Tales of Whoa!—When and How Rebranding Is the Right Move
September 13, 2010
by Katherine B. Ponder
“What’s in a name? That which we call a rose/ By any other namewould smell as sweet.” —Romeo and Juliet, Act II, Scene II
Shakespeare’s phrase may be true, but who among us, as modernconsumers, would even give a trial sniff to a flower that has aless than alluring name? So it is with corporate branding, andrebranding is even more challenging.
Rebranding is not something to be taken lightly. It is a clearsignal that something bigger than just a logo or name is undergoinga transformation. It usually accompanies a repositioning of thebrand as well. Since a corporate identity is the most visible andoutward sign of a company, tweaking or downright overhauling theidentity says a lot about the company’s present and futuredirection. Several direct selling companies have recently completedrebranding efforts, varying from complete, top-to-bottomrepositioning to more minor changes that nevertheless havefar-reaching effects.
What Is Rebranding?
Everyone in the corporate world assumes they know what rebrandingis. However, let’s set the stage with a few Marketing 101definitions. Brand: identifying mark, symbol, word(s) orcombination of same that separates one company’s products orservices from that of other firms. Repositioning: modification ofconsumer perception of a product or service; often necessary when amarket has changed.
In effect, a rebranding is the changing of a corporate mark but isfrequently undertaken with a repositioning strategy. With this inmind, we’ll examine the efforts, calculations, risks, rewards andresults of companies in the direct selling industry that have takenon rebranding—and hailed their initiatives as successful.
Prime Examples
Discovery Toys was founded 32 years ago and has been through fourdifferent owners since its inception. When Jeremy Hobbs, Chairmanand CEO, bought the company in 2007, the brand had grown stagnant.The look and feel was outdated, and there had been very few newproduct introductions. The old logo had a boy in box, which Hobbssaw as a subtle message that said everything in this company isstuck “in the box.” He observed, questioned and listened tosalesforce members, corporate employees, industry peers and manyother audiences for about a year. Then he felt comfortable callingfor change, diving in on everything from a new logo to newproducts, a new compensation system, revamped website and more.
With a dramatically different product set, Vollara is the new namefor the company formerly known as EcoQuest. In February 2009, thename was unveiled to give new structure and a fresh identity thatwould unite four brands, five compensation plans and four websitesthat had existed under the EcoQuest umbrella. Ironically, this wasnot the first corporate name change for CEO Joe Urso. In 2003, heacquired the name Electrolux and transformed it into Aerus. Thisfirst change took six to seven months to complete, and while thecompany still retains branding rights to Electrolux, Urso isconfident that his decisions helped shed the reputation as “yourgrandmother’s vacuum.” The Aerus change helped educate and trainUrso for the eventual unveiling of the Vollara name, and many otherchanges along with it.
Team National also had two runs at changing their corporate name.The company was founded as Nationwide, but that became confusing,because a well-known insurance company had a very similar name.Even during those days, corporate founder Dick Loehr always calledthe sales field “Team Nationwide” in homage to his auto racingbackground. Thus, in 2001, the company name was changed to NationalCompanies, and the salesforce was called Team National. As thecompany continued to grow, however, it became clear that having acorporation and field team called two different things wasperplexing to customers and potential members. “It’s one of thosethings that I look back on now and say, ‘I can’t believe we didn’tsee how that would be confusing to call ourselves one name and ourfield another,’ ” says Angela Loehr Chrysler, CEO and President.“But it wasn’t really an issue when we were smaller. Everyone justknew.” In 2009, Loehr Chrysler simplified. The corporate officesand salespeople are now united under the moniker Team National,with a revised logo to boot. The “N” in the logo now takes centerstage, and the car image was dropped.
Tahitian Noni International (TNI) faced a different challenge. Thecompany found itself in a crowded marketplace, with manycompetitors that had joined the super fruit juice category. TNIcreated this category when it founded the company in 1996, but 14years later, the company had a new story to tell and wanted torevamp everything along with it. “We renovated virtuallyeverything,” says Jeff Wasden, Vice President of Global Marketingfor TNI. “We’ve done a logo redesign, packaging redesign,formulation modifications, new formulations, new story thatleverages our science, and we’ve redefined the space we’re in. Iwould say ours is a rebranding as well as a repositioning as towhat industry we’re in and who our competition is.” This hugeundertaking was rolled out in February 2010 for Canada and theUnited States and will continue to be implementedinternationally.
Ambit Energy also revised its logo this year and invested inexpanding brand awareness and positioning the company as a smartalternative to other energy providers. The revised “spark” logo ismany things to many people. All the A’s that form the outsideborder of the spark’s circle represent consultants’ type “A”personalities and the integrated teams that make up the company.The symbol itself represents a spark, referring both to thecompany’s product and the energy needed to make a difference inothers’ lives. In its entirety, the mark presents a consistent,professional image to the industry at large.
Motivations
The driving reasons behind each of these corporate changes are asdiverse as the strategies and results. For every inspiration, therewas an equal and sometimes opposite reaction as to how to handlethe challenge.
Some companies needed a complete “reset.” For Vollara, Urso and histeam decided that the entire business needed to be updated,adjusted and revitalized. For many years, they felt the companydidn’t live up to its full potential. Urso acquired EcoQuest in2009, knowing that something dramatic had to happen to show that heand his fellow corporate leaders were committed to significantchanges. They wanted a fresh start to attract new people. “Thebusiness had some technologies that needed to be updated, and somenew technologies that needed to be introduced,” Urso says. “Wewanted to bring all the pieces together under one brand, onewebsite and one compensation plan. We knew we needed a new, freshbrand.”
