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Advanced Data Analytics Improves Sales Force Deployment and Distributor Performance

By Garrett Sheridan, Donncha Carroll and Ryan King, Ph.D.

Sept. 3, 2014

“Where and how should we be deploying our sales team and partnering with distributors to win more business?”

Word Cloud "Business Analytics"

Getting the right answer to that powerful question compelled the Chief Sales Officer at a national CPG company to take a deep dive into a variety of data that the company hadn’t considered before.

The company already knew that certain populations and age demographics constituted the company’s most important customer segments. However, changes in the product portfolio and consumer preferences for various brands suggested that additional market segmentation was needed to ensure that the right numbers of sales resources were deployed, working with the right distributors and channels, to increase market share at the lowest possible cost.

Similar to many sales organizations, a detailed analysis of internal customer transaction and distribution data offered key insights about sales force deployment. However, the real power was unleashed by combining internal data with external data. The Axiom team explored at the zip code level hundreds of relationships between variables ranging from macro-economic, demographic and various local trend data to historical sales data by brand. Even beyond that, we factored in:

  • Temperature and weather patterns, since consumer demand is in part driven by weather;
  • Economic prosperity, including household income, changes in housing prices and changes in employment, because increased spending power and rising employment were also related to increased consumption of the company’s products, particularly at the high end of their product portfolio;
  • Population trends, including the growth of specific ethnic populations in various population centers where the business historically had significant success.

To measure the effectiveness of point-of-sale promotions in driving performance at the store level, marketing managers used a custom survey instrument deployed on iPads to capture sales execution data on the prominence of product pricing, placement, promotion and other factors. Axiom data analytics experts aggregated data at the distributor level to reveal previously hidden insights about customer behavior and the relative effectiveness of various promotional efforts.

Notably, the team achieved the most significant break through in understanding how different market forces drive sales using a big data technique known as “cluster analysis.” With literally hundreds of individually correlated variables, cluster analysis allowed the team to look across the entire data set and develop a new segmentation approach based on factors that can be directly influenced by sales resources as well as company’s distribution network. Not only did the new segments enable a new “go-to-market” strategy; it provided the fact base for richer conversations with distributors and more accurate, aspirational goal setting.

Results

The project is expected to have an ROI that far exceeds the investment. Some of the more tangible benefits will include:

  • Rich market information to enable fact-based decisions on where and how to deploy resources—Knowing how much opportunity is available in different markets and how to access it;
  • Improved goal setting—Setting better goals that are stretch but achievable and introducing a new recognition program that leverages the competitive nature of distributors to drive higher performance;
  • More accurate forecasting—Better information on market demand will enable setting of more precise forecasts for the supplier, which will yield cost and efficiency benefits across the supply chain;
  • More targeted marketing investments—Knowing where to invest in regional marketing to access additional market share will enable the business to scale successful promotional efforts and ensure the brands can be well positioned in markets where it counts most.

Conclusion

Companies that want to deploy the right number of sales resources and have them focus on the highest value and highest potential customers and territories can use a variety of data to make smarter decisions about how to build their sales coverage model. Anecdotal evidence from the field and simple financial ratios aren’t sufficient to persuade the sales force of the need for change, nor will it identify the underserved market segments that hold the greatest growth potential. As one CPG company demonstrated, it often takes deep data mining in surprising places and innovative statistical techniques to deliver insights that improve the bottom line.

Sidebar: The Hidden Value of a New Distributor Focus Program

The Chief Sales Officer knew instinctively that he needed to change the conversation with distributors to focus on the level and nature of market opportunity. Doing so would help to improve forecasting and business planning; performance at the retail level; and could significantly increase sales volume and market share.

He also knew that demanding a higher level of discipline around the process would raise a new set of challenges that would need to be addressed carefully. For one thing, it would require the sales organization to build new capabilities to ensure that fact-based discussions led to the setting of appropriate goals for each distributor. By introducing new tools and analytical processes and introducing a new Distributor Focus Program the CSO expects to generate buy-in for the process and goals; promote more profitable distributor behavior; improve financial performance across the supply chain and strengthen the distributors’ loyalty with the company and its brands.

In helping the company create the new Distributor Focus Program, Axiom recommended that a prerequisite for distributor participation was the creation of a more detailed annual business plan, including volume goals, distribution targets and point-of-purchase marketing execution plans. Output from business plans provided performance expectations that distributors would need to exceed to earn awards ranging from special trips and sponsored parties to increased territory marketing investments.

In addition, the Axiom team’s detailed market segmentation analysis had the added benefit of enabling comparisons of similar distributors so that each distributor was competing for recognition against their peers on a level playing field.

To succeed the program needed to be simple, easy to execute, unique and memorable. The simplicity of the program was contrasted by the amount of data and analysis that was needed to build an approach that would drive the behaviors and results that were needed. The Axiom team interviewed senior leaders and owners at almost 20 distributors, representing a mix of large and small businesses, to gather competitive intelligence and understand what sort of recognition program would generate excitement and support. In-depth interviews with the company’s internal sales, marketing, legal and operations executives yielded additional insights and generated enthusiasm for the new initiative.

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