Posted by Daniel Sullivan on Mon, Mar 18, 2013 @ 02:54 PM
John Care is currently Managing Director of Mastering Technical Sales, having spent numerous years building world-class Sales Engineering organizations at companies such as Oracle, Sybase, Vantive, Clarify, HP, Business Objects and most recently Vice President and Area Manager of Pre-Sales at CA. MasteringTechnicalSales.com
“How Do I Justify Incremental SE Headcount?”
“What’s the ROI for an SE?”
“How Do I Calculate Presales Effectiveness?”
Have you ever heard one of those questions? Have you ever been put in the position of
having to justify your business impact (or that of an entire presales organization) to a
sales leader, sales operations, or to someone in finance or even HR?
It’s a topic I’ve wrestled with over the years, and with the help of Michael Lohr, Sean
Cullen and Jim Sargent from out there in the SE community we’ll look at the costs, the
benefits and a few ways to calculate the ROI of a presales engineer.
The Costs. So let’s look at the basic costs associated with an SE. These are all
approximations based on an average SE salary in the software business in the US. So your
mileage will vary depending upon location and industry – but the basic structure remains
the same.
Base Salary and Commissions $150,000 Average SE ; 5-7 years
Overhead/Burden $ 60,000 40% for Benefits and Overhead Expense
Training $ 14,000 External Training/Certifications etc
Travel $ 36,000 $3k/month
Approximate Overhead $250,000
So – figure that even a 40 person SE organization is going to cost you $10m if you get
them travelling. From a financial point of view, only 10-15% of that $10m budget is
variable – the rest is fixed no matter what happens to sales quota.
The Direct Benefits: The first obvious benefit is that the SE team drives a massive
proportion of new product revenue – where product is defined as what you are selling. If
your product is renewable in terms of being software, hardware or other goods that
require ongoing support – then there is an annual support or maintenance payment stream
as a result of the sale too. In most industries the sales force is credited for at least the
first year of such support. There may also, for example in the Telecommunications space,
be recurring annual revenues instead of an upfront-payment. Plus, your product may
require installation, setup, education or configuration services – which is also revenue
driven directly by the sale.
So, at least for a first approximation, you can count all this revenue as SE-driven
revenue. For accuracy you can factor out upgrades and increased customer use due to
natural growth and expansion (i.e “more seats”). This applies only to the current solution
set. For example if you are selling medical supplies/pharmaceuticals and a new indication
is approved which causes additional sales – someone still has to “push” that.
The Indirect Benefits: There are a number of these softer benefits so I’ll focus on
three common examples.
1. Post-implementation visits. A typical presales organization spends 5-8% of its time in
post-sales activity fixing something that is broken – either in support or services. Happy
customers buy more products and this is an area we can influence outside of the
traditional role. You can also include planned post-implementation visits such as
performing a "health check" with the goal of making some recommendations to improve
the product usage as well as explore other opportunities in accounts. This is very hard to
measure because these visits are not always attributed to another sale but I'm certain
they contribute to these deals.
2. Enhancement requests. In general, SEs are the foot soldiers who know what customers
want and where they want to go. Product Managers would be very blind to the market
without the SEs input. Hiring one more SE does not necessarily increase this feedback
but this information cannot be underestimated.
3. Collateral. As the typical organization of last resort – if a piece of collateral, training
or general infrastructure is required then presales will usually create the content when
no-one else does. This also extends to covering marketing events, partner training, trade
shows and so on.
The Extreme ROI. Having looked at the SE-driven revenue, it’s important to understand
that sales is primarily driven and rewarded for generating revenue. Just as it’s easy to
say that if there were no SE organization then revenue would plummet, the same could be
said for sales. An extreme and simple ROI would be – using our 40 person SE organization
and an overall sales quota of $100m. (So even though most SE’s do not have a personal
quota, for the purpose of the calculations Quota = (100m/40 = 2.5m per SE)
Quota 2,500,000
------- = ROI ----------- = 1,000%
Salary 250,000
Clearly not a credible calculation for many reasons.
Alternate Views. There are now two approaches to the ROI calculation. The first is the
overall ROI on the entire pre-sales organization. I personally find this is almost
impossible to calculate and is not a feasible business number anyway – what is more
important is the ROI of the next SE hired. So let’s look at that instead.
The New Hire. The annual costs for a new hire using our same example are still around
$250,000. Training and travel costs may be lower, balanced by a possible internal
referral fee, cost of laptop and other equipment etc. In terms of potential quota
contribution, industry guidelines are:
Years in Organization Qutota Contribution
1 40% (1,000,000)
2-4 100% (2,500,000)
5+ 120% (3,000,000)
This takes the conservative approach that the first six months are pure ramp-up time
spent in training and ride-alongs with other SE team members. The second six months the
SE is placed in lower-value and lower-risk situations – typically smaller deals, RFPs, trade
shows etc. thus freeing the more experienced members of the team to focus even more
of their time on the high-value revenue targets.
