Transcript No Slide Title

Sales Process
Engineering
A Systematic Approach to
Improving Sales, Marketing &
Customer Service
1
© 1995-2006
The Paul Selden Companies, Inc.
Introduction & Welcome
 Introduce Yourself
 Name
 Company’s
Products and Sales
Channels (OK to brag here)
 Personal Background in
engineering, ISO, TQM, SPC, etc.
related to topic today
 Instructor’s Background
2
© 1995-2006
The Paul Selden Companies, Inc.
About Paul Selden
 Business Experience: Founded Performance Management,







1978; board member, 3 related companies
Six Sigma / DOE related experience: GE,
AlliedSignal/Honeywell, others
Project Track Record: $100+ M sales
Education & Cert.: Instructional Design, Large Scale Systems
Implementation, Behavioral Psychology, Certified Quality
Engineer, Certified Performance Technologist
Author: Sales Process Engineering
Researcher: 500+ tested sales & marketing factors on file
Email: [email protected]
Voice: 269-343-3700 x101
3
© 1995-2006
The Paul Selden Companies, Inc.
Definition
 What is “Sales Process Engineering”?
4
© 1995-2006
The Paul Selden Companies, Inc.
Sales Process Engineering:
Definition
 The systematic application of scientific and
mathematical principles to better serve the
practical goals of a particular sales process.
 Who is a sales process engineer?



A very smart and energetic sales person
A manager who is also a builder and leader
An internal or external consultant
5
© 1995-2006
The Paul Selden Companies, Inc.
New vs. Old View
Old View
 Old View: Too focused on discrete, one-time transaction
 New View: Must include repeat sales and entire process, not
just “closing the deal”
 Old View: Engineering only works in manufacturing and product
development
 New View: Systematic approach works in most any field, such
as information flow, biology, sales, marketing, customer service
6
© 1995-2006
The Paul Selden Companies, Inc.
Engineering Gurus Agree On
One Key Point
More than 80% of problems in a process are due
to the systems, usually in management’s control.
85%
15%
System
Individual
If you fix the system, a lot of what you think
are “people problems” are reduced, as well.
Sales Process Engineering focuses on structure first.
7
© 1995-2006
The Paul Selden Companies, Inc.
Workshop Goals
MAIN GOALS
 Learn a systematic approach to improving
sales, marketing, and customer service
 Learn tools
 Apply ideas to your own business
 Stimulate the imagination!
* Throughout, we speak of “sales” as outputs of a system or
systems, not as a single “department.” Our focus will be on sales,
marketing, and customer service systems.
8
© 1995-2006
The Paul Selden Companies, Inc.
Agenda
 Bienvenidos and Introductions
 The “DMAIC” Method of Improvement
 Define: Process Mapping The Big Picture
 Measure: Using “SPC” With Sales Data
 Analyze: Simulating the Steps and Using Cause-
Effect Logic to Find Greatest Constraint
 Improve: Brainstorming & Testing Improvements
 Control: Holding the Gains
 Summary and Adiós
9
© 1995-2006
The Paul Selden Companies, Inc.
Other Expectations?
 Ask As Other Issues Arise During Workshop
 We’ll Try to Cover
 With Only Two Days, We May Need to Put
Some on a “Parking Lot”
10
© 1995-2006
The Paul Selden Companies, Inc.
Agenda
 Bienvenidos and Introductions
 The “DMAIC” Method of Improvement
11
© 1995-2006
The Paul Selden Companies, Inc.
The Steps of “DMAIC”
Define
Measure
Analyze
Improve
Control
 Made popular under the name “Six Sigma”
 Useful general method for process
improvement
 We will use the DMAIC sequence to show
when to apply tools of Sales Process
Engineering (other steps are also possible)
12
© 1995-2006
The Paul Selden Companies, Inc.
DMAIC and Our Agenda
Define
Measure
Analyze
Improve
Control
Process
Maps
Statistical
Process
Control
Simulation
Brainstorming
Behavioral
Psychology
Cause-Effect
Diagrams
Statistical
Process
Control
Flowcharting
Theory of
Constraints
13
Design of
Experiments
© 1995-2006
The Paul Selden Companies, Inc.
Discussion
14
© 1995-2006
The Paul Selden Companies, Inc.
Agenda
 Bienvenidos and Introductions
 The “DMAIC” Method of Improvement
 Define: Process Mapping The Big Picture
15
© 1995-2006
The Paul Selden Companies, Inc.
DMAIC and Our Agenda
Define
Measure
Analyze
Improve
Control
Process
Maps
Statistical
Process
Control
Simulation
Brainstorming
Behavioral
Psychology
Cause-Effect
Diagrams
Statistical
Process
Control
Flowcharting
Theory of
Constraints
16
Design of
Experiments
© 1995-2006
The Paul Selden Companies, Inc.