“You have to look at the reason the business isn’t going the wayyou want to go.” —Joe Urso, CEO, Vollara
This complete confidence didn’t come without analysis. Urso says,“You have to look at the reason the business isn’t going the wayyou want to go. Is it because of your people, including yourcorporate team? Is it because of the systems by which you run thebusiness? Are you inadequately capitalized? Or is it somethingfundamental with the business strategy, your market, your productline, your compensation plan? Is it something in your businessstrategy that goes beyond people or systems or financial resources?If the answer is yes, you have to decide whether a fresh start isreally necessary. For us, it was.”
Other companies wanted to refresh their brand without a totaloverhaul. For Ambit, the 4-year-old company wanted a mark thatwould accurately reflect their growth and more experienced vision.When the company was started, everything was built from the groundup. The first logo was fine for their mad-scramble, startup mode,but didn’t accurately reflect what the company has become, now thatthey’ve had several years of success. Corporate leaders knew thatat some point the brand would need to be changed. Marketcircumstances played a role in making 2010 the right time.
“I remember going through my 45-minute daily commute to work inlate ’09, and I was driving in on a fairly heavily trafficked partof Dallas. I saw all these billboards were empty,” says Founder andChief Marketing Officer Chris Chambless. “In all the years I’d beenmaking this commute, I had never seen that many availablebillboards. It dawned on me that if inventory was high and demandwas low, we might have an opportunity to get media at an attractivecost.” This light-bulb moment (coincidentally, this is also thetheme of Ambit’s new advertising campaign) for Chambless led to arebranding initiative that started with the new mark and tookadvantage of affordable TV, print, outdoor and even radiospots.
Discovery Toys also recognized the need for change but didn’t wantto lose the historic name recognition of a formerly thrivingcompany. However, the business desperately needed an infusion ofenergy, commitment and defined goals. Field members were hanging inthere, but the new leadership team knew they could deliver so muchmore. “We had some field members who had been with the company for15–20 years,” says Chief Creative Officer Meryl Holland. “They hadbeen relatively ignored, provided with precious few new productsand offered little inspiration. But they stayed because the missionof providing learning toys that parents and children can use toplay together and learn or teach is simply outstanding.” The bottomline said it all: Sales hadn’t increased in 10 years. Hobbs saw thepotential and brought together a team that could make thenecessary—and significant—changes.
Still other companies needed to create a new space. At TNI, scienceand clinical studies were providing excellent support for theproduct. TNI has multiple human clinical studies as well asthird-party proof of the noni fruit’s bioactive efficacy. Thisinspired corporate leaders to differentiate their company byemphasizing the value of noni and its iridoids, components whichhave been scientifically proven to deliver several important healthbenefits. “We’re creating a new category and calling it bioactivebeverages,” Wasden says. “This focuses on one of our core productattributes—medicinal plant bioactive compounds that are stable overtime and proven through numerous human clinical studies.”
For many of the companies undergoing rebranding, the new logos andad campaigns also helped to create excitement around other, evenmore significant, corporate changes. From new products to improvedscientific support, redesigned compensation plans and fabulous newwebsites, these companies invested time, effort and money toexecute their strategies exceptionally well.
Preparations
Repositioning and rebranding aren’t done on a whim. All of thecompanies we spoke to did extensive research and groundwork beforemaking any changes; and then there was significantly more workinvolved to choose the right changes.
Often, thought processes start percolating in the back of CEOs’minds, and this unofficially launches the rebranding. TNI leadersbegan to think about making a change when they kept seeing clinicalstudies—14 to date—that supported their products’ effects based oniridoids’ interactions in the body. By February 2010, corporateleaders were ready to make a change and launch a new category.
Ambit Energy’s leaders had also known for quite a while that theywould eventually change their logo. When Creative Director JohnMarch was hired, he and Chambless discussed it. March worked on theproject on and off, as time allowed. But when media prices droppedsignificantly, the work began in earnest. Discussions with fieldleaders and corporate team members helped mold the eventual newlogo.
Because Team National wasn’t in a huge hurry to rename and rebrandtheir company, they watched their inventory for a while to see whenreplacing everything with a new logo would be most practical. Theyalso talked significantly with top field leaders first, floatingthe idea and giving extreme advance notice that a change might becoming. Those conversations helped Loehr Chrysler know that she wason the right track; when inventory of corporate stationery, appareland other branded items was relatively low, the new name and logowere rolled out.
Other CEOs wanted to move quickly. Discovery Toy’s Hobbs bought thecompany and took some time to gauge the situation. When he wasready, he wanted fast changes toward a corporate relaunch. He hiredMeryl Holland, a former brand manager of Barbie from Mattel Toys,to start the heavy lifting. She first interviewed all stakeholdersto learn their opinions, including the company’s original founder.This led Holland to develop a brand platform around threewords—connected, vital, educational. All these terms wereconsistently used or referenced when she spoke with customers, thefield and employees. They became the foundation that guided all therebranding and relaunch efforts, including the company’s new logoof a dancing child.
“From August to October, we did research, identified key brandnames, and saw logos,” Holland says. “I contracted with PaulFarris, who is a well-known, New York-trained brand developmentdesigner. He nailed it the first time. When Jeremy [Hobbs] and Isaw it, we had goose bumps.” So, within three months, DiscoveryToys had a new logo and a tagline that conveys everything thecompany embraces: Teach. Play. Inspire. All corporate packaging wasredesigned accordingly, new products were launched and everyproduct included “layers of learning” skill cards and activityguides to help parents and educators interact with kids on multiplelevels.
Despite all the research and “gut” feelings, sometimes rebranding’sbiggest requirement was a willingness to dive in. What drove Ursoof Vollara to revamp the company, name and all? “Stupidity!” hesays with a laugh. “Really, we knew we had to rebrand and did agood evaluation of the risks. I was willing to make the change. Iwasn’t willing to be the milkman and just continue to milk thecompany. I wanted to make it grow.” The Vollara team completed anevaluation phase, tested concepts for six to nine months, and thentook another six to seven months to complete the changeover. Thecompany’s whole rebranding process took about two years.
