-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
1/33
Improving Pricing Quality with Six Sigma Methods
In a technical context, the word quality can have two meanings, according to the American Society forQuality: 1. The characteristics of a product or service that bear on its ability to satisfy stated or implied
needs; 2. A product or service free of deficiencies.
An important characteristic of a product or service is a price that satisfies the implied need for
profitability, at least from top managements viewpoint.
Just as quality in manufacturing became important in Detroit during the 1970s with the oil crisis and
increased competition from Japan, so is quality inpricing becoming important in many industries as the
costs of raw materials skyrocket, the U.S. dollar plunges against other currencies, and companies face
stiff competition worldwide. The difference now is that, for many companies, the tool set for
implementing and deploying quality initiatives in manufacturing is quite sophisticated. Whats lacking is
a means for targeting and adapting this tool set for pricing.
This article describes a situation faced by a real company--well call it Acme Industries Inc.--in which it
was compelled to adapt its Six Sigma manufacturing expertise to improve its pricing processes. The
result was Six Sigma pricing, previously described in a May 2005 article in the Harvard Business Review
and more thoroughly in my book Six Sigma Pricing: Improving Pricing Operations to Increase Profits, (FT
Press, 2008).
Red alert at Acme
Executives at Acme Industries Inc., an industrial manufacturer, called an emergency planning session.
Unless they could improve profits within one or two quarters, the companys projections to Wall Street
regarding profits would seem foolishly optimistic. To increase profits, the company had already cut costs
as much as possible. Now it would have to increase prices without losing sales. The question was how to
do that given the competition and the companys own erratic history.
In the past, the company aggressively pursued market share by allowing sales representatives a lot of
flexibility on price. However, Acmes dollar sales grew only marginally in a bullish market while profitplummeted. The following year, drastic inflation in critical raw materials motivated the company to push
for higher prices, even if it meant losing some business. The companys dollar sales remained flat.
Operating profit grew by more than 10 percent, but the stock price remained below expectations and
precipitated changes in key management positions. The new leaders reverted to capturing market share
through lower prices, even though the costs of raw materials were rising. Annual results were dismal--
sales, operating profit, and stock price were down.
Acme had its share of internal issues as well. These were due to the complexity of its manufacturing
processes, as well as several pricing functions that contributed to price leaks. The functions included
marketing, sales, finance, and pricing. Marketing owned pricing strategy, sales was responsible for fixing
the customers price, and finance was responsible for all reporting. The different incentives in different
functions led to variations on basic processes, shortcuts, double approvals, and a buddy system, even
in the same product line and sales region. When someone tried to lead a discussion on priceimprovement, it degenerated quickly into a blamestorm rather than a brainstorm.
Six Sigma for pricing
During the emergency meeting, the vice presidents of marketing and sales emphasized the tough
external environment and the importance of pricing. The pricing manager showed two slides (see figure
1, below) that reflected the wide variation in discounts--from 5 percent to 95 percent--offered to
customers within a single stock-keeping unit (SKU), regardless of the customers size or even the
transaction.
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
2/33
Senior managers began to understand that this variability was a problem and symptomatic of process
issues. Acme had enjoyed considerable success in reducing manufacturing variability by applying Six
Sigma. The managers felt that the transaction- pricing process was similar enough to a manufacturing
process to warrant piloting a Six Sigma pricing project in one of the companys North Americansubsidiaries. They appointed the manager from pricing to carry out the five Six Sigma DMAIC steps:
define, measure, analyze, improve, and control, with the help of a Master Black Belt recruited from
manufacturing. The project sponsor was the senior executive responsible for pricing.
Define
The project sponsor limited the scope to one particular product line. Acmes project manager proposed
that a defect be defined as a transaction invoiced at a price lower than the one that pricing had
approved (or lower than the current blanket guidelines, when approval hadnt been sought). The project
would have to deliver a better understanding of the existing pricing process and a modified process to
improve and control final transaction prices or discounts.
The project manager then enlisted people from pricing, finance, marketing, IT, and sales for the Six
Sigma team. He also asked people in positions of influence at Acme to serve on a steering committeechaired by the project sponsor. These included the director of sales, vice president of IT, vice president
of finance, and vice president of marketing. The committee confirmed the proposed problem definition
and project charter, and set a project goal of increasing revenues by $500,000 during the first year
following implementation--without incurring any losses in market share or unit sales volumes.
Measure
The project manager formally interviewed colleagues from IT, sales, pricing, finance, and marketing. He
also sought informal feedback from other people in these functions to draw a high-level diagram of the
entire process showing information flow from one step to the next. The map revealed a pricing process
with six main steps. In practice, however, the sequence was replete with exceptions and shortcuts.
Step 1: Perform initial price assessment with customer. The input for this are the list price, the blanket-
discount guidelines for sales in the particular market, and the customers product and pricingrequirements. The output is a discount taken off the list price. Approval is needed from pricing if the
discount is deeper than the maximum authorized for the particular market.
Step 2: Request pricing approval. For pricing personnel receiving such a request, the input are the price
the sales rep has requested and the guidelines for pricing analysts. In practice, sometimes a sales rep
offered a final discounted price to the customer without prior approval.
Step 3: Compile quotation information. The input are the information about the customer and the order
provided by the sales rep to support his or her request. The output are the complete details of the
transaction. In practice, the sales rep didnt or couldnt provide enough information about the quotation.
Step 4: Review and analyze quote. Input are the completed quotation information generated in theprevious steps, including the tentative price that the sales rep requested, reports summarizing the
history of similar transactions in the particular market, and, when available, reports of similar
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
3/33
transactions with the same customer. In practice, with information scattered in different computer
systems, the guidelines available to the pricing analyst could be quite poor, or the sales rep might
request a quick turnaround, leaving little time for a pricing analyst to carry out this step effectively.
Step 5: Communicate approval to sales office.The input are the tentative approved price from the
analysis in the previous step and any additional information regarding the order and the customer. The
output is the approved price. In practice, this could be the beginning of a prolonged negotiation betweensales and pricing. A senior sales or marketing manager might weigh in at this point as well, and the final
approved price could end up quite a bit lower.
Step 6: Submit price to customer. The input is the approved price. The output is the tentative price for
invoicing that the sales rep submits to the customer. In practice, the price that the sales rep actually
offered to the customer could be quite a bit lower than the approved price.
The team also assessed the quality of the input data that supported the pricing process and found the
sales transaction data to be reliable.
Analyze
The team, with the help of the Master Black Belt, used a cause-and-effect matrix to guide discussion
toward identifying and prioritizing problems. The main findings from this exercise suggested that the
defects arose largely from problems in steps 1, 4, and 6, and from failures in reporting.
Step 1. The team found that sales reps abilities to help customers select the right products and features
was critical to managing customers price expectations. Unfortunately, salespeoples failures in assessing
customer requirements couldnt be easily detected or controlled.
Step 4. Sales reps sometimes wanted discount approval within hours of forwarding a request, which
made it difficult for pricing analysts to determine whether the discount was reasonable.
Step 6. Sales reps sometimes offered final prices to customers without prior approval, leaving pricing
with little choice but to approve the price after the fact.
At the reporting stage, information about transactions wasnt gathered or presented consistently.
Discrepancies and redundancies in reports led to variability in the decisions the analysts made when
deciding prices.
The project manager statistically analyzed transaction- level data for all transactions that occurred
during the two years before the project started. He found the actual discounts to be bell-shaped in
distribution. Using analysis of variance, he was able to conclude that different pricing guidelines had to
be set for different transaction sizes and for different territories within the same market, and possibly
even for customer groups.
Improve
Response speed was critical for salespeople to act quickly and close deals, but this was a challenge forpricing personnel. The project team concluded that clear guidelines were needed when granting deeper-
than-usual discounts. The team proposed giving graduated discount-approval authority to individuals in
three levels of the organizations hierarchy: sales reps or managers, pricing analysts, and the pricing
manager. Making the guidelines and the escalation process clear sped up the transaction process.
