EXCERPT: 'Viral Loop'

[ MOVING BEYOND SATURATION ]

Tupperware prospered well into the 1970s, revenue doubling every year, achieving half a billion dollars in sales in 1976. Along the way it hit a point of nondisplacement—competitors couldn't knock it off its pedestal even with comparable products. Eventually, though, like all viral companies, it reached a point of saturation and began a steady decline. Tupper's patents expired and competitors like Rubbermaid entered the fray, but the predominant reason was socioeconomic. Women had entered the workforce and weren't around to host or attend parties, which disrupted the vast social network that had driven sales for more than a generation. The company struggled into the 1990s, losing $22 million in the United States in 1992. Then a former senior manager at Avon, E. V. "Rick" Goings, took the company's reins.

As his name implies, Goings is a fast-talker who could sell dial-up Inter-net access to an AOL customer service rep. He has been experimenting with viral strategies in the offline world for almost forty years, believing that products that require a customer education are best suited to direct selling. (Direct selling involves person-to-person contact or home parties like Tup-perware's, while direct marketing is simply catalog sales.) If you are unload-ing blue jeans, he says, direct selling probably isn't for you, since everyone knows what jeans are and what they are used for. If you are peddling some-thing in a new product niche, say, gourmet food that must be tasted to be believed, direct selling could be an apt strategy. Then it's all about what Goings calls "FNR": friends, neighbors, and relatives, "who go out and tell their friends, neighbors and relatives, and so on and so on." It works as a marketing strategy because it offers the product credibility. "In a world of friends I'm not going to tell you about something unless I think it is for your own good."

While attending classes part-time at the University of Virginia, Goings started his first viral business, a smoke detector distributorship in 1970. Be-cause forty years ago no one knew what a fire alarm was (or was even aware of the need for one), Goings opted for a direct-sales approach. He recruited college students to create fire safety crusades in their communities to induce people to buy smoke and heat detectors. Because he offered sky-high com-missions (each smoke alarm retailed for $100, and each distributor pocketed $60), it didn't take long for Goings to set up three hundred locations across the United States. The key portion of each sales pitch involved a short film explaining that most fire victims die between 10:00 p.m. and 6:00 a.m., usually from smoke inhalation.

"Customer education was extremely important because most people didn't even know they had a problem," he says. With the group primed to act, the representative would take orders, then ask, "If you knew the cure to cancer, who would you tell?" He would request from each attendee a list of ten FNRs with whom he would like to share the filmstrip. Then the presen-tations spread virally, with each purchaser doubling as a highly credible re-ferral—someone who had your best interests at heart.

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