• Kate Markovitz

Direct Sales, MLM, Pyramid Scheme + Beautycounter Opportunity: Honest Thoughts from a Consultant

I want to review the Beautycounter business opportunity from the inside.


I've seen a couple of reviews that are sharing their perspective from the outside. They are quick to make assumptions. I question how much they can know if they haven't engaged with the company directly (just as I cannot speak to other MLM companies that I have not been apart of... HOWEVER, I do have years of experience from the inside of other direct sales brands).


I also cannot take reviews seriously when they can't even spell the company name correctly. I've seen Beauty Counter, BeautyCounter, and more. Drives me a little crazy - I'm a Type 1 Enneagram if that means anything to you. ;) For the record, it's Beautycounter - one word, one capital.


Beautycounter: A disruptive safer skincare & beauty brand focused on 3 pillars: education, formulation, and advocacy.


Gregg Renfrew (CEO + Founder) set out to change the lucrative and secretive beauty industry. She wanted it to be powered by people (an independent base of consultants) and commerce (safer products) to create change quickly.


At first, Gregg also has a negative bias towards MLM, until she also looked at the model and thought "we can do this better, too."


Thus far, her methods have been effective as Beautycounter was the #1 Trending Beauty Brand in 2018, Most Innovative Company from Fast Company and Women Wear Daily's Best Performing Brand - Small Cap. These awards are in addition to being a certified B Corporation since it's launch in 2013.


If you think I'm going to give a glowing review just because I'm a consultant, please keep reading. It's important for me to be honest. There's much I love about this business and job, but like any position, I have some hang-ups and cons to share.


Outline:


  • Beautycounter's Model

  • Multi-Level Marketing: Pros + Cons

  • Pyramid Scheme Discussion

  • Beautycounter Specifics: Compensation, Income, Cost, Inventory, Incentives, Training, Pros/Cons, etc.

What is Beautycounter's model?


Beautycounter's model is called direct retail, direct sales, or to direct-to-consumer (I've heard/seen all 3 mentioned). What does this mean?


You can shop with Beautycounter via multiple channels.


  • e-Commerce (online) - with a consultant or without a consultant

  • Friends & Family - consultant base

  • Retail storefronts (New York City, Denver + pop-up shops in Nantucket and other cities throughout the year) - credit to a consultant or without a consultant

  • Limited time Partnerships (Target, J Crew, etc)

Is Beautycounter a Multi-Level Marketing Company?


Multi-level marketing is defined as "A sales system under which the salesperson receives a commission on his or her own sales and a smaller commission on the sales from each person he or she recruits to become a salesperson."


By this basic definition, the Consultant field of Beautycounter could be described as an MLM set-up. I receive 25-35% commission on orders from direct customers and 5-9% (or 0%) on team members in my downline. I do not receive a salary.


Pros and Cons of MLM-style


Pros:


  • What you put in, you get out (with a good compensation plan).

You are in charge of your potential with this style of company. It may not suit people who are not going to stick to goals or push themselves (though you could ask your mentor for help), it's great for a self-motivated and hard-working individual. Many promise "the sky's the limit," and while that may be true in some regard, it will take a lot of work to get there. There is no such thing as a free lunch (see I was listening in Economics).

  • Freedom.

No punching the clock. No set work hours (unless you create them). This was huge for me. I need freedom in my job to accommodate my creative mind - I can work different aspects of this business based on my energy. This was also a PERFECT solution for me as I raise our daughter. I can be home but still, fit in work (which I wanted to do) in pockets of time! In general, I think MLM-style are perfect opportunities for moms who still want to have a job.

  • Flexibility.

If you want to ramp up your business and earn more one month, you can! If you need to take a breather and have something personal going on, you can take a step back for a month. Ultimately, no one can do your business but you (for better or worse!)

  • Discount on products.

In most companies that implement this system, consultants enjoy a discount on the company's products. While this is not always the case, the majority of people who sign up for this are doing so because they enjoy the products and want to shop with a discount on what they are already using.

  • Choose your mentor & coworkers.

THIS IS VERY IMPORTANT. I chose my mentor because she is an entrepreneur, she's grown successful businesses, she understands how to do this work. I have women on my team who are similar to me - we all get along wonderfully. Not to mention the extended group of women I've come to know and admire. Total community over competition mindset.

This statement could just as easily be a con. If you sign up with the wrong mentor who pressures you or makes you feel like you have to spend more money than you are comfortable with or you fall into a negative crowd, this would miserable. However, YOU are in total control of this. Choose someone you want to learn from and a team that inspires you. And don't blame the industry if you make the wrong choice.

