Case 2 Sales Force Training at Arrow Electronics
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Transcript Case 2 Sales Force Training at Arrow Electronics
Case 2
Sales Force Training at
Arrow Electronics
Marketing 458- Sales Management
Mike Atwood
Carson Young
Brittany Carmichael
Tyler Torbett
Nick Meyer
Outline
Background
Business Case Issues
Analysis
Business Problems
Solution
Company History
Radio-equipment retailer in 1935.
In the 1950’s and 1960’s, Arrow began
selling electronic components.
1977- main distributor in the United States
Industry growth in the 1970’s
Growth from regional to national company
1993- Arrow had the highest sales in
North America.
Business Case Issues
Customers
Market Offerings
Competition
Sales Force Structure
Sales Force Compensation
Sales Strategy
Other Sales Force Issues
Customers
Arrow ordered products from suppliers.
Sell the components to Original Equipment
Manufacturers (OEMs)
Smaller companies
Start-up companies
Market Offerings
Extensive relationships with customers
Handled the supplier’s goods.
Access to thousands of products from
hundreds of suppliers
Competition
Around 350 competitors within this Highgrowth Industry
Many sales people left Arrow to work with
competitors
-Departing Arrow sales people took their
clients with them
Mainly competed with 20 large regional or
national companies
Sales Force Structure
Sales divided into 4 distinct operating
groups based on product type:
1) Commercial Semiconductors
2) Military and aerospace semiconductors
3) Passive and connector products
4) Computer systems, peripherals, and
software
Sales Force divided into geographic divisions
-Each of which had a Branch Sales Office
Branch Office Structure
Branch General
Managers
(45)
Area Sales
Manager
(1-3)
Inside Sales
Manager
Marketing
Manager
Field Sales Reps
(6-8)
Sales & Marketing Reps
(6-12)
Product Managers
(3-6)
Admin
Manager
Admin
Personnel
Sales Force Job Description
General Manager (GM)
Field Sales Representatives (FSRs)
Sales and Marketing Representatives
(SMRs)
Product Managers (PMs)
Branch Office Compensation
Branch Office
Employee
Compensation
Average yearly
income
General Managers
(GM)
35% of salary is bonus
based on branch
performance (measured
by operating profit)
$60,000-$120,000
Field Sales
Representatives
(FSR)
$300/week draw against
a commission (8% of
gross profit dollars
shipped to the FSR’s
customers)
$60,000-$80,000
Sales & Marketing
Representatives
(SMR)
Paid entirely on
commission, earned 45% of gross margin
dollars generated
$40,000-$50,000
Product Managers
(PM)
25% of compensation
based on sales & gross
margin of product lines
$35,000-$75,000
Sales Strategy
Relationship based selling
- Sales strongly tied to individual FSR’s
relationship with suppliers
-Sales Force of 300 people with no formal
sales training
-Sales Force used a lot of “T & E”
Typical Sales Force
Gender: Men and Women
Age: 30’s and 40’s
Personality: high energy, highly
aggressive, strong monetary motivation
Education: high school graduate
– Most did not have college degrees
Problems with Sales Strategy
Sales Force challenging to retrain
Sales Force “wine & dine” customers
instead of solution selling
-creates a lack of customer loyalty
High Turnover Rate
-lack of company loyalty
Sprout Background
Arrow needed more salespeople, but
wanted to change the make-up of sales
force
Decided to hire kids fresh out of college
The plan was to go on college campuses,
interview kids, choose the best ones,
make offer, hire, train, and send to the
field
Objectives of Sprout Training
Upgrade professionalism of sales force by
hiring kids and molding them into modern
salespeople
Teach classic sales skills
Teach how to manage territory, cold calss,
overcoming objections, and how to close
sale
First Steps
Train Arrow managers how to interview
college students
Taught managers to look for self starters,
goal-orientated, leadership skills, and
people skills
Conducted mock interviews with students
Sprout’s Training
Went to company headquarters for
weeklong orientation
Sprout’s sent to warehouses for two weeks
Six months of on the job training
Returned to headquarters for a week of
sales skills training
Formal Training Program
Needed more formal training program
Rented training facility where sprouts
would live for 13 weeks of classroom
learning
13 weeks of on the job training
3 weeks of training before entering field
permanently
GMs noticed huge difference in sprouts
Sprouts Compensation
New Recruits - $18,500
First year “Sprouts” - $24,000
Second year “Sprouts” - $27,000
Competitors - 30 to 60 percent more
- First year “Sprouts” - $30,000
- Second year “Sprouts” - $40,000 to 45,000
Class Discussion and Questions
Are there any questions so far?
Business Problems
Turnover Rate
Arrow/Industry?
Initial Sprout Training
Existing/New Salesforce
Modified Sprout Training
Competitors move in on Sprouts
Solutions
Company Loyalty
Regional
National
Compensation
Training
Class Discussion and Questions
?