Project TargetCo Sales & Marketing Due Diligence · • Accelerate sales cycle through better sales enablement • Create more awareness in new strategic markets Investment in Marketing

Project TargetCoSales & Marketing Due Diligence

Q1, 2015

Partial deliverable, confidential content excluded

2

QUESTIONS TO ANSWER

• What are the strengths and weaknesses of the sales force?• How effective is the go-to-market strategy?• Is TargetCo’s value proposition aligned with what the customer wants

and needs?• Is TargetCo’s sales and marketing team structured effectively?• Is TargetCo incentivizing the right sales rep behavior?• Due to a lack of acquisition targets, how does Sponsor ensure the

organic growth outlook can deliver expected value creation?

3

AGENDA

Topic PageA. Investment Recommendation 4

B. Executive Summary 8

C. Organic Growth Levers 12

D. Focus Areas1. Corporate Strategy 172. Product Strategy 193. Marketing Strategy 214. Sales Strategy 24

E. Risks and Mitigation 26

F. Appendix 32

4

INVESTMENT RECOMMENDATION

Recommending that Sponsor bid on TargetCo• Key growth levers are:

Market penetration+ Sufficient runway to grow market share in existing relationships with hunting licenses+ Product expansion opportunities have not been exploited + Opportunities in new concepts New growth segments are promising+ Channel Opportunities+ Early establishment of key concepts

• Material risks to be mitigated:∆ Solution is not top of mind for key markets∆ Fragmented decision-making process will continue to impact cycle time∆ Organization is not sufficiently mature for international expansion∆ Rollup play is not available due to first-in-market solution

5

PRIORITIZED RECOMMENDATIONS

Strategy

V1 Segmentation V1 Planning V1 Engagement V1 Org V1 Execution V1 Support

Corporate 1. MarketSegmentation

1. DocumentedCorporate Strategy

Product1. Documented Product

Strategy2. Market Problem3. Competitive Analysis

1. Product Portfolio2. Product

Roadmap

Marketing1. Account

Segmentation2. Buyer

Segmentation

1. Documented Marketing Strategy

2. Budget Planning3. Brand Planning4. Campaign Planning5. Content Planning

1. Demand Generation

2. Lead Management

1. Marketing Org

1. Content Execution

2. Campaign Execution

Sales1. Documented Sales

Strategy2. KAM Plan3. KPI’s

1. V1 Sales Ops

1. Sales Org2. Talent3. Compensation

Planning

1. V1 Sales Enablement

2. Forecast & Pipeline Management

1. Sales Ops

Sign to Close First 100 Days Q4 2015 Q1 2016 Q2 2016

6

ORGANIZATION AT EARLY LEVEL 2 MATURITY

Level 2:Defined

• Documented process

• Not fully adopted

• Some repeatability

• Varied success

• Limited performance

tracking

Higher Maturity = Increased Effectiveness & Scalability

7

AREAS REVIEWEDStrategy Planning Process Org Execution Support

Market Segmentation Revenue Planning

Demand Generation

Process

Marketing Org Design

Content Production

Marketing Operations

Account Segmentation Budget Planning

Lead Management

ProcessSales Org Design Campaign

Execution Sales Operations

BuyerSegmentation

Product/ Solution Planning Prospecting Channel

Optimization

Lead Management

ExecutionSales Support

Campaign Planning Sales Process Talent Program Sales Enablement Systems

Content Planning Territory Design Field Adoption

Data Planning CompensationPlanning

Forecast/ Pipeline Management

Quota Setting Dashboards

Key

Reviewed

Not Reviewed

8

EXECUTIVE SUMMARY (REFRESH)

Obstacles to achieving organic growth objectives:

1. Customer Intelligence• Lack deep understanding of key accounts and how they make purchasing decisions.• Understanding of marketing and sales critical success factors inside each segment.

2. Resource Allocation• Underinvestment of Marketing organization.• Alignment of resources to key accounts.• Duplicity in selling efforts causes inefficiencies in the sales organization.• Middle Management span of control.

