Six Sigma and Business Marketing Feb05

2005 Joint ISBM-CBIM ConferenceSix Sigma and Business Marketing

Institute for the Study of Business MarketsCenter for Business and Industrial Marketing

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The 11th Annual Joint ISBM-CBIM Conference

Six Sigma and Business MarketingFebruary 16 - 17, 2005

Atlanta, GA

6 σ

© 2005, ISBM & CBIM

Presentations summarized:• Valerie Mason Cunningham, Xerox Corporate Marketing Services, “Xerox Lean Six Sigma Marketing”• Pete Pande, Pivotal Resources, “Pulling the Focus Out: The Basics of Six Sigma and Its Applications to Business Marketing”• Jane Hrehocik Clampitt, DuPont Consulting Solutions, ”Applying Six Sigma to Marketing at DuPont”• Gordon Schwartz, MarketBridge, “Performance- Driven Marketing: Applying Six Sigma Principles to Demand Generation”• A. Charles Clark, Dow Chemical, “Six Sigma in Sales & Marketing? One Black Belt’sExperience in Process Improvements”

(list continued)



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Presentations summarized (continued):• Roundtable Panel Discussion, “Marketing Process Improvement and Six Sigma: Why now? When will it work? When won’t it? Questions and answers.”• Pamela J. Roach, Breakthrough Marketing Technology, “Delivering What Customers Value: The ‘Quest for Excellence’”• Kevin J. Clancy, Copernicus Marketing Consulting, “Six Sigma Dreams, Half Sigma Realities”• Jean M. O’Connell, 3M Company, “Business Marketing at 3M Using Six Sigma:The Company Project Approach” • Patrick LaPointe, MarketingNPV, “Six Sigma or Not: Building better, more effective, more accountable marketing in today’s complex B-to-B Organizations”




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Xerox Lean Six Sigma Marketing:Strategic and Tactical Impact

Valerie Mason CunninghamVice President

Xerox Corporate Marketing [email protected]

Keynote address:


Key insights from Valerie Mason Cunningham



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Lean Six Sigma: our tool to put Xerox back on track after our 2000/2001 crisis.• More robust than Total Quality Management, which we’d already gone through.• Applied across the enterprise, with:

• Manufacturing & Design, to… reduce cycle times and inventory… drive out cost… reduce time to market• Back Office, to… reduce process errors… eliminate process steps… drive down cost• External Clients, to… create real differentiation via tools and skills to help clients achieve their goals… enable continuous improvement… enhance strategic relationships by “improving the customer experience”… customers expect suppliers to contribute to their 6σ initiatives

• Lean Six Sigma provides metrics illustrating the return on marketing investment• Adding Lean to Six Sigma reduces waste and increases process speed• Following Lean with Six Sigma improves customer-critical quality and consistency

Our performance as of January 2005:1100 Lean Six Sigma projects, including 140 customer-facing projects; 520 active 6σ Black Belts and 1,763 active Green Belts in residence. 17,538 Yellow Belts trained online. More than 2,000 seniorexecutives completing leadership workshops





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Lean Six Sigma and Marketing: “It’s all about the customer experience”• “Just improving customer satisfaction and loyalty is a rear view mirror look.”• 50 million-plus customer touch points of all types annually

First project in my group, Global Accounts and MarketingImprove customer communication processes• providing the information customer requested• reducing internal processes cycle times ≥40% by assigning ownership and simplifying processes• email newsletter project DMAIC

• Define customer needs via a voice-of-the-customer survey• Measure Xerox performance and perceptions vs. competition• Analyze VOC data• Improve via email newsletter process owner and a new database•Control: e.g. 2,734 emails sent 2/5/04, 92% delivery efficiency; newsletter posted on xerox.com

Second project: marketing effectiveness dashboard• Deliver web-based, concise marketing performance metrics• Opening screen (next slide) features click-through boxes to drill down to data (sample in the following slide) in three core buckets:

• marketing effectiveness• branding• customers and the market

Next project: reduce collateral development cycle time• Weak up-front planning causes expensive revisions, greater agency spend, lost product managerproductivity and a longer creative cycle.• Success will be measured by an overall collateral production spend of 10%.

“Lean Six Sigma marketing clearly is a journey without end”





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Public Relations

Performance vs. HP

Market Share

Customer Experience –Satisfaction & Loyalty

Inquiries

LeadsCampaigns with Financial ROI

Customers & the Market

Branding

Marketing Effectiveness

Installs

Campaigns with Non-Financial Metrics

Net Adds

Web MetricsCustomer Wins

Unaided/Aided Awareness (First/All Mentions)

Office Printers

Office Copiers/MFD’s

ProductionPredisposition

Awareness

Consideration Waterfall Uncontested Win Rate

Contested Win Rate

MDM Share

Corporate Marketing Dashboard Key MetricsCorporate Marketing Dashboard Key Metrics

Page Volume


© 2005, Xerox Corp., ISBM & CBIM



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Whoosh Phaser 7300 – Wave 3Program Target Program Results Status R/Y/G

PROGRAM DETAILS

Program Investment Cost ($) $150,000 $145,000

Number of Targeted Contacts 150,000 150,000

FINANCIAL METRICS

Number of Leads Generated 1,340 3,093

Lead-to-Contact Rate (%) 0.9% 2.1%

Cost-per-lead ($) $112 $47

Number of Sales Generated* 107 247

Close Rate 8.0% 8.0%

Cost-per-sale (%) $1,399 $586

Revenue Generated ($)

Net Profit Generated ($)** $307,235 $709,163

Return on Investment (%) 205% 489%

NON-FINANCIAL PROGRAM METRICS

Number of Total Responses 6,696 16,452

Response Rate 4.46% 10.97%

Cost / response $22.40 $8.81

NOTES

OVERALL PROGRAM ASSESSMENT:

*10% close rate, 80% incremental assumed. **Assumes mixture of color and mono printer sales.Third wave of direct mail lead generation campaign featuring the Phaser 7300 printer.

