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Does lean apply to sales?

2/27/2016
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Dear Gemba Coach,

Does lean apply to sales? We’re trying to introduce lean thinking throughout the company and have found very little on how to lean the sales department.

To be honest, I don’t know of much material around on lean in sales either. Still, salespeople are the first contact with customers and the sales department as a whole is the closest point to customers so they have a critical role in delivering customer satisfaction.

Sales is also in a key position to create muda (waste). Sales policies that encourage mura, unlevelness, such as monthly quotas or quarterly price promotions, are a frequent source of “created demand.” This is demand generated by the company’s own policies rather than by customer behavior that impacts the whole supply chain as the variation spreads and is amplified down the chain along with the associated waste.

Another form of waste is due to price and credibility erosion. The easiest way to conclude a sale is to (1) agree to whatever modifications the customer is asking for and (2) give away a price incentive. The impact down the line can be quite bad by creating:

  • A dissatisfied customer when it turns out that the changes sold are not so easy to make and can impact quality and delivery.
  • Price erosion created by rebates and discounts from the price lists, which also affects the value customers see in the product or service (if I got a 20% discount, could I have obtained more? Who else got what?) Human beings are far more sensitive to relative difference (we get very annoyed to find out someone got a better deal) than absolute value.
  • Disruption in the design, production, and delivery chain when changes have a rolling impact on operations and suppliers.

Friends, Not Suckers

Worse, I was on the Gemba recently with a CEO who told me that during a customer visit he realized his salespeople focused the transaction exclusively on price, and missed opportunities to do a much better deal with customers who were interested in shorter lead-times, (which, having practiced lean for years, the company knew how to deliver) but no one ever mentioned the possibility. Not engaging sales people in a wider perspective of a lean company’s efforts and attitude towards clients can lead to huge missed opportunities.

The deeper issue is indeed to change sales’ attitude to customers. In lean, customers are not seen as suckers (one born every minute) that one can scam (fleece them for all they’re worth) and move on to the next one to reach the monthly quota. Customers are seen as long-term partners who will help us grow through repeat sales (after all, a repeat sale costs far less than a new customer sale). We need to convince customers that:

  1. We will help them make money.
  2. We will stand by them as they go through good and bad times.
  3. They’ll make far more money with us than with our competitors.

For instance, Toyota’s implicit promise is that:

  1. My car will be totally reliable, and cheaper to operate because it’s more energy efficient and will have a smaller maintenance budget.
  2. If I damage something, Toyota is fast in getting spare parts and fixing the damage and will be helpful with my special circumstance. If I need a different car, they can offer me what I’m looking for from their extensive lineup variety.
  3. When I want to sell the car, it has higher residual value than its competitors.

Delivering on these promises creates a solid basis of loyal customers who attract new customers by being advocates of the company.

Start with These 3 Activities

Most sales forces are historically focused on the new sale. Here we need to refocus attention on:

  • Understanding how each customer expects to benefit from the product or service. How do they intend to use it (how do they habitually use it), and where do they see the benefit, rather than what we think is our product’s advantage.
  • Be responsive to customers service needs and understand that as customers’ circumstances change, so can their expectations of what the product or service is supposed to do for them.
  • Look for ways to show customers how they can better profit from the product or service without exclusively focusing on price. This requiresa deeper understanding of both how customers use our products and how we make them to find win-win opportunities in doing things customers value which are easy to do for us, but not for them.

Where to start? On the Gemba, I’ve found that we can get off the ground in sales with three activities: an obeya room, a customer loyalty reward program, and individual self-development activities.

Salespeople usually find it quite easy to post on their wall the transactional part of their jobs, such as where are we currently against sales objectives, and what is the current state of the pipeline. Indeed, this is a good place to start as few would dispute the legitimacy of visualizing the current state against budget.

The next step is to turn this first visual board into a customer-dedicated obeya room with information on:

  1. Customers’ current gripes: Sales people are asked to pick up customer complaints they hear during sales calls, place them on a board with their analysis of the cause, what countermeasure we can come up with and, when we do, whether this satisfied the customer – or not.
  2. Customers’ business or usage models: How do different customers benefit from our products, not in our terms, but in theirs? Where could offer customers more value?
  3. Sales calls technical problems: This includes problems encountered during calls, or issues arising from the rest of the company due to calls, how the sales team solves its own problems, and is responsive to the issues they create for their colleagues in engineering, production, or supply chain.
  4. Key changes in the product, production, and delivery processes: Sales often feels it is kept out of the loop of what else is happening in the company (other functions feel sales doesn’t care much), so make it a point of warning sales people of the changes that will affect them and their customers.

The second large topic to address is how to give sales people the tools to reward customer loyalty. From the lean perspective, we don’t want to sugar the deal to make the sale easier. We want to thank customers for their continuing patronage. Sales needs tools to work with, and you can build with them a program to recognize and recompense customers’ repeat sales.

In many cases, I’ve seen this dovetail in fascinating discussions about add-on sales opportunities and a number of things customers would like us to do that we simply … don’t. A simple starting point for this program is checking up on customers after the sale to hear them out rather than focusing narrowly on prospects.

Third, you can ask each sales person to build their own self-development plan for the next quarter or semester. They can choose a few topics where they’d like to deepen their knowledge of customers, the sales process itself, products or the production process, and offer their own ideas of how they’re going to learn more about these topics. Such individual plans are a good way to start having conversations with sales staff beyond the very narrow focus on the next sale, and to open their minds to a wider perspective of customers and the company.

