Is Vector Marketing a pyramid scheme? It isn’t a multi-level marketing company, let alone a pyramid scheme. However, you might still dislike some of the direct sales company’s practices.
This might lead you to believe the company isn’t a pyramid scheme. In fact, the company has explicitly stated it isn’t even a multi-level marketing company.
Vector Marketing is definitely smaller than the aforementioned companies. However, I believe this makes it just as, if not more, dangerous. This is because it hasn’t received the amount of scrutiny that most other MLM companies experience.
This company targets vulnerable young adults looking to make their footing in the sales world. They also prey on fresh graduates desperate to earn money to pay off their student debts.
The direct sales company entices you with many promises. This includes learning sales techniques for free and working under a flexible business model. However, these offer little value in the long run. In reality, you will spend too much time promoting products for the company with minimal rewards.
In this guide, I talk about Vector Marketing’s sales models and how much you can expect to earn as a sales representative. I will also describe my personal experience with the direct sales company and what I feel its pros and cons are.
I hope to dish out the truth about Vector Marketing so that you can think twice before falling for their promises. I didn’t have access to such information before signing up, so I hope to change that by sharing my experience.
This article is written by our Editorial Team at Incomepedia with the help of a former Vector Marketing sales representative.
My Personal Experience
I have known about multi-level marketing companies since I was a teenager. After all, we all have that one relative obsessed with natural products such as essential oils from Young Living. It’s the same relative that ends up getting sucked into an MLM.
I believe my pre-existing assumptions about multi-level marketing companies prevented me from seeing Vector Marketing for what it truly was: A direct sales company with an unrewarding business model.
So how did I get roped into becoming one of their sales representatives? I blame my college as well as my own naivety. You see, Vector Marketing held a presentation in my lecture hall at the start of my last semester.
A company representative had put together a slick Powerpoint presentation. They began talking about how you could earn money by selling cutlery and household items.
They started off with a brief introduction to door-to-door sales. They described how Vector Marketing offered young people around the country the chance to work in sales.
The pitch seemed pretty straightforward for the most part. Show off our products to customers, and you’ll receive a base salary each week. Convince people actually to buy the products, and you’ll get a commission.
I would say the representative did an excellent job conveying their points to students who were still half asleep at 9 am. I say this because I witnessed a dozen people sign up with Vector Marketing as soon as the presentation was over.
I didn’t sign up with Vector Marketing at the time for two reasons. First, I wanted to devote my full attention to my studies. My average had dropped by a couple of marks in the last semester, and I intended to work extra this semester to graduate with honors.
The second reason was that I had bigger plans for the future. I had planned to grab my degree and get a great job in the hospitality industry.
Why I joined
Those plans came crashing down quickly because I graduated a couple of months after the COVID-19 pandemic started. As you may already know, the hospitality industry took a massive blow between 2020 and 2021 due to travel restrictions.
I applied to the few job postings available at hotels and public-housing facilities in my city after graduating. However, I managed to land only one interview after four months of trying. I needed to start paying back my student loans within the next two months, so I bit the bullet and signed up as a Vector Marketing sales representative.
This online sign-up process through their website was surprisingly quick and easy. I then conducted a phone interview with one of the company’s hiring managers and underwent a three-day training session.
Within a week, I was off promoting Cutco’s products on my own. My chopping skills weren’t the best, but I was thrilled to adopt a salesperson persona and show off the company’s knives to potential customers.
This excitement wore off within a few weeks, and I became miserable within a month. I trudged on for another three months before quitting as a Vector Marketing sales representative.
Why did I quit?
The first reason was that I felt I wasn’t getting anywhere. I made only a couple of weekly sales despite spending close to thirty hours promoting the company’s products.
The baseline salary I was receiving also felt meager. I learned this after comparing it with the compensation offered to full-time salespeople at other companies.
I didn’t make a loss working for the Vector Marketing Corporation. However, I could have earned far more money working elsewhere. I don’t think you should jump into this income idea without fully understanding what it entails.
So let’s examine:
- Vector Marketing’s sales model.
- Your potential earnings as a sales representative.
- The pros and cons of working in this role.
- The various lawsuits Vector Marketing has faced over the decades.
What is Vector Marketing
Vector Marketing is an American direct sales company founded in 1982. It is the sales and marketing division of Cutco Corporation, a cutlery manufacturer based in New York.
