Sales Proposal Process Excellence Six Sigma for Marketing

Sales Proposal Process Excellence

Six Sigma for Marketing

<Marketing Planning>, © 2005, PDSS Inc. 2

Intuition can be costly

Captains sailing west to colonial America assumed direct route was fastest route.

Those using facts to chart course achieved more predictable & profitable outcomes; they arrived two weeks earlier


Desired State

• Sales system with structured activities and a process for developing quality written proposals

• Clear focus on quality in selling;

• all activities and processes must be buyer driven – based each buyers unique needs and wants.

• Do proposals increase probabilities of sales success ?


Learning Objectives

1. How Proposal Development Process works within broader sales process.

2. How to establish a repeatable process that consistently achieves desired outcomes

3. How to use Process Maps to align support functions with Critical Customer Requirements.


Sales Proposals

• document negotiated agreements to describe how seller’s offering will meet buyer’s requirements.

• They also provide framework to• establish trust based relationships & credibility with customers• identify, understand & solve business problems • exploit revenue growth opportunities of mutual benefit• accurately represent service and product capabilities of seller• specify what actions will be taken, by when and by whom.


When to Use Sales Proposals

• When sale is complex • Offering & value proposition not easily communicated • Financial & non-financial benefits not readily apparent

• When multiple people at multiple levels involved in purchasing process & decision

• When proposal seeks to solve complicated business problem impacting other functional areas.

• When team sales approach is used.

Sales

Team

Buyers


Sales Process / Customer Relationships

Ad Hoc

Replicable

Focused

Dominant

Map Process / Identify what effective reps do, integrate into process track compliance with in-process measures

Qualify leads, decision make, ability to buy

Make fewer more relevant calls/ sell

solutions to meet needs of high gain customers /

businesses

Consultative involvement in business. Demonstrated

Ability to Achieve Results

Once they have a customer, They don’t lose them.

Reps get leads/ Schedule sales calls/

Leave brochures / follow up e-mail or phone

Less MorePredictable Outcomes

Quantity Quality

Transactions Collaboration Relationships Mutual Benefit

How capable is your process ?

What are optimal customer relationships ?


Transactional

• Definition:

• To complete, transact business (Customer & supplier focus on basic products/services to sustain business process)

• Characteristics:

• Tactical focus

• Driven by price & product specifications (buy & sell)

• Low relationship

• “Standard” resources employed

• “Off the Shelf” product & services

• Low loyalty

• Low degree of differentiation


Collaborative

• Definition:

• A number of persons associated together in work or activity: a group on one side


• Collaborative, supportive

• Mutual expectations are agreed upon

• Additional, special services may be bundled with a product

• Some level of differentiation

• Level of relationship at functional levels

• Level of risk & reward is high, may favor one party

• Operational focus


Partnership

• Definition:

• Two or more persons engaged in the same business enterprise and sharing its profits and risks: each is the agent for the other and is liable


• Shared goals and resources

• Focused on Strategic issues

• Level of resource commitment and service goes beyond part time

• Best people assigned to meet team objectives

• High Relationship (multi-level contacts)

• Significant risks & rewards

• High level of differentiation


Transactional Relationships

• Pros:

• Simple, low maintenance

• Low cost

• Few resources, low time commitment

• Price flexibility when supply is short

• Low risk

• Ease of movement

• Cons:

• No loyalty

• Spot business

• Difficult to forecast and plan for needs

• Demand uncertainty

• Low level of market understanding or information

• Can’t effect product specs

• Low “hit rate”

• Low VOC

• Higher product development cycle time


Collaborative Relationship

• Pros:

• “Strategically” focused

• Can drive new product and technology without being committed to one customer

• Can share resources (cost effective)

• Improved turn-around time

• Customer assisted design

• Better VOC

• Cons:

• Risks tend be be more one sided

• May limit market development potential

• May meet only limited number of customer’s requirements

• “Middle of the road” higher costs, but may not be differentiated enough


Partnering Relationship

• Pros:

• Highly differentiated products & services

• Shared risks

• Potential for breakthrough products

• First to market and “beat out” competition

• High switching costs

• High VOC

• Potentially high “hit rate”

• Faster cycle time

• Cons:

• Have to share rewards

• May partner with wrong customer

• Low flexibility to serve entire market

• High risk (all eggs in one basket)

• Have to share too much information (e.g. patents)


Sales Proposal Development Process

• Should be part of larger Sales System • Focus on Process (how things get done) > Results (what’s done).

