The Reality of National Sales Director Commissions
Yesterday we discussed the lawsuit between Mary Kay Cosmetics and former National Sales Director Amy Dunlap. Mary Kay is suing Amy for using information on MK consultants to recruit to Isagenix. Amy is counterclaiming, saying that MK lies to women when it says that you “own your own business.” Unfortunately for Amy, she is guilty of telling women the exact same thing while she was in Mary Kay. She is also counterclaiming, saying that the non-solicitation clause in her NSD agreement should be unenforceable.
In an affidavit in the lawsuit, Amy makes it clear whey she left Mary Kay. She wasn’t making much money:
After years of being a Consultant with Mary Kay Inc., I became a National Sales Director (“NSD”) for it on or around March 1, 2005. During my last few years with Mary Kay Inc. my sales bonus and commission income ranged from approximately $100,000.00 to $140,000.00. I resigned as NSD and began working as an Isagenix distributor in 2011. Isagenix, based in Phoenix, Arizona, markets mostly nutritional supplement products. Since becoming an Isagenix distributor in July 2011, my husband and I have been paid approximately $80,000.00 in bonuses and commissions generated primarily by my efforts in building our Isagenix business By my third month with Isagenix we were making $20,000.00 per month in bonuses and commissions from my efforts, which is much more income on a monthly basis than I had been making with Mary Kay Inc. before I resigned my NSD position.
Mind you, I don’t think most of us would sneeze at income of $100,000 to $140,000 per year. But as a self-employed individual, we need to consider certain facts in conjunction with this income. As I explained in this recent post, all business expenses need to be paid out of this income. She received prizes as well, and while those are nice, you have to remember that she had to pay taxes (both income taxes and self-employment taxes) on all of those.
I estimate that Amy had about $40,000 in business expenses (including office staff), and then had to pay regular income taxes and self-employment taxes (which makes the net take home lower than if she had a job) out of the remainder. Amy likely had about $30,000 to $55,000 left to support her family each year.
The most important thing to remember is that Amy was at the top of Mary Kay. Think about all the sales directors who are struggling to get to NSD, who believe they will have it made if they can just get there. Think about the sales directors who have been on the hamster wheel for years… trying to get to NSD… and repeatedly failing. (Amie Gamboian, Julia Mundy, Jen Besecker (formerly Semelsberger), Kim McClure, Pat Nuzzi…) Even if they finally get to NSD, they stand a good chance of making less than $10,000 before business expenses.
Remember Allison LaMarr, the big record-setter in Mary Kay who got to NSD the fastest and had it all? Theoretically. She was making a whopping $10,000 per month before business expenses when she quit MK. Her income broke down like this:
If Mary Kay Cosmetics is such a great opportunity, why so many quitters?
But back to Amy Dunlap. Here is what her gross commission income looked like over the years:
In mid-2010, Mary Kay stopped publishing NSD commission checks under $10,000 per month. Why? Because it illustrates exactly what we’re talking about here: How you can make it to the top position in Mary Kay and still not bring in an executive income. And this is not an isolated occurrence. It is happening to plenty of National Sales directors.
So at the top of the pyramid, Amy was barely making lower to middle management type wages, so she quit and went to Isagenix. She claims that within a few months, she was making $20,000 per month. How did she do it?
This is an October 18, 2011 interview with Amy Dunlap, who was said to be a “3 Star Golden Circle.” (Large file!) She “advanced her business quickly,” and the interviewer asked her how she did it, having been in network marketing before..
“The reason why I joined Isagenix was, definitely for – – and I mean I’m just going to be honest – it was for the compensation plan. That’s 100% why…”
About Mary Kay (which she didn’t actually name):
“We were really in a place financially where – – I was doing wonderful, but I was really in a place where if I was going to make a change I would need something were I could produce a high six figure income very quickly.”
She said, “The people that I’m working with are ALL business builders. Every single one of them.” She focused on these people for the first 90 days, and brought in people with “vision and ambition.” She selected 10 “business builders” who were hard workers who wouldn’t whine. They were told Amy’s goal was to make $300,000 in her first year in Isagenix, and she needs 10 people to join the team with her right now. They created the same goal to earn $300,000 in their first year. Each decided on their top 10 business builders and mapped out a plan.
