Kauflauf GmbH Company Analysis

Service design: Kauflauf GmbH was established in 2002. Very first European organisation to offer "software application as a service". The product portfolio consisted of Customer Relationship Management and ERP software for - Car Parts, Computer/ Workplace Products and Medical Gadgets business. Product owners worked with design group, sales force to prioritize new features and expect consumer needs. Their competitive benefit was obtained from their effective field specialists who supplied consulting and support to customers.

Kauflauf had 3 departments:

1. Advancement and Support services,.
2. Marketing.
3. Sales.

They had a strong competitive advantage due to _ hands on consulting _ offered by field specialists backed up by the development group. Instead of rivals who targeted larger firms, Kauflauf targeted middle market (revenues from EUR100 million to EUR1 billion) and top-tier smaller sized customers.

CLIENT EDUCATION, HAND HOLDING AND MODIFICATION were the primary locations of focus for the sales force, in order to acquire customer commitment. The culture of the company was YOUTH ORIENTED AND ANTI-HIERARCHICAL. It was defined by small business friendliness and deep pride in superior software application engineering.

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JESS WESTERLEY

An American female who had lived with her household in Germany as a child, Jess had established a love for the nation and was proficient in the language. She has been hired as Assistant Product Owner (CRM product) for computer and office supply wholesalers and retailers.

QUALIFICATIONS

• Jess featured a proven performance history. She had previously worked with a quickly growing CRM software service provider in the United States, where she demonstrated excellent success in growing market share.
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• Has high degree of analytical abilities and eager grasp of market advancement.
• Is deeply thinking about computers, management and worldwide service.
• Able to speak German and form informal relationships with her associates.

OBLIGATIONS

• To comprehend the marketplace and clients.
• To establish item advancement concerns to serve both existing and future consumer requirements.
• To increase sales volume and enable greater penetration in the global CRM subscription software market

JESS WESTERLY'S PROPOSED CHANGE

Even if the external environment was not changing, the competitive landscape was stable and Kauflauf was doing well in terms of business and revenues, the company still required to bring about a change. The internal environment was changing and demanded for Kauflauf to shake itself up in regard to its strategy, processes and structure. With its single minded focus to operate in the middle size market segment, the firm was operating in silos. There was a persistent failure to spot new development and opportunities in the market.

Thus, to trigger off innovation, increase sales revenue and build more agility in the company, Jess Westerly proposed a change in the sales call patterns at Kauflauf GmbH, with the field consultants redirecting atleast 30% of their time and focus towards larger, more established potential purchasers of CRM software services in the computer and office supply business.

Based on Jess westerly's own quantitative analysis and simulations, she had identified that:

1. Only 35 % of the consultant's time went to customers who produced 85% of the revenues, while the remaining time was spent with smaller, less profitable accounts
2. By reducing the time spent with customers with annual sales volume less than € 250,000 (Class 5 and 6 clients) by 20%, and instead focusing on bigger prospective clients , Kauflauf could increase revenues by 30%
3. Field Consultants spending time on closing sales for companies with less than €100,000 in annual sales volume only yields suboptimal returns
4. Kauflauf's recent success in getting business from Dart, one of world's largest suppliers of computer parts through persistent call efforts also supported her proposal

Thus, the company was losing significant sales growth opportunities by strictly focusing on smaller accounts and neglecting large prospective companies.

WHY IT FAILED - THE RESISTANCE TO CHANGE

1. An organization-level change requires the change agent to clearly communicate the vision ahead to those being most impacted by the change. Jess Westerley did not speak to RSDs and consultants before sending out the memo to implement the changes.

2. Change requires the agent to form a core group of people who buy into his/her idea and begin the change process. Jess did not explain why there was a need for change, even though there were no changes in the company's external environment. Internally, it seemed that all was well too. Hence, the field consultants felt that she was intruding into their work schedule. To them, it appeared that she was interfering with their work-patterns though she had no idea of how things actually worked.

3. Jess did not understand the challenges faced by consultants at different levels of experience - She did not seek the consultants' opinion which could have contributed to the change. The issues that came to light when Jess sent out the memo were :

• Consultants felt that this proposal was not for their market
• They did not wish to work for a firm that served larger accounts
• They doubted whether such a change would be good for the firms competitive advantage
• They doubted Jess' understanding of different markets
• They had concerns about Kauflauf's development capacity to support class 1 and 2 sales

4. She did not get approvals from the higher management and RSDs before approaching the Field consultants. An approval from them might have made them think of the change more seriously. However, the entire change process that she suggested was completely based only on her analysis and simulations, and it did not have the backing of the higher-ups.

5. Large clients did not allow consultants to have access to top management and hence closing a sale was tougher and less probable. However, this was the one point which gave maximum motivation to the consultants. Since closing a successful sale required a lot more effort with larger clients, the consultants were left disappointed at times when all their efforts did not bear fruit. Hence they were up in arms against the idea of changing their call patterns towards larger clients.