The Complete Sales Production System

“A system is an interconnected set of elements that is coherently organized around some purpose.”

— Donella H. Meadows

When Amazon Pulled the Buy Button

Amazon built a digital version of a simple management principle: when a defect becomes visible, do not allow it to continue unnoticed.

Its customer-service operation uses an Andon Cord mechanism for customer-experience problems. Amazon describes the mechanism as part of its defect-detection and root-cause-elimination system.

The significance was not the name of the mechanism. It was where the information appeared and what happened next. A customer problem did not have to remain buried in support conversations while more customers bought the same problematic item.

The Final Result Arrives Last

Production is the monetary value of completed Sales. Meetings, Financial Commitments, and Sales are counts of different events; they are not alternative names for that value. Cash collected may also require a separate financial record.

By the time a final commercial result shows a shortfall, the condition that caused it may have existed for days, weeks, or longer.

Suppose a team misses its monthly Production requirement. The result confirms that the required outcome was not produced. It does not identify where the system first weakened.

The problem may have begun with too few Productive Salespeople, insufficient Activity, weak Contact-to-Appointment Conversion, weak Appointment-to-Meeting Conversion, weak Meeting-to-Financial-Commitment Conversion, weak Financial-Commitment-to-Sale Conversion, or a lower Average Sale Value than the plan required.

Managers cannot correct a final number directly. They can manage more of the conditions that produce it.

A final Production or revenue report therefore answers an essential accountability question: What commercial result did we produce? It does not automatically answer the operating question: Where did the Sales Production System first weaken?

Effective management works upstream. It makes material operating evidence visible while corrective action can still influence the result.

The final result must never be replaced by Activity measures. Earlier measures exist to explain and influence the conditions behind that result, not to provide an alternative definition of success.

Separate Counts from Value

Four measures must retain their units throughout MDSS:

Meetings — the number of Qualified Sales Conversations completed during the defined period.

A Qualified Sales Conversation is a commercial discussion with a person who has sufficient ability and authority to buy or materially influence the buying decision, conducted for a commercial purpose and recorded through the applicable management evidence.

Financial Commitments — the number of evidenced customer commitments to buy during the defined period. A commitment is not a completed Sale.

Sales — the number of completed sales transactions during the defined period.

Production — the monetary amount of completed Sales, measured on a stated currency and value basis.

See the Whole Sales-Production Chain

A revenue target becomes manageable only when the manager can see the chain of conditions required to produce it.

At a high level, distinguish the commercial stages from the people, planning, and value measures supporting them.

Activity remains the umbrella management term for recorded work and results, including Calls, Appointments, Meetings, Financial Commitments, Sales, and Production. In an equation, conversion calculation, standard, or control record, name the specific measure rather than using Activity as a substitute for the underlying unit.

The chain should be read in two directions.

Planning works backward. Divide Required Production by Average Sale Value to estimate required Sales. Use defensible conversion rates to calculate the Financial Commitments and Meetings needed, then the supporting Appointments, Calls, and prospecting work.

Execution is managed forward. Productive Salespeople perform the required work. Calls create legitimate Contacts and opportunities for Appointments where those stages apply. Meetings create opportunities for Financial Commitments. Unresolved commitments must then be followed through until they either become completed Sales or leave the active pipeline.

These directions solve different management problems. Working backward establishes what the operation requires. Managing forward shows whether the required movement is actually occurring.

A manager who sees only the target sees the destination. A manager who sees the complete chain can locate where commercially meaningful movement first began to weaken.

CONTINUE READING

This is only part of Chapter 2.

Continue with the Free Reader Edition to explore the wider MDSS architecture, including the Five Diagnostic Gaps, Seven Management Systems, performance visibility, corrective management, and operating rhythm.

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