  • This is fun!

I CHOOSE to do this work every day. I could be a stay-at-home-mom and solely take care of our daughter, but I truly love this company/mission, helping people, mentoring my team... all of it!


Cons:


  • Anyone can do it... and not everyone is cut out for this work.

Because this is different than a traditional job, there's no interview process or weed out. Anyone can pay the enrollment fee and sign up and (just being honest), not everyone is cut out for this work! Not everyone puts in the effort. Not everyone can be accountable to themselves. Not everyone is resilient for the work of building an independent consulting business.. and that's okay!

  • Bad eggs in the industry give a bad name for the whole.

There have been some VERY shady, abusive companies in this model. Look for transparency and ask the hard questions. Research before you jump in (but don't lump all companies together).

  • Untruthful sales tactics - promise a "get rich quick" scheme.

If someone is promising you quick financial success or throwing around "get rich quick" jargon, run the other way. It may be their story, but for the majority of people, it takes time to build a business! There is a lot of work that goes into it. I had relatively quick success with Beautycounter when I started working it more consistently because I had already spent years ahead of time building a nutrition business and had a solid base of clients/supporters.

  • The "pyramid scheme" stigma

For some, this may not matter, but occasionally, I do get hung up on the negative association that people have with direct sales, but more so the CREEPY sales techniques that people use. I've been able to build a financially rewarding business, help people improve their health and skin, and even make an impact in Washington, but I feel looked down upon when someone says "oh, are you one of those companies?" or "OMG this random girl from HS messaged me and told me to join her team." CRINGE. I hate being associated with sleazy sales and overstepped boundaries... so I control what I can: what I do and what I teach my team.


Comparison: MLM with other traditional set-ups


I've shared some negatives of this MLM model, but let's also consider what's going on in other corporations. I have two close family members in sales positions in small business companies. Family Member 1 (FM1) is salaried - he does not receive a commission. He also does not recruit other salesmen for the job. Family Member 2 (FM2) works purely on commission and does not have the option to grow and/or mentor a team.


Observing their positions, FM1 isn't offered incentives to go out and get new business or keep accounts happy (other than being a moral, ethical employee). There are coworkers of his who abuse this model or simply are not great at their jobs, but aren't doing anything to get fired and certainly aren't doing anything to get new business or keep the business' bottom line in check (aka spending money without concern). They ride the benefits of the salary and show up to do the bare minimum.


FM2 had been very successful in her position (territory-based sales) until the company started redistributing and cutting territories. Accounts she worked so hard to get were stripped from her hands... along with the commission. Her earnings were dramatically decreased over the past few years (like by 50-70+%) with little to no warning, nothing to do with her work ethic, sales ability, or customer service support.


Both of these shortcomings fly under the radar. No one is calling this a scam or predatory, these are status quo set-ups and happily accepted? No thanks.


I bring this up to say that there are pros and cons to EVERY model... IMO, it's because ANYONE can do the MLM and some get burned that it's a "louder" conversation. People love to complain and blame a lack of success on others.


What makes Beautycounter different than other MLM companies?


  • BC is a Mission-based and B Corporation that is advocating in Washington DC and Parliament for stricter laws in the industry they are part of. This is unheard of in ALL industries.

  • No pay-to-play concepts. Every consultant that is active receives 25% commission on orders credited to them, period. Yes, there is a 6-month minimum to remain active, however, this keeps consultants that are actively working the job in the role ... otherwise, consumers wanting a "discount" can be part of the Band of Beauty program (all detailed below).

  • More than 1% of the company earns money. Sadly, I have seen stats that 99.7% of people in an MLM company do not earn money (though I think this data may be outdated, I suspect it's high after doing research for this post). This was due to companies forcing consultants to purchase in order to receive commissions, training, conferences, products, etc. Here's what I know about Beautycounter: we have a once-a-year LEAD conference that's available for Directors and above (the first big "leadership" title - meaning the consultant is earning on average $2,134 a month). They also do smaller training around the country in the Fall for the field. We have no mandates on purchasing products. We have no mandates on building a team. A consultant could spend $69-98 and never spend another penny to do this work and receive a commission. According to our Income Disclosure Agreement, over 50% of consultants were paid on average $5,269.

Is Beautycounter a Pyramid Scheme?


A true Pyramid Scheme is defined as "A fraudulent moneymaking scheme in which early participants are paid out of money received from later recruits, with the final recruits putting money in and getting nothing back." Pyramid schemes are absolutely illegal.


