The Theory Of Constraints, and its Application to Sales & Marketing

This just in from Wikipedia:

Theory of Constraints is based on the premise that the rate of revenue generation is limited by at least one constraining process (i.e. a bottleneck). Only by increasing throughput (production rate) at the bottleneck process can overall throughput be increased. The key steps in implementing an effective TOC approach are:

1. Identify the constraint (bottlenecks are identified by inventory pooling before the process)
2. Exploit the constraint (increase its utilisation and efficiency)
3. Subordinate all other processes to the constraint process (other processes serve the bottleneck)
4. Elevate the constraint (if required, permanently increase bottleneck capacity)
5. Rinse and repeat (after taking action, the bottleneck may have shifted or require further attention)

The Theory Of Constraints can also be applied to sales and marketing. Your typical lead generation and conversion scenario is a series of interdependent processes that goes something like this: Generate a lead… Convert the lead into a firm enquiry… Produce a proposal or Action Plan… Follow up… Close the sale… Fulfil the work or order… Rinse and repeat…

And it’s very common - almost to be expected - that one area will get out of sync with the others. It seems that you either have too many leads and not enough “closing” or fulfillment resources, or else a sales team who are desperate for qualified sales leads to turn into sales. (They spend the majority of their time on relatively UN-productive prospecting work and only a small proportion of time doing what they should be doing - closing sales). If the “fulfillment” part of your business is time-consuming (as it can be in the case of service providers), this can upset the apple cart further, as you switch priorities from lead generation, to sales, to fulfillment - either as an individual or as an organisation. There’s no easy answer, but the TOC certainly supplies some valuable ideas. On the TOCCA website, there’s a fantastic flash video that demonstrates the key principles of the TOC. It’s a little hard to find: click the link on the bottom left that says Click Here to View 3 Minute Flash Demonstration.

Eliyahu Goldratt’s work in another great source of information on this subject.

Will

P.S. What’s the secret to evening out your lead flow and bringing a measure of control back into your sales process? Automated lead generation systems of course! Ones that utilise “pull” marketing and the web to build a herd of interested prospects that you nurture over weeks, months and years to generate an even, steady stream of sales leads that YOU can turn on and off like a tap. Is it easy? Nope. But it is possible.

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