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Six Sigma and marketing.

Six Sigma has been successfully adopted for years by many manufacturing industries. Some of them moved on to apply Six Sigma to other areas of their business to decrease errors and rework. The techniques within Six Sigma’s toolkit can be applied to different types of business processes,  in a wide variety of departments.

One of the last areas to be touched by Six Sigma has been marketing. Good marketers have always used tools to help them create effective marketing. Market research applied to segmentation, audience profiling, branding studies, and creative pre-testing allows the marketer’s job to be based on data and measurement rather than guesswork or instinct. Marketers also use other analytical tools, such as sales response modeling and ad tracking, to evaluate the success of marketing campaigns post-launch so that they can apply the lessons of successes and failures to future campaigns.

Since Six Sigma is grounded in making decisions based on data  to decrease erroneous and ineffective outputs, are marketers already doing Six Sigma? No. Six Sigma is a very specific process and approach to data-driven decision making. It can inspire confusion or fear when mentioned in the context of marketing. Some marketers may feel Six Sigma poses a threat to what they do. Others may struggle to see how it can apply at all.

Six Sigma disconnect

Six Sigma differs from other processes in that it demands high-level executive sponsorship of projects, extensive training of Black Belts and Green Belts, disciplined data collection for statistically-based decision making, and broad-scale Six Sigma participation across functional teams. It also requires documenting the reduction in “defects” and quantifying the clear, measurable financial benefits achieved by improving the process. And, perhaps most of all, Six Sigma is about consistency: creating defect-free products again and again, regardless of the individual employees working to create the final product. This is not how marketers typically operate.

Sometimes non-marketers denigrate the measures that marketers use as “soft”. The reality is very different. Marketers have a myriad of information — both quantitative and qualitative — that guides their decision-making. It is not lack of data, but rather conflicting or ambiguous data, or the lack of the right kind of data, that marketers regularly encounter. Nevertheless, the data with which marketers work — leads generated, unaided awareness, digital conversions, brand image and customer loyalty — differ from Six Sigma data that is focused on “defects” per unit of output. Marketers often cannot link the metrics they track directly to the ones that matter most to executives: quarterly sales, day-to-day share price, quarterly profits.

The very notion of “defects” is a stumbling block for marketers in adopting Six Sigma. Marketers tend to evaluate campaigns on a continuum from not effective to extremely effective and everything in between. However they rarely think of even the most ineffective campaign in terms of “defects.” In manufacturing, there are clear measures to show when a product is defective, but with marketing, such judgments feel presumptive. Marketing campaign goals are defined up front, and any campaign falling short of those goals could be considered defective. However, marketers know 1) how arbitrary campaign goals  can be and 2) how many uncontrollable factors impact a campaign’s effectiveness.

Six Sigma is about rigorous control to reveal and eliminate unknown variables that can impact a product. However, most marketers know that there is no way that they can control the many variables that impact campaigns. Sound research can provide a strong foundation of expectations within a small margin of error, but budget and timing constraints often require marketers to scale back or eliminate research entirely. Thus, marketers often make decisions using research that carry a high margin of error or, even worst, they have no research at all. In addition, having a poor product to market, lack of customer service once the product has been sold or low budgets with inadequate media weight can all inhibit campaign success.

Many marketers have helplessly watched as their campaigns failed, perhaps thinking “I told you we should have…” to themselves. Jaded marketers then do not want their campaigns measured for fear they will lose their jobs, though they may have sounded the alarm early on that some elements necessary for campaign success were absent. If campaigns will not be adequately funded, if product or service flaws are not addressed, if research needed to understand the market is scaled back or eliminated, marketers don’t want to be held accountable for the results. Six Sigma’s world of “defects” and “control” is not the one that marketers inhabit. This creates one of the reasons that marketing has not participated in Six Sigma to the extent of other organizations. Marketers speak a different language and are accustomed to using their own tools. True adherence to Six Sigma requires specialized study and knowledge of its tools, many of which were developed in environments very foreign to marketers.

Furthermore, the success of marketing is typically viewed in terms of revenue growth, not cost containment. While production lines or internal departments strive to increase efficiency to reduce costs, marketers measure their success in terms of topline growth. Therefore, Six Sigma’s mandate to demonstrate cost reduction by eliminating defects does not fit marketing’s mission. What marketer ever boasted about cutting his/her marketing budget?

So, it is not surprising that marketing has not wholeheartedly participated in  Six Sigma. But should they? Does Six Sigma offer something that marketers can use to solve their problems? In some cases, yes. Six Sigma can provide a framework to address some of the fundamental disconnects between marketing and other divisions within organizations that value the approach in other parts of their business.

