ADAPTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE DISCIPLINE OF SALES LEAD MANAGEMENT ppt

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AD
ADAD
ADAPTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE
APTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE APTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE
APTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE
DISCIPLINE OF SALES LEAD MANAGEMENT
DISCIPLINE OF SALES LEAD MANAGEMENTDISCIPLINE OF SALES LEAD MANAGEMENT
DISCIPLINE OF SALES LEAD MANAGEMENT

PREPARED BY
PREPARED BYPREPARED BY
PREPARED BY


KEITH D. BURWELL
KEITH D. BURWELLKEITH D. BURWELL
KEITH D. BURWELL


SVP SALES, KALEIDICO
SVP SALES, KALEIDICOSVP SALES, KALEIDICO
SVP SALES, KALEIDICO

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Executive Summary


All too often, organizations will continue to drive the notion that somehow sales personnel
are to be measured qualitatively in the short term and by revenue output in the long term.
The idea that we should utilize standardized processes for manufacturing and
technology, yet sustain a laissez-faire method of management towards our sales
teams is not only antiquated but has been detrimental to the well-being of our
economy as a whole. This paper will examine many TQM (Total Quality Management)
techniques as they are applied to the manufacturing discipline, their purpose, and how
they can translate to increased productivity as well as sustainable, quantitative
measurements in sales organizations within any vertical market.

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What Hath Poor Sales Performance Wrought?

According to the Bureau of Labor Statistics, the average American productivity increase
since 1949 has decreased steadily. While this means we are still improving how we work,
we are steadily losing ground. A popular study done by America Online and Salary.com
several years ago backs up this data by indicating the amount of time wasted by age
group each day of work per individual.
Year of Birth
Time Wasted Per
Day
1930-1949
0.50 hrs.

1950-1959
0.68 hrs.

1960-1969
1.19 hrs.

1970-1979
1.61 hrs.

1980-1985
1.95 hrs.

Source: Salary.com

While these are simply correlating data, it is an indication that our economy is
sorely underutilized and its performance is struggling as we move from a majority of blue
collar manufacturing production to an increasingly large sales workforce. Most of the great

strides in performance measurement and Lean Manufacturing techniques have
unfortunately not been translated from vertical market to vertical market as it is, by and
large, two separate societal groups that comprise professional sales versus
manufacturing.

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In many sectors of the American economy, we have seen massive off shoring and
outsourcing of manufacturing jobs that have found new employees around the globe,
leaving many individuals skilled at performance measurement without an outlet.
Meanwhile, generations of American youth are growing up and taking jobs that are
traditionally sales focused as we become a heavier retail and services oriented economy.
Therefore, the idea of productivity and performance measurement has unfortunately
escaped much of our emerging workforce.
In order to effectively raise the productivity of the American sales sector, it is vital to begin
to properly apply these traditional manufacturing techniques to our sales teams and
organizations. It is no longer enough to simply measure monthly or quarterly sales
revenue and haphazardly adjust budgets accordingly.
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The State of Most Sales Teams

The typical sales organization has been the pointy end of the economic spear in many
companies. To continue the analogy, when dull they get sharpened through layoffs and
cutbacks of poor performers and in strong sales periods they are the ones that are looked
to for the production of revenue and are rewarded as such. As long as the spearhead

continues to provide dinner, the spearhead stays intact. Unfortunately, it often takes a
misstep by the sales group—a missed quarter, a blown projection, or a lost deal to
suddenly and backwardly attempt to repair the damage. Current methods of “control” are
often the equivalent of dialing a thermostat left to right without seeing the temperature-
simply a guess based on instinct and feelings.
This has resulted in the unnecessary raising of marketing budgets, reduction of staff,
pointless and often unobtainable sales goals, as well as alarmist reactions translated into
inflated budgetary projections, allowances, and cutbacks. Roaming targets set by worried
sales executives simply translate to longer hours on the sales floor, an over anxious (and
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soon to leave) sales team, and ultimately a cutback in personnel in order to meet
whatever “seems” to be the right number this quarter. This may sound overly comical,
unduly harsh, or simply counterintuitive to our expectations. However, the fact is that
many of these organizations are being run by someone skilled in “anything” other than
sales.

