Using the Theory of Constraints
to improve your
Marketing Hourglass
This E-Book written by
Joe Dager, Business901
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The Pillars of the Lean Marketing House: The Marketing Hourglass
As many readers know, I am a Duct Tape Marketing Coach and even before that adhered
to the Duct Tape Marketing principles. John Jantsch is the author of "Duct Tape
Marketing - The World's Most Practical Small Business Marketing Guide“ and
the creator of the Duct Tape Marketing small business marketing system which include
the foundation of the Marketing Hourglass that I reference and expand on in this chapter.
John has always described Marketing as getting someone with a need to know, like and
trust you. He has expanded that in his widely acclaimed blog to The 7 Stages and logical
touch points along this customer referral life cycle look something like this.
Know – Your ads, article, and referred leads
Like – Your web site, reception, and email newsletter
Trust – Your marketing kit, white papers, and sales presentations
Trial – Webinars, evaluations, and nurturing activities
Core – Fulfillment, new customer kit, delivery, and financial arrangements
Repeat – Post customer survey, cross sell presentations, and quarterly events
Refer – Results reviews, partner introductions, peer 2 peer webinars, and
community building
He also suggest creating a diagram consisting of the stages above and mapping out
every touch point you have. As I did this, I found it to be not only a great exercise with
my clients but such an integral part of the process that it became a cornerstone in
implementing a marketing system.
I recommend that you read The Pillars of The Lean Marketing House before
reading this.
Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

This is a simplified version of how a hourglass would look. As you can see the natural
progression of the flow (know, like, trust… flow to the right), the enablers or information
to move the process forward is provided above each step. Taking a group of current
customers, you can identify this in your current process. If this seems difficult, make a
certain group that you can segment and document the process. Many companies will find
huge gaps in their processes, which are supported by other departments such as sales or
service or maybe by repetitive marketing.
Know Like Trust Try Buy Repeat Refer
Articles Web Site White Paper Webinar Financing Add-on Peer2Peer
Ads Newsletter Presentation Sample Service Survey Ref. Pack.
Search Speaking Seminar Free Trial Terms Updates Incentives
Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

The Goal: A Process of Ongoing Improvement by Eliyahu Goldratt and Jeffrey Cox?
The Theory of Constraints was introduced in the book and it consists of these three
principles:
1. A set of Proven Solutions
a. Drum Buffer Rope (DBR)
b. Critical Chain Project Management (CCPM)
c. Replenishment
d. Sales/Marketing
e. Human Behavior
f. Measurements
g. Strategy
2. An Approach to Problems
a. Five Steps of Continuous Improvement
3. Thinking Process Tools
a. What to Change
b. What to Change to
c. How to Cause the Change
People have been successful in applying these principles and my experience is more
centered around the 5-steps of continuous improvement. The primary deterrent in using
these principles is that you have to have developed a value stream or a systematic
method of marketing. Using a marketing hourglass will allow us to use the Theory of
Constraints quite easily in developing and understanding a more complete marketing
system.
Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

Starting with some basic definition that I have modified to fit my marketing perspective.
Throughput: The rate at which the system walks prospects through the marketing
hourglass. Note that it is the money that is generated through sales and not generated
by number of prospects because if you produce sales by discounts and other incentives,
you have not really had throughput.
Inventory(Prospects): All the prospects that the system has targeted that it intends to
sell too.
Operational Expense: All the money the system spends in order to turn prospects into
customers/sales.
Bottleneck: Any resource whose capacity is equal to or less than the demand placed
upon it.
Optimization of a hourglass: Balance flow, not capacity
Types of elapsed time:
Setup time: The time a prospects spends waiting for a resource.
Process time: The amount of time the prospect spends reviewing the material.
Queue time: The time the prospects spends in line for a resource while the resource
is busy working on something else ahead of it.
Wait time: The time the prospect waits, not for a resource, but for another resource
so that they can be used together.
Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Product Marketing Lean Marketing

When you create your hourglass the purpose is to achieve better cooperation of the
multiple phases. Each interlinking phase depends upon the other links. In each of them
you will have different capabilities, normal variation and a changing workload making it
practically impossible to balance. Using the TOC(Theory of Constraints) we will find one
phase of the hourglass more limited than another. Since we have determined that the
whole hourglass is dependent upon the cooperation of all phases, the weakest link
determines the strength of the chain.
Every System, typically has relatively few constraints. However, to operate at maximum
efficiency, the limiting constraint must be identified. Five Steps of Continuous
Improvement help identify and improve the constraint.
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Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

Before starting with the 5-steps, there are two prerequisites:
1. Identify the Goal of the System /Organization
2. Establish a way to measure the progress
The most common goal is to make money and that should be our overall purpose. It
sometimes can be overlooked in increasing sales, client retention and many other
factors. Many will argue but increase sales can hide many problems. The companies that
fail the quickest in a recession are the ones that were living on growth without really
generating income.
There are several ways to measure progress with the most common being Throughput,
Operating Expenses and ROI. Going into to much detail about how to use the ratios is
beyond the scope of this E-book. The important thing to remember is that TOC
methodology values Throughput and it as the best means to fuel growth. TOC then looks
at Inventory(Prospects) second and operating expenses third. So our concentration will
be optimizing the Throughput of the Marketing Hourglass utilizing the Five Steps of
Continuous Improvement :
Step 1. Identify the system’s constraint.
Step 2. Exploit the system’s constraint.
Step 3. Subordinate everything else to the above decision.
Step 4. Elevate the system’s constraint.
Step 5. If a constraint is broken (that is, relieved or improved), go back to Step 1.
However, don’t allow inertia to become a constraint.
Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

