Advice for a Mary Kay DIQ Who Wants to Be Ethical

Last week we posted a request for advice from a DIQ. She wanted to know how to become and ethical Mary Kay sales director. This is the advice provided by one of our readers.

I think it’s honorable what you’re trying to do. Here are some things I wish would have been different about my time, I did 8 years. (Started when I was 18, and really think I had a good unit).

  1. I wish my director would have been more understanding when I chose to go to college (why do that if you’re dedicated to mk was her response).
  2. Same thing when I ultimately had to get a job. I know they call it Journey Of the Broke, but this lead to so many mixed emotions because I’d never been so broke until I did mk. I just didn’t understand, I was often queen of sales for my unit and felt like I was hiding a huge secret. Try as I might, I never made 50%.
  3. Shark Tank, of all things, really put into perspective for me. A 50% margin is what you need to break EVEN (oh shoot). Profit comes at 65-90% profit margin depending on what you’re selling. One item to keep in stock you’ll need a 65% margin, over a hundred like in mk and you’re going to need more in the 80-90% range. If a consultant made a pitch on shark tank the two critiques they’d likely make would be: you need to increase your margins significantly, and that inventory is a nightmare and will bleed your business.
  4. Don’t encourage taking out debt to fund an inventory. Because the company measures success based on what you buy not what you sell (minus cheap bracelets at weekly meetings), it just makes that jump into debt rewarding for superficial reasons like recognition and prizes. A small business should not be taking on debt, especially in the first month. Normal business owners would get investors, start a campaign to raise capitol, take preorders.
  5. Not make me feel dirty when I left. This was the most saddening and surprising thing I experienced, and again I was in a pretty good unit. It was the right decision for me. My mom, whose an executive of a business says “as hard as it is for the company to lose an employee and train a new one, I never want someone to feel held back or like they owe it to us to stay.”

By comparison of my time in mk versus now: Now I’m in a company that was named one of the top companies to work for in its industry. I thought mk was a company that valued me by giving me opportunities to prove myself. But where I am now, the tone is totally different in a positive way.

First, the company always covers airfare, hotel, rental car, and food when traveling for work. Running an errand?–record your mileage and get reimbursed 58 cents per mile…the next week verses after taxes. Any office supplies (decor included) are also covered by the company. Everyone gets retirement, you don’t have to reach a certain level in your career. We get PTO to volunteer, whether it’s at a charity or just your kid’s school. They pay our personal cellphone and internet bills because we can work from home verses getting a tax deduction (we’re not even independent contractors).

In summary, my current workplace has really caused me to reflect on mk as a company. Day 1 the new place said “please don’t pay for anything out of pocket; it should never cost you to work here” (that was a culture shock to say the least!) And please don’t do any work, including checking emails, without being paid for it. (No zero sales parties)

Dave Ramsey has some really good advice on ethical leadership in companies like mk. I think I literally YouTubed Dave Ramsey MLM.

Do I think mk is a terrible company? No. Do I think they either intentionally or unintentionally mislead people? Yes. Do I think they’re a good place for women to work? It depends.

A therapist once told me that you’ll find the jobs/hobbies/relationships that feed your top 3 “wants/desires”. When I was in mk I wanted to feel pretty, classy, and have a reason to travel. It fed all of those. But now my desires have changed, and mk would be a horrid match for me.

I think that’s why this site can be feel so outrageously taboo to each “side”. If you felt your desires were being starved in mk, you want to convince everyone to jump ship and become saddened when people won’t. I try to embrace the grey–that nothing’s ever black or white–and ultimately people who are feeling nourished by mk will stay because the jump doesn’t make sense.

I truly wish you the best as you navigate DIQ.

12 Comments

  1. Char

    (I appreciate the post by this person. My rebuttal is going to seem harsh, but I don’t mean it to be an assault on her. It’s not! I’m simply cutting to the chase about predatory pyramid schemes. People must stop making excuses for them.)

    “Do I think mk is a terrible company? No. Do I think they either intentionally or unintentionally mislead people? Yes.”……………So, you don’t thinks it’s terrible to mislead people?

    “When I was in mk I wanted to feel pretty, classy, and have a reason to travel.”……….Perhaps join a travel club or a sorority? The problem here is, MK presents itself as a business.

