Direct Selling

For years, direct sales got little buzz and even less respect, but this admittedly old-fashioned sales methodology is back with a vengeance. In 2006, the direct-selling industry employed over 60 million people, raking in $30 billion in the U.S. and $100 billion worldwide. Wow! That’s a whole lotta sittin’ around the neighbor’s den on weeknights after work.

The boom has been heightened by a new wave of direct-sales companies, many of them established during the last five years. Amy Robinson, VP of communications with the Direct Sales Association, says, “We’ve seen an expansion in the number of products and services sold. There will always be the traditional favorites, including cosmetics, kitchen essentials, and home décor, but we’re also seeing pet supplies, organic gardening products, and in-home photo shoots.”

Products that require explanation or client education tend to thrive in the direct- sales environment. A skincare company like Nu Skin, which has 800,000 independent distributors and sales of more than $1 billion a year, clearly benefits from leisurely demonstration. Wine Shop at Home, which offers luxury trips to exotic destinations as sales incentives, hosts in-home wine tastings. Taking the customer through a multi-step process provides the salesperson plenty of opportunities to differentiate their product from others in the field.

It also helps if you’re selling a product, like moisturizer or Chardonnay, that either needs to be frequently replaced or is the sort of thing where people get “hooked” and always want a little more. Either way, you have a customer for life. As Tory Kiam, CEO of the jewelry company Lia Sophia, points out, “If you sell someone a lawnmower he’s not going to need a new lawnmower six months later. But who can say when you have enough fashion jewelry? A woman can buy a bracelet one month and a necklace the next…. Our advisors can sell the same customer over and over.”

Some of the clichés of direct selling hold true – about 75 percent of the sales force is women, and about 75 percent work part-time. But the advantages of this type of selling are luring more men and full-timers into the game. Think about it. Basically you’re your own boss and running your own business – but with very little or no capital investment. You can create a flexible work schedule, giving you time with your family. You can deal with a product you like, basically turning a hobby in something like gardening or decorating into a career. There are no required levels of education, experience, or financial resources. You don’t have to live in a big city. And, perhaps most important of all, you control how much you earn.

“Success is different for each person and individually defined,” says Robinson. “There’s not some magic number of hours worked or income earned, it’s not a matter of whether it’s a big company or small company. Success in direct sales is a matter of finding out what’s a good fit for you.”

The two companies below vary in size, but both help their salespeople follow their bliss, while earning good money along the way.

THE HAPPY GARDENER

Annette Pelliccio grew up in a family of gardeners: her grandfather and mother ran a plant nursery on Long Island. Living in Ashland, VA, with two young daughters, she found herself literally returning to her roots.

“I wanted to provide my girls with a healthy living environment,” she says, “which meant no pesticides in our yard or garden.” A berry bed that began as a family project quickly turned into a business idea. “It was hard to find natural products,” Pelliccio says, “and I thought ‘Well, if I don’t have a lot of choices, neither does anyone else.’ I began trying to make my own organic soil enhancers and plant foods.” While her family laughed at her “concoctions,” the product line eventually became The Happy Gardener, which she founded in 2003.

The company now offers “high-quality, earth friendly products” for lawn care, gardening, birding, and composting. While the target customers are baby boomer suburbanites, city dwellers are not left out of the sales model. Pelliccio says container and indoor gardening are expanding areas of the business.

The sales process begins when one of The Happy Gardener’s 125 independent garden consultants shows up for an in-home demonstration, called a “garden party.” “The education is a big part of the sell,” says Pelliccio. “Organic products are more expensive and you have to explain exactly why they’re better for your health and for the environment. We’re not the company that has the pretty bag with the big glossy photo of a flower sitting on the shelf at Home Depot. You can stick our bags right in the compost bin and the packaging becomes compost too.”

Surprisingly for the industry, 46 percent of The Happy Gardener’s sales force is male. Pelliccio reports that while her female consultants like the in-home demos, the men do more word-of-mouth marketing and tend toward commercial accounts. “We attend green festivals and environmental conferences,” she says. Clients include local parks and the University of Richmond.

