THE EVOLVING WORLD OF MARY KAY
Byline: Laura Klepacki
DALLAS — Five years after founder Mary Kay Ash suffered a debilitating stroke, executives at the helm of Mary Kay Cosmetics are finding ways to maintain the company’s personal culture while steering it into the future.
Keeping on top of technology, the company has made broad use of the Internet to handle a bulk of its internal business and, later this year, will launch a product collection targeted at young women to cultivate a new customer base.
Yet in some respects, time stands still at Mary Kay.
Ash’s office — swathed in pink carpets and pink wallpaper, with a pink sectional sofa — has remained untouched since the day she left. It has been opened to tour groups and visits from Mary Kay consultants, who pay homage to Ash via notes written on her desk blotter. Periodically, the blotter sheet is removed and sent to her home — although company executives, who speak of Ash in reverential tones, carefully avoid discussions on the status of her health.
The corporate headquarters, an imposing granite and glass structure with cascading fountains that served as home to Ewing Oil in the movie version of “Dallas,” symbolizes the company of contrasts Mary Kay has become — equal parts big business and big sister. Columns in the cafeteria are designed like lipstick tubes and elevator buttons resemble cosmetic compacts. Three spaces in its visitors parking lot are reserved for VIPs, i.e., Pink Cadillacs. More than 30 years after it began, its top sales associates are still awarded the signature Mary Kay status car. The shade of pink has been toned down to a “pearlized” version that could almost pass for a silver/white, replacing the Pepto Bismol pink of the past. Tom Whatley, president of U.S. sales at Mary Kay, confided that some auto dealers would hide the showy cars in the back while awaiting pickup. “Now,” Whatley said, “they put them in their showroom.” Leaders who attain pink-Cadillac status are a source of pride for the divisions they represent and it is not uncommon to hear the achievement touted in the division’s phone greeting.
Quaintness aside, Mary Kay has become a $2.5 billion company and continues to grow. While 80 percent of its business is in the U.S., it is steadily opening new markets and is now in 37 countries. In 2000, the company boasted its strongest recruitment period yet — in August alone it added 175,000 consultants — bringing worldwide total to about 800,000, according to Mary Kay executives. The company remains privately held by the Ash family, although they no longer participate in its operation. A long-term goal is to double the size of the business to $5 billion, according to Whatley. “We would like a shot at that level of sales.”
Six years ago, Mary Kay began developing an Internet program. Today, 50 percent of its business is conducted online, generating 65 percent of its revenue. To be clear, that is not e-commerce, but consultant orders placed directly to the company. [The company does not sell to consumers, all transactions go through a consultant.] Previously, everything was handled by fax or phone. The change has resulted in savings in both time and money for the company.
Ash founded the company with a handful of skin care items and developed it into a beauty behemoth driven by her desire to help women achieve their dreams. A corporate symbol — the bumble bee — is a creature that aerodynamically should not be able to fly. In the spirit of Mary Kay, the company published a book last year titled, “Paychecks of the Heart.” It is a compilation of personal stories of 113 Mary Kay national sales associates as told to Yvonne Pendleton, director of corporate heritage. The company’s mission statement is: “Enriching women’s lives.”
In an archived “60 Minutes” interview, correspondent Morley Safer challenged Ash’s motives, asking her if she wasn’t “using God” to foster a business. After a brief pause, in a soft Southern voice, Ash replied: “I like to think God is using me.”
Besides the pink Cadillac for sales achievement, an even higher honor is the company’s Go-Give award, which recognizes an associate for a selfless act of kindness.
Based on this heritage, Whatley’s role has developed into one of strategizer, cheerleader and counselor.
At recent Mary Kay meetings, Whatley has dressed up as Uncle Sam and a bumble bee. His otherwise masculine office of dark wood and leather, has shelves filled with bumble bee artifacts — even bumble bee slippers. You have to have an “overarching sense of humor,” is how Whatley puts it. “Mary Kay would do fun things at meetings.”