Dr. Deming’s Map –
Business As A System
Design and
Redesign
Materials
Receive
&
&
Equipment:
Test
Suppliers Materials
Consumer
Research
Consumers
Produce,
Assemble
& Inspect Distribute
A
B
C
D
Tests of Processes, Machines,
Methods, Costs
- Source: WE Deming, 1982
17
© 1995-2006
The Paul Selden Companies, Inc.
Process Models:
Ballistic System
Supplier
Process
Input
Customer
Output
No adjustment per feedback
Note: Six Sigma calls this the “SIPOC” model
18
© 1995-2006
The Paul Selden Companies, Inc.
Process Models:
Guided System
Processing
System
Input
Output
Can correct output
(Adapted from Brethower)
19
© 1995-2006
The Paul Selden Companies, Inc.
Process Models
Adaptive System
Processing
System
Input
Customer:
Receiving System
Output
Output
Can correct output and adjust goal per shifts in customer needs
(Adapted from Brethower)
20
© 1995-2006
The Paul Selden Companies, Inc.
Business to Business Sales
Acquisition Process
Leads
Follow-up
Service
Contact
Analyze
Needs
Present
21
Develop
Proposal
Close
Enter
Order
© 1995-2006
The Paul Selden Companies, Inc.
Repeat Business Process
Repeat Business Model
Goal: Profitable Ongoing & Increasing Sales
Invoice
Service
Client
Needs
Analysis
Advise
Agree
22
Enter
Order
© 1995-2006
The Paul Selden Companies, Inc.
Sales Management Process
Let
Go
Attract,
Select
Retire
Promote
Make
Offer,
Hire
Train &
Equip
Set
Goals
Coach
23
Evaluate
Reward
© 1995-2006
The Paul Selden Companies, Inc.
Customer’s B to B Buying
Process
Detect
Mkt
Needs
Contact
Potential
Suppliers
Reveal
Needs/
Wants
Generate
RFPs
24
Compare
Props/
Sign Deal
Use &
Maintain
Item
© 1995-2006
The Paul Selden Companies, Inc.
Checklist: Is Your Process
Well Managed?
 Accountable process owner
 Well defined process boundaries
 Clear internal communication and responsibilities
 Documented procedures & training requirements
 Measurement & feedback close to activities




performed
Customer-related measurements and targets set
Known standards
Know how well they perform against standards
Know how to change/improve when needed
From Harrington
25
© 1995-2006
The Paul Selden Companies, Inc.
Tool:
Flowcharting
Survey
Lead
Portion
of Telemarketing
Lead
Screening
Process
No
Qualified?
Pass to
Referral
Plan
Yes
Pass
to Rep
26
© 1995-2006
The Paul Selden Companies, Inc.
Flowcharting
 Flowchart: picture of steps in a process
 Variation: Functional flow chart (shows ownership of





steps)
Common symbols: diamond (decisions) and
rectangles (procedures); many others
Define boundaries of process under study
Assemble true experts in flow to diagram
Each process block should have definite input from
previous operation
Each block should deliver output to next step or
operation downstream
27
© 1995-2006
The Paul Selden Companies, Inc.
Checkpoint
28
© 1995-2006
The Paul Selden Companies, Inc.
Activity - Mapping Your
Sales Process
 Small groups - by company or in pairs
(consultants split up)
 Break your own process into 5 to 7 sequential
blocks representing MAIN sub-processes
 Details not important now, just big picture
 Draw decision diamonds between subprocess blocks even if not sure what to put
into decision diamonds for now
29
© 1995-2006
The Paul Selden Companies, Inc.
Mapping Your Sales Process
30
© 1995-2006
The Paul Selden Companies, Inc.
Discussion
31
© 1995-2006
The Paul Selden Companies, Inc.
Agenda
 Buenos Dias and Introductions
 The “DMAIC” Method of Improvement
 Define: Process Mapping The Big Picture
 Measure: Using “SPC” With Sales Data
32
© 1995-2006
The Paul Selden Companies, Inc.
DMAIC and Our Agenda
Define
Measure
Analyze
Improve
Control
Process
Maps
Statistical
Process
Control
Simulation
Brainstorming
Behavioral
Psychology
Cause-Effect
Diagrams
Statistical
Process
Control
Flowcharting
Theory of
Constraints
33
Design of
Experiments
© 1995-2006
The Paul Selden Companies, Inc.
Visualize Output Of Selling
System As a Stream Over Time
Our
Measure
(e.g.,
Sales)
Time
34
© 1995-2006
The Paul Selden Companies, Inc.
