Saint-Gobain Denmark uses analytics to re-shape customer behaviour

Identifying inefficiencies and incentivising positive change with IBM Cognos

Published on 23-Mar-2011

"When we say that Kapacity did an excellent job on this project, we aren’t exaggerating... Thanks to Kapacity, we have been able to build a sales analytics solution that meets all our corporate objectives." - Nicolai Riisager, Business Analyst, Saint-Gobain Distribution Denmark

Customer:
Saint-Gobain Distribution Denmark

Industry:
Wholesale Distribution & Services

Deployment country:
Denmark

Solution:
BA - Business Analytics, BA - Business Intelligence, Information Infrastructure, Information Integration, Optimizing IT, Smart Work, Smarter Planet

Smarter Planet:
Smart Work

IBM Business Partner:
Kapacity

Overview

Saint-Gobain Distribution Denmark, part of the Saint-Gobain group, is a specialist in the wholesale distribution of equipment and tools for the Danish construction and plumbing industries. The company has its headquarters in Brondby, employs 1,400 people, and operates 60 sales outlets and 10 warehouses across the country.

Business need:
As part of a sales and marketing excellence initiative, Saint-Gobain Distribution Denmark decided to use business analytics to gain greater insight into its sales process. The company wanted to discover not only what customers were buying and how much they were spending, but also how their purchasing behaviour affected the speed and cost of the sales process itself.

Solution:
Working with Kapacity, an IBM Business Partner, the company created an analytical model that assesses each customer in three dimensions: size, loyalty and cost of sales. Each customer is then sorted into one of 45 different categories, each of which is associated with a unique value proposition that the sales teams can use during future negotiations.

Benefits:
Uses a simple graphical model to help sales teams identify inefficiencies in each customer’s sales behaviour, and suggests strategies for persuading or incentivising them to improve. Accelerates sales analysis processes by a factor of ten – enabling sales reports to be created daily instead of every two months. Embeds sophisticated analytics into sales teams’ daily routine, ensuring that they always have the latest data at their fingertips.

Case Study

To read a Danish version of this case study, please click here.

Using analytics to encourage better customer behaviour

Instrumented: Collects real-time sales and customer data from corporate ERP and CRM systems to create a 360-degree view of customer activity and behaviour throughout the sales process.

Interconnected: Uses sophisticated statistical models to assess each customer’s size, loyalty and behaviour and sort them into 45 categories, presented to users in an easy-to-understand graphical format.

Intelligent: By associating each category with a specific value proposition, the solution enables sales reps to persuade customers to change their negative behaviours – reducing the cost of sales.


Saint-Gobain Distribution Denmark, part of the Saint-Gobain group, is a specialist in the wholesale distribution of equipment and tools for the Danish construction and plumbing industries. The company has its headquarters in Brondby, employs 1,400 people, and operates 60 sales outlets and 10 warehouses across the country.

“We operate a business-to-business sales model, and our plumbing and heating division has more than 12,000 customers – ranging from large companies to independent professional craftsmen,” explains Morten Nikolajsen, Sales Director at Saint-Gobain Distribution Denmark. “The large number and varying sizes of customers, combined with the variety of sales channels we use, made it difficult to assess the overall efficiency of our sales processes – especially since our existing sales analysis involved a lot of tedious manual work with spreadsheets.”

Sales and marketing excellence
As part of a major initiative to update the company’s business strategy, its senior management team decided to embark on a sales and marketing excellence project that was intended to optimise the sales process from end to end. A key part of this project was to create more sophisticated sales analysis capabilities by extending the company’s existing IBM Cognos Business Intelligence solution.

“We started using IBM Cognos Business Intelligence for financial reporting in 2000, and it quickly became one of the most important tools for our accountants and managers,” explains Jesper Clausen, IT Director at Saint-Gobain Distribution Denmark. “We realised that by integrating Cognos with our CRM system, we could eliminate the manual, spreadsheet-based sales reporting processes and deliver a near real-time view of sales data.”

Game-changing analytics
Working with Kapacity, an IBM Business Partner that specialises in business intelligence and performance management solutions, the Saint-Gobain team designed a sophisticated sales analysis solution that gives sales teams game-changing insight into their customers at a glance. Instead of complex spreadsheets, the solution uses IBM Cognos Business Intelligence to generate a one-page report on each salesperson’s customers, and displays it via the user’s standard Lawson CRM interface – so the data is at their fingertips whenever they need it.

