Another MLM “scheme”???

Updated: Feb 13, 2019


You, I and the lamp post are being inundated with Multi Level (Network) Marketers posting their goods on facebook, asking us to join online parties and wanting to book appointments to sell us on these “proven” systems of residual income. Many of us are skeptical to these Multi Level Marketing “schemes” but many are making millions and there are certainly a lot of moms preaching the rewards of being able to work from home and make some money to contribute to the family expenses.


I have decided to run an experiment.


Instead of poo-pooing on this sales method, I am going to try it. However, I am going to first share with you my objections to the network marketing model. I must first disclose that I am a sales consultant for a network marketing company called Silver Icing (SI) that sells clothing online. I chose to do this because I love the clothes and wanted a discount. I post new items on my Silver Icing facebook page and my online party daily and have been able to reward my friends (and myself) with free and discounted top quality clothing. I’m not pushy about it and I don’t work it like a business because I am not reliant on the commissions I generate from it, but many SI sales consultants do.


Disclosure aside, I have been very opposed to network marketing when it comes to hair and beauty products. Why? Because any soccer-mom turned “insert MLM company name here” sales consultant can recommend these products without having a cosmetology background. We, as cosmetologists, go to school to learn the science behind skin and hair care and I don’t think that anyone who hasn’t should be prescribing beauty products to the consumer. I work hard to assist in elevating the standards of our industry and these MLM companies that allow any Tom, Dick or Harry to sell their products are not helping with that. That being said, the number one place where consumers purchase their beauty products is the supermarket and I’m sure no one working there knows how to properly assess the skin, scalp or hair. In fact, salons and spas sit at #3 on the list for where consumers purchase their beauty products and the industry average for retail sales sits FAR below the goal for best practice; if we aren’t selling to our clients, someone else is. If a client doesn’t purchase a product from you, they will purchase somewhere else within 48 hours of leaving the salon/spa.


Lately, it seems we are at an all time high for skin and hair care companies operating within the direct sales model. Many of them are targeting salon and spas and I have even had coaching calls with network marketers wanting to learn how to sell into salons and spas. What is it that we, as salon/spa owners, are looking for when partnering with a brand? Sadly, I see far too many (in facebook groups for hairdressers and salon/spa owners etc) asking for others opinions about who they should be partnering with (for my thoughts on this please read the blog “How To Choose The Right Brand(s) For Your Business”).


What do salon and spa professional brand manufacturers offer us that we don’t think we can get from a direct sales manufacturer? Most of these brands are comparable in research and development, price and ingredients to the professional products we carry in our businesses.

Besides what I’ve already shared, here are some of my initial thoughts upon diving into this experiment (I have already spoken with some direct sales consultants and have chosen the brand for my shelf):


  • First and foremost, I am looking for a profit. I consider my retail space valuable and retailing helps me pay the rent. Upon doing my initial research on a couple of direct sales brands, I can tell you that we will not get the 40-50% profit margin that we get from our professional manufactures. Now, there are opportunities to make up to 100% profit by earning free product to retail, but this is dependent on signing up our clients for monthly direct shipping.

  • I am looking for a brand that speaks to my current clients or a market I want to target. Check. I haven’t yet found a professional product line that also addresses the health of a client to encourage healthy hair growth.

  • I am looking for a reasonable buy in. Meaning I do not want to spend more than $1000 on an opening order and I also don’t want another line with a huge amount of SKUs.

  • I am looking for something “different”. Check. See comments above. This product addresses hair loss and is specific to creating an optimal environment for hair growth.

  • I am looking for a “partnership”, this is yet to be seen. I know they can’t provide us with education when it comes to hair cutting or colouring, but I have received some videos on the science of hair growth and loss. I am also currently reviewing their sales packages and benefit information.

What I am really not interested in is signing up my stylists below me in the “pyramid”. I’d rather do this together as a team. I am also unsure as to how that would work for keeping our client information within the salon. I will look into this more as it is recommended (for some reason) to sign up each stylist as a consultant as well. I am also not interested in recruiting other consultants as I, like many other salon and spa owners, am wearing many hats and do not have time for this. I teach authentic selling and coaching my team to retail takes up enough energy; there’s none left for working to sign up and coach other consultants. Because of this, I have my doubts that this sales model will be that financially rewarding.


I am just doing the product research and will be launching the brand to my team at the beginning of August. Our retail numbers typically sit at benchmark or higher so if we can’t sell this…


This Blog will be updated regularly with my MLM experimental journey so be sure to check back often to hear my thoughts.


*UPDATE*


It has been over two years since I wrote this blog and completed this experiement and, guess what? I have experienced amazing success!

To be honest, one of my main concerns was that anyone can sell these products and in re-visiting my days as a sales manager for a master importer, looking at the products shelves at my local drugstores and in doing some online research the fact of the matter is that ANYONE can sell ANYTHING ANYWHERE these days. Even our distributors are selling to online retailers and setting up their own online sales channels, selling to consumers and competeing with us, their customers (and their own sales force). My clients are still buying from me (not the soccer mom down the street) because I am the one recommending and educating them about these products that they are hearing about through network (word of mouth) marketing. And really, if the soccer mom down the street is taking away your product sales, you either aren't doing a good job of educating and selling to your clients or you don't sell the products that they feel they need or are drawn to.

Why would any manufacturer of premium salon products choose to sell via MLM instead of thru the traditional channels to salons? Because it's a fact that salons don't sell. The industry benchmark for retail sales is 20% retail to service, the industry average s 7%. Why do you think our "pro" manufacturers are placing their products in the drugstores? (There IS an application process to have your products on their shelves so, I hate to break it to you, but it IS the manufacturer themselves selling to these big box stores).

Network marketing products get known. Fast. In fact, these products I chose to run this experiment with became the number 1 premium haircare line in North America in just 3 years.

I am also able to sell these products online to anyone in North America and the UK (for now) and am selling tons to non-salon clients. This may mean I am selling to YOUR clients #sorrynotsorry. Selling online also allows me to spend less on inventory.

This particular line of products are targeting a large market and bringing new clients into the salon because I am able to help them with many of thecommon hair woes. They are higher priced and have increased my retail sales dramatically (we always hit benchmark but now, and consistently for two years, we have soared well above).

The company has given me more rewards and I have earned more money on my sales than all of my other retail product lines combined. Not one of the manufacturers of the other lines we carry has sent me on an all expenses paid trip since I took over this salon 5 years ago, but in just 2 years of selling these (MLM) products I have been sent to Vegas twice, Bermuda (on a cruise) and have another Vegas trip coming up.

And one of the absolute best parts about being a market partner with this company is that I am given the opportunity to help other salon owners introduce these products to their clients/friends/family/collegues and make more money too. I am handsomely rewarded for my referrals and the more I help my friends succeed in sales, the more money I earn. This is an excellent second revenue stream and has allowed me to cut down on my time behind the chair (my body is breaking and I need to spend more time working on growing my businesses too). Have you ever received a monetary gift from the manufacturers of the products you sell because you told another salon onwer about them?

I will admit that the profit margin on the products is not the typical 40-50% we are used to, but the fact that I don't have to hold as much inventory, am provided with my own dedicated website to sell online (greater reach), am attracting new customers for services just because they trust me (since the products I am selling to them actually help with so many hair issues) and I am selling more of this product line than any of the 3 others I carry speaks volumes and makes up for the lower mark up.

I am so glad that I allowed myself to have an open mind and put this business/distribution/sales model to the test. If you want more information please email me at info@salonskipper.com

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