The Eternal Decision-Making
Dilemma
Stay The Course or Take Extreme Measures?
Revenue
Quarter
35
© 1995-2006
The Paul Selden Companies, Inc.
The Quote Closing Experiment
36
© 1995-2006
The Paul Selden Companies, Inc.
Closing Scorecard
Rep
1
Quarter
2
3
4
Total
Total
Average
37
© 1995-2006
The Paul Selden Companies, Inc.
Examining the Record
 As a real life manager, which reps would you:
… send on the annual President’s Club trip?
… encourage to try harder?
… pat on the back for improving the most?
… fire?
 Is there a better way to make decisions than
this?
38
© 1995-2006
The Paul Selden Companies, Inc.
Scorecard Revisited
39
© 1995-2006
The Paul Selden Companies, Inc.
Need To “Filter Out” False vs.
Real Alarms
False Alarm #1
Reacting to a normal outcome as if it were
unusual
False Alarm #2
Failing to act on a genuinely unusual outcome
40
© 1995-2006
The Paul Selden Companies, Inc.
Source of the Filter: Natural
Process Behavior
Concept:
Use “Like” Subgroups as Filter to
Detect “Different” Subgroups
Our
Measure
(e.g.,
Sales)
Time
41
© 1995-2006
The Paul Selden Companies, Inc.
Alarm Zones Set Empirical
Triggers on Financial Data
Upper Alarm Zone
Operating
Margin
Lower Alarm Zone
Time
42
© 1995-2006
The Paul Selden Companies, Inc.
Four Cautions for Setting Up
Basic Filter
1. Subgroup data “rationally” - like with like
2. Never dump all the data together and
use “standard deviation” for the filter
3. Standardize measurement gathering
procedure; stick to it
4. Follow the rules for selecting and
interpreting charts
43
© 1995-2006
The Paul Selden Companies, Inc.
Calculating & Applying the
Filter
 See Worksheet
“It Is More Important to
Take the Right Action
Than to Find the Right Number”
-- Don Wheeler
44
© 1995-2006
The Paul Selden Companies, Inc.
Plotting the Performance
Revenue
20
15
10
5
5
10
15
Sequence
45
20
© 1995-2006
The Paul Selden Companies, Inc.
Testing For Signals
 See Handout
46
© 1995-2006
The Paul Selden Companies, Inc.
When Process is
“In Statistical Control”
 Only random causes are present
 Variation occurs around a consistent mean
 Being in statistical control is based on
observations and calculations
Chart - With Operationally Determined Limits
Upper Natural Process Limit (UNPL)
Revenue
Average
Lower Natural Process Limit (LNPL)
Time
47
© 1995-2006
The Paul Selden Companies, Inc.
Operational Definition of
Change
 What is an “operational definition?”
 Specifying the operation by which
something is done or assessed
 Allows for repeatable decision-making and
action
Typical Management Graph
Revenue
Time
48
© 1995-2006
The Paul Selden Companies, Inc.
Two Strongest Alarm Signals
Desirable
When performance trips alarm on the “good” side, it is vital to
detect it so that the factors causing it can be replicated or
enhanced more consistently.
Good
Bad
Undesirable
It is just as or more critical to detect alarms on the “bad” side, so
the factors causing it can be prevented from recurring.
49
© 1995-2006
The Paul Selden Companies, Inc.
Operational Definition of
“Predictable”
UNPL
Service
Level
LNPL
Quarter
50
© 1995-2006
The Paul Selden Companies, Inc.
Meeting Quotas -Or Tossing Dice?
An Objective Definition of Need to Change System
Upper Alarm Zone
Goal
Zone of
Empirically
Predicted
Result
Revenue
Lower Alarm Zone
Time
51
© 1995-2006
The Paul Selden Companies, Inc.
Uses
 Credit and Collections
 Forecasting
 Performance Appraisal
 System Improvement
 Monitoring Service Levels
 Inventory and Stocking
 Goal Setting
 Setting Baselines Before Conducting “DOE”
 Other?
52
© 1995-2006
The Paul Selden Companies, Inc.
Discussion
53
© 1995-2006
The Paul Selden Companies, Inc.
Agenda
 Bienvenidos and Introductions
 The “DMAIC” Method of Improvement
 Define: Process Mapping The Big Picture
 Measure: Using “SPC” With Sales Data
 Analyze: Simulating the Steps and Using
Cause-Effect Logic to Find Greatest
Constraint
54
© 1995-2006
The Paul Selden Companies, Inc.
