What is a Party Plan Company?
Party Plan Selling is one of the most popular methods of direct selling. Most, while not all, direct sales companies employ this type of method because it is one of the most convenient ways of marketing a company and its products while at the same time, acquiring sales and leads. In essence, Party Plan marketing is characterized by a social event, typically a home party, where independent sales consultants of a particular company offer their merchandise for sale. Most party plan companies also employ multi-level marketing where sales consultants are given commissions from both their personal sales and from the commissionable sales of their sponsored downline representatives. Under the party plan system, anyone can host an event for the company by scheduling a date with a sales representative. The host will then invite guests, typically her personal network, to the party where a sales representative will demonstrate products.
History of Party Plan Marketing
The woman behind the party plan marketing method goes by the name of Brownie Wise. She developed this system of marketing for the direct sales company, Tupperware. The company has then gained the reputation for pioneering the party plan system. As a company that caters primarily to women, Tupperware saw the need to give women in the 50s a venue to meet new people and mingle with friends during their free time, which is why the company welcomed Brownie Wise’s idea of integrating the party plan system into the company’s marketing framework. At Tupperware parties, women are able to socialize with other women while being given the opportunity to earn their own income or shop for Tupperware products in a relaxed and comfortable environment.
Soon after Tupperware’s success in party plan marketing, other direct sales companies also adapted this method of marketing.
Party Plan Demographic
Since most party plan companies feature products primarily aimed at women, most people who host and attend parties are also women. Although there are also several companies that employ the party plan system aimed for the male population of direct sellers. The direct sales company Man Cave is one such company that offers grilling products aimed at men. Their version of a home party is called a “Meating”, which is essentially a backyard event in the form of a barbecue that works much like a regular home party.
Party plan companies such as Mary Kay and Avon employ the same format as Tupperware parties, where women invite their friends and family over to try out different types of products offered by the company.
Party Plan Companies’ System of Compensation
Party plan companies compensate their hosts for hosting a party in their behalf. Most companies have a host rewards system, under which the host will be eligible for free items and discounts on merchandise if his or her party sales reach the minimum required. Most party plan companies offer a portion of the party sales in free products and a certain number of items at discounted prices; these items are typically exclusive to hosts only, although other companies allow hosts to choose which products they would like to get for free or purchase at a discount. Brownie Wise was also the first to introduce an incentive system to hosts through Tupperware parties.
On the sales consultant’s side, commissions can be received if the consultant is able to recruit new members to the company at the home party. All sales made by the consultant in the party is also commissionable, a portion of which will go to the consultant, depending on the rates offered by the company. Commission rates typically range from 20% to 50%, depending on the company.
The Party Plan Advantage
While party plan marketing is but one of the many methods that a direct sales consultant can employ to sell products, it is perhaps one of the most profitable. One reason for this is because sales representatives are able to reach out to a bigger number of people as opposed to approaching customers individually. Home parties also save sales consultants time and effort, as they are able to present their products to entire groups of people through one presentation. While majority of direct sellers make a profit from selling their products individually from one person to another, there are also a lot of direct sellers who earn a bulk of their profit by attending home parties.
The party plan method has also proven to be advantageous for the consultant in terms of network building, as they can easily get repeat customers at home parties. If they get along with the host at a particular home party, the chances of the host contacting them to schedule another party is also pretty high as opposed to contacting another consultant.
A lot of consumers also prefer purchasing through home parties, especially when the company’s merchandise involves clothing, jewelry, kitchen supplies and food items, as they can test out the products and be provided with demonstrations, as opposed to buying retail where they won’t be given as thorough a run-through about the products like in direct sales. In the case of clothing and jewelry, it is easier to try them on in such events, as they don’t have to fall in line in crowded dressing rooms in retail stores.
What to Consider When Joining Party Plan Companies
Before joining a party plan direct sales company, one must first consider the profitability behind the venture, in the same manner as one would consider the profit potential behind any direct sales company or business venture. Take a look at the commission rates and the potential and marketability of the product base.
Since party plan marketing involves talking to a lot of people, one must also consider whether they can confidently represent the products. Sales consultants who are not too confident about their public speaking skills typically opt to focus on person-to-person selling and other methods of direct selling. However, you may be missing out on a large market if you completely stay away from home parties. Ideally, you should choose a party plan company that offers products that you enjoy yourself so that you can properly market them and discuss their benefits during home party demonstrations. It is rather easy to demonstrate in a home party, as most of these events are invitation-only and are done in the host’s own home so the environment is typically very relaxed and friendly.
Another thing that direct sales consultants should take into consideration when joining party plan companies is the host rewards program. Does the incentive system compensate the host properly for her efforts? Are the rates fair for the host? These are some questions you should take the time to ask and ponder on. While most party plan companies, especially big ones, have established a fair and attractive rewards system, others may be a little more conservative with their rewards program. The disadvantage with joining a party plan company that offers products that don’t appeal to most people or offer incentive programs that don’t compensate the host’s efforts properly is that it may be difficult to get people to even book events. In which case, the venture may prove to be not so profitable for the sales consultant.
Party plan companies generally offer lucrative opportunities for sales consultants and a venue to build a loyal network of customers. Most of these companies have also developed a rewards system that fairly compensates their hosts, you just have to take the time to choose a reputable company with a well-established party plan system.