Should you re-band and change the image?

CRM
Whenever a company is not performing or when product sales appear in decline, one of the choices of remedial action is for a product “re-launch” or image change. For the newly appointed executive responsible for business income, the idea of “re-banding” a product or a company has its attractions in showing that the executive is making a mark on the business and pursuing new actions.

But the road to hell is full of good intentions. For while “Re-Branding” may be the right answer to falling sales income in some cases, the reasons for declining sales is rarely the result of an “old” image. In the majority of cases, when products and services fail to meet the planned sales and income projections, there will be a number of underlying and usually quantifiable reasons.
But what is branding? It’s not just a logo or new packaging design. To a business organisation, the image of its brand is a symbol that defines it for trust, innovation, and quality. Based on their aspirations, imagination and association with their own self-image, the perception of a brand image creates a customer loyalty. Organisations use brand image to convey an identity and value, with which customers will want to be associated. Customers also want reliability and consistency, which the image of long established brands helps to convey. Thus customers associate themselves with brands which they think define in part the image that they believe others have of them, in terms of fashion, quality, money and status. Any change in the brand image will therefore affect the customer’s relationship. The image of successful brands is in effect “owned” by the customers rather than by companies.
An established brand image is not a prime factor in producing profitable income, but it is a supportive one. The level of profitable income is dependent on the quality and reliability of the product or service on offer, as well as the price, the communication with the market and the ability to deliver to the customer in a manner that meets their needs.

The objective of a commercial manager is to maximize profitable income while minimizing costs and the use of assets. To do this effectively, commercial managers require careful analysis of quantified performance data from all the activities involved in anticipating and satisfying customer demand. Only by careful analysis of performance data may proper conclusions be drawn on the strengths and weaknesses of the business operation, and proposals made for improvement.

Where does brand image fit into this? Image helps sales but only indirectly. While advertising helps to initiate or re-enforce brand and company awareness with the customer, with established brands and companies, image should promote confidence in the customer of continuity and standards. Any change in the brand or company image may therefore affect the confidence that the customer has in the continuity and standards of the business. Thus any change in that image may affect the relationship that the customer has with the image and the loyalty that they have to it.
There have been many misconceived image changes to established and successful brands, for often no more reason than a desire for change, that have proved wastefully expensive and unnecessarily damaging.
In 1985 in an apparent attempt to appeal to younger consumers, Coca-Cola rebranded its flagship soft-drink with the introduction of “New Coke”. However, a strong consumer backlash forced the company to bring back the original formula under the name, Coca-Cola Classic.
In 2010, clothing retailer, Gap abandoned its ubiquitous logo consisting of a blue box with “GAP” written in white inside, for a slightly altered new version. However, the subsequent volume of online criticism by customers forced the company to revert to its original logo within a week.
Ill-conceived changes to a company’s packaging or logo aren’t the only ways to generate criticism. In 2001 the Post Office disastrously changed its name to Consignia, in preparation for operating independently from state control. Consignia was picked because brand researchers believed it conveyed trustworthiness and honour. However, the public though otherwise and the name was changed that of Royal Mail, which had public approval.
The temptation to tinker with logos, names and strap-lines can lead firms to ‘fix’ what isn’t broken. It cost British Airways’ ÂŁ60 million to repaint the tail fins of its fleet of aircraft with a variety of ethnic themes designed to reflect its international reach. However, the down-playing of the British flag as part of the paint scheme, was seen to have undermined the “British” identity of the brand, and within four years, the artwork was quietly dropped. 
“If it ain’t broke, don’t fix it.” Radical change of an established brand image should only be contemplated as a last resort. Any changes to brand image ideally should be incremental and carefully done. If the business and product are producing profitable income as planned, why do you want to change the image?

Before embarking on a re-banding or a change to logos, names and strap-lines, commercial managers need to ask:

* If the product or business is meeting its planned projections, -Why change? – If profitable income is in line with the business plan, the image cannot be an adverse problem. If a business is not performing as it should, the answer will lie in the analysis of business performance measurements.
* How will such a change help? What will it achieve? How do you know?
* Why do you want to change?
* How will it improve the sales income? – How do you know?
* What will it cost to effect the change?
* Is there a budget to do this?
* Are all the risks known and understood?

