCoy’s profile here.

The Technological Disruption of Direct Sales

by Gary White

Click here to order the November 2013 issue in which this article appeared or click here to download it to your mobile device.

Whether you like it or not, technology is playing a big part in our lives. It’s infiltrating and impacting our business practices, purchasing behavior and expectations. As a direct sales executive you need to be constantly asking yourself how you can stay ahead of this overwhelming movement. We’ve reached a stage in business where it’s no longer possible to ignore technology or steadfastly stick to old-fashioned ways of working. Technology innovation is here to stay, and those who don’t prepare to embrace it are only preparing to fail.

This trend is clear to see even in our everyday buying behaviors. Purchasing behavior continues to evolve, and it’s rare for buying decisions to be made without prior online research taking place first. These newly evolved savvy-shoppers are ultimately your potential customers, so in order to keep up with the fast-paced nature of online activities and stay aligned to human behaviors you need to be using technology to your advantage. According to the U.S. Census Bureau, it’s been estimated that the U.S. retail e-commerce sales for the fourth quarter of 2012 was $59.5 billion, an increase of 4.4 percent from the third quarter of 2012. Not only is that a significant figure in itself, but the steep increase indicates further, on a broad scale, where the sales industry is headed.

I regularly come across direct selling professionals missing a trick with technology due to their fear of the unknown and reluctance to adopt potentially beneficial and innovative technology. The typical concerns expressed are understandable and include: “Technology is advancing so quickly, how do I stay on top of it?”; “How do I know I’m on the right track?”; “How do I realize the benefits?”; “What’s the ROI?”—all valid questions. However, there is another, and I believe more positive and engaging, way of looking at the future.

Technology disruption should be embraced. In the realm of direct selling, executives should be looking at their existing tools and practices with a view to using technology as a solution—one that can improve efficiency as well as productivity. Regarding technology adoption as a supporting tool that enhances the way you do your job tends to induce much less anxiety around the subject.

Training is a vital part of successful direct selling in the corporate world, and this is a particular area where technology can help executives thrive. A vast amount of money is spent on training courses to immerse executives in proven sales training methodologies, but what happens next? How often do you honestly believe workbooks are referred to as a reminder of successful processes? To achieve real ROI on training, technology needs to be incorporated at every step. Embedding technology within Customer Relationship Management (CRM) systems that are used every day is the only surefire way to make certain that knowledge is reinforced and therefore retained. If a sales methodology is integrated into genuinely user-friendly systems, then workflow is streamlined and productivity increases. Such integrations remove the need for excess research and admin by collating all the relevant material and presenting it in a way that works for executives out in their territories.


Developing a digital strategy to sit comfortably within existing practices works on a number of levels, not least to ease the anxiety associated with technology adoption.


Developing a digital strategy to sit comfortably within existing practices works on a number of levels, not least to ease the anxiety associated with technology adoption. Tangible results and the ability to track success and failure is gold dust in selling. Knowledge about what’s working, and what’s not, can dramatically impact a bottom line, which at the end of the day is what we’re all working toward. Technology can be seamlessly embedded into CRM systems to make this information readily available, which is vital to gauge the ROI from training. This is one of the many reasons why I’m so passionate that technology is not something to shy away from—but something to be welcomed with enthusiasm.


Gary WhiteGary White, CEO of U.K.-based White Springs, has 10 years of experience in delivering technology to businesses. With a background in accountancy, sales and software implementation for global organizations, White is passionate about the use of technology to drive sales transformations and regularly speaks on the topic. White Springs is a technology provider that transforms training from an event into a continuous learning process. It enables sales training companies to maximize the benefits of their intellectual property by offering clients the ability to use the training methods within their existing Customer Relationship Management (CRM) systems.

J.Hilburn: Built to Last

by Jennifer Workman Pitcock

J.Hilburn

Company Profile

  • Founded: 2007
  • Headquarters: Dallas, Texas
  • Co-Founders: CEO Hil Davis and President Veeral Rathod
  • Products: Custom clothing and accessories

In six short years, J.Hilburn has grown to be the largest maker of custom shirts and made-to-measure trousers in the world. Each year since its 2007 launch, J.Hilburn’s revenues have doubled. The company is on track to reach $55 million by the end of 2013.