I’m not sure if there is a set lean approach to sales, and if there is I’m unfortunately not aware of it. When in doubt, I guess the best thing to do is to go back to the essentials: (1) What additional value topics are we working on for customers right now? (2) What operational problem are we working on fixing right now? (3) How do these two activities reflect on our understanding of the muda we inadvertently create up and down the value stream by our tactical management decisions?

Asking yourself there three basic questions in unusual settings typically leads to very interesting ideas and deeper exploration of lean thinking in your company.

6 Comments | Post a Comment
Brent Wahba February 28, 2016

Michael is correct in stating that there is no set approach - Lean Sales is very broad with a wide variety of specific needs and opportunities.  Many of our common Lean techniques & tools can be applied (with care!), but there are also many elements such as customer behavior, "influence," and learning cycles that do not follow traditional Transactional Lean methods.  Sometimes they may seem counter-intuitive in terms of waste elimination but are necessary to understand for driving selling effectiveness.  For instance, the most effective websites are often not the simplest - they have just the right amount of intentional reader "friction" to drive engagement.  Creating a deeper understanding of what customers value is crucial, but that has to be linked to a process that transforms theoretical value into attainment action throughout the customers' search / purchase / utilize / repeat purchase / recommend value stream.  In other words, we need to look at the selling process from the customer's process perspective too, and not just try harder to give them what we think they should want if they were us.   

As Michael also notes, there are often many problems that extend beyond just the sales process - especially when trying to answer the common question "why are sales so low?"  It could be one or all of the Sales, Marketing, Product Development, Quality, Delivery, etc. processes impacting customer behavior by interacting in negative ways.  There is that critical need to coordinate selling activities with Operations (Lean Sales & Operations Planning / S&OP) and other departments so that organizational AND customer overburden and unevenness are prevented.  I've witnessed many cases where more efficient selling led to more sales short-term, more customer dissatisfaction mid-term, and fewer sales long-term.

I have worked in nearly every organizational function and find Lean in Sales to be both one of the broadest applications and also incredibly important to driving real change throughout the enterprise.  Sales (& Marketing) can often identify complex problems that cross departments or value streams, and then lead their resolution.  As always, the key is to first understand "what important problems do we need to solve?" 

We, LEI, do offer classes on Lean in Sales & Marketing and there are some articles on Lean.org including The Lean Post.  There are also a few books (including my own, The Fluff Cycle) available.    

Brent Wahba, LEI Faculty

Michael Ballé February 29, 2016

Got the book, next on the reading queue - glad to hear some lean thinkers are on the case!

Francesco Culòs March 2, 2016

Dear Mr.Ballé

we are currently providing lessons in higher instruction institutes on Lean Sales topics.

Obviously it is very difficult to summarize the contents in a few lines...

We think that first of all we have to agree that Sales are a process, and its phases have a strict  correspondence with the phases of the Buying process, and then simply follow Lean principles, in particular Value for the customer.

During the sales process we have to be sure of providing value to our customer during all the phases, using the correct techniques (and surely they are not only "pure" lean techniques...such as SPIN selling, Behaviour study, etc...) and tools  and for sure adequate soft skills.

By the way I'll follow with grat interest this topic.

kr

Francesco Culos, consultant at Auxiell

 

Tweeter Linder - Your Digital Mentor March 2, 2016

Hi, I am running a project to share mentorshipin digital format on www.tweeterlinder.com. The current series is focused on Lean and Learning Sales with a number of insights from establishing lean in a sales support context for B2B. And as said above lean in sales is very different from lean in R&D and production. I hope you find some valuable input to your initiativ.

David Brunt March 4, 2016

Hi Michael. I'm sure readers of your column would be interested in some of the experiments we've been doing at the Lean Enterprise Academy in this area. We shared the story at last year's LEI Summit, so perhaps the materials are available on here, but I can't readily find them. We have the story on www.leanuk.org. In this article http://www.leanuk.org/article-pages/articles/2015/september/03/lean-in-sales-can-lean-be-applied-to-sales.aspx we ask a similar question to your post. The company we've done this work with are a group of Toyota dealers in South Africa - people can get more background here: http://www.leanuk.org/article-pages/articles/2016/january/19/terry-o’donoghue-from-toyota-to-car-dealerships.aspx and there is a link on the same page to a video on our YouTube channel. 

The real point I'd like to emphasise is that they do this improvement themselves - no big programme or improvement team in this transformation. Together we've teased out the problems so they can frame their hypotheses and we've designed learning experiences that help deepen understanding while they are doing the work. We reflect together about what works and what doesn’t - we’ve been able to do different things in different sites at different times and assess what happens - not every experiment works right, first time, on time, but by following PDCA they are really learning. I think that's what counts!

Bob Marcks March 13, 2016

Dear Mr. Balle,

My experience with what I would term Lean Sales Velocity began in 1980 at Chrysler with a test at retail in which I was able to take cars that took 100 days to sell and turn them in 20 to 30 days with stock high velocity options. This, to me was the essence of introducing lean manufacturing.

Peter Drucker: "There are few things less pleasing to the Lord, and less productive, than an engineering department that rapidly turns out beautiful blueprints for the wrong product."  "Lean" that results in a beautiful product that won't sell is useless, and not "lean" to me. I think in terms of a "Demand Loop" in lieu of a "Supply Chain."

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