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Varun Jain 1301-431 Section-A Assignment – Session 15

Eureka Forbes Ltd. (EFL), a joint venture between Forbes Group and Electrolux formed in 1982, is the leading company in India in consumer durable products like vacuum cleaner and water purifier. Over the years, EFL has effectively utilized the direct selling approach by setting up the largest field sales force in Asia comprising of 5,000+ sales representatives called „Eurochamps‟ for its two main products, EuroClean vacuum cleaner and AquaGuard water purifier. The image of a Eurochamp, wearing a white shirt and a dark tie, with a demo kit in his bag, going from door to door, has been ingrained in the minds of Indian consumers permanently. This goes with the motto of the company to consider the customer as “A Friend for Life”. By late 2003, however, the company was faced with multiple issues like declining sales volumes, falling sales closure rates and high sales rep attrition. The company also witnessed a declining performance of the sales force across many of EFL‟s territories. There were instances of missing sales and other such irregularities by the Eurochamps. To counter this, Mr. Suresh Goklaney, the CEO of the company, came up with a new sales representative evaluation and compensation system called “Bettering the Best”. The new system called for rewarding sales reps for process adherence and sales both, in contrast to the earlier system based on sales only. The key decision facing the EFL management team is to assess the effectiveness of the new system and decide whether to rollout the system nationwide and across all product lines. The company will also have to determine the manner of rollout of the new system. The Current System The task given to the Euro Champs were result oriented i.e. sales was the prime and sole objective. There was no importance as to how they could do the same. The process was neglected and the only the result mattered more. Even the compensation of the eurochamps were based on the same philosophy. Some other observations regarding the existing system are:

Transparency in the compensation system. Recognition of high achievers Limitations 1. The compensation was linked to the points scored by the salesperson. This would also improve the chances . 2. but they ignored the art of responding to the customer objections. Due to this it may be possible that an efficient eurochamp may not be recruited due to poor judgement skills of the recruiter.    The commissions were directly related to the sales. Less attention given to build customer relationships. The idea behind the new system was to reduce the sales pressure on the sales people and to change their focus to improving the process of selling. Too much emphasis on target sales have led to psychological pressure on the sales reps.  Training received was not apt and was certainly inadequate. how it was achieved is not important.500. There is no limit to the commission one can earn. Highly result oriented system. If there is no sale happening then. giving a demo. as it is dependent on the number of sales. like making a call. 4. The scheme also included daily recognition of the Eurochamp couple with a maximum monthly reward of Rs. Direct contact with customer is possible as there is no middle line of distribution. It is mainly based on the subjective judgements of the people. The job is a very high pressure job. Achieving maximum sales was the sole objective. eurochamps prefer to exit the company swiftly. The conversion rate was The New compensation system.“Bettering the Best”: The New compensation system was designed to give award points to the sales person for successful completion of various stages of selling process. where commissions were directly impacted by the number of sales done. 5. The selection of the eurochamps was not based on academic criteria. Strengths of the current system 1. 2. 3. closing the sale etc. They focused how to increase the customers and how to talk to so that they could give a demo at the potential customers home.

Hence. Pros 1. Possible high compensation with low sale for process points. improving sales productivity and reducing the growing attrition rate amongst the Eurochamps. 3. which in turn. will lead to increased sales. This will provide greater incentive to the sales people to follow the processes. Improvement in sales productivity per person. Daily recognition will lead to greater motivation. 4. Improve sales process in terms of customer experience. I propose a few modifications / additions to the scheme as follows: 1) Increase the financial rewards linked to various sales processes. This way a Euro champ who has 1200 points out of two sales(600 points each) and the Eurochamp with 1200 points with only 1 sale would be compensated the same . . Lower attrition rate. This would bring about discrepancies in the recognition achieved for a sale. Possibility of overstating of efforts. Another point against the scheme is that while we can measure the number of sales calls or demos done. Time spent in daily filing of reports. we cannot measure the quality of salesperson interaction with the customer. Not possible to measure qualitative aspect of selling. Cons 1. This is a way to equalize the compensation process even when the sale is not made. A nationwide implementation of the scheme would require complete commitment from regional sales heads and their team. Recommendations I recommend that new scheme should be implemented at EFL. Also. It will also be helpful in reducing attrition rate at EFL due to increased sales productivity leading to higher compensation per salesperson. thus. 2. However. Improved customer acquisition and retention. 3. The scheme will be helpful in increasing the overall quality of customer interaction. it was felt that the rewards were not commensurate with the amount of effort put in by the sales rep for the same. the system entailed some pitfalls as well in the form of additional workload on sales people and the leads to record and monitor the daily activities of sales. 2.of sale as the overall customer handling improves. differentiation in rewards for a sale should be made. Reduction of sales pressure.

2) Find means to measure the qualitative aspect of customer interaction. While there may be some short-run effect on the sales numbers due to the focus change. the sales productivity and numbers will increase. but in the long-run. 4) To reduce time spent on recording. promote self-reporting by salespersons with penalties for incidents of incorrect reporting. 3) Incentivize middle levels of EFL‟s sales hierarchy for retaining sales people and achieving targets. . 5) Use the new scheme in the recruitment advertisement to attract potential candidates. The current scheme is only focused towards Eurochamps. This can be achieved by periodic customer surveys. The company should monitor the results of the new scheme on a periodic basis.