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Think About It… the e-book version » Metrics

Archive for the ‘Metrics’ Category.

Are you a real doctor; a PhD? …or just a physician?

by Todd Youngblood

Innumerate: Unable to understand and use numbers in a calculation.

No, this isn’t your “new-word-of-the-day” newsletter. It’s a wake-up call. Innumeracy is rapidly and relentlessly reducing the relevance of one set of professionals after another. Are sales professionals next?

The role of the professional baseball scout got blown up in the late 90s. Up till then, the job required in-depth knowledge of the game, along with years and years of experience watching, evaluating and judging the potential of young athletes.

Today, every team in Major League Baseball puts vastly more emphasis on player performance statistics. The numbers analyst has shoved the scout aside as the critical player personnel decision maker. Scout pay has plummeted. (…but this story has no relevance to sales professionals.)

Wine collectors have forever relied on the reviews of professional wine-tasters, before plunking down thousands of dollars for what they hope will be the “next great vintage.” There’s a robust, extremely sophisticated, amazingly lucrative industry that provides advice about the best wine investments. The demand for the knowledge and skills of the top professional wine-tasters has been driving the price of their services briskly upward …until recently.

An economics professor at Princeton has proven that a simple calculation using three sets of weather statistics beats the daylights out of the pros in predicting future wine prices. The pros are stunned by this career-threatening development, and spend a lot of time bashing and bad-mouthing Orly Ashenfelter’s numbers analysis. (…but this story has no relevance to sales professionals.)

When I bought my first house in 1979, I spent over three hours at a bank in the fancy, corner office of a mortgage loan officer filling out forms and disclosing what seemed like every aspect of my life to get a $30,000 loan. Back then, the judgment of the professional loan officer, with highly honed skills developed and perfected through years of experience was critical to the bank. My loan got approved in “only” seven business days.

When I bought my current house, for a lot more $$$, the realtor asked me four questions over the phone and secured the loan in less than 24 hours. Because of the numbers analysts at the banks, all the loan officers lost their corner offices and high paychecks. In fact, what at one time was a highly respected, professional job – mortgage loan officer – is virtually non-existent today. (…but this story has no relevance to sales professionals.)

How about physicians? Surely such a highly respected, immensely professional group of folks is immune to the number-analyzing geeks. A friend recently asked me what I thought about the treatment regimen prescribed by his doctor for a pretty serious condition. He pointed me to a web site he’d read, and within an hour I had found six others and concluded that two additional treatment options were available. Both of them had what appeared (to me anyway) to be statistically better efficacy rates and lower odds of significant side-effects.

My buddy’s doctor switched the prescription. Switched the prescription!!! Are you kidding me??? Some business consultant from The YPS Group dispensing medical advice??? … that the licensed professional agrees is a better course of action than his original judgment? How can this be? Is it possible that anyone with some basic numeracy and ability to use Google will in the not so distant future be able to self-diagnose? Is it possible that professional physicians are headed down the same path taken by professional baseball scouts, professional wine reviewers and professional mortgage loan officers?

But I guess you’ll still insist that these stories have no relevance to sales professionals. Or maybe you’ll start to learn a bit more about means, medians, bell curves, standard deviations, regressions and correlations. Maybe.

Think about it…

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More, Bigger, Faster

by Todd Youngblood

I’m a football fan and my team (the Atlanta Falcons) started this season with three consecutive losses. That got me to thinking about “back to basics.” Ladies and gentlemen, this is a sales rep: One who moves a greater number of larger deals through the funnel faster.

When you blow away all the smoke, the job of the sales rep or manager really is as simple as moving a greater number of larger deals through the sales funnel faster. In fact, I think it would do all of us a lot of good to keep that simple phrase in the front of our minds at all times.

Assuming of course, that we realize it’s a lot more than a simple slogan; that it carries some deeper meaning; that it requires exposing ourselves to unvarnished, perhaps harsh, judgments about our personal skills. Let’s take a closer look.

