I plead guilty to enjoying a cold beer or two, and I’ve watched with amazement as the decade-long bull market in the craft beer industry shows no signs of abating.
The business of earning new customers bears a striking resemblance to a perfect storm. Sales and marketing must come together to create a rare and perfect mixture of early- and mid-stage sales cycle activities—the intensity and alignment of which must be perfectly timed to provide optimal results and earn new customers. The sad truth is, the ability of most companies today to consistently earn new customers is about as rare as a perfect storm. <br clear="none" /> <br clear="none" /> The tried-and-true methods of the past no longer work. The days when marketing handed off a list of leads to the sales force to close the deal are over, and relying on the sales force to figure it out and determine how best to earn new customers no longer works. These traditional methods have little impact on generating new customers in today's challenged economy. <br clear="none" /> <br clear="none" /> A recent announcement from the marketing department of a multinational hig--tech company proclaiming 6,000 leads were generated from a trade show was cause for great celebration. But six months later, virtually none of those leads had been turned into customers, leaving the leadership team in a state of bewilderment. <br clear="none" /> <br clear="none" /> The inability of businesses to execute and consistently earn new customers doesn’t just result in the loss of billions of dollars in revenue each year—it also creates poor sales force productivity and missed opportunities. This failure can be directly attributable to the lack of a disciplined process being deployed.<br clear="none" /> <br clear="none" /> To compound matters, today's new customer acquisition process is made up of many critical to quality (CTQ) integral pieces: discovery process, strategic plan, data mining, appointment generation, CRM, customer data base, Website, white papers, success stories, e-mail, direct mail, and so on. The real challenge is creating a disciplined process utilizing these pieces in a coordinated manner-one designed to turn an unengaged opportunity (lead or suspect) into an engaged opportunity (prospect) and ultimately into a new customer. <br clear="none" /> <br clear="none" /> Adhering to the principles and methodology of Six Sigma can bolster a company's ability to earn new customers. Being successful in today's extremely competitive marketplace is derived from focusing a "scarce few" resources on the "critical few" things that will have the greatest impact on eliminating defects in vital business processes. Understanding that inefficiencies in any process are driven by variation, which leads to an increase in defects, cost, cycle time, and ultimately loss of new customer acquisition opportunities are critical. <br clear="none" /> <br clear="none" /> Six Sigma is a business process management strategy originally developed by Bill Smith, a vice president at Motorola, back in 1986. Today, it enjoys widespread application in many sectors of industry. In essence, it seeks to identify and remove the causes of defects and errors in business processes. The goal of any company utilizing Six Sigma is to have a targeted error rate of 3.4 defects per one million opportunities.<br clear="none" /> <br clear="none" /> In Six Sigma terms, most companies are complete and total failures when it comes to the process of earning new customers. In fact, most organizations' new customer acquisition processes operates well below One Sigma, which equates to 690,000 defects per one million opportunities—or an efficiency rate of 31 percent. Not may companies can boast of turning this percentage of their unengaged opportunities (raw leads) into new customers. <br clear="none" /> <br clear="none" /> Employing Six Sigma methodology and tools will ensure new customer acquisition processes are maximized and, more importantly, since money and time to invest in improvements are scarce, this approach will help you figure out what you’re not going to do. This allows you stay focused on all relevant activities critical in opening and maintaining profitable new customer relationships.<br clear="none" /> <br clear="none" /> To begin with, Six Sigma embraces the DMAIC process, which is critical to achieving desired new customer acquisition results. DMAIC is an acronym for five interconnected phases: Define, Measure, Analyze, Improve, and Control. Let's elaborate on each in turn.<br clear="none" /> <br clear="none" /> <b>Define the CTQ issues</b>, as well as the core new customer acquisition processes and integral pieces required. Define new potential customers, their demographics, titles of key decision-makers, the number of employees, etc.<br clear="none" /> <br clear="none" /> <b>Measure the performance</b> of the core business process involved. Collect data from many sources to determine types of defects and metrics. Compare to internal customer survey results to determine shortfall.<br clear="none" /> <br clear="none" /> <b>Analyze the data collected</b> and process map to determine root causes of defects and opportunities for improvement. Identify sources of variation (e.g., data mining by individual sales reps). Identify gaps between current performance and goal performance. Prioritize opportunities to improve.<br clear="none" /> <br clear="none" /> <b>Improve the target process</b> by designing creative solutions to fix and prevent problems (e.g., hire or outsource parts of your early- and mid-stage sales cycle processes to professionals). Develop and deploy an implementation plan. <br clear="none" /> <br clear="none" /> <b>Control the improvements</b> to keep the process on the new course. Prevent reverting back to the "old way."<br clear="none" /> <br clear="none" /> Six Sigma employs additional powerful tools and strategies to identify and improve CTQ areas and processes. Doing so can immediately transition a business from trying to earn more dollars from existing customers (a very dangerous proposition) to consistently acquiring new customers. Here's a sampling:<br clear="none" /> <br clear="none" /> • The Pareto Chart identifies the 20 percent of variation leading to 80 percent of defects in your new customer acquisition process (80-20 rule).<br clear="none" /> <br clear="none" /> •The Process Map identifies current process and hidden factories leading to failures in your new customer acquisition processes.<br clear="none" /> <br clear="none" /> •The Cause and Effect Diagram enables a team to focus on causes, not symptoms.<br clear="none" /> <br clear="none" /> •Failure Mode and Effects Analysis (FEMA) assesses the risk to new customer acquisition success if a key process input were to fail.<br clear="none" /> <br clear="none" /> • Successful brainstorming sessions provide immediate action items to improve new customer acquisition results.<br clear="none" /> <br clear="none" /> The business of earning new customers is too critical to leave to chance, old methods, or an undisciplined approach. The opportunity exists for any company to dramatically increase new customer acquisition rates and bottom line profits, provided it is willing to focus on a disciplined approach to acquiring new customers. <br clear="none" /> <br clear="none" /> <i>Al Liberty is chairman of XSELLERATE USA (<a href="http://www.xsellerateusa.com" target="_blank">www.xsellerateusa.com</a>). He holds a Six Sigma black belt from both the American Society For Quality and Océ North America. Contact him at <a href="mailto:email@example.com">firstname.lastname@example.org</a> or by calling 516-978-7623.</i>