Lean Sales and Marketing approach to Productivity 2

Deming always instructed us that if we improved quality, productivity increased. The economist’s definition of productivity is

Productivity = Output / Input

If quality is poor, then the output will be less to the extent that bad-quality items exist. The bad-quality items are still around and must be scrapped or reworked. The cost of this activity is in the input. When output is low and input is high, productivity is very low. Improve quality and your reverse this situation. Output goes up; input goes down and productivity shoots up. Improving quality is a cheaper way to increase productivity than alternative methods such as automation. With automation, output goes up but so does input to pay for the automation. If productivity goes up at all, it increases slowly.

How much of sales and marketing efforts are spent on raising the input? How much money is spent on automation of low-quality leads? How many of these leads end up being reworked or scrapped? What have you done to increase the productivity of your sales and marketing?

If most of us think about this, it is the message that we hear repeatedly from our salespeople, it is the quality of the leads. So how do we improve, more measurements?

Dr. Deming would add that though we still needed inspections (measurements), we should not depend on them. Dr. Deming did not say this; I believe it is attributed to Dr. Harold Dodge that you cannot inspect quality into a product. Quality must be built into the product. If you depend on inspection to achieve quality, you fail to look at the process to improve it. Dr. Deming added, “Give people a chance to understand the system. Then we won’t need as much inspection.”

In my blog post, Sales Process Engineering is not Lean Sales and Marketing, I discuss the marketing funnel and managing the flow-through stage gates as an acceptable way of improving performance in a sales and marketing process. Under this system, there are little incentives to improve quality. Instead, it is how do we raise the number, the input to each stage? Our methods for improvement are typically more and more automation. Case in point auto dialers so we can increase the number of calls in a given time period. We also try to manage the sales process through what I would call “optimistic” planning. It is just a numbers game and as we increase low quality input, our productivity goes down and our output follows, just do the math.

What is the alternative? First, we must improve the sales conversation which is, in essence, our value proposition. This means that we need to stop manipulating the customer through a sales funnel. This type of linear planning only increases the risk for a customer to engage in an inappropriate course of action. It also prevents us from learning how to improve our value proposition. Reflection is a key lean strategy. I have discussed this numerous times, and in this video explain Hansei and why we must learn how to disagree with a customer.

 

This may be taking the point further than is needed. However, without reflection and the opportunity to understand the customer (system) and how our value proposition affects them little success will be achieved in sales and marketing productivity. There are numerous ways to address sales productivity. However, automation and spending on the input, though the most common are seldom the most productive.

P.S. I encourage the use of USA principle of Understand, Simplify and then Automate.

Productivity paragraph paraphrased from the book Four Days with Dr. Deming: A Strategy for Modern Methods of Management.