Item 22 -- BUILDING A BIG BUSINESS

I should like to terminate this sequence of posts with something that has been very close to my Avon experience: the building of a large Avon business.

When I began with Avon, I had a singular purpose. I was going to make this business just as large and successful as I possibly could. The lady by whom I was recruited was an active Avon dealer, Leadership representative, doing about $500 a month. That was 1992, Campaign 13. I certainly could exceed that, couldn't I? We initially signed up my wife, Mary, because Avon was a "woman's thing." Went to PC in five campaigns. When the PC Banquet was held, despite the fact that we had both worked the business and despite my willingness to purchase the extra meal, only one was permitted to go. Mary let me go. There I resolved that if that was the way the game was to be played, I was going to get myself signed up, and by gorry, they would know who Ken Lord was.

When I signed up, in early 1993, the original recruiter quit, so effectively, she had turned her business over to me. Within two years I had built that business to about $300,000 annual sales. Had she remained, her downline checks would have been in excess of $7,000 a year, based on my business alone. She chose to take the $20 referral fee. Six months later, she was out of Avon altogether. She has since expressed regret, understandably.

When I began, the swapmeet where I had acquired the dealership was sufficient. We opened a booth for the Avon product. And then two. And then three. During our first two years, as fast as we expanded, we outgrew our capabilities. The word got around town. Ken and Mary were willing to deal Avon. Not simply have it available on the cheap, like the dealer at another local swapmeet -- but real bargains on unspoiled merchandise and, best of all, the merchandise was in stock. Goals were set and surpassed. For the first six years of the business, the goal was set for annual increases of 30%. That was accomplished in the first five. Year number six achieved only a 25% growth. But grow it did! It took a plan; it took action; it took measurement; and it took adjustment. Our growth was phenomenal.

I had already a working successful business at the swapmeet, selling everything but the kitchen sink. I had taken on Avon not because I knew anything about the product, but because it was a known winner. When the original dealer approached me, my protest had been that I knew nothing about the business. Her response was that the cost was $20 and she had $400 of inventory, and it "would sell itself." Anything that popular was certain to be a winner, and at that location, at least, I had an exclusive.

There were questions in those days about the propriety of selling Avon at the swapmeet (what other folks called a "flea market.") But two dealers had existed at my swapmeet before I took it over, and there were several other dealers around the state who were doing similar things. I would subsequently learn about the existence of Avon in such retail settings around the country, and when Avon held its first convention in Orlando, FL, I was privileged to visit two such dealers, who sell there still.

By the second year, the facility where we had held our business had become fallow. Eight years later, we would learn that the reason was that the owner, a Los Angeles lawyer, had purchased the facility solely for the tax advantages. He wanted to lose money on the property, and would subsequently lose the facility to the county for back taxes. He hung on to get his 10 years of depreciation, thereby sheltering more than a million dollars of income, and then pulled the plug. But by 1992, when we began, the owner had begun his process of not paying the taxes, recognizing that it would take the county seven years to acquire the property via tax title. Promotion of the facility had ceased, and we began to lose money. I lost $25,000 that second year. Couple that to the losses sustained by a dishonest employee, and we pulled out of the swapmeet by early 1994. Ironically, we would later return to the swapmeet (after closing down the stores) and would help to close it up ten years after it opened.

What to do? Nothing in my contract with Avon proscribed my opening a retail store. I asked my district manager if there was an Avon retail store anywhere in the country. The answer was affirmative. I began to check telephone directories and found others in Arizona, Florida, Georgia, Pennsylvania, Ohio, etc. Clearly doing the work retail was sufficient and supposedly permitted. Avon would ultimately change the rules, and I would later learn that Avon enforces those rules selectively.

So I met with the lady who was the regional manager at that time, and with my district manager, and laid out a business plan for an Avon retail business. It was done openly and with Avon's full knowledge. We opened our first retail store in March of 1974. Six months later, we opened our second, in a community about 30 miles south of town. Both stores were subsequently moved to larger quarters as they grew, and at the time of my collapse, June 1999, one of the stores occupied a 2,500 square foot former convenience store.

About four months before the collapse, after rattling my cage for more than a year with veiled threats, Avon finally ordered me to close it down. I will never know whether the stress brought on by Avon's edict contributed to my collapse. I do know that extreme stress is potentially fatal to a diabetic, and that stress plus the stress of having built the most successful dealership in the State of Arizona, certainly had taken its toll.

I've never been able to determine why, after more than six years, and while performing at the $300,000 annual level for three years, Avon felt it important to shut me down. They left at least two other retail stores going in my vicinity, and I'm fully aware of others in the south, east, and northeast which continue to function to this day.