Words like “greater,” “larger” and “faster” imply that we’re comparing something to something else. Greater, larger and faster than what? Well, first of all, how about greater larger and faster than this month last year? Exactly how many deals did I initiate, advance and close last September versus this September? What was the average dollar value of the deals I initiated, advanced and closed last September versus this September? For the deals I closed last September, how many days did it take me to move them from the top of the funnel out through bottom? Did it take me more or less time this September?

The answers to those questions will tell me if I’m improving my skills or not; if I’m getting better at selling, worse, or staying the same. You might argue however, that even if some of those numbers have a downward trend, that it’s due to circumstances beyond your control. (In fact if there is a downward trend, you’ll almost certainly say that.) Maybe that’s true, so we’ll need to make a few more comparisons to find out for sure…

How many deals did all the other reps in your company initiate, advance and close last month? Were you first? In the top 10%? In the top half? In the bottom quarter? Where did you rank in terms of the average dollar value of the deals you initiated, advanced and closed last month? In terms of sell cycle time, are you among the fastest, the slowest or mired in the middle of the pack? You might argue however, that a low ranking for 9/07 ignores how fabulous your performance was in 8/07. Maybe that’s true, so we’ll need to make a few more comparisons to find out for sure…

For the last 3/6/9/12 months how many deals did all the other reps… You get the point.

We’ve all got to measure all kinds of stuff, to identify our current and emerging strengths and weaknesses; especially the emerging weaknesses. If I’m slipping somewhere, I want to know about it NOW. If, for example, my sell cycle is starting to stretch out a bit – or if it’s staying the same while everybody else’s sell cycle is shrinking – I want to have a few conversations with colleagues, and I want to have those conversations TODAY. I want to find out which “Sales Best Practices” are and are not working.

It’s so easy after five or 10 or 15 or 20 or more years to lose sight of these basics; to assume that you can depend on your experience and instinctively handle any situation. It just isn’t so. There’s always someone chasing each one of us; trying to chip away at every little competitive advantage we have.

I think I want to be “stuck” in an organization that promotes friendly competition among colleagues based on measuring the basics. Based on moving a greater number of larger deals through the funnel faster. I think I want to be “stuck” in an organization with a habit of continually thinking, learning and improving. I think I want to be “stuck” in an organization perpetually unsatisfied with past performance.

(…and by the way, my Falcons got back to basics and won this week!)

Think about it…

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What’s the “muda-factor” in your sales process?

by Todd Youngblood

Good time management is a fundamental business necessity; especially for those of us in sales. We all agree that we need to eliminate time wasters. As usual, I think measurement is in order.

We all waste time. Sometimes it’s un-avoidable, like cooling your heels in the customer’s lobby waiting to get escorted up to the decision-maker’s office. Sometimes it’s self-inflicted. Ever had “one more cup of coffee” in the break-room or check your stock portfolio during working hours? Sometimes whiling away a small chunk of the day can even be a good thing. If I blow a sales call, five or ten minutes of feeling sorry for myself somehow helps me get back on track.

Bottom line, though, we all need to maximize the number of hours we invest in executing the critical activities that lead to sales growth. That’s where the notion of a “muda-factor” comes into play. Muda is a Japanese word that means waste; something that consumes resources but produces no value for a customer.

The concept has been around for a long time in the manufacturing world. It’s the basis for “Lean Thinking” – a powerful business concept and a classic management book by Womack & Jones. There are a multitude of examples where its application has led to multi-hundred percent increases in performance.

Is it also a useful concept for sales?

How can it not be? Consider, especially, the guts of the definition above; “something that consumes resources but produces no value for a customer.” How much “important” stuff do you do each day that does not produce value for a customer? When you put your ToDo? list together, do you think through which items will and will not produce value for a customer and prioritize them accordingly? Have you ever looked back at a week and quantified your muda vs. value-producing time?

