Download THE POWER OF QUALITY THINKING IN SALES AND MARKETING

THE POWER OF QUALITY THINKING IN SALES AND MARKETING
Paul Selden, President
Performance Management, Inc.
(From Quality Progress Magazine, Fall 2000)
In the past decade a growing number of pioneers have explored out how quality thinking
can be applied to sales and marketing (1, 2, 3, 4). As applied to sales and marketing, quality
thinking holds the credo that in the long run, the most effective way to increase earnings is to
view revenue as the outcome of a process, and further, that process can be improved
systematically by applying principles of quality (see Note 1).
Older ways of looking at sales and marketing field put a straightjacket on our ability to
improve. The better we understand how quality thinking can help us break free of limitations
imposed by the old constructs, the better we will serve our customers, the more likely we will fulfill
the promises of quality programs such as "Six Sigma," and the more success our organizations
will achieve.
This article outlines a number of key differences between the old and new ways of
looking at sales and marketing, highlighting the concrete benefits of quality thinking. Part One
presents an example of how process mapping can help us analyze sales and marketing. Part
Two presents examples of how five firms applied quality thinking in their sales and marketing
processes to increase profitability and leadership in their field. We finish with three brief personal
examples. The conclusion is simple but powerful: because quality thinking offers a new and more
systematic approach to improvement, further investigation along these lines should pay great
dividends to businesses ready to extend their quality journey into the field of sales and marketing.
Copyright © 2000 This article originally appeared in Quality Progress Magazine
Part One: OLD VS. NEW WAYS TO MAP THE PROCESS
For many people, systematic thinking is thrown out the window when examining the world
of sales and marketing. In 1999 a popular observer of the sales scene, writing in a respected
publication (both shall remain nameless), wrote that what happens in sales is "magic." The
author's analysis of the process is that a potential customer appears. Then abacadabra-a sales
transaction is consummated-each one a surprising, mysterious, fleeting, and discrete event. We
may hope the customer buys again, but if they do not it is nothing to lose sleep over. There's
plenty more out there.
The old "Sales as Discrete" event view (hereby dubbed the SAD view of sales, tongue
firmly in cheek) is illustrated in Figure One. This approach tends to treat each transaction as the
result of a minor miracle.
Figure One. Old "Sales as Discrete" (SAD) View of Sales Process
By contrast, when quality thinking is applied to the field of sales and marketing, we are
likely to draw a high-level flow chart that looks more like Figure Two.
Copyright © 2000 This article originally appeared in Quality Progress Magazine
Figure Two. New View of Sales Process (High Level)
Figure Two illustrates the flow of much more tangible events across the functional
departments typically responsible for them in business to business selling. In smaller companies
or in consumer sales environments such as retailing, any given individual may play many roles,
but the flow itself is fairly similar. Marketing is typically responsible for attracting potential
customers. If Marketing is successful, Sales then meets the potential customer for the first time,
and an initial mutual review of customer needs and wants versus the supplier's general
capabilities takes place. If a general fit seems to make sense, a more careful needs analysis
takes place, often with specialists from Engineering (designers or other technical experts) and
Accounting (credit staff, pricing, etc.) working as part of a team coordinated by Sales. If the
project looks feasible, a proposal is created, with Sales typically presenting the proposal to the
prospective customer. If the deal is approved, Service (or shipping, production, installation, etc.)
Copyright © 2000 This article originally appeared in Quality Progress Magazine
provides the products and services and deals with complaints regarding the order. Marketing
observes what happens in the field to apply any lessons learned, and the cycle begins again.
Once a customer has a purchase history, responsibility for getting a customer to return and make
repeat purchases often shifts more directly to Sales.
Of course, the process flow for any given business can be different than the generic one
illustrated above.
Notice that, even though the process mapped out in Figure Two lends itself to systematic
analysis, it does not illustrate the customer's side of the flow. From a customer's perspective in
the business to business environment, the buying process often resembles Figure Three.