Given the typical ramp-up time for an SE, there is also a case to be made for building
bench strength for each of your major solution sets. Under no circumstances should
activity in a vital geography or product line be single-threaded because there is only one
SE who can cover the opportunities. Sometimes hiring needs to occur prior to a projected
increase in activity, regardless of current ROI.
An Introduction to ROPE “Return On Presales Effort”. The other assumption in the
calculations that will follow is that a new-hire is placed in the optimum position to benefit
the company. One way to assure this is by using an analysis of activity against revenue –
hence the ROPE acronym. In essence you are checking that (a) sufficient demand (and
pipeline) exists for an incremental head and (b) sufficient revenue is associated with that
demand. ROPE examines revenue, utilization, time and win-rate broken down by
geography, product line and activity. For example – by geography:
Geography Revenue(m) Heads Rev/hc Utilization (%) Win-Rate
North 15 8 1.88 82 36
South 18 6 3.00 66 42
East 24 8 3.00 65 42
West 22 9 2.44 58 44
Strategic 12 4 3.00 54 53
Federal/Gov 20 5 4.00 74 56
There is a lot of analysis and definitions of terms that we’ll skip over here, as you need to
examine all three dimensions (and that’s one of the things I consult upon), but looking
through the data it seems the Federal/Government group is producing the most revenue
per SE, has the highest win-rate and is heavily utilized. It is the logical place to add a
head as there is both demand to satisfy and revenue to gain. The criteria for each
parameter are highly dependent on each individual company, but in general the higher
numbers win.
When dealing with sales you can also factor in the size of pipeline. Usually 3.5 to 4x quota
in a pipeline is considered healthy enough to justify additional SE-power. Assuming the
pipeline is large enough then none of the other geographies satisfy the ROPE criteria.
There are two options – either hire a new SE directly into Federal or transfer from the
North or West into Federal and then backfill.
New Hire Direct Into Federal --4.00m x 40% = incremental revenue of 1.60m
Transfer North to Federal and backfill -- (4.00-1.88) = incremental 2.12m. Plus 1.88m x 40% = 0.75m -- Total incremental revenue of 2.87m
Based on this data you could incur the additional $250k cost of a new SE and recoup
anywhere from $1.6 to $2.87 million in return – both a payback in way less than a quarter.
It’s important to realize that these calculations are based on the marginal rates of
adding a small number of heads. Adding ten new SE’s to Federal wouldn’t return ten times
these results. That said, what financial controller could turn down these numbers?
Article By John Care
http://masteringtechnicalsales.com/files/How_Much_Is_An_SE_Worth.pdf
http://masteringtechnicalsales.com/news.html
Posted by Daniel Sullivan on Tue, Jun 26, 2012 @ 10:00 AM
Finding the right job involves much more than simply completing an online application. It requires adopting strategies for success, including networking, creating a tailored resume, effectively highlighting skills and experience and marketing yourself in a cover letter. Making use of these job search marketing skills will set you apart from a sea of applicants.
Career blogs can be a valuable resource to job seekers. They can help candidates learn and refine career management skills, such as responding to interview questions and salary negotiations. A good career blog can provide common sense advice that helps you market yourself as a desirable candidate.
These three career blogs offer resources designed to give you a push in the right direction:
Careerealism: A free resource available to all job seekers. This website generates career-related information and resources from career experts. Daily fresh content is available to blog followers and covers topics pertinent to their circumstances. The Career Advice section provides resources on crafting a cover letter, building leadership skills, networking and other employment search aspects. People in different stages of their career – such as post-military, internship, unemployment – can find information tailored to their needs. Article and blog topics cover everything from interview preparation tools to tips on working well with executives. The lifestyles section also adds an element of human interest through topics such as maintaining a work life balance.
The Workbuzz: Powered by Career Builder, this site offers plenty of useful information to make it a good tool for job seekers. Blog entries tackle a wide range of topics such as how to focus ones resume on results or which college majors typically earn the highest starting salaries. Delve deeper into the site and visitors will find job search portals and networking opportunities. Options and resources are divided into several categories: finding the job, getting the job, on the job and news and trends.
Career Hub: An informational site with career related content provided by career coaches and professional resume writers. The site provides a news feed peppered with topics such as creating a career action plan. It also features a job search portal powered by Indeed.com. Career Hub reads is another useful tool that provides recommendations for career management books to help job seekers craft the right plan of attack. So many elements on Career Hub make it a valuable resource.