Cutco stands out from other cutlery manufacturers because it offers knives with a “Forever Guarantee”. This means the company will take care of knife sharpening repairs and sharpening for free for an unlimited period.
The company recruits young people as sales representatives and gets them to promote Cutco’s products. This includes knives, scissors, frying pans, and other household tools.
The company typically offers these representatives a base salary along with commissions each time they make a sale. This sales model helps the company stand out from multi-level marketing companies. This includes ones where representatives rely solely on commissions and recruitment bonuses.
You can’t talk about Vector Marketing’s history without first learning a bit about Cutco. Cutco was founded in 1949 under Alcoa and Case Cutlery. The company was created to manufacture stainless steel knives sold under Alcoa’s cookware division.
Cutco developed many innovative features for its knives in the 1950s and 1960s. This included a “hand-perfect” handle and a double-recessed edge.
The company’s products were initially sold by various independent distributors. One of these was a new company called Vector Marketing, which was founded in 1982.
Cutco’s parent company, Alcas Corporation, bought out Vector Marketing in 1985. They have since become the exclusive distributor for Cutco’s products.
Vector Marketing then opened up its headquarters in New York and has expanded its reach across the United States. The company currently has thousands of sales representatives. It reported an annual sales revenue of $273 million in 2019.
You can learn more about Vector Marketing’s history and growth in the following Youtube video:
CEO and Staff
Vector Marketing’s current CEO is Albert DiLeonardo. He was appointed to this CEO position in 2002 and also serves as Vector East’s President.
DiLeonardo began working as a Cutco sales representative after graduating from college. He had plans to become an accountant but chose to stay with Cutco after finding success with the company. He skillfully worked his way up the corporate ladder and became the direct sales company’s CEO in 2002.
Vector Marketing has approximately 8,700 employees in North America, according to its LinkedIn profile. This excludes the thousands of people who serve as the direct selling company’s sales representatives.
Is Vector Marketing a Pyramid Scheme?
So is Vector Marketing a pyramid scheme? Let’s check the Security and Exchange Commission’s definition of a pyramid scheme:
“[a pyramid scheme is] an investment fraud in which new participants’ fees are typically used to pay money to existing participants for recruiting new members.”
The SEC lists the main qualities of a pyramid scheme as:
- No genuine products or services are sold;
- Members are promised high returns in a short period of time
- Members are told the business model allows them to make easy money or passive income
- There is no demonstrable revenue generated from retail sales
- Members must make a purchase to sign-up
- The business has a complex commission structure
- The business model places a high emphasis on recruiting
Why Vector Marketing Isn’t a Pyramid Scheme?
Vector Marketing doesn’t qualify as a pyramid scheme because it doesn’t possess some of the characteristics described above. This includes:
#1. The company sells genuine products
Vector Marketing is known for selling cutlery, frying pans, and household tools. These products have been reviewed thousands of times. It also isn’t uncommon to run into people who have purchased Cutco products.
#2. It clearly stated it’s not a get-rich-quick company.”.
Vector Marketing ‘s website explicitly states, “We are definitely not a get-rich quick company.”
#3. They don’t claim it is “easy money”.
Vector Marketing informs potential recruits that they can earn money under its business model. However, they don’t claim it is “easy money”.
Instead, the company promotes its sales model with different terms. This includes “flexible schedules”, “no experience needed”, and “personal growth”.
#4. No sign-up fee.
Vector Marketing no longer publicly discloses its sales figures. One source stated that the company made $273 million in 2019.
The company doesn’t charge recruits for signing up. They also aren’t required to purchase inventory. This means the bulk of Vector Marketing’s revenue probably comes from product sales.
#5. No Purchase Needed for Sign-Up.
As mentioned earlier, you don’t have to make a purchase when you sign-up with Vector Marketing.
#6. Recruiting is NOT encouraged.
Vector Marketing doesn’t encourage sales representatives to bring in new members. However, they do encourage you to promote the products to the people around you.
Why Do People Think Vector Marketing is a Pyramid Scheme?
People believe Vector Marketing is a pyramid scheme for the following reasons:
The Business Has a Complex Commission Structure.
Vector Marketing’s pay structure differs from most multi-level marketing companies. The company offers you variable weekly base pay for showing potential customers Cutco products.
You can also receive a commission if customers go ahead and make purchases. This commission percentage varies based on the total value of the products you sold. When put together, these different methods can make calculating your earnings complex.
The Company Targets Young and Vulnerable.
