PROCEED vs TH
The arguments supporting going ahead with PROCEED are as follows: * Salesoft will lose their first mover advantage in the CSAS market if they divert their attention to TH
| * TH will prevent SaleSoft from partnering with consultants
| * SaleSoft has promised the delivery of the remaining modules of PROCEED to current customers by June 1998
| * Twenty Prospects for PROCEED want to see completed product before making any purchase commitments
| * Microsoft and Lotus are planning to enter the TH market, thereby, making competition tight. There are no big players in the CSAS domain, making it an easier avenue for Salesoft.
| * Salesoft lack the skills to mass market products like TH.
| * It will cost Salesoft around half a million dollars over the next six to eight months to create awareness about TH.
| * Salesoft will hit $5.7 million in sales if they are able to convert just 6 of the 20 prospects ($2,400/sale * 400 sales per prospect * 6 prospects= 5.76 million). This is achievable given the fact that there are just five players in CSAS and Salesoft are considerably better than its competitors.
The arguments supporting going ahead with TH are as follows: * Selling TH is very much like selling CMS and there are so many success stories in the CMS market. Customers don’t need to be educated on the benefits of TH. Most Sales VPs will grab it at any price.
| * The cost involved and the time required to develop the TH product are not very high.
| * Consultants are not needed to sell TH.
* The TH market is much bigger and broader than the PROCEED market.
| * TH is an easy way to gain quick sales, and generate much needed revenues .
| * Customers are skeptical about CSAS and the ability of CSAS vendors to survive in the long-run.
| * TH doesn’t require customization, and its benefits can be easily quantified.
| * There are too many players involved in the purchase of PROCEED (from CEOs to SalesReps). Only the sales VP needs to get on-board for a TH sale.
| * The time needed for seling TH is much lesser than the time taken for selling PROCEED
What are the benefits of CSAS?
The benefits of CSAS are:
1. Sales cycle reduction,
2. Startup time reduction for new employees,
3. Employee turnover reduction.
Company A (a financial services firm)
Additional Sales due to Sales cycle reduction
= Selling time reduction x ($ sales/ year)
Avg. selling time
= 6 x $120m = $6 million / year --------- > I
Additional Sales due to reduction in start-up time for a new sales rep
= Days reduced in startup x ($ sales/rep/year) x Days to startup x (No of new reps) Number of days to startup
Workdays / year
$120m x 60 x 24 = $1.1 million / year
------------------------ > II 60
Additional sales due to reduction in sales rep turnover
= (% reduction) x (current turnover) x ($ sales / rep) x Days to startup
Workdays / year
= 0.1 x 24 x ($1m) x 60 = $480,000 / year
-------------------- > III
The total additional sales (I +II+III) for Company A from using CSAS are = $7.6 million
| Without PROCEED
| With PROCEED
Sales Costs (at 30$ of sales)
| $127.6 million
| $127.6 million
| Selling Costs (at 30$ of sales)
| $38.28 million
| $36 million+commissions
| =36 + .1 x 7.6 = $36.76 million
| =38.28 – 36.76 = $1.52 million
*-$120 million x .30 = $36 million. Using PROCEED, cost of sales remains the same as it would be if sales volume were $120 million without PROCEED. Assuming that selling costs don’t change, then the company saves 30 percent (row 3 of Exhibit 7) of the additional sales in costs less commissions of 10 percent. Thus, the firm gets $7.6 x .20 = $1.52 million in the first...
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