Figure Three. New View of Buying Process (High Level)
Like the selling process diagrammed from the supplier's point of view in Figure Two, the
buying process can be viewed as a sequence of steps. Marketing functions are constantly
Copyright © 2000 This article originally appeared in Quality Progress Magazine
assessing how the market is reacting to their own current offerings and formulating a "wish list" of
desired alterations to the current line up. At some point the desired changes are communicated
with other departments. Engineering works out specific ways that Marketing's ideas will impact
the current product or service. Internal Users of the proposed change (such as production,
service, and installation groups) comment on the quality of how well the previous approach
worked in practice, and pros and cons of the new idea. Purchasing reviews its current supply
base for potential sources of the product or service, and may help prepare and issue a formal
Request for Proposal (RFP). As proposals come in they may be reviewed by any or all of the
groups involved in issuing the RFP in the first place. If an agreement is reached, the goods and
services purchased are deployed and used, and Accounting pays the supplier. The cycle
continues as experience with the new approach is gained and fed back to the company's
departments in more or less formal ways. The role of Management is not shown in either
diagram, but Management obviously plays an important role. Managers may or may not possess
expertise in all the particular functional areas, but they often have financial and personnel
responsibilities, must juggle priorities across multiple projects, and are in a position to provide
their own inputs to the process or to alter the design of the process itself at various points.
Just as in Figure Two, Figure Three is a generic process map meant to convey the
general idea of how quality thinking can demystify a heretofore "mysterious" process. The
experienced reader will also understand that Figures Two and Three only begin to hint at how
easy it is for a myriad of inefficiencies, breakdowns, bottlenecks, delays, cost overruns, missed
communications, and quality problems of all sorts to play havoc throughout the cycle. Even these
simple process flowcharts underscore Dr. Deming's observation that process stability is rarely a
natural condition, and that to achieve it requires active management. (5)
Moments of Truth
Mapping one's own selling process helps to surface a host of opportunities to improve.
Quality thinking tells us, however, that we will not get very far by improving areas that do not
matter to the customer. Stated in more precise behavioral terms, what "matters" to the customer
are antecedent stimuli that prompt the customer to approach a supplier and enter into purchase
agreements, and the consequences of doing so at each step that reinforce (or weaken) this chain
of behaviors in the future. The map of the customer's buying process helps us see these
observable stimuli and events with more clarity.
A powerful strategy on the road to Six Sigma is to learn what is most important to the
customer at each point the supplier and customer come into contact during the buying cycle, and
Copyright © 2000 This article originally appeared in Quality Progress Magazine
to focus quality assurance and improvement efforts on those critical and highly visible "moments
of truth." A number of such moments of truth are shown in Figure Four.
Figure Four. Moments of Truth in the Buy-Sell Cycle
Supplier improvements that are not noticeable to the customer or that address the
customer's concerns of yesterday but not the needs of today or tomorrow means resources may
be spent on improving services and products without having any impact on overall sales volume
or market share. This point has not been lost on Jack Welch, who has stated, "The best Six
Sigma projects begin not inside the business but outside it, focused on answering the questionhow can we make the customer more competitive? … One thing we have discovered with
certainty is that anything we do that makes that customer more successful inevitably results in a
financial return for us." (6)
Part Two: FIVE DIMENSIONS OF SAD vs. QUALITY THINKING
The old-fashioned point of view puts the sales rep at the center of the universe. By
treating each sale as the result of mysterious forces, that is, by failing to distinguish special from
common causes, the old approach is constrained by its refusal to even attempt to distinguish the
two. Consequently, the old school usually seeks to improve sales chiefly by focusing on how reps
can increase their activities and close more deals. Unless we know what contributes to or hinders
a sale at each step throughout the entire process, of course the only approach is to do more of
whatever it is that you are doing, and hope it results in more output. Hence the "sage" advice to
new sales reps, "It's a numbers game." The old way of thinking is not entirely wrong, but it's like a
one-note musical instrument, much too limited.
Copyright © 2000 This article originally appeared in Quality Progress Magazine
Quality thinking leads us to is a much larger view of what generating revenue is all about
than the "sale-as-discrete-transaction" approach. By contrast, quality thinking considers the entire
set of variables that govern customer purchase behavior, separates special from common
causes, and seeks to improve the systems that deliver or affects these variables.
Consider how the "sale as discrete" transaction crowd treats five common business
process dimensions: quantity, money, time, quality, and variability. (Tongue in cheek, we will
continue to saddle the old view with the acronym, SAD.) As the examples show, the old, SAD
approach limits profitability in many ways.
Quantity
SAD Focuses On: How much time reps spend with customers (see Figure Five).
Figure Five. SAD vs. Quality Thinking: Dimension of Quantity
Typical Recommendation: "Increase customer face time and watch your sales soar."
How Limits Profitability: Two people are involved in this equation to increase face time. If the
customer does not see the value in longer or more frequent visits, this tactic is bound to add cost
unmatched by income.
