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April 02, 2010

Company Spotlight

Scentsy: Selling the Scents of Success

by Barbara Seale

Scentsy Logo

Scentsy Stats

  • Independent consultants: 55,000
  • New consultants enrolled on average each day: 225
  • Average annual growth rate: 300%
  • Pounds of wax used in manufacturing each day: 30,000
  • Shipping capacity per day: 20,000
  • Customer orders received on an average day: 7,000
  • Company employees: 53

When the unique little company from Idaho burst onto the direct selling scene in July 2004, who could have predicted that Scentsy’s far-from-spectacular start would almost instantly transform into such a scent-illating story? Certainly not its founders.

Husband-and-wife team Orville and Heidi Thompson took a product that Orville discovered on a business trip and turned the concept into one of the industry’s rocket ships. But while Orville loved the unique nature of the Scentsy scented candle bars, it was Heidi who identified direct selling as the ideal way to sell them while helping others achieve their dreams.

“Orville used to sell things at fairs and shows, and he was always bringing home products for me to look at,” Heidi says. “He was doing a home show in Utah where his booth was across the aisle from a new company called Scentsy. He called me that night and described the product to me, but I didn’t understand. I thought, ‘Yeah, yeah, that will go into the junk pile of other products I didn’t think would make it.’ But then he brought it home, and I actually saw and experienced it.” Everything changed.

Heidi’s sister and mom were visiting at the time. The three spent hours sniffing testers and talking about memories that the scents evoked. They loved the fragrances, the beautiful packaging, and the sheer fun of spending time together while scent-fueled memories filled their conversation.

Orville thought the candle bars would make a good addition to the products he already offered, so he began talking with the Scentsy originators, Kara Egan and Colette Gunnell, about buying them at wholesale. Eventually, he bought out their inventory. But Heidi explored other distribution methods. That’s when she found the Direct Selling Association Web site. At the time, the couple was $700,000 in debt, and only Heidi’s determination stood in the way of their filing for bankruptcy.

A month later, Orville went alone to the DSA Annual Meeting in New Orleans—they could afford only one registration fee. He was eager to learn all he could. He called Heidi and excitedly told her, “This is how we’re going to do it!”

A month later, armed with handmade product catalogs and order forms developed on Microsoft Excel spreadsheets, they held their first home party to show their wickless candles. Their earnings: $75.

“I came home that night crying,” Heidi says. “I said, ‘What did we do? We’re in all this debt!’ ”

Orville and Heidi Thompson

Orville and Heidi Thompson

The Smell of Success

But the second party would predict the success to come. Its sales were about $1,000.

The growth in sales set the pace for the upstart company, and since its inception, Scentsy has had an annual average increase of well over 300 percent in both revenue and number of consultants.

Scentsy’s success starts with its unique, scent-sational products. The foundation is a warmer that resembles a small, two-part vase. In the bottom is a low-wattage light bulb that emits just enough heat to melt highly scented cubes of wax in the well on the top of the warmer. The electric warmers can sit on tabletops or plug directly into outlets, nightlight style.

Scentsy offers some 75 warmer styles and about 80 scents. The wax bars contain, literally, all the fragrance that the wax can hold without seeping. That means that without flame, soot, smoke or lead, Scentsy customers can fill their homes with the aroma of everything from Baked Apple Pie to Gardenia to Clean Breeze and much more. Fragrance bars and the larger bricks are scored so that consumers can break them into sections for melting, even mixing and matching fragrances when they feel creative. Travel tins, room sprays and hanging fresheners let travelers carry their favorite Scentsy aromas with them. Scentsy works hard to ensure that each product is a great value.

The Scentsy Experience

But as pleasing to the eyes and nose as the products are, they’re just the beginning. The truly sweet smell of success comes from the whole experience, both at a party or after buyers bring a Scentsy wickless candle home. Scentsy’s unscripted home parties aren’t that different from the evening of laughing and sharing memories that Heidi had with her mom and sister. The experience attracts and retains both customers and consultants.

