House parties — whether you were having a few friends over for dinner, or inviting your entire contacts list — used to be a simple way to stay connected and meet new people. But in the era of COVID-19 and social distancing, house parties have become really complicated.
This is the challenge that Pampered Chef, a Berkshire Hathaway company, is facing.
Pampered Chef is an Illinois-based multinational, multi-level marketing company that operates under a direct selling model. Independent contractors called “consultants” facilitate parties where they introduce groups of people to the company’s various cooking products and kitchen tools, and earn commission based on sales.
Consultants typically do not host the parties themselves; usually, they invite someone in their network to host the event at their house. Any benefits — such as discounts on products and free gifts for the host, and recipes and cooking tips for the guest — are split between the host and guests. Products are shipped directly from the company to the customer. This has been the Pampered Chef model since the company was founded by Doris Christopher in the 1980s.
While house parties have fallen off most people’s social calendars for the time being, Pampered Chef is actually having a pretty good year — both in terms of attracting more consultants and selling products online, potentially because of higher unemployment rates and an increase in home-cooking as many people are under voluntary quarantines, says Shiv Dutt, Vice President of Experience Innovation. This moment also presents the opportunity to finally shake up their traditional sales model.
Taking Cues From Customers
The migration away from in-person selling to the digital realm actually predates the COVID-19 pandemic, according to Dutt. What inspired Dutt and his team to look into altering this model was the customers themselves, he says.
“I would say that even prior to me joining [the company, a little under two years ago,] there was a little bit of a migration [away from the in-home selling model]. Our contractors tend to be very entrepreneurial,” he says. “They had found some different ways to use social media, whether it be Facebook, Instagram, Snapchat, WhatsApp, texting, to essentially start connecting with customers,” and getting them to buy with a special link — no party required.
The problem the innovation team needed to solve was the lack of access to data and the lack of control around the user experience on these third-party platforms, Dutt adds. One solution that Pampered Chef is currently exploring is partnerships with social media platforms like Facebook and Instagram in order to better craft the digital-selling experience.
“We’re doing a lot of alpha and beta testing with [Facebook, Instagram, and other social media platforms]. … That’s going to be a very important way people are going to connect and buy and sell. But to do it in a way that’s authentic and real…that’s the critical thing, right?” Dutt says.
While consultants have already begun selling on social media, developing a marketplace on a social media platform that both consumers and consultants can trust is key.
“You can’t take social media channels and make them exclusively sales channels, because that defeats the purpose of having social media channels,” he adds. “But at the same time, what you want to do is enable sales if a consumer chooses to do so. … We’re getting on the forefront of testing, so that we can not only inform ourselves about the opportunities and figure out how we set up for success for the future, but also inform [the platforms] about how to build the product the right way so that they can be successful and in so doing help us as well. So it’s truly a partnership.”
“When you’re in the office, oftentimes you get very focused on trying to just innovate from within. And I think this, in some respects, has opened up our eyes to saying, ‘There’s probably a lot of things that already exist’…”
At the same time, the company is also using this as an opportunity to reshape their current model, which has had limited evolution since its inception, according to Dutt.
“[In the current model,] the host is getting all the benefits, because if you think about it…if I’m hosting a party in my house, I’m doing a lot of work in terms of actually setting the party up, getting food, et cetera. If it’s a digital experience, then the workload is different. And so then the question is, do the benefits end up being different as well? We’ve really worked on evolving a completely alternative model, whereby the benefits are far more equitable, sharing that with incentives for everybody to win,” he says.
In the new model that Pampered Chef is trying, guests and hosts share benefits, which include discount codes up to 25 percent off and free product offerings, almost equally, with the exception of a few extra incentives for the hosts. While hosts have always received tangible benefits like discounts and similar gifts, guests have not. Now, they’re being brought in on the fun.
“It’s a model that we’ve been testing out and we found it to have huge success…We did a proof-of-concept last year for about three months with a small group of about 10 people. Then we ran a pilot earlier this year for three months with about 1000 people…and now we’re going to go live,” Dutt says. “All the way from ideation to proof-of-concept to pilot to technology development to launch [was about] 12 months.”
Tying Up Loose Ends
Along with the success that Pampered Chef is experiencing come challenges.
“There’s incredible amounts of pressure on our supply-chain systems. I think across the world there’s product shortages, inventory shortages. There’s challenges in being able to deliver products on time. … The system was not really set up to handle the major fluctuations we’re seeing in our business,” Dutt says.
Smoothing out the post-purchase journey for customers has become a high priority. To alleviate some of the pressures on existing support channels like call centers and email, Dutt is looking into creating the infrastructure for a chatbot to provide instant customer support. The trick is choose the right one, he says.
“If you think about chatbots, it’s a concept that’s existed…and we could even build one ourselves. It’s a case of finding the right solution that can solve our problems now, but also set us up for success for the future.”
Dutt’s team is also working on developing a digital solution that would hold all necessary information for consultants in one place. While this has been in the works for a while, the team is looking to accelerate the release — perhaps with external help.
Developing new partnerships that can potentially accelerate projects that got started in-house has become a common approach for Pampered Chef’s innovation team during the past few months. Being out of the office has inspired Dutt and his team to solve problems in different ways, he says.
“When you’re in the office, oftentimes you get very focused on trying to just innovate from within,” he says. “And I think this, in some respects, has opened up our eyes to saying, ‘There’s probably a lot of things that already exist that we might be able to foster.'”