Door to Door: Feeling at Home with

Brands

Door to Door: Feeling at Home

with Brands

Contents

3 Introduction

4 Trust

9 Passion

14 Community

18 Summary

©XPotential 2012 3

From the key benefits and success factors of door-to-door, we can learn how brands can build and profit from:

– Trust

– Passion

– Community

Introduction

Although many brands now sell direct through the rise of e-commerce brand sites and even s-commerce (social, e.g. selling through facebook), for the purposes of this case study we pay closer attention to the more classic direct selling style. This piece examines companies that still sell through representatives in person, in order to find key learnings that might be applicable to any business faced with today’s challenges of advertising bombardment, reduced human contact through technology and intense competition for spending.

The idea of door-to-door selling inspires mixed reactions; some people think of intrusive and annoying sales people, whereas others see an opportunity to get closer to brands they love, with a better service

Either way, direct selling is a growing channel opening up opportunities for manufacturers to reach more consumers in a closer way, an opportunity many companies are seizing

Direct sales reached $132 billion worldwide, growing 12.4% last year

The USA is the #1 direct selling county, at $29.6 billion and with a sales force of more than 15 million independent contractors, Japan is #2, Brazil #3

Although in some industries and geographies, direct selling has developed a negative reputation, there are valuable lessons to be learned from those companies that have carved their success through this channel

http://www.directselling411.com/for-sellers/myths-facts/ www.dsa.org

http://www.businessforhome.org/2012/02/direct-selling-2011-growth-9-2-for-public-companies-amway/

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Trust

In order for door-to-door selling to be successful, shoppers must feel trust in the brand and the sales-person; this form of selling hinges on personal relationship more than conventional retail does, heightening the importance of service

At the same time, the direct selling method is an opportunity to earn closeness to the consumer and to build trust in a meaningful and personal way

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For many direct selling brands, the first point of contact is at the consumer’s door. Right from this point, the consumer must be able to feel they can trust the seller, particularly if they invite them into their home

There must be a sense that the representative is well-meaning and honest. Across companies that sell direct there is a common goal of getting close to people and helping them

To achieve this goal, employees must be equipped with the power to do what is best for the customer, to build trust – it comes down to the actions of individuals within the company

You can invest heavily in marketing communications to get your message in front of customers, but if your employees aren't equipped to deliver what you've promised, your marketing investment could be wasted

With the dwindling faith and interest in advertising, given the bombardment we are faced with today, selling person-to-person represents a much more engaging way to touch base with consumers

Door step selling can be negatively viewed, for example around energy sellers and rogue traders in the UK - the area has received bad press. To combat this, it is important for companies that sell this way to be built around sound ethics and fairness. This problem also ties in with the fact that many early stage sellers begin by selling to friends and family, which some people can find uncomfortable if not executed sensitively

Trust: Delivering Promises

http://www.guardian.co.uk/lifeandstyle/2011/aug/18/125-years-avon-calling

http://lmanternach.wrytestuff.com/swa464611.htm http://www.brandrepublic.com/news/913125/Door-to-

door-sales-company-Kleeneze-opens-promotions-channel/

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Once trust has been established, there is an opportunity to provide real benefits to consumers, e.g. older people who may not be as well-informed if they do not use internet, or have limited mobility. This group may also value the human contact

Door to door selling company, Kleeneze establish channels of trusted sellers, who can then introduce customers to affiliated brands / products

Benefits of trust include long-term loyalty and positive word-of-mouth

Trust: Delivering Promises

http://www.guardian.co.uk/lifeandstyle/2011/aug/18/125-years-avon-calling

http://lmanternach.wrytestuff.com/swa464611.htm http://www.brandrepublic.com/news/913125/Door-to-

door-sales-company-Kleeneze-opens-promotions-channel/

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Trust: True Identity

Selling direct to consumers cuts out the “middle man” – the retailer. This brings a higher level of control over where and how products are presented to shoppers (to the extent that you can manage agents)

Communication within a big retailer can be lost, surrounded by POS marketing for hundreds of other brands, losing effectiveness

One big advantage of the direct selling model is that you have control over your business. You control how many agents you sell through, where you will sell, and which geographic locations you will expand into.