Here’s how I looked at last week… I spent Monday morning writing a proposal and scheduling time to review it with the decision maker. I gave myself an “A” for Monday AM. The afternoon was spent driving and flying. Normally that would be a “C,” but I listened to over three hours worth of podcasts from Business Week and the Harvard Business School, so I gave myself a “B” for Monday PM. I scored each remaining half day on the same scale, then added up 1 for each A, 3 for each B, 5 for each C and came up with a muda-factor of 26 for the week. (Note that the lower the number, the more valuable the week.) Is 26 good, bad or indifferent? How did you do last week? (…and give me break since I took Thursday off to play golf with my brother and nephew.) What does your planned score for next week look like?

I intend to calculate my muda-factor for the past week and projected muda-factor for the next week every Friday from now on. I’ll be surprised if my scorecard doesn’t drive me to scrub out a bit more waste every week. That would also force me to continuously add more and more activity of direct value to my customers.

Sounds pretty simple. Maybe you ought to give it a try also…

Think about it…

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Hi, my name’s Todd and I have sales flaws

by Todd Youngblood

Is it possible that our relentlessly positive attitude actually inhibits our efforts for continuous improvement? Certainly, no sales rep can survive with a negative outlook, but does “always up” have unintended consequences?

That headline makes me wince every time I read it. I was born with a positive attitude. That “sun’ll come out tomorrow” outlook is a part of who I am. Like anyone who has chosen sales as a profession, focusing on the negative is downright un-natural.

Our over-riding purpose is to solve the problems of our customers. That’s the focus of all good reps. All good sales managers constantly help/cajole/force their sales teams to maintain that focus. And therein lies the “unintended consequences” monster.

It’s always the other guy who has problems that need solving. That’s certainly the ultimate source of sales, but… Is it possible that we and/or our sales process and/or the sales tools we use also have problems? (Is it possible that we and/or our sales process and/or the sales tools we use don’t have problems?)

The cold, hard, unpleasant fact of the matter is that all of us have all kinds of problems; “sales flaws” if you will. Until we identify them, focus on them and clearly define them, we can’t fix them. Unless we also measure them somehow, we can’t know if we’re getting better or worse or just treading water. (Oh, and don’t lose sight of the fact that if we address one of our sales flaws, we’ll wind up selling more.)

For the sake of argument, let’s say that if you are below average at something, there is something flawed in the way you do that something. For example:

  • The average rep in your company or industry achieves $1.2 million in sales per year. You achieve $1 million. You have a $200 K “revenue flaw.”
  • The average rep in your company has $2 million worth of potential sales identified in his or her sales funnel. You have $1.5 million. You have a $500K “funnel flaw.”
  • The average rep in your company reviews a formal “Here’s how much money I saved you last year” document with the top 5 accounts in his or her territory. You do it with 3. You have a 2-account “value review flaw.”

Seek out a critical sales best practices at which you are below average. Do something about it! Then seek out another sales best practice at which you are below average. Do something about it. etc., etc., etc.

Your company doesn’t numerically track that sort of thing? Well, your company has a “finding sales flaws flaw.” But that shouldn’t slow you down a bit. Any individual can easily and habitually identify and quantify sales flaws, then address them. A few examples:

  • Ever notice that when you take the time to craft a well-written, quantified value statement for a quote/proposal, your customers mention some other problem they’re wrestling with? What percent of the time do you write a good value statement? 25%? You have a 75% “value statement flaw.” How about getting that down to 50% in the next 90 days?
  • Ever notice that customer conversations centered on changing and improving a customer business process (as opposed to your product or service) seem to result in more orders? What % of your customer conversations have that focus? 60%? You have a 40% “sales call focus flaw.” How about getting that down to 20% in the next 60 days?
  • Ever notice how a follow-up visit three months after a big sale to see how things worked out always yields another opportunity and/or gets you a referral? What % of your big deals get that visit? 20%? You have an 80% “big deal follow-up flaw.” How about getting that down to 45% over the next 6 months?

I could go on with this list forever. So could you. It’s easy to identify your sales flaws. It’s easy to quantify them. For a surprisingly large number of those flaws, reducing their impact is also easy. That means you wind up selling more.