By the end of 2014, J.Hilburn expects to double its distributors—known as stylists—hitting the 7,000 mark. What’s behind the company’s success? According to CEO Hil Davis, it comes down to two things: the company’s value proposition for its customers and its value proposition for its stylists. “If you own these two things, you’re going to build a successful business,” Davis says.

Hil Davis Hil Davis
Veeral RathodVeeral Rathod

For the customer, that means getting the best product for the money. J.Hilburn uses custom Italian fabrics—the same quality as Armani or other high-end brands. But the shirts start at $89.

And when it comes to stylists, the company really listens. J.Hilburn defaults to the stylists when they tell executives what they need. “We realize that they’re not just a distribution channel, they’re our brand. They’re our stores. If you start looking at the stylists like that, it changes the way you think,” Davis says.

Maintaining Davis’ two value propositions is harder than it looks. “It’s expensive,” he says. One thing that sets J.Hilburn apart from other direct sales companies is that it spends more on product. “Our profit margin is 60 percent,” he says. “Then you take 35 percent for commissions, and you have 25 percent left over. Most direct sales companies have 35 percent left over because their products are marked up more.” At the end of the day, J.Hilburn has less to reinvest in the company.

Davis and his co-founder, J.Hilburn President Veeral Rathod, believe that their next focus has to be on investing more in technology and brand. “We’re doubling without them,” Davis says. “But imagine what will happen when we actually build those two areas.”

Building Technology

A brand is built on more than a product. It’s an emotional connection and an experience. Through its market research, here’s how J.Hilburn has come to understand the journey that a typical customer takes toward understanding style and developing brand loyalty:

    • He gets a shirt that fits better, gets compliments, feels more confident.
    • He personalizes the shirt from a fashion standpoint—adding patterns, a different fabric inside the collar, a new type of stitching.
    • He grows out of just wearing J.Hilburn shirts, adding other wardrobe items.
    • He personalizes the whole outfit.
    • He adds details that develop his personal style. Nothing flashy, just understanding the value of an unlined jacket or when to wear a certain collar.

 

J.Hilburn has already begun improving its technology. Last year, the company introduced an iPad app for its stylists. The J.Hilburn Style Kit is a sales tool. The executive team spent a lot of time with the stylists and asked them to share their biggest challenges. Stylists told the executives what they needed, and J.Hilburn built it. The result was an app that includes all clothing the company sells in an easy-to-search format that can show multiple images.

The app also addressed the biggest frustration of the field. “When they would take an order from a guy and later find it was out of stock, they would lose the sale,” Rathod says. “So they wanted real-time inventory availability.”

The app provides that and much more. It also functions as a “virtual showroom.” With the app’s style boards, a stylist can pull together several looks and show the customer how various pieces work together. “This was a big breakthrough for us,” Rathod says. “The average volume on orders that come in through the iPad app is about 40 percent higher than without.”

The company wants to continue to expand its use of technology to help stylists engage with customers. J.Hilburn has brought in two business data analysts to dive into customer data. The analysts examine trends, customer segmentation, life cycle and lifetime value. The company also hired e-commerce experts to focus on creating customer engagement.
One goal is to automate the curating process that stylists provide for each customer, creating a virtual stylist. “This is not to replace our stylists, but to supplement them,” Rathod says. “When our existing customers go online, we want them to feel like their stylist is with them in their closet. Instead of saying, ‘Here’s what’s new for fall,’ we’re showing them, ‘Here’s what we recommend for you.’ ”

And that’s the core of what J.Hilburn is able to do that no other company currently can. “One of the big advantages we have is that we’ve got every guy’s measurements and style preferences,” Davis says. Already J.Hilburn’s monthly emails have a 45 percent open rate. Having every customer’s purchase record will allow them to make the emails even more targeted and valuable. Soon J.Hilburn will be sending what Rathod calls “curated emails” with suggestions tailored to customers’ preferences and buying history.

