Atomic Company Case Study
Key Strategic Issues
Thanks to a lucky series of events, Atomic Company has enjoyed a sharp increase in sales of their Tiger Pants line. The most obvious and immediate pains being felt by management is the inability to predict future sales and the high amount being paid out in sales commissions. While these are legitimate concerns, I believe deeper problems exist.
The current sales structure divides independent sales representatives into different product lines and territories. This means that an Atomic Company retailer carrying four or five different Atomic product lines would have four or five different sales representatives. Not only that, independent sales representatives typically have a fairly high turnover rate in the industry, which means that relationships with Atomic retailers suffer.
With this structure, it’s difficult to get a full picture of a retailer’s needs. In order to place an order for Atomic clothing, the retailer has to go through multiple people. With high turnover, it could mean that a retailer has to work with a new sales rep every year – sometimes more frequently. It’s difficult to estimate future sales because sales reps don’t have a big picture view of retailer needs. More importantly, Atomic Company is not encouraging fully committed relationships by creating value, meeting expectations, or building trust (Cron & DeCarlo, 2009).
An added issue surrounding sales structure is that commissions are set up so that sales reps get rewarded with high commissions for orders from existing accounts. If the sales reps are getting orders from a spike like the one just experienced, they may not care to go out and find new business or nurture existing accounts since they’ve already met their personal commission goals.
Alternative Courses of Action
1. Develop a sales structure where a greater number of territories are created for independent sales representatives. Keep the commission at a flat 15 percent.
2. Transition into a company sales
Thanks to a lucky series of events, Atomic Company has enjoyed a sharp increase in sales of their Tiger Pants line. The most obvious and immediate pains being felt by management is the inability to predict future sales and the high amount being paid out in sales commissions. While these are legitimate concerns, I believe deeper problems exist.
The current sales structure divides independent sales representatives into different product lines and territories. This means that an Atomic Company retailer carrying four or five different Atomic product lines would have four or five different sales representatives. Not only that, independent sales representatives typically have a fairly high turnover rate in the industry, which means that relationships with Atomic retailers suffer.
With this structure, it’s difficult to get a full picture of a retailer’s needs. In order to place an order for Atomic clothing, the retailer has to go through multiple people. With high turnover, it could mean that a retailer has to work with a new sales rep every year – sometimes more frequently. It’s difficult to estimate future sales because sales reps don’t have a big picture view of retailer needs. More importantly, Atomic Company is not encouraging fully committed relationships by creating value, meeting expectations, or building trust (Cron & DeCarlo, 2009).
An added issue surrounding sales structure is that commissions are set up so that sales reps get rewarded with high commissions for orders from existing accounts. If the sales reps are getting orders from a spike like the one just experienced, they may not care to go out and find new business or nurture existing accounts since they’ve already met their personal commission goals.
Alternative Courses of Action
1. Develop a sales structure where a greater number of territories are created for independent sales representatives. Keep the commission at a flat 15 percent.
2. Transition into a company sales
References: Cron, W. & DeCarlo, Thomas (2009). Dalrymple’s Sales Management. Hoboken, NJ: John Wiley & Sons, Inc.