Extended exposure of the night sky with Polaris, the North Star, in the center of the star trails.

Principles are the essence of our work. They don’t change with time or place, technology or tactics, conditions or context. They are a constant reference point to guide us.

Lean and Six Sigma are two well-established initiatives that organizations use to improve how they do their work. Making a process Lean improves its productivity, and Six Sigma is used to improve quality.

All Lean and Six Sigma initiatives are built upon the same set of core principles. These principles can be applied to Sales and Marketing as well as to any process in an organization. Sales and Marketing groups that hew to these principles will deliver more customers, bigger deals, and more profitable revenue to their company.

Marketing and Sales: advancing the buyer’s journey

The process of Sales and Marketing revolves around the buying cycle. Sales and Marketing creates value that motivates buyers to move from stage to stage in their journey.

The Buyer's Journey

Buyers don’t start out thinking “Hmm, of the products that solve this problem, which one should I buy?” No, they start out unaware that the problem even exists. They then proceed through a series of stages from becoming aware, to looking for solutions, and to making a decision. The job of Sales and Marketing is to help your buyers move smoothly through those stages.

Lean: removing friction to increase customer flow

The goal of making a process more Lean is to remove unnecessary actions (waste) from the system and to cause the process to flow more smoothly. Lean methods have their origin in the production system at Toyota, a story that James Womack and Daniel Jones tell well in The Machine that Changed the World and elaborate in Lean Thinking.

The principles of Lean are:

• Specify value – Value is defined by the customer. In Sales and Marketing, value is what meets the specific needs of the buyer at each stage of the Buying Cycle. Value is what buyers are willing to take action to obtain to answer their questions and solve their problems at each stage. This action could be to read a white paper, to visit your website, to see a demo or to review a proposal.
• Identify the value stream – For each type of buyer at each company, the value stream is the sequence of value creation steps that support the customer’s buying cycle.
• Flow – Make the value stream flow faster by removing obstacles that create friction for the buyer. Increase the motivation of the buyer to move forward in the Buying Cycle by showing the alignment of the buyer’s goals and your goals.
• Pull – Once your value stream flows, then it is easier to let the customers pull value from you as they need it.
• Perfection – Work towards perfection through endless steps. Perfection of what, you might ask? Perfection in what you do to create value for the customer at each stage of the buying cycle.

Six Sigma: fact-based management

Once you have made your Sales and Marketing process Lean by creating a series of value-creating steps that flow, then you can focus on improving the quality of the value you create. Here is how Mike Webb describes the core principles of Six Sigma for Sales and Marketing.

1. Create Value for Customers: A company exists to create and sell something of value to customers; that’s the North Star that must guide all our activities.
2. Manage Data and Facts: We need measurements, data, and facts on what we’re doing and the results we’re getting before we make decisions; otherwise, we’re operating from opinion and politics.
3. Analyze Cause-and-Effect: A problem occurs for a reason; if we find the cause of a problem and eliminate it, then we’ve solved the problem.
4. Minimize Waste, Errors, and Defects: Like a watch or a car, a business process should have all the parts it requires, and do everything it’s supposed to do and nothing else; if we rid the process of useless activities and eliminate or at least minimize mistakes, the process will run correctly and produce the intended results.
5. Create Collaboration: All process improvement methods recognize that business activities and functions are interconnected and that they all have to work together for any of them to succeed.

Regardless of your size, your industry, or your customer, the principles of Lean and Six Sigma enable companies to improve the speed with which buyers move through the pipeline and the quality of buyers that become customers.

It’s easier to imagine applying these principles to marketing and sales if you start by thinking about just one buyer. And by visualizing the buyer’s journey (see below).

Specify value – Every step in the marketing and sales process should create value for the customer. After each interaction, customers should feel that they received value. Any action that doesn’t create value for the buyer is waste (muda).

An advertisement that interrupts the buyer with an irrelevant message? Waste. A delay in getting a quote or a question answered? Waste.

Identify the value stream – The buyer encounters different value streams at each stage of the buying process.

At the early research stage it may simply be a sequence of events starting with a query to a search engine, clicking on your entry on the search engine response page, reading some pages on your website and downloading a white paper.

At a later stage it might be requesting a quote, a series of meetings with a sales rep, placing an order, and receiving your product.

Flow – Once you have mapped the value stream for a particular marketing or sales process (and eliminated obvious areas of waste), you can start to make the process flow. In the first example above, it might mean watching your analytics closely and modifying your website to make it easier for buyers to find the information they want.