“When customers go to a party, they see how simple it is. There’s no set script they have to follow. It’s more about showing off the product and having fun with the group,” Heidi says. “Customers see how simple it is and how much fun the consultant is having. They come away thinking, ‘Wow, that was really a party—not what I would have thought it was. I could do that party.’ So the fear factor is small. And our starter kit is very reasonably priced at just $99, so it’s easy to earn back its cost.”

Mark Stastny

Mark Stastny

Scentsy Chief Marketing Officer Mark Stastny echoes Heidi’s explanation.

“The opportunity itself is simple,” he says. “People attend a party, and they watch a consultant or hostess explain the products. Almost without fail, early into the game, they think, ‘I could do that. It’s not that complicated.’ That’s when they transfer from the customer mindset to potential-consultant mindset. That’s half the equation of getting them there.”

Whether they become consultants or remain customers, Scentsy fans find that having the company’s fragrances fill their home makes it feel, well, homey.

“It goes back to the feel-good aspect,” Heidi says. “I love to come home, open the door and find my house smelling so good. Customers love that feeling when they walk in the door, too. They also have the peace of mind that our products give them. A lot of them leave their warmers on 24 hours a day. You couldn’t do that with a candle.”

She explains that the flame from a candle can start a fire, burn fingers or singe hair. But Scentsy’s products use no flame, and the wax warms only to around body temperature. If a warmer gets tipped over, spilled wax is the only consequence. The low temperature even helps the fragrance last longer.

Originality Rules

Scentsy’s creative team regularly develops new warmer designs and fragrances. It’s a fun but long process. For the spring and summer line, Heidi and Scentsy’s creative team tested some 400 fragrances, finally narrowing them down to about 20.

he team goes through a process of rating each fragrance and then chooses the ones with the highest ratings. Input from their field organization is part of the decision-making process, too.

Originality permeates the process, all the way through the launch. For example, the spring and summer line creatively used social media to send both consultants and customers on a virtual scavenger hunt for new products.

“We wanted to reengage the field after the holidays, so starting the first week of February, instead of putting out a catalog and exposing it to the field, we had them go online and search for the new products using map technology,” Mark says.

Based on clues we gave them through our Web site and on our social media sites, we had consultants and customers do a scavenger hunt for the new products. As they found them, they posted them online. The engagement was amazing. We got more than 1.5 million impressions in a short time with people who were rabidly engaged with the game.”

The game is just one example of the way Scentsy’s corporate team embraces social media and how its customers and consultants respond to it. The company recognizes that its Gen X and Y consultants use social media to build relationships, so it encourages them by providing content and minimizing restrictions on its use.

High-Tech, High-Touch

Social media is just one of the ways Scentsy’s staff stays closely connected with its consultants. It begins when a member of the corporate staff reaches out to each and every recruit, even before the welcome kit arrives. It’s one of the ways that Scentsy sponsors—rather than recruits—new consultants, supporting and mentoring them as they grow.

“We give them an expectation of what their first few days and weeks will include,” Mark says. “We also provide training and development areas on their Web site. Our Quick Start program incents them to get involved in their business early. When they do, their later productivity goes up exponentially.”

As consultants continue in their careers, they may participate in live or phone events with Scentsy executives. Both Mark and Orville host regular conference calls, with Mark hosting calls for the top-ranked group of consultants. Orville mans the phones twice each Monday, opening the lines for discussion and dialog with any director who wants to participate. And participate they do—by the thousands.

“We try hard for authentic communication,” Orville says. “We’ll review anything from shipping times, communications that are coming out soon, and then, if we’re experiencing any problems, I’ll address them and give my insight. Sometimes we can do on-the-spot training to try to resolve something. I let them ask questions, too. Every director in the company can e-mail a question. I answer it on the phone or send it to someone who can. That lets us start to see patterns—where we’re strong or weak. It’s the most important thing we’ve ever done to stay close to the field.”

