September 01, 2012
Scentsy Making Bold Moves
Historically, direct selling companies haven’t ventured far from the core business upon which they’re built. New products are usually natural extensions of a core product line or are very compatible with the core product. A few direct selling companies, however, lost their competitive advantage as a result of mass-market knock-offs that throttled once robust growth and momentum.
Acquisition strategies to bring about growth have been tried by only a few direct selling companies, with Tupperware probably being the most successful. Tupperware is now known as Tupperware Brands and many product categories are now under their umbrella. The acquired company is most often operated as a completely separate company, for example in Avon’s acquisition of Silpada and Liz Earle and Tupperware’s acquisition of BeautiControl.
Heidi and Orville Thompson
Orville and Heidi Thompson, along with their company Scentsy, are introducing a strategy new to the industry. It could be breaking a paradigm. Scentsy is not only creating new brands but new and completely separate businesses under an umbrella named “The Scentsy Family.” We have not seen a strategy such as the one now executed by Scentsy, where new businesses are started that allow core consultant participation, but are structured as completely separate businesses. Scentsy has introduced two new businesses within the last 90 days. Scentsy is indeed making bold moves.
In considering the products themselves, there doesn’t seem to be continuity—from wickless candles to chocolate fondue to fashion and accessories. The owners, however, speak about simplicity, authenticity, generosity, aspirations and value—the intangibles that make up the Scentsy ethos—and how they all apply to each business.
An outsider may look at all of this as a bold but risky move. What is the strategic rationale from the founders’ point of view? How long did it take to complete the research, arrive at decisions and develop the concepts surrounding the new businesses? Where does the name Grace Adele come from? What measures were taken to keep the new businesses from distracting the current Scentsy sales organization as well as corporate staff? After all, Scentsy is considered a huge success in the industry, having achieved $537 million in revenue in 2011, up $155 million over the prior year, resulting in the achievement of being the 20th largest direct selling company in the world!
Most amazing to Direct Selling News was to find that the core management team, along with very insightful Scentsy consultants, helped to develop the founders’ vision. Core Scentsy staff—not new staff brought in to design and brand the new businesses—executed and launched two new and very different businesses within one year!
Their amazing story is an exclusive of Direct Selling News.
Shift in Business Paradigm Decodes Fashion
by Barbara Seale
Scentsy Inc. has launched its second new brand this year, Grace Adele—a “style system” of accessories that includes handbags, clutches, wallets, clip-ons and jewelry. Consultants will offer the product line in the United States, Canada, Puerto Rico and Guam.
Grace Adele joins the company’s original Scentsy Wickless brand of scented, wickless candles and other fragrance products. Velata, which offers patent-pending silicone fondue warmers and premium Belgian melting chocolate, was launched by Scentsy Inc. on May 1.
The Grace Adele product lineup is an integrated collection of accessories that consumers may mix and match to create their own unique look. The five-step process begins with a consumer choosing the color she wants to wear. Then the consumer chooses the handbag itself. Each handbag is designed with an Intelligent Interior™ that keeps the bag neatly organized, with inside pockets for cellphones, keys or Grace Adele accessories. Step three is choosing a clutch—one of six matching or contrasting mini handbags—that either tucks into the outside pocket of any Grace Adele bag or can be carried alone. Step four of the process lets the consumer accessorize the purse with a wallet, makeup bag, scarf or other finishing touch. Coordinating jewelry is the final step. Nine collections are available.
Scentsy Inc. executives worked with international designers to create the Grace Adele fall collection, which includes high-quality, faux-leather bags in five styles and seven colors, faux-leather clutches available in six styles and seven colors, and premium leather bags and clutches in four colors.
Scentsy founders and co-owners, CEO Orville Thompson and President Heidi Thompson, told Direct Selling News that the expansion provides their consultants a way to get a larger slice of the economy while providing additional opportunities to engage with hostesses. Each of the company’s brands appeals to a slightly different group.
“The secret to success in a party-plan business,” Orville says, “is the ability for consultants to get hosts to put on a party.” He notes that having additional products gives hostesses more incentives and confidence to hold parties more often for a wider group of friends.
Heidi adds, “A hostess might not be interested in candles, but she may be interested in chocolate or handbags or jewelry. We want them to do what they’re passionate about.”
Consultants can choose to offer any or all of the company’s three product lines. Each has a separate consultant agreement and starter kit.
The Thompsons told consultants in July 2011 that Scentsy would launch a new brand in another year, but while they had done basic research on options, they hadn’t identified the product line. They convened a Super Star Director summit, bringing in their top-ranked consultants to work on committees that made decisions about aspects of the new brand, including strategy and product development. The consultants signed nondisclosure agreements and then provided feedback on the possible new product line.
