Overcoming Sales Resistance with SOAR

The traditional marketing funnel built on a theory of manipulation is gone (Kill the Sales and Marketing Funnel). In this recent blog post, I discussed the Lean Marketing: 2-Step Marketing Funnel and how you are either marketing or selling. Evidence enough that it is becoming widely accepted that 70% of the customer decision is already formed before you are invited into the customer’s decision process. This fact gets quoted so much; some people are tired of talking about it! Does that make selling outdated, in my opinion, it has never been more important. The difference is that it has changed.

In this blog post, I am going to concentrate on after the invitation has been received. You are fortunate to be one of the selected few to participate. There only really two different scenarios, you are either the preferred choice or you have been selected to re-confirm the preferred choice. These two choices break down into an immediate purchase environment which I will call the micro-level or the macro-level where it may be a large sale or a B2B environment, or my be better defined by a longer sales cycle.

On a micro-level, if you have been selected, you may be thinking that when you are invited that it is time to prepare your position and be ready to give it your best shot. Even in a short sales cycle, you may have to develop trust before someone buys from you. The definition that I use is from Covey (Taken from one of my favorite sales books: Let's Get Real or Let's Not Play: Transforming the Buyer/Seller Relationship ) that states Trust = Intent + Expertise. If we lead with our expertise first, which most of us do, we typically end up creating a low-level of trust. So solidifying your intent is something that you must do as a salesperson.

At the macro-level (not just for one purchase) it is looking at the opportunity to develop a relationship, more often seen in B2B sales. By asking a few questions you can often tell if you are the favorite going in. The importance is not selling but discovering the true intention and any undiscovered needs the client may have. It is not a matter of just finding out their needs because if you are not the favorite that will just confirm the original choice.

If you try to problem solve, it is much more difficult to develop trust. Often times, even the customer will accelerate the conversation to a solution. Don’t try to change them; it is a very difficult to do and you may not have the time to do it. A more attractive method is through the use of Appreciative Inquiry and more specifically leading with SOAR. It is a strength-based approach. SOAR allows you to lead with the positive side of the issues and many times you will often discover more. The SOAR framework outlined:

• Strengths: External and Internal to organization; what can be built on? How are present strengths used to get results? How do these strengths fit with realities?
• Opportunities: What are the external and internal stakeholders asking for? What existing skills exist to deliver?
• Aspirations: What do external and internal stakeholders care about most? What is the most compelling aspiration?
• Results: How will success be measured? What resources can be utilized? What are the best rewards?

Recommended Book: The Thin Book of SOAR; Building Strengths-Based Strategy

I think you will find a strength-based approach when you are not the preferred choice; quite a differentiator. The “intent” is to help them prioritize what is important. If it plays into your wheelhouse, you are in luck.

If you are the preferred choice, your mission would be to move the decision along. Besides competitors, there are many other internal and even external influences that could postpone or eliminate the purchase. I am not saying to force the decision but to make sure that you remove the barriers preventing the decision to take place.

In the book, Conversations That Win the Complex Sale , they show a Venn diagram that discusses the value parity and ask you to focus on where you are different from your competitor. I sort of agree with them. However, I believe the value differentiation is getting smaller and smaller for companies. The process methodology thinking of Faster, Better, Cheaper has become so commonplace it is no longer a game changer. It is value parity. Most of us recognize the game changer as innovation.

Or is it? Can we out innovate all the competition? How long does an innovation keep us ahead of the curve? Does our customer always want the latest and greatest? I would imagine all of our customers are not early adaptors; I would imagine most of them are in the middle part of the curve.

Everyone is Faster, Better; Cheaper and Innovation has less of an effect on the decision.

Tomorrow’s Blog Post: Sales to the rescue!

Lean Sales and Marketing Productivity – Applying SMED

Yesterday, I discussed why we must concentrate on the quality of the leads versus automation and increasing input. Many organizations choose to spend most of their time and dollars on increasing the input, creating more opportunities more fresh bodies, instead of looking at their work in process. I have always believed that inventory is a bad thing, from my previous blog post, Work in Process is Wasteful even in Sales and Marketing. However, just as accountant looks at WIP as an asset so does marketing looks at WIP as a good sign in marketing. Flooding yourself with increased prospects is bad. WIP lowers productivity and does not create more business and even less of the right business. We end up doing all these things that may or may not be good for us. Have you noticed that you seem to be building specials or that sales are bringing you the off-beaten request? It is because your input variables are too high.

I am not going to discuss Voice of Customer and Voice of Market in this post but if you are inclined to learn search for VOC and VOM in the search box. A quick overview is contained in these posts, Lean Marketing listens to the Voice of the Vital Few and Can Voice of Customer deliver? I am going to assume that you recognize the importance of the two.

Special Bulletin: A Process for removing Waste in your Marketing

The next step is to institute SMED in your sales and marketing process. Many of us understand SMED as single minute exchange of dies. In manufacturing this tool allows us to increase the flexibility of manufacturing and decrease lot size. Traditional manufacturing increased productivity by manufacturing in large lot sizes. This way, we rid ourselves of costly changeovers and were able to have inventory on hand for production. When Lean manufacturing came along we changed all that. We were able to institute SMED and as a result our lot sizes went down, inventory in all forms, raw material, work in process and finished goods went down. And we are still arguing with accountants about productivity.

