The power of data analytics
KordaMentha’s Data Analytics team was engaged by a confidential client to apply our expertise to a case involving agent commissions. The company was prompted to appoint us when a senior sales manager walked off the job following a major strategic announcement by the company. Executive Director Andre Menezes recalls how the engagement unfolded and the impact of our data analysis techniques on the final outcome.
‘On preliminary review of the agency contracts managed by the sales manager, the company was concerned with the commission rates extended to agents in his portfolio. Customer sign-on and trailing commissions were significantly higher than industry rates. Of particular interest was an agent that was known to be a personal acquaintance of the sales manager.
Once engaged, we acquired all commissions, revenue and customer data stored across multiple company systems. Even more challenging was both the agent management and financial systems had recently been upgraded.
Our work involved profiling and testing of the data to identify trends, consistencies and discrepancies over a 10-year span. Our data analysis identifies relevant attributes required to detect the suspected activity; this was conducted using available data fields and through discussion with the company.
In this case, the data analysis focused primarily on:
- customer behaviour and movement over each customer’s lifecycle
- correlations between company revenue, collections and agency commission
- customer acquisition trends for each agency.
During the course of our engagement, the sales manager filed a claim against the company for unlawful dismissal.
Our data analysis revealed that:
- three agent accounts were associated with the same agent
- non-commercial commission rates had been extended by the sales manager to the same agent
- there was no correlation between revenue earned and commission paid to the agent of interest
- there had been cannibalisation of walk-in customers into one of the agent’s accounts
- the rate of cannibalisation was almost identical to an identified loss of sign-on customers.
The results of our analysis assisted the company to undertake a targeted review of commissions and the renegotiation of commission rates, saving the company from continuing to make uncommercial agency payments.
A positive side effect of this exercise was that all remaining agency and customer associations were validated. Furthermore, the unfair dismissal claim made by the sales manager was dropped without explanation.’