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Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
Arrow Electronics Sales Force Analysis
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Arrow Electronics Sales Force Analysis

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  • 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

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