Six Sigma and Business Marketing

2005 Joint ISBM-CBIM Conference Six Sigma and Business Marketing
The 11th Annual Joint ISBM-CBIM Conference
Six Sigma and Business Marketing

February 16 - 17, 2005 Atlanta, GA
Presentations summarized:
Valerie Mason Cunningham, Xerox Corporate Marketing Services, Xerox Lean Six Sigma Marketing Pete Pande, Pivotal Resources, Pulling the Focus Out: The Basics of Six Sigma and Its Applications to Business Marketing Jane Hrehocik Clampitt, DuPont Consulting Solutions, Applying Six Sigma to Marketing at DuPont Gordon Schwartz, MarketBridge, Performance- Driven Marketing: Applying Six Sigma Principles to Demand Generation A. Charles Clark, Dow Chemical, Six Sigma in Sales & Marketing? One Black Belts Experience in Process Improvements
(list continued)
Institute for the Study of Business Markets Center for Business and Industrial Marketing
2005, ISBM & CBIM
Presentations summarized (continued):

Roundtable Panel Discussion, Marketing Process Improvement and Six Sigma: Why now? When will it work? When wont it? Questions and answers. Pamela J. Roach, Breakthrough Marketing Technology, Delivering What Customers Value: The Quest for Excellence Kevin J. Clancy, Copernicus Marketing Consulting, Six Sigma Dreams, Half Sigma Realities Jean M. OConnell, 3M Company, Business Marketing at 3M Using Six Sigma: The Company Project Approach Patrick LaPointe, MarketingNPV, Six Sigma or Not: Building better, more effective, more accountable marketing in todays complex B-to-B Organizations
2005, ISBM & CBIM
Key insights from Valerie Mason Cunningham
Keynote address:
Xerox Lean Six Sigma Marketing:

Strategic and Tactical Impact Valerie Mason Cunningham
Vice President Xerox Corporate Marketing Services
valerie.mason@xerox.com
2005, ISBM & CBIM
Lean Six Sigma: our tool to put Xerox back on track after our 2000/2001 crisis.
More robust than Total Quality Management, which wed already gone through. Applied across the enterprise, with: Manufacturing & Design, to
reduce cycle times and inventory drive out cost reduce time to market
Back Office, to
reduce process errors eliminate process steps drive down cost
External Clients, to
create real differentiation via tools and skills to help clients achieve their goals enable continuous improvement enhance strategic relationships by improving the customer experience customers expect suppliers to contribute to their 6 initiatives Lean Six Sigma provides metrics illustrating the return on marketing investment
Adding Lean to Six Sigma reduces waste and increases process speed Following Lean with Six Sigma improves customer-critical quality and consistency
Our performance as of January 2005:

1100 Lean Six Sigma projects, including 140 customer-facing projects; 520 active 6 Black Belts and 1,763 active Green Belts in residence. 17,538 Yellow Belts trained online. More than 2,000 senior executives completing leadership workshops Institute for the Study of Business Markets Center for Business and Industrial Marketing
2005, ISBM & CBIM
4
Lean Six Sigma and Marketing: Its all about the customer experience Just improving customer satisfaction and loyalty is a rear view mirror look.
50 million-plus customer touch points of all types annually First project in my group, Global Accounts and Marketing Improve customer communication processes
providing the information customer requested reducing internal processes cycle times 40% by assigning ownership and simplifying processes email newsletter project DMAIC Define customer needs via a voice-of-the-customer survey Measure Xerox performance and perceptions vs. competition Analyze VOC data Improve via email newsletter process owner and a new database Control: e.g. 2,734 emails sent 2/5/04, 92% delivery efficiency; newsletter posted on xerox.com
Second project: marketing effectiveness dashboard
Deliver web-based, concise marketing performance metrics Opening screen (next slide) features click-through boxes to drill down to data (sample in the following slide) in three core buckets: marketing effectiveness branding customers and the market
Next project: reduce collateral development cycle time
Weak up-front planning causes expensive revisions, greater agency spend, lost product manager productivity and a longer creative cycle. Success will be measured by an overall collateral production spend of 10%.
Lean Six Sigma marketing clearly is a journey without end

2005, ISBM & CBIM
5
Corporate Marketing Dashboard Key Metrics

Marketing Effectiveness
Leads Inquiries Campaigns with Financial ROI Campaigns with NonFinancial Metrics
Branding
Unaided/Aided Awareness (First/All Mentions) Public Relations
Awareness Consideration Predisposition
Contested Win Rate Waterfall Uncontested Win Rate MDM Share
Office Printers Office Copiers/MFDs Production
Installs
Web Metrics Performance vs. HP Page Volume
Customer Wins Customer Experience Satisfaction & Loyalty
Customers & the Market
Net Adds Market Share
2005, Xerox Corp., ISBM & CBIM
Whoosh Phaser 7300 Wave 3

Program Target Program Results PROGRAM DETAILS Program Investment Cost ($) Number of Targeted Contacts FINANCIAL METRICS Number of Leads Generated Lead-to-Contact Rate (%) Cost-per-lead ($) Number of Sales Generated* Close Rate Cost-per-sale (%) Revenue Generated ($) 1,340 0.9% $112 107 8.0% $1,399 3,093 2.1% $47 247 8.0% $586 $150,000 150,000 $145,000 150,000
Status R/Y/G
Program Name Report Date & Purpose: Program Manager Program Date / Duration Measurement Period Program Type EMC Member
Phaser 7300 "WHOOSH" DM Wave 3 1-14-05 Final Results Bonnie Gail Mailed October 8 - 12, 2004 Oct - Dec 04 Print Direct Mail Office (printers)
Net Profit Generated ($)** Return on Investment (%) NON-FINANCIAL PROGRAM METRICS Number of Total Responses Response Rate Cost / response
$307,235 205%
$709,163 489%
6,696 4.46% $22.40
16,452 10.97% $8.81
Third wave of direct mail lead generation campaign featuring the Phaser 7300 printer.
NOTES *10% close rate, 80% incremental assumed. **Assumes mixture of color and mono printer sales.
OVERALL PROGRAM ASSESSMENT:

