Sales

CASE: DRAFT

DATE: 01/08/2012

Professor James Lattin and Lecturer Mark Leslie prepared this document to accompany the sales forecasting

simulation used in conjunction with Sales Forecasting at EchoPort. The exercise is designed to facilitate learning

through class discussion rather than to illustrate either effective or ineffective handling of an administrative

situation.

Copyright © 2007-2012 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. No

part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any

form or by any means –– electronic, mechanical, photocopying, recording, or otherwise –– without the permission

of the Stanford Graduate School of Business.

ECHOPORT SALES MANAGEMENT SYSTEM (SMS-REP):

SALES REP USER’S MANUAL

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Signing on to SMS-Rep for the first time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

INFORMATION IN ECHOPORT SMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Account identifiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Information from marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Information revealed during the qualification process . . . . . . . . . . . . . . . . . . 4

Account milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Customer satisfaction index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

SEQUENCE OF STEPS IN SALES PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Step 1. Make forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Step 2. Allocate sales efforts for period 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Steps 3 and 4. Moving on to period 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Step 5. Allocate sales efforts for period 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Steps 6 and 7. Finishing the quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

FREQUENTLY ASKED QUESTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

APPENDIX: ERROR MESSAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

EchoPort SMS: Sales Rep User’s Manual (Draft)

p. 2

INTRODUCTION

The EchoPort sales management system (SMS-Rep) described in this manual serves two roles.

First (and foremost), it is a simulation engine that takes as input hours of effort (as allocated by

the sales rep to different selling activities across leads) and translates them into sales outcomes.

Second, it is a tool used by sales reps to keep track of their sales pipelines and by sales

management to capture sales forecasts at the beginning of each quarter. It is important to keep

this duality in mind when interacting with the system.

Signing on to SMS-Rep for the first time

As a new EchoPort sales rep, you must initialize an account on SMS-Rep. The system is not

designed for mobile devices (e.g., iOS, Android devices); you must log in from a PC or

Macintosh using an internet browser (e.g., Chrome, Firefox, Internet Explorer, Safari) with the

latest version of Flash Player (Version 9 or greater). Additional instructions, including the URL

for SMS-Rep, will be provided by your instructor.

You will be instructed to use either your Stanford SUNet ID or an ID and password provided by

your instructor. After logging in, you will see a page with the heading “Active Games.” Click

on the active game and you will see the EchoPort SMS-Rep interface with your initial sales leads

(an example is shown in Figure A; your lead pipeline will be different).

In class, your instructor will announce the times and dates corresponding to the beginning and

end of the EchoPort fiscal year (e.g., from Thursday at 12:01pm through the following

Wednesday at 6:00pm). During this period of the simulation, you will complete one year of

sales, using SMS-Rep to make your sales forecasts, allocate your sales efforts, and track your

sales pipeline. In order for these sales to count toward your quota, you must complete all four

quarters before the end of the fiscal year.

Each quarter will consist of two periods (the first half of the quarter and the second half). At the

beginning of each quarter, you will receive a number of new leads from marketing. These leads

(with an account status of .new) are numbered according to the quarter in which they are

received (1xx for first quarter leads, 2xx for second quarter leads, etc.).

You are allowed to complete two quarters of sales in one session; thus, you can complete one

year of sales in two sessions on the computer. If you prefer, you can play one quarter at a time.

However, the system will enforce an hour-long break between Q2 and Q3 in each fiscal year

(i.e., you cannot play Q1 in one session and then return the next day to play Q2 and Q3 in the

same session).

During this session, do not hit the BACK button on your browser. If you do this before

completing the period, your forecasts and allocations for the current period will be lost. Be sure

to allocate enough time to complete your session (probably 20 minutes for the first time just to

be safe; it should speed up once you get more familiar with the system). It is also a good idea

not to wait until nearly the end of the fiscal year to begin the simulation.


p. 3

Figure A

EchoPort SMS-Rep: Initial View

INFORMATION IN ECHOPORT SMS

SMS-Rep keeps track of many different kinds of data: account identifiers, information provided

by marketing, information revealed (i.e., learned by you) during the sales process, and account

milestones. These are described in more detail below.

Account Identifiers

The first two columns of SMS-Rep identify the account.

