ANÁLISIS ECONÓMICO - RESULTADOS Y DISCUSIÓN

4. RESULTADOS Y DISCUSIÓN

4.6 ANÁLISIS ECONÓMICO

In order to empirically test the validity of the proposed framework, it was decided to test the S.B.I. framework in the Mercedes-Benz Cyprus and in another company of the organisation. The main aim was to provide evidences to support the validity of the S.B.I. and provide information concerning the nature of the relationship between different categories of products in the automotive sales business. Validity is a theoretical concept that refers to the true ability of a measure to illustrate the phenomenon or concept that it is being used to represent (Carmines & Woods, 2005). In this context, validity refers to

150

the fact that the measures include all relevant crucial performance measurements with accurate results.

The empirical framework validation methodology included testing at the relationship between objectives and indicators, for the purpose of providing valid information for the tactical managerial decisions. In order to validate the framework KPIs results were selected for three different months. For each of the KPIs, hypotheses were formulated regarding their reliability towards the company official financial and other reports which are sent to the principal. The data have been processed, interpreted in order to prove if the KPIs can be the basis of certain analyses and decisions action plans.

Shahin & Mahbod (2007) state that “the criteria for effective KPIs are that of S.M.A.R.T (Specific, Measurable, Attainable, Realistic and Time-sensitive)” as shown in figure 6:16.

Figure 6:16. Smart Criteria (from Shahin & Mahbod, 2007)

Data were tested that reflect stable and consistent data collection processes and analytical methods over time which they were clearly, directly and adequately represent the result that was intended to be measured.

Addressing data source validation criteria for every different key performance indicator as present in Table 6:19 allows organisations to validate their performance results. This table was formulated in order to provide validity, regarding the data sources of the KPIs. Additionally, every KPI was validated and approved by the responsible stakeholders, which performed the original review, authorisation and issue.

151

Table 6:19. KPIs data source validation for Mercedes –Benz Cyprus

Key Performance Indicator

Description Validated Data Source Validated Performance Target Source Approved Order indicate

Number of orders per month

Monthly Report for Daimler A.G

Target Agreement with the Daimler A.G

Sales & Marketing Director, Management Team

Number of Retails

Number of invoiced vehicles per month

Monthly Report for Daimler A.G, Local Financial Reports

Target Agreement with the Daimler A.G

Sales & Marketing Director, Financial Director

Gross profit

The difference between the sales price and the purchase price of a vehicle

Profit & Loss Financial Reports, Profit reports for Daimler A.G

Target Agreement with the Daimler A.G, Target Agreement report of the Board of Directors

General Manager, Sales & Marketing Director, Financial Director

Stock level per model in %

The stock level per model must be no more of 1.5 times the average retails per month

Monthly Report for Daimler A.G

Target Agreement with the Daimler A.G

Sales & Marketing Director, Management Team

Stock age per model

Number of stock vehicles more than 90 days in Cyprus per model

Monthly Report for Daimler A.G

Target Agreement with the Daimler A.G

Sales & Marketing Director, Management Team Customer Satisfaction Index General Satisfaction with the sales process.

Customer

Satisfaction Report for Daimler A.G

Target Agreement with the Daimler A.G

Sales & Marketing Director, Management Team

Order % of offers

Conversation rate of the number of orders to number of offers

Sales Funnel Report for Daimler A.G

Target Agreement with the Daimler A.G

Sales & Marketing Director, Management Team

Test drive % of live contacts

Conversation rate of the number of test drives to live contacts

Sales Funnel Report for Daimler A.G

Target Agreement with the Daimler A.G

Sales & Marketing Director, Management Team

Test drive % of offers

Conversation rate of the number of test drives to live contacts

Sales Funnel Report for Daimler A.G

Target Agreement with the Daimler A.G

Sales & Marketing Director, Management Team

Market Share rate per month

Market Share rate comparison with main competitors

Market Analysis Report

Target Agreement with the Daimler A.G

Sales & Marketing Director, Management Team Marketing Effectiveness comparing with the marketing activities

The rate of the marketing activity from QSM with the

Marketing Effectiveness of the Sales Funnel

Sales Funnel Report for Daimler A.G

Target Agreement report of the Board of Director

General Manager, Sales & Marketing Director, Financial Director Training Effectiveness rate Number of Trainings tests completed successfully to total number of the

participants per module

Training Planning Report

Target Agreement with the Daimler A.G, Target Agreement report of the Board of Director

General Manager, Sales & Marketing Director

The other target company of the validation process was Automasters, that is, the general distributor for the Fiat, Alfa Romeo, Jeep and Lancia vehicles in Cyprus. Automasters was a recently new established company under the group of Cyprus Import Corporation which also owned the Mercedes-Benz Cyprus. The researcher as the quality and business analyst manager for the overall organisation undertook the responsibility to investigate and implement the S.B.I. framework after the final approval from the general manager of the specific company.

