Mary Kay Inc is a cosmetics company, which was started in 1963 by Mary Kay Ash. Since inception, the company has grown to be one of the largest direct selling companies in the world. According to Mary Kay statements, the company has a global network of more 3.5 million Independent Beauty Consultants, and generated annual wholesale sales of $4 billion.
The company claims that as a Mary Kay Independent Beauty Consultant, you can run your own business, set your own hours and can 'earn amazing rewards'. We decided it was time for the Finance Guy to conduct a streetonomic review of the Mary Kay business opportunity to find out if people are really making money with Mary Kay
What Is The Mary Kay Opportunity
To learn more about the Mary Kay business opportunity, we watched this video about it:
The video is a discussion between one of the Mary Kay corporate people and one of their top consultants. After a lengthy introduction and background info, we learn that Mary Kay taught the consultant how to dream. She then goes into her Mary Kay success story. We hear how she built her downline in her own time, while she was a single mom. It grew from there etc etc.
We learn her path to success. She shared the Mary Kay opportunity with absolutely everyone she knew because ‘you never know who is going to join’. We then here a bit more about why she’s so happy to have found Mary Kay. Eventually we hear the familiar MLM mantra, ‘you’re in business for yourself, not by yourself’. This is there way of telling us that even though are building your own downline, you have access to their infrastructure and can seek help from your upline.
If you join Mary Kay, the people that recruited you can help you recruit others. Furthermore you’ll have access to their online tools and other pre-made marketing material.
We were a little surprised that after 16 minutes, we didn’t learn all that much about the opportunity. All we really know is that this one consultant has done very well, and she seems very excited about recruiting others to join her downline. They somehow managed to not explain anything about how the business will make us money. We thought we better keep researching.
How Do You Make Money With Mary Kay
We managed to find a copy of a Mary Kay Recruiting Notebook, which is designed to promote the Mary Kay business to prospective new recruits. The document starts off with the company mission, which is 'to enrich women's lives', with 'an unparalleled business opportunity'.
The notebook goes on to claim that Mary Kay 'is not a multi-level or pyramid company'. Yet on the same page there is a label reading 'direct sales', which is just another name for MLM. It then goes on to simplify the Mary Kay business model into two steps. 1. The sale Mary Kay makes to consultants. 2. The sale the consultants make to their customers. This is precisely how any MLM company would describe their sales process.
To make money with Mary Kay, you need to sell product. As a consultant you can purchase Mary Kay products at half the recommended retail price. This means that you can earn up to 50% commission on any sales you make. Even with this generous incentive, to make a decent living, you'd have to sell a lot of makeup to a lot of customers. If you want to earn an income of $50,000, then you have to find enough customers to buy $100,000 worth of Mary Kay product.
Even if you can find enough customers to buy a large volume of Mary Kay product, you will encounter logistical challenges. As part of your role as a Mary Kay consultant, you are responsible for delivering the products to every individual customer. Along with the time this would take, you will also incur expenses. As a Mary Kay Consultant, you will have to pay all of your business expenses.
You will spend a lot of time and money building and maintaining your Mary Kay Business. Your real profit from selling Mary Kay, is what is left after costs, and it will be less than 50% of your total sales. Retail sales are however not, the only way to earn money with Mary Kay. You can also make money when you 'share the opportunity'.
According to the recruiting brochure, sharing the opportunity can give Mary Kay Consultants 'unlimited earning potential'. If you recruit others to become Mary Kay consultants, then you can earn commission on any sales they make. Depending on how many people you can recruit, Mary Kay will pay you between 4% and 13% commission on any sales they generate.
If you are an exceptional recruiter, you might achieve the status of 'Director', which will entitle you to earn up to 13% in additional commission as well as other cash bonuses. There's even a VIP Car Program. For a company which claims not to be multi-level, they are doing a good job of impersonating an MLM
How Much are Mary Kay Consultants Earning
If you were to look at the recruitment notebook, you'd find a list of the top 100 Mary Kay commission earners. This is a list of people who have achieved the status of 'Sales Director' with Mary Kay, and have made monthly commissions ranging from $5,800 to $16,900. The top 100 consultants at Mary Kay are earning a good income.
While it's clear that money is being made at the top, we want to know how much the average Mary Kay consultant is earning. Mary Kay has not made this information easy to find, but we were able to find a copy of the Canadian Mary Kay 2015 Earnings Representation, which we used to create the following table:
According to our math, 94.39% of Mary Kay Consultants earned less than $100 commission in 2015 in Canada. The recruitment notebook claims that Mary Kay is 'an unparalleled business opportunity', yet in Canada, 19 out 20 Mary Kay consultants earned less than 28 cents per day in 2015. In 2015, less than 6% of Mary Kay consultants earned more than $9 a month in commission.