Gee, maybe focusing on my sales flaws is a great way to help maintain my positive attitude…

Think about it…

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The power of the scatter chart

by Todd Youngblood

Have you heard the one about the sales manager who started learning and using statistical analysis? His sales team was convinced that he had finally lost his mind. Correlation coefficients? Regression analysis using the least squares method? Are you serious? But then the revenue growth kicked in…

Most of us in sales instinctively run the other way when confronted with a task that involves statistical analysis. We’re convinced that it’s just not a necessary part of our skills repertoire. Maybe we shouldn’t be so sure…

Maybe a few statistics can provide some really powerful insights into how we can sell more in less time. Maybe today’s spreadsheet programs can remove most – even all – of the mathematical mystery.

Consider the first “scatter chart” here that was created back in 2003 using data for the six reps in a distribution company. Each dot represents one of the reps and shows the current value of that rep’s funnel vs. revenue from that territory over the past year. (For example, the dot in the lower left shows a funnel value of about $250K and revenue of about $425K.)

What can you learn from the chart & what questions does it raise? Here are few possibilities:

  • The slope of the purple “best fit” line is 0.14, meaning that a dollar added to the funnel will produce 14 cents in revenue. Hmmmm…
  • There really isn’t much of a relationship between how much a rep has in the funnel and how much gets sold. (A “perfect” correlation is a 1; a 0 means no correlation at all.) In other words, what is a “long shot” for one of these folks is considered a “well qualified opportunity” by another.
  • The rep in the lower right has a lot going on – lots of opportunity but not much revenue. Is this person a weak closer? Is she chasing a large number of un-qualified deals? Or, is she running a lot of pilot tests that will pay off big-time next year?
  • What about that guy in the upper left? More than $1.4 million of revenue and a $200K funnel… Is he a great closer? A phenomenal deal qualifier? A genius? Or, is he just plain lucky? He is a new guy. Could he just be reaping the rewards of effort expended by his predecessor?

Stare at the chart for a while. What else do you see? What other questions does it prompt? What actions would you take?

Now take a look at the second chart. Same data, but from 2004. What has the sales manager accomplished? What new questions come to mind?

  • First of all, total revenue is up almost 21%!!! (…in an industry that grew less than 8%)
  • The correlation between funnel value and revenue skyrocketed from 0.2 up to 0.82! That means all the reps have gotten MUCH, MUCH better at qualifying opportunities. Far less time is being wasted on long shots.
  • The slope of the “best fit” line jumped way up too. Now I get 73 cents of revenue for every new dollar added to the funnel. (Also due to better focus on the right deals.)
  • What are those two reps out to the far right doing to find new opportunities? (I think I’d find out and get the others doing the same things.)
  • Does the the rep on the far left have what it takes? Same revenue as last year, less in the funnel. (I think I’ll show him these charts and ask him why he’s the only one not improving.)

Stare at this 2nd chart for a while. What else do you see? What other questions does it prompt? What actions would you take?

SERIOUSLY… Every sales manager I’ve reviewed these charts with comes up with at least 5 more insights and at least 15 more questions. Every one of the insights and questions have the potential to help sell more in less time.

It will take you less than 15 minutes to read the Excel spreadsheet help sections for scatter charts and the “CORREL” and “LINEST” functions. That will provide enough statistical knowledge to produce charts like those above.

I know this isn’t traditional sales management stuff, but the numbers don’t lie. You can improve your funnel quality dramatically. You can increase your kill rate dramatically. You can apply these scatter charts to all kinds of sales best practices.

You might not make time to learn these techniques… But what if your competitors do?

Think about it…

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Blind if not for the rear-view mirror?

by Todd Youngblood

Recently, BusinessWeek profiled Joseph Juran and W. Edwards Deming in its “Great Innovators” series. How is it that two of the most pragmatic business thinkers in American business history are virtually ignored by sales executives? Well, we’ve ignored the insights of Frederick Taylor for over 100 years, and those two have only been around since the 1940s. We can safely ignore them for at least another 50 years…

The fundamental brilliance of Taylor, Juran and Deming stems from their habit of managing and measuring processes instead of just inspecting results of those processes after-the-fact. Here’s why that habit is so important to sales…

Take Taylor’s work at Bethlehem Steel starting in 1898. They shoveled a lot of stuff by hand in those days, and the level of shoveling performance was so low, that it was hurting the bottom line. Taylor started by measuring the iron ore shovelers. He found that the average guy moved 25 tons per day. (That’s analogous to measuring sales results.)

