Introduction

Direct Selling
This book is based on the findings of an ethnographic study focussing on the UK direct selling industry and, specifically, on the sociologically significant aspects of the selling practices, interaction order, internal culture and organisational characteristics of two home improvement companies, Mega Home Improvements (MHI) and Big Time Products (BTP). The study also draws upon a range of publicly available material, as a means of demonstrating that the findings obtained from these companies are largely representative of the UK industry as whole. What presents itself throughout is an industry with an insular internal culture, supporting a range of practices and an organisational form that are, often, at odds with the image these companies present to the public. Moreover, certain aspects of this discrepancy between public image and private reality are not co-incidental but are self-consciously orchestrated as, to a large extent, the business of home improvement direct selling relies upon the maintenance of a high degree of skilful and co-ordinated impression management for its very existence. As is also made evident throughout this book, the distance between public image and private reality within this industry spans most levels of its operations, from the interaction between sellers and customers to the very nature of the organisations themselves. To a great extent, it is these characteristics of this form of direct selling that have gone some way to ensuring that, thus far, it has been overlooked as an area for sociological investigation. However, prior to engaging with these issues directly, and as a means of clearly identifying the specific form that is explored in this book, it is necessary to outline what defines direct selling as a whole while also, crucially, clearly distinguishing between two distinctly separate contemporary forms of this commercial activity. What is Direct Selling? There are two major types of commercial organisation to which the term direct selling can be applied. Both have similar origins, and continue to share some broad characteristics. However, direct selling has evolved to produce two structurally and qualitatively distinct styles of organisation. Direct selling can be traced to the door-to door salesperson, common until the latter part of the twentieth century, a figure who gained almost iconic status in

The Hard Sell

America (Biggart, 1989). While traditional door-to-door selling is undoubtedly still in evidence, it has gradually been superseded by contemporary direct selling organisations that have adopted its methods in evolved forms. What unites all forms of direct selling, including its early incarnations, is the tendency for business to be conducted in the customers home rather than on commercial premises. In addition, the seller rather than the customer normally makes the first approach. Network Direct Selling Organisations One particular form of contemporary direct sales organisation has been the subject of a previous sociological study: Charismatic Capitalism, Direct Selling Organisations in America (Biggart, 1989). In this book, Biggart traces the evolution of direct selling in the United States, from its humble origins with the Yankee peddlers of the past to the, often, very large corporations in the present who sell directly to American consumers. According to Biggart, direct selling has grown to become a major form of commercial activity in the US, despite encountering opposition from other sectors of the business community during various stages in its development. In particular, as direct selling expanded in the 1920s, small town retailers in many towns across America were concerned that it represented unfair competition. Shopkeepers became increasingly concerned with having to compete with visiting salespeople, whose businesses had neither fixed overheads nor an investment in the community. Local chambers of commerce pressured politicians to institute bureaucratic barriers, in the form of relatively costly trading licences and other trade restrictions, as a means of combating the perceived commercial threat. Such restrictions, compounded by the subsequent economic depression of the 1930s, created difficulties for many of those engaged in direct selling. However, a combination of greater organisation in the sector, an improving economy, and an organised reaction to the restrictions placed upon the industry led to its increasing development in the post-war era. Branch Office Organisation Biggart identifies three important changes that aided the growth of the direct selling industry during the 1940s. Firstly, the establishment of local branch offices, that had emerged from around 1915 onwards, aided recruitment and training of new salespeople, and created a more formal and committed relationship between salespeople and organisations. From the 1940s onwards these branch office DSOs increasingly eclipsed the previously predominant home office form of organisation, where sellers had maintained a more distant relationship with companies often only maintaining contact by mail and other messaging services (Biggart, 1989).

Introduction Party Plan Direct Selling

A second significant innovation in direct selling was the introduction of a new selling strategy known as the party plan (Biggart, 1989). Party plan made use of the informal atmosphere of social gatherings as a venue for direct selling. This had the presumed advantages of generating multiple sales, whilst reducing the tensions inherent in formal one-to-one selling situations.
The party plan was an important innovation for several reasons. First, it allowed the salesperson to be more efficient in the use of his and now more frequently her time. Rather than being addressed to one prospective customer, the sales demonstration was delivered to a roomful, sometimes as many as 15 people. The hostess, moreover, did much of the work. She issued the invitations, served the refreshments, and provided the location. Not only were the prospective customers brought together by the hostess, they were screened for interest in buying. A more important innovation was that it skilfully blurred the social and economic spheres. An essential economic function, the demonstration of consumer goods, was transformed into, or at least confused with, a social function. The cues from social behaviour a friends invitation, a gathering of acquaintances, a private home set the stage for mannerly conduct and the fulfilment of social obligations. For many of the guests good manners seemed to dictate that one help the hostess/friend to have a successful party. Success seemed to require that one show interest in the ostensible purpose of the gathering the chance to inspect products through at least a modest purchase (Biggart, 1989, p. 43).

