Malcolm Gladwell, Seth Godin, and Geoffrey Moore are all wonderful thinkers in the field of marketing-even if they are likely names you don’t know. The concepts and methods that they promote have advanced the marketing thought process while shaping strategic approaches that produce more effective outcomes.
However, when it comes to the challenge of measuring marketing effectiveness, there is still a hole in the field waiting to be filled.
Taiichi Ohno, the innovator of the Toyota Production System that is popularly known as Lean Manufacturing, may not have ever considered himself one of the great minds of marketing. Lean Manufacturing is a management philosophy aimed at eliminating waste from the production process. This tested and proven philosophy has helped thousands of corporations around the world improve manufacturing productivity.
It was Ohno who offered that the scheduling of work should not be driven by sales or production targets, but by actual sales.
Today, the growth of many companies is being constrained by their inability to plan, execute, and manage their sales process, which is leaving capacity in production that has most businesses under $10 million stalled.
When it comes to measuring and making the marketing operation more effective and efficient at driving actual sales, CEOs who want to win instead of waste should be looking to new applications of longstanding Lean Manufacturing concepts and other process improvement methodologies like Six Sigma and the Theory of Constraints to help them win more control over their marketing operations and sales process.
The number one complaint from CEOs of companies who are trying to rapidly increase sales is that they can’t measure their return on marketing investments and that the sales process performs unpredictably.
Consider the bad habits and waste that exist in marketing and sales planning, execution and management. It is barely any wonder why there is so much money, time and resources thrown about in the sales process and marketing operation.
The sales process terminology may be different from those words that keep production managers up at night words like transportation, inventory, motion, waiting time or over-production (some of the main areas corrected by Lean Manufacturing practices) but the phenomena that the marketing manager is charged with controlling still exist.
Lack of quality leads, no defined sales process, silo management, services that customers don’t want, salespeople sitting around with nothing to do, etc. can all be part of the problem.
Amazingly, there is little available in the way of a management philosophy like Lean Manufacturing that contains the complexities that challenge CEOs to define their sales process, identify where it is breaking down and correct it. It’s likely the marketing managers fire their ad agency and their sales managers hire more salespeople to hit the sales goals. This, of course, doesn’t work because of turnover and demoralization.
Henry Ford (1922, My Life and Work) summarizes the entire concept of waste in the following way:
“I believe that the average farmer puts to a really useful purpose only about 5 percent of the energy he expends. Not only is everything done by hand, but seldom is a thought given to a logical arrangement. A farmer doing his chores will walk up and down a rickety ladder a dozen times. He will carry water for years instead of putting in a few lengths of pipe. His whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense. It is wasted motion wasted effort that makes farm prices high and profits low.”
How many companies instead of putting a strong sales process in place have their sales people (farm hands) identifying, qualifying, selling, closing and even servicing customers? How many companies under $10 million don’t even have a formal marketing department or function inside of the company?
Yet, the marketing department should be the very function supplying leverage to operations of the sales and production processes. After all, it is the sales and production relationship that is supplying the core functioning of the overall business system.
The reason that the sales and production processes are considered “core” when compared to other high-level business processes is because when one of them fails, it tends to get all of top management’s attention immediately. The basic reason is because continued failure, even for short periods of time, can mean death for the business.
Science in Management
Ever since the Industrial Revolution, science has been applied to improve efficiency and achieve quality outcomes in production. Yet, the sales process has remained one of the least scientifically approached business processes, and its leveraged counterpart, marketing, even more so.
As a result, companies endure feast-or-famine revenue fluctuations that in turn put major strains and pressures on smooth production. The boons produced by the good times are eaten up by the downturns of the bad times, and business growth remains stagnant, management teams confused, and ultimately customers unhappy.
In an attempt to combat the stagnation and unpredictability of the ups and downs in the aftermarket, administration looks to their marketing departments for plans and programs that will increase sales more effectively and predictably. They instead get the same old songs about branding, customer listening, and numerous other “strategic initiatives” that amount to nothing more than disconnected outcomes.
But without some sort of management philosophy targeted at measurement for the purpose of eliminating waste and to guide effective program design and support, management teams drift apart. They don’t know what to keep and what to throw away, so they throw ideas at the wall and keep what sticks. I wouldn’t say this is exactly rocket science or pure management design.
The Power of Six
The sales process is just like a production line. It represents a series of value-added steps to a predetermined goal the sale.
If the marketing department is going to bring leverage to that process, it needs a good grasp of what the steps are and how specifically the actions being taken are going to influence those steps toward the desired outcome. In short, marketing needs to know why the sales process works (functions), which will naturally lead to figuring out which steps in the process are necessary and which are not in pursuit of the ultimate overall goal: sales.
By taking a function-focused approach, such as Six Sigma, to marketing program design that supports the sales and production processes, a more predictable and improved outcome to the overall business system can be achieved.
Six Sigma can be understood as a methodology for improving business processes. It was originally developed by Motorola to systematically improve processes by eliminating defects.
A full explanation of Six Sigma goes beyond the scope of this article. However, for our purposes it can be understood basically as a “way of thinking.”
A key Six Sigma methodology is known as DMAIC, which is used to improve existing business processes. The basic DMAIC methodology consists of the following five steps:
Let’s say you define your sales process as the process by which you identify customer opportunities, qualify these opportunities, engage with these opportunities and close these opportunities. Executing the process well leads to orders flowing in to your company at an optimal rate for your production process to be able to fulfill those orders in a way consistent with the customer’s expectation.
When there is a change either up or down in the rate of your sales process, then there is an impact on both the production process, and if allowed to continue, ultimately the customer. These processes work in relationship to allow the overall business system to function. Favorable changes bring about positive results, and defects bring about negative results.
Six Sigma can offer marketing management a more systematic way to understand, plan, and manage execution in aligning the sales process with the marketing and production operations. Bringing a philosophy and method to the process helps to contain the complexity of these interrelated core functions.
Process improvement is about defining defects. But improving the sales process and marketing operation by approaching them like an assembly line to manufacture customers is a lot different than building an automobile providing management teams dedicated to improvement and measurement, thus presenting unique and significant challenges.
Right away there are new obstacles. For example, think about your company language with respect to the definition and measurement phases of the DMAIC method. The analysis and improvement phases seem to be more difficult at the outset, because one of the biggest problems that you encounter is not one you would anticipate which takes us back to the company language.
It is very hard to manage a process without clear and unambiguous operational definitions.
Getting everyone across top management and even the entire company to agree what a hubcap is, and how it is made, and why it performs, and what it costs, can be a lot easier than arriving at a common definition for “marketing” in your organization. Just stop 10 people in your company and ask them what they think marketing is, and how your company should use it to win. You will get 15 different answers and 30 different answers if you ask more of your senior people!
A good way around this is not to attack the problem by trying to work from or agree on some abstract or theoretical definition of marketing. Instead, take a practical approach to what you want from your sales and production process, and then begin to map how it should work.
Once you have a high-level sales process and production maps, you can see it will be a lot easier for everyone to agree on what “marketing” is functionally, what they’re to do and thus arrive at a company-specific definition. This is now a definition rooted not in industry theory but focusing on specific company challenges.
It is my intent to aid in your marketing approach from a method of critical deep-thinking, with the understanding that you perhaps need to rethink your approach, your methods and then make a personal evaluation.