Our guest this time is Magnus Brannstrom. Magnus has been the CEO and President of Oriflame since 2005. Before this role, he worked as Oriflame’s Managing Director of Russia and as Regional Director for CIS, Baltics and Asia.
Magnus Brannstrom was elected as the Chairman of Seldia (European Direct Selling Association) in October 2012 for a two-year term. I wished to learn and share with our readers his vision and his thoughts from this perspective.
First of all, congratulations on your new role at the European direct selling industry. In terms of focus areas what should we all expect to see under your leadership at Seldia?
Thank you. Seldia is an efficient organisation with a busy agenda and dedicated staff, working for the benefit of European direct selling. It’s a great honour to be Chairman. I think that the main areas for Seldia to focus on going forwards are:
1. In accordance with Seldia’s main functions, and in line with the work of the previous chairmen, Seldia will focus on its lobbying function in the EU. The EU has an ambitious legislative agenda that requires our full attention and involvement, in matters such as alternative dispute resolution, data protection legislation and regulating the status of the self-employed (and thus our Consultants).
2. Focus on helping the member DSAs. Here we will strive for all members to achieve full compliance with the WFDSA standards and we will work with the non-compliant DSAs to reach these standards. We will also help the DSAs with their national lobbying by providing position papers, documents and helping share best practices. Seldia can also be extremely helpful in organising events representing the industry, so we can extend valuable help to our members should they wish to organise local events favouring the direct selling industry.
3. Expansion of the Seldia membership by evaluating the opportunities for establishing DSAs in countries where these do not exist; a good example is the markets of the former Yugoslavia. It is important that our industry has one face and one voice in every market where there are more than two direct selling companies.
4. Being the face and voice of the industry Seldia has an important PR role. While we will follow our main priorities to lobby and provide member services we will not overlook the need to increase the visibility of Seldia on the EU stage and even beyond the borders of the EU, for example as a lobbying partner to the WFDSA.
What do you think the biggest challenges are that lie ahead of the industry in Europe?
One of the biggest challenges is the demographic shift. As the population matures, direct selling companies face a double challenge: how to retain their existing sales force and how to engage the younger generation. We need to attract and retain both target groups by offering them relevant products and opportunities – without the offer becoming blurred and consequently relevant to no one. The challenge for the companies is therefore to tailor their business opportunity and product ranges to appeal to the different groups. In addition, the new generation is attracted by other means of communication. Adapting to these new ways while preserving the tradition and legacy of direct selling is a challenge…but also an opportunity in itself.
Of course another challenge is the current economic climate. Many people are facing an uncertain financial future, which means they are tightening their belts and spending less. When customers spend less, companies have to look at their product offer, their pricing levels and target groups and take action accordingly. Here the challenge is the preservation of the brands from the effect of price reductions, the balance between the long-term brand positioning and the immediate actions the market demands at the moment.
And the biggest opportunities are?
The challenges I just mentioned are also our opportunities. The online world represents an enormous opportunity to reach the younger generation and engage them in direct selling. The potential for growth is unlimited. If I may quote the Chairman of the WFDSA, Alessandro Carlucci, ‘Direct selling is the original social network.’ So, we have an enormous opportunity at hand and we need to use that to the maximum.
In terms of the economic challenges, when people have less money to spend they look for greater-value products. This is an excellent opportunity for companies to review what they offer and ensure that what they produce represents value for money.
It is also a good time to revise the earning opportunities the direct selling companies have to offer. In times of financial crisis when employment opportunities become scarcer, people look for other ways to earn a living and direct sales offers them exactly that – an opportunity to earn, to save and to preserve their living standard. Of course we have to make sure we are promoting this opportunity in an attractive way.
Do you think direct selling associations in Europe are doing their best or do you think there is still a big room for improvement?
There are many DSAs throughout Europe that do fantastic work, have lots of enthusiasm and manage to keep their membership base actively involved in various local activities. This work and this spirit need to continue and expand to countries where we see less involvement and less energy. The DSAs have a pivotal role in building the image of the industry and making known all the good work the direct selling companies are engaged in. Although equally important, lobbying is a smaller part of the DSA activities, especially in the EU where most legislation comes from Brussels and thus leaves little space for local actions.
Another matter where more public awareness is needed and where the DSA should focus their efforts is the industry self-regulatory mechanism, that is the direct selling Codes of Ethics, and the possibility to resolve issues out-of-court via the figure of the Code Administrators. The direct selling industry is so far unique in this aspect as there are no other industries that offer such an effective and easy approach to dispute resolution mechanisms.
Another important role of the DSA is to reach out to all direct selling companies in their markets and make sure these are associated. Having one face and one voice is essential for the success of the DSA as the only true industry representative.
Looking at the growth potential in the emerging markets, many U.S. and European companies are turning their attention to these countries. On the other hand, we know there are established companies that still achieve double-digit growths even in the U.S. that is known to be the most mature market. In your opinion, is it the outside factors like the level of the maturity of the market or is it the internal factors like the right product portfolio, right compensation plan that drive growth the most?
It is not a question of one versus the other – it has to be a combination of both to achieve a high level of growth. In emerging markets, the rapid Internet penetration has fuelled social networking and selling in online channels and of course the aspect of social interaction is the core of any direct selling business. Moreover as the economies develop in the emerging markets, aspirations and demand for new products increase, which in turn drives sales.
On the other hand, in mature markets spending power and disposable income are generally higher; there is a greater willingness to buy non day-to-day essentials, which also presents an opportunity to drive sales. The online environment is equally important in mature markets, as consumers shop around to find must-haves and good value products.
Whilst the tactics for driving sales in emerging versus mature markets may be different, they are both of equal importance. Indeed, each individual market has its own dynamic, which means that a flexible company has to analyse and act accordingly.
At the most recent Seldia conference in Milan, there was much emphasis on the utilization of the Internet in direct selling. Where do you personally see the opportunities in this field?
The Internet is a channel that offers a host of opportunities for social networking, recruiting and selling – an opportunity that we must be sure to capitalise on. With the help of online channels and social media our Consultants can reach hundreds of people at
once and really expand their business.
I see opportunities in the flexibility that the Internet offers, meaning that it allows Consultants to work from home or whilst travelling . They can make sales and recruit any time and anywhere.
The world of social media also brings us closer to Consultants around the world; we can easily obtain their feedback about a company and its products and find out more about their needs. In short it gives companies a valuable insight into their Consultants’ and customers’ lives.
Do you see any threats?
It is important to understand that use of the Internet is not a threat, but a great opportunity! It doesn’t overshadow our existing direct selling model, but rather complements it. It is important that we acquaint ourselves with the online world, understand its potential and learn from it.
One argument is that today’s younger generation is very different than the previous generations. Consequently, the direct selling companies need to listen to what they say and observe what they do with utmost care. How would you comment on this?
Of course, it is important that direct selling companies evolve with the times. Nevertheless, the core of the business is the social interaction, and this doesn’t change, regardless of the demographics. Someone might ‘Like’ a product and talk about it online, others might prefer to meet face to face, so how they connect and where they connect might vary but the principle remains the same – quality products, fair offers, a fun environment and the ability to grow one’s own business.
Thank you very much Mr. Brannstrom. Would you like to add anything before we conclude?
The need for social interaction is becoming increasingly important for business and personal development. At the same time more and more people want to make an active choice regarding how to live their lives and to be independent. Direct Selling is definitely one of the answers to these needs!