UK: Knock Knock. Who's There. Betterware.

UK: Knock Knock. Who's There. Betterware. - Uninvited, multi-legged guests, domestic fungi - all the plagues of the house-proud are countered by Betterware, itself counted as one of the top 500.

by Charles Darwent.
Last Updated: 31 Aug 2010

Uninvited, multi-legged guests, domestic fungi - all the plagues of the house-proud are countered by Betterware, itself counted as one of the top 500.

There is, behind the sofa of the human soul, a darkness in which nameless things scuttle and spin. It is one of Andrew Cohen's favourite places. "Know what this is," asks Cohen, chief executive of Betterware plc, waving a perspex pyramid on the end of a handle: I blush, and hazard something gynaecological. "Hnh. Not quite. Suppose you have a spider on your wall. You put this over it, turn it upside down and" - a small click as a trapdoor snaps shut - "ha - you've got it. Then you can put it out of the window or" - he taps an expensively shod toe on the boardroom carpet - "step on it."

There are women (nay, men) of one's acquaintance who would swoon with gratitude for such a dragon-slayer, and Cohen knows it. He also knows other horrors of the domestic Grand Guignol, other things that invade the home. Take the lavatory overflow pipe. "Frost can get in them, you know," he says, hollowly, "and spiders - that's how they get in, too. So we invented this" - a plastic valve - "to fit over the end. It lets water out, but stops things getting in."

Then there's dirt, in all it forms: mud that needs wiping off on Betterware doormats, of course, mildew that needs killing off with Betterware fungus killer, germs that have to be poised with Betterware Sani-tabs (pack of 10, £1.99). There is no end to the marketing opportunities afforded by lower-middle-class paranoia, and Cohen knows that, too.

In 1983, the Cohen family, with business interests in Birmingham property and textiles, acquired an ailing, Romford-based, door-to-door sales company called Wooltons Betterwear from the receiver. They paid, as Andrew Cohen now acknowledges with undisguised pleasure, £253,000.

"In the '60s, the company's pro rata turnover was north of £6 million," notes Betterware's chief executive. "By 1983, it was down below £3 million. Let's just say, things didn't look good." When, despite these unpromising auguries, the family decided to raise capital in a £10-million flotation on the Unlisted Securities Market in 1986, financial institutions were, perhaps not surprisingly, wholly underwhelmed. "Ours", Cohen sniggers, "was the second worst launch after Mrs Field's Cookies. They were 86% undersubscribed, we were 83%. Our launch price was £1.04."

He can afford the odd titter, and a great deal more besides. Those institutions which found themselves the doubtful owners of Betterware equity six years ago have seen two subsequent splits and a blossoming of the real value of their shares to £9.68. In 1990, Betterware went for a full listing at £24 million; today, the firm is in the FT Top 500, and Smith New Court puts its market capitalisation at £100 million. ("Actually, it's only £97.4 million this morning," says Cohen, modestly.). The portals of its present Curdworth HQ, expanded five times in as many years, are flanked by a matching pair of Porsches couchant. The only thing that troubles Cohen is that the family has agreed on a maximum turnover of £200 million for a single site, and, the way things are going, Betterware's massive new HQ - due to open down the road in '93 - may not be big enough for long. Problems, problems, problems.

Now, clearly this phenomenon can not be explained away by a sudden epidemic of arachnophobia among the British petit-bourgeoisie. Cohen's answer, honed for the legion of analysts that has beaten a path to his door over the last couple of years, is that Betterware is "a systems business". As is no doubt intended, this raises as many questions as it answers. Nearer the mark is his call for a new definition cover Betterware's specific, and unique, activity: Cohen would like it to be known as "personal mail-order", and this is how it works.

In the old days, Wooltons' drummers would carry suitcases crammed with brushes from house to house, perhaps the only domestic penetration, if saucy postcards are to be believed, positively welcomed by the grade-D housewife. In addition, the firm manufactured the major part of the wares these drummers sold. Now, notes Cohen, Betterware has sold off its tooling to subcontractors (although 70% of the moulds are still company-owned) and the Betterware distributor "is not allowed to sell, forbidden even to speak", far less to do anything more pneumatic. "They're permitted one sentence," says Cohen, adding, in honeyed tones, "Good morning, madam. I'd like you to accept this catalogue with our compliments."

The taciturn distributor then returns to pick up the hapless householder's completed order form. She (70% of distributors being female) also picks up the catalogue to pass it on: each is fine-bound and bears the legend £1.50 so that recipients will not throw them away, although Cohen happily admits that they are never sold and cost a fraction of that sum to produce. Impressive warehouse computerisation and a dedicated van fleet ensure that deliveries of bleach, brushes and other domestic etceteras are made within 72 hours. The take-up rate for Betterware's 13 million catalogues is one in five, perhaps 10 times the average for direct selling or straight mail order.

