Design by

Kate: The
power of direct
sales

Group: 6, Section B

Case Overview
DBK is a vastly successful business selling jewelry by Direct
Sales
Most of the growth has been volume driven but as per
trajectories, the companys top line growth has slowed
The founder believes that this may be due to sales reps not
wanting to grow in the company which has been the growth
model so far
The various options being considered are reworking the
incentives system, hiring more national trainers to inform the

Case Facts
Representatives are mostly women ranging from 25-50 years in
age
They earn a base commission of 25% of sales which can go up
to 32% in case the sales exceed $1000
The growth model consists of recruiting 3 reps in which form the
L1 team, the leader of which earns 5-12% commission of the
sales and L2 in which the leader earns 3-8%.
Leadership positions are determined on the basis of sales

Problems and Causes

Lack of motivation to achieve higher selling status and building
the team as the reps feel that adding new members cut into
their pie as the new members belong to the same circle
Reps feel that there is too much work involved if you move up
the company and the rewards are not proportionate
Calculations
Average monthly sales = $781
If one person is recruited by rep, sales go down by 15%
($663) and if more are added, new sales with 2 recruits =
$594, with 3 recruits = $507
The decrease in sales thus brings a reps commission from
$195 to $127

Actual Benefits of Becoming a

Team Leader
Average monthly sales = $781
Average monthly commissions = $195
Counting the extra incentives, Average monthly commission with 3 L1 members
=$281
Average monthly commission with 3 L1 members and 6 L2 members = $656
Total average monthly commission = $851.28

Hence, the incentives in the long run are not being

communicated well and effectively

Solutions
Hire more trainers to educated reps about the incentives plans
Pros: Sales reps are educated and informed about the long term benefits;
increased overall sales
Cons: Extra costs incurred

Generate Sales through other venues like DBK Jewelry cleaner etc
Increase sales by increase in events. Currently around 6 events are
held annually. Even if one is held for every holiday, at least 9 of them
can be held
Increase incentives for leaders, managers
Introduce loyalty incentives.