Risks
Every major change in a company carries significant risk, andrebranding is one of the biggest. “A fresh start should be a lastresort,” Urso says. “There are costs and consequences that areunavoidable, and therefore, there is a risk.”
Anticipation of field rejection or reluctance was near universalamong the companies we spoke with. How they handled this potentialnegative reaction showed each company’s strengths. At TeamNational, Loehr Chrysler put her faith in open communication withthe field. “The only risk that ends up having to be overcome isreally communicating it to your sales field so that they learn thenew name and the new look and that they are aware of it,” she says.“Anytime you have change with a salesforce in the direct sellingindustry, even if it’s a good change that they embrace, it stillmay take time to make them stop what they are doing—recruiting,selling and utilizing your products and services. Some people justby nature have to stop and say: What is this? Why are you doingthis? You have to know that this is a risk, and you have toovercome that risk from the start by truly communicating throughevery means available.”
Leaders at Discovery Toys took a different tack. They knew theywere taking a big step by revamping the logo and overall corporateimage. “Half to three-fourths of our salesforce was still attachedto the old look and feel,” Holland says. When the company surprisedtop salesforce members with the new logo at an incentive trip, thegroup was collectively shocked. “Those of us in the corporateoffices had been seeing it, and we loved it,” Holland continues.“We thought they would, too. It didn’t go over too well at first.On Day One, Jeremy [Hobbs] said 80 percent of them did not like it.By Day Two, 50 percent loved it. By Day Three, 80 percent lovedit.” Once new products and reinvigorated corporate support wererevealed as part of the process, the field overwhelmingly acceptedthe changes. For TNI, preparing the salesforce was paramount.“You’ll always have people who think a brand shouldn’t change, andthey like it just the way it is,” Wasden says. “But in any company,if they have the ability to make a product better, they will. Wetalked to our independent product consultants, and at ourconvention last February, did a presentation showing a Macintoshcomputer from 1984, the iMac from 2000 and the Mac computer oftoday. The point was clear that products change, and we are allhappy that they do. Very few people drive a Model T anymore. Whenproducts are improved, it should elevate the product’s value forthe customer. Improvements like this help a brand stay relevant.Brands that become more and more relevant, grow.”
One business, in particular, didn’t see much of a downside topotential changes. Ambit, as a young company, found it relativelyeasy to make its logo change, because there wasn’t as much brandequity in their existing mark. “We had the luxury of not having alot of road in our rearview mirror,” Chambless says. “We were ableto look at this as the introduction of a brand. We were kind ofalmost brandless before. Our consultants tell our story, andthey’re really our brand to the customer. We just gave them abetter look and more exposure to help them.”
Rewards
Every one of this article’s participants has been very pleased withthe results of their rebranding efforts.
At Discovery Toys, the new brand is energetic, youthful, fun andpurposeful. New salesforce members are coming in with gusto.They’re young and excited. Recruiting is up, and sales have risenfor the first time in 10 years. “We’re out of survival mode,”Holland says. “Now we’re in revitalization.”
Ambit’s new logo and advertising have generated many positiveresponses from customers and their sales force. The field hascommented that their potential customers have better namerecognition because of Ambit’s media push. Sales are continuing togrow, and the brand identification has increased and builtcredibility. “We thought we’d hear from consultants, and we did,”says March. “But we’ve also heard positive things from customers.”He and Chambless further explained that all 300 corporate employeesadopted, without prompting, the logo in their corporate e-mailsignature lines. “It has resonated,” Chambless says.
In the halls of Vollara and Aerus, both brands have beensuccessful. Aerus’ new approach to the former Electrolux helped toreverse a 20-year downward trend. Aerus has consistently turned aprofit since the name change seven years ago. Vollara’sself-makeover, including a new starter kit, has led to improvedrecruitment and a steady stream of new representatives coming inunder relatively new field members. In fact, more than half of thereps who have joined since the rebranding are joining under otherfield members who have been active less than four weeks. “I thinkthat’s a great indicator of a very strong platform,” Urso says.One- half of Vollara’s total product line is also new, and salesare up 30–35 percent.
At Team National, the overall “feel” of the company has improved.While there weren’t major hurdles to be overcome or significantshifts undertaken, the new name and revised logo have, nonetheless,helped. It is now much easier for the salesforce to explain andsell the memberships without confusing customers by using twodifferent names. It has better aligned the company with marketperceptions and reinforced existing strengths.
TNI’s new designs and products, and its move into the scientific,clinical arena for marketing, have created improvements. “We hadmore truth that we could tell,” Wasden says. “Now we are helpingIPCs to convey the scientific truth behind our bioactive story.”Through these changes, TNI’s sales are up 18 percent since February2010 in North America alone. The rest of the world will get the newscientific messages in the coming months.
The take-away to all these experiences is that rebranding andrepositioning can be done well and yield great results. Asking theright questions, making preparations and being willing to takerisks are necessary. In the end, a brand that matches your company,values, field and mission is the ultimate reward.
News Article Courtesy of www.DirectSellingNews.com
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Sterling Strategy: Avon Acquires Silpada
September 09, 2010
by Barbara Seale
In the fall of 2009 Silpada Designs Co-Founders Bonnie Kelly,Teresa Walsh and Co-Founder and CEO Jerry Kelly began to considerpartnerships that would help their sterling silver jewelry companycontinue to thrive for years to come. They had lofty standards.Their high expectations paid off in early July, when Avon announcedthat it would acquire Silpada Designs for $650 million.
The transaction was structured as an all-cash asset acquisition.Avon will also make a potential additional payment in early 2015 tocurrent Silpada shareholders if certain earnings growth targets areachieved.