J.Hilburn also intends to use its wealth of information to help men visualize how to create a look out of items they own, while also suggesting new pieces that would work well with previous purchases. “When you log on, you will see your closet,” Davis says. “It’ll have everything you’ve ever bought from J.Hilburn. You can click on any product and say, ‘I want to wear it with a suit or denim,’ and it will spit out a look, as well as what you should be adding to complete that look.”

Eventually J.Hilburn’s accumulated information will allow the company to become “the fit graph”—just like Facebook is the social graph.

The company has already put all its customers’ measurements into 3-D sizing technology. “If we wanted to right now, we could roll out 1,000 different sizes,” Davis says. That means even their ready-to-wear—a category that’s grown to 30 percent of J.Hilburn’s revenue—will be nearly a custom fit based on J.Hilburn’s use of information and technology.


“The average volume on orders that come in through the iPad app is about 40 percent higher than without.”
—Veeral Rathod, Co-Founder and President



Building Brand

Hil Davis and Veeral Rathod have always known that brand-building is key to J.Hilburn’s long-term success.

“If you build a brand and infuse that into direct sales, you have a very powerful model,” Davis says. “There are more direct sales companies that do $100 million than e-commerce companies that do $100 million. But why aren’t there more billion-dollar direct sales companies? There should be. Direct sales should be as powerful as franchising, but it’s not.”
Davis attributes the lack of billion-dollar direct sales companies to lack of brand, which is why establishing the J.Hilburn brand is a top priority.


“If you build a brand and infuse that into direct sales, you have a very powerful model.”
—Hil Davis, Co-Founder and CEO


That’s what led J.Hilburn to Brandstream. “We wanted to go out and find the team that’s built the biggest iconic brands in the world,” Rathod says.

In 2011, J.Hilburn named Scott Bedbury, CEO of Brandstream, to its board of directors. The mastermind behind Nike’s “Just Do It” campaign and the redesign of Starbucks in the 1990s, Bedbury is a key player in J.Hilburn’s current brand-development efforts.

Bryan Kokkeler is Creative Strategist at Brandstream, and he says that a brand is not simply a logo or a tagline. “It’s an experience and a relationship. How we deliver our products is as important as what we deliver,” he says. Through research, J.Hilburn has discovered that what resonates with customers is more than just clothing. It’s “the way it makes them feel when they wear something that truly fits them,” Kokkeler says.

As part of its research, J.Hilburn conducted focus groups in seven cities. The purpose was not to test new fabrics or products. “We were just genuinely interested in what [customers] thought about fashion, about shopping, about fashion brands, and what they thought about us and how they felt about the experience,” Kokkeler says. “It was very rewarding to hear how satisfied they were with our products and how strong their emotional connection was with the brand and their personal stylist.”


J.Hilburn displays its clothing at its recent conference.
J.Hilburn displays its clothing at its recent conference.


Equipping Stylists

Davis and Rathod both emphasize that every contact a customer has with the company should help to build that sense of brand. Since the stylists are such a big part of the brand experience, excellent training is another priority for J.Hilburn. “Training is a part of brand,” Davis says. A good experience with a stylist creates repeat business.

Here’s where more data is utilized, which makes sense because even a brief conversation with J.Hilburn’s co-founders includes lots of statistics. They’re constantly analyzing the data to better understand what’s working for the company and what’s not. The stylists do not escape this level of scrutiny. “We’ve run regression analysis on our stylists to find out what makes them successful—down to hair color, ZIP codes, income—everything. What we’ve found out you’ve got to have is what we call A, B, C, D, E: Attitude, Belief, Commitment, Duration, and Engagement,” Davis says. “What makes a stylist successful or not is all internal.”

But at the same time, J.Hilburn representatives fit within certain parameters. For instance, 92 percent are women aged 30 or over. And the closer they are to a family income of $100,000 or higher, the broader their network of friends who will be potential customers. “There’s a demographic cutoff for us that doesn’t necessarily exist at other companies,” Davis says.

Larry Novak is President of Partner Development. He and Development Director Karen Bejjani are the executives that work most closely with the stylists. Novak says that the majority of J.Hilburn stylists haven’t been involved in direct selling before. That means most don’t already know how to develop an organization or how to manage it and communicate with their recruits.

