Case 2Case 2Sales Force Training at Sales Force Training at

Arrow ElectronicsArrow ElectronicsMarketing 458- Sales ManagementMarketing 458- Sales Management

Mike AtwoodMike Atwood

Carson YoungCarson Young

Brittany CarmichaelBrittany Carmichael

Tyler TorbettTyler Torbett

Nick MeyerNick Meyer

OutlineOutline

BackgroundBackground Business Case IssuesBusiness Case Issues AnalysisAnalysis Business ProblemsBusiness Problems SolutionSolution

Company HistoryCompany History

Radio-equipment retailer in 1935.Radio-equipment retailer in 1935. In the 1950’s and 1960’s, Arrow began In the 1950’s and 1960’s, Arrow began

selling electronic components.selling electronic components. 1977- main distributor in the United States1977- main distributor in the United States Industry growth in the 1970’sIndustry growth in the 1970’s Growth from regional to national companyGrowth from regional to national company 1993- Arrow had the highest sales in North 1993- Arrow had the highest sales in North

America.America.

Business Case IssuesBusiness Case Issues

CustomersCustomers Market OfferingsMarket Offerings CompetitionCompetition Sales Force StructureSales Force Structure Sales Force CompensationSales Force Compensation Sales StrategySales Strategy Other Sales Force IssuesOther Sales Force Issues

CustomersCustomers

Arrow ordered products from Arrow ordered products from suppliers.suppliers.

Sell the components to Original Sell the components to Original Equipment Manufacturers (OEMs)Equipment Manufacturers (OEMs)

Smaller companies Smaller companies Start-up companiesStart-up companies

Market OfferingsMarket Offerings

Extensive relationships with Extensive relationships with customerscustomers

Handled the supplier’s goods.Handled the supplier’s goods. Access to thousands of products from Access to thousands of products from

hundreds of suppliershundreds of suppliers

CompetitionCompetition

Around 350 competitors within this Around 350 competitors within this High-growth IndustryHigh-growth Industry

Many sales people left Arrow to work Many sales people left Arrow to work with competitorswith competitors

-Departing Arrow sales people took -Departing Arrow sales people took their clients with themtheir clients with them

Mainly competed with 20 large Mainly competed with 20 large regional or national companiesregional or national companies

Sales Force StructureSales Force Structure

Sales divided into 4 distinct operating Sales divided into 4 distinct operating groups based on product type:groups based on product type:

1) Commercial Semiconductors1) Commercial Semiconductors2) Military and aerospace 2) Military and aerospace

semiconductorssemiconductors3) Passive and connector products3) Passive and connector products4) Computer systems, peripherals, and 4) Computer systems, peripherals, and

softwaresoftware Sales Force divided into geographic divisionsSales Force divided into geographic divisions

-Each of which had a Branch Sales Office-Each of which had a Branch Sales Office

Branch Office StructureBranch Office Structure

Branch General Managers

(45)

Area Sales Manager

(1-3)

Inside Sales Manager

Marketing Manager

Admin Manager

Admin Personnel

Field Sales Reps (6-8)

Sales & Marketing Reps (6-12)

Product Managers (3-6)

Sales Force Job DescriptionSales Force Job Description

General Manager (GM)General Manager (GM) Field Sales Representatives (FSRs)Field Sales Representatives (FSRs) Sales and Marketing Representatives Sales and Marketing Representatives

(SMRs)(SMRs) Product Managers (PMs)Product Managers (PMs)

Branch Office CompensationBranch Office CompensationBranch Office Branch Office

EmployeeEmployeeCompensationCompensation Average yearly Average yearly

incomeincome

General ManagersGeneral Managers

(GM)(GM)35% of salary is 35% of salary is bonus based on bonus based on

branch performance branch performance (measured by (measured by

operating profit)operating profit)

$60,000-$120,000$60,000-$120,000

Field Sales Field Sales RepresentativesRepresentatives

(FSR)(FSR)

$300/week draw $300/week draw against a commission against a commission

(8% of gross profit (8% of gross profit dollars shipped to the dollars shipped to the

FSR’s customers)FSR’s customers)

$60,000-$80,000$60,000-$80,000

Sales & Marketing Sales & Marketing RepresentativesRepresentatives

(SMR)(SMR)