In Lean Sales and Marketing, we can do the same thing. If we consider service dominant thinking and understand the concepts of the job to be done. This will mean that our thoughts are not limited to our existing services and products. It is our ability to build a value proposition around the customer’s job to be done. When we start viewing the value proposition from the customer standpoint, we realize that our offerings also take a different perspective. We can now think how our products/services can be utilized (value in use) by our customer in the most effective way. Using a SMED style thinking we can bundle or unbundle our offerings depending upon the customer needs. In this way, our strengths become more recognizable and our actions clearer. Our product/service applications do not become limiting but rather the tweaks that are needed are much more specific and can be handled much more efficiently. And since we have done our homework, with the CTQs (Critical to Quality issue found in VOC and VOM) we know when to apply adjustments and more add-ons that will result in longer-term value for the customers and markets we serve.

A Lean marketing perspective is that we must create interchangeable features. We must be willing to unbundle everything that we do and re-bundle them in an efficient manner. Think of how car manufacturers, including Toyota, drove many customizations down to the dealer level. Think how the dealers have numerous items to bundle with the car. You can think of many others along this line; it is not uncommon. Bundled services and contextual pricing are very commonplace. Would you think about buying a sub-sandwich that you could not design?

Improving productivity in sales and marketing is not a matter of volume of inputs. It is a matter of offering quality outputs that pull your inputs. It is a matter of having a defined value proposition relative to the market that you are offering it to. It is creating a conversation with the customer and allowing them to customize the offering and as a result strengthen your value proposition.

Your products/service offering should evolve through market penetration. Your value proposition will strengthen and as a result your inputs will be easily more identified.

Related Information:
Mapping Customer Pains to your Value Proposition
Jobs to be Done – Explained by Dr. Deming in 1950
Lean Marketing listens to the Voice of the Vital Few

ASQ Lean Enterprise Division will host the Lean Service Design Program

(ASQ)  Lean Enterprise Division will host the webinar Lean Service Design: Closing the Gaps between Perception and Reality on Tuesday, January 8, 2013 12:00 PM - 1:00 PM CST.

80% of Companies believe they deliver a Superior Service, only 8% of their Customers agree

Lean Service Design changes the way you think about business. No longer can companies focus their efforts on process improvements. Instead, they must engage the customer in use of their product/service rather than analyzing tasks for improvement. We must change our mindset from thinking about design at the end of the supply chain to make it look good and add a few appealing features. Instead, we must move design and the user themselves to co-create or co-produce the desired experience to the beginning.

We typically think of Service as a verb or an activity that is consumed by our customers. We think of Service in forms of organizational functions such as Engineering, Purchasing, Shipping, Marketing, Accounting, IT, Human Resources. When we set out to improve one of these functions, we look at how we do the work. We focus on our own activity. The carryover of product thinking that better, faster, cheaper wins is a total misnomer. The focus on our own activity encourages internal thinking and misplaces our priorities. While addressing services from this viewpoint may seem to be productive and worthwhile, it misses the point in design. If we intend to make services profitable, we must accept that customers do not care how we do our work. They might not even care that we are incompetent at certain functions. Customers want us to provide a service to help them achieve a desired outcome. However, have we designed our services to demonstrate that value?

Lean Service Design Trilogy teaches us how to…
·       Think of services as products or deliverables.
·       Close the performance gap between customers and your organization.
·       Create services that can be part of a package.
·       Create services that are not only supporting but also self-supporting.  
·       Create services that are cost leaders not cost losers.
·       Create opportunities through services.
·       Create revenue through services

American Society of Quality (ASQ)
ASQ’s Vision: By making quality a global priority, an organizational imperative, and a personal ethic, ASQ becomes the community for everyone who seeks quality concepts, technology, or tools to improve themselves and their world.
ASQ’s Mission: To increase the use and impact of quality in response to the diverse needs of the world.

(ASQ) Lean Enterprise Division is a global network of professionals helping individuals and organizations apply proven and leading edge Lean principles and practices to achieve dramatic results for your personal and organizational success.

If you can’t wait for the webinar, you can always sign up for the workshop!

A Value Problem with Lean Marketing

A few days ago, Joel Standwood posed this question on the Lean Edge. Why has the Lean movement largely failed to capture the imagination of the sales team? The Lean Edge is where invited Lean Experts are posed a question and respond with advice about it. I am thrilled to see Lean Sales and Marketing conversations starting to take place.

A recap and my interpretation of what was said is below and indented. These are not quotes; I encourage you to read the entire thread. I would like to mention that the people in this thread know more about Lean in their little finger than I do in my entire body. However, their comments I think accurately points out why Lean has not captured the heart and soul of the sales and marketing community.

In Joel’s comment, he accurately points out that “the most alluring promise of Lean is to boost sales, delivering ever higher variable contribution margins while delighting customers and winning in the marketplace. Yet, the language of Lean to unlock the growth engine of the company rarely enters the sales vernacular, and in general, sales professionals are far less likely to have participated in Kaizen.”