152

The Fiat brand had a different approach compared to the Mercedes-Benz focuses on small car's segments with lower budget customers and modern style. It established branches in the main cities of the island with headquarters in Nicosia and showrooms in Nicosia, Limassol, Larnaca and Paphos. The General Manager of this company had extensive experience in this business sector.

The first step in the validation process was a meeting with the general manager of the company. The purpose of this interview was to understand through his perspective the company’s culture and possible changes that may be necessary in the S.B.I. framework. The S.B.I. framework was presented and its results through the development phase in the Mercedes –Benz. Additionally, the necessary data sources for each of the KPI’s were analysed and investigated. It was indicated that a similar implementation, with a different perceptive weight for each KPI, could be possible as the culture of the customers and product are diversified from those of Mercedes-Benz. There were several strong competitors with equal products and aggressive marketing culture in the market which made the importance of measuring sales performance a necessity.

“…All these KPIs can be used in our company but it is important to analyse and take a different and more aggressive action plan. Customers of Mercedes – Benz are coming in the showrooms but for the Fiat group we must go out and find our potential customer…”

“…We are not alone in the market…our competitor’s everyday have a different marketing activity…”

Participant 1

A view that was expressed by the general manager was that the connection of the S.B.I. results with the sales performance of the sales team in a way which would be affected on their compensation scheme. It was not only required to measure the sales team performance not only was required to be measured but that the sales team needs to be aware of the significant changing of their income, based on their sales performance results though the S.B.I. framework. It was decided to establish a new compensation system based on the performance results from the S.B.I. framework.

“…We do not have time to wait…we have to change our salesmen thinking…now days…needs a ‘win win’ philosophy between the company and the salesman… ”

Participant 1

Linked to this, there was a need to upgrade the S.B.I. framework with a new dimension, a relationship between sales performance and salaries, commissions of the sales team. Churchill et al. (1994) state that “one of the main aims of any sales compensation system is to motivate and manipulate the sales team to follow management directivities”.

153

A further step was included for defining the appropriate levels of staff management and reward based on performance measurement results after the evaluation face of the derived actions of the S.B.I. framework as shown in figure 6:18.

Figure 6:18. S.B.I. framework including the Compensation Scheme

The Compensation Scheme aimed to reinforce the employee’s contribution for improving sales performance under a team-based approach. The scheme might be included financial, non-financial rewards or penalties according to the policy of the company. Financial rewards might be payments adjustments based on performance achievement results and non-financial could be tours, recognised awards, celebrate events. A team pays compensation system should be focused to improve employee satisfaction with respect to the pay programme itself align with organisation sales performance (Bartol & Hagmann, 1992; Lawler,1990).

It was agreed that the monthly results had to be discussed and to use the propose action plans at a meeting with the salesmen in order to activate all the sales team. Because of the size of the company it was allowed to include all salesmen in the decision-making monthly meetings. These aspects of decisions emerged as the process of the culture of the staff with reflection of increasing the sales performance will change.

“ …I would have the monthly meeting with all our salesmen, give them the opportunity to express their opinion in our action plans…”

“…this is the only way (salesmen) to feel part of this company…”

“…and to understand that their income depends from their performance…”

Participant 1

Yearly Analysed Monthly Analysed

Vision SWOT ANALYSIS

Key Performance Indicators (KPI's) External Factors Balanced Scorecard Employee Satisfaction Tracking Key Performance Indicators (KPI's)

Classification of derived Actions Corporate Communication Internal Communication Internal procedures Training Development

Evaluation of derived Actions

S.B.I FRAMEWORK. Measuring and Managing Sales Performance

Strategic Objectives (SO) & Key Performance Areas (KPA)

154

Addressing data source validation criteria for every different key performance indicator for the S.B.I framework for the Automaster as present in Table 6:20 allowed organisations to validate their performance results.

Table 6:20. KPIs data source validation for Automaster

Key Performance Indicator

Description Validated Data Source Validated Performance Target Source Approved Order indicate

Number of orders per month

Monthly Financial reports