Six Sigma Marketing (SSM) has evolved in response to the convergence of two factors. First, the irresistible force of Six Sigma is spreading to new areas within the organization. Six Sigma practitioners are being impelled to find new projects other than defect reduction and cost cutting in areas other than manufacturing. Questions such as “Can Six Sigma be applied to improving processes in the front office or sales activities?” have been raised. On a converging tack are questions about the immovable object, Marketing. What are the actual returns that Marketing produces for the organization? There is evidence that many CEOs (Harvard Business Review 2005) and managers are frustrated with the ineffectiveness of Marketing. Problems include strategies and decisions driven by agenda or intuition and the absence of hard information to drive the marketing process. This has raised an initial question: ”How can Six Sigma be applied to Marketing?” which has been characterized as the blend of art and science, or more sarcastically, the blend of fire and water.
The application of Six Sigma to Marketing, in my opinion however, is not the real challenge facing either Six Sigma or Marketing. The application might result in a more efficient set of marketing activities but is not likely to result in more effective marketing results. In other words, the cost of selling may be lowered but the number of sales closed may not change. The most desirable outcome would be a combination of efficient and effective selling.
Six Sigma Marketing is a fact – based, disciplined approach to growing market share by providing targeted product/markets with superior value resulting from the integration of the two disciplines.
This integration requires a new approach structured around the following elements:
1. Customer value replaces customer satisfaction as the driving metric. Both Six Sigma and Marketing rely heavily on the contented customer theory of marketing where happy (satisfied) customers are profitable customers. Different researchers (Gale; Reidenbach and Goeke; Reichheld) have shown this assumption to be flawed. Value is the best predictor of market share and becomes the strategic metric of SSM.
2. SSM employs a unique set of value management tools not used in either Six Sigma or Marketing. These tools help the organization manage the competitive value propositions within the product/markets targeted by the organization.
3. SSM uses a modified DMAIC processthat focuses not only on the improvement of critical customer requirements but also on leveraging them for a greater value advantage.
4. SSM has the goal of growing market share by becoming not only more efficient but also more effective in value creation and value delivery. This results in profitable share growth.
5. Defect reduction remains a tenet of SSM but the defects are now described as failures on the part of the organization to provide the requisite value to their customers. The goal is to achieve a level of six sigma or 3.4 customer failures per 1,000,000 transactions.
6. SSM expands the traditional view of Marketing to include not only emphases on price, product, promotion and distribution but also processes.
7. The Voice of the Market (VOM) replaces the Voice of the Customer (VOC) as the information source that drives Six Sigma Marketing. Market share is a function of the dynamism of markets, the give and take of competitive forces. Accordingly, understanding how the market and not just the customer defines value is critical.
I will elaborate on these elements in subsequent blogs.
SSM is a powerful concept, easily transitioned to within those organizations that have already embraced Six Sigma. It focuses the power and discipline of Six Sigma on the competitive weaponry of organizations to grow market share and top line revenues. It offers organizations the opportunity to increase the return on their Six Sigma investments.
Just remember the famous old limerick:
There once was a black belt who knew little-
To him market share was mere piddle.
But as revenues fell
He heard the death knell-
SSM he no longer would belittle.