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case analysis
Sales force training at
arrow electronics Aashita Jain 081
Aniruddh Choksey 090
Anu Radhakrishnan 094
Aritri...
Company Summary
• Arrow electronic - A broad line distributor of semiconductor & electronics components to OEMs (Original
...
Sales force
expectations
30 – 40 year old
No college
degree/technical training
High energy
Highly aggressive
Monetar...
Branch General
Manager
Inside
Sales
Manager
Area Sales
Manager
(1-3)
Marketing
Manager
Admin
Manager
Admin
Personnel
Field...
Sales force
Problems
• Lack of sales personnel
• Hiring by and from competition
• No employee loyalty
• Sales were tied to...
Sprouts Program
Hire students from college campuses and train them to sell the way “modern salespeople”
should sell.
3 fol...
Selling based on relationship Selling based on what the
customer needs now and in the
near future
Selling parts selling so...
Sprouts Program
HIRING
Field office
[6 months]
Warehouse
[2 weeks]
Headquarters
[1 week]
Headquarters
[1 week]
Field offic...
Sprouts 2.0
•Varied results across branches
•Field organization didn't have time to
train people
•Friction between Sprouts...
Industry Training Ground
• For better compensation: Sprouts who were in first year were offered guaranteed annual salary o...
Pathways: The new program
•Arrow Electronics is a bigger company with a sales force of 1,000
•As a result of consolidation...
questions
What are the merits and demerits
of introducing the pathways
program?
 It is essential in order to counter the constantly
reducing sales force pool
 Arrow has acquired four of the top ten di...
questions
What is the way
forward for
Pathways?
Possible solution
1. Recruitment
College on-campus recruitment
Inter-industry recruitment to break-free from the
clutter...
questions
What should
Arrow do to retain
the talent?
Possible solution
Differential Recruitment Process
•Hire from Ivy League and non-Ivy League
Colleges
•Differential pay pa...
questions
Can we restructure the
sales force
organization?
 Giving Area Sales Managers a more focussed approach towards retaining
clients by means of regular interactions
 This wi...
Thank
You
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Sales Force Training at Arrow Electronics - Case Analysis

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Sales Force Training at Arrow Electronics - Case Analysis

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Sales Force Training at Arrow Electronics - Case Analysis