7
Case Study
Solution Solution

Intercontinental Hotels Group
Employed Lean Six Sigma methodology Implemented remote control to minimize deskside visits Standardized operating system and IT environment
A leading hospitality company, managing brands such as: Holiday Inn Crowne Plaza Candlewood Suites
Moved administration offsite Eliminated redundancy among vendors
Client Challenges Client Challenges

Needed to cut costs to stay competitive during post9/11 travel downturn While at the same time improving customer satisfaction with IT support services
Measurable Results Measurable Results

Achieved savings goal of $1.2 million/year Maintained/Improved customer satisfaction across 5 key metrics: Overall customer satisfaction Knowledge of staff Professionalism Technical ability Fix time
8
Case Study
Solution Solution

Monroe County Sheriffs Department
Employed Xerox Lean Six Sigma methodology Digitized and streamlined accident report process Created web-based document access system Integrated existing systems
New York States largest sheriffs office
Client Challenges Client Challenges

Balance $100M budget Improve quality of service in accident report management Eliminate backlog of more than 3,000 records and over 4 months of data entry Free deputies from paperwork, so they can spend more time ensuring public safety
Measurable Results Measurable Results

Reduced cost of processing an accident report from $28 to $8, ($500K/yr savings) Reduced cycle time from as much as 3 weeks to less than 3 days Reduced time spent by deputies on accident reports from 30 to 5 minutes Created revenue stream from charging for accident reports, worth $32K/year
9
Key insights from Pete Pande
Pulling the Focus Out:

The Basics of Six Sigma and Its Applications to Business Marketing Pete Pande
President Pivotal Resources Inc.
ppande@pivotalresources.com
2005, ISBM & CBIM
10
Six Sigma is a system linking process management based on facts & data, rather than opinions, to a focus on the customer.
Emphasis is on the value creation process rather than individual functions. 6 raises employees from an inward focus to an external focus. 6 integrates many tools and concepts, involving both analytical and creative skills, tailored to a specific process, business, or problem. Understand and satisfy customers more effectively. Drivers of satisfaction, loyalty, behavior, market share Monitor how were doing. Staying ahead of the competition? Enhance efficiency
Reduce variation, eliminate errors and rework Expand internal capacity
Drive profitability
Reduce operational expenses due to errors and rework Grow market share and share-of-wallet Increase revenue
Transform management thinking

More informed decisions, greater collaboration and focus Optimize flow of value to customer, and gains to shareholders
2005, ISBM & CBIM
11
Y = f (x1, x2, x3, x4)

Promotion Process VOC Process
Six Sigma manages the critical business process Xs that determine the process output Ys.
12
2005, Pivotal Resources ISBM & CBIM
Key Principles
All processes vary Variation is due to various causes: people, equipment, information, processes & procedures, environment. Too much variation = trouble. We can learn from variation, the only way to know which Xs influence outputs and which create process defects. Variation, not before & after averages, tells the story.
Change need not be expensive. Eliminate irrelevant Xs and the reject scrap outside the customers requirements, caused by the bad Xs.
13
DMAIC Process: The Six Sigma Analytical Model Define: describe the problem or pain, the goal, the outputs (Ys)
Measure: gather data on the problem, the process, the customer Analyze: review process and data to identify causes (Xs) Improve: develop solutions; design processes Control: plan for stability
Six Sigma management focuses on a few critical Xs for each of 3 approaches Process improvement
Process design/redesign Process management
Customer Focus with Six Sigma discipline: Customer requirements based on careful assessment
Processes designed & run to fulfill customer requirements Multi-faceted Voice of the Customer effort Customer-focused data key to managing the business, short- and long-term
Customer focus without Six Sigma discipline: Conjecture and assumption about what customers want
Processes based on our convenience and cost Limited efforts at tracking customer satisfaction Customer-focused data not communicated or used
2005, ISBM & CBIM
14
Law of the Ignorant Customer

You need a multi-level VOC research process because every single methodology is flawed. Customers rarely, if ever, understand or can communicate their own requirements as well as wed like, or expect. They have other important priorities Rarely are they experts in our products and services Customer organizations have silos, too! Priorities change to match their latest crisis They may not really understand their own customers requirements What they think they know could well be wrong
15
Marketing & Six Sigma Challenges and Opportunities

Manage and improve marketing processes Understand your customer requirements and key Y
Assess the Xs to boost effectiveness and efficiency For every service process, start by thinking about what youd need were the process outsourced.
Own and drive Voice of the Customer capability Clarify objectives, gather data, formulate and assess hypotheses,
communicate knowledge, support decisions Marketing operations have an opportunity to play a key role in company improvement.
Develop creative ways to deal with the Law of the Ignorant Customer
Challenge current assumptions, yours and theirs. Look a the broader supply chain. Seek to educate customers and your organization
Promote change as essential core competency Key Q&A observations:

