1)Analyse case facts and identify the problem area.

This case talks about FedEx corporation, its growth from 80’s and the current
concerns and competitions faced by FedEx. They started overnight delivery
of packages through a dedicated air network. This service was in high
demand till improved SCM and JIT demanded for lower cost ground
deliveries. Along with the express and ground delivery services(after
acquiring RPS) they also provided other services such as: less than truck
load, niche services, non step ground services for private clients, consulting
services for logistics, transportation and other SCM needs. The company was
considered as highly innovative company. However due to increased
competition by other competitors FedEx is now thinking of integrating its
express and ground sales force teams. For this they have initiated an
internal project called ARISE which included marketing and sales unit and
customer facing IT units of ground and express to be combined. They require
a single account executive offering both air and ground delivery services i.e.
needed single value proposition for both express and ground package.

Thus current concern faced by executives and management of FedEx is

project ARISE and redesign of compensation plans of the sales unit force.

2)What should the compensation plan for the sales force look like ?

The compensation plan of an average account executive should be

comprised of 75% salary(fixed) and 25% incentives(variable). Also, monthly,
quarterly, and annual incentives and bonuses based on goals achievement
should be carried out. Revenue goals may be set different for express and
ground contracts, but basic structure of the sales force should remain
equivalent. Percentage compensation on the basis of revenue achieved
(annually) can also be one of the options that can be included in the
compensation plan.

3)Why are the express and ground plans different ?

For express plans:

Sales goals occurred on a quarterly basis. The minimum performance to plan

that qualified for a bonus was 96% of one’s planned sales objective. In
addition to the cash incentives, account executives also competed for sales
awards e.g. President’s Club was awarded to top 5% of account executives.
Their major compensation consisted of 70% salary with an additional 30% in
incentives and bonuses.

For ground plans :

The customer base was small unlike express. Also signing new clients was
somewhat difficult. Here package yield (average revenue per package) was a
key component of a ground account executive’s sales objectives in addition
to total package revenues. These people had some ‘activity targets’ like at
least 4 lunches and one entertainment per month with existing or potential
customers. Their plan comprised of 82% from fixed salary. In order to qualify
for incentive compensation, they had to reach a minimum of 50 % of their
plan.

4)What is designed sales process in terms of sales force?

The design of the sales process should be comprised of :

1)Compensation

2)Structure

3)Skills

In terms of sales forces, following decisions needs to be taken before

designing the sales process :
1.Sales force changes.

2.Territory changes

3.Trainig course changes

4.Special reporting

5.Staff to fire.

These decisions would help to formulate the process in terms of sales force.
The design should also be done keeping in mind the size and structure of the
objective of the concerned company.