Program NameReport Date & Purpose: 1-14-05 Final ResultsProgram ManagerProgram Date / DurationMeasurement PeriodProgram TypeEMC Member Office (printers)

Phaser 7300 "WHOOSH" DM Wave 3

Print Direct Mail

Mailed October 8 - 12, 2004Bonnie Gail

Oct - Dec 04





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Case Study

• Employed Lean Six Sigma methodology• Implemented remote control to minimize deskside

visits • Standardized operating system and

IT environment

• Moved administration offsite • Eliminated redundancy among vendors

• Achieved savings goal of $1.2 million/year• Maintained/Improved customer satisfaction

across 5 key metrics: – Overall customer satisfaction – Knowledge of staff– Professionalism– Technical ability– Fix time

Client ChallengesClient Challenges

Intercontinental Hotels Group

• Needed to cut costs to stay competitive during post-9/11 travel downturn…

• While at the same time improving customer satisfaction with IT support services

Measurable ResultsMeasurable Results

SolutionSolution

• A leading hospitality company, managing brands such as:

• Holiday Inn• Crowne Plaza

• Candlewood Suites





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Case Study

• Employed Xerox Lean Six Sigma methodology• Digitized and streamlined accident report

process• Created web-based document access

system• Integrated existing systems

• Reduced cost of processing an accident report from $28 to $8, ($500K/yr savings)

• Reduced cycle time from as much as 3 weeks to less than 3 days

• Reduced time spent by deputies on accident reports from 30 to 5 minutes

• Created revenue stream from charging for accident reports, worth $32K/year

Client ChallengesClient Challenges

Monroe County Sheriffs Department

• Balance $100M budget• Improve quality of service in accident report

management• Eliminate backlog of more than 3,000 records

and over 4 months of data entry• Free deputies from paperwork, so they can

spend more time ensuring public safety

Measurable ResultsMeasurable Results

SolutionSolution

• New York State’s largest sheriff’s office





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Pulling the Focus Out:The Basics of Six Sigma and Its Applications to

Business Marketing

Pete PandePresident

Pivotal Resources [email protected]


Key insights from Pete Pande



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Six Sigma is a system linking process management based on facts & data,rather than opinions, to a focus on the customer.• Emphasis is on the value creation process rather than individual functions.• 6σ raises employees from an inward focus to an external focus.• 6σ integrates many tools and concepts, involving both analytical and creative skills, tailored to a specific process, business, or problem.• Understand and satisfy customers more effectively.

• Drivers of satisfaction, loyalty, behavior, market share• Monitor how we’re doing. Staying ahead of the competition?

• Enhance efficiency• Reduce variation, eliminate errors and rework• Expand internal capacity

• Drive profitability• Reduce operational expenses due to errors and rework• Grow market share and share-of-wallet• Increase revenue

• Transform management thinking• More informed decisions, greater collaboration and focus• Optimize flow of value to customer, and gains to shareholders





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Y = f (x1, x2, x3, x4…)Promotion Process VOC Process

Six Sigma manages the critical business process Xs that determine the process output Ys.


© 2005, Pivotal Resources ISBM & CBIM



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Key PrinciplesAll processes vary• Variation is due to various causes: people, equipment, information, processes& procedures, environment.• Too much variation = trouble.• We can learn from variation, the only way to know which Xs influence outputsand which create process defects.

Variation, not before & after averages, tells the story.

Change need not be expensive. Eliminate irrelevant Xs and the reject scrapoutside the customer’s requirements, caused by the bad Xs.





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“DMAIC” Process: The Six Sigma Analytical Model• Define: describe the problem or pain, the goal, the outputs (Ys)• Measure: gather data on the problem, the process, the customer• Analyze: review process and data to identify causes (Xs)• Improve: develop solutions; design processes• Control: plan for stabilitySix Sigma management focuses on a few critical Xs for each of 3 approaches• Process improvement• Process design/redesign• Process management

Customer Focus with Six Sigma discipline:• Customer requirements based on careful assessment• Processes designed & run to fulfill customer requirements• Multi-faceted ”Voice of the Customer” effort• Customer-focused data key to managing the business, short- and long-term

Customer focus without Six Sigma discipline:• Conjecture and assumption about what customers want• Processes based on our convenience and cost• Limited efforts at tracking customer satisfaction• Customer-focused data not communicated or used





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“Law of the Ignorant Customer”• You need a multi-level VOC research process because every single methodology is flawed.• Customers rarely, if ever, understand or can communicate their own requirements as wellas we’d like, or expect.

• They have other important priorities• Rarely are they experts in our products and services• Customer organizations have silos, too!• Priorities change to match their latest crisis• They may not really understand their own customers’ requirements• What they think they know could well be wrong





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Marketing & Six Sigma Challenges and OpportunitiesManage and improve marketing processes

• Understand your customer requirements and key “Y”• Assess the Xs to boost effectiveness and efficiency• For every service process, start by thinking about what you’d need were the process outsourced.

Own and drive Voice of the Customer capability• Clarify objectives, gather data, formulate and assess hypotheses,communicate knowledge, support decisions• Marketing operations have an opportunity to play a key role in company improvement.

