by J.M. Emmert
“Life’s a bit like mountaineering,” said Sir Edmund Hillary. “Never look down.”
NOTE: This is an amazingly detailed article about the phenomenal growth of the SDI (Self Directed Income) Profession - as the Cover Story in the December 2014 issue of Direct Selling News.
It’s what direct sellers do, too—never look down. The direct selling
industry is an industry comprising people who seek to achieve things
never thought possible, scaling new heights, whether reaching inside
oneself to achieve personal goals or driving a company toward what is
considered the Mount Everest in direct selling, the $1 billion summit.
But like Hillary, only a few direct selling companies have managed to
reach that elite status. In the 159-year history of direct selling in
the United States, Avon was the first to achieve the feat in 1972. Amway
followed in 1980. In 1996, Mary Kay Inc. and Tupperware both reached $1
billion. In 2004, Nu Skin and Herbalife joined the group. But another
nine years passed before the next company, Ambit Energy, reached $1
billion in sales. Many companies are turned back in their efforts to
reach that summit. But why? What makes it so difficult?
The simple answer is that growing a company to such an extraordinary
level brings with it new challenges, and, like experienced climbers,
extraordinary companies know to stop when the footing gets treacherous,
even if the summit is close. Because it is an industry focused on
people, direct selling companies understand that the welfare of the
entire team is more important than putting up numbers. One tragic
misstep and the whole team could come tumbling down.
Orville Thompson, CEO of Scentsy and a former chairman of the U.S.
Direct Selling Association, once analogized direct selling and the quest
to reach $1 billion to scaling Borah Peak in Idaho. At 12,668 feet,
Borah Peak, or Mount Borah, is the highest mountain in the state and
among the 100 highest summits in the Rocky Mountains. The most popular
route to the top of Borah Peak follows the southwest ridge, ascending
5,262 vertical feet from the trailhead in a little more than 3.5 miles.
Just prior to reaching the top, climbers encounter Chicken Out Ridge, a
thin ridge of rock with steep slopes so intimidating that many abort
their summit attempt.
For those chasing after the $1 billion summit in direct selling, the
biggest challenge, says Thompson, is simply finding the right path to
follow, those “smooth areas worn down by countless others who have
blazed trails.” When they reach that direct selling version of Chicken
Out Ridge, they must “challenge their skills and test their fears” in
the face of new obstacles.
Despite the risks, more companies than ever appear to be chasing the summit. Direct Selling News
research has identified 13 U.S. companies with net sales at or
approaching the $500 million to $1 billion range and experiencing strong
growth. Having as many companies on their way to the $1 billion summit
as there are currently at the peak is a testament to the strength of the
channel. Here is a closer look at the contenders:
On the Summit Push
ACN
In 2011 ACN posted $550 million in sales, down from the previous year’s
$553 million. However, the company came back strong the past two years,
achieving $582 million in 2012—a 5.8 percent increase—and $700 million
in 2013—a 20.2 percent increase. This June, the telecommunications and
essential services company launched in Mexico, the seventh-largest
direct selling country and the company’s 24th market.
Stream Energy/Ignite
Stream Energy/Ignite has been camped near the billion-dollar summit for
the past four years, breaking the $900 million ceiling in 2010. After
two years of down sales, the company came back strong in 2013 with $27
million over the previous year—a 3.2 percent increase—putting it at $867
million. The company has seen continued growth, particularly in
Hispanic markets, and has significant expectations for company growth
across the board in 2014 and beyond as it diversifies its service
offerings, allowing it to sell nationwide.
Thirty-One Gifts
Of the 13 companies, only Thirty-One Gifts uses the party plan method of
selling, joining Mary Kay and Tupperware as the only companies in the
Top 17 of the Global 100 ranking that employ this sales approach. What
makes that especially interesting is that, according to the U.S. Direct
Selling Association, the party plan method of selling has decreased 4
percent in each of the past two years, going from a high of 31 percent
in 2011 to just 23 percent in 2013. The person-to-person method, on the
other hand, accounted for two-thirds of sales in 2013, according to the
DSA.
