The Commissions Management System Of A Leading US Telco’s Retail Arm Was Too Slow And Inflexible. We Increased Performance 15X.

CUSTOMER CHALLENGE

When most people think of wireless telecommunication companies, they think of smartphones and antenna-laden towers. What they usually don’t think about is each of the major wireless carriers also have huge retail operations, with many thousands of retail locations including company- owned stores and kiosks, authorized dealers and third party retail locations. With that many more sales people, products SKUs, incentive plans, spiffs, etc., calculating the sales commissions each month is beyond a daunting task involving literally billions of data points.

Our client, a leading US mobile communications carrier, was struggling to deal with the flood of data required to calculate commissions accurately and on a timely basis. Like most large retailers, it utilized an incentive compensation management systems (ICM). The ICM industry is now a largely mature technology space dominated by a handful of companies such as IBM and SAP. The ICM systems are costly and usually require a great deal of supporting IT infrastructure such as database servers etc.

The foremost challenge our client faced was that a volume of sales information so great that that their legacy ICM system was literally taking days to calculate commissions, and the error rate on these calculations caused numerous incorrect payments. The time lag created several additional challenges, most notably:

• The client’s commission management system lacked the speed and responsiveness needed to continuously optimize commission strategies–running experimental scenarios took too long to make such exercises truly practical
• Multi-day calculations made it far too slow to support shift-oriented, daily, and even weekly commissioning plans
• An inability to provide up-to-date commission earnings information to the sales team
• Inaccurate commission calculations created numerous post-payment problems for the sales, accounting, and finance departments

In short, our client had a commissions system supporting tends of thousands of sales people that was slow, inaccurate, difficult to manage, and provided poor visibility into its results.

OUR APPROACH

First and foremost, we realized that despite its limitations, replacing the IBM-based legacy ICM system was impractical despite its high costs and inflexibility. The primary problem was that the ICM systems were drowning in data. Utilizing our Digital Business Platform, we developed a Sales Performance Management (SPM) system that providers granular pre- and post-processing of commission data. Pre-processing data enables business owners to perform more targeted analyses, reducing the volume of data used and thus dramatically improved performance even though the same ICM calculation engine is being used as before. Specifically, calculations that used to take days now take 90 minutes, with an average performance improvement of 15X. Pre-processing the data helps increase the quality, resulting in a reduction in data errors that cause inaccurate calculations and incorrect payments.

Similarly, the SPM systems post-processes the data so that it can be fed into applications other than just a payment service like ADP. In particular, the processed commission data can be accessed through conversational AI systems that allow sales people to simply ask their computer or smartphone how much they have earned in commissions. This has driven a jump in user satisfaction inside our client’s sale organization.

Lastly, our approach to pre- and post-processing of data allowed us to work around significant limitations in the legacy ICM system. The IBM-based system required a operate and expensive database for each data model being calculated. Trying to run a second model for experimentation literally doubled the clients database licensing expenses. Our approach obviated this restriction, with the result that our client can now run multiple datasets scalable, and saved them $5M is hardware and software costs.

OUTCOMES

SmarTek21 was able to modernize our client’s old, slow, and inflexible ICM system. Instead of “rip-and-replace” we were able to use our Digital Business Platform to insert modern technologies at the right places within to older system. This injection of modern technology into an otherwise stingy legacy system provided the client with

• 15x performance improvement
• 3-5% increase in accuracy
• Saved $3M in database software licenses.
• Enables business owners to directly work with system without a data scientist.
• Enabled support for commission management windows as small as half-shifts.