|Filed under: Articles, Sales and Marketing Leader Articles||Leave a Comment|
By Michael J. Webb
This article answers fourteen frequently asked questions about applying process improvement (and Six Sigma) to finding, gaining, and keeping customers. Ask me your question about sales process improvement in the dialog box at the right, and I'll do my best to give you an answer.
(FAQ) Frequently Asked Questions
Click on a question to be taken down the page to where an answer is provided.
- What is process improvement?
- What does process improvement have to do with marketing and selling?
- What is Six Sigma, and what does it have to do with process improvement?
- How does Six Sigma work?
- Can process improvement be used to improve top-line growth?
- People have been improving marketing and selling practices for years. Is Six Sigma all that different?
- When you apply process improvement to marketing and selling, is the main application to the selling itself, or to sales management?
- How can statistical tools be applied to measure marketing and selling activity?
- What are the barriers to process improvement (such as Six Sigma) in marketing and selling environments?
- How can process improvement improve sales forecast accuracy?
- How can you motivate a sales department to support a process improvement project, such as Six Sigma?
- What is the definition of Marketing, and how does process improvement apply in marketing?
- How do you correlate customer satisfaction data with improved selling results?
Questions and Answers:
- What is "process improvement?" Process improvement is a management technique for improving business results. It applies the scientific method to business activities. Process improvement depends on carefully defining terms (inputs, work activities, outputs, etc.) and measurement to identify cause-and-effect relationships. Understanding these relationships enables better decisions about what to change in order to improve results. Most of the basic techniques of process improvement originated in the quality movement in manufacturing industries, and have been proven to be quite useful in many other fields as well. Currently, there are vibrant movements bringing process improvement to the healthcare, hospitality, and financial services industries, and many others.
- What does process improvement have to do with marketing and selling? Marketing and selling activities are business processes. They add value like any other business process (else, why do them?). Process improvement can improve marketing and selling results (often dramatically) just as it has improved results in many other fields. One of the key principles of process improvement is to eliminate waste: In marketing and selling that means things like reducing the amount of poorly targeted promotions, or making sure salespeople spend time only with the best qualified prospects. Marketing and selling professionals often have good strategies for improving these kinds of specific results. However, what they may not have is a way of determining their impact on the "system" of all the variables that affect their business. A common example is a promotional campaign such as trade show. These can increase the number of "leads" into a company (more leads = good marketing, right?). Unfortunately, these "leads" often go to waste. Salespeople may not have time to follow up on them after the show. Or, the "leads" may be of such low quality that following up on them is a waste of time. Which is it? These kinds of dilemmas are difficult to resolve through traditional views of marketing and selling. Instead, the solution requires viewing marketing and selling as a system where causes and effects are interconnected. Understanding these systems is exactly the purpose of a process improvement approach.
- What is Six Sigma, and what does it have to do with process improvement? A number of related things are meant by the term "Six Sigma. "First, the word sigma is a mathematical term for measuring variation. One sigma represents a high degree of variability (7 mistakes/defects out of 10 opportunities for defects). Six Sigma represents a very low degree of variability (3.4 mistakes out of 1,000,000).Next, "Six Sigma" the name for a rigorous form of process improvement that grew out of the Total Quality Management movement of the late 1980s and early 1990s. It is credited with hundreds of millions of dollars in bottom-line savings in many large corporations, such as GE, Allied Signal, Raytheon, and many others. It is a highly disciplined approach to decision making that helps people focus on improving processes to make them as near perfect as possible. Applying Six Sigma does not mean requiring all processes to operate at a "Six Sigma" level of performance. Instead, it means achieving a sophisticated understanding the nature of the variations inherent in your business processes. This enables you to know what they are capable of producing, and what must be changed in order to improve them still further. In addition, Six Sigma refers to a company's campaign to implement Six Sigma style process improvement within their organization. These campaigns include training programs that certify individuals at various levels of expertise, such as Green Belts (basic), Black Belts (advanced), and Master Black Belts (teachers of Black Belts). They also include the administration and assessment of large numbers of Six Sigma improvement projects across the enterprise.
