Eureka Forbes Ltd

Case Analysis

Submitted By: Aditya Thakre

Roll No: 150101007

Section D

Eureka Forbes had a direct sales approach for its customers without the involvement of middlemen. They marketed themselves as sellers of clean air and safe drinking water. They targeted customers at home as it gave them ample time to demonstrate and present to the customers.

Target Customers :

1. Households in 400 A-level cities (population>10000)2. Monthly income that matches the typical price of its products

Eurochamp’s Profile

Young men in their early 20s from lower middle class, preferable speaking English and the local language. Should promote the “Friend for Life” philosophy. The compensation was directly linked with the sales and the variable component of their salaries was based on the sales figures that the achieved. Being financially needy made them driven to thw task and the age made them enthusiastic. There was no academic criteria for selection. Just that they shold be convincing, extroverts and have good presentation Skills.

Eurochamps Tasks

They were needed to perform extensive presentations / demos and were also trained for customer objection handling.. They needed to sell the product as a concept that the customers needed the product, i.e. creating the need for the product in the minds of the customers. They performed the demonstration at home, which gave enough time for a customer to make purchase decision. They gave a feel of “Try and then Buy” to the customers

Analysis of evaluation and Compensation

Their territories were defined, however due to lack of monitoring methods the territories were prone to overlap between two eurochamps. No customer database was present to track the customers. A major part of the salary was through commissions on sales, the company thought this would drive them to sell more and more products. A large number of the salesforce came through friend referrals and the “own your own bike campaign was also attracting the youth to join the company as eurochamps.

Issues faced

Inadequate training of the new recruits was a major issue. There was less attention on relationship building with the customers. The experienced eurochamps were not willing to carry new recruits along with them for training. Thus no proper hands on experience was imparted to them. Also, there was another problem with it: In India, two men entering the house in the middle of the day was not considered appropriate, where the housewives would

be alone in the afternoon. There were also cases of poaching by other firms and internally by other eurochamps also. No women candidate was there in the salesforce as it was not considered appropriate for women to knock the doors of strangers.

New processes

The new training process aimed to give a feel good factor to the eurochamps about themselves. It was designed to improve the spirit and morale of the candidates, thereby improving sales productivity and overall quality of the sales. Point based system was launched where each activity would generate some bonus points. Eg a knock on the door would earn 5 points, a demo would earn 100 points and so on. There was clarity on different stages of the sales process and how the points were to be earned. Daily recognition of performance was done which promoted low attrition rate in the company. There was an improvement in sales productivity and sales quality too. But this process had its own disadvantage too – non performers with no actual sales but with substantial points could also get rewarded. There was no established method to prevent eurochamp fro overstating their efforts. Manual form was filled which could have been easily manipulated.

The annual quota was 60 product demonstrations, at least 10 sales per month, and 50 customer contacts per day. This included cold calls and door knocks, demonstrations and sold by friend sales force.

Exhibit 1 Analysis

YearSales of products YOY% Income YOY%

Total Turnover YOY%

98-99 2390 - 96 - 2586 -99-00 2791 16 248 26 3039 172000-01 3187 14 346 39 3533 162001-2002 3451 8 438 26 3889 102002-2003 3822 11 502 14 4324 112003-2004 4112 5.9 616 22 4728 9

Job is physically demanding involving lots of travelling and long hours. Its also psychologically demanding as lots of negotiations, customer handling takes place. Demoralizing and insulting responses. Pressure to sell more and more as 2/3rd of income is through sales incentives. These reasons make Euro Champs drop out after 1 yr on an average

EFL should train team leaders to be able to recognize the signs of frustrations. Introduce an attractive TA package which adequately compensates travelling efforts. Introduce psycho-therapist services to be able to handle frustrating and insulting responses beter. Change compensation structure which focuses on other aspects of jobs too and reduces pressure.

Base salary is scaled against length of service, total sales, and average sales over the last 6 months. A contingency compensation scheme based on number of units sold could be invoked in the event of marriage or hospitalization. Confirmed EuroChamps who maintain contact with or retrained a customer 3 months and 6 months from date of purchase can earn an additional Rs. 30 and Rs. 40, respectively. Payment under this plan, termed the Friendship Chain, can not exceed Rs. 600 per month.

An averagely successful salesman earns two-thirds of his monthly earnings through commissions. This emphasis has an automatic sieving effect: anyone who cannot learn to sell does not get commission and hence earns less and exits very quickly.

Issues with Eurochamps

– Eurochamps missing an easy sale

– Missing simple cues

– Unclean and damaged demo equipment

– Responding to customer objections is neglected in training

Possible Reasons:

– Improper training from seasoned reps and team leads

– This can be due to stringent targets/ lack of time to senior reps

– Senior reps have no incentive to train new reps who would encroach on their targets subsequently

Steps Taken by eureka Forbes :

• New system “Bettering the best” was introduced

• Compensation is dependent on successful completion of various stages of selling

• Objectives:

• Improving productivity

• Increasing daily demos

• Enhancing Customer engagement time

• Providing a diagnostic tool for HCRC