High unemployment resulting from the economic downturn in Brazil is changing the nation’s labor relations. One of the visible consequences is the decline of the registered workforce and the rise of entrepreneurship. Workers have become more proactive and less reliant on external factors to guarantee their income and improve their life standards.
The financial crisis that impacted negatively on many businesses actually served as a stepping stone for beauty and personal care manufacturer Hinode. Since the company adopted a multilevel marketing model in 2012, the number of representatives under its belt has gone from 35,000 to 600,000 in Brazil. The number of franchises to support the resellers has jumped from 20 to 340, and the company’s revenues have grown from R$ 180 million to R$ 1.3 billion - a remarkable 600% growth in less than five years.
This shift in business model was key in transforming the family business, established in 1988, into a direct sales powerhouse that has been battling it out for a share of the market with beauty giants such as Avon and Natura. But what exactly is multilevel marketing? Eduardo Frayha, sales and marketing VP at Hinode, explains it’s a payment system that rewards resellers based on services and products sold. “Unlike the pyramid scheme, where revenue is not taxable nor ultimately grounded on sales, in the multilevel model the representative’s bonus payments stem directly from the products purchased by customers,” says Frayha.
On top of profits scaling according to team size, a 100% profit on each product sold works as a compelling argument for new additions to the sales force, especially when compared to the average 20% to 40% profit offered by most competitors. Frayha also stresses that the 450-plus products in Hinode’s portfolio are offered at same or lower prices compared to both retail stores and other direct sales companies.
However, juicy incentives and affordable pricing are not the only pillars that support the operation. “Training is one of Hinode’s greatest strengths,” says Frayha. “In the last 12 months, we have delivered over 5,000 hours of training to more than 200,000 people across Brazil, as well as promoting large scale events focused on empowering the sales team.” One of the lecturers recruited to speak to a 30,000-people audience in São Paulo is The New York Times’ reporter, Pulitzer Prize winner and author of the book ‘The Power of Habit’, Charles Duhigg.
Representatives who are unable to physically attend training sessions have access to Hinode University, an online program that offers courses and full business support. The distance learning tool goes hand-in-hand with the company’s plan to expand its activities to remote corners of Brazil. “Our strategy is to cover these areas with local franchise branches that allow for wider and faster distribution, as well as assisting local leaderships,” says Frayha. The company also offers a customizable e-commerce platform that encourages resellers to try their hand at online sales. All they need to do is promote their online channel since Hinode controls both handling and shipping.
For those who think that direct selling is a traditionally female-dominated environment, think again. Hinode has seen a substantial increase in male representatives, who already account for about half of the sales force. “Women are usually attracted to the sales part of the business, and then eventually start building their teams. Men, on the other hand, are often set from the start in the full scope of opportunities the model has to offer. We’re also seeing a rise in couples who build teams together,” says Frayha.
Ending 2016 on a high note, Hinode was awarded two of the biggest industry awards: the ABIHPEC Company of the Year Award and the Atualidade Cosmética Award for Professional of the Year to the company’s CEO, Sandro Rodrigues.
The company also revolutionized TV advertising by striking a deal with Rede Globo, Brazil’s biggest broadcaster, to include the brand as a fortunate turning point to the otherwise tragic bio of a character in soap opera Sol Nascente (Rising Sun). The character, Sirlene, manages to turn her life around by becoming a Hinode reseller after being dumped by her boyfriend while pregnant. “Aside from the happy coincidence of the show’s name – Hinode means ‘rising sun’ in Japanese –, we saw a strong opportunity to build brand awareness with the female audience”, says Frayha. Art, as they say, imitates life.