Since it was launched in 1997, Silpada has become the largest andfastest-growing direct seller of sterling silver jewelry. It hasoperations in the United States, Canada and—launched this year—theUnited Kingdom. It has more than 32,000 independent representativesand recorded $230 million in sales during 2009.
Its new parent company, global beauty company Avon, is the world’slargest direct seller, with more than $10 billion in annualrevenue. It markets in more than 100 countries throughapproximately 6.2 million independent sales representatives.Jewelry is a small part of Avon’s current product line, whichfocuses primarily on beauty products. But Avon’s jewelry offeringstypically are in the $20 price range, while Silpada’s average pricefor a single piece of sterling silver jewelry is $68. Silpada’sjewelry prices range from $12 to $279.
Bigger Than Bling
This acquisition runs much deeper than products, as both JerryKelly and Avon CEO Andrea Jung noted in a recent conversation withDirect Selling News. They said that, at its core, the union bringsstrengths from each company to benefit the other. Those strengthsbecame evident early in the process.
“What’s so attractive about Silpada is obviously the extraordinarytalent and vision of Jerry, Bonnie and Teresa, but also thestrength of their management team and their commitment to growth,”Jung said. “What we believe we can do at Avon is leverage some ofthe strength we’ve built as the leading direct sales company interms of branding, brand awareness and marketing analytics.”
She noted that consumer insights have been critical to Avon as ithas grown to a $10 billion company. Even during the due diligenceprocess they realized that additional insights Silpada had gainedon its consumers would help both companies boost market penetrationin North America.
“Down the road I think that Avon’s global footprint, infrastructureand expertise in opening markets will be something that Jerry andthe team can leverage when they’re ready to go further intointernational markets,” Jung said.
That expertise was part of the reason Silpada was eager to join theAvon family of companies. Kelly sings Avon’s praises, noting thatthe company expects the new marriage with Avon to help Silpadaaccelerate the growth of its brand throughout the United States andCanada, as well as expand globally and provide even better supportand resources to its representatives and customers through thepartnership.
Goal: Generational Growth
Silpada’s leadership had a well-thought-out list of must-haves forany prospective parent company. The three have always beenlong-term planners, and their ultimate goal was to ensure thattheir company would be able to thrive, even beyond their lifetimes.“We began to look at this in earnest in the fall of ’09 and to urgeourselves—as emotional as it was—to structure that process to makesure that we did this in a very thoughtful, prudent and transparentway,” Kelly said. “We began to identify those characteristics andfundamentals that we thought were important. Number one, we wantedto remain a standalone brand with our own culture. Number two,Bonnie, Teresa and I, and our management team, wanted to stayintact to continue to lead the company. We wanted to affiliateourselves for the future of Silpada with the most stable,significant direct selling company focused on women in the worldthat knew how to grow a brand and eventually to grow our brandglobally. One company stood out, and that was Avon Products.”
Silpada stood out for Avon, too. It had 100 percent annual growthin each of its first eight years and has increased average annualsales by 27 percent a year since 2004. Its $950 per-party salesaverage is one of the highest in the industry. Avon told Dow Jonesthat it expects the purchase of Silpada to boost earnings by 3 to 5cents a share next year. But beyond finances, Silpada offered the XFactor.
“We’re about to celebrate our 125th year next year,” Jung said.“But the belief and desire to understand what it’s going to take tomake sure that Silpada has a 125-year anniversary, and to do it ata time where they can leverage some of the learning and resourcesof a strategic partner, not many have that foresight.” She added,“I have very rarely met a founder and CEO who has that much of adisciplined and yet visionary approach to growth.”
Selling the Salesforce
Of course, one of the keys to making the new partnership a successis the support of each company’s salesforce—particularly Silpada’s,since it’s the company being acquired. The acquisition was not yetcomplete, but Avon and Silpada made the decision to issue anannouncement ahead of time so that executives could speak directlywith the Silpada salesforce as soon as possible. The timing of theannouncement allowed Kelly and Jung to speak in person to Silpadarepresentatives who attended Silpada Designs’ annual NationalConferences in Kansas City and Toronto. Kelly told representativesthat he believes that the acquisition marks a seminal moment in thecompany’s history.
“I believe that history will judge this as one of the most sound,significant business decisions that we could have ever made onbehalf of Silpada, its representatives and their futures, and thatSilpada will, as a result, be a wonderful company for decades andgenerations to come,” he told Direct Selling News.
During Silpada’s annual U.S. and Canadian National Conferences, heemphasized to 5,000 representatives in Kansas City and 1,500gathered in Toronto that the partnership gave the company access tothe resources and acumen of “the most iconic, largest, mostrespected direct sales company in the industry.”
“The presentations that Andrea made have really opened the eyes ofpeople who didn’t really know as much about Avon as they couldhave,” he told Direct Selling News, “and I think that ourrepresentatives in the United States and Canada have a much deeperand greater appreciation for Avon and the values and the iconicbrand and the wonderful company that it is. Our representatives areas excited as I’ve ever seen them.”
Jung fully acknowledged the importance of making thosepresentations. But even more important was the opportunity to standbefore the audiences and put her own integrity and that of Avon onthe line. She emphasized that honesty and transparency were part ofthe Avon culture—as sterling as Silpada’s high-quality jewelry.
“I was able to express person-to-person, in front of 6,500 Silpadarepresentatives, that our word is our word, that we cherish thespecial and unique business and company that Silpada is, and thatthis is an intention not to change it but only to add value wherewe can and let Jerry take advantage of the resources,” she said.“The feedback that I think both of us got after [the first meetingin] Kansas City is that, once any anxiety is gone, then it allbecomes a complete celebration of what the possibilities canbe.”
