CUTCO Collegiate: Direct Sales at the University of Calgary
By Scott Strasser with files from Jason Herring, October 13 2015 —
Most students expect their degrees to net them a job after graduation. But what if you could land one before leaving university? The Students’ Union often allows businesses, marketing firms and non-profits to rent space in MacHall to advertise their programs, essentially creating a year-long career fair.
The sentiment — connecting students with employers they otherwise wouldn’t have access to — sounds well-intentioned. But students aren’t swayed easily, and targeted marketing campaigns often fall on deaf ears.
University of Calgary students proved that recently by taking to reddit — a popular online forum — to criticize Vector Marketing, a direct-sales company that recruits students on campus.
One reddit user started a discussion thread on Sept. 18 in the r/ucalgary subreddit. The user criticized Vector’s recruitment tactics on campus, and other redditors quickly joined the discussion.
“I’m sick of the scams, the clipboards, the interruptions before and during class, for what amounts to human pop-up advertisements in real life,” they wrote.
Vector has gained notoriety both online and on campus, where they do much of their recruiting. Former employees and recruits claim the company misleads students by painting an inaccurate picture of what working there is like.
“I went to one of their interview sessions and it was probably the biggest time-waste I’ve ever been involved in,” another user wrote. “It is literally a way to make money off the backs of naive or desperate people.”
A 2013 article published in Business Insider points out five signs to watch for when considering joining a multi-level marketing company. If the company focuses more on recruiting than selling, encourages you to sell to friends and family or asks you to pay for basic supplies, Business Insider says the business might be a scam.
Vector is the marketing arm of CUTCO Cutlery, a company that uses direct sales tactics to sell knives and other household products. The company has over 250 offices in North America, and generates annual sales over $250 million.
Vector hires sales representatives as independent contractors — non-salaried staff. Reps set appointments with prospective customers and perform in-home demonstrations of the product. Basically, they hope to sell knives based on an in-home version of show-and-tell — like the Tupperware parties your mom held in the ‘90s.
“It’s a demonstrable product, so that’s why we demonstrate in the homes of customers,” Vector national campus recruitment manager Sherri Dickie said. “We let them try our products, compare them with their own products and then they make a decision.”
After noticing the r/ucalgary thread, Dickie created a reddit account to defend Vector and answer students’ questions via an ‘Ask Me Anything’ (AMA). She said other Vector employees also created reddit accounts to help defend the company.
Dickie hoped to provide another side to the story. But soon after starting the AMA, she stopped answering questions.
“In hindsight, we should’ve realized a reddit AMA was too much of an opportunity for a community of anonymous critics to attack without knowledge what we do and the success stories we have,” Dickie said. “Some of the comments there were bordering on slander. It didn’t make sense to continue the conversation.”
A group of former Vector employees and university students created a group called Students Against Vector Exploitation (SAVE) in 2003 to expose what they called Vector’s unethical business practices. The group’s Yahoo page has 1,219 members, but went dark several years ago.
Members of SAVE claimed the money employees use to buy sample kits is where Vector profits most. Vector sales reps have to make a deposit on a CUTCO sample kit for $99 before they can start selling.
For most university students, that’s no small investment. But Dickie said the kits are refundable if a rep leaves the company.
“If someone decides to move on and they don’t want to keep the product, they can return it for a complete refund. We do not profit from a sales rep paying a deposit for their sample kit,” Dickie claims.
SAVE claimed that new employees are encouraged to start selling to friends and family to build a clientele. Vector hopes those connections will lead to referrals to their friends and families’ social circles, so reps can grow their sales at an exponential rate.
Dickie argues this business practice is common in many industries, like real estate or financial planning.
Others have criticized Vector’s pay structure. Sales reps are either paid per appointment or given a commission based on their sales — whichever sum is higher. They earn $17.25 per appointment if they don’t sell a product, or 10 per cent commission on what they sell that week. If they sell more knives, their commission can rise to 35 per cent.
