GROUP 5 - VISWANTH_(P16004), NAVNEET_(P16013), SRISTY_(P16012), NITIN SINGH_(P16050), VINOD_(P16055)

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 womens jewellery via direct sales method with 8400
salesforce to help them with the distribution along with 24 employees. The companys
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 representatives as a venue to showcase
their products. They banked on the social way of soft selling and always 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 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?
GROUP 5 - VISWANTH_(P16004), NAVNEET_(P16013), SRISTY_(P16012), NITIN SINGH_(P16050), VINOD_(P16055)

Options Available:
i) Revamp the current commission schedule to account for any loss of sales by a
representative in adding new ones.
ii) Increase the leadership dollars for Leaders, Managers and Directors.
iii) Hire full time trainers to improve the productivity of the new representatives and
educate the salesforce about the potential of DBK sales ladder

Criteria for Evaluation: