TRPM CASE STUDY – MARY KAY COSMETICS

( SALES FORCE INCENTIVES)

Submitted by, Francis C Sebastian (F20020)

1. Based on the five relationship quotient between sales force and Mary Kay called
STORM, critically analyze how the VIP car program may or may not satisfy these
five factors.
According to the company there are five things that all consultants seek, which they refer
to them as STORM:
• Satisfaction with a task well done (self-worth)
• Teamwork (a sense of belonging)
• Opportunity (to succeed)
• Recognition
• Money
These five STORM needs are being met through various aspects of the company. These
needs are not fulfilled in their very successful VIP car program which was a huge success
in the growth of the company. The program aimed to motivate its top-performing,
nondirector beauty consultants (i.e., independent saleswomen). The program, which
originally awarded the use of compact size Oldsmobile Firenzas to eligible beauty
consultants. Under the car program Mary Kay awarded the use of a new car to eligible
beauty consultants who sustained the required sales and recruiting levels for the
designated number of months. Winners maintained the use of their cars for two years as
long as they continued to meet the required sales volumes on a monthly basis. The
company bore all the costs associated with leasing the new General Motors cars from ARI
Leasing, insuring the cars, and then selling the used ones as consultants returned them.
The company has managed to efficiently implement all five of their STORM theory in
practise using their VIP car program.
The VIP car program had certain benchmarks in order to win the use of a VIP and keep it
for the entire awarded period of 24 months, a consultant had to reach and maintain three
types of targets over that period: (1) team monthly production volume (i.e., wholesale
value of all her recruits' orders); (2) personal monthly wholesale production; and (3)
number of active recruits. Therefore, there was a sense of satisfaction which or self-
worth employees gained from achieving the car.
The VIP car program had collective characteristic which appreciated teamwork. The
employees had to achieve the team monthly production volume to achieve the VIP car
ensuring the teamwork in the company.
The company has provided equal opportunity to workers of all levels using their VIP car
program. All the 175000 independent saleswomen of the company are given the
opportunity even if they are not permanent employees of the company.
The VIP car program had certain benchmarks in order to win the use of a VIP and keep it
for the entire awarded period of 24 months, a consultant had to reach and maintain three
types of targets over that period therefore only 2.5% of total saleswomen were able to
achieve the VIP program at the peak years hence there was enough recognition which was
gained by the VIP saleswomen.
Lastly, there was value of money in the car. Apart from that each VIP consultant was
given a fixed "allowance" she could draw on to make up for shortages in particular
months, so that she would not have to relinquish her car because of one or two bad
months. The allowance could be increased (and thereby "banked") by performance above
the minimum requirements in any given month. Along with the car, The company bore all
the costs associated with leasing the new General Motors cars from ARI Leasing, insuring
the cars, and then selling the used ones as consultants returned them.

2. Use any theory or theories of motivation to map the sales force incentives at Mary
Kay.

The McClelland's theory of needs is one of the theories that can be utilised to
explain Mary Kay's sales force incentives. Achievement, Affiliation, and Power are
the three motivators according to this idea. The corporation addressed these three
motivators by implementing the VIP car programme, which supplied luxury cars to
top-performing beauty consultants. It increased their sense of accomplishment by
addressing the candidates' urge to be accomplished and demonstrate their own
expertise. This scheme took into account their demand for association since they were
given premium cars over others. This motivated them to work harder and join the
company's social group. Among other things, they were given power and status.
These were instances in which they might wield power and influence over other
employees, as well as their desire to achieve a higher level of prestige and authority.

Apart from McClelland’s theory , the Vroom's Expectancy theory's Instrumentality

portion can likewise be utilised to map the incentives in this scenario. According to
this notion, an individual's drive is derived from his or her hopes for the future.
Instrumentality is the notion that if one performs well, the result will be advantageous.
Employees believe that if their performance is good, they will be handsomely
rewarded, and the company provides them with a good incentive to maintain their
faith in the system, allowing people to trust their own judgments about the company
and providing a clear understanding of the company's policy regarding the
relationship between reward and performance.
Overall, Mary Kay's VIP automobile programme was a very attractive incentive
scheme, and it was also a very effective one, based on the results it gave. When it was
implemented, sales went through the roof, and the employees were blown away by the
motivation it offered.
3. Recommend a set of changes to the VIP car program that will improve overall sales
force effectiveness, without reduction in employee morale and at the same time
minimize the cost to the firm. Be as specific as possible.

Even though the VIP car program has seen its success in the past , it has become
decreasingly efficient over the years below are a set of recommendations which will
improve the overall sales force effectiveness without reducing employee morale and
simultaneously minimizing the cost of the firm. Below are few recommendations on
the changes to be made in the VIP car program.

If a consultant fails to meet the required numbers in a given month, they may be
placed on probation. Instead of giving the consultant the car straight away, set a 3- or
6-month probation period during which they can meet their monthly quota and
continue to work hard for their car. The car will be seized if the consultant does not
fulfil their quota within the specified time frame. This type of forbearance can
encourage a consultant to keep working hard while also demonstrating that Mary Kay
wants their employees to succeed without taking away their hard-earned benefits.

Another strategy to combat escalating leasing expenses is to re-gift confiscated

vehicles. If Mary Kay signs a two-year lease on a new car and has to take possession
of it after six months, it only makes sense for the car to work for them for the
remaining 18 months. Any new consultant accepted into the VIP programme now got
a slightly used car, but a free car is a free car at this point. By not having to cancel
leases or resell used automobiles that were previously confiscated from consultants,
reusing cars will save thousands of dollars.

Mary Kay has the option of setting a slightly lower performance criterion in order to
obtain a used car if necessary. A system of checks and balances, akin to the "claw-
back" recommendations presented in planned social security reforms, would be an
alternative to a slightly lower performance benchmark. These provisions have already
proven to be effective in a variety of businesses. The difference in value between a
new and used car could be due to these factors. Mary Kay would be able to positively
bend the cost curve in the future with this type of clawback plan. A claw-back clause
in new contracts would be a smart counterweight to allow for unanticipated business
and performance changes.