“Most companies analyse sales in a fairly simplistic way – for example, looking at volume of sales per customer,” comments Morten Nikolajsen. “Our approach is much more sophisticated. We plot each customer in three dimensions: their size, in terms of volume of sales; their loyalty, in terms of actual sales compared to predicted sales; and the cost of selling to them, which is a score based on seven different cost parameters.”

Moving into the third dimension
This third dimension – cost of sales – is a key differentiator for Saint-Gobain, because it enables the company to preserve profit margins by persuading or incentivising customers to change their purchasing behaviours.

“The way that a customer behaves when they are purchasing from us can make a big difference to our margins,” explains Morten Nikolajsen. “As one example, many small plumbing companies and handymen tend to over-order and then return the products that they don’t need. The returns process is very expensive to manage, so we need to discourage this kind of behaviour in order to preserve our profits. Another example might be the way that the customer places their orders: if they do it online via our web shop, the cost for us is minimal; but if they visit one of our stores, the cost is higher. Equally, if they often order custom components that we have to source especially for them, or if they have unusual delivery requirements, this can also increase the cost of sales.

“We use the IBM Cognos solution to measure all of these factors and give each customer a score that relates to their cost of sales, compared to the average. If the score is high, the solution allows our sales people to see which aspects of their purchasing behaviour are causing problems, and suggests specific value propositions that they can use to persuade or incentivise the customer to change their behaviour. As a result, we are able to offer our customer better value while streamlining our sales process and increasing profitability: it’s a win-win situation.”

Embedding analytics into everyday work
The three-dimensional customer segmentation is presented as a single-page report that can be accessed from the CRM interface with no need to log into a separate system. The report distributes customers across a 45-square grid, and the results can be filtered in various ways – so, for example, individual sales reps can use it to look just at their own customers, while regional sales managers can look at all the customers in their area. Each square of the grid is linked to a specific value proposition, which gives the sales team a focus for forthcoming negotiations with the customers in that square.

“Instead of relying on a static sales report that is only updated every two months, we now have instant access to the latest sales information, updated on a daily basis, and available whenever users want to see it,” comments Nicolai Riisager, Business Analyst. “We no longer have to rely on the knowledge of individual salespeople about how we should handle a customer – we have a standardised and structured approach that helps us align our sales tactics with the overall business strategy.”

Instant popularity
Nicolai Riisager concludes: “In the first month that the new solution was live, each salesperson used the new report an average of ten times – which shows that it has immediately become an important part of their working routine. We are still in the early stages, but over the next few months we expect to see significant benefits, particularly in terms of reducing cost of sales. Our in-house team and the consultants from Kapacity deserve considerable credit for designing and successfully implementing this innovative solution, and we look forward to extending our use of IBM Cognos software even further in the future.”


The Inside Story: Getting There
When Saint-Gobain Distribution Denmark’s senior management launched a new sales and marketing excellence initiative, the need to improve sales analysis became a top priority. In-house resources were scarce, as a number of different IT projects were already underway, so the company needed help from outside. Kapacity had worked with the Saint-Gobain team on previous projects, and had become a trusted partner for solutions built around IBM Cognos software.

“We have worked with many different IT consultants over the years, and we don’t give out praise lightly,” comments Jesper Clausen. “So when we say that Kapacity did an excellent job on this project, we aren’t exaggerating. Their technical skills are first-class, and they have a very good project management approach, especially in terms of change management and knowledge transfer. Thanks to Kapacity, we have been able to build a sales analytics solution that meets all our corporate objectives.”

Products and services used

IBM products and services that were used in this case study.

Software:
Cognos Business Intelligence

Legal Information

© Copyright IBM Corporation 2011. IBM Danmark ApS, Nymøllevej 91 2800 Kgs. Lyngby, Denmark. Produced in Denmark. February 2011. All Rights Reserved. IBM, the IBM logo, ibm.com and Cognos are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of other IBM trademarks is available on the Web at “Copyright and trademark information” at: ibm.com/legal/copytrade.shtml. IBM and Kapacity are separate companies and each is responsible for its own products. Neither IBM nor Kapacity makes any warranties, express or implied, concerning the other’s products. References in this publication to IBM products, programs or services do not imply that IBM intends to make these available in all countries in which IBM operates. Any reference to an IBM product, program or service is not intended to imply that only IBM’s product, program or service may be used. Any functionally equivalent product, program or service may be used instead. All customer examples cited represent how some customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics will vary depending on individual customer configurations and conditions. IBM hardware products are manufactured from new parts, or new and used parts. In some cases, the hardware product may not be new and may have been previously installed. Regardless, IBM warranty terms apply. This publication is for general guidance only. Photographs may show design models.