Six Sigma Sales – Understanding Customers Better

On-Target Sales Strategy / Six Sigma Sales

The economy is not getting any better… but you can buck the trend!

Knowing your customer creates focus and focus creates success. Read below how we used Six Sigma to create a focused sales and marketing strategy by deeply understanding the best markets for our Client.

Problem

This organization was featured in last month’s newsletter (to review this newsletter goto www.supplyvelocity.com and click the “Archive Newsletter” link on the right side of the homepage). After understanding who their best customers were, via statistical ranking, we finalized their On-Target Sales Strategy by understanding which were their best market segments and the impact of project size on sales success.

Tools

On-Target™ Sales Strategy

Details – Customer Ranking

1) They brainstormed all of the different ways the market could be segmented. Instead of focusing on their customers’ segments (they were all general contractors) they focused on what was being built. This included buildings for banks, retail, office space, industrial, schools, hospitals and restaurants, as well as residential.

2) They conducted comparison-analysis, comparing each segment according to each of the performance measures.

3) The Restaurant segment stood out as having a higher close rate and gross profitability than the others. It was the fourth largest in sales, but based on profitability and sales productivity (close rate), it was the best. Since it wasn’t the largest sales segment, it had not been given much attention. Now, it is getting the attention it deserves. This is the marketing focus! General Contractors that work in this segment get greater attention. Tradeshows for this segment are attended. They are calling directly on companies in this segment to get preferred status on the bidding.

Details – Deal/Project Size

1) This company bid jobs that ranged from a thousand to over a million dollars. When we looked at close rate, and sales by project size, it was apparent they weren’t competitive for large projects. (See the Bid-Size worksheet in the linked Data-Table Spreadsheet) Prior to this analysis, if a big opportunity came along with a new potential customer, they would bid. The largest bid they created was for $1.2 million. It took a couple of people over a week to complete this bid. During this time they were not able to bid for any other existing customers. They didn’t win this bid, or any of the other larger bids they proposed for new/potential customers.

2) Using close rate and sales by project size they developed bidding rules for new and existing customers. They would not bid large jobs for a new customer. They asked to start on something small or medium sized as they had a better chance of winning this work.

3) Even for existing customers they would not bid on any job more than 2x what they had already done for them. This way they would build on our knowledge of working with each customer and wouldn’t waste our bidding/estimating resources on something they had little chance of winning.

Results & Summary

1) They used this analysis to create a real marketing plan. Tactics were centered on calling on general contracting customers that serve their best markets.

2) They created rules for bidding based on the size of the job and the reality that they need to build on our success with customers.

We hope this Real World Lean Six Sigma case study gives you ideas to improve Sales Execution and achieve Operational Excellence. Next month we will turn towards Operations and how to improve On-Time Delivery.