These are just a few of the free resources available to job seekers or anyone else looking to manage their career
Posted by Elissa Jane Mastel on Tue, Sep 27, 2011 @ 01:47 PM
by Guest Blogger Colleen Moran
When searching for a job, so much time is spent preparing for interviews and trying to impress employers it’s easy to overlook one simple question, “Do I actually want to work here?” A job offering can be so exciting that you may be tempted to jump on the first opportunity that presents itself. But, before you accept an offer, carefully consider every aspect of the opportunity to ensure this is the right workplace for you. Full time workers spend 40 hours or one quarter of the total hours in the week at work. You should be confident time spent working will be compatible with your skills, lifestyle, and career ambitions. Here are the Top 4 Factors you should assess before saying yes to any job offer.
Benefits can be worth up to 30% of your total compensation. Don’t forget to look beyond salary figures and see what financial perks come with the job. Familiarize yourself with the medical, dental and vision insurance plans. Does the company have a pension plan or 401(k)? Other financial perks could include tuition reimbursement programs, signing bonuses, and relocation reimbursements. The Location of the job is a determinant with many factors to consider. Is relocation an option and is the cost of living in the new place different than where you currently reside? For any job, consider what your commute is going to be like. Fluctuating gas prices, road tolls and parking fees are factors of the daily commute that must be considered. Check out public transportation options or see if there is a carpool available. See if the job offers flexible hours or if telecommuting is an option as these are benefits that could cut down cost of commuting. Learn about the company’s Work Environment to determine whether a job is a good fit. Consider the dress code, company size, company culture and values. Does the firm share your ethical values? Do you agree with their mission and their vision for the company? If you feel comfortable in the work environment you will experience higher job satisfaction. Research recent performance and the reputation to see if your values mesh with the firms. It is important to ask “will this job take you where you want to be in your career?” The right job should utilize your current talents as well as sharpen and improve them. Each new job should challenge you as well as further your career in some way. So before jumping on the first job offer, consider these four factors to ensure successful and satisfying career.
Posted by Elissa Jane Mastel on Thu, Sep 15, 2011 @ 09:23 AM
EVIL HR LADY
Is the Evil HR Lady so Evil? Nah, but Suzanne Lucas' irristable moniker is pretty catchy. She's more of a straight shooter and speaks to pertinent topics in the industry. Jaded, maybe a little and with good reason, it isn't easy being the HR point person. She's had 10 years of hiring, firing and number crunching before launching her own firm.
The Evil HR Lady's posts are not objective and you certainly do not have to agree. Regardless of your opinion, she raises valuable points and strikes up a great conversation. Some of her latest posts include thought provoking quesitons workplace oriented questions like;
Are Personality Tests Required for the Job You Want?
Guns at Work: Should You Be Able to Defend Yourself?
Are Crude Jokes Appropriate Office Behavior?
You can catch up on the Evil PR Lady's blog posts on BNET.
Posted by Elissa Jane Mastel on Mon, Aug 08, 2011 @ 09:34 AM
I got a couple of emails last week and posts on my Facebook page in response to my blog post last week on avoiding burnout. Interestingly enough, the item they focused in on was meditation. Continuing a conversation I was having with my friend Scott, we talked about burnout in relationship to having the right job.
Wait, what is Right Livelyhood and is this something you should care about? And how does this relate to working for J. Patrick + Associates?
Interestingly enough, it counts a lot. My job is to promote jobs and connect people to their next career move. I mean, my job is to get people jobs, can't get more right than that, or can it? The other thing I love about my job working with Dan Sullivan and the gang is that I love my co-workers. The environment at J. Patrick + Associates is a very positive one. We are friendly, respectful and communicate with one and other with the same care we offer to our clients and candidates. It says a lot to love going into work, and I gotta say, I really love my job.
But she didn't answer the question, what is Right Livelyhood? Well, let me offer you the Cliff's Notes version of Buddhism 101. Over 2500 years ago, the Buddha walked the earth, saw all the suffering in the world and came up with the First Noble Truth;
In life there is suffering.
In other words, Life Sucks! Bummer. So he walked around, starved himself, tortured himself, sat still and meditated under trees until one day, he had an epiphany.... there is a way out of this suffering and that way includes walking the Eightfold Path. There are steps one must take to find happiness and one of them is this idea of Right Livelyhood. Ok, they didn't have high technology jobs back in those days, so how does this pertain to you and me?
The Buddha's definition of Right Livelihood basically says to not engage in employment that causes harm. Not so easy in this day and age. Just working in a big office means we're causing harm to the environment by shredding up tons of paper, making waste, powering up loads of computers and big lighting fixtures, dumping chemicals into the environment and working with people who aren't always honest and respectful of one and other.
And let's face it, many of us in technology are creating products for a host of uses and not all of them fit into the Buddha's interpretation of right livelihood. But hey, not all of us are Buddhists either. Right?
But coming from a spiritual perspective, I believe you personally deserve to work in a job that is healthy for your well-being. Not only should your career bring you some kind of financial security, but it should also generate a sense of purpose and be an environment that is positive. In the Technology sector, most of us work extra long hours, get heavily involved in the corporate culture and have a higher level of intelligence to contend with.
