Podcast „Alles neu Aus dem Maschinenraum“ | Folge #50: Dr Thomas Stoffmehl von Vorwerk

Yes, dear Tobias, likewise a warm welcome from me and thank you very much for the invitation.

Well, if I met Reinhold Würth, I think we would quickly talk about direct sales. I think that's obvious. Yes, because I believe that drives him and his fantastic company. It has been driving me for over 20 years in various roles. But I think that's just the start, because we would then essentially talk about people, because I believe that in our business, people make the difference. And I'm pretty sure we would probably have a second coffee together.

Well, the magic of this business, which may not always be easy for an outsider to understand, lies in the combination of personal relationship, personal selling, and first-class products. And we will certainly come back to this during the conversation: we are not a company that sells products alone, like a retail business or an e-commerce business. For us, this combination and building communities is absolutely crucial, and that opens up completely different possibilities in sales, conversation, and the entire customer relationship. So that's why I believe that many people always claim that people are at the center. I think with us, it's simply the case. And as a last point, we are in a situation where we have to inspire not only customers for our products, but above all consultants. Because that is the way we sell our products, and they hold up a mirror to us. If we don't succeed in inspiring more and more people internationally for this business, then we probably haven't done various things right in our business model. That's why people are so central and of elementary importance for success or failure.

That was the warm-up phase for direct sales. And that started in 2001. So my heart beats for direct sales and for family businesses. I also made a small detour, four years as CEO of a private equity-led direct sales company. I feel very comfortable in the environment of family businesses because I believe that direct sales requires a very long-term orientation. When we talk about community building and building relationships, it's important to have a shareholder structure that understands the drivers of the business very well. So I think direct sales and family businesses go together very well. Incidentally, if you look worldwide, we are number 1 in Europe. I think currently number 5 worldwide, or number 4. The major successful companies are indeed family businesses. And there are good reasons why that is the case.

Yes, that would be exciting because I believe you can't be successful if you don't understand the business from the ground up. I remember starting at Bofrost in 2001. I had agreed with the then CEO to also do an induction in sales. That turned out completely differently than I imagined because I ended up spending almost a year and a half in sales, performing all the key functions myself. It wasn't always a walk in the park, but you get a good feel for what it means, and on the other hand, you later have an extremely good understanding of the specifics and challenges. It was a very tough, incredibly interesting, fun, and educational time. I think it was a good foundation for understanding this sales channel. At Vorwerk, I also take care of that intensively. I try to be out in the field regularly, once a month if possible. Without closeness to the people who do this day in and day out, it doesn't work. And there are also many examples at Vorwerk of people who weren't that close and had great difficulties understanding the mechanisms.

Well, the Vorwerk group is of course a bit more. We also have the AKF Bank and other activities, but you're absolutely right. Our main business is Thermomix and Kobold, although Kobold is not just one product but many products behind it. Thermomix also has various accessories. But I understand where you're going. I think the common thread for us at Vorwerk is what we discussed earlier: the love for people, for direct sales, for closeness, and for that special sales experience. I think Vorwerk has modernized incredibly in the last 5 to 6 years and has become a truly digital company. If you look at the products today, like the Thermomix, it's no longer about a product, a piece of hardware; it's about an experience. And I think this development is typical for Vorwerk because we always try to be innovative, ahead of our time, and we know that especially when selling high-priced products, you always have to be one step ahead. That's how I would describe it.

Well, we don't require a completed degree in psychology as an entry criterion. I think a good feel for dealing with people helps a lot. But let me elaborate a bit. For us, the one and only key figure—and I want to simplify this consciously—is the number of our consultants worldwide. If we don't succeed in growing this community, we won't achieve any growth. And if you look at how Vorwerk has developed in recent years with record years in the most difficult economic environment, you can see what's happening in retail and e-commerce. It's solely because we managed to massively increase the number of consultants worldwide. Between 2014 and 2018, we averaged around 60,000 consultants, and now we're looking at around 106,000 to 107,000 by the end of this year. That's a gigantic number. That shows what I said earlier: our opportunity, which is linked to selling attractive products, and this community must fit together well. So, people who generally enjoy working with people, who like selling, who enjoy demonstrating things in a situation like with the Thermomix. The same applies to our Kobold vacuum cleaner, although the models work very differently and the trigger point is different. One is a very emotional field, the other more rational cleaning. You need different people, but they all must have one thing in common: a good feel for their people, to promote and build them up, and a good feel for dealing with customers. And in my view, that can only be learned to a limited extent. You can attend many seminars and training sessions, but if it's not intuitive in you, it will be very difficult.

