During the years 2001 to 2004 of gradual development of Jive Systems, the company solidified its status as the fastest growing SBS Company in the industry, doubling the size of its workforce since 2008 and increasing full year revenue 85% from 2008 to 2009. Throughout this period of rapid growth and expansion, Jive relied on a variety of technologies to handle their sales forecasting process. Till they realized that their structure of business changing almost daily, Jive’s eccentric system struggled to keep up.
The structure was done in a haphazard manor. They were doing quota management in Excel, bookings and sales in Sales force and pipeline analysis in Cloud9 Analytics, which resulted in lack of all the information into one central system. Jive’s multi-tool approach was the source of several serious issues: The executive team had poor visibility into the sales opportunity pipeline; all data updates involved a tedious and cumbersome transfer process from salesforce. om to Excel pivot tables; and, when changes of any kind needed to be made, instead of conducting research and having an all team/ department meeting for synchronisation they just made ridiculous plans and moved to creating new products. 1. Put yourself in Wilson’s shoes when he is first hired. You have to formalize Jive’s sales functions. What are the core building blocks of the sales function you need to put in place?
The core building blocks of the sales function that one needs to put in place are as follows – The ability to understand and analyse business issues and develop solutions around the core building blocks of sales process which are tools, skills, competencies and attitudes. Based on the company’s revenue hire sales reps that are capable of using the latest techniques to engage individuals in their development and understanding coaches and mentors (VP’s) who help individuals to become aware and responsible for their opportunities.
With ref to the Sales Learning curve article and adding to the above one should start out with very low assumptions about expected revenue per salesperson, and increase these expectations gradually, quarter by quarter. Anticipate that during the initiation phase, reps will not generate enough revenue to cover their total costs. Instead of hiring new sales reps the VP should track the productivity of existing reps approaching the point where they cover their total costs. Post that if necessary one should consider expanding the sales force. . Evaluate the strategy of using team vs. individual coverage/quota models. What are the pros and cons of each approach? Suggest an alternative coverage/quota mode In the Jive case study we see that when Dennis Deveny and Sarah Denman worked as a team, the sales strategy was going on the right track till the VP introduced more sales players. But however using a team is more effective as they can split up responsibilities and cover areas that they are capable also making it less time consuming.
With respect to team coverage quota models – Depends on if they are the same job role or not – if it’s two of the same role (i. e. two Field Reps vs. one Field Rep paired with an Inside Rep), then the following applies: Pros: Obvious alignment and cooperation in rep activity and reduction in rep conflict on deals resulting in no commission and credit fights. Cons: Diluted responsibility, much easier to overpay for sales influence per $ of revenue, much easier to overpay for lower levels of performance, if quota relief is ever given it can reward the wrong person, etc.
However an individual sales quota might work in the initial stage (testing stage) when the company is just starting out as a small firm, with minimum expenses and quota. The pros would be awarded for one’s own credit/work, examine the reps progress and the cons would be few areas covered compared to a pair, work overload, stress/ depression and time consuming. Alternative coverage/quota mode – Have a marketer look after introductions, qualification and generation of opportunities, then bringing in the salesperson to discuss commercials and close the deal, you can create an effective pairing.
But the company must make sure that these pairs look after different territories, which could be geographic, vertical etc. The most important thing is to ensure there is no crossover, one can split by verticals, and we need to make sure to draw the lines and that no one company can sit in two verticals. 3. What are the merits of a quarterly vs. annual quota systems? What is the ideal length of a quota period? What are the adverse effects if the period is too long or short? Which quota period length is most appropriate for Jive?
Quarterly annual quota is effective as sales reps can measure their performances per quarter and rectify the problems in the next quarter thus avoiding a big blunder towards the end of the financial year. One can keep track, learn from the changing business environment and their targeted territories. Also if compensation is included in each quarter it can boost the competition of the sales rep. On the other hand long term quotas can be less stressful and the sales reps have enough time and space to learn their territories well.
The ideal length of a quota period depends on each company and different factors such as Corporate revenue goals, Historic revenue performances, Current sales coverage model, Planned increases in sales headcount, Introduction of new products and services, Current market share, Stretch targets. Adverse effects if the period is too long – sales reps would start with their quota with great gusto in the beginning of the year and loose interest towards the end of the year. The company tends to solve the situation when the year ends because they learn about the problem too late and at that stage the issue can be unsolvable.
As for too short a period it can lead to a lot of stress, incorrect methods of achieving sales quotas as the competition level is too high which results in Sales reps not contracting the right information and failure in understanding the customer needs. As the case study shows that quarterly quotas were a big disaster I would recommend Half yearly sales quotas because sales reps will have enough time to understand their target territories, half yearly sales quota will be less stressful and plus allow them to gather accurate data keep their strategies current with the business.
Also the company must be willing to adjust the leverage down to anticipate some reduction in quota accuracy and manage compensation costs to reasonable levels and avoid revamping the sales for at every quarter. 4. How does the enterprise sales learning curve (ESLC) apply to this situation? The sales rep will have time to understand the consumer needs by allowing the beta to be tested by the consumers. By reduction of quotas, it will result in a less stressful situation giving the sales reps the opportunity to gather information on the pros and cons of the product and creating a correct report for the company.
On doing this the engineers, product developers, marketers and sales can work on a half yearly plan according to the results of the report. 5. Jive Software has announced plans to bring on John McCracken as the new VP of Sales in Q109. What steps should McCracken take to mitigate the problems in sales? With ref to the Sales Learning Curve – Adjust the sales strategy he learns by using the sales learning process that unfolds in three phases—each requiring a different size sales force with different skills: Initiation: Once the products are beta-tested and have few potential customers.
Should hire three to four salespeople to learn how customers will use the product and to support other parts of the company in refining the offering as well as marketing and selling strategies. Look for salespeople who: Communicate well with teams from other functions, Tolerate ambiguity, Have a deep interest in product technology, Can bring customers together with various functional teams in your firm, Can develop their own sales models and collateral material. Transition: Once acquired a critical mass of customers and sales are accelerating.
Keep initial sales team focused on learning. Add sales reps who can operate effectively within an evolving sales model but who don’t necessarily have the analytical and communication skills the initial team required. Execution: Once developed the formula for success and put the sales force’s support requirements in place, bring in traditional salespeople—and arm them with a territory, sales plan, price book, and marketing materials to take orders. Sources: The Sales Learning Curve Article by Mark Leslie and Charles A Holloway.