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Apr

Lean Sales and Marketing Roles

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In Lean Marketing, there are three primary roles for the development and management of Lean Sales and Marketing process. It is the Value Stream Manager, the Team and the Team Coordinator. The roles and responsibilities are similar to the three roles used in Scrum which are the Product Owner, the Team and The Scrum Master.

Quick overview of the Scrum roles:

The Product Owner represents the stakeholders and the business.
The Team is a cross-functional group of about 7 people who do the actual design, implementation, testing, etc.
The ScrumMaster maintains the processes in lieu of a project manager.

Quick overview of the Lean Sales and Marketing System:

The Value Stream Manager (VSM) represents the product/service markets and the business.
The Sales and Marketing Team (Team) is a cross-functional group whose number and expertise is derived from the decision making path of the customer. This Team does the actual sales; providing content, technical functions, trials, testing, etc.
The Team Coordinator maintains the integrity of the processes through coaching and predefined control points.

The Value Stream Manager is responsible for maximizing return on investment (ROI) through his particular Value Stream of Customer Identification, Customer Value, Customer Acquisition, Customer Retention and Customer Monitoring. (Value Stream Mapping Customer Value). He translates this Value Stream and assigns it in conjunction with the Team Coordinator to particular Teams similar to a typical Sales Manager would to his Salespeople. The VSM and the Team Coordinator will routinely evaluate the outcomes to determine best fit. The VSM may work with Multiple Teams for his Value Stream. The VSM has profit and loss responsibility for the product/service. The VSM represents the Voice of the Market which may be thousands of individual clients, distributors, brokers and agents. As with Scrum’s Product Owner, the VSM has the final authority.

The Sales and Marketing Team is first and foremost the listening post for the customer (prospect) that enables them to provide the customer with the information, technology, and support that is required. This is done through a PDCA/SDCA Cycle that depending on the complexity may constitute an entire sales cycle or just a certain portion of the customer’s decision making process. The team is cross-functional and includes the expertise required to fulfill the requirements of the customer through his decision making process. It may include but not limited to salespeople, marketing, IT, service, etc. It is self-managing with a very high degree of autonomy and accountability. The team decides what to do, what commitments to make and how best to accomplish it. Stable teams are important for internal productivity but also since they are in direct contact with the customer. When these teams only serve part of the decision making process of the customer, the Team Coordinator becomes directly involved during the handoffs form one team to another.

The Team Coordinator serves very similar to the ScrumMaster. The TC helps the Team learn and apply PDCA. The TC does whatever is in their power to help the team be successful. The TC is not the manager of the team but instead serves the team, minimizing distractions, educating them on the iterative process of PDCA, Knowledge Creation and Agile methods. The TC and the VSM must be different people. As the TC runs interference for the Team there may be some priority balancing that is required between the VSM and the TC. It is imperative that the TC creates and maintains a manageable flow inside the Team. If the Team runs into an impediment it is the TC job to find the resources needed to remove it. The TC will also monitor the Team flow through the use of established control points created within the cycle.

The confusing part for most organizations is in defining the role of the team. Look for an upcoming blog on that particular subject.

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Categories : Driving Market Share, Marketing Coach, Marketing with Lean, Sales, Six sigma marketing

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Feb

How do I determine which markets to go into?

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The starting point for identifying product/markets is to focus on first, the markets. There are two criteria that we use in Lean Marketing to assess or to evaluate markets.

The first one has to do with how attractive is that market?

Attractive of markets could be defined in terms of the market growth rate. Is it a growing market or is it a market that is in decline? For most purposes we probably want to target markets that are growing as opposed to in decline. We may want to look at the competitive intensity of the market. Is it a highly competitive market or is it more of a blue ocean type of market? One where there are few competitors or preferably even none.

What is the revenue flows within that market? What’s our market share position? Who are the dominant players? There’s any number of different criteria that we can use to assess the attractiveness of a particular market.

The second criterion is the ability to compete.