Yes, well, not all of them are sales representatives, for the record. In the Kobold business, we essentially have sales representatives, and in the Thermomix business, they are people who basically decide entirely on their own, without being sales representatives, how much time they want to dedicate to us. I think we differ in many places from other companies in terms of structure, but massively in key areas. And that also makes it not easy to recruit people from outside. You have to understand very well why we are different. Let me start with two areas. One is marketing. Marketing in large brand companies is often characterized by media spending and budgets. With us, marketing is of course also about brand, but essentially it's a support function for our consultants to make them successful. That requires people who think very strongly from the customer's perspective and from the attractiveness of the community. Sales at our company is completely different and very dominant in the countries. It's about community building and community care. Marketing and sales are very closely networked. And there is another discipline that I believe no other company has: the whole topic of advisor recognition and events. Direct sales lives extremely strongly from competition. Our people love competition. Our most successful instruments for recruiting are international competitions. You can measure yourself against others, and if you are successful, you have fantastic personal experiences. It's not about giving people gifts; it's always closely linked to performance. That is a topic that other companies don't have in this form. Of course, everyone likes praise and recognition for their work, but I would say that for many of the people closely tied to us, this appreciation is the most relevant point. I don't want to say the only relevant one, but it's sometimes less about money and commission levels and more about being part of this community and experiencing special appreciation for special performance.

Well, cars do play a role in vacuum cleaner sales in Italy, for example. That's a very important element. But we don't build our business primarily on that. Let me give an example. We talked about recruiting earlier and the development of our consultant numbers worldwide. With the new strategy, when I joined the company, we launched a so-called International Recruiting Challenge. It was about focusing completely on recruitment in September and October. That didn't exist before. It has become our life insurance, the main driver for consultant growth. Let me explain in detail: it's not about sales—there are sales competitions too—but here it's about recruiting and something else: teamwork. I set certain goals for a team, and only if all team members achieve this goal do they qualify. For the event the following year, our Vorwerk International Award Night, only the teams that have achieved their minimum goals qualify, and among them only the best. So even if you and your team have achieved your goals and every single team member has, it doesn't automatically mean you're there because ten other teams may have outperformed you internationally. What follows is an incredibly great event at an amazing level, where all the performance is appreciated with a great program, usually with a world-class act. And then it's interesting: a brand develops, and the people who were there decide that they don't want to miss it, which creates tremendous dynamics. That was the shortest summary using a concrete example. It's important because this culture of competition—I don't mean negative, but positive, and everyone is happy for each other—is an integral part of our DNA and our business, and that is completely different from other companies.

We've already talked about one area for a long time. We have focused our attention on consultant growth in the last six years, and we will continue to do so. If we don't have consultant growth, we have no company growth. The measures to achieve this growth are not just the challenge I mentioned; they change over time. It's also about how we can best support our consultants to run their business successfully. That's why the second big area—and I don't want to weigh them, they are all interconnected—is the whole topic of experience and digitalization. We no longer sell just a hardware product. That's over. We sell an experience, and with the Thermomix we sell a guarantee of success through our recipe worlds. I think that will become even stronger: bringing product, digital, and experience together. We are currently working on our next strategy period until 2030. I would highlight these two things. One could mention many other topics, but consultant growth and how to support it, as well as achieving enthusiastic customers worldwide through an even stronger focus on a unique experience that is closely linked to the digitalization of the company.

Well, let me ask a counter-question: is it a bad thing that it's incredibly analog? I think the foundation of this business will always remain quite analog. Over the last 20 years, I've often heard that it's all so dusty and outdated. But I could counter that there aren't many businesses that have outperformed like we have in recent years. That's no coincidence. It's because it's not about just selling a product where it's only about price and discounts. It's about combining unique products with a fantastic experience and ideally being part of a community. But that remains a bit abstract, honestly. So what does it really mean concretely? You stand in someone's living room or kitchen and want to sell them a Thermomix. Why does that work better than if people go to MediaMarkt and buy a kitchen machine? First of all, one thing is clear: if you don't have the opportunity to experience our products optimally, the risk is relatively high that you might be disappointed by the high-priced product. We simply offer a different experience. Let's stick with the MediaMarkt example. Imagine the Thermomix in MediaMarkt. Let's do the exercise together. You go to the household appliances department, and on the far right is the high-priced Thermomix, then the Bosch Cookit, and then some mid-range devices. Everyone wants to be the Thermomix. Lidl also says they have the cheap Thermomix. Everyone references our brand. Then what happens is exactly what always happens: you stand there and start excluding things. 'Oh, the cheap ones I won't take, the expensive ones I won't take either.' But you still have no idea what this device can offer you. Then you go to the checkout, feel good, say, 'I don't know, I went for something in the middle, and there was a 10% anniversary discount,' and then you leave the checkout area and that's it. That has nothing to do with what...

At our company, we don't just want to sell products. I even go so far as to say that if a customer is dissatisfied with the overall experience, that's a sale we might have been better off not making. Our advisor growth lives on word-of-mouth. Ideally, you buy a Thermomix and are so thrilled that you host a party at home. That's why the connection between analog and digital is so important. For example, when you buy via the advisor websites, you can opt out of the party and still get the Thermomix, but at checkout you can book a Welcome Service where someone comes to your home to explain the device. About a third of online customers choose that. This shows how important the personal connection is. As long as I'm responsible here, the analog element will not disappear. If we don't cultivate that alongside digitalization, our business will lose its differentiation. Was that concrete enough?