Up Close and Personal

He and Heidi periodically do what they call “world tours” to connect personally with consultants.

“When we’re there, we don’t sneak in with a security guard, give a talk and leave,” Orville says. “We get there in the morning, greet people at the door and try hard to remember everyone’s names. We meet with them and answer questions. We spend a ton of time personally dealing with consultants, and we try to get into all levels. When you see us at our convention or at a tour stop, we’re in the middle of everyone.”

When they’re “on tour” Orville and Heidi get up close and personal with as many consultants as possible. In the evening after formal meetings, Orville will settle in with a group and share stories. Heidi engages with a different group.

Close contact with consultants, an environment of teamwork and trust between the field and corporate office, and innovative products and product launches are among the ways that the Scentsy community lives out their goal of having a company based on authenticity, simplicity and value—defined as contributing more than you take.

Living Their Values

Jen Pugh

Jen Pugh

Scentsy Vice President of Human Resources Jen Pugh explains the importance of the culture. “More than any other company I’ve worked for, culture is the cornerstone of everything I do from an HR perspective. It’s been critically important to us to make sure that there’s an alignment with Orville and Heidi from a leadership perspective. That’s created an environment that’s very creative and innovative. There’s a strong level of respect and trust. Due to our rapid growth, we know that mistakes will be made along the way, but what we learn is the key.”

To maintain that culture, Heidi and Orville carefully chose a staff—some from the direct selling industry, some not—who were willing to express differences, but who shared their values. The environment lends itself to authenticity, being yourself. That authenticity is one of the reasons that consultants don’t use a script to sell Scentsy products. They can do it their own way—by being themselves.

“Our differences and diversity bring strength to what we do,” Jen says. “It may sound cliché, but it truly is some of the magic of our company.”

Those values—Scentsy refers to them as “virtues”—are the litmus test for every corporate decision, from which products to offer to the benefits provided to headquarters employees. They’ve allowed Scentsy to grow fast, learn from its mistakes and revel in its uniqueness.

Expanding Internationally and at Home

As the company grows, it is determined to maintain its culture, even as it becomes international. Consultants now number about 55,000, concentrated in Idaho, Utah and Texas. But the company has consultants around the country and in Puerto Rico and Guam. To support them, it added distribution centers in Chicago and Lexington, Ky., to its distribution and manufacturing facilities in Idaho. In late 2009, it expanded into several Canadian provinces.

“Canadian expansion was a test of our ability to translate internationally—including our systems, our message and our products—and to start getting accustomed to dealing with foreign laws, regulations and people, just to see whether we have an appetite for it. It’s gone well,” Orville says. “We’ve been there since October, going in very lean, like we do everything. And we made a profit there in 2009. We have other countries on our mind.”

But just as important as geographic expansion are the company’s plans to delve into demographic and psychographic divisions within the United States.

“We’re like most party-plan companies, very strong in suburban America,” he says. “Someone in suburban New York is similar to someone in Salt Lake City. If you only think geographically, you can’t attack the market very effectively. You have to look at psychographics and target them. How do you adjust the product line to appeal to a different subset of America, whether it’s ethnic or psychographic? There are pockets of people we may not appeal to now, and we want to make adjustments to penetrate deeply into groups of people who are outside the scope of direct selling or outside the reach of our current product lineup.”

Developing products that appeal to more and more customers is simply the latest way Scentsy is working toward Orville’s personal goal for the company: to make it a top-of-mind company in the party-plan portion of the industry.

“Before we got into this, when I thought of party-plan, I thought of Pampered Chef. For me, it was an industry-leading company,” he says. “I think we must set a goal that when people think of our industry, they think of companies like Mary Kay, Tupperware, Pampered Chef and Scentsy. If we’re not one of the companies people refer to when they talk about the industry, then why do it?”