It’s been a few months since my last post. I have been head down on completing my Lean Six Sigma Black Belt. For those of you that have completed this you know how difficult it is. For those of you that have not and are looking to, brush up on your college stats. That has been the toughest part for me. 

All of this focus on hypothesis testing, ANOVA, Chi-Squared, DMAIC, Kaizen events etc., has got me thinking. Can you apply Six Sigma strategies to marketing processes and roles?  With a little research it’s easy to see that Six Sigma and Lean is usually applied in financial, manufacturing and healthcare companies. However, I think you can definitely apply the principles to companies/departments that focus on marketing.       

When you strip it down, GE defined Six Sigma as a “disciplined methodology of defining, measuring, analyzing, improving and controlling the quality in every one of the company’s products, processes and transactions–with the ultimate goal of virtually eliminating all defects.” Check out this clip of an interview with Jack Welch, former CEO of GE, on his view of what a Six Sigma company is. http://www.youtube.com/watch?v=aNMULFcLuIM.  The Six Sigma approach says if you can reduce process variation, you can improve organizational effectiveness and efficiencies.  

Applying six sigma strategies even if not formally entering the entire process will enable companies to improve marketing’s strategic, tactical and operational processes leading to top line revenue growth. By applying Six Sigma to marketing you can develop a more efficient marketing workflow, become proactive about process gaps and performance improvement while honing in on the correct growth indicators. Measurement of performance is one of the five fundamental phases in the Six Sigma methodology. Once you begin measuring marketing performance, you can begin to make modifications and improvements. Six Sigma provides a methodology for process improvement and an easily definable way to prove its value.

Applying one of the key philosophies of Six Sigma, DMAIC, you can see how it can be used to improve existing business processes. DMAIC includes five steps:

  1. Define – job functions, goals, and deliverables consistent with customer demands and the organization’s strategy
  2. Measure – current performance and processes, and collect relevant data for future comparison and improvement
  3. Analyze – the data relationship and factors leading to variances and defects, utilizing specific proven statistical analysis tools
  4. Improve – the process to eliminate defects 
  5. Control – any variances before they result in defects to improve overall performance.  Let’s consider how we can apply the DMAIC process to marketing to grow revenue.

So how does this apply to marketing?  The role of marketing is to keep and grow value of existing customers in the CRM flow and acquire new customers in the Acquisition flow. Effective marketing programs must establish goals and deliverables to track effectiveness and deliver value from the two flows.  The various marketing functions will need to be integrated to create a comprehensive and integrated workflow.  Flowing the processes allows you to map the workflow and develop metrics tied to marketing activities that relate to desired business outcomes. These activities will become standardized across the organization and enable successful data collection to identify areas of improvement.

Performance can only be measured and improvements made after data collection.  The first step in measuring and improving performance is to determine what data exists, where it exists, what is needed, and how to obtain it.  Customer specific purchase patterns, marketing program results and conversion rates, actual costs for programs and people, lead quality data,  associate lead cost,  and churn are examples of some of the data that can be assessed. Once the metrics are defined, the team should use the data to establish baselines. This is a key application of DMAIC.  These baselines are used in a statistically significant way to develop hypotheses of variances and test results.

Marketing metrics are established with full knowledge of the desired business outcomes. Consideration needs to be given to not just the cost of the programs, but also how these investments contribute to the company’s ability to achieve its goals and generate profit.  Business outcomes may be related to cost to acquire, the rate of acquisition, customer affinity and value, loyalty, etc.  By analyzing the data and understanding what it means, marketing can determine the degree of impact it is having on the organization, and redesign processes that will improve performance.  Analysis leads to the improve step.

Improve: A performance driven organization with the customer voice in mind welcomes opportunities for improvement. The main purpose of applying Six Sigma to marketing is to determine how to improve performance and processes.  Data analysis should result in valuable insights that generate possibilities for improvement.  These possibilities can include enhancements in tools, systems, processes, and skills.  Working through these changes, marketing can play a greater role and better align with overall strategic imperatives.

Change/Control: All the analysis is done and the process changes have been identified. Now it’s time to implement these changes.  The changes might be new data mining tools, collateral, or media (print or online) etc. They all need to be managed and brought to market with quality program managers and a disciplined process. The control and change phase ties closely to the control phase identified in PMI’s 5 Process groups discussed in some of my previous posts.  

Applying Six Sigma to marketing is efficacious and will increase the ability to deliver the company’s strategic imperatives. You will see improvements in the efficiency and effectiveness of the marketing planning process and operational processes and be able to quantify a direct correlation between implementation and top line revenue growth.