FedEx Sales Force Integration - Example of How To Do3

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.
Revenue per pkg
Year 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/Natl
Field
Inside
Inside Telephone Sales
Worldwide 104 Accts
Over $10,000,000 Rev.
Global 237 Accts
$1,000,000 -10,000,000 Rev.
Local/Natl 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 Accts
Below $6,000 Rev.
Express Structure
National
Field
Inside
National 59 Accts
Top 500 firms
Field 616 Accts
Medium Size
Inside 155 Accts
Small Custs and Prospecting
for 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 custs.
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 teams
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 one
2. 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 SFs 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).

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Case 1

Sales Force Integration

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