Vector Marketing often targets high school graduates and college students for recruits. Such people fall for the company’s business model because they are unfamiliar with the sales industry. As a result, they spend many months or even years with the company hoping to make it big.
How Much Money Can You Earn from Vector Marketing?
Vector Marketing hasn’t publicly disclosed how much money its sales representatives earn.
We can attempt to deduce the company’s wage rate for representatives by reviewing information on Glassdoor.
As you can see, Vector Marketing sales reps earn between $8 and $31 per hour. The low-end estimate likely comes from new recruits struggling to make sales. The high-end estimate could be from veteran sales reps skilled at making multiple daily sales.
You should note that the above wage rate doesn’t factor in your expenses as a Vector Marketing sales representative. This refers to your phone bill from making sales calls and fuel costs from traveling to in-home demonstrations. Vector Marketing doesn’t reimburse you for these costs.
So if you’re getting paid the $20 per hour average, your actual profits are likely lower than this.
How to Earn Income Through Vector Marketing?
Vector Marketing lets you make money in two ways. These are:
- Base pay for showing customers products
- Commissions from selling products
Method #1. Base Pay for Product Demonstrations
Vector Marketing pays you between $16 and $22 for showing off products during each “qualified appointment.” The company refers to this pay rate as their “base per appointment.”
In the past, these appointments included only in-home demonstrations. However, the company began including virtual demonstrations during the COVID-19 pandemic.
The great thing about qualified appointments is you get paid even if customers don’t make a purchase.
Method #2. Commissions from Selling Products
If customers decide to go ahead and purchase Cutco products using your referral, you will receive a commission. This commission percentage varies based on the total number of sales you make during your time as a Vector sales rep.
The total sales amounts and their corresponding commission percentages are listed below:
|Total Career Sales Amount||Commission Percentage|
|$6,000||20% to 25%|
The above commission structure gives new recruits an incentive to stay on with the company. Many of them spend months hoping to hit the $10,000 sales amount to reach the 30% commission tier.
You can learn more about Vector Marketing’s sales model in the following Youtube video:
3 Key Advantages of Becoming a Vector Marketing Sales Representative.
Pro #1. No Start-Up Costs
Vector Marketing stands out from multi-level marketing companies because they don’t ask you to pay a sign-up fee. Once you start with the company, they will lend you product samples to use for your demonstrations.
This is in contrast to other direct selling companies that charge you for product samples and promotional materials. Mary Kay comes to mind when I think of such companies.
Pro #2. Free Training
Vector Marketing provides free training for new recruits. This means you can learn some valuable sales skills for no cost.
I should point out that this sales training is fairly basic. It generally includes going over products and constructing a simple sales pitch. This method might be simple, but it is also relatively effective at getting young people acquainted with sales.
Pro #3. You Don’t Have to Recruit New Members
Vector Marketing dislikes being referred to as a multi-level marketing scheme because it doesn’t ask you to recruit new members. This can be great for salespeople who don’t want to spend time finding new members or building a team.
Based on this, you will likely spend most of your time looking for potential customers. You will also spend many hours performing product demonstrations each week.
3 Key Disadvantages of Becoming a Vector Marketing Sales Representative.
Con #1. You’re Encouraged to Sell to Family and Friends
Vector Marketing might not ask you to recruit new members. But they teach you to promote Cutco products to everyone around you. This includes family members, friends, acquaintances, teachers, and others in your network.
This can be embarrassing at first. You might have no choice until you learn how to approach cold leads.
Con #2. You Aren’t Reimbursed for Costs
Vector sales representatives earn $16 to $22 for each product demonstration appointment. It should be noted, however, that these earnings do not include the cost of scheduling an appointment over the phone. They also don’t include the fuel costs spent on getting to a prospective customer’s home for a demo.
This means your actual earnings could be much lower.
Con #3. Cutco Products are Overpriced
Cutco products are way overpriced for what you get. For example, their 6-inch prep knife is priced at around $160 on Amazon. A similarly sized knife from a reputable brand such as WÜSTHOF retails for around $135.
Cutco aims to rope in customers with their Forever Guarantee. This guarantee offers customers free knife repair and sharpening services for life. However, this guarantee might not be enough to pitch the product successfully.
For this reason, you might have trouble selling Cutco products to a large subset of customers.
Major Vector Marketing Controversy.