Changing an established image is frequently an unnecessary cost, which may actually harm customer relations and reduce income. The only people who really benefit from changes to logos, names and strap-line are the design agencies whose business is to promote and sell expensive change to businesses that should know better.

© N.C.Watkis, Contract Marketing Service 29 Apr 13
reband and change the image

May 2, 2013   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators, Uncategorized  Comments Closed

Are customer communications really a sham?

Effective communications with customers are vitally important especially for consumer based businesses. For Commercial Managers, responsible for producing a steady flow of profitable income, “making the customer the centre of the business,” has been a mantra for decades.
But in reality, what does it mean to have the customer at the centre of the business?Article grafic 8

The sole purpose for any business is to produce profit. That profit is for the benefit of the owners, but it is also for the benefit of the employees, without whom the business would not be possible. Customers also benefit, because profitable businesses remain in being and are therefore able to continue to provide the products and services for the customers. So where do the customers fit in?

Businesses make profits by anticipating and satisfying customers’ requirements. Customers provide the income to the business in exchange for the goods and services provided. However, the purpose of a business is to make money, satisfying customers is not its purpose but only the way in which it gains profitable income.

Customer relationship management (CRM) is largely about managing data regarding customer requirements and buying habits, rather than communicating with them. A good relationship between customer and supplier relies on the service delivered and especially the quality of communications between them. However, in many cases while the bulk of communication may be expected to be from the supplier to the customer, the level of communication from the customer is often impeded by the difficulty of making effective contact with the supplier.

Many companies often give the impression that communication from customers, other than for placing orders and remitting payment, is generally not of interest and is possibly discouraged. Companies appear to hide contact links on web-sites, and make contact phone numbers difficult to find. In some cases, standard answers to Frequently Asked Questions (FAQs) may resolve customer requirements, but in other cases, only direct communication with the company will prove satisfactory. While Twitter and other media have their place on modern business and customer communications, they are still no substitute for direct personal customer contact.

Information from customers is vital for every business. Customers are not always intent on complaints. Many loyal customers want to help their suppliers with ideas, suggestions and other positive information, because it is in their interest to assist them to continue to supply the goods and services they require. Yet somehow, some businesses seem to treat their customers as “the enemy”, so that some refuse to give individual contact names on the grounds of “security”. But customers want to know the identity of an individual who can answer questions and resolve problems, even if that individual answers through a pseudonym for “security” reasons.

How should the Commercial manager assess the company’s communications with customers and what actions might be needed to improve them?

* Are all telephone numbers for customer service easily accessible? How do you know?

When away from the office, try telephoning, e-mailing and texting the company while acting as if a customer. Ask for help and see how well the system does or does not work. – How easy is it to identify someone in authority and to contact them, how long does it take?

* How easy is it for customers to find contact points on a Web-site, in order to send in an e-mail enquiry/? – If directions are not clear and simple, the customer may give up trying, and important information lost.

* Are full contact details of key personnel available, including telephone, e-mail and postal address? If not, why not? Unnecessary secrecy is a barrier to commercial trust. (If security is a problem, provide pseudonyms).

* Are all telephone calls answered by personnel capable of giving adequate answers or referral to other authority?

* Do all e-mails and letters have a timely response? –

All e-mails should at least have an automatic response, giving details of when a full reply can be expected. – Why? Because there is nothing worse for customer relations than for e-mails and letters not to be at least acknowledged in a timely manner. Such inaction simply creates frustration and irritation with those who seek to correspond with the organisation.

* Are the number and type of received customer responses monitored and analysed? How they are dealt with? Is the level of comment indicative of a problem or a customer requirement?

Using pre-recorded answering systems may appear to be cost effective. However, consider what effect it has on callers and prospective customers, when faced with a menu and press button selection, followed by more menus and press button selection? It creates annoyance and the impression that the company is not interested. Similarly, being put onto automatic telephone hold, while being told that “their call is really important to us” clearly demonstrates to the caller the exact opposite attitude

While businesses exist to produce money which they obtain from customers, customers should not be taken for granted. Showing that the views, comments, and interests of the customer are important and valued, encourage the customer to continue to return, even if they have encountered problems. It is easier and cheaper to keep existing customers than to have to replace them.

