Mary Kay is one of the largest multi-level marketing companies in the world, and it has been around for quite some time. It has become a household name over the years and its Mary Kay pink Cadillacs have become icons in the health and beauty industry. Overall, Mary Kay is a very well-trusted company and has avoided any major scandals during its long existence.
Mary Kay Company Overview
History of Mary Kay
Mary Kay got its start in 1963 when a lady named Mary Kay Ash opened a 500 square-foot store in Dallas, Texas. At the time, Ash had only 9 products, but she had big dreams. The products were from a skincare line that she had used for years previously, but she felt they were not marketed very well.
Mary Kay Ash had spent 25 years in the direct selling industry before starting her own venture. She had committed her life savings of $5,000 to starting her own company. However, a month before she was set to launch, her husband passed away. Not knowing what to do, Mary Kay’s 20 year-old son quit his job to help launch the new company.
The company was quickly successful as women fell in love with the quality of the products. Within a year, Mary Kay has 857 distributors, or independent beauty consultants, as they are known. Within three years, the company had reached $1 million in sales.
In 1968, the iconic pink Cadillac was born when Mary Kay convinced a local dealership to paint the car to match her lip and eye color palette. The company continued to grow and expanded into a worldwide brand. Today, the company boasts over $3 billion in sales and has over 3 million independent beauty consultants. It is considered the sixth-largest direct selling company in the world.
A direct selling company as large as Mary Kay has surely seen its share of pyramid scheme accusations. Mary Kay has been the target of multiple lawsuits regarding its employment practices and business structure. The company has generally been successful in defending these lawsuits.
One such lawsuit alleged that the plaintiff was improperly terminated from her position as director when she failed to make her sales targets. Mary Kay ended up winning the lawsuit on appeal because the court found that workplace rights did not extend to independent contractors.
A more recent class action lawsuit from 2015 alleges that the company misclassifies employees as independent contractors and forces them to buy products to remain employed. The allegations go on to say that Mary Kay forced some contractors to purchase and wear uniforms, and that the company mandated certain marketing practices. As of early 2020, this lawsuit is still ongoing.
Mary Kay has also been the plaintiff in some lawsuits, mostly to protect its name and business practices. The company has gone after a handful of companies and internet websites that sell its products at heavily discounted rates by buying them from discontinued consultants. Mary Kay has been successful in most of these actions.
Current Company Structure
Today Mary Kay has approximately 3.5 million beauty consultants all across the globe and a full time workforce of roughly 5,000 employees. They have manufacturing facilities in Texas and China. Their annual sales are in the range of $3 billion.
While Mary Kay was a publicly traded company for a number of years, they returned to being a privately held company in 1985. Mary Kay Ash’s son Richard Rogers still serves as Chairman of the company, while the CEO is David Holl. Holl has served as CEO since 2006.
Mary Kay Products
Since the beginning, Mary Kay has focused on skincare and beauty products, and that is still where their focus is today. The bulk of their products fall within their skincare line. They offer many different products in that line including moisturizers, night creams, serums, and many others.
Outside of skincare, makeup is the next most popular Mary Kay product. They offer an array of lipsticks, eyeliners, eye shadows, and other types of makeup. Lastly, they also have collections of fragrances and men’s products.
Mary Kay Company Marketing Practices
Mary Kay has taken some heat in recent years for their lack of transparency in marketing to potential new consultants. As a privately held company, they are not required to release certain financial information, and many people believe they are intentionally withholding information to convince people to sign up. The accusations are that the company grossly over promises the amount of income that a consultant can expect.
As for marketing their actual Mary Kay products, the company has suggested marketing practices that they encourage their consultants to use. The main one of these is hosting parties where the consultant can demonstrate the products by doing makeup, facials, or other treatments for the party guests. Once the guest sees the quality and results of the products, they will be very likely to buy. This approach generally works well, though some consumers say they feel compelled to buy from friends or family when they attend a party.
Making Money With Mary Kay
While the health and beauty industry is a huge market, is the market for Mary Kay already saturated since there are 3.5 million consultants out there? Is it really possible to make a good income selling their products? The answer is much of the same song in the MLM space. There are a handful of consultants who are making very good money, but most make little to no income from the company.
Mary Kay does not release earnings information for its U.S. consultants, so it is difficult to get exact numbers on earnings. However, you can see the general trends from the numbers they publish for their Canadian sales force. In 2018, only about 5% of their 29,500 consultants earned commissions in excess of $100. Those are pretty dismal income numbers, considering that does not take into account any expenses incurred in operating their business.
How to Enroll
Enrollment as an independent beauty consultant is straightforward. Simply connect with an existing consultant to get started. You are required to sign their consultant agreement and purchase a start kit which costs $100. There are no annual renewal fees after your initial enrollment, but certain minimum purchases are required to remain commission eligible.
Mary Kay Compensation Plan
Compensation on your personal sales of products is very basic. You buy the products at wholesale prices, which are 50% off the retail price. You then keep the difference between your purchase price and selling price. If you sell for full retail, then you essentially earn a 50% commission on each product.
As you recruit new consultants, you can move into higher tiers such as Sales Director or evening National Sales Director. At these tiers, you earn commission and bonuses based on the sales of your team as well. If your team’s sales are high enough, you can qualify for the pink Cadillac award or similar monthly cash incentive. Once you reach these levels, you must maintain those sales each month in order to continue receiving the awards.
Sales and Marketing Techniques
One of the biggest techniques used by Mary Kay consultants is hosting beauty parties and similar events. They get people to come to the party and use the products so that they will want to buy afterwards. Founder Mary Kay Ash made it clear that she did not like pushy salespeople, and she encouraged consultants to apply the Golden Rule to all their customer interactions. The company still gives this advice today.
Mary Kay Compared to Other MLM’s
In terms of brand and name recognition, Mary Kay is definitely a leader in the industry. It is a household name, and people are generally very fond of their products. Many of their customers are very loyal and have used their products for years.
However, in terms of income potential, Mary Kay is low on the list. The market is flooded with consultants, and very few of them make any income at all. Even considering this fact, the longevity of the company speaks to the quality of their products and their brand loyalty.
Conclusions For Mary Kay
Mary Kay is a well-respected company that has been around for almost 60 years. Their products are very well-liked by consumers, and their sales have held relatively steady for the past several years. As a consumer, Mary Kay is a great company with great products. However, as someone looking to make a good income, this is probably not the best business opportunity.