I have written extensively about the inability of satisfaction to do much of anything, create loyalty, drive market share or increase top line revenues.  It just does not correlate with any measure of performance.  Nor am I the only one who is attempting to deflate the conventional wisdom.

Now comes a strong refutation of the conventional wisdom.  The Corporate Executive Board (CEB) has done a study focusing on the linkage between satisfaction, NPS (Net Promoter Score) and what they call the CES (Customer Effort Score).  The study involved 17,968 customers across a wide variety of industries within a global setting.  The results provide powerful insight into how companies should be measuring their strategic health.  The linkage between customer satisfaction and loyalty was a paltry .18 (R² = .18).  This means that only 18% in the change in loyalty was explained by changes in customer satisfaction.  Put another way, 82% in the change in loyalty was explained by something other than customer satisfaction.    There’s more:

• 20% of satisfied customers intend to leave
• 28% of dissatisfied customers intend to stay

The report also studied the effect of reducing customer effort as measured in the following manner:

“How much effort did you personally have to put forth to handle your request?”

• None
• Low
• Moderate
• High
• Very High

Their conclusion, “Effort matters a lot…Ninety six percent of customers who put forth high effort to resolve their issues are more disloyal while only 9 percent of customers with low effort are more disloyal.”

CES is a transactional measure perhaps most useful directing the activities of call centers.  Make it hard for a customer to solve a problem and don’t be surprised if they find another provider.

In focus group after focus group, customers tell me that one of the most important factors in their decision to stay with a company and its brands is whether it is easy to do business with that company.  If they have a problem can they get it fixed right the first time?

This is the essence of customer value, the DNA of Six Sigma Marketing (SSM).  SSM focuses on growing market share and uses a modified DMAIC process to provide superior value to those product/markets that a firm targets.  Customer retention is critical to market share growth.  It makes little sense to spend significant resources on acquiring customers when you can’t keep them.  SSM has a target of reducing defects – customer defects to three per million.  Granted this is a target that is not likely to be achieved but it casts the creation of value to the forefront of a company’s efforts.

There is more to this report, and I urge readers to download the report and read the rest of the findings.  It is illuminating.  Hopefully, it will start a conversation about what is important in your efforts to increase the loyalty of your customer base.

In some preliminary conversations with product managers in Peoria we dug into the role that dealers play in the CAT system.  An interesting and enlightening point was made regarding how the role of value creation and delivery was changing.  According to the product manager, there was a time when value was embedded within the product itself.  The idea was, “If you want value buy yellow!”  Over time this view of value had changed.  As technology reduced the gap between CAT products and those of their competitors, value creation and delivery was moving down the distribution chain.  According to the product manager, “All we can do in Peoria is to keep us in the game with good solid product.  The game is being won at the dealer level – that’s where the value is being created.”

This represents a revelation for many companies who have a real product focus.  They believe that all value is embedded within the product itself and that value at the point of production equates into value at the point of consumption.  I don’t think they could be more wrong.

Virtually all value models that I have created based on how the market defines value are heavily loaded with dealer, product support, sales, and repair elements.  These elements are not performed by the manufacturer but buy the dealer.

This takes us back to the point I want to make – it will be the Toyota dealers that bring back Toyota.  How they handle the recall will, at the very least, be a determining factor.  That is where the value is now being created and delivered.   Industry pundits are questioning the loyalty of Toyota owners – will they continue to repurchase the Toyota brand? The future behavior of Toyota owners will be greatly impacted by how the dealers respond to the recall issues and treat the current owners.

Six Sigma Marketing is driven by the market’s definition of value – one that encompasses the entire value stream from production to sales to post sale service.  It recognizes a comprehensive view of value creation and delivery.  In Six Sigma Marketing, value at the point of production does not equate to value at the point of consumption.  Value is a flow that traverses the distribution system and responds to the needs of the market.  The companies that really understand the tenets of Six Sigma Marketing will be in the best position to become best in market.