“He who has the money makes the rules”. It is the customer that has the money which the business wants. Business and customers are in partnership, but if the customer concludes that a business considers their opinions of little importance, they can always take their business and money elsewhere.

© N.C.Watkis, Contract Marketing Service 28 Mar 13
Contract Marketing Service, (Business Development Specialists)

April 1, 2013   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance management, business performance measurement, marketing management, performance management  No Comments

We see what we want to see, but is it reality?

A recent visit to the optician prompted the thought that we often see what we want to see or expect to see, but can be blind to the reality. In business it is equally true that management will see what it wants to see but be blind and in denial of the true situation.
We See What we want to see, but is it reality?

When businesses fail, it sometimes comes as a surprise, yet analysis may show that the writing had been on the wall for some time and that the warning signs of problems were there, but were either not appreciated, were misinterpreted, or simply ignored.

The commercial world is highly volatile especially in consumer markets, and change in fashion, technology and other trends, tends to be rapid and increasingly frequent.
For the commercial manager, responsible for getting and maintaining profitable income, the frequency of change and development is a continual problem. The solutions to yesterday’s problems may still be valid today, but is today’s situation the same as yesterdays? How do you know? If today’s situation is not much different from yesterday’s, then yesterday’s solution may suffice, or need only minimal adaptation, but if today’s situation is very different, then a new solution will need to be found.

Recognising that a new problem requires a new solution, may create the additional problem that the new solution may require a change in organisation or in the way operations are conducted. The idea of change is one that generally creates most resistance, either from the management or the workforce or both. However, as the world and the commercial environment are constantly changing, businesses have to change and adapt if they are to survive. Difficult trading conditions require leadership and motivation, so that radical changes should be avoided unless absolutely necessary, as they are disruptive and demoralising. But if management is to be effective, then performance should be continually monitored and change effected by flexible evolutionary development, adjusting actions to the changing business environment. This approach to change is successfully demonstrated by the number of family owned businesses, mainly in Britain and Europe that have remained in continuous operation for over 300 years. In every case these businesses continue to exist because they have continued to adapt to changing market and trading conditions.

For the commercial manager, responsible for managing the diverse activities that anticipate and satisfy customer requirements, to produce the profitable income, the ability to see and assess things as they are, rather than how they are imagined to be, is paramount. That insight should always be both dispassionate and questioning.
Measuring the performance of all business activities is essential, because as Peter Druker said” If you can’t measure it you can’t manage it”. But performance measurement is only an indicator that shows how effectively resources are being used and the return that is made. Management decisions must be based on the interpretation of facts and measurements, avoiding preconceptions and personal prejudices.

Education for business can do a lot to increase understanding of the commercial environment, as well as the detail and process of business operations. But while academic qualifications are important as indicators of study and learning, they are not qualifications of competency.

What sort of knowledge base should the Commercial manager possess or seek to acquire?

To understand the commercial environment, a commercial manager needs to:

* Use market research to understand the market.
* Study independent reports to qualify own research
* Study the performance of key customers to ascertain their current and future requirements
* Study competitors to understand their business philosophy, products and operations
* Be aware of new technologies and developments in order to assess how they might affect future business development.
* Be clear about what information can be verified and what is based on assumption
* Ensure that all assumptions regarding the business environment, the markets served, and the customer are identified and defined.

Additionally, a commercial manager should have the following competencies
* A good understanding of statistics
* A good understanding of the markets served
* A good understanding of the problems and requirements of customers
* The ability to read and understand a balance sheet and accounts in general
* A good working knowledge of all the elements of the marketing mix
* The ability to select and use performance measurements to enable management decisions to be based on quantitative data, rather than qualitative opinion.

Commercial managers should encourage employees to ask questions and engage in valid criticism, as they are often in closer contact with customers and the market than senior management and may well have better insight into the realities of customer relations and the market.

By so doing commercial managers will have the advantage of being able to assess divergent view points of the problems and better able to assess solutions, based on clear-sightedness of business realities rather than business illusions.

© N.C.Watkis, Contract Marketing Service 28 Feb 13
Contract Marketing Service, (Business Development Specialists)

March 6, 2013  Tags: , , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing management, Uncategorized  No Comments

ARE YOU SITTING COMFORTABLY? Well watch out!

are you sitting comfortably well watch outDuring the last couple of months, three major retail businesses that are household names in Britain have collapsed into receivership. In each case, the companies have struggled with massive overheads, falling sales and cash-flow problems that ended in receivership and closure. All these companies were well established, so what went wrong?

