Improve Sales by focusing on customer/supplier relationships

sales

Continuing with the theme of improving our sales process, it’s important to remind ourselves that satisfied and delighted customers are the lifeblood of any organization.

Providing customers with the highest quality products and services at the best possible price starts with clearly understanding the customers’ needs and requirements and then designing and implementing processes that consistently deliver value.

But there are two types of customers:

  • external customers
  • internal customers

It’s important to recognize that both types of customers are important and have needs that must be met. External customers are the people who pay for our products and services. As Dr. Deming said: “No customers, no orders, no jobs!”

Paying attention to the external customers’ requirements is essential and helps us keep the entire organization focused on doing value added work (i.e., “work the external customer would pay for if they know what we were doing”).

However, to effectively meet the external customers’ needs, we must also work with our internal customers. Understanding and meeting our internal customers’ needs and requirements helps the process of producing our product or service to flow smoothly, be problem-free and deliver the highest quality at the lowest total cost. When we work with our internal customers we are, in fact, “internal suppliers.”

Of course, this customer-supplier relationship extends to our external suppliers as well. From our external customer’s point of view, we are responsible for what they buy from us; and our suppliers are part of the system.

It is increasingly important to build strong customer/supplier partnerships that ensure that we get exactly what we need, in the right quantity, at the right price to be able to meet our external customers’ needs.

Studying Our Work to Improve…

If we’d like to increase sales by improving our “sales” process, we should begin by studying our work. As a first step, identify our top customers’ 3-5 “must-have” requirements. As requirements are identified, it helps to understand their relative importance. What requirements does the customer consider “musts” versus “wants?”

Keep in mind that customer requirements are constantly changing as well, and yesterday’s “wants” may become tomorrow’s “musts.”

Sales Process Improvement: 5 best practices & 20 questions!

sales

While many businesses make efforts to improve production, distribution, and various administrative work processes, it is less common to find organizations that focus on applying the fundamentals of Continuous Improvement to the sales process.

However, our research and experience indicate the selling process is more complex than many people realize. In addition, we have consistently found that the largest waste in most commercial and industrial organizations is lost gross margin that results from sales not made, sub-optimal pricing, and excessive costs in sales-related processes.

So, leaving aside the “selling skills” or “charisma” that is often associated with those perceived as the most successful sellers, when you consider the day-to-day activities required of field-based sales professionals, there are some proven best practices that can help boost field-day efficiency, which include the following five:

  1. Pre-call planning: by planning each sales call in advance, in writing, sales people can position themselves to accomplish more in less time, thus increasing personal productivity as well as accelerating overall cycle-time. Not only will conducting more comprehensive sales calls increase efficiency, but the habit will also make a stronger, more positive impact on customers. Many who have embraced this best-practice report that their customers recognize the difference and, over time, become more willing to schedule meetings, thus enabling them to more easily make more calls each day.
  2. Set a daily call volume goal. This may sound like an unnecessary step, but a surprising number of sales people are unable to quantify the actual average number of sales calls they make each day. As author Jack Falvey has said, “Want more sales? Make more calls.” By setting an average personal goal, (or company requirement) which will vary depending on the nature of each territory, sellers are often able to self-motivate more effectively and make more calls per day.
  3. Geo-plan: by creating a strategic geographic or travel plan each day, outside sales people can minimize drive time and optimize “face” time (Or, in our current situation, “virtual face time.”). The best plans will begin by creating territory quadrants and then mapping the locations of customers and key prospects. The rule-of-thumb is to avoid traveling beyond two quadrants in any given day, so when an appointment is set in one area, try to schedule meetings or plan to visit others in the same general region to enable a maximum number of interactions in a minimum amount of time.
  4. Bookend each day by scheduling an appointment early in the morning and another late in the afternoon. This will promote “staying the course” as opposed to deciding to drive back to the office early to do administrative work. This best-practice might also help to achieve item #2 above.
  5. Try to schedule next steps (i.e., follow-up meetings, conference calls, etc.) “on the spot” before the conclusion of each sales call. This simple best practice can significantly boost efficiency for two reasons. First, it helps sales people more easily populate their calendars for future selling days in the field; and second, it can help shorten selling cycles by securing time with buyers sooner than could be done otherwise.

