Written by Michael Webb
Peter Drucker, the father of business consulting, said, “The purpose of a business is to create and keep a customer.” One can imagine his friend, Edwards Deming, responding with his famous rejoinder, “By what method?”
Given the importance of sales and marketing, why isn’t operational excellence more successful there? Their goals are the same – to give the customer what they want, and will pay for. So, why do lean and sales and marketing seem so allergic to each other in most companies?
In this article, I will describe three reasons why sales and marketing are allergic to lean and operational excellence. When you realize what they are, you’ll see why you need to crack this code today.
Reason #1: Lean practitioners practice manufacturing, not sales.
Practitioners of the lean philosophy typically do a great job improving ways to fulfill demand. Often enough, they are successful expanding its applications to logistics, engineering, administrative, and service functions – until they reach sales and marketing.
One master black belt confided to me, “I have no idea what standard work looks like in sales and marketing.” That is a pity because most sales and marketing executives don’t either.
Department store merchant and marketing pioneer John Wanamaker famously complained, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” The same could be said for money spent in sales or virtually any other commercial function. The typical B2B company’s sales operation is filled with collateral and websites customers don’t read, poor-quality sales opportunities, and proposals that don’t sell, not to mention products and services not enough people will buy. The challenge is distinguishing the value from the waste.
It’s a big challenge. Companies that research sales and marketing tell us that the track record for successful product launches, achievement of sales quotas, and return on sales investment in most companies are nothing to write home about:
- 62% of companies had difficulty making target revenues in 2014 (Forrester Research)
- 42% of all sales opportunities end in No Decision” (HubSpot)
- A pass bet at a craps table has better odds than the average sales forecast (CSO Insights)
According to Google and the CEB, B2B companies increasingly avoid engaging with salespeople until most of their decision-making process is complete. No wonder the average turnover of salespeople across all industries is around 40%!
Bedeviled senior executives are trying to solve life-or-death problems like these:
- If we build more production capacity this year, will enough sales materialize next year for us to be profitable?
- Which product development initiative will create the best return on our capital?
- Will we get better results by spending our resources on tradeshows, websites, sales training, lead generation, or something else?
- Which accounts or sales opportunities should our salespeople spend time on? Which should they walk away from?
Of course answering these questions is so difficult because they have almost no data for decision-making. The only certainty is the increasing difficulty of achieving their goals year after year.
What does the lean philosophy offer them?
Quite a lot, actually. Yet neither side fully realizes it.
Of course, it would help if more lean practitioners could practice sales and marketing rather than manufacturing. Most companies have lots of people with knowledge and experience in sales and marketing. They just need to learn lean thinking.
And that will happen faster as lean practitioners correct the flaws of their past approaches.
Reason #2: The myopic focus on “tools”
Operational excellence (including lean and six sigma) have generally been presented as a set of tools and even edicts. Lean training focuses on improving flow with standard work and tools such as 5S, work cells, Kanban, visual boards, set-up reduction, and others. Six sigma training focuses on its series of analytical tools applied in rigid DMAIC sequence.
Unfortunately, the “tools” mentality is deadly – and not just in sales and marketing. If you focus on tools, you can fail to ask the right questions. Failing to ask the questions makes you prone to jump to solutions involving “standard work” and “flow” without understanding the purpose of the standards, or what precisely should be flowing. It is called “process for process’ sake.”
Salespeople and company presidents intuitively know this. They are proven right when a practitioner tries to get them to do things like “5S” their desk or do a six sigma training project. Like teaching pigs to sing, the value is limited and it irritates the pigs.
Process for process’ sake was vividly illustrated in a $5 billion manufacturing company with an explicit operational excellence strategy. The Finance VP began to demand his Sales VPs provide hard metrics for measuring and improving productivity.
Unfortunately, like most sales and marketing organizations, the sales force had no operational definitions. There were no reliable measures of any of their work. Insisting they start somewhere, the VP of Finance demanded data – and improvement – around generating proposals.
