Case 2 Sales Force Training at Arrow Electronics

Case 2
Sales Force Training at
Arrow Electronics
Marketing 458- Sales Management
Mike Atwood
Carson Young
Brittany Carmichael
Tyler Torbett
Nick Meyer
 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
 Market Offerings
 Competition
 Sales Force Structure
 Sales Force Compensation
 Sales Strategy
 Other Sales Force Issues
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
Around 350 competitors within this Highgrowth Industry
 Many sales people left Arrow to work with
-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
 Sales Force divided into geographic divisions
-Each of which had a Branch Sales Office
Branch Office Structure
Branch General
Area Sales
Inside Sales
Field Sales Reps
Sales & Marketing Reps
Product Managers
Sales Force Job Description
General Manager (GM)
 Field Sales Representatives (FSRs)
 Sales and Marketing Representatives
 Product Managers (PMs)
Branch Office Compensation
Branch Office
Average yearly
General Managers
35% of salary is bonus
based on branch
performance (measured
by operating profit)
Field Sales
$300/week draw against
a commission (8% of
gross profit dollars
shipped to the FSR’s
Sales & Marketing
Paid entirely on
commission, earned 45% of gross margin
dollars generated
Product Managers
25% of compensation
based on sales & gross
margin of product lines
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
 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
Objectives of Sprout Training
Upgrade professionalism of sales force by
hiring kids and molding them into modern
 Teach classic sales skills
 Teach how to manage territory, cold calss,
overcoming objections, and how to close
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
 13 weeks of on the job training
 3 weeks of training before entering field
 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
Company Loyalty
 Regional
 National
 Compensation
 Training
Class Discussion and Questions

similar documents