Connect with us on Facebook Follow us on Twitter Join our LinkedIn Group Subscribe to us on YouTube Share with us on Google+ Subscribe to our RSS feed

April 01, 2013

Cover Story

Car Bonus Programs: The Ultimate Recognition

by Barbara Seale

Click here to order the Direct Selling Newsissue in which this article appeared.

DSN April 2013

Americans love new cars. We bought more than a million of them every month in 2012—the highest number in four years—and that number is growing this year. For many direct sellers, that’s just more proof that having a car program is a great investment in their business.

They make that investment in a variety of ways and at varying points in their distributors’ careers. Some companies offer a single luxury vehicle that represents a high level of distributor skill and success. Others dangle the car carrot early and often.

The companies who spoke with Direct Selling News about their car incentive programs are enthusiastic about them. They believe that when their distributors drive a car emblazoned with the company logo, it delivers much more than that coveted new car smell. The car also speaks volumes about how successful they have been—and how successful any prospective distributor can potentially be—because they make the most of the company’s opportunity. The message comes through loud and clear in markets large and small, and it creates pride, and yes, desire, among the salesforce. Car programs cross the lines among compensation, incentives, rewards, recognition and even advertising.

While cars are traditionally viewed as an incentive reserved for the company’s highest-ranking distributors, companies who want to offer a car bonus often think outside that box.

While cars are traditionally viewed as an incentive reserved for the company’s highest-ranking distributors, companies who want to offer a car bonus often think outside that box. Some offer a progression of car bonuses that can be earned as early as the distributor’s first career promotion.

Many Methods and Models

The industry’s best-known car program undoubtedly belongs to Mary Kay. The company introduced its pink Cadillac in 1969. It quickly became the most sought-after vehicle in a series of auto motivators that Mary Kay includes in its Career Car program.

Youngster companies ViSalus and Nerium included the opportunity to qualify for a car—a BMW or a Lexus, respectively—in their early compensation plans. Shaklee’s car bonus program lets its distributors choose any car they like with a compensation bonus that can start at the company’s first promotion level, director, and gets progressively richer at higher ranks and greater production. Arbonne’s white Mercedes-Benz has stood the incentives test of time since company Founder Petter Mørck first conceived it in 1983. It’s a luxury reserved for achievers, but it can be earned when a distributor reaches the regional vice president level, about the middle of the company’s career ladder.

Car programs aren’t ubiquitous, of course. Many direct sellers choose alternate options for their compensation and incentives programs. In fact, the industry’s three largest companies, Avon, Amway and Herbalife, don’t have car bonus programs.

For example, Avon offers a range of comprehensive recognition and incentive programs to inspire its representatives. Over the years the company has surveyed its top leadership to get their thoughts on whether they would like Avon to institute a traditional car program. The company found that its leaders would prefer a simple cash bonus instead of a car. Avon created a “SEUL Cash Bonus” to cater to the wishes of its top leaders, giving senior executive unit leaders (SEULs) the opportunity to earn attractive dollars that they can apply to a car or anything else they choose.

But the companies that embrace a car bonus believe in it emphatically. For them, crafting and administering the program is well worth the effort and expense. But since car programs are a big commitment of both time and money, many companies turn to compensation experts to help them develop their best possible program.

Car Bonus Programs

Carefully Crafting Compensation

The father-daughter partnership of compensation plan specialists Dan Jensen and Andi Sherwood, of Dan Jensen Consulting, have worked with hundreds of direct selling companies to help them structure their compensation plans, which sometimes include car programs. They believe that for many companies, a car program can be an important component. But Jensen notes that they’re not right for every company or in every circumstance.

“New, young, startup companies rarely launch with a car program,” Jensen observes. “There’s a simple reason: They just don’t have car-qualified people and don’t have the critical mass of salesforce, leaders or volume. If a young company launches a car program at the right time, when they have a few qualifying people, then it should cost between 1 and 1.5 percent of commissionable volume.”