Lead ID. This is a number assigned by the system to each of your leads. Leads are numbered

according to the quarter in which they are assigned. This designation remains fixed over

time.

Account Status. There are six different levels of account status, which change throughout the

sales process. They are (listed in alphabetical order):


p. 4

.new When leads are first assigned by marketing, they are designated as .new (the .

at the beginning of the label is there to facilitate sorting; this ensures that new

accounts appear at the top of the screen when sorted by Account Status).

.qual During the time you are qualifying a lead, but before you have devoted any

sales effort to the account, the account status is .qual.

active As soon as the account is fully qualified, it becomes active.

closed If you succeed in making the sale, the account status will change to closed. In

addition, the quarter in which the sale closed will appear (e.g., closed q2).

This facilitates keeping track of your actual sales over time.

lost Occasionally, you will be informed by a customer that you have lost the sale.

The system will keep track of the quarter in which the sale is lost (e.g., lost

q2)

xxx This is the label for a dropped account. You may decide to drop a lead at any

time. However, once the status is xxx, you cannot go back and resuscitate the

account.

Information from Marketing

Marketing provides two pieces of information with each assigned lead.

Source. Marketing will note the source of each new lead it assigns. In general, there are two

sources of new leads:

in In-bound telemarketing

out Out-bound telemarketing

Title. Marketing also provides a title to identify each lead. There are three categories: physician

(Dr), clinic (Clin), and hospital (Hosp).

Information revealed during the qualification process

In addition to the information passed along by marketing, there is also information that you will

learn by spending time with each account. This information is tracked by SMS-Rep. Note that

this information is revealed by the system only after you have spent a sufficient amount of time

engaged in qualifying the lead.

Need. Does the account have an essential need for hand-carried ultrasound? (yes or no)

Budget. Has this account allocated sufficient budget to meet its needs for hand-carried

ultrasound? (yes or no)

Size. Deals come in three sizes: small (75K), medium (250K), and large (750K).


p. 5

Account milestones

Throughout the sales process, you will engage in different sales activities. SMS-Rep keeps track

of the status of each of these activities.

Demo. If an account requests a demonstration program, the status of Demo becomes req. It is

then up to the rep to decide whether to act upon that request. Once the rep allocates

hours to a demonstration program, the status of Demo becomes open. The rep must then

continue to allocate hours to demonstration until one of two things happens: the account

accepts the results of the demonstration program as adequate (in which case Demo status

becomes success) or the account rejects the results of your demonstration program as

inadequate (in which case Demo status becomes failed and Account Status becomes lost).

ROI. If an account requests an ROI study, the status of ROI becomes req. It is then up to the rep

to decide whether to act upon that request. Once the rep allocates hours to an ROI study,

the status of ROI becomes open. The rep must then continue to allocate hours to ROI

until one of two things happens: the account accepts the results of the study as adequate

(in which case ROI status becomes success) or the account rejects the results of your

study as inadequate (in which case ROI status becomes failed and Account Status

becomes lost).

Final Proposal. If an account requests a final proposal, the status of Final Proposal becomes

req. When the rep allocates hours to closing, the status of Final Proposal becomes open.

The rep must then continue to allocate hours to closing the sale until one of two things

happens: the account accepts the final proposal (in which case Final Proposal status

becomes accept) or the account rejects it (in which case Final Proposal status becomes

reject and Account Status becomes lost). While most accounts close successfully after

the final proposal is accepted, not all of them do.

Note that there is no account milestone associated with presentation activity. Reps must

continue to present to an account throughout the selling process and must use their judgment to

determine what is sufficient.

Customer satisfaction index

Once a lead is qualified, a customer satisfaction index is shown. In this example, the satisfaction

indexes for the five pre-qualified accounts range from 7 to 9 (on a 10-point scale). In each

successive period, marketing will survey your active accounts and post the measured satisfaction

index in this column.

SEQUENCE OF STEPS IN SALES PROCESS

The selling process at EchoPort unfolds in the following sequence of steps:

1. At the beginning of the quarter, the sales rep makes his/her sales forecasts for the coming

two quarters and enters them into SMS-Rep.


p. 6

2. The sales rep then allocates his/her efforts for the first half of the quarter (i.e., the first

period). This involves allocating exactly 300 hours of effort to lead qualification and

different selling activities across potential customers.

