A few months ago, we wrote that Six Sigma, the ubiquitous methodology for managing an entire company or business unit for the production and delivery of defect-free products and services, has missed marketing. By way of review, achieving six sigma (sigma is the statistical term for standard deviation) means you've delivered a defect-free product or service 99.9997 percent of the time—a near perfect record. Correction costs go down and customer satisfaction goes up, so the logic goes.

At the time, we suggested that while operations and manufacturing go gangbusters with Six Sigma, producing defect-free products and services 99.9997 percent of the time, marketing routinely generates one flailing campaign and new product disaster after another. For example, we've directly observed one Fortune 500 manufacturer that prides itself on its meticulous adherence to Six Sigma doctrine routinely make marketing decisions based purely on gut thinking and management intuition without recognizing this gross violation of data-driven Six Sigmatic principles.

Our conclusion at the time we wrote that article was that if Six Sigma proponents broadened their view of the application of the system and unleashed its power on marketing, they'd see an even more dramatic financial performance than they have seen applying the methodology selectively to operations. In other words, it'd be a good thing.

But since writing our original article, it's come to our attention that we need to clarify our suggestion. We've come across at least three companies where Six Sigma zealots have discovered that marketing was exempt from Six Sigma standards and seized control of the practice to try to rectify the situation. Sounds just like what we were talking about, but here's the rub.

Seems the Six Sigma people that are trying to remake marketing are not actually indigenous to the marketing department—they come from other departments. As a result, marketers are not driving the integration of Six Sigma principles into the marketing decision-making process—Black and Green Belts (Six Sigma comes with it's own titles for different people involved in applying the methodology at a company) from operations and other departments with little to no background in marketing are imposing requirements. What they are basing their requirements on, we don't know.

At these three companies, the marketing departments were at odds with their company's Six Sigma rulers. At one major financial services conglomerate, for instance, all research projects have to be approved by a Six Sigma oversight committee. The Six Sigma committee, comprised of operations gurus, not marketers, dictated that the marketing department should use an antiquated, yet popular analysis technique which saves time and money but offers nothing in the way of valuable strategic information. The marketing department was at their wit's end trying to convince the committee that an alternative method, while it took longer and cost more, would yield information that would ultimately lead to (relatively) defect-free marketing programs. But the Six Sigma committee wouldn't budge.

Nothing but trouble comes from putting non-marketers in charge of marketing decisions. Just look at what happened with CRM. CRM (customer relationship management) software was supposed to completely transform the process of interacting with customers, allowing for more customization, producing better customer intelligence, and dramatically improving customer loyalty. Even though marketing is the discipline charged with getting and keeping customers, IT managers ended up heading the creation and implementation of CRM systems. As a result, companies ended up spending billions for what amounted to a colossal data warehouse of often useless information because marketing was not involved from the very beginning. Now survey after survey among CEOs and CFOs find CRM to be one of their biggest sources of disappointment.

So with all of this in mind, let us restate our original recommendation to apply Six Sigma to marketing: Six Sigma principles hold tremendous promise for improving marketing performance ONLY if marketers manage the process.

As an aside, for the equivalent of a "Six Sigma Guide to Marketing," pick up a copy of Counterintuitive Marketing, by Kevin Clancy and Peter Krieg.

We're always on the look out for examples of studies that debunk conventional wisdoms based on incomplete or, often in our view, incorrect analysis with a more comprehensive, thorough, and statistically accurate examination. We happened across two recent studies that illustrate how research methodology could lead someone to draw the wrong conclusion.

The first is a recent study by University of Southern California economist Richard Easterlin which gave scientific credence to the statement, "Money can't buy happiness." Easterlin examined the responses of 1500 people over the course of three decades to test two different theories of happiness: 1) that people are hardwired with a set happiness point to which, no matter what happens to us, we naturally gravitate and 2) that an increase in wealth improves an individual's sense of well-being and, therefore, happiness. He found the data supported neither theory, and, in fact, the relentless pursuit of pecuniary gain decreases happiness in the long-run.

The second study is one Copernicus conducted to find discriminating characteristics between two groups of people: those who consider themselves happy and those who don't. Interestingly, we used the same data source as Easterlin's study, the General Social Survey, but looked only at responses from one year, not over the course of time. Importantly, the intent of our study was to compare the two groups, NOT to draw conclusions about the causes of happiness.

We found that people who consider themselves very happy do have a higher annual household income than those who do not consider themselves too happy. They are also more satisfied with their financial situation and believe they have exceeded their parents' standard of living. On the flip side, people who do not consider themselves too happy are less satisfied with their financial situation.

We can see why one might conclude money equals happiness, given the higher incomes and higher satisfaction with their financial situation of people who consider themselves happy. Yet given that more happy people are married, are more educated, and less likely to have been unemployed—a highly traumatic and stressful event for most people—there are just as many other potential contributors to the overall level of happiness which require further investigation, which Easterlin's study undertook. Clearly, it's important to recognize what different kinds of analysis, in this case longitudinal vs. single-point-in-time, enables you to do.

