A Case study on

Eureka Forbes Ltd :

Managing the Selling Effort

Submitted By
ANIRBAN KAR
Roll no : EPGP – 12A – 022
Marketing Management-1
Question need to be answered from the Case
• Should Goklaney roll out the new 'Bettering the Best' program through entire sales
organization? What changes, if any would you like to recommend to the current plan?

• Define the role of the Euro Champ? What sales tasks Euro Champs undertake?

• What are your views on the current approach to compensation? Does the new program change
this approach? How?

Company Overview
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 5000+ sales representatives called EoroChamp, for its two main
products EuroClean vacuum cleaner and AquaGuard water purifier.
The image of an EoroChamp, 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 representative 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 EoroChamps.
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 representatives for process adherence and sales both, in contrast to the earlier system based on
sales.

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 EoroChamps were based on the same philosophy. Some
other observations regarding the existing system are:
• The selection of the EoroChamps was not based on academic criteria. It is mainly based on the
subjective judgements of the people. Due to this it may be possible that an efficient EoroChamps
may not be recruited due to poor judgement skills of the recruiter.
• Training received was not apt and was certainly inadequate. They focused how to increase the
customers and how to talk to so that they could give a demo at the potential customers home, but
they ignored the art of responding to the customer objections.
• The commissions were directly related to the sales. If there is no sale happening then,
EoroChamps prefer to exit the company swiftly.
• Less attention given to build customer relationships.
• The job is a very high-pressure job. Too much emphasis on target sales have led to psychological
pressure on the sales reps.

Strengths of the current system

1. Highly result oriented system, where commissions directly impacted by the number of sales.
2. Direct contact with customer is possible as there is no middle line of distribution.
3. There is no limit to the commission one can earn, as it is dependent on the number of sales.
4. Transparency in the compensation system.
5. Recognition of high achievers Limitations
6. Achieving maximum sales was the sole objective, how it was achieved is not important.

The Challenges with the current system and possible causes

The Challenges Possible Causes
High end “Concept” products, generally not Improper training from seasoned reps and team
well known to the consumers leads
No option to retail as it required extensive This can be due to stringent targets/lack of time
presentations, demos, customer handling to senior reps
Goklaney found following disconnects: Sales Senior reps have no incentive to train new reps
guys missing easy sales, missing simple cues, who would encroach on their targets
unclean & damaged demo equipment, inability subsequently
to handle customer objections

Territory conflicts between seniors and juniors Saturation in territories, competition amongst
employees
Less attention by EuroChamps on relationship Focus only on targets/sales
building
The High Attrition rates

Turnover data Jan’02 – Dec’03 shows a attrition rate of almost 82%, which is considered to be
astonishingly high with respect to industry standards

Periods Available Reps Resigned Attrition%

Initial recruited 180 0
0-6 months 60 120 66.7%
7-12 months 37 23 12.8%
13-24 months 32 5 2.8%

Possible causes
1. Data is inadequate on how much of it is due to natural sieving process
2. ELF staff a hot target for companies looking for “sales talent” – owing to their formidable
reputation in direct sales
3. Due to inadequate support from senior reps
4. Saturated territories, high targets like minimum 40 sales to go from probation to confirmed
5. Almost 12hrs rigorous duty hours.

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, like making a call, giving a demo, closing the sale etc.
The compensation was linked to the points scored by the salesperson. The scheme also included daily
recognition of the EoroChamps couple with a maximum monthly reward of Rs.500.

Table: Bettering the Best: EFL’s New Compensation Plan, Points Allocated, January 2004

Criteria Points Criteria Daily Target

Active Door Knock 5 per door knock 30

Appointment for the Day 10 per appointment 5

Gift-a-Smile (GAS) 30 per call (if achieved) 1

per service request /
Service Request 10 2
complaint logged
Demos 100 per demo 3
Sale: Standard 300 per sale 1
Sale: High end products 600 per sale
Reference 50 per reference 1
Friend-Get-a-Friend (FGF) 3,000 for interview
Meetings 200 attend all meetings 1
Commercial Appointment
50 per appointment 1
(w/ a business entity)
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. This would also improve the chance of sale as the overall
customer handling improves, thus, improving sales productivity and reducing the growing attrition rate
amongst the EoroChamps.

However, 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. Also, it was felt that the rewards were
not commensurate with the amount of effort put in by the sales rep for the same.

Another point against the scheme is that while we can measure the number of sales calls or demos
done, we cannot measure the quality of salesperson interaction with the customer.

Pros Cons
1. Reduction of sales pressure. Lower 1. Time spent in daily filing of reports. 2-3
attrition rate. hrs of extra filling the form job.
2. Improve sales process in terms of 2. Possibility of overstating of efforts.
customer experience.
3. Improved customer acquisition and 3. Possible high compensation with low sale
retention. for process points.
4. Improvement in sales productivity per
person. Daily recognition will lead to 4. Not possible to measure qualitative
greater motivation. aspect of selling.
5. Better training system with proper 5. Resistance to computer training
support from seniors.

Recommendations
I recommend that new scheme should be implemented at EFL. The scheme will be helpful in
increasing the overall quality of customer interaction, which in turn, will lead to increased sales. It
will also be helpful in reducing attrition rate at EFL due to increased sales productivity leading to
higher compensation per salesperson. A nationwide implementation of the scheme would require
complete commitment from regional sales heads and their team.

I propose a few modifications / additions to the scheme as follows:

1) Increase the financial rewards linked to various sales processes. This will provide greater
incentive to the sales people to follow the processes. This is a way to equalize the compensation
process even when the sale is not made. This way a EuroChamps who has 1200 points out of two
sales(600 points each) and the EoroChamps with 1200 points with only 1 sale would be
compensated the same . This would bring about discrepancies in the recognition achieved for a sale.
Hence, differentiation in rewards for a sale should be made.
2) Find means to measure the qualitative aspect of customer interaction. This can be achieved by
periodic customer surveys.
3) Incentivize middle levels of EFL’s sales hierarchy for retaining sales people and achieving
targets. The current scheme is only focused towards EoroChamps.

4) To reduce time spent on recording, promote self-reporting by salespersons with penalties for
incidents of incorrect reporting.

5) Use the new scheme in the recruitment advertisement to attract potential candidates.

6) Ratios like call conversion should be analysed territory-wise and weights should be adjusted
accordingly.

7) High chances were there that these points would be inflated, therefore a strong code of conduct
should be in place to avoid malpractices.

8) A proper feedback mechanism for seasonal reps and team leads should be there to ensure the quality
of training for EuroChamps.

9) Maintenance of customer database to be included in the new system:

- It would help EFL maintain relations with customers even after the reps leave EFL
- It would help understand the potential and other demographics in each territory.

The company should monitor the results of the new scheme on a periodic basis. While there may be
some short-run effect on the sales numbers due to the focus change, but in the long-run, the sales
productivity and numbers hopefully will increase.