Next he talked to a handful of employees who were able to move 35 tons per day. With a bit of discussion and observation, it became clear they were bracing an arm against a leg and leaning into the shovel using their body weight to scoop up the ore. Turns out this was more effective and far less tiring than the typical method of swinging the shovel into the pile of ore using both arms. (This part of the story is analogous to asking your eagles about their most effective sales best practices.)

Teaching this single best practice to the rest of the iron ore crew drove the average from 25 tons up to 29 tons per worker per day. Now… changing the way a man shoveled was bad enough, but nothing compared to what Taylor did next. He started cutting off pieces of the shovel handles! He started messing with the size of the shovel scoop! (Ever see a sales rep object to a change in work methods? Ever see a sales rep flat refuse to use a new tool, even sabotage the effort to make it work?)

To make a long story short, Taylor convinced management to override the vehement – close to violent – objections of the work crews. His cutting reduced the length of the shovel handles by over two feet. He reduced the size of the scoops from 38 pounds each down to 21 and a half. (And, oh boy, did the shovelers screech and warn about the dire consequences of that!)

The average went from 29 tons to 35 tons per worker per day.
Pay attention, sales manager, to what Taylor, and later Juran and Deming, did:

  • Measure results
  • Examine the process that produces those results
  • Identify one distinctive thing that the top performers do (or add/change one tool)
  • Teach the best practice or new/changed tool to everyone (Make ‘em use it!!!)
  • Measure results
  • Repeat

Sounds overly simple, doesn’t it? It is, except for one thing. It’s that “Make ‘em use it” line. You will get resistance to change and you will either be leader or not.

The only sure-fire way to “make ‘em use it” is by tying the behavior change to income. The ore-shoveling manager used the numbers. He measured process-oriented stuff like number using the arm/leg/body-weight technique, handle length, scoop size…, and correlated it to after-the-fact results i.e., tons per day. Those that delivered got a 60% pay increase. The others…

As a sales manager, count process-oriented stuff like total cost analyses completed, proposals delivered, calls made… Measure process-oriented stuff like quality of customer relationships, level of product knowledge, resources used… Correlate those things to results. (And that, of course, would be size of the commission check which is what really matters to the rep.) Show everybody the correlation between each best practice/tool and $$$. Those that heed and deliver get more money. The others…

Or, you could just ignore the sales process and keep looking at only after-the-fact results in your rear-view mirror.

Think about it…

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“Great relationships” with customers are way too easy (maybe…)

by Todd Youngblood

Something about the whole concept of “great customer relationships” has always bothered me. It’s like stubbing your toe. How much does it hurt? A lot? A little? Does it hurt more or less than the last time? A lot more? A little less? About the same? Does my stubbed toe hurt more than your stubbed toe?

Before I go along with you and agree that “relationships” are the most important factor for successful selling, two conditions must be met. First, we have to agree on a precise definition of the term. And second, we both need to measure the quality of our own relationships. Only then can we have an intelligent discussion about it.

Like it or not, friendship is not particularly relevant except at the very beginning of a business relationship. In today’s highly competitive environment, relationships are grounded in how reliably you can deliver value. (As value delivered increases, so does the friendship and vice versa.) Given that, here’s my definition of five levels of customer relationship:

  • Level 0, Hope: You have no relationship
  • Level 1, Price: Your customer buys from you because of your low price
  • Level 2, Features & Benefits: Your customer justifies buying from you based on how the features and functions you provide fulfill his or her expectations
  • Level 3, Value Added: Justification is grounded in improvements to the customer’s business processes; AND, one of the following is also true:
    • The customer is willing to pay a premium because of the “extra” services you provide, OR…
    • The customer always calls you first for help and gives you the “last chance” to bid.
  • Level 4, Total Cost of Ownership: Justification for your products/services is based on a hard dollar analysis of the impact you have on the customer’s financial statements

Not a lot of wiggle room in the above definition. A lot more objective than “OK” “Good” or “Great.” If you’re a level 2 and your new competitor is a level 3, your customer “buddy” will soon be apologizing profusely for not buying from you this time around. A level 4 competitor will be making sales calls in the executive suite and your “buddy” might not even be part of the decision.