Ignores: Engineering principle that the best alternative is the one that most economically satisfies
customer requirements.
By contrast, sales quality thinking understands that the best approach may be a
coordinated mix of techniques that cuts across traditional functional departments. In 1993 Victor
Hunter bought a floundering company called Team TBA, a distributor which sold Shell-branded
tires, batteries, and accessories to Shell service stations. Hunter immediately asked the service
station managers how THEY would like to receive information about new products and receive
service: by email, fax, phone, or in person? Many dealers chose to receive their information by
Copyright © 2000 This article originally appeared in Quality Progress Magazine
email, fax, or by phone. Hunter cut his field rep force from 83 people to 18, hired 6 outbound
telesales reps and 7 inbound customer service reps. The result? By honoring his customer's
preferences, dealer satisfaction increased, total sales expense dropped 65%, sales increased,
and Team TBA made its first profit in years. Amazingly, even though the number of face-to-face
contacts went down by 70%, dealers perceived that face-to-face contacts increased by 17%. (7)
Money
SAD Approach Focuses On: How much money can I make off this deal? (See Figure Six.)
Figure Six. SAD vs. Quality Thinking: Dimension of Money
Typical Recommendation: "See each customer as a bag of groceries."
How Limits Profitability: Sales reps are trained to screen out or "qualify" prospects with apparently
low initial purchasing power. Inevitably this means that customers with potentially larger follow-on
purchases or a stream of steady purchases will be repulsed, both literally and figuratively, by the
behavior of the sales rep. The words of the immortal W.C. Fields come to mind at this point, "Go
away son, you bother me."
Ignores: Economic principle that the lifetime value of a customer is often 10-20 times larger than
any single transaction. (8) (See Note 2.)
By contrast, sales process thinking shows up in the work of Dan Sewell, who calculated
that his lifetime customers will spend some $332,000 at his Dallas auto dealerships. Sewell
created systems that increase the likelihood that his customers will do just that, citing the work of
Deming, Taguchi, and Ohno among the chief positive influences on his own thinking, and
remarking, "Systems, not smiles," are the most important part of customer service. (9) At the time
he made that observation, his reps were selling 15 cars per month, nearly twice the national
average. Sewell's techniques for achieving this goal are spelled out in his highly readable book.
Copyright © 2000 This article originally appeared in Quality Progress Magazine
In addition to familiar techniques, such as using surveys to better understand customer opinions
and ongoing employee training in customer service, Sewell has instituted quality oriented
measurements (for example, percent of retained customers) to help guide an explicit cycle for
improvement and support a more fact-based approach to management.
Time
SAD Focuses On: Techniques to create quick close (see Figure Seven).
Figure Seven. SAD vs. Process Thinking: Dimension of Time
Typical Recommendation: Verbal tricks, such as "Get the prospect to say YES seven times, and
they'll say YES to your offer."
How Limits Profitability: Customers buying something they are not satisfied with may later return
the purchase and/or refuse to make or defer making similar purchases in the future.
Ignores: Psychological principle that the consequences following an individual's action govern the
probability that their behavior will occur again in the future. (10)
By contrast, sales quality thinking shows up in the action of legendary retailer Nordstrom,
whose salespeople will go to just about any lengths to make sure customers are treated like
honored friends and family before, during, and after they purchase an item. "Top associates don't
look for the one spectacular sale that will make their day. Instead, they are committed to planting
the seed for an ongoing business relationship and doing what's necessary to nurture that seed.
… Joe Dover finds he 'hooks' the customer when he calls him back a few days later to ask how
the shoes are working out. 'Ninety percent of the time, they're so stunned that you called, they
remember you,' Dover attest(s)." The customers of Nordstrom are delighted; no doubt Nordstrom
is too, with the huge value of free publicity it receives as a result! (11) Where product quality
between competitors is at parity, good service after the sale is critical.
Copyright © 2000 This article originally appeared in Quality Progress Magazine
Quality
SAD Focuses On: Sales personnel best practices (see Figure Eight).
Figure Eight. SAD vs. Process Thinking: Dimension of Quality
Typical Recommendation: "Watch your best reps in action, ask them why they're successful, and
teach what they do to the rest."
How Limits Profitability: Spending money to train all reps to follow "best practices" may actually
decrease profits if the reps' behavior is not the main reason sales are lower than desired.