Now we take a look at how capable are we in competing within a potential market. That goes back to this concept of what are our competencies?

And one of the things we may want to look at from competitive standpoint is what the qualifiers are? What are the must haves? Do we qualify for that particular product/market or are we going to have to invest additional resources to qualify?

Second, do we have a product line that has both the width and depth of the market? Can we successfully provide product and product support? That’s a very important point. Do we have the product support systems to support the product lines once we are marketing there?

What about our distribution system? Do we have the right network setup? Are the dealers that we have adequate or the brokers, the agents, the middlemen, that type of thing? And again, do we have the right personnel?

So by matching the attractiveness of the market with our ability to compete, we can then begin to prioritize different potential markets. Clearly we want to target those markets that are highly attractive and for which we have a very strong ability to compete. Then we want to target attractive markets that we might have a moderate ability to compete in. We also want to be able to ask the question, what do we need to do to improve our capacity to compete with any of those markets?

This is an approach that is good not only for those companies that are embarked on a marketing development strategy where they’re looking to enter new markets and they’re trying to assess the efficacy of any market, but it’s also a good thing for companies to do on an audit basis of what their current markets are because a lot of those companies have inherited markets and been serving them.

From time to time markets change, their attractiveness will change, the market growth rate may drop, and the competitive intensity may have increased significantly, the revenue flows have declined. So it’s a good opportunity for the company to take a look at what they are currently doing and then make the assessment as to whether or not those markets are the right ones for the company to be in.

Leaders who take the time to really focus and understand their markets are super tough competitors. That’s why they’re leaders and not followers.

The following was derived from a conversation between Dr. Reidenbach creator of the 5Cs of Driving Market Share and me.

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Feb

Is your price worth it? And why you settle for less!

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How many times have you been approached to match a price after working diligently to provide a solution? You may have incurred design, engineering, sourcing and/or many other soft assets in the engagement that are typically built into the price of the product. You lose this job many times because a competitor has swooped in and offered a “deal” that the customer can’t refuse. Or was it that the customer never perceived enough value to those soft assets?

Following is a guest blog post from Dr. Eric Reidenbach on Value Based Pricing. Dr. Reidenbach is the Director of the Six Sigma Marketing Institute, the leading organization and authority of Six Sigma Marketing. His consulting services are absolutely unique are designed to help you grow market share and top line revenues. He understands the meaning of value.

Value Based Pricing

Markets, when freely operating, do many things. One of the things that they do, and do well, is to operate as a pricing mechanism. This will not come as a blinding insight to many economists, but it will shed some light on how companies need to move forward strategically. Within this basic function as a pricing mechanism is a host of implications for how organizations need to manage their product lines.

Companies put their products or services on the market for what they think are fair and competitive prices. This initial offering is often based on costs and other financial considerations. For example, they might use a break even pricing system or one based on a payback period. This can be made even more sophisticated by using a discounted cash flow model. Once on the market, the real pricing process begins. Potential users asses and evaluate the offering in terms of its quality and then ask a fundamental question, “Is it worth it?” Failure to pass the worth it test means that end users will not buy the product or service. This poses two options for the company.

Option one is to reduce their price and make it more consonant with the quality of the product or service. Buyers are telling them that the quality of their product does not merit the price that they are charging. Reducing the price brings the calculation of quality and price into a more acceptable outcome.

Option two is to enhance the quality of their product or service offering. This is a longer tem option but one that is strategically more sound. Quality enhancements, if done effectively and efficiently, allow the company to either keep their original price or offer the product service at a higher price.

Knowledgeable readers will understand that I am really talking about a value based pricing approach. Value is the relationship between the quality of the product or service and price that the company is asking for it. This also means that many companies that think they have a pricing problem really have a value problem.

