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