Centra Software Essays

Centra Software Essays Centra Software Paper Centra Software Paper Eureka Centra Software Catalogue ? ? ? BACKGROUND ANALYSIS ALTERNATIVE PLANS ? COMMENTS ? PLAN IMPLEMENTATION ? Background Centra is a pioneer in software eLearning in the fast-growth market. However it faces the threat from WebEx, who sells exclusively over the phone. Now, It is debating how to modify its go-to-market strategy and how to add telesales to improve sales force productivity. Should Centra concentrate on the enterprise customer and exclude small and mid-size corporations ? OR Should Centra ‘fish where the fish are biting’ ? ANALYSIS The market for Corporate eLearning and eMeeting the market for eLearning and eMeeting 11 12 10 8 6 4 2 0 1. 1 1999? 2004? The number of Delivery Platforms Vendors the number of Delivery platforms vendors The one that wins the broadest installed customer base in the least time, 20 20 15 10 5 0 3 survive! ANALYSIS (Continued) Competitors The competition among 20 vendors is very fierce. Comparison between thr ee typical companies is as follows. revenue($000) sales spending 25000 51000 revenue per customer($000) technology sales process ustomers simple telesales 3300 7. 58 WebEx field sales, telesales and enterprise sales sophisticated 23000 4673 440 52. 27 Centra enterprise sales; single-source vendors sophisticated 2200 20 110. 00 Lotus Not available ANALYSIS (Continued) technology Positioning sophisticated simple revenue per customer ANALYSIS (Continued) Straightforward strategy Market leader in sophisticated end Products from simple to sophisticated RD capability Rapid growth markets Merger waves The friction between telesales and field sales Bad financial situation Penetration rather than dissemination Limited experience in enterprise deal Success of new competitor, WebEx Compared with LMS vendors, lack the support from SIs. ? Alternative Plans A Target customers: All types of customers Part of telesales integrated with field sales being responsible for Global 2000;other telesales responsible for non-Global 2000 customers. B Target customers: Global 2000 Telesales responsible for EMeeting and Conference; Field sales responsible for Symposium. C Target customers: Global 2000 Telesales commence Initial contact and try to sell big-ticket products. They would deliver the transaction to field sales when necessary. ? Comment on Plan A Advantages: Economical efficiency; Clear classification of responsibilities; Expansion of telesales to Global 2000 brings better penetration and dissemination. million $ 30 25 20 15 10 5 0 1996 Disadvantages: Decentralization of target market; Reduced chance to become a leader in a particular market segment. Shot gun Sales force are used like Sales SGA expense 1998 2000 a shot gun to cover over a large spectrum of customers. Sales may be satisfactory but leadership of any market segment may be lost thereof. Reducing this cost item is vital for financial improvement of the company. For every million dollar of sales, telesales saves $100,000 compared with field sales. So telesales is a possible solution to this problem. Comment on Plan B Advantages: Concentration on one single market segment; Economic efficiency; Clear classification of responsibilities. Disadvantages: Potential conflicts of interest between telesales and field sales personnel; Possible loss of business opportunities. Automatic pistol 2% Revenue from products 17% 66% 15% Symposium Conference EMeeting Other services Although faced with some loss of small and mid-sized midcustomers, all the sales force can cooperate to help the company achieve the leadership in the mainstream market segment. Telesales people may try to sell EMeeting to customers instead of more profitable Symposium or Conference in the best interest of themselves. It is also a hidden trouble of invasion by competitors when customers ask for multi-functional products. multi- Comment on Plan C Advantages: Elimination of harmful competition between telesales and field sales; Market focusing as Plan B; Both sales teams focus on promotion of big-ticket products. Disadvantages: Unpredictable obstacles in the combination of telesales and field sales. 12% 12% Performance Evaluation Field Sales Enterprise Sales Telesales 76% Predicted Revenue Structure in 2001 The diagram above implies that large corporations on which field sales focus are the most significant source of revenue. As a result, the company should pay more attention to this group of customers. Fluent process In sales process Prioritization of Sales of profitable products Choice of plans In 2001 the eLearning and eMeeting Industries were in their infancy. Most corporations are potential customers. Mutual reference among customers are key to successful high-tech highMarketing. 45. 