With each article that features Rodan + Fields and its executive leadership team, it makes me realize how fortunate I am to be a part of this company as it continues to dominate the network marketing and direct selling industry.
President and CEO, Lori Bush, was recently interviewed by Smart Business about how the company has grown from $56.9 million in 2011 revenue to $330 million in revenue for 2014. Below is the full feature written by Mark Scott.
Published December 2, 2015 by Mark Scott – Smart Business
“A colleague of mine said, ‘At some point in your career, you should start a company or be involved in the startup of a company. It’s the experience of a lifetime. You won’t regret it if you do it, whether it’s successful or not,’” Bush says. “I had it in me and I think anybody who has it in them should go for it. It’s a remarkable experience.”
Bush is president and CEO at Rodan + Fields, which launched in 2002 selling high-end clinical skin care products in department stores.
She met the company’s founders, Drs. Katie Rodan and Kathy Fields in the mid-1990s when they had an idea for a different approach for treating acne.
“They had the idea for Proactiv Solution and their first thought was to partner with a company like Neutrogena that had a strong presence with dermatologists,” Bush says. “I thought the doctors were fantastic and I wanted more than anything to be able to work with them. But as we explored the idea, we recognized we didn’t have the right class of trade for bringing the concept to the marketplace and really being able to connect with people.”
Proactiv would ultimately become an incredibly successful brand for Drs. Rodan and Fields. Bush pursued her career and the doctors went about their work, but they stayed in contact with each other. Bush was intrigued when she learned of their plan to move beyond acne to develop products for the anti-aging skin care category.
“They took their new idea and launched it into the prestige retail channel, high-end department stores,” Bush says. “They were very shortly thereafter acquired by Estee Lauder, which they thought would be the optimal way to get their brand footprint established with their new brand, Rodan + Fields. What they learned was the department store channel was not the optimal place for breakthrough concepts.”
Bush once again reconnected with the doctors, who were preparing to buy their business back from Estee Lauder and blaze a new trail “to give their brand the opportunity it truly deserved.” And they wanted Bush to help make it happen. The time to work together had finally arrived.
“They bought the business back with my agreement that I would join and orchestrate the pivot to what at the time we thought of as direct selling,” Bush says. “But through the years and through a lot of learning, we’ve evolved to think of the business model and go-to-market strategy as social commerce.”
Focus on behavior
One of the first and biggest challenges when Bush joined Rodan + Fields in October 2007 was developing an independent sales organization.
“The major attraction was the brand,” Bush says. “Join the doctors who created Proactiv in their new business venture. The challenge there is those who joined us in the early days had absolutely no direct selling experience. In one way, it was a very good thing because we wanted to do something different and disruptive in our approach. But it was also a challenge because there was no experience in building a direct selling organization.”
Many of those on the team at that early stage loved the product immensely. They just didn’t have the training to sell it.
“Our major breakthrough came in a couple ways,” Bush says. “No. 1, we started thinking about things a little bit differently. In direct selling, the compensation plans are very much outcome oriented. If you sell these things, if you build the organization in a certain way, it determines what your payout is going to be.
“The traditional notion is to give the sales organization something to run for and they will run for it. But our sales organization kept asking us not so much what do I get and what’s in it for me, but what do I do? We started realizing we needed to focus more on behaviors and disciplines and reward those in a way. That would lead to the independent consultant productivity and success we were looking for to build the business.”
Toward that end, Bush piloted a program called the Atlanta Project. It involved isolating a geography and working with an independent sales consultant on key performance behaviors.
“We focused on a couple of key performance behaviors and also on the intrinsic rewards that would drive those behaviors,” Bush says.
“What we quickly learned was that we could move the needle very effectively and very quickly by galvanizing a sales organization to actually become a community in and of themselves. The business is extraordinarily social and community driven.”
Bush was very aware of the fact that within this “community,” she couldn’t compensate individuals for recruiting new sales representatives into the organization.
“That would constitute a pyramid scheme, something we don’t even like to think or talk about,” she says.
“So while we were looking at leveraging a distributed sales organization, basically crowdsourcing sales and marketing, we recognized that we really needed to focus on the personal development aspect of the sales organization. By focusing on that in the right way and rewarding the right behaviors, that was a real breakthrough.”
Digital is the way to go
The next step was to launch an e-commerce platform with the initial strategy of having all transactions conducted online.
As consultants started to embrace the social aspects of the business and technology continued to advance, it became clear that digital was going to be a pivotal part of the business going forward.
“A really disruptive opportunity was to empower the sales organization and delight the customer or end user and connect that end user with their sales representative through effective digital strategies,” Bush says.
“Now we feel like we’re right at the epicenter of SoLoMo [social-local-mobile] with a very robust social marketing organization. Virtually all business is conducted and transacted online, and now more and more of those transactions are happening via mobile devices.”
The digital strategy also enables Rodan + Fields to be clued in to who their customers are and what they are buying.
“That allows us to leverage data and to be very agile in terms of our approach with the business and supporting the sales organization, but also meeting the market need,” Bush says.
Onward and upward
Rodan + Fields has grown from $56.9 million in 2011 revenue to $330 million in revenue for 2014. The number of consultants has skyrocketed, going from 7,500 in 2008 to more than 50,000 in 2014.
Bush says success in selling is all about matching your product, service or value proposition with the right go-to-market strategy, a lesson she learned from working at Johnson & Johnson.
“The most innovative products I worked on and developed were sitting on the R&D shelf and not making it into the marketplace because the marketing channel wasn’t that hospitable toward innovation,” she says.
“The greatest advice is to be mindful, strategic and innovative and also, to quote Jim Collins on empirical creativity, ‘Fire some bullets and get closer and closer to your target before you lob a big cannonball at something,’” Bush says.
“That’s exactly what we did without calling it that at Rodan + Fields. We went into this marketing channel with a lot of clarity, but we also tested the waters and made adjustments pretty quickly.”
Bush says the system that has been built allows for agility and adjustments at both the product strategy and business strategy level.
As she looks at the successful business that Rodan + Fields has become, Bush sometimes thinks about those who questioned whether her idea for a business model could work.
“In this particular case, you could have a hybrid where your sales organization could be delighted and satisfied to participate at different levels and it didn’t have to be about going for the big pot of gold in all cases,” Bush says.
“Most of our consultants achieve what we call an executive title without ever recruiting another consultant into the business. They do it strictly by selling product. What’s important is in the overall compensation plan; those who are business builders value those product sellers more so than they would in a different kind of plan.”
As for advice for other leaders who have an idea to shake things up in their industry or sector, Bush says one of the keys to making it work is collecting feedback from a variety of sources.
“Create a diversity forum, whether it’s an ongoing think tank or an innovation summit, and bring in people from disparate backgrounds, disciplines and areas,” Bush says. “Avoid subject matter experts in the areas you’re looking to disrupt. It’s that completely unexpected comment or analogy that is going to be your aha moment.”
Bush loves the idea that she gets to share that life-changing advice she received years ago to step out and try to build a business.
“Here at Rodan + Fields, I get to pay that idea forward because we help tens of thousands of micro-entrepreneurs start their own companies and we get to see how it changes peoples’ lives,” she says.
- Don’t be afraid to think outside the box.
- Find ways to be disruptive.
- Get feedback from a variety of sources.