SALES AND CHANNEL MANAGEMENT

MGMT 261A
Professor Terech

Design by Kate
Since it was founded in 2006, Designs by Kate, Inc.(DBK), a direct seller of private label jewelry,
has enjoyed exceptional growth. The company has been built almost exclusively on word of
mouth and relationships. Growth has been driven by its sales force; they not only sell the
products, but they also recruit, train, and manage new sales representatives. However, recently
the DBK model has stalled somewhat, with sales representatives showing less willingness to
recruit and train new representatives. Growth in absolute terms was still high, and CEO Kate
Creevey was aware tjat a slowdown was inevitable as the company matured. However, this
sudden slowdown in the rate that sales representatives transitioned to team leaders surprised
Creevey. And, a subsequent survey of the DBK salesforce revealed some negative attitudes
toward the DBK compensation structure. Creevey and her management team need to revisit their
current incentives structure and determine if they are well-positioned to meet their ongoing goal
of profitable, above-average revenue growth

Suggested Preparation Questions:

1. Discuss DBKs historic growth rate. How does its growth compare to the industry
overall? What are the drivers of top-line growth?
2. How much would the average sales representative earn in a year? How does this change
as the sales representative remains with the company over time? How does this change
as the sales representative transitions to a leader? A manager? A director?
3. Discuss the importance of retention of sales representatives. If the attrition rate had
averaged 25% or 30% over the past five years, how would this have impacted the total
number of sales representatives? Given that not all sales representatives are equal, how
would this impact revenues?
4. Evaluate the potential costs associated with the two options Creevey is considering.
Which option would you advise her to take?