The word “Saturation” was thrown out as it relates to Mary Kay (referred to as her prior business). There are only 200,000 consistent users of Isagenix products around the world, so there is lots of opportunity to get people using the products. She calls it a “gold mine.”
Amy feels like “… God just plucked me out of something and just put me into a place where literally we are in the right place at the right time.” This a common phrase heard in Mary Kay any time a new product or initiative is announced… showing us how the same tired lines are able to be used as people jump from MLM to MLM.
I wonder exactly how many people on her Isagenix team were poached from Mary Kay? I suspect several, which is exactly why Mary Kay is going after Amy. If she had left and not bothered any MK consultants or directors, I bet Mary Kay would have left her alone.
Is Amy making $20,000 per month in Isagenix? Probably. Will her downline do the same? Probably not. The pyramid is set up for failure. If Amy gets her 10 business builders, and they each get 10, the pyramid already has 100 people in it. How would all 100 of them (who are going to be serious about this business, if we’re to believe Amy) make $20,000 per month each? That would be $2 million in commissions per month for 100 recruiters, and this flies in the face of reality.
Do some people make big money in MLM? Sure. You will always have the “high earners,” who are touted to show “what’s possible” if you just work hard enough. The reality is that for each of those high earners, there are hundreds or thousands of other participants who lost money in the MLM. And remember, the only way that high income is sustained is through a constant influx of new money-losers.
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There’s a potential explanation for Ms. Dunlap’s impressive income in her new MLM company–she may have been paid by the new company to leave Mary Kay and join them. Lawsuits between MLM companies reveal the common practice of “poaching”, where one MLM lures another’s top people with bonuses for leaving and joining them. They may also insert people into the top of the pyramid, giving them an instantaneous huge downline (and income). All MLMs need a handful of top income earners they can parade in front of the masses to show how they too can be rich! They of course, don’t mention those people are being paid for motivational speaking at conferences and are getting a cut of the tools income as part of their reported riches, as well as any bonuses or placement high in the structure they were given–income not available to regular distributors. Here’s an example of just this type of thing:
http://www.deseretnews.com/article/700109703/Utah-firm-Max-International-settles-Melaleuca-suit-for-12-million.html
I believe this is very likely.
I wonder if MK had something to do with Bellamora crumbling? It is hard to find anything about what happened but maybe MK contacted them and put pressure on the compnay and Allison. It would explain why everything is hush hush.
Bellamora collapsed for several reasons, none of which had anything to do with Mary Kay. They are a classic example of being killed by what looks like success.
1 – They were inadequately funded, and had cash flow problems:
– couldn’t afford to produce and send out all the free startup kits recruits were expecting
– couldn’t pay for a website adequate to meet the demand of the exploding number of recruits
– couldn’t pay all the people they owed commissions to
All that led to recruit complaints and loss of trust – loud and public.
2 – they had some MLM looters who quickly exploited the commission structure to snarf up large commission checks before the inevitable collapse (leading to even more cash flow problems)
3 – the internet –
– made it easy for people to recruit large downlines in a hurry
– made it easy for complaints be seen and spread
Pre-internet, the complaints would have been invisible to potential recruits and the MLM participants. But the complainers were all over Facebook and the consumer sites.
“And remember, the only way that high income is sustained is through a constant influx of new money-losers.”
And here is the core of life in Mary Kay, and all other MLM’s.
I’d like to think that their earnings are going sucky because WE are here. Since 2006, women have had opportunity through the internet to get “the rest of the story”. SO they sure can blame us if they want to. But that would STILL leave their basic job description as, “find as many more women as you can to buy in with full inventory or something close, to sustain the upper tier of the pyramid, while building a large slow lumbering base of personal users who sold their friends and family and then settled for the discount to hold that base production.”
TA-DA.
MLM Pyramid builders are financial rapists. They care not for the condition they leave their downline in, “chasing the dream”. You HAVE to lie and manipulate people to get them on board. She did it in Mary Kay…and admitted it! So what exactly do you think she’ll be telling her Isagenix wannabbes.
