June 1, 2008

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Opportunity Knocks

On a warm summer evening, a well-groomed, neatly dressed young man knocks on ...Read More

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Opportunity Knocks

Summer Sales Companies Find Talent and Success in Orem-Provo

Jamie Stum

June 1, 2008

On a warm summer evening, a well-groomed, neatly dressed young man knocks on a front door with a clipboard and a smile. The neighborhood might be an upscale subdivision in Dallas, an apartment building in New Jersey or a tract home in Arizona, but his company polo shirt proves he’s not peddling subscriptions or pushing religion. He’s a summer salesman and he’ll let you know his company is from Utah. Centered in the Provo-Orem hub, the door-to-door summer sales industry cropped up more than 10 years ago and is now finding legs to stand on. With early adopters evolving into major players, promising startups gaining ground and some much-needed industry consolidation, these companies say they’re ready to be taken seriously. A Workforce is Born Experts say the Provo-Orem area is a fertile hotbed to grow the summer sales industry, with a workforce available in spades among the young men recently returned from missions for the Church of Jesus Christ of Latter-day Saints. For many, it’s a quick swap from a suit and tie to tennis shoes and a training manual and they’re back on the doorsteps. Most door to door sales companies in Utah focus on a four-month selling season which capitalizes on the availability of college students in the summer. The school year is spent recruiting and training next year’s force with most drafting done by last summer’s successful salesmen. When April hits, managers take teams of about 20 reps to cities across the nation. Salesmen individually knock on doors 10 hours a day, six days a week. Of the products pedaled door-to-door, pest control, alarm systems and satellite TV are the most popular coming from Provo-Orem companies. Tyler Swinyard, who owns Earthworks Pest Control, brings a team to Arizona every summer. His focus on pest control is based on an affordable necessity in the desert, he says. His workforce is mainly college students between 20 and 30 years old. About half are returned missionaries, who Swinyard says are usually more comfortable approaching customers at a doorstep. The majority of summer sales companies operate as marketing companies or “dealers” for equipment providers or security monitoring companies. The sole job of a summer salesman is to generate as many solid accounts as possible for the marketing company in four months. Accounts are typically held in-house for a short period of time, then sold to a larger company such as ADT or Monotronics. Companies also have the option of holding the accounts themselves or using a hybrid model of sell some, hold some. For young, poor college students, the industry gleams with the shiny promise of cash. An average first year rep that sells 50 security system accounts in one summer might come home with about $23,000, while selling 100 accounts could garner as much as $50,000 in just four months. Experienced reps and managers make more, according to industry officials. “There’s not very many viable options as a college student to make the kind of money you can in this industry,” says Greg Snider, president of Orem-based Vision Home Security. Such work is lucrative, but not for everyone. Days are long and hot, and rejection is frequent. Snider says he always plans on 10 to 15 percent of reps quitting within the first month of the season. “Even though the money is great, you’ll earn every penny. I don’t think it does anybody any good to give the impression that you make $20,000 a summer just for wearing a company T-shirt,” Snider says. A strong work ethic and a great attitude are superior to any skill set, he says. “I have seen people who don’t have the best sales skills, but they are the hardest workers and they do the best.” Making a Name The unending supply of college-age workers compounded upon years of industry experience has fueled continued year-over-year growth among many local companies. Officials for Icon Security say they anticipate 125 percent growth this year and 2008 is projected to be many companies’ biggest summer ever in number of reps and sales projections. One of the oldest in the local space and the biggest name in town is APX Alarm, based in Provo. The company started in 1999 as a dealer for Protection One, but has recently undergone a massive effort to keep all its accounts in house. APX, which already has more than 100,000 accounts managed in house, recently inked deals with Goldman Sachs, Jupiter Partners and local venture firm Peterson Partners to finance the transition. “In the dealer world, you are essentially just a marketing company for the real company. We felt like we were creating a lot of value for another company but at the end of the year, you have no value, you’re not in control,” says Alex Dunn, APX’s chief operating officer. Since making this strategic move in 2003, the company has jumped from generating about 20,000 accounts a summer to more than 130,000 accounts and is projecting to sign on more than 150,000 accounts this summer alone. Positioned to Sell Officials pitch to potential recruits that the summer sales experience can develop traits essential to any career. Though not necessarily glamorous or enjoyable, the job builds characteristics such as time