How to Apply Six Sigma to Sales

If someone were to say the words, “Six Sigma,” what would come to mind? Beyond the inevitable quip that it’s “just Greek to me,” you’d probably think of manufacturing process and quality improvement. That’s because Six Sigma has long been linked with reducing costs, improving product quality, and increasing productivity in factories around the world. But the same principles can be applied to sales and marketing organizations, asserts Michael Webb, founder of Sales Performance Consultants, Inc., and author of Sales and Marketing the Six Sigma Way (Kaplan, 2006). Sales, he points out, is a process – a series of activities designed to produce specific results. And process thinking, which enables you to measure activities and results and to analyze them for causes and effects, is the foundation for Six Sigma. In his book, Webb outlines the five steps of Six Sigma (called DMAIC) and shows how they apply to sales:

Step #1: Define the problem and the process precisely, whether you are examining the entire process (i.e., the complete sales process) or only one part of it (i.e., the cold calling process). By identifying and clearly defining the process that contains the problem, you ensure the problem is real, solvable, important to the right people (i.e., your customers and stakeholders want it solved), that the data needed to solve the problem exists or can be developed, and that the resources to do the job exist.

Step #2: Measure the activities and the results to understand the process. For instance, say your sales process relies heavily on cold calling, but you aren’t getting the results you need. In this step, you would document everything relating to your reps’ calls – the times they’re being made, the number of calls, the results of each call, the scripts being used, the type of contact being reached, and so on. Webb acknowledges that this step usually involves a significant data collection effort. But that data is essential because without it you don’t really know what’s happening.

Step #3: Analyze the data for variations in the results and in the activities that produced them and search for cause-and-effect relationships. You’ll often need to move back and forth between the measure and analyze steps. For instance, Webb tells the story of the private banking division of a major financial institution that wanted to bring in more business. It examined its sales process and discovered a bottleneck at the account-opening stage. So the division measured and analyzed the way it opened accounts – the procedure, the number of employees involved, the number of touches a customer required, and the time involved. It also examined the results – customer satisfaction, customer complaints, instances of troubleshooting by salespeople, and deals lost at this stage. The bank’s conclusion: the procedure for opening accounts caused customers to drop out at that point.

Step #4: Improve the process by constructing an experiment or pilot project to test your hypothesis. If your hypothesis is correct, you should see a measurable change. For instance, when the bank redesigned its account-opening procedure, more customers completed the account-opening process and the division increased its revenue by 18 percent in one year with no increase in staff.

Step #5: Control the process to make the change permanent. In the case of the bank, the change was relatively simple to make permanent – a change in forms and the information those forms required. In other cases, institutionalizing the change might involve “new management reports or financial incentives as well as a control plan to ensure that the inputs and outputs remain within the targeted ranges,” says Webb.

In short, Six Sigma applies science to the art of sales to consistently improve results. For more information on how you can apply these principles to the problem areas in your sales process, visit www.salesperformance.com.