Lead Management is Not a Skill Held by Most Business Owners
According to statistics from the Small Business Administration, 99% of all American
businesses are small, with an average of one location and 10 employees. This sector is
responsible for over half of the non-farm workforce in America and the entire net gain of
1.86 million new jobs in 2004 (the most recent year data is available). We can reasonably
infer that the majority of business owners 1) did not start their shoe store, software
company, mortgage brokerage, insurance branch, cookie manufacturer or other specialty
concept because they were skilled at utilization of sales leads and were simply looking for
an outlet for this managerial ability and 2) the typical 10 person shop is going to have a
sales staff run by the owner or, more likely, a moderately skilled former salesperson.
Either of these two facts is grim if we are expecting a disciplined sales process,
appropriate management techniques, and procedural adherence over extended periods of
time to come from our largest business sector.

What becomes necessary then is to adapt large business models of effective
management for small businesses. Typically, as we see individuals stay in their respective
disciplines and become more refined and specialized, sales performance management
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isn’t a primary focus. Therefore, more often than not, poor habits of under-managing and
over-correcting in other departments becomes the quasi-norm.
In order to correct for such an imbalance and to right a listing ship, some level of discipline
must be understood and placed within our sales economy. Too many business owners
and managers rely solely on sales “techniques” to drive to the next level. Often the focus
becomes about “changing the pitch” or selling “differently” as opposed to addressing the
fundamentals of the environment, the process, and all of the steps leading up to the
conversation and then the follow through. When the engine is failing, neither putting more
fuel in the tank nor going faster will correct the issue at hand, yet that is the overarching
strategy employed by the majority.
Organizations reliant on a sales team for revenue generation, either in part or whole, need
to evaluate their functional groups for proper efficiency and re-calibrating. Simply pressing
Marketing to add leads or creating inflated budgetary targets and using strong arm
techniques to drive goals are no longer considered strategies worthy of companies
attempting to gain market share, hit targets, and continue to grow.
The remainder of this paper will focus on specific methods typically found in
manufacturing settings that have very strong correlating results within sales teams. These
techniques are typically foreign to most professionals within a group dedicated to
engaging potential clients and working directly with external individuals. However, this
paper will address the methodology, the purpose, the expected results, as well as the
typical application in order to create a complete picture and understanding of not only how
to apply the techniques to one’s organization but why one would and should strive for full
implementation.
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Understanding TQM Methodology- a Primer

Total Quality Management, as it is called, is the concept of reducing waste from a
process. Typically it is structured within a manufacturing setting with the goal being the
highlighting, removal, and resolution of waste within a given process. It is meant to make
the machine, assembly line, worker, or team as productive, efficient, and streamlined as
possible.
While TQM is agreed to be a conceptually lofty goal, it is nonetheless, a target that is
always attempting to be reached. Arguably no organization has completely removed
waste in toto, but this is one of the more salient points regarding the process—it is indeed
a continual process designed to be a recurring and always present reminder of what
should be as opposed to simply what is.
It is hard to argue with the success of the methodology as it has been utilized over the last
half century. Countless organizations, most notably Toyota, and consequently many auto
industry giants, have seen enormous savings through implementation and by creating a
culture wherein TQM can be embraced. GM has seen $9 Billion in savings through only
three years of system implementation.



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Does TQM Translate To Sales?

In order to determine whether the methodology will actually be an effective tool within a
sales environment, it is necessary to find symmetry of problems between Manufacturing
and Sales groups. If, in fact, there are similar problems, then we can reasonably assume
that the solutions may indeed fit.

What, then, are the problems in manufacturing that are solved by TQM? First, wasted time
is one of the most egregious harms inherent in a manufacturing environment. Wasted time
is found in machine spacing, work levels, amount of work, behaviors, and many other
processes. Can we see this in Sales organizations? Yes. We know that a sales
organization will have issues with work levels, processes, behavior, and time between
work functions. Therefore, we can begin the discussion at wasted time as a symmetrical
problem in both types of environments.
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Other areas of like occurrence would fall into categories of inventory (where raw material
is equal to leads), process setups, workloads, changeovers, work environment issues, as
well as development of a value stream.
We could rightly say that the Sales team is a work cell dedicated to manufacturing. It is in
the business of manufacturing closed deals. The variables are the raw materials, the
suppliers of those materials, how the material is stored, accessed, worked, developed, the
quality of effort placed into the final product, as well as the time spent to create the
product, the efficiency of the work environment, and the communication between
necessary groups.
When viewed in this way, a sales team can be assessed, valued, monitored, and
controlled much more efficiently than we typically have done in the past.
The remainder of this paper will discuss in detail various techniques found in Total Quality
Management methodology, their intended purpose and problem it solves, the explanation
of the same problem in the sales function, and finally the application of the technique
within the sales discipline.