management, a positive attitude and the ability to gracefully handle rejection, says Dunn. “To be successful at anything, you have to learn how to be a good salesperson. You’re selling yourself, your company or your service in any profession. These kids teach themselves perseverance and we give them the opportunity to hone in on skills that are very critical to their success after APX,” Dunn says. Michael Bauer, a BYU senior from Idaho, says his experience selling door to door has taught him how difficult, yet rewarding, the sales industry can be. Bauer has room to talk — last summer he earned more than $60,000 working for APX Alarms. Bauer decided to try out the industry two years ago when he needed extra money to pursue a double major at BYU. He says a supportive atmosphere among the sales team, a solid manager and, of course, the money, keep him going through the long, tiring days. Bauer plans to stay in the industry for a few more years, then start his own construction company. “I’ve made more money than I ever thought I would in four months,” agrees Dave Neumann, a student at Utah State University. “It’s very hard work and it gets old really quick, but it’s well worth the money you make,” Neumann headed to the doorsteps of Miami as soon as his finals were over. Growing Pains Although the money is good, salesmen attest going door to door is no easy sell. A simple Google search will bring up countless stories of unhappy customers and salesmen alike, who say they were treated unfairly, ripped off or tricked by a Utah-based summer sales company. Many company owners admit there’s been some wrongdoing that needs correction. “Our industry has got some ground we need to make up in cleaning up the industry,” says Jake Taylor, president of Icon Security. “You see companies that turn the other way because a salesman is a heavy producer, or they don’t want to knuckle up and face reality. But at the end of the day, you’ve got to feel proud of what you’re doing and the business you’re in.” One of the main complaints is customer service. Because many of the accounts are sold off repeatedly, customers can get shuffled around from marketing company to provider to monitoring company, each turn taking them farther away from the clean cut salesman who knocked on their door. Lee Donehower is one of them. A retired pilot and truck driver, Donehower lives in Oakland, Calif., an area where he feels a home security system is a necessity. After signing on with a door-to-door salesman from a Utah-based company in 2003, he ended up dealing with six different alarm companies as his account got sold and resold. Meanwhile, repeated phone calls and emails to corporate offices were ignored, fees were overcharged and never repaid and the salesman was nowhere in sight. Donehower says his experience is not atypical; he continues to get emails and phone calls from people around the country who say similar incidents happened to them with Utah-based, door-to-door companies. For Donehower, it’s the young salesmen he worries about. “Not only are the companies pulling wool over eyes of potential customers, but also of the young men selling and it’s despicable,” he says. “I think they are sold the same bill of goods that they are programmed to sell us.” Some salesmen can vouch for Donehower’s frustrations. Dustin Bluhm managed 20 security system salesmen last summer in Washington. After a summer filled with customer service issues and shoddy treatment caused by his company, Bluhm had only 10 salesmen that hadn’t quit. For example, a month into the summer, the monitoring company started randomly overbilling customers, sometimes taking up to five months of service payments out of a customer’s account. “It took one customer three months to get the company to even admit they had taken too much money out,” Bluhm says. “I still lose sleep over the whole experience.” But Bluhm says the worst part of the experience was the deceitful approach tactics reps were subtly encouraged to use by corporate. Reps were encouraged to say they were not selling anything and that they picked a customer’s house specifically because of the flowerbeds or its location on a street corner, “things to make them feel special,” Bluhm says. Though equipment is typically given to customers for free, “We’re encouraged to tell them the equipment would normally cost them between $800 and $1,200 but all they have to pay for is the monitoring fee, when anybody who just called us would get it for free just as they are.” Local company officials say that any company that puts on high volume will have its share of unhappy customers and that such behavior is not condoned. Some, such as APX and Icon, have instituted installation surveys and welcome calls that allow customers to express if they’ve been treated unfairly or haven’t been given what the door-to-door rep promised them. “Obviously any business that operates at the scale we operate at is going to get some complaints,” says APX’s Dunn. “We aggressively look into every complaint to make sure that if what they say has happened, we remedy the situation. I don’t suggest that we are perfect, but we do not condone that behavior in the least. We wouldn’t have the partners like Goldman Sachs and Royal Bank of Scotland if we didn’t have very high business practices or run our company well.” He says the company does end up firing some sales reps every summer to keep quality high. Close Quarters With so many summer sales companies located in Orem