Question

measuring average month over month performance

Asked by: avoorheis

We are looking for ways to help measure our customer reps performance. They each have a set of stores, about 50, and we have a certain monthly metric, let's call it units. So, we can say the more units sold per month the better the performance.
But, if the units sold went down one month for store A, store A's performance might still be good, if all the other store's sales went down more.
So, I'm looking at 2 ways to measure all of the store's performace (baseline), the average of total volume, month over month (which seems to give larger stores more weight), or, the average of each store's percentage change, month over month (which can have problems too, especially when there's a new store and the 1st month is very low and the 2nd month is more of what you'd expect, but, the % increase could be like 2,000%).

Probably not any quick and easy answers, but, coments, suggested reading material, etc, would be appreciated too.
thanks for looking
alan

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Asked On
2009-10-29 at 10:42:02ID24855472
Topic

Math & Science

Participating Experts
4
Points
500
Comments
7

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Answers

 

by: cy_hungPosted on 2009-10-29 at 11:16:05ID: 25696508

I got an idea, but not sure if this fit your situation.

Consider that we need to access how good the individual store perform against baseline.  We may choose the previous YTD figure as benchmark.  For new store, just give them a pre-agree figure (say, average of similar stores ...).

From month to month, we may compare the performance by ranking of "Current YTD / Previous YTD".

Of course, this won't work if you're focus on month to month growth rate.

Maybe it would be even better if you could share the ultimate goal that all these assessment  would want to achieve, say push sales figure by year end ... drive seasonal sales  ..etc.

 

by: avoorheisPosted on 2009-10-29 at 11:32:21ID: 25696685

thanks cy,
The goal is to be able to measure the effectiveness of the customer service rep that is responsible for that store. In this case, I'm not sure YTD would be very relevant, but, I'll discuss with other members of the team. We were thinking it would be better to compare against the average of all stores, since this industry as a whole is much lower this year. Of course improvement over last year would be great, for this metric, we want to use it as part of the evaluation process for the customer service rep.

 

by: RobinDPosted on 2009-10-29 at 11:48:30ID: 25696866

On a month-to-month yon could take an average of all the stores and see how the individual compares to this. If there are enough stoes then an individual low or high won't affect the  average too much to be able to see a variation.

 

by: RobinDPosted on 2009-10-29 at 11:52:43ID: 25696913

oops sorry. i just noticed you already posted that. It would show performance against the other stores with seasonal differences cancelled out.

 

by: aburrPosted on 2009-10-29 at 11:56:45ID: 25696946

I assume the customer rep has nothing to do with the operations of the whole store.
Try
#units of store A/# of units in ALL stores.
advantage - industry wide changes would be minimized. However this metric would favor large stores. Average his score over all his 50 stores. That should reduce the size effect (unless stores are assigned by size).
A person who consistently increases his score is good. Keep him.
One can get more sophisticated but might not help the evaluation process much

 

by: harfangPosted on 2009-10-29 at 19:35:09ID: 25699852

This looks like basic econometrics.

Your baseline, your universe, is the chart of total units over time. However, this includes the growth of the entire store chain (more store, more units) so it's unfair to reps who are stuck at 50. Using the average of units per store is therefore better.

This chart shows a monthly trend (the gain or loss in volume) and a volatility. If you have enough stores, this is the volatility of the business branch of the stores speciality. It's defined as the standard deviation of monthly trends: each month sees a percent increase or decrease compared to the previous month, taking the standard deviation of that shows how "rugged" the chart is. Low volatility means stability and predictability (for risk analysis, for example). Volatility is like a moving average, since it needs a certain number of months to become meaningful.

Now each rep has about 50 stores, but not all stores have the same size, and the number can change. Again, it makes sense to use the average units per store as the reps basic chart, but it can be argued that the total units better represents performance.

In any case, you have again monthly figures, their variation, and the volatility. You can compare these charts to your baseline.

There is also the "internal volatility", and "internal coherence". These are again the standard deviation of monthly variations, the first store by store over a period (say 12 months), the second taken for a single month. A stable rep will improve performance steadily over all stores, a "busy bee" will jump from store to store, producing excellent performance in one store while neglecting others, the "admiral" will solely concentrate on the mother store, etc.

For all these charts, one good visualisation is to use last Decembers values as starting point (say 100%), and plot all figures relative to that number. It's very readable, and removes the area effect, concentrating on how a rep (or other factors, naturally) evolves compared to others.

Finally, since many interesting figures involve a form of moving average, the cut-off effect should be mentioned. If there was one exemplary increase, it will "count" as long as it stays in the 12 month window. When it drops out, you notice a drop this month, although it's caused by a large increase last year. The solution to that is to use "decaying averages" or "decaying volatility".

Enough rambling, I just meant to write a paragraph or two...

(°v°)

 

by: avoorheisPosted on 2009-10-30 at 10:35:26ID: 25705175

Thanks Markus and everyone else. I see it's not a simple solution, but, this gives me a lot to consider.

20120131-EE-VQP-002

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