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Sales Force Training at
GROUP 6-B | PGP 19
Aditi Rastogi
Ankita Datta
Ankeeta Deb
Bhuwan Kathuria
Nitika Soin
Rohan Chugh
Rohit Rohan
Shikha Saket
Tarini Bandhu
Virat Jain
What are we talking about?
•

Background of the company

•

Issues we observed in the case

•

Analysis of these issues

•

Business Problems

•

Solution of the problem

SDM | Group 6 | Section B | PGP 19 | MICA
History of Arrow Electronics
•

1935 | Started as a radio-equipment retailer

•

1950’s and 1960’s | Began selling array of electronic components to
small and medium sized manufacturers of electronic equipment

•

1977 | Became the main distributor (4th largest) electronic parts
distributor in the United States

•

1970’s | Growth by 12% annually

•

1980 | From regional northeastern company to 2nd largest distributor in
US

•

1993 | Arrow had the highest sales with $ 2.5 billion in North America

SDM | Group 6 | Section B | PGP 19 | MICA
Business Case Issues
•

Customers

•

Market Offerings

•

Competition

•

Sales Force Structure

•

Sales Force Compensation

•

Sales Strategy

•

Other Sales Force Issues

SDM | Group 6 | Section B | PGP 19 | MICA
Customers
•

Arrow ordered products from suppliers.

•

Sell the components to
•
•
•

Original Equipment Manufacturers (OEMs)
Smaller companies
Start-up companies

SDM | Group 6 | Section B | PGP 19 | MICA
Market Offerings
•

Extensive relationships with customers

•

Handled the supplier’s goods.

•

Access to thousands of products from hundreds of suppliers

•

They did not have any technical skill

•

Built on their major asset - people

SDM | Group 6 | Section B | PGP 19 | MICA
Competition
•

Around 350 competitors within this High-growth 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

SDM | Group 6 | Section B | PGP 19 | MICA
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

SDM | Group 6 | Section B | PGP 19 | MICA
Branch Office Structure
Branch General
Managers
(45)

Area Sales
Manager
(1-3)

Inside Sales
Manager

Field Sales Reps
(6-8)

Marketing
Manager

Sales &
Marketing Reps
(6-12)

Admin
Manager

Product Managers
(3-6)

SDM | Group 6 | Section B | PGP 19 | MICA

Admin
Personnel
Sales Force Job Description
•

General Manager (GM)

•

Field Sales Representatives (FSRs)

•

Sales and Marketing Representatives (SMRs)

•

Product Managers (PMs)

SDM | Group 6 | Section B | PGP 19 | MICA
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

SDM | Group 6 | Section B | PGP 19 | MICA
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” Travel & Entertainment

SDM | Group 6 | Section B | PGP 19 | MICA
Typical sales force
•

Gender: Men and Women

•

Age: 30’s and 40’s

•

Personalities :
•

high energy

•

highly aggressive

•

strong monetary motivation

•

Education: high school graduate

•

Most did not have college degrees

SDM | Group 6 | Section B | PGP 19 | MICA
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 Attrition Rate
• lack of company loyalty

SDM | Group 6 | Section B | PGP 19 | MICA
Sprout Background
•

Arrow needed more salespeople (300 per year)

•

Also wanted to change the make-up of sales force & sales strategy

•

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

SDM | Group 6 | Section B | PGP 19 | MICA
Objectives of Sprout Training
•

Upgrade professionalism of sales force by hiring graduates and
moulding them into modern salespeople

•

Teach classic sales skills

•

Train how to
manage territory
• manage cold calls
• overcome objections
• close the sales
•

SDM | Group 6 | Section B | PGP 19 | MICA
First steps
•

Train Arrow managers how to interview college students

•

Taught managers to look for
self starters
• goal-orientated
• leadership skills
• people skills
•

•

Conducted mock interviews with students

SDM | Group 6 | Section B | PGP 19 | MICA
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

SDM | Group 6 | Section B | PGP 19 | MICA
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

SDM | Group 6 | Section B | PGP 19 | MICA
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

SDM | Group 6 | Section B | PGP 19 | MICA
Business Problems
•

Turnover Rate - Competitors move in on Sprouts

•

Arrow/Industry ?

