A routine investigation of customer loyalty for a
client uncovered a significant positive correlation between the call
frequency of the sales representatives and customers’ perceptions of the
overall sales representative’s quality. Sales representative quality was a
strong driver of the overall quality of the firm. Overall quality of the
firm led to desirable behaviors of customers – maintaining their business
with the firm, increasing their business with the firm, and recommending the
firm to others.
SITUATION
The Loyalty Research Center was able to calculate the threshold level of call
frequency – the level of call frequency below which the perceived quality of
the firm’s sales representatives had a sharp decline.
The following illustration shows a dramatic change in
the slope of the quality curve at the threshold level. Note: The numbers
on the graph have been masked to disguise the actual results.
IMPLEMENTATION
Management of the firm initially considered several alternatives. One
option was to hire more sales people in order to increase the frequency of
calls to all customers. This idea was dismissed due to insufficient
resources.
The second alternative considered was to terminate the
sales people whose call frequency was below the threshold level and replace
them with new sales people with the assumption that new sales people would
be more efficient and productive than those who had been terminated. This
alternative was determined to be a last resort.
A third alternative was to identify the deficient
salespeople and give them individualized sales training in order to make
them more efficient. This was also an expensive and time consuming
alternative.
Before any corrective plan was decided, management
decided to drill down deeper into the data to see what other trends the data
might hold. All the customers who reported low quality scores resulting
from infrequent sales calls were identified and grouped by account
representative. Then the affected account representatives were grouped by
geographic region, which was the same as grouping by sales office. The
results of this additional analysis showed the sales representatives with
the lowest call frequencies were concentrated in two districts. While
interviewing the two district managers to uncover reasons why their sales
people would have less frequent sales calls to current customers than other
districts, the managers admitted they were using an incentive system
designed to reward account representatives for bringing in new customers.
As a result of this incentive program, sales people
were allocating a larger share of their selling time to prospecting for new
customers instead of servicing their current accounts – a considerable
change from what sales representatives in the other districts were doing.
Once the effort to acquire new customers had been put in proper perspective,
the quality scores of the sales representatives in those two districts were
the same as those in other districts.
KEY FINDINGS
- When managers have the flexibility to institute
different goals for their areas, the outcomes will differ among
departments, and one global standard cannot be used to evaluate all the
departments within the firm.
- One should not rely solely on surface research
results to base managerial decisions without first understanding the
root causes of those results. Research is a very effective way of
spotting trends in existing data, but managers and consultants must
understand the causes of the trends in order to make the appropriate
changes to correct negative trends.
For more information
contact:
Loyalty Research Center
931 East 86th Street, Suite 120
Indianapolis, IN 46240
Tel: (317) 465-1990
Fax: (317) 465-1991
Email:
LSeibert@loyaltyresearch.com
