Veteran leaders share insight on keeping distributors during tough times
By: Jenna Lang Warford
“Denying or disregarding the issue at hand only prolongs the crisis.” —Al Bala, CEO and President, Mannatech
Though the U.S. direct selling channel had $40.5 billion in sales in 2022, it seems like every month there is a company facing negative publicity—some from company crises, others from docu-dramas, the Federal Trade Commission, class action lawsuits, or from aspersions cast by Truth in Advertising (TINA), even a groundswell from social media.
Grinding through these reputation management crises can test the mettle of any executive, but by prioritizing several things, an executive team can maintain the confidence of the field as well as its customers.
Al Bala, whose 16-year tenure with Mannatech Inc. has encompassed a publicized lawsuit with a founder, scrutiny by regulatory agencies, and even fall out from a political candidate’s supposed association with the company, resulting in media attention from The Wall Street Journal and Bloomberg News.
Bala says, “The executive team needs to respond promptly and transparently to address the concerns raised by the negative media coverage.” He believes their top priorities should include swift crisis management, open communication and rebuilding of trust.
“Developing a comprehensive crisis management plan that outlines clear strategies and actions
to address the issues at hand
should include communication protocols, internal training, and coordination with legal advisors to ensure compliance with regulations,” he says.
In-person meetings as well as an online strategy can be used to retain distributors and customers. Key, he believes, is establishing open channels of communication with distributors and customers to address their concerns and provide accurate information.
“Timely updates, town hall meetings, and online forums can facilitate dialogues to build trust and foster a transparent environment.”
This conversation is crucial to rebuilding trust, according to Bala. ”Working towards rebuilding trust among distributors and customers should be a primary focus. This can be achieved through a combination of sincere apologies, corrective actions, and a commitment to rectifying the issues that led to the reputation crisis.”
Ginger Greenberg, vice president and general counsel at Sunwest Communications, says that the question isn’t if a crisis will occur, but when it will, and that the best response depends on the situation.
“It’s important to communicate early and often,” she says. “Your employees and sales force appreciate the notice and thoughts on how to manage questions should they receive them.”
Sunwest Communications CEO Crayton Webb says, “You don’t want to say anything that will hurt your case in court, but it’s just not enough in this day and age to say, ‘No comment’ or ‘We can’t say anything while we’re in pending litigation.’
You have to be able to say something that explains your values and where you’re coming from as an organization without hurting your case in court. It’s critical that your organization be able to answer that question today.”
Shellie Sullivan, chief sales officer of Urban Retreat, faced a reputation crisis of an unusual sort. After launching in the U.S. and Canada on Jan. 1, the company suffered a catastrophic fire in its U.K. distribution center, which burned to the ground on March 13. The company had over 5,000 sales consultants and nothing to sell.
When faced with the media attention that was bringing the negative impact to the immediate awareness of consultants and customers alike, Sullivan knew that the company’s response would set the tone for rebuilding.
“Our top priority had to be to pause,” she says. “We needed to circle the wagons, pause, look, listen, and think broadly. We had to get our bearings because at the end of our day, the most important thing was that our consultants can generate an income, that they can put food on the table. We understood that by pausing, the focus could be not ‘How do we get this business back up and running? Not ‘How much is this going to cost us?’ Or even, ‘What’s the negative impact going to be?’ But the most important questions of all: ‘How can we take care of our Consultants; what do we need to do so they’re prioritized?’”
The Right People
Sullivan believes that this pause is key in situations other than total-loss fires.
“Maybe there’s a lawsuit in the news, but a lot of times in our channel, the negative press is a groundswell that might happen inside a company, or as a result of a move that didn’t please the field.
“Even if it’s that, I think it’s even more critical to stop, pause, bring all the right people in the room, and become aligned on what’s important, what approach you are going to take, who is going to speak and a timeline.”
The right people, she says, include a cross-functional team. “I’m a firm believer in the importance of that. I grew up in sales, but fortunately I had mentors that put me in situations to learn about supply chain, about distribution, operations, legal compliance.
“That’s really helped shape me, and through all of that, I’ve seen how critical it is that in that room I need the legal team, I need supply chain, I need distribution, I need marketing, I need training, I need field; because I need us all to be on the same page about how we’re communicating, as well as who we’re communicating to.
“This depends largely on knowing what our values are, what our goals are, what our core focus is,” she says. “Then there needs to be a locking of arms and agreement that we’re going to do this together, because one rogue email—that might even be a mass autoreply—can really throw a wrench that causes more churn, making the noise swell.”
Sullivan, who was hired by founder John Miller specifically for her passion and prioritization of the field, believes that in addition to pausing to regroup, transparency is key to succeeding.
“I went out the very first day and said, ‘Look, we’ve had a fire and we don’t know a lot. We’re going to need some time. We’re asking you for grace. Please know that we care deeply for you, and we’re going to give you all the information when we can.’ Just being very forthright and very honest with them.”