9

EXECUTIVE SUMMARY (REFRESH)

Obstacles to achieving organic growth objectives:

3. Talent • Growth occurring through the efforts of the heroic few.• Hiring talent for key accounts.• Compensation is not driving customer penetration.

4. Field Execution• Lack of structure and cadence impacting confidence level in forecast.• Little to no training after onboarding process.

10

REASONS FOR THE WRONG SALES STRATEGY

16%

24%

39%

51%

58%

67%

0% 20% 40% 60% 80%

Not Aligned with CorporateStrategy

Not Aligned with ProductStrategy

No Sales Strategy

Tactics Masquerading asStrategy

Not Aligned with BuyerNeeds

Same as Competitors

Organic Growth Levers

12

ORGANIC GROWTH LEVERS

Penetrate Existing Accounts

TargetCo can grow organically $96M domestically by 2019

Invest in Marketing Initiatives

Focus on New Strategic Markets

13

RESOURCE REALIGNMENT TO HIGHEST CLV ACCOUNTS

Sales Organization

Implications

• Gain access into top accounts• Accelerate sales cycles• Scale faster• Improve win rates• Increase pipeline to quota ratio

Penetrate Existing Accounts

Sources• Data Room

documents• CIM• Management

Meeting

Top 15 QSR accounts are penetrated at 10%

Existing top franchisee coverage is disconnected (TAM- 10,671 sites / ~$75M market opportunity)

Overall win rate of 28.7%; Franchisee win rate of 37.9%

TargetCo in total 60 Concepts vs. Top 500

Customer Lifetime Value (CLV) approximately $12,000 vs. Customer Acquisition Cost (CAC) $9,700

Ability to accelerate concept testing stage

14

IMPROVE NUMBER OF OPPORTUNITIES AT THE TOP OF THE FUNNEL

Marketing Strategy

Implications

• Improve Return On Marketing Investment (ROMI)• Improve quantity of sales ready leads• Gain revenue lift from a strategic pricing strategy• Accelerate sales cycle through better sales enablement• Create more awareness in new strategic markets

Investment in Marketing

Sources• Data Room• CIM• Management

Meeting

.5% Marketing Budget vs. 4-8% B2B Benchmark

Marketing collateral mostly focused on features and benefits, but starting to map to buyers

Building campaigns targeting top franchisees or new strategic markets

Demand Generation program limited to website and email campaigns

Lead Management will be based on Eloqua, but no resources

Potential to create pricing power with introduction of new products/ customer intelligence

15

EARLY INDICATORS OF SUCCESS IN NEW MARKETS

Sales Execution

Implications• Accelerate growth through markets with higher CAGR• Potential for higher price points• Increase pipeline size• Improve testing cycles

Sources• Data Room• CIM• Management

Meeting

Focus on New Strategic Markets

Segment C market 5.5% CAGR

Relative low penetration in new markets: (Segment B=19.8% and Segment C=1.8%)

List of top customers in the industry

Same competitive field / leverage best practicesManagement indicates win rate is

higher in Segments B & C

Pipeline of opportunities proven in these segments

Corporate Strategy

17

CORPORATE STRATEGY

MissionHow we win

VisionWhat we want to

become

ValuesHow we behave

BrandHow we serve

customers

ObjectivesCorporate, Product,

Marketing, Sales, Ops

Market Segmentation

Competition

Advantages

Product Strategy

19

PRODUCT STRATEGY

Market•Market Problems•Competitive Analysis

Focus•Market Segment Definition•Product Portfolio•Product Roadmap

Business Planning•Product Profitability•Business Planning•Pricing

Build•Use Scenarios•Solution Design•Testing Solutions

Launch•Positioning•Messaging•Launch Planning•Launch Execution

Marketing Strategy

21

MARKETING STRATEGY

Market•Market Segmentation•Account Segmentation•Buyer Segmentation

Planning•Brand Planning•Campaign Planning•Budget Planning

Process•Content Process•Campaign Process•Lead Management

Process

Org•Marketing Org Design•Agency Management

Execution•Product Marketing•Content Production•Campaign Execution•Lead Management