The biggest variation in marketing projects is the revision process. Companies that focus mainly on hard-dollars, vs.. softer outputs, wind up doing cost reduction rather than output improvement. Instead of succumbing to the please the boss approach, remember that its rare that only one function controls the whole process. To see it all and see whos to blame for problems, start at the end of the process and work backwards. Institute for the Study of Business Markets Center for Business and Industrial Marketing
2005, ISBM & CBIM
16
Key insights from Jane Hrehocik Clampitt
Applying Six Sigma to Marketing at DuPont

The Science of Marketing Jane Hrehocik Clampitt
Strategic Marketing Practice Leader DuPont Consulting Solutions
jane-hrehocik.clampitt@usa.dupont.com
2005, ISBM & CBIM
17
How We Connect Our Science Capability to The Marketplace

Use Six Sigma as a common language and disciplined process across the company to improve our marketing and sales competency Bring products to the marketplace that have relevance in the value chain and respond to end customers needs Target regions where economic growth is rapid Key requirement: An external perspective. Are you making things better for the customer, or just more convenient for you?
2005, DuPont Co., ISBM & CBIM
18
Why integrate Marketing and Six Sigma?

Six Sigma has high credibility and visible top-management emphasis in DuPont Shifting Six Sigma emphasis from cost reduction to Top Line Growth Voice of the Customer requirement for data analysis fuels willingness to invest in marketing research Project discipline lends implementation rigor to the outcomes of the marketing efforts At first blush one would think that marketing (touchy feely stuff) and Six Sigma (statistics for nerds) are not remotely related in fact the core process used by DuPont in marketing, the Strategic Marketing Process, maps directly to Six Sigma
2005, DuPont Co., ISBM & CBIM
19
Case study: needs-based segmentation

Problem: How can we accelerate growth in auto safety?
DuPont is a material supplier to many auto safety segments: frontal protection; side and rollover displays;
electronics Intense competition in component material supply DuPont competitive advantage lies in great quality, broad offering, broad science/technology platform Position as a development partner varies Relationships and access to individuals with design-in clout is limited The automotive industry will continue to aggressively drive low cost at the component level where there is no technology advantage
Goal: Establish DuPont as a technology development leader by delivering innovative system offerings at competitive cost Strategy: Establish 4-6 growth projects that expand technological leadership capability and market position Approach:
Segment this huge market then identify targets for project selection Validate market segments Test prior assumptions through direct voice-of-the-customer interactions Conduct secondary research Expand Voice of the Customer interactionsan ongoing process---to gain insights on market trends, industry structure and offering relevance in the global automotive industry Institute for the Study of Business Markets Center for Business and Industrial Marketing
2005, ISBM & CBIM
20
Tools: Voice of the Customer discussions

Confirmed accurate segment selection and choice of goal The automotive safety market space is evolving, growing and an area of focus A vehicles safety position is a source of competitive advantage Separate customer organizations focus on safety as a whole as well as on individual components Trends in technology Unmet needs Perceptions about DuPonts capabilities as enablers of customer visions and strategies
Results:
Met or exceeded growth targets in 2003 & 2004 The rigor of talking with people in the marketplace and continuing that dialogue made all the difference in the world. Received DuPonts 2004 Sustainable Growth Excellence Award Drivers of growth Strategic projects with target customers who have high value for innovative system offering development Expansion of influencer support Use of integrated marketing and Six Sigma process for all major projects
2005, ISBM & CBIM
21
Case study: delivering & capturing value
Problem: How can we accelerate growth in auto safety? DuPont Performance Coatings shares a 50/50 supply position with a competitor for a strategic
customers business This customer is not satisfied with our current method of supplying product and service through our existing route-to-market partner If the current method is not improved, we could lose this customers business If the current method is improved, we could gain a greater share of this customers business
Goal:
Develop a new service model that satisfies this customers needs and grows our share of their business Keep existing route-to-market partners involved in servicing this customer
Approach:
Form a team involving personnel from all parties: customer, route-to-market partner, and DuPont Performance Coatings Focus the team on the creation and testing of a new product and service supply model for this customer, using design for Six Sigma methodology (DMADV)
Tools:
Kano Analysis: customer-interview research to identify critical needs Evaluation of needs based on: fulfillment or non-fulfillment of a need, and satisfaction experience Classification into four categories: attractive, must-be, indifferent and one-dimensional (they love it or they hate it) elements of offering delivery. Pugh Matrix approach evaluates offering concept options, rating each for its ability to improve fulfillment of each need vs. the default offering. Creates strong alternatives and identifies optimal concept A disciplined, team-based process including the customer and strong route-to-market partner Institute for the Study of Business Markets Center for Business and Industrial Marketing
2005, ISBM & CBIM
22
Reflections on results:
What went well: Forming a multi-party team Use of 6-Sigma tools helped convince the customer to keep route-to-market partners involved; the customer recognized the partners service capabilities. DuPont Performance Coatings won awards: Best Customer Support & Supplier of the Year Other Six Sigma projects developed as a result of this work Applying Six Sigma for the customer at the customer provided a highly visible level of commitment as a supplier and provided objective data to help inform and influence the customer in favor of DuPont
Our Top 5 What Weve Learned

