Door to Door Sales and College Kids

Updated and revised

My friend Karoli's oldest son got caught up in a door-to-door sales scam--this one featuring a faux "reality show" format that actually sends kids out to market one product, a home protection system.  Karoli writes about her son's experience in Pure Bull or Pure Evil?  and GoFirstline.com: Evil, Deceptive Marketing to College Students.

In the GoFirstline.com post, Karoli exposes the 10 lies Firstline tells to get students to sign up to be sales representatives.

It also turns out that some companies prefer to hire members of the  LDS church, especially those who have been on a mission.

On March 27, 2006,  The Daily Utah Chronicle (the University of Utah's student paper) published an article by Alicia Greenleigh, on summer sales jobs for students.

Door-to-door sales companies recruit university students with promises of big money; while huge paychecks are possible, there are things students should know before signing up.

Companies selling home security alarms or pest control contracts focus recruitment on college campuses.

Job advertisements state "Thousands of dollars in only three months" and "$500 just for signing up!!!" Information meetings often offer free pizza and movie tickets.

Mark Poff, a recent U alumnus who worked one summer as an alarm-system salesman, said the companies especially target returned missionaries.

"We're used to knocking on doors," he explained.

Poff estimated that 80 to 90 percent of the salesmen he met were returned missionaries from Utah schools.

Even though religion is used to recruit, the companies employ strict business practices that students should ask about before signing up, Poff said.

For example, many companies promise a $500 signing bonus. But salesmen are paid only half of the money they earn in a pay period. The other half goes into what is called a "hold fund," from which the company can deduct money, should any clients cancel their contracts.

"The remaining funds are then given to the salesmen, usually in February, and it is almost always less than what you think you're going to get," said Patrick Kilbourn, a former Salt Lake Community College student and alarm salesman.

What recruiters don't always tell potential salespeople is that this half-and-half payment system often includes the "signing bonus." In reality, that money is often eaten up by contract cancellations well after the summer job is over.

Kilbourn and Poff both added that another promise made is free rent for the entire summer.

But many of the companies only provide the rent for free if they sell one contract per day. If they fail to do so, the rent is automatically deducted from their paychecks, they said.

Another company selling satellite dishes only discloses after students have signed up that free rent is contingent on "100-percent attendance."

"The rent was a joke because if you missed any work, they wouldn't pay for it," Kilbourn said.

If they do miss a day, the money is deducted, often from the hold fund so the students don't know until after the summer is over.

Other companies set a "reasonable housing fee," they explained.

Poff said that he and his three roommates paid $400 a month per person for a four-bedroom apartment.

"But then we asked our neighbors (who weren't part of the program) what they paid, and it was only $900 a month (total) for the same apartment," he said.

When the company was confronted about the inflated prices, Poff was told that the extra money goes toward rent in other areas where the prices are higher-as it does for missionaries.

"It's like they were trying to recreate our missions in a creepy kind of way," he said. "That really made me mad because they were just using religion to get us to sell their contracts."

In spite of the loopholes, most salespeople asked said that they made a large amount of money. The commission is about $500 per contract.

Eric Brady, a pre-medicine junior, worked for Stone Security last summer and made $10,000.

"It was my first time out there, and I was just OK at it. There were guys who made $20,000, $30,000 and $50,000," Brady said. "It's really hard work and really discouraging sometimes, but if you're willing to work hard, you can make a ton of money."

If you only sell two contracts a week, that is $1,000 per week, as compared with $250 a week working at a bagel store. If you sell one contract a day for three months, you could make $32,000 to $35,000 dollars, he said.

Andy Smoot, a junior in sales and tech services at Weber State University, said he made around $20,000 last summer.

"What you should know about selling is that it is mentally challenging," he said. "(It's) like a mind game because sometimes you'll sell two (contracts) in one day, and then none the next week."

But if you can break through that barrier, he explained, you can pretty much make as much as you want.

On July 21, 2006,  USA Today published an in-depth look at door-to-door sales for students, in College students learn from job of hard knocks.

The story estimated that there are about 150,000 college students selling product as independent contractors.  The companies listed in the article were

• Southwestern (almost all sales people are college students or college-age; uses traditional cold-call, one-on-one sales calls.  See this story on a successful Southwestern alumni.)
• Mary Kay (adults dominate; also uses sales parties)
• Avon (adults dominate but uses college students for their young adult line of cosmetics; also uses sales parties)
• Cutco Cutlery (almost all sales people are college students or college-age; face-to-face in home sales from referrals from previous customers. Read about a successful Cutco Rep here and note the support from the company.)

For the companies, the students provide a windfall. They operate as independent contractors, not employees. They pay for all their own gas, food and lodging. They get no automatic health benefits. And they'll do what many others won't: work up to 80 hours a week, usually with no guarantee of pay.

"Young entrepreneurial students have a lot of energy," which is why these jobs can be a good fit, says Joseph Mariano of trade group Direct Selling Association.

[snip]

How safe are these door-to-door positions for college students? The industry doesn't keep track of any related crime figures. But direct sales — especially door-to-door knocking — carry the risks involved in selling to strangers in their homes.

[snip]

Selling door to door brings peculiar challenges. Southwestern salespeople will be chased by dogs and yelled at by angry homeowners. Sometimes the police are called if a town restricts soliciting.

But the company, during weeklong training in Nashville before the students scatter across the country, warns them their biggest barrier will be a mental one: overcoming feelings of hopelessness, of self-pity.

[snip]

Direct sales evolving

Southwestern is one of the few direct-sales companies still doing traditional door-to-door sales as others focus more on selling wares on the Internet, by referral and through product parties.

The company says it's done business the same way for more than a century because it works. Its book sales have climbed gradually in the past five years, and made up about 15% of parent company Southwestern/Great American's $248 million total sales last year.

The industry no longer keeps separate numbers for traditional door-to-door sales. It lumps them instead in an $18 billion category called "face-to-face selling in the home," which includes product parties and sales by appointment. Overall, in 2004, the latest year figures were available, direct sales were a $30 billion industry, a sliver of retail sales.

[snip]

Note that the companies listed do not sell either pest control or home security.

Companies that hire college students for direct selling that seem to have spotty or poor track records.

Magazine Sales

• Too many to count.  Most door-to-door cold calls seem to be fraudulent.  There's a big racket   Many k-12 school fundraisers also use magazine sales, but that's generally reputable.
  

Security Systems Sales (this is the Karoli's son was snookered into sellfing)

• Firstline ()

Comments

[Bea]

www.pinktruth.com

MLM is MLM is MLM and it means MONEY LOSING MACHINE

[Douglas]

I was a student that did summer sales for 4 summers. For me it was a great opportunity. I earned enough money to pay for school and graduate debt free. I also had enough money during the school year to accomplish the things I wanted. Spending your entire summer selling isn't the most enjoyable thing to do, I never had time for wake-boarding, or family vacations, but it allowed me to earn good money and avoid debt. I am not scared of "selling" anymore, and I think that has given me a leg up. There is a website that is dedicated to the summer sales industry you can view it at www.SummerSales.org
It has a lot of good information about summer sales.