The conventional wisdom dies a slow and truculent death.  The vestiges of a product orientation, especially in manufacturing organizations, live on.  Why wait for a situation that has catastrophic consequences to begin to begin to understand how the market defines value or quality?  Why wait to mobilize systems that will be necessary to deal with the problem?  Why not have these systems in place ready to go?  This is the power of Six Sigma Marketing.  Because it understands the flows of value creation and delivery, SSM puts into place the necessary product and information flows that move not only down the distribution system but also up the distribution system.  Moreover, SSM deals with the most difficult element to change, the mindset of people who will have to deal with the problem.  Absent this market focused mindset, solutions to the problem may wander on the wrong elements.  For companies that rely on an internal definition of value, this change can waste valuable response time in setting up the proper systems and flows.

Toyota’s recall problem will be solved at the dealer level.  This does not mean that the Toyota engineers will not be important but it is at the dealer level where customers actually meet and understand Toyota.  This is where the actual value will be created and loyalty re-won or preserved.

For a complimentary copy of my new book Best in Market: The New Imperative for U.S. Manufacturing go to www.6sigmarketing.com and download it from the contact page.

I recall from my distant and hazy past that Lee Iacocca once commented, regarding the problems with the Corvair, “Safety doesn’t sell”.   That was always considered to be an interesting observation and one that was discussed in great detail in many schools of business.  The quote was taken apart from a number of directions.  One of the meanings that is relevant today is that “safety” as an attribute or CTQ is a qualifier – a must have.  In other words it is not a differentiator (at least until something like Toyota comes along).

Volvo found a segment that placed a high premium on safety.  In this segment safety did sell because it was a CTQ or attribute that was important.

Qualifiers are interesting little devils.  They often get overlooked because of their lack of sexiness in favor of their sexier counterparts – differentiators.

Qualifiers often start off as differentiators but though the me-tooism in marketing are copied and their significance as a differentiator fades and their relegation to qualifier begins.  There are a number of qualifiers in any industry.  Often, but not always they relate to legislation that sets restrictions on certain issues or factors.  In Australia we were confronted by noise ordinances that limited noise levels on large trucks.  The result was that Caterpillar could not sell their large trucks in certain parts of Australia because they could not qualify (too loud).  Failure to qualify can mean a couple of things.  First it may mean that you cannot sell in certain markets.  In other cases it may simply impede penetration into a market.

Sometimes qualifiers can be resurrected as differentiators.  For example, warranties are typically considered to be qualifiers.  However, some innovative companies have been able to change their warranties (lengthen or make easier to use) and they have become an attribute or CTQ that has a differentiating element to them.

How you handle qualifiers from a marketing standpoint is important.  I have seen companies invest marketing resources into qualifiers in an effort to leverage them.   This is wasteful since, in most cases, qualifiers are a check-the-box proposition.  Either you qualify or you do not.

This is an important consideration when developing new products because the speed of penetration will depend on whether you qualify or not.  Considerations of a market penetration strategy should examine qualifiers carefully.  Often it can be expensive to qualify.  For example, in Western Australia we found out that farmers were willing to buy my clients ag equipment from their dealers but the dealer could be located no more than 30 miles from the farmer.  This meant that any ag company seeking to penetrate this market would have to invest in dealerships located at strategic points throughout the state – a pretty expensive proposition.

Six Sigma Marketing identifies growth opportunities in the DEFINE stage of the process.  Each targeted product/market will have its own definition of value and its own set of qualifiers.  These will emerge in the MEASURE stage.  Value models are based on a regression technique that responds to variance.  Qualifiers typically have small Beta weights (little covariance) or actually drop out of the modeling process.  This is a good clue to their nature.  Does that mean that they are unimportant?  Not at all.  It means that from a value perspective they are not CTQs or differentiators.  It does mean they have to be addressed.

Toyota will have to go back and re-qualify.  They will have to convince their markets that their cars are safe.  It won’t matter how much they differentiate their product from other competitors if the market sees them as unsafe.  Considering the cost of lost sales, direct costs of the recall/repair and additional advertising, this will not be inexpensive. Falling out of qualification and then having to re-qualify seldom is.   Ironically, it will be the dealers that bring Toyota back.  This is where the value is being created and where customer loyalty will be won.