Develop creative ways to deal with the Law of the Ignorant Customer• Challenge current assumptions, yours and theirs.• Look a the broader “supply chain.”• Seek to educate customers — and your organization

Promote change as essential core competency

Key Q&A observations:• The biggest variation in marketing projects is the revision process.• Companies that focus mainly on hard-dollars, vs.. softer outputs, wind up doing cost reduction rather thanoutput improvement.• Instead of succumbing to the “please the boss” approach, remember that it’s rare that only one functioncontrols the whole process. To see it all and see who’s to blame for problems, start at the end of the processand work backwards.





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Applying Six Sigmato Marketing at DuPont

The Science of Marketing

Jane Hrehocik ClampittStrategic Marketing Practice Leader

DuPont Consulting [email protected]


Key insights from Jane Hrehocik Clampitt



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How We Connect Our Science Capability to The Marketplace• Use Six Sigma as a common language and disciplined process across the

company to improve our marketing and sales competency• Bring products to the marketplace that have relevance in the value chain and

respond to end customers needs• Target regions where economic growth is rapid• Key requirement: An external perspective. Are you making things better for the

customer, or just more convenient for you?


© 2005, DuPont Co., ISBM & CBIM



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Why integrate Marketing and Six Sigma?• Six Sigma has high credibility and visible top-management emphasis in DuPont• Shifting Six Sigma emphasis from cost reduction to Top Line Growth• Voice of the Customer requirement for data analysis fuels willingness to invest in marketing research• “Project” discipline lends implementation rigor to the outcomes of the marketing efforts• “At first blush one would think that marketing (touchy feely stuff) and Six Sigma (statistics for nerds) are not remotely related … in fact the core process used by DuPontin marketing, the Strategic Marketing Process, maps directly to Six Sigma”


© 2005, DuPont Co., ISBM & CBIM



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Case study: needs-based segmentationProblem: How can we accelerate growth in auto safety?• DuPont is a material supplier to many auto safety segments: frontal protection; side and rollover displays;electronics• Intense competition in component material supply• DuPont competitive advantage lies in great quality, broad offering, broad science/technology platform• Position as a development partner varies• Relationships and access to individuals with design-in “clout” is limited• The automotive industry will continue to aggressively drive low cost at the component level where there isno technology advantage

Goal: Establish DuPont as a technology development leader by delivering innovative system offerings at competitive cost

Strategy: Establish 4-6 growth projects that expand technological leadership capability and market position

Approach: • Segment this huge market then identify targets for project selection• Validate market segments

• Test prior assumptions through direct voice-of-the-customer interactions• Conduct secondary research• Expand Voice of the Customer interactions—an ongoing process---to gain insights on market trends, industry structure and offering relevance in the global automotive industry





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Tools: Voice of the Customer discussions• Confirmed accurate segment selection and choice of goal• The automotive safety market space is evolving, growing and an area of focus• A vehicle’s safety position is a source of competitive advantage• Separate customer organizations focus on safety as a whole as well as on individual components• Trends in technology• Unmet needs• Perceptions about DuPont’s capabilities as enablers of customer visions and strategies

Results:• Met or exceeded growth targets in 2003 & 2004• The rigor of talking with people in the marketplace and continuing that dialogue “made all the difference inthe world.”• Received DuPont’s 2004 Sustainable Growth Excellence Award• Drivers of growth• Strategic projects with target customers who have high value for innovative system offering development• Expansion of influencer support• Use of integrated marketing and Six Sigma process for all major projects





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Case study: delivering & capturing valueProblem: How can we accelerate growth in auto safety?• DuPont Performance Coatings shares a 50/50 supply position with a competitor for a strategic customer’s business• This customer is not satisfied with our current method of supplying product and service through our existing route-to-market partner• If the current method is not improved, we could lose this customer’s business• If the current method is improved, we could gain a greater share of this customer’s businessGoal:• Develop a new service model that satisfies this customer’s needs and grows our share of their business• Keep existing route-to-market partners involved in servicing this customerApproach:• Form a team involving personnel from all parties: customer, route-to-market partner, andDuPont Performance Coatings• Focus the team on the creation and testing of a new product and service supply model for this customer, using “design for Six Sigma” methodology (DMADV)Tools:• Kano Analysis: customer-interview research to identify critical needs

• Evaluation of needs based on: fulfillment or non-fulfillment of a need, and satisfaction experience• Classification into four categories: attractive, must-be, indifferent and one-dimensional (they love it or they hate it) elements of offering delivery.

• Pugh Matrix approach evaluates offering concept options, rating each for its ability to improve fulfillmentof each need vs. the default offering.

• Creates strong alternatives and identifies optimal concept• A disciplined, team-based process including the customer and strong route-to-market partner





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Reflections on results:What went well:• Forming a multi-party team• Use of 6-Sigma tools helped convince the customer to keep route-to-market partners involved; the customer recognized the partners’ service capabilities.• DuPont Performance Coatings won awards: “Best Customer Support” & “Supplier of the Year”• Other Six Sigma projects developed as a result of this work• Applying Six Sigma “for the customer at the customer” provided a highly visible level of commitment as a supplier and provided objective data to help inform and influence the customer in favor of DuPont

Our Top 5 “What We’ve Learned”5. Map your strategy to show links among key elements.• Determine where the revenue and costs originate.• Communicate clearly, making the hard simple. Tell each employee where they fit in.4. Have the organization do work as “projects” highlighting each process step.3. Define “winning” in measurable terms. Establish managing processes.2. Take advantage of creativity; a disciplined process focuses creativity.• Use multi-generation planning to determine what to accomplish now, what to do later.1. Build your business on a solid foundation of external, direct, voice of the customerinsights.• You need facts, not opinions.• Marketing research is an investment!

