Mary Kay Cosmetics: Sales Force Incentives

Company Background

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%

Fact Sheets

Sales

◦ Wholesale Value

◦ Number of active recruits

Direct Selling

Communications

◦ Written Material

◦ Telephone Hot Line

◦ Regular Solicitation of Feedback

Sales Force Support

Recognition and Prizes ◦ “ A $5 ribbon plus $20 worth of recognition is

worth more than a $25 prize. ”

Sales Force Support Cont’

Events: ◦ 3-day Annual Seminar

◦ Contest

◦ Conference

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.

Sales Force Support Cont’

Two Stages: ◦ Initial Qualification ◦ Maintenance

Three Targets to Meet:◦ Team monthly wholesale value ◦ Personal monthly wholesale value ◦ Number of active recruits

The VIP Car Program

Lack of Incentives for Sustainable Improvement

High Cost

Problem of VIP

Car Expense as % of Sales

Commission as % of Sales

Company’s Solution: ◦ Increase in Requirements for VIP Qualification

Consequence More Rush-intos and Less Competent Directors; Disappointed Sales Force

Solution?

Recognition Sometimes is more Important than Money;

Incentive System can be a Double-edged Sword;

Morale is almost Everything for Sales Force

Lessons

Thoughts?