personalized skincare service with visible results | rodan + …€¦ · that was aired a number of...

PASSIVESDETRACTORS PROMOTERS

We’ve launched a research program called Net Promoter Score. More commonly known as NPS, the Net Promoter Score approach is used by many power-house companies, including Apple, the Four Seasons Hotel, Neiman Marcus, JetBlue, Charles Schwab and even my alma mater, U.C. Berkeley. These are all organizations committed to providing excellent service and premier products that customers want to buy again and again. How do they do it? They interview customers and they ask them two simple questions: Would you recommend us to others? And if not, then why not? The insights gained are powerful and can be transformational. So, we’ve embarked on our NPS journey, spearheaded by Courtney Winget, our former Chief Marketing Officer, and a cross-functional group that includes each and every department at Rodan + Fields. We’ve interviewed thousands of departing Consultants and we are happy to report that our promoters, those who would recommend us, greatly outpace our detractors, those who left with a bad taste in their mouths. But while we have a positive NPS score, we do not plan to congratulate ourselves and stop there. We plan to keep the analysis going and make it a part of how we continuously improve. We will work to make our positive score even higher and to learn as much as we can from our detractors so that we can turn them into promoters. In this day and age of social media, we all know how even one person with a gripe to share can reach hundreds of thousands of people with negative blogs and social media posts. Today, much of what I am sharing with you is validated by our NPS research. We sometimes think of Compliance rules as pesky rules we need to comply with, but our NPS research is validating that these rules are also good for your business, because if you follow them, you will avoid having people out in the community who are detractors, complaining, for instance, they were not aware they could have joined for $45 or that Pulse and CRP are optional. You will be hearing a lot more about NPS as

we get past the initial pilot phase, but I wanted to make sure you had this preview of it. We are all excited at the home office about how this will benefit Rodan + Fields and all of you.

Never sell the business as a way to make big bucks quickly. It is not a get-rich-quick scheme and I was so proud to see Jen Griswold tell the world that when she was interviewed on the Today Show. Sure, some people have done quite well in this business and it is fine to point that out, but it is important to not sell people on the low-probability proposition. What do I mean by that? I mean that there are only a small percentage who will earn seven figure incomes and to promote that and only that outcome will set your recruits up for disappointment later. You should talk about the wide range of opportunities: everything from fun money to steady income, personal growth, the great community of inspiring people in the business, the fun culture, and of course, the best-looking skin of your life. And always remember to let them know about the Income Disclosure Statement. It’s there to protect you and your business. If we tell people about the amazing things that some have achieved, we need to provide disclosure on the full range of what has been achieved under the plan.

And always remember to let your recruits know about the Income Disclosure Statement. My suggestion on how to position this it to urge recruits to include a review of the IDS as part of their due diligence in making the business decision on whether to join. This is not only the right and compliant thing to do, it is also very good for your business, as you will demonstrate yourself to be a savvy, transparent and reliable business partner. Justin Keisel has shared with me that when he has positioned the IDS this way recruits have told him that this was what they needed to hear to convince them to join. They appreciated the transparency and it made a key different to them.

Hello Canada and US Sponsors of Canadians! We are so glad to have you with us and in awe of your fast start that has exceeded our projections. You are super stars! I want to remind you of a special requirement of the Canadian Competition Bureau. Direct selling companies in Canada are required to disclose a range for the “typical participant,” which is calculated according to a formula mandated by law. We worked with the Competition Bureau and received permission for the following statement: “We estimate that in Canada the typical participant will earn between $1,700 and $2,000 per year.” We will be updating these statistics as we have more experience in Canada. Like the US Income Disclosure Statement, this statement must be used whenever lifestyle income claims are made, things such as “I’ve been able to quit my full time job, remodel my house, go on a beautiful trip or allow my spouse to retire.” The Competition Bureau even required us to footnote our “changing skin, changing lives” tagline in the P&Ps with the Canadian IDS, so you can see how broadly they want this statement to be used.

In the law, I’ve been trained to stay one step ahead of the hard questions and to take them head on. But that means you need to think in advance about what you are going to say and not say while you are on the spot. So we all need to be prepared on what to say when we are asked the P question: “Are you a pyramid scheme?” But before we discuss what to say, it’s important to first understand what exactly is a pyramid scheme.

Let’s look at a direct selling distributor who was caught on tape saying some of the wrong things. [SHOW VIDEO] That was aired a number of months ago, and unfortunately for Vemma and its distributors, a few weeks ago, the FTC filed a complaint putting the company into receivership. And while the court case proceeds, Vemma’s business has been severely damaged.