Explaining the Uncle Sam pose, Whatley said a recent forum had an American production theme. When Mary Kay left, “we had to find ways to maintain the warm, friendly, caring environment.” A favorite Ash saying, recalled Whatley is: “Don’t forget to be kind to people, folks.” Ash also referred to sales associates as “daughters” and, instead of profit and loss, P&L stood for people and love.
When new sales directors came to town, Ash would bake cookies and give them a tour of her home. And an unusual ritual developed — visitors would have their photos taken in Ash’s bathtub, believing it would bring good luck. To carry on the tradition in his own way, Whatley has a pink heart-shaped tub brought into his office and cookies baked from Ash’s recipe are served.
“We had to adapt her ways, but we couldn’t usurp her,” said Whatley, who along with chairman John Rochon now entertains the visitors.
Remarking on the company’s strong recruitment recently, Whatley says efforts are driven by the sales force itself. “They believe in the dream and have passion. They want to share the opportunity.” Based on the company’s culture, said Whatley, “the recognition factor for recruiting is more powerful than money. Happily, we are not forced to resort to financial incentives. We don’t look at recruiting as a function of earning money — but to get people what they want in life,” although top-selling national directors do earn six-figure incomes.
Besides, noted Whatley, what made working for a direct seller interesting to women years ago — enabling them to get out of the house — offers the opposite attraction today. “Now, it allows women to stay home.”
Commenting on the move by direct-seller Avon to build a retail component, Whatley said: “Some of those initiatives are counter to what we would do — so our people never feel we would compete with them.”
When it comes to market competitors, “We look at both direct selling and retail,” noted Whatley. Because of our size, we have access to industry [sources and suppliers] at the highest level.
Kregg Jodie, senior vice president and chief information officer said: “Our business model is a structure to help you with a career. Our job is to make sure that we offer tools to help them [consultants] be as successful as they can be. It is about being part of something special, that has meaning.”
The use of the Internet is at the core of Mary Kay’s business development, noted Jodie. “It is not a piece added as an afterthought. It is integrated from the top. I am in the boardroom for executive meetings.”
On the product side, the foundation of Mary Kay’s business remains skin care and color cosmetics. Its latest launch, TimeWise, a two-step cleansing system, has beaten expectations. Projected to reach first-year sales of $200 million, volume has exceeded that by 35 percent.
Last year, the company also branched into gifts and collectibles with a program called Embrace Life, said Lisa Cohorn, director of product development. A portion of the proceeds from some Embrace Life items help fund the Mary Kay Ash Charitable Foundation, which targets breast cancer and domestic violence. Products range from jewelry to gift boxes to dietary supplements.
Rhonda Shasteen, vice president, core business marketing, realizes that, in order to sustain itself, the company must reach out to new consumers. So for more than a year, Mary Kay executives have been speaking to and holding focus groups with women aged 16 to 22.
Shasteen believes the daughters of its consultants can help form its future.
“We have an opportunity to create a grassroots movement with the daughters of our baby-boomer customers and sales associates,” said Shasteen. “But I don’t perceive our products are for them.” To remedy that, Mary Kay will unveil a new line of products in July. The company declined to offer details, but did say there will be close to 100 stockkeeping units across several product categories.
“It will breathe new life into our cosmetics brand. It is all built around fun,” said Shasteen. Excluding Embrace items, Mary Kay now offers some 300 sku’s in skin care, cosmetics, fragrance and bath and body. Lipstick is its best-selling color item and foundation, positioned with skin care, is a very strong business. Product development labs are located in Dallas near headquarters with several manufacturing plants throughout the U.S., China and Switzerland.
In 2002, the company will overhaul its cosmetics business with new packaging, new formulations and new product forms, noted Shasteen.
Like other beauty marketers, Mary Kay may be modernizing its product lineup, but Whatley recognizes its business model is distinctly different.
“People don’t look at this business in a business-discipline fashion,” he said. Offering tours of Ash’s office and sending consultants birthday cards “are types of things to let them have faith in their corporation.”