DMAIC and Our Agenda
Define
Measure
Analyze
Improve
Control
Process
Maps
Statistical
Process
Control
Simulation
Brainstorming
Behavioral
Psychology
Cause-Effect
Diagrams
Statistical
Process
Control
Flowcharting
Theory of
Constraints
55
Design of
Experiments
© 1995-2006
The Paul Selden Companies, Inc.
Process Engineers Identify
Two Types of Problems
 Sporadic problems: feedback detects, then
troubleshooting, fixing, and preventing
reduces chance of recurrence
 Systemic: ordinary feedback loop not
sufficient, must change very nature of system
or inputs; careful diagnosis, careful remedy
testing, and implementation needed
Problems
in all
Processes
Chronic
56
Sporadic
© 1995-2006
The Paul Selden Companies, Inc.
Approaches to Analyzing CauseEffect
 Previous Studies
 Cause – Effect Mapping
 Simulation
57
© 1995-2006
The Paul Selden Companies, Inc.
Causes of Low Sales
Sales
Tracking Orders
Talk to Wrong Prospects
Time/People
Paperwork
Travel to Client
Lack of Contacts
Entry Errors
Not Enough Names
Coffee Drinking
Staring Into Space
Not Getting Right
Decision-Makers
“Cheating on Time”
Poor Presentation
Poor Pricing
Late Delivery
Poor Proposal
Turnover
Claims
58
© 1995-2006
The Paul Selden Companies, Inc.
Top Ten Sales Process
Problems - Selden
1. Failure of marketing to find and capitalize on
existing information
2. Insufficient qualification of leads prior to
passing to sales
3. Blind use of field sales to perform all types
of contact
4. Absence of presentation impact analysis
5. Non-uniform and incomplete customer
needs analysis
59
© 1995-2006
The Paul Selden Companies, Inc.
Top Ten Sales Process
Problems (cont’d)
6. Pricing policies and systems for complex
items
7. Labor intensive quote and proposal
generation
8. Lack of ability to understand and adjust
close to true customer motivations
9. Order entry errors
10. Broken implicit and explicit service
commitments
60
© 1995-2006
The Paul Selden Companies, Inc.
Cause and Effect Diagram
Example: Causes for Lower Than Desired Sales
Customers
Have
Many Choices
Used
Merchandise
Competes
“Politics”
Influence
Decisions To
Put on Shelves
Poor Support
From Own
Staff
No Unique
Selling
Proposition
Customer
Buying
Season Short
Lower
Sales
Bargain
Shoppers
Don’t Like
Our Price
Not Required
To Buy
Our Brand
61
© 1995-2006
The Paul Selden Companies, Inc.
Cause & Effect Diagrams
 Diagram of relationship between outcome and





potential controlling factors (from Ishakawa)
Layout resembles “fishbone,” “stream and river” or
“branch and limb” appearance
Effect is main trunk, causes are branches, main
causes can be boxed at branch ends
Ask “5 Why’s;” don’t stop until all final “root” causes
exhausted
Effect, or symptom of problem, must be clearly stated
or group will be confused
Does not demonstrate true responsibility between
one cause and others
62
© 1995-2006
The Paul Selden Companies, Inc.
Checkpoint
63
© 1995-2006
The Paul Selden Companies, Inc.
Activity - Surfacing Cause and
Effect
 Examine your process maps.
 Circle a portion you are having trouble with.
 Draw a cause and effect diagram exploring
“reasons why”
64
© 1995-2006
The Paul Selden Companies, Inc.
Why Simulate?
 Find gaps in understanding
 Less expensive than trial and error
 Mistakes don’t hurt you as in real life
 Pinpoint place(s) to improve with greatest
payback
 Other?
65
© 1995-2006
The Paul Selden Companies, Inc.
Activity: Sales Process
Simulation
Input
Qty, Yields
Costs
Names
Contacts
Presentations
Estimations
Proposals
Closes
Value per close
Sales
Quantity
4000
1000
200
80
64
8
Yield
0.25
0.2
0.4
0.8
0.135
1
Unit Sales Total Sales
Cost
Cost
-2
-$8,000
-10
-10,000
-250
-50,000
-300
-24,000
-400
-25,600
-500
-4,000
-$121,600
$100,000
800,000
% COGS
Gross Margin
70%
-560,000
240,000
%G&A
Sales Cost
GSA
15%
15%
-120,000
-121,600
-241,600
Operating Income
-$1,600
Operating Margin
0%
66
© 1995-2006
The Paul Selden Companies, Inc.
Activity: Simulating The Sales
Process
 Pretend you can definitely improve two things, + or – 10%
 Write them down (up to 10% each).
a.Change __________ to _________
b.Change __________ to _________
 Let’s try them out! Note the results here:
a.______________________________
b.______________________________
 Which seems to be most optimal combination of settings?
a.Set _____________ at ___________
b.Set _____________ at ___________
 Are you positive these are the best?