When you sell via retailers, you are dependent on the retailers’ expansion plans. These plans may or may not be in line with your own business needs

Although direct selling provides more control, which allows for building trust with customers based on giving them a clear understanding of your brand identity, values etc. this is only made possible by strong training, guidelines and internal marketing to representatives

http://www.kentgrayson.com/Grayson%20Archive/directsellingchp.pdf

http://mansmith.net/index.php?option=com_content&view=article&id=220:direct-selling-as-a-sustainable-

competitive-advantage&catid=43:direct-sales-a-multilevel-marketing&Itemid=44

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J.Hilburn is a luxury custom-fit men’s clothing brand in the US that has built a direct selling business model around insight, and grown through building trust

The company has 50 employees and a multi-level direct selling model (similar to Avon)

The choice of direct selling as the channel was driven by insight and understanding:

– The founders saw how Amazon had succeeded in stripping back mark-up on books (by cutting supply chain and distribution), but understood that e-commerce for clothing was challenged by consumers’ need to see, touch and feel the products

– They used the insight that men do not enjoy shopping for clothes, and decided to build a network of representatives who would make house calls; solving the dislike-for-shopping issue and cutting costs so that the pricing remained similar to off-the-rack

– This created a compelling value proposition of custom-fit, quality clothing for off-the-rack prices without the hassle of shopping

J.Hilburn’s sales representatives (“Style advisers”) visit customers at their home or office, take their measurements and show fabric samples and a catalogue

The trust that builds between style advisor and customer is the company’s most valuable asset, and the style advisers are well supported with technology, communications and

individual support. When their e-commerce site is launched, style advisers will still receive commission from their customers’ orders

Customers spend, on average $400 to $500 a year with the company.

A testament to the quality and trust of the representative-customer relationship is that their latest e-mail campaign had a 50% open rate (very high for mass e-mail), and the re-order rate is an incredible 93%

The direct sales model is particularly good for custom product like this, as it reduces the number of steps and opportunities for misunderstanding in the selling process

J.Hilburn: Building Trust to Win

http://www.nytimes.com/2011/11/03/business/smallbusiness/j-hilburn-wants-to-sell-online-case-study.html?pagewanted=all

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Passion

To create convincing direct sales-people, the brands they represent must be built around passion and instil this into their representatives to create advocates

Through building personal relationships with consumers, providing a social aspect to their contact with the brand and developing their product knowledge better – door-to-door selling can be a catalytic way to grow passion around a brand

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Passion: A Foundation for Business

http://www.brandchannel.com/features_profile.asp?pr_id=429 http://adage.com/article/global-news/brazilian-cosmetic-company-natura-building-brand-globally/228143/ markets.ft.com

Every business has a better chance of success when driven by passion, but passion is especially important for direct selling; to create and keep persuasive and driven representatives to keep the sales channel alive

“The Avon lady who visited my mom wasn’t just some sales drone: she maintained personal relationships with her clients and, most importantly, used and loved Avon products” (Anthony Zumpano, Brand Channel)

The leading Brazilian cosmetics, fragrance and personal hygiene brand, Natura, is a great example of passion driving a direct selling business

Natura’s slogan is “Bem estar bem” (well-being

well), and sustainability is the passion that has been driving the company since it was founded in 1969

This passion is not a response to current trends, but is embedded in every part of the business, from use of natural ingredients in their formulas to paper reduction in office activities. There is no animal testing, they were among the first to sell re-fills, they use biodegradable or recycled packaging. In 2005, Natura was cited in a UN report, “Talk the Walk,” as one of the pioneers in green marketing and is seen as "the real deal" eco-friendly company