Orry Fiume responded with “Get field sales people to participate in shop floor kaizens!” He mentioned at Wiremold they insisted that all field sales people had to participate in shop floor kaizens. In this way, they could see the disruption that they caused by encouraging customers to order in big batches while at the same time they began to recognize how shorter lead times (from weeks to days) would enhance their ability to meet customers’ needs.”

Pascal Dennis emphasis similar thoughts but brings out the point that we focus too much on the making and not enough on the selling. He compliments the Wiremold successes.

Art Byrne answered the question from a CEO perspective, that is what he was and a damned good one, I might add. He said is it is a lack of understanding Lean as a business system. He correctly states it is simply about providing more value than your competitor.

I agree with Jean Cunnigham more than anyone else on the thread, scary thought for Jean. She says the fault is not with the sales team, but in our ability to translate lean concepts to the core of the sales process.

Jeff Liker accurately states that Lean should be most often started in operations where there is a template for success. He discusses delivery of product and services.

This is traditional Lean thinking that leads us to focus our efforts of continuous improvement internally versus externally. We are constantly trying to improve internal processes making them more and more efficient. What I believe the comments are missing is that there has been a significant shift in the marketplace and at the moment the customer is in control. Supply exceeds demands. However, Lean seems to be still on the wrong side of the fulcrum, the internal processes. Very often we can assist sales and marketing by providing Lean concepts to make their task more effective and efficient. There is no question about it. However, at the heart of the process that Lean experts never address is DEMAND in an economy of excess supply. They still believe that you can drive demand through operational efficiency. Businesses can no longer sell and market with a mindset that demand exceeds supply. In this day and age, for the vast majority of products and services supply exceeds demand. As a result, the supply-side thinking of better, faster, cheaper in the market place is a fallacy. If it is still true in your market, hold on to your seat because it is changing and at a pace that only through the iterative process such as PDCA will we compete (aka: Lean startup, Design Thinking, Service Design, Agile). The Lean mindset is simply stuck in product (Goods) dominant thinking or GD-Logic. Additional information is available on this page, Service Dominant Logic (SD-Logic). There are a few notable exceptions that I believe understand this view (not saying they agree with my thoughts) to include Dan Jones, Stephen Parry and Steve Bell, but it is rare to find SD-Logic thinking within the Lean community. Most people look at the sales and marketing process through an internal lens (GD-Logic). They focus on delivery. Instead, you must focus on how the customer uses your product, as described so often in Clayton M. Christensen Jobs to be done approach (Do You Know the Right Job For Your Products?). You may have to take a step further than that to find demand. Demand is found on the edges where opportunities exist. Most of us believe that means taking our products and spreading our marketing funnel horizontally or from a process point of view, becoming more effective and efficient within the funnel. Instead, we should be in the customer’s environment (playground) and finding the edges there. Those are the unexplored areas that create demand. Apple’s demand has not increased because of more features and benefits. It has increased because of more ways to use the product, apps for example. Amazon has not grown and prospered because of more features and benefits but through customer use of their core services. 37 signals did not grow and prosper because of Ruby on the Rails rather through the proliferation of simple highly focused cloud products that facilitated at first only software developers. Rolls Royce did not capture market share by building better, faster, cheaper aircraft engines. They did it through developing a leasing and service system for those engines. It was on the edges of the customer’s playground that demand was developed. I often use the original Toyota Supplier hierarchy depicted by Liker and Meier in The Toyota Way Fieldbook in explaining the application of Lean in the sales and marketing process. This 7 step hierarchy is where I first saw the opportunity to apply Lean to sales and marketing. If I was marketing to Toyota (The 7 step Lean Process of Marketing to Toyota), I would be seeking to climb the supply chain as a vendor. I have written a great deal on this but what it comes down to is improving my value proposition with my customer and the marketplace. At a micro-level the value proposition is nothing more than a promise that I make in every sales conversation. The conversation may start with check (CAPD) described in my post, Looking and Listening first is not all that Bad of an Idea, Eventually it just turns into PDCA or Kaizen with the customer. It is this knowledge building exercise, this learning cycle that sales people need to be trained in. This PDCA cycle is what creates the pull. Our customer becomes our Sensei. With product-dominant thinking companies (GD-Logic), we do not think that way. It is in service dominant thinking companies such as Amazon, Rolls-Royce and Apple. Without going into a flown blown discussion about SD-Logic, it is the mindset that you co-create value with your customer. Your product/service are only enablers of the use of product. Many of us in the internal world of Lean think we understand value. In the world of Customer Relationship Management, User Experience and Customer Experience they view Lean as process methodology that has a very limited scope in understanding value. As Michael Balle once told me, "Toyota did not become number one in the world by building better cars. They became number one by building cars people wanted." The conversation on the Lean Edge missed the heart and soul of the sales and marketing process. They never stated what people wanted, how to create demand. The pull in Lean at the macro-level is knowledge and understanding of the markets our customers participate in. It is not enough to listen to the voice of the customer or even voice of market. It is the ability to co-create value through PDCA or continuous improvement with the customer. At the micro level it is the conversation. It is building that understanding on what the customer needs (Sales and Service Planning with PDCA). At the Macro or Micro levels, you are not looking to deliver latent knowledge, what you're doing is looking to develop knowledge, and that new developed knowledge, that new learned knowledge, from the act of PDCA is really the pull. This is the highest level a vendor can achieve with Toyota according to Dr. Liker. Lean captured the heart and soul of operations by reducing waste. The heart soul of sales and marketing is creating demand. To look at Lean as an enterprise we must capture the heart and soul of the sales and marketing community. The only way to do that is to address demand and a better understanding of customer value. It is no longer a product dominant world. SD-Logic allows for us to address the value proposition on the demand side. What it lacks is the processes and the rest of the enterprise’s understanding to get this accomplished. Lean offers SD-Logic the gateway to the enterprise. SD-Logic offers Lean the gateway to sales and marketing and the understanding of customer value. It is through the use of the product/service that demand is created. Lean is the best methodology to explore these opportunities through learning PDCA cycles with customers, the 7th step in the Toyota Supplier Hierarchy. What step are you at with your customer? Picture derived from the The Toyota Way Fieldbook.