· “Call Center Quality & Monitoring: From Best Practices to Next Practices”

· “Does Average Handle Time (AHT) Have a Place in the Modern Call Center?”

· “Managing Call Center Results is More Than Managing AHT”

· “Tested Methods For Reducing Absenteeism & Turnover in Your Call Center”

· “Call Center Outlook 2010” – Whitepaper

Do you see a theme here or is it just me? Is customer management simply a question of setting up a call center and making sure that it runs in an efficient manner? Now, I like this website and have contributed to it on several occasions. However, the dominance of call center issues bothers me since I believe strongly that customer management is much more than running a call center. I suspect that you do too.

Six Sigma Marketing is all about proactive customer management by providing buyers with superior value. Superior value is the way to reduce reliance on call center activities and costs.

SSM employs a modified DMAIC process to provide superior value to targeted product/markets resulting in the kind of market performance that will make your company best in market.

Customer management (and SSM) begins by deciding which customer you are targeting. This is an overt decision on the part of the organization and not a random approach that throws out a product or service and sees who will buy it.

Once targeted customers have been identified, SSM uses the VOM (voice of the market) to capture how that targeted product/market defines value. This results in a listing and prioritization of the CTQs that drive the interaction of quality and price to create value. This is powerful information because customer value is the best leading indicator of market share and top line revenue growth.

Next, SSM analyzes the value propositions of the various competitors within the targeted product/market. This identifies the value gaps that exist surfacing the people, product and process options for enhancing or improving the organization’s competitive value proposition. Value is created and delivered to the market place through the interaction of people, products (services) and processes. Value and quality have no meaning whatsoever when they are separated from the buyers that define it.

Value is a flow, not an event. Call centers can and should be part of this flow but cannot be regarded and treated as the catchall for value creation and delivery. Value issues may surface in the call center but I guarantee you that they are created earlier in the value stream. Failure to recognize this means that you are treating symptoms instead of the disease. Eliminating these value problems by relying on Six Sigma Marketing places less emphasis on the growing importance of call centers to try and fix problems and retain customers.

Moreover, many organizations focus their six sigma efforts on call centers in an effort to reduce their costs and average handling time. The focus should be on the entire value stream of which the call center is but a single component. It is the system (the value stream) that needs the attention and not what is often the last component in the system.

If you are like me having to contact an organization, work through their phone tree and hopefully get someone to help me about a problem (and hopefully be able to understand them) that should not have occurred in the first place is an odious occurrence. As an executive of an organization, which would you rather rely upon to manage your customers– SSM that provides a pathway to superior value and growing market share or a call center that might be able to solve customer problems and hopefully keep them from going elsewhere?

For a free copy of my new book: Best in Market: The New Imperative for U.S. Manufacturing go to www.6sigmarketing.com/contact and download a copy.

First, it highlights the use of “customer satisfaction” as a driver of future purchasing. The premise is if customer satisfaction is severely damaged, future sales of Toyota products, certainly the ones involved in the recall may drop. Many companies, consultants and writers do not understand the relationship between “customer satisfaction” and performance. To understand this relationship you have to understand what customer satisfaction actually is. If you are not a customer or Toyota, can your satisfaction be lessened? If you do not own a Toyota, can you be satisfied or dissatisfied with it? Customer satisfaction relates specifically and only to actual purchasers of your brand and your customers, not potential purchasers. So, the question about harming future sales relates specifically to repurchase issues. Clearly, some will be dissatisfied while others will not.

A lot of repurchase decisions will be made in response to how the dealers handle the recall. If the dealers have the essential technical skill, know how and customer handling capability, many Toyota owners will be satisfied and may choose to repurchase. If, on the other hand, dealers are not equipped to provide the requisite service, many will be dissatisfied. Does that mean that they will not repurchase a Toyota? Not necessarily, but they may choose to repurchase a Toyota from another dealer. Or, they may find another brand of similar quality but lower price and buy that one.