- How does Six Sigma work? The steps of Six Sigma are deceptively simple: Define: Begin at the beginning. What is the defect or problem you are trying to solve? Define the SIPOC (Suppliers, Inputs, Process, Outputs, Customers), and define the process itself as best you can.
Collect data (measurements) about the process to gain a better understanding of it.
Try to figure out what the data is telling you. Often, you will go back and forth between the Measure and the Analyze steps to clarify your understanding of how the process really works. This becomes is your hypothesis. It is essentially the expression of a theory of cause and effect for your process.
One thing that distinguishes Six Sigma from other approaches is the genius of this insight: cause and effect can be expressed in terms of a mathematical equation:
Y (Output) is the F(function) ofthe X(process)
After analyzing the process, you construct an experiment to prove your hypothesis. Your experiment will measurably change one of the independent variables (x) s. If your theory is correct, the result will be a measurable (and positive) change to the dependent variable (Y). If your experiment is on target, you will have reduced the instances of defects.
It does no good to learn how a process can be improved if the improvement is not institutionalized in some way so the problems do not recur. The control step is doing the things necessary to cause this to happen.
These steps are deceptively simple, because they apply at a business level (i.e. how we organize and manage the business) as well as the process level (specific work steps accomplished by people or machines). Like many truly valuable skills, actually implementing these steps is vastly different than just talking about them. That is why implementing one or more Six Sigma projects is required to earn your "credentials" in the trade. Implementing the approach provides individuals the opportunity to gain substantial insights that are difficult to gain by any other means.
- Can process improvement be used to improve top-line growth, or is it just limited to cost reduction? Six Sigma can be used for both top and bottom line results. Top-line growth is the most interesting application of process improvement. In manufacturing, we add value to raw materials. Walkthrough a production plant and you can see the value. It is tangible in the form of inventory. In marketing and sales, we add value to people in the market place (not just our own company). The value created is in someone's head. This means helping people in the marketplace to move through the stages necessary to realize their problems and solutions and to take action. In general, the job of marketing and selling is to create a transition. You are trying to transition people who have never heard of your company, the problems you can solve, or the solutions you offer into people who are ready, willing, and able to spend their time and money with your company. When a sales process is properly designed, the value added can be measured in terms of the actions you are able to get people to take. In this way the effectiveness of one headline vs. another, one marketing strategy vs. another, or one selling approach vs. another can be compared.
- People have been trying to improve marketing and selling practices for years. Is Six Sigma all that different? This is a complex question, and I'd like to answer on three levels: On one level, process improvement simply brings tools to address many of the traditional problems of marketing and selling. For example, it brings an approach for measuring activities and results more objectively. The beauty is that on the surface process improvement does focus on the same things as traditional approaches. Since we are at the beginning stages of this evolution, it is common for basic process improvement steps (such as defining the sales process appropriately) to uncover easy-to-fix problems, such as lack of measurements, inadequate job aids, or training, etc. Fixing these "low-hanging-fruits" often has huge payoffs. On another level, the tools and language of process improvement are very deep (remember, this is the scientific method). Six Sigma in particular is a far more, disciplined, and analytical way of improving business results than most non-technical organizations are used to. It requires a deep understanding of process language and statistical mathematics. Although the goal of Six Sigma is business results, this depth can make communicating with business people a challenge. (Dick Lee, author of The CRM Survival Guide, once said to the uninitiated, listening to Six Sigma Black Belts is like listening to my 8-year-old talking about Pokémon.) These difficulties are definitely surmountable; however, and the best Six Sigma practitioners translate between the two cultures magnificently. Finally, and what makes process improvement difficult in some organizations is this: Done correctly, process improvement requires people to face previously hidden facts of reality. For example,
- The company president likes a specific ad campaign, but prospects don't
- Marketing and selling objectives conflict
- Compensation programs dysfunctionally reward the wrong behaviors
Process improvement and Six Sigma are just the mechanisms of rational thinking. Helping people within the organizations to deal with the change required and the emotions they generate is a different matter that must be dealt with. Dealing with these things can be difficult, but the payoffs are huge.
