Grow Your Business

Selling. Many books have been written about it, experts have created a myriad of concepts on how to master it, and retailers are moving heaven and earth to understand its workings. That's how important selling is. If you can't sell, you have no business being in business.

Several years ago, my friend and former Entrepreneur Editor Lyra Villafana asked me to partner with her in a selling adventure, peddling fish balls, squid balls and kikiam in a local bazaar. And while we didn't make tons of money from our bazaar stint, we learned a lot about selling. We learned how important it was to always keep tabs on what the competition was doing. We learned how to engage in healthy, friendly rivalry. And most important, we learned that our business was only as good as our product, and that value adding drove sales.

I believe there's an underlying set of strategies that make selling work regardless of the nature of your business and its size.

To prove my theory, we asked some of the country's successful retailers their approaches to boosting their sales. And we asked five marketing experts to discuss how direct selling, multilevel marketing, customer relationship management, distributorship and franchising can be used as marketing models to bring success to your company. We're aware that for some of you, these concepts are vague theories that you may not know how to apply. This is our attempt to demystify these concepts through our telling of the real life stories of those who made money hand over fist from learning and adopting these marketing strategies.

Marketing Strategy 1:  DIRECT SELLING
Many entrepreneurs are finding success in direct selling because the highly personal interaction involved allows them to sell practically anything under the sun.
By Carla Paras-Sison. Photos by Jun Pinzon

Many consider direct selling as the most effective marketing strategy because it is highly personal. Ardy Roberto, chief "encouragement" officer of marketing and events firm Salt & Light Ventures, says direct selling is a retailing method used since biblical times when merchants who could not afford a space at public markets would go direct to the customers to sell their wares. Because this strategy involves a highly personal and intimate communication process, anyone into direct selling can sell practically anything under the sun.

Avon franchise manager Judyera Taroc can attest to this. Her 28 years of selling Avon products have taught her how selling imbued with personal touch could make a big difference to her bottom line. Proof of this is her 3,500 dealers in Antipolo; Marikina; Commonwealth Avenue, Cubao, and Novaliches, Quezon City; EDSA-Manila and Shaw Boulevard, Mandaluyong City who turn in P2 million in sales per month.

Taroc believes selling direct to the customer has an advantage over opening a retail shop. "When you open a store, you're just waiting there hoping for customers to come in and buy from you. With direct selling, you go out and look for people to sell to, or to join you. Yes, you spend on transportation, but you save on rental."

In 1978 Taroc was a wide-eyed 20-year-old whose purpose for signing up as one of the Avon ladies, also known as certified beauty counselors (CBCs), was to avail of the company's product discounts. "The discounts gave CBCs like me very good margins that could cover all our selling expenses and more," she says.

Avon taught her the ropes of direct selling, which she learned fast. She sold to friends, neighbors, and relatives, and then recruited them to form her 50-person dealer network. The 20- to 40-percent discounts given to Avon ladies, she discovered, were quite attractive to potential recruits. In no time Taroc was inducted into the President's Club--Avon's elite group of top sellers. She grossed P8 million in her first year as a franchise manager.

Now Taroc recruits dealers and aims to sign up 10 a day. Around 700 of her 3,500 dealers are considered active for logging in thousands of pesos in monthly sales. "My top seller is a nurse in a government hospital. She sells about P200,000 a month," she says. She is also targeting to recruit as dealers the employees of banks, schools, hospitals, and corporations.

Knowing that direct selling depends a lot on personal contact, Taroc allots time to visit her dealers to keep abreast of what's happening in their lives, and when her hectic schedule doesn't allow it, she mails them letters or home-made greeting cards.

Avon's information system regularly furnishes Taroc with a list of dealers and details of their purchases. She identifies the inactive ones from the list whom she would write to or call. "I write very nice personal letters to them. For regular correspondence, e-mail is fine but I really prefer snail mail. It still has a different impact if the recipient knows you took the time and the effort to write them a personal message to send by post," she says. "I sometimes attach the latest brochure to remind them that Avon is still an open opportunity for them either to purchase high quality products, or to earn extra money."

She rewards top sellers by inviting them to special meetings where she would personally prepare at least three viands for them. And her experience has shown her time and again that personal touch--more than any form of incentive--is what inspires and motivates her team to sell more, better, and faster.

Roberto says many are becoming successful in direct selling because of the highly personal interaction involved. With the transaction entailing a face-to-face encounter between the seller and the buyer, there are greater chances of a deeper relationship being forged between the two parties, says Roberto, co-author
of the book S4-Success Secrets of the Sales Superstars.

"That's how the Gokongweis started. Selling taho is a good example of an ancient technique still being done. The evolution of it is a long story. But direct selling is the root or grandfather of direct marketing--direct mail is called an army of direct sellers--and advertising," he says.

