Siebel Systems: Anatomy of a SaleCase Analysis

Group PPriyanka de

NoronhaRishi RajSaumitra

AmbegaokarSreya GhoseTejas Pradhan

Agenda

• Part 1: Introduction to Siebel Systems

• Part 2: How did Siebel gain leadership status?

• Part 3: The Situation• Part 4: Questions, analysis &

Summary

INTRODUCTION TO SIEBEL SYSTEMS

Part 1

Siebel Systems: Background

• Siebel Systems founded by Tom Siebel1993• Revenues reached $2 bn• Fortune Magazine had rated Siebel as one of

the fastest growing companies in USA for the past three years

• 8,000 people employed

2000

• World leader in CRM software with 50% market share

• 200+ products• 139 offices in 40 countries

2001

Part 1

What is CRM?

Customer Relationship Management System

Part 1

HOW DID SIEBEL GAIN LEADERSHIP STATUS?

Part 2

1. Customisation of product

• Among 400 players in the sales force automation space

• Extended services beyond electronic contact management

• Customised product according to customer requirements

Part 2

Result

Gartner’s CRM Top 10 Magic Quadrant (2002)

Part 2

Niche Player Visionaries

LeaderChallenger

PeopleSoft

SAP

Completeness of Vision

Ab

ilit

y to

Exe

cute

Interact Commerce Firepond

PivotalOnyx

J.D. EdwardsEpiphany

2. Value-added services

Multichannel approach:• Retail outlets• Kiosks at trade shows• Internet• Call centres

Part 2

Result

• Increase of over 20% in their customers’ average satisfaction levels,

• Increase of over 19% in their employees’ productivity levels, and

• Increase of 16% in customer retention (98% of customers ready to buy again from Siebel)

Focus on Consumer Satisfaction

American Customer Satisfaction Index (ACSI):• Companies with top

50% ACSI scores generated ~ $42 bn in shareholder wealth

• Companies with bottom 50% of scores created only ~ $23 bn

• 1 ACSI = market value of $898 mnA 1% increase in customer satisfaction =

a 3% increase in market capitalization

Part 2

3. Consumer value-add

• Did not attempt to capture value from each component

• Only 16% of client’s CRM investment went to Siebel

Part 2

Result

• 729 partners by 2001– Integration alliance partners:

Accenture, CapGemini, Ernst & Young– Hardware & Software partners: Alcatel,

Avaya, Compaq, AT&T Wireless

Part 2

THE SITUATIONPart 3

Gregg Carman’s Dilemma

• $2.1 mn sale to Quick & Reilly (Q&R)• FleetBoston – recently acquired Q&R –

wanted to veto the sale• Should Carman sell the product to Q&R

or stand by FleetBoston’s wishes?

Decides to go ahead and make the sale

Part 3

Quick & Reilly: A Background

• A discount-broker• 1996: Cathy Ridley (VP Marketing)

wanted to introduce sales force automation in 1996 – to track 100 offices, 500 brokers & 1 mn customers

• 1997: Q&R got acquired by FleetBoston• 1998: Met Gregg Carman to consider the

possibility of implementing Siebel’s customised solution

QUESTIONS, ANALYSIS & SUMMARY

Part 4

Part 4

Question 1

How should Carman respond to the invitation to tell the Quick & Reilly executives what he thought of Oracle?

Part 4

His response to Cathy Ridley is appropriate

1) He does not undercut Oracle2) He launches into a demonstration of Siebel’s solutions

What else could he have done?

a) Provided Cathy literature of Siebel’s productsb) Walked her through the various stages of product

implementation and showcased Siebel’s end-to-end solution provision

Question 1

What features of this particular interaction influence your opinion?

1) Carman has no information about the client requirements or budget

2) Oracle is among Siebel’s leading competitors, so bringing Oracle into focus may not be a good idea

3) Cathy Ridley is a knowledgeable customer4) Carman is not comfortable directly comparing

Siebel to Oracle without prior information on the customer’s requirements

Part 4

Question 1

Would your opinion of the right response change if the circumstances were different?