Paid entirely on Paid entirely on commission, earned commission, earned

4-5% of gross margin 4-5% of gross margin dollars generateddollars generated

$40,000-$50,000$40,000-$50,000

Product ManagersProduct Managers

(PM)(PM)25% of compensation 25% of compensation

based on sales & based on sales & gross margin of gross margin of

product linesproduct lines

$35,000-$75,000$35,000-$75,000

Sales StrategySales Strategy

Relationship based sellingRelationship based selling

- Sales strongly tied to individual - Sales strongly tied to individual FSR’s relationship with suppliersFSR’s relationship with suppliers

-Sales Force of 300 people with no -Sales Force of 300 people with no formal sales trainingformal sales training

-Sales Force used a lot of “T & E”-Sales Force used a lot of “T & E”

Typical Sales ForceTypical Sales Force

Gender: Men and WomenGender: Men and Women Age: 30’s and 40’sAge: 30’s and 40’s Personality: high energy, highly Personality: high energy, highly

aggressive, strong monetary aggressive, strong monetary motivationmotivation

Education: high school graduateEducation: high school graduate– Most did not have college degreesMost did not have college degrees

Problems with Sales Problems with Sales StrategyStrategy

Sales Force challenging to retrainSales Force challenging to retrain Sales Force “wine & dine” customers Sales Force “wine & dine” customers

instead of solution sellinginstead of solution selling

-creates a lack of customer loyalty-creates a lack of customer loyalty High Turnover RateHigh Turnover Rate

-lack of company loyalty-lack of company loyalty

Sprout BackgroundSprout Background

Arrow needed more salespeople, but Arrow needed more salespeople, but wanted to change the make-up of wanted to change the make-up of sales forcesales force

Decided to hire kids fresh out of Decided to hire kids fresh out of collegecollege

The plan was to go on college The plan was to go on college campuses, interview kids, choose the campuses, interview kids, choose the best ones, make offer, hire, train, and best ones, make offer, hire, train, and send to the fieldsend to the field

Objectives of Sprout Objectives of Sprout TrainingTraining

Upgrade professionalism of sales Upgrade professionalism of sales force by hiring kids and molding force by hiring kids and molding them into modern salespeoplethem into modern salespeople

Teach classic sales skillsTeach classic sales skills Teach how to manage territory, cold Teach how to manage territory, cold

calss, overcoming objections, and calss, overcoming objections, and how to close salehow to close sale

First StepsFirst Steps

Train Arrow managers how to Train Arrow managers how to interview college studentsinterview college students

Taught managers to look for self Taught managers to look for self starters, goal-orientated, leadership starters, goal-orientated, leadership skills, and people skillsskills, and people skills

Conducted mock interviews with Conducted mock interviews with students students

Sprout’s TrainingSprout’s Training

Went to company headquarters for Went to company headquarters for weeklong orientationweeklong orientation

Sprout’s sent to warehouses for two Sprout’s sent to warehouses for two weeksweeks

Six months of on the job trainingSix months of on the job training Returned to headquarters for a week Returned to headquarters for a week

of sales skills trainingof sales skills training

Formal Training ProgramFormal Training Program

Needed more formal training programNeeded more formal training program Rented training facility where sprouts Rented training facility where sprouts

would live for 13 weeks of classroom would live for 13 weeks of classroom learninglearning

13 weeks of on the job training13 weeks of on the job training 3 weeks of training before entering 3 weeks of training before entering

field permanentlyfield permanently GMs noticed huge difference in sproutsGMs noticed huge difference in sprouts

Sprouts CompensationSprouts Compensation

New Recruits - $18,500New Recruits - $18,500 First year “Sprouts” - $24,000First year “Sprouts” - $24,000 Second year “Sprouts” - $27,000Second year “Sprouts” - $27,000

Competitors - 30 to 60 percent moreCompetitors - 30 to 60 percent more

- First year “Sprouts” - $30,000- First year “Sprouts” - $30,000

- Second year “Sprouts” - $40,000 to - Second year “Sprouts” - $40,000 to 45,00045,000

Class Discussion and Class Discussion and QuestionsQuestions

Are there any questions so far?Are there any questions so far?

Business ProblemsBusiness Problems

Turnover RateTurnover Rate Arrow/Industry?Arrow/Industry? Initial Sprout Training Initial Sprout Training Existing/New SalesforceExisting/New Salesforce Modified Sprout TrainingModified Sprout Training Competitors move in on SproutsCompetitors move in on Sprouts

SolutionsSolutions

Company LoyaltyCompany Loyalty Regional Regional NationalNational CompensationCompensation TrainingTraining

Class Discussion and Class Discussion and QuestionsQuestions

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