The three key defining characteristics of a pyramid scheme are: • The promise of riches based on the recruiting of others. In other words, it is sold as a get-

rich-quick scheme and it is all about recruiting distributors. • No sales or very little sales of products that consumers want to buy. • Inventory loading – or buying of excessive products beyond what can be personally used or

resold – by recruits and distributors. The FTC complaint alleges Vemma suffered from all of these things. The FTC also pointed to other things, such as the fact that all their training programs were about recruiting and none were about selling the products. Purchase of the starter kit with products was mandatory in order for bonus and other qualifications. And Vemma offered no financial financial rewards for selling to customers. What do you think? Is this us? No, of course it’s not.

Of course we are not a pyramid scheme, but make sure you know why and practice your response to the hard question. But first, let me take a detour and tell you one thing you shouldn’t say. We’ve heard that some very well-meaning Consultants have said that Proactiv is sold in 181 countries and there’s no way Doctor Katie Rodan and Doctor Kathy Fields would risk their reputations by being associated with a pyramid scheme. The latter point about the Doctors is very true, but it is not true that Proactiv is sold in 181 countries, so please do not say that. You may refer to it as a premier global brand. Now, here’s my way of handling the pyramid question: • First and foremost, we have transformational products that people what to buy, and this

sets us apart from most other direct sellers. • We have hundreds and thousands of Preferred Customers, and they are the ones who buy

most of our products. • This is not a plan that depends on Consultant purchases. Consultants are not required or

encouraged to make large product purchases. • This is not a “get rich quick” scheme and we make sure our recruits know that. • Our IDS gives full transparency regarding earnings and we do not stick it on the website and

hope no one sees it. We actively promote it to people interested in joining. • Finally, Rodan + Fields audits and educates the field to ensure compliance. And because we

are first and foremost a skincare company, there is extensive training on the products and how to sell them.

You may hear outside trainers urging you to only promote the $995 kit to your recruits. Please, please do not listen to them. It is essential that you tell your prospects that they can join for as little as $45 with the purchase of the business portfolio (except in North Dakota where it is optional), or that they can buy product kits that cost $395, $695 or $995. The FTC would consider it to be evidence of inventory loading if only the expensive kits are reveled to your prospects. Just as importantly, it can be bad for your business and your reputation if you are not transparent. From time to time, we have heard from new Consultants who are quite upset with their Sponsor for not revealing options other than the $995 kit. So please be sure to discuss all options and train your teams to do the same. Of course, you may describe the advantages of the various kit options and the one-time savings that can be achieved by buying them. It is also important to ensure your recruits know that if the business doesn’t work out for them, they may return their kits. There’s a 60-Day 100% Product Satisfaction Guarantee, and between 60 days and a year, they can receive a 90% refund. Again, not only is this the right thing to do, it is also good for your business, as the return policy is a great sales tool. It takes some of the uncertainty out of the equation for your recruits as they know they can get most or all of their money back if the business isn’t right for them. And if they quit and don’t return the products, you know where it may go: eBay, and we don’t want that to happen. It is also important to position Pulse and CRP correctly. While they are great programs with many benefits that you can proudly share with your recruits, you may not suggest to them that these are mandatory programs because they are not. If they were, it would raise regulatory issues. When recruits who have been led to believe that these programs are required find out that they are not, you can imagine how disappointed they are with the Sponsor who gave them

the wrong impression, so please make sure that your teams, in their effort to enthusiastically promote R+F, do not suggest that CRP and Pulse are mandatory aspects of our program. And along these same lines, your PCs need to understand they are signing up for an autoship program. The number one reason we hear from PCs as to why they quit is that they did not understand they were signing up for an autoship program. We have many advisories in the sign up process, but we also need Sponsors to clearly explain this to PCs.

These images of stretch marks would be considered medical claims by the FDA, and we don’t have clinical studies to support any such claim. And recommending our products for use on babies is also not something we should do. If you see something like this, please let us know so we can educate the Consultants who may have posted it.

