Southwestern Company, a scam?

[Yoyo]

The Southwestern Company is a company (formed 1855, program started 1868) that has college students doing door-to-door sales of educational books over the summer for an average of 78 hours a week, knocking on about 35 families' doors a week. The pay depends on sales - 40% for each sale, and participants take a trip to Nashville for training school before they go to their respective locations. Training school is free for participants, though there is a $1000 penalty "in the event of default by Dealer after the closing of a selling season." Prior sales experience is not required.

This is something I just got into today (but have yet to actually sign the papers to agree on any penalty thing), and after my dad mentioned that it was a potential pyramid scheme (aka a scam), I've concluded that it certainly has the potential to be a MLM company that may have some people benefiting over others. Money doesn't seem to be an issue (an average of $8000/summer sounds reasonable, really) but it seems a bit weird how I'm only getting positive feedback from people I have called, yet online I can see criticisms and screams of scam. Overall, the reaction seems very mixed. Certainly, some people think it's a great thing while others do not (which is actually quite common for any company). Some articles even say that it seems like a scam but many people do benefit from it.

I'm quite confused about all this and don't know what to think of it. I can see how people can benefit from it (as the experience strengthens them as a person) while I can also see the parts of it that seem rather scammish.

What are your thoughts about it? Do you think this company is legit?

[Erki]

I was also invited to join it two weeks ago. I wasn't told about any penalty thing. I also saw there are some negative and some positive feedback on the 'net - quite confusing. I had to give it up though because I can't go this summer anyway.

Pretty interesting that this popped up here though...synchronity?(Happened twice yesterday too...)

[RT Wolf]

The Better Busines Beaureu is always a good bet, if you haven't looked them up yet:

BBB

I don't have enough relevant details else I'd have done it.

[openeyes]

I almost did this a couple years ago, but decided that if money were the goal one would practically be better off at McDonald's when you break it down to average hourly pay (at least for the first summer). In addition to the 12-15 hour days, someone with a car can expect to drive about 10,000 miles over the summer, and apparently it's not at all unusual to total at least one car (my would-be manager told me some of his stories, though to him they weren't deal breakers). A friend who did it a few years ago remembered the people fondly, but definitely felt you work very hard for the money. She was one of the people who chose to walk rather than bring a car and drive everywhere, and it rained quite a bit that summer.

From what I've gathered, the basic process is to head off to training, then head out to wherever in the country you'll be working, and find a family that will let you stay at their house cheaply over the summer. Then you go about looking for houses with toys out front as a sign they have kids, and try to sell to them. If you do get the sale, you'll deliver the item to them personally at the end of the summer, meaning you'll need access to a car, and will be delivering quite a few books. It bothered me that the customers would have to wait several weeks to receive their orders, and that during that time they might back out. That said, if one looks at it as an internship rather than a way to make above minimum wage the first summer or two, it may be worthwhile. I ended up doing sales for a different company this past summer, but would not recommend the experience I had. One caveat: the direct sales industry does not track what happens to sales representatives (how often they're attacked, mugged, etc.).

[Yoyo]

Erki: Oops, the penalty is $500. Still hefty, though.

RT_Wolf: The BBB of Middle Tennessee says the company is "satisfactory".

openeyes: Thank you for the story about your experience openeyes. I certainly feel that the experience would be interesting, though it appears that the costs of doing it may be too high if the direct sales industry is not going to be responsible for what happens to their representatives.

[RT Wolf]

Satisfactory usually means its not a scam. But that's about all that tells you.

[Brutha]

When exactly do you get the penality?
I googled "default by dealer" and it gets 25 hits. It doesn't seem to be a term that is in the normal language.

[poetrythug]

A lot of the companies with this same business model will grossly over-estimate the amount of money from sales can be made. They will say something like, "And if you make X worth of sales, you will make $8,000 profit over the summer," and they will not mention that the average person makes only one-third of X worth of sales.

If it's for the summer break between college years, I think you would have a much better experience getting an internship -- even an unpaid one -- with a good company, that will give you valuable experience and contacts in an industry you're interested in.

