OLEAN, N.Y. — Tom and Melissa Miklinski have just agreed to spend $200 a month for five months for a new set of kitchen knives, but the 18-year-old salesman who got them to sign on the dotted line isn't through with them yet.
If the couple will refer him to two people — right now while he's still at their dining room table — Ben Owliaie will notch another point toward a $200 scholarship.
"I'm working on it, getting closer and closer," he tells the Miklinskis.
The calls are made, referrals sealed. A good day for Owliaie. A crucial day for CUTCO Cutlery Corp.
As its college-age sales force goes, so goes the western New York cutlery maker. There are no retail outlets stocking its high-end wares, no Internet sales except to existing customers.
CUTCO, North America's largest manufacturer of kitchen cutlery, relies on the college students and these in-home encounters for virtually every sales dollar — $182 million in 2004, $242 million the year before.
It's direct selling at its purest.
While changing times and technologies have swept up other traditional direct sales companies — Tupperware and Avon are now stocked at mall kiosks and Web sites — CUTCO's reach remains only as long as the arms of its young sales people.
It has been that way since the 1970s when college students brought in to bolster the adult sales force in the summer became the primary sellers.
"We have been at it long enough that we recognize that there are shortcomings," said Erick Laine, chairman of Alcas Corp., the parent company of CUTCO and its sales arm, Vector Marketing. "But they make such a perfect sales force that we have no desire to change it."
Owliaie (pronounced oh-woll'-ee), a Canisius College finance major with a career eye toward Wall Street, is typical. Recruited by mail before his high school graduation, he signed on for three half days of "life skills" training that served as a crash course in the knives and how to sell them.
"It was a lot of role playing, going over the program, over and over again, why CUTCO is so much better," he said.
Now, armed with a demo set, a couple of carrots, rope, shoe leather and self-confidence, Owliaie gives his spiel, a mix of youthful zeal and seasoned sales speak.
"Is that cool or what?" he asks as Tom Miklinski glides a knife through a narrow length of rope in a single stroke. Then later, "I'm sure you would agree that CUTCO is a value."
Leaning so heavily on students, who by their nature are temporary employees, may seem like building a castle on shifting sands, but company officials say that's not so.
An ever-changing sales force opens the company to an equally changing potential customer base. Each sales person is told to make their first pitches to the people they know best — parents and friends — and network from there via referrals like the ones from the Miklinskis.
"This is not walking down the street, knocking on doors," said James Stitt, Alcas' president and chief executive.
He estimated more than 40,000 college students sell CUTCO each year in the United States and Canada.
The in-home approach is a logical one for a big-ticket item like CUTCO, whose knife sets can range from $600 to $2,400, experts said. The 45-minute sales presentation gives customers a detailed lesson on the knives' construction, with an emphasis on their American-made status and a "forever" guarantee the knives carry through generations. The pitch covers the knives inside and out, from the ergonomic thermo-resin handles and high-carbon steel blades, down to the hand-sanded nickel-silver rivets.
All is woven into a demonstration that keeps the potential customer engaged — slicing, peeling, inspecting, handing over pennies to be snipped in half or spiral-cut into a corkscrew.
"Certain products are very good for the direct sales model because they benefit by that demonstration: kitchen products, home decor," said Amy Robinson, spokeswoman for the Direct Selling Association, an umbrella organization for the $29 billion a year direct sales industry. "If you can see those products in the home, it's so much better than seeing them on a shelf in a store."
While unique, its sales model has hardly shielded Alcas from the ups and downs of the economy. Three rounds of layoffs over the past year have reduced the staff at the manufacturing plant to a little over 700 employees, down from more than 1,100.
The layoffs, attributed to flat and declining sales in 2003 and 2004, followed several years of growth and hiring, said Stitt.
Sales, which were $130 million in 1999, increased 17 percent in 2000, 39 percent in 2001 and 17 percent in 2002, he said, leading the company to hire hundreds of workers and spend $30 million on equipment and building upgrades to keep up inventory.
The company expects sales to pick up this year and into 2006.
Despite the recent hardships, company leaders are not tempted to stray from the direct-sales model, intent, they say, on protecting their college-age force and ultimately the company's livelihood. Internet sales, for example, are made only to customers who've already bought through the in-home demo, and commissions are funneled back to the original salesperson.
"If we were tying to sell our product on price alone, we'd be right where everyone else is," Laine said, "closing up shop. There's no way that we would win the price battle against nations with wage rates 10 percent what ours are."
Students "are not born sales people," said Laine at Alcas' Olean headquarters, south of Buffalo. "But once they understand what the product is they become very enthusiastic sales people."