Build Rapport & Relationships

2. Audit Operations & Organization

3. Seek & Confirm Needs & Wants

4. Initiate & Present Solutions & Strategies:

The Proposal

5. Close Sale

Time

Source: “Quality Selling Through Quality Proposals”ISBN 0-89426-224-6


Integrating Six Sigma Concepts & Terms

Critical to Quality (CTQ) (P/S) Attributes most important to customer

Defect Failure to deliver on customer requirements

Process Capability What process is capable of delivering

Variation Customer experience relative to process aims

Design For Six Sigma

Six Sigma For Marketing

Designing products to meet customer requirements within phase gate process using assigned tasks, tools, and methods to meet gate deliverables


Types of Six Sigma

• “Lean” to reduce steps in a process that don’t deliver customer value.

• “DMAIC” to reduce variation (fix a problem) within in an existing process or create new process. (Used on one-time basis)

• “Growth” used on ongoing basis to coordinate process phases of top line growth projects & manage for more predictable sales results.


Order Entry Purchasing Operations SchedulingInvoicing / Collection

Value (products, services, information)Cash

Human ResourcesFinance & Accounting

Information TechnologyMarketing, Sales

Management & LeadershipNew Product / Service Development

Lean & DMAIC Six Sigma..

…Focused on Operations


Integrating Lean & DMAIC

Process after Lean Flow – Focus on systems timing between process steps and removing non-value added work

Process after Variation Reduction – Focus on reducing variation within each step of the process

Time

Period 1

Time

Period 2

Time

Period 3

Process Step 1

Process Step 2

Process Step 3

Process Step 4

Time

Period 1Time

Period 2

Process Step 1

Process Step 2

Process Step 3

Hold the GainsControl Plan Measurement Validation

Speed & QualityImprovement

Time

Period 1

Time

Period 2

Process Step 1

Process Step 2

Process Step 3


Sustainable Process Improvements Hold the Gains !

“The big difference is that before, someone might do something really terrific, but then change jobs or position and the great work would fade away.

Six Sigma makes those improvements sustainable; they don't go away…they’re built into the process.”

Scott Fuson; corporate executive director of marketing, sales,& customer service

Source: “Marketing NPV”


Develop a Won / Lost Analysis for Proposals to

Define Problem identify most common root causes of success & failure

Measure Current Success Rate measure % of Proposals that convert into sales

Define, Measure, Analyze, Improve, Control

When completed reader should be able to visualize a narrative of how this market behaved and responded to your company’s

proposals against competitive proposals in the past.


Won / Lost AnalysisProduct / Family:_____________________

Markets/ Segments

Won Lost To/From Whom

Why When Special Situations


Tool: Portfolio Matrix Analysis

Mar

ket

Att

rac

tiv

enes

s Company Strengths High Low

Low

Invest for growth

Maintain position,

manage for earnings

Manage for Cash

Develop Opportunity

Strategy Invest Maintain Manage Develop

Market Share Maintain / increase dominance

Maintain / milk earnings

Maintain Increase

Product Differentiate – line expansion

Prune / differentiate for segments

Prune Aggressive Differentiate – line expansion

Price Lead – aggressive price for share

Stabilize Prices / raise

Maintain Aggressive price for share

Place Broaden distribution Hold wide distribution

Gradual withdraw Establish

Promotion Aggressive Marketing

Limit Minimize Aggressive Marketing

To determine if marketing mix is properly aligned with product strategy


Sales ( & Sales Proposal Development)…

• Are Processes

• With Deliverables ( e.g. more predictable & more positive sales outcomes

• Responsibility assigned to individuals who are held accountable for quality & quantity of results ( includes timing )

• That can be Managed

• A clear work break-down structure establishes integrated continuum of tasks & tools to produce deliverables within sales process


Develop Process Maps to Analyze

• Graphically identify / describe major steps, inputs & outputs.

