What Is Lean Six Sigma, and Why Should Strategic Account Managers Care? Part 2
By Michael J. Webb
Fact-Based Sales Problem Solving
As much as anything, strategic account managers (SAMs) exist to solve customers’ problems. Of course, that means the problems that, the company’s products and services are designed to solve for customers. Yet, it also means the problems that bedevil customers and salespeople in any business: incorrect deliveries, errors/returns, poor installation, lack of follow-up, and so on.
Standard Register also employed Six Sigma in this area to good effect. A group of eight hospitals in Phoenix had experienced chronic problems regarding invoicing despite account managers’ repeated attempts to resolve them.
The information available was anecdotal. At one location, billings couldn’t be reconciled with purchase orders. At another, incorrect shipments had repeatedly arrived. And so on. Yet the nature and frequency of the problems was unclear. Was the perception of poor service being created by a few vocal people, or was truly poor service repeatedly occurring? The situation grew heated and had to be resolved.
The hospital group didn’t have a Six Sigma initiative of its own, and they only wanted a solution, not a “methodology.” But they agreed to work with Standard Register to gather facts on the problems in the various locations in a systematic way, using a Voice of the Customer, or VOC, survey (see sidebar “Tools, Not Rules”).
The hospital administrators wanted a sound, productive, survey and wanted the survey to come from them rather than Standard Register. Susan Kraus, a Standard Register Black Belt, helped them design a sample of respondents and survey questions that would produce data that would give them a handle on the situation.
As a result of the survey both the hospital administrators and the salespeople understood what was happening. Essentially, both the hospital locations and the company had overlooked several basic procedures that each of their organizations had already established.
Why was Six Sigma instrumental in this?
The causes of the glitches (remember the cause-and-effect element of Six Sigma?) had eluded both the customer and the vendor because the “evidence” had been anecdotal and scattershot rather than organized and analyzed. For that reason, the root causes of the problems could not be identified. Once the root causes were diagnosed and eliminated, the invoicing and delivery routines became as routine as they should have been all along.
The VOC survey provided a framework that enabled the account manager and customer service people to accomplish something that eluded their individual efforts. Rather than having a series of well-intentioned but lightly armed account managers individually tackling individual problems, the survey provided a structured, efficient way of gathering the right data to identify the scope, nature, and causes of the problems.
SIDEBAR: Tools, Not Rules
Six Sigma employs various tools in projects. Some of the most useful and most commonly used ones include the following:
- Voice of the Customer (VOC): Market research surveys, including carefully structured questionnaires used in telephone, personal, and mail surveys, gather data and information in organized ways to analyze problems and their causes.
- SIPOC Chart: A SIPOC (sy’ pock) chart lays out the key parts of a business process so you can see what’s going on. These parts, as indicated by the SIPOC acronym, are Supplier, Input, Process, Output, and Customer. The supplier provides an input to the process, in which people or equipment generate output for an internal or external customer. The charts are like maps that help you see the process—and potential hotspots—clearly.
- Process Map: A process map is similar to a SIPOC, except it focuses on the process itself. Proper sales process maps identify not just what your company does, but the decisions/actions required from the customer at each phase. This allows everyone (not just salespeople) to focus on how to help the customer make progress toward the sale.
- CTQs: Critical to Quality describes elements of a product, service, customer relationship, or other aspects of a company’s performance that the customer considers to be of real value.
As you see from these examples from Standard Register’s experience, Six Sigma helps overcome sales challenges ranging from the relatively global one of repositioning your company in the eyes of the customer to the relatively mundane but important one of solving recurring customer-service problems.
Cases from two other companies show how Six Sigma can help address two other challenges SAMs regularly face: that of making sales truly consultative, and that of improving salespeople’s performance.
How to Turn Your Sales and Marketing Into a Lean Six Sigma Production Machine That Runs Like Clockwork (And Do It in a Way Your Salespeople Will Love!)
Making Sales Truly Consultative
Many companies talk about bringing a consultative approach to their sales efforts, but this often amounts to mere positioning rather than actually helping the customer make or save money. In other words, a truly consultative approach creates new value for the customer. Such an approach makes sense for many products, particularly those with a large information component. By that I mean that a key function of strategic account managers is to give customers information about the product in all its dimensions. This goes far beyond discussing product specs and uses and reaches deeply into customers’ operations to show them how to make and save money with your products and services.
Here’s an excellent example of what I mean. Johnson & Johnson’s Ortho-Clinical Diagnostics manufactures blood chemistry products for hospital labs. Hospital labs work under intense time and cost pressures. That’s their problem. Getting high-quality products at competitive prices actually isn’t their problem. So this J&J unit challenged itself to discover a way to help customers improve their lab processes and reduce costs.
J&J formed a team of Six Sigma experts with sales experience to go into the labs to improve workflows, first on a pilot basis (a common Six Sigma approach) and then on an operational basis. Those teams analyzed foot-traffic patterns, blood-sample arrival and processing schedules, and results reporting procedures to learn how the lab work was actually performed. When did samples arrive? How did people move about? What tests did they perform? Which materials did they use? Was their equipment properly placed?
Such analysis identified usually straightforward changes that generated time, cost, and resource savings. Changing the location of equipment improved traffic patterns. Scheduling blood draws more frequently eliminated downtime and bottlenecks. Reducing inventory freed up thousands of dollars per lab.
Based on these efforts, Ortho-Clinical Diagnostics built a consulting business that augments its product lines, binds its customers closer to the company, and generates profitable revenue in its own right. According to Jim Ellis, the company’s director of sales process excellence, “About 80 percent of our clients recover the cost of our services in less than 12 months, and 100 percent do at 24 months. After that, the savings go to the bottom line.”