“We had samples to show them so they understood what we were thinking about,” Heidi explains. “They loved the concept we finally chose. For the past year we have met with them, had phone calls and talked about what we were planning to do.”
Orville says the core idea for Grace Adele came out of the frustration he saw Heidi experience when she shopped for clothing and accessories.
“Watching beautiful people who are extremely successful constantly question whether they’ve picked the right look inspired us to create a system of accessories that is decoded and has an intelligent concept,” he says. “We looked into all aspects of fashion and then narrowed it down with our Super Star Director committees to where it was a product we could launch with, but was expandable. It’s large enough to be a system but as small as it can be so that we can grow it based on the feedback of our consultants.”
Fun with Fashion
As time grew closer to the launch at the company’s July annual convention, Scentsy began to tease its salesforce, offering clues about the much-anticipated new brand to add to the excitement. At the same time, they planned to introduce the new line with humor.
On the day of the big reveal, the Thompsons walked on stage wearing carefully constructed, designer duct tape outfits. Orville sported a duct tape suit, plus duct tape shoes designed by his son, and Heidi donned a duct tape dress. Calling on their best acting skills, they announced that the new brand would be called Sticky Style. They even explained the benefits of the sturdy fashion line. The crowd didn’t know how to react. But humor is a tradition at Scentsy, and veterans suspected something was up.
Then the Thompsons’ daughter, 9-year-old Grace, took the stage alone. Unbeknownst to consultants, she wore jewelry from the new Grace Adele collection—the brand named for her. She opened by humorously reviewing her own lifelong history with Scentsy, telling consultants that they were truly her family. She segued into her announcement that consultants would have an exciting new brand to offer their customers. Then she said, “But I’m just a little girl. I can’t tell you everything. Why don’t I just show you?”
Suddenly the stage became a fashion runway filled with wave after wave of Scentsy Super Star directors, along with the Spirit of Scentsy award finalists from previous years—all strutting like supermodels while they modeled Grace Adele handbags, accessories and jewelry in a myriad of combinations. When the fashion show ended, a video explained the product line’s concept and showed how each piece worked together. Then the Thompsons—sans Sticky Style—explained the system piece by piece.
“You could see the crowd change as they understood that Grace Adele wasn’t just random handbags and jewelry, but a full system,” Orville recalls. “You could see the moment when person after person realized: Holy cow, this is a game-changer. They all went through that process.”
Scentsy gave each attendee a free Grace Adele handbag—plus one of six different clutches and various pieces of coordinating jewelry. As the convention continued, consultants became walking demonstrations of how the system works.
“When they saw each other with each one carrying a basic purse that was accessorized with a different clutch and different pieces of coordinating jewelry, you could see the light bulbs coming on,” Heidi recalls. “They were saying, ‘Now I get it. Hostesses and customers will jump on this.’ ”
Consultants are already jumping on it. The brand announcement was at the Scentsy Family convention on July 26, and the new brand officially launched Aug. 1. The Thompsons spoke with Direct Selling News about 27 hours later, and by that time 5,000 people had signed up as Grace Adele consultants. About 170 of them were consultants who previously were unaffiliated with Scentsy. By the end of that first day, the company had sold $1.2 million of Grace Adele products. Orville believes that the Grace Adele brand has the potential to equal Scentsy Wickless revenues in three years.
That blastoff carried on a tradition of rapid growth for rocket ship Scentsy Inc., and it represents one more step toward the Thompsons’ goal of building a company that lets consultants create legacy organizations that they can pass on to their children and grandchildren.
Learn by Multitasking
Developing and launching the Grace Adele brand was a collaborative effort between Scentsy’s top consultants and corporate staff, but the staff did the legwork.
The Scentsy Inc. corporate staff took their consultants’ comments and critiques and incorporated them into the final product. The same team that runs Scentsy Wickless every day and develops new product extensions in that brand also put on new hats to develop chocolate-fondue brand Velata and then Grace Adele.
Company CEO Orville Thompson says the team successfully innovated a process of rapid prototyping, getting feedback and reacting quickly to that feedback to take a great product to launch. But he sees room for improvement.
“After the Velata launch we discovered that we’re good at launching, but after launch we’re not as good at continuing that same level of development and support on the brand,” Thompson says. “We’re in the process of making some changes.”
In addition to the functional groups, such as design, legal or public relations, the company has regions that are responsible for the consultant experience. Executives are leaning toward developing a third group of brand managers who focus on individual brands and the processes that support each.
“We think that the direct selling model we’re creating is a three-legged stool that is co-equal, strong and supported,” Thompson explains. “Right now we’re a little weak on the brand side, but we’ll get that tweaked over the next few weeks.”