It would appear that most Mary Kay consultants are not earning significant commission. Having said that, the same document does state that the 'vast majority of the Independent Sales Force Members primary source of profit is selling product'.
Like most MLMs we have reviewed, including Tupperware, and Avon, Mary Kay admits that the best way to make money is through the retail sales. On the quick facts section of the website, we found a summary of the annual Mary Kay Global sales figures. We assumed that all consultants sold all product for the maximum retail profit of 50%. Based on this, we used the Mary Kay sales results to create the table below:
According to their own figures, on average, worldwide Mary Kay consultants earn less than $100 per month in retail profit. They claim to provide consultants with 'unlimited earning potential', but in reality less than 1% of all Mary Kay consultants are earning a full time income
Can You Make Money With Mary Kay
Like all network marketing companies we have looked at, it is possible to make money , but it is highly improbable that you will turn a profit with Mary Kay. Here at The Finance Guy, we believe that you can't make money with MLM. It's a model which makes good money for the product providers (including Mary Kay), but most people who are recruited will end up losing money.
As we have seen from the financials provided by Mary Kay, the average retail profit made by consultants is less than $22 per week, and less than 1% of consultants in Canada made more than $1,600 per month in commission from Mary Kay. The recruiters may focus on the select few who are making a good income, but the numbers show that the vast majority of consultants are not making money with Mary Kay
Why Is It Difficult to Make Money With Mary Kay
One of the main problems with the direct selling model, is that they endorse constant recruitment. Any salesperson will tell you that the demand for any product is finite. Adding more salespeople will not increase total sales. Constant recruitment means less sales per consultant
Mary Kay doesn't care how much the individual consultants earn, because they make their money from total sales of their products. Using the MLM model means that it costs them nothing when extra consultants join the sales force. In fact they make money because the consultants have to buy product when they sign up.
Mary Kay is just like all the other network marketing companies. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money. Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.
If you attend a Mary Kay promotional event, they will tell you that it's a system for everyone and that they believe that the 'more you help others, the more you help yourself'. In reality, there is no such thing as a system that continuously works for everyone. If you keep adding new people to any income generating system, you will eventually reach the point of saturation. No matter how big a company is, there is a limit to how many sales they can make.
The Mary Kay recruitment notebook claims that one of the benefits is that there are no territories, so you can sell Mary Kay anywhere you like. We see this as a disadvantage because allowing too many consultants to sell in the same area creates market cannibalisation. This means that there are too many sales people, and not enough customers. It would be like McDonald's opening 4 outlets right next to each other, and expecting all of them to turn a profit. Despite what some members claim, network marketing is not the same as franchising
How Good are Mary Kay Products
There is no shortage of salespeople, who will claim that they 'can sell anything', including 'ice to Eskimos'. Despite their vaunted skills, the truth is that to make good sales, you need a good product. The best products (such as the original iPhone), will literally sell themselves. Customers will be lining up to buy them. To make good sales, you need an in demand product with a good reputation.
Before you sign up with any MLM, or accept any sales role, you should ask yourself if you believe in the products. It is much easier to sell something if you are a customer yourself. You can try the product yourself before you join, or you can do some research and see what others had to say. We did some online research and found that Mary Kay products only scored 2/5 with consumers.
No matter what you are trying to sell, there's nothing better than a happy customer to help you find your next deal. We did not directly engage with a Mary Kay Consultant, but our web surfing has lead us to believe that Mary Kay sells products by running 'skincare classes', or offering facials.
The classes involve finding a host, and asking her to invite some friends to her house. They will then see a demonstration of Mary Kay products before they are given the opportunity to buy them. From our distant perspective, Mary Kay classes are like Tupperware parties. Based on our research, we believe that you can't make money with Tupperware. Our opinion did not improve when we read this Mary Kay customer experience.
How Is Mary Kay Promoted
To get an idea of how Mary Kay is sold to new prospects, we once again looked at the Mary Kay Recruiting Notebook. We looked toward the back, just after the page that claims '$100 could change your life!!!'
We found what appears to be a guide for prospecting potential Mary Kay recruits. This includes a list of opening questions, closing questions and two full pages about overcoming a list of 20 objections! Team Finance Guy has cumulatively had an extensive experience in sales, just like most people in the finance industry. In our opinion, we believe that Mary Kay uses cheap sales tactics to promote their opportunity.
The opening questions could be a cut 'n' paste from any MLM, including the emphasis to 'Dream past the ordinary!'. The concept of dream building, is central to network marketing. Dreams are idealistic, dreams are Utopian. Thinking about our dreams makes us feel warm and fuzzy, but thinking about dreams does not make them achievable!
