Door-to-door sales is back… but why?

 |   Kendall Tucker, CEO, Polis

Microsoft is proud to be launching our third year of Civic Tech focus at MassChallenge with the Civic Tech Scholarship. The scholarship recognizes 5 startups as they enter the MassChallenge accelerator with a cash grant to help them grow their businesses. Microsoft’s Civic Tech Scholarship aims to identify startups helping elected officials deliver improved services to citizens, increasing communication with residents and enhancing government effectiveness. The ultimate goal is to identify solutions that foster citizen engagement and transparency between government and constituents. This blog post highlights the work of one of the 2016 Civic Tech scholarship recipients.

— Aimee Sprung

For an industry commonly assumed to be dying, door-to-door sales is growing a lot. The Bureau of Labor Statistics, which reports occupational employment statistics every year, has released its 2015 employment report which shows a 34% compound annual growth rate in door-to-door sales between 2011 and 2015.

Surprised? So were we. In 2015, almost 4,000 Americans were employed doing door-to-door sales and far more than that were independent contractors. (To give you a sense, independent contracting numbers are not reported, but Vivint, the 9th largest solar contractor in the country, has 4,000 door-to-door sales reps, all of whom are independent contractors.)

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*The BLS did not begin to report door-to-door sales employment in cable, security systems and wholesale trade until 2014, 2013 and 2012 respectively.

*The BLS reports data only for full and part-time workers.

Still surprised by these numbers? It may be because of where you live. The BLS does not release employment data from all of their states (disclosure differs by state), but it’s a phenomenon primarily taking place in the South and Midwest.

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So how is it possible that door-to-door sales, long considered the expired dream of Willie Loman, is not only alive but thriving? It has to do with the limitations of its competition.

When organizations look to sell their goods or services, they generally calculate the return on investment from advertising on TV, calling on phones, sending direct mail and running digital ads. While each of these mediums has its benefits (we’re a door knocking company and we run digital ads as much as anyone!), companies are also looking for better options.

Calling people on their phones and sending direct mail has seen its effectiveness severely reduced by the advent of do-not-call lists, the decline of home phones and the infrequent mail checking habits of many Americans. TV ads remain effective, but as viewership has declined, prices have gone up, making it by far the most expensive of the advertising channels. Digital is being praised as the future of sales (see Hubspot in all its glory), but ad blockers and near internet saturation has deemed over 50% of ad buys viewerless.

So what is a company to do for differentiation and effective sales? Vivint Solar and Vivint Smart Home (confusingly now two separate companies) have acquired more than 2/3 of their customers through door-to-door sales. As Adam McClellan, their VP of East Coast sales told me in a call last week, “We’ve found that when selling home service products, the most effective place to do it is at the consumer’s home… While other companies wait for consumers to come to them, we go to the consumer, provide them value & win.”

Similarly, Christopher Noon, the CEO and Founder of SmartLawn has said, “Door to door sales offered a very economical way of gaining clients or at the very least getting the word out about our company in targeted neighborhoods.” After running his previous company with this mantra for 15 years, he sold it for $8 million last year.

Door-to-door sales offers an efficient and cost effective strategy for companies doing complex sales looking for differentiation. A lot of work goes into training representatives and targeting prospective customers, but ultimately prospects who talk with door-to-door salespeople are more likely to remember a product and more likely to buy. As Oxford Economics showed in its study on face-to-face interactions, for every dollar a business spends on travel it earns an average of $12.50 in added revenue and $3.80 in new profits. Numbers like that are tough to beat.

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