Case 2Case 2Sales Force Training at Sales Force Training at
Arrow ElectronicsArrow ElectronicsMarketing 458- Sales ManagementMarketing 458- Sales Management
Mike AtwoodMike Atwood
Carson YoungCarson Young
Brittany CarmichaelBrittany Carmichael
Tyler TorbettTyler Torbett
Nick MeyerNick Meyer
OutlineOutline
BackgroundBackground Business Case IssuesBusiness Case Issues AnalysisAnalysis Business ProblemsBusiness Problems SolutionSolution
Company HistoryCompany History
Radio-equipment retailer in 1935.Radio-equipment retailer in 1935. In the 1950’s and 1960’s, Arrow began In the 1950’s and 1960’s, Arrow began
selling electronic components.selling electronic components. 1977- main distributor in the United States1977- main distributor in the United States Industry growth in the 1970’sIndustry growth in the 1970’s Growth from regional to national companyGrowth from regional to national company 1993- Arrow had the highest sales in North 1993- Arrow had the highest sales in North
America.America.
Business Case IssuesBusiness Case Issues
CustomersCustomers Market OfferingsMarket Offerings CompetitionCompetition Sales Force StructureSales Force Structure Sales Force CompensationSales Force Compensation Sales StrategySales Strategy Other Sales Force IssuesOther Sales Force Issues
CustomersCustomers
Arrow ordered products from Arrow ordered products from suppliers.suppliers.
Sell the components to Original Sell the components to Original Equipment Manufacturers (OEMs)Equipment Manufacturers (OEMs)
Smaller companies Smaller companies Start-up companiesStart-up companies
Market OfferingsMarket Offerings
Extensive relationships with Extensive relationships with customerscustomers
Handled the supplier’s goods.Handled the supplier’s goods. Access to thousands of products from Access to thousands of products from
hundreds of suppliershundreds of suppliers
CompetitionCompetition
Around 350 competitors within this Around 350 competitors within this High-growth IndustryHigh-growth Industry
Many sales people left Arrow to work Many sales people left Arrow to work with competitorswith competitors
-Departing Arrow sales people took -Departing Arrow sales people took their clients with themtheir clients with them
Mainly competed with 20 large Mainly competed with 20 large regional or national companiesregional or national companies
Sales Force StructureSales Force Structure
Sales divided into 4 distinct operating Sales divided into 4 distinct operating groups based on product type:groups based on product type:
1) Commercial Semiconductors1) Commercial Semiconductors2) Military and aerospace 2) Military and aerospace
semiconductorssemiconductors3) Passive and connector products3) Passive and connector products4) Computer systems, peripherals, and 4) Computer systems, peripherals, and
softwaresoftware Sales Force divided into geographic divisionsSales Force divided into geographic divisions
-Each of which had a Branch Sales Office-Each of which had a Branch Sales Office
Branch Office StructureBranch Office Structure
Branch General Managers
(45)
Area Sales Manager
(1-3)
Inside Sales Manager
Marketing Manager
Admin Manager
Admin Personnel
Field Sales Reps (6-8)
Sales & Marketing Reps (6-12)
Product Managers (3-6)
Sales Force Job DescriptionSales Force Job Description
General Manager (GM)General Manager (GM) Field Sales Representatives (FSRs)Field Sales Representatives (FSRs) Sales and Marketing Representatives Sales and Marketing Representatives
(SMRs)(SMRs) Product Managers (PMs)Product Managers (PMs)
Branch Office CompensationBranch Office CompensationBranch Office Branch Office
EmployeeEmployeeCompensationCompensation Average yearly Average yearly
incomeincome
General ManagersGeneral Managers
(GM)(GM)35% of salary is 35% of salary is bonus based on bonus based on
branch performance branch performance (measured by (measured by
operating profit)operating profit)
$60,000-$120,000$60,000-$120,000
Field Sales Field Sales RepresentativesRepresentatives
(FSR)(FSR)
$300/week draw $300/week draw against a commission against a commission
(8% of gross profit (8% of gross profit dollars shipped to the dollars shipped to the
FSR’s customers)FSR’s customers)
$60,000-$80,000$60,000-$80,000
Sales & Marketing Sales & Marketing RepresentativesRepresentatives
(SMR)(SMR)
Paid entirely on Paid entirely on commission, earned commission, earned
4-5% of gross margin 4-5% of gross margin dollars generateddollars generated
$40,000-$50,000$40,000-$50,000
Product ManagersProduct Managers
(PM)(PM)25% of compensation 25% of compensation
based on sales & based on sales & gross margin of gross margin of
