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Quantifying Hard Benefits of Sales Process Improvement

by Michael Webb | * Comments (1)
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Recently, the following question appeared on the www.iSixSigma.com discussion forum. It is a telling question, and the answer is crucial to every company today:

"Our organization has started using Six Sigma for marketing and sales projects. We've instituted metrics like "conversion of leads," "improving cross-sell per employee," "improving productivity."

"Why is it that quantifying the benefits of these projects often seems ambiguous?"

The reason sales process improvement projects have ambiguous results has little to do with Six Sigma, and a great deal to do with how a company thinks about sales and marketing.                        

Consider:

Most people would readily agree that sales and marketing is a production process. Yet, what does it produce? It seems obvious that the answer is "orders," or "revenue."

However, that answer misses a crucial point: what is the value to the customer?

Lean and Six Sigma require that we find the customer's CTQs, which means what they value/what they would pay for. Excellent companies analyze every step of their production process this way. In fact, they are willing to radically re-design things when they find ways to create even more value for customers with less investment.

Yet, two cultural blind spots prevent companies from improving their sales and marketing (whether they use Six Sigma or not).

First is ignorance of process. Without the requisite focus on their process, companies literally cannot see the causes of their results. This means, in part, operating definitions:

  • What, exactly is a lead?
  • What, exactly is a qualified sales opportunity?

What evidence enables us to classify people in the market as "leads," or "qualified sales opportunities?" This is the key to linking sales and marketing culture to the culture of the quality and productivity sciences. Ultimately, there must be objective, observable evidence, statistically validated by evidence to support these classifications, just as there would be in any tangible production process.  It takes time, effort, and lots of iterations to get there, but that is the goal. Tying people's words to observable reality is the way to prevent "improvements" from becoming "ambiguous."

The second is ignorance of customer value. How often have you heard a company consider the value to the customer in their marketing and selling? For example:

  • What value does that brand awareness campaign create for the customer?
  • What value does that trade show create for the customer?
  • Why should the customer read your advertisement?
  • Why should the customer take your salesperson's call?

Better yet:

  • Why wouldn't the customer be willing to PAY for your salesperson to call on them?

And, perhaps most importantly,

  • What is the quantifiable benefit the customer receives when they use your products and services?

Instead of zeroing in on these important questions, companies define their sales process in terms of themselves. "We prospect for business. We make sales calls. We do demonstrations and proposals. We close deals."

Right. Then, why doesn't the customer cooperate with each and every one of those steps? Because there is no value to them, of course.

Customers have free will. They act only when they see value to themselves (or their company). If you want to get their attention, or get their information, or their cooperation (much less their money!), you must show them what is in it for them. In fact, their actions are the only evidence that value has been created.

Customer actions are hard data that can be measured. Doing this requires that you define the process correctly. Attempting to "improve" a sales process without

A) defining the value to the customer
(i.e., why they should do what you want them to), and
B) setting up a means of measuring their actions

is pretty much a waste of time. Which is another way of describing so called "Six Sigma projects" that produce ambiguous benefits. It also the reason sales and marketing organizations don't consider Six Sigma to be credible or applicable in their world.

Conversely, the Six Sigma professional who approaches a sales and marketing project correctly will get the attention and the respect of sales and marketing practitioners quickly. Not to mention producing hard improvements to the company's top and bottom line.

Michael Webb
Feb 17, 2007

One Response to “Quantifying Hard Benefits of Sales Process Improvement”

  1. This is an excellent post Michael. It really highlights the fact that, even if marketers understand the need for tracking and metrics, the process ends up being surprisingly difficult -- largely due to the lack of defined marketing processes.

    I've spend the last couple of months working to develop a metrics and tracking system for myself and my clicents. As a result, I've developed a Top 10 list of what I see as "keystone" metrics -- the numbers that matter most.

    I'd be interested in getting your opinion on the list. Also, this list might bring some clarity to those marketers who are attempting to quantify their success.

    I'm sure this list needs some refinement, but it is a start:

    http://www.marketingpathway.com/newsflashes/marketing_metrics/top_10_marketing_metrics_reva.html

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