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Direct Buy and the Magic of Lead Generation

I don’t know how many times I’d seen it. That chipper blond, the irritatingly giddy couples explaining how much money they’ve saved, the irrefutable logic of being able to purchase things directly from manufacturers, avoiding all those costly markups.

If you’ve seen the infomercial, you know what I’m talking about. If you haven’t, here are just a few of the claims Direct Buy makes:

  1. Retailers are making a killing—even on sale or closeout items. Direct Buy cites statistics from the U.S. Census Bureau to support the following average retail sales markups: home furnishings-43.3%, appliances and electronics-26.2%, sporting goods-37.7%, clothing-41.6%, general merchandise-25.2% and internet & mail order-37.7%.
  2. Through Direct Buy, you can buy items at the same prices the retail stores pay—and sometimes even cheaper.
  3. Direct Buy gives you access to the complete lines of over 700 different manufacturers—in a sense, unlimited options. For example, while a store may carry a sofa in a choice of 3 different fabrics, the manufacturer may actually offer 50 different fabrics. You, of course now get to choose from 50, all from one location. No shopping from store to store.
  4. You will belong to an organization that operates more like a private club than a store, with access to confidential manufacturer prices.
  5. Everything you buy comes with a complete manufacturer’s warranty.
  6. With a Direct Buy membership, you can now buy like the stores do. All you ever pay is cost and shipping.

If you’d like to see more of Direct Buy’s claims (ahem) directly, just visit them here. If you’re here for serious research, I strongly encourage you to check it out. Be sure to click on the testimonial tab in the lower right hand corner of the screen labeled, “What Members Are Saying.” .

Now just to be fair, let’s balance it out a bit with couple more testimonials. I found the following on this site.

3/10/2007 – Casey of Michigan, USA writes:

We were skeptical of this outfit and went prepared to say no. We are building a home and were “promised” by the owner savings of 20-30%, approximately $45,000-70,000. We have tried to take advantage of these “savings”. However, we have done better on purchases at box stores & local distributors.

We purchased four stainless steel Kitchenaid appliances and saved $311 through a big box. We found our front door for $600 less than Direct Buy’s “insider” price. Other examples: Our plumbing, lighting, hardwood, and tile have all been cheaper through the installers. Our lumber, doors, siding, roofing, and window price was $52,408 through Direct Buy, but another lumber company in town is offering the same thing (apples to apples) for $49,817. We are refusing to chase our losses and have unfortunately not been able to save a penny by purchasing through Direct Buy.

If we can’t save at least $4500 to recoup our initiation fee then you won’t be able to.

And this one can be found here.

2/25/2007 – Rocky writes:

I do not recommend this company to anyone. It is a scam. My husband and I joined in 2003 (I think it was $3600 to join and haven’t bought a stick of furniture from Direct Buy yet. If you really want a laugh try getting prices of an item off their web-site, it is so confusing just to navigate their site that I just gave up. Going to the actual site isn’t any better. The reps aren’t really helpful almost to the point you feel as if you’re bothering them. I have found many pieces of furniture and other items a lot cheaper “outside”. I will probably just take this as a lesson learned, and not try to purchase anything from them, after also hearing the horror stories about the extra shipping & handling charges and other excess fees, plus the long waiting time just to get your items. If anyone wants to start a lawsuit, I’m in, because we’d like to get our hard earned money back. I will keep coming back to this web-site to get contact info from anyone of you out there who is brave enough and angry enough to carry this out.

Direct Buy: Our invitation to the showroom

So anyway, like I said, God knows how many times I’d seen that infomercial. And of course, as a homeowner with a history of gutting rooms until nothing’s left but dust, studs and wires, it always looked like a pretty good deal to me.

But I just could never find the time to make that phone call. Always something more important to do—like chew meat snacks and watch infomercials. So, as chance would have it, last October Direct Buy made the first move and called us.

Not only did they extend a warm invitation, but they also promised us one of three fabulous door prizes—a new car, a cruise or a $30 gift certificate at a popular chain restaurant—just for showing up.

