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Salesoft Inc. Group D - 5 Decision: Choose between PROCEED and Trojan Horse (TH) Target Market: Sales Automation (SA) - Automate from lead generation to post sales services Size: $1 billion in 1995. Estimated growth of 40% for next 5 years SA Solutions: • Contact Management System (CMS): Glorified Address books • Comprehensive Sales Automation Systems (CSAS): Process view of automating sales cycle o Reduced Cycle Time o Reduced Rep Turnover o New Reps productive faster Participants in business buying process: Initiators: Senior Management Users : Sales Department, Marketing Department, Senior Management Influencers : SA Consultants, Vendors, Information Systems Department Deciders : SA Consultants Approvers : Heads of users departments Buyers : CEO, Top Management Gatekeepers : Secretaries PROCEED vs TH: Particulars PROCEED TH Market Segment Sales, Marketing and Services Only to Sales Buying Cycle 21 – 30 months/Many people Short/ Fewer people Customization Huge Minimal Price $2400/user $400-$1000/user Revenues 20 prospects - 5 converted 200-600 users – 400 users Total = 2000* 2400 = $4.8m $ 1 billion – 80% CMS Same as PROCEED: 0.2 % Rev = $1.6m Cost Development - $1m Marketing - $3.5m Development - $0.2m Marketing - $1.1m + $0.5 Profits $0.3m ($0.2m) Value Proposition of PROCEED: Particulars Company A Company B Cycle Time Reduction 6/120 = 5% Extra Sales = 120*0.05 = $6m Contribution = 0.4 Savings = $6*0.4 = $2.4m 15/250 = 6% Extra Sales = 350*0.06= $21m Contribution = 0.4 Savings = $21*0.4 = $8.4m Reduce Rep Turnover 20/100*120=24 reps leave Old Loss = 60/365*24*1 = 4 Reduced Turnover = 2.4 reps Productive Time = 46 days New Loss = 46/365*21.6 = 2.7 Savings = $1.3 * 0.4 = $0.52m 35/100*250 = 87.5 reps Loss=90/365*87.5*1.4=30.2 Reduced Turnover = 13.125 Productive Time = 70 days Loss = 70/365*74.3*1.4 = 20 Savings = $20 * 0.4 = $5m Cost $2.50m + $0.27m/year $6m + $0.65m/year Value $0.2m/ first year, $2.65 / year $6.8m/ first year, $13.8 / year Company’s current financial position in Sep 1995: Venture Capital = $2m, Assets increase = $ 1m, Hence Burn Rate = $ 1m/ year Overall Expenses = $ 3.3m for 1995 out of which $ 1.5 are marketing costs Current Assets = $ 1m so they should last for a year at this rate Going for VC funding of $2m next year.
Approximate Word count = 368
Approximate Pages = 1.5
(250 words per page double spaced)
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