Santa Barbara's LMS Fragrances Doing Well Despite Recession.
Selling Never Smelled So Sweet
Santa Barbara’s LMS Fragrances Sells Direct with a Twist
Saturday, June 27, 2009
With a 115 percent annual growth rate over the past three years and more than 2,500 sales consultants nationwide, LMS Fragrances is flourishing and looking to expand even more.
Much like Mary Kay or Tupperware, LMS Fragrances, which was founded in Santa Barbara by Susan Suh and husband Robert in 2004, sells products through contracted consultants. But unlike other companies, LMS has an entirely different, less cutthroat way of approaching the direct-selling model.
“It’s said that direct selling does well during a recession, and I think our slowest month we added 72 consultants, but a typical month we add about 110,” said Suh. Before diving into the direct selling industry, Suh and her husband had to do some homework to see what was going wrong in similar companies and how they could ensure it wouldn’t happen in theirs. “For the first year, we studied other people’s company plans, and it’s just ridiculously complicated,” said Suh. “Both my husband and I have MBAs and we still didn’t understand it.”
Santa Barbara’s LMS Fragrances Doing Well Despite Recession.
After about eight months of research, Suh and her husband developed a unique direct-selling plan that allow their consultants to keep more money - up to 30 percent of their sales - and not have to pay up-front for the product. “The selling model absolutely attributes to the growth rate,” said Suh. “Most of these people have tried everything. They go from one company to another seeing what suits them. I do have people come onboard and do very well where they haven’t done well at other jobs before.”
The typical direct-selling model has consultants buy a kit, take the kit home, and have $200 worth of product that they need to sell, said Suh. Each month, such companies charge their consultants the $200 and send them product to sell. If they don’t sell it, then the consultants are out the money and are stuck with the product as well, said Suh.
But with the LMS Fragrances model, the consultants pay a small start-up fee, which ranges from $169 to $379 depending on the kit, and take orders from customers first rather than having to pay out of pocket for the product before selling it. LMS, meanwhile, trains its consultants on how to sell the fragrances, with Suh herself teaching two sessions per week “without fail.”
“It’s direct selling with a twist on it,” said Suh. “I wanted to make sure the compensation plan had a lot of integrity to ensure that there are things in there to help [consultants] succeed. If you want to [sell] just casually, then there’s no punishment factor, which is sort of unheard of in this industry”
According to Suh, the fragrance business is a $5 billion industry that has not been tapped into by the direct-selling model. “It’s a very powerful industry if done right,” said Suh, whose products are sold under the brand name d’essense. Though they feature many of the same natural ingredients and are often exactly like the scents developed by the world’s top perfumers, d’essense products can be as much as 80 percent cheaper.
Typically the attrition rate in the direct-selling industry is around 45 percent, according to Suh, who boasts a much lower percentage. “You’ve got to ensure that you have more people coming in than going out,” said Suh, stressing the importance of making her organization a “sticky” one, or one where people stick around.
Though she’s from the Santa Barbara area, Suh started building her company in Florida and the Carolinas. Her goal for the future of LMS Fragrances is to expand into Las Vegas and Utah and to double the amount of consultants she has now.