The Happy Gardener also has less than a 5 percent dropout rate, rare in an industry with high turnover. Pelliccio believes it’s because her consultants are so passionate about the product. “Our motto is ‘Doing what’s right for the environment, our families, the community, home gardeners, and for our future,’” she says. “Our consultants don’t just see this as fertilizer – it’s a cause they believe in.”

LIA SOPHIA

With 18,000 sales advisors nationwide (up from 3,500 two years ago), Lia Sophia is booming.

The company has a long and somewhat complex history. It began in the ’70s as Act II Jewelry, so named because it created jewelry for women “in the second act of life.” Business giant Victor Kiam bought the company in 1986 and renamed it Lady Remington, in an effort to use publicity generated by the family razor-blade company. When he took over the business after his father’s death in 2001, Tory Kiam dropped the Remington name.

“It was never right for jewelry,” he admits. “Remington was about razor blades, chain saws, guns…hardly a feminine image.” After a year-long search for the perfect name, Kiam finally decided to honor his two daughters, Lia and Sophia. Their names were not only beautiful and feminine, but using them also “brought the family business into the third generation.”

He also broadened the target demographic to attract a much younger customer. Lia Sophia is all about product turnover, creating a new catalogue every six months so that their advisors can go back to the same customer base repeatedly. “We’re right up there with the trends,” says Kiam. “If a young, hip star wears a certain kind of necklace, we can replicate that quickly.”

Lia Sophia tries to make the sales process easy for their advisors. Party hostesses are urged to invite 40 people in order to ensure that at least 10 show up and, while the advisors have a few samples on hand, most sales are made through the catalogue. “We don’t force our salespeople to carry inventory,” says Kiam. “Some companies do this, basically turning their advisors into wholesalers, and this can be disastrous. Our advisors pay a one-time $150 fee to get their sample kits and from that point on, no jewelry is shipped until it’s been ordered and paid for by the customer.”

And while Kiam has been approached by retailers and urged to sell the product on TV, he refuses to do anything to compete with his own salespeople. “You can’t order off our Website,” he says. “It directs you to the advisor nearest you.” He sees the future as unlimited, pointing out, “We’ve only reached 4 percent of our target market. We could go overseas – that’s a huge market for direct sales – and we haven’t touched it yet.”

One of the advisors who is happy she got in on the ground floor is Donita Dahm, who was making good money as an RN when she attended her first party 14 years ago. Always a jewelry lover, she got hooked on the product very quickly and was successful in part-time sales. But after six years it was still difficult to leave nursing and go full-time into Lia Sophia.

“My part-time business had grown to where I couldn’t handle both,” she said. “I was making $50,000 as a nurse and $30,000 in what I considered my fun job, the jewelry sales. I knew I had to figure out how to make $80,000 from Lia Sophia.” Dahm took a businesslike approach, systematically calling all the company’s top salespeople and interviewing them over the phone, but her decision still met with skepticism. “At that time direct sales was seen as degrading,” she says. “People were like ‘You’re going to leave a respectable nursing job and go out to sell Tupperware?’”

But, thanks to her research, Dahm had a plan. “I knew that I had to do more shows,” she says. “The salespeople I’d interviewed made it clear that there’s no substitute for being out with the people.” Dahm was helped by the relatively high-priced product line – the average Lia Sophia show total is $750, considerably more than most companies. “Women love jewelry,” she says. “They would always see something they wanted and couldn’t afford, so it was easy to convince them to book a show so they’d get the hostess discount. Pretty soon they’d see that it wasn’t just about getting more jewelry, that they could make real money at this.

“I now have a big team,” Dahm says, a modest statement considering she is a zone manager who leads 1,350 advisors, including her own two daughters. Their combined efforts provide Dahm a salary she describes as “in the mid six-figures” and she points out, “With direct sales the sky is the limit because you’re not tied to annual raises like in the corporate world. I wish all the people who laughed when I left nursing could see me now.”
Feedback: wiley@sellingpower.com