Production Control for Sales and Marketing
Years ago I took a job selling manufacturing resource planning (MRP) software to small and medium sized manufacturers. Predecessors to today’s enterprise software, these systems had powerful impacts on businesses that installed them. I got my education in these matters from APICS (the American Production and Inventory Control Society), and ultimately I was even elected president of the St. Louis Chapter. There was a recession at the time, so computer systems were not the only things suffering from slow sales. Several APICS members had been laid off, and were looking for work. One fellow, Steve, who had formerly worked at a large company (the MacDonald Aircraft company, I think), came in one day marveling at the cool job he had landed as production control supervisor of a tiny company – I think they made party containers, or something.
This was totally different from the kind of job he had before: he was now responsible for the entire company’s inventory system, which was in shambles. A month later he told us stories about how he had started with the basics he had learned at APICS. He devised a part-numbering system, and conducted physical inventories. A few months later he told us about cleaning up the bills of material, implementing cycle counting, establishing proper routings, and so on. He was working harder than he had ever worked in his life.
Then, Steve explained how his company’s inventory had been reduced by 15%, then another 10% the next month. Later he bragged about reducing cycle time from four weeks to three. Sitting across the table from him at dinner meetings, his smile was getting bigger and bigger.
“This stuff really works!” he exclaimed.
Things didn’t seem to work that way in sales, and that made a big impression on me.
Why Can’t Companies Control Sales and Marketing?
I had had several jobs by that point, including as a sales manager. I had seen myself and others do everything right and still not make the sales we needed. We knew it was “a numbers game,” so we continued to work hard on the chance that it would all pay off and we would get exorbitant commission checks someday.
Some people did seem to have success, too.
Some salespeople left in search of easier money. I liked selling manufacturing systems, so I stayed and concentrated on improving my selling skills. I performed well compared with my peers. There is always this assumption that comes with sales jobs. It says you, the salesperson, are solely accountable for success.
Then, after a while, you look around the office and realize that you are one of the best, and that no one, including you, is doing particularly well.
You realize there are lots of things not in your control in the market, in the customers, in the company you work for. You realize there are things that a positive attitude and working harder will not solve.
You wish other people in your company would recognize some of these things too.
That’s what got me thinking.
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The Requirements for Managing Anything
How had my friend Steve’s APICS knowledge enabled him to improve the profitability and service levels of his company? It obviously wasn’t magic.
It had to be that these APICS principles enabled them to separate the things they could control from the things they couldn’t control. Further, these principles had to be things that ran counter to conventional wisdom at that company. Otherwise, everybody would have been doing them already.
In a manufacturing plant, it is pretty obvious that you can’t make your quota of parts if the quantity and quality of materials you need aren’t available, no matter how hard you work or how positive your attitude is.
Yet in sales, instead of identifying the actual quantity and quality of prospects in a local market, companies often blindly throw people and resources at them in hopes of getting a result. They assume the salespeople are accountable for success. When numbers don’t match expectations, people are asked to “Just work harder.” Sometimes they are replaced.
In the companies I worked for, results in sales and marketing were sometimes attributable to the hard work of the salesperson. Other times they were a crap shoot.
Then there were the times we in the field figured the folks in the mother ship were smoking something weird because there was no way their and campaigns could succeed!
Production and inventory control principles are scientific, based on evidence and facts. They work by providing a provable means for everyone in the company to know what is really going on.
Eventually I realized there is no similar set of “production control principles” in sales and marketing. Since words mean different things to different people, no accountable means of tracing promotional campaigns, leads, selling activity, or forecasts down to observable facts was possible. So, sales and marketing remains a mystery to the rest of the company.
Without such a body of knowledge around how to define the facts in sales and marketing, life inside corporations continues to be incredibly frustrating. Decisions are driven from the reputations and personalities of individuals rather than on evidence and facts. Senior managements continue getting sucked into broad, indefinable strategies like “we need to sell solutions instead of products.” They continue to come up with lame strategies that cannot work.