How could we lose? Worst-case scenario: we satisfy our curiosity and get a free meal. Can’t beat that.

The Rubber Meets the Road (and I slip into a coma)

If you visit the sites I linked to, you’ll get a pretty good idea about what to expect during your visit. The presentation was slick. A nice little movie much like the infomercial you see on T.V., a little talk by the owner showing us some newspaper ads, some sale prices, and then comparing those to Direct Buy’s prices.

The deal we got was $4,300 for the first three years and then something like $95 a year after that.

But we had to decide right then and there. It was a go or no-go situation. If we decided that it just wouldn’t work for us right now, or that we needed to sleep on it, we couldn’t come back for at least 4 years. And of course, who knows how expensive the initiation fee will be by then.

Anyway, after the pitch, we were invited to look around the showroom, which in our case really wasn’t much more than some furniture and a bunch of shelves packed with catalogues.

The thing to understand here is that we really wanted this to work. I’m an investment kind of guy. If I can make sense of it and think I can make my money back in a reasonable amount of time, usually I’m in. My experience with geo thermal heat pumps and CFLs are just two examples of how I’ll put my money where my mouth is.

So all I had to see was how I could recoup my investment in the next three to four years. The problem was that we weren’t planning any major building projects or renovations.

But maybe an even more compelling reason to decline was that we simply couldn’t find anything. We didn’t come prepared. So we made a hasty list of things we thought we might buy.

Gas grills? Um, couldn’t find ‘em.
How about toilets? Umm . . .hang on, let me see.
Maybe clothing? How about athletic apparel or shoes—ehh, not so much.
Bed sheets? Nope.

Direct Buy: The Deal Breaker

They don’t carry basic building materials like Sheetrock or lumber. We’ve already replaced all the windows and doors on our house. So we thought maybe siding. We’ve actually already started doing this ourselves (slowly), as time and money permits, using a brand of fiber cement siding we get at Menards. But we still have a large majority of the house left. We figured if Direct Buy carried the siding, we might be able to recoup much of the $4,300 membership fee.

Like I said, I really wanted it to work.

Bottom line: it didn’t.

After a completely mind-numbing search (first with a sales rep, then another sales rep, then the owner) of the catalogues, we finally came to the conclusion that they couldn’t get it. However, one of the advantages of being a Direct Buy member is that you also get discounts from “partner” retailers and installers and whatnot. So the owner pulls out his cell phone but, alas, it was now nearing six o’clock on a Saturday evening. Nobody who knew anything could be found.

By now I was completely comatose.

We’d spent nearly 3 hours in that place, and I’d had it. It just wasn’t working. And seriously, the hardest part about the whole process was the endless searching. The manufacturer’s catalogues are confusing as hell. Item numbers, limited descriptions, maybe a pencil sketch or a picture here or there but that’s about it.

We had heard during the pitch that everything was also online and shopping was a breeze from home—but we never got close to a computer when we were there. Indeed, I think we only saw one on the floor–and it didn’t look friendly, but that might have just been my blood sugar.

I imagined countless hours over the next 4 years vanishing in the pages of dusty catalogues, as we searched relentlessly for ways to recoup our start up fee. No thanks.

We can’t set foot within 100 feet of the building for the next 4 years? Bummer. Please tell me we won the restaurant gift card. I’m starving.

Direct Buy and Persuasive Sales: A Case Study

Persuasive Sales 101

Ok. First the crash course. If you’ve been to enough sales presentations, you’ve probably noticed a pattern. This pattern is not an accident. It’s replicated because it just plain works.

Different industries, presentation methods, and individuals all tweak the pattern to suit their particular product/media/style, but the persuasive pattern is still the same. Understand, of course, that there’s a whole lot more to this. Libraries have been written about sales persuasion. But here are the basics:

1) The Big Promise
2) The Proof
3) Stories (often in testimonial form)
4) The Guarantee (you’ve got nothing to lose, yet lots to gain)
5) The close (with a tag of urgency)

If you think about it, you’ll find all the basics in Direct Buy’s approach, but what I want to examine in particular is number 5.

