The news at Avon is not good. The company announced a fourth-quarter net loss earlier this month, it’s being investigated for possibly bribery in China, and it just let go its long-time CEO Andrea Jung (though kept her on as Chairman, with no responsibilities other than collecting a big fat paycheck). Avon’s sales in North America have slid every year since 2007, and its stock price is off 60% since its high in 2004.
The worst news is that the company is going to “restructure” with the help of management consultancy McKinsey. You can usually bet that there’ll be layoffs (firing people is easy because it simplifies those graphics on PowerPoint slides) and lots of nonsense about stakeholders, TAM and SAM, innovation, and other very expensive buzzwords.
I’m sorry, but it’s just not as hard as all that. Too many people are getting paid lots of money to drive Avon into the ground.
Avon invented social selling and a business concept called “multi-level marketing,” in which sales people make money not only by selling themselves but through recruiting more sales people. In the mid-1880s, a traveling book salesman named David McConnell would brew perfume at home to hand out as freebies to the women he visited during his sales calls. The stuff proved far more interesting to his would-be customers than his books. He also noticed that many of them were struggling to make ends meet, or simply chafing against the limitations imposed on them by society (it was hard for women to find work outside the home).
So he hatched the idea for the California Perfume Company: women would sell to other women, going door-to-door, and they’d earn a percentage of the sales success of the saleswomen they recruited. He had 5,000 representatives working for him in little over a decade, and his central tenet -- that people sold best to other people in informal, conversational, social settings, and that they should profit from the networks of trust they’d established -- would pave the way for Amway, Tupperware, Herbalife, and a host of other businesses.
Fast-forward to 2012, as a new generation of consumers thinks a handful of technologists and entrepreneurs have invented the idea of social selling. Job opportunities are hard to find, and more people are seeking work that doesn’t chain them to office cubes or computer screens. And Avon has a 125-year history of empowering women. Fired CEO Jung did a marvelous job giving away money to worthy charities that support women’s issues, but did an awful job connecting the dots back to actually selling stuff for which customers paid money.
Avon needs to reassert that connection. I think I just wrote McKinsey’s PowerPoint, didn’t I?
Of course, it can’t be that easy because then why would any company need lots of leaders and consultant experts, but whatever devil hides in those details I bet these three thought-starter ideas would get Avon far along in facing and fixing ‘em:
- Go young -- Why couldn’t Avon create programs to recruit high school and college girls, giving them sales programs combined with presentation, accounting, and other educational tools? I’d imagine these consumer groups are the most suspicious of mainstream marketing, and there are few industries that are more full of BS than cosmetics and their inane promises. There’s are real authenticity pitch here, I think, and these kids are also the most likely to need work. Does the idea seem anathema to what you think about the Avon brand? That’s a sure sign that it needs to consider it.
- Segment & crowdsource -- From a generalist perspective, Avon “looks” like any other cosmetic business. Its products are mainstream and seem generically like any other products; I’m no expert, but there’s nothing really distinctive about them. Somehow the company decided that it would create its differentiation in the marketplace through its distribution network, which might have been a reasonable idea but it was silly to rely on it alone. Why not get communities of women involved in proposing, developing, and creating new products, perhaps by geographic region and/or age? Blur the distinctions between “sales people” and “customers” entirely, and let everyone have a piece of the pie. I hear there’s this tech called social media that might be useful.
- Pick a real issue -- Jung expertly gave away money because that’s what she thought would magically translate into sales, and nobody stopped her from wasting hundreds of millions on good causes that delivered bad results. The central premise of doing good is sound, of course, even if it doesn’t produce revenue, but why couldn’t Avon pick an issue...one really big and meaningful women’s issue...and own it? Like forever. Organize a hunk of the business for its eradication or cure (or whatever). Dedicate a product line to it. Don't just give money but stake the future otf the brand on overcoming the challenge. Don't be shy.
Avon’s tagline is “the company for women.” Imagine if it could get its consultant-distracted head around the idea that operations will make it by, for, and of women, not any marketing slogan.
It shouldn’t be so hard.