By: Kevin Klump, Senior Consultant Lean Advisors
Studying the sales processes of over 100 companies it is easy to see that more than 85% of the average sales process is pure waste. I have applied lean principles in sales organizations all over the world, and mapped out a client’s sales process and developed metrics to track waste, that 85% number (or higher) proves true in the majority of cases. Some company’s sales process is over 92% pure wastes. This is defined as process steps that do not generate revenue or sales for the company, increase sales commissions for the sales representative, or provide any value to the customer.
Given the current crisis in sales effectiveness, it seems that eliminating some of that waste should be a high priority for sales organizations, and lean process promises to help. Unfortunately, applying lean in a sales organization isn’t as simple as sending an employee to a lean manufacturing conference and asking them to apply the principles they learn.
The truth is, applying lean principles to sales process requires an entirely new way of looking at both lean and at sales. Lean manufacturing looks at physical processes that are easy to identify, measure, and quantify. Sales, however, involves a virtual process that more often than not has never been formally identified, measured, or quantified beyond the lagging indicators of win rates and revenue.
In order to gain the benefits of lean within a sales organization, executives must understand their sales organization not just as a line item, but as a business process to measure and improve. Simultaneously, they must gain a better understanding of how lean principles can be applied to virtual processes.
The good news is that the effort is worth it. Companies that I have worked with often see 60-70% improvements in lead time, and 60% reductions in waste both in terms of cost to sell and time invested. Let’s take a look at the principles behind how these improvement metrics ae accomplished.
The elements of a lean process for sales
Step one in any lean process implementation requires the sales organization and the executives responsible for it to recognize that all sales teams have a process, even if it’s not yet documented. A large number of companies researched do not believe sales are a process so it is difficult for them to realize how it actually works.
Step two is to understand the elements of lean process as it applies to sales. I have done extensive work defining and refining the elements of lean process to make it accessible for sales organizations. I take the traditional lean manufacturing principles, and recast them into three driving principles for virtual processes: Pain, conflict, and waste. Eliminate those three things, you have a lean process.
Step two is to understand the elements of lean process as it applies to sales. I have done extensive work defining and refining the elements of lean process to make it accessible for sales organizations. I take the traditional lean manufacturing principles, and recast them into three driving principles for virtual processes: Pain, conflict, and waste. Eliminate those three things, you have a lean process.
The pain principle
Pain in the sales process indicates an area where the process can be improved. Pain can be unhappy customers, loss of market share, or failure to meet quotas.
The conflict principle
Conflict refers to anything in the sales process that creates friction between what should be happening and what actually happens. An example is when the situation arises that entering the correct information into the CRM won’t give a salesperson the result they need, so they enter wrong information instead. Another common conflict is a situation where a salesperson makes more money for the company but less for him/herself than another representative, due to the product mix or other elements of how it’s been set up.
The waste principle
Waste is the most commonly talked-about element of lean process, partly because its elimination is one of the primary benefits of lean. In a physical, manufacturing setting, waste is easy to identify—it’s materials, labor time, and rework. In a virtual environment like a sales process, it’s a little harder to get a handle on. Examples of waste in a sales process include unnecessary turn-over due to poorly constructed compensation systems, money and time spent on sales deals that should have been disqualified much earlier, and activities or training engaged in by salespeople that don’t move the needle. Most companies are surprised at the amount of a sales representatives time is spent following process steps that do not have anything to do with sales.
Applying Lean to Virtual Processes
Applying Lean to virtual processes is not a new concept, but it is an area that has very little success and even smaller success when the same terminology that is used to drive Lean improvements in manufacturing are just copied and applied to virtual processes. I have applied Lean improvements to sales processes very effectively, but it works for all virtual processes. Some other virtual processes are software design, implementation and testing, marketing, business, electronic documents, quality, logistics, etc.
