Glen Gary Glenn Ross, David Mamet's powerful 1992 film, had an all-star case with Jack Lemmon, Al Pacino, Ed Harris, Alan Arkin and Kevin Spacey. And, of course, the unforgettable Alec Baldwin who portrays Blake, a ruthless salesman brought in by the owners of the business, to "motivate" a failing sales team.
A seven minute scene has Blake holding court and conducting one of the most memorable and brutal sales meetings ever depicted on film. He berates, belittles and terrorizes the sales team about their dismal performance and enlightens them about their bleak future. "The good news... you're all fired... the bad news... you all have just one week to regain your jobs." If leads aren't turned into sales and quotas met the answer is simple: "Hit the bricks and beat it, because you are going out."
This scene is played out in real life each and every day by companies both big and small. In most instances the language is couched in softer and motivational terms. No matter the style or delivery the message is clear, turn your leads into sales, make your quota or be gone.
To be successful in earning new customers in today's challenged economy a Six Sigma process must be deployed to effectively coordinate all of the required Critical To Quality (CTQ) integral pieces.
The extent of the problem is massive. In fact it has been reported [1] that the 3,000 largest B2B companies in the world spend $300 billion a year on new customer generation, resulting in millions of leads. Yet, despite this massive expense, most sales executives are not happy with the number and quality of marketing generated leads. Why this catastrophic process failure?
The failure can be directly attributable to the lack of a disciplined process being deployed. To be successful in earning new customers in today's challenged economy a Six Sigma process must be deployed to effectively coordinate all of the required Critical To Quality (CTQ) integral pieces. That includes: discovery process, strategic plan, data mining, scripted dynamic appointment generation talk tracks, CRM, web site, white papers, email, direct mail and promotional material.
What is Six Sigma?
Six Sigma is a business management strategy, originally developed in 1986 by Bill Smith, a vice president at Motorola. Today Six Sigma enjoys wide-spread application in many sectors of industry. Based on the work of such mathematical and management pioneers as Shewhart, Deming, Juran, Ishikawa and Taguchi, it seeks to identify and remove the causes of defects and errors in business and manufacturing processes, with a targeted error rate of 3.4 defects per 1 million opportunities. Most new customer acquisition processes are complete failures, operating well below One Sigma which equals 690,000 Defects per 1 Million Opportunities—an efficiency rate of 31 percent. Not may companies can boast of turning 31 percent of their unengaged opportunities (raw leads) into new customers.
Einstein Was Right
Frank's Steaks, a high-end group of three restaurants, was challenged to generate new customers in their Rye Brook New York location. A sister restaurant in Jericho New York had been successful for many years and was the footprint for the Rye Brooke location. The one big difference was that Rye Brook had undergone a multi-million dollar face lift and was more upscale and suitable for B2B as well as B2C engagements.
To generate new customers the Rye Brook management had been down the typical paths with little or no results:
- Print ads in local magazines and papers
- Radio ads on the local radio stations
- Purchased "Leads" list of local businesses
Bottom line: nothing was working. Trying to avoid Albert Einstein's definition of insanity, "Doing the same thing over and over again and expecting different results," Franks Steaks management realized they did not have the time, expertise or focus to hire, train and manage a full time appointment generation staff. To optimize the opportunity and minimize the time to deploy the task would be outsourced to a SPO (Sales Process Optimization) company to create a Six Sigma plan.
Utilizing Six Sigma would insure the number and frequency of new customer growth by targeting the primary areas of opportunity for improvement. Utilizing the Six Sigma methodology would insure that all new customer acquisition processes were maximized and more importantly, since money and time to invest in improvements are scarce, this approach would determine what activities would be eliminated to keep focus on all relevant activities essential in acquiring new customers.
Five phases
Six Sigma embraces the DMAIC process, which refers to five interconnected phases: Define, Measure, Analyze, Improve, and Control. DMAIC refers to the data-driven quality strategy for improving processes, and was an integral part of the Franks Steaks New Customer Acquisition Quality Initiative.
