Dbk Solution

The current growth of Designs by Kate’s (DBK) business model is not sustainable for a future success of the company. In order to maintain, respectively improve its performance and thusly its position within the direct sales industry, it is essential that Kate Creevey realizes, how important the monetary reward for the sales representatives is. Therefore it is recommended that the compensation structure as a motivational tool should be changed in order to guarantee maximizing the key financial objectives, which can predominantly be defined as further volume growth. Sales growth is driven by two factors: in the first place by the number of sales representatives and secondly, by their increased productivity, when they become team leaders. This means, it is vital for DBK to “invest” in the acquisition and the keeping of sales representatives. One can think of two variants on how to approach a modification of the compensation structure, motivating the sales staff to develop their own team structure. The management of DBK could think of adapting leadership dollars or leadership dollars and commission rates. With the purpose of educating sales representatives of the advantages of a team build-up, Creevey should definitely invest the $1,000,000 into the four full-time trainers. Since the trainers will demonstrate to the prospective leaders, why it is good for them to move up the career ladder by acquiring new sales representatives, this will be a profitable step (for further explanation see Arguments). Moreover, it is vital for the company to understand, how relevant incentives are – beyond non-monetary benefits. For the purpose of driving team building within the company, Creevey should consider team incentives as a possible appealing and attractive enticement that goes further than the pure cash payout.
Furthermore, Kate Creevey should consider how her business is overall positioned in the direct sales industry. Tupperware, Mary Kay or other competitors can rather be