This consulting activity binds customers closer to the company and generates revenue in its own right. This case shows what can happen when you look at the total process in which customers employ your product or service through the eyes of the customer and the lens of Six Sigma.
Managing Salespeople the Six Sigma Way
Six Sigma’s information-based approach brings new insights to the actual management of salespeople. For example, Darwin Cox, a Six Sigma expert at Unisys Corporation, studied potential success factors on over 400 Unisys sales executives, including sales skills, usage of the Siebel CRM system, account characteristics, and so on. The goal was to identify, statistically, which factors most influenced success.
The analysis identified two factors that accounted for more than half of the variation in performance. Cox said, “The first factor was gaining knowledge about the client and documenting it in our internal system. Salespeople who did that hit 242 percent of their target, almost five times greater than those that didn’t. The second factor was time spent with clients. Our top performers spent 68 percent of their time client facing, versus 37 percent for low performers.”
Unsurprising? Perhaps. But such measures precisely define and validate the often conventional wisdom and common-sense behavioral changes that improve salespeople’s performance. Sound management doesn’t rely on guesswork or even on “doing what makes sense.” It’s learning what high performers do, then giving low performers reasons to do those things.
It’s also a matter of getting the whole picture. In this case, success did not depend on just spending time with customers or on gaining knowledge of the customer. It depended on documenting that knowledge in the internal system, an activity that calls for thinking about what you are inputting and a degree of discipline. These two factors—real knowledge of the customer and spending time with the customer—increase the chances of having long and productive interactions with the customer. You can also create metrics on whether salespeople document client data and spend time with clients and relate these metrics to performance and rewards—and you can do this for less powerful, but still significant, behaviors.
Learning What Customers Really Value
After Standard Register executives saw how Voice of the Customer (VOC) helped resolve problems at the hospital group, they applied it to customer retention and loyalty. To retain customers and build loyalty, you must be doing and delivering the things that customers actually want you to do and deliver. To clearly define these things, the company asked customers what product, service, and relationship attributes they valued and measured two key characteristics each attribute:
- How important is this attribute to the customer?
- How well do we perform on that attribute?
To measure loyalty, as distinct from satisfaction, the survey asked three additional questions:
- How satisfied are you with your relationship with Standard Register?
- How likely are you to re-partner with us in the future?
- How likely are you to recommend us to another company?
This made it possible to correlate the attribute questions with the loyalty questions so the key drivers of loyalty for specific customers could be identified. Each strategic account manager receives the responses for his or her accounts. Standard Register Six Sigma expert Susan Kraus points out: “We encouraged them to take those results back to their customers and to ask about opportunities to improve our performance.” Since part of the account manager’s compensation is based on the customer’s VOC scores, this is one way Standard Register fulfills customers’ expectations. Again, VOC converts vague, anecdotal information into concrete, specific, actionable facts.
However, Standard Register took this effort even further by quantifying the impact of the company’s products and services in dollars so they could sell on value and not just price. To do this, Susan Kraus and her team helped the strategic account managers to develop account scorecards that were more specific than the VOC surveys mentioned earlier.
This meant identifying the measurable attributes most critical to the customer’s business. (These are called CTQs—Critical to Quality—in Six Sigma.) These CTQs would be tracked on the account’s scorecard over time and used to evaluate Standard Register’s performance. A Six Sigma approach defines CTQs in specific ways so they can be measured precisely and consistently, so all information on the scorecards had to be supportable by objective, valid data.
These scorecards gave the account teams a new and practical way to be measured by the customer and by Standard Register. It drove behaviors and communications that differed from those that prevailed when the company focused mainly on the more traditional concerns of price and delivery. For instance, some customers chose metrics such as call-center wait times, turnaround times for design services, and money spent with minority outsourced suppliers.
Such metrics broadened the salespeople’s reach into their accounts. If a CTQ related to an end-user’s requirement, the customer had in effect agreed that the team needed to speak with those end-users or their managers rather than only with purchasing. Speaking with end-users or their managers was the only way to understand their requirements, to find ways to address them, and to measure the company’s performance in addressing them. Stories circulated within Standard Register about how customers agreeing with CTQs opened doors that had been shut to account managers for years.
The effect was to start a new, more value-oriented conversation with the customer, one that went well beyond low price and fast delivery. Moreover, the metrics gave account managers real leverage within Standard Register as well. For instance, if an internal department failed to deliver a promised improvement for a customer, it was a documented fact not the salesperson’s opinion. Such facts drive system changes and resource allocations that are often impossible in organizations ruled by personalities and politics.
It takes discipline to ask, “What does the customer want?” in order to learn what they really value, and to ask, “How do we know?” to get supporting data and facts. But the answers to those questions cut through the impressions, assumptions, and emotions that cloud so many account relationships. And the result is a more value-oriented, and therefore stronger, account relationship.
At this point the question that opened part I of this article—what is Six Sigma, and why should strategic account managers care?—prompts several other questions that SAMs may want to answer. These include:
- Do my customers (or competitors) have Six Sigma or other process improvement initiatives underway? If so, what are they doing and how could it affect our relationship?
- Does my company have an active Six Sigma effort at headquarters or in another division? Do we have Black Belts or Master Black Belts whose brains I could pick for ideas on improving our sales processes as they relate to our customers?
- How can I learn more about Six Sigma?
As to the latter question, there are a huge number of ways available to salespeople and to anyone else who wants to learn about Six Sigma, or even learn the methodology. These include Websites, books, and magazines as well as courses and, at many companies, in-house experts. Answering the first and second question calls for some of the legwork and questioning that seasoned salespeople do so well.
It is effort that would certainly repay itself. Given the pervasiveness of Six Sigma in major accounts and the intensity, and success, with which many companies have applied it, anyone whose livelihood depends on knowing how customers think and manage should know about Six Sigma.