1) Carman has full information about Q&R’s requirements and budget

2) Cathy Ridley is not very knowledgeable

Part 4

Carman should push to sell Siebel over Oracle because he knows exactly what the customer wants

Carman should stick to his original response, since Cathy would otherwise not appreciate the differences between Siebel and Oracle

Question 2

How should Carman qualify the prospect?

“HOT”

Q&R is in the market actively shopping for sales force automation systems. If Carman can address Q&R’s requirements, he will quickly and successfully be able to convert the sale.

Part 4

Question 2

Should he ask, “What’s your budget?”

YES.

The information (Pre-approach stage) Carman gathers will determine his strategy when he sells to Q&R executives.

Part 4

Question 2

Should he suppress his curiosity and leave it to the prospect to bring up information about the size and timing of the opportunity?

NO.

The prospect may not bring up the information at all in which case the opportunity will be lost.

Part 4

Question 2

If he asks for information, how will he use it?

Sell the product to the powerful buyer, i.e. Q&R top management (“the right set of executives”)

Part 4

Question 3

Evaluate Carman’s interactions with the customer up to this point. Is he doing a good job?

Prospecting & Qualifying

Pre-approach

Presentation & Demonstration

Overcoming Objections

Closing

Follow up & Maintenance

Identified Cathy Ridley

(Q&R) as a prospect

Information gathering to understand

requirements

Demonstrates Siebel’s product at the trade

show

Q&R raises “objection”

by mentioning

Oracle

Will close sale after

meeting the decision makers

Siebel’s USP – ensuring customer

satisfaction

Carman is doing a good job so far

Part 4

Question 3

How effective is Siebel Systems’ approach?

Follows a Targeted Account Selling (TAS) Process

Assess the Opportunity

Define the competitive Strategy

Develop the Relationship Strategy

Turn Ideas into Action

Test and Improve the Plan

Part 4

1

2

3

4

5

Step 1: Assess the Opportunity

Is there an opportunity?

$2mn sale to Q&R

Can we compete?

Yes, only company offering end-to-end

solutions

Can we win?Yes, market leader

Is it worth winning?

Yes, large sale

Part 4

Step 2: Define the Competitive Strategy

Compelling event and can compete to win

Marketing strategy: Flanking attack

1. The market is segmented2. There are some segments that are not well served by

the existing competitors3. Oracle has relatively strong resources and is well able

to withstand a head-on attack4. Siebel has moderately strong resources, enough to

successfully defend several niches

Part 4

Step 3: Develop the Relationship Strategy

• Key players: Cathy Ridley, senior executives

• Powerful buyers: top management to whom the final sale has to be made

• Current status: still assessing the situation

• Relationship strategy: need to built a long-term relationship

Cathy Ridley(VP Marketing)

Part 4

Step 4: Turn Ideas into Action

Market leader in CRM Systems

Pre-approach stage

Only provider of end-to-end solutions

Gather information on customer requirementsCustomer value addition and satisfaction, customised products, long-term relationships

Part 4

Step 5: Test and Improve the Plan

Will come into play once the selling plan is implemented

Understand the Plan

Test the Plan

Improve the Plan

Part 4

Summary

The TAS process is effective because Siebel:

1. Follows a market-driven approach (delivers superior customer value through complete solutions which is hard to replicate)

2. Gathers information and better understands customer requirements to deliver a customised product

3. Creates strategies keeping in mind counter strategies which competition might adopt

Part 4

References

B. Fryer (2001), “High Tech the Old Fashioned Way,” Harvard Business Review, Vol. 79, 3(March), 99-125.

C. Fornell (2001), “The Science of Satisfaction,” Harvard Business Review, Vol. 79, 3(March), 120-121.

Siebel Systems: Anatomy of a Sale Part 2 (HBS Case 9-503-022)

Thank you