How to Apply Six Sigma Principles to Enhance Sales
Six Sigma is a structured, disciplined and rigorous approach to process improvement. Learn how the concept can be applied to sales processes.
Editor’s note — Dave Varner has worked in sales training for 20 years, but that’s not where he earned his stripes. He started out in the trenches, as a robotic systems sales engineer, calling on companies in the machine tool and manufacturing industries.
He changed careers to work for a major national sales training organization before forming The Millau Group. His engineering and manufacturing mindset drew him to looking at ways to apply Six Sigma principles to selling.
It starts here:
I noticed organizations continually invest time and money to improve sales team effectiveness, but which one? There are hundreds of sales training companies offering thousands of programs in all aspects of selling: call planning, presenting, negotiating, managing key accounts, questioning and more.
I concluded they didn’t scratch the itch. There had to be a better, less confusing and practical way to improve sales training.
I reckoned they’re missing the boat. What these organizations are often neglecting something as fundamental as basic selling skills. My engineering “genes” kicked in and determined all these companies needed is a systematic method to continually improve their sales process.
It was clear that they don’t have a sales “process,” and identifying it as a problem is the first step toward fixing it.
Looking back at my personal Six Sigma program I realized that if those principles work in manufacturing, the same systematic approach to continuously and intelligently improve manufacturing should also work in a sales process. It would increase sales, decrease costs and improve productivity.
What Is Six Sigma?
Everyone understands the term “sales process.” Few however, can actually describe their sales process from a Six Sigma perspective. I want sales executives to get back to the basics.
Six Sigma is a structured, disciplined and rigorous approach to process improvement. Six Sigma’s goal is to increase profits by eliminating variability, defects and waste. Although Six Sigma is typically thought of in a manufacturing environment, its principals apply to all processes — including sales processes.
Here’s how Six Sigma applies to selling:
Let’s start with this question, “How well does your sales process meet your expectations relative to variability, defects and waste?” Variability by definition lacks a consistent, systematic approach to selling. I see this all the time, which results in essentially every member of your sales team pursuing opportunities differently. How would that work in the shipping department?
Do you have variability in execution?
Here’s a simple test: Look at an active sales opportunity where the outcome is in doubt. This happens all the time. Then write it up as a case study and pass it out to your sales team. Ask, “What would you do next to move the sale forward toward a close?” How many answers would you expect to get? You know the answer.
Defects are lost sales, pure and simple. The Millau Group studies show the average closing rate across all industries is approximately 25%. What is your closing rate? A 25% closing rate is a 75% defect rate. Is that acceptable anywhere in your company? So why do we accept it in sales?
Resources are wasted when they’re not invested where they will produce the greatest return. What percent of your resources are currently being wasted?
The math is painfully simple. You have a 75% losing rate. Do you see your company in the story so far? If you say “Yes,” Six Sigma will have a significant positive impact on your sales results.
5 Key Elements to Six Sigma
There are five key elements to Six Sigma — Define, Measure, Analyze, Improve and Control. Incorporating these elements into your sales process will produce immediate, measurable results.
First, what needs improving?
Identify the problem you want to solve. While Variability, Defects and Waste are all critical, if you solve the Variability problem, Defects and Waste will also be positively impacted. For the sake of this discussion, let’s focus on Variability in execution as the problem we want to solve.
Now that we’ve isolated Variability as the problem we want to solve, we need to use facts and data to identify the root cause. If the execution of your sales process is based on data/facts and not gut feelings or emotions, gathering the data will be straight forward.
If, however, your sales process is not based on data, this will not be possible. The good news is that you’ve identified a problem that you can now solve.
An example of measurable data is how many of your pursuits are a good fit for your company, i.e. in your sweet spot? If you have specific criteria as to what makes a good fit and everyone in the sales team utilizes the criteria, it’s very straight forward to identify what percent of pursuits are a good fit.
If your sales process does not specifically state the criteria and how to use them to establish fit, a significant number of opportunities your salespeople pursue will not be a good fit; defects and waste will be high.
Based on the outcome of the Measure phase in our example, we have identified that salespeople do not ensure that customers are a good fit for your organization prior to investing company resources.
Analyze the situation by using the data to determine the root cause(s) of the problem that’s inhibiting your performance. Why are they not doing this? If you were to ask your sales team, “What criteria do you use to determine if a customer is a good fit?”
How many answers would you get? If it’s multiple, you’re close to discovering the root cause of the problem. Often the root cause can be traced to the fact that they don’t know what makes a good fit, or they do not consistently and systematically filter their pursuits based on fit.
With the root cause identified, develop potential solutions. For example, it can be as simple as identifying what makes a good fit, communicating it to the sales team and ensuring compliance. Test solutions to validate your approach; use data when possible, not emotions or gut feelings. Test with a control group of salespeople to verify the impact of your solution.
Finally, implement your solution, use data to determine the extent of the improvement and to ensure gains are not lost over time. This is a critical stage; there is a tendency to implement the solution and stop. The idea is to leverage the key elements of Six Sigma to drive continuous process improvement; it’s not a one-time event.
I detail this in a new book, “The Sales Checklist, to be released later this year. At first glance the book will seem almost ridiculous in its simplicity compared to all other conventional sales training available and some might think it’s a little crazy to those who have spent years investing in, or selling, the latest sales training on the market.
Rest assured, there is sophistication in simplicity. It has taken three years to simplify the checklist.
Dave Varner is President & Founder of The Millau Group, a sales training and consulting organization.
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