I queried my branch manager about the rationale of throwing away an Inner Circle producer. I detailed the fact that my facility was known and the growth had been extraordinary. I offered several workable alternatives. My response was contained in a seven-page rebuttal which had been approved by legal counsel. Had I not collapsed, there is every possibility that I might have sought legal remedies because of the jeopardizing of my source of income. Avon responded to me by ignoring me.

What wasn't known at that time was that Avon would be finding its way into J.C. Penny and Sears stores. What wasn't known at that time was that Avon wanted someone to open kiosks at each of the local malls. And we'll never be able to tell just how much competition my facility would have been for those. Interestingly, nobody here has bitten, and feedback I've received from other would indicate something less than the kind of success I had enjoyed. One thing for certain, even should that facility become known, I would hardly be willing to pay three times the monthly rent at mall rates for fewer than 50 square feet than I had paid for 2,500 square feet.

So, arbitrarily, Avon sought to take away my livelihood. My collapse and the subsequent loss of virtually 100% of my resources, merely obviated the process. Theoretically I couldn't go back now, assuming I had the resources, and rebuild my retail activity.

But I had built a large business once. I can build it again. And somehow I see little difference in the rental of retail space for my product as compared to its occupancy of half my home -- except for the opportunity to serve the walk-in trade.

How this will ultimately shake out may never be known. What is known, however, is how it was built in the first place, and I'm going to lay that out for you here -- you may find a way to take the approaches to your own business and thereby grow your own business to some larger degree of magnitude.

Pick A Target

When I began, I determined who the leader in my district was, found out what she was doing, modeled what I would do to mimic her, and laid out some very specific plans to surpass her. I followed those plans to a "T." Took me two years to do it, but I made myself the target. Had it not collapsed, I'd still be the target. But recovery is possible and it's happening.

Stocking The Store

I purchased my recruiter's $400 of inventory. Put it on the shelves. Sold a portion of it, and plowed the profit back into merchandise. For more than a year, I took nothing from the business other than those monies necessary to pay the rent, the insurance, necessary transportation, and product. Everything else went back into stocking the product in quantity. By the time I decided to open my first retail outlet, I had acquired nearly $10,000 in inventory (at retail prices). I purchased at least four of everything -- and in at least two instances where the prices were outstanding, I went after things in units of 100. I'll never forget that first purchase of SSS Original 8 oz Lotion -- for 75 cents a bottle. I couldn't believe my luck. A $3.99 retail value for 75 cents. I began to dream about the potential of large returns on investment.

Ultimately, I would split the swapmeet inventory in order to stock my first retail store. When the second store came along, each existing facility split the inventory, producing what was necessary to begin at the new facility. Gradually, all stocks came up to substantial levels. The first technique of developing my large Avon business, then, was to locate where people were, with sufficient stock to satisfy an increasing demand. In your business, if it is to get large, then instant delivery of the majority of products will become a necessity.

Obtaining Satellite Production

Even before the move was made into the retail space, the leadership question was confronted. Did I wish to become involved in recruiting? No, not really. I could see no benefit for it. Besides, I had people seeking me out who would ultimately become good quality helpers.

When I decided to go after helpers, I decided to do so in a big way. I printed flyers and gave them to customers. I placed an ad in the paper. I talked to everybody. I enticed them with discounts and encouraged them to take books to work.

From the beginning, I made the decision to be extra generous to helpers, for two very specific reasons: (1) I was looking to drive my volume up substantially, and generous discounts were an excellent way to do that, and (2) I wanted a LOT of helpers. On the way up that climb, there would ultimately be more than 40 helpers. I made it a point to give my helpers free brochures in exchange for their volume. Now if you can figure the volume of business that 40 helpers would give in a range $50 to $500, you can see how that would accelerate the business into the nether regions. It was not uncommon to receive shipments of 150 or more boxes on primary delivery and to do add-on orders every couple of days. The delivery company that brought out the orders found it necessary to detail a large truck on my route.

I've always compensated helpers in money; never lower than 30%, and as high as 45%, with bonuses at holiday times. I've felt it to be niggardly to be negotiating discounts on products or payment in product kind when what the helper really needed was shoes or clothes for her children. There would be frequent orders for them, I would observe, so that was never a problem. Contracts with helpers? Why bother? If they wanted to do it, they did it. If they didn't want to, I wasn't about to force them. They weren't going to get product until it was paid for anyway. I wanted them to want to be my helpers.

Hiring Help and Gearing Up

As you might suspect, with that kind of volume, it quickly became necessary to obtain assistance. That was OK with me, as I'd much prefer to sell (and, hehehe - buy) than do bookwork anyway. So I obtained bookkeeping assistance. That led to the need for computers, and I've kept at least four of them busy since the beginning. That hasn't changed, by the way, with the shutdown of the stores. I keep two DOS computers and two in Windows 98, and they are all being used. At that time, I produced two levels of invoice: one for the helper and one for her customers. I still do, and I'm quickly returning to the point where I'm going to need that kind of help again.