But the sales process extends well-beyond a day in the field, as it encompasses everything from identifying a lead to delivering a solution. Considering this broad spectrum, it is really not surprising that the largest waste within most businesses can be found in the sales area.

The first step toward improvement or to moving from “where we are now to where we’d like to be if everything were right,” is to identify specific areas of sales process waste, and a good way to begin might be to answer the following 20 questions:

  1. What is our current market share?
  2. What are our customers’ requirements?
  3. How well are we meeting these requirements?
  4. What would it take to truly delight our customers?
  5. How long does the sales process take from lead to sale?
  6. What is our lead conversion ratio?
  7. What were the top 3 reasons for lost sales over the past quarter?
  8. How many calls do our sales people make, on average, each day?
  9. How much time do we spend talking with uninterested or unqualified leads?
  10. How do we continually improve our sales team’s skills and habits?
  11. What percentage of prospects contact us first?
  12. How does this percentage (#11) compare with industry data?
  13. Does the sales process take less time to complete for inbound leads? If so, how much less?
  14. What is our response time to customer or prospect inquiries?
  15. How many customer complaints do we receive?
  16. How much time do our sales people spend interceding or responding to complaints?
  17. What is done with the information associated with customer complaints?
  18. How do customer complaints or how does customer dissatisfaction impact our ability to make sales?
  19. How often are discounts extended, and what is the average discount?
  20. Are discounts offered due to competition or in response to dissatisfaction?

Clearly there are many ways to analyze and improve the productivity of an organization’s sales process, but these five best practices and twenty questions are good starting points.

Motivating people to improve performance

inspiration

We have consistently observed that most high-achieving organizations are able to develop and sustain high performance cultures in which team members are inspired, engaged and highly motivated.

During a discussion with Human Resource, Quality, and Continuous Improvement leaders, various approaches to the motivational component of performance management were shared.

Individual v. Group
Some organizations focused on personal quantitative measurements to motivate individuals and to encourage and inspire them to achieve important goals. Tying these individual goals to the organization’s KPIs was cited as an effective way to align behaviors with goals and make sure everyone is aware of exactly what they are expected to do.

However, others said that group rewards and recognition were more effective than focusing on individual metrics. For example, one participant described how teamwork deteriorated to the detriment of the organization as a whole after his organization switched to individual metrics and rewards instead of rewarding everyone based on achievement of the company’s key strategic metrics.

Show me the money?
We also discussed experience with financial rewards as opposed to intrinsic rewards, such as recognition, and financial rewards did not necessarily produce the best results.

One participant explicitly pays people for participating on improvement teams in some of their facilities, while one of their Midwestern plants is prohibited from paying for participation. The Midwestern plant relies on intangible rewards such as recognition and “thank you notes.” Surprising to many, the Midwestern plant had a much higher rate of participation than the others, seeming to demonstrate that intangible or ‘intrinsic’ rewards can be more effective than monetary rewards.

Another organization found recognition, sometimes coupled with small gift cards, was an effective method for their organization.

Two Critical Factors
Everyone agreed that two keys to effective use of recognition as a motivational method are timeliness and making the recognition public.

Several examples involved peer-recognition programs, in which people were empowered to recognize one another by giving-out stars or some similar token when observing a co-worker exhibiting certain behaviors. When someone receives a certain number of stars, they get a gift card and the ‘star of the month’ gets a party, recognition, and a preferred parking space. It was noted that guidelines for the awarding of stars or tokens were set in advance.

Another perspective relative to timeliness involved making motivational and performance management activities an “everyday job,” and basing strategies on more than just past data. Over-reliance on past data when crafting improvement or motivational plans was referenced as working through the “rear-view-mirror.” A better approach not only enables managers to identify opportunities for team improvement based on analyzing past activities and results, but to also identify preemptive action steps and strategies that can impact outcomes and future results.