All companies make use of direct selling one way or another and it is a strategy that works in all business cycles. Roberto says successful direct sellers are trained to call a pre-determined number of prospects every day because they know that making a sale is a numbers game. "For example, if I call on and present to 10 people per day, at least one or two will buy from me. Or if I call on 10 previous customers, I know that I will get another order from five of them, et cetera. You can use this simple and basic principle for any business," Roberto explains.

He advises direct sellers to always cultivate their relationship with their loyal customers if they want to grow their business and client base. "The biggest mistake of direct sellers is not going back to their sukis while engaging in cross-selling or getting referrals. Also, customer loyalty is a function of product satisfaction, service, availability, and continually providing reasons for the customer to stay loyal, as well as communicating these reasons on a regular basis--either through the direct seller or through direct communications such as newsletters," he says.

Many direct selling companies have "standing orders" or "auto ship" services so that the customers' favorite product is automatically shipped every month or every two months. This way the company doesn't have to rely on the direct seller to do follow ups, Roberto says. "Remember, most direct sellers are part-time and the attrition is very high, as much as 50 to 60 percent. A smart direct seller will, for example, follow up with a customer 25 days after he or she sold a 30-day supply of vitamins or supplements. Common sense marketing lang, but unfortunately, it's not commonly practiced."

This is why Taroc invests in training her dealers. These trainings are for free, and attendees even get to take home food and gifts. "We want the dealers to know the benefits of completing the training. We want them to feel na doble panalo sila because aside from the knowledge they gain, they also receive a gift," she says. "I know they are motivated because of their performance following the training. We can feel their enthusiasm as much as they feel ours."

BOBBY AND AMY DELA CRUZ: "Pwede na naming suportahan ang aming lifestyle. Hindi na kami nahihirapan."

Marketing Strategy 2 : MULTILEVEL MARKETING
Network marketing can save a company from spending a lot on promoting its products while boosting its client base. But to be successful in it, the company’s products must be beyond reproach.
By Prime Sarmiento and Mary Anne M. Velas. Photos by Jun Pinzon

Despite the bad rap it has been getting lately, multilevel marketing (MLM) as a selling technique has its own merits, foremost among which is its ability to significantly lower a company’s operating cost while boosting its sales, says Josiah Go, one of the country’s foremost experts in MLM, also known as network marketing. He believes that network marketing has its roots in direct selling, but differs from the latter in its compensation plan.

MLM “rewards the sellers when he sells the company’s products or when his recruits also sell these products, enabling a network marketer to leverage on the efforts of others and producing residual income not available in the traditional direct selling method,” says Go, chairman of Mansmith and Fielders, Inc., a company that provides marketing and sales training.

He says MLM’s low capital requirement is a natural magnet to people in search of a secondary income for the family. Anyone interested in network marketing can go into it even if he only has a few thousand pesos in capital, which is still a lot less than what a traditional business set-up would require.

And having a means to augment the family’s finances--and not having to be overly dependent on a nine-to-five job--were what couple Bobby and Amy dela Cruz had in mind when they joined Amway Philippines nine years ago.

Bobby used to be a senior bank executive with a punishing 12-hour work schedule. He quit this high-octane job in December 1998 (he didn’t want to end up like other retired bank executives who were too ill and too old to do what they wanted because they spent almost all their lives working) to help his wife build a business. Amy was then a distributor of Amway products (food supplements, cosmetics and personal care items) that were being sold via MLM. “I want to enjoy life while I’m still young,” Bobby says. Nevertheless, it was Amy who persuaded her husband to give up employment. “Sabi ko sa kanya, if you don’t get out of the rat race, you’ll likely get a stroke. Plus our business will grow kung dalawa tayong gagawa,” she says.

The Michigan-based Amway Corp is the world’s biggest MLM company, with presence in more than 80 countries and territories and global sales hitting $6 billion. Amway entered the Philippines in 1997, with hundreds of Filipino immigrants in Australia, New Zealand, and the United States coming back to their homeland to find new distributors, or what Amway calls independent business owners (IBOs).

One of the first to be recruited in the Philippines was the De la Cruz couple through Bobby’s Sydney-based niece. “I wasn’t too positive about it,” Amy recalls. “To me it’s just another form of door-to-door to selling. I don’t like that. I hate talking to people na mahirap makumbinsi.” But because Bobby was very keen on Amway, Amy gave it a try. In 1997, Amy and Bobby paid a registration fee of P1,600 and in exchange received their starter kit--some Amway products and company brochures and leaflets.

Because all their children were still studying and they were paying their home mortgage, the couple decided that Bobby would continue working while Amy would focus on Amway. Amy worked at home, calling friends and relatives in the morning and meeting them in the afternoon to outline Amway’s sales and marketing plan and aiming to recruit them into the networking company.

