Financing Company – Visualization

Challenge & Selection

Working for a finance company I noticed that sales staff were constantly making loans to customers  with poor credit quality. On the one hand this was introducing new business which was good, but on  the other hand, drove up bad debt expense and therefore reducing profit. The challenge was to  understand the motivation of the sales staff, identify if they were lacking any tools or resources and  ultimately improve the quality of customers. The exercise consisted of internal sales staff and one  member from each Finance and IT departments.

The selected design thinking tool we decided on was Visualization or visual thinking. The reason for  this was that, given the exercise contained participants from varying fields, visualization helps unlock  that aspect of our mind and bring everyone together on one level, to think non-verbally rather than  using wordy reports full of technical jargon. As the saying goes – a picture tells a thousand words.  The exercise was initially given a 6 month duration. This is so that as a solution is developed, it can  be gradually rolled out and tested with the outcome reflected in the Sales staff’s monthly results,  allowing the opportunity for refinement if required. Then tested again the following month.

Application & Insight

I started the process by conducting informal 1 on 1 interviews with each of the sales staff and ask  the following questions: a) what motivates you in making the sale? b) what would help you in  making a sale? and c) what understanding do you have as to the impact of your sale onto the wider  company profitability? These were 10 minute maximum interview with each of the 15 sales staff and  the answers were kept anonymous.

Following the interviews I ran a 2-day workshop where the answers were grouped together  according to similarity on a larger poster board. From this, three themes emerged – 1. Motivation is  based how staff are measured i.e. value of new loans sold, 2. Almost all sales staff asked for a  tool/spreadsheet that can be used in the field when speaking directly to brokers and 3. Other than  knowing that new loans drives profit, they didn’t know how.

We decided to approach this in reverse order. Firstly, on a white board the Finance representative in  attendance drew a flow chart of how new loans impact profitability so that sales staff can visualize  the income flow. This was a quick win. The process starts with the new loans and ultimately the  interest received for the duration of the loan. However, where the borrower has poor credit (as in  our case) then the probability is the loan will turn bad and written off, thus an expense to the  company. Unfortunately this was not a consideration at the time of sale. Next, we covered the  tooling requirement to aid sales staff. On a white board again I drew up a rough skeleton of a  dashboard which can be used when sales staff are in person with brokers. This included a small  model which allows for input of variables about the customer i.e. income, credit history, interest  rate charged, duration of loan. This outputs a small profit statement which shows income generated  from this customer but possible bad debts and also a RAG status flag to instantly point out to staff  the potential profitability of the deal. The sales staff in the room expanded on the drawing to  improve their user experience. The IT representative confirmed a prototype can be developed in 6  weeks which can be used and then refined if required.

The insight gained from conducting this exercise was that by individually interviewing staff we could  understand where the deficiencies existed. By visualizing how a bad loan can impact profitability on  the white board, the sales staff now know that charging the highest interest does not always make  the most financial sense i.e. low interest rate can me charged to a customer who is more credit  worthy. Also, by arming the staff with the dashboard, they have the capability of making more  informed decisions in real time. Finally, this exercise by accident allowed senior management to  identify that they were measuring staff on the wrong metric which is to now paying commissions on  the profitability of the staff and not just the sales which in turn will reduce the level of bad debts and  hence drive up profitability. This shows that in design thinking looking at a process from end to end  and having customer involvement (internal customers in this case) allows us to unlock additional  solutions to that which was intended.

Approach

Visualization was definitely an effective design thinking tool to use for this exercise as it has the  ability of bringing together various disciplines and normalizing for all to understand. By drawing the  flow chart, the staff can now have a mental image of the flow-on effect of their sale. Also, by  enabling the staff to draw the dashboard as they see fit, we are allowing all in the room the visualize  how the output will appear. An alternative approach to visualization may have been mind mapping  as these contain two critical elements: 1) visualization of course and 2) interview/input from the  customer.

