Imagine that your wiper blades assortment grossed $700,000, up from $600,000 last winter. Come fall, your boss expects a $100,000 lift and asks you to identify the financial impacts; notably, the dollar value of the wiper’s market share change.
With oodles of in-house point-of-sales data supplemented by information streams from outside sources this analysis might seem routine. It is not. From my personal encounters with vendors, manufacturers, and rep agencies suggest a hunger for efficient best practices to build a profitable product mix. While it is hard to gauge where the auto care industry category management approaches stack up against other industries, there is no doubt that there is plenty of sound training to satisfy the appetite for developing business insight skills.
|"It turns out they had access to oodles of data, but nobody knew how to use the data to tell stories." - Steve Gerst|
One learning group called Delta Associates promises that by the end of the course their pupils will become proficient in uncovering and communicating their findings. Taught by seasoned product veterans– some who come from Kraft and Unilever–they are eager to introduce a rigorous curriculum for critical thinking in the work place. By contrast, some auto parts software firms are marketing an array of business analytic apps that can pull up comparative sales histories to show what is up or down in any given category at a granular level. The shortcoming in presenting those results, according to the Delta team, is that regurgitating previously known trends is neither revealing nor actionable. The point is to unearth “golden nuggets” for financially valuable facts; otherwise a buyer may end up making a misinformed decision that may hurt the bottom line.
Curious about Delta’s value proposition, I enrolled in their six-month program. Day one enlightened and unnerved me in double doses. Most of the 12 attendees of all ages and varied product backgrounds had previously worked with big-data to better understand their customers’ buying habits. Moments into booting up onto Excel, I strapped on the training wheels for a no-nonsense ride in business analytics.
Our instructor tossed out a warm up drill. Across the first worksheet, black raw numbers littered several rows and columns. With incomplete sales and market data to work with on an imaginary dental care category, we were asked to name the money making and unprofitable product lines that Delta calls “bleeders” and “leaders”. A degree of intuition spurred me to expand the chart beyond change over time sales, percentage change, and remaining market data into shiny insights.
With some toiling, I was able to string together a viable solution based on a few calculations that in the end felt primitive. Peaking over my neighbor’s shoulder who had studied quantitative business analytics before being recruited by Staples, this Millennial had produced more relevant answers than I did in a fraction of that time. With an air of boredom, she distracted herself by scrolling for online apartment listings as I was triple checking for potential formatting errors.
Was this instructional a wake-up call for companies to pay heed to what they are doing? One jovial classmate, named George, who has been managing statistics from the day of mainframe storage systems gave a sobering theory. Consider the Millennials who were raised on electronic spreadsheet formulas that he was not. Educators expected them to integrate math and logical functions—such as PEMDAS arithmetic mode of operations—seamlessly into their academic work. An emphasis on flawless execution, George hinted, is not necessarily the same understanding as the how and why behind each concept, which is one reason why he had enrolled in Delta Associates. Regardless of age, incremental training is insufficient to stay apace in an era of diffuse technologies. To develop usable work habits that will stick, George advocates for comprehensive education. As a manager for consumer technology for the NPD Group he is ready to move beyond the traditional scorecard benchmarking that he has used and migrate into a creative knowledge mindset.
In a related conversation with Steve Gerst, principal for Delta, this vision had been brewing in his mind before he turned to category management education in 2007. When he was a chemist inside 3M Company’s Post-It Notes labs, he regularly collaborated with the sales force, responsible for bringing the paper product to market. Few were introducing real-time data into the sales presentations about the potential financial benefits to their retail accounts. In fact, there was a disconnect between the vendor and their accounts that Gerst felt that could be bound together. The missing link that Gerst observed was the temptation to cut and paste generic market information out of a template sprinkled with fancy language. This presumptuous outlook ignores the negative impacts or latent profit opportunities within the product mix. Due to his passion for numbers and teaching, Gerst developed a curriculum to guide company managers to meet their financial objectives by identifying what may sell versus what the sales person wants to sell.
While training under Delta is commonplace with General Mills and Walmart, only two high profile companies in the auto care industry are actively participating—Advance Auto Parts and Standard Motor Products. According to Gerst, Advance has stretched applied category management to the edge of the frontier by involving their key stakeholders who are part of the merchant’s support system. This collective effort has evolved into a standard reporting process that fits interchangeably with their retail store front and backroom hard parts operations. In the case of Standard whose sales team calls on their traditional WD and retail accounts, Gerst envisions a strategic supplier to customer relationship, in which both sides are better positioned to benefit from each other’s product goals. Nowadays, passing off top level sales histories or basing an alliance on an if you like the account executive; buy the product anyway attitude is twaddle.
Between the coming together of shifting demographics and complex analytics, it is understandable why Advance and Standard invest in formal education. By next year, experts predict that 45 percent of the workforce born between the early 1980s and the 2000s will be coexisting with the baby boomers and the generation Xers. As a gen Xer myself who began my career in 1991, many of my engrained managerial habits that I have learned have been challenged by my new Delta classroom peers, and the homework exercises have forced me to think creatively, but not to the point of becoming overwhelmed. One Delta instructor assured me several times that they are available to support the development of every student. What I describe is the act of reinvention. Reinvention is within reach for only the motivated, and this means that the small companies can succeed with relevant best practices. Alas into week five week of Delta schooling, the training wheels have come off.
Creating a new knowledge base and changing new critical thinking behaviors through Delta has been a mind-bending education. I suspect that there are many other options available that would be compatible with your organization too. Seize it. Show a willingness to widen your neural pathways for your entire pool of employees, not just for the select few. The way forward needn’t be reserved for the elite companies who prefer that their competitor’s think otherwise.