Top Desk
January 2011
Passion, Responsibility and Trust
Dr Jens Abend is CEO of German-based LR Health & Beauty, whose products are promoted by big name celebrities, including Bruce Willis and Leona Lewis. He began his career at Henkel and at Procter & Gamble, and since then has held key roles at leading companies including McKinsey and Fielmann AG – Europe’s largest retail optician. Dr Abend is also Chairman of the board of the German direct sales federation, UVDV. Here, he talks about his company’s recipe for success, the importance of ethical business practices and why the industry needs to be united in its struggle to ensure the economic power of direct selling is fully recognised.
Its seems that many direct sales companies are struggling quite a bit with mature markets in central Europe, thus the focus on growth opportunities in eastern Europe and developing markets. On a more global scale, BRIC countries (Brazil, Russia, India and China) are driving growth.
Yet I believe that there is still growth potential also in Europe; however, this will not be an easy catch.
We have particular issues with respect to the legal environment – for example, the impending health claim regulations which could lead to longer approval times for health products and which we constantly have to keep an eye on. From the point of view of the industry, this development is often neither expedient nor consumer- friendly.
Moreover, our industry still suffers from a misperception of what we are all about. This is based on both prejudices and lack of knowledge. We, therefore, need a strong representation both on political and public platforms.
The current situation with respect to associations is, however, unsatisfactory, as the forces are often not united on either a national or on a European scale. Just look at the biggest market, Germany, for example, where two associations are fighting for the same thing, yet on an individual basis – a historic situation that has yet to be overcome.
You have to believe in what you do and see the noble purpose that is embedded in our industry. We can really change the life of people for the better. From a business point of view, you need good products and a business opportunity that works for all with honest, fair, authentic and ethical behaviour. At LR, we have analysed every aspect of our business in respect to delivering against our promise to our Partners and consumers. Consequently, we optimised the whole business chain from product and business offerings up to logistics and delivery of parcels. The outcome is a clear, serious and genuine vision that is based on unique key factors of success and values.
Our vision is to become a global leader in direct selling. For us, leading in that context does not only mean size but also innovation and setting the trend as well as behaviour.
We can achieve this because LR offers five distinctive key factors of success that comprise top-quality products made in Germany, cooperation with world-class celebrities, a fair and transparent marketing plan, a unique care concept and top service and training for our sales partners. All this is embedded in a value-oriented business conduct based on our core values of ‘Passion, Responsibility and Trust.’
As I said before, we have done our homework, and, therefore, LR Health & Beauty Systems has undergone a very positive development and uncoupled itself from the recession. As a consequence, we see not only growth but also increasing market shares and, meanwhile, leading positions in many of our markets. The last three years were all record years for LR. All this is the result of hard work of both our employees and our Partners.
Ethical and professional business practices are a must, everywhere. You cannot grow a business on spoiled grounds. Due to the still existing prejudices and misperceptions against our industry, this is, however, especially important. A comprehensive code of ethics is a clear must for the industry and every single company within the industry. Everybody has to accept it and prove it day by day. This is imperative.
We all have to improve the image of the direct sales industry and make progress. A single black sheep can destroy the industry’s public image and destroy what is currently being built up by all.
Due to the fact that the fundamental economics of our industry are tremendously good, especially in comparison to many mature industries or distribution channels, we see an increasing number of direct sales companies either going public and/or being held by financial investors. As a consequence, the whole industry is being professionalised as new management and new standards are brought in from other industries.
Parallel to this, our world is becoming ever more transparent, as communication and information have been revolutionised in recent years. Internet, social media, and web 2.0 have a lot of implications for our industry – for example, how we communicate and how we behave but also how we support business processes.
Everything has become more transparent, more connected and faster. We have new ways to communicate and to network and new ways to support the business, e.g. online registration of partners or order processing. But there are also risks attached to the internet; just think about the homepages of Partners and possible corresponding violations against laws, or the fast distribution of right or wrong information.
All in all, I think that we have to clearly define areas where the internet can help and, at the same time, clearly define inherent industry benefits that cannot be compensated by technology. In doing so, we should not forget that direct selling is a face-to-face business, personal and not anonymous. The internet can support but never substitute the personal contact of human beings.
The direct sales industry has tremendous growth potential for various reasons:
In mature markets, the benefits of direct sales will become more evident and the industry will capture a larger share of economies. You just need to compare the direct sales share across economies of the major industry nations. Then there is huge potential in international expansion in markets where direct sales can drastically support underdeveloped distribution and income opportunities.
Furthermore, we see megatrends in our societies that additionally support direct sales. On a macroeconomic level, we have noticed the willingness and necessity to take on more self-responsibility, more flexibility regarding working hours and place, and working women as major source of economic growth. On the microeconomic level, we have observed that the most important reasons for a buying decision are: personal advice, the possibility to test and try, authentic testimonials, and convenience.
The public recognition our industry deserves will gradually improve. We will become part of the political discussions as politicians recognise the economic power of our industry, the huge workforce and voting power, and our contribution to social peace based on economic stability. Direct sales will emerge as a topic in academia and will become part of the curriculum of universities, resulting in new awareness and career opportunities.
If your Partners/Distributors are successful and your consumers are happy with the products and/or services, then your company will be successful as well. Every aspect of a business system has to be derived from these two objectives. Do not put the money first – do put the people first.
At LR, we put people first. Our philosophy is based on three values: Passion, Responsibility and Trust – passion for the people, passion for the products and passion for the business; responsibility for the people we work with, responsibility for the markets we are in, and responsibility for our environment; trust, because people know they can trust us to deliver our promises, they can trust us to operate a serious and professional business and they can trust us to make the right decisions.