I asked my audience on Instagram what they defined as a Pyramid Scheme and here were some answers:

  • an unsustainable business where money flows upwards to the "bigger" people at the top

  • a company that relies on people to bring in more people in order to send $ up the chain

  • people at the top don't work and just get money from people on the bottom


Truthfully, these definitions are just a negative description of a corporation, right? Everyone assumes the person at the top is "filthy rich" and "not doing anything." I won't start a tangent here, but I do challenge you to think about the stress and responsibility the people at the top endure. They are responsible for jobs and people's livelihood, massive decisions that can be extremely difficult, and more. It is REALLY easy to assume the grass is greener and that money provides happiness. Just pause and think about this concept for a moment.

It's in this space I need to bring up the support I provide my team... offering 1-1 coaching/mentoring to anyone (whether I "earn" from them or not), providing graphics/templates/resources, book clubs, brainstorms, etc. If I were to offer this service outside of this model, it would have a hefty price tag.


Because of this model, I'm incentivized TO be a good leader and help my teammates build a sustainable business they feel proud of, we are both rewarded.


In my experience, the other women at Beautycounter "at my level" are providing very similar value and mentorship to their teammates and we all collaborate to support the community at large (not just our teams).


This model can end up sounding negative if you view the mentor/company as a "they just want to earn money from me," but I assure you, this is not the case if you align yourself with the right people. :)


Is Beautycounter a Scam?


No. Beautycounter is one of the most transparent companies in their respective industries: meaning the beauty and the direct sales industry. Transparency is definitely NOT associated with either of these industries.

Do you have to become a Beautycounter Consultant to receive a discount?


No. I love the rewards program with Beautycounter and I believe this is what really sets Beautycounter apart from other MLM companies (and why our $$ stats are much more impressive... more on that below).


In other MLMs I can think of, you "join" or "sign up for the discount" and suddenly you are roped into this auto-renewals and spending so much a month (how did that even happen?)


Beautycounter has 2 options to support the mission:


Band of Beauty Membership: a rewards program that's $29/year, offers 10% on product orders, free shipping over 100%, a complimentary enrollment gift, and special member exclusives. There's no auto-renew, auto-shipping, or auto anything.


Beautycounter Consultant: partnering with the company to spread the mission providing sales and customer service. It's $69-98 to enroll (depending on if you were already a BOB member), earn commission on orders and small earnings from team members. There is a 6-month quota to remain an active consultant.



How are Beautycounter consultants compensated?


Our model is very transparent.. again speaking from the experience of other companies. We have a 1-page document that lays out the compensation plan, but here's a general explanation:


Sales Commission: 25-35% on personal sales to customers and members (bonuses the more you sell per month. My goal is always to earn 35%). If you sell one lip gloss in a month, you will still receive 25% on that lip gloss... 25% is the minimum commission on ANY order.

Speaking from someone who has done a lot of affiliate work, this is fabulous to use as an affiliate stream alone!!


Team Commission: You do not have to build a team, however, it can be another source of income. You'll earn 5-9% on your first 3 levels with specific requirements on your business (based on title + New Volume in the month - meaning you are working your own business). As you become a "Leader of Leaders," you also have the ability to earn 1-3% override commissions on leader generations below you.


Every earning statement comes with a report of where the totals come from for each order and downline.


How much do Beautycounter consultants make?


On the website, the company has a full Income Disclosure Statement, complete with a chart broken out by title, income, % of active consultants.


According to a recent Beautycounter HQ call, an average consultant invests around $400 when they join and earns $2,722 annual income. This includes all active consultants (active received a commission payment from BC and had a valid Consultant account by the end of a commission period).


If we consider all registered consultants (including those with 0 sales and 0 commission), the average income is $2,233.


Keep in mind, this is NOT the main source of income or priority for the majority of the consultant base. In fact, on my team of 100+, less than 5 use this a significant stream of income to their small businesses (they work similar to me - Beautycounter is a big source of my income streams, but not my only one.) Everyone else uses this a side hustle, hobby, money to pay for kid's activities, vacations, groceries, etc.


When I poll my consultants, many are using this opportunity as a discount on products they already use/love and to take the burden off of their household (aka groceries, gas, etc). They are totally content with the amount of effort they put in and the amount they receive. Their sentiments reflect the numbers above.


That said, this CAN be a lucrative opportunity.