1. Define the required Critical to Quality (CTQ) Core New Customer Acquisition processes
Each month, 50 new customers per month were required. Each new customer would be comprised of an average table of 3 people spending $60 per person and equated to $6,500 dollars in total revenue based on retention rates and repeat business. A dynamic script was needed to clearly and early in the call transmit the benefits and mitigate the risks of arranging a customer meal or function at Franks Steaks. A dynamic company web site was essential in gaining trust early in the call. Titles of were defined for data mining purposes: Owners, Presidents, CEOs, Vice Presidents and Directors of Finance, IT, Sales and Operation. Demographics were defined and included such items as distance from the restaurant and number of employees, annual revenue, etc.
2. Measure the current Core Business Process performance
Data was collected and measured to determine types of defects and compared to internal management's expectations to determine shortfalls. The data revealed that new appointment generation activities were occurring about six hours a month resulting in just two customers per month being generated vs. management's expectation of 50.
3. Analyze data collected to determine root causes of defects and establish opportunities for improvement.
The sources of variation and gaps between current performance and goal performance were identified and opportunities to improve were prioritized. Causes for the defects were pinpointed which included:
- Generating new customers was not a core competency
- No plan in place, an ad hoc approach was being used sporadically
- No scripting of the outbound calls
- Lack of appointment generation sales training
- Lack of a multiple touch approach, no follow up process for unengaged prospects who initially said "No"
- Emails, direct mail and the website were not being used
- No target metrics established
This "lead" list of business names was given to the Rye Brook restaurant management and it was expected that local restaurant personnel would make the appointment generation calls. However, the pain is too great for the average person to make the required 50 calls and generate three to five professional touches to garner one customer, along with performing all of their normal duties. Not surprisingly, people usually just do other less painful tasks and give up trying to generate new appointments. That was certainly the case in Franks.
4. Improve the target process by developing and deploying an implementation plan that includes creative solutions to fix and prevent problems that included:
- Data mining to determine the names, titles and email addresses of decision makers
- Dedicated appointment generators who would devote the proper amount of time to ensure results
- 120 hours of appointment generation activity per month with 15 calls an hour
- 30 calls to generate one appointment accounting for voice mail, gate keepers and call backs.
- A creative and customer engaging appointment generation talk track
- Creation of marketing materials that specifically addressed how the restaurant could meet customer needs such as high-speed internet, special menus and ability to close off an entire section
- The timing and number of touches required to generate required new customers—even when a customer said "No thanks," or "Not interested"
- Three touches per opportunity on average
- Identification and timing of each touch piece which included email, direct mail, success stories, and more.
5. Control the improvements to keep the process on the new course.
To insure that the "Old Way" did not creep back, several controls were put in place, including:
- Regular review meetings that detailed new customer generation activates and results and ensured a constant flow of communications.
- Retention programs were added to follow up after each customer visit to determine the level of satisfaction with the services rendered.
Other Critical Factors for Success
Additional Six Sigma tools and strategies that identified and improved CTQ areas and processes were deployed:
- Pareto Chart—Identified the 20 percent of variation that lead to 80 percent of Franks Streaks defects when generating new customers, (80-20 rule). The 20 percent included the lack of appointment generation training, time and scripting.
- Process Map—Identifying current process and hidden factors that lead to failures in Franks Steaks customer acquisition processes. A new Six Sigma process map was used as a road map and a tracking tool.
- Cause and Effect Diagram—enabled the team to focus on causes instead of symptoms.
- Failure Mode and Effects Analysis—assigns a risk rating from 1 to 100 to each new customer acquisition process and determines the severity if a key process input "X" were to fail. What quickly becomes apparent is which part of your process should be fixed first. In most business a few key fixes will provide a dramatic increase in process performance.
- Brainstorming sessions with immediate action items to improve new customer acquisition results. The SPO management team along with the appointment generation team and the restaurant staff had a plethora of ideas flowing with in minutes. These ideas were then put on sticky notes and posted on the wall, where it quickly became evident that all of the ideas and current problems fell into one of three buckets. This is typical in this exercise and what it points to are some very quick fixes in any process to bring about immediate results.
The Tale of the Tape
To Frank's Steaks management's credit, they realized that their core competency was providing excellent customer service and top quality food and beverages. Developing and managing a dynamic new customer generation program was not a core competency.
This Six Sigma process enabled helped Frank's Steaks acquire 107 new customers in the just the first month, which had an immediate impact in transforming the business from only earning more dollars from existing customers—a very dangerous proposition—to consistently acquiring new customers.