In cases where sales reps had already offered a customer a price and needed after-the-fact
authorization, a new process required that the rep involve her boss for approval. The price already
offered would still be honored, but now representatives could be held more accountable for making
unauthorized commitments. Exception codes enabled Acme to track the reasons for price variations and
made it clear who had been involved in the decision to deviate from guidelines.
Control
Acme set up a monthly review during which executives--mainly the vice presidents of marketing, sales,and finance, along with their direct reports--looked at the companys overall performance as well as
particular geographic markets and transaction sizes. They determined whether the new process resulted
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
4/33
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
5/33
How to Apply Six Sigma to SalesShare on facebookShare on twitterShare on linkedinMore Sharing ServicesShare onemailShare on print
If someone were to say the words, Six Sigma, what would come to mind? Beyond the
inevitable quip that its just Greek to me, youd probably think of manufacturing processand quality improvement. Thats because Six Sigma has long been linked with reducingcosts, improving product quality, and increasing productivity in factories around the world.But the same principles can be applied to sales and marketing organizations, asserts MichaelWebb, founder of Sales Performance Consultants, Inc., and author ofSales and Marketingthe Six Sigma Way (Kaplan, 2006). Sales, he points out, is a processa series of activitiesdesigned to produce specific results. And process thinking, which enables you to measureactivities and results and to analyze them for causes and effects, is the foundation for SixSigma. In his book, Webb outlines the five steps of Six Sigma (called DMAIC) and showshow they apply to sales:
Step #1: Define the problem and the process precisely, whether you are examining the entireprocess (i.e., the complete sales process) or only one part of it (i.e., the cold calling process).By identifying and clearly defining the process that contains the problem, you ensure the
problem is real, solvable, important to the right people (i.e., your customers and stakeholderswant it solved), that the data needed to solve the problem exists or can be developed, and thatthe resources to do the job exist.
Step #2: Measure the activities and the results to understand the process. For instance, sayyour sales process relies heavily on cold calling, but you arent getting the results you need.
In this step, you would document everything relating to your reps calls the times theyrebeing made, the number of calls, the results of each call, the scripts being used, the type of
contact being reached, and so on. Webb acknowledges that this step usually involves asignificant data collection effort. But that data is essential because without it you dont really
know whats happening.
Step #3: Analyze the data for variations in the results and in the activities that produced themand search for cause-and-effect relationships. Youll often need to move back and forth
between the measure and analyze steps. For instance, Webb tells the story of the privatebanking division of a major financial institution that wanted to bring in more business. Itexamined its sales process and discovered a bottleneck at the account-opening stage. So thedivision measured and analyzed the way it opened accountsthe procedure, the number ofemployees involved, the number of touches a customer required, and the time involved. Italso examined the resultscustomer satisfaction, customer complaints, instances oftroubleshooting by salespeople, and deals lost at this stage. The banks conclusion: the
procedure for opening accounts caused customers to drop out at that point.
Step #4: Improve the process by constructing an experiment or pilot project to test yourhypothesis. If your hypothesis is correct, you should see a measurable change. For instance,when the bank redesigned its account-opening procedure, more customers completed theaccount-opening process and the division increased its revenue by 18 percent in one year withno increase in staff.
Step #5: Control the process to make the change permanent. In the case of the bank, thechange was relatively simple to make permanenta change in forms and the information
http://www.sellingpower.com/content/article/?a=1751http://www.addthis.com/bookmark.php?v=300&winname=addthis&pub=sellingpower_webmaster&source=tbx-300&lng=en-in&s=linkedin&url=www.sellingpower.com%2Fcontent%2Farticle%2F%3Fa%3D1751&title=How%20to%20Apply%20Six%20Sigma%20to%20Sales%20%7C%20Sales%20Management%20e-newsletter%20-%202006-9-5%20%7C%20SellingPower.com&ate=AT-sellingpower_webmaster/-/-/522746bbf073c5f0/2&frommenu=1&uid=522746bb399f3264&ct=1&pre=http%3A%2F%2Fwww.google.com%2Furl%3Fsa%3Dt%26rct%3Dj%26q%3D%26esrc%3Ds%26frm%3D1%26source%3Dweb%26cd%3D5%26cad%3Drja%26sqi%3D2%26ved%3D0CFMQFjAE%26url%3Dhttp%253A%252F%252Fwww.sellingpower.com%252Fcontent%252Farticle%252F%253Fa%253D1751%26ei%3DnEYnUsHpN9DHrQeR2oCQBQ%26usg%3DAFQjCNEe-kzMMsye-0zKWqAjACErCUtjUA%26bvm%3Dbv.51495398%2Cd.bmk&tt=0&captcha_provider=recaptchahttp://www.sellingpower.com/content/article/?a=1751http://www.sellingpower.com/content/article/?a=1751http://www.sellingpower.com/content/article/?a=1751http://www.sellingpower.com/content/article/?a=1751http://www.sellingpower.com/content/article/?a=1751http://www.sellingpower.com/content/article/?a=1751http://www.addthis.com/bookmark.php?v=300&winname=addthis&pub=sellingpower_webmaster&source=tbx-300&lng=en-in&s=linkedin&url=www.sellingpower.com%2Fcontent%2Farticle%2F%3Fa%3D1751&title=How%20to%20Apply%20Six%20Sigma%20to%20Sales%20%7C%20Sales%20Management%20e-newsletter%20-%202006-9-5%20%7C%20SellingPower.com&ate=AT-sellingpower_webmaster/-/-/522746bbf073c5f0/2&frommenu=1&uid=522746bb399f3264&ct=1&pre=http%3A%2F%2Fwww.google.com%2Furl%3Fsa%3Dt%26rct%3Dj%26q%3D%26esrc%3Ds%26frm%3D1%26source%3Dweb%26cd%3D5%26cad%3Drja%26sqi%3D2%26ved%3D0CFMQFjAE%26url%3Dhttp%253A%252F%252Fwww.sellingpower.com%252Fcontent%252Farticle%252F%253Fa%253D1751%26ei%3DnEYnUsHpN9DHrQeR2oCQBQ%26usg%3DAFQjCNEe-kzMMsye-0zKWqAjACErCUtjUA%26bvm%3Dbv.51495398%2Cd.bmk&tt=0&captcha_provider=recaptchahttp://www.addthis.com/bookmark.php?v=300&winname=addthis&pub=sellingpower_webmaster&source=tbx-300&lng=en-in&s=linkedin&url=www.sellingpower.com%2Fcontent%2Farticle%2F%3Fa%3D1751&title=How%20to%20Apply%20Six%20Sigma%20to%20Sales%20%7C%20Sales%20Management%20e-newsletter%20-%202006-9-5%20%7C%20SellingPower.com&ate=AT-sellingpower_webmaster/-/-/522746bbf073c5f0/2&frommenu=1&uid=522746bb399f3264&ct=1&pre=http%3A%2F%2Fwww.google.com%2Furl%3Fsa%3Dt%26rct%3Dj%26q%3D%26esrc%3Ds%26frm%3D1%26source%3Dweb%26cd%3D5%26cad%3Drja%26sqi%3D2%26ved%3D0CFMQFjAE%26url%3Dhttp%253A%252F%252Fwww.sellingpower.com%252Fcontent%252Farticle%252F%253Fa%253D1751%26ei%3DnEYnUsHpN9DHrQeR2oCQBQ%26usg%3DAFQjCNEe-kzMMsye-0zKWqAjACErCUtjUA%26bvm%3Dbv.51495398%2Cd.bmk&tt=0&captcha_provider=recaptchahttp://www.sellingpower.com/content/article/?a=1751http://www.sellingpower.com/content/article/?a=1751 -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
6/33
those forms required. In other cases, institutionalizing the change might involve newmanagement reports or financial incentives as well as a control plan to ensure that the inputsand outputs remain within the targeted ranges, says Webb.
In short, Six Sigma applies science to the art of sales to consistently improve results. For
more information on how you can apply these principles to the problem areas in your salesprocess, visitwww.salesperformance.com.
How Does LeanProcess Excellence Conserve Resources In Sales and Marketing?