Overall Toyota market share is comprised of three elements:

1. Current owners repurchasing a new Toyota

2. Current owners upgrading to a higher priced name plate

3. New customers buying Toyotas

Clearly, the first two elements of market share are more directly impacted by customer satisfaction because satisfaction cannot be judged unless the product is experienced. However, an equally important issue is how are future buyers affected? This is an issue of customer value, not satisfaction.

An evaluation of customer value results from the assessment of the interaction between the quality of the offering and the price that is being charged. It answers the “worth it” questions – is the product or service worth it. The quality component of customer value is comprised of a number of CTQs. Best in market companies understand that value and quality mean absolutely nothing unless those factors are actually based on what the market says. Among the factors that continuously emerge in value analyses of industries such as the auto industry are dealer factors. It is with the dealer that the customer interacts, not the manufacturer. Product focused companies will tend to ignore the dealer factor and instead be concerned solely with the product. This will leave many product-focused companies behind the eight ball and their recovery from a recall less complete and rapid.

I have written extensively on the difference between satisfaction and value which can be found in my new book, Best in Market: The New Imperative for U.S. Manufacturing. Satisfaction represents the conventional wisdom, while value is the new boy on the block. Value’s importance, and that which accounts for its increasing adoption as a strategic metric, is its link to market share and top line revenues that satisfaction does not have. Value has been shown to be the best leading indicator of market share. Given all of this, the headline of the article might be better phrased as “Will Toyota’s Recall Severely Impact Customer Value?”

First, let me point out an area of agreement. He states:

However, unlike other service industries (think Hospitality industry), the healthcare professionals will tell you what they think their customers want and need, but will often fail to directly ask you what their patients actually want by determining the Voice of the Customer.

I think this is a pathology that pervades much of American business (I can’t comment on international business). Companies give lip service to the VOC instead of actually collecting it. As a consultant to many companies I constantly hear that management already knows what the customer wants and needs and there is no need to collect the information. When confronted by information that does not agree with their beliefs I hear, “The customers don’t know what they are talking about!” I can’t think of anytime when they have been correct. This arrogance has a severe depressing impact on the success of projects and initiatives.

Now for the first bone. Mr. Kollengode talks about the impact of customer satisfaction on profitability. I would really like to see the research on which this point is based. The “contented customer theory of profitability” has been widely and strongly discredited. I refer readers to the work of Gale, Reichheld and Reidenbach and Goeke. Recent empirical studies such as that conducted by Soderlund and Vilgon (1999) provide a strong punctuation to this point. The authors used a lagged model (using three years of observations) looking at the impacts of satisfaction on such outcomes as number of orders, purchase volume, purchase amount, and customer profitability. Here are the correlations:

Number of orders -.07

Purchase volume .04

Purchase amount .02

Customer profitability -.05

This is particularly stunning. Satisfaction plays a negligible role in increasing the number of orders from your customers, increasing customer purchase volume, amount or profitability. I have discussed the insufficiency of using satisfaction as a strategic metric to drive outcomes such as those listed above in several blogs and refer interested readers to Six Sigma Marketing: From Cutting Costs to Growing Market Share for a more comprehensive discussion. Instead, companies would be better served by measuring and monitoring customer value. Value is the relationship between the quality of a company’s product service offering and the price that the customer has to pay for that quality. Gale’s work, using the PIMS data (Profit Impact of Marketing Strategy) concluded:

Superior customer value is the best leading indicator of market share and competitiveness. And market share and competitiveness in turn drive the achievement of long-term financial goals such as profitability, growth, and shareholder value (p.26 Managing Customer Value, 1994).

Reflecting the schizophrenic view of value and satisfaction that exists in Six Sigma, Kollengode uses the two terms interchangeably. They are not synonymous. Satisfaction is an emotional response to a buying event while value is a cognitive (thinking) measure that weighs the quality benefits against the cost (price). I have found that satisfaction is a good transaction measure (report card on performance) while value is a very powerful strategic measure that drives market share and top line revenues.

