In 2007 Amway was a global, $6 billion company nearing 50 years in business. Known as a leader in multilevel direct selling, the company had nearly 3 million distributors in about 100 countries. From the outside, the company would certainly appear to have been doing plenty right.
Yet, as it prepared for the 50 anniversary, Amway undertook a massive transformation program, one designed to make the company more consumer-focused and performance-driven.
Enter Candace Matthews, as the company’s new CMO. Matthews brought marketing credentials from such major CPG brands as L’Oreal, Coke, P&G, and General Mills. As Matthews set out to bring marketing to a distribution-centric company–seeking the balance between the company’s strengths and new disciplines–consumers were busy redefining direct selling through digital. Amway’s transition and the rise of digital became closely connected; Matthews discovered that Amway’s core strength–its deep engagement with its distributors–matched the emerging ethos of digital marketing.
“My job was not to transform us into a CPG company, but to bring the discipline of CPG to our business model,” Matthews said. “It was two steps forward, one step back. Bring people along and make sure they understand it before you go to the next step.”
Matthews recently sat down with CMO.com contributing writer Jeff Pundyk to discuss the transformation.
CMO.com: What did you find when you got to Amway in 2007?
Matthews: My job was to help the company become more consumer-oriented and bring a bit of the CPG discipline to the direct sales business model. What I found was not only was I bringing the CPG discipline, I was bringing the understanding of marketing. When I got there, you’d talk marketing, and it wasn’t understood.
CMO.com: That’s because it was a distribution-focused organization?
Matthews: Right. Very much centered around distributor relations, very much centered around the business model and the products to support it. And I use “products” specifically because they weren’t referred to as brands. My job was to bring global strategy and global branding to the business model.
CMO.com: When you got there, did you see the path?
Matthews: No. What I did see was this company has been incredibly successful. It is far more global than I realized. And it was transforming from a position of strength. They understood that it needed to become an enterprise, rather than the independent affiliates all rolling up to a holding company.
CMO.com: And did that change in thinking come as a result of some outside forces?
Matthews: It just got too big to manage. When you’re $500 million, it’s one thing; when you’re–at that point–$6 billion, you really do have to transform how you operate. We have 3 million distributors across the globe. We needed to put a strategic emphasis on what we were doing to help the distributors be more successful.
CMO.com: Was it a struggle?
Matthews: It was a lot of education. And it was a lot of resilience. It was two steps forward, one step back. Bring people along and make sure they understand it before you go to the next step.
CMO.com: Give me an example of something you tried to do and felt some resistance.
Matthews: The first thing I had to do was develop a position around the Amway brand, give it a new identity, and help people understand why we needed an identity–who are we and how do we communicate it in a succinct way. We were becoming more consumer-oriented, but we had to make sure our distributors understood that that meant we were not going directly to consumers. We were creating an umbrella strategy that was global, that each of the markets could take and make it relevant locally, but not change it locally.
CMO.com: You’re driving this transition, which is forward-looking. Meantime, you have deliverables. How do you balance the two, and how do you not overinvest in the things you are trying to change?
Matthews: I did very early on bring in a couple of key people who could manage the different parts of it. But I also had some core people on the team who understood Amway. Amway is very relationship-driven. It meant traveling the globe, walking them through, helping them understand the change. It was a combination of having the legacy people as well as the new thinking, and a front line I could rely on to help keep things moving forward. It was almost like a grace period the first year–I got to learn–develop the strategy the second year, and the third year was show me what it is. Part of the strategy was in marketing you have to look long term. It’s not about what’s happening this year.
CMO.com: And while you’re doing this, the very nature of retail is changing.
Matthews: My job was not to transform us into a CPG company, but to bring the discipline of CPG to our business model. At the same time, the economy is troubled, and our business model becomes even more appealing to distributors, and the marketing piece is becoming more important.
CMO.com: That’s tricky because of potential channel conflict.
Matthews: No matter what we do, the distributor benefits. If somebody orders online, the revenue goes into a pot for the distributors. The distributors are never bypassed. Becoming more consumer-oriented didn’t mean going around them. It’s making people more aware of what we do such that they can do their jobs better.
CMO.com: It’s interesting now that with digital everybody is embracing the idea of using customers as advocates and even sales people.
Matthews: Yes. We started coining the phrase that we were the original social network. Digital is an incredible part of our business. We started with basic things, like podcasts for the distributors to show their customers. This is one of those places where people react once they see it because it’s been a tactical company. You have to get to the tactical level before people truly understand what you’re saying.
CMO.com: Was that a piece of learning you got on the job, to put the PowerPoints away and show us some stuff?
Matthews: Yes. The other thing that was interesting was, when I joined, everybody was still heavily Web-based. At that point, the projection that smartphones would overtake PCs was four years out. It literally happened in 12 months. And so we even had to change our strategy. Now our strategy is that we build to mobile, but we didn’t start that way. Things change so quickly that you have to change how you go about doing things as well.