Thirty-One also has made one of the fastest ascents in recent years.
The company posted sales of $100 million in 2010 and then climbed to
$482 million in 2011, a 382 percent increase. Sales continued to rise in
2012—a 48.9 percent increase to $718 million. In 2013, Thirty-One
achieved a 6.2 percent increase, ending the year at $763 million. Its
four-year growth rate: 663 percent.
USANA
USANA, which surpassed $100 million in its first six years, has been the
steadiest climber in the group over the past few years. It has
maintained an average of $67 million in sales growth annually for the
past three years—ranging from a 10.6 percent to 12.5 percent increase—to
bring it to $718 million. The company reported $182.4 million in sales
for the first quarter of 2014, a 7.9 percent increase over the prior
year; second quarter results saw a 0.4 percent decrease, with $188.3
million compared to $189.1 million in 2013; and the third quarter saw
record sales of $191.9 million, a 10.5 percent increase over the
prior-year period of $173.7 million. For the first half of 2014, USANA
generated sales and customer growth in nearly every market in which it
operates. Strong growth was seen particularly in Mainland China, the
Philippines, Singapore and Mexico.
Expectations are that the wellness industry in particular will
continue to thrive in the coming years. In a Sept. 29 article on the
health and wellness industry’s global performance, Euromonitor
International reported that the United States was leading all countries
in 2014 with more than $160 billion in sales. The global industry is
expected to reach $1 trillion by 2017, fueled by the general
population’s preference for healthier products.
Rapid Ascent
AdvoCare
Four years ago, Plano, Texas-based AdvoCare had $89 million in sales and placed No. 91 on the DSN
Global 100 ranking for 2010. This year it landed at No. 26 in the
ranking, due to $460 million in sales for 2013. The wellness company has
achieved tremendous growth over the past three years: a 55 percent
increase in 2011 to $138 million; an 84.7 percent increase in 2012 to
$255 million; and an 80.3 percent increase in 2013 to $460 million.
doTERRA
An essential oils company that has not previously participated in the
Global 100 list, doTERRA International LLC provided a window into its
growth when it received state economic development incentives at the
time it decided to locate its global headquarters in Pleasant Grove,
Utah, last year. The company pledged that the $60 million headquarters
would bring $83 million in estimated new state tax revenue and 330 new
full-time employees to the community over the next 10 years. Founded in
2008, doTERRA says it has more than 1 million independent consultants,
which it calls Wellness Advocates.
Isagenix
Isagenix, which had a modest increase of 2.3 percent in 2011, has seen
increases of 27.4 percent and 34.1 percent in the past two years,
putting it at $448 million for 2013. Co-Founder and Executive Vice
President Kathy Coover estimates that the company will achieve $720
million in 2014 and $1 billion the following year. “It will happen in
2015; we are tracking on that right now,” she says. “We have a goal to
hit $1 billion in 2015. We really don’t think of it as a money goal; we
think of it as how many lives we’re going to change. That’s what we
equate dollars to, lives being changed.”
It Works!
It Works! placed in the Top 30 for the 2013 Global 100 ranking,
achieving a 128 percent increase from 2012 to 2013. Over the three-year
period, the company grew by 1,565 percent, going from $27.4 million in
2010 to $456 million in 2013. Founder and CEO Mark Pentecost predicts
that 2014 will be the company’s strongest year yet for sales, continuing
the streak of 14 consecutive years of growth.
Team Beachbody
Team Beachbody first landed on the DSN Global 100 ranking with
net sales of $218 million for 2012. Last year the wellness company
achieved a 50.5 percent increase over the prior year, achieving $328
million in sales.
Climbing Strong
Arbonne
After a slight decrease in sales in 2011, Arbonne has responded over the
past two years with increases of 6.7 percent and 9.5 percent, placing
it at $413 million. In 2014 the company is experiencing growth across
all of its product categories in existing and new offerings. “All
Arbonne markets have been growing double digits for the past six months,
including the U.S. market,” says CEO Kay Napier. “We expect to
approach, if not achieve, $500 million for our Arbonne business this
year, which has been a key goal of ours for the last five years—and then
on to $1 billion!”