Party plan arose within an economic environment increasingly favourable to direct selling (Biggart, 1989). While the growth of consumerism had been interrupted by depression and war, renewed confidence and full employment policies in the period after the war heralded an era of massive expansion. Moreover, expanded industrial capacity and increasing efficiency now gave manufacturers the capability to supply far more than was currently being sold through existing outlets. Manufacturers desire to exploit these potentially larger markets at this time led to an extension in direct selling, as it was recognised that selling goods directly to the public created sales that would not have occurred had the initiative in the process been left to the consumer (Biggart, 1989). Thus, increased demand could be created by both stimulating desire through advertising and by salespeople proactively seeking out potential customers and persuading them, through skilful presentation, that the goods they neither needed nor particularly wanted were essential purchases. The direct selling industrys use of social networks to widen its potential client base through the party plan was part of the response to these favourable conditions and achieved a degree of success to the extent that this manner of marketing is currently widely employed in the US. This development also highlights an important aspect of direct selling in that, in all of its forms, it tends to colonise and, in some cases, manipulate aspects of

The Hard Sell

normal interaction as a means of doing business. In this case, the party plan employs the norms of friendship, and friendship networks, as a vehicle for selling goods. Network Marketing A further development, now generally referred to as network marketing, appeared to present greater opportunities and increased efficiency for both salespeople and direct marketing organisations. This overcame one potentially negative feature of the way in which party plan exploited friendship networks, in that party plan organisers could exhaust the sales opportunities amongst friends, family and other acquaintances fairly quickly. Network marketing created new opportunities for business expansion beyond ones own immediate clientele, as it entailed salespeople being paid a bonus and/or commission on the business of other organisers that they managed to recruit into the organisation. Thus, within the network structure salespeople could utilise social/client contacts, not only as a potential source of customers yielding a one-off commission payment, but also as a source of recruits. New recruits would provide income to the sponsoring agent from their own activities, and from the activities of all the people that recruits subsequently enlisted, and so on and so forth. Active salespeople could, therefore, envisage potentially limitless income, as the chains which developed grew, and those that burgeoned down the line continually cast an increasingly wider net in the pursuit of new sales opportunities and new recruits. Although network marketing presented evident attractions with respect to salespeoples long-term earnings potential, this innovation also promised obvious advantages for direct selling organisations themselves (Biggart, 1989). Network marketing held the potential for DSOs to grow exponentially as sellers sought to build their networks and, consequently, their incomes. Furthermore, it was in the interests of salespeople seeking to extend their chain to become involved in both recruiting and training of new agents, as they now profited by it. Therefore, network marketing created the conditions for massive expansion of DSOs whilst relieving the organisations of a great deal of the responsibility and cost of recruitment and training. The network marketing form of organisation and the party plan marketing method are now normally found together, whilst network marketing is also prevalent amongst the remaining door-to-door companies selling low-cost domestic products. A Feminine Organisation Network direct selling is particularly attractive to women: 80 percent of sellers are now female. Biggart claims that these DSOs have evolved to become increasingly women friendly due to the social characteristics of both the organisations and their marketing strategies (1989). These organisations represent a departure from the rigid, competitive, male-dominated and highly bureaucratic forms of organisation that characterise most contemporary businesses.

