September 1, 2009
Refashioning the Familiar
In 2000, in an attempt to improve its image in the U.S. as well as develop and acquire new businesses, Amway formed the holding company Alticor. Quixtar would replace the name Amway in the U.S. and relaunch as an online business.
The board, however, approved setting another agenda in 2007 and, for the first time in the company’s history, recruited outside talent: Among them Russell Evans, a former Boeing and General Electric exec as CFO; former S.C. Johnson Wax Senior Manager Steve Lieberman as managing director of North America; and Matthews as CMO.
With the new team in place, one of the first decisions was to reintroduce the brand in the U.S. using the original name, but this time as Amway Global. According to R. Dale Wilson, marketing professor at Michigan State University, it was an astute business move. “The problem with [changing the name of a product] is you have to build brand awareness, and that could cost hundreds of millions of dollars,â€ he offers. “Using the old name, they could focus on changing attitudes around the brand.â€
The newly installed CMO’s next challenge was indeed to change perceptions among corporate managers and independent distributors who viewed sales and marketing as interchangeable functions and communicated to customers only through direct sales channels. “I’m bringing the discipline of consumer marketing to this business model as well as an understanding of the difference between marketing and selling,â€ says Matthews, “demonstrating that you have to augment selling with marketing efforts.â€
Initially, Matthews’ brand-building strategy wasn’t popular with distributors, who believed investment in such marketing would diminish individual growth opportunities. Changing that mindset required an education process, she says, in which distributors “could see facts, data, and then understand the business opportunity within this new model.â€ Matthews showed them that if the direct sales model tapped 20% of market share in a particular category, then 80% of that market represented additional sales opportunities. Moreover, aggressive marketing to that segment would create product awareness and, in turn, boost revenues. “Our Nutralite business is our biggest business,â€ she says. “We are the world’s largest vitamin supplement company. We have the world’s largest market share, and literally nobody knows about us. What would happen if we actually started telling the story about this brand?â€
Matthews also had to direct international distributors on how to address specific issues within their regions. Over the past year, she hired chief marketing officers in six regions to serve on her CMO council. To convey her expectations to the group, she used a stuffed octopus. “I said, ‘We think globally here,’ â€ she explains, touching the head of her colorful sea creature, “and then we implement through each of our areas,â€ in which she points to the octopus’ tentacles. “So I gave everyone a stuffed octopus and when we get into one of our meetings and people get too far down into their details, I say ‘Whoa, whoa, whoa–get back to the head of the octopus.’ â€
Carlos Costa, manager of strategic business lines for the Latin American Transformation Team, recently back from an assignment in that region, successfully applied her strategy. “We have adopted Candace’s philosophy in the region,â€ he says. “Our leader has started saying, ‘We’re not regional marketing; we are the Latin American marketing team.’ Since then we’ve been seeing a lot of success.â€