The Pull in Lean Sales and Marketing via the Last Responsible Moment

The conversations below emphasize in a world with a high degree of uncertainty, that we must wait for the “Last Responsible Moment” before committing.

David Anderson author of Kanban: Successful Evolutionary Change for Your Technology Business says in an upcoming Business901 Podcast:

The whole Kanban thing really came about from the challenge of people resisting change. I was looking for ways of pinpointing root causes of problems. I found that introducing a pull system where we’re limiting the work in progress, was a way of addressing quite commonly occurring problems. Problems with committing on something too early, making commitments where there was a great deal of uncertainty.

So under conditions of uncertainty, people were committing too early, and a Kanban system was a way of deferring commitment until much later, Lean people might say, “the last responsible moment.” And also controlling a lot of the variability in the flow of work through the limiting of work in progress, the understanding of different types of work and different classes of service and setting capacity allocations for those, controlling interruptions and disruption.

A Personal Kanban tip that Jim Benson gave in a Business901 Podcast:

We basically create different projects, and those projects, aren’t atomized until the last possible minute. So we keep things in an aggregated form as long as we possibly can, which is a fancy way of saying that we procrastinate. But this is a good type of procrastination.

The other day I wrote and basically said; “You can put things off until the last responsible minute,“ which means that you’re waiting until you have to get it done, which seems like procrastination, but what it actually is, is you’re not doing something too soon.

So, lots of times we will start a task before we need to, and then as we’re doing the task, more information or more knowledge will come to us and we will figure out “Oh! I should have done it a different way!” Then we end up having waste in the work that we’ve just done, because we started the work too soon.

On the other hand, there’s the other type of procrastination, which is the “I’m going to ignore it, until it becomes a problem.” That’s not good. Nobody wants to do that.

Alan Mossman discussed his latest updates with me and in this PDF Last Planner® – 5 + 1 crucial & collaborative conversations for predictable design & construction delivery  and in a Business901 podcast, he said about the Last Planner®

It manages uncertainty. It deals with reality, rather than with somebody's fantasy about how things will work out at some point in the future, which we're now in. It's moving from working on the basis of what should happen, to working on the basis of what can happen.

One of the things that happens with the Last Planner system, is that the people who are responsible for doing the work on a day to day basis, are involved in making sure that what the plan says should happen, can happen. They're involved in removing constraints, systematically, week in; week out from the work that's coming down the pipe towards them, and are then involved in proposing the work that they will do next week on the basis of the work that they know can be done. Ideally, that's the work that should be done. But there's no point in putting into production, something that can't be done just because it should be done.

Uncertainty is the condition of doubt. Do you allow your salespeople to handle uncertainty? Or is everyone just good at reacting to problems when they are created? Lean is a structured but a highly iterative process that handles uncertainty. It does this through the application of SDCA, PDCA, EDCA that allows the workforce to make strategic and tactical decisions.

From a Sales and Marketing perspective:

1. When you think of a task to be done do you wait for the handoff to be requested?
2. Do you schedule task to be done when and only when everything is ready?
3. As a sales manager can you be confident that you understand the “trigger” points that you need to react to?
4. As a VP of Sales and Marketing are you confident that you will make your numbers?
5. Are you afraid to wait for Pull?
6. Can you apply Lean to your Sales and Marketing without pull?

When we think about Lean, we think about empowering the workforce. The workforce that I think about is not on the factory floor. It is the workforce that is eye to eye with the customer, Salespeople. It is where pull begins.

Taiichi Ohno said, “ The Toyota style is not to create results by working hard. It is a system that says there is no limit to people’s creativity. People don’t go to Toyota to “work” they go there to “think.”

Can you put things off until The Last Responsible Moment and

allow your Salespeople to think?

Follow Pareto not Wannamaker in Customer Retention

Should Lean Marketers be using the Wanamaker Principle or the Pareto Principle in your Customer Retention programs?

John Wanamaker said: "Half the money I spend on advertising is wasted; the trouble is I don't know which half." I have written about this on several occasions on how this is a good thing, not a bad thing. In particular, two posts; Deming was just simply wrong about variation… and Why Should 50% of your marketing should fail (statistical proof offered by Don Reinertsen). However, this type of thinking applies mostly to acquisition, not retention. We need a little of the Pareto Principle in retention.