Introduction

One major attraction for women is that agents can choose their own level of activity and commitment within the organisation. Network direct sellers are normally self employed and, while some approach this type of work as a full-time career, the majority vary between regular and sporadic part-time activity. This is seen to hold specific attractions for women wishing to generate income whilst juggling their working lives with the demands of their traditional family role. Many of the major companies involved in this sector also promote products specifically associated with traditional images of femininity. A good deal of the market is built around goods that are either domestic (e.g. kitchenware, household cleaning products) or particularly used by women (e.g. cosmetics, lingerie etc.). Companies such as Tupperware (kitchenware), Amway (domestic and cleaning products) and Mary Kay Cosmetics (health and beauty) are examples of market leaders in network direct selling. This summary very briefly outlines Biggarts account of some of the key developments that produced the contemporary direct selling industry. However, while Biggart acknowledges the continued existence of other forms of direct selling, her focus is predominantly on this subset of the industry the more female dominated network form of organisation (Biggart, 1989). In support of Biggarts privileging of this type of direct selling it must be noted that the governing bodies of the direct selling industry (Direct Selling Associations which are affiliated to the World Direct Selling Association), that identify themselves as representing the industry as a whole, are comprised exclusively of the same or similar organisations as Biggart studied in the United States. Moreover, the general utility of the Biggart study is reinforced by the fact that, while her research was conducted in the USA, the global complexion of contemporary direct selling appears to have been highly influenced by the American model (www.dsa.org, 1999). Overall, it must be acknowledged that Biggarts study ably investigates central aspects of a significant socio-economic phenomenon. However, her study tends to set to one side another large class of direct selling organisations, emerging from the same lineage, whose development has followed a different trajectory. These organisations most definitely refer to themselves as being engaged in direct selling, although their organisational structures, practices, composition and strategies set them quite clearly apart from the networking form. In the interests of clarity, and given that both types of direct selling will be referred to at some points, it is important to clearly distinguish the type of direct selling organisation I have studied from that researched by Biggart. However, it must be emphasised that evaluation of, and comparison with, the Biggart study, and the organisational form she presents, is not a central concern of this book. Nonetheless, when referring to the type of organisation central to Biggarts study I employ her term Network Direct Selling Organisation (NDSO), signifying the use of social networks to sell cheap consumables as being the central distinguishing characteristics of this form. By contrast, when referring to the distinctive form of contemporary direct selling organisation that is the focus of this book I have used the term Value Direct Selling Organisation (VDSO).

The Hard Sell

Value Direct Selling Organisations The range of organisations that constitute this category can, as noted, also trace their origins and practices to the common ancestor of direct selling, the door-todoor seller of the past. Moreover, these organisations are predominantly the inheritors of the branch office form of organisation referred to by Biggart (1989). Value direct selling organisations are typically small to mid-range companies engaged in selling high value consumer durables on a one-off basis. In order to define Value Direct Selling Organisations as a distinct economic practice it is necessary to address several conceptual difficulties. First, is it justifiable to categorise the types of organisation I researched as direct selling organisations, when they have been excluded from that definition by associations characterised by that term? Second, what typical characteristics distinguish VDSOs from NDSOs? Third, why might such organisations have been overlooked by those large NDSOs, who, through the membership of their affiliate associations, appear to present themselves as encompassing all major categories of direct sales organisations? With respect to the first of these questions, it is necessary to consider the criteria that are identified as definitive of direct selling. This will enable us to identify the types of organisation that can plausibly be identified by that term. The following description, provided by the Direct Selling Association (a worldwide body wholly comprised solely of NDSOs), identifies characteristics of direct selling thus:
What is direct selling? Direct selling is a method of marketing and retailing consumer goods directly to the consumer; it does not rely on direct mail, product advertising or fixed retail outlets. Independent sales people call on consumers, mainly in their homes, to show and often to demonstrate products and to obtain orders. The goods are then supplied by the company either directly to the consumer or through the sales person who obtained the order. Direct selling is suited to high-quality household and personal products which can be conveniently distributed by independent sales people. It is a method of marketing which is particularly suited to products that benefit from detailed explanation or demonstration or even being tried out by the customer. It is a personal approach that is rarely found in high street retail shops. Direct selling owes its continuing success to the thousands of people of all ages and in all walks of life who either want to be independent or to have a business of their own where their personal rewards are a direct reflection of their own enterprise and efforts. It is particularly suited to people who wish to work part-time, and because virtually no capital is required to start, there is minimal risk involved. (The Direct Selling Association Ltd) The DSA represents businesses with combined sales currently in excess of 900 million and which account for almost 80 per cent of the total direct sales of consumer goods in the UK. These businesses range from small companies to large multi-national operation. (The Direct Selling Association) (c) 199699 Biz/ed.