  1. 1. case analysis Sales force training at arrow electronics Aashita Jain 081 Aniruddh Choksey 090 Anu Radhakrishnan 094 Aritrika Das 096 KV Saurabh Kamalakaran 114 Nikhil Saraf 124 Paarmi Modi 127 Saarini Bagga 139 Surabhi Anand 152 Vasundhara Adukia 158
  2. 2. Company Summary • Arrow electronic - A broad line distributor of semiconductor & electronics components to OEMs (Original Equipment Manufacturer) • It began as a radio-equipment retailer in 1935 • Listed in NYSE in 1979 • Became the second largest distributor in the US by 1980 Arrow’s sales was divided into fouroperating groups • Commercial semi-conductors • Military and aerospace conductors • Passive and connector products • Computer systems, peripherals and software History CUSTOMERBASE • Start-ups • Small and mid-sized manufacturers of electronic products • Also handles suppliers’ sales of goods VALUEADDITION • Convenient access to variety of products • Allowed orders with short lead time • Credit management for customers
  3. 3. Sales force expectations 30 – 40 year old No college degree/technical training High energy Highly aggressive Monetary motivation Relation based selling Did their own thing – difficult to inject new idea •Achieve sales goals and deliver good performance •Manage the territory •Understand the customer strategy : Knowledge about company, products in pipeline, demand creation for the same , need analysis of consumer and supplier •Make cold calls •Overcome objections and persuade •Close the sale profile
  4. 4. Branch General Manager Inside Sales Manager Area Sales Manager (1-3) Marketing Manager Admin Manager Admin Personnel Field Sales Reps (6-8) Sales & Mktg Reps (6-12) Product Manager (3-6) •Earns $300 weekly •Yearly Avg: $60k-$80k •Max Earning: $150k-$200k •Yearly Avg: $35k-$75k •Commission: 25% of Gross Margin •Yearly Avg: $40k-$50k •Max Earning: $100k •Commission: 4%-6% of Gross Margin •Comm: 25% of Gross Margin •Yearly Avg: $35k-$75k •Comm: 4%-5% of Gross Margin •Yearly Avg: $40k-$50k Structure •Yearly Avg: $60k-$120k •Commission: 35% of Branch Operating Profit Sales force
  5. 5. Sales force Problems • Lack of sales personnel • Hiring by and from competition • No employee loyalty • Sales were tied to personal relationships • Attrition of employees lead to losing customers • Sales people from competitors are hired for their loyal customers High Turnover Rate Concept of Selling No Standard Training
  6. 6. Sprouts Program Hire students from college campuses and train them to sell the way “modern salespeople” should sell. 3 fold objective Needed more salespeople Only 300 people before Sprouts started Change the make-up of the salesforce No quality in hiring from competitor, people lower down in arrow had even less rich backgrounds Improve the culture Move them to managerial positions in a due time Brief
  7. 7. Selling based on relationship Selling based on what the customer needs now and in the near future Selling parts selling solutions to customer business problems Personal relationship with buyer Relationship with the whole customer Having relationships and product knowledge in tool kit Well equipped tool kit with territory management, understanding strategy, making cold calls, overcoming objections, how to close sale etc. Sprouts Program Changes sought Kind of people SELF STARTERS BUSINESS MAJORS GOAL ORIENTED PEOPLE SKILLS LEADERSHIP SKILLS NO TOP GPA NEW 2nd YEAR1st YEAR Compensation $18,500 $27,000$24,000
  8. 8. Sprouts Program HIRING Field office [6 months] Warehouse [2 weeks] Headquarters [1 week] Headquarters [1 week] Field office Hire graduates right out of college to join the sales force through a structured interview process Taught about Arrow’s history and values, basics of the industry and electronic components How to pick orders off shelves, track inventory, operate systems Exposing recruits to sales, customer support, marketing, shipping, work with FSR and SMRs, product management assistance Sales skill training Training period over; instated as permanent employees at field office Sprouts training process
  9. 9. Sprouts 2.0 •Varied results across branches •Field organization didn't have time to train people •Friction between Sprouts and managers •Programme needed to be more formal Why? •IROC – Idiots Right Out of College •“Some of the managers just weren’t good trainers” •Sprouts had different expectations •Sprouts given – “ROW” (Rest of the World Accounts – Not wise as it required best selling skills ) •Used as Clean up staff HIRING Xeroxfacility [13 weeks] Xeroxfacility [3 weeks] Field office [13 weeks] Field office [permanent] changes •Create common bond: “espirit de corps” •Like an MBA program •Demanding workload •Understanding of real time computer systems process
  10. 10. Industry Training Ground • For better compensation: Sprouts who were in first year were offered guaranteed annual salary of $30,000 by the competitors. And those in their second year and had their own sales territory (with a salary of $25000 - $30,000) were offered $40,000 to $45,000 • To move up the management ranks: Since sprouts were fresh out of college, their career advancement to management positions was slow. However, other competitors recognised their management potential and Sprouts were offered faster career growth Reasonsfor employeesto leavearrowafterthesprouts’program Changesmade: Resultsof the changes: Deferred Compensation Program: A part of salary was given a commission rate and put to individual accounts, a percentage of which was given out every quarter and at the end of two years. This did not works as competitors would make up for the deferred compensation that employees would lose by leaving Arrow Non – Compete Agreement: Employees were made to sign an agreement that they would not leave to work for a competitor Arrow continued to lose Sprouts as non-compete contracts had no legal binding in some states, such as California
  11. 11. Pathways: The new program •Arrow Electronics is a bigger company with a sales force of 1,000 •As a result of consolidation, only 5 major players remain in the market •Arrow Electronics, with a turnover of 25%-30% each year requires to grow its pool of sales force by 300 every year •As there are only 5 players in the market, Arrow does not have many choices in hiring industry professionals •With Pathways, it looks to revive their college recruitment program to satiate their imperative requirement of a larger sales force •The objective of this recruitment program was also to bring new energy and professionalism to the sales force Thepondis gettingsmaller
  12. 12. questions What are the merits and demerits of introducing the pathways program?
  13. 13.  It is essential in order to counter the constantly reducing sales force pool  Arrow has acquired four of the top ten distributors and the size of company has increased which would need a uniform training programme  Although they had a sales force of 1000, their turnover was around 26 – 30%  To attain competitive advantage and become the benchmark in salesforce in the industry by creating a consistent talent pipeline  Since the recruits are fresh out of college, it is essential to train and bring energy and professionalism For × A rigorous training pattern is making them the most sought after sales people in the industry and hence being offered higher pay package and management ranks which in turn leads to attrition × Training was an additional cost to company × According to Kaufman, “it’s more reasonable to hire somebody from a competitor at $40,000 than to give somebody a 30% increase inside your own company.”[1985 figures] × The compensation set by competitors was very high ($40,000), so an increase in sales pool would require huge investment [1985 figure] × It led to clashes between General Managers and newly trained sales force due to stark difference in their ideologies which caused internal HR issues Against Possible solution
  14. 14. questions What is the way forward for Pathways?
  15. 15. Possible solution 1. Recruitment College on-campus recruitment Inter-industry recruitment to break-free from the clutter of the industry Scout for potential employees from within the industry Procedure for efficient recruitment : •Hiring profile •Application scrutiny •Interview •Psychological testing •Reference check •Physical examination •Job Offer 2. Training  Expand the scope of Pathways into a professional training program for employees in other ranks of the organisation. • Theoretical frameworks • Scenario based • Gamification • Voluntary quality circles  Sales 101 handbook  Recreational activities throughout the program for heightened bonding and relaxation in a stress induced environment Twotierintegratedprogram:
  16. 16. questions What should Arrow do to retain the talent?
  17. 17. Possible solution Differential Recruitment Process •Hire from Ivy League and non-Ivy League Colleges •Differential pay packages •Non-Ivy League graduates expected to stay for longer satisfied with pay and work  Staggered Training Module •Avoid excess investment in short span of time •Step-wise Training Program spread over first 3 years of FSR’s Careers •Structure Training programs on basis of performance Increase Awards and Recognition Programs over the course of Training Include Stock Units to employees Fringe benefits like the following should be offered : •Compensation •Medi-claim •Recreational centers •Campus/ hostels during training Loans with reduced interest rates should be offered: •Educational, Home and Car loans Sabbatical Leaves can be provided Restructure Recruitment,Trainingand Compensation
  18. 18. questions Can we restructure the sales force organization?
  19. 19.  Giving Area Sales Managers a more focussed approach towards retaining clients by means of regular interactions  This will reduce Arrow’s dependence on FSRs as the only touch points for Customer Relationship Management  This will also de-risk Arrow from potential loss of Clients when FSRs leave Possible solution
  20. 20. Thank You Icons from: TheNounProject

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