In the second example, it could mean examining and improving the steps in your quoting and ordering process.

Pull – In a manufacturing environment, pull is when a customer makes a purchase and initiates an order. In marketing, sales and customer service, pull occurs when the buyer or customer initiates a series of actions that satisfy the need for information at that stage of the buying process.

An important question to ask is “What is the circumstance in which a buyer would want to pull information from my company?” This is a different way of looking at marketing. But it’s a way of forcing ourselves to look at it from the buyer’s point of view.

Perfection – There is no end to the process of making it easier and faster for buyers to solve their problems using the capabilities you have to offer. Understand the buyer better. Make it easier for customers to get the information they need at each stage of the buying process. Continuously improve.

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Manufacturing companies have not only gained significant improvements in productivity, by creating more value for their customers they have also grown their business simply by focusing on making their processes more lean.

Can we do this in marketing and sales also?

First, some history
In the 1980′s two researchers went to Japan to try to understand why Japanese industry was doing so well in the global marketplace. When James Womack and Daniel Jones looked at Toyota, they realized that it was doing many things differently from companies in the U.S., Europe, and even Japan.

According to Womack and Jones:

“Toyota’s success lay in brilliant management of its core processes: the series of actions conducted properly in the correct sequence at the right time to create value for customers.”

“It’s not brilliant product innovations or culture or a weak currency or strong government support that makes this company stand out in global competition. It’s the brilliant focus on core processes.”

They documented Toyota’s methods in The Machine that Changed the World. The book explained that it was the combination of processes in product development, supplier management, customer support and manufacturing that collectively comprised the Toyota “machine” that made the company successful.

In a later book, Lean Thinking, Womack and Jones extracted the general principles of lean production so that other companies could apply them to their own processes. Applying these principles is how lean organizations constantly look for ways to remove wasteful practices from their processes. What is waste (muda) in lean thinking? Anything that doesn’t produce value for the customer.

Five principles of lean thinking
The principles of lean are value, the value stream, flow, pull, and perfection.

Specify value – The starting point of lean thinking is to understand how the organization creates value. Not value as defined by the producer, but value from the point of view of the customer.

Value is expressed as a “specific product (a good or a service, and often both at once) which meets the customer’s needs at a specific price at a specific time.”

The way to define value is through dialogue with specific customers about what they need and are willing to pay for.

Identify the value stream – The value stream is the sequence of events that are necessary for the company to put a finished product in the hands of the customer.

Mapping the value stream from raw materials to finished product is the next step in lean thinking. This mapping process usually reveals large amounts of waste in the value stream – work-in-process inventory, long setup times, rework – waste that wasn’t visible until each step in the entire process was mapped.

Flow – Once you have defined value and mapped the value stream (and removed obvious wasteful steps in the value stream), the next step in lean thinking is to make the series of actions in the value stream flow.

Flow is the opposite of our intuition that the best way to organize work is with using a “batch and queue” method. With batch and queue you make each stage in the process as efficient as possible. Make many units of a part, setup the machine for a different part, repeat. Each batch produces many more parts than are needed at the time (waste) and makes the machine unavailable to produce anything else until the batch is done.

Pull – When you convert from a batch and queue method to flow, it significantly reduces the time to deliver products into the hands of the customer.

This reduction in time let’s you shift from scheduling and producing in advance of customer demand to letting the customer pull from you. It’s made-to-order in the extreme.

Instead of forecasting demand, making lots of product that you may not be able to sell, and then using pricing discounts to get rid of it, you throw out the forecast and let the customer pull product from the enterprise.

Perfection – Once you have defined value, mapped the value stream, made the steps in the value stream flow continuously, and have let customers pull value from your organization, then companies begin to see that these four principle interact in a virtuous circle.

“Getting value to flow faster always exposes hidden muda (waste) in the value stream. And the harder you pull, the more the impediments to flow are revealed so they can be removed. Dedicated product teams in direct dialogue with customers always find ways to specify value more accurately and often learn of ways to enhance flow and pull as well.”

This virtuous circle leads to the final principle in lean thinking, perfection. Each process improvement not only improves productivity for the company and value for the customer, it reveals new sources of waste that could be removed from the process.

Marketing and Sales is a process
Womack and Jones have documented in company after company that lean thinking made it possible to significantly reduce the time to make and deliver a product (or service), lower costs, and increase the quality and value of what these companies deliver to their customers.

