Case Study - Behavior Score 4KST in Industry/Distribution

Why use the 4KST Behavior Score in my industry or distribution company?

Usually industries and distributors, whether they are food and beverage, medicine or cosmetics, etc., work with recurring orders and have a B2B (Business to Business) business model. Some of them have long-standing relationships with their customers, who may be supermarkets, small stores or large wholesalers and retailers. As a result, these industries have a wide range of data and a rich financial history of their customers at their fingertips for intelligent order management. 

However, for the most part, these companies still don't know how to organize this data and use Artificial Intelligence to make the best use of it. Take, for example, this Case Study of a 4KST customer. 

Before we implemented our Artificial Intelligence through Saas (Software as a Service), the process of analyzing requests was manual and bureaucratic. The credit policy was fixed and the decision to grant credit was based on the personal perception of the financial analyst. The default rate was 10.45% and sales were not growing.

Now understand how the use of the 4KST Behavior Score, built with this client's data, optimized the work of its finance team and allowed the company to build a flexible credit granting policy to increase its sales and reduce defaults. 

Learn about a Success Story of the 4KST Behavior Score in Industry/Distribution:

4KST used its own Machine Learning algorithm and developed a Behavior Score based on the history of customer orders from this industry/distributor over the last 6 months. The Behavior Score 4KST acted on the customer base of this Industry/Distributor.

The score is used to classify all customers with a score between 0 and 1000, indicating their risk of default within the next 30 days. In this case, the customer's behavior, whether they are on time or late with payments, and the frequency of orders directly influence the score calculated.

And most importantly, with 4KST's real-time change detection technology, the 4KST Behavior Score is always kept up to date with new information, for frequent use.  

How does the 4KST Behavior Score work?

See the real results:

Click on the image to enlarge.

The 4KST Behavior Score classified the behavior of almost 50,000 customers of this industry/distributor, placing them in a score range:

A) Customers with scores in the 0-150 range, which accounted for 18.57% of total customers, were responsible for almost 70% of all defaults. 

B) Customers with scores between 150 - 300, which represented 17.59% of the total, were responsible for 18.73% of defaults.

C) Customers who received a score of 300 -1000, and represented 63.85% of the total population, were responsible for only 11.40% of defaults. 

 In other words, customers with scores between 0 and 300 accounted for almost 90% (70% + 18.73%) of all defaults. 

In addition, the model had an average performance of detecting up to 50% of customers who fell into arrears, and showed that the probability of a customer with a score above 300 falling into arrears was only 1.86%.

What changes would you make to your Credit Granting Policy for recurring orders with this information in hand?

Visit our Industries and Distributors page and schedule a chat with one of our sales executives right now.