Published on March 12, 2014
Eureka Forbes Ltd. Case Analysis SDM, NMP Term IV Group 5 Abhijeet Tomar - 03 Argha Ray - 15 Khushal Malik - 28 Vipin Kathuria– 59
Context • Eureka Forbes is the largest direct selling manufacturer of household Vacuum Cleaners and Water Purifiers. • Sales its product range using an army of over 5000 sales personnel known as Eurochamps. • CEO Goklaney is concerned with current trend of falling sales. • Introduces pilot of a new salesforce evaluation and compensation scheme.
Trend Analysis: • Turnover is constantly rising. • Profit tapering due to Cost of Sale and Expenses. • Goklaney needs to contain cost. • Aquaguard (Rs 7500) sales are constantly rising. • Euroclean (Rs 6400) sales is the cause for concern. • Push Euroclean.
High Pressure Job: • Almost 11 hours everyday, 6 days a week. • Almost 50 to 60% of salary component is variable. • Both emotional and physical chagrin. • Minimal training and handholding. • Seasoned sales personnel poaching on Junior’s territory. • Apart from OYBS, no real incentives as achievements like Silver Circle will be the preserve of only well trained and experienced sales personnel. • Results in high attrition.
Benefits of Bettering the Best: • Emphasis on both Sales Volume and Sales Process. • Splitting bigger goals into smaller targets. • Reward for even smallest of activities. • Emphasis on customer retention and referrals. • Quality rather than quantity of sales calls. • Encourages supervisors to be more active in the field. • Hopes to improve Hit Ratio and Salesforce morale.
Pitfalls of Bettering the Best : • Very easy to collect points without even closing sales. • Too high emphasis on Get a Friend (3000 Points) will distract salesperson. • Not much point difference between Demos and Standard Sale (100vs300). • Salesperson may push for only High End Products with customers as against Standard Products (300vs600). • Lots of paper work and daily quota for each activity will create more pressure. • No explanation about how to increase demo time with minimum 3 demos to be done in 180 minutes. New scheme does not talk about how time is allocated to each activity. • Very difficult to verify points collected on process activities rather than actual sale.
More Pitfalls: • With only 3 chances to make a repeat sale in 20 years lifecycle of a customer, the concept of Customer Retention is an illusion. The same salesperson may not be continuing 6 years hence considering the current attrition rate. • How will Get a Friend check attrition? On the contrary it seems to encourage new joinings to replenish burnouts. • How will the sales quality improve if nobody is there to point out mistakes to ignorant Eurochamps during solo demos? Compensation may also not be commensurate. • Is there adequate time allocated for Courtesy Calls to generate referrals? • Does the scheme takes care of the fact that as salesforce increase each year there is bound to be spotty performance due to both quality of personnel and lack of training?
Decision: • Emphasize more on training during live sales calls to point out mistakes. Group and Team leaders must accompany Eurochamps till they gain enough experience. • Attrition between 0-6 months slab is understandable as new joiners without inherent selling skills may opt out. Put more effort to retain between 7-24 month slab. • No better metrics than Sales volume to gauge performance. Sales will be closed if the process had quality and not otherwise. • Rationalize salary structure with more fixed component after probation. Also workload needs to lowered. • Reduce personal sales quota of Team and Group leaders so that they can concentrate on training Eurochamps on the job. • Increase incentive for higher volumes. Currently it moves by only Rs5 intervals. • Allocate more time in the day for demos, courtesy calls and conversion. Rethink the scheme.
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