Execution•Field Marketing

Support•Reporting•Marketing Operations•Systems

22

MARKETING CURRENT STATE

Strategy Tactics masquerading as strategy

PlanningRevenue planning for the Marketing budget needs to be performedMarketing Resource allocation (internal and external) needs improvementCampaign and content planning must improve to align with strategy

Segmentation Buyer segmentation needs more intel and content mapped to buyer journeys

Engagement

Organization

Execution

Support

Demand Generation and Lead Management need to be stood up

Marketing org is buried in one BU without effective central or field functions

2015 plans increase content, campaigns and reporting, but staff/skills missing

Tools being implemented, but need better alignment with strategy and segmentation

Sales Strategy

24

SALES STRATEGY

Segmentation•Market Segmentation•Account Segmentation•Buyer Segmentation

Planning•Revenue Planning•Budget Planning•Data Planning

Engagement•Prospecting•Sales Process

Org•Sales Org Design•Channel Optimization•Talent Program•Territory Design•Quota Setting•Compensation Planning

Execution•Sales Enablement•Sales Adoption•Forecast / Pipeline

Management•Reporting

Support•Sales Operations•Sale Support•Systems

Risk and Mitigation

26

Execution Team Company

Execution

Operational

People

Financial

RISK DISCUSSION

Dimensions1. Execution - Can the desired growth timeline

be met?2. Operational - Is there potential business

disruption during the transition?3. People - Does the team have the ability to

adopt & manage over time?4. Financial - What is the revenue implication

from not executing on recommendations?

• The purpose of this section is to:• Capture and quantify the risks specific to sales and marketing that are relevant to a potential TargetCo acquisition

• Identify a series of actions that can mitigate the impact and/or the likelihood that these risks will materialize

Who is affected most by these risks?

27

ASSESSMENT APPROACH

Low

Medium

High

Determining Probability: High – very likely to happenMedium – somewhat likely to happenLow – minimal likelihood

Determining Impact: High – Recovery time = 1 quarter or greater. Sufficient damage is done to sales results. The damage is beyond the ability of the sales leader to manage. Medium – Recovery time = 1 quarter or less. Damage will disable one or more sales channels but not the entire sales force. The damage is manageable but requires significant effort. Low – Recovery time = less than 1 month. Damage will disturb the business but no damage will be done. The damage is an inconvenience.

28

EXECUTION

Risk Category Assessment Mitigation Plan

Execution Prob. Impact Comments

Leveraging execs in the sales process cannot be scaled fast enough H H

Hire or train NAMs to be as skilled as current “top to top” sellers; create roundtables where execs can reach many at one time; leverage and enable existing client execs to sell for you

Current leadership approach turns away A players and limits agility and innovation M H Shuffle tenured managers around; assess managers for leadership

competencies and train them;

Management span of control leads to undeveloped talent and turnover H H Implement career paths for supervisor/management positions;

hire/promote sales “team leads” with rep/manager quota mix

Solution is not top of mind for buyers so the value propositions fail to resonate M H Invest in deeper buyer intelligence and modify product positioning

and messaging accordingly; Increase marketing and awareness

Adoption of improvements doesn’t take hold L M Ensure KPIs are related to improvement adoption; leverage robust change management and gamification

Sales pursues low-quality opportunities H M Ensure sales management is coaching reps on prioritized account targeting; modify org to have AS role pursue low-priority accounts

Leads decrease in quality or quantity L H Increase targeted demand generation; ensure no leads go untouched (hire Lead Management personnel)

29

OPERATIONAL


Operational Prob. Impact Comments

Counterattack by competition, especially _________and _________ L M Monitor and mystery shop competition to understand their moves;

socially listen to what’s being said about them; leverage clients

Issues with products cause bad press and lost sales L H

Perform win/loss analyses; ensure rigor around accountimplementation and QBRs; assess risk during sales cycle with new accounts

Key players leave because of new owners L M Prepare and manage strong communications and change mgmt.