Sensing a problem in the making, the VP of Sales asked me for assistance. I suggested he ask this question: “Is the purpose of sales to optimize the generation of proposals? Is that really what you want us to produce?”
Of course, winning more of the right customers was the goal, not generating proposals. Would reducing the cost of proposals help win more of those customers? In fact, a good argument could be made that more preparation and planning (increasing the cost of those proposals) was a better idea. In this light, optimizing proposal generation outside the context of the system was a diversion, and potentially a costly one.
As human beings we love to have theories for guiding our decisions. Yet we are naturally bad at creating them. It is called “jumping to conclusions.”
Of course, the lean philosophy offers principles for improving our theories. Defining the problem and systems thinking are valuable skills for bedeviled company presidents and sales and marketing VPs who don’t already have them.
Lean, or operational excellence is not about tools or edicts. Instead, it is about knowing how you know what you know. Its principles put into words what is otherwise only intuitive and unreliable. They enable you to grasp what your mind should be doing (and why), so you can detect when you’re not doing it.
Most importantly, doing this for yourself is the prerequisite for helping other people detect when they’re not doing it. And that is a crucial thing if your job is leading or managing people.
Now, lots articles and speeches have been written about this. Yet lean and sales and marketing remain unintegrated.
What is the remaining reason sales and marketing doesn’t understand the value of operational excellence?
Reason #3: An incorrect definition of “value”
When I began learning about process improvement, I was taught the common sense definition of value in manufacturing: “Value is that which the customer will pay for.”
However, since I grew up as a sales guy that always bothered me. That’s because in sales, by definition, you don’t know what your prospects and customers will pay for. So, how does this help sell anything?
Then, I realized what good salespeople have always known. Salespeople need to get prospects and customers to pay attention, spend time, and decide to trust them.
These actions are known as the “customer’s journey,” and getting people to take these actions is the “purpose of the business” Peter Drucker was talking about. The work of finding, winning, and keeping customers is the “By what method” Deming meant. Anything that enables customers to take these actions creates value. Everything else is waste.
This principle puts into words what is otherwise only intuitive and unreliable – the sales process. It enables you to grasp what your company should be doing (and why), so you can detect when your company is not doing it. In an age where customers are looking for information in places salespeople cannot go, this is incredibly important. The realignment of resources it drives is as radical – and productive – as leaning out the manufacturing floor.
Unfortunately, most B2B companies pay virtually no attention to their customer’s journey. In the grip of their definition of value and waste, they focus on the product rather than the customer. Like the Finance VP who wanted to optimize proposals, they assume the goal is optimizing the production of product instead of optimizing profitable customers.
The consequences are tragic. It reduces their senior executive’s interest in studies and experiments designed to identify new and unique customer value (as advocated in Eric Ries’ “The Lean Startup,” for example). It blinds them to the stupidity of unrelated, functionally oriented objectives in marketing selling, and servicing. It encourages them to think of the “sales process” as just another tactic for the sales department to tweak alongside sales training, territory realignment, compensation, and CRM. It prevents them from seeing sales and marketing as a a vital production system, where value must be studied and increased, and waste reduced.
Perhaps worst of all, this mentality can make it harder to “see” the value of layers of engineers, product managers, and market researchers focused on what potential customers might want at some time in the future. How can you prove the customer is “willing to pay for” our quality and other personnel responsible for solving technical, operational, or product problems that don’t happen to exist at the current moment? And, what is the value of these “relationships” the sales department is always talking about, anyway?
I often talk to incredibly talented salespeople whose companies are in the grip of this mentality. Making quota is not an option, regardless of whether the marketing department provides the sales opportunities, or the service department fixes the problems. They struggle as the business loses its ability to produce products the market wants. With resources and expertise stretched ever more tightly by the company’s masters even small disturbances, such as a customer’s non-standard requirement, relocating a production line, or installing a new accounting system, can reveal unseen weaknesses. Management gets blindsided, driving losses and unreasonable amounts of overtime to recover. No one can find the words to explain what is going on and why it should stop.