Don’t Mess With Success
Just as the Silpada founders required, the two companies willoperate independently, while both contribute to the same balancesheet. Silpada sells its merchandise through the party plan method,while Avon uses a person-to-person model. Avon has no intention ofmeddling with Silpada’s success. In fact, Jung underscored that theacquisition reflects Avon’s confidence in the entire direct sellingchannel.
Industry leaders agree. “The acquisition by Avon of Silpada, whichwas built from the entrepreneurial spirit of three dynamicco-founders, is an affirmation of the strength of the directselling model,” comments Direct Selling Association President NeilOffen. “It is a melding of tradition, wisdom and stability withvision, energy and innovation.”
“When I look at the landscape in terms of industries and channels,I think that the power of direct sales, both here in North Americaas well as around the world—well, I don’t think we’ve seen anythingyet,” she said. “This acquisition demonstrates our strategic beliefin the power of direct sales, and that doesn’t need to be limitedto just our traditional one-on-one selling. Instead, we’repartnering with a company that has proven to be best in class. It’sa way to help accelerate growth.”
For Jung, the exact direct selling model that Silpada used wasn’t afactor in the merger. But the fact that both Avon and Silpada sharethe proud spirit of the same industry was a big plus.
Avon is no stranger to acquisitions, having invested in severalcompanies over the years. In addition to Silpada, earlier this yearit acquired Liz Earle Beauty Company, a primarily online seller ofnatural skincare products, and also purchased the trademark of babycare brand Tina Tillia. Jung said that Avon has taken a disciplinedapproach to acquisitions, always focusing on its core business.
“Most important, it’s not just about strategic sense or financialsense. It’s also about fit, and it’s about leadership,” Jung said.“It did take me to my 11th year [as CEO of Avon] to find Bonnie,Teresa, Jerry and Silpada, but it was worth the wait, because it’sthe right company and the right leaders. They add to the capacityof the Avon corporation in terms of thought leadership and directsales excellence.”
She noted that Avon has worked hard to restructure its business inorder to free up enough investments to funnel funds back into brandbuilding and the company’s compensation plan. She estimates thatthe company has put more than $700 million back into brand andchannel investments over the last few years.
While growth has slowed recently in North America, Jung said shebelieves that Avon will continue to grow both domestically and innew markets. Acquisitions such as Silpada contribute to herforecast.
“We look at it as how many more women we can reach from every walkof life whose lives we can change,” Jung said. “That gives us afull plate for the company to focus on for another decade.”
Article Courtesy of www.DirectSellingNews.com
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Suit Filed Against Local Multi-Level Marketing Firm
September 07, 2010
by Linda B. Blackford
A group of former marketing representatives have sued a Lexingtoncompany in a class action lawsuit in federal court.
The lawsuit against Fortune Hi-Tech Marketing accuses the companyof being an illegal pyramid scheme because it emphasizes recruitingnew members over the sales of products it represents.
Fortune was founded in 2000 by Paul Orberson, a Danville native whomade millions with network marketing in the Excel communicationscompany. Fortune’s business model is based on new representativesjoining the group for $299. Representatives receive commissions forselling goods and services — such as security services andnutritional products — and for bringing other people into the salesforce. Orberson estimates the company has 160,000 representativesworldwide.
In most network marketing groups, people who join early can make alot of money because commissions automatically flow to the earlymembers of a pyramid-shaped sales force that is based on recruitingnew people. Illegal pyramid schemes are generally defined as thosethat only recruit new people, rather than selling products.
Earlier this year, Fortune agreed to pay nearly $1 million toMontana to settle allegations that the company was operating anillegal pyramid scheme there. Fortune had a similar problem inNorth Dakota, and paid a $12,000 fine.
Fortune’s general counsel, Jason Baker, said officials would haveno comment on the lawsuit, which asks for a jury trial andunspecified damages from the defendants.
The four plaintiffs are former Fortune representatives; none ofthem are from Kentucky. The lawsuit was filed in U.S. DistrictCourt for the Eastern District of Kentucky by their attorney,Kenyon Meyer of Dinsmore Shohl in Louisville.
“Once you get past a certain level in the pyramid, it’sstatistically impossible to make any money,” Meyer said. “Peopleare lured into believing that by paying $299 they can change theirlife at a time when people are desperate. They’re preying on thevulnerable.”