CMO.com: Is the model for distributors still driven by face-to-face interaction, or are they more digital, too?
Matthews: They’re more digital, too. We have a global Facebook platform. It’s still their independent name, but the template is driven by us. It gives consistent branding but allows them to be independent.
CMO.com: Do you have access to their metrics?
Matthews: Hot topic. Why do we do these things, and what is it doing for you? Part of it is educational about how to use metrics. Now that we have global systems, what are the countries that have the most productivity doing differently, and how do we take that information and leverage it across the globe? We put in global CRM, global data warehouse management, so we have the metrics to look at it across the globe. We even have traditional account execs to help the distributors look at the data.
CMO.com: How did you drive those innovations internally?
Matthews: We really build the understanding of what digital is and why we needed to use it. And it took probably two solid years to get the organization to understand how important it was and what to do. Digital wasn’t really part of what the company did. We weren’t part of the conversation. There were things that as a company we had to do, and there were things that we needed to prepare to make the distributors’ lives better. We’ve gone from nothing to 150 miles per hour in the past few years. Take the iPad. I got an iPad, and IT said we don’t support that. So I got iPads for all the execs and said, “This is where you need to be.” And what was interesting was they went to our site, which was done in Flash, and they couldn’t see it. Then IT said it would take so long to change it. No, this is an instantaneous world. When you figure out that something has to change, you have to react at change it immediately. Those behavior changes were important.
CMO.com: That’s a challenge, too. You have to figure out what to keep an eye on but not to jump into.
Matthews: Right. But we are so global that we can test things in different places.
CMO.com: Looking forward, what kind of skills does your team need now that you have the fundamentals in place?
Matthews: Our consumer insights team had to build an analytic arm that was even stronger than what we were used to having because data is so important. You have to manage data and apply it so that what you’re doing is scale, but the person who is looking at it from the other side feels like you’re doing it just for them. And it does require different skill sets. The other thing is, we cannot be afraid of young people. They live in a digital world. And what they’re thinking about is beyond what we baby boomers could ever imagine.
CMO.com: How do you respond to that challenge?
Matthews: You have to listen to them. They are so different from us.
CMO.com: Is there a next generation of distributors doing things differently, too?
Matthews: Absolutely. The next-generation distributors recruit people in an entirely different way, through social media. Even when we do incentive trips for distributors, we need incentive trips for the under-35 distributors that are different from the over-35. We have to change to address how they want to do this business. Part of my job is to meet with them, listen to what is going on, and then come back and say we better change quickly.
CMO.com: Where is your growth coming from?
Matthews: We’ve grown incredibly globally. We’re an $11 billion business. China is our biggest market and fastest growing. We started off as an American company, and now 90 percent of our business is outside the U.S. It’s not that the U.S. is small; it’s that the rest of the globe has exploded. This is a personal-relationship-driven business, so when you’re in cultures where that is respected–Asia, India, it’s part of the culture–the businesses grow naturally. We’re grown with the growth of the middle class in these cultures. And the other thing that Amway does incredibly well is when they open a market, they really understand the regulations of the market first.
CMO.com: Do you see differences in digital across geographies?
Matthews: Most of the countries, they just skipped the analog side. They’ve gone completely to the digital format. Digital enhances our business model; it won’t replace our business model because that contact is who we are. What digital does is it brings relevance, but it won’t replace relationships. That’s the core of who we are.
CMO.com: Does it increase margins for the distributors?
Matthews: It helps them be more efficient at what they do and be more credible at what they do.
CMO.com: What’s the key to your success at Amway?
Matthews: Germane to our business is to build relationship and to want to build relationships.
CMO.com: Is this something you figured out along the way?
Matthews: Along the way. Oh, I’ve made some mistakes! Building relationships is a fundamental, core requirement to work here.
CMO.com: Amway is an old-school company, but all of the things you are talking about are the hot buttons for modern marketing–engagement, authenticity. It’s what everybody is chasing.
Matthews: It’s who we are.
CMO.com: Where do you see it going?
Matthews: Getting faster and better at it. One of the things is teaching the company that partnerships are important. You cannot keep up with the change in the digital space by yourself. We’ll be partnering, particularly in the digital space, much more in the future, but also, trying to leverage what we know so people look at Amway differently. It’s truly global. If you love world cultures, it’s an amazing place to be.
CMO.com: What’s your advice to those about to take on transformation?
Matthews: Take it in bites. Listen. You cannot bring whatever it is you have learned and impose it on whatever you’re trying to transform because you need the best of both. You’ve got to listen to the people so you don’t lose what is germane to them. What you’re doing is enhancing it. The other thing is, that company survived before you got there. They were doing something right. All they’re trying to do is go to the next level. So you have to take what they do so well and elevate that to the next level.