Online Exclusives

Growing Despite the Recession

By Christine Esposito, Associate Editor | October 9, 2009

With its first original scent on the way, direct-seller LMS Fragrances continues to expand its consultant force.

The beauty business isn’t easy, and neither is the direct-selling market. But LMS Fragrances, a Santa Barbara, CA-based direct seller of scents and body care products, is succeeding at both and company executives insist its roster of products and a transparent approach to direct selling will resonate with consumers and would-be consultants nationwide.

Founded by husband and wife team Robert and Susan Suh, LMS Fragrances touts the D’Essense line, a range of scented products that replicate many of best-selling perfumes and colognes on the market. It currently includes 80 fragrance “essences”—think fragrance replicas from Calvin Klein, Issey Miyake and Chanel—at prices “as much as 80% below similar perfumes sold in department stores,” according to the company.

Susan Suh, president, LMS
The LMS executives insist their company brings unmatched value to consumers by making its D’Essense perfumes with 28% essential oils and offering them in refillable purse size atomizers, table top atomizers or hand-blown crystal flacons.In addition, LMS sells a variety of candles as well as shea butters and lotions (including unscented bases that can be scented with each LMS perfume at home.)

With no formal experience in beauty, the Suhs started LMS in 2004, with Ms. Suh taking on the role of president and “consultant No.1,” and Mr. Suh assuming the role of chief operating officer. Today, LMS has 13 full-time employees, is outgrowing its current space and most importantly, is nearing 3000 consultants.

According to Ms. Suh, the secret to the company’s growth stems from its easy-to-understand, transparent approach to direct selling. Often a technique that often gets a bad rap for promising careers, rewards and fortunes that it can’t deliver, LMS contends it has built a direct-selling model that the average person can understand and fit into her lifestyle.

One point of difference, according to Ms Suh, is LMS’ inventory requirements.

“We don’t have auto ship or monthly requirements,” she said, noting that consultants who are inactive after two months will be asked to make a minimal purchase. Another point of difference noted by Ms. Suh is that when LMS consultants hold parties and get the money upfront from their customers, they keep 30% and send the rest on to LMS—no waiting for checks.

For its scents, LMS sells hand-blown crystal flacons, which can be refilled.
Ms. Suh also believes her incentives are more feasible for the average consultant to achieve. While 11 people earned a place in LMS’ President’s Club this year (and with it an all-expenses paid trip to Hawaii), 54 attended the “Elite Winter Retreat,” which was offered to any consultant who generated at least $350 in monthly sales for the six consecutive months from July 31, 2008 through Jan. 31, 2009, and at least $3,000 in total revenue during that same period. LMS covered their expenses for a five- day Celebrity Cruise to the Cayman Islands, and for those consultants who achieved higher levels, LMS also picked up their airfare and their guest’s airfare too.

“It is rewarding the people who are consistent. Those people are very valuable assets to the company,” Ms. Suh said.

Even with a bullish goal of reaching 5,000 consultants in 2010, Ms. Suh recognizes that issues with direct selling remain—even at time when the slumping economy has increased unemployment rates.

“You have to work hard to recruit people now. People are leery; there is a lot of hype in the industry,” she said. “It is a hard sell because this industry has been inundated with false promises.”

LMS is building its reputation. Earlier this year it received national accreditation and an “A” rating from the Better Business Bureau (BBB). More recently, LMS was honored as a 2009 Company of the Year by the Pacific Coast Business Times. In addition, Audra Strickland, Assemblywoman for the 37th District in the California State Assembly, award the firm with a Certificate of Recognition.

Having achieved a level of success, Ms. Suh told Happi that LMS has grown by “50%” this year, the company is expanding beyond replication scents. Its first original scent, Premiere, a chypre-floral, is rolling out this fall. (For more on Premiere, read Happi’s upcoming fine fragrance feature in November.)

Looking ahead, the Suhs want to focus on building the business nationally.

“We are plugging along,” said Ms. Suh, who spends two weeks each month on the road. “We just want to build and get our name out there. Direct selling requires that big bang—I think it will come in the next year. For now, we just want a presence in all states. We want to be nationally known.”
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