Vector’s critics say the high price of CUTCO products make the knives difficult to sell, meaning an employee is likely to earn only the base-pay. If a rep continuously fails to sell a product, a more experienced employee will accompany them until they can close a deal.
“The problem is finding the clients, organizing a demo, commuting and performing that demo is not worth [$17.25],” one reddit user wrote in the thread.
But Dickie argued Vector’s pay structure actually increases the likelihood of making a sale. She said reps sell product roughly 60 per cent of the time.
“If the only way I was going to get paid was based on commission, I might be more aggressive and [customers] would be turned off by that, even if they like the product. With the base-pay system in place, the representative is relaxed and the customer is relaxed. In turn, we actually sell more because it’s a great product in a relaxed setting,” Dickie said.
Vector’s critics claim employees often log several unpaid hours each week. Employees aren’t paid for training sessions and former reps say Vector encourages its workers to participate in phone jams — group meetings to cold-call potential customers.
Dickie said meetings and phone jams help reps improve their sales and grow their clientele, but those hours aren’t billable.
“We hold phone jams and workshops with the purpose of giving [sales reps] the tools, support and training to help them achieve all their goals,” Dickie said. “While none of these are mandatory, we find that most representatives find them valuable.”
Vector has received 118 complaints via Better Business Bureau — a site that measures businesses based on the length of time they’ve been open, transparency and licensing credibility — since 2012.Gripes range from customer issues with advertising to problems with the product or service. According to the website, only 25 of these complaints were resolved.
So why does a company like this do business at the U of C?
Vector has recruited here since 2001. This year, they booked an information table in MacHall from the SU for 13 days. The company has partnered with Career Services and business clubs in the past.
But fifth-year U of C science student Kevin Blakey said Vector’s recruitment tactics have been more aggressive than those partnerships imply.
“They come into classrooms. They do their speeches at the beginning of large classes. They put their clipboards in peoples’ hands and insist you pass them around. They wait outside and talk to people when they’re coming out,” Blakey said.
An organization needs to get permission from the professor before visiting their classroom. Clubs, organizations and SU election candidates often visit classrooms. The Gauntlet asked the SU if there were any policies for classroom visits from recruiting companies, but they were unable to provide an answer.
Vector reps used to write advertisements on classroom whiteboards, but Dickie said they stopped after both students and professors complained. She denied the allegation that Vector recruiters visit classrooms or distribute clipboards in lecture halls — a recruitment tactic many participants of the r/ucalgary thread criticized.
Blakey’s experience draws Dickie’s claim that Vector recruiters adhere to U of C policy into question.
“I had this box at school. Every time a clipboard was handed to me, I would keep it and put it in the box. I got up to about 30 clipboards before the box was thrown out by people who were cleaning. But it was getting ridiculous,” Blakey said.
SU vice-president operations and finance Sarah Pousette said they have guidelines vendors must abide when using information tables. Companies can’t solicit passersby; people have to approach their table first. Vendors are supposed to stay within three feet of their table. They also aren’t allowed to pass out pamphlets, which must be picked up from the table.
“I think it’s fair we allow anyone who doesn’t break the law and follows the rules to sell their business on campus. However, Vector has broken most of [these] rules,” Blakey said. “There are a lot of people who I think would agree with me because Vector does those things quite blatantly.”
Pousette said that after noticing the r/ucalgary thread, the SU approached Vector’s information table in MacHall to notify them of the complaints.
“We approached the company and said ‘hey, this is a concern. We’re concerned when students are concerned’,” Pousette said. “This was the first time it was brought to our attention that students have been complaining in other places about it, online in this case.”
Although Blakey and some participants from the r/ucalgary thread claim Vector approached students away from their tables, Campus Security hasn’t received any formal complaints.
SU director of marketing and communications Robyn Dinnadge claims the SU made sporadic visits to Vector’s booth after they saw the reddit thread to ensure the company follows guidelines.
“We contacted Vector Marketing to let them know about the complaints and reminded them that any future breach of the guidelines may result in not allowing them to return to MacHall,” Dinnadge said. “There is every indication that they are complying with the guidelines.”
