Focus should be sales, not quality control

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Reed Taussig, chairman-CEO of Callidus Software Inc., San Jose, is a technology industry survivor.

The 47-year-old executive began his career selling mainframes 24 years ago and switched to mini-computers in the early ‘80s. In January 1995, Taussig launched Internet electronic marketing company Inc. After selling in late 1997, Taussig co-founded Callidus Software Inc., a sales marketing management company that appears to be holding its own in a down economy.

Today, Callidus is a 200-strong international company that specializes in creating and administering pay-for-performance programs for sales teams. Selling into both the sales management and corporate finance departments, the Callidusthe name means "expert, experienced, skillful and dexterous’’ in Latinproduct connects sales-force incentive plans with payroll. Companies such as America Onlines Netscape Communications Corp., Dun & Bradstreet and Pennzoil-Quaker State Co. use Callidus systems, which cost $350,000 for the first 400 users. Taussig spoke to BtoB Senior Reporter John Evan Frook.

BtoB: Many advertising, direct campaigns and sales efforts were postponed or suspended immediately following the terror attacks. What is your advice to b-to-b marketers looking to reinstitute marketing and sales efforts?

Taussig: Be patient! More economic damage is being self-inflicted due to people acting on their worst imagined economic fears. Every decision delayed is a further victory for the terrorists. Our businesses will return to normal when we as a country and economy decide that they should return to normal. It is in our control.

BtoB: How can you sell sales managers on enterprise software, when theyve been burned by sales-force automation systems that failed to deliver?

Taussig: Sales-force automation systems promised a lot of benefits, but they essentially made sales a bunch of quality control clerks. For us, the sales organization is the recipient of all the benefits. We capture data through the companys enterprise resource planning system, and give sales managers and sales representatives graphical representations of how much theyve sold, how much theyve earned and other data. It is exactly the opposite of the old sales-force automation model, and as a result our reception among sales managers is in fact very, very high.

BtoB: Why did Callidus introduce software that manages sales promotion and marketing budgets?

Taussig: TrueChannel [released in August] handles market development funds, price protection, cooperative advertising and other factors prevalent in manufacturer-retail channels. Our view is that youve got sales guys negotiating agreements with the retailer, so market development is a natural extension to sales-force compensation. In essence, it is a contiguous expression of incentive dollars. [TrueChannel is priced based on a percentage of the sales-promotion budget, but averages around $250,000 per installation.]

BtoB: Information technology budgets are being slashed everywhere. What argument do you have for your software, given the state of the financial markets?

Taussig: More and more, companies are looking not to expand their top-line revenue growth, but their bottom-line profits. The return on investment of a sales-force application can be enormous. Consider our customer, Minolta. If they can motivate salespeople not to provide a 2% discount on a $2 billion product, thats $40 million that drops right to the bottom line. And theres virtually no cost associated with it. We think it is a pretty compelling argument, even when budgets are going away.

BtoB: What steps can manufacturers take to make their sales and marketing people more effective?

Taussig: I began my career in sales when Jimmy Carter was president, so I know something about selling during a recession. There are three things manufacturers should focus on. First, qualify the customer at higher levels than normal. Ask yourself in the stark, cold light of day whether the customer really wants the product. Second, dont let sales representatives get happy ears, which happens when they only hear what they want to hear. Sales management must be very critical that all levels of a potential clients organization involved in the use of the product have signed off on a documented return on investment. Third, use common sense. If you read bad news about a company, the chances are really, really small that youll score a customer win.

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