Managed Product Sales Report

Kevin Li

Objective
The goal of Constellation Energy's Information to Implementation (i2i)
program is to improve electricity product sales performance by streamlining
communication with customers. Customer reports generated by the i2i are
meant to demystify the complexities of electricity contracts, giving
customers the confidence to purchase larger quantities of electricity product.
To evaluate the effectiveness of the program, this report compares the
performance of contracts managed in i2i program with the contracts outside
of the program. A contract's performance is determined by the contract's
total margin, unit margin, and renewal/win rates. Contracts included in i2i
reports are referred to as managed products and contracts not included in
the contracts are referred to as non managed products. A product is
considered managed if it appears in an i2i report.

Summary:
Managed products display significantly higher total margins due to much
higher mean sale volumes.While the modes ranges for the metrics similar,
the BDMs and Contracts in the i2i program have a significantly higher
probability of being top performing outliers . Difference in margins per unit
electricity sold are uncertain due to the quality of the data, but it is possible
that Non-Managed products have a higher mean unit margin.
In regards to renewal and win rates, there is no significant relationship
between a BDM's performance and the extent to which they use managed
products

Comparison between Mean total margin, unit

margin, and Volume Performances:
The data set analyzed contains 96647 contracts and 251 BDMs. The patterns
mentioned in the summary can be seen for each statistics in the raw data
plots and tables. Curves for managed products are in green, Non-Managed

products are in purple. Unit Margin and Total Margin are in dollars while
Volume is measured in kWh.

Graphs and Charts

Total Margin Statistics

## Contract.Type Mean.Total.Margin SD.Total.Margin Median.Total.Margin

## 1 Non.Managed
7419.29
41203.66
1045.29
## 2
Managed
47686.22
149071.49
6437.62

Unit Margin Statistics

## Contract.Type Mean.Unit.Margin SD.Unit.Margin Median.Unit.Margin

## 1 Non.Managed
7.05
30.39
5.25
## 2
Managed
4.21
4.53
5.25

Volume Statistics

## Contract.Type Mean.Volume SD.Volume Median.Volume

## 1 Non.Managed
3159.10 20478.88
173.79
## 2
Managed 22561.02 22561.02
2503.76

Raw Data Summary

Summary Statistics
Total Margin and Volume
The distribution curves for Managed products and Non-Managed products
show that while the concentration for each product's data sets are relatively
similar, the Managed Product data set contains 10.24% more contracts in the
right extremes of the data (Total Margin > 10,000 and Sales Volume > 2000)
than the Non Managed product data set.Therefore, the average managed
product is more likely to perform better than the average product, though a
substantial ( 80%) of managed products will perform similarly to
nonmanaged products.
But even though the median and mean total margin and sales volume for
managed products are significantly higher than the Non-Managed product
statistics, it is difficult to attribute statistical significance to these numbers
due to the large standard deviation of the mean volumes and the large
numbers of outliers in both data sets.
To get a better view of the data and statistics it is beneficial to look at the
ranked percentile performance, Managed product effect on BDM

performance, and sampling distributions of the data. Which will be done later
in the report.
Unit Margin
Non-Managed products perform more strongly in resecpt to unit margin. The
Non-Managed product unit margin distribution more heavily centered to the
right around 9$ per unit compared to the 7$ of the Managed Products;
however, this may not be significant due to a moderate inverse relationship
between volume and unit margin.
As the graph below shows, unit margin tends to decrease as volume
increases for both types of product.

Therefore, the generally lower unit margin of managed products may be due
to the natural tendency for high volume contracts to have lower unit margins
rather than an intrinsic characteristic of managed products.
Performance Percentiles and Rankings
As can be seen from the below graphs, managed products are more likely to
rank in the top performance percentiles in total margin and volume.
Managed products are 32.0298451% more likely to be in the top 25% of the

highest total margin contracts than non managed products. Therefore, in

respect to total margin, Managed products are overrepresented in the top
25% performing contracts by a factor of more than 2. The difference in
performance is more noticeable in respect to volume, where a managed
product is 36.1175985% more likely to rank in the top 25% of highest volume
products than a non-managed product.In respect to Volume, Managed
products are overrperesetnd in the top 25% of performing contracts by a
factor of around 2.5.

