Progreso Financiero

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Progreso Financiero faces two critical problems. First, it is falling significantly short of its sales forecasts (Exhibit 4), causing concern for investors and employees of the company. Second, Progreso has not yet identified a clear path to profitability. There are four key drivers to underperformance at Progreso Financiero: poor sales analytics systems, improper human resource management, poor managerial decision making and ineffective compensation incentives. The collective result of these shortcomings is that Progreso’s sales employees are highly unmotivated and ill equipped to help the company realize its sales and profitability goals.

In order to be effective, sales executives need to have clear selling objectives and the ability to track their performance against key performance metrics. Much to its detriment, however, Progreso Financiero does not have any systems in place to track conversion pipeline and CPA over time. This has deleterious effects both on management’s ability to accurately forecast overall sales (likely the cause of the huge discrepancy between forecasts and actual sales – see Exhibit 6) and the account executive’s ability to track potential and existing customers throughout the sales-force funnel. Indeed, Progreso Financiero suffers from low lead-to-loan conversion (~14%) as well as low customer retention (~52%), which are key drivers of underperformance in terms of sales volume and customer lifetime value vis-à-vis the company’s acquisition costs.

Many of Progreso’s problems can also be attributed to poor HR management. It’s decision to hire its sales managers directly from the groceries in which it sells has created channel issues with its retail partners and has also left it with a sales force that is highly inexperienced. As a result, these employees require significantly more training before they can effectively sell at a level of an experienced sales executive. Progreso’s decision to promote internally to fill its DSM...
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