3. The sales rep then submits his/her forecasts and first period allocations.

4. The system then returns the results of the first period efforts to the sales rep.

5. After viewing the results of the selling activity in period one, the sales rep then allocates

his/her efforts (totaling 300 hours) for the second period.

6. The sales rep then submits his/her second period allocations. Note that there are no

changes to sales forecasts in mid-quarter.

7. The sales rep observes sales results for the quarter.

Each of these steps is described in more detail below.

Step 1. Make forecasts.

Sales management has asked you to submit three different forecasts at the beginning of each

quarter: guaranteed sales for the quarter (this is sometimes referred to as your “blood commit”),

expected sales for the quarter, and expected sales for next quarter. There are three boxes at the

top of the EchoPort SMS form for you to enter these forecasts, as shown in Figure B. Express

your forecasts in thousands of dollars and omit the dollar sign. Thus, if you expect to make no

sales in the first quarter and $300,000 in sales in the second quarter, enter the numbers 0, 0, and

300 in the boxes as shown in the figure.

Figure B

EchoPort SMS-Rep: Entering Forecasts

Step 2. Allocate sales efforts for period 1.

To allocate sales efforts, use your mouse to click on a cell corresponding to a particular activity

with a particular lead and enter the number of hours you wish to spend. When entering data, you

can also move the cursor from one cell to the next using the directional arrows on your keyboard.

Total hours allocated (across all leads) is tracked at the top of the screen (as shown in Figure B).

In order to be able to move on to the next period, you must allocate exactly 300 hours of lead

qualification, selling effort and/or closing activity.

Most sales reps develop rules of thumb for allocating hours. One way to simplify the process is

to start by allocating hours in five-hour chunks (roughly equivalent to half a day of selling

effort). Each period is the equivalent of 60 half days. If you have 10 active leads and 10 new

leads, you have to think about how you will distribute these half days across accounts and

activities. You can then go back and adjust so that the final total is exactly 300 hours.


p. 7

Figure C

EchoPort SMS-Rep: Entering Hours in Period 1

Figure C shows one possible allocation of hours. Note that this rep has allocated 135 hours to

qualifying new leads and 165 hours to selling active leads. In qualifying new leads, the rep has

spent anywhere from a half day to two full days with each individual account. The rep has

initiated demonstration programs with Accounts 104 and 105 and an ROI study with Account

105.

Helpful hint: When allocating hours, be very careful to put the numbers in the correct columns.

The columns are color-coded to facilitate this. Once you have submitted your hours, they cannot

be undone.

Steps 3 and 4. Moving on to period 2.

If you have made your forecasts and entered a total of exactly 300 hours, you should be able to

move on to the second half of the quarter by clicking the Submit button at the top of the page. If

the submission is successful, you will see the message “Data have been saved.” Click the box

labeled OK and you should see the results from your selling efforts reflected on the EchoPort

SMS page. Figure D shows example results after one period.


p. 8

Figure D

EchoPort SMS-Rep: View in Period 2

In period 2, the rep discovers that two of the 12 new leads received in period 1 are qualified

leads: one small deal (Account 107), and one medium deal (Account 113). The rep also

discovers that six of the 12 leads are not qualified, lacking either need or budget for HCU. The

information on the remaining leads is incomplete. However, the rep now knows that Accounts

111 and 115 have no budget for HCU, so further qualification of these particular leads will not

be fruitful.

Over time, as the number of leads increases, it makes sense to drop unqualified leads and keep

your pipeline sorted by Account Status. This keeps new and active leads (the ones worth

spending time with) at the top of your page and closed, lost, and dropped leads at the bottom. To

drop a lead, select the row (by clicking on it) and click on the button Drop Selected Lead(s) in

the bottom left-hand corner of the window. To sort by any column, click on the grey cell

underneath the column heading (you should see a small black triangle appear to indicate whether

the sort is ascending or descending). Figure E shows the results from dropping non-qualified

leads and sorting by Account Status.


p. 9

Figure E

EchoPort SMS-Rep: Dropping leads and sorting by Account Status

Helpful Hint: Be very careful when dropping leads. Once a lead is dropped, it cannot be

resurrected. Be sure that only the leads you want to drop are highlighted. You may also drop

multiple leads at one time by pressing Ctrl when clicking each lead. Be even more careful when

dropping multiple leads.