5. Map your strategy to show links among key elements.
Determine where the revenue and costs originate. Communicate clearly, making the hard simple. Tell each employee where they fit in.
4. Have the organization do work as projects highlighting each process step. 3. Define winning in measurable terms. Establish managing processes. 2. Take advantage of creativity; a disciplined process focuses creativity.
Use multi-generation planning to determine what to accomplish now, what to do later.
1. Build your business on a solid foundation of external, direct, voice of the customer insights.
You need facts, not opinions. Marketing research is an investment!
Though not necessarily new, Six Sigma is not painful, but is a natural integration with marketing and marketing leadership on real projects.
2005, ISBM & CBIM
23
Key insights from Gordon Swartz
Performance-Driven Marketing:
Applying Six Sigma Principles to Demand Generation Gordon Swartz
Vice President MarketBridge
gswartz@market-bridge.com
2005, ISBM & CBIM
24
Performance-driven marketing requires tying sales and marketing investments to financial results
Process-oriented industries are comfortable determining how inputs affect outputs Significant investment is shifting to integrated lead and relationship management Addressing the black hole between lead generation and sales channel/sales force follow-up
72% of surveyed C-level executives think sales would grow 10% just by plugging the black hole, but 60% of them believe they dont have a process to do so
Applying Six Sigma building blocks to marketing processes, what is the same? Process focus: optimizing the conversion of market opportunity into revenue Measurement: exploiting increasing amounts of data with modeling tools and experimental designs Technology-enabled performance: improving CRM, Web tools, databases, etc. But marketers complain of having too much data while missing critical data. People skills and management dependent: hiring, training and motivating in the 6 culture
and what challenges make it different?

Poorly defined marketing-through-sales processes: marketing treated as art; process black holes Undisciplined measurement systems: unintegrated metrics among marketing process silos, with little systematic experimentation Historical emphasis on automation technology vs. business intelligence technology. CRM captures increased point-in-time data, but intelligent analysis of ongoing processes lags Required new organizational capabilities lagging Lack of screening, planning, ROI measurement Premium placed on creative and big idea skills vs. marketing science Imbalance of people vs.. program spend Institute for the Study of Business Markets Center for Business and Industrial Marketing
2005, ISBM & CBIM
25
Case Study: Optimizing Marketing Spending Mix

With its sales force closing complex orders in the $1-10 million range, company recognized that each sales and marketing investment has a unique incremental yield curve affecting overall marketing and sales pipeline performance. We need to know where we are on each investments yield curve. What would happen if a key competitor shifted its allocation? Altering an allocation can change downstream yield curves.
2005, MarketBridge, ISBM & CBIM
26
Armed with a robust model, we optimized the firms $100 million+ marketing mix spend. Shifting spending changes the relative importance of functions within the organization. Learning, cultural and institutional issues arise. The model indicates the direction of spending changes to be made incrementally, simultaneously accomplishing cultural change over time.
27
Case Study: Optimizing Marketing Process Yield
Modeling the effects of adding media to a campaign is straightforward. We get more sophisticated examining the lagging brand effects of spending.
28
Experimentation via controlled field tests reveals how media interact.
29
Multi-channel marketing & contact management optimizes tactical and end-to-end results
Gains of these magnitudes have been achieved by changes in marketing mix allocation with no increases in overall spending. The Rule of 5s generalization: A 5% budget remix produces five times more return than achieved by a 5% budget increase.
30
SAMPLE DASHBOARD METRICS
The best marketing organizations use the pipeline framework to launch Six Sigma discipline The challenge and opportunity is in the integration of lead and relationship management tactics. The green spot provides the process control threads linking market conditioning and sales management.
31
In-market experimental design is a foundation of Six Sigma discipline

Hypotheses: Develop hypotheses to be tested (e.g. yield, interactive effects). Design: Design tests with segments, market, offers, attributes, and media to test, control and normalize. Avoid attempting to build the intergalactic data warehouse. Organize around the critical information needed. Execution: Engage market managers and campaign planners to mine databases, establish offers, and execute tactics within execution and test construct. Measurement: Collect and filter time-series response data Produce econometric analyses, correlations and interaction elasticities Compute optimization scenarios; simulate forecasts Replication: Develop ongoing test model across framework Embed measurement and testing methodology within market management, offering and execution functions.
2005, ISBM & CBIM
32
In which decision-making phase does your company operate?
33
Key insights from A. Charles Clark
Six Sigma in Sales and Marketing?

One Black Belts Experience in Process Improvements 3 examples A. Charles Clark
Former Six Sigma Black Belt, Marketing and Sales Dow Chemical
acclark@insightbb.com
2005, ISBM & CBIM
34
Project #1 Business Practices

Parent company auditors found multiple cases of expense abuse and poor reporting while investigating 3 years of expense records. Excessive variation in reporting use of company funds claimed as business expenses
Thousands of $'s missing and / or unaccounted for The actual extent of loss could only be estimated after interviewing the culprits
DMAIC Solution: Basic 6 tool that applies to everything we do in sales and marketing Define problem: missing funds, missing reports, missing receipts, false reports, etc. Measure: Found poor managerial systems to track the process. Analyze: What is the process, standards for inputs and outputs, process owners? Improve: Nine months to get everyone to agree on new processes.
Process outlined, agreed & mapped with accounting dept. Process manager role added to existing position Coordinated with Bank of Americas EAGLS system, launched company-wide Standards created for review & audit functions Monthly reporting established with expense auditors Awareness campaign boosts knowledge & sets expectations Company policy web archive established Auditors released for other work Margin disappearance stopped
2005, ISBM & CBIM
35
Control:
Process manager reports to national sales manager Process manager empowered to inspect, intervene & enforce Business ethics position created by Global Ethics committee Compliance definition & tracking better coordinated: legal, accounting & sales / marketing groups New employees orientation changed -- better information about company expectations of funds usage & reporting Definitions of defects standardized - auditors & managers Monthly reports by process manager to national sales mgr.
Solution sustainability? Employees awareness GREATLY increased Role & responsibility of management to monitor, communicate & inspect - better Process mgr functioning as champion Internal capability to know individual practices significantly enhanced Process ownership clearly identified.
2005, ISBM & CBIM
36
Project #2 Agency Consolidation