My Journey:


I was working 3 (maybe 4 depending on your view of primary caretaker/stay-at-home-mom) other jobs when I was hustling to actively build my Beautycounter business (Content Coordinator for Balanced Bites, Communications/Social media for a Country Club, My BC/other business, Charlotte's primary caretaker). Since then, I now only work Beautycounter + Motherhood Grace (my other business) while taking care of my daughter.


My title is Executive Director, but transparently, I fluctuate between Director - Senior Director - Executive Director based on the activity of my team on a monthly basis. I average the annual income of a Senior Director for 2019, which is 18% more than I made on my 4th year of teaching when I quit.


2016 - I joined for the discount (knowing what goes into this job from previous experience) and became pregnant shortly thereafter (aka I laid on the couch for 9 months with severe morning sickness).

2017 - I started to work the business after having Charlotte and realizing I desired freedom and flexibility in my job. I hit Director this year. I grew my income 8x compared to 2016.

2018 - Stepped away from my job at Balanced Bites to focus on growing Beautycounter, but continued working at the Country Club and writing my book while building my team and business. Earned 4x my earnings in 2017.

2019 - Stepped away from Country Club to finish my book, building Beautycounter and Motherhood Grace. Earned 1.4x my earnings in 2018 (which is 54x my earnings in 2016).


I work 5-20 hours a week on Beautycounter depending on the season, keeping in mind I lead a team of 100+. Most consultants put in significantly less time, especially without a team. I also have to work on my energy, sometimes I'm super focused on Beautycounter - other times I'm working more on Motherhood Grace.


Why do I think I was successful with Beautycounter compared to over MLM opportunities?


A couple reasons.

(1) Social mission. Making an impact. My work is more than face cream and lipstick, it's about changing the landscape of our products and exposing the truths. This is important to me.

(2) Every person uses face wash, body wash, cosmetic products... having something safe that performs is icing on top. No convincing someone they need to use skincare (I am NOT in the market of convincing). If they want to switch to safer, I'm here!

(3) I can still teach! I do believe much of my purpose in this life is to educate, which is one of Beautycounter's pillars. I align strongly with this pillar.


Is Beautycounter predatory to women or putting them in financial hardship?


Beautycounter itself is not putting any burdens on their consultants. The amount required to enroll is $69(member)-98(non-member), which includes products totaling $97 retail, materials, swag, a website, and more.


This goes back to the idea that you are choosing a mentor that is going to be respectful of you (and vice versa). I have never pushed someone on my team to spend money on anything and I've never felt pressured to purchase.


If someone has hesitation about enrolling because of money, I tell them to wait a few months until they build up funds or we build a plan to understand exactly the work it will take to earn the investment back.


In my experience, very few (if any) women who are actively trying to build a business are losing money on the business overall. The majority earn back their initial investment (usually $500-$1,500) within one to three months of continuously working the business.


As a side note, the investment for starting this business is extremely low in comparison. Starting my nutrition business, I spent well over $3,000 (not to mention the cost of the schooling) and about the same to start my Motherhood Grace venture (which are both also low as I do not have any retail locations, etc). In comparison, $98 or even what I would recommend which is usually $500-700 is a worthwhile investment.


What does it cost to become a Beautycounter Consultant?


As mentioned above, the amount required to enroll is $69(member)-98(non-member), which includes 2 products totaling $97 retail, materials, swag, a website, and more, however, there is a unique opportunity to purchase a Starter Set during enrollment.


Starter Sets are curated, deeply discounted (40+%) sets new consultants can use to begin their business.


As someone who did NOT purchase a starter set, I kick myself because I've had to use my 25% discount to build my products for displays, sampling, drop off kits. It would have saved me more money to purchase at the beginning, but I did not know what this was going to look like for me, I mostly wanted the discount. Now I understand the SS benefits.


Since Beautycounter is an online company, I have found that most people want to see, touch, use the products (if possible) before ordering, so my stash has been well worth it either way!


Do you have to keep an inventory?


No. Actually, as a consultant, we are not allowed to keep an inventory of products! I have products I use for displays, sampling, drop-off kits, and my personal use products.


Are there incentives?


Yes, Beautycounter does offer incentives for Consultants throughout the year.


We have an ongoing incentive called "Start Counting" which allows new consultants to earn up to $1,000 bonus in their first 3 months.


We have a DC/Parliament inventive trip every 2 years to take top representatives from each state to lobby for more restrictive laws. The next trip is the end of April 2020!!


We have Incentive Trips based on activity for spoiling, relaxation and a mini-training. I earned the 2019 Palm Beach trip and it was amazing!


