The Client's Analytical Challenge

New Challenges From Competition And An Emerging Market

This is a complex business model in which the client manages over 500 dealers in the continental U.S. that are selling and installing a high engineering content product to all sizes of organizations. The client has effectively managed the model for over 20 years, but is now facing competitive pressure from multiple new vendors that are intent on poaching the dealers as well as a new emerging market for the client's technology. The dealers are the competitor's keystone in their strategies to penetrate the client's customer base targeting the developing new market.

Predictable Performance

The dealers near-term performance is often unpredictable. Dealerss who are expected to over-perform in the next quarter often fail, while those expected to under-perform surprisingly bound upward. This leads to unbalanced post-order burdens in areas such as inventory and project management. Accurate forecasting will identify dealers whose loss in expected revenue may induce turnover to competitors. High-performing dealers will be competitive targets and also vulnerable to turnover from poaching.

Statistical Time Series Projections By Dealer

This interactive chart displays the traditional statistical order input forecasts for the dealers in our client's distribution channel. To demonstrate the errors typically introduced by traditional methods, select a dealer from the dropdown box to observe each dealers projections.

Resource Allocation

Allocating resources to the right partners is essential to retention and investment returns. The competitive pressure is forcing increased expenditure to maintain market position. The client has maintained extensive training and support structures and has regularly surveyed partner opinions. A targeted application of resources to partners is now necessary because the cash is tightly budgeted due to the competitive pressures. The client is convinced that the dealer/partner financial incentive is the primary cause for dealer retention and performance.

Pricing

The customer negotiations always include price and the sales staff clamors for competitive price reductions. The anecdotal evidence is that price is continuously elastic and minute changes in price have a large impact on order volume. The client believes price is part of the sales process with price negotiation being intrinsic to the customer relationship. Further, the belief is that as long as the client remains "competitive", price is not a primary dealer driver. The competitive entry requires a fresh look at the pricing strategy.


Protecting The Dealer Is First Major Challenge

Pricing Is Second

The analytical model to be tested includes making an accurate dealer forecast, identifying change points in dealer performance, finding the dealer incentives and estimating necessary pricing actions.

The Analytical Model