Senter and James Paulsen Baylor University Identification of the Issues Sales Process Sales force Structure Compensation Sales Training Sales Process Campus Plan All about numbers and opportunity for revenue ID: 760618
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Slide1
McGraw Hill Case Study
Grant
Senter
and James Paulsen
Baylor University
Slide2Identification of the Issues
Sales ProcessSales force Structure CompensationSales Training
Slide3Sales Process
Campus Plan
All about numbers and opportunity for revenue
No deep thought process
Created the night before
Lack of real preparation
Relationship is lost
No Desire
5 minute meetings with professors
Bookstores are checked to be up-to-date
Goal: to get the professor “up to speed” on the latest offerings
Bottom Line:
Customers are not being appreciated
Sales Process is shorted in an effort to maximize revenue opportunity
Result of a poor training process and incentive structure
Slide4Buyer Process
Slide5Salesforce Structure
The cons of a “generalist geographic approach” often limit the product knowledge the sales representatives have, make it difficult for reps to master broad product lines, and pose a coordination issue.
Consequences:
Decreased sales
Missed
o
pportunities
Decrease in customer satisfaction
The current structure does not present the level of value that our clients are seeking. McGraw Hill needs to slightly restructure the sales force to ensure that there are resources available to help with McGraw Hill’s broad range of products.
Slide6The Candle Problem
Slide7Slide8Compensation Plans
Research:
“Once a task called for even a rudimentary cognitive skill,” a larger reward “led to a poorer performance.”
“In eight of the nine tasks we examined across the three experiments, higher incentives led to a worse performance.”
“We find that financial incentives can result in a negative impact on overall performance.”-Dr. Bernd
Irlenbusch
, London School of Economics.
Issues:
The current commission plan only allows for commission to be achieved if one achieves over 95% of quota.
The current plan is contrary to scientific research, does not promote a group mentality, and does not financially incentivize any sales activity under 95%.
Slide9Sales Training
“Reps
are thrown into the field with barebones training
.”- Anonymous Sales Employee
McGraw Hill sales employees are moving from a generalist sales position to a specialist sales position requiring an in-depth knowledge of McGraw Hill’s technology products.
McGraw Hill sales employees are given 2-3 weeks of in-house training led by their manager. This is far below the standard.
Organizations sales training:
AT&T-6 months
Oxy
Chem
- 5 months
IBM- 9 months
Reynolds and Reynolds- 6 months
No current E-Learning Modules in place to keep sales representatives up to date on products benefits, features, etc.
Slide10RecommendationsSales Force:
Slide11Sales Process
Starts with Training
Process: Develop a Relationship
Remove “check ins”
Become less concerned with maximization of revenue opportunities
Require and encourage conversation
Cascading Campaign:
Slide12Recommended Sales Process
Slide13Compensation Plans
Sales representatives will no longer have to achieve 95% of quota to receive additional compensation from their 50k base salary.
Sales representatives will operate on a straight base salary of 60,000 and will be able to receive bonuses ranging from 1-10% of your current salary. The bonus is based off the group performance of a district manager’s sales team. This includes the product specialist. This method encourages team work, collaboration, and friendly competition amongst groups.
The top performing team in each region will receive the 10% bonus off of their base salary.
Slide14Sales Training
-Sales training will be given more of an emphasis as the new sales training program will be 3 months long for recent undergraduates. Experienced Sales Professionals will have a training process of 2-3 weeks. E-Learning modules will have to be completed quarterly and will cover every aspect of the sales cycle. Sales professionals will be trained on products, the proper sales process, and additional learning
Turnover
Revenue & Profit
Slide15Implementation Process
March
Make sure new sales reps pass certification to enter the field
Slide16Financials:
Increased Revenues: 54 million dollarsSavings: 2.4 million dollarsExpenses: 2.32 million dollars56.4 million -2.77 million dollars= Increased Profit: 53.63 million dollars Revenues Training- 30 million dollars (100,000 increase per sales rep) Compensation- 9 million Sales force structure-15 million dollars ( 50,000 increase per sales rep) Up front expenses:Training- 5,000,00018 Product Specialists- 900,000 Implementation- 200,000Bonuses- 720,000Total Expenses= 2.77 million
Savings:
Expected Decrease in Turnover- 1,000,000
Compensation:
300 reps with the
bottom 20%
not making quota:
Currently: 60
x 50,000= 3,000,000
New plan: 60
x 60,000= 3,600,000
60% reps
hit
quota
:
Currently: 180
x 70,000= 12,600,000
New plan: 180
x 60,000= 10,800,000
12.6
million – 10.8 million= 1.8 million
10%
reps
over 100
%
quota
:
Currently: 30
x 100,000= 3
million
New plan: 30
x 60,000= 1.8 million
3 million – 1.8 million=
1.2
million
- 600,000
+1,800,000
+ 1,200,000
Total Savings= 2.4 million dollars
Impact on Revenues= 1.5 million dollars