Car programs are best used as part of an entire approach to compensation, and generally in mature markets. In some international markets, especially emerging markets, adding a car bonus program might not make sense if the general population is struggling with more basic necessities. “We work with a lot of international companies,” Sherwood explains. “In some markets, a car program doesn’t make sense based on credit ability, standards of living and so on.”

In marketplaces such as North America, however, the best car programs are aligned with desired distributor behavior. If a key behavior is recruiting large teams and mentoring them to sell and recruit, then the car program qualifications—along with compensation, incentives and other rewards—should drive those behaviors.

But, Jensen emphasizes, the compensation plan should stand on its own. A well-designed car program will make it even stronger and will provide additional fuel to get leaders to grow to the next level, he believes, but no car program will transform a poorly conceived compensation plan into a good one.

To achieve that impact, Sherwood and Jensen recommend a unique approach. Rather than tying car program eligibility to the achievement of any given rank, structure the program’s eligibility criteria so that it falls between one level of achievement and the next higher level. For example, if a career ladder has silver, gold and platinum director levels, car qualifications would be at a somewhat higher level than a distributor would have to reach to achieve the silver director title, but not as high as gold. The additional requirements encourage distributors to continue to grow their business, visibly reward the right behaviors and provide yet another way to recognize success. The extra effort required can produce a significant return on investment for the company.

Do They Work?

The car is a literal “message in the driveway” about what’s possible in pursuing the opportunity. It’s a conversation-starter with potential recruits, and positive branding for the company.

Car bonus program ROI is measured in a variety of ways, and the five companies in this story say that program benefits reverberate within the company and its community, as well as externally.

First and foremost, the programs drive sales by providing a wonderfully tangible feel-good incentive to distributors to continue building their businesses. Additionally, the car is a literal “message in the driveway” about what’s possible in pursuing the opportunity. It’s a conversation-starter with potential recruits, and positive branding for the company.

ViSalus had been in business for two years when it launched its Bimmer Club, which provides a car bonus to distributors who achieve the rank of regional director, their second promotion level, and then help six team members achieve director status. Driving their ViSalus-provided BMW demonstrates that the regional directors are doing more than finding people to join the Body by Vi™ Challenge. They’re also developing the necessary recruiting and mentoring skills to help others build a business.

“Earning a BMW is a giant belief builder in themselves and their ability to have success in ViSalus,” says Co-Founder and Chief Marketing Officer Blake Mallen. “It redefines their paradigm. Our goal is to let them do that at a relatively fast pace. We want to give cars to our part-time loyalists who want to use the car to make more money and eventually go full time.”

“Earning a BMW is a giant belief builder [for promoters] and their ability to have success in ViSalus. It redefines their paradigm.”
—Blake Mallen, Co-Founder and Chief Marketing Officer, ViSalus

Lots of ViSalus directors, which the company refers to as promoters, receive the car bonus. More than 15,000 people have qualified since the program’s inception, putting thousands of rolling billboards on the road, all driven by brand enthusiasts.

Skincare direct seller Nerium opened its doors in 2011 armed with a compensation plan that included a car bonus from the beginning. They spell out exactly how distributors can qualify through their Roadmap to Lexus. When their independent brand partners reach the senior director level—which includes the building of a team of brand partners and directors, and 12,000 in sales volume a month—they qualify for a bonus of up to $1,000 a month that lets them either buy or lease the silver, white or granite Lexus they choose, provided it is no more than four years old.

“We wanted to go as low as we could that made financial sense within the compensation plan,” explains Amber Olson Rourke, Nerium Co-Founder and Vice President of Marketing and Culture. “If you’re a senior director, you have successfully built three separate teams. That sets you up for long-term success and continual advancement. It’s what we consider a turning point. You’re no longer new. You’re becoming a leader, training your team and developing into the next level of leadership. It’s very achievable for anyone, but just outside someone’s comfort zone. They have to treat their business like a business. It’s attainable, but it helps drive the correct behaviors.”