From Wikipedia:

Business-management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto. It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients". Mathematically, where something is shared among a sufficiently large set of participants, there must be a number k between 50 and 100 such that "k% is taken by (100 − k)% of the participants". The number k may vary from 50 (in the case of equal distribution, i.e. 100% of the population have equal shares) to nearly 100 (when a tiny number of participants account for almost all of the resource). There is nothing special about the number 80% mathematically, but many real systems have k somewhere around this region of intermediate imbalance in distribution.

Why is this important in retention? It is that number, the people that you are presently retaining is the key in developing a retention program.

Wannamaker Customer Retention Program:

Typically, most marketers will design a retention program by establishing a variety of listening posts. We develop campaigns for follow-up that incorporate survey, telephone solicitation, focus groups, etc. With the advent of social media and new technology; it seems that we can be everywhere and at any time. We open the flood gates to this sea of data and here it comes. The information and data collected is bountiful and never ending. In fact, we have created entire industries and threatened to be overwhelmed by big data.

The data flows but much of the feedback is negative. It is pretty common, since the unhappy customer is willing to make the effort to tell someone about it. Only your mother and maybe a few other relatives are ready to expound the virtues of working with you. The continuous improvement people are overjoyed. This is a good thing. We start finding all the problems and now we can correct them. Or, so it seems.

Pareto Principle Customer Retention Program:

In your first efforts, 80% of the people responding will be negative. You must develop a recovery program to handle these instances and improve your ability to respond but in the beginning you will stand little chance of accomplishing both a good response and as a result a customer whom you can retain.

Don’t take this the wrong way and think I am advocating not correcting problems. But this is not necessarily a good thing to improve and create an on-going retention program. What your customer retention program must concentrate on is the 20% positive responses. This is our strength. The first steps of any Lean process are identifying value and creating a current state. Why should we identify the process through Non-Value Activities defined as waste (Weaknesses and Threats) versus value added activities? I use the appreciative inquiry approach of a SOAR framework as the beginning step in the Defining stage and a natural lead in to the other steps.

• Strengths: Internal to organization; What is our core?
• Opportunities: External to organization; What might be?
• Aspirations: Internal to organization; What should be?
• Results: External to organization; What will be?

We continue with the five steps of appreciative inquiry:

1. (Definition) What are we presently doing and how do customers feel about them?
2. (Discovery) What is our present value proposition for the customers we are retaining
3. (Dream)What are our targets for improving? How will we measure success?
4. (Design) How do these experiences differ? How do the customers differ?
5. (Destiny) What’s our investment strategy – not only in media, but in time and events?

By creating our customer retention program from a position of strength, we accomplish those early successes and celebrations so much needed for jump-starting a program. Do we end up forgetting about the problems? Of course not, what we do is by concentrating on the vital few, we create a much more manageable program at the beginning and something we can deliver on. It matches our capabilities. When the program expands, it attracts more customers into our strength versus growing in a random manner. As Dr. Juran might say, it is the vital few not the useful many.

Related Book: The Thin Book of SOAR; Building Strengths-Based Strategy

Related Information:
Using Desired Effects to find Root Cause
Lean Marketers concentrate on SOAR vs. SWOT
Appreciative Inquiry instead of Problem Solving

Listen to the Voice of the Vital Few

One of the first inclinations people have about using Lean in Marketing is the term Voice of Customer.

From Wikipedia: Voice of Customer (VOC) is a term used in business and Information to describe the in-depth process of capturing a customer's expectations, preferences and aversions. Specifically, the Voice of the Customer is a market research technique that produces a detailed set of customer wants and needs, organized into a hierarchical structure, and then prioritized in terms of relative importance and satisfaction with current alternatives. Voice of the Customer studies typically consist of both qualitative and quantitative research steps. They are generally conducted at the start of any new product, process, or service design initiative in order to better understand the customer’s wants and needs, and as the key input for new product definition, Quality Function Deployment (QFD), and the setting of detailed design specifications.

VOC is a great tool but has limitations that are uniquely pointed out by Dr. Eric Reidenbach in his book, Listening to the Voice of the Market. In the book, he states that too often Voice of Customer has been internalized. For example, we use terms such as an internal customer. That may be fine for IT but for sales and marketing, there is only one customer, and you do not find them inside the organization. He goes on to say that VOC though excellent for customer retention severely limits us in customer acquisition. We must understand and use Voice of Market to increase market share. In my work with Dr. Reidenbach, we created a program 5Cs of Driving Market Share with two of the components being Customer Retention and Customer Acquisition that expand on these concepts.

The Vital Few and useful many is a term coined by Dr. Juran which he later named the Pareto Principle. In today’s marketing efforts, there is a mecca of tools and ways to access our customers. The problem is we typically do not have the time, money or skill to be in all places. For the most part, it is the cost of having the skill and the time to manage all the new tools people are using. It is too simple of an answer to just say, “You have to be there.” The problem is that we cannot market to the useful many. We must market to the vital few.