Introduction

The above description of direct selling is clearly consistent with the organisations studied by Biggart. However, I will show that the key defining features are also typical of the organisations I have referred to as VDSOs, despite no companies from this sector being listed as Direct Selling Association members. In accordance with the principles of direct selling, VDSOs are also concerned with the demonstration, presentation and sale of goods directly to customers, usually within their own homes, and on a face-to-face basis. The marketing strategies within this business sector, whereby companies make initial overtures to prospective customers, tend to be fairly consistent across a wide variety of product groups. Some VDSOs continue to market their products via the door-to-door strategy, where sellers activity is divided between prospecting for new customers and conducting sales appointments obtained from initial doorstep or telephone canvassing. These functions are normally conducted at different times, in that prospecting may be carried out during the day while appointments are conducted in the evening. Sellers in VDSOs will rarely attempt to sell a product without arranging an appointment. This division of activity is typical within this form of direct selling to the extent that, more regularly in the majority of contemporary VDSOs, the functions of marketing and selling are undertaken by different personnel within separate departments of the organisation. There are a variety of reasons for this specialisation of functions, and this will be more extensively discussed in the following chapter. However, I would suggest that the central reason for such a strategy is related to the type of products sold by VDSOs. Key products within this market tend to be related to the home i.e. home improvements (double-glazing, fitted kitchens, bedrooms, conservatories etc.), home security products, time-share holidays and ancillary domestic products such as orthopaedic beds. Recently there has also been a growth in direct sales companies offering re-mortgages and other associated financial products, using the marketing and selling strategies associated with VDSOs. Real estate sales can also be included within the VDSO classification. As indicated, the companies in this study sell home improvement products. Both are engaged in selling fitted kitchens and bedrooms, while MHI also sells replacement windows and conservatories. As described, the common feature of all products sold by VDSOs is that they tend to be large, one-off purchases involving a considerable financial commitment and, therefore, a serious decision on the part of the customer.1 This factor is the primary reason for the adoption of the specialist marketing/sales strategy mentioned above and is important in understanding the particular form of direct selling employed by VDSOs. Initial contact is generally made through an unsolicited telephone or personal call to a customers home or, in some instances, a personal approach may be made within a store or shopping mall. The purpose of this initial contact is to find people with at least a passing interest in the companys product or service and arrange a
1

As a consequence of the privatisation and, thus, competition between energy utilities in the UK, many of the new companies have adopted aspects of their marketing strategies from VDSOs.

The Hard Sell

sales appointment. The canvasser will then try to arrange a free quotation for the potential customer, normally via some sort of inducement such as a special offer, sale price or the opportunity to receive a free product as a prize. Having gained a potential clients interest, the canvasser will attempt to arrange a specific time for an advisor or consultant to call to demonstrate the companys product or service at the customers convenience. The seller, in the course of the appointment, is required to convince the customer to make a substantial financial commitment in exchange for a product or service where the customers prior interest may have been relatively casual. In order to do this successfully the salesperson attempts to control the customers responses via well-practised techniques, ranging from encouragement and friendly persuasion to skilful manipulation and deception. Thus, it is the degree of persuasion, and therefore selling skill, involved in value direct selling that has led to the specialisation of tasks described above. From this very brief description, despite some important distinctions, VDSOs, at least superficially, fit the definition of direct selling offered by the Direct Selling Association. However, it is important to try to understand VDSOs exclusion from recognition as direct selling organisations by the associations who present themselves as the industrys representatives. I have attributed many of the distinctive features of VDSOs to the demands of their particular product markets. I would suggest that this factor is also crucial to understanding the division between VDSOs and NDSOs. Thus, the demands of different product markets have led to the development of two qualitatively distinctive forms of direct selling with different cultures and forms of organisation. The more aggressive and adversarial type of selling that occurs in VDSOs has generated an industry where sellers are predominantly full-time and male. This contrasts with the part-time female seller more typically associated with the social selling of NDSOs. In addition, the consequences of different product markets can also be seen to have influenced the size and structure of companies in each form of direct selling. Curiously, in as much as it may conflict with common sense assumptions, the amateur part-timers of the NDSOs are associates operating typically within corporations where the major names in the industry are multi-national and, often, global concerns. In contrast, VDSOs, with their ranks of professional salespeople, are for the most part relatively small to medium-sized businesses, with very few achieving even national status. This situation can be understood with reference to the differences in the ability to anticipate product demand in each sector. Products offered by NDSOs are generally low-priced consumables. This type of product market, therefore, affords some opportunities for re-selling to previous customers. Companies operating in such conditions can entertain a degree of optimism that demand and, therefore, the future prospects of a company, will be reasonably calculable in the long term. Such an outlook leads to confident investment and planning for a relatively predictable future, creating the conditions for the growth of large corporations. Conversely, the product markets of VDSOs are characterised by uncertainty. High priced durable products, often with a relatively finite demand, particularly in

