Revamping The Mary Kay Incentive Program

1863 words - 7 pages

Revamping the Mary Kay Incentive Program

Executive Summary

This proposal will attempt to revamp the Mary Kay incentive program. The three problems I am going to address are: the morale of consultants, motivational/stagnation of sales, and poor or weak directors and consultants. In addressing these issues I am going to be referencing other business that have used different motivational techniques in these situations. At the end of my proposal I hope to have at least 3-4 viable options that could be implemented in the Mary Kay Company to fix the problems mentioned above.

Introduction: The Problem

The problem facing Mary Kay Inc. today is that their incentive program is not working. Based on the data used in Mary Kay Cosmetics: Sales Force Incentives, the company introduced the VIP car program to motivate their consultants to sell their cosmetics. The top sellers would be awarded a step program of cars. Initially you would receive a red Grand Am and then a pink Cadillac. However, in doing this program they have ran into problems they had not thought of. This program was initially created to keep up morale as well as give incentive for sales growth. In reality it has caused the company to have poorly trained directors who created a "team" of sales people under them but did not have the experience to be a leader. It has also caused a stagnation of sales once the leaders received the car. The motivation to continue increasing sales was gone.

Background: The History

In 1984, Mary Kay Cosmetics introduced the VIP car program. After several years of incredible growth using this incentive the company began noticing a decline of 14% in sales. Between the years of 1983 and 1989, Mary Kay's car programs increased form a base of 1100 cars on the road to over 5000. Over time however, the cost of each car on the road began to increase. The interest levels of each leased vehicle increased and automobile insurance premiums escalated. All of these contributed to the increased cost of the VIP program.

Source: Mary Kay Cosmetics: Sales Force Incentives

The Current Challenge:

According to top management within Mary Kay Cosmentics, the top objectives for a new plan are :
• Improve profit margins by reducing overall beauty consultant compensation as a percent of sales.
• Enhance the beauty consultants' career path with more distinct milestones and forms of rewards.
o More well trained directors to be prepared for the roll of directors.
o Continuance of sales past director level (delete stagnation)
o Minimize the cost to the firm of maintaining low-performing consultants.

Source: Mary Kay Cosmetics: Sales Force Incentives

Thoughts: What is needed in the program
Per an article from 2006 Buyer's Handbook, the first things that we need to determine when creating or altering an incentive program is what we want this incentive program to accomplish (see above). By taking a poll and/or asking the...

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