Direct Selling News (Scentsy)

Sometimes the next big success is nothing more than an
entrepreneur looking for a great product and a product looking
for a great entrepreneur. This magical combination is exactly what
occurred at a trade show in Salt Lake City a few years ago. Stayat-
home mothers Kara Egan and Colette Gunnell had designed
and packaged no-flame candles—aromatic and decorative—and
since October 2003 had been selling them here and there. Orville
Thompson was an entrepreneur who, since 9/11, had been
struggling, and he and his wife, Heidi, were considering giving
up their business of selling goods at fairs, kiosks, etc. When
Thompson first saw the candles made by this tiny company
called Scentsy, he immediately sensed they had huge potential.
“Initially, I wanted to sell their product through my normal
distribution channels—fairs, kiosks, and shows—but there was
something about it,” Thompson says. “I brought the product testers
home to my wife, mother-in-law and sister-in-law. An hour later,
I came back, and they were still smelling the testers, laughing and
sharing memories.”
The first thing he did was call the wife of a friend who was a
consultant for a struggling direct selling business and was ready for
a change. Thompson asked her if she wanted to help him launch
a company, and together they went to New Orleans for the Direct
Selling Association’s (DSA) annual meeting. That’s where ideas
really started to generate, and Thompson says he received help
from all sides. “I was immediately impressed with the collaboration
of the DSA,” he says. Thompson returned home with excitement,
and he, Egan and Gunnell brainstormed ways to take the wickless
candle concept to the next level. On May 1, 2004, Thompson
and his wife bought Scentsy, keeping the two founders on as both
consultants and members of the board of directors.
Humble Beginnings
Scentsy’s first home was literally no more than a metal box:
Thompson had a 40-foot ocean container on his small sheep farm
(no kidding about the sheep). “We were building a team while
deciding on compensation plans, making the candles ourselves and
working 20 hours a day to get this thing off the ground,” he says.
What the company lacked in accommodations and capital,
it made up for in determination. “We started off with a sense
of purpose and a sense of destiny,” Thompson says. “Everybody
told us the sacred rules of margins and cost of goods and the
importance of making sure you’re fully capitalized ahead of time.
We weren’t able to meet even one of those rules.”
For Thompson, bucking conventional wisdom about the “right”
way to do business paid off. “We were a little company with an
aspiration to be a big company,” he says. “And we had 322 percent
growth in the first year.”
A year and a half after the company launched, Scentsy moved
into a 2,000-square-foot facility. And yet people were still looking
at the business plan and telling Thompson, “The candle industry is
Young Company Focus Scentsy
by Deanne Lachner
A Scents-Able
Philosophy
Values, Authenticity, Simplicity
Serving the Direct Selling and Network Marketing Executive Volume 4, Issue 2 February 2008
©2008 Direct Selling News. All Rights Reserved. Material may not be reproduced in whole or in part in any form without written permission.
www.directsellingnews.com
dying. You don’t have enough capital
to get where you need to go.” Despite
the naysayers, Thompson forged
ahead, and in Scentsy’s second year
he was able to invest in the company’s
growth. “We paid others instead of
ourselves,” he says. “We changed the
price of the kit and sold it under
cost. We bought software. We had
about 100 consultants and revenue of
about $5,000 a month and we hired a
consultant trainer.” Scentsy grew 410
percent in its second year.
The company continued to grow, and after a one-year stay in
5,000 square feet, Scentsy had grown so much that it was sorely in
need of space. So Thompson found a 42,000 square-foot building
and approached the property owner who quickly said Scentsy’s
projections were unreasonable and denied him tenancy. Not ready
to give up, Thompson cut the growth predictions in half, to 200
percent. The property owner agreed to rent the building and
Thompson obtained financing. “We used that line of credit for
three weeks,” he says. “About $60,000 is all the company has ever
needed. Everything else has been completely bootstrapped.” And by
the way, the growth during that period was more than 750 percent.
And Scentsy’s growth shows no signs of slowing. “We ended
2007 at 594 percent sales growth—$13.5 million,” Thompson says.
