Overview
A multi-billion dollar global electronic component distributor recognized the need to reduce unnecessary price variability and after a rigorous partner selection process chose a best-in-class technology partner to help guide their sales team with data driven price recommendations. The technology was proven to be capable of delivering a much higher level of precision but the most significant challenge the distributor faced was getting hundreds of sales people to adopt the price recommendations. Autonomy was a significant element of a very effective culture and the leadership team wanted to ensure that the technology was adopted but needed to balance the carrot vs stick methodologies. An over reliance on a “use the guidance or else” approach would reduce sales rep accountability and not encourage productive rep feedback. Using purely up side financial incentives would likely result in low levels of adoption and sub-optimal project ROI.
Approach
The approach the company took was multi-faceted. There was a very clear message sent from the CEO to the branch leaders that choosing to veto the technology would be highly detrimental to their career. The sales teams were measured relative to how many transactions were being priced within the price envelope recommendation and the opportunity cost of the transactions priced below the floor was highlighted. In addition the branches were compared to each other relative adoption and the leadership of branches with low adoption rates were invited to come to corporate HQ for their quarterly business review. Lastly, the annual performance review included a rating for technology adoption. A high score in adoption helped raise the overall performance review score which positively effected the employee’s raise and conversely would have a negative effect if the adoption rate score was low.
Outcome
The outcome was a significant positive impact on margin, a dramatic impact on reducing unnecessary price variability, and one of the highest ROI’s on a technology investment the company had experienced.