BPC’s Problem
BPC ventured into the business of providing payroll services to small and medium-sized enterprises. After four years, the business had prospered with an annual return of about $40million. This outcome prompted the business to expand its sales. The expectation was that the founder would collect over $30million from shareholders after the expansion. However, the attempt failed.
The company witnessed reduced revenues and sales. When the global financial crisis struck, the board of directors discovered a problem in the marketing and sales department because they (directors) did not know their customers’ interests. Hence, they had to deliberate on the effectiveness of getting in touch with their esteemed clients.
BPC’s Initial Solution
Initially, BPC attempted to grant six months free service to clients who made a yearly loyalty to the company. The company also introduced various sales incentives to help in fastening its deals.
The Research
The company collected information regarding the attributes of its clients from its small restaurant stores. Data was collected from annual reports, websites, press reports, and internal financial records. Some of the aspects that were examined during the study include its returns, the number of human resources, and the industry status. The company discovered that the number of personnel directly influenced customer profitability.
It was observed that the sales cost was also affected by the selling-cycle length since prolonged cycles existed where more proposals and product advertisement among others things were established. Furthermore, the researchers also noticed that despite the dropping quantity of sales, clients continued pledging their loyalty. Most of them came from the small and medium-sized enterprises.
Hypotheses
BPC prepared the following preliminary hypotheses:
- Mid-sized professional service firms qualify as good clients because they consistently need payroll processing services to outsource such services from a firm such as BPC
- Firms that are situated in urban areas are good clients because the can easily be accessed and that thorough customer visits can be realized for a particular period
- Firms that have recorded a prolonged operating history with BPC are excellent customers because their probability to cancel contracts is minute
- However, a refined hypothesis is, ‘since most of the customers come from small enterprises, hence exposing the company to a high degree of seasonality and elevated default rates, they are not the best clientele
Adjustment of the selling model
BPC opted to adjust its selling model by focusing on professional firms that had more than 15 workers. It also decided to trade with stable firms that had existed in the business for long. Its new clients now comprised Certified Public Accounting (CPA) firms because most of them were reluctant in processing payrolls and that they did not mind outsourcing such services.
Furthermore, BPC also modified its sales metrics and incorporated its number of calls it made to its clients. It also rewarded sales representatives who established good deals with customers. Monitoring the performance of employees enabled the company to determine the most qualified workers and/or fire the nonperforming ones.
It amended the qualification requirements for sales representative such that it now considered individuals who had a good rapport with CPA firms. For customers who were not ideal, the company decided to use online communication, rather than sending sales representatives.
The Results
Adjustments that were made by BPC after the research had positive results. The rise in sales was gradual in the first six months. Even after reducing the number of its employees, orders kept on rising. Thus, it was evident that BPC found the ultimate solution to its initially decreasing sales volume.