product linesproduct lines
$35,000-$75,000$35,000-$75,000
Sales StrategySales Strategy
Relationship based sellingRelationship based selling
- Sales strongly tied to individual - Sales strongly tied to individual FSR’s relationship with suppliersFSR’s relationship with suppliers
-Sales Force of 300 people with no -Sales Force of 300 people with no formal sales trainingformal sales training
-Sales Force used a lot of “T & E”-Sales Force used a lot of “T & E”
Typical Sales ForceTypical Sales Force
Gender: Men and WomenGender: Men and Women Age: 30’s and 40’sAge: 30’s and 40’s Personality: high energy, highly Personality: high energy, highly
aggressive, strong monetary aggressive, strong monetary motivationmotivation
Education: high school graduateEducation: high school graduate– Most did not have college degreesMost did not have college degrees
Problems with Sales Problems with Sales StrategyStrategy
Sales Force challenging to retrainSales Force challenging to retrain Sales Force “wine & dine” customers Sales Force “wine & dine” customers
instead of solution sellinginstead of solution selling
-creates a lack of customer loyalty-creates a lack of customer loyalty High Turnover RateHigh Turnover Rate
-lack of company loyalty-lack of company loyalty
Sprout BackgroundSprout Background
Arrow needed more salespeople, but Arrow needed more salespeople, but wanted to change the make-up of wanted to change the make-up of sales forcesales force
Decided to hire kids fresh out of Decided to hire kids fresh out of collegecollege
The plan was to go on college The plan was to go on college campuses, interview kids, choose the campuses, interview kids, choose the best ones, make offer, hire, train, and best ones, make offer, hire, train, and send to the fieldsend to the field
Objectives of Sprout Objectives of Sprout TrainingTraining
Upgrade professionalism of sales Upgrade professionalism of sales force by hiring kids and molding force by hiring kids and molding them into modern salespeoplethem into modern salespeople
Teach classic sales skillsTeach classic sales skills Teach how to manage territory, cold Teach how to manage territory, cold
calss, overcoming objections, and calss, overcoming objections, and how to close salehow to close sale
First StepsFirst Steps
Train Arrow managers how to Train Arrow managers how to interview college studentsinterview college students
Taught managers to look for self Taught managers to look for self starters, goal-orientated, leadership starters, goal-orientated, leadership skills, and people skillsskills, and people skills
Conducted mock interviews with Conducted mock interviews with students students
Sprout’s TrainingSprout’s Training
Went to company headquarters for Went to company headquarters for weeklong orientationweeklong orientation
Sprout’s sent to warehouses for two Sprout’s sent to warehouses for two weeksweeks
Six months of on the job trainingSix months of on the job training Returned to headquarters for a week Returned to headquarters for a week
of sales skills trainingof sales skills training
Formal Training ProgramFormal Training Program
Needed more formal training programNeeded more formal training program Rented training facility where sprouts Rented training facility where sprouts
would live for 13 weeks of classroom would live for 13 weeks of classroom learninglearning
13 weeks of on the job training13 weeks of on the job training 3 weeks of training before entering 3 weeks of training before entering
field permanentlyfield permanently GMs noticed huge difference in sproutsGMs noticed huge difference in sprouts
Sprouts CompensationSprouts Compensation
New Recruits - $18,500New Recruits - $18,500 First year “Sprouts” - $24,000First year “Sprouts” - $24,000 Second year “Sprouts” - $27,000Second year “Sprouts” - $27,000
Competitors - 30 to 60 percent moreCompetitors - 30 to 60 percent more
- First year “Sprouts” - $30,000- First year “Sprouts” - $30,000
- Second year “Sprouts” - $40,000 to - Second year “Sprouts” - $40,000 to 45,00045,000
Class Discussion and Class Discussion and QuestionsQuestions
Are there any questions so far?Are there any questions so far?
Business ProblemsBusiness Problems
Turnover RateTurnover Rate Arrow/Industry?Arrow/Industry? Initial Sprout Training Initial Sprout Training Existing/New SalesforceExisting/New Salesforce Modified Sprout TrainingModified Sprout Training Competitors move in on SproutsCompetitors move in on Sprouts
SolutionsSolutions
Company LoyaltyCompany Loyalty Regional Regional NationalNational CompensationCompensation TrainingTraining