Article courtesy of: www.kentucky.com/2010/09/07/1424241/suit-filed-against-local-multi.html
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______________________________________________________________________________________________________________________ Thirty-One Gifts: Gifted and Talented September 01, 2010 
by Lauri Dodd Thirty-One Gifts is turning heads for their ability to rack upincredible growth numbers, while maintaining a close-knit familyfeel. Maybe today would be the day. Jeanie had gotten off work just alittle bit earlier, in the hope that the adorable little boutiquedowntown would still be open, even for a few minutes—that’s all itwould take to make her desired purchase. Weeks earlier, she hadspotted a cute trinket that would make the perfect gift for herfriend, Susan. Now, as she rounded the corner, she held her breathin anticipation, and then nearing the storefront, promptly exhaleda long sigh. With shoulders slumped and more than a littledejected, she made her way slowly back to her parked car. Like herlast three attempts to peruse the shelves of the delectable retailstore, today would, in fact, not be the day. It is for working women like Jeanie that Thirty-One Gifts wascreated seven years ago. Founder and CEO Cindy Monroe was workingin corporate America at the time, and she, herself, had experiencedthe frustration of never getting to visit the corner giftboutiques, because they were always closed before she got home fromwork. “The goal right from the start was to provide products thatwere gift-able, ones that previously were only available atexclusive retail shops,” says Scott Monroe, Thirty-One Gifts ChiefBranding Officer and Cindy’s proud husband. “As her idea cametogether, she remembered the success she had with direct selling incollege and knew that was the only way to go.” Now, in less than adecade, the young company continues to rack up the accolades, andan entire industry has begun to take notice. The Culture Club Ask anyone at Thirty-One Gifts, and a good majority will, no doubt,point to the company’s culture as the No. 1 reason for theirinvolvement—the organization’s driving force, if you will. “People often ask us if we are a Christian company,” Scott says.“And the answer is that we are a company that was founded byChristian people and run by Christian principles, and our business,therefore, is really an extension of who we are.” Before joining the Thirty-One Gifts team in early 2007, Scott was apastor. While it was a big decision to make the career switch, itdefinitely seemed like the perfect time to do so. Trained as a jazzmusician, Scott had become “the music guy” for a few modernchurches over the years, and in that role he usually took on theresponsibility of marketing for the congregation. From thebeginning he supported his wife in her new venture and only wishedhe could do more to help the business develop and grow. Four yearsafter its inception, Thirty-One Gifts was ready to expand itsmarketing division, and Scott got the opportunity he was lookingfor to put his talents to work. Even at the most basic level, faith plays a major role in themakeup of Thirty-One Gifts. “The name Thirty-One comes fromProverbs 31, which describes the characteristics of a good woman,”Scott says. “She is virtuous and business-minded, always takingcare of her family. And our goal in everything we do is tocelebrate women, help them achieve their goals and enable them togive great gifts to others at the same time.” Their mission, indeed, is to celebrate, encourage and reward theconsultants in the field, which adds another interesting layer tothe culture of Thirty-One Gifts. “We are all about making apositive impact on people’s lives—bettering the human condition—oneperson at a time,” Scott says. “We have some consultants who werestay-at-home moms, who never saw themselves joining the workforce.But through Thirty-One Gifts, these women have been able to have acareer where they can contribute to their family income, and insome cases, even help their family survive and thrive in thesetough economic times—all without sacrificing time with their familyto do so.” Thirty-One Gifts Business Prowess It is an elite group that can boast the same level of phenomenalsuccess that Thirty-One Gifts has experienced. However, very fewhave done so in such a short amount of time. “For the first threeyears or so, we saw between 300 and 400 percent growth,” Scottsays. “And we only had about five or six employees that whole time.Every year since then, we have consistently seen between 200 and500 percent growth.” The products, including handbags, totes, children’s items,stationery and home décor, are not really consumables in thetraditional sense—Scott says they are somewhere in between.Thirty-One Gifts has secured a great amount of repeat business fromcustomers. “We work hard to keep up with the trends, and to provideour customers with what they tell us they want,” Scott says.“Because of the nature of our gifts, between 60 and 80 percent ofour product line is new for every fashion season. We may keep thesame body style for several years, but the prints will always bechanging, and since we insist on keeping our prices reasonable, ourcustomers can afford to keep coming back.” The business has mushroomed solely on a grassroots basis, partlybecause of the word-of-mouth aspect of direct sales and partly bydesign of the company’s astute leaders. “We have been growing fastall along, but we wanted to make sure our growth didn’t outpace ourability to keep up with the business,” Scott says. “We knew we hada lot to learn about running a successful company, and we wanted tocontrol our growth to ensure we were making the right choices alongthe way.” Now they are positioned and ready for that future growth—and, itseems, the future is now. Earlier this year, Thirty-One Gifts movedinto a 97,000-square-foot facility, one that houses 450 employees.In 2008, they made the decision to move from the Monroes’ homestate of Tennessee to Ohio, largely because of the incredibledistribution channels in place to help facilitate business.Additionally, Ohio’s strategic location places it within 500 milesof much of the U.S. population, so for the Thirty-One Giftsleadership team, the move was a no-brainer. Interestingly, even inspite of moving two states away, the company’s first five employeesare still with them and going strong. “We have been fortunate enough to not see the negative impact ofthe faltering economy,” Scott says. “Instead, we have seen anincrease in business and our consultants’ average is well above theindustry standard of $350 per party.” Looking back, Scott admits his family and their burgeoning businesshave both come a long way from their humble beginnings at theMonroe home just seven short years ago. “We literally started thiscompany in our own basement,,” Scott says. “We borrowed a smallamount of money from family to get started. And at the time, Cindyand a handful of people did all the hard work, recruitingconsultants and hosting parties themselves, to get the business offthe ground.” Today, Thirty-One Gifts is a completely debt-freecompany, and proud of the fact that their growth has not beensupported by advertising dollars—it’s been organic every step ofthe way. Feels Like a Family If the culture of Thirty-One Gifts is the driving force behind thecompany’s raging success, then relationships are the fuel thatkeeps it going. “We have gathered a group of people here whobelieve strongly in the mission of the company,” Scott says. “Theyhave embraced what we stand for, and you could easily call this afamily business.” Beyond the