The Business Sponsor Who Asked The Right Question
KENNESAW, Ga. (Jul 6, 2021) — We hear all the time about business sponsors who don’t seem to get analytics and who are difficult to work with. There are some great business sponsors out there too, though they don’t get as much written about them. Sometimes, the accepted conventional wisdom about what drives a given business trend can be dead wrong. It simply takes someone to think critically to find the issues. In this blog, I’m going to discuss a business sponsor who did all the right things and saved his company seven figures in the process.
First Question: Why Are There No Sales At Hundreds Of Stores?
The executive I talked to works in a global business that provides products to thousands of stores. In his company’s line of business, most stores have a “preferred” provider who they go to first for products. Even if a vendor isn’t the preferred provider, stores are typically able to order from other providers when there is an out of stock, customer preference, or other good reason to deviate from the default.
As a result, the executive’s company has very high sales in stores where it is the preferred provider and very low sales in stores where it is not the preferred provider. This pattern is known and expected. However, the executive saw something else as he dug through the numbers. Namely, there were several hundred stores with absolutely no sales across an entire year. Not low sales, literally NO sales. So, he asked why that might be.
First Answer: They Don’t Like Us
The initial answer, which was the accepted conventional wisdom, was that those stores must have a bad relationship with the company and so avoid ordering from the company at all costs. Another alternative explanation was the clearly weak claim that there were simply unusual “local conditions” that cause the stores to sell none of the company’s products. These explanations just didn’t make sense to the executive. To the extent the explanations were true, there should obviously be interventions taken to rectify the problems. However, he wanted to dig deeper to see if those explanations were really the cause of the issue.
He pointed out that even a store that didn’t like the company at all would almost certainly have a few times per year where nobody else could supply the product needed at the time or where a new associate would order a product from the company before learning that it was taboo. In other words, very low sales could make sense but it seemed almost impossible to have literally no sales. If there were only one or two extreme cases perhaps it was possible, but not the hundreds of cases he saw in the report.
Second Question: What’s Different About Those Stores?
The executive then asked the analytics team to dig into what was different about the stores. How were they set up in the system? How long had they been in business? Was there any past sales history? As the team dug, they uncovered something very important.
Not surprisingly, every store must get an explicit connection set up to allow them to order from the company. What was surprising was that these hundreds of stores had somehow never been set up properly. As a result, the employees in those stores had no way to order from the company even if they wanted to. The company simply didn’t exist in their system. That’s a far different situation than a relationship gone sour!
Final Resolution: Connect The Stores Properly
Upon learning this, the executive tasked the team with reaching out to all of those stores with no sales and getting them connected properly. Almost immediately, sales started coming in from the stores that had been traditionally written off as simply not liking the company or having unusual local conditions. In fact, sales rose into the millions of dollars annual pace following the onboardings!
The moral of the story is that the executive I talked to challenged the status quo explanation and dug deeper when he identified a serious flaw in its logic. In doing so, he proved that the conventional wisdom was dead wrong and that millions of dollars of sales were being lost each year due to a previously unidentified and unaddressed configuration issue. As luck would have it, the issue was very easy to resolve as well.
If every business sponsor would apply fresh thinking to the reports and analysis they review like this executive, think of how much value might be uncovered. Equally important was his confidence and persistence in forcing the team to investigate thoroughly. Certainly, at the beginning, there were those who thought he was wasting people’s time. He pushed through those doubts and it paid off big.
Encourage your business sponsors to think critically and challenge the standard explanations for the data they are seeing. Instead of fighting them or resenting the work, realize that while every case won’t have a payoff, it is likely that enough will payoff to make the investigations worthwhile in aggregate. In fact, your sponsor just might find your own multi-million dollar mistake.
By Bill Franks | July 6, 2021
Originally published by the International Institute for Analytics