TQM Techniques and Their Implementation

Technique: 5S
Definition: 5S describes a workplace organization method (five words that begin with S)

in which the worker is continually making their workstation efficient by ensuring its
cleanliness, order, and standardization.
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Implementation: The first S, Sorting, speaks to the necessity of the worker to maintain an
environment with only the most essential items present. We can think of this not only in
our desk area, office, but also, more significantly, our computer desktop. How does the
sales person organize their email inbox or the important documents that are used
frequently? Sorting is clearing the work area of only essentials. While we may find it clever
or entertaining to see sales personnel with various basketball hoops, games of chance,
dartboards and other implements of time abatement, one would probably question their
presence on or around a tool and die machine in a factory. This illustrates a common
paradigm—why is it acceptable for a sales production worker to have these types of
“escapes” yet unthinkable for a manufacturing production worker? One is led to
believe that if it is unproductive for one group of producers, it is likely unproductive for the
other, no matter what the prevailing assumptions may be.
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The second S, Straighten, or Set in Order, is about maintaining a “clean” environment to
achieve the goal of simplifying the process, quick response to client and prospect, ease of
use, and quality control. Straightening minimizes the problem of shuffling through papers,
throwing away important articles, or wasting time by having to find emails, names, contact
information, or various data. Sorting is the first step in organizing and managing the work
environment.
The third S, Shining, refers to a continual (daily or periodic) maintaining of the order and
cleanliness of the workstation. When sales people finish their work each day, their
workstation (computer, desktop, files, etc) should be arranged so that work can be

immediately accomplished at the next shift start. In a manufacturing setting, it is
unthinkable to leave a work area without bringing it to the level of usability that the
personnel began the day with. There should be no difference in a sales organization.
Maintaining the level of organization, cleanliness, and usability is translated as efficiency
at the next shift start.
The fourth S, Standardizing, relies on a consistency in work assignments. If there are
shared work stations, for example—printers, copiers, filing cabinets, etc.—then
Standardizing stresses the importance of everyone knowing and following through on,
their individual responsibilities. By standardizing the work practices, sales teams can be
assured that shared areas are always in working order, thereby minimizing downtime from
individuals either performing tasks they are unsure of, improperly organizing, loading,
adjusting, or repairing. When everyone has assigned tasks and responsibilities that they
are proficient at performing, efficiency in this area is greatly increased.
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The last S, Sustaining, is about reviewing and implementing best practices. It is about
adding new ideas, improving existing workflows and processes, and ensuring that the
entire group is aware of the changes, gaining buy-in, and implementing to improve
efficiency while monitoring to make sure the desired outcomes are achieved.
Some reading this may feel that this is overt and unnecessary for a sales oriented
atmosphere and that to place such draconian tactics on sales teams would certainly be
the first and largest step to seeing them exit. This author strenuously disagrees. An
important point, and one that you should heed as you read the remainder of this paper, is
that every employee you have that is worth keeping is looking for ways to improve
their performance. They may be actively or inactively pursuing methods and concepts to
better themselves through techniques, self-improvement methods, better habits, and
many other ways. Or they may not know HOW to improve. To begin implementing these
methods even in skeletal formats is throwing many of your future best personnel a life
preserver of sorts. Help them to embrace the techniques by clearly advocating their
potential for increasing manufacturing (of sales and closed deals).