Most of you are now saying here comes that target marketing pitch and that is all fine and good, but I need new customers and without reaching out, how will I get them? We all know it is a risky and costly proposition to reach out and acquire new customers. There are many failures along the way. That is why retaining present customers is so important. However, you can distinguish from the useful many and reach out to the vital few; if you choose to do your homework. You can significantly reduce your acquisition cost.

This will be somewhat of a simplified exercise as the tools we use to do this can be relatively simple to elaborate depending on your situation and size of market.

1. The first step in determining the vital few is to understand your present value proposition for a particular value stream or as other may call it your product/market or service/market. This value proposition should be what attracts your present customer base. This is where the tools of VOC are important. Understanding what makes these customers loyal (which is value, not satisfaction) and the critical to quality (CTQs) components of that value proposition.
2. We must understand our competitors’ relative value propositions and what drives their loyalty base. This should not be an insurmountable task and typically, your sales and marketing people already have a pretty good idea of this.
3. Compare the performance gap, much like any other internal improvement effort. I recommend picking your closest competitor, which you know best and do this exercise. This gap which can be measured numerically hopefully is positive, which means you have a stronger value proposition than your competitor.
4. Do this for several value streams (product/markets or service/markets) and see where you have the largest advantage over your competition.
5. Look at markets, trends and other pertinent data to determine where the best opportunity for growth is for your strongest value streams relative to the competition which you obtained in step four.
6. Decide based on your budget and your capability which type of customer/prospect offers the best opportunity. The vital few you can acquire with the CTQs of your present value proposition.

This exercise is not as simple or as intuitive as one thinks. The gap is dynamic and should be monitored. You may find that you do not have the capability to widen the gap with a competitor. Or, your gap may be negative and in your present position, you will not be able to close it. You may find that it will take a complete product/service innovation to do it. However, the advantage that you now have is that to find these answers you will not have to research the useful many but only concentrate on the vital few that are most attracted to your present value proposition.

Related Information:
Follow Pareto not Wanamaker in Customer Retention
Deming was just simply wrong about variation…
Why Should 50% of your marketing should fail

Lean Marketing meets SD-Logic

Lean Sales and Marketing is just not another extension of Lean into another area of business. if you think that way, you will be marred into product dominant thinking. You must recognize Lean as the pathway into  Service Dominant Logic Thinking (Vargo and Lusch (2006)). How that happens is through using Lean as the vehicle for effective and efficient value propositions that co-create value with the customer.

This infographic below is my humble attempt to start the discussion between Lean and Service Dominant Logic.

Considering taking the first step.

If you are a Sales and Marketing person: Lean Sales and Marketing Workshop

If you are Service provider:  Lean Service Design Trilogy Workshop

Considering taking the first step.

If you are a Sales and Marketing person: Lean Sales and Marketing Workshop

If you are Service provider: Lean Service Design Trilogy Workshop

Your Structure needs to Change before You Create Demand

In one of my favorite books,The Path of Least Resistance for Managers  author Robert Fritz states:

People are fond of saying, "Well, that's our culture." They seem to think that the cultural norms and habits of the organization are causal. But what creates the cultures? The underlying structures people are in.

In fact, it is the structure of the position that produces the consistent pattern of behavior, not the usual things people say that cause human motivation and behavior. Think of all the money that is wasted on Myers Briggs and other such personality profiling systems that assume it is one's personality type will predict his or her performance. The real cause of how well people will perform or not perform comes from the underlying structure they are in, no matter what their personality types.

But personality profiles are a telltale sign that people within organizations think situationally rather than
structurally. They think if they get the right personality type, they will succeed. They are completely unaware that whomever they engage, the underlying structure will determine the degree to which they will succeed or fail. If we change the structure of the position, the performance pattern will change. If we don't change the structure, no matter who attempts to succeed in that position, he or she will fail including the most competent people available who have what is said to be the most ideal personality profile.

This resembles the principles of Toyota Kata: Managing People for Improvement, Adaptiveness and Superior Results and the discussion of structures and resistance. But it brings to the forefront why I believe that the principles that I discsuss in my Marketing with Lean Book Series and most particularly in the Lean Engagement Team book. I highlight this in the blog post; Success is based on more than just luck.

We have to change the structure to create demand. Our organizations will not adopt without this change. Review Blog posts, When Efficiencies and Innovation no longer work, is Customer Centricity the answer? and The Uniqueness of Hoshin Kanri. In the former post, I discuss how catchball is used and is a great template for how we must engage not only internally but externally. It is that type of thinking that will accelerate our understanding or our customer and their customer needs. It is our structure not our people, not our products or services that need innovation.

One such description is by  Dave Gray through his recent book, The Connected Company. Dave is my podcast guest tomorrow and I asked him when we were talking about this subject, “How does that relate to the connected company?”

Dave:  I talked about, for lack of a better word, the industrial age company, which is a form of a company that most of us are familiar with today, that still most of us work in. It's a company that's based on this principle of division of labor. At a very fundamental level, these are divided companies. A connected company is, in many ways, the opposite of a divided company, so it's not based on the principle of division of labor. It's based, actually, on a principle that's more like the connection of labor. To put a little meat around that, you think about the way that we organize work today. We divide up the work, and different people have different parts of the work.

