IIMK

SaleSoft, Inc CA Note

Assignment Questions
1. What is your plan? Do you plan to continue with proceed or will you introduce the TH product? Provide support for your plan? Our proposed plan is to put the development of proceed on hold and develop TH quickly by devoting all the resources to it Reasons i. CSAS is a risky product as it takes very long time to develop and introduce in the industry which is dynamic and changing fast. ii. There is lack of enough demand for CSAS product iii. The number of people involved in decision making is large and negotiation is a time consuming process iv. TH is a new product and requires efforts on advertising front to build awareness

Whereas v. TH takes less time to develop vi. There is a high demand for the product with certainty vii. Will have first mover advantage viii. Less people involved in decision making and hence easier to sell ix. CMS is an industry wide accepted technology and since TH is a upgraded version of CMS based on the shortcomings of the same, it is bound generate high demand post launch. x. TH shares some common features with the incomplete modules of CSAS, hence developing TH is not completely independent of developing CSAS, and the development of these common features will reduce the completion time of CSAS as well, and the company will be in the better financial position to market CSAS better. Though there are chances of some bigwigs like MS and Lotus entering TH market as soon as they sense high demand of TH, same thing cannot be ruled out for CSAS market also. Marketing TH enables customer acquisition, understanding the problems better and hence helps in better development of CSAS.

2. What is the buying cycle for proceed? Who are the people involved in the purchase of a CSAS solution? What is the role of consultants?

Stage

Involvement

Activity

Time (Months)

Need Identification

CEO, CFO, VP Sales, VP Marketing, VP Service

Realization by senior management that CSAS might solve existing problems Evaluation of potential to automate existing processes and specifications of the order in which functions are to be automated Evaluation of how different functions to be automated are related and how data is to be collected, stored, analyzed

21-30

VP Sales, VP Marketing, VP Need Clarification Service, VP MIS, SA Consultants

3-4

VP MIS, IS Managers, Sales Need Definition & clarification mgrs, marketing mgrs, SA Consultants Evaluation of Software/ Hardware and vendor alternatives Sales reps, Sales mgrs, MIS Pilot testing and customization Dept, SA Consultants, CSAS Vendor Rollout CEO, CFO, VP MIS, SA Consultants

2-3

Decision on which system (h/w & s/w) to purchase, short-listing vendors

6-8

Customization of CSAS and pilot testing

3-4

4-6

Buying Cycle Observations

Consultants get involved quickly in the cycle and get more powerful over time Senior mgmt plays a bigger role in the beginning and in the end; limited role in the middle stages Line managers are involved in the intermediate stages that involve system design Users might only be involved towards the end

3. Quantify the benefits of CSAS to a customer using the information given in Exhibit 7? Sales ( $mn ) 120.00 350.00

No of Sales people Rep Turnover New time to be productive Selling cycle ( Days ) Benefits Est reduction in startup Est %age reduction of Rep Turnover Savings Savings from reduced cycle time Savings from reduced startup time Total Savings Costs of Proceeds

120.00 20.00% 60 120

250.00 35.00% 90 180

14 10%

20 15%

6.32 2.96 9.28 2.63

43.75 20.42 64.17 5.92

Net Savings ( $mn )

6.65

58.25

4. How will you price TH? The pricing of the Trojan horse will be based on the following parameters: 1. Market Demand 2. Presence of other competitors 3. Present landscape in the Software Automation industry and the future trends 4. The use of Trojan horse in the long term strategy of SaleSoft, Inc The 1st three drivers are bullish in favor of SaleSoft as the demand is burning at the moment and software automation is in a very high growth stage. In our marketing strategy, we are using the Trojan horse opportunity to access customers, generate loyalty, and build strong brand equity. The 1st step in this strategy would be creating brand awareness to achieve market penetration. A significant market share in 1-2 years will create a brand image which will complement the launch of PROCEED as customers would be aware of the brand and would thus be more accepting towards this high profile product. Since, the competition in this industry is high and with the presence of 2 large players, the

barriers to entry are also high for Salesoft. Thus, it is imperative to price the product low initially while keep the quality high. As put forth in the argument by Mr Tanner, TH should be priced at the same level as CMS since the product is being positioned as CMS. Going by our presented arguments, $400 price is justified.

5. Comment on the sales capability of SaleSoft. Do you suggest any changes?

The case says that the current sales force is capable of selling only the CSAS products and that they cannot sell both the products together. It is also given that given an opportunity to sell either TH or CSAS, sales rep prefer only TH over CSAS. This shows that the sales rep is not very comfortable with marketing of CSAS which may be due to lack of technical knowledge of CSAS or fear of not being able to convince long list of people involved in the negotiation process of CSAS, though the margins are higher there. Hence, we give the following recommendations regarding sales rep, Train the sales representatives for marketing TH to be launched soon Provide adequate training about the industry verticals they are assigned to sell the products Increase the sales force so that the market can be captured soon, as MS and Lotus are feared to enter