How could a systematic approach like Lean Six Sigma be applied to sales management, sales being more an art than a science? The results are not directly causal, rather chaotic, and the masters of selling are very seldom nothing less of artists.
Many of the customers I have met shrug at the word “process”. To many an SME entrepreneur process is synonymous to bureaucracy that slows business down and decreases profits. Undoubtedly a documented and enforced process limits the freedoms of the entrepreneur. What is not so blatantly obvious is that a good process limits the possibilities to waste time on errors.
Sales, like any activity that goes on in a firm is a process. The sales person contacts old and new customers using phone and various messaging systems. Customers are visited, quotations made and orders received. Complaints and returns are handled and the ongoing debate with production and R&D is taking its time. In project business the sales person may also take care of the project management of the sold project. Add a little bit of resource- and communication problems and chaos lurks behind the door. Adding resources to the sales team is a solution that will hide, not solve the problems. One of the key paradigms of Lean is to reduce resources to make problems visible. The corollary is to add resources to hide the problems.
This is where Lean Six Sigma comes in to the sales management process. From a management point of view the value add a sales person is supposed to bring is sales margin and turnover. Everything else is non value added waste of time, defined as Muda in Lean Six Sigma. Let’s approach the sales process with the DMAIC methodology.
Define the scope
Let’s start by defining what is expected of the sales process. Write down what the customer, management and owners expect. What is the purpose of the sales process? What are the critical outputs of the sales process? Are there differences to the scope of the entire company and the sales process?
Measure and make sure you measure right
Typically sales results such as sales margin and turnover are interesting to the management. Especially if a “Management by objectives” paradigm is in use the actual daily work of the sales person gets a less attention. Measuring results gives very little information about what actually is happening in sales. Is the salesperson really visiting customers? What happens after a quotation is sent, an offer given or price indicated? Is the customer engaged in a deal negotiation after the quoting or is she forgotten. Measuring turnover and sales margin gives very little or no information what really is happening in the sales process. If we want to improve sales we need to know how it works and what is done. Getting exact information out from a sales person is a challenge especially if the situation is chaotic.
To make wise decisions we need data about the sales process that we can trust. To achieve this an X-Y analysis, made to identify the key inputs, gives us a list of good quantifiable measurement points that can be numerically and statistically analysed. Depending on the industry and company interesting X’s or measurement points could be: number of customer visits per week, number of sales calls after offer is sent, number of hours spent on project management, R&D or waiting for someone, hours or km or miles spent on the road. A measurement system analysis MSA should be done ensure the data that is extracted is precise and accurate.
Analyse the data from the measurements
After the measurement system is set up and the validity of the measurement data is established it is time to analyse the current state. A good rule of thumb is that a minimum of 30 measurements or samples should be made on each input before any statistically reliable conclusions can be made. Range charts are a good way to analyse the sales process. Very quickly we will see if the customers are visited and if enough time is spent with the customer after the quotation and offer is sent. The measurement data is very likely a surprise, perhaps even a shock to both the sales persons and the management. The perception management and the sales persons had on where and how time and resources were spent will most likely differ from what actually is happening. Here the Measurement System Analysis performed in the previous phase comes in handy as the measurement data and results will be challenged if they do not confirm the generally assumed and expected working model.
Improve the way you work
With the measurement data at hand it is time to start the improvement work. A good Kaizen team includes people from sales, R&D, and production and a Lean Six Sigma black belt to facilitate the work. Based upon the analysis results and Lean tools solve the identified problems one by one. An example could be to increase sales calls by reserving a regular time every day for calling customers with quotes older than 2 weeks. Results are documented using Deployment Flow Charts DFC or process maps and put on display after management review.
Control the improvements to make them permanent
After the Improve phase it is important to run the measurements once again to confirm the improvement really has happened. It is good management practice to bind the Kaizen team’s and its’ facilitator’s bonuses to the measured improvement.
Sadly more often than not a process or company returns back to old habits after the consultant leaves or latest when the next crisis occurs. As a result of this the results of the improvement work are lost and the work done has turned into waste. Luckily Lean Six Sigma provides tools to make the changes permanent. The Kaizen team selects the key measurements to be followed after the project is finished, creates an Out of Control Action Plan OCAP and a Response Plan RP on what actions need to be taken when the changes are in risk of being reversed. With the help of the OCAP and RP the management of the company can ride through the change resistance following the announcement of the change. With careful management and lean work, the new improved state will become the new normal.
Despite sales being an art, it is a process that can be Defined, Measured, Analysed, Improved and Controlled. Lean Six Sigma methods are well suitable to improve the daily work of the sales manager and his team in a measurable and sustainable manner.