As a point of interest, here are some of the other discriminating characteristics we found between happy and not too happy people:

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To find out what buyers care about—in other words—what's most important when considering a purchase in a particular product or service category—too many marketers think all they have to do is ask.

WARNING: This is exactly what you DO NOT want to do!

In a typical situation, researchers will pull out a list of 25-125 different attributes, such as "contains fluoride," in the case of toothpaste or, "has ATMs everywhere," in the case of a bank, and benefits, such as, "prevents tooth decay," or "makes you feel like a valued customer," and ask you how important each is on a five-point scale. For instance: "When you are in the market for a new sports car, how important is it to you that the car impresses your friends and neighbors? Extremely important? Very Important? Somewhat important? Slightly important? Not at all important?"

The problem is you'll never learn what's really important by asking what's important: It's highly unlikely to tell you what is truly motivating in the category. And here's why.

Take a new energy cola. Researchers asked respondents about the importance of taste, refreshment, sugar content, caffeine content, color of the can, availability of 16 oz. bottles, has taurine, availability in grocery stores, availability in health clubs, offers the lowest price, it makes you feel young, and a whole slew of other characteristics. Taste and refreshment, not unexpectedly, topped the list as very important characteristics, along with sugar and caffeine content, while taurine, makes you feel young, and lowest price rounded out the bottom of the list. So what's wrong with this picture?

Well, for one, taste and refreshment are price-of-admission items—the very basics any energy cola needs to get into and stay in the market. After all, who's going to seek out and buy an energy cola on a regular basis that they think tastes bad? Same goes for sugar and caffeine. These aren't exciting positioning opportunities for a new energy cola because every market player has to have them, so everyone already does. There's no chance to break out from the clutter with these product attributes.

These issues become particularly evident when you go on to ask respondents how satisfied they are with the brands they use regularly in terms of the same set of attributes and benefits on another five-point scale. This scale might range from "extremely satisfied" to "not at all satisfied," or "excellent" to "poor"—it makes no difference which one you use. What you find is that these price-of-admission items are both very important and already satisfied (i.e., the brands they use rank "high" on importance and satisfaction). Phil Kotler, the dean of American marketing professors currently at the Kellogg School of Business at Northwestern University, would say that these characteristics are, therefore, not consumer problems. Because marketing is the discipline concerned with solving buyer problems, importance ratings alone do not reveal information key to great marketing.

People will also say that something is unimportant if they don't know anything about it. People aren't likely to admit to what they don't know, but even if they are, how many will really spend the time learning about what something is to answer a questionnaire? In the case of the energy cola, "contains taurine," was unlikely to rank as very important until recently. Red Bull, one of the fastest growing soft drinks in America, burst on the scene a couple of years ago and its key ingredient, the herbal stimulant taurine, emerged as an important point of differentiation. Now every soft drink company is trying to replicate Red Bull's success with all manner of "natural," herbal energy-boosters.

Further bear in mind that "importance" is a loaded word; it inherently implies rationality. So when asked about importance, people naturally want to give a response they think the researcher wants to hear, a response that will make them look good in the interviewer's eyes—whether those eyes are in front of them or not. Ask what's important and people will give you the most rational, expected, socially acceptable answers.

As a result, no one will ever tell you that "makes you feel young," is especially important, yet it has been an overwhelmingly successful positioning for Pepsi for decades. People just naturally hesitate to say anything that makes them seem superficial. Likewise, people do not want to admit they are price sensitive. No one wants to come across as cheap, so low price, though it may be highly motivating, is reported as relatively unimportant. This holds true whether a respondent is interviewed by a live person, or is responding to a mail questionnaire, or online survey.

Conclusion: Self-reported importance yields no great insights, certainly not the kind that leads to truly transformational marketing.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at info@copernicusmarketing.com

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"If all you do is what you've done," Kevin Clancy's mother used to say to him, "then all you'll get is what you've got." We're constantly amazed by companies that think they can continue doing things the same way they have always done, yet expect a different result. Finally, we found a book that recounts the powerful stories of 25 business leaders who understood that business-as-usual wasn't going to cut it and set about creating a totally different company.

In Guts!, the Freibergs describe "gutsy leaders," including Jim Goodnight from software giant SAS Institute, Bob Davis from USAA, and Colleen Bartlett from Southwest Airlines who "have dismantled fear-based management and replaced it with heart, soul, discipline, loyalty, humor and long-term record profits." The very helpful sidebar bullets explain how to apply techniques and approaches to your own firm. We found the stories enthralling and examples of creative leadership inspiring.

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If you only attend one marketing conference this year, this should be the one. On May 10-12, at the Westin River North, Chicago, Illinois, the American Marketing Association will present Transformational Marketing: Straight Talk from the Great Minds in Marketing Today, featuring a powerful line-up of speakers talking about cutting-edge concepts including customer equity and marketing ROI measurement.

For a PDF of the conference brochure, click here.

To register, visit www.marketingpower.com/strategy

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