Though not necessarily new, Six Sigma is not painful, but is a natural integrationwith marketing and marketing leadership on real projects.





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Performance-Driven Marketing:Applying Six Sigma Principles to

Demand Generation

Gordon SwartzVice PresidentMarketBridge

[email protected]


Key insights from Gordon Swartz



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Performance-driven marketing requires tying sales and marketing investmentsto financial results• Process-oriented industries are comfortable determining how inputs affect outputs• Significant investment is shifting to integrated lead and relationship management

• Addressing the “black hole” between lead generation and sales channel/sales force follow-up• 72% of surveyed C-level executives think sales would grow ≥10% just by plugging the “black hole,”but 60% of them believe they don’t have a process to do so

• Applying Six Sigma building blocks to marketing processes, what is the same?• Process focus: optimizing the conversion of market opportunity into revenue• Measurement: exploiting increasing amounts of data with modeling tools and experimental designs• Technology-enabled performance: improving CRM, Web tools, databases, etc. But marketerscomplain of having too much data while missing critical data.• People skills and management dependent: hiring, training and motivating in the 6σ culture

… and what challenges make it different?• Poorly defined marketing-through-sales processes: marketing treated as “art”; process black holes• Undisciplined measurement systems: unintegrated metrics among marketing process silos, withlittle systematic experimentation• Historical emphasis on “automation” technology vs. business intelligence technology. CRM captures increased point-in-time data, but intelligent analysis of ongoing processes lags• Required new organizational capabilities lagging

• Lack of screening, planning, ROI measurement• Premium placed on “creative” and “big idea” skills vs. marketing science• Imbalance of people vs.. program spend





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Case Study: Optimizing Marketing Spending MixWith its sales force closing complex orders in the $1-10 million range, companyrecognized that each sales and marketing investment has a unique incremental yield curve affecting overall marketing and sales pipeline performance.

• We need to know where we are on each investment’s yield curve.• What would happen if a key competitor shifted its allocation?• Altering an allocation can change downstream yield curves.


© 2005, MarketBridge, ISBM & CBIM



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Armed with a robust model, we optimized the firm’s $100 million+ marketing mix spend.

• Shifting spending changes the relative importance of functions within the organization. Learning, cultural and institutional issues arise.• The model indicates the direction of spending changes to be made incrementally, simultaneously accomplishing cultural change over time.





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Case Study: Optimizing Marketing Process Yield

Modeling the effects of adding media to a campaign is straightforward. We get moresophisticated examining the lagging brand effects of spending.





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Experimentation via controlled field tests reveals how media interact.





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Multi-channel marketing & contact management optimizes tactical and end-to-end results

• Gains of these magnitudes have been achieved by changes in marketing mix allocationwith no increases in overall spending.• The “Rule of 5s” generalization: A 5% budget remix produces five times more return thanachieved by a 5% budget increase.

SAM

PLE

DA

SHB

OA

RD

ME

TR

ICS





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The best marketing organizations use the pipeline framework to launchSix Sigma discipline

The challenge and opportunity is in the integration of lead and relationship management tactics. The “green spot” provides the process control threadslinking market conditioning and sales management.





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In-market experimental design is a foundation of Six Sigma discipline• Hypotheses: Develop hypotheses to be tested (e.g. yield, interactive effects).• Design: Design tests with segments, market, offers, attributes, and media to test, controland normalize. Avoid attempting to build the “intergalactic data warehouse.” Organize aroundthe critical information needed.• Execution: Engage market managers and campaign planners to mine databases, establishoffers, and execute tactics within execution and test construct.• Measurement:

• Collect and filter time-series response data• Produce econometric analyses, correlations and interaction elasticities• Compute optimization scenarios; simulate forecasts

• Replication:• Develop ongoing test model across framework• Embed measurement and testing methodology within market management, offeringand execution functions.





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In which decision-making phase does your company operate?





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Six Sigma in Sales and Marketing? One Black Belt’s Experience

in Process Improvements3 examples

A. Charles ClarkFormer Six Sigma Black Belt, Marketing and Sales

Dow [email protected]


Key insights from A. Charles Clark



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Project #1 — Business PracticesParent company auditors found multiple cases of expense abuse and poor reporting while investigating 3 years of expense records. • Excessive variation in reporting use of company funds claimed as business expenses• Thousands of $'s missing and / or unaccounted for• The actual extent of loss could only be estimated after interviewing the culprits

DMAIC Solution: Basic 6σ tool that applies to everything we do in sales and marketing• Define problem: missing funds, missing reports, missing receipts, false reports, etc.• Measure: Found poor managerial systems to track the process.• Analyze: What is the process, standards for inputs and outputs, process owners?• Improve: Nine months to get everyone to agree on new processes.

•Process outlined, agreed & mapped with accounting dept.•Process manager role added to existing position•Coordinated with Bank of America’s EAGLS system, launched company-wide•Standards created for review & audit functions•Monthly reporting established with expense auditors•Awareness campaign boosts knowledge & sets expectations•Company policy web archive established •Auditors released for other work•Margin disappearance stopped





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• Control:Process manager reports to national sales manager Process manager empowered to inspect, intervene & enforceBusiness ethics position created by Global Ethics committee Compliance definition & tracking better coordinated: legal, accounting & sales / marketing groupsNew employees orientation changed -- better information about company expectations of funds

usage & reportingDefinitions of defects standardized - auditors & managersMonthly reports by process manager to national sales mgr.

Solution sustainability?Employees’ awareness GREATLY increasedRole & responsibility of management to monitor, communicate & inspect - better Process mgr functioning as championInternal capability to know individual “practices” significantly enhanced Process ownership clearly identified.