Note: This simulation does not include variability as a factor.
67
© 1995-2006
The Paul Selden Companies, Inc.
The Penny Simulation
 How Variability Effects Output
68
© 1995-2006
The Paul Selden Companies, Inc.
Discussion
69
© 1995-2006
The Paul Selden Companies, Inc.
Lessons of a Wavy Pipeline
Suboptimization
Occurs
Bottlenecks Shift
Here’s
the real
problem!
Perspective is
Essential
70
Here’s
the real
problem!
© 1995-2006
The Paul Selden Companies, Inc.
TOC’s Thinking Process
Company Is
Not Selling To
Maximum
Potential (UDE)
Some Reps Sell
Below Full
Market Potential
Some Clients
Are Less
Forgiving Than
Others
Mgmt Deploys
Some Ineffective
Tactics and
Strategies
Training Program
Ignores
Certain Important
Skills
Some Costly
Oper’al Mistakes
Are Occurring
(UDE)
Some
HQ Directions
Are Conflicting
(UDE)
Some Factors
Vital To
Increase Sales
Are Unclear
71
© 1995-2006
The Paul Selden Companies, Inc.
Activity: Theory of Constraints
 Where are your biggest bottlenecks?
 Review your cause and effect diagram
 What factor within your control causes most of the
other factors to happen?
 Add to, or re-draw your diagrams, accordingly.
72
© 1995-2006
The Paul Selden Companies, Inc.
Discussion
73
© 1995-2006
The Paul Selden Companies, Inc.
Agenda
 Bienvenidos and Introductions
 The “DMAIC” Method of Improvement
 Define: Process Mapping The Big Picture
 Measure: Using “SPC” With Sales Data
 Analyze: Simulating the Steps and Using
Cause-Effect Logic to Find Greatest
Constraint
 Improve: Brainstorming & Testing
Improvements
74
© 1995-2006
The Paul Selden Companies, Inc.
DMAIC and Our Agenda
Define
Measure
Analyze
Improve
Control
Process
Maps
Statistical
Process
Control
Simulation
Brainstorming
Behavioral
Psychology
Cause-Effect
Diagrams
Statistical
Process
Control
Flowcharting
Theory of
Constraints
75
Design of
Experiments
© 1995-2006
The Paul Selden Companies, Inc.
Once The Causes for the Problem
Are Found…
 Time for solutions
 Brainstorming: Common method – easy but
not often done well!
 Many other “Idea Generation” systems
76
© 1995-2006
The Paul Selden Companies, Inc.
Brainstorming
 Brainstorming: voicing, listing ideas in group
 No criticism permitted; no censorship
 Unconventional, wacky, outrageous ideas





encouraged
Expanding, combining, adding to ideas encouraged
Capture many ideas in short time
Warm up with neutral ideas and examples of
discouraging comments to avoid
Explain issue involved clearly; use facilitator
Analysis may be next, but is separate
77
© 1995-2006
The Paul Selden Companies, Inc.
Checkpoint
78
© 1995-2006
The Paul Selden Companies, Inc.
Activity: Brainstorming Solutions
 Look at your cause and effect diagrams
 Brainstorm solutions that may overcome
undesirable, negative causes
79
© 1995-2006
The Paul Selden Companies, Inc.
Discussion
80
© 1995-2006
The Paul Selden Companies, Inc.
Caution!
 Brainstorming and creativity are great when
generating ideas
 Finding whether the ideas work requires
testing
Aha!
Look!
IDEA
TESTING
“I think”
“I can show”
81
© 1995-2006
The Paul Selden Companies, Inc.
Test Methods
 Simple Methods
 Using Statistical Process Control
 Design of Experiments (DOE)
82
© 1995-2006
The Paul Selden Companies, Inc.
Simple Method For Testing:
Pre-Post With Control Group
Sales
Pre
Post
Test
Group
Control
Time
(adapted from Selden)
83
© 1995-2006
The Paul Selden Companies, Inc.
Simple Method For Testing:
Multiple Baseline
Sales
Group
Pre
Post
A
B
C
Time
84
(adapted from Selden)
© 1995-2006
The Paul Selden Companies, Inc.
Using SPC to Test for Change
 Did our solution really work?
 Measure
new “recipe”
 Chart
 Calculate
control limits
 Use 8 Rules to determine whether change “is
real” or “just noise”
Leads
Appts
Proposals
85
Orders
© 1995-2006
The Paul Selden Companies, Inc.
Activity: Using SPC to
Test Change
5
10
15
20
Sequence
86
© 1995-2006
The Paul Selden Companies, Inc.
Why DOE?
