Orville Thompson described himself as a hack entrepreneur before. While he managed to sell a number of items in various trade shows, he admitted he was not prepared for the recession after the 9/11 incident. Since the bills he had to pay mounted, he considered filing bankruptcy as he thought there was no hope with his situation.
Fortunately, his wife Heidi discouraged Orville to declare bankruptcy. He was urged to keep trying. Good thing he discovered Scentsy during a garden how in Salt Lake City in early 2004. At first, Orville did not understand what the concept was. Scentsy are ceramic warmers scents that users can light like a candle without having to worry about an open flame. The wax gathers hit from a light bulb. When Heidi tried the product, she was instantly impressed. The couple decided to buy the company as a price they refused to disclose. There was a deal with the founder to still get payment once the company managed to grow. Later on, these founders became the consultants of the company.
Structural and marketing changes
When the Thompsons took over, the couple decided to make it a direct selling firm. They hired some independent consultants who are knowledgeable in selling low-watt wares online or at private homes. They mainly focused on building a defined system to prepare for the growth of the company, instead of depending on one-off sales. After a few months, the client base expanded as many became fans of the unique wickless candles. Today, there are many Scentsy customers who have multiple warmers inside their homes. This only shows that the company has successfully maintained a loyal client base, which is crucial in the success of any business.
According to Joe Mariano, the president of Direct Selling Association based in Washington, DC, one loyal customer can bring so much in a direct selling business. One loyal customer could mean having more since he/she will surely recommend the product to his/her own network.
For some, spending too much in the marketing aspect may not be necessary as loyal customers will subconsciously promote the products for you—even without asking for it. Word-of-mouth has always been an effective marketing tactic. As long as you have branded your product right, your loyal customers can bring in a series of favors for your business.
How they work
For the consultants that the company has recruited, Scentsy is more than just earning extra money. Of the top 20 sales persons of the company, 15 have no additional income source; hence, they work for the company fulltime. This means they are earning enough money for their everyday expenses. At present, the company has more than 170,000 active consultants across the globe. They also have 48 part-time workers and 952 full-time employees. These figures were very far from the number of employees the company had before the couple took over. Many of the company’s top executives were recruited from other corporations, and each of them has enough experience in running this kind of venture. The Thompsons understood the importance of investing on the human resources of the company to stand out in the market full of competitors.
Their inventory is efficiently checked twice a year. Some of their fragrances are perennial sellers, while the new ones are put to a vote during the company conferences before selling it out in the market. They have no retail shops and depend on their consultants when it comes to direct sales.
Through their pool of independent sales persons, and with no amount of help from any external investor, Scentsy remains strong in the market. The couple managed to expand the business to about $535 million revenue last year. The owners are also fully aware of the potential downfall of a direct selling company, and they have been working so hard to cope with the challenges ahead. To avoid saturation in the market, they always come up with new products. This is important so that their client base will not get tired of the products they sell in the market. They now have Layers by Scentsy, a new line-up of scented personal care and laundry products launched recently. By the end of the year, the owners are expecting to hit at least $750 million.