Conclusions & Best Practices

  1. Performance Management and motivation must be about much more than individual performance measurement. As Deming said, over 90% of problems are caused by the system not the person. To manage performance, we must manage the system by which people, plant, process interact to produce results.
  2. Frequent observation and feedback is more helpful to people than formal annual reviews. Motivation and engagement levels were consistently rated as “much higher” when team members received frequent, consistent feedback on their work, and also when they felt they had input to improvement plans.
  3. Frequent communication about what an organization needs and wants greatly increases the odds that the organization will get what they need and want.
  4. Group rewards encourage teamwork, while individual rewards encourage an individual to optimize his or her own goals even if it may sub-optimize the organization as a whole.
  5. Tying money directly to performance appraisal can be a two-edged sword – raising stress and reducing the intrinsic rewards and personal satisfaction from doing a good job for the team.
  6. Intrinsic rewards tend to increase motivation over time as opposed to financial rewards. Recognition is among the most effective. The keys to effective use of recognition as a motivational method are timeliness and making the recognition public.
  7. Avoid performance management in the “rear-view mirror.”

Decision making process

In a past post we discussed the importance of having a decision-making process, as researchers from various sources all agree that “how” we make decisions in business is as important as the decisions themselves!

Their studies also indicate that the “best” decision-makers share certain traits. They:

  • Follow a process
  • Involve others when appropriate and use knowledge, data and opinions to shape their final decisions
  • Know why they chose a particular choice over another
  • Are confident in their decisions
  • Rarely hesitate after reaching a decision

The first trait is critically important, as following a standard process enables people to make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives.

Naturally, there are different processes from which to choose, and the previously mentioned article shares one approach.

Here is another option developed by the University of Massachusetts, Dartmouth.

  1. Identify the decision
  2. Gather information
  3. Identify alternatives
  4. Weigh the evidence
  5. Choose among the alternatives
  6. Take action
  7. Review your decision

how to lower the cost of disengaged workers

cost die

Continuing with the theme of employee engagement, or the lack thereof, people readily agree that disengaged workers are “expensive.”

For example, recent data shared by Gallup indicates that 74% of actively disengaged workers are actively seeking alternative employment. Along those lines, turnover is much higher among disengaged workers, as is absenteeism.

In addition, if the predominant environment within an organization is one of disengagement, productivity and profitability are lower, there is little or no continuous improvement, and pay tends to be higher.

Clearly it is advantageous to engage our employees or, at least, make a concerted effort to address and lower the costs associated with disengagement.

Here are a few suggestions for driving engagement within a business organization and for lowering the costs of disengagement based on input from CI professionals and leaders:

  • Enhanced recruiting and on-boarding – At an Engagement World Conference, leaders from several organizations explained how they had increased employee engagement and retention beginning at the recruiting stage. The first steps involved the inclusion of the organization’s mission and vision into interviewing conversations, and a more conscious effort to identify and hire people with aligned goals. Adding a mentor program to the on-boarding process helped new hires assimilate faster so they became more productive in less time.

    Enabling people to achieve higher levels of productivity and success early-on not only promotes greater engagement levels, but also reduces first-year attrition rates, which are often among the highest. Early churn tends to demoralize the entire workforce as well, so in addition to reducing rehiring and re-training costs, the costs associated with negativity within the existing workforce are also reduced.
  • Flexibility and work/life balance – Employer/employee relationships, expectations, and engagement criteria have evolved significantly over the course of the pandemic. Depending on the type of organization, scheduling and work-from-home options has become a priority in many workplaces.
  • Consistent performance management and communication – People need to find meaning in their work, and understand how their work aligns with organizational objectives. This point was well made by several speakers in an episode of TED Radio Hour, called The Meaning of Work. If managers communicate a shared purpose or sense of direction, and encourage employees to openly share their perspectives and input, then they can increase employee engagement.

