Ashly Luther

Professor Quinlan

Sales Management

17 March 2019

Meridian Systems

In the Meridian case I had to make some very crucial sales decisions for Meridian

systems. Some of those decisions included; should the sales force being seperated or be

implemented within the existing sales force; How should each sales rep be compensated; Finally,

how Meridian will be able to control more than 2% of the market. Lets begin with some

background knowledge though. Meridian systems was originally founded by Robin Eisenstadt.

Meridian systems started out selling point of sale systems and terminals to restaurants. They

currently only occupy two percent of the market in the terminal space. The company only made

2,235.00 dollars last year after taxes and company expenses. The company was profitable its first

3 years but not by a whole lot. In order to survive and thrive in the growing market of POS

systems Meridian Systems needs to infiltrate the cloud based tablet market quickly and

efficiently. Competitors have already begun selling tablet based systems so therefore they are

already one step ahead. Which is where our problem begins.

Meridian Systems is coming out with a new cloud based point of sale machine called

“Gingersnap”. Gingersnap will be run by tablets and is apart of the opening of a new sector in

the market. Opening this sector of the market is crucial to meridian becoming more profitable

and obtaining more market share. Many restaurants are trying to keep up with the times by

implementing new technology driven operations. Gingersnap has been in beta for six months and
will be a newly improved version of their previous product the square. The cloud based system

would have a base price of 4000 and a monthly charge of 1000 a month. The terminal based

system would have a base price of 36,500 and a yearly charge of 5100. Therefore for the cloud

based system to be more profitable the customer retention rate would have to be at least 6 years.

For the terminal based system to be more profitable the customer retention rate would have to be

under 6 years. The tablet cloud based also opens up a new customer base of medium sized chains

and restauants which could be a real game changer for Meridian Systems. With the current

terminal based systems Meridian is only selling to larger full service restaurants and small chains

leaving out the middle ground to only competitors. Another big difference is the difference in

lead to close with the owner operator type of business it is projected for a terminal sale to start

and close in 60 days. With the cloud based it is projected that from lead to close it will take 30 to

45 days which is potentially half the amount of time on each client.

The external competitors have already begun selling and manufacturing these cloud

based systems as I had stated before. The problem with this is that it will be extremely hard to

get anyone to try our new product gingersnap because a good part of our business is due to good

referrals. Therefore if no one has or is willing to try our product then we will not be able to sell

any. The other problem is that it will be nearly impossible to steal any customers from our

competitors already in the cloud based market because it is such a hassle to switch POS systems.

This is because you have to relearn and retrain the entire system and restaurant staff. Another

issue could be that although the market is currently growing it has been growing for the past five

years and the growing for the market could be almost complete. Meridian Systems only has a

small gap of time to develop the sales force, and got this gingersnap project rolling.
 The other internal competitors could be ourselves. We could cannibalize our own

company by making our current customers switch to the cloud based system rather than reaching

a new segment of the POS market. Our other internal issues could come through our sales force

arguing who sells what product and for what compensation. Due to the different price points and

contribution margin for each product. Another potential problem could be, the model tests ran for

gingersnap was only tested on current customers that are already an avid truster of Meridian

systems. So therefore the people being sold to were bias making the sales model possibly

inaccurate and misleading. The other problem is that the margins for gingersnap are lower

therefore the salesman told to sell gingersnap would have to be given more incentive to drive

them to want succeed in selling the gingersnap product. One last potential snafu is that the

salesforce has little product knowledge and experience selling gingersnap which will require

training and resources the company just does not have to spare or waste.

Regardless of the sales projections it is a fact that Meridian systems needs to penetrate

either a new segment of a market or deeper into its current segment to become more financially

stable. If gingersnap does not infiltrate the market and create a good position for itself in the first

two years the company will be hemorrhaging money and will most likely go under. Therefore it

is crucial that the most cost effective sales attack is implemented to be the most productive and

profitable. The main problem we are trying to solve though is how to implement gingersnap into

the salesforce to sell without losing money while obtaining a greater market share and profit.

Some of the possible solutions is to just allow all sales members to sell both gingersnap

and the terminal based system. The positive side of this is that this is the easiest implementation

of the new product to just see how the experienced sales people sell it and let it play out as it
may. The problem with this solution is that the sales people will end up selling more of the

terminal based systems because they will earn more commission off of them so they will not

divide their time evenly. The other problem with this idea is that the company would have to set

a quote for each sales person to hit before they could unlock the extra commission earned from

selling the gingersnap product. One last issue with this solution is that none of these salespeople

really know the product and that would require the company to train each individual rather than a

select few.

Another potential solution would be to separate the SA’s and Sd’s because most people

feel more comfortable when the person they begin the sale with also closes it. The SA’s could

sell the new gingersnap product because none of the sales representors really know much about

gingersnap or selling the cloud product. This would allow the SD’s to keep their customers for

the terminals and force them to take on more responsibility. Some of the problems that could

arise from this arrangement is that the SA’s have no experience in closing sales. ANother

positive part to this solution is that this would allow for lower compensation costs. Also with less

skilled works you can pay them much less than more experienced workers.

Overall out of the two solutions I discussed I decided I would make the SA’s in charge of

selling gingersnap. I would schedule training in specifically closing sales because they already

understand how to make cold and warm calls. They also understand how to service accounts they

have all the key components to being a representative except for closing. This would also be

much cheaper for the company because they would not have to bring on more SD’s for

gingersnap which would cause the company to hemorrhage money until Gingersnap became

profitable. By using SA’s we can pay them less a=in salary and commission allowing them
control all aspects of the buying process for customers. This makes it more personal and suitable

for the product making the selling potential that much higher. This path would also allow for less

training about the product because rather then just training the entire companies sales reps and

wasting time and money.

With the solution would come some minor structural changes. Each region would

still have 1 regional sales manager to oversee operations but they would no longer be in charge

of selling they are only to supervise and direct salesmen. They will be expected to spend 30

percent of their time with the SD’s and 60% of their time with the SA’s. Each region would then

have 2 SD’s who would be in charge of selling the terminals and their compensation system

would remain the same. Then each region would have 4 SA’s to really show our full support in

the launch of our new product Gingersnap. Gingersnap will be sold by the SA’s and only the

SA’s. The compensation will be based off of the previous compensation and a selling bonus will

be added on for incentive. Each region will also still have one ST.