Group 3

Section H
Eureka Forbes Ltd.: Managing the Selling Effort

Executive Summary:
Eureka Forbes Ltd. began as a joint venture between the Forbes group and Electrolux of Sweden.
The major products of the company were EuroClean vacuum cleaners and AquaGuard water
purifiers. The target market of the company were the households living in the 400 A-level cities
with monthly income exceeding the price of the products. The company focused more on the
performance of the products rather than the prices. Hence, their products were priced higher than
those sold at the retail shops. Their sales were dependent upon proper presentation and
demonstration of the product to the customer. The personal selling method gave them several perks
like selling in an environment where there are no distractions, competing models, no crowds and
a plenty of time with the customer. their customer sales specialists were known as EuroChamps
and they were called the heart of the company. Initially, the compensation of the EuroChamps
were based on the sales volume but now the company was considering to re-engineer this process.
Problem Statement:
The company was in a dilemma whether to continue with the old system of compensation or
implement the new system in order to increase the sales of the company.
Alternatives:
 Continue with the current model where the EuroChamps are given compensation based on
the sales volume only.
 Move to a new model of compensation where each step of sales is rewarded with certain
amount of points which later be converted to monetary compensation.
Analysis
Alternative Pros Cons
The current model  Heavy weightage to  EuroChamps were
sales hence the doing the demos
EuroChamps will mechanically.
focus on converting  EuroChamps
every appointment repeatedly missed
they have rather than opportunities to
finding new clients. convert the
 Less paperwork for the demonstrations to
company. sales.
 The company does not  Sales team leader did
have to pay the not have enough time
 EuroChamps for to coach the new reps
mundane tasks like and were focused only
knocking the doors on sales quota.
etc.

The new Model  The attrition rate of  Increased amounts of

sales rep will reduce paper work required at
because they will be every level of
compensated at every authority hence
step of the sales. wasted time on
 In cases of lower and paperwork
medium level  Numbers of all
performers, the parameters can be
employee motivation inflated by the
is higher as they are Eurochamps in greed
recognized regularly of higher
by the top compensations.
management.  Difficulty in
 Better understanding verification of data
of the components of submitted by the
sales by the Eurochamps
Eurochamps
 Greater incentive of a
sales motivates the
Eurochamps to do
better demos resulting
in more sales per
demo.

Quantitative Analysis:
Variable Income Per Eurochamp per month: Rs 3346

Old Model:
Compensation for sales (100 %) : Rs 3346

New Model:
Avg Sales per Eurochamp: 16 per month
Avg Demos per Eurochamp: 5/day = 72/month
Avg no. of door knock : 50/day = 1200/ month
Avg no. appointments : 5/day : 120/month
Keeping aside the unsubstantial components

Points from Sales : 16*300 = 4800

Points from Demos : 72 *100 = 7200
Points from Others : 7200
Total number of points: 16*300 + 72*100 + 1200*5 + 120*10 = 19200 Points

Compensation from Sales: Rs 836.5

Compensation from Demo : Rs 1254.75
Compensation from others : Rs 1254.75

Recommendation:
1) Unnecessary compensation is being given for routine activities such as door knocks and
taking appointments which is an extra cost for the company. Reducing this component for
compensation and not totally removing.
(a) This retains the motivation factor for Eurochamps while reducing costs for the
company.
(b) This allows the group and team leaders to spend less time on verifying the data since
there is less money associated with it.
(c) Eurochamps will also spend less time in filling paperwork by ignoring unnecessary
data input.

2) The seasoned Eurochamps are not getting any incentive to guide and train the trailing new
Eurochamp hence they are ignoring them. To combat this, an incentive for the seasoned
Eurochamps can be introduces such as 1.2X compensation during the period of training
another eurochamp.

3) Keep targets low and slightly increase compensation during the first 6 months of a new
Eurochamp to reduce the attrition rate of new recruits which is currently around 66%.

4) Reduce the paperwork involved, which is the main complaint of eurochamps, by

streamlining the process and reducing the amount of information required in each data
input.