The closing questions purported in the Mary Kay notebook, are unsurprisingly positive. They are about why you should join today, and what impressed you most. Last time I saw such an aggressive sales push, I was looking at a second hand car! Having said that, I did buy the car, but I bought because I liked the product, not because of the cheap sales push.
When we looked at the 'Mary Kay Consultant's Guide to Overcoming Objections', at the back of the notebook, we found the advice to be somewhat questionable. For starters, item 2. indirectly suggests promoting Mary Kay to your work colleagues. Depending on your workplace, recruiting office friends to Mary Kay could get you fired!
Mary Kay targets people who are financially desperate. Item 14 in the 'Overcoming Objections' section, is aimed at those who can't afford to lose money. The suggested response includes the statement that with Mary Kay you 'could make $750 per month'. This is somewhat incongruent with the Mary Kay financials which show that on average, consultants earned less than $100 per month.
The remainder of the Mary Kay 'Guide to Overcoming Objections', is exactly what you'd see from any multi-level marketing presentation. Including the claims that 'you don't need to be a salesperson, you don't have to sell to your friends and family, you don't need to know lots of people, etc etc'. The common MLM theme is that the sponsor can teach you to copy what they have done. Unfortunately copying your sponsor may not be the path to untold riches. Our research has found that you can't make money with direct sales. It is more likely than not that your MLM sponsor is losing money, if you copy them, you will also lose money!
Can Mary Kay Teach you to Make Money
Over the last 20 years (or thereabout), The Finance Guy has been (unsuccessfully), recruited to more than 13 direct sales teams. If you come across a lot of people in your daily life, then this probably sounds normal, or even below average! Let's face it, everyone has at some point been shown the 'MLM opportunity'.
One of the common themes with network marketing companies, is that they can teach you to make money. They all claim to offer the 'secret to financial freedom'. All you have to do is copy your 'mentors'. The promotional presentations will focus on the most successful members in the system. Despite what they tell you, no matter what you do, there is no guarantee you will earn as much as the people at the top..
We recognized more MLM smoke and mirror, techniques when we looked at the Mary Kay marketing plan. This document claims that you don't need to know anything about selling because Mary Kay will supply you with 'motivational material'. We're not saying that Mary Kay motivational materials are ineffective, but our research did find that Amway motivational content is controversial. Even though Mary Kay claims to be different, they look just like MLM!
Is Mary Kay Different From Other Direct Sales Companies
It doesn't matter which network marketing company you look at, they all claim to be 'different from the rest'. It's almost comical when you look at how similar they are when they claim to be different. Mary Kay is just like all the other MLMs in that they claim to be different!
The Mary Kay marketing plan, claims that they pay the 'highest commissions structure of any direct sales company'. This claim might be true, but it doesn't change the fact that on average, Mary Kay consultants earn less than $1,200 per year. This is based on our interpretation of Mary Kay financials
The marketing plan claims that Mary Kay has 'the highest paid women, with hundreds earning over $100,000'. If earning big money with Mary Kay is easy, then something strange must be going on in Canada, because according to the official 2015 Canadian Mary Kay Earnings Representation, only 0.03% of all representative earned over $100,000. In other words, your chances of earning more than $100,000 with Mary Kay, are around 1/3,333. Your chances of getting rich from the lottery are better than with Mary Kay
Another common MLM misconception we noticed in the marketing plan the claim that with Mary Kay, there is no middle man. The irony is that to make money with Mary Kay, you become the middle man. The commission system, which they claim is not MLM, pays you commission when your recruits make sales. You are earning a mark up on the sales of your down line
Mary Kay claims that these commissions, of up to 26%, are 'paid out of company profits'. The joke is on the consultants, because Mary Kay makes those profits from selling them product! The 26% mark up is included in the price Mary Kay charges on all products to all consultants!
Is Mary Kay An Illegal Pyramid Scheme
Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.
The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?
Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.
While MLMs may be legal, that doesn’t make them ethical. If you knew that on average consultants earned less than $5 per week, would you feel comfortable recruiting all your friends and family to the ‘opportunity’.
Should I Join Mary Kay
If you are looking for a way to make more money, then it is unlikely that Mary Kay will work for you. If you become a Mary Kay consultant then you are a commission based salesperson. The only way to make money, is to sell product. Unless you can sell huge amount of Mary Kay product, you won't won't turn a profit.
The only reason you should join Mary Kay, is if you are already using the product. If you want to make money selling any product or service, then it should be something you that you are already using. There's no point trying to convince people to do something you are not doing yourself
As always, we'd love to hear your feedback in the comments section below. Let us know what you think, especially if you can share your real world Mary Kay experiences
For more posts like this, look at our list of mlm reviews.