Sales and marketing dollars are a terrible thing to waste.
The concept of “muda” — a Japanese term meaning “waste” — is central to Lean Manufacturing principles, and has its roots in the famed Toyota Production System. Within that framework, it essentially refers to the consumption of time and resources in an activity that does not add value to the end product (or creates value that the customers do not actually want). According to Lean principles, the elimination of “waste” in a production process is therefore a key goal for improving the manufacturing process.
7 Classic Types of Waste
The seven common categories of waste, are, to quote BusinessDictionary.com:
- Transport: Unnecessary movement of parts or products due to inappropriate location of equipment or machines.
- Inventory: Half-completed parts and works-in-progress are costly and add no value whenever they are not being worked on.
- Motion: Unnecessary movement of workers or tools due to inappropriate location of equipment or machines.
- Waiting: Idle time when either machineries, workers, or parts are waiting to be worked on.
- Over-Processing: Unnecessary processing steps that do not add value (from the customer’s perspective) to the product.
- Overproduction: Unnecessary production and holding costs of manufactured products due to bad planning.
- Defects: Product defects cause additional costs in rework and pacifying the customers.
Clearly these are straight forward, common sense ideas that should apply readily to any manufacturing process. But as sales productivity expert Nancy Nardin discusses, I actually believe these concepts of waste can be adapted and applied to sales and marketing, as well.
The key is to think of sales and marketing as a process, with marketing activities and buyers’ interests as inputs and happy, satisfied customers as outputs.
7 Types of Sales and Marketing Waste
Here are seven types of waste your organization should seek to eliminate to improve the efficiency and effectiveness of your sales and marketing efforts.
- Forecasting Unrealistic Opportunities: Sales reps have a tendency to be overly optimistic about their opportunities, and this can lead to valuable sales cycles being spent on large opportunities that have no real chance of getting closed. For help on creating more accurate forecasts, see our eBook, Sales Forecasts: A Question of Method, Not Magic.
- Unnecessary Discounts: In the heat of getting a competitive deal done, reps may be too quick to resort to deep discounting of the product, losing sight of the fact that if they have a solid, valuable product and are targeting the best potential customers, they will most likely be willing to pay up.
- Overqualification: This type of waste is the result of sales and marketing being too rigid with their definition of a “qualified” lead. The lead goes back and forth between sales and marketing until all of the prerequisite qualifications criteria are satisfied, and crucial time is lost in actually getting the deal closed.
- Overproduction: Admittedly, this is a problem most companies would die to have (most companies starve for leads). But it can be an issues, particularly when a company raises a new round of investment and has capital to scale up their demand generation efforts. Too many leads overwhelm sales reps and cause them to cherry pick the best while letting the rest go, wasting valuable marketing dollars and brand capital.
- Funnel leakage: This is similar to the “transportation” category in the list above. The more steps and handoffs involved in guiding leads through the marketing and sales funnel, the more likely some leads will be lost in the shuffle. Another danger is that leads that finally make it into the sales reps’ hands do not have the full history of prior interaction with marketing, wasting valuable sales intelligence and contextual information.
- Slow Reaction to Qualified Leads: Just as inventory or work in progress inherently causes waste by just sitting there, leads that get stuck in the no man’s land between sales and marketing also create sales and marketing costs.
- Lost Opportunities to Generate Referrals: Many sales and marketing teams forget one of the most powerful channels and drivers of business — customer satisfaction and referrals. A lost opportunity to delight a customer and suggest them to refer the product to others is a wasted opportunity to generate more dollars, not to mention a waste of customer loyalty and capital.