Market America
Founded in 1992 in Greensboro, North Carolina, Market America has
achieved steady increases of $46 million, $43 million and $42 million
over the past three years, respectively, including 2012 when it
surpassed $500 million in sales. The product brokerage and Internet
marketing company grew from $416 million in 2010 to $462 million in
2011, an 11 percent increase; achieved $505 million in 2012, a 9.3
percent increase; and posted $547 million in sales in 2013, an 8.3
percent increase. At its August annual convention, the company announced
it was expanding its Emerging Markets Program to enable the purchase of
its products by customers throughout the world, and thus help it
springboard into new territories. The program is currently available in
nine markets, including New Zealand, Spain, Panama, Singapore and
Jamaica.
Shaklee
Shaklee had hovered around the $500 million level for a few years before
posting $515 million in 2012, and then jumping $135 million in 2012,
landing at $650 million.
Young Living
Lehi, Utah-based Young Living, which celebrated its 20th anniversary
this year, has achieved steady growth since its founding. However, over
the past few years the essential oils company has really taken off,
achieving triple-digit growth that has continued into 2014. “Today we
are at 165 percent growth, which as you can imagine, is like a comet
taking off,” says Jared Turner, Chief Sales & Marketing Officer.”
Maintaining Focus
So how do companies in that $500 million to $1 billion range prepare
to take their organizations to the next level? Maintaining focus, even
during expansion, is critical.
For Cindy Monroe, CEO of Thirty-One Gifts, keeping her company on
track requires three things: staying focused, staying on purpose and
staying authentic. “Focus can be tough for entrepreneurs especially. Our
creative desire to find bigger and better ideas creates a perfect
environment for distraction if not kept in check,” she says. “We believe
that by being purposeful and minimizing distractions, we can maintain
focus on the things that make the most impact and keep us on track
toward a bright future.”
To further the vision of Founder Dr. Myron Wentz, who dreamed of a
world free from pain and suffering, USANA has established core values
that are centered on producing the highest-quality, science-based
nutritional and personal-care products in the world.
“Our vision and core values are part of our DNA, so staying true to
them has not really been a challenge,” says President Kevin Guest.
“That’s not to say, however, that there have not been challenges as we
have grown. As we knock on the door of $1 billion, most of our
challenges have related to becoming a $1 billion organization before we
actually hit that level of sales. This means that we need to think, act
and behave like a $1 billion organization before we can become one. Our
customer base has also become much more diverse and international as we
have grown, so we have had to navigate how to best serve the wants and
needs of a more diverse audience. Focus is another area we have had to
keep under control during growth. It’s easy to get distracted by every
new opportunity you learn of, but you never achieve your goals if you
let that happen.”
According to Turner, Young Living’s executive team has really bridged
the gap between the vision of the founder, Gary Young, and what the
field is doing. “They have really aligned the purpose of the company and
the ‘why’ of the company with the ‘why’ of the field in terms of
education, and that has really resonated with our people,” he says. “The
ethos of our company is quality.”
ACN Co-Founders Greg Provenzano, Robert Stevanovski, Mike Cupisz and
Tony Cupisz have kept their commitment to the company’s independent
business owners by continuing to put the needs of the company above
their own personal needs. Their growth plans have always been based on
stability and longevity. Sound business practices plus integrity, they
believe, equate to strength and size.
“While our core values have remained the same, we continue to
reinvent ourselves as a company,” says Provenzano, whose company now
serves 23 countries on four continents. “We are always reviewing our
product line and our business support, asking ourselves how we can make
our product offerings and the opportunity for our IBOs even better.”
Pentecost of It Works! acknowledges that keeping a growing team
focused on the big picture and maintaining a company’s culture is a top
challenge for any growing company. “Distractions are constant and
never-ending,” he says. “‘We can do anything, but we can’t do
everything’ is a message we live by here at corporate. We’ve learned at
times that saying ‘no’ is not a consequence but a necessity.”
