Lean Marketing: Sales Quotas lead to Waste


Share on LinkedIn

When everyone thinks of Lean they think of Muda or the waste. I am a firm believer that you never directly attack Muda in sales and marketing simply because most people do not know what works and what doesn’t. Lean is not all about Muda. James Womack himself suggested that Lean practioners should think about Mura (unevenness of flow) and Muri (overburdening of the process) first and then Muda (waste).

My example of this is sales quotas. Think about what happens at the end of month or end of quarter and even the end of the year. Sales are driven by milestones which often lead to discounts and delivery promises that cause Mura which results in Muri which turns into Muda.

Lean’s goal would be to reduce to reduce the range of variation and then adjust or improve the process to reach the needed output. I would suggest that sales quotas would be a form of tampering which leads to special-cause variation. Dr. Deming went to great lengths to illustrate the common forms of tampering in his famous red bead experiment. Tampering is present when adjustments are made to a process that only shows common cause variation. He proves that you actually do more harm than good.

Just about all variation within a process is due to chance causes, inherent in the design of the process. This process may or may not be controlled by you, it is likely determined by your customers buying process. Even at that, limits within which the common variation of a process can be determined from data collected. When all data points fall within these limits, the process is said to be in control and stable. Watch this video.

Control Charts

Back to Deming’s red bead experiment, problems arise when sales and marketing reacts to common cause variation as if it were special cause variation. Think about how many times pressure is applied to salespeople who have little control over the variation resulting from the design of the process? As a result, emphasis is placed on point-to-point variation rather than working to decrease all variation and improve the average.

No two customers are alike, all sales are different, and there is simply too much variability to ever make a process work. Variation is unavoidable in sales and marketing. However, the simple use of a control chart allows one to easily observe when the process is outside the limits, thus indicating special cause variation within the process. Your decisions should be geared toward improving the common variation versus increasing the number of special-cause variations.

Knowledge gained from understanding variation in your sales and marketing process will add improvement to your entire organization. As Deming states, “Management’s job is to optimize the entire system. Sub-optimization is costly.” All sales and marketing people should strive to reduce special-cause variation.

Republished with author's permission from original post.

Joseph Dager
Business901 is a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He has authored the books the Lean Marketing House, Marketing with A3 and Marketing with PDCA. The Business901 Blog and Podcast includes many leading edge thinkers and has been featured numerous times for its contributions to the Bloomberg's Business Week Exchange.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here