McGraw-Hill learns to sell smarter.
Book selling has always been about getting the product into the hands of customers. Sure, one can judge a book by its cover, but that judgment is worthless. Without a recommendation from a friend or a trustworthy review, a customer won’t know whether he wants to spend his money on a book until he goes to a bookstore, opens the book, and reads the first sentence. Even the advent of e-books has required publishers to think of new ways to enable a reader to sample their products (e.g., Amazon.com allowing Kindle owners to read the first chapter of a book before making a purchase).
Textbook publishing operates on a different model. Professors or academic departments select which books students will have to purchase for a given course. In other words, only one person (or a small group of people) needs to sample the book before a bulk purchase is made.
Before the Internet was used to disseminate information on a massive scale, publishers sent sales reps to college campuses to sell books to professors. Once a sales rep had established a relationship with a professor, the company would begin to physically ship sample books to the school for the professor to peruse.
This format worked well when professors were seeing the samples, selecting the textbooks, and commanding students to purchase them. But parts of the process at McGraw-Hill Higher Education were inefficient or broken: The lack of a real CRM system was allowing expensive sample copies (produced and mailed on the company’s dime) to be sent to the wrong campus or the wrong instructors. And there was a fair amount of duplication in the sampling when samples were sent to the right place…more than once. Sales reps and the marketing team were sometimes promoting and sending free sample copies to professors who were no longer teaching those courses, or in some cases, no longer at the college. In a few extreme cases, multiple sales reps were pushing several textbooks at once, to the professors who didn’t teach the targeted course, on different occasions. A lot of time and money were wasted for the lack of the right sales systems and tools.
These foul-ups generally happened because sales systems weren’t in place to collect, store, or distribute critical information that the reps and the management team needed to run the business. Communication between customers, sales reps, managers, editors, and the management team was inefficient. The way sales reps managed their work had to change and many of them were vocal about it.
After acquiring the Times Mirror Higher Education Publishing division in 1996, McGraw-Hill became the world’s largest education publisher. With more than 400 employees—300 of them salespeople—the need to collect and share information in an organized manner became a top priority for the company. With so many sales reps scattered across the country, each speaking to approximately 30 potential customers daily, the era of salespeople writing down information and keeping it to themselves had to end.
It was obvious to Bob McLaughlin, who’d come over from Times Mirror to become the new senior vice president of sales, that the successful integration and future productivity of the combined sales organization required a CRM solution. At Times Mirror, McLaughlin had been using what he describes now as an adequate, usable sales force automation (SFA) system. The SFA tool allowed him to see what reps were doing and who their leads were, but not much else. Simple as that system may sound, it made McGraw-Hill’s system look like an abacus.
“I can’t emphasize enough how inefficient and unstructured the systems were at McGraw-Hill,” McLaughlin says. “It was kind of like going back to paper and pencil. The McGraw-Hill employees knew how [SFA theoretically] worked but there was no process or system in place, no way to collect and share information on customers or to share it with management. It was desperate but it was a great opportunity to move this new sales organization forward as well.”
A CRM task force was quickly formed, headed by Jimmy Bartlett, a senior regional manager who was familiar with CRM technology and had done a lot of work in the field while still at Times Mirror. McLaughlin describes him as an interesting mix—a top notch sales rep and sales manager, someone who clearly understood the importance of providing sales reps with the right tools to manage their territories, their reports, and their forecasts.
Bartlett went on the road to investigate SFA systems and, in the course of attending several conferences, heard Barton Goldenberg, founder of consultancy ISM, speak about CRM. [Editors’ Note: Goldenberg is also a longtime CRM columnist.] ISM urged the task force to perform a detailed needs analysis, which ISM then studied in order to figure out how the business worked, what the workflow was like, what its sales process comprised, and what needed to be automated.
McLaughlin recalls the days ISM spent going over the information with reps and sales managers and technology staffers. “[Our] people were pretty impressed with [ISM’s] ability to understand the details and map out what we were saying. That was really an upfront assessment.”
ISM then urged the team to push for top-level financial and business support from the Higher Education management team, in particular, the president and the finance VP. Despite some initial skepticism from some parts of the sales organization, the CRM task force ultimately received the support needed to implement the project.
The task force determined its solution should be Web-based—a capability still in its infancy in 1997, and therefore difficult to properly assess. McGraw-Hill’s complex sales process required that the CRM system organize and relate thousands of college courses to thousands of textbooks taught by thousands of college instructors at more than 5,000 college campuses in the United States. In addition, the CRM system had to accommodate a long sales cycle and the process of sending sample books.
Seven vendors were asked to design a model of how their systems might fit McGraw-Hill’s CRM strategy. McGraw-Hill refused to review systems that had been developed for any other industry. Once the group of seven was narrowed to three, McGraw-Hill held a four-hour meeting with each vendor.
“What became clear during the meetings was that one of them could actually do [what we asked them to do] but the other two were just talking about it. The other vendors didn’t deliver on the Web-based interface,” McLaughlin says.
So the task force chose as its vendor a small Charlotte, N.C.–based company named Sales Vision—an outfit McLaughlin now describes as six guys who were willing to do anything they had to do to deliver what was needed of them.
“For the folks at Sales Vision,” McLaughlin speculates, “it was kind of do-or-die. They were small and probably hoping to be acquired by a bigger company so our reference was important. They killed themselves to make this thing happen.” The CRM system, nicknamed Marketing Editorial Sales Automation (MESA) by the McGraw-Hill team, was developed over the next six months and launched to a “Super Users” group in January 1998.
