Creating the business model
Direct marketing tactics are generally reserved for tangibles — make-up, cookware, baskets, candles and other items sold at home parties. The founders had deep knowledge of this selling structure after a combined 85 years in the industry working for other companies, but Provenzano knew that focusing on services such as telecommunications and energy would differentiate ACN from product-focused network sales organizations and give it a competitive advantage.
“People are accustomed to network marketing being associated with pills, potions and the like,” Provenzano says, addressing skepticism that a model like this would work outside the catalog world. “Because we are a service company, we attract a different type of person — someone who is professional and never saw themselves selling products.”
Telecommunications services also appealed to the founders because of the industry’s growth potential; communications is already estimated to be a $1-trillion-dollar industry. Also, such services do not require storage or shipping — two areas in which the founders lacked extensive experience.
“You can’t have a garage (full of) of telecommunications services,” Provenzano says. “Our representatives don’t have to worry about inventory, and there is no delivery or transaction of money. That attracted us to this industry.”
He and the founders were also looking for freedom to succeed, both for them and their employees.
“We had all come from a string of companies where management changed and the culture changed,” Provenzano says. “We didn’t want to risk putting our lives in the hands of other people that didn’t consider our interests or the general interests of the other representatives.”
After all, not all direct marketing structures provide just desserts for representatives at all levels, Provenzano says. From the beginning, he and the founders knew that ACN’s marketing model must fuel growth but also had to feed base-level employees.
“If the opportunity isn’t great for the newest person coming into the business, then it isn’t a great opportunity for anyone but the original founders,” Provenzano says. “And anyone who joins ACN today truly has more of an opportunity to do phenomenally well than when we started 13 years ago.”
Provenzano attributes this success to the telecommunication industry’s growth and the fact that representatives are selling services rather than products. And because ACN representatives sell services that consumers already purchase, customers are more comfortable with the pitch. This means representatives are more likely to bring in business and, therefore, earn a comfortable income while helping to expand ACN’s network.
It all starts with a different kind of selling technique than conventional corporations present.
“Traditional forms of customer acquisition are antiquated,” Provenzano says. “You can no longer spend hundreds of thousands of dollars acquiring a customer and hope they stay in your network long enough for you to make a profit.”
Customer acquisition costs can be next to nothing because the network-based sales model does not rely on traditional marketing methods to attract customers. Instead, ACN depends on its representatives to reach out to prospects, and cutting out acquisition costs means the company can provide services for less than its competitors do.
“Because of the ease of acquisition, we have been able to produce hundreds of millions of dollars in revenue for ourselves and still provide tremendous savings for customers and opportunities for representatives,” Provenzano says.
A strong infrastructure was a critical step for expansion, and Provenzano says that building the skeleton of the marketing machine was a daunting task for four marketing gurus with entrepreneurial spirit but no start-up experience.
“Thinking about the early days of negotiating office leases and setting up computer systems, we didn’t know any of that,” Provenzano says.
At first, the founders tried to build the business and recruit network representatives themselves.
“That was taxing and cumbersome,” Provenzano says.
Once the business grew bigger than four professionals could manage on their own, they knew they needed executive assistance.
“We have always understood our limitations and thus, we have never tried to be something we are not,” Provenzano says. “We’ve never had a problem with trying to attract people who are better than us in certain areas where we lacked. Because of that, the right kind of people can sense that we are not control freaks. We will always relinquish responsibilities to competent people.”
Provenzano says this mentality helped reeled in talent so that operations and sales functions could develop in tandem.
“It was our responsibility to say, ‘We need help.’ You have to ask the right people the right questions to get the right answers,” he says.
People drive the network selling vehicle — more representatives translate into more revenue. But the founders aren’t interested in collecting glossy resumes decorated with high-profile recommendations.
“I don’t trust resumes,” Provenzano says, questioning the validity of paperwork that can be botched or bloated with half-truths. “Just like we are great at network marketing, we are also great at networking in general. That means not just taking a look at someone’s resume but actually networking through references and really digging deep.”
And unlike most employers, Provenzano isn’t looking for skills that applicants learn in college. What ACN seeks in its network representatives are people with passion and a desire to change their lives. To these individuals, ACN provides hope and opportunity.
“I’ve always felt I had a chance to win, but I’m not so sure very many people feel that way anymore,” Provenzano says. “People take the traditional career path and find out it is not as profitable or (is) more demanding than they would like it to be.”
If the right environment isn’t provided for representatives to reap rewards for their hard work, the whole network breaks down.
“This is no longer a W-2 world, this is a 1099 world, in my opinion,” Provenzano says.
ACN’s network representatives are independent but still connected to a central nervous system that feeds them with training, encouragement and a structure in which to thrive.
Everyone rises together.
“There is a saying that it is lonely on top,” Provenzano says. “I learned that it doesn’t need to be lonely on the top. You should have a network of people you can interact with and trust.”