This winter, we had a swag-based incentive during the holidays. I won a brand-new Green Pan kitchen set. We always align with companies/swag that has a similar mission.


Throughout the year, there are opportunities to earn limited-edition swag, like special T-shirts, limited edition colors, and more.


Incentives aren't my thing, they create unnecessary stress for me... but I know SO MANY consultants who LOVE going for these incentives. It gives them targets and goals to work towards. I also run smaller incentives for my team throughout the year, just for fun :)


What training do Consultants receive?


Beautycounter Consultants are given award-winning training via Counter University (Brandon Hall Group Inc's Best Advance in Coaching and Mentoring and Best Advance in Mobile Learning).


Counter University has interactive learning tracks for products (skincare, cosmetics, etc) and by title. We also have a brand-new onboarding system for new consultants during the first 90 days, along with a program called Start Counting, which is an incentive for new consultants to earn $1,000 in the first 90 days.


This is in addition to what your mentor/larger team support offers. I always provide an initial 1-1 call (usually 45-60 minutes) to review goals, answer questions, provide tips, and set up a plan. From there, we check-in as often as the new consultant needs. We also have book clubs, team newsletters, meetings, videos, and so much more.


Do you have to build a team/recruit?


Nope, absolutely not! It's been on the biggest blessings for me, but it's by no means a requirement.


From my Seat:


Pros of being a Consultant:

  • Fills my advocacy bucket. We are making a difference!

  • Amazing community and friendships. I talk to my BC ladies every day. They help me not only with my business but my life. The Beautycounter women I have in my life are some of the most passionate, driven, hard-working women I know.

  • Helping people find skincare and makeup that is good and safe for them!

  • Confidence. I always struggled with self-confidence, but this job has helped me become a leader and recognize my strengths.

  • Financial contributions to our family

  • Something for ME!


Cons of being a Consultant:


  • Being completely honest here.... getting looped in the MLM negative talk can be challenging and disappointing. As we continue to do this work and show how we are different, I believe people will WATCH and SEE Beautycounter is different, but now and then I get bummed about it.

  • Work in physical isolation a lot of the time. I get energy from people, so I love doing events and getting out - but with my current situation, I do struggle with it! There are ways to avoid this - have in-person events, one-on-ones, and/or build a loc†aial team! So far my local gals are full-time moms, so we are juggling a lot ;)

  • No control over promotions or product releases. Can you say control freak? Beautycounter communication has improved tremendously over the years, but I still have a hard time not being able to work this around my schedule.


Should you become a Beautycounter Consultant?

Great Beautycounter consultants:


_ love the Beautycounter mission

_ love the Beautycounter products

_ want to make an impact on their family and world

_ are open-minded and coachable

_ willing to try new things and put themselves out there


If you've checked 3 or more, you should reach out to me and hear more!


DURING MAY 2020, YOU CAN JOIN WITH A "DIGITAL ENROLLMENT KIT" FOR $50.


Email beauty@holistickate.com with "consultant curious" as the title.


Stay tuned for a future post... how to build a meaningful and successful business without scams, begging, or spending all your money.

When I asked my Instagram following for questions to help me craft this post, I received many comments about quitting similar positions with other MLM companies because of x, y, z. I do get it.


As mentioned a million words ago, I have experience with 2 other multi-level marketing companies before Beautycounter (one I actively tried to build a business, the other to enjoy a discount and that was the only way to do so.)


Team Name originated here: Robes & Rose ;)

I'm not here to bash other companies, but I can confidently say that Beautycounter's model is the most transparent, easy to understand, fair to consultants and consumers without pushing certain products, auto-shipments, etc.

My business thrives when I'm actively working on MY business first and foremost and supporting my team by being a good role model and mentor.


The truth is, most women (and other consultants) have NEVER built a business before. They need training, they need a sound-board, they need guidance, they need a personal mentor. I lead by example and offer 1-1 meetings at any time for any of the women on my team.


However, this is also where I see the downside of MLM companies. It can be the blind leading the blind... luckily (as mentioned above) Beautycounter has a robust and comprehensive, step-by-step training system along with some pretty awesome mentors. Choose wisely.

THANK YOU for reading this small novel.


I hope this blog post has provided some context for you about Beautycounter's opportunity in the direct sales industry. If you have any questions, I am happy to answer them.


Should you think this is a good fit for you, or you want more information, please email beauty@holistickate.com with the subject "consultant curious!"


Kate Markovitz
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