    This type of communication works best when systematized as part of structured, proactive approach to performance management. This methodology includes frequent feedback rather than annual performance appraisals and reviews, ongoing engagement surveys (i.e., e-Net Promoter Score) with real-time feedback loops, and protocols for keeping people aware of how individual work impacts organizational goals and how it aligns with mission and vision.
  • Learning and development – A young, seemingly fast-rising junior executive had been working at a large bank for just over six years. When he was asked about his job and how he felt about it he said, “The job’s OK.” His lack of enthusiasm was evident, and when pressed to say more he added, “Well, I’m not really learning much anymore.” He went on to confirm that he was not truly engaged, and that he did not make much of an extra or discretionary effort, which engaged workers regularly put forward. Only recently has it become clear to forward-thinking business leaders that the path to sustainable employee engagement is to drive productivity, and to do so through ongoing education and empowerment. In support of this perspective, a recent article in Human Resource Executive magazine identified “continuous learning opportunities and personal development” as being two of the four key criteria (scheduling flexibility and social responsibility being the other two) recent graduates value most as they evaluate career options.
  • Recognition and rewards – Recognizing and rewarding employees is not a new concept, but if the goal is to engage workers rather than simply acknowledge milestones (such as length of service), then the approach must be different and must be aligned with what is meaningful to each recipient.

Why employee engagement matters more now

engagement around the work

A recent article shared by Gallup indicated that 36% of the U.S. workforce is engaged in their work. Surprisingly, this statistic is higher than it has been for many years, though the number itself is typically perceived as disappointing. However, Gallup also says that globally, only 20% of employees are engaged at work.

Equally important, their findings indicate the percentage of actively disengaged employees in the U.S., has risen to 15% through June 2021. Actively disengaged employees cost businesses a lot… higher turnover, more safety issues, more absenteeism, and so on; they generally “report miserable work experiences and are generally poorly managed. They also tend to bring-down their coworkers.

Why Now?
The reason workforce engagement has emerged as more important now is that the U.S. Bureau of Labor Statistics says employee turnover or “quit rates” are reaching record highs, and Gallup research has found “substantial differences in intentions to change employers as a function of the quality of the work environment.”

“Among actively disengaged workers in 2021, 74% are either actively looking for new employment or watching for openings. This compares with 55% of not engaged employees and 30% of engaged employees,” the article states.

With this fact in mind, and despite the recent rise in engagement levels, with only 36% of U.S. employees engaged in their work, there is much room for improvement.

The first step in this improvement process is to formalize an employee engagement plan, and to do so in the same fashion as one would implement a continuous process improvement initiative:

  • Get acceptance and buy-in from senior leaders. Little will be accomplished without this; the best results are achieved when leaders understand the benefits of engagement and take action.
  • Create a formalized implementation plan and establish performance measures so that progress can be tracked. Develop realistic, achievable, and measurable goals and objectives.
  • Work with the leaders so that they can model the right behaviors and cascade the concepts throughout the organization.
  • Create and equip project teams to identify and quantify opportunities for improvement.
  • Foster an atmosphere of collaboration, innovation, continuous improvement, and fun. Increases in productivity yield increases in engagement.
  • Make sure people have the knowledge and skills needed to succeed.
  • Implement an appropriate integrated communication plan, reinforcing the concept of improving both the “work and workplace.”
  • Reward and recognize people so that they feel supported in their efforts.
  • Measure results and ROI… and keep your foot on the gas!

What to do when Improvement projects stall or hit the wall

question mark what to do

Our previous post shared ten reasons why improvement projects stall or peter out.

But simply knowing “why” doesn’t help when we’ve hit the wall!

A poll of CI leaders and specialists revealed the following suggestions when a project grinds to a halt:

  • Go back to basics… “be true to the Continuous Improvement process and manage it; review systems, put routines in place, collect additional data, and reaffirm objectives.”
  • Review of CI fundamentals and roles with both participants and sponsors can often result in getting projects back on track. “It’s important for sponsors to fully understand their role; otherwise, when things begin to shutdown they are unable to provide the necessary support.”
  • Encourage project participants by showing or reminding them of “what’s in it for them” (WIIFT) as opposed to how the organization-as-a-whole.
  • Reassign people and tasks to bring about fresh outlooks and give everyone a shot in the arm that helps them get back on track.
  • Communicate! This must involve running effective team meetings and action planning sessions as well as publicizing success, or even the lack of it. “It’s important to celebrate the wins and achievements to help anchor the participants, and also to make the results as well as the activities known throughout the organization.”
  • Root-out naysayers.
  • Conduct more frequent project reviews.
  • Make sure you’re working on the right things; on things that will make a difference.
  • Measure progress and results in a “visual” way.
  • Apply the principles outlined in the “4 Disciplines of Execution”
    • Identify and focus on a Wildly Important Goal (a WIG)
    • Monitor and act on LEAD measures
    • Keep a compelling SCOREBOARD updated by the people doing the work
    • Develop a rhythm of ACCOUNTABILITY.