Multiple communications agencies employed to produce annual product communications for > 50 brands. Suspected redundancy of effort and cost, non-coordinated campaigns, off-strategy work, inconsistent use of trademarks, missing synergy and staff overlaps. Despite 18 years of success with the lead agency, we realized there was no process map, standards, process owner, success metrics, or data comparability across agencies. Our lead agency asked for more business. Our Six Sigma project examined the processes and justified the cost savings of consolidation. Analysis defined the process via surveys and interviews, cost analyses, and 2 Black Belts
What is the process? Communications development What are the inputs? Marketing plans, biz objectives, mgr. insights What is the unit flowing in the process? Brand message unit What is the process output? Product brand messages What are the standards for the output? $-effective & on-strategy Who is the process owner? Brand manager, marketing mgr. Process manager? Agency personnel (?) Process stakeholders? Managers & leaders
An example: Tracking costs, we had to go externally to the agencies. Internally, we had simply examined and approved invoices. We had no systems or process mentality to track and document the basis on which we could make decisions.
2005, ISBM & CBIM
37
Improvements: We have to properly define the process in order to cut account management costs.
Four major agencies terminated; others trimmed. Work definition process = marketing plans Process map created with agency & product groups Electronic routing & approval adopted Process manager designated Cost codes standardized to match process [168 to 9] Lead agency process aligned with codes & process Reporting & tracking by business unit Accountability enhanced with more relevant data
Control: The agency started tagging costs according to each costs step in the communications process
Concentrating ALL work in -1- agency. Clarifying PROCESS phases (added DEFINE) & work output standards. Utilizing standardized Cost Elements in billing & reporting. MEASUREMENTS discipline -- a mentality & a NEW process step. Directing work via MARKETING PLANS by value score Achieving buy-in from the lead agency on value of changes & processes Roles & responsibility of management to monitor, communicate & inspect much improved Internal interest in process discipline and data-driven decisions improved. Agency very cooperative and committed - more at risk Process ownership better defined & assigned. Institute for the Study of Business Markets Center for Business and Industrial Marketing
38
Sustaining the gains by:
2005, ISBM & CBIM
Project #3 Sales Force Deployment

Specialized sales force is covering same territory as traditional sales team. Cost redundancy? Balanced deployment? Efficiencies lost? 4 different specialized sales forces share the same geography, the same distributor accounts and the same retail dealers and exhibit vastly different levels of productivity: as much as 425% variation between top and bottom full-time territories. Solution: Analyze balance of sales force deployment, by territories, sales levels and other key variables, overlaps, task complexity, workload, etc. Improve balance.
Process outlined & mapped Process operator designated Standard definitions for data adopted Key crops identified based on specific, agreed criteria Crop segment managers identified & role defined dBase administration clarified and corrected Marketing plan template refined with product manager and market research agency to include sales rep inputs AND measures of potential 2 territories combined at savings of at least $300,000.
2005, ISBM & CBIM
39
Solution sustainability?
Product manager / district manager buy in! Key market researcher supports use of sales rep. data in his market assessments Sales rep data also included in marketing plan Sales rep input processes unchanged Other sales specialties re-deployed people based on project analysis and outcome Generated interest in other sales related projects that continues even today.
Second Thoughts & Learnings

Six Sigma methodologies and philosophies fit in the world of sales and marketing because its not about theory; its about action. Marketers have a bias for action. If things are aligned, coordinated and linked together in the right way, human-based marketing has a chance in this process world. Problem statements are crucial. If no problem hypothesis, no go! Process maps are invaluable Project champions are a vital imperative: a human being taking responsibility Process partners greatly facilitate improvement Standardization is critical in support systems Process ownership is the king of all solutions Sustainability is biggest worrywill managers forget, minimize or just overlook? Creativity is not necessarily compromised by discipline Decisions without data are usually costly Cost-of-a-rep myth debunked !! The discipline of data-based decisions is difficult !
2005, ISBM & CBIM
40
Suggestions
About year 4 or 5, go back and reevaluate the projects you did in year 1 and do them again. Your outcomes will probably be a little different because you know more. A great metric to consider: What percentage of your marketing budget is touching the customer? Fix the most tangible processes first paper flow; documents flow; communications flow; data flow; services flow, etc. These usually are interface points between procedures. Then fix not-as-tangible processes approvals, sign-offs, collaborations, planning managing, creating, and cross-functional relationships. These are usually interface points between people. Get a good grip on the whats, hows and whys of 6 Sigma. Practice in the backyard and get ready for the real deal. Then, consider how to seriously engage the customer. Those projects will be the major breakthroughs & gains! These are usually always interface points between groups.
2005, ISBM & CBIM
41
Key insights from Roundtable Panel
Marketing Process Improvement and Six Sigma:

Why now? When will it work? When wont it?
Selected Question and Answer Highlights
Roundtable panel discussion:

The Customer Strategy Group Moderator Xerox
Fred Wiersema
Valerie Mason Cunningham Jane Hrehocik Clampitt Jean M. OConnell