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Project #2 — Agency ConsolidationMultiple communications agencies employed to produce annual product communications for > 50 brands.• Suspected redundancy of effort and cost, non-coordinated campaigns, off-strategy work, inconsistent use of trademarks, missing synergy and staff overlaps.

Despite 18 years of success with the lead agency, we realized there was no process map, standards, process owner, success metrics, or data comparability across agencies.

Our lead agency asked for more business. Our Six Sigma project examined the processes and justified the cost savings of consolidation.

Analysis defined the process via surveys and interviews, cost analyses, and 2 Black Belts•What is the process? Communications development •What are the inputs? Marketing plans, biz objectives, mgr. insights•What is the unit flowing in the process? Brand message unit•What is the process output? Product brand messages•What are the standards for the output? $-effective & on-strategy•Who is the process owner? Brand manager, marketing mgr.•Process manager? Agency personnel (?)•Process stakeholders? Managers & leaders

An example: Tracking costs, we had to go externally to the agencies. Internally, we had simplyexamined and approved invoices. We had no systems or process mentality to track and document the basis on which we could make decisions.





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Improvements: We have to properly define the process in order to cut account management costs.•Four major agencies terminated; others trimmed.Work definition process = marketing plansProcess map created with agency & product groupsElectronic routing & approval adoptedProcess manager designatedCost codes standardized to match process [168 to 9]Lead agency process aligned with codes & processReporting & tracking by business unitAccountability enhanced with more relevant data

Control: The agency started tagging costs according to each costs’ step in the communicationsprocess

Sustaining the gains by:•Concentrating ALL work in -1- agency.•Clarifying PROCESS phases (added DEFINE) & work output standards.•Utilizing standardized Cost Elements in billing & reporting.•MEASUREMENTS discipline -- a mentality & a NEW process step.•Directing work via MARKETING PLANS – by value score•Achieving “buy-in” from the lead agency on value of changes & processesRoles & responsibility of management to monitor, communicate & inspect much improvedInternal interest in process discipline and data-driven decisions improved.Agency very cooperative and committed - more at riskProcess ownership better defined & assigned.





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Project #3 — Sales Force Deployment

• Specialized sales force is covering same territory as traditional sales team.Cost redundancy? Balanced deployment? Efficiencies lost?• 4 different specialized sales forces share the same geography, the same distributor accounts and the same retail dealers and exhibit vastly different levels of productivity:as much as 425% variation between top and bottom full-time territories.

Solution:• Analyze balance of sales force deployment, by territories, sales levels and other key variables, overlaps, task complexity, workload, etc.• Improve balance.

Process outlined & mappedProcess ‘operator’ designatedStandard definitions for data adoptedKey crops identified based on specific, agreed criteriaCrop segment managers identified & role defineddBase administration clarified and correctedMarketing plan template refined with product manager and market research agency to include sales

rep inputs AND measures of potential2 territories combined at savings of at least $300,000.





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Solution sustainability?Product manager / district manager buy in!Key market researcher supports use of sales rep. data in his market assessmentsSales rep data also included in marketing planSales rep input processes unchanged Other sales specialties re-deployed people based on project analysis and outcomeGenerated interest in other sales related projects that continues even today.

Second Thoughts & Learnings•Six Sigma methodologies and philosophies fit in the world of sales and marketing becauseit’s not about theory; it’s about action. Marketers have a bias for action.•If things are aligned, coordinated and linked together in the right way, human-basedmarketing has a chance in this process world.•Problem statements are crucial. If no problem hypothesis, no go!•Process maps are invaluable•Project champions are a vital imperative: a human being taking responsibility•Process “partners” greatly facilitate improvement•Standardization is critical in support systems•Process ownership is the king of all solutions•Sustainability is biggest worry…will managers forget, minimize or just overlook?•Creativity is not necessarily compromised by discipline•Decisions without data are usually costly•Cost-of-a-rep myth debunked !!•The discipline of data-based decisions is difficult !





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Suggestions

• About year 4 or 5, go back and reevaluate the projects you did in year 1 and do themagain. Your outcomes will probably be a little different because you know more.

• A great metric to consider: What percentage of your marketing budget is “touching”the customer?

• Fix the most tangible processes first… paper flow; documents flow; communicationsflow; data flow; services flow, etc. These usually are interface points between procedures.

• Then fix not-as-tangible processes… approvals, sign-offs, collaborations, planningmanaging, creating, and cross-functional relationships. These are usually interface pointsbetween people.

• Get a good grip on the what’s, how’s and why’s of 6 Sigma. Practice in the backyard and get ready for the real deal. Then, consider how to seriously engage the customer.Those projects will be the major breakthroughs & gains! These are usually always interface points between groups.





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Marketing Process Improvement and Six Sigma:

Why now? When will it work? When won’t it? Selected Question and Answer Highlights

Roundtable panel discussion:Fred Wiersema

The Customer Strategy GroupModerator

Valerie Mason CunninghamXerox

Jane Hrehocik ClampittDuPont

Jean M. O’Connell3M


Key insights from Roundtable Panel



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Wiersema: A recent Bain Consulting survey found that 77% of senior executives think thattools like Six Sigma promise far more than they deliver. What got your companies startedwith Six Sigma?

Cunningham: Timing was critical for us.We were a company in crisis and needed some discipline for managing the business.

O’Connell: Four years ago we got our first CEO from outside the company, from GeneralElectric. He brought Six Sigma with him. He told each manager to hire three Black Belts, oneeach for growth, cost management and cash management. For instance, we were weak incapital usage. Decision-makers used capital for free and were evaluated only by their P&L.

Clampitt: DuPont is science-oriented with many technical people. We had a marketing processand wanted to apply what has worked in operations to that marketing process.

