Case 1 Sales Force Integration at FedEx Corporation:A Case Presentation Example For Marketing 458 – Sales Management Team Members: Doug Vorhies Jimmy Buffett “Mac” MacNally The Coral Reefers …
Outline • Situation Analysis • Assumptions and Missing Information • Problem Definition • Analysis of Alternatives • Recommendations
Situation Analysis • Recent acquisitions of freight firms has lead to multiple FedEx Salespeople calling on the same account. • Need for unified approach to customers • Project ARISE
S.A. - Customers • Large Businesses (GT $40,000/yr) • Contractual – lower price to customer. • Small Businesses ($6,000-40,000 rev.) • Try for contracts – lower price to customer.
S.A. - Market Offerings • Overnight packages • 1, 2 or 3 day delivery • Money back guarantee on 1 day. • Ground • Freight services for large and often heavy packages.
S.A. - Competition • Overnight: • UPS • Airborne • USPS • Ground: • UPS • Trucking firms
S.A. – Compensation • Express: • Revenue Targets w/ Bonus at 96% of goal • Primary focus on existing accounts. • Goals set by Corporate with adjustment • 70% salary • Trips/Pres Club as incentive
S.A. – Compensation • Ground: • Revenue Targets + Activity Targets with bonus at 50% of goal • 60% of incentive based on SP F/C • No adjustment • 82% is salary • Bonus financial incentive only
S.A. – Pkg Rev. • Results for 2000 demonstrate that integrating the sales force may be problematic due to less revenue attributable to ground. • Express AEs might see comp. shortfall if quotas not realigned. • Ground AEs would see targets jump creating disincentive.
S.A. -Sales Force Structure Two Units Express and Ground • Express: • 2,200 Account Executives (AE) • Ground: • 800 AEs. • Both SF structures are hierarchical • Multiple AEs call on client • No one AE as focus
Express Structure Worldwide – 104 Accts Over $10,000,000 Rev. WWS Global – 237 Accts $1,000,000 -10,000,000 Rev. Global Local/Nat’l – 200 Accts $5000,000 - $1,000,000 Rev. Local/Nat’l Field – 600 Accts $40,000 -$5000,000 Rev. Field Inside – 60 Accts $6,000 - $40,000 Rev. Inside Inside Tel – 211 Accts Below $6,000 Rev. Inside Telephone Sales
Ground Structure National – 59 Accts Top 500 firms National Field – 616 Accts Medium Size Field Inside – 155 Accts Small Custs and Prospecting for new business Inside
S.A.– ARISE Impact • Will make dealing w/ FedEx easier. • Will integrate shipping systems • Designed to improve customer ability to ship via FedEx. • Will give opportunities to integrate SF • More consultative selling • Move toward stronger relationship • Build importance of SF to customer
S.A. – Teams • Team selling can enable stronger service knowledge by bringing ground and express knowledge to benefit customer. • How to compensate. • Role of inside sales?
SWOT - Strengths • Overnight industry leader (46% Share) • Best on-time express performance • High brand recognition • Consultative selling combined with Industry leading technology brings Innovative solutions to save customer money.
SWOT – Weaknesses • Two Sales forces leading to two points of contact for cust’s. • Two SF structures & comp systems. • Two shipping tech systems. • Weaker position in ground • Duplication of some operations (e.g., 2 sets of FedEx trucks ground and express.
SWOT – Opportunities • Market growth for O/N & Express • O/N growth at 6-8% (Ex 2) • Ground growth at 8-10% (Ex 2) • Cost savings from shipping systems integration (ARISE) • Build business when ARISE goes online. • Cost savings when ARISE goes online. • Cost savings from SF integration
SWOT – Threats • Commoditization of O/N business lead to reduced revenue. • Ground is commodity business. • UPS stronger in ground. • Customer confusion due to two SF. • Customer confusion w/ two shipping systems. • Business is impacted by bus cycle.
Class Discussion • The presenting team is to stop their presentation at this point and give the class an opportunity to add to and discuss issues. • This is the time for the class to find what the presenting team has missed. • I will be evaluating the class on their analysis and ability to find problems or unidentified issues in the presenting team’s presentation.
Assumptions/Missing Info. • ARISE will be successful • Top Mgmt support • Economy continues to grow • SF is not able to stonewall changes
Class Discussion • What have we missed.
Problem Definition • Problems: • Different sales strategies • Different comp plans • Lack of coordination • Reduced opportunity for relationship building • Multiple customer touch points creating confusion • Increased costs
Overall Problem • Need to integrate Sales Force to bring unified customer contact.
Alternatives • Integrate current sales forces into one • Do not integrate but coordinate. • Maintain Status Quo – not considered.
Alternative - Integrate • Develop one point of contact • One shipping system (versus two today) • More focus on consultative selling • Build Ground Services Business • Compensation system for ground not delivering. • SF Goals individually set/Targets too low?
Alternative - Do not integrate but coordinate. • Maintain two SF’s but create coordination mechanisms. • Team Selling for larger accounts • Set Ground goals at corporate to match Express approach • Move toward higher goals for ground. • Create sales support specialists to do the technical integration w/ customer systems.
Recommendation – Integrate! • Model comp system after Express – less disruption to revenue. • But add “Yield” goal/incentive. • Redistribute territories where necessary • Cross Train • Train on ARISE • Create sales support specialists to assist with tech integration. • Eliminate duplication in territories – eliminate positions in SF if necessary – cost savings. • Maintain salary plus incentive model. • Cost savings can be realized from integration of both SF and ARISE.
Class Discussion • What has the group missed in their analysis of alternatives?
Other things for Class to Remember • Team Presentation – Approx 30 Minutes of presentation time (not counting questions). • Individual 2 page (typed) case outline will be turned in at the beginning of class by each student (presenting team excluded). • Hand in 1 copy and keep one for yourself. • You may discuss w/ your team but prepare individually (we will check for copying). • Presenting team to give 5 T/F questions (with answers) to Dr. V. for inclusion on final exam. • Send Dr. V. copy of team slides (via email).