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Technique: SMED
SMED is an acronym for Single Minute Exchange of Die. This may be one of the most
remarkable advances that the Lean / TQM Method brought to industry. The history and
definition will give you a good understanding of how the concept works, but the real life
practice that we can all relate to will certainly make this technique crystal clear.
SMED began by Shingeo Shingo for Toyota in the late 1950’s. The issue was with large
production machines that needed to make multiple products (ex.—a left and a right side
body molding) but each product had a certain production run before the next could be run.
The downtime between production runs was due to changing over the dies in the
machines. Shingo found there was a way to reduce the downtime to less than 10 minutes
(or single digit minutes) to change over the dies, thereby greatly reducing downtime from 8
hours as was typical to less than a few minutes!

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We see this technique every Sunday during racing season for NASCAR. A pit stop is a
perfect example of SMED principles. It is about eliminating every second of down time and
maximizing every second the wheels are not turning. Pit crews are able to change 4 tires,
fuel a car, clean windshields, and other various tasks, all in less than 25 seconds. How did
Toyota and NASCAR do it? Is it only about simplifying the process or are there

standardized techniques that we can use in a sales setting?

Internal vs. External

SMED, at its core, is about separating external from internal processes. External meaning
those processes or components that are not critical to be performed while the “wheels are
stopped”. Internal processes are those that can only be done during the actual down time.
By truly evaluating those components of the work that need not be performed while the
machine is stopped and allocating that to time outside of the changeover, total downtime
is massively reduced.
A sales organization faces a very similar problem on a daily basis, yet since there are no
machines present, many a manager would miss the abundant opportunity for efficient
improvement. Let’s start with defining internal processes for a sales team. Internal
processes or actions are those that involve direct contact with the client such as meetings,
conversations, networking, calling, emailing, or other communication. When equating
sales with manufacturing, it is these activities which correlate to a production line machine.

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What, then, are the External processes that are to be “separated” out? Researching a
client, prospecting, writing contracts, building out a sales pitch or slide deck, expense
reports or any other administrative function would fall under the category of External. Here
is the critical oversight and the paradigm that is accepted—most organizations would find
that their sales staffs oscillate in and out of Internal and External duties throughout the
day. However, communicating with clients (production) can only be done during certain
times of the day. Your sales staff likely cannot contact prospects before 9am, even though
they may be in the office. Reserving this time for performing the External tasks, thereby
allowing for more direct communication during the “uptime” hours, ensures greater contact
potential. By performing client research, searching for phone numbers and company
officers, and attending to the administrative tasks of the job during these outlying time

periods will maximize the time spent in direct communication with the client, or to continue
the analogy, more production time and less downtime.
Many companies currently perform SMED on a small scale—whenever someone calls for
a “Power Hour” or a block of time dedicated to the phone, they are implementing the
principles of SMED. Imagine how much more efficient these teams would be if they were
able to remove the external processes inhibiting them to make all day a “Power Hour”?

Technique: Just In Time (JIT) Inventory

By definition, JIT is an inventory strategy that aims to ensure only enough materials on
hand to meet the current needs. It is necessarily averse to carrying costs of any inventory
sitting on shelves. The argument is that if you are warehousing materials, you are paying
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for the warehouse space, the warehouse personnel, the liability of spoilage or damage,
the possible overrun, as well as inefficient cash management by replacing cash on hand
that could be earning interest and placing it in warehouse shelves, translated as raw
material, which bears no economic fruit until it is a finished product.

In a Lean environment, the storage of raw materials is looked at with as much disdain as
holding trash or other waste. It serves no economic purpose and can only be termed a
liability as it relates to an efficient and effective production line.
Within a sales environment, as has been put forth prior, this paper equates sales leads
and prospects as raw material. They are the pieces that go into creating the finished good-
a closed deal. Therefore, we can examine the way in which sales leads are treated by
organizations and find efficiencies in JIT inventory of these “raw materials”.
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A sales organization can begin to gain efficiency in their lead inventory by ensuring a
policy of immediate utilization. Surprisingly, many organizations do not immediately

process their leads. A company may receive their inventory of leads through their website,
television ads, purchased lead sources, and other marketing channels, all leading to a
central “hub” or “warehouse”, from which the production workers then receive their raw
material. The sales leads sit, age for hours and sometimes days before use, and
effectively take shelf space until they are put “in process”.