3M
2005, ISBM & CBIM
42
DuPont
Wiersema: A recent Bain Consulting survey found that 77% of senior executives think that tools like Six Sigma promise far more than they deliver. What got your companies started with Six Sigma? Cunningham: Timing was critical for us.We were a company in crisis and needed some discipline for managing the business. OConnell: Four years ago we got our first CEO from outside the company, from General Electric. He brought Six Sigma with him. He told each manager to hire three Black Belts, one each for growth, cost management and cash management. For instance, we were weak in capital usage. Decision-makers used capital for free and were evaluated only by their P&L. Clampitt: DuPont is science-oriented with many technical people. We had a marketing process and wanted to apply what has worked in operations to that marketing process. [A show of audience hands finds that more than half believe their corporate culture is not yet conducive to Six Sigma.] Wiersema: How do we market Six Sigma in our organizations? What is the value proposition? Cunningham: We used TQM, which addresses product quality and customer needs, but not the marketing process and helping the customer get its own processes right. When you address those, you see improvements to make that you didnt see before.
2005, ISBM & CBIM
43
Wiersema: But we have to ask, how do you package Six Sigma? Is it for everybody? Will marketing embrace it or is it analytics for nerds? Clampitt: We found that everyone going through the program has been successful. We select green belt candidates with leadership potential, who see that Six Sigma is a process for thinking and solving problems, and not so much a tool in itself. Wiersema: How do you roll out Six Sigma? OConnell: There are as many models as you want to adopt. When you have good coaches on projects, people cant sit and wait it out. At 3M, the average initiative went away after three years, but Six Sigma is not going away. Cunningham: Six Sigma wasnt new to us. The manufacturing group always used it, saving a million dollars in inventories, and multimillions in accounts receivables. We convinced management that marketing needed Six Sigma, and the top executive pushed executives to launch projects. Then skeptics turned into believers. OConnell: We had executives clinging to a lot of tribal knowledge, but they changed their attitudes about Six Sigma once they saw the results.
2005, ISBM & CBIM
44
Clampitt: People did resist Six Sigma by shooting holes in data and disagreeing with interpretations. And leadership turf issues did stand in the way. You have to go upstairs, around obstacles. And, bringing the people who are obstacles into the solution works. Cunningham: For example, we learned we werent getting results from what we thought was a good direct marketing program. We shifted some spending to events to improve how we build the customer experience. OConnell: Dont be afraid to kill high-visibility projects that are not working.
Responding to Audience Questions

Q: How do you keep Six Sigma from becoming a religion, so wrapped up in tools and tech rather than the objectives? OConnell: Six Sigma must be driven for business strategy. Choose projects than genuinely further the business. Cunningham: If the project doesnt improve the customer experience and advance the interests of the business, stop it. Wiersema: You have to determine what is the right project for your company. Then you need a leader to challenge the religious zealots and the laggards who do nothing.
2005, ISBM & CBIM
45
Key insights from Pamela Roach
Banquet address:
Delivering What Customers Value

The Quest for Excellence Pamela J. Roach
CEO Breakthrough Marketing Technology
pamela@breakthroughgroup.com
2005, Breakkthrough Marketing Technology, ISBM & CBIM
46
Our Best Practices study of Six Sigma in Sales and Marketing found
Black Belts need training and experience in Marketing/Sales in order to be successful Six Sigma success in Operations doesnt necessarily translate into Marketing and Sales success Vocabulary and examples work best when specific to Marketing and Sales Commitment from senior leadership is critical Those who are most successful see marketing as a process Projects flow from business strategy and deliver a measurable ROI, with emphasis on top line growth Tool usage is flexible, applied as needed. Six Sigma is a way of thinking and making decisions based on facts; clearly defining a problem before you try to solve it.
This is a free introduction to ProMetrix , a software-based diagnostic that identifies the ROI impact of marketing and sales underperformance. The unique report will enable you to directly compare your Marketing and Sales process capabilities to a composite of your peers. Each participants business will be profiled with its individual statistics, including the ROI impact of its marketing strategy. The study addresses a sampling of critical marketing competencies: market selection; use of customer data; communications effectiveness; robustness of sales process; and sales channel productivity. Whether or not your business is Six Sigma driven, the report will highlight opportunities for improvement.
47
Our current study, the ProMetrixSM SV Benchmarking Study, co-sponsored by ISBM, will allow you to compare your marketing performance to other firms. SM
A Case Study: AstorLight
A project contending in the prestigious 2000 Americas Quest for Excellence: the best of the best Six Sigma Plus projects throughout the various Honeywell business units. Six Sigma competence reduces the risk of the company missing potential merger synergies. Fostering a win/win employee attitude, when Six Sigma gains traction in an organization, it transforms from a top-down to a bottom-up commitment to continuous improvement. Competitions like this can help create a pro-Six Sigma culture change by inspiring employees. Our challenge: Delivering 12% annual growth in a commodity marketindustrial wax for candlesin a market forecast for 7-10% annual growth over five years. Intensely competitive marketplace, with the wax business far upstream from the consumer. We faced tight budget constraints. Our approach: We started by segmenting the value chain. Wide dispersion and types of retailers; each segment with its own supply chain. Where do we participate to capture share? Voice of the Customer attempted to identify special candle effects customers wanted. Everyone said, We want something new, but we dont know what it is. We always hear that in markets, but what does that mean? So we used our Green Belt training to identify the special effects needed to drive double-digit sales growth with equal or better margins (including capturing more of the retailers margin).
48
Forming the team: The results we sought indicated the kinds of experts needed. We employed a critically important Six Sigma tool:FMEA, a failure its mode its effect by analysis in a cause-effect manner. FMEA provides an early warning on problems and trigger points for contingency plans. VOC led the way to high-margin commercialization: customer interviews, researching retail offerings, qualitative and focus group research on a shoestring with employees from other Honeywell business units and their friends. The approach was bias-free. We learned that men appreciate candles and special effects, and have specific preferences Women seem to be satisfied just knowing of a candle special effect Respondents were willing to pay a premium for a pillar candle with a special effect QFD (Quality Function Deployment) linked product concept options to customer needs and company inputs required We addressed risk affecting our brand and partners We tested sensitizing consumers to our ingredient brand with a radio personality endorsement and an Internet campaign to the cottage industry making high-end candles. Both approaches worked. Customers linked quality candles to quality ingredients. The success of a differentiated value proposition in a product category thousands of years old shows that in any market, theres always an opportunity for technology and differentiation. The retailer will never tell you that there are customers willing to pay more. But when you know there are, you can charge the retailer more and capture more cash from the retailer.
49
We created whats continued to be the most profitable line of candle wax in the business Six Sigma lead the way in a market-driven approach requiring new data, new insights, and new behaviors. We beat time and dollar targets.
21% revenue growth in six months; 13% revenue growth in 9 months from new products. Reduced cycle time for new product commercialization Freed 5% additional capacity for less than $5K Segment gross margins increased more than 30% over time. Lower-cost, long-term supply contracts were negotiated.
50
Key insights from Kevin Clancy
Keynote address:
Six Sigma Dreams Half Sigma Realities

