May 01, 2011
Southwestern: Student Entrepreneurs
by Barbara Seale
Training for Success
Southwestern student dealers start their summer at the company’s famous Sales School, learning everything they can absorb about products and the selling process in a week of long days and evenings. But the things they take from the school and then supplement in the school of hard knocks all summer will prepare them for a lifetime of success that goes beyond sales.
Southwestern’s stated mission is to be the best organization in the world at helping young people to develop the skills and character they need to achieve their goals in life. The first step is in Sales School, where they learn skills such as goal setting, self-motivation and record keeping, as well as how to start a conversation with someone who doesn’t know you’re coming. A student dealer’s goal is to make 30 sales presentations each day. It’s an ambitious objective that requires mental and physical stamina.
Basically, the Southwestern experience usually turns a student’s schedule on its head. “In college you study for 12 weeks and have a week of exams. It’s the opposite in the book field,” explains Southwestern President Dan Moore. “Sales School is designed to replicate the daily schedule of the person in the field. They start at 8 a.m., attend classes all day and finish studying and record keeping around 9 p.m. It gives them a preview of their work schedule and actually conditions them to start working that hard for six days in a row before they move into the book field.”
Moore says he believes people are very resilient when they know what’s coming. Sales School gives student dealers the tools to develop strategies to deal with the unexpected—possibly the most important thing they learn. He is proud that Southwestern provides skills and experience that the students’ future employers will demand.
Moore explains, “Recently the National Association of Colleges and Employers surveyed companies and asked what characteristics they looked for that let their employees succeed on the job. Of the Top 10, none were related to their academic major. No. 1 was communication skills—not just the ability to text their friends to ask where’s the party, but communication with someone of a different age and background. If you spend the summer talking with 3,000 families across all spectrums, you learn how to get a message across, how to communicate an intangible concept or a key idea. No. 2 was usually about initiative and work habits—the ability to finish what they start, the ability to work in groups, flexibility and adaptability.”
The sales field teaches those skills in a way no classroom could. Employers specifically recognize the value of the Southwestern summer experience students receive.
“Employers actually set up their search engines on sites such as Monster.com to scan résumés for people who have a Southwestern background,” Moore says proudly. “That experience teaches character that involves integrity, the ability to get up when you’re knocked down, persistence and doing the right thing even when no one is watching. When young people are doing business away from home, knocking on doors, they have to develop those character skills. Our mission has always been to help the student grow and be the best person they can be.”
Few college students view summers as the foundation for their future. But each year for about 3,000 ambitious young people, that’s exactly what it is. They’re the young adults who spend their summers running their own businesses as they sell Southwestern’s educational learning system to families.
They come from more than 340 colleges and universities worldwide. And each one of them accepts the challenge to move away from the comforts of home, relocate to another state and work 12-hour days six days a week. A Southwestern summer internship is hard work, but every time students knock on a door, they’re opening doors for themselves for the rest of their lives. They learn life skills and maturity, and just simply make an income that few other summer jobs can offer.
Southwestern has offered its summer internship program since 1868, when the company’s founder, Rev. J.R. Graves, recognized that jobs were scarce in the Civil War-devastated South. Graves had established his company in Nashville, Tenn., in 1855 as Southwestern Publishing House. The company got its name because, at the time it was founded, middle Tennessee was considered the southwestern United States. Initially the company sold Bibles through the mail. But Graves developed a new sales concept. He selected engaging young Southern men to sell the products door to door.
Since then, many things have changed. Southwestern’s influence has reached around the world. It has become known for its independent-contractor salesforce of high-achieving college students who run their own businesses. They finance their educations by knocking on doors all summer to sell a family-oriented, integrated learning system made up of educational books, software and a subscription website. And the company’s salesforce has expanded beyond charming, young Southern gentlemen to include men and women of every ethnicity from almost 30 countries.
Some students work one summer, making between $8,000 and $9,000 in gross profits. But at Southwestern, experience pays. About 25 percent of students return for a second year, and those experienced salespersons make about $15,000. In their third year, they average more than $20,000, and by year four, students can average about $25,000 a summer. If they’ve spent their school year recruiting other students and building what most direct sellers call a downline, then they also earn leadership overrides.
“The first-year student dealers sell and learn the business,” explains Southwestern President Dan Moore. “The next year they’ll have the chance to recruit and lead a team by example, continuing to sell as well. The next summer some of those people will return and recruit, and so on. Because our company is very seasonal and does most of our business in the summer months, a student could add a level to their business each year, and residual income builds throughout.”
That kind of income goes a long way toward paying college expenses. Moore says that at graduation the average college student nationwide has accumulated about $23,000 in student loan debt, plus $5,000 on credit cards. With Southwestern, they have the opportunity to change this dramatically.
“It takes a long time for graduates who have not heard about our program to get out from under that load when they take on a full-time job,” Moore explains. “It’s always been a mission of Southwestern to help students become financially independent.”
Like a number of Southwestern executives and employees, Moore started his Southwestern career as a college student, selling books door to door. He returned each year until he graduated with honors from Harvard University. His next step was a natural progression—he went to work for Southwestern. The experience created a deep appreciation for the culture he now helps lead. He later earned an Honors MBA degree from the Vanderbilt University Owen School of Management.
“In my case, my family had financial setbacks when I was in college,” he remembers. “If not for Southwestern, I don’t know what I would have done. I could continue to sell and build my organization every summer and pay the lion’s share of [costs at] what was a very expensive college.”
Moore had the financial incentive shared by many students. His fellow executive, CEO Henry Bedford, started selling books the same year while he was a student at the University of the South, but he sought out Southwestern for a different reason. He was looking for adventure.