Why Cracking the Code Should Start Today
Ironically, we have all seen plenty sales processes emerge that disrupted markets all around us. Consider some historical examples: IBM dominated mainframe computers not because of the caliber of its machinery, but by the way it sold and serviced its customers. Walmart was a better place to buy things. Dominos disrupted the pizza delivery industry. Starbucks went from nowhere to dominating a commodity market by providing a store environment we didn’t know we needed.
Have you ever wondered what would happen in your industry if you reduced your customer’s buying process to a single mouse click? In the traditional, sedate retail market for books Amazon saw the potential and we all know the result. Now they are threatening Walmart and Target. Think about what Uber, Airbnb, and Yelp have accomplished.
Right now today, your customers are aggressively attempting to leverage the Internet to help them realize, prioritize, and solve their business problems. Now ask yourself, is there is there anyone in your company whose job is to make their life easier?
Instead, many B2B companies are sedately unconcerned that the marketing, the website, and the service department have different purposes than the sales department. They flog salespeople with sales training, contests, coaching, etc., as if individual contributions were the best way – indeed the only way – to improve results. They routinely expect the majority of sales hires to wash out.
Instead of searching for sales supermen and women (and offering to pay them exorbitantly), thee firms would do well to consider another thing Deming was famous for saying (Out of the Crisis, pg 101):
“I should estimate that in my experience most troubles and most possibilities for improvement add up to the proportions something like this: 94% belongs to the system (responsibility of management), 6% special.”
The principle that value is created when the customer takes an action enables marketing and sales work to be defined in ways concrete enough to be measured. Customer behaviors like visiting to your web pages, opting-in to your newsletters, opening your emails, asking for information or assistance, and requesting proposals become data. The flow of customers on their journey becomes visible. It can tell you what is working, and where the bottlenecks are. Value and waste are revealed.
Here are some typical results companies have achieved applying these principles:
Aligning the work of finding, winning, and keeping with the customer’s journey:
- A chemical company discontinued samples to low quality prospects. Sales rose 23%.
- A water filtration manufacturer’s new dealer process reversed a four year sales decline.
- An auto aftermarket firm became market leader, hitting its five year plan in four years.
Operationally defining sales qualification criteria:
- A company selling hospital respirators increased sales productivity 30% in six months.
- An accounting software company’s forecast accuracy exceeded 90%.
- Better prioritization of deal flow at a machine tool company increased margins by 1%
Now, more than ever your B2B company is being challenged. Your investors and owners want more productivity. Customers want better results. Company presidents and sales and marketing VPs are under intense pressure to improve. They need better data indicating what customers want. They need to locate the root causes of their problems. Some are realizing they cannot expect improvement to happen without installing a method that enables – indeed requires – it to happen.
The data and evidence needed are out there. It will be discovered by companies who are looking for it. Opportunities exist not just to improve sales and marketing productivity, but to innovate new business models, new industries, and new dynasties. Why wait for someone else to obsolete your business, when you can beat them to it?
The fact is, salespeople and marketers desperately want to improve. They are not really allergic to process at all. They ARE allergic to bad management. And bad management happens when businesspeople fail to apply good thinking principles.
The lean philosophy provides the methods for learning and for improving. It provides the kind of thinking that leads to new and better tools for creating customers. And as more companies follow this path, they may at last move toward the vision of the lean enterprise.
About the Author
More than twelve years ago, with deep experience in field sales, sales management, and sales training, Michael Webb set out to create a data-driven, process-based alternative to the offerings of typical sales training, sales consulting, and CRM companies. Since 2002, he has published numerous articles on ways B2B sales organizations can benefit from process improvement techniques, and consulted with companies like Burr Oak Tool, Danfoss, Wacker, Pentair, Tyco, and Thermo Fisher, as well as many smaller B2B companies.
His newest book, Sales Process Excellence earned the Shingo Research Award in 2015. Learn more at www.salesprocessexcellence.com.
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