Sales Territories and Strategies in Real Businesses

A reader offers this discussion of how companies analyze a market (and the territories) to decide where to place distributors/retailers. Of course, Mary Kay does no such thing, telling consultants to ignore the concept of saturation and that countless reps in an area are no problem. 

I’m mid 40s and a lifelong sales professional (no MLM). I worked over a decade in furniture/mattress retail as a salesperson, manager, and small business owner with my own small store. I also spent more than another decade as a territory sales rep, half for a mattress manufacturer and the other half for a giftware manufacturer. All of these positions (minus when I owned my own store) are full-time, salary-plus-commission positions with full benefits, mileage/fuel reimbursement, free training, etc. All of my wholesale customers were/are small, independently owned local businesses. My manufacturing employers did also sell to big box/chain stores, but they had a separate sales force to focus on the independents in the territories.

Based on this extensive experience, I’m finding that how the MK world defines and treats “sales”, “market”, “inventory”, business ownership”, and so on, to be ridiculously out of touch to the point of creating their own “business” language that has little to no resemblance to real life.

I’ll describe, for example, my territory as a mattress manufacturer’s rep and how we built business and increased sales. I had a physical territory that was guaranteed to be mine and protected as such. Almost all manufacturers who produce consumer products sold through retail outlets do this, and it’s pretty easy to set up. For me, I had physical counties that were mine. So another ABC Mattress rep from a different territory couldn’t just drive into my area and set up a wholesale account with any of those retail stores and the company. Same thing with my giftware position…protected territories where we wouldn’t sabotage one another. 

One of the biggest things we practiced that absolutely flies in the face of the MK way is our deep understanding of market opportunity/saturation. Our corporate office compiled significant, recent data that was provided to us (for free of course, though it cost them money to get it) for every inch of our territory.

Here’s a summary: the data broke down the territory by county and thus provided numbers by county. They used the estimated annual overall US numbers of money spent by consumers on all mattresses, then broke that down by population to get a fair estimate of what each county’s potential mattress purchasing power is, and the company pulled up how much of its product was sold in that county. Then, the company itself used its knowledge of our own overall market share (ie, ABC Mattress, doing xxx million a year, and knowing that the overall mattress industry does xxxx million per year, currently has xx% overall market share on average).

Let’s say our average market share of the entire mattress industry is 21%. We then looked at the data for each county and could easily determine the areas in which we were pretty strong, and the areas where our market share was low. Then we look at those lower areas and figure out if there is potential for more business and create a plan to get it. What we did with the giftware manufacturer was similar. In both positions, we were frequently given updated lists of exactly how many dollars the accounts in our territory spent with us and by which accounts. Because this makes so much sense from a business perspective, it BOGGLES MY MIND that MK not only doesn’t even consider this, but strives to keep this way of thinking and use of data (that they absolutely have) hidden and even discouraged.

So MK tells you to trust that the product sells itself and that the number of other MK sellers in your area is irrelevant to your success. THAT MAKES NO SENSE. Seriously, it doesn’t. I’m guessing that they try to use the lack of physical territories as a plus (you can sell to/recruit anyone, anywhere). But then they focus on how you have to do it in person to be successful. Those two things are contradictory.

Any person being recruited to sell MK should carefully consider the “opportunity” by expecting to be given proper data to gauge the potential for success. This includes knowing how many active IBCs are in their area, how much total they are ordering from MK (and thus extrapolate estimated retail sales), and how that amount compares to national estimated numbers. This is the only way to know if the market is saturated or not. To just blow that off flies in the face of all we know about successful retail sales (sales to the end consumer). Even if you managed to get those figures (hahaha, and if you do, are they real) and conclude that your area is not saturated, there is no guarantee that it won’t be next month or next year (since you have no protection of territory).  

I know this is a lot in one post, but another thought: when I opened my own business (retail mattress store), I used the county data I had, and knowledge of the market, very carefully to determine where to place the store and whether to even do it. I actually chose the next county over from where I lived to avoid the market saturation in my own county. It seems that the focus that MK presents as what should be the main determining factor you should consider when thinking about a MK opportunity is your potential earnings. Well, potential earnings are infinitely tied to the sales potential in the market. It is not, nor will it ever be, unlimited. That’s ridiculous. Frankly, the MK use of the phrase “own your own business” is laughable to me, as it is to many of you. It’s a joke.

12 Comments

  1. Celeste Harmer

    THANK YOU for pointing out the obvious! My best friend and I sold Mary Kay years ago, and there were at least half a dozen IBCs in her town that she knew of. When I pointed this out to our sales director, she said it didn’t matter, that MK sells itself and that there was no such thing as saturation. Um, yeah, there is, and it was one of the reasons my best friend and I didn’t make money in MK.

  2. pinkpeace

    I remember wondering about territories as a new consultant, and was pointed toward Pam Tull. Back then she was a top director, and is now an NSD from Bridgeville, Delaware – population just over 2,000. It was implied that if Pam Tull could rise to the top in such a small town, there was no reason that I couldn’t do it also.

    It took me years to realize that there was much more going on behind the scenes and that there’s no way to have a viable sales business in a market with multiple consultants.

  3. Char

    Mary Kay is not a sales business. It’s multi-level marketing which has a definition unto its own. If it were a sales business, as we tend to think of sales per the article, it would be classified as such. It is not. It is MLM.

    MLM cannot be fixed or changed. Well it can, but then it wouldn’t be MLM. Duh, right?

