Case Study:
TEL-SOFT SOLUTIONS: MAKING THE SALE
When Vicki Cambridge reached her office, she had a message from Mike Smith, the regional sales manager, to meet him in his office regarding the ABC Telecom order. Vicki Cambridge is a senior sales associate for Tel-Soft Solutions Inc., a firm that markets software designed for telecommunications companies. The ABC Telecom order represents a multimillion dollar contract for Tel-Soft and would help ABC Telecom boost its productivity levels and revenue for the region. To prepare for the meeting, Vicki reviews her sales call report notes on the ABC Telecom account.
Tel-Soft Solutions
Tel-Soft provides software solutions to large telecommunications firms and has an established track record for delivering an exceptional standard of quality and high levels of customer service. This excellent reputation allows Tel-Soft to charge a substantial premium, ranging from 10 to 20 percent above the market leader. The telecommunications software services market has been dominated for two decades by this market leader. Tel-Soft holds the second position in the marketplace, with a considerably lower but growing market share. Only one other competitor, an aggressive, small, lowprice player, holds a significant market share; this provider has made inroads into the market in the past several years through its aggressive sales tactics. Tel-Soft has just built a new facility and hired 50 new software programmers. Therefore, the company must generate new business to meet its higher financial goals; even more important in the short-run, it must keep the new programmers working on interesting projects to retain them.
ABC Telecom
ABC Telecom is a division of a major U.S.-based telecommunications firm that provides voice, data, fax, Internet, and videoconferencing services. Its purchasing department negotiates contracts for software services and coordinates the interface among a variety of members from different departments. The business environment for telephone services has become highly competitive in recent years, leading to tight budgets and higher levels of scrutiny of the value added by vendors. Competition is fierce, as large numbers of end-user customers are considering new phone providers, which results in considerably lower revenues. ABC Telecom has been consistently buying software development services from the market leader since 1991 and is generally satisfied with its service. A recent change in corporate leadership, however, has increased concerns about its overreliance on one vendor for a particular service. Also, because of the difficult economic climate, the company is concerned about the cost of software services and whether it is necessary to provide such a high service level.
Vicki’s Call Report
A call report is like a diary of sales calls made to a particular client. The notes in Vicki’s ABC Telecom file pertaining to the current negotiations began on June 4:
June 4 I contacted Bethany O’Meara, Chief Purchasing Officer at ABC Telecom, to introduce myself to her and get a sense of what their future software needs might be. She told me that the slowed business climate had caused ABC Telecom to institute a program for increased efficiency in operations and that they would be looking to negotiate a new contract for software solutions. She gave me some insights into the technological aspects of their needs.
June 18 Met with Jon Aaronson, Head of R&D, to explain our productivity-enhancing solutions. Went into considerable depth explaining how Tel-Soft could service their needs and learned what they were looking for in a provider. I went over some specific product
specification issues, but Jon did not seem impressed. But he did ask for a price and told me that the final decision rested with Brad Alexander, the Chief Financial Officer.
July 2 Presented to Bethany O’Meara and Jon Aaronson. They first asked about the price. I gave them a quote of $3.3 million. They suggested that other services were much cheaper. I explained that our price reflected the latest technology and that the price differential was an investment that could pay for itself several times over through faster communication speeds. I also emphasized our reputation for high-quality customer service. While the presentation appeared to meet their software needs, they did not seem impressed with the overall value. I also sent a copy of the presentation in report form to Brad Alexander and attempted to get an appointment to see him.
July 9 Contacted Jon Aaronson by phone. He told me that we were in contention with three other firms and the debate was heated. He stated that the other firms were also touting their state-of-the-art technology. Discussed a lower price of $3.1 million. Also encouraged him to visit Tel-Soft headquarters to meet with the product manager who oversaw the product development efforts and would manage the implementation of the product. He wasn’t interested in making the two-day trip even though it would spotlight our core competencies.
July 15 Received a conference call from Brad Alexander and Jon Aaronson to discuss the price. Brad said the price was still too high and that he could not depreciate that amount over the life of the software and meet target levels of efficiency. He wanted a final quote by August 6.
The Final Pitch
Vicki prepared for her meeting with Mike by going over her notes and market data about the competitors. Mike’s voicemail indicated that they would be meeting to put together their best possible proposal.
Help Vicki prepare her sales presentation.
Q1. Who should be at the presentation?
Q2. How should Vicki start the meeting?
Q3. What are the key points she should make in her presentation?
Q4. What reservations should she expect? How should she handle them?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.