When businesses fail, it is mainly through failures of management. When high street names like Comet, Jessop’s,  HMV and Blockbuster go into receivership and liquidation, the underlying reasons are often that the management failed to recognise, evaluate and compete with the changing economic, trading and competitive conditions. While sometimes these conditions are beyond management’s control, in many cases it is a lack of appreciation of the situations and ability to deal with them, which result in subsequent business failures.

All the companies mentioned that have failed were involved in retail entertainment and equipment, namely music, photography and electronic equipment. In reality, the “writing has been on the wall” for some time for these businesses so it is not really surprising that they have been forced into closure, but could the situation have been avoided and the businesses continued as profitable enterprises? Other companies recognised changing market conditions, evaluated the problem and reacted accordingly. Thus Virgin, which started as a record retailing company, sold their UK megastores and concentrated on their media and aviation business. Are there lessons that can be learned from these failures?

Marketing, as defined by the Chartered Institute of Marketing, is “the management process that identifies anticipates and satisfies customer requirements profitably.” The most important element of this statement is that it is “a management process” which is there to produce profitable income by identifying anticipating and satisfying customer requirements. It is the failure of this management process which is the underlying cause of many business failures.

The objective of the commercial manager is to produce profitable income for the long term future of the business. Managers that concentrate on those activities which do not in themselves make money, such as twitter and customer management systems, may be distracted from those fundamental market developments that are vital for business survival. In every business, complacency is the biggest enemy of commercial management.

SWOT analysis, (Strengths, Weakness, Opportunity, Threats) is a well recognised tool of commercial management. Although SWOT analysis can often be confined to the internal organisation of a business, it is in indentifying the external threats and opportunities for business that constantly arise that it is most valuable. By undertaking SWOT analysis on a regular or continual basis, a commercial manager is better placed to evaluate both the current, as well as the potential future business situation. Ideally, SWOT analysis should come from independent outside sources, to reduce the opportunity of internal company bias. There are  many commercially available reports  by independent  market research companies on the state and trends of most markets around the world, which reduces the need to commission expensive specific research.

Many B2B (business to business) markets change slowly, but retail markets, especially FMCG (fast moving consumer goods), can change rapidly, so how should a business react?
Change for the sake of it is often costly and not beneficial. Radical change should generally be envisaged only in extreme circumstances, as it can be confusing, disruptive, and demoralising. However, evolutionary change to meet changing circumstance is essential for survival and prosperity. Thus commercial management needs to be flexible in both thought and organisation in the development and execution of its business plans.

Business Planning should always contain a detailed contingency plan to meet opportunities and threats identified and evaluated from a SWOT analysis.  Fundamental to all business planning is a thorough appreciation of the economic and market situation, identifying the threats and opportunities that might exist. It is important to identify:
* How is the market changing?
* What are the trends?
* How might these trends and changes affect continuing business?
* Would those effects be positive or negative for the future of the business?
* What are the key factors that support the income plan?
* How vulnerable are they of trends and changes in the market place?
* What happens if the key factors fail to happen?
* Is there a contingency plan to be enacted if the key factors fail?
* Does the contingency plan cover all likely eventualities including an action plan should identified threats become realities?
* How much do you know about your clients? Are they financially stable.Is their market good? How do you know?
* What is the worst case scenario?

Businesses operate today in global markets which are continually changing because of technology, economics, and fashion, if businesses are to continue to survive and produce profits they must be aware of these changes and be prepared to adapt and change even radically if necessary.

Complacency in business, especially in consumer markets is potentially a recipe for disaster.
Good planning does not eliminate risk, neither can it cover every eventuality, but it should cover the most obvious ones as well as some of the improbable ones.

However, commercial managers need to remember that if you are too comfortable, you might be in for a nasty surprise.

© N.C.Watkis, Contract Marketing Service 24 Jan 13
Contract Marketing Service, (Business Development Specialists)

January 25, 2013  Tags: , , , , , , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators  No Comments

Time for a Change?

“Change” is the only constant. Whether considering the states of the universe, weather patterns, or ecological systems, all are in a state of continuous change and development where even the rate of change itself changes, creating very dynamic systems.