Investing in Infrastructure
While maintaining focus is critical to growth so, too, is ensuring
that a solid infrastructure is in place to support any growth or
expansion. Even companies with tremendous momentum can be stopped dead
in their tracks when considering what further growth entails: Do we have
enough inventory to keep up with demand? Is there enough warehouse
space for our products? Do we have the support staff to meet increased
orders? Are we providing our consultants and independent business owners
with the tools they need to succeed during this substantial growth
period?
The companies driving toward $1 billion are cognizant of these
possible stumbling blocks and have taken steps to ensure the growing
process comes with as little pain as possible.
At its 2014 International Convention in August, USANA launched an
all-new digital marketing suite for its worldwide Associate base. “The
all-new tool suite consists of a back-office Hub, personal websites, and
advanced communication and marketing tools, all of which significantly
enhance our Associates’ ability to manage, promote and build their USANA
business in today’s demanding eBusiness environment,” Guest says.
“These new tools were designed to simplify conducting a USANA business,
enhance communications and provide an online atmosphere that is personal
to the Associate and highly engaging for the customer.”
At Young Living, accelerated growth over the last two years has
caused the company to address several issues with infrastructure,
including information technology, operations, warehousing and shipping.
“Our warehouse is meant for $200 million to $300 million worth of
product sales a year, and now we are far surpassing that, so we have
decided to triple the size of our warehouse,” Turner says. “We are at
capacity with pick lines, manufacturing lines and packing stations, so
we are adding a new mezzanine level to double the number of packing
stations.”
Young Living is now running two shifts a day, seven days a week, to
keep up with orders. In addition to investing in its IT teams, the
company is working with outsource partners to accommodate the growth.
Turner says Young Living’s more than 720,000 active members have been
patient and kind throughout the process. “The infrastructure can
strengthen, not constrain, commission payout, so it has been great for
everyone. We turned a corner with all our infrastructure improvements,
and we’ll be able to sustain the growth into the future.”
At Stream Energy, CEO and President Mark Schiro and his team have
been making improvements to IT, customer service and marketing to handle
its growth. “Our goal at Stream is to create a world-class
organization,” Schiro says. “We’ve organized ourselves in such a way to
support this growth, and we look forward to becoming a world-class
company on both an internal and external level.”
Arbonne will launch a totally new web-based platform early next year
that will position the company for more growth and facilitate
international expansion. “Our biggest challenge is replicating the
incredible culture and brand we have with Arbonne,” Napier says. “I know
we will succeed, but it will take careful consideration and strong
execution.”
Acquiring and Onboarding Talent
According to Malcolm Gladwell, author of The Tipping Point, a
person can only realistically develop relationships with a maximum of
150 people. That’s why in the direct selling industry, says Scentsy’s
Thompson, a company must have the executive team in place to maintain
its influence with the downline. The goal is to scale effectively,
always growing leaders to match the growth of the company.
Earlier this year USANA promoted three Asia-Pacific vice presidents
to executive vice president status in a strategic effort to give more
representation from its A-P markets in the company’s Executive (Chief
Officer) Meetings. It also put into action leadership and strategic
planning training as well as sessions for the executive staff to
strengthen the team as a whole. “There have been skill-specific
trainings added, such as negotiation strategy,” Guest says. “In
addition, tied to the executives’ compensation is a mandate that they
all must participate in leadership trainings and seminars year-round.”
It Works! increased its corporate staff by 60 percent in 2014. “When
we say ‘One Team,’ it’s not a marketing campaign, it’s a mission,”
Pentecost says.
Isagenix’s Coover realized the need to adjust her company’s corporate
team by bringing on experienced executives to manage the exponential
growth. “We really set ourselves up for success when we brought in some
heavyweights. It got to the point where Jim and I said, ‘This is beyond
us; we need help.’ So we brought in three people from ConAgra that have
run multibillion-dollar companies. They have the strength and experience
to run this, and they have great teams.”
