Group 3 Clearion

ITBD Assignment
Clearion Software
Group 3
12P134 Faiz Shamsul Haque

12P136 Gaurav Gaba
12P137 Gautam Hariharan 12P138
Himanshu Gupta
12P145 Lucky Sharma
12P148
Mansi Singhal
Question 1: Should quota be based on profitability or revenue?

The quota was initially being decided based upon the revenue that each region was
generating. But in the new model that was devised by Jacoby, he decided to allocate
quota and measure the performance based on profitability that is revenues per unit.
So, for deciding on this, we need to see the various stakeholders in this and how
each of them will be affected by this
Sales Force These include the various sales force like CAM, TSM, SE, Field
Reps, etc who have the role of closing the deal, getting the deals and completing the
sales or revenue target.
They can increase the revenue through sales to large accounts which in turn will give
them large bonuses. Though there is a decreasing trend of profitability so should the
quota be increased? And if it is increased then how will that impact the motivation
level?
Or they can look at increasing revenue through various small accounts which will
lead to lesser bonuses. This though will increase the profitability but in turn might
lead to increased quotas but will such a situation be good enough?
Sales Manager He manages accounts in the various regions. Challenge and
complexity of forecasting the cost of sales. Need to calculate the trends in cost and
how it will affect the quotas. Thus, the bonuses have a wide range and can vary a lot.
Regional Sales VP They have got responsibility of the various geographic
territories. He receives the quota from the SVP of worldwide sales based on
revenue. They need to achieve the increase in revenue based on increase in budget
for the resources.
As given in the case, the compensation was performance based and hence wide
variations were possible. Now, that we know how the various stakeholders will react
to the different situation lets look at what can be done. Thus, profitability will be a
good metric to go ahead with. Following are the reasons to go ahead with it
Profitability will give a good measure of the bottom line

Converting headcounts into units
Beneficial to keep a cap on increase in headcounts along with assigned
quotas
Hence, while deciding the quota it is important to keep in mind both the top line as
well as the bottom line. The top line will deal with the revenues and the number of
customers reached that is the market reach. While the bottom line will focus on the
net profits and a health PV ratio.
Hence, the Quota should be decided based on the following parameters -
Evaluate
(Appraisi
ng)
Control
(Expense,
Profitabili
ty)
Plan
(Sales
Plan,
Forecasti
ng)
Question 2: Will the sale organization be more efficient with fixed ratio of CAM
to TSM to SE or in the new policy of giving regional manager the power?
In this question, we need to look at both the scenarios as to what will be the result if
we assign them in a fixed ratio and what will be the result if we dont assign them.
Fixed Ratio
The fundamental issue with assigning the SE and TSM with 1 unit each is that then it
would not be possible to estimate the extent to which these personnels are being
utilized by the various regions. As seen in the case from the example of western
region, more dominating and experienced sales manager will tend to utilize them
more efficiently and get more work out of them while in other regions they might be
underutilized.
Regional Managers Decide
If Regional Managers were given the power to decide then naturally they would like
to give more importance to the CAMs as they are considered to be more productive
because of experience and also the fact that the quotas attached are to the CAMs
and not to the SEs and TSMs. This might lead to the underutilization of the SEs and
TSMs.
Recommendations
There should be a separate hiring agency which conducts its business based
on the quota assigned with equitable mix of CAMs, TSMs and SEs in order to
avoid an all CAMs organization
This will compel the Managers to make sure that the costs are lowered and
they better utilize the resources that are made available to them
Hence, the SEs and TSMs be allocated in proportion with the region wise utilization
Question 3: What are the issues that a company should consider in

establishing the corporate sales goals for sales person? For exampleobjective, fair etc.
Defined parameters: -Sales goals should be based on historical trends and

past year sales. Also every territory needs to be analyzed in terms of
competition, market potential for setting sales goals. This will help in better
sales forecasting and territory alignment
Growth expectation from employees should be realistic as well as

challenging to make them give their best performance and better sales force
management. This will also give a sales activity goal to the salespeople.
Adapt the quotas to each sales rep: Sales personnel should be assigned
quota taking into consideration competition and market potential in their
territory.
Add quotas on Market Condition: Basis of assigning quota should be

explained to sales people and they should be guided and motivated to
achieve the same. Their concerns and inputs should also be taken into
consideration in meeting s with them.
Get Buy in from Sales Team: Size of sales force should be also taken into
account while deciding sales target for a region. They should be involved in
the meetings and quotas be explained properly to get the best out of them.
Hence, we need to establish the goals smartly followed by comparison of
results to give a better understanding.
Question 4: Comment on the new process implemented, pros and cons.
It focuses on optimization of profitability rather than focusing only on revenue.