In respect to unit margin, however, non-managed products perform

significantly better in both the summary statistics and performance ranking
(the equal medians are interesting). A Non-Managed product is 18.1199099%
more likely to rank in the top 25% of highest performing unit margin
products than a managed product. In respect to unit margin, Non-Managed
products are overrepsetneed in the top 25% of by a factor of around 1.7.

Managed Product Performance by BDM

The higher total margin associated with Managed Products is clearer when
controlling for the Business Development Managers(BDMs). When averaging
a BDM's non-managed and managed product total margins, 80.7692308% of
BDMs have higher total margins on their Managed Products than on their
non-managed products. On average, the Managed products of these BDMS
outperformed their Non-Managed counterparts by 6.61512110^{4}$.
Of the 19.23% of BDMs who had lower total margins on their managed
products, the average difference in total margins between non-managed and
managed was smaller, only 1.22327910^{4}$.

Sampling distribution statistics

The following statistics were obtained by taking the mean of randomly
selected 100 contract large samples from each contract pool 10,000 times.
The sampling smooths the data and allows a comparison of variance/center
and also allows an evaluation of the data's skewness.

Graphs and Charts

Total Margin Statistics
##
Type Total.Margin.Mean SD.Total.Margin.Mean Total.Margin.Median
## 1 Non.Managed
7387.17
2339.42
6922.49
## 2
Managed
47682.11
8239.10
47003.52

Unit Margin Sampling Statistics

##
Type Unit.Margin.Mean SD.Unit.Margin.Mean Unit.Margin.Median
## 1 Non.Managed
7.10
1.92
6.99
## 2
Managed
4.21
0.25
4.19
## Warning: Removed 70 rows containing non-finite values (stat_density).

Volume Sampling Statistics

## Volume.Mean Volume.Median SD.Volume.Mean

## 1
3176.75
2911.29
1205.20
## 2 22512.55
22115.54
4441.02

Summary
The smoothed plots largely confirm the patterns of the raw data. Variance of
total margin and and volume are significantly higher for managed products,
reflecting the heaveir skew of the managed product data set to the right.The
variance of both product types in response to unit margin is small, indicating
the

Win Rate and Renewal rates

The Renewal and Win Rates analysis in this report was drawn from 96 BDMs.
The association between a BDMs use of i2i products and Renewal Rate is
weak. The graphs below show that there is no clear difference between the
renewal/win rate distributions among i2i users and nonusers.
##
Type Mean.Win.Rate SD.Win.Rate Mean.Renewal.Rate SD.Renewal.Rate
## 1
Managed
0.388000 0.2642992
0.8149333
0.2071191
## 2 Non Managed
0.627619 0.3797355
0.6552381
0.4218367

Though there are slight differences in distributions, it should be noted that

the population size for this analysis is relatively small, and may be more

heavily affected by fluctuation over time and the region the BDM belongs to.
Also, variance in BDM skill/product specialization has more impact on
Renewal and Win rates.
Furthermore, among i2i users, there is no correlation between the proportion
of managed products in a BDM's portfolio and their overall win and renewal
rates. Plotting BDM renewal rates and win rates against the proportion of
their portfolios that are managed, one can see a cloud pattern . Each point
represents a BDM.

The correlations coefficients for these graphs are near zero, 0.04 and 0.04
respectively. Therefore, it can be concluded that the use of i2i reports have
no significant impact on the Renewal and Win rates of BDMs.

Posible Conclusions and Future Research

A contract managed by the i2i program has a singificantly higher probability
of ranking in the top performance percentile due to consisnently higher
volume sales. It is possible that the high volumes for managed products
reflect an increased confidence of a client in purchasing greater loads of a
managed Exelon's electricity product. This would indicate that i2i reports are
achieving their goal of removing the uncertainty surrounding energy market
operations, however; the usage of managed products may be dependent on
confounding variable such as the size of the client company, the product
sub-types (Fixed Price Solutions vs Flexible Index), or the region of the BDM
From a quick random sample of 10 Managed and 10 Non-Mangaed products
(see attached data table at end) no conclusion can be made on such
dependence. Further study of the managed product should test the
independence of these other factors with margin to ensure that the i2i
program is the determining factor of higher total margins for contracts and
BDMs.