Six Sigma for Sales: Truth About the Customers' Needs

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New from iSixSigma Knowing the Customer Research Report Customer Identity Verification Project Example Customer Correspondence Project Example

y John Krupar

"The more I learn about customer satisfaction, the less I know," the CEO of a Fortune 500 company recently lamented. Many CEOs can empathize – for even the most customer-centered companies fall short on truly understanding their customers' wants and needs and often don't realize it until it's too late. How does this happen? Many CEOs are inundated with customer satisfaction data that have been gathered as an end in itself rather than a means to an end.

Forward-thinking companies know that getting the focus right is key. Their underlying sales strategy is to determine what few things will have the greatest leverage, and to focus scarce resources on these critical areas. One way to accomplish this is to close the gap between what customers value and what you provide using the Six Sigma methodology. Six Sigma is a disciplined methodology that begins and ends with the Voice of the Customer (VOC). It has its roots in manufacturing but is proving equally effective in sales and marketing. Many companies which have reaped the benefits of applying Six Sigma to increase productivity and the bottom line are now using it to create top line growth by applying it in the areas of:

• Client relationship management
• Sales effectiveness
• New market development
• Pricing process improvement
• Advertising/communication improvement
• Branding effectiveness
• Channel effectiveness
• Lead management
• Service improvement
• Product development

General Electric, entering the ninth year of its Six Sigma journey, began using Six Sigma to improve sales effectiveness in year five. Jack Welch said, "We found that Six Sigma isn't only for engineers. . . . Regional sales managers can use it to improve forecast reliability, pricing strategies, or pricing variation."

DuPont, now in its fourth year of integrating Six Sigma, began using Six Sigma for top line growth in year two. "Six Sigma brought a new focus on the voice of the customer. Customer input is valuable in driving research development, product development, and applications," said Don Linsenmann, DuPont vice president and corporate champion-Six Sigma.

Bombardier, now in its seventh year of implementing Six Sigma, initially focused its business improvement efforts on cash flow, cost reduction, cost improvement, cost avoidance and efficiency improvement. Today, many of their Six Sigma projects are focused on growth projects to increase sales volume and sales margins.

If It Can Make Products Better, Can It Improve Sales?

To understand how Six Sigma impacts top line growth, let's take a look at how it is applied specifically in sales and marketing to increase selling effectiveness. We must first begin with an understanding of the theories of Dr. Abraham Maslow and Dr. Noritaki Kano. Many of Kano's concepts are utilized in Six Sigma to enable sales executives to understand the psyche of their customers.

Kano, like Maslow before him, postulated that organizations, like people, have needs and wants. These needs and wants can and should be segmented into a hierarchy. This hierarchy provides us with a logical pathway to meeting and exceeding customer needs on the important elements of our relationship.

Many of us first encountered Maslow's theories in Psychology 101 but few would suspect that the key to understanding our customers also may be found in Maslow's Hierarchy of Needs. Maslow believed that an individual's needs must first be satisfied at the lower, more basic levels (food, water, and oxygen) before one could seek to gratify needs at the next higher level (safety, love, esteem). Only when lower-level needs are satisfied can self-actualization needs begin to be addressed. Self-actualization is the fulfilment of one's human potential and is often the point at which an individual becomes truly creative. (For more detail, see http://www.wynja.com/personality/needs.)

There are significant parallels between Maslow and Kano's theories in explaining the needs of organizations and how to meet them. The Kano Model is a powerful tool that enables a sales team to properly identify the few critical items customers are saying have the highest impact. The model segments these needs according to:

1) Must be's
2) One-dimensional
3) Delighters

Figure 1: Banking Example

Must-Be Needs

Must-be's are those needs and wants that have to be met for a customer to even begin to have a positive relationship with your company. Many customers believe their must-be needs are so basic they don't even think of discussing these unless they have been disappointed. Must-be needs for a typical hotel customer, for example, would include an accurate reservation in the system, a clean bathroom and a non-smoking room preference. Customers of major hotel chains fully expect lower level needs to be met, and simply assume the hotel knows what these needs are.

One-Dimensional Needs

One-dimensional needs are the needs a customer will discuss and are typified by a "win-lose" negotiation. An example might be the price of a hotel room. If asked how the hotel might make a guest more satisfied, a majority might request a lower room rate. But while each dollar of discount provided to the guest makes them that much happier, the same dollar of discount makes hotel management that much unhappier.

Delighters

Delighters are when wants or needs are met when a customer is not expecting it. During a recent vacation, I received a beautiful fruit and cheese tray when I checked into a well known hotel. Unfortunately they had assigned me to a smoking room. The delighter did not have the desired effect. In fact, it backfired because my must-be need for a non-smoking room was not met. When a bellman arrived to move me to a non-smoking room, I requested he remove the cheese tray because it smelled of smoke.

The Lesson Is Clear

• We must be nearly flawless (approaching Six Sigma levels) on meeting customers' must-be needs and we should focus our time, effort and Six Sigma teams on these needs.
• We should acknowledge the one-dimensional needs of our customers but quickly move the discussion to the next level to focus on delighters.
• We must focus concentrated effort on the delighters -- those differentiators that provide extraordinary benefit to the customer without increasing a supplier's cost.

Using Six Sigma to understand a customer's needs and wants ensures you are developing and delivering products and services to create more value for customers and make them more likely to stay with you than go to your competitor. More importantly, since money and time to invest in improvements are scarce, this approach helps you figure out what you're not going to do. This helps you stay ahead of the game in closing a sale and opening a profitable customer-centered relationship.

A Case Study

Does wining and dining prospective customers lead to sales? The conventional wisdom of a product sales team was that such entertaining was necessary to close the deal. But a Six Sigma project that examined sales data found that while face time with customers was important, wining and dining was not. The data showed that regular face time helped close sales, but that time could be spent over a cup of coffee, not golfing at a resort. In addition, too much face time with customers was counterproductive. A regularly scheduled customer outing was found to be detrimental to closing sales since it was at a busy time of year when customers preferred not to be away from their offices. Changing this process resulted in an increase of more than 10 percent of sales for the product as well as a decrease in the cost of marketing this product.

About the Author

John Krupar is an executive consultant with Six Sigma Academy. He has assisted numerous Fortune 500 companies in deploying business improvement methodologies that align tactical execution with strategic goals. Mr. Krupar joined Six Sigma Academy as a Master Black Belt in 1999 with four previous years of related experience at General Electric. He holds an executive master's degree in management from Purdue University. He has a bachelor's degree from the U.S. Military Academy at West Point. Mr. Krupar can be reached at jkrupar@6-sigma.com.

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