In fact, Womack and Jones confidently state that “if you can’t quickly take throughput times down by half in product development, 75 percent in order processing , and 90 percent in physical production, your are doing something wrong.”

Can Lean Thinking be applied to marketing and sales? After all, marketing and sales is a process too.

And more importantly, can marketing and sales see the same kind of process improvement that Womack and Jones have documented in production environments?

That will be the subject of my next post.

Process improvement methods are based on the idea that the elements in a business are interconnected. To improve the results in one area, you have to make changes in other areas as well. Collaboration is how people work together to make these changes.

If I want to improve the close rate of my sales person, I have to provide better leads. And if I want to generate better leads, I need to provide a more compelling experience on my website. And if I … well, you get the idea.

But while collaboration is something that we agree is a good thing in principle, we often resist it in fact.

Why?

Because power is distributed unevenly in organizations. Because individuals and groups are in competition with each other. Because we aren’t given enough reason to trust each other.

What are some methods that organizations have found to be successful in improving collaboration?

• Management has to lead the charge. The higher in the organization the better. If senior management talks about and models collaborative approaches to work and process improvement, then others will follow.
• Change the process before asking people to improve their performance. Simply flogging people to do more faster without changing how they do their work will not succeed.
• Give people more information to make decisions and to take action to implement their decisions. Show the linkage between events. This information also provides feedback to people and to management to see the results of the changes.
• Start where people are receptive to a change. Find people or groups who are willing to be early adopters. Focus on places where it’s easiest to implement or where people have the most to gain.

And finally, managers must let individuals and groups take credit for the improvements. Remember the words of that ancient management consultant, Lao Tzu:

A leader is best when people barely know that you exist, not so good when people obey and acclaim you, worst when they despise you. Fail to honor people, they fail to honor you. But of a good leader, who talks little, when the work is done, the aims fulfilled, they will all say, “We did this ourselves.”

Michael Webb explains: “…in process improvement, waste is any activity or result that doesn’t add value for the customer. Errors and defects are unwanted results.”�

Examples of waste include:

• Swiping the cards of visitors to a trade show booth and handing them off to sales as “leads”�. Sales staff then contact a few of these leads, find out they are not qualified, and ignore the rest. This activity creates no value for the customer. The time spent by marketing to collect and collate is a waste. The time spent by sales calling them is a waste. Worse, it creates resentment between the two groups.
• Sending unsolicited “press releases”� via email to a list of reporters and editors. If the company or the public relations agency has no relationship with the reporter, the email will be ignored. This is a waste and adds no value to the customer. In fact, it creates a negative value. Witness the flap over Chris Anderson’s decision to treat these emails as spam and publish the addresses of the senders.
• Preparing a proposal for a sales prospect before achieving alignment with the decision-makers about the project. The proposal will be rejected. Not enough value has been added to the customer to allow for a consensus decision. This wastes the time of both the customer and the sales team.

The causes of waste can be discovered by managing on data and facts and by analyzing cause and effect. And these causes can be removed.

But removing waste is not the hard part. Webb points out that what’s hard is seeing waste in the first place.

Why?

Partly because we are too close to the problem. We’re too accustomed to our current pattern of doing things. And it’s hard to believe that dramatic results are possible.

The best way to start seeing waste is to come back to the question: “Does this activity add value to the customer?” If the answer is yes, please continue doing the activity in the same way. But if not, it’s time to take a closer look.

What does it mean to analyze cause and effect in your sales and marketing process? Does it require statisticians to crunch numbers and produce complicated graphs? New procedures that will just add to the workload?

No, it’s not either of these. It’s simply another way to say that you are going to find the truth, the truth behind what is causing a particular problem in your sales and marketing process. Analyzing cause and effect is what enables you to understand not only what is happening, but why it is happening and what you can do to change it.

And, as Fletcher says in his moment of revelation in “Liar, Liar”, the truth shall set you free. It will set you free because you won’t be guessing what the cause is. Your team won’t be debating the cause based on opinion and anecdote. You’ll know what the cause is. You’ll know why it was causing the problem. You will have tested alternatives and found a way to remove it.

Chefs in a kitchen never just guess why a dish is turning out differently than expected. They analyze the steps in the process, isolate some likely causes, and test alternatives. Meat turning out too dry? Maybe it’s the oven temperature or time in the oven. Try different temperatures and cooking times. Maybe it’s the marinade. Try adjusting the ingredients in the marinade and the length of marination. They know the only way to remove the cause of the problem is with a systematic and objective approach.

