Six Sigma Methodology (SSM) prescribes a common language and method to address business opportunities and solve business problems. Although its use originated in manufacturing industry, it has been found to be effective in finance and service industries (called transactional industries) and in fields as diverse as health care and software development.
Most non-advocates are skeptical about the ability and effectiveness of the standardised methodology as they view it as a hindrance to creativity; however, believers refute these claims on the basis that creativity comes through the content and the ability to reach a solution that speaks success and is implementable, not in the tools that are used to reach the outcome. For example, in manufacturing, improved techniques and machineries have been driving higher sales and no need was felt to improve the sales and marketing. Nonetheless, SSM has been used for process improvements and reengineering as it provides a roadmap by using the data and statistical analysis to show the path for identifying and eliminating “defects” in business processes and has generated profits in a wide variety of industries worldwide. In the process, it can measure and further improve a company’s operational performance.
Six Sigma professionals and Sales and Marketing professionals have similar objectives in mind – finding the path of least resistance and sticking to what works best. The difference is that Sales and Marketing often rely on intuition and judgment, while Six Sigma relies strictly on scientific analysis of data**.
So, we now know about the method, but, people often wonder about the roots of the term “Six Sigma”. To elaborate on that, “Sigma” is a statistical term for the measures of variability. “One” Sigma is a very high degree of variability (Seven “mistakes” out of ten opportunities). “Six” Sigma means a process/technique where the degree of variability would be as low as 3.4 “mistakes” out of 1 million opportunities. If you have a close/hit ratio of 30%, your sales process can be said to be operating at one sigma!
The traditional Six Sigma problem-solving approach, consisting of define, measure, analyze, improve, control (DMAIC), offer a unique tool for employing Six Sigma methodology to enhance the marketing processes for enabling a business to attain strategic, tactical, and operational growth*.
SSM can be applied to any work that is goal-directed and where the problem can be explicitly defined and organised. In marketing and sales, it revolves around the value proposition (from the point of view of the customer rather than the organisation) and market segmentation**. The trends have shifted from the metrics of customer satisfaction to the metrics of customer value as there is plenty of evidence (Gale, Reidenbach, Reichheld, among others) that the metrics of customer satisfaction do not correlate well with business performance. The metrics of customer value, on the other hand, have proven to be the best leading indicators of market share – leading to both high levels of customer acquisition and customer retention (loyalty/stickiness).
To create a value model of the targeted market for products and services, SSM is used. This is called the voice of the market (VOM) model which is driving both the strategic and operational initiatives that are needed to organise a business and its marketing strategy. The model uses the SSM by using facts and statistical theory for decision making and replaces strategic guessing, hunches, and agendas. As a result, a superior value which propels growth within the market and targeted product delivery areas is created.
During its analytical phase, Six Sigma marketing uses numerous tools to steer the delivery of the value model which will transform the survey data into meaningful metrics. These tools often include the competitive value matrix, the competitor vulnerability matrix and the customer loyalty matrix. The matrices are based on the two main drivers of value, namely quality and price.
Each tool is specifically designed to help the following three elements which further aid market share growth in the following manner:-
1. The acquisition of new customers is achieved with the incorporation of the competitor vulnerability and competitive value matrices.
2. Retention of current customers and increasing sales revenue by pursuing customers to buy upgrades, renewed contracts and more is attained by the customer loyalty matrix.
Thus, using SSM in marketing results in metrics that enable prediction of future business performance, and provide managerial direction as well.
Author: Debaleena Debnath
Debaleena is a digital media consultant @ speradigital.
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* Creveling, C. M. et. al (2006).Six Sigma for Marketing Processes: An Overview for Marketing Executives, Leaders, and Managers.
** Asefeso, A. (2013). Six Sigma Marketing