Amway’s sales and marketing model involves an IBO buying products from Amway at wholesale prices. Each product has an associated Points Value (PV) that represents the profit from its sale. The sum of the group PV determines an IBO’s commission level. Joining Amway requires an applicant to be sponsored by an IBO, who will become the recruit’s “upline.” The recruit, then, becomes the IBO’s “downline,” who pays a specific amount to get the starter kit.

The IBO builds and manages his network by recruiting, motivating, supplying, and training others to sell Amway products. The IBO’s compensation comprises his own sales and a percentage of his downlines’ sales.

Amway usually gives leadership and marketing seminars, which Amy had come to value as these had helped develop her interpersonal and communication skills. After a few months as an Amway IBO, Amy was able generate enough income to defray the family’s monthly expenses, allowing her to keep Bobby’s salary as savings. When Bobby quit his job, the couple focused on their Amway business.

And after nine years of cold calling, networking, meeting clients, and attending training seminars, Amy and Bobby finally became top-level or diamond-level IBOs last May.

Because diamond-level IBOs could get five-to six-digit earnings every month, the Dela Cruz couple realized they could start enjoying the rewards of their hard work--annual vacation overseas, two cars, and a fully paid house. Their earnings also bankrolled new business ventures, such as a medical transcription firm and a school training aspiring medical “transcriptionists.” “Pwede na naming suportahan ang aming lifestyle. Hindi na kami nahihirapan,” Bobby says.

Apart from their material success, Bobby and Amy also find fulfillment in knowing that through Amway, they have been able to help cash-strapped people start their own business. Bobby cites a downline who was so grateful for having been recruited into Amway because he now earned an extra P3,000 a month.

Having reached their goals does not lull the dela Cruzes into a false sense of security. Instead, they are setting their sights on the next rung--Amway’s executive diamond level--which would allow them to buy a 10-hectare farm in Tagaytay where they plan to set up a retirement home for themselves and a hospice for aging priests.

Go attributes the dela Cruz couple's success to the fact that the company they represent has a reputation for crafting a sound business model.

MLM traces its origins in the United States when Carl Rehnborg decided to sell his Nutrilite Products through network marketing in the 1940s. Richard Poe’s book, Wave 4: Network Marketing in the 21st Century, says Rehnborg allowed salesmen “to draw permanent commissions from their recruits, a steady income stream that would keep on flowing through the entire life span of the business.” This scheme led to the geometric increase in the incomes of Rehnborg’s distributors, making Nutrilite a better alternative to those seeking greener pastures.

Many U.S.-based companies will soon follow the MLM model. Jay Van Andel and Richard DeVos, Nutrilite’s top distributors, later used MLM as their ticket to establishing Amway Corp. in 1959. Amway and other U.S.-based companies like Nu Skin and Harbalife brought MLM to the Philippines in the 90s.

Go, who is also president and CEO of Waters Philippines, an MLM company selling home water purifiers, says network marketing, if done right, can be a better strategy than direct selling in pushing one’s product or service. He cited his experience with Waters Philippines, which did not do well when it was being sold direct to the consumers “because of the lack of salespeople and the high cost to sales ratio. Waters Philippines increased the number of its independent distributors only when it set up its network marketing unit in 1994. And this freed the company from the responsibility of recruiting people, as it became the task of independent distributors.

“Cost to sales ratio dropped as it no longer had to pay the sales people’s salaries and allowances even if they had no sales, maximizing the rewards only to those with sales production,” Go says.

The scheme also allows the company to expand its client base at a faster rate and introduce new products and services to the market. Go shares that Waters Philippines has been able to sustain its operations by cross-selling AMC healthy cookware from Germany.

Nevertheless, Go advises companies to be extra careful when adopting MLM as a marketing strategy. “MLM works through a network, so companies must have products that are natural talking points in social events,” he says. He says poor quality products “do not stand a chance to be distributed in a network marketing scheme as sellers would be discouraged, while many customers would complain.”

Contact details:
JUDYERA TAROC
Avon Franchise Manager
Telephone: (02) 647-0457
E-mail: era_taroc@yahoo.com

ARDY ROBERTO
President and Chief Encouragement Officer
Salt & Light Ventures
Telephone: (02) 813-2732
E-mail: ardy@inspire.ph; ardy.roberto@gmail.com

BOBBY AND AMY DELA CRUZ
Diamond IBOs
Amway Philippines
Telephones: (02) 837-1172; (02) 635-6071
E-mail:bobbypalman@yahoo.com; amy_deecee2004@yahoo.com
Website: www.amway.com.ph

JOSIAH GO
Mansmith and Fielders, Inc
Telephone: (02) 723-6671
E-mail: josiah@mansmith.net
Website: www.mansmith.net

Learn more money-making tactics in the Part 2 of marketing strategies that can bring success to your business.