McGraw Hill Case Study

Grant Senter and James PaulsenBaylor University

Recap Sales Process Sales force Structure Compensation Sales Training

Sales Process

Sales force Structure

Compensation

Sales representatives will operate on a straight base salary of 60,000.

Sales representatives can achieve a bonus of 10% of your current salary based off the group performance of the district manager’s sales team. T

Sales Training

Sales training will be given more of an emphasis as the new sales training program will be 3 months long for recent undergraduates.

Experienced Sales Professionals will have a training process of 2-3 weeks. E-Learning modules will have to be completed quarterly and will cover

every aspect of the sales cycle. Sales professionals will be trained on products, the proper sales process, and additional learning

Financials: Increased Revenues:Training- 30 million dollars (100,000 increase per sales rep) Compensation- 9 million Sales force structure-15 million dollars ( 50,000 increase per sales rep)

Expenses:

Training- 5,000,00018 Product Specialists- 900,000 Implementation- 200,000Bonuses- 720,000Total Expenses= 2.77 million

TotalsIncreased Revenues: 54 million dollarsSavings: 2.4 million dollarsExpenses: 2.32 million dollarsIncreased Profit: 53.63 million dollars

Issues

Pros:

-Customer Satisfaction

-Training Program

-Sales force structure Cons:-Innovation

-Unsustainable Growth

-Recruitment Program

-Compensation Structure

Innovation

“The decisive actions we are taking today will reduce our debt and improve our capital structure to support our long-term business strategy of transitioning from traditional print models to digital educational and research materials.”

-Michael Hansen, Cengage Learning’s Chief Executive Officer

-85% of American Association of Educator members incorporate technology in their lesson plans.

-58% agree that that textbooks will be phased out with digital content, including interactive and adaptive multimedia.

Unsustainable Growth

Success

Recruitment Program Does not hire anyone with prior selling experience.

Does not hire talent straight out of professional selling programs or recent college graduates.

These methods limit the talent of the organization and are based off a false assumption that experienced sales professionals will not be able to adopt the consultative sales methods of Prestige Worldwide.

Compensation Structure

Example: History and Political Science: 0% Business and Psychology: 15% Math and Economics: 2% Biology and Physics: 3%

Potential Issues:- Unbalanced growth plans- Lack of management in the decision making

Recommendations

Focus on technology Adapt, React and Advance

Implement positive Prestige Worldwide Tactics Customer Satisfaction Surveys Training Program

Ignore the Negatives Recruitment Program Textbook initiative

Sale force structure—Product Specialist Compensation Plan

70,000 base salary with a 10% bonus available among district teams. Sales representatives will be rewarded with 10% increase in base salary every time they are

able to achieve 100% of quota for 5 consecutive quarters.

Implementation Process

January

Inform experienced reps of the new policy

January

Training of experienced reps

at main office

JanuaryNew recruits begin three

month training

MarchExperienced reps must complete first E-Leaning

session

MarchConduct ride along,

district mangers observe sales reps

March

Make sure new sales reps pass certification to enter the field

JuneExperienced reps must

have logged second E-Learning session

JuneBreak down region by district success

JuneSend

directors to the least

productive districts. He

will train, advise, and advance the process in

these districts

June

Send out customer surveys

June

Evaluate Customer surveys and take action accordingly

Financials:Costs over 10 years

Purchase Prestige Worldwide: $2.5 BillionImplementation: $2 Million DollarsRaised Salaries/New Pay Structure: $34 MillionContracting Fees: $2 Million Total: $2.88 Billion

Revenues over 10 yearsRevenues: 2.5 Billion

300 million/year at a decreasing rate

Takeaways:

• Payback period: Over 10 years

• Uncertainty of Textbook Industry