Six Sigma Marketing…Made Simple
Last week I was invited to speak at a new conference on Six Sigma marketing. Over the past couple years I’ve watched this topic heat up, but you know it’s starting to tip when there’s a conference!
Six Sigma has migrated from manufacturing (to reduce COGS) to the front office (to reduce marketing opex). Also called Business Process Improvement (BPI), it’s the ‘new thing’ that promises to improve the bottom line in a business world where margins are going down yet marketing costs are going up. But BPI can also, and should, improve revenue and margin.
The concept behind Six Sigma/BPI marketing is not really new, especially if you’re a direct marketer who is used to measuring everything you do and improving your campaigns. Also, I don’t think it’s as complicated as some might think. It’s like modifying the instructions on the back of the shampoo bottle: “Wash, rinse, repeat…but wash 2x more vigorously the second time.”
Six Sigma employs useful tools – such as brainstorming, fishbone, paretos, process maps (with swim lanes). You were probably already using some of these. Other tools, like Design of Experiments with Full Factorials…well, maybe not.. If you understand this stuff, it’s pretty cool…but not critical to implementing Six Sigma marketing.
I think 80% of Six Sigma/BPI value in marketing is simply understanding what you do in marketing, and executing continuous improvement of those processes with measured results.
Here are four principles to apply Six Sigma, or business process improvement, to the marketing organization:
1. First, realize there are three sources of revenue for your company: a. Adding new customers b. Getting existing customers buying more c. Getting existing customers buying more frequently 2. Identify the processes you do within your company to effect each of the above sources of revenue. Keep an eye out… every day employees make a choice to start a new process vs. improve an existing one. 3. Break down these processes into steps. (See Workback Waterfall). Identify the variables that effect the quality (output) of each step. In marketing, sometime quality is a subjective thing…but if you’re measuring your marketing results for each step and the end result (ex: response rate), than quality can be quantified. 4. Now, choose a problem or process to improve and go at it using the DMAICR framework. “Define” and “Measure” the problem or process, “Analyze” why it’s performing poorly, “Improve” it based on your analysis, and “Control” the process to sustain results.
Here’s an example:
– Why do emails drive low margin sales compared to average web site visitors? You may reduce the definition of problem around your product selection. – So you Define that process to improve (how you select products) and measure a baseline of results (margin per email). – Analyze opportunities for improvement…i.e. AB split testing or previous email results. – Improve your email process…perhaps a weighted model of margin x response rate to maximize margin. – And finally, put Controls in place to sustain that ne process, and Report results.
There…you’ve done DMAICR…Define, Measure Analyze, Improve, Control, & Report.
Now do it again for something else in marketing. And again. Simple as wash, rinse, repeat!