Now the question you may legitimately be asking yourselves is: why. For this we have to turn to the Cohen icon and self-appointed Nostradamus of marketing, Faith Popcorn. According to Ms Popcorn (ex-Ms Plotkin, and, you will be surprised to learn, an American), the developed world is in the throes of a retail revolution. With High Street shops closing in favour of out-of-town shopping centres, the unfortunate, non-car-owning grade D has to slip on its support stockings and lug its lavatory cleaner home on a bus.

Imagine the pleasure of being able to manage the whole process simply by ticking boxes. Imagine the pleasure, too, of being able to sell products that do not need to be expensively colour-differentiated (Betterware's standard stock is strictly anonymous grey-and-white), displayed in costly shop premises or advertised, as they would be in the High Street. "The products we sell aren't sexy," reasons Cohen. "They aren't pretty, they aren't elegant: but people have to have them." Betterware's customers are, in other words, the victims of that retail revolution described by Ms Popcorn, a revolution in which Andrew Cohen is pleased to play Robespierre.

The firm's customers are not the only victims of social tectonics making a contribution to betterware's success. In 1990, new distributors were joining its ad hoc UK workforce at the rate of 150 a week; in 1992, that figure has climbed to 500 a week, and the workforce to a running total of over 8,000.

The reason for this burgeoning is hardly very difficult to deduce, and it has nothing to do with a sudden popular fondness for catalogue delivery. "If", as Cohen trenchantly observes, "you can walk and talk, you can deliver Betterware catalogues": one may safely assume the intellectual rewards of this process to be slight. With average earnings standing at £35 a week, so, too, are the financial ones, for many distributors at least.

Sales director Brian Hale notes that retention rates (as they are known in the business) among Betterware's distributors have more than doubled, from four weeks to 10, and puts this down to the company's "caring" approach. At the same time, he is frank in describing the incentivising beanfeasts beloved of such door-to-door coevals as Amway and Avon as "a waste of money". All of this has enabled Betterware to be "not so much recession-proof as cycle-proof," as Cohen puts it. He explains: "People say we're not affected by recession, but it's not true. Our average doorstep sale has gone down from £9 to £7 since 1988, but we've been able to offset it by simply selling a whole lot more." It is, as they say, an ill wind. Betterware's doorstep strategy is underpinned by a demographic orgy that makes M15's intelligence gathering look like a Brownie outing.

Using census results, Ordnance Survey Maps and postcode data, Betterware has managed to produce bespoke software that, claims Cohen, puts every potential UK customer somewhere on its computer map. Zones are subdivided into regions which are subdivided into areas: an unimaginable one in three British households are now visited by their friendly if comparatively reticent Betterware distributor. ("We did have a problem until '88 with nine million missing Britons," admits Cohen, adding ominously, "but we've got all 56 million now."). Sales are calculated on a pounds-per-household basis, and catalogues distributed accordingly: sell well and your area expands; sell badly, and it contracts.

All this removes the pressure from the firm itself, the responsibility for collecting money from distributors devolving to area co-ordinators.

"If you don't pay within 17 days, you don't get any more goods," beams Cohen good-naturedly. Bad debts, discontinued lines and refunds are consequently, and not surprisingly, low, running at somewhere under 1% in any given year. What is more, the spread of unemployment into white-collar areas in the South East has opened up new catchment areas for distributors, and thus for customers as well. Cohen, ever-vigilant, casts a sanguine, professional eye at companies such as Avon, whose UK sales run at £250 million a year. Today, he reasons, St John's Wood; tomorrow, the world.

This world domination has, indeed, already begun with Betterware's first sally into Abroad. Last September, the company opened up its first European distributorship, supplied through a central warehouse in Reims. Within six months, its average doorstep sales were exceeding those in the UK, although totals are still less than 1% of those in Britain: Cohen predicts profitability from year two, and an expansion into another European country every other year thereafter.

There is also talk about the possibilities of the United States and Japan, but Betterware's managing director happily notes that its present stunning results in the UK have been achieved with a product line of only 400 individual items, and with only five new catalogues - the lynch pin of his company's operation - produced a year. The firm has already added Betterbooks and Bettertoys to its list, and both are reported to be doing very nicely, thank you. "If we print catalogues faster," he reasons, "we can sell faster, make more visits and build a greater product range. Profit isn't a dirty word in this business." Wait for the knock on the door.

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