Step 5. Allocating sales efforts for period 2

The process of allocating hours for the second half of the quarter (period 2) is the same as that

for period 1. Note that you are not required to submit sales forecasts; this takes place only at the

beginning of each quarter.

Steps 6 and 7. Finishing the quarter.

This brings sales activity for the quarter to an end. At this point, you may quit your browser or

continue on to the next quarter (if appropriate). When you next login to SMS-Rep, your existing

pipeline (as well as your new leads from marketing) will be available for the next round of play.


p. 10

FREQUENTLY ASKED QUESTIONS

Q: Who should I contact when I have problems or questions?

A: Contact your instructor if you have any problems with the simulation.

Q: Is it possible to sort my leads by Account Status and within Account Status by Lead

Number?

A: Yes. Click on the empty cell just beneath the title Account Status and the system will

sort your pipeline by both Account Status and Lead Number (clicking the cell again will

reverse the sort, from ascending to descending). You can also sort on any other columns

in the table (e.g., Size, Title, etc.), but only by one column at a time.

Q: What happens if I don’t complete four quarters of selling before the end of the fiscal

year?

A: Note that you will have plenty of time to complete four quarters of sales (which can be

done in two sessions), so this is a problem you can avoid with a little advance planning.

If you leave things until the last minute, it may be necessary for you to complete your

sales at the beginning of the next fiscal year. Note that sales closed after the end of the

year will not count towards quota (and this will adversely affect your compensation).

Q: Can I discuss the SMS with other sales reps?

A: Yes. Keep in mind, however, that every sales pipeline evolves differently.

Q: Do I have to share my thoughts about the sales process with other reps?

A: No. You are well within your rights to keep your ideas about successful selling strategies

to yourself. The simulation is not a zero sum game (i.e., helping someone else to sell

more does not mean that you will sell less). On the other hand, only the top 20 percent of

reps are invited to President’s Club.

Q: There are a lot of data in my sales pipeline. I’d like to download my data from

SMS-Rep at the end of the quarter and put them into Excel, so I can analyze the

results and prepare for the next quarter. Can I do this?

A: It is possible to copy your pipeline from SMS-Rep to the Clipboard, and then copy from

the Clipboard to an Excel spreadsheet. Begin by sorting the data as you would like them

to appear (you can always re-sort later in Excel) and then click on the button labeled

Copy to Clipboard near the top of the SMS-Rep screen. You should receive the

following message: “Data have been copied to clipboard. You may now paste into an

Excel spreadsheet. PC users: use the Office Clipboard option on the Excel Edit menu to

perform the paste.” The result is shown below. It is now up to you to save and manage

and analyze the data any way you see fit.


p. 11

Q: Now that I have analyzed my sales pipeline data in Excel, I’d like enter my hours in

Excel and upload the result to SMS-Rep. Can I do this?

A: Unfortunately, there is no easy way to upload data from Excel into SMS-Rep. Your best

bet is to make sure the pipeline is sorted according to the same index and then complete

the data entry by hand.


p. 12

APPENDIX: ERROR MESSAGES

Error Message Reason For Problem What To Do

Allocated hours must equal

total available hours.

Hours entered do not total

300.

Add or remove hours so that

allocated hours equal total

available hours.

Forecasts must be entered in

period 1.

Forecasts are blank. Enter forecasts before

proceeding.

You are not eligible to play

right now. Please return

later.

Attempted to play a Q3 too

soon after playing Q2, or

attempted to start playing a

year that has not yet begun.

Close the application and try

again later.

Input must be a non-negative

integer.

Entered a negative number of

hours.

Nothing. The negative

number will be set to zero.

Input must be an integer less

than 300.

Entered a number of hours

greater than 300.

Nothing. The number will be

set to zero.

Closed leads cannot be

dropped.

Attempted to drop a lead with

a status of closed.

Nothing. The status of the

closed lead will not change.

Application error. Please

report this to your manager.

Fatal application error. Contact your instructor

describing the events

surrounding the error. It may

be necessary for you to replay

the quarter.

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