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 …

 Situation Analysis
 Assumptions and Missing Information
 Problem Definition
 Analysis of Alternatives
 Recommendations

 Recent acquisitions of freight firms has lead to multiple FedEx
Salespeople calling on the same account.
 Need for unified approach to customers
 Project ARISE

 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.

 Overnight packages
 1, 2 or 3 day delivery
 Money back guarantee on 1 day.
 Ground
 Freight services for large and often heavy packages.

 Overnight:
 UPS
 Airborne
 USPS
 Ground:
 UPS
 Trucking firms

 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

 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

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.

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

Express Structure
Worldwide – 104 Accts
Over $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 Accts
Below $6,000 Rev.
WWS
Global
Local/Nat’l
Field
Inside
Inside Telephone Sales

Ground Structure
National – 59 Accts
Top 500 firms
National
Field – 616 Accts
Medium Size
Inside – 155 Accts
Small Custs and Prospecting for new business
Field
Inside

 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

 Team selling can enable stronger service knowledge by bringing ground and express knowledge to benefit customer.
 How to compensate.
 Role of inside sales?

 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.

 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.

 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

 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.

 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.

 ARISE will be successful
 Top Mgmt support
 Economy continues to grow
 SF is not able to stonewall changes

 What have we missed.

 Problems:
 Different sales strategies
 Different comp plans
 Lack of coordination
 Reduced opportunity for relationship building
 Multiple customer touch points creating confusion
 Increased costs

 Need to integrate Sales Force to bring unified customer contact.

1.
Integrate current sales forces into one
2.
Do not integrate but coordinate.
3.
Maintain Status Quo – not considered.

 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?

 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.

 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.

 What has the group missed in their analysis of alternatives?

 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).