Introduction

the home improvement sector, are sold to customers in a succession of one-off deals. There is very little scope for repeat business. This creates a situation where companies seek to maximise returns in the short term, often in highly lucrative and competitive markets, but where future demand is relatively uncertain as saturation is an ever-present possibility. This type of business environment is not conducive to long-term planning or confidence in the future. The outlook is always precarious and, hence, the investment of such companies in their infrastructure is always contingent on meeting the requirements of a relatively short-term future. In summary, NDSOs and VDSOs can identify a common ancestor, and both types of organisation meet with the broad conditions that typify direct selling. However, direct selling has yielded two distinct forms of organisation, largely due to the circumstances described above. Furthermore, I would suggest that these structural and organisational developments have evolved in tandem with divergent cultures and identities, to the extent that neither contemporary form now recognises the other as being involved in the same activity. The NDSO sector of the market, according to Biggart, exhibits a feminine culture where selling and business are conducted in a caring, empathic and cooperative environment (Biggart, 1989). By contrast, the male dominated VDSO sector, as I will illustrate in this study, is viewed from both within and without the industry as conforming to male stereotypes of competitiveness, aggression and even ruthlessness. This latter factor, incidentally, may also have contributed to the non-recognition of VDSO companies by the affiliative bodies who claim to represent the direct selling industry, as the VDSO sector is often associated with unscrupulous and shady practices in the public imagination. Despite their lack of recognition, the prevalence of VDSOs can be illustrated by a simple reference to telephone and business directories across many developed nations. In particular, there are large concentrations of these organisations in Western Europe and the United States. However, as I will argue throughout the study, public and, indeed, academic knowledge of VDSOs is largely restricted to advertising blurb and crude stereotypes. In the UK, VDSOs have been subject to a number of sensational television documentaries, while a report by the UK Citizens Advice Bureau in 2002 also focussed on the more outrageous practices of VDSOs (Marks, 2002). Nonetheless, very little is known about what occurs within these, often highly insular, organisations. As I will show this lack of public knowledge is, in fact, the consequence of deliberate strategies engaged in by VDSOs. James Foleys production of Glengarry Glen Ross (1992) provides one of the few publicly available insights into the secluded internal culture of VDSOs. Foleys film depicts a slice of life where machismo, aggression, deception, fierce competition, manipulation and desperation constitute the unexceptional daily experience of a group of Chicago real estate salesmen. The significance of this film, for this research, lies in the way in which the peculiar hidden world it depicts, in terms of the practices, values and attitudes of its fictional inhabitants, so closely mirrors my own observations. From this incidental encounter, and my own experiences, I began to believe that the practices I observed in the field were merely manifestations of a wider and significant social phenomenon, which

Table 1.1

A Comparative Typology of Retail and Direct Selling Multiple Retailer Predominantly Low Mid/Some High Fixed Customer or Seller Instigates Transaction Indirect Persuasion Employment Salary/Wage Multiple/Repeated Company Premises Full Time/Part Time Female (N)etwork DSOs Low-Mid Value/Low Commitment Fixed Seller Instigates Transaction Low Level Persuasion/ Peer Pressure Agency/Self Employment Commission Multiple/Repeated Customer or Sellers Home Full Time/Part Time Female (V)alue DSOs High Value/ High Commitment Negotiated Between Seller and Buyer Seller Instigates Transaction High Level of Direct Persuasion Self Employment Commission Single/One-off Customers Home or Company Premises Full Time Male

Value of Goods Sold Pricing Sales Approach and Level of Influence Dominant Employment Form Remuneration of Salespeople Frequency of Sales per Customer Site of Transaction Seller Profile*

*This refers to the predominant characteristics of workers in each area.

Introduction

11

deliberately avoided public understanding as far as possible for its own ends. The purpose of my research, then, is to understand the social processes encountered behind the public presentation of an economic sphere whose inner reality is intentionally obscured from view. As identified in Table 1.1, VDSO direct sellers operate in an environment where making a living is potentially highly precarious and requires a good deal of pro-active persuasion on the part of the seller. There is normally no guaranteed income, no reasonably predictable repeat business, nor a reliable pool of regular clients. Moreover, each new potential customer must be persuaded to enter into a substantial financial commitment, otherwise the seller who is also responsible for his or her own expenses earns nothing. As will be explored in the following chapters, the constant presence of insecurity, at least in part, goes some way to explaining some of the tactics industry operatives engage in.