McGraw Hill Case Study

1. McGraw Hill Case Study Grant Senter and James Paulsen Baylor University

2. Recap • Sales Process • Sales force Structure • Compensation • Sales Training

3. Sales Process

4. Sales force Structure

5. 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

6. 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

7. Financials: Expenses: Training- 5,000,000 18 Product Specialists- 900,000 Implementation- 200,000 Bonuses- 720,000 Total Expenses= 2.77 million 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) Totals Increased Revenues: 54 million dollars Savings: 2.4 million dollars Expenses: 2.32 million dollars Increased Profit: 53.63 million dollars

8. IssuesPros: -Customer Satisfaction-Training Program-Sales force structure Cons: -Innovation -Unsustainable Growth -Recruitment Program -Compensation Structure

9. 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

10. -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.

11. Unsustainable Growth Success

12. 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.

13. 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

14. 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.

15. Implementation Process March Make sure new sales reps pass certification to enter the field June Evaluate Customer surveys and take action accordingly June Send out customer surveys

16. Financials: • Takeaways: • Payback period: Over 10 years • Uncertainty of Textbook Industry Costs over 10 years Purchase Prestige Worldwide: $2.5 Billion Implementation: $2 Million Dollars Raised Salaries/New Pay Structure: $34 Million Contracting Fees: $2 Million Total: $2.88 Billion Revenues over 10 years Revenues: 2.5 Billion 300 million/year at a decreasing rate