    What is MLM? It’s a product based pyramid/Ponzi scheme operating under the guise of a sales business. The only thing that they are really selling is the “opportunity”. That’s illegal btw. Whether or not the law has caught up to MK yet doesn’t change the fact that consultants are participating in a scheme.

    It’s what you do when people, or the law, aren’t watching that is the true judge of character. No doubt god is shaking his finger at you for not thinking for yourself, not doing due diligence and then exposing others to this fraud and taking their money, and for listening to gaudy, cheesy con artists like Mary Kay.

    1. TRACY

      You and I know MK isn’t really a sales business. But they sure pretend they are, don’t they? And I think that’s the point. This article shows that if MK was really a sales business, they would do these data-driven types of things that would help consultants succeed with sales. Yet they don’t because they really only care about infinite recruiting.

      BUT…. in order to stay “legal” in the U.S., they have to keep positioning the company as one that sells a product. Because to admit that they are just an endless chain recruiting scheme would mean the end of the con.

      1. Char

        @Tracy – I agree. I was also thinking what the author wrote most definitely shows and explains how real business works, hence there is no comparison to MLM. It’s a great article.

        @ Readers – The one thing I wanted to point out, and perhaps I did a poor job not first complimenting the author, is that I’ve seen people think they can improve MLMing or fix it. I wanted to highlight the fact that it is what is. This to me is one of the big hurdles in completely understanding MLM. Myself included back in the day.

        About twenty years ago I realized MLM was a fraud, but initially I was in the mindset of the many who ask:

        Is Amway a scam? Is Herbalife a scam? Is Excel a scam? Is ACN a scam? Is Flexcom a scam? Is Vemma a scam? Is Mary Kay a scam? Is Le-Vel a scam? Is OneCoin a scam? Is Melaleuca a scam? Is Lularoe a scam? And so on. Everybody treats each company as an individual. My lightbulb eventually went on and I realized it’s the method that is a scam no matter who uses it. It’s not “an” MLM, it’s MLM-ing.

        The best way, so far, that I can convey this and hopefully get the message across, is to compare it to other acts, for example drowning. You can’t fix drowning. It is what it is. IMHO, this is one of the keys to getting the majority of people to stop participating in this fraud. I believe the reason there are so many repeat offenders is because they think the next company will be different. Again, drowning is drowning whether the pool is old or new, located here or Timbuktu, blue tile or purple, and regardless of who manufactured it.

        You only need to know one thing, is it MLM. You don’t need to listen to the product pitch they use while MLMing, or the name of the company.

        It’s great to have a hook such as Mary Kay and this site. It’s an introduction to understanding the bigger fraud of MLMing while also helping MK consultants.

        1. Mickey2942

          It is not about the product, it is about hooking others into the game. And you have to keep finding new recruits that will in turn buy product. Like BeachBody, soon everyone was a BeachBody “coach”, to get their discounts.

  4. JanRD

    Great article!

    My husband and I have also owned a retail business with stores strategically located to attract customers and with corporate restrictions in place regarding distance between stores. Both stores were in shopping centers with other high profile businesses. When we were ready to relocate across the country, we were able to sell the business to a new owner. Try doing that with an MLM.

    1. Mountaineer95

      Ha exactly, as so many have stated here before, your Mary Kay “business” is not yours to sell. No matter how many years you’ve been in, how many recruits of yours still exist, nothing is yours to actually sell. Hello fellow retail person! (The post above was from me).

      It seems that the only thing an MLM-Er “owns” is the inventory and the debt. But even the inventory isn’t fully owned since you can’t sell it when, where, and how you see fit.

  5. Morningstar

    Thank you for your breakdown and perspective on how sales and territories work. And they work for those who carefully glean the data and use it for businesses purposes. I have often wondered the employee layering at MK corporate. What in he$& do they do all day? Except the lawyer team, party animal Richards and his entitled son, manufacturing support and the pseudo marketing department et al. Ok back to the program, MK corporate is a money grab using women to do the dirty work. As long as their marketing to the down line brings in bucks with the NSD and directors as head of the “cartel”, consultant mules are the target for MK marketing. I have touted this before and constantly shake my head as to if MK did what is in this article they would be so much farther ahead. The barn door is open and the horse has left. Only a matter of time before it goes way south. How come in 25 years ultimately the same
    nsds reign, something isn’t kosher. Thank you pink truth!!!

  6. Data Junkie

    Interesting topic, but MK is NOT in the business of selling retail products to the general public! Rather, they are in the business of selling starter kits, seminars, sales tools, marketing materials and retail product to IBCs. Oh, and dreams. We can’t forget about the dreams.

    Now, since MK corporate is the sole retailer, and since the IBC is the target customer, there is no need for territories. Does Amazon worry about having too many prime customers in a single neighborhood? Of course not. Why would they? Same with MK. They don’t care how many IBCs are in the same neighborhood, street or even house!
    Since IBCs are the target customer, they want to have as many as possible, ideally with auto-ship and aspirations to reach the next “level” compelling them to meet monthly purchase minimums to qualify. MK does not care if the IBC sells a single unit of merchandise…ever. MK already made their money.

    Sadly, the size of the pile of merchandise in the IBC’s home grows as fast as the IBC’s friends lose trust in them. Regaining the trust of friends turns out to be almost as hard as selling MK merchandise to the general public.

Leave a Reply to Mickey2942 Cancel reply

Your email address will not be published. Required fields are marked *