Finally, I do agree with Mr. Kollengode regarding the need to capture the VOC early on in the DMAIC process. In fact, Six Sigma Marketing makes it an initial priority on which everything else is based. It drives the Six Sigma Marketing process.

Companies and organizations seeking to improve their market share and profitability are not getting good value from their use of satisfaction. Healthcare organizations rely heavily on satisfaction based on the premise that a satisfied patient is a profitable patient. This is too simplistic and they would be well-advised to look into customer value as a strategic metric. A customer who receives superior value is a customer who is loyal and profitable.

The healthcare industry is currently facing challenges on many fronts. Escalating costs for rapidly advancing technology and pressure to deliver quality care to more people (baby boomers, uninsured, under insured) at lower costs have created the perfect storm….To find a discipline solution that will lead to sustainable improvements in quality while driving down costs, the healthcare industry has turned to Six Sigma and other methodologies.

-Anantha Kollengode

My co-blogger has put his finger right on the global problem facing healthcare. A careful reading of his comment points out an overlooked point. While much of the healthcare industry has focused on customer satisfaction, the problem facing the industry is one of value. “Escalating costs and pressure to deliver quality care” are the two components of value, not satisfaction.

The costs of healthcare show up in the price that the consumer of healthcare services has to pay. How do this price relate to the quality the public wants? This is a value question. Healthcare institutions would be much better served if they understood that the objectives of their business are to provide superior value to their consumers. Unfortunately, by focusing on satisfaction, they can lose sight of what the public really wants – value.

Six Sigma Marketing is a fact based disciplined approach for growing revenues and market share in targeted product/markets by providing superior value. Value – the interaction between quality and price – is at the heart of SSM. SSM provides superior value by using a modified DMAIC process (compare to the DMAIC process outlined by Anantha).

The DEFINE stage is focused on identifying which product/markets the healthcare institution should target. For example, many hospitals have concentrated on providing gynecological services to the female market. St. Jude’s in Memphis, targets cancer treatment for children. Value definitions will change from product/market to product/market.

MEASURE involves the capture of how specific product/markets define value through the VOM (voice of the market). The value model identifies the tradeoff between price and quality while also identifying the CTQs as defined by healthcare consumers within the product/market. These CTQs focus on the entire value creation and delivery system and are not simply limited to the actual treatment. They will include such factors as accuracy of billing, parking, courtesy of physicians and staff, availability of physicians and staff and a number of other factors that impact value. Moreover, the model will identify the relative importance of each CTQ enabling better resource allocation for creating superior value.

ANALYSIS uses unique value tools to provide input into strategic and operational excellence. Market share is a function of three elements:

1. The acquisition of new users

2. The retention of current users

3. The repeat use of acquired consumers

The value tools identify value advantages and shortcomings that a healthcare provider has relative to other healthcare providers. Value advantages are to be leveraged for greater share gain, while value disadvantages are to be corrected. These are powerful tools designed to grow occupancy rates and usage.

IMPROVE uses a value stream mapping and a modified C&E Matrix to pinpoint areas for value enhancement whether they are advantages or disadvantages. As part of this stage, SSM identifies non-value adding costs that can be eliminated for greater efficiency, value enhancement and profitability.

CONTROL in the SSM paradigm focuses on reducing consumer defects by monitoring the value they receive. This stage seeks to identify the reactions not only to changes made in patient delivery identified in the previous stage but also provides an ongoing assessment of the institution’s value delivery system. This is a step that most traditional marketing programs either ignore or forget. It is an essential component of SSM.

SSM is a powerful program focused on value. Healthcare faces an enormous value challenge – how to provide the requisite quality at a competitive and fair price. This value issue, many would argue, is what is impelling the industry towards a government remedy- one that, if other government institutions are used as a comparison, will surely reduce the value provided to the healthcare consumer.