Key accounts change stance because of new owners L H Prepare and enable AMs with positive communications about the

change; introduce new owners to key account execs

Backlog increases due to fast growth and lagging operations capabilities L M Sales Management to be measured on forecast accuracy and CRM

use

Aggressive improvement plans placed on the capable few will cause burnout and turnover M M Hire outside help for design, training, implementation tasks

30

PEOPLE


People Prob. Impact Comments

Not enough resources or skills in marketing to carry out 2015 plans H M Set the Marketing strategy and then build the marketing revenue plan for

an increased budget; hire staff or leverage external help

Turnover of Sales personnel increases M H Continue to monitor employee development progress; reduce management span of control; increase manager to rep coaching cadence

Sales Management positions will not be added H M Leverage Reps to become ‘supervisors’; reduce manager admin and non-

coaching time;

Sales Management coaching capabilities are not strong H M

Assess managers to determine coaching skill gaps; build an SM leadership academy; ensure rep coaching is a manager metric and part of their comp

No ownership of ongoing sales/marketing improvement efforts L L

Enable the SFE group with sufficient resources and tools to first understand the return on improvement efforts and then implement in prioritized order

Competition hires away personnel L MContinue to monitor personnel for exit risk; monitor compensation benchmarks against industry and competition; perform exit interviews of leaving talent to understand improvement areas.

31

FINANCIAL


Financial Prob. Impact Comments

Competitor growth (Competitor A, Competitor B, Competitor C, D, E) H M

Increase competitor intelligence; devise attack plans instead of follow me plans; leverage account segmentation to determine where to pursue and where to let go

Customer Acquisition Cost increases because of recommended org model M L Org model will reallocate resources, not bring net new; however, new hires

will be more costly, but should offset cost with quicker, larger sales

Lack of penetration in target segments M HPerform win/loss/no decision analyses; ensure managers are helping reps strategize on deals; ensure sales process adherence; improve account based marketing

Increasing percent of churn L MLeverage account exit interviews to learn how to stem future churn; ensure active QBRs and perform near renewal time marketing to gauge account satisfaction

Too much revenue locked up in few top accounts H M Ensure diverse account penetration at middle levels, not just top concepts;

move upstream from independents;

Project TargetCo

Appendix

33

SBI’S 3 PHASES OF ENGAGEMENT

Coaching Take someone

from beginner to expert

Training Teach the client how to use the

solution

Consulting Define a problem correctly and build a solution to solve

it

34

STRENGTHS AND WEAKNESSES OF THE SALESFORCE

• What they do well+ TargetCo holds a leading market position among their competition+ Market opportunity is strong and ready for them to exploit+ Value proposition with proven results+ Strong leadership team+ Strong talent management framework

• Improvement opportunities∆ Product strategy has been reactive to customer needs vs. identifying segment market needs∆ Sales misalignment of focus and resource allocation with segmented opportunities∆ Key Account Management to create alignment, execute campaigns and net new installs∆ Current pipeline is not sufficient to achieve targets∆ Management span of control leads to undeveloped talent and turnover∆ Marketing is lacking budget, resources and skills to drive segmentation focused growth∆ Sales enablement to align messaging and process with how the buyers make decisions

35

SALES COSTS AT ROUGHLY 13% OF REVENUE

Item CalculationNet 2014 Revenue 5.7%

% Field Sales Costs from 2014 Income Statement $140mm

Field Sales Expense (compares to $5.6mm salaries in 9.1.1.9.1), in line with normal benefits costs $8mm

Field Sales percent of total salary 49%

Estimated total sales salary and benefits expense $16.5mm

Estimated program spend carried at corporate $1mm

Total Sales Costs $17.5mm (12.5%)

2014 Marketing spend $0.4mm (0.3%)

Total Sales and Marketing Spend (differences due to rounding) $18.0mm (12.8%)

Low Med HighConfidence Level

36

CONTRACT SIZE AND CHURN KEY DRIVERS OF CLV

Item CalculationCost of Sales (previous page) 12.5%

Annual Growth 7.8%

Replace annual churn 4.0%

Annual growth ($96mm over 5 year period in CIM) $16.5mm

Sites added in 2014 1,699

Customer Acquisition Cost $9,738


37

SIGN TO CLOSE

Category Key Actions Potential Impact

Market SegmentationFurther refine market opportunity, including concept and franchise ownership

Increase CLVDecrease CAC

Market Problem Using outside-in lens, evaluate other problems that TargetCo can solve


Competitive Analysis Evaluate competitive dynamics in the new markets. Decrease CAC

Account SegmentationEvaluate willingness and ability to pay within the sub-segments.Prioritize accounts appropriately.


