Case 2 Sales Force Training at Arrow Electronics

Report
Case 2
Sales Force Training at
Arrow Electronics
Marketing 458- Sales Management
Mike Atwood
Carson Young
Brittany Carmichael
Tyler Torbett
Nick Meyer
Outline
Background
 Business Case Issues
 Analysis
 Business Problems
 Solution

Company History
Radio-equipment retailer in 1935.
 In the 1950’s and 1960’s, Arrow began
selling electronic components.
 1977- main distributor in the United States
 Industry growth in the 1970’s
 Growth from regional to national company
 1993- Arrow had the highest sales in
North America.

Business Case Issues
Customers
 Market Offerings
 Competition
 Sales Force Structure
 Sales Force Compensation
 Sales Strategy
 Other Sales Force Issues

Customers
Arrow ordered products from suppliers.
 Sell the components to Original Equipment
Manufacturers (OEMs)
 Smaller companies
 Start-up companies

Market Offerings
Extensive relationships with customers
 Handled the supplier’s goods.
 Access to thousands of products from
hundreds of suppliers

Competition
Around 350 competitors within this Highgrowth 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 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
Branch Office Structure
Branch General
Managers
(45)
Area Sales
Manager
(1-3)
Inside Sales
Manager
Marketing
Manager
Field Sales Reps
(6-8)
Sales & Marketing Reps
(6-12)
Product Managers
(3-6)
Admin
Manager
Admin
Personnel
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
(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
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”
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
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 Turnover Rate
-lack of company loyalty

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
field

Objectives 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 Steps
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 students

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

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

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
Class Discussion and Questions

Are there any questions so far?
Business Problems
Turnover Rate
 Arrow/Industry?
 Initial Sprout Training
 Existing/New Salesforce
 Modified Sprout Training
 Competitors move in on Sprouts

Solutions
Company Loyalty
 Regional
 National
 Compensation
 Training

Class Discussion and Questions

?

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