Applying the Learning Curve in Marketing and Selling

Currently the cost of Sales and Marketing can account for 40% of end user price (distribution costs would be included). Companies can no longer afford to exempt 40% of the costs from a systematic effort to reduce costs by harnessing the experience curve.
A fundamental principle of continuous improvement in manufacturing is the experience-based learning curve. In many companies, manufacturing is able to implement processes yielding significant cost reductions (14-18%) every time cumulative experience doubles. What many companies do not realize is that the opportunity exists to establish a similar learning and improvement process in Marketing and Sales. If you were able to increase your marketing and sales profitability only 10% every time your company doubled its sales experience, total profit improvement would be significant.
Currently only manufacturing has a systematic process for learning the best approach and processes to use for each product. While all companies use everything they know about manufacturing to determine the best initial approach, we are dependent on the experience gained in the product manufacturing process to move from this starting point to ever-greater efficiency. Continuous improvement is a mechanism for capturing and applying this learning-curve experience, but an analogous framework does not exist in marketing and sales.
And yet the need exists. Companies don’t usually think that a sales force has to “learn” how to sell. The assumption is that occurred in sales training. But “learning” how to sell a new product or to a new segment is different than learning sales skills. When a product is first introduced, there is no proven “best” way to sell it. As with manufacturing, we use everything we know to define the best possible starting point, but we depend on our best salespeople to “learn” effective ways to create sales. This undoubtedly works for these “best” salespeople, but the opportunity to maximize the value of this learning comes from moving it beyond the “superstar” performer to the mainstream of the sales force. We need to capture “what works” so we can create the sales programs that enable the successful selling approaches to be replicated by every salesperson, but with less direct sales time and skill needed. Just as manufacturing has several processes designed to facilitate the learning process through the capture of experience, Sales needs to implement similar processes. Examples could be the equivalent of “Quality Circles”, “Pilot Runs”, etc.
If this initial learning isn’t captured and supported as the sales efforts move to the mainstream of the channel (i.e., the average salesperson), these salespeople would have to increase sales time to substitute for the sales skill and experience differential. At some point the amount of selling time required makes the sales effort uneconomical, and even then the win rate would decline. The result is to “commoditize” the product by selling on price.
Proactive "experience curve" learning for channel migration:
While we tend to refer to “the Channel”, there is in fact a continuum of channel resources, both within any one channel and between the complete range of channels (including customer self service as a channel!). Channel effectiveness is determined by two factors; the difficulty of transferring confidence of the Value Proposition, and the Time and Skill available in the channel.
Using the parameter of Time and Skill available, the capabilities of each channel can be assessed regarding their ability to effectively sell given the quality of the Value Proposition at any point in time.
A firm’s ability to utilize channels with increasing reach is limited by their ability to reduce the Time and Skill required for the transfer of confidence of the Value Proposition to the average skill and time available in the channel.
The objective then is to reduce the transition time within one channel by systematically improving the quality of the value proposition by proactively capturing the experience of the current channel. As the current channel learns the calibration of the customer value and accumulates increasing evidence, the quality of the Value Proposition improves to the point that new channels, ones with greater breadth but lower time and skill capabilities, can effectively sell.
The impact on the share of opportunity gain objective is to reduce the time to channels that can capture significant share due to their breadth of reach.
For many new products gaining penetration of the targeted channel is critical to the business plan, and frequently the first company that can demonstrate success in a channel with greater capacity captures the market share.
Each channel has "not to exceed" level of skill and effect they are willing to speed selling a product in the channel. If the selling process has not been "reduced to practice" for implementation of production selling at or below their threshold of effort, the channel will not be an effective product of sales transactions.
It is critical to implement a process that captures experience and incorporates that experience into increasingly effective selling tools and approaches, therefore developing a learning based "experience curve" for cost reduction. Especially for new products where there is little or no initial experience for use in identifying a selling approach that works.