[openeyes]

Originally Posted by poetrythug

If it's for the summer break between college years, I think you would have a much better experience getting an internship -- even an unpaid one -- with a good company, that will give you valuable experience and contacts in an industry you're interested in.

Agreed. Another thing is that the profit figures given are for people who stay the whole summer. Many people leave early, either because they don't like the setup, or they're not making nearly as much as expected. Those who stay and make the "average" figures are doing better than the average people who started.

[madmadboy123]

Everybody please help me. It's kind of urgent!!! I am a student from the University of Kentucky. I was selected to join the summer program for South western company. I did sign for the contract for the summer and also return the letter of endorsement from my parents. I meet with my manager once a week to prepare for the summer. However, I have some problems that I cannot continue with the summer. I would like to ask if I want to quit right now, what will it cost me? Do I have to pay any kind of penalty?
Please answer me as soon as possible. i'm so worried about it right now.
Thanks you so much everyone...

[openeyes]

Originally Posted by madmadboy123

I would like to ask if I want to quit right now, what will it cost me? Do I have to pay any kind of penalty?

As long as you return the sample packet (if you already have it) you should be fine.

[Garrett Lancaster]

My name is Garrett Lancaster, and I am a college student at the University of Texas in Austin. I have participated in Southwestern for three years now, and have found it to be one the best choices I ever made, as well as the biggest learning experience. It's definitely not for everyone however, and it does require a very large work ethic. If anyone has any specific questions about the company, or my experience (both good and bad aspects) please feel free to email me at ******, or call me on my cell...actually, if you really want to call me, email me first so I don't go posting my number all over the internet!

EDIT: I removed my email address from the post to avoid spam, but you may still email me through this site

[seeker5]

Originally Posted by Garrett Lancaster

it does require a very large work ethic.

"very large work ethic" sounds like "working like a slave" . But if you enjoy it, all the more for you.

[Garrett Lancaster]

hehe...I guess you could look at it that way. I work hard for 3 months to play hard for 9 months To put it in perspective for you though, on a typical Saturday, I make between $500 to $1000. Do you think anyone really has to twist my arm to go work on Saturdays? not so much

[Addict]

I posted this in a thread about Vector and of course it's more relevant here:

I have a small piece of advice. I was almost was taken in by Southwestern, a similar company I believe. Instead of making appointments to sell knives, you get relocated for an entire summer to sell textbooks door to door. The whole operation seemed a bit fishy. The two things that I realized while going to their "group interview" session were:

1) They need you more than you need them- They really focused entirely on what they were going to offer you (which was inflated I'm sure). Compare this to a normal job interview where there is talk of compensation, but it's largely about what you can provide the company.

2) They would hire anyone- There was never any hint that they would actually refuse anyone; they tried to make it seem like they were selective, but they were setting up group interviews by calling everyone they could find! If they would hire anyone, do they really expect everyone they hire to be successful? Of course not. This company had nothing to lose. If you failed, it was your problem. In a typical employment setting, it's way too costly to hire people you expect to fail. You've got to train them and pay them.

So in general, I would look out for opportunities were the company isn't selective at all and they build you up and list off tons of benefits instead of asking about your qualifications. It just doesn't make sense.

[Garrett Lancaster]

Addict,
Although I understand your perspective, I wanted to respond to a few of your misunderstandings.
1)the "group interview" you speak of is not an interview at all, but a corporate spotlight. This is no different than when a company such as Slumberger (as they did very recently at UT) sets up a huge display with all of the benefits and interesting aspects of the company to attract applicants; the intent is to inform. Those who find the prospect of working with the company intriguing then apply, and are interviewed.
2) Although I cannot speak for other companies, Southwestern certainly does not "need you more than you need them". The idea that a person's failure costs the company nothing is untrue, and here's why.
A) the company invests EXTENSIVE time, effort and money in training both new recruits and managers absolutely free of charge.
B) Imagine that you are building a team to bike across the country with you. Instead of finding people who are excited and talented bike riders, you just let anybody tag along. The people who have no endurance or skills or excitement drag the team behind, keeping them from their full potential. And say that people begin to quit and go home because it is harder than they thought. Don't you think this would drastically affect this team? Of course it would. These are the people you're living with and relying on. The same goes for Southwestern. As I said, I can not speak for all companies (and I'm sure there are even a few novice SW managers who have yet to learn this), but I and the vast majority of SW would not even think about hiring someone that would weigh me or the rest of the organization down.