Here's a few things you should look to bring your job closer to the Buddha's goal of Right Livelyhood;
1) Practice Loving Kindness. The Buddha teaches that we should love all sentient beings the same way we would love our own child. For me, this is a task too great to master. Instead, I say, "Make everyone your friend." Yes, that annoying woman in accounting, that boss who talks to you like your five and your ex you got the job for in the publicity department. ALL OF THEM! Make them your friend. By putting out the Loving Kindness towards others, you'll be setting an example and attracting kindness for youreself. Sure, we all get frustrated, and maybe you're one to bark.
2) Create a comfortable workspace. Some of us have our own offices, and for us who are that lucky, good for us. It's easy to personalize your space. For others we may have cubicals, or work stations. Whatever your environment, do what you can to make it your own by incorprating objects and images that remind you to keep your mind calm. I have a little blue medicine Buddha in the dashboard of my car for such a purpose. I spend a lot of time traveling, so keeping the peace in my car and on the road is essential. On your desk, pick something, can be a buddha, a stone, a snow globe from Coney Island, whatever it is that reminds you to take a breath and relax.
3) Make boundaries and keep them. Most of us want to please others, we say yes to tasks we don't have time for or even worse, bring work home. Make some healthy boundaries for yourself. Decide when you are working and when you're not. Say no when you don't have time to work on something. Don't take that task home, save it for the morning and allow yourself that break from work. Be clear on what you can do and what extra work is going to cause you stress. Of course, we work in Technology, which is pretty busy and we want to impress our bosses and our team. There's nothing impressive about a burnt out team player. Detach, and put time aside that isn't work time.
Our career and co-workers may be a big part of our lives, so whe you create balance and find the space to be at peace, you'll turn your work situation into a right one.
Posted by Elissa Jane Mastel on Thu, Jul 28, 2011 @ 04:11 PM
Over the past twenty years, I've burnt out from the busy work thing multiple times! I have to be very careful, because when I work too hard and get addicted to business I get very sick, like physically and mentally. So I know the consequences of burning out for me are very high.
Fortunately, I've learned to cut back on the 14+ hour days and have retrained myself to get hooked on other things besides that need to be busy all the time. It's not that easy working at an executive search firm and not working too hard. There's a lot of work here at J. Patrick + Associates and I'm never at a loss for assignments and projects to manage and promote.
Here are seven ways I've learned to keep my mind and soul steady and avoid the burnout;
1. Schedule my work time. If it's not on the schedule, I turn off the computer, charge my phone and do something not work related. As a publicist it is counter intuitive to turn my phone off, but getting burnt out is worse. There's a reason we have voicemail. I have included a term in my contract that I am available from 9am - 6pm, Monday - Friday for my clients. This means, I'm not breaking any aspect of our agreement by turning my phone off and taking time to go off-duty.
2. Meditate daily. Getting up in the morning is a busy time at my house. As a mom, I have two people to get ready for the day so I have to do things like pack lunchboxes, make sure the laundry is done, jump in the shower, get my son on the bus, drive to work, make a bunch of phone calls... and that's all before 8:30 am. I used to go nuts by 9am but I came up with another solution, I give my mind permission to stop thinking. Meditation is the practice of making space in my head so I can be present with what is. When I meditate in the morning, I clear the cache in my brain and start the day with a crisp, clean mind.
3. Eat good food. Yes, it's so easy to get busy and chow down on delivery, skip meals, think coffee is a food group, chomp on the leftover birthday cake in the office fridge. I've trained myself to eat healthy foods for a different result. I pack fresh fruit and snacks to keep me from gorging on easily accessible junk food from the vending machine or my workmate's desk. I have breakfast, lunch and dinner. When we order in lunch, I pick a robust salad filled with veggies and grilled chicken instead of the calzone. By fueling my body with what it needs, I don't crash by 1pm.
4. Hydrate. I drink water, lots and lots of it. And, did I mention, drink more water?
5. Hit the spa. Yes even guys can hit the spa. Get a massage or a pedicure. Weekly spa treatments really help me feel like I'm treating myself to me time.
6. Say NO. It's ok to manage expectations with your boss and tell her that you that can't do what she's asking you to do. If you have a problem with time management, then it is time to manage the people managing your time. In other words, Say "NO" to taking on work if it is more than you can handle. People respect a person who knows how to manage their assignments successfully.
7. Get outta here! Pack up an overnight bag and go away for a day or two. Pick someplace like Phoenicia, NY, one of the coolest small towns in America and they don't have cel service. It can be something inexpensive like camping or a night at a really nice hotel. Allow yourself to disappear for a weekend.
How do you check out and unwind? Have you burnt out before? Tell us your story. We’re all ears.