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Quantifying Sales improvements

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  • #46130

    Parija
    Participant

    We at my organisation have started using six sigma for marketing and sales projects. Metrices like Conversion of leads, Improving cross-sell per employee, improving productivity have been instituted for such sales projects.
    However when it comes to quantifying benefits of these projects its often termed ambiguous. Why? The oft asked question that has just process improvements/ streamlining can actually increase top line or is it a mix of discipline, product offering, incentives to sales channel ..actually contributed to the increase in sales.
    I am sure companies around have done quantification of incremental revenue projects. I would like if individuals from companies who have implemented six sigma in Sales and have quantified such benefits to shed light on the topic. 
    Regards
    Parija

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    #152081

    Yadav
    Participant

    Parija
    The quantification of the benefits will have to be done based on the process scope that was defined during the project kick-off and the business case prepared for project approval.
    In a typical transactional process, once you start analysing your process, there are a lot of low lying fruits, that yield and many times, these become a issue as to ‘we already knew it, but…’. The biggest take away of any transactional process is that, it inculcates the habit of looking at your process and attempt new ways of doing things. That itself is a benefit that is difficult to quantify. A thumb rule use by many is to let the process owner take a decision as to which processes have been influenced by the six sigma project.
    As a BB or GB, you can ask questions, which will make the process owner realise, how those changes have been initiated. Post process mapping there are usually a lot of consequencial changes that take place and often donot get documented. Improving your documentation in the improve phase, will also help you to quantify the savings.
    Ajit
     

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    #152120

    Michael Webb
    Participant

    Parija,
    The problem you describe, where the benefits of Six Sigma projects in sales and marketing seem ambiguous rather than quantifyable is common. The reason for it has nothing to do with Six Sigma, and a great deal to do with how your 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. They focus on their results without the requisite focus on their process. This means they literally cannot see the causes of their results. 
    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 tradeshow create for the customer? – Why should the customer read your advertizement? – 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 proudcts 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 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 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 companys top and bottom line.
     
    Michael J [email protected]

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    #152126

    Salesman
    Member

    It’s obvious there’s plenty of people here with zero sales experience.  The biggest reason for sales failures is that salesmen talk, rather than listening … and you certainly don’t need to feed greedy six sigma consultants to change that …

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    #152159

    Appreciator
    Participant

    Very well said.
    Ajit

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    #152164

    Szentannai
    Member

    Hi Salesman,
    may I ask two naive questions?One: how do you know (as opposed to believe) the biggest reason for sales failures?Two: if this is so obvious, why is it still happening? Regards
    Sandor

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    #152171

    Deanb
    Participant

    Salesman: I do think you are on the right track here. One of the reasons six sigma approaches can struggle to improve sales and marketing processes is they too often will apply a production philosophy instead of a marketing philosophy.Instead of DMAIC, a good marketing roadmap might look more like: research; target; listen; org-response to listening; transactions-customer acquisitions; customer retention; financial performance. I have found it is not how the marketing steps are done that matters, but just doing them at all, and integrating them that matters most. The entire organization needs to be aligned with the company’s marketing philosophy first, before specific processes can be improved with much impact. Like the old quality engineering adage: stabilize the process before you change it. Also, when real marketing and sales processes are truly improved, the entire organization feels it, so it should not be difficult to get a consensus on whether something improved or not.

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    #152173

    Steve Kraus
    Member

    It has been my experience that…

    Sales organizations never stand still.  They are always playing with sales incentives, new products/programs, etc. that are going to make measurement difficult.
    Sales people are unique (vs., say, manufacturing folks) in that they tend to be highly competitive.  Even the most direct contribution to their results (e.g., generating new leads) are discounted.  (‘I would have gotten that account anyway, they were on my list, etc.’ are the kinds of things I’ve heard.)
    Rather than argue exactly who ‘gets the credit’, what I’ve found to be the most effective is simply to agree with sales mgmt to ‘split the difference’.  For example, ‘can we agree that at least 70% of the leads generated by this new program are truly due to the improvement project vs. other influences?’  If they can agree to a percentage, then we can move forward.

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    #152176

    Deanb
    Participant

    I have found one of the most impactful ways six sigma can help sales and marketing is to support the blocking and tackling of marketing, which is responding to customer demand with a more marketable and profitable product/service mix. Often companies are insufficently aware of their true cost-profit realities. Help find and turn the constraints in the mix into positives, and you will immediately improve competitive advantage and marketing’s impact on profit. I have found that six sigma is at its best when it focusses more on “what” is marketed and “why,” and less on “how.” Doing too much “how” work can tamper with the marketing professionals domain and leave them less than eager to support six sigma initiatives. You would never consider telling an accountant how to do accounting. Six sigma needs to respect the marketing function much the same way. Instead, give marketers and the CFO a better mousetrap to sell, and both will become your allies soon enough.