10 Reasons improvement Efforts hit the wall

failing improvement projects

Regardless of methodology or intention, Continuous Improvement efforts frequently lose their momentum, leaving quality and improvement leaders looking for ways to reenergize teams, reengage with sponsors, and resurrect or redirect their projects.

In a poll of business leaders and quality experts, the following “top 10” reasons for what we have often referenced as “discontinuous” improvement are:

  1. Lack of managerial or sponsor support, or failure on their part to commit the right resources
  2. People believe they have “already eliminated all the waste”
  3. The law of diminishing returns… if projects last too long people lose interest
  4. Absence of quick-wins / results; if teams don’t achieve at least some early results, then their focus and effort tends to drop-off
  5. Disengaged culture in which “naysayers” discourage teams
  6. Too many projects / Scope creep
  7. Changes in top management and organizational goals
  8. CI is viewed only as a cost-cutting tool with short-term or ad-hoc focus
  9. CI is viewed as a “side line” job rather than the cultural “way we do things”
  10. People are “stretched” with day-to-day responsibilities and the prevailing culture is one in which the “don’t have time” for improvement projects

it’s about time!

time_is_money

When we are faced with the task of evaluating and improving a business, we have many metrics to choose from. We can ‘follow the money’ — study the spending: where does it go, how does it compare to previous periods or to competitors; we may look at market share or wallet share; we might measure revenue per employee or benchmark against the competition; or we might measure customer satisfaction or the customer experience.

But one of the most powerful measurements for helping to make breakthrough improvements is also one of the simplest: following where the time goes.

In fact, many agree that time is the most universal and most valuable component of work and work processes! Consider that by determining how much time it takes to complete a cycle of value (i.e., building a widget, closing the books, making a sale, completing a project, etc.) and how much of that is truly adding value, an organization captures information that provides a motivating vision and road map for making improvements.

Key areas to study are delays, over-processing, rework, transportation, and inspection; and using time as a measure to find and focus opportunities for improvement has three big advantages:

  1. time drives important business results
  2. time is universally applicable
  3. it is very simple to do — i.e., something anyone can do!

Once you’ve decided that managing time is an ideal way to reduce costs and increase customer (internal and external) satisfaction, you might try using the following five steps for effective measurement:

  1. Identify the process to study and improve — where it starts and where it ends.
  2. Confirm with the customer (internal or external) the key element of value the process yields. Sometimes this is obvious, but in some cases not so much. An accurate understanding of what the customer considers of real value is key to any improvement effort.
  3. Determine how long the process actually takes today. This number— in minutes, hours, days, or weeks, whichever is best suited to the process — is the TOTAL component of the ratio we will calculate in step 5. Some questions often arise at this step:
    • Should we collect “person hours” or elapsed time? Measure elapsed time. If you study and improve elapsed time, you increase customer satisfaction and quality as well as costs. Person hours spent on the work almost always decline when an organization focuses on elapsed time.
    • How precise do we need to be? It is valuable to get good data about the total time elapsed from start to finish, if only through a modest sample. Of course, there will be variation — and the variation can be quite substantial for some processes. Keep the raw data and calculate the average TOTAL.
  4. Determine which steps actually add value and how much time is spent on those. For a step to be considered to add value, it must:
    • Be directly related to what the customer values and would pay for (if they knew what we were doing)
    • Actually change something of value — the product, database, approval status, whatever, (inspecting something or moving something does not actually change the thing, so does not ‘add value’)
    • Do so for the first and only time. Fixing or reworking something does NOT add value, because it compensates for not being done completely or correctly the first time.
    • Often these steps must be done today, because they compensate for an imperfection somewhere in the process. Correcting those imperfections is what will yield the improvements.
  5. Study the differences between the total time and the value adding time to identify and eliminate the root causes. Then calculate again. To calculate the ratio: if total time today is 55 hours and value adding time is 2 ½ hours, then the ratio would be either:
    • Total-to-Value: 55 divided by 2.5 = 22, which means that the organization spends 22 hours for every 1 hour of value add, or
    • Value-To-Total: 2.5 divided by 55 = 4.5%, which means that 4.5% of total elapsed time is actually spent adding value.

