Conference 7.286::digital

3146.0. "How the COMPAQ sales force works at home" by QBUS::F_MUELLER (HOME but not forgotten!) Mon Jun 06 1994 15:44

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Note 98.0           How the COMPAQ sales force works at home          No replies
SUBPAC::SAUBER                                      107 lines   6-JUN-1994 09:11
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VNS COMPUTER NEWS:                            [Tracy Talcott, VNS Computer Desk]
==================                            [Littleton, MA, USA              ]

 Compaq - Slashed its U.S. sales force by 1/3 while doubling revenue.  To do so,
	it redefined the sales rep
	{Forbes, 23-May-94, p. 212}
   David Hall used to work at Compaq's Houston headquarters.  He'd spend an
 hour in bumper-to-bumper traffic on Interstate 10 getting there from his home
 on the city's western fringe.  But the 32-year-old salesman doesn't commute
 and more.  In April 1993 Compaq shifted its U.S. sales force into home
 offices.  Even though his territory is Compaq's home town, Hall stops by
 headquarters maybe once a week.  "The only traffic I have to avoid is my
 4-year-old," he says.
   That and the customers beating down his door.  Since CEO Eckhard Pfeiffer
 took over in 1991, Compaq had doubled revenues to $7.2 billion, while cutting
 its sales force by one third, to 224, saving $10 million annually in salary
 and rent.  Some of the revenue growth has come from expanding into discount
 department stores like Wal-Mart, but only some.  Sales to dealers and
 businesses still account for 80% of Compaq's revenues, and that's where the
 productivity gains have been dramatic.  Since 1992 Compaq's U.S. sales force
 has tripled its revenue per person, to $16 million.  "We decided to automate
 instead of populate," explains North American division head Ross Cooley.
   When Cooley was helping to set up a sales force for Compaq a decade ago, the
 upstart company had its hands full just establishing itself as a credible
 manufacturer.  So it replicated IBM's infrastructure of large branch offices
 in big cities.  By 1991, though, the sales force wasn't getting the job done.
 That year revenues fell 10%, earnings plunged by 70%.
   Compaq asked its customers what was wrong.  They said the couldn't find the
 peripatetic salesmen.  Some representatives were getting more than 40
 voice-mail messages a day.
   Were there too few salespeople?  Or were there too many who were organizing
 their time badly?
   Pfeiffer decided it was the latter.  He shrank the sales force from 359 to
 224 in the U.S. and shut down three of eight regional offices.  He moved the
 survivors into home offices.  To eliminate the information bottleneck,
 Pfeiffer set up a toll-free number to answer routine inquiries about products,
 pricing and availability, freeing salesmen to focus on developing new business
 and servicing accounts.
   This reduced overhead and, more important, enabled Compaq to use computer
 and communications technologies to boost the surviving salespeoples'
 productivity.  The leaner sales force could keep up only by automating.
 Hall's office, in the 3rd bedroom of his one-story suburban home, is equipped
 with a Compaq LTE Lite notebook computer with a 486 processor and a
 200-megabyte hard disk.  The notebook plugs into a docking bay, which gives
 Hall access to a 15-inch color monitor, wide keyboard, 120-megabyte tape
 backup drive and laser printer.  The office is also outfitted with fax/copier,
 cellular phone, two phone lines, desk, bookshelf and credenza.  Total cost:
 about $8,000, reflecting the fact that Compaq makes some of the equipment
 itself.  Ordinary folk might pay $10,000.
   Every morning Hall logs onto Compaq's client/server network, whose hub is a
 Compaq server with 38 gigabytes (billions of bytes) of on-line storage.  The