Wasting Lead Inventory

Here are the overlooked financial aspects of this lack of JIT inventory for sales leads. By
bringing leads in and allowing them to age, the company is increasing the risk that the
lead will underperform or “spoil” by going elsewhere. It is possible that the by setting the
leads in the “warehouse” they will 1) need someone to “manage” the warehouse
(database) which means an added cost, 2) leads are collecting in the warehouse faster
than they can be utilized on the production line, therefore, causing more spoilage, 3) cash
spent on marketing and advertising which caused a large influx of leads over a short
period of time cannot be reclaimed and is being poorly utilized as the result of the ad
spend sitting “on the shelf”.
Moving your sales organization to a JIT inventory can be effective but it needs to be a
coordinated effort between sales, marketing, and management. In order to effectively
accomplish this methodology, it is important that many other factors such as Load
Balancing, WIP, KanBan, and the concept of a Visual Workplace all be adhered to as well.
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This paper will discuss each of these in detail and how they relate to the effective
implementation of JIT inventory of raw material.

Technique: Push / Pull

The method of Push vs. Pull as it relates to sales leads is a concept driven by
technological lead management in recent years. Push vs. Pull is the two ways in which

raw materials can be presented to the production worker. In a Push environment, raw
material usage by production is determined by the availability or production level set by an
external manager.
The rationale for this method of distributing raw materials is based on pre-set levels of
inventory (leads), purchasing behavior, and supply levels. Pull distribution is based on
demand by the production staff driving the supply chain to fulfill the production needs.
Each have advantages but the Push method is considered to be a less efficient and
cumbersome method due to the following—changes in supply, changes in demand,
bottlenecks, and other production issues take longer to see and react to in a Push
environment than they do in a Pull.
As it relates to a sales team, we have typical paradigms that are borne out in the Push
method and taken for granted as the most effective way to distribute leads. However,
when examined in light of Pull, the Push method is found to be lacking. Push distribution
of sales leads necessitates that pre-set levels of marketing and ad buying determine the
pace and work load of the production (sales) team. In most organizations that utilize sales
leads, the overarching practice is either a set number of leads for each sales agent per
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day (based on how many leads are being purchased) or it is simply an ad hoc reaction to
the number of leads coming into the system from the various channels. Both are
reactionary and do not effectively utilize the raw material (leads).
In a manufacturing setting, if raw materials enter the production area too quickly, there is a
bottleneck or the material ends up being improperly utilized, thereby creating waste. As
sales leads are pushed to various sales personnel, decisions about efficient use of the raw
material are then left to the end user—the sales team. An illustration of this can be found
in a very popular, old episode of I Love Lucy in which the main character works in a
chocolate making factory. If we envision each chocolate candy as a sales lead, we can
easily see the problem with Push methods with regards to sales leads.

Pull, however, is when procurement, distribution and production are all demand driven.
This is a method of sales lead distribution that effectively marries supply with demand and
removes such inefficiencies as overbuying, underutilizing, or, the worst offense, lack of
appropriate interaction and contact with a lead.
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If a member of a sales team receives X number of leads every day and each member of
the team receives the same amount, several things are likely to be true. 1) The number of
leads provided for each individual are either too many or too few leads for each individual
to handle—rarely will your management staff be so prescient and your sales team be so
homogenous that a specific and arbitrary level of raw material is ideal for each of them.
Likely, some will be overwhelmed with the workload they face and others will not be
challenged nor will they perform as well as they could if given the right amount of leads.
Both scenarios have a deleterious effect on the organization as well as, more importantly,
the end client. 2) Likely, the sales and / or marketing managers are spending too much to
generate or purchase leads. If the leads are not being allocated efficiently, then there is
most likely overspending, which ultimately drives up the cost of the finished product
(closed deal).


Pull, then, is the art and science of allowing demand to drive lead distribution. This has
become easier in recent years with technology allowing for the decisioning and the
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movement to take place within a software system. When sales teams are able to utilize
the Pull method, a number of important factors come to light. 1) Sales managers can truly
see a demand driven level of usage and make decisions based on these numbers rather
than being masked by an arbitrary number and left wondering. If a team member is
underperforming, managers can use their sales lead demand to potentially discover
reasons for performance—too few closed deals—is it the result of too few leads as