- When you apply process improvement to marketing and selling, is the main application to the selling itself, or to sales management?
Process improvement's (or Six Sigma's) primary application is in sales management, and specifically sales process management. These approaches force the organization to recognize the fact that the sales process and therefore the results of marketing and selling, involve far more than just what salespeople do. It is critical to realize that there are actually three levels of sales process:
- Level 1: Skills such as listening, asking questions, handling objections, empathizing, etc. These are a process within the individual. They apply to the thinking an individual must do to exhibit effective behaviors. Many training companies provide course material at this level.
- Level 2: The personal sales process. This refers to the goals and objectives salespeople use to achieve their goal, such as qualifying, researching needs, formulating the value proposition, presenting the solution, etc. These are the province of some of the more sophisticated sales training courses, the ones with a "sales process" embedded in them.
- Level 3: The organizational sales process. All the work of finding, gaining, and keeping customers is interdependent. The organizational sales process is the organization's plan to meet its business objectives.
All too often, executives have failed to think through the organizational sales process. They hire great people and then put them out in individual trenches to function like basket weavers, toiling away independently, fighting for all they're worth. If the organization doesn't work to make sales easier for them, believe me, it won't be! In companies where salespeople are competitively ranked, it is actually against their interests to share best practices or to help each other!
Executives focused only on results (and not on process) can't see these issues. As a result, they have no means of getting to the root of problems that continue year after year.
One of the most powerful effects of a process approach is in helping executives to better understand what is going on in their organizations. It helps them to understand where the problems really are. For example, if the real problem is not enough opportunities in the marketplace, spending money on CRM or sales training is the wrong solution. These kinds of situations can only be identified with the perspective of a process approach.
- What is its relationship between process improvement and CRM (Customer Relationship Management)? CRM has two meanings, so this question has two answers. The first meaning for CRM is computer software that aids sales organizations. Computer software is necessary for applying process improvement to marketing and sales, just as it is in manufacturing production. Without computers and software you can't measure or analyze activities and results fast enough to do any good. Unfortunately, the CRM vendors don't have it right yet. Their systems are not typically configured to measure the yields of marketing and sales activity, or to uncover cause and effect. Instead, the systems we redesigned to provide managers with control over field activity. But, of course, you can't control customers, or salespeople for that matter, so the results have generally been suboptimal. It isn't really the CRM vendor's fault, because they have just been providing what companies have asked for. When their customers start asking for the right kinds of functions and configurations, they'll start providing them.
In any case, the proper approach does not start with software. It starts with a process definition that clarifies the "unit of production," i.e. what incremental actions, or steps do we want the customer to take, and how do we measure them? Taking this approach respects the fact that leads, opportunities, and deals are the inventory of marketing and selling, enabling the CRM system to perform the same incredibly valuable role that MRP systems perform in production manufacturing.
Of course, purists correctly point out that Customer Relationship Management itself should not be about software. It should be about managing the customer relationship. If that is what the industry is truly about, then process improvement should be at its core. Unfortunately, at this time most of the CRM industry does not really recognize or understand what process improvement is? There are still many people who would argue that strict processes’ thinking has no place in marketing and selling. Those perspectives are just beginning to change, and will change more rapidly in the future.
