Case 1 Sales Force Integration at FedEx Corporation:

A Case Presentation Example

For Marketing 458 – Sales Management

Team Members:Doug VorhiesJimmy Buffett“Mac” MacNallyThe 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.

Revenue per pkgYear Overnight 2/3 Day Int'l Pref Ground

1999 14.34$ 9.93$ 41.87$ 5.36$ 2000 14.52$ 10.31$ 43.36$ 5.55$

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

WWS

Global

Local/Nat’l

Field

Inside

Inside Telephone Sales

Worldwide – 104 AcctsOver $10,000,000 Rev.

Global – 237 Accts$1,000,000 -10,000,000 Rev.

Local/Nat’l – 200 Accts$5000,000 - $1,000,000 Rev.

Field – 600 Accts$40,000 -$5000,000 Rev.

Inside – 60 Accts$6,000 - $40,000 Rev.

Inside Tel – 211 AcctsBelow $6,000 Rev.

Express Structure

National

Field

Inside

National – 59 AcctsTop 500 firms

Field – 616 AcctsMedium Size

Inside – 155 AcctsSmall Custs and Prospectingfor new business

Ground Structure

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

1. Integrate current sales forces into one2. Do not integrate but coordinate.3. 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?

Questions about process?

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).