[Addict]

This is no different than when a company such as Slumberger (as they did very recently at UT) sets up a huge display with all of the benefits and interesting aspects of the company to attract applicants; the intent is to inform. Those who find the prospect of working with the company intriguing then apply, and are interviewed.

No, it is different. I've now been in college for over three years and I have attended many presentations similar to what you are describing with Slumberger. A week ago I attended a presentation by Google. Yes, those kinds of presentations are there to inform. It's usually a very large group of people, there is a presentation, a Q & A at the end, and students are recommended to apply online. Is that what happened at the SW meeting I attended? Absolutely not!

-They did their best to make it seem like a group interview. I'm fairly certain they used the word interview over the phone, but it has been three years since I went. I know that they were very secretive on even disclosing what the company even did over the phone (which is a good clue it's a scam). I've also never been solicited by phone to attend a company presentation. Why didn't they just post fliers around campus?

-It was small, but still a group. The presenters interacted with every attendee, unlike a general info session.

-We were asked to fill out a sheet with our qualifications and some very strange essay type question. The sheet also had a place for us to list our friends that might be interested so they could hassle them. The presenters would look at each sheet and try to build each person up. This is the opposite of being selective. The presenter remarked that he was amazed at my 4.0 gpa.

-We immediately scheduled follow up interviews at the end (all of us remaining at the meeting). This has never happened at any other single company spotlight I have attended.

the company invests EXTENSIVE time, effort and money in training both new recruits and managers absolutely free of charge.

I suppose you're referring to their "sales school" that lasts one week. According to the website, they don't even provide gas, food, or lodging during the time you're there. That's complete crap by the way. I would never attend a training session that expected me to pay for everything except the training.

EDIT: Don't know if this is true, but if so, it speaks volumes about how much they are really "investing" in you:

Training school is free for participants, though there is a $1000 penalty "in the event of default by Dealer after the closing of a selling season.

2) Although I cannot speak for other companies, Southwestern certainly does not "need you more than you need them". The idea that a person's failure costs the company nothing is untrue, and here's why.
...
B) Imagine that you are building a team to bike across the country with you.

Poor analogy and here's why: to my understanding, you are an independent contractor at SW. If you sell a ton of books, you make the company a profit because they are selling the books to you. If you make nothing, they lose nothing. Yes, there is the training, but I'm sure they can and do afford to let many people fail completely.

All they have to do is get as many people as they can into the program with large group interviews and training sessions. Then as long as a certain percentage of those people sell, the company is fine. It's not like they are paying anybody to go out there and sell. They make kids move away from their homes for an entire summer and recommend that they work 72+ hour works to survive. And once these kids realize that they're away from home, paying their own bills, making no income except what they provide for themselves, they are kind of forced to make it work. If they fail, it's their problem, plain and simple.

(an average of $8000/summer sounds reasonable, really)

I wanted to direct this to yoyo. Please remember that this statistic only includes those that work 20 days or more per month (odd to me because they're independent contractors and should be able to work as much as they want). Also in general, to answer you question of "is this legit?" It's certainly more legit than many other companies and you certainly could benefit. The big issue I have with it is the responsibility to earn is completely on you. Of course this is just like owning your business. So why not start your own business and make/sell something novel instead of using a prepackaged business plan someone provided you with? Also, I wouldn't want to live away from home (somewhere I didn't choose to go) working 80 hour weeks. That's just me.