- How can statistical tools be applied to measuring marketing and sales activity? The question is no longer "Do these tools apply?" but "How can we apply them well? Traditionally, marketing and selling executives just selected activity metrics with only a vague idea of how the data of what would be useful: for example, the number of times the phone is dialed, the number of times the phone rings before customer service answers it, the number of hours of "face time," or proposals issued per week. What would a manager be able to do with any of this data? Process improvement provides logic for determining which measurements are the most relevant. In so-called "soft" functions (like sales and marketing), the key is to understand the goal: what value are we trying to create? Specifically, what actions are we trying to get the prospect or customer to take? Direct response marketing provides an idea model to understand which measurements are important: The objective might be to get prospects to send in a post card or call a phone number. This is the result. The activities might be to send a mailing with a specific headline, body copy, photograph, to mailing lists with certain demographic characteristics. Companies are measuring these kinds of things every day, and they are learning which factors produce better results, and which ones don't.
Sales organizations can establish qualifying criteria for measuring the quality of leads and opportunities. The calls and contacts they make are the activities they pursue in their efforts to get customers to do various things. The customer's actions attending demonstrations, committing time or resources to evaluating offers, etc. are the results.
Statistical measurement techniques have been applied in all kinds of nonmanufacturing environments (hospitals, hotels, restaurants, customer service organizations, finance departments, etc.).
The main purpose of process improvement in marketing and sales is the same as it is anywhere else. Process improvement is a set of rational power tools to cut through the jungle of noise, hearsay, and false assumptions to uncover objective reality. Just like any other power tool, it can be applied well, or not so well.
- What are the barriers to applying process improvement (such as Six Sigma) in marketing and sales environments? Some people think that salespeople resist process improvement because they are trained to focus only on results (a supposed to process), and because these process approaches take a way salespeople's autonomy. However, there are a variety of barriers involved: For example:
- knowledge barriers lack of knowledge of how process thinking applies to them
- value or cultural barriers valuing results over process instead of analyzing cause and effect
- information barriers data on the sales process is not available and CRM systems do not help much
- workload barriers companies often fail to realize the impact of additional administrative burdens requiring salespeople to provide additional information
- compensation and performance evaluation barriers people are compensated and rewarded for the wrong things
- precedent barriers in many companies, salespeople know from experience that any information they provide can and will be used against them.
Process approaches do not necessarily reduce salespeople's autonomy.In fact, they often augment the salesperson's power by forcing the eliminationof internal barriers salespeople struggle with every day.
- How can process improvement improve sales forecast accuracy?People in manufacturing plants often struggle with problemscreated by poor accuracy in the sales forecast. Often they struggle in vain tofind a magic algorithm that will provide a few percentage points ofimprovement. However, the sales forecast accuracy problem can't be solved withthe data available in the plant.Shipments are forecast based on what is happening where theproduct is made - within the plant. Proper sales forecasting should be basedon what is happening where the sales are made - in the field. Statisticalextrapolation of past sales numbers looks for patterns in the historicalnumbers. But what if competition has changed in the market? What if aninexperienced new salesperson or distributor is involved? What if aprevious coupon promotion is no longer in place? What if the customer switchedto a new approach and needs a different kind of product? These are the things thatwill drive future behavior of customers, and they are not things you canpossibly be aware of without input from the field.As Thomas Wallace and Robert Stahl said in their excellentbook, "Sales Forecasting:""Better processes yield better results. Betterforecasting processes yield better forecasts."
To that I would add, "Better sales processes yieldbetter sales results as well."
Sales forecast accuracy can be improved dramatically by applying process improvement techniques: defining the process, measuring and analyzing activities and results, identifying and reducing causes for variations, and institutionalizing the new approach. There are a host of powerful short-cut techniques around targeting markets, improving qualification criteria, and others that have proven effective for increasing forecast accuracy.
