Eureka Forbes

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Eureka Forbes Ltd.
Managing the Selling Effort
SHRM Case Submission

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17-Jul-12

PGPX –VII (12-13) – Term I1

Aditya Bansal ( 6612006)

Problem Statement

Eureka Forbes Ltd. (EFL), a joint venture between Forbes Group and Electrolux formed in 1982, is the leading company in India in consumer durable products like vacuum cleaner and water purifier.

Over the years, EFL has effectively utilized the direct selling approach by setting up the largest field sales force in Asia comprising of 5,000+ sales representatives called ‘Eurochamps’ for its two main products, EuroClean vacuum cleaner and AquaGuard water purifier. The image of a Eurochamp, wearing a white shirt and a dark tie, with a demo kit in his bag, going from door to door, has been ingrained in the minds of Indian consumers permanently. This goes with the motto of the company to consider the customer as “A Friend for Life”.

By late 2003, however, the company was faced with multiple issues like declining sales volumes, falling sales closure rates and high sales rep attrition. The company also witnessed a declining performance of the sales force across many of EFL’s territories. There were instances of missing sales and other such irregularities by the Eurochamps. To counter this, Mr. Suresh Goklaney, the CEO of the company, came up with a new sales representative evaluation and compensation system called “Bettering the Best”. The new system called for rewarding sales reps for process adherence and sales both, in contrast to the earlier system based on sales only.

The key decision facing the EFL management team is to assess the effectiveness of the new system and decide whether to rollout the system nationwide and across all product lines. The company will also have to determine the manner of rollout of the new system.

Theoretical Framework

The case revolves around maximising the results of the sales force. The HR discipline provides us with different possible means to achieve this, some of which are listed below:

1) Monetary incentives to salespeople in the form of fixed salary and sales-related variable pay.

2) Career growth options.

3) Non-monetary incentives like social recognition and job satisfaction.

4) Award structure to incentivize high-performance employees.

An analysis of the various aspects of EFL’s Eurochamp sales team gives the following insights:

Positive aspects:

1) Eurochamps were young people in their early 20s from lower middle class homes. The company looks from enthusiastic candidates and then grooms them to become good salesmen. They come as boys and become men in EFL family.

2) Potential to generate huge earnings in the form of variable commission on sales volume.

3) Powerful recruitment tools like ‘Own your bike Scheme’.

4) Inculcating team spirit by use of theme song ‘We the Eurochamps’ (See Exhibit 1)

5) On the job training in the form of ‘learning by experience’. A new recruit spends a week shadowing a senior sales rep before starting on his own.

6) Pride of becoming a professional – A Eurochamp is treated with respect by the society and thus, is a powerful motivator for them.

7) Reward programmes like Silver Circle Club, Awards night, Living Legends and Pioneer Legends.

8) Career growth options to become group leader, team leader, Head of Customer Response Centre (HCRC), Deputy divisional sales manager (DDSM) or even higher positions.

Negative aspects:

1) High pressure to generate sales – Two-thirds of compensation linked to sales volume as commission leads to situation of ‘sell or quit’.

2) Physically and psychologically demanding job – Requires all-day travel in all seasons carrying products and taking ego-knocks from door slams.

3) Poaching from competition as companies look for scarce sales talent.

4) Lack of adequate training due to time constraints on the senior...
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