At Arbonne, Napier brought in Joe Wojcik, an industry veteran who has
experience in expanding businesses both in direct selling and outside
the industry. Wojcik will serve as Senior Vice President of
International, focusing on the company’s ongoing development of foreign
markets. Improvements in technology infrastructure at Arbonne during the
past few years also are starting to show, with earnings growth ahead of
revenue growth, says Napier.
Finding the Right New Markets
There is a common belief that to grow one must expand into new
markets. Yet it’s interesting to note that of the 13 companies driving
toward $1 billion, seven companies—Stream Energy/Ignite, Shaklee, Market
America, Thirty-One Gifts, AdvoCare, Team Beachbody and Arbonne—are
currently in less than 10 markets.
Stream Energy, which does business in the U.S. market only, will be
undergoing a significant expansion in early 2015 when it introduces a
premium nationwide product offering, Stream Mobile Services. “We have
partnered with two of the top four mobile carriers in the U.S. to build
our very own Stream branded mobile service,” Schiro says. “Stream will
be aggressively expanding into new markets as we roll out mobile
services nationwide.”
USANA, which is in 19 markets, has a careful approach for
international expansion. Typically, the company creates a solid
foundation in one market over an 18-month period before venturing on to
another. The expansion into France and Belgium in 2012 was actually
initiated by the company’s Associates, who requested the new territories
due to the tremendous success in Quebec, which is one of the company’s
largest markets. Because the company’s nutritional supplements have a
loyal customer base, USANA now has 265,000 active Associates in North
America, Europe and the Asia-Pacific region.
“International expansion, product innovation and enhanced technology
are all important aspects of USANA’s growth strategy,” Guest says. “The
key aspect of our strategy, however, is generating customer growth. In
2013 we made several enhancements to our product pricing structure and
our Associate compensation plan in an effort to promote customer
engagement, success and loyalty with USANA. These enhancements have been
successful and generated meaningful customer growth for USANA over the
last 12 months.”
At ACN, any expansion discussions have always been met with caution
and restraint. “We want to ensure that when we launch a country, not
only is ACN ready and positioned with the right products and services,
but also that the market is ready for ACN,” Provenzano notes. “We see no
need in launching a new country unless we are 100 percent confident
that the launch, and more importantly our business operations for the
long-term, will be a success—and timing plays an incredible part in
determining that success.”
That approach seems to be working. The last market ACN entered,
Korea, has made the company a powerhouse in the Asia-Pacific arena. Next
up for the company is Latin America, where Provenzano believes there
are limitless opportunities.
At Isagenix, which is in 12 markets, Australia recently surpassed
Canada as the company’s second-largest market, up 350 percent in new
enrollments and sales. “It’s not going to stop,” Coover says. “The U.S.
is still our biggest market and was up 50 percent over last year.”
Arbonne launched in Poland on Oct. 1, and the reception the company
received has left Napier and the executive team with high hopes for
future expansion plans. The company expects to open its first market in
Asia within the next two years.
Young Living has expanded into several foreign markets over the past
few years. The company recently held a grand opening in Malaysia,
bringing the number of Asia-Pacific markets to five (the others are
Australia, Singapore, Hong Kong and Japan). The company is also
established in Canada, Mexico, Ecuador, Peru, the U.K., Sweden, Germany
and Austria. Every market is reporting high double-digit or triple-digit
growth for 2014.
Because It’s There
Over the next few years, several companies will face the challenges
and opportunities brought on by the desire to grow their companies, and
perhaps, one day, join the $1 Billion Club.
In that quest to reach the top, what remains the most important part
of the journey is staying true to the core values of the company,
maintaining that integrity that reflects on the reputations, businesses
and families of customers and independent business owners.
Never looking down is easy enough to do. Looking up and seeing the
possibilities to achieve the seemingly impossible and how it affects
millions takes careful planning.
NOTE: This article is originally published at this website:
http://www.directsellingnews.com/index.php/view/who_will_summit_next_reaching_1_billion
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