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Passion: A Foundation for Business

http://www.brandchannel.com/features_profile.asp?pr_id=429 http://adage.com/article/global-news/brazilian-cosmetic-company-natura-building-brand-globally/228143/ markets.ft.com

With one million consultants in Brazil, Natura is the leader in direct sales (ahead of Avon)

Passion drives Natura forward, to keep improving and expanding: the company has invested in a concept store and R&D unit in Paris to improve development

– "We've always been concerned about using natural ingredients. French consumers are highly aware, and their demands have helped us improve. Before becoming a global brand, we want to reach global quality.” Natura VP Jose Vicente Marino

Year on year Natura grew revenues 8.85% from $5bn to $6bn (in 2011)

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Passion: Spreading the Word

Via direct selling, face to face contact with consumers can instil passion through understanding, experience, excitement and embodiment.

http://www.directsellingnews.com/index.php/entries_archive_display/beauty_everlasting http://csi.mckinsey.com/en/Knowledge_by_region/Americas/brazilbeauty.aspx www.marketingweek.co.uk http://anitak.hubpages.com/hub/Direct-Selling---The-Keys-to-a-Successful-Home-Based-Business

Understanding:

House calls can be mutual beneficial; when the shopper does not feel pressured, it is an opportunity for sellers to gather insights about how consumers see that brand and what they want from the products, price sensitivity and competitors etc.

For the seller, house calls provide an opportunity to demonstrate and explain products – it is essential for them to be well-informed and enthused, conveying their passion

Experience:

Many direct selling companies aim to create an engaging experience at the point of sale (in the home), providing a talking point and fun memories of the brand that will be shared with others, for example WIV Wein provides at-home wine tastings for customers before they buy

Party experiences can be a good way to sell and promote passion for fun / interesting products. For big investments items, experience (e.g. trial) can help to reassure

Excitement:

To create passion and succeed in direct selling, brands need to breed excitement, e.g. through new product launches to give representatives something to go back to customers and talk about. Natura gets 60% of its revenues from products launched in the last 2 years.

It is also important that the catalogue / website are exciting, to speak for the company and keep passion and interest alive in between rep visits. Some reps choose to let the catalogue do the talking and cut out the “hard-sell”, unlike in big retailers, products displayed in a catalogue are not plagued by the distraction of other brands nearby

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Passion: Spreading the Word

http://www.directsellingnews.com/index.php/entries_archive_display/beauty_everlasting http://csi.mckinsey.com/en/Knowledge_by_region/Americas/brazilbeauty.aspx www.marketingweek.co.uk http://anitak.hubpages.com/hub/Direct-Selling---The-Keys-to-a-Successful-Home-Based-Business

Embodiment:

The representative is the main communication from most direct selling brands, so in order to build the brand this person needs to embrace it. Natura invest a lot of effort here, based on the company belief in the importance of relationships. Consultants are rewarded for sales, longevity, and presence at events, and offered professional training and development; Natura know that this is the front line for their values.

The company works hard to improve areas of consultant dissatisfaction and as a result has a 91% consultants satisfaction, enjoys low turnover, and has received awards such as “Most Admired Company”, “Most Trusted Brand”, “Best Company to Work For”… Mauricio Bellora, Natura's Executive VP says, "We pay attention to our relationships with our consultants, so we had low turnover and kept up productivity for healthy growth.” With dissatisfied representatives, hopes of transferring brand passion to consumers would diminish. Reward also acts as motivation, with many direct selling companies offering commission to representatives for recruiting more

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Community

By adding a personal and social aspect to the buying and selling of products, brands that sell door-to-door become part of the community

At the same time, the direct selling channel helps to build communities centred around brands, which improves advocacy and loyalty

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Community: Growth through Existing Community

www.unilever.co.uk http://csi.mckinsey.com/en/Knowledge_by_region/Americas/brazilbeauty.aspx http://www.directsellingnews.com/index.php/entries_archive_display/top_performing_global_markets

Direct selling success stories can come from understanding local communities and recognizing ways to meet their needs and grow through them

In India, Unilever connected with rural villagers to sell products through them to their neighbours, for commission

This “Shakti Initiative” began in 2000 and had grown to more than 50,000 entrepreneurs in the first decade, covering 3 million homes.