You see urgency in sales and marketing all the time. “Act Now. For a Limited Time.” Sales always have an ending date. Every window and siding salesman who ever came to give us a “Free Estimate” always told us that we had to buy that night in order to get that particular deal. Same with time-share presentations.

Direct Buy’s Sales Machine

But Direct Buy puts this whole urgency thing on steroids. If you ask me, the decide-tonight-or-you-can-never-come-back is pure genius.

Why? Direct Buy knows that 95% of people who walk out won’t come back anyway. People have a strong aversion to missing out. Psychologists have proven that fear of loss is a much greater motivator than potential joy from gain.

Direct Buy knows this.

Simply put—if you can resist their tactic, they know you weren’t going to buy anyway. And in probably 99% of the cases, they’re right.

But here’s what I was wondering: Are they really telling the truth?

I mean c’mon. First of all, do you think they really keep track of every person that walks in and out of their doors without signing on the dotted line?

And even if they did, what if (say, six months later), some couple’s situation changes and now they really do want to take advantage of all Direct Buy has to offer. Are they really going to turn away another $4,300 in cold hard cash?

Testing Direct Buy’s Urgent Call To Action

I decided to find out.

Remember, our visit was in October. But last Friday I decided to experiment by clicking on that little “Direct Buy Visitor’s Pass” ticket thingy in the upper right hand corner of their website.

This is what happened next:

First I get a choice of days and times,

Then I get some preliminary instructions about who must and must not attend with me before I’m asked, “Will Saturday, 3/24/2007 at 3:30 PM definitely be good for both you and Lisa?

Followed closely by a reminder that there are absolutely no children allowed (in case you didn’t catch that the first time), and finally my confirmed Visitors Pass. Yea! I can go!

I even got a pdf version that I prints out neatly and I’m encouraged to bring along to the appointment.

So there you have it. Banned from the building for 4 years? Hah! Just try to keep me out.

Direct Buy and the The Bottom Line for the Consumer

I don’t think Direct Buy is owned and operated by the devil. I don’t think it’s an evil company. And at least from the perspective of an outsider looking in, I would hesitate before I called it a scam.

I honestly think Direct Buy is trying to do what it says–save the consumer money. It’s a good business model, and I truly think it’s legit. But Direct Buy has some serious issues to resolve to get to the next level. The first being the daunting challenge of streamlining and simplifying the flow of information to the customer.

Searching through 8-foot high shelves filled with 5 pound catalogues? Fuggetaboutit. Direct Buy is set up more like an old fashioned library crammed with technical specs than a fun, creative, imaginative showroom.

So who is it right for?

  • Probably people looking forward to some major furniture purchases,
  • people who have the time and patience to do their own research,
  • and people who aren’t afraid to wait 6 weeks without word on their order.

Oh, and it probably helps to have some experience (or at least no fear of) dealing directly with manufacturers–which is a whole different beast when it comes to customer service.

A few final tips to prepare for your Direct Buy showroom visit

So, if you’re going in for a visit, here are a few final tips:

  1. Keep an open mind.
  2. Remember the initiation fee will be anywhere between $4,000 and $6,000.
  3. Be prepared. Bring a list of items you’re thinking of buying in near future. Don’t forget to include specific manufacturer item numbers, specs, and retail prices.
  4. Don’t be pressured. Take your time. See if you can find the things you want quickly and efficiently without a sales person helping you. Who knows how helpful they’ll actually be after they get your money.
  5. When they remind you it’s now or never, just smile and not your head. Now you know better–but it’s still probably best to let that be our little secret. You’d hate to upset them. They might actually remember you six months or a year from now.

UPDATE: If you found this article interesting, you may also enjoy learning how Direct Buy’s corporate headquarters felt after they read it and all the comments posted here.