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Direct Selling 20/21

Jan 25, 2021
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In some circumstances it might be prudent to, as Lewis Carroll says, not go back to yesterday. There is power—and comfort, perhaps—in solely focusing on the here and now. Of maybe allowing fleeting thoughts toward the future, but certainly not spending time dwelling on the past. It goes beyond Carroll’s assertion that we were different people then; that we had changed. In this circumstance, it simply reflects the fact that 2020 was a year most people would like to forget.

It’s hard to celebrate what an important year it was for direct selling when considering the pain experienced by so many Americans. Business closings and lost jobs. Social unrest brought on by racial inequality. The loss of the hundreds of thousands of lives to COVID-19. That’s not to say that direct selling companies did not struggle in 2020. Many did. But what came of the collective struggle was, in the eyes of many, a much stronger channel. Company executives lifted each other up, offering guidance and encouragement on the transformation needed to stay in business. Corporate leaders helped their fields engage with customers in new ways. And the business model itself proved once again that during tough economic times, it is resilient and enduring.

What changes us ultimately moves us forward. The global pandemic forced the acceleration of new technology that created new online celebrations for direct sellers and met customers where they were in the new normal. The call for racial equality and social justice was answered by renewed efforts for inclusive diversity in the workplace. And polarization of politics was a stark reminder that to survive, in both business and life, cooperation is key. How direct sellers conduct business, engage with customers, and treat each other moving forward will long have the echoes of 2020.

The COVID-19 Pandemic

In January 2020, the US direct selling channel was coming off a year in which sales had slightly declined—$35.2 billion from $35.4 billion in 2018. Leaders were focused on increased competition from the gig economy and online retail technology disrupters.

Just two months later, they were strategizing how to keep their businesses going. The coronavirus was a full-blown pandemic. Hundreds of thousands of people were affected. Hospitals were overwhelmed, schools were closed, and non-essential businesses shut down. In March and April more than 22 million Americans lost their jobs.

John Agwunobi, the former Assistant Secretary of Health for the US Department of Health and Human Services was less than ninety days into his new role as CEO of Herbalife Nutrition when he joined with other direct selling CEOs to discuss the state of the channel. Reiterating Nu Skin President Ryan Napierski’s belief that the channel was stronger together, Agwunobi added, “I think this idea is a driving force behind what makes our channel such a catalyst for positive change. The significant events that surround us today present an opportunity to learn.”

Direct selling leaders had multiple opportunities to learn last year—from communicating with remote employees and field leaders, to reimagining conventions and meetings in virtual formats, to investing in the digital transformations of their businesses. Technology and economic experts believe that the future came upon us two to three years earlier than expected, accelerated by the pandemic. But direct selling was ready.

However, the pandemic was not the only crisis the country faced in 2020. 

Racial Inequality and Social Unrest

By May 2020, the first wave of the pandemic had peaked and was slowing, and businesses were settling into the new norm. Then, on May 25, George Floyd, a forty-six-year-old African-American, was killed by a White police officer during an arrest in Minneapolis. His death—coupled with the earlier deaths of Ahmaud Arbery and Breonna Taylor, both African-Americans—led to nationwide demonstrations and protests of racism and police brutality.

Direct selling companies in the US and abroad issued statements in the days following Floyd’s death. On June 3, Amway CEO Milind Pant sent a public message to the extended Amway family in support of Black Lives Matter.

“Events in recent weeks have brought to light deep scars within society and, for many, our society isn’t working. We must seek to understand and act to do our part . . . We stand behind the black community and their call for equal justice. . . . There is great power in all of us working together to end racism. We vow to be part of the solution. We will hold ourselves accountable to these words. We will help change the future.”

Avon Products Inc. and its parent company, Natura&Co, also released statements calling for equality and justice: “We strongly believe in the value of life, the idea that all are interconnected, and as society we can and should be agents of change. . . .We stand by basic human rights and more than ever all humankind believing that all forms of racism and discrimination must end.”

The direct selling channel has always been a vehicle for people from all walks of life to be business owners. There are no barriers—not age, religion, race, or ethnicity. All people are welcome. But, considering the social and racial injustice of the past year, are direct selling companies doing enough?

Forward-looking companies, many of which have diverse executive teams and boards already in place, are thinking about what more they can do to engender true equality within their organizations. The bigger question is: What more can a company do once they’ve successfully seated a diverse table?" 

—Asma Ishaq, CEO, Modere

Following the protests, Asma Ishaq, CEO of Modere, made donations to organizations on the Black Lives Matter movement’s front lines. She also created inclusion and equity councils at her company, but believes that, looking toward the future, more is needed.

“Forward-looking companies, many of which have diverse executive teams and boards already in place, are thinking about what more they can do to engender true equality within their organizations,” said Ishaq. “The bigger question is: What more can a company do once they’ve successfully seated a diverse table? I know this type of introspection may feel uncomfortably frank, but what is most important right now is to confront the reality of inequality in our culture so we can take an authentic and honest approach to finding solutions. We must accept and embrace that we are not perfect in order to begin making real progress toward change.”

SeneGence Founder and CEO Joni Rogers-Kante is also the founder of the company’s non-profit, The Make Sense Foundation®. During its twenty-one-year history dedicated to empowering women, SeneGence has continuously worked to make strides to support women of all races, colors, ethnicities, and backgrounds. Moving into 2021, Rogers-Kante has established the SeneGence Leadership Diversity Development Program to evaluate and discover innovative new systems.

“We are doing business in many different countries and our company took a global position. In this time of tremendous need and change, we are ‘all hands on deck’ to identify opportunities to support our distributors and their communities,” explained Rogers-Kante. “I am very hopeful of the human spirit. It’s times like these when we see the best in others through their helping hands, selflessness, and generosities—putting aside gains for profit for the betterment of their neighbor.”