 database includes a centralized account listing, where Compaq staffers from
 different departments record their contacts with each prospect and client.
 The system also contains marketing material, technical reports, press releases
 and electronic mail.
   Pre-Pfeiffer, these databases resided on independent networks within each
 department.  That made it tough for the various departments and sales regions
 to keep abreast of one another's activities.  "It was a network of who do you
 know to ask," recalls Michael Raab, who runs the new system.  Now, rather than
 playing phone tag, sales, management, engineering and customer service
 staffers scan the network for updates, using a point-and-click Windows
 interface.
   After checking the network for E-mail and activity affecting his accounts,
 Hall downloads the material he will need for the day's meetings - what he
 calls his "bag of tricks" - into his notebook computer.  On this slim gadget
 Hall keeps appointments, telephone numbers, charts, illustrations and
 graphics.  "We don't have to carry around overhead projectors and
 transparencies," says Hall.  If he wants to leave a brochure with a client, he
 produces one on the laser printer.
   On the road, Hall can plug into Compaq's database from any phone jack, or in
 a pinch from a cellular modem.  After three or four sales calls, Hall returns
 home, writes and prints letters, responds to E-mail and updates the common
 database with the latest news about his accounts.  "If I meet a new contact
 and need a system engineer to follow up with some information, I input that
 contact's name," Hall explains.  "When the engineer looks at his accounts in
 the database, he'll call the contact."
   After supper Hall spends part of his evening faxing clients technical papers
 or press releases.  "It's neat to be able to get immediate information to your
 accounts," says Hall.  "We weren't able to do that in the past."
   Corporate users and dealers appreciate the extra attention.  Michael St.
 John of Business Products, a Denver computer dealer that sells Compaq machines
 to small businesses, says that before the reorganization Compaq salesmen
 didn't have time to go with him on joint sales calls, but now they're
 available.  His Compaq sales have climbed 30% in dollars during the past year
 - and this when computer prices were falling by 50%.
   The home offices are a great way to sell to customers who themselves have
 employees working from home.  Farmland Foods, the $830 million (revenues)
 Kansas City meatpacker, recently hooked 50 sales reps who work from home into
 a database network using Compaq notebooks.  "You can see their eyes light up
 when we access the database right from their office," says Ann Bacon, 36, who
 works out of her two-bedroom townhouse in Menlo Park, Calif.
   Sales force automation helped reduce Compaq's sales, general and
 administrative expenses to 12% of revenues in 1993 from 22% in 1991.  As a
 result, even though Compaq's gross margin fell 6 points last year, to 23%, net
 income climbed a point, to 6% of revenues.  Alex. Brown analyst Steven
 Eskenazi predicts Compaq will coon get SG&A down to 10%, making it possible
 for the company to live well off a gross margin that will probably skid to 20%
 amid further price cuts.
   Look at how far the work has come in a short time: IBM used to boast of an
 80% gross margin, four times as fat, on its mainframes.
   The downside?  Hall misses the buzz, the camaraderie of colleagues who now
 exist solely as electronic blips.  "Sometimes you fell like you're on the
 frontier," he reflects.  Then there's the danger of putting in too many hours.
 "You can't leave it behind, because it's always there," says saleswoman Ann
 Bacon.  She says her husband usually wanders in around suppertime and
 announces "The office is closed!"  But it's a small price to pay for not
 having to commute.
    