•

Initial Sprout Training

•

Existing/New Sales force - GM’s hostile to Campus Hiring

•

Modified Sprout Training

SDM | Group 6 | Section B | PGP 19 | MICA
A perspective AGAINST pathways
•

Cost –benefit analysis
•

•

Are the expenses on training justified?

Output is not instant
•

1 year of training+ building a new relationship with customers

•

Insecurity amongst existing members

•

The programme is a potential threat to the company’s
leadership position in the market as well as to the company’s
profitability

SDM | Group 6 | Section B | PGP 19 | MICA
A perspective FOR pathways
•

5 major companies; Switching-cost high

•

Play on reputation

•

Identify need to build company Loyalty- an “ Arrow sales person”

•

Mentorship Programme
•

•

Sense of belongingness to Arrow
•

•

Relationship Building b/w GM’s and Sprouts
example Awards for each Hierarchy (Best Sales Rep, Top performers etc.)

Training
•

Incorporate loyalty and mentorship programmes

SDM | Group 6 | Section B | PGP 19 | MICA
A perspective FOR pathways (contd.)
•

Fringe Benefits
•
•
•

Compensation, Medi-claim
Recreational centres (like Gyms)
Campus/Hostels during training

•

Sabbatical Leave

•

Loans
•

•

Clause in Appointment Letter
•

•

Attrition within 2 years leads to ineligibility to take job interviews for a
minimum period of three years

Step by Step Training
•

•

Educational, Home and Car Loans

Gradual guidance to grow in Arrow Electronics

“Cooling-off period”- 1 year
SDM | Group 6 | Section B | PGP 19 | MICA
End of presentation
Thank You

SDM | Group 6 | Section B | PGP 19 | MICA

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Arrow Electronics Sales Force Analysis

