9. CP06 Program 1x1 Recovery Plan Actual Variance Growth
Appointments (K) 27,0 44,7 17,7 66%
Appoint Retention 3rd Cp. 62% 78%
Active Reps 243,4 254,5 11,1 5%
Billed Gross Sales MM 20,6 21,7 1,1 5%
AvO 84,5 85,2 0,7 1%
Total Winners (K) 36,6 69,7 33,1 91%
Total Cost Program MM 1,2 2,2 1,1 94%
% to Sales 5,6% 10,3% 4,7%
MOV CP01 102,8 102,8
Total Prize Cost (2 phones) 63,0 64,2
Colombia 2Q - 1x1 CP06 2012
9
Program
almost
doubled
Key Outcomes:
Program does not have pre and post event financial analysis.
From incremental results ROI is -0,6M, while breakeven requires +2,7M of incremental Revenue.
Giving incremental cost in Incentives, Sales should have increased ~18M to maintain %TR projected.
To calculate ROI and Breakeven, GM at 60% and Variables at 20%
10. CP16 Program 1x1 Plan (FLL) Actual Variance Growth
Appointments (K) 8,0 15,8 7,8 97%
Appoint Retention 3rd Cp. 70% 86%
Active Reps 106,0 116,0 10,0 9%
Billed Gross Sales MM 7,4 8,0 0,6 8%
AvO 70 69 -1,2 -2%
Total Winners (K) 11,2 27,2 16,0 143%
Total Cost Program MM 0,5 1,2 0,7 143%
% to Sales 6,6% 15,0% 8,3%
MOV CP01 63,8 63,8
Total Prize Cost (2 phones) 88,0 88,0
Chile 4Q - 1x1 CP16 2012
10
Program
more than
doubled
Key Outcomes:
After Incentive Approval Meeting, program changed to 1x1 with a Cell phone as prize
From incremental results ROI is -0,5M, while breakeven requires +1,2M of incremental Revenue.
Giving incremental cost in Incentives, Sales should have increased ~10M to maintain %TR projected.
To calculate ROI and Breakeven, GM at 60% and Variables at 20%
11. TOTAL VENTAS 88.715
Devoluciones 3.576 4,2%
VENTA NETA AVON 85.139
Costo de Ventas 24.207 28,4%
Regalable 8.141 9,6%
Total Costo de Ventas 32.347 37,99%
UTILIDAD BRUTA 52.792 62,0%
Gastos Variables 16.190 19,02%
Costo del Programa 53.949 63,4%
UTILIDAD OPERATIVA (17.347) -20,4%
Step Sexy C-14 a 16
Estado de Resultados
Mexico – Step Sexy 2011
11
Level
Units
Sold
Sales
Gross
Profit
Variables Incentives
19%
1st Level 1 99 62 19 21 23 22,9%
2nd Level 2 198 125 38 80 8 3,9%
3rd Level 4 396 250 75 180 6
- -1,5%
12 1.187 749 226 631 107
- -9,0%
24 2.373 1.499 451 1.262 215
- -9,0%
36 3.560 2.248 677 1.893 322
- -9,0%
5th Level 100 9.889 6.245 1.880 4.832 468
- -4,7%
Marginal Profit
4th Level
Program with
negative
profit
Key Outcomes:
Incentive Program did not have preliminary financial analysis
Negative profit in 3 levels leverage the result in the program
Giving the P&L, Sales should have increased LC ~40M above
Actual results to be at breakeven point.
Local Currency
Incentive Program done before Incentives Process implementation in NOLA
12. Brazil Colordisiac – Cp.13 to 15/2011
12
P&L R$ (000´s)
R$ %NS R$ %NS R$ %NS Var%
Total Units 14.462 21.270 6.809 47%
Net Sales 92.272 100,0% 138.648 100,0% 46.376 100,0% 50%
COGS (26.183) -28,4% (39.796) -28,7% (13.613) -29,4% 52%
Gross Profit 66.089 71,6% 98.852 71,3% 32.763 70,6% 50%
GWP 0 0,0% 0 0,0% 0 0,0% 0%
Gross Profit 66.089 71,6% 98.852 71,3% 32.763 70,6% 50%
Variable Expenses (12.549) -13,6% (18.855) -13,6% (6.307) -13,6% 50%
Investments 0 0,0% (9.508) -6,9% (9.508) -20,5% 0%
Marginal Contribution 53.540 58,0% 70.488 50,8% 16.948 36,5% 32%
Advertising 0 0,0% (6.921) -5,0% (6.921) -14,9% 0%
Marginal Contribution with Adv 53.540 58,0% 63.567 45,8% 10.027 21,6% 19%
CENÁRIO SEM
INVESTIMENTO
CENÁRIO COM
INVESTIMENTO
INCREMENTAL
Post Mortem
not available
Key Outcomes:
Post Mortem not available to confirm assumptions approved in the preliminary analysis.
13. Key takeaways from the previous examples
13
Lack of consistency on pre and post event analysis.
After Approval Process, incentives changes were not reviewed for new approval.
No share of best practices among the Region.
15. Key Points towards Incentives effectiveness
Finance participates in Annuals and Quarterly Planning for Incentives definition
Demand Planning participation on the analysis.
ALL Incentives Programs with a financial analysis to validate it contribution.
Marginal Contribution target for incentive programs approval.
Incentives Approval Meeting to validate and approve financials for the Quarter.
Monitoring process after approval and visibility of changes and gaps.
Post Mortem analysis for ALL Incentives programs.
Follow up on collateral expenses from closed Incentives (Inventory, Warehouse
Cost, refurbish of incentives, freights changes, etc).