Vector Marketing has faced numerous controversies since it was founded. This includes lawsuits filed against it for:
- Deceptive recruitment techniques
- Failing to pay sales representatives minimum wage
- Failing to train representatives to protect them against sexual assault
#1. Deceptive Recruitment Techniques Lawsuit
Arizona’s Attorney General sued Vector Marketing in 1990. They alleged that the company was using “deceptive” recruitment techniques. This included misrepresenting how much representatives would be paid.
Vector eventually settled by performing a series of actions against its Tucson manager. It also agreed to stop misrepresenting its compensation system.
#2. Failing to Pay Minimum Wage Lawsuit
In 2008, a former Vector sales representative filed a suit against the company. She alleged that the company coerced new recruits into purchasing sample knife sets during a training session. She also claimed the company did not pay representatives minimum wage for attending the training session.
In the end, Vector Marketing was ordered to pay $57 to each member involved in the lawsuit.
#3. Failing to Train Representatives for Protection Against Sexual Assault
Vector Marketing was hit with a particularly gruesome lawsuit in 2014. One of its youngest sales representatives alleged she was sexually assaulted at a product demo.
The former representative stated that the company hadn’t offered adequate training. The type of training that would have prepared her for such situations. The lawsuit’s outcome isn’t publicly known. Therefore, it is difficult to tell if Vector changed its training practices following this.
Vector Marketing is definitely different from other multi-level marketing schemes. They don’t encourage you to purchase inventory and recruit new members. However, these differences don’t necessarily make it a good choice for many people.
I worked as a Vector sales rep for four months and made around $6,000 from a combination of base pay and sales. This amount might not seem bad for a fresh graduate without prior work experience. However, these earnings don’t factor in the high phone bills and fuel costs I racked up in those four months.
In reality, my earnings were around $4,000. That’s around $250 per week for around 30 hours of weekly effort. That means I was making close to the minimum wage for a sales job that should pay far more.
I certainly got better at making sales as time went on. However, I still found it difficult to pitch the company’s products. Their price tag is high. So you should expect an uphill battle if you do decide to sign up as a Vector sales representative.
Who Would Vector Marketing Be a Good Fit For?
I believe Vector Marketing could be a good fit for someone who wants to work in sales but has yet to land a position at a reputable company. Vector might teach you a basic sales pitch, but you have the freedom to spruce it up with a bit of reworking.
You can certainly use Vector Marketing to test your sales ability. Just don’t expect to make a lot of money doing it. Vector Marketing might not be a pyramid scheme, but its business model is largely unrewarding for most of its salesforce.
I hope this guide on Vector Marketing has helped you make a more informed decision about signing up for this income idea.
Frequently Asked Questions
Does Vector Marketing Offer a Bonus for Recruiting New Members?
Vector Marketing doesn’t give you any bonus for recruiting new members. The direct sales company would rather you approach family members as customers.
Can You Lose Money as a Vector Marketing Representative?
You aren’t likely to lose money as a Vector sales rep. This is because you aren’t required to purchase inventory or pay sign-up fees.
The only sales costs you need to bear are your phone bill and fuel costs. However, these are generally higher than the base pay the company offers.
Do Cutco’s products last forever?
Cutco’s products don’t last forever. But the company is willing to repair and sharpen purchased knives for free.
- Vector Marketing Denies Being a Multi-Level Marketing Company: Vector Marketing – The Truth
- What is Vector Marketing: The Work
- Cutco’s Forever Guarantee: The Forever Guarantee
- Cutco’s History: The Cutco Story
- Vector Marketing History: Vector Marketing History
- Vector Marketing’s Sales Revenue: Sharpening Strategy and Leadership
- Vector Marketing’s CEO: ABOUT TODAY’S GUEST | ALBERT DILEONARDO
- Vector Marketing’s Employees: Vector Marketing LinkedIn
- Vector Marketing Denies It Offers a Get-Rich-Quick Scheme: The Pay
- Ways to Earn Income: Vector Marketing FAQ for Parents
- Cutco Knife Price: Cutco 1738 Gourmet Prep Knife
- WÜSTHOF Knife Price: WÜSTHOF Classic 6” Chef’s Knife
- Deceptive Recruiting Practices Lawsuit: FOR VECTOR MARKETING, THE QUESTION OF THE HOUR
- Unpaid Training Lawsuit: Harris v. Vector Marketing Corporation
- Sexual Assault Lawsuit: Door-to-Door Saleswoman Alleges Rape