Why Six Sigma Applied to Marketing is Not Enough
by Raymond Pettit
The Current Challenge
In the not too distant past, companies relied in large measure on anecdotal evidence, marketer’s experience, and rudimentary tools to develop marketing strategies and tactics, implement them, and assess their effectiveness. It was accepted that marketing cost money – a necessary evil. But recent economic challenges, measurement advancements, and executive expectations have changed all that.
Marketers, and the organizations they work in, are increasingly feeling the pressure to demonstrate accountability. Initial attempts to address the problem have turned to statistical techniques used by economists to quantify marketing spending and return on investment (ROI). The result has been less than spectacular. That is because determining the return on investment of marketing needs more than a statistical technique; in fact, it requires a method that supports the use of a variety of analytic and measurement techniques at appropriate points in the marketing process.
There are a number of ways to do this. For example,
a growing proportion of marketers are very interested
in using their detailed marketing databases to infer
the unique contribution to sales of disparate marketing
factors. But relatively few are actually deploying or
successfully using the complex, and often expensive,
statistical modeling techniques that are being promoted
today, due to poor data quality, integration costs and
concerns, and spotty, less than relevant results.
But other quantitative marketing measurement, assessment, and planning methods have evolved as well (some with generative bloodlines from the fields of agriculture, psychology, accounting, and manufacturing), and the demand for them is growing. Complex statistical modeling has a role in presenting the big picture of marketing’s impact. But marketers also need to be able to look at the effect of their efforts at the campaign (or even individual) level, across all media and communication channels, and sometimes across many brands or services.
Enter Six Sigma
Six Sigma techniques certainly have the potential to help marketers, however the unique challenges of marketing requires quite a bit of modifications to effectively impact marketing effectiveness and efficiency. The analytic and measurement techniques of Six Sigma essentially have their roots in the methods of experimental design developed by R.A. Fisher in the early twentieth century. His primary focus was on agriculture: optimization and increasing yield of crops and plantings. In many ways, this paradigm fits the marketing situation better than economics. The techniques Fisher developed handle qualitative and random factors that affect a dynamic process very similar to the multidimensional impacts that marketers deal with every day.
Six Sigma has taken these techniques and adapted them around the following elements:
Efficiency – do things better (faster, cheaper)
Process – a natural by product of the experimental design approach
Control of variance – both through statistics and in the experimental design, by isolating and understanding impacts
Management tool – by affording ‘transparent’ results that can be acted upon, as opposed to econometric black-box models
Design of Experiments (DOE) – the backbone of Six Sigma, well documented and codified in training and certification courses
What Marketers Need
While Six Sigma is a valuable management process and has a lot to offer marketers, there is a sizeable gap between the potential and what marketers actually need to accomplish, if they are to answer the accountability questions. Briefly, these are:
Efficiency and effectiveness – marketers need to increase efficiency, but also the effectiveness of their efforts. To turn a phrase, they need to do things better, but also do better things.
Creative (advertising message and content) impacts – oddly enough, the impact of an intangible, such as advertising creative, is often considered a ‘random’ variable by Six Sigma methodologists. What this means is that the ‘impact’ of advertising’s qualitative effects are held constant. In the worst cases, they are discarded as a nuisance variable. In reality, the creative element in advertising can enhance or diminish the effectiveness and success of marketing. As such, it needs to be included in the ‘equation’. When creative is assessed, it is critical to understand both the underlying strategy that the creative reflects, and the strength of the creative in achieving breakthrough, brand relevance and positive purchase intentions (all contributors to effectiveness).
Multidimensionality of marketing – As all marketers know intuitively, marketing, advertising, messaging (creative content), and channel all work together to communicate, influence, and persuade audience and consumer to do something. Six Sigma techniques, particularly the more advanced designs, actually discard interaction effects in the pursuit of efficiency, thus missing one of the most important sources of marketing insight and guidance available.
Dynamism – marketing and change are synonymous. Short of doing continuous, minute-by-minute experiments, it is very difficult to envision the straight ahead application of Six Sigma techniques without a degree of adjustments that reflect the expected market conditions (short term, long term, incremental, and accretion effects in advertising and marketing need to be addressed).
‘Optimize’ variance – Six Sigma works on the assumption that variance needs to be minimized. In marketing, however, we frequently look for differences and variation in consumer/customer groups to build segmentation schemes and profitability models. This may be at odds with some Six Sigma tenets.
What Can Be Done?
Let me be clear that Six Sigma is a valuable methodology
that can support marketing. This critique is meant to
be constructive in the adaptations that must be kept
in mind. By carefully examining under the hood of Six
Sigma, and applying knowledge about the reality of marketing,
it is plain to see that the automatic application of
Six Sigma to marketing would be foolish and counterproductive.
Corporations and businesses do not need another silver
bullet. Instead, it is hoped that thoughtful and careful
adjustments of Six Sigma to marketing can take place.
This is already occurring in a number of places, and
we hope that the work continues. Six Sigma does indeed
have a lot to offer marketers, but it needs to be approached
thoughtfully and not applied mindlessly. It is also
a very structured process that will work best in companies
that have an existing Six Sigma process outside of marketing,
or a strong analytic focus.
Dr. Raymond Pettit is President of Education, Research, and Planning Associates and a senior quantitative and market research consulting partner of Lenskold Group. Ray works at the critical juncture of technology and marketing science to drive improved return on investment of marketing and advertising, and helps corporations foster innovation and improved accountability. He has just completed a new book commissioned by the Advertising Research Foundation and sponsored by Microsoft Corporation entitled “Learning From Winners: What the David Ogilvy Awards Have Taught Us” (to be released in Winter 2006).