15
Incentives
Design
Financial
Analysis
Validation
& Approval
Monitoring
Post
Mortem
Financial
Analysis
Post
Mortem
Incentives
Flow
16. LATAM Status 2012
16
Brazil Venezuela NOLA CPE SMG
Finance participates in Annual and
Quarterly Planning for Incentives definition
Demand Planning participation
on the analysis
ALL Incentives Programs with a financial
analysis to validate it contribution
Marginal Contribution target
for Incentives Programs Approval
Incentives Approval Meeting to validate
and approve Incentives for the Quarter
Monitoring process after approval and
visibility of changes and gaps
Post Mortem Analysis
for ALL Incentives programs
Follow up on collateral expenses from
closed Incentives
Financial
Analysis
Incentives
Flow
Incentives
Design
Financial
Analysis
Validation
& Approval
Monitoring
Post
Mortem
Post
Mortem
17. Next Steps
17
Re launch Incentives Process in LATAM
Define a standard methodology for analysis based on type of incentive.
Standardize templates for analysis and deploy to all markets.
Create guideline for markets based on incentives types to fulfill templates.
Marginal Contribution target for incentive programs approval.
Regional Process monitoring based on KPIs defined as standards
Benchmark sharing in LATAM.
April xx
May
May
May
May
June
July
19. Markets Status Brazil – (R. Buscarilli)
All Incentives programs run through the financial analysis process to validate the marginal contribution
Finance participates on the Annual Planning and Quarterly Planning for Incentives
Demand Planning participation in the process with estimations of sales, units and winners for the program
Incentives Approval with GM after internal alignment between Sales & Finance on investments for the Quarter
After approval, Finance loose visibility of any change done to the program that could impact on it cost
After approval, Finance do not have visibility of collateral costs from the incentive program (excess, warehouse cost,
changes in freights, etc)
Post Mortem not done for all programs, just for marketing incentives (focused on productivity and launches)
Marginal Contribution for the program depends on the strategy followed, directionally should be higher than the
operating margin for the quarter. For incentives to product, need to evaluate contribution for the whole category or
brand.
19
20. Markets Status Venezuela – (G. Gerstl)
Finance does financial analysis for most important incentives programs, primarily focus on incremental profit.
Informal meetings with Incentives to build the scenarios when required. Final scenario is circulated to Sr.
Management.
Finance have not participated on the Annual Planning and Quarterly Planning for Incentives
Demand Planning does not participate in the process with estimations of sales, units and winners for the program
Venezuela does not have a formal Incentives Approval Meeting with GM after internal alignment between Sales &
Finance on investments for the Quarter. Finance sent the information to Sr. Management.
Finance validates any change to the program that could impact on it cost, ensuring the profitability.
After program, Finance is doing follow up over collateral costs from the incentives (excess, warehouse cost,
transportation)
Post Mortem not done for all programs, just the ones being evaluated
Marginal Contribution target to achieve for the incentives programs, depends on the strategy and approval from the
GM.
Finance is reinforcing the incentives process in April – May 2013.
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21. Markets Status NOLA – (M. Amador)
Finance does financial analysis for most important incentives programs, 1 headcount from FP&A working on that.
Incentives Process will be launch during March-April for NOLA.
Finance participates on the Annual Planning and Quarterly Planning for Incentives. In the Annual Planning there is
no formal review for Incentives.
Demand Planning does not participate in the process with estimations of sales, units and winners for the program.
This will be completed with the formal launch of the process in March-April.
There is an incentives approval meeting to review investments, even though this is not today in the same format as
the Incentive Process. This will be implemented in March-April.
Finance does not have complete visibility of changes to the program that could impact on it cost, ensuring the
profitability already defined.
Finance is doing follow up over collateral costs from the incentives (excess, warehouse cost, transportation)
The formal post mortem will be completed with the implementation of the approval process. For financial purposes a
follow-up on each incentive program is done when it closes and we analyze the differences Vs budget.
Marginal Contribution target to be implemented with Incentive Process in March-April (re launch lead by Finance)
21
22. Markets Status CPE – (P. Caicedo, J. Giraldo)
Product Incentives programs run through the financial analysis process to validate the marginal contribution, it is
done by the Incentives area and audit by finance on a quarterly base. Activity and Appointments program out of
scope at the moment (around 75% of the investment)
Finance does not participate on the Annual Planning and Quarterly Planning for Incentives, however exists monthly
meetings to evaluate incentives programs that compensate those participations.
Demand Planning participation in the process with estimations of sales, units and winners for the program
Incentives Approval with GM occurs at the moment of Closing Campaign Meeting (CIP), with approval of the
Finance Director. In CIP approves GM but not a formal approve of Incentives. CPE do not have a meeting to
approve the incentives. In the future will set up this kind of discussion in a separate meeting
After approval, Finance looses visibility of changes done to the program that could impact on it cost
After approval, Finance do not have visibility of collateral costs from the incentive program (excess, warehouse cost,
changes in freights, etc)
Post Mortem done and presented in a campaign meeting name "Analisis de Campaña" where the discussion is
around the learning's.
Marginal Contribution for the program depends on the category and the market only for Product Incentives.
22
23. Markets Status SMG – (J. Ramos)
All Incentives programs run through the financial analysis process to validate the marginal contribution
Finance does not participate on the Annual Planning and Quarterly Planning for Incentives
Demand Planning participation in the process with estimations of sales, units and winners for the program
Incentives Approval with GM after internal alignment between Sales & Finance on investments for the Quarter
After approval, Finance does not validate changes to the program that could impact on it cost.
After approval, Finance has partial visibility of collateral costs from the incentive (excess, warehouse cost, etc)
Post Mortem not done for all programs, just for big ones.
Do not have Marginal Contribution target to achieve for the incentives programs, depends on the strategy and
approval from the GM.
Finance is reinforcing some points of the process during 1st Half 2013.
23
