Get the parties started

Explaining how organic virgin coconut oil is sourced from Samoan farmers is the kind of sales story many retailers would love their staff to be able to tell customers in their stores.

But for retailers that operate shopping parties, it is just as likely to be a customer telling this story to a friend in their own home.

Getting customers to act as sales staff sounds like a good business plan. Retailers can use parties to build brand awareness, promote their values, push sales and acquire new customers.

The Body Shop at Home has 4,000 party organisers and its annual turnover is about £25m - about 10% of The Body Shop’s predicted total UK business this year. This autumn it will advertise its shopping parties using flyers and point-of-sale advertising. It aims to recruit party organisers through digital advertising on websites such as iVillage and Mumsnet and TV advertising on channels such as Living TV.

However, retailers have to ensure that home shopping parties reinforce rather than damage their brand and that they provide the best returns.

Commission schemes based on sales are the usual set-up to encourage organisers to exceed targets. “People can set up their business at no risk at £40 for a pamper kit,” says The Body Shop at Home director Deborah Stead. Base commission is 25% and rises to 28% for organisers with sales of more than £1,200 a month and to 30% on monthly sales of more than £1,600.

A personal touch

But why would customers choose to buy products at a party rather than online? “Parties bring alive the product experience,” says Stead. “You can hear more about the product, try and test it. On websites you have to read everything and you can’t feel the products.”

However, customers can do this in stores. What truly differentiates parties from other sales channels is that they are a sociable activity and a more trusted way of communicating with a brand. “This social aspect makes a difference,” says Stead. “You trust your friend and have more time at an evening event than rustling around with a buggy in stores.”

The value of the social nature of parties cannot be underestimated. Mintel director of retail research Richard Perks believes the enthusiasm they create feeds off itself and generates sales. “The ambience of parties and the ability to try things on is why home shopping works for women and as a channel,” Perks adds.

There is a definite gender divide when it comes to shopping parties. Among the 3,000 UK and Ireland organisers working for Jamie at Home, which sells celebrity chef Jamie Oliver’s Jme Collection, only 15 are men.

The relationship built through parties can impact on shoppers’ experiences. The nature of Ann Summers’ products is suited to home shopping parties and this is how the business started in 1981.

The company’s party plan operations manager Victoria Penfold explains that some women are too shy to walk into its stores. “Instead you can have a quick chat with the organiser at a party, who you have been building a rapport with, about how you want the evening to run,” she says. “People feel comfortable shopping in their home.”

The relaxed atmosphere leads to better customer service. “People can ask silly questions about products on a one-to-one basis and feel comfortable with that,” says Jamie at Home managing director Kim Claxton. “Getting answers to these questions helps build awareness of our products.”

Sound advice

Staff in stores will not necessarily be trained to sell a particular brand. “People want to know about the product, and store staff don’t have the expertise to give the best advice,” says Claxton. “Jamie at Home organisers have product cue cards that they can take to parties.” She adds that this can help them answer questions like ‘Why buy wood instead of glass?’ or ‘What temperature can you use it up to?’

Swapping product advice makes parties feel like a social event rather than an obvious sales channel. “At an Ann Summers party, you can try stuff on and see it on someone else and want to buy it,” says Penfold. “The more relaxed atmosphere encourages people to buy. A lot of people have come to parties and then they go to stores. Parties are an entry-level into the brand.”

But retailers need to put time and effort into their party planning operations. Retaining organisers by generating loyalty is important. “Home shopping parties suffer from theproblem of every direct sales operation, which is the short lifetime of organisers,” says Perks. “This is because of the nature of the people who take it on. Some use it as pocket money.”

Making representatives feel part of the brand is necessary, as retailers have to carry the risk of other people selling their products. Ann Summers achieves this through its training and through rewards that give organisers something to aspire to. “Rewards and training sessions are important, as you must have a certain amount of motivation to be self-employed,” says Penfold. “They make them feel part of the business.”

A network of loyal organisers means that any shortcomings in service levels will soon become apparent to the retailer. Claxton says: “The network of parties means that a bad name will travel quickly.”

There are ongoing training sessions that help organisers to expand their business. Ann Summers recommends its party organisers in an area meet-up once a month. They are encouraged to discuss what’s new, what’s popular, how to advertise their business, how to recruit new organisers and how to encourage them to increase sales.

An average organiser earns £2,750 over three months. Top unit organisers, who manage a group of party organisers, will be awarded a car on the basis of the sales level they have reached. Nearly 50% of unit organisers drive cars awarded through this scheme. All organisers receive 30% off any Ann Summers products they purchase.

Becoming a manager is the most lucrative progression for organisers. Retailers can improve the running of their home shopping business by providing managers with the best training. Jamie at Home requires organisers who want to be managers to recruit six people to work with them as organisers. Organisers are given two to three months of training on a one-to-one basis with a manager - this covers topics such as looking for new organisers, how to train and develop people and looking at their business plans.

Try before you buy

While the main interaction is between the organiser and the customer, the retailer is not forgotten. Boden has been testing parties in the UK for the past 18 months with the aim of persuading home shopping party customers to buy clothes from its online store and catalogues.

“We deliver to customers direct to establish our relationship with them, and enable them to see what it will be like to be a direct sales customer,” says Boden marketing director Mark Binnington. “We get their details, and ultimately the aim is to target them with promotions and catalogues.”

Binnington says commission is geared towards encouraging organisers to acquire customers who have not bought from Boden before. Organisers can earn a maximum of 25% on new customer purchases, significantly more than the commission earned on sales to existing Boden customers.

Boden believes parties improve its image as a brand that offers quality products. “Boden can never show clothes as well online as in real life, and parties save the hassle of returning the product,” says Binnington. “A lower returns rate is found with parties compared with catalogue.”

Parties make up different proportions of sales for different retailers. But whether they account for 10%, as at The Body Shop, or 90% to 95% for Jamie at Home, a strong brand is essential if people are to bring the product into their homes. “Avon and The Body Shop work well with parties because of the brands’ reputations,” Perks says. “Attention to product innovation guarantees success.”

Shopping parties help to build brands, but retailers will need to have already built a reputation that will make consumers want to sell their products and that will give new customers the confidence to buy.