    “But now my desires have changed, and mk would be a horrid match for me.”…………Well sure. You now describe having a real job, making money with benefits – and not a a feel pretty money pit.

    I think that’s why this site can be feel so outrageously taboo to each “side”……….Which side are you on when it comes to drunk driving home from a super fun party where you felt popular? Mary Kay is pyramid scheming. There are no sides.

    “I try to embrace the grey–that nothing’s ever black or white–and ultimately people who are feeling nourished by mk will stay because the jump doesn’t make sense.”………Kind of like street gang members.

    “If a consultant made a pitch on shark tank the two critiques they’d likely make would be: you need to increase your margins significantly, and that inventory is a nightmare and will bleed your business.”……….

    Canada’s “Shark Tank”, The Dragon’s Den, WAS pitched an MLM company. They basically laughed him off the stage. Watch it. It’s cringe worthy:

    https://m.youtube.com/watch?v=-8I4mNnht1E

  2. MLM Radar

    The picture attached to this article says it all: MK is so hungry for new recruits that they’re actually making it More Likely for DIQs to fail!

    Getting through DIQ was hard enough under the old rules. But at least you started with (nearly) enough recruits to get you going.

    Under these new rules, you can enter DIQ with fewer recruits, but the final number you have to reach is still the same.

    End result: more women working their butts off recruiting, but fewer finishing DIQ. Mary Kay wins, you lose. Again.

    1. MLM Radar

      Yes, you’ve got it right.

      But real businesses seldom work with rounded numbers. It’s a lot clearer to say 325% markup instead of 3.25x markup, or 119% markup instead of 1.19x markup.

      1. Shay

        🙂 Thank you!
        So, in this article, when she says,
        “Shark Tank, of all things, really put into perspective for me. A 50% margin is what you need to break EVEN (oh shoot). Profit comes at 65-90% profit margin depending on what you’re selling. One item to keep in stock you’ll need a 65% margin, over a hundred like in mk and you’re going to need more in the 80-90% range. If a consultant made a pitch on shark tank the two critiques they’d likely make would be: you need to increase your margins significantly, and that inventory is a nightmare and will bleed your business.”

        Can you translate the numbers? 60%- 95%
        So.. $1 would be $1.60 – $1.95?

        1. MLM Radar

          You’ve got it.

          This can work in the real world, when you’re offering products and services that people are really buying.

          But it doesn’t work in Mary Kay, because you’re pressured to buy inventory based on absolutely no market research, and when you have no customer orders. You’re just guessing, and trusting your Director.

          Everything you buy that you can’t quickly resell becomes a loss. It ties up your available cash. It costs you credit card interest. And it expires.

          In a real business, where you only buy enough inventory to fulfill customer orders, you might make enough money with “Buy for $1 and sell for $2.” But the other problem with Mary Kay and all other MLMs is that expenses eat you alive. Conference fees. Samples. Order forms. Name-branded supplies. Unrealistic shipping costs. The Suit. Co-pays. Ordering quotas that force you to buy more inventory you don’t need.

          It isn’t enough for the company to overload you with inventory. They want all the rest of the money you get from selling their products.

          1. Shay

            I used to sell Ulta & Sephora sale items on ebay and always made money but it was hard and took strategic measures.
            When I first started up, I made sure I never spent more than $300 at a time and would never restock unless 90% of the product sold and if I was willing to just keep the product if it didn’t sell. I eventually learned my craft and and focused on products that I knew would sell. Always had to make sure I charged at least 5x the amount. I had to find the best sales and use coupons. Only one time a year I would spend $1,000 and that was Christmas time because there were good sales.
            After I got good, I would only buy 4 times a year and spend a lot more (at self employment tax time) and it went in to the thousands. I also would buy palettes from Amazon to sell that companies no longer wanted.. On and I would always take advantage of the Ulta 10x points.
            Even doing it that way, for every $1,000 after expenses and taxes, paypal fees, shipping (you get the point) I would $800. The bonus was when I sold in person.

            But this is why I bang my head on the table when someone says they opened their [Insert MLM business], I delicately explain buying for $1 and selling for $2 does not work.
            As one person said, “you used to do it, if I walk in to Ulta and buy something for $7 a turnaround and sell it to you for $14”
            No I would say. if you look at it that way most people know how much products are. If a bottle of foundation sells for $10 bybthe manufacture’, i’m not gonna give you $20 for it when I can buy it myself for $10. Now if you got it for $2 and wanted to sell it to me for $4, sure that could work here and there. But when you open your “business” you have to pay taxes, expenses, etc. And no one is banging down on your door wanting to buy your overpriced Younique products. I explained to her that I had to be creative and bundle stuff and always make sure they could save money buying it from me. I miss the days when shipping was cheaper. LOL.

