Written by Frosty Rose
One of the things I was taught as an emerging leader in Mary Kay was to always recognize what you want more of. My director at the time was having trouble with people coming late to the weekly success meeting. So, she started an “on time” drawing. Everyone who showed up on time received a ticket for a prize (gaudy, cheap jewelry or discontinued product) that was drawn at the beginning of the meeting.
It’s solid leadership advice, and it works really well. Miraculously, everyone started showing up on time for that meeting! I’ve seen many directors do this with different things they were recognizing at weekly meetings—sales went up (a little), people showed up on time, everyone came in dress code (ugh), everyone was using more MK products, and they came in a full face of makeup (double ugh).
But what happens when we try to apply this leadership maxim at the corporate level? For years, corporate has wrung its hands and said it simply cannot recognize retail sales to customers. After all, consultants are independent contractors—corporate doesn’t have the right to ask them for sales slips, P & L statements, or any kind of report that would indicate actual sales to real live customers.
This is blatantly false. Can you imagine Uber saying something similar? “Well, we can’t require mileage reporting from our drivers. They’re independent contractors!” Yeah, right.
They’re doing their best, they say, when they recognize the “Queen of Sales.” They use the best measure they have—wholesale orders times two. For those who are not aware consultants purchase their products from Mary Kay Inc at 50% of the retail price. That’s how they come up with the mythical 50% profit margin that consultants enjoy.
The problem with that math, as Pink Truth has repeatedly shown, is that consultants rarely sell products at full retail price. They’re making considerably less on all sales. And all those consultants running half-off sales in June? They’re selling products at their cost (and taking a loss after you factor in shipping and other expenses), simply to achieve recognition at Seminar for “retail” sales. Or, worse, they’re ordering a bunch of product they haven’t even sold and stockpiling it.
I remember the first time I visited one certain former director. I admired her persistence in her business, her refusal to give up despite setbacks. Sure, she’d lost her directorship, but she was still a successful consultant with a profitable sales business. She was always a star consultant and had even earned a “real diamond” ring for selling $36,000 retail in one year.
I was horrified when I saw her garage. There was no room for one car, much less two. Wall-to-wall industrial shelving held boxes upon boxes of Mary Kay product, much of it discontinued, probably more than that expired, all of it stored in a garage that wasn’t climate controlled. More than any consultant would need to sell to an entire town, much less one person’s customer base.
I lost a lot of respect for her that day, after seeing the reality behind how she “earned” those accolades. But I thought, surely, she was a fluke. Over the years, I learned that this was the rule, not the exception. The exception is the consultant who consistently sells and keeps an appropriate level of inventory on hand to fulfill her customers’ orders. Ya’ know, like a real store.
So, why doesn’t Mary Kay corporate crack down on this kind of behavior? Surely, it’s in no one’s best interests to have consultants stockpiling products that will never be sold to a consumer. Consultants are losing money and burning out, and customers aren’t getting to enjoy those “fabulous, high-end” products. Plus, when a consultant sells an old, expired, discontinued product to a customer, it makes the brand look bad—who wants to be associated with old, turning, separating product?
It would be relatively simple to require proof of sales to compete for recognition purposes. Those consultants who only order for themselves or as “hobby” consultants could simply opt out of recognition. But corporate won’t do it. Because they don’t care how much consultants are selling to their customers.
Corporate’s dirty little secret is this: they are doing exactly what they ask directors to do—recognizing what they want more of. In this case, wholesale orders to corporate, regardless of what happens to that product once the consultant receives it. They’re making their money on wholesale orders. It’s up to you as “CEO of your own business” what you do with all that makeup when it’s in your hands. Never mind that they don’t teach you how to be a “CEO.” Never mind that they actively discourage consultants from running an appropriate P & L report (because it’s almost all loss with very little profit). Never mind that they employ the best manipulation tactics on the planet to encourage excess purchasing.
If it were only a few consultants who had garages full of product melting in the hot southern sun, never to be delivered to a paying customer, it would be easier to blame the consultants for their lack of business acumen. But 99% of women who start a Mary Kay “business” will lose money. That number indicates to me, and to most people who stop to think about it, that they are losing money because that’s how the business model is designed, not because of some unfortunate accident that corporate can’t control.