Business and commerce generally are similarly dynamic in their evolution and change. New market opportunities arise as others decline, resulting from the continual alteration and development of customer’s needs and desires, driven by fashion, economics and technology. Businesses must therefore modify and develop their organizations, to match their capabilities with customer requirements, in a cost effective manner to maximize their profits.

The objective of every business is to continually produce and maximize profits for the long-term benefit of owners, staff and customers. For the manager of commercial operations, the objective is to maximize profitable income, sustainable for the long term while minimizing costs and the use of assets. But in order to achieve this, business may need to adapt their organization and operations in order to maintain and increase their profitable income.

More often than not, organizational change in businesses is driven by a perceived need to cut costs, often usually resulting from reduced profit. But profits come from income, so reorganising to cut costs may not be the answer when failures in customer satisfaction, a decline in demand or increased competitor activity may be the underlying cause.
While recognising that business organizations need to change and develop, to meet the changing circumstances and conditions of their markets, it is important to understand that the way such changes are made may have far reaching and unforeseen consequences.

Before embarking on change it is therefore important to establish why it should be necessary, what it is intended to achieve, and how it will benefit the organization. Is the requirement for radical process or evolutionary development? Experience shows that evolutionary development is generally more effective than the radical answer, which should rarely be used and almost as a last resort, as it frequently produces confusion, inefficiency and demoralization.

Changes in organization and operations are intended to produce consequences which may be, more efficient, cheaper, cost effective and ultimately more profitable business.
However, the most important consideration is how such changes will affect the customer.
It should be remembered that alterations to a business’s operations and organization may be disadvantageous to the customer, which in a competitive market may result in reduced demand and thus reduced income. At the same time, reformation in a business organization and operation may provide opportunities to increase market penetration and increase income. Any adverse effects on customers and their demand resulting from changes to a business’s organization and operations must be avoided or minimised. Therefore, before commencing structural or operational change, Commercial managers need to ask:

* How will this change affect the customers?
* Will the customers perceive the change as beneficial or detrimental to them?
* What will be the positive consequences of the change?
* What will be the negative consequences of the change?
* Can the results of the changes be quantified?
* If not quantifiable how are the benefits to be measured?
* How much will the changes cost in time and money?
* Who will benefit from the changes?

Only when these questions have been satisfactorily answered should organizational and operational changes be considered. When they are, the objectives should be clearly understood and ideally the results should be quantifiable. “Best practice” suggests that as far as possible, staff should be encouraged to suggest where changes and improvements can be made, as they are often better placed to know how these may be made and more likely to implement them successfully.

Change and development are essential if businesses are to continue to prosper for their long –term future. But change and development must not be made at the expense of the customer, and as far as possible, should aim to increase customer satisfaction in order to maintain and increase profitable income.

While companies need to make profit to justify their existence, they make it by providing products and services that the customers want to buy. When companies make changes that are perceived by the customer to have adverse effect on the product or service they seek, they will go elsewhere and take their money with them.

© N.C.Watkis, Contract Marketing Service 02 Jan 13

Contract Marketing Service, (Business Development Specialists)

January 7, 2013  Tags: , , , , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance indicators, business performance management, business performance measurement, marketing management, marketing metrics, performance management, performance measurement indicators  No Comments

CRM: Do customers really want to forge ‘relationships’ with companies?

There are    many “principles” and “rules”, which are said to be fundamental to the process of business. One of these is sometimes known as “The Golden Rule”. What is the Golden Rule?
Put simply, it states that “he who has the gold, makes the rules”.

Businesses are set up to produce money in the form of profit from their commercial activities. The money produced is for the benefit of the shareholders or owners, who have risked their investment of time and money, and also for the benefit of the workforce in the form of payment for the necessary work that they do. Businesses produce money by selling goods or services to customers who seek resolutions to problems and the satisfaction of their desires. Customers have the money which businesses seek, and are therefore the life-blood of every business, The attitude and relationship between a customer and supplier is therefore fundamental to the prosperity of any business.