Value problems can be hidden by multistage distribution systems where products move from their point of production to their point of consumption. As long as each stage of the distribution process is adding value, real value as determined by the end user, price sensitivity is less of an issue. This suggests that manufacturers should think of their distribution system as a value delivery system with each member of the system understanding their role in value delivery. Many models that define value show that the factors that drive quality are not necessarily product related but rather related to services that are provided by the other members of the value delivery system. This poses a real challenge to those companies that are product focused and believe that all quality and value is resident within the product itself. In these product focused companies quality initiatives may impact only a small portion of how the market defines quality and value. These organizations must learn to look beyond the manufacturing floor and embrace a much larger and more powerful definition of value. Changing this thinking and making the organization more market focused is the long term solution.

Old methods of pricing are more workable in familiar domestic markets. Globalization will require organizations to understand the quality price calculation in terms of how less familiar and foreign markets define value. Pricing is inextricably related to value and failure to understand value will make market penetration difficult at best and impossible at worse.

Since the publication of Listening to the Voice of the Market, Dr. Reidenbach has published Six Sigma Marketing, created the Six Sigma Marketing Institute and has launched the product, The 5Cs of Driving Market Share. The power of Six Sigma Marketing is illustrated and embodied at www.drivingmarketshare.com where you can be introduced on using Value to Drive Market Share.

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Jan

Have you been told to increase sales this year?

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Increasing or sometimes just maintaining sales is a major challenge for a company these days. Many companies will receive an edict that we want to increase sales 10% this year. But really how are you going to do that? The mechanics are one thing. Gaining consensus and understanding is a totally different thing and maybe your biggest stumbling block.

The central theme of 5Cs of Driving Market Share is to provide a direct line of sight to customer value. That line of sight is actually from the customer’s point of view. I am going to walk you through the program mostly for the reason to explain the diagram I have included for you to demonstrate how and where you increase in market share will come from.

The first things we do in the program is identify your customer buying segments, the product/market relationship that exist and where you most profitable market opportunities are. It is based on not only how your customer defines value but also how the market defines value. We take this knowledge and identify competitive value and performance gaps that enable you to create and implement the processes that we think are needed to reach the targeted goal. This is basically the Plan and Do phase of a PDCA cycle.

After implementing the initial efforts, we Check (phase) those efforts to against the targeted gap. If they have been met, we continue to the Act Stage and standardize the process and move forward. If they are not, we return to the Plan phase and start the cycle over.

I know this sounds simple and to a certain extent it is. Most of us complicate much of it with shortcuts and a lack of true understanding of customer value. We just don’t take the time in the planning phase that is required. However, I want to use this explanation to discuss what is needed in gaining market share. Simple or not, few companies can really define correctly how the customer and market views the value that they add and are willing to spend money for.

Most companies seldom have one value stream. They will have numerous ones based on Customer Segments and product/markets. After analysis many times these segments and product/markets are reduced to a critical few. We don’t walk away from all the others but our focus and energies go towards what is paying the bills now and in the future.

These models can be used to determine quite easily what efforts and budgets must be created to increase market share. For example, if we have one very significant product (service)/market and our best opportunities are in that area, we may dedicate 50, 60 percent of our marketing budget and resources to it.

In the picture I show that the gap we are trying to increase or maintain is 1 million dollars. Through analysis utilizing tools opportunity and loyalty matrices for example we divide the dollars up between customer retention and acquisition. We then take a look at dividing that again by utilizing your existing value proposition and maybe a new product innovation proposition. We can further divide these up as we dig deeper into our customer segments or product/market. Just utilizing a very simplified value stream such as this it starts giving you a feel for how you will increase sales. As you drill down through these various stages, you also become much more targeted and focused on what your customer values.

As you drill down and segment your list don’t just think about percentages of budgets and resources. Using real $ if you can versus %. It not only adds more meaning to the conversation but when you start looking at your expectations from customer segments and the value proposition you are offering them, well are you being realistic?

This is where continuous improvement efforts, PDCA and A3 problem solving come to the forefront. Starting A3 before you drill down into a very tight cycle is useless. Your efforts will not be defined enough to pay off.

Some Potential A3’s that may come out of this exercise would be: