Designs by Kate: The Power of Direct Sales Background: 5C Analysis: 1) Company: Kate Creevey, after completion of MBA in 1999, launched Designs by Kate (DBK) in 2005. The company sold women’s jewellery jewellery via direct sales method with 8400 salesforce to help them with the t he distribution along with 24 employees. The company’s salesforce is growing exponentially but with a low attrition rate in the industry. They are estimated to generate 75million USD by 2010. DBK made use of the direct sales model, wherein they recruited sales representatives who were mostly stay-at-home mothers and others who wanted to do a part time job as extra source of income. 2) Customers: Customers of DBK were mostly women who liked to socialise. The company used social gatherings and DBK parties thrown by its r epresentatives as a venue to t o showcase their products. They banked on the social way of soft selling and alwa ys promoted their events as fun events rather than sales program. 3) Competitors: As the direct sales force of the company was instrumental in building the business, other firms who sold jewellery through direct sales method and firms who were involved in any other kind of direct sales and personal selling were considered as the major competitors. Competition existed in not only acquiring new customers but also acquiring new sales representatives and retaining the old ones. The major firms in direct sales industry were Avon products, Alticor Inc, May Kay, Tupperware, Forever Living products, etc. 4) Context: The company followed a business model in which their sales representatives were encouraged to add and form a team of their friends and relative as representatives. The incentive plan was devised in such a way wa y that adding a team member from your friends or relatives would help you earn a part of the revenue they generate. About 90% of DBK sales representatives were recruited by existing ones. But the growth rate of DBK has gone down recently and this was due to the slowdown in rate at which new sales representatives were transitioning to leaders and acquisition of new sales representatives. This was further attributed to the significant amount of overlap in customer base of new and old representatives.
Problem Statement: What should Designs by Kate do to motivate the existing sales representatives to add new representatives to their chain?
Revamp the current commission schedule to account for any loss of sales by a representative in adding new ones. Increase the leadership dollars for Leaders, Managers and Directors. Hire full time trainers to improve the productivity of the new representatives and educate the salesforce about the potential of DBK sales ladder