“Sometimes people who have an adventurous spirit do well at Southwestern,” Bedford notes. “That was my own motivation. I thought it would be fun to do, versus having an hourly wage job. I looked at everything through the lens of how crazy it was.”
But he adds that, while the company seeks independent high achievers who show a sense of discipline, he can never predict who will do well in the book field.
Southwestern has found tremendous success through Millennials, people under 30, who have been difficult for most direct sellers to attract. But Southwestern has based its business on this specific demographic for 143 years (helping students since 1868 finance their education by selling books), so recruiting them is no mystery.
“The people I get to know all have the same fundamentals,” Bedford says. “They show tendencies for independence, motivation and innovation.”
Bedford recently spent several days in “the book field,” Southwestern’s affectionate name for the communities where its student dealers sell.
“One reason I knocked on doors was to validate some of the conversation I was hearing about Millennials, but my experience showed me that people are the same,” he explains. “It was fun for me, too, because I could focus on doing one thing well without a lot of distractions. I didn’t have 140 e-mails coming at me during the day. It was refreshing.
“One thing I found was that today there’s a sense of [students] wanting to be part of a mission,” Bedford continues. “I had read that kids today aren’t so interested in jumping on a career track at 21. Instead, there’s a tendency to want to do something meaningful and helpful. I had already seen that in our young salesforce. I know scores of kids in the Southwestern program who choose a cause and donate a portion of their profit to it.”
Bedford adds that top earners are rewarded with fun trips to the Caribbean—something that Southwestern calls Sizzler trips. They were initially designed as a time for fun and social interaction. But a few years ago the Southwestern students took the vacations to a new level, coming up with the idea to do a service project. So, as it always does, Southwestern listened to its salesforce. A service project is now scheduled as part of every Sizzler trip, and Southwestern has identified a way to link a new product with the service opportunity that students demanded.
The Advantage of a Lifetime
Beginning this summer, the company will offer Southwestern Advantage, an integrated suite of educational resources that use the unique strengths of books, software and a comprehensive online component. Customers may purchase any component of the set, a combination of them or the whole set, depending on their needs. The suite includes a six-volume set of Southwestern Advantage Books; Southwestern Kids Books, containing multiple titles for children of various ages; and Southwestern Software, comprising CD-ROM bundles. But the component that has the company especially excited is the newest one: Southwestern Advantage Online, a subscription website. The subscription isn’t just a new component for customers. It also creates an additional income stream for the young salesforce. Southwestern thinks that will bring more of them back each year because it provides an opportunity for hard workers to literally create a lifetime of residual income.
When the company piloted Southwestern Advantage Online, the results were outstanding. More than 40,000 customers subscribed, with more than 200,000 projected for this coming summer. Students receive 40 percent of sales as residual income. When a customer continues the subscription into the second year and beyond, residual income drops to 25 percent and stays there as long as the student is with Southwestern. So far, about 50 percent of the initial customers have retained the service beyond the first year. Southwestern estimates that a student who sells with Southwestern for four years could make between $50,000 and six figures in annual residual income by the time he or she graduates. That transforms the Southwestern experience from lucrative summer work into one that creates lifetime income.
“If a student worked in their 20s at Southwestern and built a customer base and a team, it would provide all the income they’ll ever need,” Bedford says. “We just graduated a group of people who had a half million dollars in annual revenues. Residual income makes that available to everyone.”
Southwestern Advantage’s books, CD-ROMs and online resources are structured to provide a lifetime of advantages to customers, too. Its step-by-step videos, interactive learning tools and online coaching and support help young people develop similar habits and strategies that Southwestern student dealers learn. Lessons are age-appropriate. Beginning with phonics and sight reading, content is targeted to students of every age, including parents. Chat rooms even help create a parent community similar to the one that Southwestern student dealers value so much.
Caring and Sharing
As Southwestern developed the series, the company realized that it had the opportunity to change lives even beyond its customer base. Through a program called Share the Advantage—that will launch this summer—the company is reaching out to nonprofit organizations across the country, planning to partner with them to provide Southwestern Advantage Online to kids who wouldn’t otherwise benefit from such a program.
Every time a student dealer sells a Southwestern Advantage Online subscription, the company will donate an online subscription to an organization that serves underprivileged youth. Students may personally choose the youth-oriented organizations that receive the subscriptions, or they can donate them to a Southwestern-approved organization. They can also volunteer at organizations that receive the subscriptions, spending two hours a week for six weeks mentoring the young clients who receive services. Using the communications skills they’ve developed in the book field, students will look for opportunities to introduce kids to Southwestern Advantage Online, which will teach them to be better learners and provide ongoing coaching. It’s a program rich with life-changing potential.
“Harvard did a recent study on markers in disadvantaged youth that would enable them to uplift themselves,” Bedford reports. “They were shocked to find that only one had a measurable impact: interface with a charismatic figure that cared about them, gave them a sense of self-worth and expressed belief in them.”
With student involvement, Share the Advantage helps create those conditions.
The innovation and creativity that services like Southwestern Advantage Online and Share the Advantage demonstrate have helped the company grow successfully for a century and a half. Southwestern/Great American Inc. is employee-owned and doesn’t reveal its revenues by business unit—its summer-selling subsidiary known simply as Southwestern is the oldest of more than a dozen successful companies—but the company has total revenues of about $350 million across all lines of business. Moore says that the company’s shares have increased in value by an average of 15 percent a year for the last 25 years. It’s all fueled by the energy and determination of employee owners and student dealers.
“I want to commend the courage and vision of the young people who are joining our program as well,” Moore says. “They are seeing a tough job market and many of them are covered up with debt. Families have taken a hard hit over the last few years. But instead of turning to government or to relatives to get help, they’re willing to take control of their destiny. It takes enormous courage to do that, but they have a vision and a passion for becoming something greater.”