BI – Sales Analysis

Sanjay Shah narrates a conversation between the MD of a company under the gun of its foreign parent and Basu, the head of one of its large business units

Sanjay Shah

Basu has been summoned to the corporate headquarters by the MD who has just returned from a foreign trip. Basu’s business unit has done well during the recession, just about managing to meet the top line as per the annual operating plan. He is a bit concerned, as the MD’s tone over the phone sounded a little worrisome. Ignoring the smart salute of the security guard, he quickly rushes to the elevator, and punches the button for the top floor.

The secretary ushers him into the MD’s cabin. The MD is looking out of the glass wall facing the city and the beautiful sea shore.

MD: How are you Mr. Basu?

Basu: I am fine sir. And how are you?

MD: I am fine, but could be better. I have had a tough time with our headquarters abroad. They are insisting that this time there has to be a 25% growth on the top line. I explained to them about the recessionary trends etc. But they are not willing to listen.

Basu: Sir, 25% growth is not possible. We are barely meeting the AOP this time.

MD: Basu, in words of Dhirubhai Ambani, I am unaccustomed to the words ‘not possible’. Let’s analyze our sales last year, and find out how we can improve it.

Basu: Sir, I have hired a good business analyst. I will take his assistance in analyzing the sales of the last few years, and get back to you in about 10 days time with a plan.

MD: Fine, but remember that if we have to increase the top line by 25%, then our plan has to show an increase of 40%.

Basu: Yes, sir. Give me 10 days.

The secretary stifles a smile when she sees Basu coming out, harassed and sweaty, wiping his forehead with his handkerchief. The other BU heads that had come earlier also came out in a similar manner. The heat is on, she thinks.

Basu’s division handles a wide portfolio of products which face competition in the market. There are a lot of players. While his company is a market leader, there is huge pressure coming in from non-branded players and foreign imports. He wonders, ‘How do I even make a plan of 40% growth which will have the support of my sales team and will pass the hawk eye of the MD?’

Ten days later Basu is back in the MD’s cabin with a thick file of various sales analysis reports. Basu is thinking: the Business Analyst has done a good job. Now I will dump these reports on to the MD and make him realize how difficult it is to plan for a 40% increase. After 10 days of day and night work, we have barely got a 10% planned increase.

The MD has his laptop in front of him. He takes the thick folder offered by Basu and puts it to one side.

MD: Basu, what has been our year on year growth for the last three years?

Basu: Sir, please see Page 3. We have given this. Our YOY growth has been just about 15%. Last five year’s data has been given, Sir. I don’t think we can achieve 40% growth. I have checked with all my regional managers, and they all agree with me. Last year our growth was just about 10% due to recession.

MD: Basu, give me the region-wise YOY growth rate.

Basu: Sir, please see Page 10. Each region mainly shows similar growth rate. Sir, please negotiate with the foreigners. Promise them only 10% growth. We will then try to achieve 15% so that they will be pleased.

MD: Basu, we don’t have that option. It’s do or die. I am not going to have no for an answer. Now tell me what your product-wise growth rate is for the last five years.

Basu: Sir, I don’t have that data. That will take a long time to make. We have so many products and thousands of invoices. That will take a full team of people.

MD: Don’t bother Basu. I have done all your work. I have built a Sales Analysis with Intelligent Dimensions which will show us the way.

The MD drags the product dimension at the row level. The system immediately shows product wise growth rates. He pulls in the growth buckets before the products. The system now shows bucket-wise growth rates.

MD: Basu, while your overall growth rates are 10-15%, it can be seen that some products are showing phenomenal growth rates of over 50-60%. I see that these are new products.

Basu: Uh…Yes, Sir, some products are selling well. But these are products which require a lot of training to the staff and the customers. With the huge selling pressure, we do not get time to do this training, so we stick to the traditional products.

MD: Basu, so set aside a budget for training your staff. Make training camps for the customers also, and push these products more. You will get a much better top line, because these products actually save cost for the customer.

MD removes the product dimension and brings down the responsibility dimension. All the sales persons come at the row level and the five years sales in columns. He brings down the bucket dimension so that all sales staff are classified by y-o-y growth rates.

MD: Basu, while your overall growth rates are about 10-15%, there are several people in your team who are showing significant growth rates, in fact almost 40-45%.

Figure 1: The above screenshot shows an illustration of how the comparison between two years sales identified customers who gave the company increased business and where the business reduced. It also identifies new customers gained and those which have been lost. The user can drill down to the customer and item level also.

Basu is scratching his head. Now where did the MD get this information? Out of almost 250 sales engineers, how do I find out all this?

Basu: Yes sir, there are a few new people we had taken. They have a huge drive and have been very successful in convincing our customers to move over to our products. But three such people have left, Sir.

