Case 1: The unscalable salesforce (not)

Problem: This software company was growing but had concerns about lengthening sales cycles (often over a year to reach a "selection" then 4 - 6 months to close) and deals lost to "no decision" or to competitors. The company would have had to dramatically increase its sales organization to achieve its growth plans.

Analysis: The contracting process was lengthy because customers used multi-tiered negotiation tactics and the company was unwilling to concede on important terms. The company could not consistently shorten the prospects' time-to-selection so they needed to increase lead development bandwidth.

Solution: To address time to close, contracts were re-written to separate business- from legal-terms and to put a value on commonly requested changes (e.g., extended warranty). The company eliminated quantity discounts and the sales force was trained to make concessions only by bringing in management. To address lead development; the company built a "Prospect Care" organization to offload the early stage burden from the sales force.

Results: Time-to-close was reduced from over four months to under one. By delaying concessions and tying them to a closing schedule the company had a more predictable forecast and increased the average deal size (5x over a period of two years). Here are the actual sales results.

Even in consideration of this explosive growth, cost of sales was reduced. Prospect Care employees were more junior than salespeople, so the cost of developing a lead was about one third of doing so in the traditional sales organization. The group also dramatically increased the company's lead-development bandwidth.

 

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