This is an important, but sometimes misunderstood, topic. As we discussed earlier in this session, inventory loading, i.e., excessive purchases of products that are not legitimately used, is a hallmark of a pyramid scheme. The P&Ps state that monthly purchases of more than $1,000 are subject to audit. This does not mean you can’t purchase more than that amount. But it does mean that if you do, we may be contacting you to find out how you used the product, whether you resold it and/or used it in your business for incentives, displays and the like. You also need to be aware that Consultants may not make purchases in another Consultant’s account. Each Consultant needs to stand on her or his own two feet. I’m sometimes asked about situations such as when a mom wants to make a gift of new account to her daughter. What you need to do is give her the money, which she can then use to join R+F or to buy a red dress if that what she choses to do. If it’s a gift, she gets to decide how she spends the money. Do not put your card on her account. I’m also asked about whether we can accommodate people who don’t have a credit card or don’t like to use theirs online. Well, that person may not be cut out for Rodan + Fields. Our business is based on eCommerce, and the P&Ps state that one of the requirements of being a Consultant is having a valid credit card on your account. The Compliance Team regularly audits to ensure understanding and compliance with these rules.

To assist us with these audits, we’ve developed the Monthly Retail Sales Record form, which, of course, is on Pulse. If the account is audited, then you will be asked to fill out this form detailing the customers to whom you have resold products or the products you have given away as incentives. I urge you to fill out this form regularly even if we do not contact you, because it will be a very useful business record to have in the event you are ever audited as to the business deductions you have taken on your tax return. And please help to calm the nerves of any of your team members who may be contacted and are fearful that they are in trouble. We are just trying to educate all as to the right way to conduct business.

’ “ ” “ ”

“ ” “ ”

“

”

“ ”

Here are some statements that FDA has noted in recent warning letters as inappropriate claims for cosmetic products:

• Stimulates collagen • Treats or cures a medical condition • Prevents or heals scarring or stretch marks • Regenerates cells • Eliminates wrinkles • Reverses the aging process • Any claims regarding rosacea, eczema or psoriasis. This one is interesting because in

the past many companies have felt very comfortable stating their product addresses redness, dryness or itching associated with conditions such as rosacea, eczema or psoriasis, but the current administration at FDA has recently been much more conservative it its approach. As a result, we are in the process of changing some of our marketing materials regarding SOOTHE.

• Another recent hot button topic for FDA is needle claims, such as stating that the product provides “the same results as injections or surgery.”

All of these types of claims, FDA and also Health Canada, consider to be claims about how a function or structure of the body is altered, which would be a medical, not a cosmetic claim, so we must stay away from such claims.

keep your comments about cosmetics focused on appearance and not on medical conditions or physical changes to the skin. This is the right way to sell our cosmetic products. • Appearance of • Younger-looking • Visible • Smoother You can’t go wrong with these words.

Consultant

Before & after photos are product claims that are subject to regulation just like the claims that are spoken or written. The claims based on the before and after pictures must be substantiated and consistent with R+F marketing materials. These before and afters are from the R+F archives, and you can always be assured that the photos we provide meet these standards. We know that you and your customers love to post some of their wonderful results, but you must be sure to obtain permission before you pose anyone’s photos. There’s a permission form in Pulse that we advise you use before posting. Rodan + Fields always has people provide their permission in writing, and we advise that you run your business the same way and ensure you have a written record that permission has been given. And do not repost a B&A you may have seen on the Web unless you know the person has given permission. Recently we were contacted by a the attorney of a woman who had great results from a chemical peel, but not from our REVERSE product. Unfortunately, a few Consultants had posted her pictures without her permission. We contacted all of them and have worked with Pinterest and Google to get the images down. We need your help in ensuring we do not need to deal with such a situation again.

P&P section 6c is a must read for any of you who want to post anything other than R+F supplied before & afters. Here are the basic rules you must follow: • If the picture if of you, it must state you are an R+F Independent Consultant. That’s because

the FTC says consumers need to know if someone has a vested interested in making the claim.

• Any image must be an honest opinion, belief or experience from use of R+F Products. If other products were used, you need to disclose that.

• No touch-ups, photo editing or make-up, and your hair should be pulled back so we can see your beautiful face!

• Make sure the photos are consistent. In focus, portrait orientation, well-lit and with a plain background.

• And, of course, all photos need to be consistent with R+F’s label claims.

From left to right they are: Cody Wilbur, Michaela James, our Compliance Manager Amber Siddiqi, and Marcus Phillips. You may remember them from their days as Sales Support super stars. Amber’s team also includes Brooke Dupre, pictured on the right, who works part-time from home while she cares for her two little ones. Please reach out to them at [email protected]. They work really hard to get back to you within 1 to 2 business days.

personalized skincare service with visible results | rodan + …€¦ · that was aired a number of...

Documents