5% of the company’s customers company’ are Global 2000 with great purchase power while others are not. The critical issue of Centra is to cross the chasm between Early Adopters (Visionaries) and Early (Visionaries) Majority (Pragmatists). Conclusions Marketing is to work the curse above from left to right, winning each Group using â€Å"captured† captured† group as reference for the next. Target on Global Target on Global 2000; 2000; Prioritization Prioritization of the big-ticket of the big-ticket Choice of plans (Continued) Comparison Visionaries (Early Adopters) treat high-tech products as short-cuts to their business objective and it is easy to sell to them; However, the market share of them is not large enough. Visionary divisions and enterprises are what we call Early Adopters here. Pragmatists (Early Majority) value reference from other users of the product and they only choose the market leader to be the provider; They account for the largest present market share because of their loyalty to the product brand and great purchasing power. Other divisions and enterprises beyond Early adopters are Early Majority. Majority. Centra should utilize existing reputation in Visionaries to attract Early Majority Choice of plans (Continued) Market oriented Sales oriented Focusing on one market segment lead Centra towards market leader in this segment Sales promotion in all segments may create rapid growth of sales Plan C is the be st Resistance â€Å"We can’t afford to focus can’ on only one market Segment. Let’s fish where Let’ the fish are biting! † biting! † Sales to all customers Leadership in one segment Leadership in entire market ? PLAN IMPLEMENTATION Strategy 1 Set the industry standard Be the industry standard for eLearning 2 Capture a dominant position with Global 2000 Target market: Global 2000 Primary product: High-end product Tactics: Dissemination Pricing: a free support contract that covered bug fixes and upgrades to maintain customers loyalty Short Term 3 Harmonize the Telesales with Field Sales Take full advantage of telesales Long Term 4 Be a single-source vendor in the future Integrate the business and the customer resources of LMS PLAN IMPLEMENTATION The Goal: 1. Broaden market coverage 2. Close sales with lowest cost Confliction of internal sales force Telesales and Field sales: Harmony and Complementary Duties of Telesales Customers Means The target companies are mainly Global 2000. A transaction is encouraged to made solely by Telesales. Products Partners Besides the eMeeting Product, telesales are expected to sell Symposium and Conference as well, further, they are encouraged to sell the highend products, which attribute more commission rewards. Take advantage of Telesales Collaborate with Field sales, in order to close a deal. ontinued Duties of Field sales Customer Means The target customers are made up of Global 2000 companies. Sellers operate the business, manage the sales cycle and negotiate with the top-tier of the target companies. Products Partners High-end Products, like Symposium and Conference, are the main products Field sale should launch. Take advantage of Field sales Telesales and Alliance Partners Constitute an ‘ecos ystem’ of partners Duties of Alliance Partners Maximize revenues from enterprise level Infrastructure Partners System Integrator Partners LMS Vendor Partners Sales process Customers TELESALES FIELD SALES TELEPHONE EARLY ADOPTERS MAJORITY EMAIL FAX One department Departments in the same company En te rp r Le ve ise l CLOSE SALES SALE PROCESS T e le s a le s C lo s e s a le Yes A llia n c e P a rn te rs S y m p o s iu m q u o te Yes D ire c t S a le No No C lo s e s a le Yes E n te rp ris e S trik e F o rc e No No F ie ld S a le s C o n fe re n c e q u o te Yes D ire c t S a le No C lo s e s a le Yes e M e e tin g q u o te Yes D ire c t S a le C lie n t d is s e m in a tio n End Performance Evaluation Target: a. ncourage high-end products sales like Symposium b. support dissemination strategy c. benefit staff with differential commission Practice: The Sales Strategy follows the essence of penetration and dissemination. The majority of first sales happen in a division of a company, then the sales are encouragement to make the transaction to other divisions of the same company, aiming to accomplish the sale on an ENTERPRISE BASIS finally. In accord with the strategy, the commission is added in the process of dissemination. Sales to ONE department of a company THE OTHER departments Of the company Sales on an ENRERPRISE BASIS Performance Evaluation (Continued) Telesales Field Sale First sale 1% commission First sale Second sale 1. 5% commission Second sale Continuous sale 0. 5% commission added forward Continuous sale C e n tr a O r g a n iz a tio n C EO P r e s id e n t, C O O V P , S tr a te g ic A llia n c e s C TO V P , C o r p o r a te M a r k e tin g V P , E u rop e, M id d le E a s t a n d A fr ic a V P , B u s in e s s D e v e lo p m e n t V P , e B u s in e s s O p e r a tio n s R e g io n a l M a n a g e r , S o u th e r n U S S V P , P r o fe s s io n a l S e r v ic e V P , W o r ld w id e S a le s D ir e c to r , D e v e lo p m e n t R e g io n a l M a n a g e r , E a ster n U S R e g io n a l M a n a g e r , W e ster n U S V P , C o r p o r a te S tr a te g y M anager, T e le s a le s , T e le m a r k e tin g D ir e c to r , A s ia P a c ific C FO Income Statement Based on the plan we adopt, there is a remarkable improvement in Centra’s income statement, showed as follows 2000 Total Sales Cost of goods sold SGA expense RD Other operating expense Net Income before tax Interest 23. 0 3. 70 27. 50 8. 50 0. 90 2001E 50. 00 8. 00 44. 40 11. 40 1. 16 2002E 79. 00 12. 51 60. 04 14. 30 1. 49 2003E 124. 82 19. 64 93. 62 17. 20 1. 91 Explanations: The revenue refers to the anticipation of management whereas the continuous 2 years follows the expansion rate of the entire market. In accordance with past 5 years’ total expenses, sales expenses are reduced given the adoption of Telesales. (17. 60) (14. 95) (9. 34) (7. 55) Eureka Eureka ? ? ? ? ? ? 07 04 07 07