For the year ended December 31, 2009, institutional sales accounted for 21% of total revenue. Rosetta Stone’s institutional distribution model served four markets: primary and secondary schools, colleges, and universities; the U.S. armed forces and federal government agencies; corporations; and not-for-profit organizations.
Sales to educational institutions represented 44% of institutional sales for the year ended December 31, 2009. Sales to governmental agencies, the armed forces, and not-for-profit organizations accounted for 25% of institutional sales. Examples of not-for-profit groups purchasing Rosetta Stone products included those that trained volunteers to teach ESL students, sent members overseas for work, and established literacy programs. Home school sales represented 19% and corporations 12% of institutional revenue.
Regional sales managers were assigned to sales territories and supervised account managers who maintained the customer base. The company expanded its sales force to keep up with its institutional marketing activities. Rosetta Stone promoted interest within this channel with onsite visits, speaking engagements, trade show and conference demonstrations, seminar attendance, direct mailings, advertising in institutional publications, and responses to request for- proposals and to calls based on recommendations from existing customers. Request-for proposals were statements seeking certain services through a bidding process that were made to vendors.