Once a company starts to see marketing and sales as a process where it is constantly adding value to the customer, then problems that arise are viewed as process problems and can be fixed using process improvement methods. Direct marketing groups have been approaching their work in this way for a long time. Search marketers also adopted a process approach to optimizing web sites for search engines and to their paid search campaigns. The idea with lean marketing is to extend these practices to the rest of marketing.

One of the biggest complaints that CEO’s have about marketing is that they can’t measure the return on their investment. It is routine for marketing organizations to fund programs for public relations, brand promotion, trade show participation and even lead generation programs without a clear and quantifiable business case for which they are willing to be held accountable.

Once a company starts to bring lean thinking to its marketing process, this situation will improve and CEO’s will have better information with which to make investment decisions.

Here are some examples of situations where lack of measurement and analysis can lead to expensive and unproductive results:

• A company that swipes the card of every visitor to their trade show booth, captures the visitor information in their database, and hands the information to sales as a “lead”. Without analysis of the information and pre-qualification of the possible suspects, this creates wasted effort by sales people and resentment towards marketing.
• Pursuing all revenue as opposed to profitable revenue. Causes of this problem could be lack of information on profitability or the incentives in the sales compensation plan. In either case it leads to lower profitability.
• Too much focus on overall conversion rate on the web site without understanding the different groups that are visiting the site. Avinash Kaushik points out that an overemphasis on overall conversion rate means that we are not investing in efforts to create a great experience for the other segments that are visiting our site.

In God we trust, all others bring data – attributed to W. Edwards Deming

I know a water polo coach who tracks an unusual number for each of his players. He calls it the Plus-Minus score. Plus-Minus captures how well you do at preventing the other team from scoring. Its purpose is to reward players who perhaps don’t score a lot of goals but who are good at making sure the other team doesn’t score either. In other words, it awards defense.

Plus-Minus is measured by tracking the number of times the other team scores while you are in the water playing a game. The coach tracks this number over the course of a season and the players on the team are very aware of how their Plus-Minus score compares to the other guys on the team.

Now I don’t want to give you the wrong idea. This coach does lots of other things to build a successful team. He teaches fundamentals and strategy, he encourages his players to think of their athleticism as a way of life and to “be your best” in everything you do, he’s very competitive and he wants his team to win.

And he tracks numbers. Not just his win-loss record, but lots of numbers. At games and at practice. During the season and during the off-season. And his numbers, like the Plus-Minus score, find relationships and drivers in the system of water polo that help his players improve across many aspects of the game.

Capture the numbers and watch the trends
Unlike this coach, we haven’t been so good in marketing and sales about tracking numbers and using them to be successful. Oh sure, we track our win record (completed sales and revenue), but we rarely track losses, let alone all the other factors that go into finding, winning and keeping a customer. But to improve a process it’s critical to start tracking the actions at each stage. And, like the water polo coach, to track the numbers that really get at what is happening inside your system. Or as Michael Webb says, to get at the facts that drive customer actions.

Here are three considerations for the principle of managing on data and facts:

1. Individual metrics by themselves don’t tell you much. It’s how they fit into the marketing and sales process. Measuring traffic to your website is good, but not if the traffic numbers stand by themselves. What are the sources that are bringing the traffic? What happens once visitors arrive at the site, do they bounce out right away or spend time on the landing page? Do they convert by registering or making a purchase?

2. Focus your measurements on the most critical component in the system. If you try to focus on every number all the time it can quickly become overwhelming. Find the most urgent one or two problems in your marketing/sales process and use data to understand the problem. Then when you start testing ways to fix the problem, continue to refine your use of metrics to measure your progress. Once that problem is fixed, you can move on to the next most urgent problem.

3. Connect your measurements to the financial system. Most of your metrics will not be financial measurements and thus won’t tie directly into your company’s financial system. What you will mainly be tracking are actions in the marketing/sales process, outputs from one stage which become inputs to the next stage. But the more you can do to map marketing and sales activities to your costs, the easier it will be to see how the results of your sales process fit into the larger financial picture of your company.

And finally, you will want to develop ways to not only measure results, but also to find what drives those results. Like the Plus-Minus score, these drivers inside your system will start to reveal the relationship between cause and effect in your sales process. Cause and effect will be the subject of my next post on lean marketing principles.