    --------------------------------------------------------------------
    There have been several stories lately about working from home. But
    this is the first that I have seen that actually give real numbers on
    reduction in force, then show how the remnents were forced to become
    more productive. Any comments?
    
    f.m.

    Does anyone know how well Digital's program is going.  From what I
    understand, there are two pilots where Digital has laid off the entire
    sales force in a particular city.  The reps were made the offer to
    become Digital Sales Agents, of which they took.
    
    A Digital Sales Agent works wherever he/she wants to, but I believe
    everyone in the pilots are working from home.  They are not DEC
    employees, but rather they are contractors that make a clear 10% on
    whatever they sell.  I.e., a rep with a $3M budget now makes $300K
    instead of $65K or less.  DEC no longer has to pay for rent, managers,
    health benefits, etc.
    
    What I don't know is whether or not they are given a protected
    territory or are mapped into the accounts they had before.  Do they
    still make money off of distributor sales and DECdirect or are they now
    competing against them?
    
    Looking for comments and information.
    
    ..Larry

Greetings,

Only in Canada you say? Here in Toronto we've been working this way since 
January. We call it the New Work Environment (NWE) ... the rest of the 
industry calls it "Telecommuting". We have eliminated the lease in the 
downtown office building and consolidated all the reps into one office 
@TRO. 

Digital foots the bill for a second phone line at home, Voice-mail service, 
and we all have DECpc 425SL notebooks with FAX/Modem cards. At the office 
we have "pods" that reps plug into to get LAT access. Phones have station 
IDs that you program to wherever you are (at the office or at home). We can 
even get DTN phone access from home if you don't mind keying in the 27 
digit phone numbers (I use my modem to dial these!). We all have little file 
cabinets on wheels with handles that you "park" and wheel over to your pod 
as needed. We use "SNAP for windows" S/W which keeps customers contacts, 
meetings, and forecasting data. We upload and download as required to the 
central server.

The actual raw data expressed in .0 was interesting. All I can add is that 
you can certainly be more productive from home without the commute and the 
daily distractions. I echo .0's comments on the downside when it comes to 
commaradary (sp?) and learning from your peers. it has certainly been an 
adjustment - but in the end I'd say a very worthwhile one!

Mario (who's writing this from home while faxing a quote to a customer on 
the other line --> I have two modems as well as two phone lines)

    
    	Very interesting. As a field sales guy myself, this is the first
    I've heard of such a program. Would be very interested in knowing who
    is responsible for this and where I could contact them. I'd do it for
    five percent and grin all the way to the bank.
    
    		the Greyhawk

    RE: .1
    
    I'm not sure if this was part of a pilot or not but here in Burlington,
    VT two former sales people (1 the DM and the second the last remaining
    Sales Support person) became Digital Sales Agents as of January (I
    think).  This wasn't the entire sales force however and, in discussions
    with both of them, I was led to believe it was voluntary.
    
    I really can't comment on how well its worked since I am not that close
    to it.  Interestingly, they do not work out of their homes but continue
    to work out of the sales office, which I think was part of the
    agreement.  They did however sacrifice their "real offices" and now
    share somewhat of a make shift office area in a corner.
    
    Larry
    

Hi, 

 I work in the Technical Consulting Center (TCC) in Merrimack.
I do outbound tele-selling to system managers, and MIS directors.
I figured that my job was ideally suited for working from home.

I approached my manager about the possibilities of doing this.

(I had seen the H.O.M.E. program announced in VTX.)

I was told that it "would not be considered." Frankly, I was stunned. There was 
no offer to discuss it, or let's explore it...Just a brick-wall "No."

Pressing on, it was explained to me that there were no "tools in place" to 
measure my productivity from home.

(We are measured on number of dials per day, connect time, etc...)

I asked if management, was looking into seeing how those tools could be adapted
to home users, and was told "no."

I find it very disturbing, that in a rapidly changing industry, where we as a
company are fighting for survival, that my management wasn't open to looking at 
alternatives. They weren't willing to look beyond "the nine dots", and see
how things could be, instead of focusing on the way things have always been.

The working from home concept does seem to be working well for Compaq....
It could work well for us too, if given a chance.


Brigham

    RE: .-1
    
    Hard to believe working at home is not an option in your situation.  A
    pizza franchise in the area has all of its telephone answering people
    working out of their homes .... clearly the technology is there to do
    it .... even if we didn't invent it  ;-)

> (We are measured on number of dials per day, connect time, etc...)

    Ummmm....you might ask your manager if he receives the little "thank
    you" letters I get from Sprint each month.  They're fairly explicit on
    WHY they're looking forward to my correspondence,
    if-you-know-what-I-mean, Vern.
    
    								Tex

    re .5

    There are several groups the the Customer Support Centers that could
    not work from home do to the constraints of the phone system, so what
    you are saying is no real surprise. It's unfortunate though, that the
    only thing keeping you in the office is the way that your contribution
    to Digital (productivity) is measured. You have to remember that the
    only reason that people in Digital work from home is to save the
    company money. If it costs more to have a non-standard phone system in
    your house, then the point is moot.


    f.m.