            I quit selling because it started taking over my life. And, I finally got to back to my field again since losing my job after the crash. Also, it got harder because Chinese seller started making counterfeit products and it was hard to compete with them. Slowly U.S. customers are starting to realize that you will not get an authentic Anastasia Beverly Hills eyeshadow palette for $13 from a seller in china. I don’t miss going back-and-forth with people trying to explain the reality behind the products of some China sellers on why I can’t compete with them prices LOL. It got real bad when U.S. sellers started buying and re selling the fake items. ugh.

            Whew that was long.

        2. Lazy Gardens

          This explains the various “profit margins” … It represents what percentage of sales has turned into profits. Simply put, the percentage figure indicates how many cents of profit the business has generated for each dollar of sale. For instance, if a business reports that it achieved a 35% profit margin during the last quarter, it means that it had a net income of $0.35 for each dollar of sales generated.

          https://www.investopedia.com/terms/p/profitmargin.asp

          A zero or negative profit margin translates to a business either struggling to manage its expenses or failing to achieve good sales. A further drill-down helps identify the leaking areas—like high unsold inventory, excess yet underutilized employees and resources, or high rentals—and then devise appropriate action plans.

          This is an analysis I have NEVER seen anyone recommend in Mary Kay … because that 100% profit they talk about (doubling the cost of the product and selling it) drops like a rock as soon as you put expenses into the equation.

          Net profit is determined by subtracting all the associated expenses, including costs towards raw material, labor, operations, rentals, interest payments, and taxes, from the total revenue generated.

          = (Net Sales – Expenses) / Net Sales

  3. Data Junkie

    An MLM could operate ethically by doing the following:
    – Set a reasonable limit on the number of reps by geography (no more endless-chain recruiting)
    – Give commissions only on sales to outside customers (no commissions for sales to down-line reps!)
    – Pay commissions only to the rep directly responsible for the sale
    – Eliminate qualifying minimums, allowing a rep to sell as little as they like and still get commissions on their sales
    – Eliminate fees to stay “active”
    – Stop exaggerating product efficacy
    – Stop exaggerating income claims/potential
    – Stop selling “the dream”
    – Eliminate attendance fees for conferences, seminars and training sessions
    – Stop charging for training/coaching materials
    – Stop misusing common business terms. Use “gross revenue” instead of “income”, and refrain from using the term “making” when referring to gross revenue
    – Provide a realistic business model spreadsheet to help reps understand how much they have to sell to meet personal income goals
    – Encourage and coach reps to keep an accurate and comprehensive balance sheet so they can tell if their business is profitable

    Given this, here is how an MLM rep can be an ethical MLM rep:
    – Don’t recruit
    – Don’t exaggerate product efficacy
    – Accept “no” gracefully, the first time!
    – Be up front about the name of your company and the real purpose of the invite to that “party”
    – Don’t target family/friends/co-workers (but do sell to them if they ask)
    – Don’t shame folks who:
    – Choose not to participate
    – Are overweight
    – Have acne
    – Wear little if no make-up
    – Work a regular 9-5 job
    – Are working moms
    – Don’t target the vulnerable
    – Create a separate business account in social media…don’t use your personal accounts or contacts for your business
    – Don’t add social media contacts to groups without permission

    Sadly, all the incentives in MLM push the reps to buy and to recruit, with no incentive to actually sell to outside customers. Everything is structured around the rep being the target customer, and making more money off the rep at every turn (many kingpins make more off attendance fees from seminars than from down-line sales).

    1. Char

      Yep. Everything you described with just one catch:

      Follow those suggestions and it is not MLM-ing. LOL. The act of MLM-ing is a definition unto its own.

      To drive this point home, I often ask. How do you ethically do ly-ing, cheat-ing, drown-ing, murder-ing, etc.?

    2. Lazy Gardens

      If you did all that, you would have a direct marketing company – like Fuller Brush used to be – and not an MLM.

      There are still several of them that work this way, and their reps can actually make a living at it.

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