Sales Model Integration

Wall Street—unaccustomed to successful software mergers—saw the integrated sales force as a significant competitive advantage, contributing to a 20 percent increase in share price in the months following the roll-out of the new sales model.

With the acquisition of a firm, two software companies needed to integrate their sales models. One company had relied on a direct sales force working with high-end systems integrators while the other sold via a volume channel. The product lines complemented one another, and many of the products were expected to easily sell into the other’s install base. In addition the Board wanted to leverage both sales models across all products; this was one of the motivators for the merger.

Both Sales Force and the Customers were negatively impacted by the two-organization model, and the company knew it had to act quickly to make the merger successful. Early sales were much lower than expected, and customers were frustrated. Although each legacy group had products that were suited to the others’ channel, maintaining two distinct — and non-optimized — sales models undermined the value of the merger.

Rubicon was brought in to integrate the sales models and address the specific challenges.

The Challenges

Non-integrated product assortment
The two companies had sold in different ways. Some products required a direct model and some required a system integrator model. In addition, one product could be sold by all channels (Direct Sales Force, System Integrators, Retail, Catalog, & VARs). They needed to figure out which products should be sold in each channel.

Incomplete compensation plan
The sales model did not provide the model to properly compensate for sales of the “other company’s” product line. This led to a lack of motivation, and resultant loss of revenue. Management was frustrated at not having a larger picture view from the sales team, and wanted to solve these issues quickly.

Frustrated Customers
Once customers knew the merger had occurred, they wanted to buy products from the other company’s product list, but were unable to amend their contract.

The Rubicon Solution:

Rubicon worked with the company to redesign its sales model, helping design a single, unifying, world-class sales model that would optimize revenue and the customer experience. The new sales model solution integrated:

Product allocation by channel class of trade
Channel design
Margin model
Licensing program and vehicles
Sales compensation model
Role of professional services

For each product from both original companies, Rubicon mapped the type of sales (off-the-shelf, customized, one-of-a-kind) against the technology adoption lifecycle phase (introduction, solution, channel-key, commodity, standard). Overlaying the appropriate sales channel for each type of sale with the adoption phase provided a chance to highlight areas of poor alignment against channel capabilities and categorized offerings as either a “push” or “pull” product. The customer found great value in the analytical-based framework on which to build the sales model rather than the “gut feel” that had previously prevailed.

This background analysis framework set the stage for addressing five key questions which formed the foundation of the re-designed sales model for the combined company:

How to appropriately focus direct selling efforts?
How to manage potential channel conflict?
How to scale through the value channel?
How to take customized products into a mainstream business?
What is the role of sales directly from the company Web site?

In addition to solving the immediate problems of customer contracts and sales compensation, Rubicon led the company through a detailed analysis of their sales methodology. This brought clarity to their current activities, and also left the company very well positioned for future acquisitions.

The Results

The new sales model was approved by the Board of Directors within a few months of the deal closing. The merger of the two software companies went very smoothly and the level of channel conflict was reduced to below pre-merger levels. Wall Street—unaccustomed to successful software mergers — saw the integrated sales force as a significant competitive advantage, contributing to a 20 percent increase in share price in the months following the roll-out of the new sales model.