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Southwestern Company: Building Character for 150 Years
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Southwestern Company: Building Character for 150 Years
by Barabara Seale

In a point-and-click world, one company has thrived for more than 150 years by selling not just person-to-person but door-to-door.

The Southwestern Company is unique for many reasons beyond its age. Its multi-level salesforce is composed of college kids who run their own businesses, selling books in the summer and recruiting other students during the rest of the year. More than 3,000 students from some 390 colleges in 57 different countries spend their summer knocking on doors in the United States, Canada, the United Kingdom and France. Each student sells within a designated territory-usually a school district-starting the day's selling by 8 a.m. and often continuing until 9:30 p.m. six days a week. The schedule alone requires a work ethic and determination to succeed that are unique in any industry.

"It's a demanding job, and there's no doubt it's not for everybody," says Dan Moore, Southwestern's Vice President of Business Development. "The kinds of students we attract today are the same as always-independent, ambitious, motivated. They can see the difference between a job and an opportunity."

Mission Driven

The opportunity those students see begins with the company's mission: To be the best organization in the world at helping young people develop the skills and the character they need to achieve their goals in life. "Our selling experience is characterized as an internship program. By its nature, it's a character-building experience," says Henry Bedford, who was named Southwestern's Chairman and CEO in January. "Students are learning something new by being in sales, going away from home to sell, moving into an independent environment. They're engaged in cold-call direct sales, though there are some referral processes built in."

Jerry Heffel, Southwestern's President since 1980, adds, "Our student dealers learn to overcome the fear of failure. When we recruit, we're upfront about how challenging it is. Students who sell in the book field learn that it's far better to attempt something and give it their best. Even if they fail, they'll grow and develop. If they continue, they'll succeed in a lot of things in life. They also learn how to handle the fear of rejection- that's huge in character building."

Bedford, Heffel and Moore all know the burdens and the benefits of selling books from personal experience. Each sold books during college for several years and joined the company after graduation-a story repeated often at Southwestern. Moore says that all Southwestern sales-organization employees sold books during college. About half of his business development team has book field experience, and some of the rest of the headquarters staff has sold books as well. The book field is a ripe employee recruiting field because it lets student dealers develop and demonstrate a wide variety of key skills and characteristics, including independence, presentation skills, leadership and sheer stamina.

Tried and True

Southwestern's non-traditional business culture includes all the functions and activities that take place in most direct selling organizations-from recruiting to training to recognition. But most of them happen on college campuses and in the book field. As in all direct selling companies, the process begins with recruiting. According to Moore, about half the company's new recruits learn about Southwestern because someone they know is a student dealer or student manager or because they have a friend who is planning to sell. The other half learn about the opportunity through campus ads, recommendations from someone on campus or a Southwestern summer-work questionnaire that's distributed on campus. One of those methods draws them to the Southwestern version of an opportunity meeting, held by managers who are either employees or students returning to the book field who are building their organizations. There they learn about the hard work that's required, the personal and professional growth opportunities and the money they can make if they work hard and apply the techniques they'll learn from Southwestern. Then, there's a selection process that may take minutes or several days, depending on how well the recruiter knows the interested student.

"We want to be sure it's a good fit," Moore explains. "And we get the parents involved by giving them information, referring them to our Web site, and letting them talk to other parents. There's even a parent hotline. Parents always have some concerns, so we work hard to keep them involved in the process."

Southwestern's student dealers have many of the same characteristics they've had for years-except for one. Until 1970 they were all male. Now about 30 percent of the dealers are young women.

"We had no women in the program until 1970, but not because we were trying to keep women out. It was just that no one thought they would want to do it," Moore says. "Boy, were those people wrong. The women in our program now represent a high percentage of our top salespeople. I talked this morning to a young woman who, in her second summer, made close to $50,000. She made $25,000 her first summer. She is very representative of our top people: self-disciplined, self-motivated."

Success School

Southwestern gets its young salesforce ready to achieve that kind of success through a weeklong sales school that teaches technical sales skills such as how to approach a customer, demonstrate the products and close the sale, as well as follow-through and delivery of products at summer's end. They learn business management, record keeping, the processes of managing the purchase, storage of inventory, cash collection and payment of invoices. On the practical side, part of the curriculum is a section that Southwestern calls 'dogology'-how to deal with a menacing dog. And throughout the week, Southwestern provides a big dose of motivational, inspirational and attitudinal training.

"We train on principle-based concepts that are important to someone so he or she can persist through adversity," Bedford explains. He enjoys watching the young salespeople blossom during their week of training. "It's always fun and exciting to realize that there is an inherent ability and passion inside some individuals that isn't obvious. Sometimes our top salespeople are soft-spoken, shy individuals, but they have the persistence that always wins the day. The profile is actually quite broad and varied, with the common characteristic that they've embraced the concepts of never quitting, learning from experience and taking one day at a time."