  • 1. Sales Force Training at GROUP 6-B | PGP 19 Aditi Rastogi Ankita Datta Ankeeta Deb Bhuwan Kathuria Nitika Soin Rohan Chugh Rohit Rohan Shikha Saket Tarini Bandhu Virat Jain
  • 2. What are we talking about? • Background of the company • Issues we observed in the case • Analysis of these issues • Business Problems • Solution of the problem SDM | Group 6 | Section B | PGP 19 | MICA
  • 3. History of Arrow Electronics • 1935 | Started as a radio-equipment retailer • 1950’s and 1960’s | Began selling array of electronic components to small and medium sized manufacturers of electronic equipment • 1977 | Became the main distributor (4th largest) electronic parts distributor in the United States • 1970’s | Growth by 12% annually • 1980 | From regional northeastern company to 2nd largest distributor in US • 1993 | Arrow had the highest sales with $ 2.5 billion in North America SDM | Group 6 | Section B | PGP 19 | MICA
  • 4. Business Case Issues • Customers • Market Offerings • Competition • Sales Force Structure • Sales Force Compensation • Sales Strategy • Other Sales Force Issues SDM | Group 6 | Section B | PGP 19 | MICA
  • 5. Customers • Arrow ordered products from suppliers. • Sell the components to • • • Original Equipment Manufacturers (OEMs) Smaller companies Start-up companies SDM | Group 6 | Section B | PGP 19 | MICA
  • 6. Market Offerings • Extensive relationships with customers • Handled the supplier’s goods. • Access to thousands of products from hundreds of suppliers • They did not have any technical skill • Built on their major asset - people SDM | Group 6 | Section B | PGP 19 | MICA
  • 7. Competition • Around 350 competitors within this High-growth 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 SDM | Group 6 | Section B | PGP 19 | MICA
  • 8. 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 SDM | Group 6 | Section B | PGP 19 | MICA
  • 9. Branch Office Structure Branch General Managers (45) Area Sales Manager (1-3) Inside Sales Manager Field Sales Reps (6-8) Marketing Manager Sales & Marketing Reps (6-12) Admin Manager Product Managers (3-6) SDM | Group 6 | Section B | PGP 19 | MICA Admin Personnel
  • 10. Sales Force Job Description • General Manager (GM) • Field Sales Representatives (FSRs) • Sales and Marketing Representatives (SMRs) • Product Managers (PMs) SDM | Group 6 | Section B | PGP 19 | MICA
  • 11. 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 SDM | Group 6 | Section B | PGP 19 | MICA
  • 12. 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” Travel & Entertainment SDM | Group 6 | Section B | PGP 19 | MICA
  • 13. Typical sales force • Gender: Men and Women • Age: 30’s and 40’s • Personalities : • high energy • highly aggressive • strong monetary motivation • Education: high school graduate • Most did not have college degrees SDM | Group 6 | Section B | PGP 19 | MICA
  • 14. 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 Attrition Rate • lack of company loyalty SDM | Group 6 | Section B | PGP 19 | MICA
  • 15. Sprout Background • Arrow needed more salespeople (300 per year) • Also wanted to change the make-up of sales force & sales strategy • 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 SDM | Group 6 | Section B | PGP 19 | MICA
  • 16. Objectives of Sprout Training • Upgrade professionalism of sales force by hiring graduates and moulding them into modern salespeople • Teach classic sales skills • Train how to manage territory • manage cold calls • overcome objections • close the sales • SDM | Group 6 | Section B | PGP 19 | MICA
  • 17. First steps • Train Arrow managers how to interview college students • Taught managers to look for self starters • goal-orientated • leadership skills • people skills • • Conducted mock interviews with students SDM | Group 6 | Section B | PGP 19 | MICA
  • 18. 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 SDM | Group 6 | Section B | PGP 19 | MICA
  • 19. 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 SDM | Group 6 | Section B | PGP 19 | MICA
  • 20. 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 SDM | Group 6 | Section B | PGP 19 | MICA
  • 21. Business Problems • Turnover Rate - Competitors move in on Sprouts • Arrow/Industry ? • Initial Sprout Training • Existing/New Sales force - GM’s hostile to Campus Hiring • Modified Sprout Training SDM | Group 6 | Section B | PGP 19 | MICA
  • 22. A perspective AGAINST pathways • Cost –benefit analysis • • Are the expenses on training justified? Output is not instant • 1 year of training+ building a new relationship with customers • Insecurity amongst existing members • The programme is a potential threat to the company’s leadership position in the market as well as to the company’s profitability SDM | Group 6 | Section B | PGP 19 | MICA
  • 23. A perspective FOR pathways • 5 major companies; Switching-cost high • Play on reputation • Identify need to build company Loyalty- an “ Arrow sales person” • Mentorship Programme • • Sense of belongingness to Arrow • • Relationship Building b/w GM’s and Sprouts example Awards for each Hierarchy (Best Sales Rep, Top performers etc.) Training • Incorporate loyalty and mentorship programmes SDM | Group 6 | Section B | PGP 19 | MICA
  • 24. A perspective FOR pathways (contd.) • Fringe Benefits • • • Compensation, Medi-claim Recreational centres (like Gyms) Campus/Hostels during training • Sabbatical Leave • Loans • • Clause in Appointment Letter • • Attrition within 2 years leads to ineligibility to take job interviews for a minimum period of three years Step by Step Training • • Educational, Home and Car Loans Gradual guidance to grow in Arrow Electronics “Cooling-off period”- 1 year SDM | Group 6 | Section B | PGP 19 | MICA
  • 25. End of presentation Thank You SDM | Group 6 | Section B | PGP 19 | MICA