That’s one reason the company has invested heavily in leadership development. Along with the usual weekly updates, webinars, back office videos and social media communications, J.Hilburn offers specialized training. Each stylist receives a full day of classroom training when they first join the company. “As a custom provider of clothing, we want to make sure that they really understand all the different measurements,” Novak says. The training also includes more information about the opportunity and growing an organization.


“What’s taught at leadership school is pulled through with coaching. Coaching fills the gap between ‘I know the skill’ and ‘I can do the skill.’ ”
—Karen Bejjani, Development Director


But what Novak and Bejjani believe really sets J.Hilburn apart is the company’s leadership schools and coaching. When a stylist reaches particular career levels, they’re invited to leadership school in Dallas. There are five schools, which correspond to J.Hilburn’s career levels. “The leadership schools equip them for what happens at that career level,” Bejjani says. And it doesn’t end there. “What’s taught at leadership school is pulled through with coaching,” she says. “Coaching fills the gap between ‘I know the skill’ and ‘I can do the skill.’

“I don’t know of anything else like our training and coaching to take people to the next level,” she continues. “It’s been wildly successful.” During Bejjani and Novak’s tenure with the company, they’ve seen soccer moms who didn’t know how to lead or build a business transform into leaders, grooming those under them to become leaders too.

The numbers speak for themselves: J.Hilburn’s churn is incredibly low, with 80 percent of recruits still with the company three months later. And 80 percent of those stay on long-term with average sales of $20,000 annually.

Growing Strong

Davis’ introduction to direct sales through reading the book The Warren Buffett Way is now part of J.Hilburn lore. The founders may have come to direct sales with skepticism, but today they’re more committed than ever to this channel and its future potential.

“Direct sales is one of the most powerful distribution channels out there,” Davis says. And it may be undervalued right now, but he sees a future where big corporations will utilize direct selling. “I think that in the next three years, we’re going to be in a perfect storm, where big balance-sheet players are going to come in and completely rejuvenate this industry.”


“I think that in the next three years, we’re going to be in a perfect storm where big balance-sheet players are going to come in and completely rejuvenate this industry.”
—Hil Davis


The reason? Companies need to maintain growth, and their other channels are largely tapped out. Direct selling opens up markets where a brick-and-mortar store would never be feasible. “Direct sales gives you the ability to get into every single market,” Davis says. “That’s a really powerful thing.”

As J.Hilburn’s founders look to the future, they are intent on building an organization that will last. The company plans to expand into Canada in 2015 and to be in the U.K. in 2016. But they’re also thinking beyond international expansion.

“I think a lot of times direct sales companies are more interested in maximizing profit near-term instead of building something that’s really big. We’re building a reputation that will translate into a lot more verticals,” Davis says. “We’re building a platform, a brand of stylists and a concept that is much bigger than J.Hilburn.”

Mary Kay China Chief on Brand Evolution, Market Insights

Mary Kay

Mary Kay launched in China—direct selling’s No. 3 billion dollar market—18 years ago with an emphasis on the company’s strong, values-based corporate culture. The market is now Mary Kay’s second fastest-growing behind Brazil and generates more than $1 billion USD in annual revenue.

K.K. Chua, Mary Kay President for the Asia Pacific Region, recently spoke to the South China Morning Post about the company’s work in China and the advantages of direct selling in a digitally connected world.

Though the company has cultivated a social media presence, Chua says its beauty consultants in the country build strong customer relationships in person through skincare classes, where women receive a demonstration of the company’s five-step regimen and tips for getting the most out of the products. The mobile aspect of Mary Kay’s salesforce also enables the company to bypass many of the challenges traditional retail brands face in establishing a presence in new cities.

Having observed the evolution of Mary Kay’s Chinese customers, Chua notes that the women have educated themselves and pay keen attention to the chemicals used in each product, placing precedence on natural, safe ingredients. Asian women, who spend more on skincare than anyone else in the world, have also warmed to color cosmetics over the years, a category that has surpassed skincare with double-digit growth in China.

Read more on Mary Kay and the direct selling industry in China.