[A show of audience hands finds that more than half believe their corporate culture isnot yet conducive to Six Sigma.]

Wiersema: How do we market Six Sigma in our organizations? What is the value proposition?

Cunningham: We used TQM, which addresses product quality and customer needs, but not the marketing process and helping the customer get its own processes right. When you address those, you see improvements to make that you didn’t see before.





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Wiersema: But we have to ask, how do you package Six Sigma? Is it for everybody? Will marketing embrace it or is it analytics for nerds?

Clampitt: We found that everyone going through the program has been successful. We selectgreen belt candidates with leadership potential, who see that Six Sigma is a process for thinkingand solving problems, and not so much a tool in itself.

Wiersema: How do you roll out Six Sigma?

O’Connell: There are as many models as you want to adopt. When you have good coaches onprojects, people can’t sit and wait it out. At 3M, the average initiative went away after threeyears, but Six Sigma is not going away.

Cunningham: Six Sigma wasn’t new to us. The manufacturing group always used it, savinga million dollars in inventories, and multimillions in accounts receivables. We convinced management that marketing needed Six Sigma, and the top executive pushed executives tolaunch projects. Then skeptics turned into believers.

O’Connell: We had executives clinging to a lot of “tribal knowledge,” but they changed theirattitudes about Six Sigma once they saw the results.





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Clampitt: People did resist Six Sigma by shooting holes in data and disagreeing with interpretations. And leadership turf issues did stand in the way. You have to go upstairs, aroundobstacles. And, bringing the people who are obstacles into the solution works.

Cunningham: For example, we learned we weren’t getting results from what we thought wasa good direct marketing program. We shifted some spending to events to improve how we build the customer experience.

O’Connell: Don’t be afraid to kill high-visibility projects that are not working.

Responding to Audience QuestionsQ: How do you keep Six Sigma from becoming a religion, so wrapped up in tools and techrather than the objectives?

O’Connell: Six Sigma must be driven for business strategy. Choose projects than genuinely further the business.

Cunningham: If the project doesn’t improve the customer experience and advance the interestsof the business, stop it.

Wiersema: You have to determine what is the right project for your company. Then you need a leader to challenge the religious zealots and the laggards who do nothing.





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Delivering What Customers Value The “Quest for Excellence”

Pamela J. RoachCEO

Breakthrough Marketing [email protected]

© 2005, Breakkthrough Marketing Technology, ISBM & CBIM

Key insights from Pamela Roach

Banquet address:



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Our Best Practices study of Six Sigma in Sales and Marketing found …• Black Belts need training and experience in Marketing/Sales in order to be successful

• Six Sigma success in Operations doesn’t necessarily translate into Marketing and Sales success• Vocabulary and examples work best when specific to Marketing and Sales

• Commitment from senior leadership is critical• Those who are most successful see marketing as a process• Projects flow from business strategy and deliver a measurable ROI, with emphasis ontop line growth• Tool usage is flexible, applied as needed. Six Sigma is a way of thinking and making decisionsbased on facts; clearly defining a problem before you try to solve it.

Our current study, the ProMetrixSM SV Benchmarking Study, co-sponsored by ISBM, will allow you to compare your marketing performance to other firms.• This is a free introduction to ProMetrix

SM, a software-based diagnostic that identifies the ROI

impact of marketing and sales underperformance. The unique report will enable you to directly compare your Marketing and Sales process capabilities to a composite of your peers. Each participant’s business will be profiled with its individual statistics, including the ROI impact of its marketing strategy.• The study addresses a sampling of critical marketing competencies: market selection; use of customer data; communications effectiveness; robustness of sales process; and sales channel productivity. Whether or not your business is Six Sigma driven, the report will highlight opportunities for improvement.





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A Case Study: AstorLight®

A project contending in the prestigious 2000 America’s Quest for Excellence: the“best of the best” Six Sigma Plus projects throughout the various Honeywell businessunits.• Six Sigma competence reduces the risk of the company missing potential merger synergies.• Fostering a win/win employee attitude, when Six Sigma gains traction in an organization, it transforms from a top-down to a bottom-up commitment to continuous improvement.• Competitions like this can help create a pro-Six Sigma culture change by inspiring employees.

Our challenge: Delivering 12% annual growth in a commodity market—industrial wax forcandles—in a market forecast for 7-10% annual growth over five years.• Intensely competitive marketplace, with the wax business far upstream from the consumer.• We faced tight budget constraints.

Our approach: We started by segmenting the value chain.• Wide dispersion and types of retailers; each segment with its own supply chain. Where do we participate to capture share?• Voice of the Customer attempted to identify special candle effects customers wanted.“Everyone said, ‘We want something new, but we don’t know what it is.’” We always hear that in markets, but what does that mean?• So we used our Green Belt training to identify the special effects needed to drive double-digitsales growth with equal or better margins (including capturing more of the retailers’ margin).





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Forming the team: The results we sought indicated the kinds of experts needed.• We employed a critically important Six Sigma tool:FMEA, a failure its mode its effect byanalysis in a cause-effect manner. FMEA provides an early warning on problems and triggerpoints for contingency plans.

VOC led the way to high-margin commercialization: customer interviews, researching retailofferings, qualitative and focus group research on a shoestring with employees from otherHoneywell business units and their friends. The approach was bias-free.• We learned that men appreciate candles and special effects, and have specific preferences• Women seem to be satisfied just knowing of a candle special effect• Respondents were willing to pay a premium for a pillar candle with a special effect

QFD (Quality Function Deployment) linked product concept options to customer needs andcompany inputs required

We addressed risk affecting our brand and partners• We tested sensitizing consumers to our ingredient brand with a radio personality endorsementand an Internet campaign to the cottage industry making high-end candles. • Both approaches worked. Customers linked quality candles to quality ingredients.• The success of a differentiated value proposition in a product category thousands of years oldshows that in any market, there’s always an opportunity for technology and differentiation.• The retailer will never tell you that there are customers willing to pay more. But when you knowthere are, you can charge the retailer more and capture more cash from the retailer.