The Make Sense Foundation offers annual $10,000 scholarship awards for outstanding female youth who are college-bound. “Supporting the educational goals of deserving young women allows us to give back and support future success,” said Rogers-Kante. Additionally in 2020, MSF provided charitable contributions to three organizations that support the movement focused on making progress to eliminate discrimination and toward equality and inclusion for all people.

USANA CEO Kevin Guest understands “not doing enough.” When he did not release a statement quickly enough, he received messages that he was being complicit. But as a global company, USANA was not only focused on what was happening in the US, but also in the company’s markets around the world. To make a statement or address the social unrest happening in the US, Guest also had to think globally.

“We were pressured by many of our distributors, as well as some activist shareholders, to make a formal statement and put a stake in the ground,” he said. “I was very reluctant to do that because I don’t have the same experiences that others might have in some of the larger cities around the world with racism and other things that are happening. But I decided that I would make a formal public statement on behalf of the company, which I did.”

Guest shot a short video that was sent through USANA’s social media channels, and the company published a written statement to shareholders and to distributors.

“When you say something and make a stand, then that’s not enough right now,” said Guest. “What action are you going to take? For us, we chose to double down on our foundation and to give added resources to help hungry children in these cities where there is unrest. So we are bringing relief and support, but we are doing it within the mission and vision of our company.”

One CEO watching all that was happening from afar was Magnus Brannstrom. The CEO of Oriflame Cosmetics said during a panel discussion with fellow direct selling CEOs that there are so many things leaders can do to make sure everyone feels appreciated and respected.

“The essence of direct selling is that every person, wherever you are, whatever your beliefs are, can make it here [in direct selling], he said. “I think that is something that speaks in favor of our business. But some people mentioned that when we present our people, who do we present? Are we representing only a certain type of people? When we communicate about certain offers, are we making sure those offers are equally perceived for everybody? Are we making sure that when we have our conferences or meetings that are following the western calendar of events, that we also recognize others’ holidays?”

Roger Barnett, CEO of Shaklee Corporation and Chairman of the WFDSA, believes this is the time for leaders to listen, learn, and lead. The listening part is the reason why people were protesting, he says. “I think in the past, there have been other manifestations of it, and I’m not sure all of us have listened. The reality is there is persistent racial discrimination in this country. There is persistent systemic inequality.”

Barnett shared facts supporting his belief: eight out of ten Black Americans with a college degree feel that had been discriminated against in the past. They are earning 25 percent less than their White counterparts. They are 75 percent less likely to own their homes. When looking at health inequalities, Black Americans are more than twice as likely to die of COVID-19 than White Americans.

“The question is, what do we do?” asked Barnett. “We have an opportunity in our channel to educate people, to have conversations, to lead. We have spending power. So I asked the people in our company, How much of our spending dollars do we spend every year on Black-owned businesses in the United States? We didn’t know that answer. We are going to know that answer.”

There are two ways to lead: one is out of fear, and one is out of what you believe is right.”

—Roger Barnett, CEO, Shaklee Corporation

Barnett also pointed out the messaging used in company marketing materials. How many Black faces are part of it? How does a company promote Black distributors? And what do leaders do in terms of addressing the fundamental health and income inequalities?

“I think at the end of the day, it’s a question of leading,” Barnett said. “I believe that leading is not only the right thing to do, but it is good for business at the same time. Right now you see business executives for the first time weighing in on these issues en mass. I am excited about that because I believe business is an incredibly important factor for change.”

A Divided America

By November 2020, the divide in the US was fully evident. As the election neared, diverse groups of American citizens made their presences known; after the election, the polarization of political parties pulled the country apart even further.

Direct selling is a microcosm of the US; there is a broad and diverse constituency of varying views. The challenge for CEOs is in choosing whether to please the largest number of that constituency, or going down a path that, as a CEO, you feel is in the best interest of the company.

There are two ways to lead: one is out of fear, and one is out of what you believe is right,” said Barnett. “In many instances in the past, it has been more fear of constraint. You don’t want to say the wrong thing. You don’t want to offend somebody. But I would like to encourage all my peers and the people watching this channel, that I think the world has evolved. If you do not lead from where the place of righteousness is, you’re not going to lead many people in the future. I think that people are looking for business leaders to take a stance on certain social issues. And I think equality is one of them.”

Barnett believes that Shaklee, which was the first company to offset its carbon emissions, can attribute a billion dollars of incremental revenue over the years to greater loyalty among distributors because its leaders took a values-based stand on the environment. Leaders who are open, transparent, and make progress with a legitimate and authentic path and journey, will find it is good for business. Those who do not will lose future customers and distributors.

“I am incredibly bullish on what our future is as an industry because I think humans crave connection and community,” said Barnett. “We are here to try to encourage and inspire others to invest their time and energy with us. I do not see any reason why our channel doesn’t thrive during this period. Those who embrace change and just go full forward and reimagine how things can work in a digital and physical way will be the winners.”

For Kevin Guest, the future of the channel closely mirrors the future of the country: leaders must come together in a spirit of cooperation for the good of the channel, for the good of the nation.

“I think the future of our channel involves coming up with ways to have cooperative strategic relationships with companies with which we have confidence, and to pool our resources to be stronger in a global marketplace that is going to have strength. Strength will equal survival,” Guest said. “Even though we are a billion-dollar company, I think we need to find partner companies to form strategic relationships, leveraging each other’s assets and core competencies to be stronger in a more difficult society. The future is not what has been in the past.”

We can’t go back to yesterday. The world was a different place then.

Tags:
  • Features
  • January 2021