The micro-enterprise opportunity doubled the household income for the rural women involved, while doubling Unilever’s rural reach through the existing community – a similar approach is now being used in Sri Lanka, Bangladesh and the Philippines

Natura’s door to door business has earned success in Brazil because of its fit with the culture and community; people love to talk and personal touch is highly valued, sales reps also appreciate the opportunity to make extra income for their household, without needing business experience, credit or to live near city offices

Many door to door brands are benefitting from the “staying in” trend that has emerged in countries like the UK as a result of the financial crisis; Come Round is a company that makes use of the home setting to create buzz and promotion (rather than direct selling) by providing sponsored “Party Packs”, e.g. for the launch of a Lady Gaga album and encourage hosts to share pictures and talk about their experience, essentially putting a brand at the centre of a social gathering in the community. Smaller BTL activities like this can drive loyal fan-ship, and feedback from them can help brands to test and hone their offering.

Rather than create their own events, some direct selling brands like PartyLite (candles and home accessories) are also sold by representatives at local bazaars and fairs

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Direct contact between brands and consumers (i.e. not via a retailer) can help in building a social side to brands, bringing the brand benefits of social identification and belonging to a community – such as loyalty and word of mouth

In Mexico, Natura opened a community space, “Casa Natura”, which could be used for community gatherings and education, consultant classes and internet café as well as promoting their products; building a community facility around the brand

Attending branded social gatherings can boost loyalty and conviction, as seen in WeightWatchers; people who attend meetings are more likely to stick to the system and lose weight. Even if they do use the system independently online, slimmers are included in a community of like-minded people, allowing

them to identify themselves as a member of the brand’s group

Natura have extended their offering to appeal to the modern desire to connect with social groups online with their Mamãe e Bebê (Mummy and Baby) line of baby and mother care products, which is supported through a website that offers information on parenting and the facility for parents to exchange tips and opinions; the site attracted more than 50,000 users last year

Other brands that have built their own online social communities include Alli (weight loss), Manchester United (football) and Nike, who have created an online community for runners where they can connect and share their progress and personal improvement – giving them a compelling reason to join

Community: Building Social Groups around Brands

http://www.directsellingnews.com/index.php/entries_archive_display/company_spotlight_natura

www.marketingweek.co.uk http://www.cult-branding.com/cb101/seven-golden-rules-of-cult-

branding.html http://www.slideshare.net/agentwildfire/it-takes-a-community-to-raise-a-brand-not-a-

campaign-presentation

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The benefits are tangible: people who join branded communities are 71% more likely to make a purchase as a result (Universal McCann Social Media Tracker)

There are a number of reasons why people join branded communities which can be leveraged when creating the community, including:

– Brand resonance

– Interests

– Chance for reward

– Expression/venting

– Hobbies / creating

– Secret desires

Brands with a big social appeal can often become the ultimate form of community; cult. Some contributing factors include:

– Consumers wanting to be part of a group that is different

– Brands with daring and determination

– Cult brands sell lifestyles

– Consumer input and needs met

Community: Building Social Groups around Brands

http://www.directsellingnews.com/index.php/entries_archive_display/company_spotlight_natura

www.marketingweek.co.uk http://www.cult-branding.com/cb101/seven-golden-rules-of-cult-

branding.html http://www.slideshare.net/agentwildfire/it-takes-a-community-to-raise-a-brand-not-a-

campaign-presentation

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Summary of Learnings

Take a look at our website to find out more about us:

www.xpotential.co.uk

“We align individuals, functions and organisations, throughout the world, to create and deliver brand

equity”

©XPotential 2014 19