Ignores: Process principle that a company's ability to generate revenue is limited by its greatest
constraint, which may not have anything to do with the sales reps themselves. (12)
By contrast, sales quality thinking may lead companies to bypass their reps entirely. This
type of creative thinking led Vaughan's Seed Company (a division of Swiss giant Novartis) to give
their biggest customers computers, modems, and the ability to directly place their own orders
through Vaughan's on-line catalog. Millions of dollars of orders now flow in untouched by the
traditional sales rep. (13) Of course, this is the same technique that Dell Computer uses in their
hugely successful internet-based PC catalog. Yet another example comes from Arby's and
MacDonald's restaurant chains, which are testing the use of self-serve ordering devices. The
advantages to customers are many: the devices can be made multi-lingual, can be stationed in
play areas so that parents supervising their children don't have to leave them to place and order,
and may provide a more pleasant ordering experience. To the business manager, hard to find
staff becomes less of an issue, errors in making change are reduced, and, interestingly enough,
some tests showed that the average order size actually increased! (14)
Variability
Copyright © 2000 This article originally appeared in Quality Progress Magazine
SAD Focuses On: The sales reps' responsibility in meeting their "plan" or quota (see Figure
Nine).
Figure Nine. SAD vs. Process Thinking: Dimension of Variability
Traditional Recommendation: "If you aren't meeting your numbers, you better have a darn good
reason."
How Limits Profitability: By confusing common and special causes of, extra resources are spent
in unnecessary troubleshooting; overall variability is actually increased; and, personnel are
stressed, which increases costs due to unwarranted turnover.
Ignores: Quality engineering principle that, as long as the process is operating in a state of
statistical control, failure to meet specifications is almost certainly the result of management's
design of the process itself or the nature of the inputs it receives, and not due to "operator error."
By contrast, sales process thinking shows up in the actions of progressive companies
such as Hewlett-Packard. Throughout the '80's HP began to understand, that, if their reps have
their quota raised and nothing else changed, a steep price would be paid in human terms. HP
realized that lost sleep and broken marriages do not make for increased productivity in the long
run. It embarked on a series of management initiated actions (such as increasing emphasis on
company sponsored customer education seminars), structural changes (such as adding a tech
support group to assist the sales reps), and process improvements (such as defining their sales
process in the first place(!)). The net effect was that the average size of sale increased from
approximately $100,000 in 1986 to $750,000 by 1995. (15)
Personal Evidence of Effectiveness
For a quality practitioner, perhaps the most compelling reason to use a new approach is
whether it works when used first hand. The best personal evidence I can offer for these
Copyright © 2000 This article originally appeared in Quality Progress Magazine
techniques is that companies I've worked for used them, and they work. In one sales training
project for 10,000 route salespeople at Frito-Lay, the team mapped out the company's route sales
process. We then listed and fleshed out the cause and effect relationships between every failure
mode the team could think of, developing response plans for each. The training department then
rolled out the training program. Their national chief competitor, a well-funded company with a
strong product, left the market completely. As a sales trainer and one of the developers of GE
Capital's "Sales Green Belt" training program, I can vouch for the fact that it incorporates quality
thinking throughout, based on Jack Welch's initiative to aim for Six Sigma levels of quality
throughout the corporation. GE Capital's stellar performance over the past few years is a matter
of public record. These techniques work so well that we use them in our own company. In human
terms, their objective nature helps us manage by facts, drive out fear, and communicate better.
They have provided hundreds of thousands of dollars of benefits in cost savings, in revenue
growth, and in the long-term satisfaction of our current clients. Though worthy of contemplation,
admiration, and respect, sales quality thinking is a tool for better decision making and action that
works very well indeed when applied on a practical day-to-day basis.
CONCLUSION: GREAT OPPORTUNITIES AWAIT NEW EXPLORERS
For now we know of no school that grants diplomas in quality thinking as applied to sales
and marketing. Many of the implications of the principles cited above, and their application to
selling process improvement and customer behavior, are unexplored. Rather than deter us in our
quest to learn more, it should excite us about the prospects to come. As Bill Latzko recently
observed, "Sales process improvement is the great opportunity for quality in the 21 st century"
(personal conversation with author, December 1998). One author has attempted to quantify this
opportunity, suggesting that in financial terms it "exceeds the [current] profit margin of many
businesses." (16)
Prior to their first flight at Kitty Hawk, the Wright Brothers had a choice. They could
continue to strap on wings fashioned according to the latest goofy fad and jump off tall buildings
with fingers crossed. They didn't choose that path. Undaunted by the amount of study required,
they systematically surfaced, tested, and applied the fundamental aeronautic principles. The rest,
as they say, is history (see Note 3).