8. How can you motivate a sales department to support a process improvement project, such as Six Sigma? This is a complex question, so here is just the briefest of responses. We all live in a world full of frustrations. However, in many sales environments these frustrations have often been compounded by an environment where any information salespeople provide has been used against them. In these environments, resistance to process improvement is a normal reaction. One of the best ways to get the sales department's participation is to apply process improvement to make sales easier in some way. Change the system they live in so as to remove a roadblock, lessen their load, or provide better qualified prospects. Conversely, one of the worst ways of getting their participation is to take and approach that assumes the problems are the sales department's fault, and that they need to take process improvement training to make things better. (Yes, it has happened, more than once.)Ask yourself what are the sales organization's biggest issues and challenges? Are they internal or external? Start there. Process improvement can be the sales department's best friend if it puts teeth on initiatives to solve the organization's biggest issues and challenges. It can be their worst enemy; if it is used to imprison the salespeople instead of create value for the customer.
There are many issues buried in this subject (see question#11 above about "Barriers"), so hopefully this provides at least a cursory overview.
- What is the definition of "marketing?" And, how does process improvement apply in marketing? Broadly, marketing is anything that makes sales easier! Specifically, it depends on your industry and company situation. Measuring the value created by marketing requires marketing and selling to work together. A great analogy with traditional manufacturing: Marketing is like engineering, selling is like production.
- If a well-written brochure describing applications of your product could help generate credibility and awareness of its value, thereby making sales easier, marketing would create it. You could do an experiment to track results of sales activities with and without the brochure to measure its effectiveness.
- If finding the right kinds of prospects is a time-consuming challenge for salespeople, marketing could work on the message and copywriting for a promotion via public media. The results could be measured by the increase in inquiries from the right kinds of prospects.
- If determining whether the size of the market justifies investment in selling resources, the marketing department can do market research.
Marketing adds huge value, when done properly. All too often, marketing is disconnected from selling, thereby diluting its potential.
Applying process improvement hinges on the question of what the department is producing. Perhaps the organization requires customer inquiries of a certain kind, or a certain amount of press exposure in trade articles and advertisements. Process improvement applies directly to producing these kinds of things.
On the other hand, perhaps the organization requires market research, planning, or creative advertising. These things, hopefully, should be intended to improve the performance of some production activity, and so, again, measurement of the production activity can prove their effectiveness.
It is when the unit of production can't be defined or measured that people run into trouble applying process improvement.
- How do you correlate customer satisfaction data with improved sales results? Customer satisfaction may be a necessary condition of doing business with customers, but it is not sufficient to getting their business. Look at it this way: Suppose you figured out how to help your customer make an additional million dollars per year, perhaps by bringing to their attention a design flaw or leveraging a unique capability you offer. Of course, you get their business. If you fumble a little once in a while, they may gripe but they will probably still buy from you, right? Now suppose a different situation: You like the supermarket you go to every week. The store is clean and neat, produce is fresh, prices are great, you are completely satisfied, and you even think one of the check-out clerks is kind of cute. But then, a competing chain builds a store less than a mile from your house, much closer than the supermarket you have been visiting.
Most of us would start going to that new store in a heartbeat. As long as we can do the shopping we need adequately, the convenient location and time savings is more than enough to make us switch.
Customer satisfaction is the wrong goal. The goal is helping customers make money, save time, etc. Customer satisfaction may be necessary, but it is not sufficient for winning customer business! (My thanks to, Mike Carnell of Six Sigma Applications for the insight to this question!)
About The Author
Michael J. Webb is President of Sales Performance Consultants, Inc., a consultancy devoted to helping marketing and sales executives who are struggling with process improvement. In July of 2003, Mr. Webb delivered the keynote presentation for the first-ever conference on applying Six Sigma to marketing and sales. He has worked to help clients such as American Express, 3M, Marriott, and many others to improve their sales processes and results. He also works with sales training firms, such as IMPAX Corporation, to help integrate the best-selling practices into client company's sales operations. Mr. Webb achieved certification with the ASQ as a Quality Manager in 1998. His website (www.salesperformance.com) contains a wealth of information and resources for helping companies improve their organizations sales performance.