Scentsy captivated candle lovers with its flameless wax warmers, but it was founders Heidi & Orville Thompson’s servant leader mindset that created a billion-dollar enterprise.
Defy the odds and survive. That was the theme of Scentsy’s earliest days, President and Interim CEO Dan Orchard said. When the company launched in 2004, its founders and co-owners Heidi and Orville Thompson deeply believed in the value of their products—but they were also deeply in debt.
A formal bank loan was out of the question, so the couple turned to family and close friends and, with the help of their first independent Scentsy consultants, opened shop from a worn, metal shipping container in the middle of a rural Idaho sheep farm. The company operated like a humble startup that required an “all hands-on deck” commitment. Scentsy consultants worked alongside the small home office team, making sacrifices, collaborating and pitching in when needed, and revenue began to build. Results were modest but encouraging in that first year but a foundational element had been clearly defined for the company. The culture would be interdependent, meaning consultants and home office would rely on each other, and the motto “contribute more than you take” would become a company mantra.
Two years later, revenue topped $2 million.
“Necessity is the mother of invention, and this was certainly true of Scentsy in the early days,” Orchard said. “While direct selling was entirely new to them, Heidi and Orville saw potential in the power of independent Scentsy consultants personally connecting with their customers and sharing products they had come to love.”
Hypergrowth Phase 1
Scentsy’s simple concept of flameless, scented wax warmers captivated a unique corner of the fragrance market and quickly gained traction and attention. Customers were drawn to the stylish wax warmers, which also functioned as home décor accessories, and the safer, cleaner option for home fragrance that erased the mess of drippy, sooty, smoky wicked candles.
As with every business venture, timing is everything. And Scentsy’s timing was perfect.
“Scentsy started to grow when many people were experiencing a financial downturn due to the 2008 economic recession,” Orchard said. “Many households were looking for an additional source of income, and from a customer perspective, even though people were perhaps feeling pinched financially, many were still willing to purchase products that beautifully scented their homes.”
Revenue topped $10 million in year three, and the company expanded organically first through local communities, then across the Midwest, to the U.S. coasts and internationally. Scentsy was now in hypergrowth.
Scaling with Simplicity and Generosity
Over the next five years, the company’s revenue would increase by two to five times year-over-year, growing from almost $12 million in 2007 to $560 million in 2012. Scaling systems and operations during this time became the company’s greatest challenge, and company executives and managers were often reassigned to projects that had nothing to do with their official job titles to keep up with the rapid growth.
In spite of its enormous operations and systems, Heidi and Orville preserved their entrepreneurial startup approach, maintaining that systems, processes and resources could never be an obstacle for Scentsy consultants interested in building a business. Investments in IT addressed back-office software limitations and internal teams were assembled to develop critical marketing tools and event capabilities for consultants.
“When it comes to growing systems and resources, it’s important to keep the business in alignment with the company’s values and culture,” Orchard said. “Scentsy’s approach to scaling our business, especially in the early years, worked extremely well for us because it aligns so well with our core values of Authenticity, Simplicity and Generosity.”
Too Big, Too Fast
Hypergrowth, even when executed well, has consequences, and Scentsy found itself in a holding pattern in 2013 and 2014. Revenue stalled or fell during this time as a result of what Orville described as “growing faster than we probably should.” The organization watched as revenue dipped from $560 million in 2012, to $482 million in 2013, and then $419 million in 2014.
“For companies that don’t learn to expect and even anticipate it, a dip or decline can be extremely traumatic,” Orchard said. “In Scentsy’s case, Heidi and Orville knew that at some point Scentsy’s period of hypergrowth would end, a correction would come to help us find our natural market value, and then we could set the company on a future trajectory of more modest and healthy growth.”
Although it may have been anticipated, these years were not worry-free. Scentsy shifted its efforts to broaden its product line, enter new markets, and initiate key product licensing partnerships to stimulate growth. All the while, Heidi and Orville focused on their role as a stabilizing force for the home office and consultant teams, focusing on the company’s values and keeping the organization aligned with the basics that sparked their initial success.
Their efforts resulted in the return of revenue growth in 2015. It was modest but consistent, and over the next four years the company retraced its steps upward, slowly regaining ground. By 2019, revenue totaled $471 million.
And then the world shifted.
$1 Billion and Beyond
The year 2020 brought an entirely new set of challenges. Amid the chaos of a global pandemic, shutdowns and supply chain disruptions, Heidi and Orville chose two priorities: Employees needed to be kept safe to allow the company to continue to operate, and consultants needed to be in the know. Honest and frequent communication with consultant leaders was a top priority.
In response to the company’s transparency, consultants formed a series of grassroots campaigns that helped teams shift their businesses to a remote, digital approach. Consultant engagement increased and customers who found themselves stuck at home for long periods of time began investing in more home fragrance, cleaning and laundry products.
The pandemic’s impact ramped up and so did revenue, climbing to $897 million by the end of 2020.
Hypergrowth Phase 2 had begun, but Scentsy’s leadership was concerned that its systems, capabilities and product availability were holding consultants back from their full potential. This massive 80 percent jump in revenue forced Scentsy to reevaluate its internal manufacturing process and work with external partners to purchase raw materials. It was a timely lesson that equipped the company for the logistical delays that continue to plague manufacturing and prepared it for two memorable milestones in 2021: The celebration of Scentsy’s one-millionth cumulative consultant and the achievement of $1 billion in revenue.
More than Money
Reaching the billion-dollar mark has created indisputable momentum for the company, but amid the celebration, the leadership is also aware that the coming years will be logistically complex, with an ongoing pandemic, rising inflation and continued uncertainty.
“While this is certainly an amazing accomplishment for our company, it’s not something that defines us,” Orchard said. “It’s something we can look back on to see how far we have come and something that will help inform our future successes. Our revenue and profits are lag indicators that tell us what’s working well for our consultants and their customers–it’s not a primary driver for why we do what we do. But there is so much more we want to accomplish and recognize—things that to us are more important than revenue. And we’re very much looking forward to what’s coming next.”
“Our approach is to have rigid flexibility,” Orchard said. “We are aiming to be rigid in our planning processes so that we can be agile and flexible when obstacles and challenges come our way.”
Lessons learned in the past two years have also helped the company double-down on its core competencies and construct a management plan for riding the waves of extreme growth without hindering its own future success.
From the March 2022 issue of Direct Selling News magazine.