It doesn’t matter which you use, as long as you are consistent.

designing a “poka-yoke”

designing_poka-yokes

As noted in our previous post, poka-yokes are meant to mistake-proof a process. They must be devised to prevent a particular type of error, which is why it is so important to thoroughly study the problem, the process, and the root causes.

Once you have all the facts and data about what goes wrong most frequently, in what way, and why, you can set your collective creative minds to designing a poka-yoke that most effectively and efficiently prevents the most frequent human errors or omissions.

To effectively design a poka-yoke, follow these simple steps.

Include the right people. Often the simplest and most effective poka-yokes are thought of by the people closest to the work.

For example, a port for the dry-docking and repair of supertankers needed to perfectly align the ship, and this was very time consuming and expensive with lots of engineers with sensitive measuring devices. A fellow working at the dock saw all this effort, and suggested a poka-yoke. His idea was that they move his shack to just the right position on the dock to line up with where the ships needed to align, then mount a scope on the shack in just the right position. He would then watch through the scope and tell them when the ship was in the right position.

It can also be helpful to include an outside perspective. Someone not immersed in the work every day may spot opportunities to eliminate problems or difficulties that the people executing the process every day may take for granted. Also, a good poka-yoke can often be created by borrowing from one industry or application to another, so diversity of experience is very useful in mistake-proofing.

Identify the specific mistakes you want to prevent. Poka-yokes are individually designed to prevent a specific mistake. Since you cannot mistake-proof everything at once, you must study the process and gather the data to identify what specific errors to address first.

Explore modifications to the work environment to reduce errors. The Five-S method identifies ways that the environment contributes to errors, often by making it hard to detect when a problem has occurred. Clutter makes it difficult to spot deviations in the location or condition of critical items. Sorting and cleaning help to mistake-proof. A bank greatly reduced the frequency of delays in processing mortgage applications by clearing off all the desks so each desk had only two applications at any one time, the one the processer was working on and one waiting in their in-box. Many organizations have found shadow-boarding ― creating outlines of tools that should be hanging on the board in that place ― to help them reduce time looking for the right tool or errors from using the wrong tool.

Explore modifications to machines or tools. Using jigs and automatic stops are changes to machines that make it much easier to execute the work to specification. Similarly, tools such as Excel are filled with poka-yokes, such as conditional formatting that can be used so that a cell’s color changes when the data in it meets certain criteria such as a date within a certain date range, quantities over a certain level, or even simply a required cell is blank.

The data validation feature is another handy mistake-proofing tool. This lets you prevent the entry of a wrong data type or an invalid name or a quantity that is too high or non-standard. This feature can be set to prevent entry that does not meet certain criteria or merely alert the user to re-examine the entry.

Explore modifications to materials. Changing materials can help to prevent an error or make a mistake readily visible so easy to catch before it causes trouble.

For example, one company gathered data on the types of errors people made on the forms they were using, and then redesigned the forms to make it much more obvious which fields were required and which were not. This greatly reduced the number of forms that had to go back to the customer for rework.

Explore modifications to the process to reduce errors. Changes to the process can be made to catch critical errors at the time they are made. Many hospitals have implemented a pre-surgical process poka-yoke that involves marking the point of incision ― in some cases having the patient sign off on the spot. To prevent the risk of an undiluted medication being delivered to a patient, a hospital changed the process so the medicine was diluted in the pharmacy rather than in the patient’s room.

Challenges and best practices associated with continuous improvement