The purpose of any company is to provide something of value to customers. And in turn customers pay to receive the thing of value. But they start paying earlier than when they make an actual purchase. Payment begins when they give their time to read your advertisement, visit your website, watch your demo, or listen to a sales person.

When I first read about this principle of lean marketing from Michael Webb, it made me think hard about my current projects and whether each of the marketing activities we were conducting were adding value to the customer. It’s a way of thinking about marketing that makes it easy to get out of the mindset of focusing primarily on what we as marketers want to say about our products.

Webb’s analogy of a manufacturing process made it easier to visualize. The process in a manufacturing plant begins with raw materials. The manufacturing process adds value to the raw materials at each step of the way until, at the end, the process produces a finished good.

In marketing, potential customers are the raw material. At each step of the process, marketing and sales adds value to the potential customer by providing information and experiences. At some point a sale occurs and a customer is created. Of course, it doesn’t end there. Companies keep customers by continuing to add value; they support their use of the product and help them apply the product to their unique environment.

Wax on, wax off. – Mr. Miyagi, from the film “The Karate Kid”

Two hundred years ago, expert craftspersons didn’t need a lot of process to produce a product or service. Whether it was a butcher, a baker, or a candlestick maker, they were thoroughly familiar with all aspects of their operation and with what their customers wanted.

As the production of goods became industrialized, processes to improve the efficiency, productivity, and quality of manufacturing were developed. Well-known figures like Charles Taylor, Frank Gilbrith and W. Edwards Deming made major contributions to process improvement in manufacturing.

More recently these process improvement methods have been applied to domains beyond manufacturing. These domains include health care, professional services and marketing and sales. Just as manufacturing is a value-adding process which takes raw materials and produces a finished good, Michael Webb explains that marketing and sales is similar. Marketing and sales “takes the raw materials of people in the marketplace who have the kinds of problems your company solves and adds value to them until they are transformed into customers.”

Danny Russo had to learn from Mr. Miyagi that developing the spirit is as much a part of martial arts as training the body. Similarly, we have to study the principles of process improvement methods before applying them to marketing and sales.

You’ll get different lists of these principles depending on which expert you ask. I’m using the principles from Michael Webb in his book Sales and Marketing the Six Sigma Way. I’ll summarize the principles here and then write about each one in a future post.

Creating value for customers. The purpose of a company is to create value for customers, who in turn pay the company for the value received. Companies create value for customers at each stage of the marketing and sales process of finding, winning and keeping customers. Process improvement in marketing and sales is constantly looking for ways to add value for customers at each of these stages in the process. Activities which don’t add value to the customer are discarded.

Managing on data and facts. Process improvement requires more than measuring the end result (sales figures). It means measuring activities and results at each stage of the process. Without these measurements the marketing and sales teams only have opinion and past practice to rely on. By approaching marketing and sales as a process, the organization can break up the process into many steps, measure the inputs and outputs of each step, and discover which steps are most in need of improvement.

Analyzing cause and effect. Once you start to collect the data and facts of your marketing and sales process, you can not only see what is happening, you can start to learn why it’s happening and do something to change it.

Minimizing waste, errors, and defects. In many companies, sales and marketing is a kind of black box. Leads go in one end and customers come out the other, but no one really knows how it works inside. Attempts to increase the number of customers are based on throwing more activity into the front end of the box. Getting a 2% click-through-rate on your search advertising? Buy more keywords. Process improvement looks for ways to remove waste from the system. Are you capturing lots of unqualified leads at trade shows? These are all waste if you can’t find a way to add value to these leads. They are errors and defects if the results are unwanted.

Setting the context for collaboration. It’s common in marketing and sales for groups to believe that the other departments are preventing me from getting my job done. Sales believes that they could make their number if marketing would just give them enough good leads. Marketing perceives that sales doesn’t follow up on the leads they worked so hard to get. Process improvement methods recognize that every activity and result is interconnected. These methods make the connections explicit by making all the activities and results explicit. Once everyone can see what is happening and why, it is much easier to begin working collaboratively to solve the problems.

Companies are accustomed to capturing the major metrics of demand generation – sales quantity, revenue, profit. But these measurements aren’t enough to know what is happening in sales and marketing and why. They aren’t enough to let individuals and groups know what to fix and whether the change is working. Process improvement is the method by which marketing and sales can look at the details of what they do, see how the parts are connected, and improve the quality and productivity of how they add value to customers.