SaleSoft, Inc.

(A)
The Case presents the profiles of two prospects for PROCEED, a CSAS product developed by SaleSoft. These prospects are Company A, which belongs to Financial Services Industry & Company B, which belongs to Computer Hardware Industry. We have to find out that to which company it is easier to sell PROCEED & why? First of all we can find out the total cost required by each company to adopt PROCEED into its system. This can be found out as, Total PROCEED costs = PROCEED License Fee + Implementation & Training Costs + Annual Support & Maintenance Costs + Hardware Costs + Project Start-up Costs + Annual Costs of Internal resources This gives us the Total PROCEED Costs for Company A & Company B as $2,750,000 & $6,558,000, respectively. Now, the adoption of PROCEED results in three benefits: Reduction in selling cycle, reduction in start-up time for new sales reps & reduction in reduction in rep turnover. Let us deeply visualize each of the three benefits.

The first benefit is reduction in selling cycle, as a result of which the sales reps are able to perform more number of sales per year. The additional sales due to reduction in selling cycle can be calculated as, = x

The second benefit the companies are getting out of PROCEED is reduction in start-up time for new sales reps. The reduction in start-up time provides each new sales rep more number of days/ year to perform actual sales. The additional sales due to this factor can be calculated as, = x Here, the no. of new sales reps can be calculated as, . = (1
%

)x

The third benefit is in terms of reduced rep turnover. As a result of this, there will be less number of new sales reps and less overall training hours. More number of sales reps will be working throughout the year to carry out sales. The additional sales due to this factor can be calculated as,

= x Here, the additional retained sales reps can be given as, =

%

After calculating all these, we find that the total additional sales after using PROCEED for Company A & Company B are $8,101,389 & $46,763,182, respectively. The net profit due to additional sales can be calculated as, =

From the calculations in the Table 1, we can see that the percentage increase in profit for company A is around 3.5% & company B is around 10.5%. Though the venture into PROCEED is profitable for both the companies, it is more profitable for company B. Also, the total PROCEED costs for company B are very low as compared to the revenues. Therefore, company B can recover the costs of venturing into PROCEED more quickly. Hence, it is easier to sell PROCEED to company B as compared to company A. Now lets find out that if SaleSoft goes for producing & selling Trojan Horse, how many customers are required to be sold off in order to reach the break-even point if it is priced at $1000? How many customers to reach break-even if the price is $400? The total cost for producing Trojan Horse is $200,000 (production cost) + $500,000 (marketing cost), i.e. $700,000. Now if the price is $1000, the total number of customers required for break-even = 700,000/1000, i.e. 700 customers. If the price is $400, the total number of customers required to reach break-even = 700,000/400, i.e. 1750.