1. Do you know with any certainty what constitutes quality for any given market segment using any given product? If you are relying on your engineers or marketing people, it is well worth asking them, how do they know! Too often quality is an issue of lore or “conventional wisdom” and not the result of data based customer knowledge.

2. Do you know how important quality is relative to price in your customers’ buying proposition? The answer to this one is obvious when you watch the internecennary price wars that reduce once powerful industries to commodities.

3. Do you know how the various markets that you choose to serve define value? If you don’t know the answer to the first two questions, you can’t begin to answer this one. Value is the relationship or interaction between quality and price and the key buying signal for customers.  How do your markets characterize this interaction?

4. Do you know what your competitive value proposition is? Your competitive value proposition is one of your most important assets. If you are not managing this critical asset, then who is? Hint: It’s someone you probably don’t want managing it.

5. Do you know what your key competitors’ value propositions are? Taken together with Question 5, this information produces the strategic value gaps that should be driving your competitive planning and quality improvements.

6. Do you understand the competitive value gaps and what is producing them? See questions 4 and 5.

7. Do you know how loyal your customer base is (that is before you start losing market share)?  What is the nature and degree of this loyalty?  What are the issues that represent potential reasons for defection?

8. Do you know how vulnerable your competitors are and what the nature of that vulnerability is?

9. Do you know whether the changes you are making are actually showing up in the market place? What mechanisms are you using to monitor these changes? If you are not monitoring these changes you are only guessing.

10. Do you know how willing your customers are to recommend your products or services to others? Recommendation should be a critical KPI (key performance indicator) because of its power to increase profitable market share.

To many people, marketing is about advertising, selling and other promotional initiatives.  Too often this is sadly true.  Six Sigma Marketing turns traditional marketing on its head by providing a fact based data driven approach for growing market share in targeted product/markets by providing superior value.  As more and more companies seek to increase their retuns on their marketing efforts they will turn to Six Sigma Marketing.

McDonalds clearly understands the importance of value creation and delivery to its overall success.  Thompson went on to talk about all the different aspects of this value proposition including the food, service, cleanliness, speed and, of course, their price resulting in “value up and down the menu board”. 

There are three interesting points to this discussion.  First, the value proposition is not fabricated within the confines of the McDonald’s boardroom but results from the market’s evaluation and approval of the performance on the key drivers of value.  If positive, they will nurture and leverage it for superior market performance.  If negative, they will correct it according to market feedback.  McDonalds understands that providing superior value, as defined by the customer, is the best leading indicator of market prosperity.

Second, the quality component of value is also defined from the customers’ perspective.  Had this been certain manufacturing firms, dominated by engineers, value would most likely be limited to the product and product features.  Forget about all the other elements that the customers actually use in assessing value and quality.  Thompson makes a point of saying that they spend a lot of time listening to their customers.

Third, Thompson talks about leveraging their value to introduce a new product line – fancy coffees such as lattes, espressos and cappuccinos.  The take away here is that once you are known as a superior value provider, new product introductions are made so much easier and more efficient.  The “value halo” created by past experience extends to new experiences reducing a customer’s level of risk when trying a new product.  McDonalds will need this “legacy value” as they take on Starbucks.  It will be interesting to see the value gaps that exist between these two purveyors of coffees within the next couple of years.

If you don’t believe that value sells then you haven’t been paying attention.  Value is at the core of Six Sigma Marketing.  SSM uses a modified DMAIC process where its define stage identifies the key product/markets in which it chooses to compete.  The measure stage defines value for each targeted product/market.  The analysis stage uses this value definition to create strategies for increasing market share.  Analysis focuses not only on customer acquisition but also customer retention and customer cultivation (increasing buying frequency, contract renewal, etc.).  People, product and process issues are the subject of the improve stage.  And finally, the control stage creates the monitoring mechanisms used to make sure that changes made in the organization’s value creation and delivery system are actually enhancing its competitive value proposition.

 Want 4% profit gains?  Follow McDonalds approach – talk to your customers, focus on value and execute.  This is the essence of Six Sigma Marketing.  