It became necessary to obtain in-store sales help. Of course, as the overhead went up, net profit went down, so there was never the kind of income that one might have from working out of a home. But that was OK, because there were enough proceeds to take money out for both Mary and me. There was enough income to buy a couple of trucks, several computers, store fixtures, etc. The volume brought bonus points which turned into dollar bills and award trips. I purchased five display cabinets, set them up in the store, loaded them with Albees, plates, obelisks, and pyramids, and proceded to share our success with the customers.

Helping The Reps

Early on when I opened the stores, I pretty much fought an uphill battle with existing Avon reps who wanted to blame me for their diminishing businesses -- even those who lived and worked many miles away. I maintained then, and continue to maintain today that any customer who is getting good service will remain loyal, and there has been strong evidence that overall volume for the city went up, not down.

I've told before of a DM who attempted to turn people against me. During this time there had been whisper campaigns, defaced property, annoying phone calls, etc. It didn't work.

Despite that, I offered any assistance I could to make other reps successful. I learned a long time ago that I could never benefit from anyone else's misery. So I became (and still am) the repository for much product that reps would need should they receive late orders or be shorted on product they had ordered. In essence, I became an Avon mini-warehouse where area reps could get product in a hurry. And most of the time I had things they needed. Once the word got out, reps from moderately-distant cities would trek to me to fill in the holes. And before long, I was holding clinics to teach existing Avon reps, informally, of course, in much the same manner as we have done here.

I purchased brochures by the thousands, and sold them to other reps for cost. Because of advanced ranking, I could get more demo items, and often I had those items for somebody who needed them early. Also, with preferential treatment brought on by the ranking, I could often get things they simply couldn't get. Even today the phone calls arrive.

Advertising

I pushed the envelope here. Gave my DM apoplexy. But I got the message out where people could see it. Took a little doing, but I was able to arrange a newspaper feature story that highlighted what I was doing. Never thought about putting out a press release, though. That may happen one of these days, thanks to Lisa Wilber. I didn't simply put in a random ad, however. Advertising doesn't do you any good if what you are doing is not sustained. Mine was sustained.

Solving The Customers' Problems

When I first began in 1992, I knew nothing of cosmetics, color, fragrance, skin care, etc. So I began to dig in the books. At that time, Avon had a pretty good skin care text, and I dug in it. I used the creams and lotions so I knew what they felt like. Everytime something was returned, I dug into it and tested what I could for myself. Returned items didn't get thrown away. They were marked as testers and put out for people to stick their own fingers into. While I didn't use the women's colognes, I did use those for men, of course -- but I had no reservation against trying even the fragranced women's shower gels. I still use them to, as I call it, "stink sweet."

As I learned color coordination and skin care capabilities, which would ultimately lead me to become the district's first Certified Beauty Advisor, I began to deal with problems identified by the customers. It's an interesting phenomenon -- your sales will correspond to your ability to address and solve the customers' problems. With customers surrounding me, I'd give mini-seminars. Those teaching sessions turned many casual buyers into serious users of such products as the Anew series. As I've stated before, I've known the sale where the customer came in for a cream and went out with a hundred dollars or more of product. Largest Anew sale I ever made was to one woman on one visit, and amounted to $190 cash.

Give The Customer Extra Value

As I learned when to stock up, it became less a concern about giving the product away. A free hand cream here, a small fragrance there, would promote a sale often far greater than the customer might have planned. A $5.99 special cologne ($3 at 50%) means that I could give a bottle of Timeless, for example, on top of a $50 sale and not impact the profit significantly. I learned to buy Outlet gift sets, the kind with a 1 oz bottle of cologne, a skin softner, a talc or roll-on when I could get the whole thing for a pittance. Often I would recoup most of the cost from the sale of the roll-on alone. That made my gift cost little or nothing, buoyed the sale I was making, and created loyal customers who came back again and again.

Partnering With My Customers

This activity remains ongoing. The distribution of cards for my customers to hand out. Sending them out with extra brochures, with a request to hand them out. Soliciting their recommendation with a referral reward when their friend makes a purchase. All these and more became ways to develop a partnership with the customer who, though she had no interest to sell or to be a helper, nonetheless would ultimately lead me to obtain additional sales. We are in a snowbird community, and customers have come to pick up product for shipment to their friends who had returned to Wisconsin and other places to the north. Are there Avon dealers there? Certainly. Yet a phone call to Tucson would get their product.