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We created what’s continued to be the most profitable line of candle wax in the business• Six Sigma lead the way in a market-driven approach requiring new data, new insights, and new behaviors.• We beat time and dollar targets.

• 21% revenue growth in six months; 13% revenue growth in 9 months from new products.• Reduced cycle time for new product commercialization• Freed 5% additional capacity for less than $5K• Segment gross margins increased more than 30% over time.• Lower-cost, long-term supply contracts were negotiated.





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Six Sigma DreamsHalf Sigma Realities

Kevin J. ClancyChairman & CEO

Copernicus Marketing [email protected]


Key insights from Kevin Clancy

Keynote address:



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The buzz today is all about Six Sigma marketing, but few companies are really doing it.Only 14% of companies on the Fortune 1000 list are growing faster than the GNP.

We found that in 39 of 48 B2B and B2C categories, brand equity is declining. Far more brands are sliding toward commoditization than commodities are transforming into brands.


© 2005, Copernicus Marketing Consulting, ISBM & CBIM



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5 Best Practices to turn 6 Sigma Dreams Into Reality1. Find a market that’s at least 3 sigma above average in terms of potential profitability.• “If you nail targeting and positioning, everything else will fall into place.” — Philip Kotler• Problems with the two most popular B2B targets.

• SIC code/industry specialization is too narrow, too heterogeneous a segment.• Heavy users are price sensitive and deal prone, and are often in the bottom decile of profitability.

• The intuitive, half-sigma approach is to make a decision in about 5 minutes.• The counterintuitive, Six Sigma approach is to analyze 50-250,000 different targets to identify the ones forecast to be most profitable.





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Proxies for Profitability enable being approximately right rather than precisely wrong.• Examples:

•Spending in the category•Current spending on your brand•Problems which if solved would lead the customer to switch•Price insensitivity•Responsiveness to your brand•Cost to deliver and serve •Opinion leadership/personal influence•Interest in new products and services•Cost to reach and impact with sales force and marketing communications

Examine many different segment plans on the basis of profitability





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2. Accept nothing less than a breakthrough positioning, one at least 3 sigma above average.• 1, 2, or 3 words, phrases or sentences about your brand that you want to imprint in the heads ofkey stakeholders; so clear, succinct, and powerful that once launched, it leads to a powerful brand.• In most companies, if products, services and brands are positioned at all, it appears to be in theminds of marketing managers and not customers and prospects.• Our study of more than 400 consumer TV and print ads found only about 7% communicate a raison d’être.• The best practice, counterintuitive approach to positioning begins with a clear understanding of prime targets’ needs, problems, and pains (i.e., motivations).• WARNING! Need-state analysis (customers rate benefits and attributes)---the all-time most popular quantitative research for uncovering needs, problems and motivations---can be dangerous.• Marketing is not the discipline of giving people what they think is important. It’s the discipline ofsolving customer problems.

•Needs should not be mistaken for problems and marketing is about solving problems.•People will say that something is unimportant if they don’t know anything about it.•People hesitate to say anything that makes them seem superficial.•People do not want to admit that they are prices sensitive and in a company driven by price.

• Our new model of buyer behavior weighs benefits and attributes on three motivational dimensions.•“Dream detection”: the self-reported ideal•“Problem detection”: discrepancies between what they want and what they get•“Preference detection:” the attributes/benefits that predict an individual buyer’s preference

• We rank attributes by motivating power, cross-referenced to our brand’s superiority, parity, orinferiority to a key competitor (next slide), which indicates the most potent attributes for competitivelysuperior positioning.





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3. Develop a Three Sigma+ marketing communications strategy.• Marketers today have lost confidence in traditional media, especially 30-second TV spots, andare shifting investments to alternative vehicles such as sports, events, interactive kiosks, theInternet and other non-traditional media.• But that won’t get you to Six Sigma if you don’t fix what caused the poor performance in thefirst place: weak targeting, positioning and media strategy. • A Three Sigma marketing strategy creates more product awareness for less media spending.

4. Use marketing science tools to develop better marketing plans.• Most companies develop marketing plans without any real knowledge of the relationship between marketing inputs and outputs.

•Managements set objectives only remotely related to strategy. •Tactical plans derive from prior year’s failed plan, with a relationship to objectives weak at best.

• The counterintuitive, best practice approach involves innovative model-based plans withempirical underpinnings, thereby integrating objectives, strategies and tactics.

5. Obsessively and compulsively implement your marketing plan.• Three studies report that most marketing plans and strategies are not implemented• The more people implementing the plan and the more creative they think they are, the morethey will change the implementation plan.• Drag managers out of their separate fiefdoms to focus on implementing the strategy.• Audit implementation to ensure conformity to strategy and plans.





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Business Marketing at 3MUsing Six Sigma:

‘The Customer Project Approach’

Jean M. O’ConnellDirector, Six Sigma Operations

3M [email protected]


Key insights from Jean M. O’Connell



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At 3M, a solutions company that happens to make products, Six Sigma is the driver behind all other corporate initiatives.