“We don’t try to police who comes and who doesn’t, but there are certain policies,” Pousette said. “If a company doesn’t follow our guidelines, we have in the past said, ‘sorry, you can’t come back’.”
But Vector’s reach extends beyond the corridor connecting MacHall and Science B.
Derek Hassay is a U of C marketing professor in the Haskayne School of Business. Hassay researches direct sales techniques and is considered an expert on the subject. He also sits on Vector’s academic advisory council — a board of industry experts who advise Vector on the changing dynamics of the sales industry.
“For me as an entrepreneurship and marketing professor with research focus in those areas, I’m interested in enabling people to pursue entrepreneurship,” Hassay said. “Everyone in the direct sales industry is an entrepreneur. For $99, which is the average cost of a sample kit with these companies, you get to have your own business.”
In 2005, Hassay partnered with Vector for his Marketing 449 course. Calling the experiential learning project Selling Smiles 101, his students sold CUTCO products to raise money for the Children’s Wish Foundation (CWF). Since 2005, his students have raised $221,000 for the charity’s Alberta branch.
Before settling on Vector, Hassay approached a range of direct sales companies. Many companies didn’t agree to his conditions, which forbid students from signing up as employees. The company could not solicit students after the course finished and had to provide sample kits for free.
“I didn’t like that most companies said my students had to sign up,” Hassay said. “In my position, there’s no way these students were signing up for anything. I wanted them to be given the product.”
Vector agreed to his conditions, and treated students like pseudo-employees during the course. However, since they are not employed by Vector, students did not receive the $17.25 per appointment, nor did they receive commission from what they sold. All proceeds went to CWF.
Students were not graded on how much product they sold.
Marketing student Aliya Noorani took Hassay’s course last year. She set the record for the most individual sales that year, raising around $10,000 for CWF. Noorani admitted she was wary of working with a company that had a poor reputation among students.
“I didn’t hear great things about Vector; that they just try to get students to, for lack of a better word, do their bidding for them,” Noorani said. “That put me off a bit. But the way Dr. Hassay brought in Children’s Wish, I forgot about the whole Vector thing and focused more on [the charity].”
In accordance with their terms and conditions, Noorani said Vector did not contact her after the course.
A video of Hassay from Vector’s official YouTube channel uploaded in 2011 shows him discussing the benefits of student summer jobs. He mentions that joining Vector is a good opportunity for students to gain sales experience.
Hassay said the video was posted as a way to share the file within the Vector organization.
“It was actually a piece we did for parents of children who were in Vector. Some [parents] were wondering what this all means in the grand scheme of things for their children. The fact it was still up on YouTube — I had no clue,” Hassay said.
Vector removed the video on Sept. 21 in the midst of a separate reddit controversy. Dickie said they removed the video because of the abuse Hassay received in the comments section.
“We took the video down because there were people writing comments that were so hurtful it was disturbing,” Dickie said. “People were saying they wished he had cancer and died.”
In the video, Hassay spoke generally about summer employment and only mentioned Vector by name once, but redditors slammed the professor for being involved with the company.
Direct sales are not for everybody. Dickie said Vector provides students with sales training that can supplement their future careers. She claims most criticisms of direct sales comes from people who don’t succeed at it.
“It’s a lot easier to blame the company than to say ‘I didn’t try very hard.’ But after 25 years, I can tell you countless stories of people who appreciate their Vector foundations as they moved on in their careers,” Dickie said.
A 2009 study from Dow Jones affiliate Factiva found that direct sales companies grow substantially during recessions. Job loss, program cuts and a waning economy can bring out anyone’s inner entrepreneur. We’ve seen all of these conditions in Alberta over the last several months.
Vector works for a very specific kind of student, but most people on campus don’t buy what they’re selling. But despite an angry online response and Vector’s waning reputation among students, Dickie said they will continue to recruit at the U of C.
“I think this is like that telephone game that kids play, where once something gets all the way around the circle, it doesn’t resemble what it started as,” Dickie said.
For better or worse, direct sales are here to stay.