Greeting Them At The Door -- Kissing Them Goodbye

I never hung over a customer who was "just looking," but if possible, I always met them at the door and took them to where the product they sought was located. If they wished to engage in conversation, we talked. I taught a little, we laughed a little, I played with their kids, and I even sang to the customers. The music ranged from "Jesus Loves Me" with the children to the Toreador Song from Carmen with the adults, often even the men.

It was -- and it is FUN. Everybody left with a blessing. Everybody was asked to return. Often I would discover that people looked forward to returning to my store. We would pick up on conversations that hadn't been completed when they were last in. I got to enjoy their families, if often only vicariously. I wanted to see them again. They wanted to see me again. I would sing little ditties to the kids, often sitting on the floor where we could converse at eye level. I'm just a little kid at heart sometimes. I took every chance I could to leave a pleasant experience in their minds. I gave them wooden nickels and admonished them not to lose them. There were free ball point pens and refrigerator magnets which reminded them of Avon and of me everytime they were used or observed.

The Customer's Satisfaction Is Determined By Your People Skills

My ability to relate to the customers has never been natural. I am not a "natural-born salesman," if indeed there has ever been such a person. I read about it. I practiced it in the mirror. I tested it out carefully and read the feedback. I modified the approach. I worked on my own self-esteem. I built my positive attitude to a razor-sharp edge. Because I wanted people to come back, it was important that they like me, like what I was doing, and feel comfortable when there. And you know what? It worked! After that, I was a "natural." There were problems, yes. There were times I was not successful. There are people who may never return, some of whom for me it will be little loss. But all in all, if bumpy, it has been an enjoyable ride.

And The Payoff Is ...

I'm no better or worse than what any Avon representative may be or can become. Yes, it was a novelty that I, a man, could do it. But had I not put forth the effort to learn about it and to make it work, success would have eluded me. The only thing I've ever had to offer my customers is service of a quality and quantity that they can get nowhere else. I've done a lot of important work in my life; impacted a lot of lives. This is amongst the most worthwhile of my experiences. There is meaning in my work.

For awhile, the novelty of getting into the position where people would come to me, rather than I to them, helped to make the business grow. But the sign is outside my house now and though the house is on a side street rather than a main artery, the business is building once again. I'm back stocking like there is no tomorrow (to Mary's consternation). I'm advertising like I used to. I'm seeking helpers, and that number is climbing. And I've gone into leadership officially this time.

I set out to build a big Avon business with the advice of Conrad Hilton ringing in my ears: "If you want to build big ships, you must go to where the deep water is." For me, that meant taking risk. Going into debt. Doing it the way nobody around me had done it. Changing with the times and the stimula. And burying the diappointing animosities that could impede today's progress should I allow it.

There are many ways to build a large business, and they are all open to you.

1. Get out there and pound the pavement. Find those customers.

2. Hand out brochures everywhere you go, to everyone you meet.

3. Be prepared to talk Avon. Carry your supplies in your car.

4. Enlist help and pay them generously.

5. Look for fundraisers and other items which will build your volume.

6. Advertise everywhere you can afford to. Use business cards liberally. Take out and maintain advertising space. Hang posters, tear sheets, and notices in conspicuous places.

7. Find places to put piles of old books.

8. Take out a bulk permit and buy a mailing list.

9. Find your way into organizaitons where busy people work.

10. Listen to all the advice you can hear and then pick out the things that work for you.

11. Get help when you need it. Rest often.

12. Challenge others to excellence.

13. Enlist your customers in your Avon Army.

14. Work incentives into your sales.

15. Work discounts with multiple sales.

16. Roll and Toss. Hang the hang bags. Give out lots of samples.

17. Work the stock-up businesses. You stock up. Get your customers to stock up.

18. Enlist the church, the women's club, the cub scout troop, the little league, the Lions, the Rotary, the VFW, and all such organizations into which you have an oar, as distribution points.

19. Give some product away and make some noise about it. Gift baskets. Donations to charities. Pass-on items.

20. Stick your neck out a little. Buy a hundred of something and then get out and sell them.

We could continue on, but this missive is getting long. If you want to build a big business, sleep well every night, eat a good breakfast every day, take this business seriously and treat it as your potential for a future. And go do it. Do it from your car. Do it from your home. Do it from your office. Do it from your school.

Just do it. Now. Today.

"Son," said the old man, passing control of the family business to his eldest boy. "The most important things in business are integrity and wisdom."

"How do you define integrity, Dad?" asked the young man.

"Integrity, my boy, is keeping your promises to the customers even if it means losing money."

"And what is wisdom?"

"Wisdom is knowing enough not to make those stupid promises in the first place!"

C'Est finis. Goodbye.

Ken the Man
EMAIL KEN

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