Written by Lazy Gardens

A common way to evaluate businesses is to do a “year on year” comparison to see if business is up, down, or holding steady from one year or decade to the next. The news from Mary Kay Canada is bad. Really bad. In a decade, commission income for the majority of the consultants dropped to half what it was in 1999, and the sales directors have also seen a decrease in commission income.

Canadian law requires MLMs to report some income for their recruits. The MLMs do not track sales, but they do know what they pay out in commissions.

Consultant numbers:

• In 1999, there were over 16,000 members of the independent sales force of Mary Kay Cosmetics Ltd. in Canada
• In 2009, there were over 29,675 members of the independent sales force of Mary Kay Cosmetics Ltd. in Canada.
• The number of consultants increased by 85.5% . The population of Canada did not. In 1999 the  population was 30,404,000, or 1,900 people per consultant. In 2009 the population was 33,894,000, or 1,142 people per consultant.

Well, 85% more consultants trying to sell product and recruit teams without an equal increase in the population base had the expected results.

They reported lower commission income for each consultant and a lower percentage of consultants getting commissions from recruits:

• 1999 – Of the 2,489 who were in the sales force for at least one year, and who earned commissions, a majority earned commissions of up to $199. (15.6% of the consultants  were in at least a year AND qualified for commissions by having at least one qualified recruit.)
• 2009 – Of the 3,996 who were in the independent sales force for at least one year and who earned commissions, 47% earned commissions in excess of $100. (13.4% of the consultants  were in at least a year AND qualified for commissions by having at least one qualified recruit.)
• Between 1999 and 2009 they lowered  the income level they reported, and changed the wording of how they reported it to make it sound better, but  the commissions earned by the majority of the consultants declined by 50%. In 1999 the majority earned less than $200 in commissions (the reverse of “up to $199”). In 2009 the majority earned less than $100 in commissions (the reverse of “47% earned in excess of $100”).

Directors also lost ground:

• 1999 – Of the 346 of those who were Mary Kay Independent Sales Directors, the top 50% earned commissions during the year of $19,000 to in excess of $100,000. Half of the directors earned less than $19,000.
• 2009 – Of the 553 of those who were Mary Kay Independent Sales Directors, the top 50% earned commissions during the year of $17,471 to in excess of $100,000.” Half of the directors earned less than $17,471.
• Of the directors they report the top 50%, which means the other half of the directors are making less than the reported figure.A drop of about $1500 in median income in a decade for the directors. If you account for inflation, the news from Canada is even worse. To match the $19,000 that was the middle of the pack in 1999, a 2009 director would have to make $23,300.

Sources of information:

http://en.wikipedia.org/wiki/Demographics_of_Canada

http://web.archive.org/web/20000916131228/www.marykay.ca/home/EarningStatement.htm

http://www.marykay.ca/ContentPage.aspx?FileName=/home/earnings-representation.html  (retrieved in 2009)

http://www.bankofcanada.ca/en/rates/inflation_calc.html