Earlier plan focuses only on top line whereas new plan focuses on top line as
well as bottom line. This plan made managers more accountable and
responsible for consumption of resources
The new plan would make managers to reduce time in hiring new employees
thus making them more accountable.
Till now shared resources were hoarded by managers who were pushy. By
making managers accountable for consumption of shared resources, Jacob
can look to improve efficiency in the organization
The new plan empowers managers to participate in planning and decision

making process and work in collaboration. These way managers will share
more information with Jacob as they will have say in quota setting process.
By merging decisions about headcount and quota allocations into one

decision, Vice President of America can make calculated investments and
hold sales people responsible for these investments.
The pros and cons of the new process are as follows

Pros:
The new system is based on profitability
Headcount based quote might decrease the hiring times and make managers
accountable for the Hiring process
Help in achieving transparency in decision making, goal setting and

evaluation based on objective parameters
The new plan makes managers to take cost into consideration and be
accountable for productivity of sales force
Cons:
Allocating Headcount and Quotas equitably increases pressure on New Hires
Headcount based quote might result in a sub-standard sales force
Power to regional managers to spend units in any manner they choose will
result in more focus on CAMs and underutilization of SE and TSM
A new hire was expected to be as productive as an experienced person within

a single performance period
Each region had different market conditions and clients and measuring them
on same criteria was not fair
The model is too objective in nature. There is no factor accounting for

dynamic changes in market if any
Suggestions:
A new Sales person should not have the same head count as an old sales
person in the same role
Selling budget to be enforced to build in efficiencies and reduce costs instead

of unitization method
Aggressive sizing strategy was not in line the profits and revenues because
although there was a dip in the target for Federal region the headcount was
actually increased
Regional Quotas should reflect Territorial conditions

Carryover Sales to be accounted for
Quantitative method of forecasting that takes into account cyclical

changes, seasonal variations and trends or long term changes
Allocate SE and TSMs Head counts in proportion of their region wise

utilization
Account reallocation in case of territory redesign should reflect in the

Quota setting
Hiring
Cycle should start a few months before the Sales quotas are set
More Centralized and structured hiring process
Separate hiring agency that collaborates with the team of Davitian and
based on the quotas assign an equitable mix of TSEs, SMs and
CAMs(to avoid an all CAM organisation
Tackling challenges
Sandbagging- More direct involvement required by Jacoby
Lobbying- Better understanding of the market scenario
Gaming- More analytical quota setting
Sales Meeting
o Outline the process to set quotas
o Involve sales people in the information gathering and decision making
process

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ITBD Assignment

12P134 Faiz Shamsul Haque

Question 1: Should quota be based on profitability or revenue?

Profitability will give a good measure of the bottom line

Question 3: What are the issues that a company should consider in

Defined parameters: -Sales goals should be based on historical trends and

Growth expectation from employees should be realistic as well as

Add quotas on Market Condition: Basis of assigning quota should be

Question 4: Comment on the new process implemented, pros and cons.

It focuses on optimization of profitability rather than focusing only on revenue.

responsible for consumption of resources

The new plan empowers managers to participate in planning and decision

By merging decisions about headcount and quota allocations into one

The pros and cons of the new process are as follows

The new system is based on profitability

Help in achieving transparency in decision making, goal setting and

Allocating Headcount and Quotas equitably increases pressure on New Hires

Headcount based quote might result in a sub-standard sales force

A new hire was expected to be as productive as an experienced person within

The model is too objective in nature. There is no factor accounting for

Selling budget to be enforced to build in efficiencies and reduce costs instead

Regional Quotas should reflect Territorial conditions

Quantitative method of forecasting that takes into account cyclical

Allocate SE and TSMs Head counts in proportion of their region wise

Account reallocation in case of territory redesign should reflect in the

More Centralized and structured hiring process

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