What If We Need To Test
The Individual Impact of
Many Ideas At Once?
87
© 1995-2006
The Paul Selden Companies, Inc.
Challenge: Find “Sweet Spot”
Find Optimal Combination
In Complex Mix of Policies and Tactics
Product
Promotion
Price
Placement
88
© 1995-2006
The Paul Selden Companies, Inc.
DOE vs. Simple Methods
 To tell which factor in the “cluster” is the
“active ingredient,” or which combination of
factors is best, more formal designed
experiments are needed
 Special training in “DOE” (Design of
Experiments) required
 Simple test methods can tell differences
between one “cluster” of factors and another
 We’ll learn those now
89
© 1995-2006
The Paul Selden Companies, Inc.
DOE Can Quickly Find Key
Factors and Best Combinations
No
Frosting
Frosting
No
Cake
No Sale!
$
$
$$$$
Cake
90
© 1995-2006
The Paul Selden Companies, Inc.
What to Test: Guidelines
Factors tested must be controllable
 Try: media choice, tagline, commission plan, training,
mailing list used, price location, size, frequency
 Tougher: presentation “style,” greeter “enthusiasm”
2. Factors should be affordable
 Use: factors already in budget
 More costly: building new warehouses, plants, or
computer systems as a “test”
3. Factors should be easy to introduce quickly
4. No impossible or dangerous combinations
 “Impossible:” Text Color: Yellow + Ad Type: Radio
 Dangerous: ideas that could seriously alienate good
clients
1.
91
© 1995-2006
The Paul Selden Companies, Inc.
Looking At Results: Guidelines
Results should be:
1. Measurable with known accuracy.
2. Measurable with sufficient accuracy not to obscure
results.
3. As directly related to end goal as possible.
4. Set up to provide an index of variation within each
recipe.
Examples
 Easier: Sales, Time, Cost Savings, Refunds,
Warrantee Claims, Reservations, Attendance
 Tougher: “Attitude,” “Willingness to Refer a Friend,”
Focus Group Outcomes
92
© 1995-2006
The Paul Selden Companies, Inc.
Regions of Impact
Region of Relatively
Small Change
Region of
Greatest
Impact
Effect
(e.g.,
Sales)
Region of Relatively
Small
Change
Implication: levels chosen for
contrast must be sufficiently
“Bold” (widely spaced) to
enable detectable difference
Factor Level (e.g., Advertising Frequency)
93
© 1995-2006
The Paul Selden Companies, Inc.
Familiar Method For Testing:
A/B or Split Test
Sales
Limitation:
Only tests one cluster
of factors vs. another
cluster (A vs B). Can’t
distinguish what
factors are
responsible for the
success of each
cluster.
A
Method
B
Time
A = Current Price, Product, Placement, Promotion, etc.
B = New Price, Product, Placement, Promotion, etc.
94
© 1995-2006
The Paul Selden Companies, Inc.
Beauty of Screening Designs
 How many balanced groups of two can we
create from one sample?
Envelope: White
Envelope: Cream
Return
Address:
Use
Return
Address:
None
Return
Address:
Use
Return
Address:
None
Copy:
Long
Return
Address:
None
Return
Address:
Use
Return
Address:
None
Return
Address:
Use
Copy:
Short
95
© 1995-2006
The Paul Selden Companies, Inc.
Displayed Another Way
Run
Envelope
Copy
Return
Address
1
-
-
-
2
+
-
-
3
-
+
-
4
+
+
-
5
-
-
+
6
+
-
+
7
-
+
+
8
+
+
+
Since we need eight runs for three factors,
why not “saturate” the design space further?
96
© 1995-2006
The Paul Selden Companies, Inc.
Secret of Multi-Factor Balanced
Designs …
Example: Seven Factor, Eight Run Two Level
Fractional Factorial (below)
(Assume Only Factors A and G “Work,” Contributing Additive Impacts To Results)
Factor
Run
1
2
3
4
5
6
7
8
Sum of +'s
Sum of -'s
Sum
Difference
Effect
A
-1
1
-1
1
-1
1
-1
1
B
-1
-1
1
1
-1
-1
1
1
8
-8
0
16
4
C
-1
-1
-1
-1
1
1
1
1
0
0
0
0
0
D
1
-1
-1
1
1
-1
-1
1
0
0
0
0
0
E
1
-1
1
-1
-1
1
-1
1
0
0
0
0
0
97
F
1
1
-1
-1
-1
-1
1
1
0
0
0
0
0
G
-1
1
1
-1
1
-1
-1
1
0
0
0
0
0
Results
-12
12
8
-8
8
-8
-12
12
40
-40
0
80
20
12
-8
-8
12
0.0 Mean
8
© 1995-2006
The Paul Selden Companies, Inc.