By Michael Webb
The Lean philosophy enables companies to identify and eliminate waste inmanufacturing environments, where the specificationwhat the customer will pay foris known. Buthow does this translate to sales and marketing environments, where figuring out what the customer willpay for is the goal?
Properly applied, Lean enables companies to conserve sales and marketing resources by improving theways in which managers allocate those resources and the ways in which salespeople use their time. Thisalso improves sales productivity and performance.
In sales and marketing, Lean process excellence can facilitate this by:
Defining the sales value stream Increasing visibility into the sales process Providing a specific method of improvement
Defining the Sales Value Stream
Sales and marketing is difficult to manage in most companies because they have copious data on sales
results, but almost none on the activities that produce the results. There is also lack of agreement on whichsales and marketing activities create value and which create waste. This dearth of data and knowledgewould never be tolerated in a manufacturing environment.
To apply Lean in sales, you must recognize that producing an order requires multiple steps, just likeproducing a product does. Manufacturers know what work is required at each stage of production.Similarly, sellers must understand the stages customers go through in becoming aware of a problem,gathering information, comparing solutions, making the purchase a priority, budgeting the funds, andimplementing the purchase decision. Along the way, the seller must command prospects attention,
provide information, earn their time, gain their trust, and motivate them to act if they are to win sales.
These stages comprise a value stream known as the Customers Journey, though the specifics vary in
different markets and change with market conditions. Aligning the work of the seller to the needs of thebuyer at each stage eliminates huge amounts of waste from the sales process, because the seller avoids
http://www.salesperformance.com/http://www.salesperformance.com/http://www.salesperformance.com/http://www.salesperformance.com/ -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
7/33
wasting resources on poorquality prospects. Far more resources are expended on poor quality prospectsand sales opportunities than are used to identify, measure, and qualify those prospects and opportunities.
Identifying your Customers Journey so you can allocate sales and marketing resources effectively andefficiently is a necessary first step. This goes beyond simply understanding their purchasing process orbelieving you know how existing customers buy just because they are existing customers. It also goesbeyond establishing sales stages based on best practices and arbitrary estimates of conversion at eachstage.
Rather, it means aligning every marketing, selling, and servicing activity to an element of the CustomersJourney in order to actively propel customer actions (and generate data) by offering valuable assistance tothe prospect at each stage of their journey.
Increasing Visibility into the Sales Process
Traditional approaches regard sales as something you do to prospects and customers. A Lean approachholds that selling is something you do with them. This more collaborative approach generates a moretransparent sales process.
For example, you use Voice of the Customer to learn the stages of the Customers Journey, and then
identify signs or actions which indicate the stage a given prospect or sales opportunity is in. Rather thanrelying on salespeoples assessments of how likely their prospects are to buy, management can review
observations of prospects and sales opportunities (data) that indicate their position in the value stream.
The resulting visibility into the sales process enables managers (and salespeople) to reduce the amount ofresources they expend producing:
Ads and collateral no one reads Tradeshows, promotions, and leads that dont pan out Prospects who dont appreciate your value Quotes and proposals that dont sell Products and services no one wants Customers who are not loyal
Anyone who has attempted to reduce sales and marketing expenses in areas like these has heard theobjections: You never know where a prospect will come from! You have to spend money to make money!
You cant increase sales by cutting costs!
Of course indiscriminant cost cutting is a blunt instrument. Tracking the movement of prospects in the
value stream provides a more powerful approach to identifying costs, distinguishing value from waste, andallocating resources. It enables managers to identify bottlenecks, and to know which part of the valuestream needs improving. Visual indications of the flow of prospects can be created and regularlycommunicated, providing more insightful and actionable information for management decisions.
This enables the focus to be expanded from simply identifying the flow of prospects and salesopportunities to identifying their quality. Instead of being accountable only for results, salespeople can beheld accountable for identifying the observable characteristics of their sales opportunities that make themmore or less likely to buy.
One client struggled due to one of the most common mistakes in sales: attempting to get prospects to dothings they were not ready to do. When improvements were made to offer helpful information at each
stage, salespeople found it much easier to implement the sales process. When they defined observablecharacteristics of prospects that were most likely to buy and used check sheets to track these
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
8/33
characteristics, amazing things happened. First, they were surprised to learn that the data more accuratelypredicted which prospects would buy than they could. Next, by allocating their sales efforts according toprospects quality scores, they immediately increased their close ratios.
Once you make the quantity and quality of prospects and sales opportunities visible, salespeople and theirmanagers can better understand and calibrate the sales process. Yet thats just the beginning, because this
is where the most powerful characteristic of Lean process excellence in sales kicks in.
Improving by a Specific Method
An initial step in defining a process is to establish respectful agreement around the best means of doingthe work (sometimes called standard work). When applied properly in a sales environment, standard workserves a crucial purpose: it defines the work at a level of detail that is useful for the sales team andprovides the basis for improvement.
Sales operationslike economies, companies, cultures, and specieseither evolve or decline. Workingmethods which are not improved over time inevitably become ineffective, inefficient, and uncompetitive.When salespeople lack the means to improve their work, improvement stops, motivation is killed,customers move on. Problems crop up repeatedly, unidentified, unsolved, unabated.
To counter this, management must create an environment that enables workers to improve the process.Edwards Demings PDCA (plan-do-check-adapt) management cycle is precisely that kind of approach. Itis the key to sustaining and extending the gains in any process because it recognizes that thetechnical/process side and the social/people side of the business must be managed with equal priority. Inaddition to harnessing the creativity and motivation of the sales team, this approach provides managementwith a constant stream of data around common, high-impact issues which prevent sales from achieving itsgoals. This approach also gives salespeople the means to improve their work.
In the client example cited above, the sales team handled prospects more consistently and improved theirqualification criteria and selling tools. This generated a higher perception of value among prospects andcustomers and increased the average deal size as well as margins and close ratios. Thefinancial impactofimproving the process over time was roughly a 40% improvement in sales productivity, with potential forfurther significant gains.
Conclusion
Once you commit to following the data trail as described above, the traditional sales managementapproaches used in most companies seem antiquated, inadequate, and disorganized. Lean in sales andmarketing enables managers and salespeople to conserve resources, cut costs, create valueand increasesalesby focusing on what the customer wants from the sales process and then delivering it.
- See more at:http://salesperformance.com/how-does-lean-process-excellence-conserve-resources-in-sales-and-marketing-2#sthash.p0mmpzqY.dpuf
Seven Ways to Permanently Improve SalesFiled under:Articles,Sales and Marketing Manager Articles Leave a Comment
by Michael J. Webb
(pdf of this article)
http://salesperformance.com/financial-impacthttp://salesperformance.com/financial-impacthttp://salesperformance.com/financial-impacthttp://salesperformance.com/how-does-lean-process-excellence-conserve-resources-in-sales-and-marketing-2#sthash.p0mmpzqY.dpufhttp://salesperformance.com/how-does-lean-process-excellence-conserve-resources-in-sales-and-marketing-2#sthash.p0mmpzqY.dpufhttp://salesperformance.com/how-does-lean-process-excellence-conserve-resources-in-sales-and-marketing-2#sthash.p0mmpzqY.dpufhttp://salesperformance.com/how-does-lean-process-excellence-conserve-resources-in-sales-and-marketing-2#sthash.p0mmpzqY.dpufhttp://salesperformance.com/seven-ways-to-permanently-improve-saleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/seven-ways-to-permanently-improve-sales#respondhttp://salesperformance.com/seven-ways-to-permanently-improve-sales#respondhttp://www.salesperformance.com/Content/Articles/Mike_Webb/Seven_Ways_to_Permanently_Improve_Sales.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/Seven_Ways_to_Permanently_Improve_Sales.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/Seven_Ways_to_Permanently_Improve_Sales.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/Seven_Ways_to_Permanently_Improve_Sales.pdfhttp://salesperformance.com/seven-ways-to-permanently-improve-sales#respondhttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/seven-ways-to-permanently-improve-saleshttp://salesperformance.com/how-does-lean-process-excellence-conserve-resources-in-sales-and-marketing-2#sthash.p0mmpzqY.dpufhttp://salesperformance.com/how-does-lean-process-excellence-conserve-resources-in-sales-and-marketing-2#sthash.p0mmpzqY.dpufhttp://salesperformance.com/financial-impact -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
9/33
Leading a company is a difficult job in the best of times. Yet executives can take common sense steps to
make things easier to generate customerrevenue.
