Arck Systems Case Solution

1. Pros and Cons of Accelerators

Arck and Lux’s management of sales was similar in many aspects. They used a somewhat similar approach to sales by dedicating separate territories to sales people. The organization of sales was similar, and they were allowed to offer a discount to their customers as approved by their superiors.

There was still one key difference in the two organizations, and that was their compensation plan. Both companies had different ideas about comp plans. Arck used simple commission based sales comp plan where the sales person would get a fixed commission on the sale after their annual quota has been met. Lux used a bit more complex system where after the quota has been met there is a base commission for a bracket, and after that, more sales would result in that sales person getting a multiple of the base commission rate based on the bracket of sales he/she falls on. These multiples of base commission rate are called accelerator, and they were a bit disturbing according to the sales management staff of Arck.

The accelerators were designed to motivate the sales force in producing higher sales for the company. The more sales they make, the more compensation they had as commissions. The sales strategy of Arck was simple. They just had to go to the department dealing with technology and make the sale based on the specifications of the hardware. Sales people at Lux had to follow a different approach. They would go to finance or administration department and try to sell the software based on its overall value for the company. In short, Arck’s sales were technically oriented while Lux sales were more of relationship sales and required selling skills rather than a technological “geek”.