True or False: Mary Kay Isn’t MLM, It’s Dual Marketing
Written by L J on May 19, 2008 – 12:26 pm -FALSE.
Mary Kay Inc. claims that their business structure is based on a concept called “dual marketing.”
They define it as separating corporate management from independent contractors. That definition, however, is the basic definition of independent contractor. An independent contractor is not an employee of the company and doesn’t receive any of the benefits of a hired employee.
The only definition I was able to find for the term “dual marketing” is the partnership between two companies that occurs when they decide to advertise their complimentary products together.
It appears that the term “dual marketing” was implemented by Mary Kay Inc. to attempt to hide the fact that the company is a Multi-Level Marketing company. MLMs elicit a negative response from many people, and aren’t considered to be “real businesses” by some.
However, Mary Kay Consultants earn money not only by sales, but by recruiting other people into the Company. Mary Kay Inc. pays Consultants a commission based on the amount of product that their recruits order from the company. Starting with their fourth recruit, Consultants also earn a bonus amount for each person they bring into the company.
Don’t be fooled: Mary Kay Inc. is a Multi-Level Marketing company that uses a Stair Step Breakaway plan as its compensation model.
Tags: dual marketing, MLM, Multi-Level Marketing
Posted in True or False? |
May 28th, 2008 at 9:03 am
Any direct sales company that involves you buying product for resale and does not allow you to return overstock for reimbursement without fofeiting your status as an independent business woman and involves making money by recruiting others is a MLM, period!
They forget to tell you that even though you might earn a comission monthly on your personal recruits or if you are a Sales Director your unit production, the commission isn’t yours to keep until a year has passed.
With MK’s 90% buy back plan anyone you personally recruited that returns product, will result in a “bill” to you from MK on the commissions they paid you.
The system only benefits MK and those at the top of the recruiting pyramid! Be wary and ask a lot of questions. If your recruiter or her SD seem to squirm and are very vague you should just “Say NO”! Ask to see their Schedule C so you can actually see what their expenses were and how much product they actually sold. if they declared a loss, their business is not a money maker, don’t let them tell you otherwise!
July 31st, 2008 at 12:27 pm
Wow, Great post. My sister was considering joining that company, but she did not get a good vibe from them.
July 31st, 2008 at 9:01 pm
I have worked in the field of Corporate Branding & Design for 15 years. The term “dual-marketing” is similar to co-branding, which has to do with two DIFFERENT and SEPARATE companies working TOGETHER to market something; many times you will see this in the grocery store in the packaged food isles, (i.e. baking mixes, such as a bread mix company using Hershey’s products as an ingredient).
In any rate, here are some incorrect facts stated in a few of the posts. I just checked with the Mary Kay Legal department; Mary Kay Corporate does NOT officially label or classify the company and its structure as a “dual-marketing” entity or classification. Legal told me that at one time there was an Independent National Sales Director who incorrectly publicly used this term upon explaining the marketing, and the term was assumed valid and used following that by those in the audience. Rather, Mary Kay is simply considered “direct sales.” One wholesale purchase to the consultant - one sale to the customer. There are no levels in between these within the wholesale level - the company sells to the consultant, and the consultant sells directly to the customer - simple and sweet. Nothing that corporate publishes classifies the company as “dual marketing.” Companies can’t always control what those who associate with them say!
August 19th, 2008 at 6:51 pm
Thank You, Kerstin Lee. What I appreciate the most is that you took the time to research and find accurate information, even called the company! I’ve come accross this before. ALWAYS ALWAYS research the truth, don’t just believe everything you hear/read. This goes on BOTH sides, positive AND negative.
August 19th, 2008 at 7:17 pm
“The term “dual-marketing” is similar to co-branding, which has to do with two DIFFERENT and SEPARATE companies working TOGETHER to market something”
Is there an echo in here? I believe I pointed this out in this post.
“Mary Kay Corporate does NOT officially label or classify the company and its structure as a “dual-marketing”
Yes, they certainly HAVE officially labeled themselves as a dual-marketing company. It was in the Career Essentials material — PUT OUT BY THE COMPANY.
I’m checking to see if it’s still in there.
Oh…and sorry, but asking the Company does NOT qualify as research. Valid research is when you gather IMPARTIAL information from lots of sources.
And the “direct sales” line is meaningless. MK’s definition has nothing to do with whether it is a multi-level marketing company or not. They throw that “direct-sales” line around all the time to deflect the concerns of those Consultants who wonder why they have to recruit to move up, like other MLMs, yet everyone keeps telling them they’re not MLM. HA!
August 19th, 2008 at 9:37 pm
I looked through all the company printed material I have, including the Business Basics booklet I received 2.5 years ago when I became a consultant. It refers to itself on page 2 as a “global direct selling company”. I’m not saying that I know 100% that they don’t refer to themselves as a dual-marketing system, but I have yet to find it.
Can someone explain to me why so many of you dislike MLM companies so much? :) I really would like to know. I can understand why recruiting is unattractive to some people. But many companies offer bonuses for employee referrals. I used to work for both Dish Network and DirecTV and both of them would pay bonuses if we recommended someone for hire. If the person was with the company for 6 months you’d get a bonus, and if for a year you’d get ANOTHER bonus. The reason being that call centers have very high attrition rates. Yet people don’t get angry at Dish and DTV for offering referral bonuses for employees! In a Direct Sales organization it is VITAL to that company’s success that they expand the sales force! We’re talking MK, Avon, Amway, Primerica, Longerberger, and SO MANY MORE who are members of the Direct Selling Association.
Also, what is wrong with earning commisions on sales of those below you? In real estate a broker hires agents to work for her. She trains them, teaches them the business, and when they sell a house she gets a cut! Sometimes bigger than theirs! (altho that is unusual but it happens) But do we get upset at Real Estate brokers?
I’m sorry it just seems that people are getting upset over things we find all the time in corporate america, altho MK has greater returns and a more fair system.
August 19th, 2008 at 10:47 pm
The reason being that call centers have very high attrition rates. Yet people don’t get angry at Dish and DTV for offering referral bonuses for employees!
Do you think maybe there is such a high attrition rate in these postions because people hate to be solicited in the privacy of their own home when they are trying to eat dinner, watch TV, help the kids with their homework or maybe even get some sleep because they work shift work? Why do you think so many states have instiituted “No Call Lists” to protect people’s privacy and to keep “direct sales” people from harrassing them?
I’m sorry it just seems that people are getting upset over things we find all the time in corporate america, altho MK has greater returns and a more fair system.
Sarah you are seriously in the pink fog if you think MK has greater returns and a more fair system than corporate America. MK doesn’t offer any benefits until a person reaches the level of SD, and then it is only Life Insurance.
In corporate America when you make a sales commission and the buyer returns the product, they don’t take back your commission…in MK if one of your recruits returns her product for 90% buyback, any comission you earned from that consultant in the prior year is taken away in the form of a “chargeback” if you are a SD, if you’re just a consultant they deduct it from your next bonus check or bill you for the difference. If you no longer are an IBC or SD they “bill you ” and ask you to remit the commissions you were paid!
Why does MK have such a high turnover of IBC’s returning product and SD’s terminating their contracts and sending back their cars, if they’re such a great company to work for?