… Allows Each Factor to Express
Itself, Across the Others
The balanced nature of this class of designs allows
active factors to show their impact across the other
factors, when genuinely present. Each level is
used an equal number of times.
Factor
Run
1
2
3
4
5
6
7
8
Sum of +'s
Sum of -'s
Sum
Difference
Effect
A
-1
1
-1
1
-1
1
-1
1
B
-1
-1
1
1
-1
-1
1
1
8
-8
0
16
4
C
-1
-1
-1
-1
1
1
1
1
0
0
0
0
0
D
1
-1
-1
1
1
-1
-1
1
0
0
0
0
0
E
1
-1
1
-1
-1
1
-1
1
0
0
0
0
0
F
1
1
-1
-1
-1
-1
1
1
0
0
0
0
0
G
-1
1
1
-1
1
-1
-1
1
0
0
0
0
0
Results
-12
12
8
-8
8
-8
-12
12
40
-40
0
80
20
-12
8
8
-12
0.0 Mean
-8
Factor A’s “Effect” = (8/4 “plusses”) – (-8/4 “minuses”) = 2-(-2) = 4
98
© 1995-2006
The Paul Selden Companies, Inc.
Examples of Factors Companies
Are Testing Today
 Business to Business Sales: Contact Rate,
Proposal Detail, Meeting Location, Demo Style
 Wholesale Net Margins: Telemarketing, Sales
Planning Time, Factory Tours, Warranties,
Commissions, Promotional Pricing
 Internet Sales: Banner Ads, Tagline, Product Price,
Logo Size
 Direct Mail: Coupon, First Class, Refund Offer, Use
of Color, Post Script, Reply Interval
 Print Advertising: Background, Credit Promotion,
Paper Type, Celebrity Endorsement
99
© 1995-2006
The Paul Selden Companies, Inc.
DOE Checklist
1.
2.
3.
4.
5.
6.
7.
8.
9.
Define opportunity & measurable effects
Create (brainstorm) list of possible causes
Narrow list (see “What to Test” guidelines)
Decide on “experimental unit”
Design, conduct, learn from screening test
Design, carry out, learn from refining test
Confirm and optimize
Implement on wider scale (if successful)
Repeat 1-8
- Adapted from Kraber, Whitcomb & Anderson; Montgomery;
Wheeler
100
© 1995-2006
The Paul Selden Companies, Inc.
Easy Screening Recipe
Seven Factor, Eight Run Two Level Fractional Factorial
Std
Order
1
2
3
4
5
6
7
8
Run
Order
1
4
5
7
3
2
6
8
Block
1
1
1
1
1
1
1
1
A
-1
1
-1
1
-1
1
-1
1
B
-1
-1
1
1
-1
-1
1
1
C
-1
-1
-1
-1
1
1
1
1
D
1
-1
-1
1
1
-1
-1
1
E
1
-1
1
-1
-1
1
-1
1
F
1
1
-1
-1
-1
-1
1
1
G
-1
1
1
-1
1
-1
-1
1
Resolution III (Main Effects Confounded With Two-Factor Interactions, others)
For example: [A] = A + BD + CE + FG + BCG + BEF + CDF + DEG
[B] = B + AD + CF + EG + ACG + AEF + CDE + DFG
101
© 1995-2006
The Paul Selden Companies, Inc.
Case (From “Crash Course”):
Response Rates and Yields
 Handout
102
© 1995-2006
The Paul Selden Companies, Inc.
Test and Pilot, Then Roll Out
 Test in controlled settings first

Try to get consistently good results
 Pilot with another small group

Work out the “bugs”
 Roll out one group at a time

Fine tune as needed for each group
103
© 1995-2006
The Paul Selden Companies, Inc.
Checkpoint
104
© 1995-2006
The Paul Selden Companies, Inc.
Activity: Ideas to Test
List three ideas you could test to see if they
could improve your system.
1.
2.
3.
105
© 1995-2006
The Paul Selden Companies, Inc.
Discussion
106
© 1995-2006
The Paul Selden Companies, Inc.
Agenda





Bienvenidos and Introductions
The “DMAIC” Method of Improvement
Define: Process Mapping The Big Picture
Measure: Using “SPC” With Sales Data
Analyze: Simulating the Steps and Using
Cause-Effect Logic to Find Greatest
Constraint
 Improve: Brainstorming & Testing
Improvements
 Control: Holding the Gains
107
© 1995-2006
The Paul Selden Companies, Inc.
DMAIC and Our Agenda
Define
Measure
Analyze
Improve
Control
Process
Maps
Statistical
Process
Control
Simulation
Brainstorming
Behavioral
Psychology
Cause-Effect
Diagrams
Statistical
Process
Control
Flowcharting
Theory of
Constraints
108
Design of
Experiments
© 1995-2006
The Paul Selden Companies, Inc.