Our work in a variety of industries has revealed seven ways to make the sales funnel flow faster. Taken
independently, they are simply shifts in how the executive thinks about the situation. Taken together they
comprise a powerful framework for winning in business.
1) Find a Starving Market
The famous direct response marketer Gary Halbert once said, A key to success is to find a starving market
whose needs you can fill.
No doubt your companys original success was due to this. Unfortunately, rather than continuing the
search for starving markets, most companies start believing their product is what makes money for them.
As a result, when the market changes from, say, electron tubes to integrated circuits (or from cell phones to
wireless PDAs), they are left behind.
Chances are some of your customers have been asking you forthings you dont currently provide. Ask
yourself, for example:
Of ten your salespeople say no to customers? What things your customers want, but dont think you can (or will) offer? What workarounds does your customer employ as they try to achieve their ul timate goal?
Finding and filling these new needs mean changing and growing. Doing it consistently is the definition of
a successful business.
2) Know Your Customers Journey
Once you are in the right market, chances are someone else is too. To win you must do a better job than
they do. That starts with making yourself easier for customers to deal with.
Your customer goes through stages (called the Customers Journey) as they attempt to solve their
problems. At first they may not be aware of their problem. Then they have to prioritize it, attempt to
understand the causes, determine a solution, and so forth.
If you understand their journey you can decide where and when to interact with them. You can avoid
aggravating them about your product when they havent yet realized they need it. You can build aprocess
that helps them, builds their trust, and gives you an advantage over your competitors.
Without understanding your Customers Journey, you can still succeed, at random intervals. With it, you
have the potential to build a more consistent money machine.
3) Establish a Systems Perspective
Many senior executives try to achieve results by optimizing marketing and selling as independent
functions.
This is wrong. As evidence, consider the swarm of cancers it creates:
Marketers work hard to generate leads that are not what salespeople can sell.
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
10/33
Service departments see customers complain again and again about issues that product designers dont payattention to.
Salespeople dont have enough opportunities to make quota because they have to nurse existing customersor because prospecting is so time-consuming.
Managers tire of the internal bickering and complaints. Unable to resolve the dilemmas, they resort to justdo it because I say so policies.
Worse, the functional view has no means of correcting its errors. Why would your definition of thefunctions be any better than mine or someone elses?
Whether you know it or not, the part of your company that finds, wins, and keeps customers is a system of
interdependent elements. How well it works depends on how well it generates actions on the part of the
customer. You make an offer; if they like it, they respond.
The goal is not to optimize the output of the marketing department or the sales department (as the
functional view suggests). The goal is to optimize the movement of prospects through the stages of their
journey. Ads and offers with high response and high conversion create value. Those with low response and
conversion are wasteful.
For example, an engineering company raffled a widescreen TV at an industrial conference. It generated
many names, but few were prospects for their services. The effort was wasteful. Likewise, proposals that
get ignored are a tragedy. Features customers chronically complain about are a crime.
These feedback loops signal the need for improvements. The defining characteristic of the systems
perspective is its ability to evaluate improvements according to their effect on the entire system.
4) Simplify the Steps and Write Them Down
Things get tricky when the thing you are trying to control (your customer) cant be controlled in the first
place! Thats why many salespeople resist efforts to document the sales process. Dealing with this issue
correctly separates meaningful selling from wasting your effort (or the paper it is printed on).
Knowledge of the customers journey is pivotal for clarifying and simplifying this work. It allows you to
lay out a game plan with defined roles for your players. It also provides a language for identifying
variations in the quality of sales opportunities.
For example, signals such as body language, tone of voice, or something that happened when they dealt
with you last year can indicate how to handle a prospect. Yes, these are judgment calls, but they are
judgments of facts, of observable characteristics of a sales opportunity. Identifying them can tell you
crucial things, such as:
Whether an opportunity really exists The extent of the pain/value/urgency to the customer The extent of the potential value to your company The likelihood of your company winning the business
Much of the sophistication of salespeople revolves around their ability to gain insight into these factors and
to use them to advantage. In my experience, salespeople love to articulate and clarify this logic. Helping
them do it puts your company light years ahead of others for three reasons: 1) it elevates the consistency of
salespeoples decision making in the field, 2) it enables new salespeople to get up to speed more quickly,
and 3) it serves as a surprisingly accurate forecast indicator.
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
11/33
Far from a boring, pointless exercise, documenting the sales process can and should be an essential goal of
every sales organization, one grounded in street-savvy facts that everyone (especially customers) must
face.
5) Measure the Process by Following the Money
Measuring live deals through the stages of the customers journey improves the performance of your
production system. Unfortunately, instead of measuring these facts, most companies substitute someones
arbitrary estimates or percent chance of close.
The futility of this has always mystified me, but considering the difficulties of getting good data from field
salespeople, some people may consider it an option.
Why is it so hard to get data from salespeople? There are many reasons, many of which are actually true:
Recording data is extra work that creates no value for us (salespeople). Any information we provide can (and will) be used against us. What we do is art, not science, so this is a waste of time. This is another example of how management just doesnt get it.
Rather than being designed in any systematic manner, most sales processes have grown helter-skelter
over the years through personalities and chance. Somehow it generates the money the salespeople and
the organization need (although few people understand exactly how). Fooling around with peoples money
generates fear and mistrust.
Sales process measurement is actually a leadership problem, and not an analytical one. Doing it requires
adroit and persistent effort (often with the help of outside consultants). Even the most effective
interventions generate some immune reactions in any organization. In sales, if you dont have somethingimmediately credible, and there is nothing obvious in it for the sales department, you are going to get fried.
This is obviously worth the effort. Salespeople are like an enormous array of sensors, each with partial
knowledge of what is happening. Focusing this mosaic effectively enables you to do learn things like
which million dollar deals will close next quarter, which packaging tweaks will increase market share by
15%, and which promotions will pre-empt the competition.
6) Provide the Supporting Infrastructure
Normally, behaviors can only change after the systems change, the training changes, and the performance
evaluations change. Often the systems, training, and performance evaluations simply need differentlinkages and policies rather than a major redesign.
One HVAC manufacturer saved hundreds of thousands of dollars when it realized that the infrastructure
for managing coop-advertising funds was unnecessary. They freed up even more sales time, eliminating
controls around price discounting, when they realized a change to the commission policy could help sales
managers self-regulate.
Another company developed a better sales process, only to discover most of the salespeople were still in
the dark. They had been busy booking business while theprocess improvement team did its thing, and thus
missed the chance to grapple with the issues and concepts themselves.
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
12/33
Working with a skilled facilitator gave them the opportunity to grapple with the question of what does
great selling look like in their environment. They applied the new process on some of their live sales
opportunities. They devised improvements to the sales tools and proposal templates. They came out with
an appreciation and enthusiasm for the new approach.
Their permanent behavior changes produced more than enough ROI for the process improvement project.Improvements to the CRMs report formats and the ability to forecast deal closures with 90% accuracy
reinforced the new sales mentality.
7) Manage Based on Facts
Getting things done through other people bedevils managers everywhere:
Ar e our salespeople prior it izing their time and their choices in the best way? Ar e our sales managers eff ectively coaching and guiding them for the best resul ts? What do our executi ves need to know to take appropri ate corr ective actions? How can our senior managers gain the facts they need to determine whether pr oblems are in the
market, in the sales force, or i n the product?
A properly designed process enables managers to focus on achieving results rather than activities. It aligns
everyones interests with the customers, so facts and data can actually flow throughout the organization.
Most important, it enables managers to learn which of the seemingly little problems they are seeing are
actually big problems, representing system-wide opportunities to increase margins and decrease costs.
Conclusion
Far from taking the human element out of sales and marketing, the right approach to the sales process
engages peoples talents to observe what is real, consider the perspectives of the customer, the salespeople,and the company, and create new opportunities to make more money.
