How Lowe’s Transformed into a Customer-Focused Omni-Channel Retailer
Lowe’s Companies, Inc. is a FORTUNE® 50 home improvement company serving more than 18 million customers a week in the United States, Canada, and Mexico. With fiscal year 2018 sales of $71.3 billion, Lowe’s and its related businesses operate or service more than 2,200 home improvement and hardware stores and employ approximately 300,000 associates.
The Need to Be Nimble and Competitive
In the years following the economic crisis of 2008, improving macroeconomic conditions were favoring home retailers such as Lowe’s. However, in 2011-2012, Lowe’s posted nearly flat results year-over-year, indicating that it was not benefiting from the strengthening industry environment.
The company embarked on a transformation to a customer-centric, multi-channel retail model to drive sales in the Do-It-Yourself segment. Lowe’s knew that changing behaviors of their front line employees was key, and that would require a flexible variable compensation program.
“Our challenge began in late 2011 when we began a business transformation. This change to omni-channel retailing and how we engage with our customers would require us to re-think many of our incentive plans which currently were focused on only a single channel,” said Holly Toth, VP HR Operating Systems at Lowe’s.
To successfully implement the required compensation model, replacing the old Incentives Compensation Management solution, as well as in-house Excel and Access solutions for other variable compensation, was a must. In the existing systems, participants didn’t get enough information for them to understand why a commission was or wasn’t earned or why a sales transaction didn’t get compensated. Lowe’s needed a system that would help employees understand how their rewards were calculated, reducing disputes and providing a robust audit trail.
The legacy systems also had other limitations. Administrators had difficulty in keeping employee data up-to-date. Retroactive changes to data (people, rates, merchandise, etc.) requiring recalculation of commissions and re-processing, could not be handled correctly.
That’s why Lowe’s was looking for a nimble compensation management software solution that could be leveraged to direct and motivate store employees and drive revenue in its 2,000+ North American stores. To manage this effectively, the retailer needed a system that was robust, flexible, scalable, and easy to adapt to changing strategies, while providing central control and visibility. It needed what their compensation team called “flexibility within a framework.”
Flexibility within a Framework
To address these challenges Lowe’s selected beqom’s Total Compensation Management software solution, automating sales commissions and bonus review processes for in-store personnel.
“Lowe's is a partner when disasters hit,” said Toth. “Our sales change dramatically when tornadoes and hurricanes occur. We need to be able to adapt our sales compensation plans quickly. Before beqom we were unable to react to changes in the business.”
Using beqom, Lowe’s now works with a flexible, business-user driven rules engine allowing for huge amounts of performance data and sales transactions to be converted into earnings and payments in no time. Processing time dropped from over 12 hours to under 2 hours despite more sophisticated processing, ensuring payrolls are not missed.
In addition, Lowe's compensation teams can define, model, simulate, and set up their own bonus schemes, in line with corporate and regulatory guidelines.
Extremely robust data processing now brings in employee data accurately, securely, and quickly, with full auditability from the payout back to the source transactions and calculations. Changes to previous period data can be made retroactively and re-processed to provide clawbacks and true-ups, with the changes included in the employee’s reports so they can understand what happened and why.
Sales Transformation with Visibility and Control
By leveraging beqom, Lowe’s:
- Delivered on an aggressive transformation strategy, driving and managing disruptive change.
- Adapted its compensation plans to local market needs, implementing “flexibility within a framework” to achieve optimum results.
- Gained central control and visibility over their processes, with full audit trails of compensation calculations and approval.
- Boosted employee engagement and motivation through transparent access to targets and compensation information.
- Realized significant savings by eliminating incorrect pay-outs from the legacy systems.
- Decreased processing time from over 12 hours to under 2 hours despite more sophisticated processing, ensuring payrolls are not missed.
“One thing that really impressed me about beqom: they understood our strategy and where Lowe’s was moving and were talking to us about how they were going to deliver what we needed in the future. And they delivered.”Holly Toth, VP HR Operating Systems, Lowe’s