What Helps People Embrace
New Methods?
 Discussion
109
© 1995-2006
The Paul Selden Companies, Inc.
To Change Behavior, Change Training,
Policies, Rewards, and Feedback Loops
 Most agree that it is more difficult to try to
directly control people’s behavior by force
 Instead, principle is to control instructional
and motivational factors – let the behavior
follow
 “Don’t control the people, control the system.”
110
© 1995-2006
The Paul Selden Companies, Inc.
Include Five Elements In Your
Plan For Change
 People must be able to use new approach or
it will fail
 Planning: anticipate and prevent problems
early
 Awareness-Building: internal “PR” to reduce
resistance to change
 Documentation: to make clear how things
must be done and to aid memory
 Training: % trained x % skills needed = ROI
 Ongoing Coaching: to prevent natural decay
111
© 1995-2006
The Paul Selden Companies, Inc.
Implementation Sequence
Stage
Element
PreLaunch
Launch
PostLaunch
Planning/
Design
AwarenessBuilding
Documentation
Training
Ongoing
Support
(adapted from Selden)
112
© 1995-2006
The Paul Selden Companies, Inc.
Checklist for Holding the Gains
Look at your flowcharts and ask yourself. . .
 Have I explained the benefits to my people and the
customers?
 Can I answer the honest questions my people may
ask?
 Does my customer experience the improvements?
 Have I set up a system to ensure prompting and
rewarding the desired behaviors?”
 Have I trained my people in the new methods?
 Have I adjusted the reporting and evaluation system
to track the new behaviors I expect?
 Am I training my people in continuous improvement?
113
© 1995-2006
The Paul Selden Companies, Inc.
Discussion
114
© 1995-2006
The Paul Selden Companies, Inc.
Use Control Charts To Help
Warn of Sliding Backwards
Average Order Size
100
85.19
64.60
Income
44.01
0
Time
115
© 1995-2006
The Paul Selden Companies, Inc.
Agenda
 Bienvenidos and Introductions
 The “DMAIC” Method of Improvement
 Define: Process Mapping The Big Picture
 Measure: Using “SPC” With Sales Data
 Analyze: Simulating the Steps and Using Cause-
Effect Logic to Find Greatest Constraint
 Improve: Brainstorming & Testing Improvements
 Control: Holding the Gains
 Summary and Adiós
116
© 1995-2006
The Paul Selden Companies, Inc.
Involve Everyone In DMAIC With
“Kaizen”
Define
Measure
Analyze
Improve
Control
Process
Maps
Statistical
Process
Control
Simulation
Brainstorming
Behavioral
Psychology
Cause-Effect
Diagrams
Statistical
Process
Control
Flowcharting
Theory of
Constraints
117
Design of
Experiments
© 1995-2006
The Paul Selden Companies, Inc.
Kaizen - Continuous
Improvement
 Kaizen = Gradual, Never Ending Improvement
 Kaizen means setting and achieving standards that





are always increasing
Improvement is gradual, not dramatic
Results can be very impressive nevertheless
An attitude - relentless, enthusiastic, not satisfied with
letting problems continue or the status quo
Involves everyone from top to bottom
All successful cultures do this informally, but very
popular in Japan as a system
118
© 1995-2006
The Paul Selden Companies, Inc.
Innovation plus Kaizen
KAIZEN
KAIZEN
Innovation
Time
(adapted from Imai)
119
© 1995-2006
The Paul Selden Companies, Inc.
Any of These Tools May Help!
 Drawing process maps
 Charting sales results using SPC
 Creating a simulation
 Drawing cause-effect diagrams
 Identifying largest constraint
 Brainstorming ideas for improvement
 Testing if ideas work, using SPC and DOE
 Adjusting the system of measurement, rewards,
training and coaching to hold the gains
 Having the mindset of continuous improvement!
120
© 1995-2006
The Paul Selden Companies, Inc.
What Ideas Are You Taking Home?
121
© 1995-2006
The Paul Selden Companies, Inc.
Thank You, and Adiós!
122
© 1995-2006
The Paul Selden Companies, Inc.
References
 Statistical Process Control
Don Wheeler, Bill McNeese
 Theory of Constraints
Bill Dettmer, Eli Goldratt
 Design of Experiments
Mark Anderson, Pat Whitcomb, Doug Montgomery
 Theory of Inventive Problem Solving
Ellen Domb, Darrell Mann, Genrich Altschuler,
 Behavioral Psychology
Paul Selden
123
© 1995-2006
The Paul Selden Companies, Inc.