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Mary Kay Cosmetics: Sales Force Incentives

Mary Kay Cosmetics: Sales Force Incentives. Company Background. Fact Sheets . 1963 Start-up Capital: $ 5,000; Employees: 10 2011 Net Sales: $2.9 billion; Salespeople : 2.4 million; Employees :  5,000 Ave Salespeople Turnover Rate: 68.6 %. Direct Selling. Sales

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Mary Kay Cosmetics: Sales Force Incentives

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  1. Mary Kay Cosmetics: Sales Force Incentives

  2. Company Background

  3. Fact Sheets • 1963 • Start-up Capital: $5,000; • Employees: 10 • 2011 • Net Sales: $2.9 billion; • Salespeople: 2.4 million; • Employees: 5,000 • Ave Salespeople Turnover Rate: 68.6%

  4. Direct Selling • Sales • Wholesale Value • Number of active recruits

  5. Sales Force Support • Communications • Written Material • Telephone Hot Line • Regular Solicitation of Feedback

  6. Sales Force Support Cont’ • Recognition and Prizes • “ A $5 ribbon plus $20 worth of recognition is worth more than a $25 prize. ”

  7. Sales Force Support Cont’ • Events: • 3-day Annual Seminar • Contest • Conference

  8. Sales Force Support Cont’ • Incentives • Financial • Retail Mark-up • Commission • Bonus • Nonfinancial • Ribbons; pin; blazers • “Special” buttons; pins; blouse, etc. • Pink Buick or Cadillac; Annual Summit Meeting, etc.

  9. The VIP Car Program • Two Stages: • Initial Qualification • Maintenance • Three Targets to Meet: • Team monthly wholesale value • Personal monthly wholesale value • Number of active recruits

  10. Problem of VIP • Lack of Incentives for Sustainable Improvement • High Cost

  11. Car Expense as % of Sales

  12. Commission as % of Sales

  13. Solution? • Company’s Solution: • Increase in Requirements for VIP Qualification • Consequence • More Rush-intos and Less Competent Directors; • Disappointed Sales Force

  14. Lessons • Recognition Sometimes is more Important than Money; • Incentive System can be a Double-edged Sword; • Morale is almost Everything for Sales Force

  15. Thoughts?

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