DIGITALTHINK: BUILDING A SALES FORCE

---GROUP 2
DIGITALTHINK-BUSINESS MODEL
BUSINESS GROWTH VALUATION

Web-based training 30 courses End of second round

company; built-in 20 customers valuation: $7 mn
interactions Largely catered to Major names: H&Q, Walden
18 months since Fortune 1000 accounts Group,
inception Investors like TI helped in
product development; beta
testing
PRODUCT COMPETITION INDUSTRY

Highly interactive CD-ROM/LAN delivered Shift from classroom to

courses covering a broad
range of topics
No maintenance product
Pay-as-you-go pricing
24-hour tutor help;
discussion boards
content eg. CBT, NETG, Web-based training
GGL etc. Increasing corporate
Relatively shorter spend on industrial
courses training
Query resolution via e-
mail
Pricing based on up-front 2
licensing
DIGITALTHINK REVENUE MODELS

CATALOG-BASED CUSTOM WORK WEBSITE SALES

OFFERINGS
Sign-up by Design of company- Open to individual
individuals needing specific courses end-customers
training in a Based on use of Effective lead-
company Digitalthinks generation
Two-step sales technology and mechanism
process; payment platform Test for product
based on experience
registrations 3
DIGITALTHINK MANAGEMENT
VP- Dir-
CEO Mkt Sale Sales
g s force

PETE STEVE JAY MICHELE

GOETTNER ZAHM PALACE GOLDBERG
Experienced in Previously product manager
Experienced in consulting Not much experienced
sales and projects with Adobe in sales
marketing No direct sales and Sales experience at IBM; web- Major work in marketing
Exposed to the marketing experience. inclinations Fitted with the young
different sales Experienced in project salesforce target group
tasks design and management Worked with existing
Successful: accounts to improve
efforts helped average revenues
triple sales 4
during two year
ISSUES
UNCLEAR ORGANISATIONAL STRUCTURE AND FUNCTIONS
1 No clear demarcation among the different types of roles; reduced scope for
coordination under new system
Choices: product-based segregation vs function-based segregation; no scope for
accounts differentiation
RECRUITING NEW SALES FORCE-LEAD GENERATION MECHANISM
Segregation of employees along accounts, locations and product classes
2 Dependent on the sales force hires for bringing in contacts and further leads into the
industry
Experience vs cost: Hiring employees well-experienced in sales would hit the balance
sheet
PRICING SYSTEM FOR GENERATION OF MAXIMUM REVENUES
3 Different pricing structure followed by the competitors; made it easy for them to have
sufficient cash flow
Need for constant engagement with end customers to ensure repeated sales
Lower cost per successful completion;
QUOTAS AND COMPENSATION METRICS
4 Company decision entirely based on competitor trends rather than in-house analysis
Need for revenue backtracking to determine hires and corresponding quota allocations

5
RECOMMENDATIONS-SALESFORCE
HIRING Q4-FY98 Q1-FY99 Q2-FY99 Q3-FY99 Q4-FY99
Projected number of courses by
100 110 115 120 125
FY1999
Average account size as of
$25000 $25000 $25000 $25000 $25000
FY1997
Revenue Projections for catalog
370 640 875 1135 1560
sales (000)
Operating Income before sales
(419) (278) (165) (17) 248
force expenses
Sales Management 30 30 45 45 50

Sales force Spend @15% 55.5 81 131.25 170.25 234

Operating Income after Sales
(474.5) (359) (296.25) (187.25) 14
Force Expense
Average compensation per $100,000 $100,000 $100,000 $100,000
$100,000
salesperson
Average compensation per $125,000 $125,000 $125,000 $125,000
$125,000
manager
Total number of hires-
0 1 0 1 0
salesperson
Total number of hires-managers 0 0 0 0 16
RECOMMENDATIONS-CANDIDATE
SELECTION
Christopher S. David Brian William William Cheryl L.
Garnett Kaplan Pruitt Pai Sinclair
POSITIVES POSITIVES POSITIVES POSITIVES POSITIVES
Experience Experience working Extensive Sales Extremely relevant Familiar with use of
Managing sales in new product Experience & diverse technical systems
force category Presentation skills experience in Regional Manager
7-years experience Internet-Savvy to bring on new technology training Management of
as salesperson Conducted training accounts Experience in sales cycle;
Experience in in software; knows Experience as recruiting and diversity
NEGATIVES
training NEGATIVES
process NEGATIVES
manager NEGATIVES
managing NEGATIVES
Highly experienced: Less experience in No experience Long period with Lesser
high costs sales working with IT- one company may specialization in
Lacks IT training Diversity of based companies; make it difficult for one sales function
experience experience; can be only field sales employee to adjust Highly experienced;
Greater inclination cross-trained to the requirements high costs
to product of start-up
development

7
RECOMMENDATIONS-SALESFORCE
MANAGEMENT
SALESPERSON PROFILE
Younger sales-force
hiring to cut down on
costs
Technically proficient;
presentation skills
3-4 years of relevant
QUOTA
experience
ALLOCATION
Average quota: $ 1mn
per salesperson
20 active accounts per
salesperson
Hiring proportionate to
quotas
REGIONAL MANAGERS
Need for more
salespeople to get better
idea of customers
Hiring of regional
managers from FY99
onwards to segregate
quotas and allocations
Quotas for regional
managers in terms of
REVENUE ANALYSIS ACCOUNT ALLOCATION
Quotas determined on With hiring of regional
the basis of size of the managers and pay-as-
account you-go pricing, every
Revenue allocation location will be
balanced to take into considered as a separate
account different account
COMPENSATION
accounts PAYMENTS AND BILLING
Variable pay for Pay-as-you-go:
salespersons and stock Compensation when
options for managers customer is billed
Capped total Upfront: Phased
compensation to achieve compensation spread
revenue and profitability out over license period
SALESFORCE
goals LOCATIONS ORGANISATIONAL STRUCTURE
Positioning based on Significant autonomy to
amount of travelling regional managers
entailed and attention Top management can be
required for account devoid of sales-based
Old accounts can be roles and focus on
managed from San financing and marketing
Francisco with frequent
travelling
Newer accounts require 8
THANK YOU
QUESTIONS?