- See more at:http://salesperformance.com/seven-ways-to-permanently-improve-
sales#sthash.xL2Bsr10.dpuf
http://salesperformance.com/seven-ways-to-permanently-improve-sales#sthash.xL2Bsr10.dpufhttp://salesperformance.com/seven-ways-to-permanently-improve-sales#sthash.xL2Bsr10.dpufhttp://salesperformance.com/seven-ways-to-permanently-improve-sales#sthash.xL2Bsr10.dpufhttp://salesperformance.com/seven-ways-to-permanently-improve-sales#sthash.xL2Bsr10.dpufhttp://salesperformance.com/seven-ways-to-permanently-improve-sales#sthash.xL2Bsr10.dpufhttp://salesperformance.com/seven-ways-to-permanently-improve-sales#sthash.xL2Bsr10.dpuf -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
13/33
Need to Fix Low Sales Productivity?
Filed under:Articles,General Manager Articles,Lean Process Leader Articles,Sales and Marketing
Manager Articles
Comments
(1)
Here are Three Root Causes
Every Senior Executive Needs to Know
by Michael J. Webb
Improvement in sales productivity doesnt grow on trees. Once you understand what is really involved, the
causes of statements like these jumps out at you:
Company President:I really like the new salesprocess you helped us design. Now, I expect my Sales VPto implement it. After all, I pay him enough.
Director of Marketing:I understand how the Voice of the Customer(VOC) could help us improveproduct development, customer satisfaction, and retention. However, what does VOC have to do with salesconversion?
CRM company executive: The sales process in most B2B companies is quite rudimentary. Yet, when weshow the Sales VP what our system can enable them to do, their eyes glaze over. Why is it like pulling
teeth to get them to see the valueof this?
http://salesperformance.com/need-to-fix-low-sales-productivityhttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articles/general-manager-articleshttp://salesperformance.com/category/articles/general-manager-articleshttp://salesperformance.com/category/articles/general-manager-articleshttp://salesperformance.com/category/articles/lean-process-excellence-leaderhttp://salesperformance.com/category/articles/lean-process-excellence-leaderhttp://salesperformance.com/category/articles/lean-process-excellence-leaderhttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/need-to-fix-low-sales-productivity#commentshttp://salesperformance.com/need-to-fix-low-sales-productivity#commentshttp://www.salesperformance.com/images/why-improving-is-hard.jpghttp://salesperformance.com/need-to-fix-low-sales-productivityhttp://salesperformance.com/need-to-fix-low-sales-productivity#commentshttp://salesperformance.com/need-to-fix-low-sales-productivity#commentshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/lean-process-excellence-leaderhttp://salesperformance.com/category/articles/general-manager-articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/need-to-fix-low-sales-productivity -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
14/33
Sales training executive:B2B companies pay to train salespeople, and yet they resist buyingreinforcement training for sales managers. Why cant they see this is the reason training doesnt stick?
Functional Silos = Wrong Standards
It is a good thing that companies organize themselves around separate functions. After all, the talents of
marketers, sellers, and servicers really are different.
The problem occurs when those functions become and end in themselves, rather than something the
customer values. A healthy company is a system whose purpose is to help customers solve their problems.
The functional mindset gives middle managers the wrong standards for what is good and what is bad. It
focuses on the parts, irrespective of the whole. Thats why companies cant help turning out products no
one wants, brochures no one reads, proposals no one buys, and customers whose problems are not solved.
Years ago, Japanese companies began beating American ones at the manufacturing game. The Japanese
approach (sometimes called LeanKaizen) provided a better framework for deciding what is good, and
what is bad in a production system. Good means:
The customer will pay for it (i.e., it creates value for the customer) We can make money doing it (i.e., it creates value for us)
Lean means everything in the system is judged against these standards. Kaizen means everyone in the
company works to continuously improve their performance.
Under this system, functional silos are replaced with production systems. Those production systems are
continually revised to increase quality, and reduce inventory, lead time, and cost.
In Lean Kaizen, functional excellence is placed in service of a process that creates what a customer will
pay for.
What Does Lean Kaizen Have to do With Sales and Marketing?
Everything. You cannot improve sales productivity until you learn to see marketing, selling, and servicing
(find-win-keep) as a production system. Manufacturing executives know their managers need leadership
and training to travel along the Lean Kaizen Journey. They know that until managers learn to see
waste (i.e., what is bad vs what is good), problems remain unseen and unchallenged.
What we see is filtered by our assumptions, especially as you get farther away from the action (called
gemba in Japan, the place where truth is found). Wrong assumptions are an occupational hazard of
senior managers, who live far from the daily work, whether it is on the factory floor or in the customers
office.
Most people in sales and marketing organizations can sense that their business is not designed very well.
Many have good ideas about how to improve. Unfortunately, with no recognized standard for what creates
value and what is waste, it is difficult to collectively see the waste. Whos opinion counts the most?
Salespeople make their own decisions and move on. They are not empowered to make big changes.
Three Root Causes of Low Sales Productivity
Getting to the bottom of this problem requires beginning at the beginning: What are the undesirableresults? What data and evidence exists? What are the potential causes of these undesirable results?
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
15/33
Working out cause-and-effect diagrams with sales and marketing organizations typically produces root
causes such as.
We have no production measurement system to tell us what needs to be improved in sales and marketing(because management didnt know we needed one).
Almost no standard workis defined across the find-win-keep system (because management didntunderstand the value of it). We dont really understand what the customer wants (because management hasnt prioritized VOC, and
doesnt know what to do with the information).
To some degree, these roots causes are common to most companies, especially in North America. They are
great places to start improving, because they dont cost anything. They are primarily educational and
cultural, which means they wont change overnight. However, they provide valuable insight for executives
who want to overcome barriers to improving sales productivity.
For example, consider the the statements at the beginning of this article:
Company President:I really like the new sales process you helped us design. Now, I expect my Sales VPto implement it. After all, I pay him enough.Should the sales department alone be accountable for its
results? Could there be marketing or servicing factors that get in the way?
Director of Marketing:I understand how the Voice of the Customer (VOC) could help us improveproduct development, customer satisfaction, and retention. However, what does VOC have to do with salesconversion?If the marketing department doesnt know what qualified prospects want (VOC), or where tofind them, how can they help the sales department lift results?
CRM company executive: The sales process in most B2B companies is quite rudimentary. Yet, when weshow the Sales VP what our system can enable them to do, their eyes glaze over. Why is it like pullingteeth to get them to see the value of this?If people dont understand the value of standard work, and have
no measurement system, how can they possibly benefit from a CRM system?
Sales training executive:B2B companies pay to train salespeople, and yet they resist buyingreinforcement training for sales managers. Why cant they see this is the reason training doesnt stick?If
the company does not have data indicating what systemic issues are causing current sales performance andproductivity, how can any initiative, such as sales training (or anything else) be any better than a shot inthe dark?
How to Improve Sales and Marketing Productivity
Once, early in an engagement, an intelligent sales VP said to me The rest of this company thinks making
the sales numbers is the sales departments problem. If we cant get them to recognize that they have to
change as well, this isnt going to work, and were going to get the blame again.
Sales VPs (or Marketing VP, or even the Servicing VPs) who attempt to improve their processes on their
own cant help but threaten the functional status quo. Without senior executive leadership their functional
peers will eat them alive. (It is the same in manufacturing organizations, by the way!)
Your team must begin at the beginning: they must be lead to identify the undesirable results, find evidence
and root causes, and begin fixing them one by one.
What do you think about this? Have you seen these thi ngs in your organization?
Michael Webb
Dec 15, 2009
Rate thi s art icle:
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
16/33
(1 votes, average: 4.00 out of 5)
One Response to Need to Fix Low Sales Productivity?