During the past ten years there has be a growth in what is generally known as customer relationship management (CRM). CRM systems are used to compile as much information as possible about customers, in order to tailor product and service offers more precisely to their perceived needs and aspirations, resulting in a great increase in personalised selling. Customer information is collected in various ways, especially in the retail consumer sector. Supermarkets use analysis of store cards and credit purchases to establish the profile of every customer, their buying preferences, frequency of purchase, size of orders and other information. Similarly, customers of on-line purchases are analysed for their searching and purchase patterns, so that “tailored” offers may be presented before they are requested. Amazon uses customer analysis to present other products “which may be of interest”.
Personalised selling messages are then delivered in an increasing variety of ways to the individual potential customer  via e-mail, direct mail, telephone, and other social media..
Many customers might be surprised on the scope and detail of the information that is held about them, if they were  to see the type of data held about them by the stores and suppliers that they frequent.

But is this increasing personalisation of presentation becoming counterproductive? As more businesses take up the fashion of personalised selling, the potential customer, becomes subjected to an increasing barrage of unsolicited offers based on the collection of personal information. How is this information collected?  While a lot of market information may be collected via anonymous surveys and traditional market research methods, there is an increasing trend to collect information that is specific to the individual, in a manner that the customer is often unaware. The danger for businesses using personalized selling is that used injudiciously, they may reveal that they know more about their customers than their customers would like them to know. Customers may become resentful if they feel that they are being manipulated by those businesses in a cynical manner in order to increase their sales.

CRM is a one way system about a business managing its relationship with its customers. In principle that can be a good thing, as it appears to put the customer at the centre of the business. Businesses that use CRM claim that they want to develop a relationship with their customers, in order to anticipate and satisfy their requirements. However, despite a business apparently wanting to forge a close relationship with its customers, the question is how far do customers want to develop a relationship with their suppliers? Trying to anticipate a customer’s every need may  appear to indicate the  closeness of the customer  relationship, as perceived by the supplier, but customers may not want that level of “closeness” Reminders to the customer to place what is normally their  regular order may be helpful to the customer, but if the reminders are too frequent and have not been requested, they may quickly become a source of irritation.

Advertising, with the exception of direct response advertising, does not create sales, but does raise awareness of the existence of a product or service to potential customers. That awareness may then encourage further enquiry via a shop or web-site that results in a wish to buy. Making potential customers aware of products and services and thus encouraging them to come and buy.  However, personalised advertising and selling  has the  potential danger of being intrusive and alienating the customer.

Successful customer relations require a fine balance of judgement of being close enough to the customer to understand and anticipate their requirements and being sufficiently distant so that the customer is not drawn to think that simply a source of easy money for the supplier.

Commercial executives responsible for producing profitable income for the long term should remember that customers are not cash cows for the convenience of the supplier, but are the very life blood of business, and therefore need to be respected and nurtured. In a competitive market the Golden rule applies, and if the customer feels taken for granted, they can always go elsewhere.

© N.C.Watkis, Contract Marketing Service 29 Nov 12

Contract Marketing Service, (Business Development Specialists)

December 13, 2012  Tags: , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, Uncategorized  No Comments

Credibility – the essential factor of successful business

Confidence?

The past few years have been particularly difficult for those responsible for developing and maintaining levels of corporate income. In most markets, demand is down, and although there are signs that economies are beginning to grow, albeit very slowly, most businesses are likely to find that progress is slow, except perhaps in some of the Asian and South American markets where growth rates are higher.

It is natural that in such circumstances, businesses will concentrate on making sales to produce the necessary income. However, although sales may produce cash-flow, what is actually required is profitable income. Income which is not profitable is not worth having in the long run. In these economic circumstances it is very easy for the executive who is Head of Corporate Income (HCI), to concentrate on increasing the volume of sales in order to maintain a level of income and perhaps to ignore other relevant and important indicators of performance.

The objective of HCIs is to maximize profitable income while minimizing costs and the use of assets, thus their performance will be judged on the amount of income produced and the efficiency of its production.

Performance measurement across all the activities which directly or indirectly produce income is essential for effective management.  The credibility of HCIs within their respective companies will depend on their ability to provide quantifiable evidence to show how they minimize costs and the use of assets, while maximizing profitable income. Thus it is in their own interest for HCIs to produce regular management reports on all agreed performance indicators.