That works really well in a factory environment when you're producing a single thing, and you want to produce it at volume, that people can specialize on their little piece of the puzzle, "I'm the guy who puts the hubcaps on," or whatever. You can specialize on that little piece, and the work can be done very efficiently.

But, the same principles do not apply when you're delivering services. When you deliver a service, it's very important that you have a sense of the whole at all times. When you're in a manufacturing environment, it's OK to own a task, but a service experience is very different. If you're providing a service, you have to own the customer. You have to own the customer's problem, not just a task, and we all know what this feels like.

In the above mentioned book,The Path of Least Resistance for Managers (If you purchase my copy from me on Amazon (I must be the shipper), I will include the Marketing with Lean (Marketing with Lean Book Series on CDrom)

The Lean Marketing version of Lean 3P

Designing your Value Proposition

Lean 3Ps of Marketing: Purposes, Practices and People

The  Competing Values Framework is used to organize an approach to leadership and management development. An excerpt from a paper (download the entire paper) by the author of Competing Values Leadership: Creating Value in Organizations (New Horizons in Management).

These dimensions form four quadrants, each representing a distinct set of organizational and individual factors. They identify, for example, the criteria of effectiveness that must be pursued by organizations, the leadership and managerial competencies that are most effective, the underlying culture of organizations, and so on. What is notable about these four core values is that they represent opposite or competing assumptions.

In the blog post, Lean Sales and Marketing Productivity – Applying SMED, I discussed the importance of being able to break down and/or bundle your product and services to match the customer needs or the job to be done. In the blog post and Infographic, Lean Marketing meets Service Dominant Logic; I discuss the roles that we must take to deliver on the value proposition that was created from the product/services. Both are viewing the process from the inside – out. One of my standard lines that I have a tendency to wear out is that it is no longer marketing’s job to get the message out, rather it is marketing’s job to get the message in, Outside – In thinking.

How much of our time, do we spend evaluating the existing customer’s value framework? Do we understand or ask the right questions to understand their decision making process? The Competing Values Framework can be used as a way of training your sales force on understanding that process. It is a way of aligning behaviors and practices to desired results. It is not only important to understand what drives your customer and your organization purposes, practices and people (PDF on the subject) but equally important to understand how that affects your communication to each other. It is a great asset for aligning Value Stream Teams to the appropriate customer and a great aid in responding to proposals.   

Does your sales force understand your different value propositions and how they can be delivered?

How often do they receive training on new uses of your value propositions?

Customer Retention Assessment

The typical company will focus on growth by emphasizing customer acquisition. However, market share growth is highly dependent on been able to retain customers. In that area, all that is needed is to find the source or the reason why they defect and then slow the rate of that defection. I doubt that you will ever get to a point where you will never lose a customer nor should that even be your goal. But what you should do is it elevate the importance of customer retention to a level of equality to customer acquisition.

Dr. Eric Reidenbach has been a favorite author, mentor and collaborator with me through recent years. We developed the info-program Driving Market Share  where we spent a great deal of time discussing his favorite past time, the subject of value. During that time we created this assessment on Customer Retention. At the bottom of the post is a quick overview of your answers. 

Customer Retention Assessment:

Q1. What percentage of customers do you lose, on average, in a given year?

            ____%    Don’t know ____

Q2. Do you have a program or system for managing customer retention?

            Yes ____    No ____    Don’t know ____

Q3. Do you have a method or system for identifying systemic breakdowns in customer service?

            Yes ____ No ____ Don’t know ____

Q4. Can you measure the dollar cost of a lost customer?

             Yes ____ No ____ Don’t know ____

Q5. Do you do any lost customer analysis?

             Yes ____ No ____ Don’t know ____

Q6. Have your quality initiatives focused on any customer loyalty or retention projects?

              Yes ____ No ____ Don’t know ____

Last week Dr. Reidenbach gave me the honor of posting his latest article which I divided into two blog post:

• Building Value into the New Product Development Process
• Capitalize on the Speed of Value to Insure New Product Success

About Dr. Eric Reidenbach. He is the Director of the Six Sigma Marketing Institute and the author of over 20 books on marketing and market research. A few of them are listed below.

1. Best in Market: The new Imperative for U.S. Manufacturing (Immediate Download)
2. Listening to the Voice of the Market: How to Increase Market Share and Satisfy Current Customers
3. Six Sigma Marketing: From Cutting Costs to Growing Market Share
4. Value-Driven Channel Strategy: Extending the Lean Approach

Assessment Overview:

Churners are those companies that answer “no” or “don’t know” to the questions are companies that tend to be complacent about customer care and customer loyalty. This response pattern suggests that there is no one or no function within the company that is focused on keeping customers. They are companies that are probably losing significant amounts of revenue by ignoring their own customers’ needs.

The costs of customer acquisition runs about 5 times the cost of customer retention and this can have a significant negative impact on profitability.

Retainers are those companies that have provided a “sticky” environment that keeps customers and enjoys the annuity effect of loyal customers. These companies know what their churn rate is (Q1) and have deployed an active program to promote loyal customers.