• Offer common depiction of process to identify waste and areas where process is poorly defined.

• Focus team on areas that most likely cause problems !

• Uncover opportunities to improve and differentiate our products and services & sales force from competitors.


Process Maps Reveal Hidden Complexity

Every process map has at least three versions

What you think it is . . .

What it actually is . . .

What you wouldlike it to be


Decompose Process into Functions

Abbr. f Mathematics “ Y is a function of x”

Marketing a set of processes for creating, communicating, and delivering value to customers and… managing customer relationships in ways that benefit

the organization and ..stakeholders." - American Marketing Association

Sales Process… “A series of actions, changes, or functions bringing about a result: the

process of digestion; the process of obtaining a driver's license.

Functions Something closely related to another

thing and dependent on it for its existence,

value, or significance: Growth is a function of nutrition.

Source: American Heritage Dictionary


Process Mapping Terms

• Input variables may influence outputs

• x’s or factors

• Output variables and customer requirements

• “Big Y’s” when referring to final output

• “Little y’s” when referring to output measurements taken upstream

),...,,( 21 kxxxfY

Understand and control the x’s to control the Y’s


Core Processes

Core processes are defined as a series of activities which cross functional boundaries and create the end product or service that is delivered to our external customers.

Core Processes

Common to Most

Businesses

Take Orders

Develop Products & Services

Manufacturer Products

Deliver Products and Services

Maintain Customer Relationship

Market and Sell


Enabling Processes

Enabling processes are a series of tasks and activities that are internal to our business but contribute to the performance of our core processes. The customers of enabling processes are the core business processes.

Enabling Processes Common to

Many BusinessesA

dmin

istr

atio

n

Info

rmat

ion

Tec

hnol

ogy

Lega

l

Tra

inin

g &

Dev

elop

men

t

Com

pens

atio

n

Hiri

ng


Functional Process Map

Build Rapport & Relationships




The Proposal

5. Close Sale

)(xfY Enabling Processes Outputs (“y’”) Process Step

CRM / Lead Generation / Sales Training / Interview

Guide Development

Develop Audit Questionnaire/ DMAIIC

Customer agreement to advance Sales Process/ contacts

Letter to Customer describing findings & how desired state will

be achieved / “Trial Close”

Structured report on current state / needs

analysis/ customer goals

Capabilities Assessment /

Pre-Flight check across functions finance, mfg. marketing, distribution

Business / Profitability Analysis / “ go or no go”

decision

Follow Up ( within x days)

Signed Contract,

Purchase Order, etc. Sales Process Management


Leading and Lagging Measures

• Leading Measures – Inform on need to adjust process before an undesired event .

• Monitor and evaluate inputs and adjust downstream processes

• Lagging Measures – Inform on need to adjust process after undesired event occurs.

• Close Lagging Measures – Enable rapid feedback & adjustment of process, monitor and evaluate results of steps & feed information upstream.

• Long Lagging Measures – Take so long to provide feedback that decision-making is not timely, monitor and evaluate process outputs and feed information upstream.


To Develop Model Further

1. Develop prioritized list of customer segments

• every process has several different customer segments• pick top few (customers may be internal or external)

2. Conduct interviews, focus groups and surveys to gain in-depth understanding of customer requirements:

• conduct Market & Competitive Analysis (benchmark)

3. Identify Critical Customer Requirements (CCRs).

• Prioritize CCRs & list highest priority CCRs on Process Map


What Functions are Critical To Customer Quality ?