For example, not long ago an executive at an extremely large software company requested “time and motion studies” on his salespeople (!). An executive at a multi-billion dollar systems company actually agreed to hand out big bonuses to salespeople who could to could increase the number of customers doing expensive “proof of concept” demos, in a classic (and disastrous) case of getting the cart before the horse. I’m sure you’ve heard of other stories like these. And, recently a large institution asked if the consistent +/- 20% quota performance of their salespeople over the years was an indication that these numbers might be being “managed” to protect their people (DUH!). (In fact, if you know of another good example of this sort of thing, please send me an email. I’d love to hear about it!)
A Realistic Way of Measuring and Managing Sales and Marketing
To try to solve the problem of measuring sales and marketing in a more rational way, I read everything I could find about process improvement, and especially about sales and marketing processes. I yearned to become involved in process improvement projects.
My journey lead me from selling MRP systems at MAI Basic Four to being an area sales manager at Rockwell Automation, to directing the sales and marketing of an engineering firm where I was able for the first time to track the flow of every inquiry through to completion for a couple of years.
I tried to work for some large consulting companies (they wouldn’t hire me, preferring recent college grads instead). I joined a sales training firm (IMPAX Corporation), and eventually helped them land lots of new clients because of tailoring methods I invented (which involved process maps and something called “Business Value Maps”). I earned certification as a Quality Manager with the American Society of Quality. Ultimately, I went independent, and IMPAX became my client. I pursued Six Sigma training and began implementing Six Sigma projects, speaking at Six Sigma conferences.
The projects I worked on in these early years were illuminating and exasperating at the same time. For example, the president of a $35 million company hired me to help his sales and marketing department increase their close ratio. We made great progress, until the fellow decided to hire another consultant to conduct training in Steven Covey’s Seven Habits. Suddenly I had been superseded and people wouldn’t come to my meetings anymore! He sold his company a few months later (a shock to his employees, because he had always denied he would do such a thing).
With each experience came another brick in the structure I was building in my mind. The picture of how sales and marketing needed to be measured was becoming clearer. After improving their qualification criteria, one company dramatically improved their close ratio. After a client’s salespeople actually scored their prospects using their qualification criteria, I hired a statistician to analyze it. The results were amazing. When we got salespeople at another company to change the sequence they used for demos and proposals, sales costs went town, close ratios went up.
Knowing I was on to something I started writing and self-publishing books, among them the “Sales Process Improvement Series.” These sold pretty well on my website. Eventually, I was offered a book contract for what ultimately would become “Sales and Marketing the Six Sigma Way.”
The decision to write “Sales and Marketing the Six Sigma Way” was a huge risk. Lots of people had tried to make a business out of applying quality principles to sales and marketing. None had succeeded. Doing the book could be good for my career, but doing it right would require hiring a top-notch business book writer. It meant almost shutting down my consulting for the months it would take to get the job done. Worse, it also meant going into debt at the same time.
The Completed Foundation
The ultimate result was excellent. Writing that book enabled me to work with more executives in exactly the way I had always envisioned working with them: at the level of leading and managing the entire find-win-keep process. The results of those large projects were slower in coming, but they were also bigger and more profound.
The experiences enabled me to grow the business, my team, and my knowledge of how companies can profit from applying process thinking to sales and marketing. Being a bit of a perfectionist, I felt “The Sales Process Improvement Series” needed to be re-written, so I took them off the market.
That was a mistake, because month after month people have wanted to read those guidebooks, and I have been unable to get to the task of rewriting them until now.
Two weeks ago, on November 5th, I announced that beginning on December 15th, I would be rewriting and releasing those guidebooks, one per month, over the next six months. This is the most comprehensive and well-documented approach to sales process improvement ever written. These guidebooks explain how to make sales and marketing run like clockwork – and do it in a way salespeople love.
As the first step toward that launch, I am re-releasing the original “Sales Process Improvement Series,” and continuing my policy of free upgrades to all customers when the books are revised. You can read about them at www.salesperformance.com/products.aspx.
Lots more is going on now behind the scenes as we get ready for this event. I’ll let you in on more of what we have planned in my next message later this week.
Mike – I posted a short interview (http://www.hertzler.com/blog/dataheads/?p=45) with Jay today in which he describes how he is setting up a data system to improve the raw material coming into his sales process. The whole thing reminded me of your work.