Step 1. Identify the system’s constraint.
The system’s constraint is the phase, part of the phase or resource which limits the output
of the entire system. Start following your actions and you may find out that your
bottleneck is not just getting more prospects in the door. If you can monitor actual
numbers , you may be amazed at what is happing to your prospects(inventory). This is
where we need to identify the constraint , where is your constraint?
The easiest way in a manufacturing analysis is to walk around and see where the work is
piled up. It is not that much different in a marketing process. Walk around and see if
there is a pile of sale presentations waiting to go out. You may find people waiting on
financing to be approved. Maybe, inconsistent delivery of Newsletters and so forth.
If you have done a good job of building your marketing hourglass, you may be surprised
on how easy it is to find. You may be so lucky to be able to completely eliminate steps .
Start internally, as you gain internal control you will also gain the respect of your
customers and vendors. This may help you significantly when you ask them to assist you
later in improvement needs.
Know Like Trust Trial Repeat
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Articles Web Site White Paper Webinar Financing Add-on Peer2Peer
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Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

Step 2. Exploit the system’s constraint
This simply means; Getting the most out of the weakest link or phase. This is a great
time to use the Lean tool of Kaizen. Getting rid of all waste associated with the systems
constraint is the first step I would take. One of the things that TOC and Lean both
encourage is to observe the process with people very familiar with it. They may tell you
that this always happens or maybe an obvious statements such as, we don’t have
enough people. Looking at the waste you will readily identify some crucial changes.
Put a cost to the constraint. If this is your weakest link, improvement is this area will
maximize the entire process. Understanding the cost of the constraint is imperative in
moving forward.
Once you have a cost assigned to the constraint, you start looking at improvement
slightly differently. Observe how things move through a constraint. Hiring that one extra
person, holding additional events, dedicating a phone line or a live operator could make
significant differences. Using a tip from Rapid Product Development, you may want to
parallel this process. This will allow simultaneous actions on the constraint.
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Using the Theory of Constraints
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Step 3. Subordinate everything else to the above decision.
Increase output through the constraint(phase) increases output for the entire system. I
sometime use the analogy when a salesman senses an order. He puts everything else on
hold and dedicates all his resources to getting that order. It is also very similar to the
Lean method of Kanban. Kanban is a method of only releasing parts as needed through
the process. A card must be given to the preceding event before that phase can start.
Interesting thought may be as you are managing campaigns or event management that
you only release call centers, direct mail and auto-responders based on responses form
your customers. A proactive drip management program may solicit certain key actions
before campaigns are launched.
In manufacturing, I have seen a quality station placed in front of the constraint before
allowing parts to move through the process. In marketing, you may add a qualifying step
so the constraint or process only receives a more qualified prospect.
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Using the Theory of Constraints
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Step 5. If a constraint is broken, go back to Step 1.
However, don’t allow inertia to become a constraint
You will always have a constraint. A fundamental concept of continuous improvement. As
you correct one another will develop. As in Lean this is fundamental concept of TOC.
Mot organizations have an unlimited number of things to improve. However, most of the
time only a relative few will make a significant difference in your company’s bottom line.
If you are going improve something , IMPROVE IT.
Why waste everyone's time? Changing the process without the data is cause for failure.
You have heard it time and time again, JUST DO IT! We have been trained that way,
action is accomplishment. But the wrong action may accomplish little or drive you deeper
into a hole. Without the data from the previous steps, you will not be able to make as
effective and dramatic improvements that you desire. Seek 200% process improvements
and cost reductions of half!
One of the sayings I have read about in TOC time and time again. Don’t leave inertia
become the constraint. Change should help your performance, not hinder it.
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Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

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Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

What others say:
In the past 20 years, Joe and I have collaborated on many difficult
issues. Joe's ability to combine his expertise with "out of the box"
thinking is unsurpassed. He has always delivered quickly, cost
effectively and with ingenuity. A brilliant mind that is always a pleasure
to work with." James R.
Joe Dager is President of Business901, a progressive company providing direction in areas
such as Lean Marketing, Product Marketing, Product Launches and Re-Launches. As a Lean
Six Sigma Black Belt and a certified coach of the Duct Tape Marketing organization,
Business901 provides and implements marketing, project and performance planning
methodologies in small businesses. The simplicity of a single flexible model will create
clarity for your staff and as a result better execution. My goal is to allow you spend your
time on the need versus the plan.
An example of how we may work: Business901 could start with a consulting style
utilizing an individual from your organization or a virtual assistance that is well versed in
our principles. We have capabilities to plug virtually any marketing function into your
process immediately. As proficiencies develop, Business901 moves into a coach’s role
supporting the process as needed. The goal of implementing a system is that the processes
will become a habit and not an event. Part of your marketing strategy is to learn and
implement these tools.
Using the Theory of Constraints
to improve your Marketing Hourglass Business901 Duct Tape Marketing Marketing Products

Joseph T. Dager
Lean Six Sigma Black Belt
Duct Tape Marketing Coach
Ph: 260-438-0411 Fax: 260-818-2022
Email: jtdager@business901.com
Web/Blog: http://www.business901.com
Twitter: @business901
Increase Throughput – (Decrease) Expenses = Increase Revenue
If you would like to take that leap, sign up on
my Members only page and after completing
a brief survey, you will have access to my
calendar to schedule a free 30-minute
assessment on your Marketing Hourglass.
Act Now!
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