1. Sales Training `says:
- See more at:http://salesperformance.com/need-to-fix-low-sales-productivity#sthash.1YpDFUKQ.dpuf
http://www.thesalesboard.com/http://www.thesalesboard.com/http://salesperformance.com/need-to-fix-low-sales-productivity#sthash.1YpDFUKQ.dpufhttp://salesperformance.com/need-to-fix-low-sales-productivity#sthash.1YpDFUKQ.dpufhttp://salesperformance.com/need-to-fix-low-sales-productivity#sthash.1YpDFUKQ.dpufhttp://salesperformance.com/need-to-fix-low-sales-productivity#sthash.1YpDFUKQ.dpufhttp://salesperformance.com/need-to-fix-low-sales-productivity#comment-156http://www.thesalesboard.com/ -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
17/33
NurturingThe Secret to Doubling Your Sales
Conversion Rate
Filed under:Articles,Marketing and Lead GenerationComments (2)
by Michael J. Webb
(pdf of this article)
The root cause of most salesprocess problems is the failure to understand the customers point of view. It
is every sellers dream to stumble on a market tornado where virtually everyone in the market is qualified
and ready to buy today, and there is no need to try to understand anything about them.
Unfortunately, as the economy becomes more complex, those conditions are increasingly rare. In most
markets (especially B2B), the Customers Journey can be complex and nuanced. Understanding it is
essential for finding the right prospects, helping them recognize their problem, evaluating alternatives, and
so forth.
The failure to understand the customers perspective leads to two basic selling problems. The first is
attempting to get prospects to do things they are not ready to do. The second is the lack of a nurturing
cycle for prospects that are not ready to buy now.
Helping Prospects Get Ready to Buy
If someone has not recognized a need for what you sell, telling them about your product wont usually help
you (duh!). The sales process must begin on the prospects terms: when they recognize a need.
Here are three examples of people who are about to become prospects for some salesperson:
1. Electronics design engineerYou need a microwave component for a small electronic system you are designing. The system needs towithstand a wide range of temperatures. You are not an expert in microwave devices, but you can readindustry sources and follow the design parameters easily enough, so you order some components and havethe prototype developed.
You think everything is going along fine, until failures on the prototype are traced to mysterious cracking
on the mounting joints for the microwave component. At this point, you have a problem: you have to
figure out the cause of the cracks and fix it while staying on budget for the project overall. You havebecome a prospect for electronic design engineering services to troubleshoot the application and select the
right components and surface-mounting technology.
1. Respiratory therapy department managerIncreasing amounts of your budget are being spent renting respirators (for patients unable to breathe ontheir own) from a medical supply house because your hospitals aging machines are becoming unreliable.You resolve to put a proposal together for new machines.
You think you are doing well until the hospital administration selects the MRI labs proposal for new
equipment instead of yours (MRIs generate new patient revenue, respirators dont). Your problem now is
how to endure another year of suboptimal equipment while figuring out how to persuade the administration
to approve your proposal.
http://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2http://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2http://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2http://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2http://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articles/marketing-lead-generationhttp://salesperformance.com/category/articles/marketing-lead-generationhttp://salesperformance.com/category/articles/marketing-lead-generationhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#commentshttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#commentshttp://www.salesperformance.com/Content/Articles/Mike_Webb/Nurturing.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/Nurturing.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/Nurturing.pdfhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2http://www.salesperformance.com/Content/Articles/Mike_Webb/Nurturing.pdfhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#commentshttp://salesperformance.com/category/articles/marketing-lead-generationhttp://salesperformance.com/category/articleshttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2http://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2 -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
18/33
You have become a prospect for assistance in justifying, selecting, and acquiring new respiratory
ventilators.
1. IT project manageryour department develops systems for an international banking firm. Your funding comes from intra-company billings that require documentation for the time your personnel have spent. Although timesheetsare part of their job, your people dont like them and it does not get the attention it needs. Making sense of
inconsistent timesheets axed or e-mailed from multiple geographies and time zones is taking up too muchof your time.
You realize you have a serious problem when a cranky division vice president alleges over-billing and
refuses to approve a payment for the services he received.
You have become a prospect for specially configured timesheet data collection software and training for
your staff.
There are several things to notice about each of these cases. For one, you are probably not aware that you
have become a prospect. It might surprise (and even delight you) to learn that there is a salesperson
somewhere who knows how to help.
For another, in each case a product wont solve your problem. The problem requires the application of
some kind of services to the product in order to fit your context.
In addition, you wont be ready to recommend that your company spend any money until you have found
someone you can trust who knows how to solve your problem. The seller who wins your business will
have focused on understanding your problem and earning your trust.
Finally, the need and decision to act come from the customer, and not from the seller. Once you have
decided whom to deal with and what to purchase, you might be somewhat interested in a discount or
package deal, but not until then. Sellers who focus on these limit themselves to transactional marketplaces
where discounts and deals are the only differentiation.
The Need for Nurturing
There are usually many reasons prospects are not ready to move from one stage of their Customers
Journey to the next. For one thing, they have many problems to deal with at any given time. It can be
difficult for them to decide which problems to focus on first.
For another, their problems are often complex and interrelated. They may require time to study their
situation and decide what is causing the problems they are experiencing. In addition, their situation
changes over time. New priorities can distract them. From their perspective, the solutions to their problems
may not be apparent or believable.
Even if they have figured out their problems and potential solutions, they may face the challenge of having
to persuade others within their organization. Or, they may face the challenge of convincing a decision
makerwho does not see the problem their way. Overcoming obstacles like these is a challenge under the
best of circumstances. People need repeated encouragement to help them overcome
these types of inertia.
When you look at it this way, it seems obvious that the sellers job is largely nurturing such relationships.
The seller must continuously educate prospects on the value of their offers, make it easy for them to take
baby steps in the right direction, reduce the prospects risk (by increasing their trust), and help them
overcome organizational inertia.
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
19/33
The question for the seller becomes how to provide the relationship nurturing so it is most effective.
Clearly, leaving the task up to salespeople alone might make it a hit-or- miss affair. While salespeople can
play an important role, the nurturing process is important enough to warrant the attention of the team to
make sure it gets done as efficiently and effectively as possible.
Types of Nurturing Programs
Nurturing programs can serve several important purposes. In the cases above, nurturing communications
could help prospects move through the stages of their problem-solving journeys (in other words, moving
the sale along). The marketing department could produce articles, whitepapers, case examples, and other
materials of interest to prospects in various stages of their journey. These could be delivered to prospects
via e-mail or direct mail nurturing programs (as part of the regular sales process) or be used by salespeople
as sales aids as they saw fit.
In addition, there are cases where nurturing should be used to create obstacles for your customers. Here is
an example:
The western regional sales manager in a small but growing company had too many prospects asking for his
time. A new prospect in Anchorage, Alaska, had asked him to visit. He had demonstrations to conduct in
Phoenix and Los Angeles. Proposals were due in Sacramento and Denver. Hephysically couldnt be in
that many places in the time available.
We designed an initial information package for his new prospects, which included a brochure set, company
background, a DVD demonstration of the product, and several case history examples. It also included a
series of e-mails sent automatically over a 3-week period informing the prospect about how their offers
had helped other companies. The last e-mail in the series asked them to complete a simple application
questionnaire on a website in exchange for the opportunity to meet with one of the companys sales
consultants.
The idea was if they were really interested, they would spend the time to complete that questionnaire. If
they did so, and if the answers were the right ones, it was evidence that they were a qualified prospect.
They would be worth prioritizing over other demands on the regional managers time. This became the
standard way to respond to initial inquiries, and it accounted for a substantial increase in sales productivity.
Some companies use permission-based newsletters as nurturing vehicles. Others use call center agents or
account managers to keep in touch with their prospects over time.
Information products and membership subscriptions are valuable vehicles to nurture relationships with
potential prospects. Campaign or lead management software are often used to help manage the mechanicsof keeping track of opt-ins, fulfilling the offers, forwarding leads to salespeople, and reporting on results.
Whatever the vehicles you use, there are several things to keep in mind when designing these
communications.
Principles of Designing Nurturing Process
The principles of designing a nurturing program are essentially the same as those for designing a sales
process:
Focus on the prospects problem and how to solve it, not on your product.
