Salesforce Integration at

FedEx
Group-10
Siddharth | Preeti | Ashish Khatri | Shubhank Verma | Yukta Yadav | Pratik Jain | Ishwar Arjun Lohar
 OVERVIEW

Purchase controlling stake International expansion done

FedEx Founder - Fred Smith in Arkansas Aviation Sales in by acquisition of regional cargo
1971 companies in 1980.

Businesses shifting to lower Competitors - UPS and

Acquired RPS
cost ground-delivery Airborne Express

Project ARISE which

Current concern is Project
FedEx thinking of included marketing and
ARISE and redesign of
integrating ground and sales unites and facing IT
compensation plan of unit
express sales team units of ground and express
force
to be combined
 Express Plan
• Sales goals - Quarterly basis
• Bonus - Min 96% of targeted Sales
• Account executives also competed for sales awards
• Major compensation - 70% salary + 30% (incentives
and bonuses)
Ground Plan
• Small Customer base
• Package yield was a key component of a ground
account executive’s sales objectives in addition to
total package revenues
• Activity targets - 4 lunches & 1 entertainment
• Fixed salary- 82%
• Incentive- min 50% of the sales target
Express vs Ground
Profitability in Express and ground segment:

• The market share of FedEx ground was 11% and

FedEx express was 89%
• Operating margin in ground segment was 11%
while in express segment was 3%
• The share of ground in revenue was 11% while in
net income was 21%
• The RPS or FedEx gr0und operation were more
efficient with less cost
• FedEx ground has contractual drivers and
vehicles which had less maintenance cost than
the FedEx express operations
• Also in RPS drivers were paid with per mile
delivery with per piece delivery incentives
• Many operations in RPS or FedEx ground were
automated making it more efficient.
 Evolution of sales culture over time:
Before project ARISE
Express sales force culture:
• The company had a sales force of 2200 organized into
units
• Hierarchical segmentation of customers based on the
revenue generated In a year
• Compensation comprised of 70% of fixed income and
30% of incentives and bonuses
• Sales goals were determined quarterly
• To achieve 96% of revenue to qualify for the incentives
and bonuses
• Adjustments can be made on the sales target based on
the macro environment factors
• Sales awards were given in addition to the cash
incentives like president’s club membership
Ground sales force culture:
• Around 800 sales executive
• Follow the hierarchical configuration of sales team
• Uses of social settings and personal relationship to
encourage customers to use RPS
• Target of social meeting were given to the executives
• Compensation comprised of around 82% from fixed
salary and rest by the variable pay
• To achieve minimum of 50% of total sales target to
qualify for the incentives
• Very rare adjustments to the revenue goals
 After project ARISE

• Compensation comprised of 80% of fixed and 20% of variable pay Revenue goals BPI factor
and to shift to 70% and 30% respectively in due time
• Goal setting is determined every 6 months 90-100% 1.0
• Revenue goals to be set for 3 segments standard express, 100-110% 1.2
international and ground
• Base bonus to be given based on the sum of revenue from all 3 >110% 1.5
segments
Note: The results of BPI factor was not as intended so the BPI
• Adjustments in revenue goals to be made only in extreme
factors were changed to make the objective of selling across
circumstances all 3 segments to met.
• The variable and bonus will be comprised of 85% revenue growth
and 15% of average revenue per package(yield)
• Eligible for bonus only in case of minimum 80% of sales revenue is Segment Changes Changes
achieved. in middle in higher
• Addition to this BPI factor was also calculated based on the BPI BPI
individual sales target for the different segments
• Average BPI was calculated for the different segments and then Domestic From 1.2 to From 1.5 to
multiplier was calculated express 1.4 1.8
Internationa From 1.2 to From 1.5 to
l 1.5 2.0
Ground From 1.2 to From 1.5 to
1.1 1.3
Incentive and bonus plan in 2002

• To encourage sales force to sell across all 3

segments
• Bonus were given to the sales executive
for achieving minimum 90% of revenue
target.
• Bonus from the right-hand table if sales
executive achieve 95% of sales target in all
three segment
• Bonus from the left-hand table if sales
executive achieve less than 95% of sales
target in any of 3 segments.
 Discuss about the desired Sales
Process.
Fixed salary
FedEx (80%)
Revenue
Compensation
focussed (85%)
Incentives and
On ground bonus (20%)
Express
(RPS)
Bonus (15%)

Combining the two sales force: Bonus to

motivate the
• Giving adequate trainings to both executives to • A threshold of 95% sales
move out of
Example: Express staff trained how to build one on one personal target for all
their comfort
relationships (and compete with UPS) segments components : express,
On ground staff trained how to leverage express delivery to international and ground
reduce inventory costs and compensate that by shipping costs, • If achieved , gives higher
optimise the client’s supply chain bonus across all
segments
• Designing the compensation plans such that there is equal
motivation for all three segments: express, international and
ground
 What are the main objectives that Beyl and his team should consider in
setting the new compensation plan for the integrated sales force?
Setting same bonus scheme for
both Express and Ground so as
to motivate account executives There should be maximum cap
for concentrating on both the on the bonus when he
services achieves 175% target

Incentivize the employee at

the higher position in line with
the profit they earn for the
company

At the same time if any

account executive is achieving
less than 100% then with each
percentage decrease, decrease
in bonus should be more
To decrease the loss in bonus if
In the current plan, the
executives fail to reach the
increase in incentive is
target revenue even by 1%
constant with extra 1%
increase in target; company
needs to increase the bonus
more with each per cent
increase in target
 Devise a compensation plan that
meets these objectives.

10% was obtained by taking the average of the percentage increase in the existing plan
 What criteria/metrics would you suggest Beyl use
to evaluate the effectiveness of the
compensation plan?

Monthly Asking account Increase in

Calculating dip
feedbacks needs executives margin should
in target in all Penalising the
to be given to regularly about also be one of
the services executives if
account the ease of the criteria
(Ground, he/she is not
executives to keep understanding (Margin in
Express, adhering to the
them on track to the new express = 3% ,
International) new scheme
meet the stated compensation Margin in
for individuals
objectives plan ground =11%)
How do you think the Ground/Express Salespeople
would react to your plan?

Account executives
will try to cross sell
Individual will be
more when compared
penalized on not Easy to understand
to the earlier plan
achieving 95% target and less confusion
because now their
but the impact will
incentives are linked
not be significant
with cross selling

A B C
Thank You