1. Case 2 Sales Force Training at Arrow Electronics
Marketing 458- Sales Management
Mike Atwood
Carson Young
Brittany Carmichael
Tyler Torbett
Nick Meyer

2. Outline Background Business Case Issues Analysis Business Problems
Solution

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

4. Business Case Issues Customers Market Offerings Competition
Sales Force Structure
Sales Force Compensation
Sales Strategy
Other Sales Force Issues

5. Customers Arrow ordered products from suppliers.
Sell the components to Original Equipment Manufacturers (OEMs)
Smaller companies
Start-up companies

6. Market Offerings Extensive relationships with customers
Handled the supplier’s goods.
Access to thousands of products from hundreds of suppliers

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

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

9. Branch Office Structure

10. Sales Force Job Description
General Manager (GM)
Field Sales Representatives (FSRs)
Sales and Marketing Representatives (SMRs)
Product Managers (PMs)

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 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

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”

13. Typical Sales Force Gender: Men and Women Age: 30’s and 40’s
Personality: high energy, highly aggressive, strong monetary motivation
Education: high school graduate
Most did not have college degrees

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 Turnover Rate
-lack of company loyalty

15. 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

16. 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

17. 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

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

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

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

21. Class Discussion and Questions
Are there any questions so far?

22. Business Problems Turnover Rate Arrow/Industry?
Initial Sprout Training
Existing/New Salesforce
Modified Sprout Training
Competitors move in on Sprouts

23. Solutions
Company Loyalty
Regional
National
Compensation
Training

24. Class Discussion and Questions?