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Case 2

Sales Force Training at


Arrow
Electronics
Marketing 458- Sales Management
Mike Atwood
Carson Young
Brittany Carmichael
Tyler Torbett
Nick Meyer

Outline
Background
Business

Case Issues

Analysis
Business
Solution

Problems

Company History
Radio-equipment retailer in 1935.
In the 1950s and 1960s, Arrow began
selling electronic components.
1977- main distributor in the United States
Industry growth in the 1970s
Growth from regional to national company
1993- Arrow had the highest sales in North
America.

Business Case Issues


Customers
Market

Offerings
Competition
Sales Force Structure
Sales Force Compensation
Sales Strategy
Other Sales Force Issues

Customers
Arrow

ordered products from


suppliers.
Sell the components to Original
Equipment Manufacturers (OEMs)
Smaller companies
Start-up companies

Market Offerings
Extensive

relationships with
customers
Handled the suppliers goods.
Access to thousands of products from
hundreds of suppliers

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

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

Branch Office Structure


Branch General
Managers
(45)
Area Sales
Manager
(1-3)

Inside Sales
Manager

Marketing
Manager

Field Sales Reps


(6-8)

Sales & Marketing Reps


(6-12)

Product Managers
(3-6)

Admin
Manager

Admin
Personnel

Sales Force Job Description


General

Manager (GM)
Field Sales Representatives (FSRs)
Sales and Marketing Representatives
(SMRs)
Product Managers (PMs)

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
FSRs customers)

$60,000-$80,000

Sales & Marketing


Representatives
(SMR)

Paid entirely on
commission, earned
4-5% 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

Sales Strategy
Relationship

based selling
- Sales strongly tied to individual
FSRs relationship with suppliers
-Sales Force of 300 people with no
formal sales training
-Sales Force used a lot of T & E

Typical Sales Force


Gender:

Men and Women


Age: 30s and 40s
Personality: high energy, highly
aggressive, strong monetary
motivation
Education: high school graduate
Most did not have college degrees

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 Turnover Rate
-lack of company loyalty

Sprout Background
Arrow

needed more salespeople, but


wanted to change the make-up of sales
force
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

Objectives of Sprout
Training
Upgrade

professionalism of sales
force by hiring kids and molding
them into modern salespeople
Teach classic sales skills
Teach how to manage territory, cold
calss, overcoming objections, and
how to close sale

First Steps
Train

Arrow managers how to


interview college students
Taught managers to look for self
starters, goal-orientated, leadership
skills, and people skills
Conducted mock interviews with
students

Sprouts Training
Went

to company headquarters for


weeklong orientation
Sprouts sent to warehouses for two
weeks
Six months of on the job training
Returned to headquarters for a week
of sales skills training

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

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

Class Discussion and


Questions
Are

there any questions so far?

Business Problems
Turnover

Rate
Arrow/Industry?
Initial Sprout Training
Existing/New Salesforce
Modified Sprout Training
Competitors move in on Sprouts

Solutions
Company

Loyalty

Regional
National
Compensation
Training

Class Discussion and


Questions
?