“Our recruiting growth was 556 percent and that translates into a 7
percent increase in sales per consultant while we grew.”
Scentsy’s market is still concentrated in a small area, and 70 percent
of the company’s growth has been in the Utah, Idaho and Texas areas.
“We’re untapped in California, we’ve barely touched the Northeast,
and the Midwest and South have room to grow,” Thompson says.
Value, Authenticity, Simplicity
The basis for Scentsy’s business philosophy is a quote by
Albert Einstein—a quote that so inspired Thompson as a young
man that when he saw it on a poster he bought it and hung it on
his bedroom wall: “Try not to become a man of success. Rather,
become a man of value. A successful man takes out of life more
than he puts in. A man of value will give more than he receives.”
This philosophy serves as the starting point for Thompson’s
three-point business strategy of Value, Authenticity and Simplicity.
“Good things flow to value,” Thompson says. “The concept of the
value of contributing more than you take has allowed us to become
stronger and stronger. Having the right values helps the business
through its generations. Be true to yourself, contribute more than
you take, be simple and good at one thing. ”
Thompson says every Scentsy consultant is important to the
success of the company. “I value every consultant,” he says. “I
don’t say, ‘You’re not recruiting anybody so I don’t value you.’ One
woman is saving her money to take her kids to Disneyland. I’m not
going to say, ‘That dream is stupid. You could be driving a new car.’
If the consultants are only giving a little bit, but only taking a little
bit, they still have value. This simple principle fosters incredible
positivity in the company.”
Both for consultants and customers, authenticity is the second key
tenet of the company’s success. Thompson holds a Director’s Counsel
every week for those who have $10,000 in team wholesale volume and
explains where sales are compared to the previous year. Nothing is a
secret. “They use this call as their thermostat,” Thompson says. “My
job is removing the impediments to growth. I tell them, ‘You guys are
the drivers of the dream.’ They’re driving it; we’re serving them.”
Authenticity is the concept that sets Scentsy apart for its
customers as well. “Boomers have a tendency to try to mask who
they really are,” Thompson says. “Gen X is completely different.
Authenticity speaks very clearly to them. Heidi is shy, I’m bald, and
I don’t shave every day. We’re authentic.”
Thompson says the buzzword authenticity resonates with the Gen
Xers and Gen Yers because they want to know what they are getting,
how much, when and why they should want it. With the value of
authenticity behind every product and every consultant in Scentsy,
a new demographic is discovering a company they can trust. “Gen X
and Gen Y are now our primary consumers,” Thompson says. “The
boomers are moving into the consumption of experience—college
educations, trips, hospital bills. It’s the Gen Xers who are buying
homes and decorating them, and who are buying diapers and food and
all the things that are needed to keep a family running.”
Scentsy’s third business strategy is a focus on simplicity. “In
the loud world we live in now, the message has to be crystal
clear for us to hear it,” Thompson says. “Instead of having a large
product offering, we have parties with one idea that people have to
understand. It cuts right through the clutter.”
One way Scentsy keeps things simple is by listening to its
consultants. For example, when the field asked for smaller samples,
Scentsy made them small enough to fit in a basket. Consultants
can put the samples in a basket, find a location to place that basket,
and leave it alone. Customers then use the samples to place orders.
“We have one consultant with 17 basket ‘parties’ going on at one
time,” Thompson says. “Now we’ve just taken away the problem of
finding hostesses for doing home parties.”
Scentsy’s Future
Thompson believes his salesforce shares his vision of the
positive future in store for Scentsy. “To self-perpetuate, we have to
perpetuate the values—the vision,” he says. “It’s not enough to have
a convention and share my vision and have consultants go home
and work on my vision. They have to have complete buy-in if they
want to instill in other people that same vision. In addition, the
Scentsy product simply offers a better value proposition.”
Thompson hopes the winning combination of great products,
a passionate salesforce and a sound business strategy will make
Scentsy a company others want to emulate. “In five years, I want to
be an industry leader,” he says. “I want Scentsy to be known as one
of the great companies that have inspired us.”
Heidi and Orville Thompson