[Garrett Lancaster]

Okay, so let me try to address all of those: You're disgruntled because
1)The presenter was a good speaker and interacted with his audience...I don't believe any explanation is required on this one
2)They asked if anyone you knew would be interested in hearing about the opportunity.
I consider my job as a recruiter to consist of finding the type of people who would succeed at the job, which usually includes being very hardworking and socially skilled. This combination is not easy to find on a college campus, and so we understandibly expedite the process by asking for recommendations.
3)The building people up remark: I often "build people up" if I see something commendable. It is good practice in business and in life. Because I recognize good qualities in others by no means indicates my willingness to bring them onboard. Whatsoever.
4)extensive training: sales school is part of it yes, and if you can show me a similar sales training experience which is free of charge and they pay for your transportation and accomodations, please do. Beyond sales school, I and all the other managers invest LARGE amounts of time each week meeting with and training the rookies for several months prior to sales school.
5)The $1000 dollar default you speak of is this: The SW Co. ships you 10-60000 dollars worth of product ON FAITH. They do not make you invest to purchase them wholesale, but rather TRUST you with the products. If a person were to STEAL those books and not deliver them to their customers, THEN the person's two endorsers would be liable for only $500 apiece.
6) Also along those lines, since the company gives the product to you on faith, and then takes back any product that you do not sell or deliver, SW makes ABSOLUTELY NO MONEY if you dont sell any books.
7)Back to the team analogy. I understand how you could think that, given that you have not experienced it, but I can tell you from three years of first hand experience: when someone quits, or even stays but has a bad attitude because they are not doing well, it has a drastic effect on the organization and we do our best to avoid either situation.
8)as far as "working 72 hrs a week to survive", it is made clear DURING the very first information session that they will be working these kinds of hours and living in a different part of the country. It's not as though people get out there and suddenly discover that they are expected to work hard. And yes, if they wanted to not work at all, that is their perogative because they are independent contractors. That is why we eliminate those people in the interview process, or more commonly they eliminate themselves. We know this isnt for everyone.

[Garrett Lancaster]

Also concerning Sales School: it is rated as the #1 undergraduate sales training in America (for which you get college credit as well)

[Addict]

1)The presenter was a good speaker and interacted with his audience...I don't believe any explanation is required on this one

Maybe you missed it, but I was disagreeing with your statement that the group interview I attended was exactly like any other company spotlight. I wasn't criticizing that particular method, just pointing out that it would never be used at a company presentation like you were referring to.

2)They asked if anyone you knew would be interested in hearing about the opportunity.
I consider my job as a recruiter to consist of finding the type of people who would succeed at the job, which usually includes being very hardworking and socially skilled. This combination is not easy to find on a college campus, and so we understandibly expedite the process by asking for recommendations.

You expedite the process of looking for hardworking and socially skilled people by asking for "recommendations" (which was little more than list as many people's phone numbers as you know. it had nothing to do with their qualifications) from random people that you have invited by phone to this presentation.

Random people giving you a list of their random friends. Oh, I'm sure you're going to find the hard workers there!

The truth is they're just trying to get the absolute largest number of people possible regardless of qualifications.

[cdn2wheeler]

I can't speak for this particular company, but there's a fundamental error that many sales organizations make (and it seems Southwestern is primarily a sales organization) in trying to get both sales and salespeople:

It's the myth that's often called, "It's a numbers game."

Essentially, that's code for "if we present this product/service to enough people, a certain percentage are going to be suckers for it."

Working 72-hour weeks, door-to-door, and asking attendees for "recommendations" shows that, at least from what's presented here, Southwestern is one of those "numbers game" companies. It's not about effectively marketing a product or service to a select clientele, it's not about getting and training the best sales force, it's about casting as wide a net as possible in order to catch a few unwary souls.

I wouldn't get near them. But that's just my personal opinion.

[Garrett Lancaster]

As far as the "calling random people" goes, we only call people who either are recommended to us through friends, organizations, professors, or those that fill out a questionnaire stating that they would like to hear about a job opportunity.
Also, sales IS a numbers game (within a certain target group). Ask any marketing expert. What do you think commercials are? And the assumption that playing the numbers game and effective marketing strategies with good training are mutually exclusive is erroneous.
As far as "suckers" go, that term supposes that the product/opportunity is without value to those who chose to buy/participate. You are certainly entitled to your opinion, but I would advise doing research before you make such blanket statements.

Anyway, this could go on forever, so if you have any questions about SW, I suggest their website Southwestern Company Otherwise feel free to email me and I will answer as best I can.