-
7/27/2019 Improving Pricing Quality With Six Sigma Methods
20/33
Make their problem/situation easier by providing helpful information, examples, and problem-solvingguidelines.
Be clear on what stage of their journey they are in and what your goal is for the communication. Always,always offer a call to action, to move them to the next stage of their journey.
If you are not sure what kind of help they need or want, the best thing you can do is to ask them! Findways to talk to prospects so you can learn what they need.
Communications that nurture relationships with prospects are definitely among the most important ones in
the entire sales process. The return on investment for developing and implementing these types of
programs can be extremely high. In addition to helping customers solve real problems, you are also
making the process more consistent, which heightens the value of their experience with your company.
Rate thi s art icle:
(2 votes, average: 1.50 out of 5)
2 Responses to Nurturing The Secret to Doubling Your Sales Conversion Rate
1. Helmut Falsersays:
- See more at:http://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-
2#sthash.swei9sC4.dpuf
Can Your Marketing and Selling Process Be
Improved?
http://www.ceobreakthrough.com/http://www.ceobreakthrough.com/http://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#sthash.swei9sC4.dpufhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#sthash.swei9sC4.dpufhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#sthash.swei9sC4.dpufhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#sthash.swei9sC4.dpufhttp://salesperformance.com/can-your-marketing-and-selling-process-be-improvedhttp://salesperformance.com/can-your-marketing-and-selling-process-be-improvedhttp://salesperformance.com/can-your-marketing-and-selling-process-be-improvedhttp://salesperformance.com/can-your-marketing-and-selling-process-be-improvedhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#sthash.swei9sC4.dpufhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#sthash.swei9sC4.dpufhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#comment-2277http://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2?replytocom=2274#respondhttp://salesperformance.com/nurturing-the-secret-to-doubling-your-sales-conversion-rate-2#comment-2274http://www.ceobreakthrough.com/ -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
21/33
Filed under:Articles,Sales and Marketing Manager Articles Comments (1)
By Michael J. Webb, Sales Performance Consultants, Inc.
Originally published in Marketing Times Spring 2005
(pdf of this article)
Process improvement has revolutionized manufacturing over the past two decades, but is only now coming
to sales and marketing. Yet it is coming, and it s something every marketing and sales executive should
know about and consider employing.
Process improvement, also know as quality improvement, encompasses scientific approaches to
management such as Six Sigma, Lean, and Total Quality Management. In general, these methods measure
and analyze the parts of a business process, eliminate unneeded parts, fix broken ones, add new ones, and
monitor improvement.
It is the measurement, analysis, and systematic approaches that make these methods scientific. For
example, Six Sigma rests upon a five-step process called DMAIC (de-may-ik): Define, Measure, Analyze,
Improve and Control. Lean systematically eliminates activities that don t add value for customers and
strengthens those that do.
This article introduces and illustrates basic process improvement concepts as they apply to marketing and
sales.
See Sales as a Process
A company s sales process comprises everything it does to find (market), win (sell) and keep (service)
customers. Every activity in this end-to-end process can be identified and, if necessary, improved.
This differs from the usual fixes for marketing and selling problems, such as branding, sales training, CRM
systems, personnel changes or bigger bonuses. In fact, fixating on those fixes can blind managers to actual
process problems.
A global bank thought the only way to increase revenue in a unit selling investment accounts to wealthy
individuals was to add salespeople. But DMAIC revealed that the problem was not in selling new
accounts, but in the procedures for opening them. The bank streamlined these procedures, at a fraction of
the cost of expanding the salesforce, while boosting revenue and customer satisfaction. The idea wouldn t
have surfaced without a process approach, which always pinpoints bottlenecks.
Create Value for Customers
The concept of creating value for customers roots process improvement in reality. What value do
marketing and sales create for customers?
Solutions to problems. Marketing locates and attracts people who have problems the company can solve.
Sales helps those people apply those products to their problems.
People in business continually ask themselves which problems need attention, who should be involved,
and how to find and implement a solution. The company whose salespeople best answer those questions
http://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/can-your-marketing-and-selling-process-be-improved#commentshttp://salesperformance.com/can-your-marketing-and-selling-process-be-improved#commentshttp://www.salesperformance.com/Content/Articles/Mike_Webb/CanMSbeImproved.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/CanMSbeImproved.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/CanMSbeImproved.pdfhttp://salesperformance.com/can-your-marketing-and-selling-process-be-improvedhttp://www.salesperformance.com/Content/Articles/Mike_Webb/CanMSbeImproved.pdfhttp://salesperformance.com/can-your-marketing-and-selling-process-be-improved#commentshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
22/33
will win the most sales. Marketing and sales must locate people who are asking questions relevant to their
product and learn what they value.
Yet marketing will often generate leads without first defining with sales what a lead really is. When
marketing and sales do define leads, it is usually in terms of prospects characteristics. A lead might be a
commercial bank with at least $50 billion in assets or a service company under 300 employees. But thatdoesn t set things in the context of what prospects value.
A software firm s website produced 200,000 leads annually. Unfortunately, Mickey Mouse was a frequent
visitor. In fact, to avoid sales calls, 28 percent of visitors supplied boguscontactdata. The company didn t
know who visited specific pages, or why.
The website had been built around the company s products rather than visitors needs. Thus, a lead was not
a specific person who needs a product like ours, but rather unidentified people downloading something. A
redesigned site dramatically increased lead quality by helping visitors get something they wanted (e.g.,
help with certain problems), requesting contact data in return.
When a lead is defined and generated in the context of customer value, you have an actual lead, which
goes beyond the name of someone in some job at some company.
Help Salespeople Sell
Thetestof any marketing or selling improvement effort is: Does it sell, or help salespeople sell (now or in
the future)? Sales process improvement should result in questions, value statements, new kinds of
interactions, product characteristics, and internal improvements that help solve customers problems, and
thus help move more products and services.
A scientific company had a better, but more expensive, product that eliminated many hours of lab testing
in food production. The salespeople could handle calls with lab and quality managers, but not plant
managers, who had to approve the higher expense.
Business Value Mapping, a tool for detecting customer needs, revealed that in order to sell the value of
that time (since no one would be laid off), salespeople had to know what else the researchers could be
working on. In mapping business value, the company learned how to discover and express the impact of
this freed-up lab time and soon saw major account wins.
Its a Process
Sales process improvement ranges from Six Sigma initiatives for global salesforces to limited projects
improving lead-generation or selling techniques. Yet they always include defining, measuring, analyzing
and improving specific activities on the basis of data and facts, usually from customers as well as from
salespeople. Those are core methods of process improvement, and they work.
One Response to Can Your Marketing and Selling Process Be Improved?
http://salesperformance.com/contact-ushttp://salesperformance.com/contact-ushttp://salesperformance.com/contact-ushttp://salesperformance.com/testhttp://salesperformance.com/testhttp://salesperformance.com/testhttp://salesperformance.com/testhttp://salesperformance.com/contact-us -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
23/33
What is Six Sigma and Why Should Marketing and Sales Managers
Care?Filed under:Articles,Sales and Marketing Manager Articles Leave a Comment
Michael J. Webb, Sales Performance Consultants, Inc.
Originally published inMarketing TimesSummer 2005
Subsequently published inMarketing Watchdog Journal, August 2005
(pdf of this article)
Six Sigma is a funny name for a serious way of boosting marketing and sales performance. Its already
transformed manufacturing in hundreds of companies, and it is now doing the same in marketing and sales
in companies such as Bank of America, Dell, General Electric, HSBC, Service Master, Johnson &
Johnson, Standard Register, Sun Microsystems, Xerox, and many more.
To apply Six Sigma to marketing and sales in your company, youll probably need to think in new ways.
With Six Sigma, you base decisions on measurement and analysis of activities and results, then improve
the activities to improve the results. Believe it or not, thats generally not how marketing and sales are now
managed (with one exception, which Ill discuss).
This article explains the basics of applying Six Sigma to marketing and sales. As it turns out, Six Sigma
practitioners have the same goal as marketers and sellers: to find more profitable ways of giving customers
what they want.
Creating Value
We all know that good marketing and selling gets other people to take the actions we want them to take.
