Success Story - "Repositioning For Growth and Profitability"
$100M Computer Services Division of Fortune 5 Firm
Company Situation and Problem
Flat sales and poor profitability, despite 300 person sales force, in a division selling computer maintenance contracts to small and mid-sized firms. Analysis showed unaddressed market shifts to desktop and multi-vendor services. Local competition had cost advantages; OEMs had scale advantages. Service offerings were narrow; target customers too small to justify cost of sale. Salesmen calling too low in companies too small. Sales processes inconsistent; comp plan driving undesired behavior, measurements inadequate.
Paladin Actions & Recommendations
Recommended strategy shift to multi-vendor, desktop maintenance, and related service offerings, targeting of C-level executives in large national accounts, with extensive sales training, new comp plans, and increased quotas.
- Implementation was phased. New offerings were developed and selling was focused on C-level management in large, nationally distributed multi-vendor companies, blocking local competitors who could not compete nationally, and OEMs who could not address multi-vendor environments.
- Sales training was instituted; sales quotas were raised; comp plans revised to reward transition to the new model. Over time, 1/3 of the sales force demonstrated the required skills. The rest resigned or were removed for performance.
- Revenues doubled in two years, while the 300-person sales force was reduced to a 50-person field force, and 20-person centralized proposals group.
- Average order size rose from $3K to $1M. Profitability improved from substantial losses to profitable at the same time.