Applying Six Sigma management strategies to the services industry

Identifying productivity and profitability obstacles

Statistics – a subject that many of us hated in college and one that has no reason to be discussed in your business, right? After all, you’re the owner of a company; you’re concerned with things like hitting your sales goal for the month or improving customer satisfaction. But believe it or not, statistics can play a vital role in boosting the efficiency with which you run your business. Six Sigma, a business management strategy that originated in the manufacturing industry, can help identify factors that are draining your profitability and productivity, and help you develop a strategy to make your business work smarter.

In the manufacturing industry, the Six Sigma method follows the DMIAC method: define, measure, analyze, improve and control in order to ensure that 99.9966 percent all products manufactured are defect-free. But this concept can work for non-manufacturing businesses, as well as in the services industry. For instance, if you’re the owner of a real estate firm that’s been receiving an overwhelming number of low marks in customer satisfaction, this would be defined as your defect.

For the next step, you could take a sample of the past 50 clients who eventually purchased a home under your firm’s guidance. After completing the company exit survey, you measured the number of negative client responses and noted that 75 percent of respondents gave your company low scores in customer satisfaction.

After this measurement, do an analysis of the experiences of those past 50 clients. During this step, you notice that the clients who gave the highest scores, worked with an agent that offered a pre-screening presentation of potential homes with them before taking them to visit sites in person, which cut down on the amount of time that would have been wasted if they’d visited houses they weren’t even remotely interested in. Those who weren’t offered these presentations saw 25 percent more properties than those that they were offered to, and gave lower scores.

After noting this, you improve your business by making the presentations mandatory for all of your real estate staff. And when new staff members are hired, you control for this new standard by training them to pre-screen all properties in the office or via email before taking a client on an in-person go see; within six months, the customer dissatisfaction rate is down to 20 percent.

The takeaway

By utilizing the Six Sigma method, you are able to take a hard look at your business and pinpoint the weak links in the organization. It doesn’t matter if you’re in the services industry or a small business owner; the process may require you to do some analysis and look at the numbers, but by doing so, you increase the amount of dollars coming in your door.