Six Sigma is …• Initiative

•Strong linkage to business goals and customer needs •Leadership development at core•Breakthrough improvement •Strong linkage to business goals and customer needs.•Management reviews•Sustaining gains•Process and Financial results($$)

• Methods and tools•Process thinking•DMAIC (Define, Measure, Analyze, Improve, Control)•DFSS (Design for Six Sigma)•Understand and reduce process variation and product variability•Data Based Decision Making•New Product Introduction (DFSS) - reduces variability & gives customers what they want

We’ve done more than 400 Six Sigma projects with customers to date.• Projects must be about the customer’s critical “Ys”—the customer’s “pain point”• Focus on improving customer processes and 3M/customer shared processes• Joint 3M/customer team membership and project ownership; project champions on both sides• We do not put a Black Belt on a customer project until the person has done 2 internal projects.


© 2005, 3M, ISBM & CBIM



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3M’s Y’s Customer’s Y’s

Mutual Y’s What is a Customer Project?

• Improves a specific customer’sprocesses or products• Can improve 3M’s processes• Involves customers as active projectteam members• Is “owned” by the customers: metrics,control plan, etc.

A good project …• Identifies a problem to be solved: “A project is a problem scheduled for solution” J.M. Juran• Has a Process Owner• Problem is of major importance to the organization; even better if of major importance to both organizations

•Clearly connected to business priorities• Clear quantitative measures of success

•Baseline, goals and entitlement well-defined (data). But at the start, don’t let a lack of data stop you.You’re forced to develop metrics.

• Reasonable scope – Able to Complete in 4-6 months•Project support often decreases after 6 months•Don’t want to “boil the ocean”


© 2005, 3M, ISBM & CBIM



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Key Success FactorsOrganizational integration• Joint Executive Commitment (Customer and 3M)• Joint Resource Commitment (Customer and 3M)• Customers on the TeamCustomer-owned metrics• Critical Customer Need and/or Pain• Customer Owns Metrics & Control PlanFlawless execution• 3M Knowledgeable Experts• Customer Training• Clear Expectations• Deliver on Promises• Operational Excellence

Key Learnings• Data determine the price/value of solutions• Building executive-level contacts is key• Enhances customer intimacy: first-hand voice-of-customer and customer business direction/strategy• Allows for leveraging of all 3M technologies• Co-location solidifies partnership• Advantage in speaking common language with our customer

“Six Sigma relies on creativity as well as fact, and it is relevant to product and merchandising ... It starts out by recognizing that assumptions are a very dangerous thing in a competitive world … One of the most important things we can do is get in thereand figure out what’s truth and what is myth.” — Michelle Moorehead, VP of Strategy and Performance Improvement for Target Corp.


© 2005, 3M, ISBM & CBIM



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Six Sigma or Not:Building Better, More Effective, More

Accountable Marketing in Today’s ComplexB-to-B Organizations

Patrick LaPointeManaging Partner

[email protected]


Key insights from Patrick LaPointe



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Marketing success depends on achain of factors that build credibilityin the organization for the art and science of marketing.

But the real heavy lifting occurs at the start of the chain. When Six Sigma initiatives enterin the middle of the chain, they struggle, missing the context, the broad-based under-standing and the culture of the process.

Six Sigma has some formidable marketing enemies: Foot dragging, information hoarding,micro-scoping, resentment and passive-aggressive behavior. It all stems from fear of the unknown, of the known, and of the facts. Marketers, though adept at persuasion, fear thatthat numbers people will expose their limitations. That is fundamentally the psychology ofwhy Six Sigma has not penetrated marketing so far.

To address the enemies, we must look at the role of marketing in the organization.• But in most organizations, marketing’s role is poorly defined strategically and tactically.• Marketing is not like the rest of the organization, leading to conflicting views over objectives.• A 2002 Study by Hewitt Associates found that Marketing is a key participant in over 2/3 of inter-departmental conflicts within Fortune 500 companies.• Marketing effectiveness is a cultural/organizational problem, NOT an analytical one.


© 2005, MarketingNPV, ISBM & CBIM



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A critical challenge: overcoming 6 primary obstacles to marketing measurement.• Data Problems

• Collecting the wrong data – focus on what is “easier” to get• Applying rocket-science analysis to it

• Speed > Accuracy > Relevance• Face-to-face begat telephone begat mail begat web/email

• IT Becoming Too Central• “Enthusiasts” monopolize the agenda• “If it’s on the computer, it must be true”

• Researchers/Analysts are poorly paid with little/no career path• Training in measurement is rare, yet skill shortages are a commonly cited obstacle• Delegation

• Selecting metrics is “big picture”, politically-charged; interpretation even more so• When measurement strategy is delegated, truth and insight lose emphasis• Measurement requires leadership

A Marketing Dashboard helps to address those obstacles• Establish causal links between spend and profits• Create a learning organization that makes decisions on hard facts supplemented with experiential intuition rather than lots of intuition punctuated by a few facts• Establish clear roles and responsibilities, creating job satisfaction and a culture of performance and success• Elevate marketing accountability to earn the trust and confidence of the CEO, the CFO, and others throughout the company





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6 Common Six Sigma Mis-steps in Marketing• Launching outside of Marketing first, then ascending like locusts• Black Belts looking for projects instead of champions• Working projects without the context of the objectives marketing wants to achieve• Setting goals for training versus implementation• Overt self-preservationism as marketers resist the interloping Black Belts.

4 Keys to Success for Black Belts Importing Six Sigma into Marketing1. Learn the language of marketing2. Start on common ground, areas marketing wants to discuss such as voice-of-the-customer and process mapping when presented in terms of marketing’s objectives.3. Embrace variability, because marketing does not have the predictability of manufacturingand operations.4. Work the problem, not the symptoms.



Six Sigma and Business Marketing Feb05

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