When I talk about our community, both. For end customers, I mean exactly that usage experience: ensuring the investment is worthwhile and they can fully use it for themselves, family, and friends. Also, these things are often linked to recruiting because if you use the earning program, you can decide to become a Vorwerk representative yourself and earn your own Thermomix. That creates a lot of dynamics.

I'd like to answer that in two parts. I know you didn't mean it that way, but it's often discussed. I believe our two product groups, Cleaning and Culinary, still have enormous innovation potential. We've shown that with the Styler, Cutter, and the vacuum cleaner system. So we don't necessarily have to think about entirely new product groups to secure future success. But we are also looking for new areas, like Nexaro, a B2B cleaning robot, which is a different business, not direct sales. We also develop internal product ideas. Innovation and development of existing areas are as important as developing new ones. We also have huge potential for digital innovations on the Thermomix, which also tie up a lot of capital.

I hope so. We create a culture where we are open to all things. There are no prohibitions or separations. It's important to define the sweet spot in strategy where we differentiate ourselves, and also to not pursue ideas that don't fit. Deciding also means renouncing. The discussion is very nuanced.

I'll give two examples: the TIAL. That was a great product idea, but it didn't work in implementation. We didn't achieve our market and sales goals. We parted ways. Internally, we also have ideas that don't fit our business. We are open but cautious, close to our core competencies. Vorwerk is well advised to stay close to its core competencies and then expand the sweet spot intelligently. Also, you can't add unrelated products to the sales channels. For example, the idea to have Thermomix advisors also sell the TIAL didn't work because people are passionate about one product group. That was a strategic mistake. We get many inquiries from companies wanting to piggyback on our customer access, but we decline because it doesn't work.

No, unfortunately it was an expensive failure. We did try it, but it didn't work. The tea machine was supposed to create a tea experience, but the assumption that we could use Vorwerk's existing sales channels for it was wrong. That was the second part I was trying to explain.

Good question, often asked. I won't reveal specific innovations because our business thrives on surprise. But I believe the culinary experience will see more digital offerings in the future, beyond the successful CookieDo and guided cooking. We are working intensively on that, like digital cooking courses with video where you can cook along.

Those are buzzwords. We have so many applications from apprentices and future specialists. We don't have a shortage. It's about company attractiveness. For our advisors, in the Kobold segment many do it full-time as sales representatives, valuing freedom. In the Thermomix area, it's people who either don't have a job or do it as a sideline. The fact that we have nearly doubled the number of advisors since 2019 shows it's not unattractive. I think the flexibility we offer is in line with the times. People are looking for second jobs. Direct sales can contribute to flexibility.

I'm not paid to complain; I need to offer solutions. Regarding the skilled labor shortage, companies must be extremely creative to stay attractive. There are catastrophic topics. Germany has fallen 15-20 places in attractiveness rankings. I see it still in free fall. I hope a stable government can solve it. Three main topics: 1) Entrepreneurship doesn't have the necessary status in Germany. 2) Everyone talks about bureaucracy reduction, but it doesn't happen. New laws burden companies. I was on a panel about sustainability; it's a huge problem. 3) Misguided energy policy. We are pricing ourselves out of the market with energy costs. We are building a second Thermomix factory in France, where energy is much cheaper. Infrastructure is also in need of repair. Even internet connection in Wuppertal is poor. I'm not optimistic about all, but my job is to find solutions.

It needs to happen quickly. It's important to define an agenda, moving away from partisan ideological discussions toward fact-oriented politics. Identify 5 major topics and solve them to maintain the attractiveness of the location. We can't let companies go under. We need a content-driven agenda that gathers many people behind it, making progress like a CEO would run a company.

The last one was 'Fundamentals of Artificial Intelligence' by Tom Colly, a non-technical introduction. I wanted to familiarize myself more with AI because it plays an increasingly big role for us.

We look at many things. We have defined different use cases in the company, all being reviewed for relevance. It affects the business model, digitalization, and efficiency. We are launching our own 'Chat Vorwerk' similar to ChatGPT. There are many things, and one should neither be driven by it nor fall asleep. We need to keep a cool head for what is relevant.

I would like to mention two goals if I may. For the company, I want Vorwerk to become the number one direct sales company worldwide. That's a heartfelt concern. Personally, I want to do the things I like and am good at. I'm 53, and I want to focus on my strengths, which I can do well at Vorwerk.

I would like to link that with the goal of becoming the world's leading direct sales company. The chapter I would have helped write would be expanding the community to achieve that. We are on a good path, but there is still a lot to do. If people say at the end that I significantly contributed, I would be very satisfied.

You're welcome. It was a pleasure.