Hard Knocks

Then comes the test: the "book field," where the students run their own businesses. Southwestern helps its students find lodging-usually in a private home with a host family-in their assigned sales territory. Host families are often Southwestern "alumni" who provide room and board for the summer for two or three Southwestern student dealers. For many students, this will be their first summer away from their families. Then for six days a week, the student dealers start their day early, having breakfast by 7 a.m., knocking on their first door by eight. They continue their sales process until after 9 p.m. Their goal is to call on 50 to 75 homes a day in order to make 30 presentations a day. In the evenings, they compare notes with their peers and their sales manager. Sundays are important, too, but aren't a true day off. The student dealers from several territories gather in a central location for training, coaching, recognition, sales incentives and some fun-much like a regional meeting in any other direct selling company. Then on Monday morning, it's back to knocking on doors. The last week of the summer, they follow up with customers, delivering products, collecting payments and showing their clients how to use the books.

"A young person who does that all summer-you can imagine how much self-reliance and self-confidence he or she develops," Bedford reflects. "When we see the parents at the awards banquet in the fall, they tell us that they can't believe that their son or daughter got up every morning and started knocking on doors. But these young people develop a new way of thinking of themselves. Real motivation is intrinsic. If you can tap into people and find out what excites and motivates them, then you can tie it to their purpose during the summer and help them see that what they do every day is achieving their purpose. They get deep down motivation that lasts."

Despite the long hours and frequent rejection, only about 30 percent of first-year student managers don't make it through the first 20 days of the summer. If they stay that long, most continue throughout the summer. The motivation often continues after the fall banquet: between 25 and 30 percent return for a second or third year. Once the young sellers reach student manager level and have started recruiting a team-usually in their second year-virtually all continue to sell all summer. Their reasons for returning vary as much as the students do.

"Some come back to see how much they can learn, how much they can self-improve," Moore explains. "Some truly feel they've grown and want to help others. So they recruit others, and they build a team and an organization. Some get on a career path right away. The majority want to learn to be leaders. The book field offers them lots of practical experience."

Balancing the Books

This unusual business model has served the Southwestern Company well. Their regular interaction with the student dealers shows executives that they're achieving their mission of developing young people, and the balance sheet of the privately held company reflects their financial success.

"We do approximately $280 million in wholesale sales, $400 million retail," Bedford says. "We've had a high level of consistent, single-digit growth over a very long period of time." He notes that growth is achieved in two ways: the number of students who operate as the company's independent contractors each year, and because of its marketing initiatives, the increase in sales productivity. "We've been in continuous profitable operation from at least the 1940s, and maybe even during the war period." He adds, "One of the things that encouraged me to sell books was a letter written by Bruce Henderson, another salesperson who went on to establish his own business. His bookselling experience was during the Great Depression. Even then, he sold face-to-face in an affordable price range, offering the opportunity to spread payments out over the summer. Typically we haven't seen a correlation between economic cycles and our ability to sell and grow. The common thread in our business success is the passion and tenacity of students to hit their goal."

A few things have changed at Southwestern. Supplementing its book line, the company now offers educational CD bundles, such as the Encyclopedia Britannica and an SAT/ACT preparation pack. It now allows customers to pay for their purchase with credit cards, and sales managers can now view the sales statistics of people selling in their organizations at the close of each day.

Global Influence

Southwestern is now in the process of entering still more countries. Already it has begun recruiting students from southern hemisphere countries, offering a sales school for them in December and sending them to the warmer parts of the United States-such as Southern California, Florida and Arizona-to sell educational materials during the winter.

Although almost 100 percent of Southwestern's book sales revenue is earned during the summer months, the company also owns 15 other businesses-many started by graduates of Southwestern's summer sales program. Some subsidiaries are related to the book sales business and others leverage the company's core expertise in other ways. For example, three of its subsidiaries offer various types of sales and management consulting or training; two provide fund-raising opportunities to schools, non-profits and other organizations; and two others are direct selling companies.

With that much expertise under Southwestern executives' collective belts, they have some important guidance to offer young direct selling companies. CEO Henry Bedford says that the first step for any company is to "know clearly what your purpose is and why you want to start. It needs to be more than just to make money. Direct sellers like to work for companies that have a cause or mission. Be able to clearly articulate your mission." And just as important, he says, companies need a set of principles that they can teach employees and distributors and that will be used to run the company. "People like to be part of accomplishing something meaningful and worthwhile," Bedford says. "They want to feel that they're making a difference with their lives. If your company can make a positive difference, that will be appealing to build a sales organization around."