husband and wife team that lead theway, there are a number of couples who work side by side inThirty-One Gifts. Scott credits his wife, in large part, for nurturing therelationships that have been the backbone of the company. “Cindy isextremely real and transparent in everything she does. And everyonearound her can clearly see that,” Scott says. “She handles the manycoaching calls personally, and at our annual conference, with morethan 1,500 people in attendance, she is out there on the floor,going from table to table, visiting and talking with theconsultants on a one-on-one basis.” It can be said that even the Thirty-One Gifts product line adds tothe company’s close-knit atmosphere, because each gift has apersonal touch that makes it special. “Most of our products aremonogrammed or personalized for the individual,” Scott says. “It isan element that sets our gifts – and us as a company – apart fromothers and makes us truly unique.” Though personal connection is admittedly a tough thing to measure,33,000 fans on Facebook is pretty impressive. “When we coach ourconsultants during training sessions, a big push for us is to neverjust sell a product. That is not why we are here,” Scott says.“Instead, we stress the importance of building relationships withpeople, whether it is with customers or prospective team members—itmakes a more lasting impact. And it is a very teachable skill. Whenyou emphasize relationships with people, the sales will come, butyou will have something much more valuable as well.” It’s not just lip service, either. From the top down, Thirty-OneGifts actually puts their beliefs to the test, even when itinvolves close friends and colleagues. “Julie Sutton was Cindy’soriginal business partner, and she decided not long ago to decreaseher role with us,” Scott says. “Part of our mission is to give momsmore time with their family. So while it was hard to lose Julie onan everyday basis, we absolutely support her decision to put herfamily first. It’s not just a fancy slogan to us. We are seriousabout our mission to celebrate, encourage and reward women inwhatever they feel called to do.” News Article Courtesy of, www.DirectSellingNews.com Share This Story ______________________________________________________________________________________________________________________ Results with Social Media? August 30, 2010 
by Barbara Seale How could there be a more social industry than direct selling? Forus, it’s all about relationships. We treasure, nurture and buildour businesses on them. No wonder social media is one of thehottest topics in any gathering of industry professionals. It’s not that we’re just chatty or trendy: It’s that we’rebusinesspeople. We know that our distributors and customers arespending time on the Net, connecting with others, talking about ourbusinesses and helping to form public opinion about the companythey represent and the products they purchase. Simply because we know that our important audiences arecongregating in cyberspace, there’s a general consensus amongdirect sellers that we need to be there, too. But how do we knowthat the time and money we’re devoting to social media is wellspent? How do we measure our return on investment? To begin with, weknow that a large and growing number of peopleuse social media and spend a lot of time on social media websites.The statistics speak for themselves. Facebook, the largest andfastest-growing social media site, has almost 500 million activeusers. Half of them log on daily, typically spending almost an houron the site. Businesses are part of that mix. Facebook hosts morethan 3 million active group or business pages, and more than 20million people become fans of pages each day. Direct Selling News polled a small and admittedly unscientificsampling of companies, asking them what social media site they’dchoose if they could have a single social media presence. To theone, they said Facebook. Not surprising, considering the site’s demographics. It’s theonly major social media site that’s attracting an audience whosemedian age is actually increasing. According to a study performedby the Pew Internet and American Life Project, the age of thesite’s users averages 33, up from 26 in May 2008. Time magazinesays that 28 percent of the site’s users are older than 34. Themedian age of a Twitter user is 31. That’s remained stable over thelast year. MySpace participants have a median age of just 26, downfrom 27 in May 2008, and the median age for LinkedIn is now 39,down from 40. Social media helps bridge the gaps among babyboomers, Gen Xers and millennials. Return on Relationship We know the numbers are there. But the question remains: How dowe know we’re doing it right? The companies who participated inthis article use a variety of Web metrics to track participation ontheir sites. They know how many fans and followers they have andhow fast those numbers are growing, for example. But they’ve heardthe message of the professional social media gurus. Social mediaisn’t about sales; it’s about relationships and service. “How to measure ROI is the million-dollar question in the socialmedia world,” says Nikken Marketing Manager Jeanne Columna.“There’s no easy answer. Ultimately, there needs to be some sort ofmeasurable ROI on it, but right now we’re using enthusiasm,interaction and the relationships being built. That’s what socialmedia is all about.” Nikken’s first foray into social media was through a blog itstarted about a year ago. That was followed by a Facebook eventpage that supported its then-upcoming convention. Then theyexpanded to a Nikken Facebook fan page and recently launched acorporate YouTube channel and a science blog. They’re consideringthe launch of a business-building blog. “We’re getting a lot of positive feedback and enthusiasm, andour fan base is increasing daily by leaps and bounds,” Columnasays. “We haven’t done anything to promote our social media effortsin any newsletters or other communications to date. People justfind it and use it. It’s all been viral.” Even so, she says thatenthusiasm and participation come from both consultants as well asfrom people who have just stumbled across the company’s socialmedia sites. For example, a resident of the Netherlands recentlyvisited the company’s Facebook page and asked how to buy Nikkenproducts. Because the company paid attention and replied to theposter, they gained a customer. Spearheaded by company President Anne Butler, PartyLite firstexperimented with social media just last year. A survey showed themthat their consultants were already familiar with Facebook, thoughthey weren’t particularly active. So PartyLite startedmethodically, carefully designing a Facebook fan page thatspecifically supported the company’s upcoming national conference.Then they sent e-mail to consultants explaining exactly how to logon to the Facebook fan page and asked them to share stories thatreflected the conference theme: Life in a Whole New Light. “We asked them to share photos and tell us how PartyLite hashelped them have a whole new life,” says Director of CommunicationsJoyce Elven. “It was overwhelming! I think that because we toldthem how, we had over 4,000 consultants telling their stories andputting up photos. We increased registration for the conference,branded the meeting and created its heart. It really brought thetheme of the conference alive.” The company captured the energy andfeeling of the participation, using posts and pictures from the fansite throughout the conference. A Bigger Net Vemma is also a recent member of the social media community.Founder and CEO BK Boreyko’s reasoning behind getting involved