Cover Story Cover Story Cover Story

A Faster Lane

Shaklee’s six-level car bonus program is integrated into its compensation plan, which it calls the Shaklee Dream Plan. When the company’s entry-level directors reach 3,000 of Personal Group Volume and personally promote a new first-generation director, they can begin to qualify to earn a monthly car bonus toward a new car for up to three years. With their first promotion to senior director, they can qualify for the car bonus. As they climb the ranks in Shaklee, the monthly car bonus payment they can earn increases. Shaklee’s car program mirrors its green brand image. Distributors who choose a hybrid car automatically receive a larger bonus. Shaklee distributors can use the bonus to purchase or lease the car that fits their lifestyle. The one exception: At the top distributor rank, presidential master coordinator, Shaklee turns over the keys to a Mercedes-Benz S400 Hybrid—green, of course.

“Our two top reasons for having the program are recognition and retention—both extremely important in the industry,” says TD Robinson, Director of Recognition at Shaklee. “Driving a Shaklee car is a tangible, physical representation of the benefits of building a business. Distributors show them off with pride to their downline, their upline, to recruits, sponsors and to their family. They’re also definitely a retention tool. Once you get someone into a car, they’ll go the extra mile to make monthly goals and keep that car.”

“Sometimes it’s hard to set a goal if you can’t visualize the goal. This really helps to do that. The car is a tangible item at the end of the road….”
—Annie Josefsen, Vice President of Recognition and Events, Mary Kay

While Mary Kay is known by industry insiders and even consumers for its pink Cadillac, its Career Car program actually includes several cars, beginning with a Chevy Cruze that consultants can earn in as little as four months. As they climb toward the top of the career ladder, qualified Mary Kay independent sales directors can earn the use of a pink Cadillac, choosing from the CTS or SRX models in Mary Kay’s exclusive pearlized pink. Other cars offered in the Career Car program are the Cadillac Escalade Hybrid, Chevy Malibu, Toyota Camry, Chevy Equinox and the newest addition, the Ford Mustang.

“Our objective is to provide a progression—a track to run on,” explains Annie Josefsen, Mary Kay’s Vice President of Recognition and Events. “Sometimes it’s hard to set a goal if you can’t visualize the goal. This really helps to do that. The car is a tangible item at the end of the road, and we teach consultants that ‘if I do this between here and there, that’s my end result.’ ”

She says that the Career Cars become visible incentives for many Mary Kay consultants. Some even take a picture of themselves with the next car they want to earn and place it prominently in their work space as a regular reminder of their goal.

Car Bonus Programs

Celebrations of Success

Arbonne’s white Mercedes-Benz is a treasured and highly respected symbol of success—so much so that when Kay Napier joined the company as its CEO in 2009, she refused to lease one for herself. She said she hadn’t earned it, and she wouldn’t drive one until she felt that she had. Consultants gave her grief for three years because she drove a different vehicle. The company had been in financial trouble when she took the helm, but after returning it to health, her field leaders convinced her that she had, indeed, earned the right to drive a white Mercedes.

She learned early on how important the car program was to Arbonne’s consultants.

“I wouldn’t have thought it was as powerful as it was, coming in. I went to a meeting in Palm Beach, Fla., to see what consultants thought of the Arbonne culture,” Napier recalls. “I thought, yeah, somewhere there’s one person driving a white Mercedes. But when I got to the meeting, there were rows and rows and rows of white Mercedes in the parking lot of the convention center.” She adds, “It’s a symbol of having arrived at a certain level in life, about having the financial freedom to live the life you never thought you could achieve.”

Napier notes that the white Mercedes is symbolic of the Arbonne brand—pure, safe, beneficial. And of course, it’s a symbol of success and skill in Arbonne. The company’s regional vice presidents—second to the top level in the career progression—can qualify for the car bonus. Napier says that the car instills added pride in the consultant who earns it. Because relatively few consultants qualify, the presentation ceremony is something special. It’s also a visible incentive for up-and-coming consultants.

“It’s a symbol of having arrived at a certain level in life, about having the financial freedom to live the life you never thought you could achieve.”
—Kay Napier, CEO, Arbonne

“By the time people get to the regional vice president level, we have very little attrition. It’s not tied to the car,” Napier says. “But the rank below sees the car, sees the joy in the family of the person who drives it, sees the pride of all the community of Arbonne, and says, ‘That’s where I want to go.’ It’s aspirational.”