The Super Users comprised approximately 35 technology-literate sales reps, sales managers, and marketing managers. They each had a specific interest in using computers to manage their regions, they had experience at it, and they had ideas about what the technology should be able to do. McLaughlin describes them as “sales techies who [were] looking for ways to do things [smarter] and more efficiently.” The Super Users understood the roles of both the sales rep, the sales manager, and the marketing manager. They provided the feedback, ideas, and intelligence about how best to build the system.
Unfortunately, that system, like most new technology tools, had lots of bugs. MESA’s biggest flaw, however, wasn’t in how the system worked, but in how the Super Users designed it to work in the first place.
The Super Users were an enthusiastic and imaginative group, and once they discovered MESA could capture much more data than they thought possible, they found a seemingly endless number of ways to apply the software. Because of this excitement, the Super Users had Sales Vision add data fields for a multitude of unnecessary items—items McGraw-Hill ultimately had to eliminate. Although the information was useful, too much time was being spent on data entry and not on selling. A year into the process, the rollout was complete—but MESA already needed revamping.
Industry insiders sometimes refer to SFA tools as “Big Brother.” A sales rep with little experience on SFA software will typically recoil when he hears that this new tool will track his sales cycles from start to finish, as well as workflow. No one wants the boss looking over his shoulder, judging the work he’s done, the decisions he has made or more importantly, the work the rep “should be doing”. That kind of transparency can make reps nervous, especially for sales reps who haven’t had to share many territory details via SFA systems. Even top performers feel they might be second-guessed by company managers. Tracked by the software, reps feel that managers will be able to see how and why the rep in the next territory or region has closed more or better deals. More importantly, many reps feel they’re being asked to trade sales times and customer-facing time with data entry time required by a new sales system, a trade-off that doesn’t make sense to competent sales reps.
While the employees who had come over from Times Mirror were happy to have a real SFA, those who had been with McGraw-Hill before the merger were dreading the rollout. They had always collected data but they were used to writing it all down and keeping it to themselves.
“The rollout was a turning point for us,” McLaughlin remembers. He wanted to make the transition as easy as possible for his sales reps, but he also wanted them to understand that the process of collecting this data would enhance their selling experience rather than give the impression of a looming security camera.
A few months later, after an extensive training period and after the Super User Group reps had used MESA for a full academic semester, they began to see the impact of some of the efficiencies and they had access to customer data they’d never had before. That experience greatly reduced the push-back from many sales reps. Upper management seemed satisfied and a little enthused.
The task force, however, still needed top-level executives at McGraw-Hill to approve funding for this initiative. That meant presenting data points to the CEO, along with projections that the system would drive results and efficiencies while producing a significant return on investment (ROI) in a three-to-four-year period.
As it turns out, McLaughlin says now, no real effort to validate those predictions ever materialized, other than some brief discussions with the Finance VP at a few of the regularly scheduled Higher Education Management Team meetings.
“It’s hard to go back and say how much money was saved or how much more efficient the sales organization became,” McLaughlin says. “I felt like our CRM proposal made a ton of sense, but four years after the launch, it was hard to get your hands around proving there would be a true ROI. The system was adopted and used so quickly, it just became part of our work life. It’s challenging to pull out the financial impact after you’ve launched, at least it was in our experience.”
The positives were clear to all parties, McLaughlin says. “After you plug the system in and it works, no one remembers to go back to the business case for why we needed to invest. Everyone knew in a general business sense that McGraw-Hill was way behind [before MESA]. Plus, we got a good deal on the system.”
That they did: The entire MESA rollout cost a paltry $1.5 million, and enabled McGraw-Hill to take major steps forward in information collection and utilization, as well as in streamlining the sales process. Quite simply, the company became more efficient.
More concretely, McGraw-Hill was able to cut down on the number of sample books sent out—books that simply went to waste when shipped to low-probability prospects. “We claimed we could save 8 to 10 percent of those books going out to people who never should have gotten them,” McLaughlin says. “They were only getting those [unnecessary] books because we had bad information.”
That may not sound like much, but consider the big picture: Each of the division’s 300 sales reps handles 30 potential customers daily. Each customer teaches, on average, between four and five courses, and each of those courses requires an average of between four and five textbooks. Now multiply those numbers by the price of production for each book, and the cost of postage on top of that.
Although McGraw-Hill declined to share hard data, the value of the time and money saved over 2-3 years by eliminating incorrect or unnecessary sampling certainly dwarfed the $1.5 million spent on the development and rollout of the MESA system.
Still, even an educational publisher has a learning curve. McLaughlin says some initiatives occasionally ran into trouble during rollout or in the first few months—but even the trouble usually yielded useful information.
“After a year or two, as we sorted out the instructors and the courses they taught, the promotion and communication got more targeted and [we sent] less crap. We were able to ramp up support to the right people.”
But what McLaughlin says he’s most proud of is that MESA lasted 12 years, which he says, “seems like an eternity these days.” (MESA was replaced by Salesforce.com last year in order to move to a SaaS solution with more sophisticated Internet and mobile technologies.)
“I’m also really proud,” McLaughlin adds, “that we didn’t get fired either!”
Company: McGraw-Hill Higher Education (a division of The McGraw-Hill Cos.)
Original CRM Implementation: January 1998
Go-Live Date: Spring 1998
Any Subsequent Updates: Following a revamp in January 1999, the CRM project lead left McGraw-Hill in 2001; when its CRM vendor is acquired in 2003, McGraw-Hill buys license to keep CRM program in-house.
IN THE POCKET
Since developing Sales Vision’s MESA sales force automation tool in 1998, McGraw-Hill Higher Education:
- has developed a more-streamlined sales process;
- wastes fewer sample books;
- better targets promotion and communication;
- tracks misconceptions about customers;
- shares relevant customer information; and
- has helped blaze the trail in Web-based CRM, a sector that was barely in its infancy at the time.