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College force serves up cutlery maker's sales

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Associated Press Writer

February 13, 2005, 11:15 AM EST

OLEAN, N.Y. -- Tom and Melissa Miklinski have just agreed to spend $200 a month for five months for a spiffy new set of kitchen knives, but the young 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 there at their dining room table _ salesman Ben Owliaie will notch another point toward a $200 scholarship.



"I'm working on it, getting closer and closer," the 18-year-old tells the Miklinskis hopefully.

Melissa Miklinski agrees to make the calls.

Owliaie gives her a script.

"I just met with Ben Owliaie," she's supposed to say. "My appointment was pretty fun. Would you meet with him?"

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 relies on the college students and these in-home encounters for virtually every sales dollar _ $182 million in 2004, $242 million the year before.

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 the board 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 freshman with a career eye on Wall Street, is typical. Recruited by mail before his high school graduation, he signed on for three half days of training that served as a crash course in the product and how to sell it.

"It was a lot of role playing, going over the program, over and over again, why CUTCO is so much better," said the finance major. "It got us pumped up."

Now, armed with a demo set, a couple of carrots, a length of rope, shoe leather and newfound 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 Alcas president and chief executive James Stitt. He estimated more than 40,000 college students sell CUTCO in any given year.

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 lesson on the knives' construction, with an emphasis on their American-made status and a "forever" guarantee that is passed with the products through generations. All are 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 industry. "If you can see those products in the home, it's so much better than seeing them on a shelf in a store."

Some colleges, including Purdue University and Illinois State, have integrated the CUTCO presentation into sales and marketing courses as a way to apply academic concepts in the real world.

CUTCO sales reps receive $14.25 for each demonstration, and a percentage of the sales, beginning at 10 percent. It's not for everyone, judging by the good number of complaints from former reps online, which take issue with everything from unpaid training time to having to pay for the demonstration set.

The sales model has not kept the uncertain economy from hurting Alcas, headquartered in Olean, a city of 15,000 about 65 miles south of Buffalo. 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.

The company projects slight growth in 2005.


On the Net:

CUTCO Cutlery Corp.: www.cutco.com

Direct Selling Association: www.dsa.org

Copyright 2005, The Associated Press

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