and Provo, a constant jostle for customers and workers is inevitable. Though some company owners say sharing the same stomping grounds in both the off season and the summer has led to a level of mutual respect, salesmen say competition is fierce in the trenches. During recruiting season (also known as the school year) companies contend to offer the best pay scales and bonus structures, some even offer signing bonuses to snag a promising salesman. Companies aggressively guard training materials and procedures; some declined to be interviewed at all for fear of backlash from competitors. The preseason rivalry gets even stiffer during the summer. A successful office needs an area with a large, concentrated population, says Icon’s Taylor, so areas like Oakland, Calif. have been hit up every summer for years. “It’s a dogfight,” Taylor says. “It just comes down to guys understanding that we will run into other companies, but it isn’t ideal.” But, in a culture where some 25-year-old salesmen are making more than their parents, it’s the money that talks the loudest. Pinnacle Security, an Orem-based security systems marketing company, pushes the slogan, “It’s all about the lifestyle” while former employees say now-defunct Firstline Security once dropped $15,000 in $5 bills from the ceiling at a company party. Though some company officials say extravagance is just part of recruiting, in the case of Orem-based satellite TV sales company Atlas Marketing, it somehow got out of hand. CEO Wade Sleater started the company in 2002 and expanded into about 20 startups, including COPIA Ventures, Source XII and others. Former employees say Atlas would bring in about $30 million a summer and Sleater would invest large chunks into his new ventures. Sleater also had what former employees termed “an insatiable appetite for material wealth.” Spontaneous shopping sprees, international vacations and a costly car collection were part of life. Lavish car allowances were issued to management on a use-it-or-lose-it basis, ensuring Atlas representatives were seen all over town in Aston Martins, Jaguars and BMWs. “Atlas was great in its heyday,” said one former employee who asked not to be named. “It was a bunch of entrepreneurial people excited about growing a business. There was a mindset of abundance and the attitude was that the future was bright.” That glowing vision began to dim in summer 2007. Unprofitable startup ventures drained company accounts while sumptuous spending habits began to crack Sleater’s empire. Just after the summer sales season wrapped up in September 2007, company officials admitted that Atlas was unable to pay its salesmen for the summer. With tuition due in weeks and no paychecks, panic ensued, say former employees. Eventually, Atlas representatives approached APX Alarms and Pinnacle Security for help. Both companies arranged to pay any rep who would sell for them the amount owed by Atlas. Relieved salesmen agreed to sell for APX or Pinnacle in the summer of 2008. Atlas Marketing officially declared bankruptcy in January 2008 and Sleater faces numerous lawsuits from creditors. Sleater was unable to be reached for comment. As for the companies which stepped in, officials say it’s just what they do to keep the industry rolling. “It’s not good for us when these companies run their business poorly and don’t pay their people because then we get painted with that brushstroke as well,” says APX’s Dunn. “We do feel some responsibility to step in and use our resources to try and right some of the wrongs.” Some former Atlas reps say the pay-out by APX and Pinnacle totaled more than $1 million. Another recruitment effort situation took place at a regional and managerial level later in the year when Firstline Securities also declared bankruptcy. Firstline Securities reached its downfall trying to strike a balance between holding and selling accounts, says owner Trevor Keyes. The company signed an agreement that allowed ADT to exclusively buy accounts generated by Firstline salesmen. When competing alarm provider SAI offered to pay more for the accounts, ADT granted Firstline permission to sell off a portion to SAI, but about halfway through the summer of 2007, ADT revoked the blessing. By that time, Firstline salesmen had already sold about 28,000 accounts that were only compatible with SAI’s technology. The result was what Keyes called “a huge child custody battle” over which company got the accounts. Firstline declared Chapter 11 bankruptcy this winter, leaving many of its summer salesmen completely or partially unpaid for their work. Though many joined other companies, most are still missing at least a portion of their earnings. “Right now our sole focus is getting our creditors paid, and at this point, even our employees are considered our creditors. I understand how people feel disenfranchised and opportunities lost; I feel like my own opportunities have been lost,” Keyes says. “We feel like we’ve gotten the short end of the stick like anyone else.” Though there’s been some downsizing, industry executives are confident the summer sales sector is moving toward improvements and even more growth. A focus on better customer service and strategically building the business will characterize the next phase for the industry, experts say. And with a seemingly inexhaustible supply of salesmen always looking to make a buck, they just might be in your neighborhood this summer.
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