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Designs by Kate: The power of Direct Sales

Presented by: Group 8 (Section B)

19P073 – Apoorv Tyagi

19P074 – Archit Goel
19P085 – Harshit Dhawan
19P087 – Kanan Gupta
19P115 – Shubham Jain 1
Click toSelling
Direct edit Master title style

• Presentation, promotion & sale of product directly to the end consumer

• Usually no fixed location of sale
• Driven by commissions on sale

• There are a variety of ways businesses utilize direct selling:

• Single-level direct sales
• Host or party-plan sales
• Multi-level marketing

• Designs By Kate uses the party plan methodology for their business

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Benefits Master
of Direct title style
Selling

Sellers Consumers

• Flexible selling hours • Opportunity to try and test

• Low capital investment the products
• Requires no specially educated workers
• Personalized delivery at
• Spouses or family members can be partners
in business (family business) home
• Adequate training and support from • Direct contact with the
companies seller
• Social contact and personal recognition.
• Flexible buying hours

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Industry Master title style
Analysis

• The industry had remained relatively flat with a growth of 0.7% CAGR
from 2001 to 2009.
• By 2009, in the USA, direct sales industry, generated $28.3 billions in
sales.
• By 2009, 16.1 million people were working as a direct sales
representative.
• In the majority, were women, 82% of them worked on a part time
basis, with a commission.
• 92.5% women worked on a part-time basis (under 30 hours/week)
• This commissions were in the range of 25%-50% of the sales.
• In 2009, 74% of U.S. consumers had purchased something from a
direct seller

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Industry Master title style
Leaders

• The industry is divided in six product groups. The

biggest one is Home/Family Care/Home Durable
with the 24% of the industry
• Some of the largest U.S. Based Direct Sales Firms:
- Avon Products – 5.8mn distributors
- Alticor – 3mn distributors
- May Kay – 2mn distributors
- Herbalife – 1.9mn distributors
- Tupperware – 2mn distributors

• DBK – 8000 distributors

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ClickBusiness
DBK to edit Master
Model title style

• Women of 25-50 age group are the sales executives

• Mandatory to buy a Launch Kit - DBK for $250
• Online Training to representatives
• Videos on topics:
• How to put together a DBK party
• How to display jewellery most effectively
• Online tool (Facebook and YouTube to drive sales)
• Two level commission: 25% base and 32% for sales above 1000$
• Higher commission if promoted
• Leader earns 3-8% commission of members
• Profitable virtually from day one. Fixed costs extremely low

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ClickStructure
DBK to edit Master title style

• DBK encouraged reps to recruit, train and mentor new sales reps
• System of levels for hierarchy
• If one rep recruited three friends, they constituted her Level 1 Team.
Level 1 team when recruited new reps, they would become original rep’s
Level 2 team.
• DBK Sales Ladder Promotions:
• Leader
• Manager
• Director

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ClickParties
DBK to edit Master title style

• Sales occurred at DBK parties

• Sales Reps would invite friends and colleagues to her home for a
DBK party(serve coffee and pastries)
• Jewellery, Catalogs would be displayed.
• Order form and payment would then be collected.
• The order would be delivered to the customer within 7-14 days

• A method of effective selling

• Social way and Soft selling
• High customer satisfaction and personalization
• Fun Social get together event leads to long-lasting connection with
customers
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DBK Growth

2006-2010

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Business Master
Model title style
Analysis

Strengths
• Direct selling model allows her vendors and clients to form a
personal relationship
• Personalized service allows for the focus of the product - DBK
jewelry
• Very successful parties - Positive feedback from guests
• High customer satisfaction leads to repeat customers
• New sales reps need no requirement to become one – High growth
of business
• Sales representatives are given the opportunity to move up the
ladder and acquire higher paying positions, leading to employee
satisfaction.

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Business Master
Model title style
Analysis

Weaknesses
• No prior requirements to become a sales representative:
• DBK won’t not know if these people representing her company know
anything about jewelry.
• DBK does not require that these representatives be trained:
• No checks and balances if representatives watch the videos or not
• No official training program - Many of the representatives do not know the
benefits of recruiting and moving up the DBK ladder and thus tend to stop
recruiting, making the company to stop expanding
• Only 26 full-time employees for handling orders, customer service, and
managing the company. This number of employees is too low if the company
plans to expand nationwide

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Business Master
Model title style
Analysis

Opportunities
• Digital Marketing
• Online Relationships with customers
• Use of new technologies

Threats
• The current growth model is not sustainable for a future success of
the company.
• Average tenure for a rep was only three years
• After 5 years of continuous 20% growth in sales, the sales would
come to low – 1% annually

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ClickProblems
DBK to edit Master title style

• Revenue was slowing due to current sales representatives non

willingness in building and managing their own sales teams
• Items were cute and affordable but not unique
• Sales reps were given no formal training in Sales
• Low morale
• Low full-time employee recruitment
• Reps afraid to become team leads
• Significant amount of overlap in the guest list
• Guests invited to more than one party

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ClickBone
DBK to edit
of Master title style
Contentions

• Sales Reps believed their incomes from jewellery

sales declined when they added members to their
sales teams due to increase competition for hosting
parties within the same geographic area.

• Sales decline due to overlap in levels:

• 15% lost after first recruit
• 10% after next recruitment

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Click to editOfMaster
Evaluation title style
Alternatives

Longevity Change current

bonuses compensation
a) Remove Management incentives
b) Revise rates, increase payout

Educate reps
Exclusive items
about long-term
for Loyal Reps
sales ladder

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Recommendations

• DBK should hire 4 well-educated staff members to train its

existing sales representatives
• The training would be mandatory and to be done within 3 months
of joining
• The 4 new employees will talk about the benefits of recruiting,
moving up the DBK ladder and would stress that the benefits in
the long run will outweigh the costs
• It is essential for these trainers to emphasize the importance of
recruiting and moving up the ladder
• In addition to this, the trainers will educate the employees about
the company and how to effectively sell their products
• Increasing the leadership rates will give sales representatives a
new incentive to recruit.

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Recommendations

• Offer non-monetary incentives similar to Mary Kay’s model

• Offer prizes such as a vacation or jewelry set to the employee who
sells or recruits the most. These incentives will help DBK get back on
track and expand
• DBK should consider advertising and online selling. It should place
ads in women’s magazine’s and women’s TV channels. It can also
use the Internet to communicate with their customers by sending
emails with promotions and coupons
• DBK should also consider giving Managers budget to create their own
form of advertising. This would increase personalization for end users
• Using online channels such as Amazon or their own website can help
the company generate some revenue from online sales as well as
make their brand well known.

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Thank You

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