The benefits of using Six Sigma for marketers

When companies adopt Six Sigma, executives do so with the understanding that it will provide a framework for consistent improvement that will ultimately impact their bottom line. Oftentimes they do not think of marketing as an area where Six Sigma applies. But when they see it successfully applied to manufacturing, accounts payable, accounts receivable, human resources, project management, etc., they become “true believers.” Yet they may have no idea how it can be applied to marketing.

Six Sigma provides a framework and tools that can bring together cross-functional teams, with the backing of executive management, to determine what it will take to make a marketing campaign successful.

Define phase: Research

Six Sigma underlines the importance of collecting data rather than going with your “gut.” And Six Sigma demands that every project starts with the voice of the customer or those issues that are “Critical to Quality” (CTQs). Six Sigma tends to lag behind traditional market research when it comes to techniques and tools for capturing the voice of the customer — this is an area where Six Sigma practitioners can learn from traditional market researchers.

Marketers also know that before you can define CTQs, you must define your customer, also a function of sound research. Six Sigma can give greater visibility and legitimacy to marketing research that is often overlooked by other divisions and executives.

Six Sigma rigor can help steer some marketers away from focus groups as the primary method of gathering customer data. Focus groups are valuable for understanding and exploring the general direction of customers’ thoughts and needs in a cost-effective way. However they should not be used as a substitute for randomly sampled, statistically projectable studies when quantification is needed. Six Sigma requires the use of rigorous statistical methods, elevating the need for quality research data.

Measure phase: Realistic goals and appropriate metrics

Six Sigma requires that realistic measurable performance goals be set. Six Sigma provides tools, such as process maps, to determine what inputs contribute to the desired outcome. For instance, if the goal is sales, and sales are impacted by inputs outside of marketing’s control, then all inputs must be included in the planning and measuring process.

Analyze phase: Critical diagnostics

While a campaign is running, the Six Sigma team can isolate where they are performing best. After the results are created, however, they must be tracked through the next phase towards the marketing goal. Is the campaign generating leads that are then squandered by the sales force? Are marketers creating foot traffic in stores while high prices send customers to the competitor? Is product being sold and then returned because of poor quality? Through Six Sigma tools in the Analyze phase, such as cause and effects analysis, marketers can identify the factors that are causing performance problems and avoid the finger-pointing of the past.

Improve phase: Testing and optimization

Corrective steps can be taken to eliminate the factors that are causing poor performance in the Improve phase. In a siloed organization, marketing looks only at “their” measurements, the ones they collect and control. Marketing looks at customer focus groups, pre- and post-ad surveys, and branding measures; finance looks at revenue, cash flow, profit and stock price. But in cross functional Six Sigma teams, everyone works together to identify the sources of variance from the expected results. The techniques used and the key measures are agreed upon by the larger team and are tied to executive-level goals. Therefore, everyone speaks the same language and improvements are made wherever needed.

Six Sigma provides a framework for experimental testing to make sure proposed improvements will achieve the desired results. Marketers often test offers, promotions and messages. However, Six Sigma can provide tools for experimental designs to be used in test marketing. (Likewise, marketers familiar with tradeoff and conjoint analyses are already working with experimental designs in surveys that might be of great interest to Six Sigma practitioners.)

Control phase: Consistency

In the Control phase, measures are tracked to ensure improvements are kept in place. Unfortunately, lessons learned from one campaign to the next often do not get “passed on” within an organization. Turnover can erode an organization’s ability to build on past successes and avoid mistakes. Finger-pointing can cause inertia as one division blames another for the failure of a product or campaign while no changes are implemented to correct the problem. Six Sigma requires a discipline to identify and improve problems and document the improvements. This is a great benefit to any marketer who has ever faced the task of marketing a product with no history of what has worked in the past.

Adapting Six Sigma to marketing

Six Sigma practices require that we understand the connection between marketing measures such as strong awareness and branding, and bottom-line results. Historically, companies successful in building strong brands have better long-term performance. However, marketers know that while strong brands make enormous contributions to the bottom line, branding campaign results cannot be quantified with measures that relate to quarterly sales increases. Six Sigma, through its quest to understand, improve and control the factors that affect performance, should quantify and enhance, rather than challenge, marketing’s contributions to the overall financial strength of the company. Non-marketers in the organization must better understand the key marketing measures that are critical to success. And the organization must embrace marketing and integrate it into other divisions.

Six Sigma should be adapted to the practice of marketing to drive towards KPIs that effect increases in topline revenue — sales increases, customer acquisition, customer loyalty — rather than focus solely on cost-cutting. Its value should be measured not only by how much it can save a company, but also in how much it can earn a company. The bottom line is that Six Sigma and marketing, while not a “love at first sight” match, can be a good fit for a long-term, productive relationship.