However, maintaining sales and income is also dependent on the trust of customers and the continuing confidence they have in the product and its supplier. The internationally famous management consultant, Tom Peters said that the secret of business success was to make the customer “delighted” with the product or service. But it may also be said that what customers really want, is to have confidence in the reliability in the supply of a product which meets their requirements, delivered in the way promised, at a satisfactory price.

Sales transactions should be considered to be that of two equals. The customer expects to receive what he has been told to expect in terms of the product, its performance, the administration of its delivery and payment. The seller expects his customer to adhere to the agreed terms and conditions of sale and to pay the agreed price in the required manner.

Customer relationship is important to establish mutual trust and respect, in order that the seller can maintain repeat sales and the customer can maintain a reliable and continued source of supply. The customer can always go elsewhere, but most customers maintain a loyalty to suppliers provided the supplier remains reliable. Finding evaluating and changing to a new supplier is time consuming potentially expensive, and until established, has the risk of “the unknown.”  There is a fundamental truth in business in that “you only get what you pay for”; while you can always “buy it cheaper,” the result may not be the same.

The development of Customer Relationship Management (CRM) has helped businesses concentrate on trying to understand their customer’s current and future requirements
Customers generally look for reliability in their suppliers, and to be able to trust their word. Customers want to trust their suppliers. There is nothing worse for a customer than being let down by a supplier on whom they relied.

Free offers and special offers may attract customers, but it is reliability of quality, product and especially the service that keeps them. Regardless of whether a customer is a corporate customer or a private individual, customers want reliability more than anything else. Reliability in the product to perform as expected and for the supplier to act as they claim.

If you cannot deliver as promised, tell the customer before they find out the hard way.
The product may “do what it says on the tin”, but if the supplier does not deliver on their promises, the customer will lose faith and go elsewhere. “My word is my bond,” should be the statement on which all customers can rely, and on which they will regularly return.

HCIs should ensure that:

* All enquires receive full and prompt responses.
* Terms and conditions are clearly understood by both customer and supplier.
* All promises of delivery and communication are met.
* The sales process cannot be accused of miss-selling.
* All mistakes are identified and rectified promptly
* Customer feed-back is regularly sought
* Rate of order return and cancellations are constantly monitored.
* The number and type of customer compliant are monitored to detect changes and trends.

Successful businesses are based on sales that require the mutual trust of customer and supplier. Customers must have confidence in their suppliers regarding the quality of the product, service, delivery and credit control. Similarly, suppliers must have confidence in their customer’s order requirements, their payment and credit worthiness. Thus HCIs should be continually aware of the level of late payments, bad debts and the identities of customers that feature in these areas.

By demonstrating their effectiveness with performance measurements, HCIs can develop and maintain the confidence of their companies, but they also need to develop and maintain the confidence of their customers, by the reliability of their words and actions.

© N.C.Watkis, Contract Marketing Service 05 Nov 12

November 7, 2012  Tags: , , , , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, Uncategorized  No Comments

Military Principles Of Business – Actions And Enablers

While the process of business should not be compared to warfare, there are some analogies with military action which are similar and relate to the principles that underpin the conduct of successful business.

Successful military action derives from the application of a number of specific principles, amongst which Selection and Maintenance of Aim , Maintenance of Morale, Offensive Action, Surprise and Economy of Effort , are perhaps the most notable. While “the Selection and Maintenance of the Aim” is considered fundamental to successful military action to support a political objective, its achievement is dependent on a combination of the other principles. Although most of these principles are specific to military action, there are some that apply equally to business activity.

In business, the principle of “Selection and Maintenance of the Aim,” is reflected in the task of producing and maximizing profitable income to support the objective of the corporate plan. The head of corporate income is responsible for producing and maximizing profitable income for the long term future of a business, which requires the successful management of many activities. However, it would appear that if those activities are to be managed, integrated and organized successfully, then they have to be governed by some underlying business principles.

 

The only purpose of any business is to make money; there is no other reason for its existence. Even “Not for Profit” enterprises have to make a profit for necessary re-investment, even though they do not distribute that profit to shareholders. But businesses whether large or small are created by people for people, regardless of whether the business is consumer or industrially related.

