StepSmart Fitness Case study is a Case Study from HBR. The case represents the tale of an organization that is undergoing sweeping changes. The entire sales organization is being restructured due to pressure from sales and competition. The case can be analyzed from the context of sales force management, human resource motivation, and performance improvement.
StepSmart Fitness Case Introduction
The foundation of StepSmart Fitness is the production of fitness tools. Mark Wallace, the newly appointed CEO of Step Smart, joined the company lately. The company had a base in the States. In 2011, the company took in around $800 million, or 18% of the projected $3.5 billion in sales revenue generated by the whole sector. In 2011, StepSmart racked up an estimated $630 million in sales. In total, there were 540 people working at StepSmart Fitness.
The company’s sales team was split into three divisions to serve its various clientele
- Retail
- Private
- Institutional and Commercial
The retail items accounted for 63% of StepSmart’s revenues in the United States. The retail division was in charge of distributing the home exercise machines to various stores, including department stores, specialty sports shops, and e-commerce sites. In this market subset, the business was predicted to hold a 27% share. It was projected that private and institutional buyers accounted for 7% of StepSmart’s total revenue. This organization’s focus was on distributing fitness tools to institutional gyms, athletic departments, and similar establishments.
Since the corporation had just recently entered this industry, it held only a small, estimated 10% stake. It was projected that 30% of the revenues came from the Commercial Products division. Its products included cardio and weight training machines that were sold to private health clubs for a price. The firm has a seventeen percent share of the market there.
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StepSmart Fitness Case study: The Central Dilemma of the Case
StepSmart Fitness had issues with the performance of its sales force in the New England region, and as a result, they were unable to reach their goals. Following his recent promotion, Ben Cooper was appointed vice president of sales for the Northeast region. Cooper was under pressure from his employer to increase the company’s sales and income goals in the New England region and to assume a leadership position in the district. Despite the fact that Cooper posed a challenge, it was determined that if the New England district failed to meet the goal, fifty percent of the squad would be released.
Numerous issues contributed to the formulation of the preceding problem statement. The most serious issue is the fact that StepSmart was active in multiple regions of the United States. The company was engaged in the production of exercise equipment. It consisted of the sales teams responsible for distributing exercise equipment to various locations in the United States.
When it came to generating sales and income from districts, the company encountered a number of obstacles at various points. The company’s sales staff were not performing as well as they could have been, which was one of the primary contributing factors. Particularly in the New England region’s New England district, the New England district’s sales staff fell short of Step Smart’s sales and income targets. This was due to the fact that the sales force was exerting effort, but for some reason was unable to give the company their full support. This was due to the fact that despite their efforts, they were unable to deliver a perfect performance.
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StepSmart has promoted Ben Cooper to the position of vice president of sales for the Northeast region. It was determined that incorporating him into the sales team in New England would increase both revenue and productivity, so the decision was made to hire him. Cooper must come up with a number of strategies or ideas for reviving the New England region and achieving the corporation’s goals, which is problematic.
It appears that the sales team was the source of the problem; therefore, a thorough investigation of the sales team is required to identify the contributing factors. Cooper, therefore, spent two days with each salesman, during which time he was able to identify a number of problems within the team. In the case of Avery, he was an experienced StepSmart employee with a wealth of knowledge; however, the problem was that he was heavily involved in the creation of new ideas and innovations as well as their implementation in his actual experiences.
In addition, he was less interested in covering sparsely populated regions, such as the northern regions of the country. This presented a challenge for him, as his position required him to introduce innovation into the work and also to seek out opportunities in each of these various industries. In contrast to Foster, Cooper realized he was performing exceptionally well, but within a year, his performance began to decline. Foster’s performance, on the other hand, continued to improve. He was in a poor emotional state due to marital problems.
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StepSmart Fitness Case study: Evaluation of Alternatives
In this case, the immediate dismissal of Foster has been proposed as the first potential resolution. Foster has a history of being a top performer, but his current personal difficulties have had a significant impact on his work performance. Foster was such a valuable asset to the organization in the past that terminating his employment poses a significant moral dilemma. Some individuals may argue that it is only fair to allow him to struggle through this difficult period of his life before terminating his employment.
In this situation, however, it is necessary to take corrective action because he has experienced such a significant decline in his work performance and has received customer complaints. In addition to placing Foster on probation, he should be granted time off from work so that he can emotionally recover. Foster will interpret this as both a warning and an indication of the company’s genuine concern for his health and well-being. If, however, Foster’s statistics do not improve after some time off, I will be compelled to advocate for his dismissal.
Concetta and Avery have the lowest sales numbers, not Foster. The possibility of dismissing Concetta and Avery is the next rung on the ladder of potential solutions to the company’s problems. Those members of the sales team who are performing well receive more opportunities and accounts due to the dismissal of those members who are performing poorly.
This, however, eliminates the possibility of transforming the performance of members who were performing poorly into that of high performers, who would then become an indispensable assets for the company. If the company chooses to pursue the termination option, the untapped ground left by these salespeople is extremely substantial.
Because adding more territory to fewer salespeople may result in a work overload, which has the potential to exhaust the company’s top performers, the organization would need to quickly find a replacement if the employee’s position was terminated.
The company has no choice but to increase the size of its sales force to avoid laying off employees. The combination of a larger sales staff and easier-to-manage territories for each salesperson has the potential to increase overall productivity. Instead of attempting to maintain a balance between an excessive number of accounts, sales representatives will be able to narrowly focus their efforts on a subset of these clients.
Because this decision restricts the ability of high performers to continue going above and beyond, the corporation may encounter resistance from its high performers if it proceeds with this choice. This should allow the company as a whole to increase sales productivity by increasing the size of the sales team, thereby creating a more manageable account list for each salesperson. Increasing the size of the sales team should increase the company’s overall sales output.
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StepSmart Fitness Case study: Conclusion
Based on the results of the preceding analysis of the available options, we believe that the most advantageous course of action for the company would be to avoid terminating any employees and instead expand the size of the sales force.
Foster, who was previously a top performer, will soon be able to better control his emotions and contribute as he did in the past. This will also allow the company to focus more on training Concetta and Avery, which will save money on the cost of training new sales agents to replace them since Concetta and Avery are already familiar with the products they are selling.
The sales representatives are able to focus their efforts on a smaller number of customers when the team size is increased. This should result in higher-quality sales and make achieving the goal of 7.49% of total U.S. sales easier. Cooper must persuade Mark Wallace that terminating employees is not the most cost-effective way to increase sales and has the potential to worsen the company’s situation for this solution to be effective.
Cooper will need to effectively convey this information to Wallace to achieve this objective. When compared to the costs of hiring and terminating new salespeople, as well as terminating some current salespeople, the cost of training only a few new members will result in significant cost savings for the organization.
We believe that increasing the team size and dividing the accounts evenly among them will result in a much more manageable sales position. This will prevent each sales representative from becoming overworked and exhausted, resulting in an increase in sales output.
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Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page