Buyer SegmentationUnderstand key decision makers by segmented account, develop personas.


38

FIRST 100 DAYS

Category Key Actions Potential ImpactProduct Portfolio Calculate profitability by product Increase CLV

Product Roadmap Prioritize development based on new market problems Increase CLV

Budget Planning Increase marketing budget to 2-4% of sales. Revenue increase ~2-5%

Brand Planning Evaluate brand positioning Reduce CAC

Campaign Planning Design campaigns towards buyer personas Reduce CAC

Content Planning Leverage persona data to ensure content is connecting with buyers Reduce CAC

Key Accounts Management Deploy Key Account Management Program

~6-10% increase in CLV, ~8-12% reduction in CAC.

KPIs Evaluate KPIs used to measure sales team

~3-5% reduction in CAC by changing behavior

39

KEY ACCOUNTS DRIVES VALUE CREATION

Segment CLV CACMCD* $15,414 $7,468

Core Market* $12,262 $9,514

Independents* $6,688 $14,689

Overall** $11,955 $9,738

Estimated: Segment C*** $18,000 $12,000

Estimated: Key Accounts**** $13,000 $9,000


*Reflects expected customer churn in 2015 from RBC Financial Model . Core market averages QSR and fine dining.** Previous slides*** From management discussion, multiple installations per site. Assumes churn at standard rate (conservative, as it may behave more like National Accounts). CAC expected to be higher due to longer sales cycle, and increased dependence on high cost sales resources**** Key Accounts assumes churn 1% better than overall book of business (less than National Accounts), and no change to ticket size.

40

PRIVATE EQUITY VALUE CREATION STRATEGY

Value Creation Revenue & Cost Model

Investment Recommendation

Talent Assessments

Revenue Planning

Budget Planning

Risk Hypotheses

Upside Hypotheses

Investment Recommendation

Competitive Landscape

Market Size & Growth

Distribution Strategy

Product/Market Mix

Pipeline/Forecast Validation

S&M Effectiveness Assessment

Value Creation Measures

Value Creation Priorities

Time to Realize Results Analysis

Option Value Analysis

Monthly/Quarterly Operating Review

Value Creation Execution

Buyer Segmentation

Account Segmentation

Go To Market Framework Execution

Screening Due Diligence Sign To Close First 100 Days

Market Segmentation

41

MAKE THE NUMBER

Acquisition Growth

OrganicGrowth

Risk Hypotheses

Upside Hypotheses

Competitive Positioning

Market Size & Growth

Distribution Strategy

Product/Market Mix

Pipeline/Forecast Validation

Effectiveness Assessment

Talent Evaluation

Cost Analysis

Revenue Model

Growth Priorities

KPIs

Cost Model

Marketing Plan

Sales Plan

Resource Allocation

Project Roles & Responsibilities

PMO Office

Kickoff Market Segmentation

Work Breakdown Structure

Kickoff Buyer Segmentation

Kickoff Account Segmentation

Monthly Operating Review

Account Segmentation

Market Segmentation

Buyer Segmentation

Budget Planning

Revenue Planning

Campaign Planning

Product/Solution Planning

Data Planning

Content Planning

Lead Management Process

Demand Generation Process

Sales Process

Prospecting

Sales Org Design

Marketing Org Design

Territory Design

Talent Program

Compensation Planning

Quota Setting

Sales Enablement

Campaign Execution

Forecast/Pipeline Management

Sales Adoption

RepoTargetCong

Sales Operations

Marketing Operations

Sales Support

Systems

Screening Due Diligence Sign To Close First 100 Days Strategy Planning Process Org Execution Support

Lead Management Execution

Content Production

Channel Optimization

42

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Project TargetCo Sales & Marketing Due Diligence · • Accelerate sales cycle through better sales enablement • Create more awareness in new strategic markets Investment in Marketing

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