Build Rapport

& Relationships




The Proposal

5. Close Sale

)(xfY

Enabling Processes Outputs (“y’”) Process Step

CRM / Lead Generation / Sales Training / Interview

Guide Development

Develop Audit Questionnaire/ DMAIIC

Customer agreement to advance Sales Process

Letter to Customer describing findings &

plans to achieve desired state / “Trial Close”

Structured report on current state / needs

analysis/ customer goals

Capabilities Assessment /

Pre-Flight check across functions finance, mfg. marketing, distribution

Business / Profitability Analysis / “ go or no go”

decision

Follow Up

Signed Contract,

Purchase Order, etc. Sales Process Management

Customer Requirements

Prompt, Courteous well prepared salesperson

Follow up visit within X Days after meeting

Follow up meeting with staff within X

Days

Presentation of Proposal within X Days/ Consistent Appearance / format flow & Content /

No surprises !

Dinner / Golf / both


Process Capability

• A process under statistical control is able to have it’s natural tolerances fitted to it. This is referred to as the Voice of the Process

+/- 3 Standard Deviations from the mean response are designated as Control Limits

This measures process capability relative to delivering Customer Value (CTQs)

Voice of The Process

UCLUCLLCLLCL

Natural Tolerances


Customer Requirements

• +/- 6 Standard Deviations from the mean response are designated as the Specification Limit. A process will have performance tolerances defined by Voice of Customer

• This is where customers perceive variation

Voice of The Customer

USLUSLLSLLSL

Performance Tolerances


A Statistical Quantity

LCL UCLy

USLLSL

6

12

Natural TolerancesPerformance (VOC) Tolerances

26

LSLUSL

Cp-3

Latitude+ 3

Latitude

Six SigmaSix Sigma = the sum of the two green distances = the sum of the two green distances (+ or - 3s between the limits)(+ or - 3s between the limits)

WasteWaste


Integrated Hierarchy

Rev. A Printed 6/5/20033M ConfidentialXX - 18

Marketing System

Sales Function

Requirement

Distribution Function

Requirement

Promotion Function

Requirement

Sub-Fxn

Sub-Fxn

Sub-Fxn

Sub-Fxn

Sub-Fxn

Sub-Fxn

Sub-Fxn

Sub-Fxn

Sub-Fxn

CC CC

CC CC

CC CC CC CC

CC CC

CC CC CC CC

CC CC

CC CC

yyxx yyxx yyxx yyxx yyxx yyxx yyxx xxyy xxyy

FxnFxn Fxn FxnFxn Fxn FxnFxn Fxn


Control: Marketing Systems

• Strategic ControlStrategic Control –evaluating whether the company’s marketing strategy is appropriate to market conditions.

• Annual Plan ControlAnnual Plan Control – ensuring the company is achieving its current goals, e.g. sales plan, profit plan, etc.

• Profitability ControlProfitability Control - measuring actual profitability of products, customer groups, trade channels, transactions, pricing proposals, order sizes.

Other Enabling Processes


IMPROVE: Goal Tree Aligns Strategies & Tactics

Target Product Revenues

$-

$5.00

$10.00

$15.00

$20.00

2005 2006 2007 2008

$ M

M

Product D

Product C

Product B

Product A

2005 Product B 40 %

Product A 60 %

2008 Product D 25 %

Product C 40 %

Product B 15 %

Product A 20 %

Current State Desired State

20 % CAGR by YE 2006

Company needs to generate $ 7 MM

growth in ongoing sales by 2008

Goals Objectives

Diversification New Product New Market

Development New Product

Existing Market

Strategies

Expand channel 2X by YE 2005

Plans / Milestones

Six Sigma for Marketing & Sales Training 2Q ‘06

Improve Product Development Process

Improve Marketing Inputs to Product Development

Process

Increase Sales / Marketing effectiveness & efficiency

Design For Six Sigma Training YE 2005

Improve & Measure Proposal Development Process

Sales Proposal Process Excellence Six Sigma for Marketing

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