Now for condition #2. Since this is my idea, I went first and ranked my own relationships with all of my key contacts at current customers and for my top 10 prospects. My average score of 2.7 makes me nervous. (Looking at just current customers, it’s 3.2 – for just prospects it’s 2.6)

Now it’s your turn. Be brutally honest with yourself, especially with regard to a level 3 rating. If you have any doubt, drop it down to 2. E-mail your score to me. I’m curious. Review your scores every month, keep driving them upward and pause often to…

Think about it…

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Who’s your eagle? Who’s your slacker?

by Todd Youngblood

When it comes to sales metrics, more is better. Don’t kid yourself. Measuring your reps only by sales and gross profit just might lead to sub-optimizing your sales management decisions.

Most sales managers judge the performance of their reps on two dimensions; total sales and gross profit. Most sales managers, I submit, are therefore slackers.

A few use as many as five metrics by also tracking things like number of sales calls, sales by product and sales growth rate. They too, I submit, are slackers.

Too harsh? Maybe so… Consider, however, the attentive-to-detail soul that tracks number of opportunities, dollar value of opportunities, % of opportunities converted to the next stage of the sales funnel and days to convert for each stage of a six-step funnel. That’s 24 discrete metrics – and, by the way, not that hard or administratively burdensome to track with today’s software. Look at the first table and tell me… Who’s the eagle? Who’s the slacker?

Quite clearly, Amy is the eagle and Ed is the slacker. A closer examination of the profit column would also cause the typical sales leader to have a discussion with Bill about the profitability of his deals.

It would also prompt doing the calculations shown in the “Margin” column. Now who’s the eagle? Did Amy suddenly transform herself into a slacker? What’s going on? Is Ed the laggard actually on to something?

While it appears that Ed does, in fact, do quite well in identifying new stage 1 opportunities, that doesn’t seem to explain his high profitability.

To suspend the steadily soaring suspense, I’ll jump forward to metrics #15 and #16 – They show conversion % and days required to move from funnel stage 4 to 5. (Stage 4 in the model is “Discovery” of the details of the customer’s requirements and decision process and how long it takes.)

Ed earns his eagle status here by a wide margin. He obviously has a lot of tips to offer to the other four reps regarding how to clearly define the customer’s pain. (Note that Ed is successful 78% of the time in only 18 days, while Amy gets this job done only 24% of the time and burns up 30 days.)

The root cause of Ed’s low revenue production shows up in the last column. Getting from Stage 2 to 3 consists of making a good enough initial sales call to convince the decision maker to invest time and resources in further exploring the potential value of his products & services. The 9% conversion rate means he doesn’t get to apply his considerable stage 4 “Discovery” skills all that often.

So… Read those first two paragraphs again and tell me if the “slacker” label really is too harsh. After that, figure out what you could and would do to use the above data to increase the sales performance of everybody on the team. Then…

Think about it…

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Does sledge-hammer-style six sigma make sense for sales???

by Todd Youngblood

Nobody ever disagrees that better sales management leads to better sales results. Nobody ever disagrees that better tools and techniques lead to better management. Nobody ever disagrees that six sigma has been an enormously successful management technique for a wide array of industries and business functions. Everybody scoffs at using six sigma tactics to manage sales.

When Michelangelo was putting the final touches on the Pieta (external link), his tool of choice was an extremely fine, soft polishing cloth. It was the right tool in the hands of this Renaissance genius to complete what many consider to be the finest example of the sculptor’s art. It was one of his last works, and therefore reflects the expertise of nearly nine decades of study, concentration and continuous improvement of skills.