More advanced retainers will actively seek out information regarding what they are not doing but should be doing. They may undertake a lost customer analysis (Q5) and use this information in their quality programs (Q6) and to improve any systemic weaknesses (Q3). These companies understand that market share is comprised not only of customer acquisition but also customer retention.

More about customer retention during the week.

Kaizen in Lean Sales and Marketing

In a recent tweet from @Kevin_Meyer he expanded on a comment that he left on a Lean Blog about ISO vs Std Work . His tweet said,

What I forgot to mention is that the job breakdown aspect of TWI became our engine of kaizen. A little different than the norm.

I intended to respond to him but felt that the 140 characters of Twitter just might not be enough.

In a recent blog post, I started discussing the PDCA conversation. In the post, I discuss how we split the PDCA cycle in half with one side being the Performer (Seller) and the other side the Customer. Read more about this in the blog post, Sales and Service Planning with PDCA. In a later post, PDCA Planning: Determining Customer Touchpoints, I take this conversation a step further and demonstrate how this applies to a B2C  and B2B individually and to a market. 

As a Lean company, we will invest all kinds of time and money on reducing waste and improving flow through ridding ourselves of non-value added task with tools such as Value Stream Mapping. Most organizations are just clueless on how this type of thinking applies to Sales and Marketing. Sure we can efficiently apply to Office systems and into call centers. But into Sales?   

When we typically think of conversation in Sales and Marketing, we think about scripts, SPIN Selling and of course, ABC (Always be closing). If you have read this blog for any length of time, you understand that I look at PDCA as the culture of Lean and therefore, a necessary ingredient for a Lean company. It is this conversation, not the tired old words that Value is what a customer will pay for (Ref: Value can no longer be defined as What a Customer will pay for!).

In essence, this is the way I took Kevin Meyer’s (Evolving Excellence) quote:  “job breakdown aspect of TWI became our engine of kaizen.” What is the engine of Kaizen for Sales and Marketing? It is the conversation. The quality and depth of this conversation drives Sales and Marketing. I might venture to say that this engine should be the driver for the entire company. If we would build our leading indicators from the PDCA conversations, I believe it would accelerate our growth in the market place.

I question how someone could consider themselves a Lean Enterprise without Lean being applied in Sales and Marketing. The PDCA Conversation is where PULL begins. 

Could I have done it in 140 characters?

Difference between Development and Design–Empathy!

The thought process that I try to embed in Lean Service Design can be summed up in one word: Empathy! It is a major differentiator between the traditional process methodologies of Six Sigma, and I say this tongue–in-cheek, Lean. Many times when you review Design for Six Sigma, Lean Startup, Lean Product Development, Lean Services and Lean Design (the list goes on), seldom when you search (like never) the index of the book will you find the words Empathy.

In Lean, you will find the words Respect for People and it is rigorously applied by most Lean practitioners. However, it is typically applied from an internal viewpoint. I do not want to imply that it does not carry over externally (Customer Experience will mimic the Employee Experience) but seldom do I see it addressed. In healthcare, I believe you will see it addressed more than anywhere else at the moment, but I believe that discipline was built from a compassionate side to begin with. It was not guided by Lean as an enabler of empathy. Developing products/services requires an organization to understand the emotional needs and difficulties of their prospects and customers. Our product/service development should be centered on understanding value in use (Service Dominant Logic).

Most organizations struggle in their attempts as they evaluate seas of data often times masqueraded in a method called called voice of customer. Often, it loses the personality of the customer. The tendency is to view development as product/service centric rather than customer/user centric. The area of Empathy is very evident in Service Design and Design Thinking. A few more thoughts about this. The 'Double Diamond' Design Process Model (From the Design Council in the UK – a complete description of the process can be found here.)

Different designers manage the process of design in different ways. But when we studied the design process in eleven leading companies, we found striking similarities and shared approaches among the designers we talked to. In this section we show one way of mapping the design process, and give more detail on the key activities in each of the process's four stages.

The double diamond diagram was developed through in-house research at the Design Council in 2005 as a simple graphical way of describing the design process.

Divided into four distinct phases, Discover, Define, Develop and Deliver, it maps the divergent and convergent stages of the design process, showing the different modes of thinking that designers use.

What I find intriguing about Design and specifically the double diamond is its similarity with the 4D process of Appreciative Inquiry.

1. Discovery: What gives life?
2. Dream: What might be?
3. Design: What should be?
4. Destiny: What will be?

I think the resemblance is not coincidental by any means. I think is a direct reflection on how the Design process has moved development into the customer’s playground. Shaping positive outcomes is only done by understanding (which comes from empathy) the user of your product or service. No longer, can we consider ourselves the experts. We may have more product knowledge but unless we understand how that can be applied and transferred to the use of the product (Service Dominant Logic) it will serve little purpose for the organization and the customer.

Shifting your organization from an internal Product/Service Development process to a Service Design/Design Thinking process may be assisted with a little Appreciative Inquiry training. Empathy is a more difficult process to acquire. Many will say it is a personality trait and much easier to hire than to change someone that has little. A great starting point is a favorite book of mine on the role of empathy in business: Wired to Care: How Companies Prosper When They Create Widespread Empathy.

You may be interested in the Lean Service Design Trilogy Workshop