compared to their peers? Or are they taking too many leads and not following through
properly in order to maximize potential? The sales manager can examine behavior in this
manner to determine performance problems as well as opportunities. 2) Marketing spend
can be greatly reduced as managers find true levels of performance and capability,
thereby allowing raw material purchase to match true demand and allocation levels.
Pull allocation of sales leads is the most effective manner because it ensures that usage
drives distribution and allocation.
Many managers would at this point say that it is haphazard to put the level of profit
responsibility in the hands of the sales team. While this author surely does not throw away
or minimize the efficacy of measurement using quotas and sales goals, one can rightly
oppose this argument by indicating that through Pull methods, true measurement of
ongoing sales performance can be seen without looking through the prism of standardized
expectations and workloads.
True sales performance is not simply measured by revenue dollars created through closed
sales, but when performed correctly, it should also be a measure of how effectively raw
materials and resources were used. Only the Pull method will give managers a clear
understanding of this entire picture.
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Technique: Work In Progress (WIP)

One cannot define WIP much better than using the term itself. WIP refers to work that is in
process and unfinished. It is by TQM standards an unwanted entity and in its worst form,
most definitely, considered to be waste. Total Quality Management views WIP as a poor
allocation of resources. Whenever something is not being used directly in the current
manufacturing process then it is representative of 1) risk / liability 2) potential spoilage and
3) a misuse of funds that could be bearing interest if it was still liquid.
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Therefore, reduction of WIP conversely lowers risk, reduces potential spoilage and allows
cash to bear interest until needed as an investment in raw materials. When evaluating
WIP as it relates to sales leads, we can see several correlations. First, we need to define
WIP in sales lead management. Work In Progress is defined as leads that have been
obtained by the sales professional and are being managed but not closed. For example, a
typical sales cycle for an organization may be 10 days from receipt of lead to signed deal.
Outlying leads in the pipeline that are outside this time frame could be considered WIP
and should have been allocated differently. If there are leads in the salesperson’s pipeline
that are for instance, 15 days old, then the true effect these leads are having on the
organization are the following—1) poor allocation of funds in that the lead should have
been purchased 5 days later in order to fit into the standard time frame. (If the average
lead closes in 10 days from purchase, then a lead that hasn’t closed by the 15
th
day was
purchased 5 days early and the capital used to make the purchase could have bore
interest for 5 more days). 2) A lead outside of the standard time frame (15 days to
continue our example) runs a high risk of spoilage—if 10 days is our “production” average
than our “raw material” that is aging could be a wasted resource by the time it is ready for
purchase. 3) Just like in a manufacturing setting, WIP in a sales setting needs manpower
to oversee and monitor it.
Within a sales group, WIP, or leads outside of the standard cycle, require sales team
attention that is being diverted from other leads that fit into the production cycle. While
sales people are busy trying to “convince” the outliers, they are actually wasting resources
(time and effort) that could and should be spent on leads that fit within the established
parameters, not considered WIP.
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Eliminating WIP in the Sales Process

What, then, is to be done with sales lead WIP? Reducing it and managing becomes very
important, but 1) most organizations will currently have an abundance of it and 2) there
will always be a lingering level of WIP to manage. Just as in manufacturing, the goal of
WIP is to very quickly use it in the process to reintroduce it to the production process.
Many plants that I have worked with will break the WIP down to usable parts in other
processes so that the components are then utilized, if not the whole.
Can this be done with sales leads? To an extent, yes, but more importantly it is about
recognizing the WIP, and addressing it at the organization level by 1) moving it to a
separate team that focuses solely on driving it to a decision, 2) placing it into a drip email,
direct mail or other communication vehicle that will reduce manpower and further effort
until the client initiates, or 3) much like reallocating, driving the client to a different product
even if it is at a different profit margin. Is the WIP stalled and an outlier to the standard
time process because they are hung up on price? Drive them to a less expensive model
so that the WIP is eliminated as well reducing potential of spoilage (lead loss because
they go elsewhere for a deal), reduced manpower, as the sales team will no longer focus
time and effort, as well as making WIP profitable by putting into the production process,
albeit at a different level (the same as breaking it down to component parts and
reallocating). WIP is the proverbial Moby Dick—the big fish that too much time, effort, and
resources are spent on trying to land, when in fact, if the team would focus on strictly the
ones in production, then efficiency, revenue, and utilization will soar.