Viewed from a business perspective, the cloth was the right tool for the execution of the last few “best practices” of a well-developed overall sculpting “methodology.” Four hundred years before six sigma was formalized, Michelangelo turned a solid block of marble into a 5.999999 sigma masterpiece.
We don’t really know, but here’s how he might have approached continuously improving his talents to become one of the greatest artists of all time:

  • Defined – Clearly understood what he wanted to accomplish and, step-by-detailed-step, how he intended to do it
  • Measured – Collected quantified feedback from teachers, mentors, and patrons (i.e. customers) on the quality of each of the myriad details of his work
  • Analyzed – Determined the root cause(s) of problems with aspects of his work that did not measure up to his standards of excellence
  • Improved – Relentlessly and methodically got better at performing the day-to-day actions that produced outstanding results, and avoided those that didn’t work as well
  • Controlled – Constantly checked and re-checked himself to assure that he faithfully executed the proven “good” activities and avoided the “bad” ones

As a boy, even as a journeyman sculptor (i.e. as he was getting from 0 up to 4 or 5 sigma), he didn’t worry much about his polishing-cloth technique. He focused on how to whack a big, multi-ton chunk of stone with the biggest sledge hammer in Florence to get the rock to take on the rough shape of whatever figure he had in mind.

Now what on earth does all this have to do sales???

Last month’s newsletter noted that the typical company’s sales process is around minus 0.93 sigma. In other words, it is crazy for a sales professional or manager to try to understand and apply all the nuances and details of six sigma. Sales is still at the sledge hammer stage.

Don’t try to read, understand and apply everything that’s in Pyzdek’s 800+ page “Six Sigma Handbook.” That is over-kill. Start implementing what’s in the introductory chapters of something like George Eckes’ “Six Sigma Revolution.”

I don’t know if I’ll ever get anywhere close to being the “Michelangelo of Sales.” I think, though, that I will take a crack at applying that D-M-A-I-C? process. Might it be worth the effort for you as well?

Think about it…

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Strive to be a zero!!! (Really…)

by Todd Youngblood

People drawn to a career in sales tend to be competitive. They tend to think highly of their own business skills and are driven to win. Odd, though, if they entered a “Business Process Quality Olympics,” they’d be dead last …by a wide margin…

We have all at least heard about the “Six Sigma” continuous performance improvement methodology. It’s intriguing to see just how passionate many of its adherents are about its effectiveness. (Click here (external link) for a really good basic overview.)

If you search what gets published about it – from the lamest trade rags up to the best, leading edge journals – you find lots and lots of examples of companies taking processes from five-point-something sigma to five-point-something-a-bit-higher sigma. You can read about manufacturing processes, accounts receivable processes, research processes, administrative processes, insurance policy application processes, logistics processes, and on and on and on. BUT… I have yet to find one about the sales process.

Odd, don’t you think?

Well, I decided to try and figure out why this is the case. The good news is that I found out. The bad news is that the reason is a bit depressing. Here’s what I did…

I took what IBM taught me when they (misguidedly perhaps) hired me after college. They said that sales was a six step process. Those steps are to identify a potential opportunity, get an appointment with the decision maker, convince that person to investigate my ideas further, investigate the ideas further, write and submit a proposal and finally, close the deal. So far, so good – that’s what the six sigma gurus tell you to do first.

Next they tell you to track the percentage of “things” that move from one stage to the next. After talking to 15 sales execs about the six-step sales process described above, I concluded the average percentages were 25%, 20%, 40%, 75% and 50%. Or, in other words, 0.75% of the originally identified opportunities actually get closed. My statistical buddy told me that equates to -0.93 sigma. Did you know that it’s even possible to be negative sigma? He also told me that the calculations show that if a business could move from -0.93 up to zero sigma, revenue would be 8.8 times higher!

Hey… I’m a sales leader just like you. I’m more convinced than ever that we ought to keep these six sigma process quality quacks far, far away from our sales teams. They’ll start measuring us, reporting results, calculating things… That could lead to getting held accountable for executing our jobs a little bit better every month.

I wonder, though, if one of my competitors is applying all those concepts and beginning to see results…

Think about it…

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