Transparency, Integrity and Accountability
Greenberg says the most important and impactful actions should be occurring before the negative story or issue comes to light.
“Top leaders and the executive team should be working to build goodwill with their audiences before a crisis comes to light. Once the crisis occurs—not if but when—leaders will need to embrace transparency and communicate early and often until the crisis abates.”
Bala reiterates that transparency is just one of the keys to managing a crisis well. “Top leaders must set the tone for the entire organization by displaying integrity, transparency, and accountability. Their actions should reflect their dedication to addressing the crisis and implementing corrective measures.”
Bala believes that decisive actions demonstrate commitment to resolving the situation; in addition to setting the example, leaders should provide support and reinforce training and compliance.
“(Executive) leaders should offer support to distributors by actively listening to their concerns, providing guidance, and ensuring their voices are heard within the organization. Clear communication channels and mentorship programs can help foster resilience and renewed confidence.
Also, emphasizing the importance of training and compliance helps protect the company’s reputation in the long run. Strengthening educational resources and providing ongoing training on compliance policies can help distributors navigate future challenges more effectively.”
Actively listening to the field is an important component, Sullivan agrees. “Communication is absolutely everything in our business to avoid the ‘telephone game,’ the stories, the embellishments, and any drama. Make sure that you’re communicating strongly and that you have one good, strong voice to the field.”
The “who” and timing of that voice can be key to impact, also. She says, “Earlier in my career, at a company that encountered a major tech crisis, I offered to do an announcement early on in the crisis, and somebody said to me, ‘Not yet, you don’t need to be associated with this crisis yet.’ So they held me back for a month or so. I didn’t immediately become the voice, and that allowed me to work behind the scenes, and to have a greater effect when I did address the field with it.”
What to Avoid
Greenberg, with legal as well as public relations expertise, says, “Living with a belief that it won’t happen to you — is what I would recommend avoiding. The best defense when up against a crisis is developing the best offense.” In part, that is building the goodwill she mentioned above, but also includes having a team that responds thoughtfully and immediately to crisis.
Bala says it’s crucial to avoid three key things during a reputation crisis: denial, reacting and neglecting relationships.
“Denying or disregarding the issue at hand only prolongs the crisis. Acknowledging the problem and taking responsibility is essential for initiating the recovery process.” He adds that reactive measures are also unwise. “Taking impulsive actions without careful assessment and strategic planning may lead to further complications. It’s important to take the time to analyze the situation and devise a thoughtful response.”
Last but not least, Bala says that failing to prioritize the needs and concerns of distributors can exacerbate the situation. “Maintaining open lines of communication and providing regular updates are vital to nurturing these important relationships.”
Sullivan says, “When you’re facing problem after problem, pride and arrogance can keep a crisis going.”
It’s key that executive leadership has established a culture that allows the team to share their insights.
“You have to be able to speak up; I usually do, but there have been times in the past where, in retrospect, I wish I’d said more. I think some things have to be established in a corporate culture before the crisis hits.
“One key to the foundation here at Urban Retreat is the field is the priority. It was easy during the pause to know what the focus would be due to that (foundation).”
Greenberg says, “The best resource in a crisis is the crisis team you’ve created before the crisis arrives on your doorstep. Keeping this team prepared and ready to go is your best resource, by far.”
To Sullivan, one of the most important resources during a crisis is gaining outside perspective.
“I’m a big proponent of being progressive, innovative and thinking differently. I believe wholeheartedly that to do that we have to look outside our industry so we don’t recycle the same ideas and concepts.
“Whether you’ve got a marketing issue or PR issue, get both inside and outside counsel and coaching from mentors and people that might have experienced something similar. Don’t operate in your bubble, get an objective perspective. Then the key is you have to make your own decisions; you can’t blindly follow what a consultant or marketing firm tells you.”
Bala agrees that external expertise can be highly useful. “Seek guidance from consultants or experts with experience in reputation management and crisis communication. Their unbiased perspectives can help the executive team make informed decisions and implement effective strategies.”
He also believes that effective communication and then adding training and education are useful. When it comes to communicating, he says, “Utilize email newsletters, social media platforms, and webinars to provide timely updates, share important information, and engage with both distributors and customers.
“Develop training modules, online courses, and workshops that focus on compliance, crisis management, and ethical business practices. Empowering distributors with the necessary knowledge allows them to navigate challenges with confidence,” Bala says. These can also have the tertiary effect of helping prevent future crises.
“Successfully retaining and engaging the sales field and customers during a reputation crisis requires a well-planned approach,” he adds. “By prioritizing open communication, decisive leadership, and rebuilding trust, network marketing companies can navigate through these challenging situations while laying a solid foundation for future growth. It’s the actions taken during times of adversity that truly define an organization’s commitment to its stakeholders and its ability to overcome challenges.”
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