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    #152182

    Benjammin’
    Participant

    Dean B ~
    Can you elaborate on what/why vs. how as it applies to Marketing and Six Sigma projects?  Seems like we could get into the same scenario of “stepping into the sandbox” of our marketing partners by looking intently at the “what” as well. 

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    #152185

    Deanb
    Participant

    Benjammin,You make a valid point. “What” needs to be limited to what is demanded by the customer, or more “stepping into sandboxes” easily occurs. Lets say a customer demands 100 widgets delivered in 3 weeks ARO, but the producer is set up to produce 10,000 in a run, and finds short runs too costly and uncompetitive.Lets also say that research shows that the company could easily sell 30% more widgets at a 40% price premium and 25% more profit if it could make short run orders at X-cost per unit. Now you have a potential six sigma project to consider creating a short-run process, or an inventory scheme, that can contribute a more aligned “what” to a demanded marketing mix. In this example six sigma helps marketing succeed by improving the ability to meet a demanded range of “what” requirements, and not dictating “what” by telling marketing they must do a better job of selling 10,000 lots of widgets because that is all the company can accomodate. The former approach is the marketing concept (better), whereas the latter is the production and selling concept. To really help marketing, six-sigma needs to support the marketing concept more and the selling concept less.

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    #152279

    Steve Bohlman
    Member

    First off, thanks for initiating the original post.  We too are struggling a bit with this issue and although I led Sales and Marketing at a different company for 10 years, and now as a MBB lead our LSS initiative, some issues have arisen.  I agree with Steve Kraus’ thought of counting 70% of the increase.  If you use a sales funnel, why not look at the key metrics in the funnel, such as $revenue, $margin, #projects that go to close/delivery in a given period of time, pre-LSS project and post-LSS project.  Compare the process capability between the two and also do your hypothesis test to see if there is a statistically significant difference with the new process.
    I also liked Michael Webb’s reply as it gave me something to think about.  And whether he’s a greedy consultant or not (I prefer to think not), the response from Salesman is really unnecessary.  Are we going to make this board look like the finance board at Yahoo, where there is seemingly no sense of decorum anymore?  It really doesn’t help.  I’m beginning to think that really serious boards should require the use of our real names rather than aliases.
    BTW, several of the papers in this area at last week’s ASQ Six Sigma conference echoed many of the more thoughtful points made by several posters.  So I think we’re on the right track.  This area really does need our help and it can provide a big time benefit to our companies if we can figure out how to address some of these types of issues.  thanks for those who are taking this issue seriously, we’ve got a lot of work to do.

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    #152281

    Deanb
    Participant

    Steve,I have led sales and marketing in more than one company over the last 20 yrs, and have been to a few ASQ Six Sigma Conferences myself (I too found them very useful). So we have some things in common.Even though Salesman’s post comes off a little rough it actually has some basis in fact where six sigma professionals may find project opportunities. A large study by Sales and Marketing Management Magazine a few years ago found that according to Purchasing Managers surveyed, the vast majority of salespeople unequivocally talk too much, fail to listen and acquire sufficient knowledge about customer needs, and talk way too much about their companies greatness while badmouthing competitors. When I spent some time heading purchasing I must say I witnessed this common failure firsthand, and other Purchasing Agents I knew concurred with this. Ironically, the study also found that most sales managers dissagreed with this, and often trained/rewarded their salespeople for practicing the poor practices identified by the purchasing managers.Six sigma can add much value to sales and marketing by monitoring outcomes of sales calls: are they producing information (customer requirements), are the requirements communicated internally, and are the requirements met in real time in the bids to those customers. It sounds simple to do, but believe me it is not simple at all. Most companies actually have a high error rate here. Just meeting more of these basic requirements can harness some powerful marketing forces adding much value over time. The customer on average should be noticably more appreciative of the bids received, which should translate into better closings and more meaningful competitive feedback, all of which are measurable attributes. This approach produces two tactical advantages: it leaves the salesperson less time to talk too much and about irrelevant things, and produces actionable information that the company needs to respond to. If a six sigma initiative in sales and marketing is determined to engage the “hows” of sales work, this may be the best place I have found to do it. It can be done without tagging along on sales calls too. Good Luck.

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