MD: Basu, most of your people are being driven by the AOP growth percentages. Once they achieve the 15% growth as expected from the AOP, then they get satisfied and don’t drive themselves beyond that. While these youngsters whom you have employed, don’t carry such baggage, and are driving themselves to get noticed by the top management and take the fast track in their career.

MD drags the responsibility dimension. The responsibility dimension is HO, Regional Office, Zonal office, Branch Office, Product Manager, and Salesman.

MD: Basu, your sales hierarchy is also too long. The salesperson has five people sitting on top of him. Obviously the best people are leaving, because they are feeling suffocated. Any new ideas they get will be taking a huge time to clear, because of the long hierarchy. I suggest you have only a two level deep hierarchy. Implement a system by which a person can freely communicate with the product manager and the HO. Give them freedom in pricing within a price band without getting price clearances each time. Make special incentives for people who are achieving beyond the AOP targets. Ensure that we don’t lose the bright minds. However, to get a proper handle, next time give me an analysis of discounts given as compared to sales achieved.

Figure 2: The Report shows the applications for which the customers business has increased or decreased and customers have been gained or lost. The user can drill down to the customer level also.

Basu: Yes, Sir. I will do so sir.

Basu’s division makes generic products which can be used in several applications. The MD brings down the application dimension, so that all the sales get classified by application.

MD: Basu, there are several applications which are showing negative growth, but there are many whose growth is tremendous, almost 50-60%. Why is that?

Basu: Sir, I will have to check this in detail. Sir, are you having some special, expensive sales analysis tool?

MD: I will tell you that in a moment.

The MD drags the customer dimension to the right of the application dimension. The report shows that while there were several customers last year for some applications, all these customers have not given business in the current year.

MD: Basu, you are having a customer exodus in some applications?

Basu: Sir, there are several non-branded companies which have come up with some very cheap products and the customers are getting lured to them. There are various applications where the product quality is not the highest priority. So customers go in for that. However, our sales are zooming up where the product quality matters.

MD drags the sales person dimension between the application and the customer dimension.

MD: But I see that you have put many sales persons on those losing applications. There are so many of them fighting a losing battle. However, there is just a handful for the high growth application. The result is that the market in the high growth application is remaining untapped, while we are fighting a losing battle in the other competitive applications.

Basu: (sweating profusely) Yes, Sir. In fact I myself put more people on the competitive applications thinking that very aggressive salesmanship may win our customers back. But that did not happen.

MD: Basu, put more of the bright salespersons on the high growth applications and tap the hitherto untapped markets. Secondly, remember that when you can’t beat them, join them. In the competitive applications, create a cost breakdown of your product, strip out all the fancy features and give an entry-level model which will have low contribution but will penetrate the market and destroy the competition.

Basu: Yes, sir. Sir, when I hired my business analyst he was using Microsoft Business Intelligence tools, with which he generated all the reports which I have given to you.

MD: (smiling) What a coincidence, Basu. I am also using the Microsoft Business Intelligence tools, with the front end in Excel. I don’t feel like using any other tool than Excel. I have grown up with that.

Basu: (wide eyed) But, Sir, your tool has so many features, it sounds like an expensive tool.

MD: Not at all expensive, my dear Basu. The tool has the same features as yours. The key differentiating factor is intelligent dimensions. The key is not in using expensive tools, but in using tools creatively. I believe Socrates said something like this … ask the right questions and you shall get the right answers. So I had a very detailed sitting with my BI developer and asked him several questions. Then I left it to his creativity to generate what they call ‘intelligent dimensions’, which answered a lot of my questions and permit me to do so much ad hoc analysis. Remember Basu, it is not the weapon, but the man behind the weapon that counts.

Basu: Yes sir. Can I have the business card of your BI developer?

MD: Certainly Basu, here it is…

Basu: Thank you, Sir!

I like to believe that Basu implemented the several tips given to him by MD and in about 10 days time brought in a revised forecast of sales which was 50% higher than the previous year’s sales, and that too with the full backing of his sales team. He revamped his sales organization making it flat and responsive and created an incentive system which encourages his team to go much beyond the annual operating plan.

BI Design Principles

BI designers need to get into the minds of the users of the reports. Don’t give them a Rubik’s cube of infinite permutations and combinations. Give them actionable information. Remember that intelligent dimensions make the information actionable.

Also remember that BI reports, are continuously evolving. New perspectives are required so that the business always remain on the top. Management must permit BI designers to attend some management meetings so that they understand the thought process and are able to identify and implement intelligent dimensions in their reporting.

Sanjay Shah (B.Com, CA) is the CEO of Prosys Infotech Private Limited—a Pune, India based company specializing in developing BI solutions on the Microsoft BI Platform. Prosys has developed BI solutions for various companies like Honeywell Automation India Ltd., Alfa Laval India Limited, Kirloskar Group Corporate Office, Kansai Nerolac Paints Limited etc. He can be contacted at sanjay@prosysinfotech.com.