The challenge is in figuring out how to do it better.
The way to get other people to take actions is to show them the value to themselves or their company.
Whether you do it in person, over the phone, in a letter, in a newspaper, on the radio, or with a webpage
makes no difference. Prospects and customers need communications in all those ways and more.
Unfortunately, innumerable variables make marketing and selling challenging. For example, some direct
mail campaigns generate a 1% return, others generate 1.5%; some salespeople close 20% of their deals,
others close 30%. Wouldnt you like to know why some mailings get a 50% greater response rate and why
some salespeople have a 50% higher close ratio?
Six Sigma helps to identify the causes of variations like these so you can make better decisions on what
needs to be changed.
I s This Greek to You?
In statistics, the Greek letter S (sigma) is a measure ofvariation. In business, Six Sigma is a measure of
quality: 3.4 defects per one million events, with a defect defined as a variation from the desired outcome.
In any language, 3.4 defects per million is an astonishingly low rate of error. (One sigma would be
variations in 70% of the outcomes!)
http://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-carehttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-carehttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#respondhttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#respondhttp://www.emcmarketing.com/mt.htmlhttp://www.emcmarketing.com/mt.htmlhttp://www.emcmarketing.com/mt.htmlhttp://www.internetviz-newsletters.com/bulldog/e_article000437261.cfm?x=b5nkNvJ,b1JNVkwfhttp://www.internetviz-newsletters.com/bulldog/e_article000437261.cfm?x=b5nkNvJ,b1JNVkwfhttp://www.internetviz-newsletters.com/bulldog/e_article000437261.cfm?x=b5nkNvJ,b1JNVkwfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/What_is_Six_Sigma.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/What_is_Six_Sigma.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/What_is_Six_Sigma.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/What_is_Six_Sigma.pdfhttp://www.internetviz-newsletters.com/bulldog/e_article000437261.cfm?x=b5nkNvJ,b1JNVkwfhttp://www.emcmarketing.com/mt.htmlhttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#respondhttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-carehttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
24/33
The focus on measurement distinguishes Six Sigma from other kinds ofprocess improvement. Six Sigma
gives you a method for analyzing sales activities and characteristics (the input variables) to learn whats
causing variation in your marketing and sales results.
Direct marketers (the one exception I mentioned) have been doing this for decades. Split testing shows
them which variable-the headline, sales copy, color of the envelope, day of the week, or use of a stampversus metered postage-caused variations in response rates. Then they employ the variables that produce
the best results.
Six Sigma enables you to apply that kind of thinking to your marketing and sales process, what ever it may
be. Of course, sales processes never approach 3.4 defects per million, which is near perfection. But
marketing and sales can be managed far more scientifically than it usually is.
The Science of Six Sigma
The science of Six Sigma resides in its reliance on two things: measurement of activities and results, and
a rigorous approach.
Measurement of activities and results is rare marketing and sales. Yes, managers usually have reams of
data on monthly and quarterly sales, period-over-period sales, and sales against quota. But those are only
measures of final results, not interim results and the activities and other variables that produced the results.
The variables determining sales results include the quality of leads (a real biggie), the presence or absence
of gatekeepers and coaches, and the quality of presentations and proposals, to name a few. Without data on
these variables, you really dont know what needs improving. That leaves sales managers with the usual
uncertain fixes of sales training, hiring or firing people, tweaking the incentive plan, installing CRM
software, and so on. Six Sigma enables you instead to learn what, exactly, needs improvement.
Six Sigmas rigorous approach comprises fives steps, known as DMAIC (de may ik):
Define the problem (defect) and the process in a precise way (whether youre examining the entire salesprocess or one part of it, such as generating leads)
Measure the activities and the results (being careful to clarify exactly what you are measuring) Analyze data (from the measurement step) for variations in the results and the activities that produced
them, looking for cause-and-effect relationships
Improve the process by forming a theory of how to change the activities to improve the results, then makethat change totestyour theory
Control the process to achieve future gains (if your theory proves correct) by making the changepermanent.
While the basic steps are straightforward, it takes experience to execute them successfully. Individuals
who have achieved basic competency in the technique are designated as Green Belts. Those with higher
competency are Black Belts or Master Black belts.
A Case in Point
Six Sigma projects can range from a complete redesign of an end-to-end sales process to SWAT-style
interventions for specific problems. However, good Six Sigma practitioners never aim to implement a
predetermined solution. Instead, they start with a problem, gather and analyze data, and then develop and
implement a solution.
http://salesperformance.com/testhttp://salesperformance.com/testhttp://salesperformance.com/testhttp://salesperformance.com/test -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
25/33
A Web-based lead generation process provides a good example: Visitors to a software companys website
downloaded whitepapers and demonstration copies over 200,000 times per year. Each time a lead was sent
to the companys call center. The CEO was frustrated with the low conversion of those leads to orders
(well under 1%).
It took some work to define the problem correctly. Like most companies, they had simply launched aninformative Website and left the rest up to the visitors. One clue was that 28% of the leads had bogus
contactinformation (Mickey Mouse and Richard Nixon were frequent visitors). In order to measure more
effectively, they needed to map their process. This involved analyzing why people would take an action.
Immediately, they saw a problem. They didnt know why all those people were visiting the site because the
site had been designed around their product instead the prospects or customers purpose.
They researched the Voice of the Customer by conducting surveys and interviews. (In Six Sigma
parlance, they were learning what was Critical to Quality, called CTQs). This enabled them to improve
the site so various types of visitors could gain what they wanted more easily. People seeking product
information were channeled to the sales call center. Those seeking free training and technical information
were channeled away from it. Thus the company gained control of the variations. The quality of leadsskyrocketed. The close ratio increased. The cost of sales declined.
Get Sales Down to a Science
Whether you are managing market research, advertising, product development, brand positioning, or
million dollar salespeople, Six Sigma and other process improvement tools provide new ways to address
perennial sales problems.
Of course, Six Sigma projects often get more complicated than this, but the logic is unassailable: If you
improve the marketing and sales process, you will improve the results that people working in that process
produce.
Best of all, companies are proving that this works.
Rate thi s art icle:
- See more at:http://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-
managers-care#sthash.73onADTQ.dpuf
What Is Operational Excellence in Sales and Marketing?
Filed under:Articles,Sales and Marketing Manager Articles Leave a Comment
by Michael J. Webb (with Robert Ferguson)
(pdf of this article)
A reader from Microsoft recently asked me an interesting question:
What are the key parameters which define Operational Excellence in a sales and marketing
organization?
http://salesperformance.com/contact-ushttp://salesperformance.com/contact-ushttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#sthash.73onADTQ.dpufhttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#sthash.73onADTQ.dpufhttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#sthash.73onADTQ.dpufhttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#sthash.73onADTQ.dpufhttp://salesperformance.com/what-is-operational-excellence-in-sales-and-marketinghttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/what-is-operational-excellence-in-sales-and-marketing#respondhttp://salesperformance.com/what-is-operational-excellence-in-sales-and-marketing#respondhttp://www.salesperformance.com/Content/Articles/Mike_Webb/What_is_Operational_Excellence_in_Sales_and_Marketing.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/What_is_Operational_Excellence_in_Sales_and_Marketing.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/What_is_Operational_Excellence_in_Sales_and_Marketing.pdfhttp://www.salesperformance.com/Content/Articles/Mike_Webb/What_is_Operational_Excellence_in_Sales_and_Marketing.pdfhttp://salesperformance.com/what-is-operational-excellence-in-sales-and-marketing#respondhttp://salesperformance.com/category/articles/sales-and-marketing-manager-articleshttp://salesperformance.com/category/articleshttp://salesperformance.com/what-is-operational-excellence-in-sales-and-marketinghttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#sthash.73onADTQ.dpufhttp://salesperformance.com/what-is-six-sigma-and-why-should-marketing-and-sales-managers-care#sthash.73onADTQ.dpufhttp://salesperformance.com/contact-us -
7/27/2019 Improving Pricing Quality With Six Sigma Methods
26/