Sales Force Training at Arrow Electronics Presented By:- Sandeep Gunjan Priyanka Brar Rohin Hooda Nitin rathi
Table Index1. Background• About company• Customers• Market Offerings• Competition• Sales Force Structure• Sales Force Compensation• Sales Strategy2. Sprout Hiring3. Analysis
About Company• Arrow electronic was a broad line distributor of semiconductor & electronics parts (as supplier) to deal directly with OEM(Original Equip. Manufacturer)• Initially in 1935 it was a Radio-equipment retailer• In the 1950’s and 1960’s, Arrow began selling electronic components.• In 1968 emerged as major distributor electronic components.• 1977- fourth largest distributor in the United States. Grew from regional to national company• 1993- Arrow had the highest sales in North America with $2.5 billion• Under Stephen Kaufman leadership in1992 Arrow became no.1 among electronic distributors.• Arrow has out numbered various competitors such as Pioneer-standard, Wyle, Marshall Industries.• Arrow sales continually growing. Year 1998 1997 1996 1995 1994 Sales $8,344,659 $7,763,945 $ 6,534,577 $ 5,919,420 $ 4,649,234
Customers• Arrow ordered electronic products from(Intel, Motorola, Texas instrument) suppliers and Sell (IBM,HP) the components to Original Equipment Manufacturers (OEMs). Who used them in assembly of computer and other electronics.• Smaller companies/Start-up companies:- For them it was convenience access to thousand of componentsMarket offering• Extensive relationships with customers (OEMs & Buyers)• Handled the supplier’s goods. (this allowed suppliers to reduce their own sales force expense and also they did not need a large inventory for their product)• Access to thousands of products from hundreds of suppliers
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• 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
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 35% of salary is bonus based on $60,000-$120,000 (GM) branch performance (measured by operating profit) Field Sales Representatives $300/week draw against a $60,000-$80,000 (FSR) commission (8% of gross profit dollars shipped to the FSR’s customers) Sales & Marketing Representatives Paid entirely on commission, $40,000-$50,000 (SMR) earned 4-5% of gross margin dollars generated Product Managers 25% of compensation based on $35,000-$75,000 (PM) sales & gross margin of product lines
Sales Strategy• Relationship based selling - Sales strongly tied to individual FSR’s relationshaip 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
Problem with 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• There was a need to change the work culture in the company so kaufman launched “the first class hiring from college”
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 fieldObjective 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 step of sprout Hiring• 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 senior students . 2nd step - sprout 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 of Xerox 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
Business Problems• Turnover Rate• Arrow/Industry?• Initial Sprout Training• Existing/New Sales force.• Modified Sprout Training• Competitors move in on Sprouts
Analysis CEO: Steve Kaufman- respected and charismatic. His role is toexecute the company’s strategy. His responsibility is to guide thestrategy of the company, and to ensure that it is carried outproperly. His major concern is getting the right people in the rightslots and motivating them.But in sprout program – he did not do budget reviews; capitalexpenditure reviews, resource allocation, thinking of staffs and oldemployee.Not clearly informed : existing sales force was not clearly informedabout new recruited sales force. that have been working at Arrowfor 10 to 15 years; that originated a system of inequity thatbrought in nothing but jealousy and unhealthy relationships amongthe sales people.
Analysis• Loyalty: came from pay (promises of money and promotions), so this is CEO’s greatest mistake as he prepared his salespeople so well that they became incredibly marketable and easy to jump into different jobs in different companies by being simply offered higher pays. So the turnover at Arrow is extremely high- a sales rep works for the company over a four year span, and then moves on.• In summary, this case study is all about money-oriented, not people-oriented as the sales force did not even care to grow in and with the company, all they really wanted was money and movement.
Analysis• In summary, this case study is all about money-oriented, not people-oriented as the sales force did not even care to grow in and with the company, all they really wanted was money and movement.
Learning• work culture• Proper planning• Financial aspect matters a lot.• Synchronization between all the levels of management.• Proper traning.