Brand Power

Car programs give any company’s brand a boost, and every company sees to it that their cars cruise about with some serious brand power. Decals, key rings and license plate frames are standard issue. ViSalus shows its sense of humor with its Told U So plate inserts. Mary Kay’s meticulous reminders of the car’s origins are especially noticeable in the Cadillacs and Mustangs. Cadillacs aren’t just painted pink—Mary Kay pink, by the way, is the color’s actual name. They also have a special plaque on the glove box that announces: “Made especially for [consultant’s name].” When a customer, prospect or family member sits in the passenger seat, they can’t miss it. And Mustangs have pink interior door lights and a pink dashboard.

At the end of their lease period, Mary Kay cars are auctioned, but not before they’re repainted and stripped of branding. After all, the second owner didn’t earn the privilege of driving a Mary Kay car.

Cover StoryCompany branding provides recognition for the distributor who earned the car and also for the company itself. Company executives say that cars are even recruiting tools, helping deliver the message of the company’s opportunity in towns both large and small. And Shaklee noticed a substantial increase in distributor retention when it reinstituted its car program three years ago. Company-branded cars even symbolize the company’s story. For example, when ViSalus CEO Ryan Blair became successful enough to afford a truly nice car, he bought a black BMW. He says that’s when he felt as though he had “made it.” And Lexus dealers even see the Nerium program’s benefits. Nerium Founder and CEO Jeff Olson says Lexus dealers have told him that they usually have to spend $500 in advertising and promotions to get someone on the showroom floor. But at a single car presentation party where Nerium presented a Lexus to several of its independent brand partners, some 300 people—distributors, their uplines, downlines, family members and friends—attended.

“The dealership would have had to spend $150,000 in advertising to get those people there,” Olson calculates. “It was a huge value for Lexus, plus it was good for us and good for our field. It’s a great partnership.”

Once a car program is in place, companies don’t often tweak it. Mary Kay keeps an eye on the marketplace and the needs of its consultants, so it occasionally adjusts its models. It added the Mustang two years ago and plans to offer it at least until this September, when it will reassess. Already 336 of them are on the road. ViSalus introduced its BMW program with one color option—black. Since then it added silver and green, the company’s brand colors, to its options. Arbonne is working with Mercedes to explore more fuel-efficient options, in line with its own “green commitment.” Shaklee and Nerium do not plan any changes to their programs, which are three and two years old, respectively. Consistency fits the approach that consultants Jensen and Sherwood recommend. They say that just as an overall compensation is comprised of a long-term set of rules, a car program should be relatively permanent. The two must create a harmonious marriage.

But admittedly, measuring the value of car programs is tricky. After all, how does one measure pride, confidence or feeling successful? But companies with car bonus options at lower levels do notice greater distributor retention, and in some cases, distributors tell them that the cars create a rolling recruiting advantage. Even the presentations can become an informal opportunity meeting when they’re done publicly.

“People will work hard for money, but they’ll go the extra mile for recognition.”
—TD Robinson, Director of Recognition, Shaklee

And what about that consultant who qualifies for a car, but doesn’t have the personal credit or savings to take possession of the car they’ve earned? Or maybe they simply don’t need another car right then. Companies typically offer an alternative. Shaklee will “bank” the bonus for six months, helping the distributor accumulate more cash. ViSalus offers a monthly cash option of half of its standard car bonus to promoters who don’t want a car right then. But once a distributor begins driving that car, they rarely allow themselves to fall out of qualification. And knowing that anyone can have a bad month or a rocky period, the companies typically have some sort of “grace period” that lets distributors regain qualification.

Every company says that the constant recognition that car-qualifying distributors receive when they drive that rolling advertisement for their own success, along with the visibility the cars give the company itself, makes car programs valuable and worthwhile. Maybe Shaklee’s Robinson sums it up best: “People will work hard for money, but they’ll go the extra mile for recognition.”