issimply that he wanted to be able to “cast the biggest netpossible.” So he consulted with social media guru Gary Vaynerchuk(see sidebar, “Set Aside Selling, Think Service,” for more onVaynerchuk), who told him in blunt language that his website wasn’thelping his efforts. Within a few weeks, the company website wassocial-media enabled, and Vemma’s brand partners—its term for itsdistributors—had personal websites that were integrated withFacebook and Twitter. In addition, they each have a free blog thatautomatically sends updates to their Facebook friends and Twitterfollowers. Boreyko hired a full-time staff member to concentrate on socialmedia, setting a modest initial goal to have 10,000 fans on Vemma’sFacebook fan page. He also now has a video blog he updates everyweek. He now says, “Social media is network marketing on steroids.It’s what we do—talk, communicate and tell stories. Social mediagives you a vehicle to do that on a worldwide platform.” He adds,“We now have more than 10,000 friends on Facebook. That’s verytangible evidence that people want to be listened to and that theycommunicate in this space. It’s validation that we’re ontosomething. We’re just getting started.” Boreyko believes that social media will change the way directsellers market themselves. He says that the industry will soonprioritize social media over print tools. “I don’t even think people are trying to monetize social media,”he says when asked about how Vemma measures its social media ROI.“If they are, they’re crazy. You can’t monetize it. You need tounderstand that if you’re in the people business, you have to bewhere the people are. What’s the ROI of shaking someone’s hand andbeing nice to them when you meet them at a cocktail party?” Tracking Tools ROI may be hard to measure, but most companies do find ways tomeasure effectiveness. At Stampin’ Up! Web Marketing Manager ChadWilliams employs a variety of tracking tools and metrics tounderstand whether the company’s social media efforts areeffective. “Web analytics give us an idea of how many visitors are leavingour social spaces and engaging on our branded Web content,” hesays. “From there we track how many users make purchases, contactdemonstrators, or any other predetermined call to action. We alsomeasure the growth and reach of our social media efforts with toolslike Facebook Insights, YouTube Insight, Twitter Search, GoogleTrends and others.” He says that the company focuses on different audiences indifferent spaces, so they have different goals for each. “Our Twitter efforts are aimed primarily at demonstrators, withan emphasis on shareable posts that can be re-tweeted or re-used bydemonstrators in their own spaces,” Williams says. “Facebook andYou Tube are more general-audience spaces where we focus oncommunicating our brand, our products and our opportunities to theworld.” USANA focuses its social media efforts on thee platforms:Blogger, Facebook and Twitter. Their goals are just as specific.They try to generate interaction, empower advocates and reach anextended community. “Comments on blogs, comments and likes on Facebook, andre-tweets on Twitter all signify increased engagement,” says DanMacuga, USANA’s Vice President of Marketing and Public Relations.“We also have conversations at our events with our associates andcustomers to gauge their involvement and interest in our ongoingsocial media efforts. We aim to create an environment where ourdistributors and others are willing to provide information, answerquestions and promote the USANA brand, which many are doingeffectively.” Macuga adds, “We strive to provide an outlet forconversations to take place. We are seeing that the community isengaging in these conversations and is helping to promote the USANAmessage throughout its various social networks.” Fans and followers flock to USANA social media outlets becausethe company offers content that isn’t found anywhere else—anythingfrom teasing a new product launch to special coverage of almost 100USANA-sponsored athletes at the 2010 Winter Olympic Games inVancouver. On Fridays, the company posts video productions on aspecial website called What’s Up, USANA? They call them Fun FridayVideos. Recent ones taste- tested recipes using USANA products thatwere submitted by their Facebook fans (http://bit.ly/FunFri). In another, theydispatched their social media team to sleuth out rumors on a newproduct (http:// bit. ly/ aSDZ4C). The video that “leaked” the news of a new product generatedtremendous traffic on the blog and excitement throughout thefield. “It helped us emphasize the point that if you want to be in theknow, you need to follow the What’s Up, USANA? blog and our othersocial media sites,” Macuga says. Blogging for Business Participation is the goal for all the social media sites at TheSouthwestern Company. Its college-student salesforce is a naturalfor social media. “We feel the most effective when we generate conversation,elicit a response, evoke emotion or receive feedback from aspecific social initiative,” says Director of Communications TreyCampbell. “We just want to know that people are receiving ourmessage and have something to say about it. That makes us happy. Italso keeps Southwestern Company out there and relevant.” Southwestern reaches its social media participants in a varietyof ways—tweets, messages on their “wall,” text messages or RSSfeeds. It has a presence on Facebook, Twitter, Flickr, You Tube andVimeo, but it counts the launch of its six blogs as its mostsuccessful social media experience so far. “In an effort tocommunicate with specific audiences and engage in search-engineoptimization under specific search terms, we felt blogs representeda great opportunity to engage in two-way communication to reach ourdiverse audiences,” Campbell says. Southwestern has a regular, growing audience who reads itscorporate, alumni and sales blogs. The company even has one forCareer Service officials on the campuses where it recruits thestudents who make up its salesforce. The award-winning blogs havehelped fuel the company’s PR and education initiatives by educatingconsumers on topics such as how not to be scammed by travelingdoor-to-door sales crews; safety tips on when to open the door tosalespersons; and even the basics of direct selling. Blogs targetedto the salesforce provide advice on important basics like dealingwith rejection. No matter whether they measure their social media resultsthrough statistics or sizzle, direct sellers are sold on socialmedia. Like Boreyko, PartyLite’s Elven sees it as thefuture. “What I’ve learned is that inbound marketing is what’s now,” shesays. “The outbound marketing paradigm is no longer how directselling or any other industry can succeed totally. You want to be amagnet to bring people to you rather than to shout at them througha megaphone. And now whole new opportunities are opening up withlocation-based marketing, like Foursquare. We’re juststarting.” Whether direct sellers are teetering on the proverbial precipiceor swimming safely in the social media waters, one thing is forcertain: The waters are deep, and the seas are expanding. Almostdaily, developers conjure up ingenious ways to help us reachprospective distributors and customers. Just as quickly, new waysto measure our effectiveness are emerging. But whether our socialmedia platforms reach thousands with our brand message or a singleperson who needs our assistance, social media is relevant fordirect sellers, so we need to manage it well. After all, socialmedia, like direct selling, is all about relationships. News article courtesy of www.DirectSellingNews.com Share This Story