THE JOB IS THE JOB. Talk other people in to talking other people in to parting with their resources so that you can get paid on their BELIEF In YOUR lie.
Is there any way to look at Amy’s Isagenix downline and check it for ex-Mary Kay directors. Although, using their spouse to sign up for the competing MLM is one way they slide through restrictions in the contracts. We’s have to check for the spouses too.
Not that I’ve found yet, I’ve been looking!
The Amy Dunlap Isagenix interview begins with the interviewer emphasizing, “It is simply a mindset. You have to believe in what you are doing.”
Right. There’s that word again: Believe.
He didn’t mention that it also helps if you have a list of hundreds of established MLMers to cull through when selecting your top 10 business builders who each know another 10 business builders. Yes, like most of the people on this planet, I don’t have such a list of established MLMers to mine from, so I’ll just BEE-LIEVE and it will work out for me too! And for extra help I’ll wish upon a star tonight.
But then again, I won’t get sued by Mary Kay either.
And, as I said before, the math doesn’t work out. According to Amy’s interview, Isagenix only has 200,000 consistent customers (whatever “consistent” means). But according to Wikipedia, Isagenix claims to have more than seven MILLION customers (which ALSO was omitted from the interview). http://en.wikipedia.org/wiki/Isagenix_International
Think about that for a moment. Think about the ratio. 200,000 divided by seven million is .0286. That means only 2.86% of customers are repeat customers, and over 97 percent are not! Isagenix has been around for 10 years now. They’ve already hit the ugly market saturation point. How long do you think Wal-Mart would stay in business if less than 3% of customers came back?
Right. Good luck with that, Amy. And good luck with that to all the BEE-LIEVING MK directors who you poached.
The saddest part about this whole mess is that, because Isagenix has tapped into the MK pyramid, thousands of unsuspecting and frustrated MK consultants are going to be victimized again by another predatory MLM.
Has anyone tried this Isogenix stuff? I did. Yikes. Hope you have an outside job. That stuff will give you the worst gas of your life.
It just makes me laugh every time they talk about how many pounds someone “released.” No one loses weight in Isagenix. They all release weight.
The word “lose” has a negative connotation for MLMers.
… and gas.
Fat blockers stop your digestion from absorbing and processing fat, but the bacteria in your large intestine have no problems doing it. The result is large amounts of extremely foul gases.
…and gas, apparently! X^D
(I had tried–and apparently failed–to put my previous comment immediately after the comment regarding “releasing” weight!)
“Amy feels like “… God just plucked me out of something and just put me into a place where literally we are in the right place at the right time.” This a common phrase heard in Mary Kay any time a new product or initiative is announced… showing us how the same tired lines are able to be used as people jump from MLM to MLM.”
Why must they always evoke God, as if God personally cares about her financial gains… The richest people on this earth often have the least material means.
God is never an excuse for greed.
Wouldn’t that make it the luck of the draw rather than how hard one is willing to work?
Just a comment on the non-solicitation clause.
Insurance agents do it all the time when they leave on company and go to another. What about other “agents”? Ever see Jerry MacGuire? hahaha.
MK knows the failure rate and are covering their behinds with that clause.
I have a friend who left MK and now years later she is in another MLM “business” using the same methods she used in MK.
But this time I know what’s going on.
Yes they are very un ethical company. they promise to me and to all the other women i saw standing at the meetings is only a 100 dollars and then you would recive a phone cal from the director and say no your bussines wont take off with nothing and you need for a good start 1,800 and that is why if you do not buy this much you are nobody there at all and then is the other phone call and meetings to recruit people it is so disgusting how they in this economy dont care about this poor ladies. My friend is a single mom and they suck her in to buying 1,800 i just bought 600 and from the moment i starting telling people about the product they were running away i have lost friends and family members by selling this products beacuse they harras them to be recruited. They are a bad company they became rich by people such us my self with no mercy. recruitng is the only estraregy they have it is sick. Mary Ash is not in a good place right now. I hope some rich person would put a law suit against them.