1.        You are losing sales but don’t know where.  One of my clients was hemorrhaging market share in a particular product line but did not in which market(s).  True story.  All of their reporting systems were set up to report on product lines and not market segments.  So, when they found that their share position had changed and continued to change, they didn’t know in what market segments this was occurring.  How do you fix a declining share situation when you don’t know which or why buyers have stopped buying?  What did they do?  Here is where agendas took over.  Some pointed to one segment while others pointed to different segments.  Some even pointed to segments they didn’t serve.  Paralysis set in and ultimately prices were lowered.  Some customers who were still buying got an unexpected and delightful price reduction when they didn’t need it while others (the real culprits of declining share still did not buy because the declining share issue was a quality issue and not a pricing issue).

2.       You are losing previously loyal customers but don’t know why or simply consider it a cost of doing business.  Another client (detailed in my new book Six Sigma Marketing) was losing 50% of their hard won customer base each year.  This was considered normal in their industry or so their executive team argued.  Their implicit strategy was to “outsell churn” instead of understanding why customers were flocking to their competition.  The answer surfaced after an intense analysis of their value proposition and why they were failing to perform adequately on the CTQs.  Value stream mapping of their order to delivery stream showed that the problem had its incipiency in the sales process where salespeople were essentially head hunting and not providing the initial, but extremely important, customer focus that their product/markets wanted.  The sales process was revamped, call center activity streamlined and churn dropped to 30%.

3.       You hear spend a lot of time talking to your dealer network and then ignoring them.  One manufacturer of tractors hired me to facilitate dealer meeting to understand what was happening to their share in the under 100 horsepower tractor market.  Dealers complained loudly and clearly about the manufacturer’s processes that made working with them so difficult.  They mentioned issues of pricing, inventory, parts delivery, technical assistance and others.  The dirty little secret was that the dealers were selling a competitor’s tractor instead of the manufacturer’s tractor.  They weren’t losing share only the manufacturer was.  The manufacturer showed up with a list of product changes to their tractor line and asked if the dealers could sell these.  No mention of fixing processes in the distribution system only product related issues.  Any reader of my blog knows this is the result of a product orientation and not a market orientation.  Such an orientation improperly assumes that value or quality at the point of production automatically translates into value and quality at the point of consumption.  The manufacturer has continued to lose share but the dealers are fat and happy selling a tractor from a competitor who is willing to make it much easier to do business with them.

4.       You track market share changes with a lagging indicator.  This is one of my favorites.  Another manufacturer went to great lengths to track and display KPIs on boards located throughout their production facility.  The KPIs included sales, market share and customer satisfaction.  The problem is customer satisfaction has little, if any, correlation with sales and market share changes.  This is a subject that I have talked about several times.  AT&T and Cadillac found out in the 1980s that while their customer satisfaction scores were the best they had experienced, their market share was dropping.  This led one wag to argue that instead of trying to please customers maybe we should be trying to dissatisfy them.  At least she understood the nature of a correlation.  And, sure enough, market share continued to drop as customer sat scores stayed constant.  Customer value is the best leading indicator of market share and top line revenue changes.  Customer satisfaction is not! 

There are, of course, other signals that indicate you should be adopting Six Sigma Marketing.  SSM supplants decision making by product line with decision making based on product/markets – the two factors (products and the people who buy them) that generate market share and revenue.  SSM can clearly identify and make actionable CTQs that drive value (the subject of an upcoming column at www.sixsigmaiq).  And value, a strong leading indicator of market share is at the core of Six Sigma Marketing.  Finally, SSM defines value from the perspective of the market and this includes issues that go beyond the simple product to include factors related to dealers, product support, customer service, repairs, parts availability etc.

 A study by Prophet and reported by Marketing Profs points out that “60% of respondents reported their marketing budgets as flat or down for 2007.  And to that point, over 75% of the survey participants rated improved marketing effectiveness as one of the top three priorities of their companies.”  If improved marketing effectiveness is at the top of your agenda, Six Sigma Marketing can and will make your marketing activities not only more effective but also more efficient and your organization more profitable.