Kevin J. Clancy
Chairman & CEO Copernicus Marketing Consulting
kclancy@copernicusmarketing.com
2005, ISBM & CBIM
51
The buzz today is all about Six Sigma marketing, but few companies are really doing it. Only 14% of companies on the Fortune 1000 list are growing faster than the GNP.
We found that in 39 of 48 B2B and B2C categories, brand equity is declining. Far more brands are sliding toward commoditization than commodities are transforming into brands.
2005, Copernicus Marketing Consulting, ISBM & CBIM
52
5 Best Practices to turn 6 Sigma Dreams Into Reality

1. Find a market thats at least 3 sigma above average in terms of potential profitability. If you nail targeting and positioning, everything else will fall into place. Philip Kotler Problems with the two most popular B2B targets.
SIC code/industry specialization is too narrow, too heterogeneous a segment. Heavy users are price sensitive and deal prone, and are often in the bottom decile of profitability.
The intuitive, half-sigma approach is to make a decision in about 5 minutes. The counterintuitive, Six Sigma approach is to analyze 50-250,000 different targets to identify the ones forecast to be most profitable.
53
Proxies for Profitability enable being approximately right rather than precisely wrong.
Examples: Spending in the category Current spending on your brand Problems which if solved would lead the customer to switch Price insensitivity Responsiveness to your brand Cost to deliver and serve Opinion leadership/personal influence Interest in new products and services Cost to reach and impact with sales force and marketing communications
Examine many different segment plans on the basis of profitability
54
2. Accept nothing less than a breakthrough positioning, one at least 3 sigma above average. 1, 2, or 3 words, phrases or sentences about your brand that you want to imprint in the heads of key stakeholders; so clear, succinct, and powerful that once launched, it leads to a powerful brand. In most companies, if products, services and brands are positioned at all, it appears to be in the minds of marketing managers and not customers and prospects. Our study of more than 400 consumer TV and print ads found only about 7% communicate a raison dtre. The best practice, counterintuitive approach to positioning begins with a clear understanding of prime targets needs, problems, and pains (i.e., motivations). WARNING! Need-state analysis (customers rate benefits and attributes)---the all-time most popular quantitative research for uncovering needs, problems and motivations---can be dangerous. Marketing is not the discipline of giving people what they think is important. Its the discipline of solving customer problems.
Needs should not be mistaken for problems and marketing is about solving problems. People will say that something is unimportant if they dont know anything about it. People hesitate to say anything that makes them seem superficial. People do not want to admit that they are prices sensitive and in a company driven by price.
Our new model of buyer behavior weighs benefits and attributes on three motivational dimensions.
Dream detection: the self-reported ideal Problem detection: discrepancies between what they want and what they get Preference detection: the attributes/benefits that predict an individual buyers preference
We rank attributes by motivating power, cross-referenced to our brands superiority, parity, or inferiority to a key competitor (next slide), which indicates the most potent attributes for competitively superior positioning.
55
56
3. Develop a Three Sigma+ marketing communications strategy. Marketers today have lost confidence in traditional media, especially 30-second TV spots, and are shifting investments to alternative vehicles such as sports, events, interactive kiosks, the Internet and other non-traditional media. But that wont get you to Six Sigma if you dont fix what caused the poor performance in the first place: weak targeting, positioning and media strategy. A Three Sigma marketing strategy creates more product awareness for less media spending. 4. Use marketing science tools to develop better marketing plans. Most companies develop marketing plans without any real knowledge of the relationship between marketing inputs and outputs.
Managements set objectives only remotely related to strategy. Tactical plans derive from prior years failed plan, with a relationship to objectives weak at best.
The counterintuitive, best practice approach involves innovative model-based plans with empirical underpinnings, thereby integrating objectives, strategies and tactics. 5. Obsessively and compulsively implement your marketing plan. Three studies report that most marketing plans and strategies are not implemented The more people implementing the plan and the more creative they think they are, the more they will change the implementation plan. Drag managers out of their separate fiefdoms to focus on implementing the strategy. Audit implementation to ensure conformity to strategy and plans.
57
Key insights from Jean M. OConnell
Business Marketing at 3M Using Six Sigma:

The Customer Project Approach Jean M. OConnell
Director, Six Sigma Operations 3M Company
jmoconnell1@mmm.com
2005, ISBM & CBIM
58
At 3M, a solutions company that happens to make products, Six Sigma is the driver behind all other corporate initiatives. Six Sigma is Initiative
Strong linkage to business goals and customer needs Leadership development at core Breakthrough improvement Strong linkage to business goals and customer needs. Management reviews Sustaining gains Process and Financial results($$) Methods and tools Process thinking DMAIC (Define, Measure, Analyze, Improve, Control) DFSS (Design for Six Sigma) Understand and reduce process variation and product variability Data Based Decision Making New Product Introduction (DFSS) - reduces variability & gives customers what they want
Weve done more than 400 Six Sigma projects with customers to date. Projects must be about the customers critical Ysthe customers pain point Focus on improving customer processes and 3M/customer shared processes Joint 3M/customer team membership and project ownership; project champions on both sides We do not put a Black Belt on a customer project until the person has done 2 internal projects.
2005, 3M, ISBM & CBIM
59
The Roadmap
60
Mutual Ys
3Ms Ys
Customers Ys
What is a Customer Project? Improves a specific customers processes or products Can improve 3Ms processes Involves customers as active project team members Is owned by the customers: metrics, control plan, etc.
A good project
Identifies a problem to be solved: A project is a problem scheduled for solution J.M. Juran Has a Process Owner Problem is of major importance to the organization; even better if of major importance to both organizations Clearly connected to business priorities Clear quantitative measures of success Baseline, goals and entitlement well-defined (data). But at the start, dont let a lack of data stop you. Youre forced to develop metrics. Reasonable scope Able to Complete in 4-6 months Project support often decreases after 6 months Dont want to boil the ocean Institute for the Study of Business Markets Center for Business and Industrial Marketing
61
Key Success Factors

Organizational integration Joint Executive Commitment (Customer and 3M) Joint Resource Commitment (Customer and 3M) Customers on the Team Key Learnings Customer-owned metrics Critical Customer Need and/or Pain Data determine the price/value of solutions Customer Owns Metrics & Control Plan Building executive-level contacts is key Flawless execution Enhances customer intimacy: first-hand voice-of 3M Knowledgeable Experts customer and customer business direction/ Customer Training strategy Clear Expectations Allows for leveraging of all 3M technologies Deliver on Promises Co-location solidifies partnership Operational Excellence Advantage in speaking common language with our customer Six Sigma relies on creativity as well as fact, and it is relevant to product and merchandising ... It starts out by recognizing that assumptions are a very dangerous thing in a competitive world One of the most important things we can do is get in there and figure out whats truth and what is myth. Michelle Moorehead, VP of Strategy and Performance Improvement for Target Corp.
62
Key insights from Patrick LaPointe
Six Sigma or Not:

Building Better, More Effective, More Accountable Marketing in Todays Complex B-to-B Organizations Patrick LaPointe
Managing Partner MarketingNPV
pat.lapointe@marketingnpv.com
2005, ISBM & CBIM
63
Marketing success depends on a chain of factors that build credibility in the organization for the art and science of marketing.
But the real heavy lifting occurs at the start of the chain. When Six Sigma initiatives enter in the middle of the chain, they struggle, missing the context, the broad-based understanding and the culture of the process. Six Sigma has some formidable marketing enemies: Foot dragging, information hoarding, micro-scoping, resentment and passive-aggressive behavior. It all stems from fear of the unknown, of the known, and of the facts. Marketers, though adept at persuasion, fear that that numbers people will expose their limitations. That is fundamentally the psychology of why Six Sigma has not penetrated marketing so far. To address the enemies, we must look at the role of marketing in the organization. But in most organizations, marketings role is poorly defined strategically and tactically. Marketing is not like the rest of the organization, leading to conflicting views over objectives. A 2002 Study by Hewitt Associates found that Marketing is a key participant in over 2/3 of inter-departmental conflicts within Fortune 500 companies. Marketing effectiveness is a cultural/organizational problem, NOT an analytical one.
2005, MarketingNPV, ISBM & CBIM
64
A critical challenge: overcoming 6 primary obstacles to marketing measurement. Data Problems Collecting the wrong data focus on what is easier to get
Applying rocket-science analysis to it
Speed > Accuracy > Relevance

Face-to-face begat telephone begat mail begat web/email
IT Becoming Too Central

Enthusiasts monopolize the agenda If its on the computer, it must be true
Researchers/Analysts are poorly paid with little/no career path Training in measurement is rare, yet skill shortages are a commonly cited obstacle Delegation
Selecting metrics is big picture, politically-charged; interpretation even more so When measurement strategy is delegated, truth and insight lose emphasis Measurement requires leadership
A Marketing Dashboard helps to address those obstacles Establish causal links between spend and profits Create a learning organization that makes decisions on hard facts supplemented with experiential intuition rather than lots of intuition punctuated by a few facts Establish clear roles and responsibilities, creating job satisfaction and a culture of performance and success Elevate marketing accountability to earn the trust and confidence of the CEO, the CFO, and others throughout the company
65
6 Common Six Sigma Mis-steps in Marketing Launching outside of Marketing first, then ascending like locusts
Black Belts looking for projects instead of champions Working projects without the context of the objectives marketing wants to achieve Setting goals for training versus implementation Overt self-preservationism as marketers resist the interloping Black Belts.
4 Keys to Success for Black Belts Importing Six Sigma into Marketing 1. Learn the language of marketing 2. Start on common ground, areas marketing wants to discuss such as voice-of-the-customer and process mapping when presented in terms of marketings objectives. 3. Embrace variability, because marketing does not have the predictability of manufacturing and operations. 4. Work the problem, not the symptoms.
66

Six Sigma and Business Marketing

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Six Sigma and Business Marketing

Hochgeladen von

Copyright:

Verfügbare Formate

2005 Joint ISBM-CBIM Conference Six Sigma and Business Marketing

The 11th Annual Joint ISBM-CBIM Conference