Sales and marketing professionals today are faced with a similar choice. Quality thinking
connects its practitioners to a huge body of knowledge, proven concepts, and time-tested tools
for improving any process. Instead of a disconnected set of ideas that jump up unexpectedly in
the form of fad upon fad, quality thinking offers a view that can launch sales and marketing into a
Copyright © 2000 This article originally appeared in Quality Progress Magazine
new era of systematic, long-term improvement. Since the quality revolution in sales and
marketing is still in its infancy, early pioneers are guaranteed a big head start. Those who
harness the power of quality thinking while the field is still young should enjoy competitive
advantages for years to come.
Notes
1. For simplicity, this article treats the terms "process" and "system" as synonyms.
2. This principle presents an interesting opposite side of the coin to the quality principle that the
cost of owning a product over its lifetime is usually more than the initial price of purchase.
3. Ironically, in 1901 Wilbur Wright felt he would not succeed at flight during his lifetime, declaring
that, "Not within a thousand years would man ever fly!" Though discouraged that "most of the
supposedly scientific information available was worthless," the Wright Brothers doggedly
pioneered their own research into the fundamental principles. On December 17, 1903, just two
years after expressing his deep frustration, the Wright brothers flew at Kitty Hawk.
References
1. Frederick F. Reichheld and W. Earl Sasser, "Zero defections: Quality comes to customer
service," Harvard Business Review, September/October 1990, pp. 105-111.
2. Paul Selden, Sales Process Engineering: A Personal Workshop (Milwaukee, WI: ASQ Quality
Press, 1997).
3. George A. Smith, Jr., Sales Quality Audit (Milwaukee, WI: ASQ Quality Press, 1995).
4. Cas Welch and Pete Geissler, Applying Total Quality to Sales (Milwaukee, WI: ASQ Quality
Press, 1995).
5. W. Edwards Deming, Out of the Crisis (Cambridge, MA: MIT Center for Advanced Engineering
Study, 1986).
6. John F. Welch, "A Learning Company and Its Quest for Six Sigma" (Presented at the General
Electric Company 1997 Annual Meeting, Charlotte, NC, April 23, 1997).
7. Victor Hunter. 1999. "Critical Measures That Drive Success." Presentation at the Customer
Relationship Management Conference, 23 February, Chicago Illinois.
8. Don Peppers and Martha Rogers, The One to One Future: Building Customer Relationships
One Customer at a Time (New York: Doubleday, 1993).
9. Dan Sewell and Paul B. Brown, Customers For Life (New York: Pocket Books, 1991 and
1998).
10. B.F. Skinner, Science and Human Behavior (New York: The Macmillan Company, 1953).
Copyright © 2000 This article originally appeared in Quality Progress Magazine
11. Robert Spector and Patrick McCarthy, The Nordstrom Way: Inside America's #1 Customer
Service Company (New York: John Wiley & Sons, Inc., 1995.
12. Eliyahu Goldratt, It's Not Luck (Great Barrington, MA: North River Press, 1994).
13. Frank Smith. 1996. "How Will We Know It's Working?" Presentation at the Sales Automation
Association 6th Annual User's Conference, 13 June, Chicago, Illinois.
14. Richard Gibson. 1999. "Machine Takes Orders In Test By McDonald's," Wall Street Journal,
11 August, B1.
15. Barry Trailer and Joseph Vavricka. 1999. "Bringing It All Together: OMS, Process, Metrics
and Training." Presentation at the Customer Relationship Management Conference, 26 February,
Chicago Illinois.
16. Paul Selden, "Sales Process Engineering: An Emerging Quality Discipline," Quality Progress,
December 1998, pp. 59-63.
About the Author
Paul Selden ([email protected]) is chairman of the international training and
consulting firm, Performance Management, Inc., a four-time recipient of Ford Motor Company's
Marketing Excellence award for professional services, and president of The Paul Selden
Companies, a firm specializing in sales process analysis, improvement, and training. Selden was
recently named one of the "10 Most Influential People in Customer Relationship Management" by
Sales & Marketing Automation magazine. He holds a Ph.D. in behavioral psychology from
Western Michigan University and is an ASQ certified quality engineer.
Copyright © 2000 This article originally appeared in Quality Progress Magazine