While the “marketing press” tends to suggest that business success is derived from brands, advertising, and customer relationship management, etc, these elements although important, do not in themselves produce income. Businesses make money initially for the benefit of those who set up and invest in the enterprise. However, making money also benefits the employees, without whom the business could not exist. Money is made by business organizations anticipating and satisfying customer demands profitably, which benefits the shareholder and the employee, but also the customer. Customers need businesses to be profitable in order that through re-investment and development, they continue to be a reliable source of supply. For the same reason, businesses have a responsibility and interest in the profitability of their suppliers. Actions which adversely effect the profitability of suppliers, may undermine their long term viability as a reliable source of supply, to the detriment of the business supply chain.

The most important assets of any business are people, be they shareholders, employees or customers, and they all need to benefit from the enterprise. Entrepreneurs   recognise business opportunities, while shareholders produce finance.  Employees quantify a need, produce a solution, and communicate with a market. But above all, it is the employees that sell the product or service, and satisfy customer requirements to produce the profit. People are the primary asset for every business because they retain knowledge and experience that is essential for the organization’s continuance and development. When businesses lose staff they lose the assets of knowledge, expertise and experience which is difficult to replace.

What then are the underlying business principles that should guide the executive responsible for business income?

* Maintain the aim -    Business has one aim only, which is to make a profit. For the head of business income, the aim is   to maximize profitable income.

*  Plan carefully.      Successful business planning requires quantified objectives, scheduled targets, scheduled actions, and a contingency action plan.

* Secure Resources   Ensure there is sufficient finance, materials and qualified staff, to anticipate and satisfy customer requirements profitably.

* Communicate           Ensure that plans and resources are communicated to staff.

* Economy of effort     Constantly evaluate progress to maximize the return and minimize the use of assets and investment.

Underpinning all these is the principle of “Morale and Motivation”.

* Morale and Motivation. – Regardless of business objectives, resources and planning, it is only people who ultimately can turn a business idea into a profit making enterprise. Maintaining their morale and motivation is therefore essential for the success of any business.

While “Maintaining the aim” to make profit remains fundamental for business success, of all underlying business principles, the maintenance of “moral and motivation” is the one enabling principle without which the others cannot function. For managers of business income, motivating staff to be creative, innovative, adaptable, and hard working in order to anticipate and satisfy customer requirements profitably, is a primary key to business success and maximizing profitable income.

© N.C.Watkis, Contract Marketing Service 24 Sep 12

Contract Marketing Service, (Profit Development Specialists)

 

October 4, 2012  Tags: , , , , , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing management, marketing metrics, marketing performance measurement, performance management, performance measurement indicators  No Comments

Cutting costs may not improve profitability

When faced with a demand by the chief executive officer (CEO) to cut costs, what should the head of corporate income do? Whenever profits are reduced, or the business makes a loss, one of the initial actions is to “cut costs”. While this is understandable, this demand can frequently be taken without thought, other than that reducing expenditure might improve profitability.

Hurried and simplistic actions across a company, in response to reduced income and profits may have other unforeseen consequences, which may not be beneficial. If income is down, a panic response of cutting costs can often ignore the real reasons which may be revealed by asking the questions; has the market changed, what is effecting demand, is there a problem with the product, and is the sales strategy and operation effective?

Executives responsible for the production of corporate income should be assessed on the amount of profitable income they produce and the efficiency with which they produce it. Therefore, the objective of these executives should always be to maximize profitable income while minimizing costs and the use of assets.

Before initiating cuts in expenditure, it is essential to understand where costs and investments are incurred and how they contribute to producing profitable income. Businesses may consider themselves to be lean and efficient, but expenditure tends to increase over time for no apparent growth in contribution to profitable income. For this reason, all expenditure should be continually monitored, and closely managed to ensure that all costs and investments are used efficiently, in order to maximise profitable income.

If you believe that your organisation is as “lean and efficient” as possible, – then how do you know? Can you prove it? Continual performance measurement is essential if management decisions are to be made on factual information, rather than “gut feel” or assumptions.

All activities involved in getting and retaining business should be continually monitored regarding their costs, benefits and contribution, in order that they might be effectively managed, but the question is – are they? Is there a clear understanding of all those activities which although they do not in themselves produce income, such as advertising and promotions, are important contributors to its production, by the anticipation and satisfaction of customer requirements?

Here is why this is important:

* Without a clear understanding of where costs and investments have to be made, it is difficult to develop a functional  strategic plan
* Without a functioning strategic plan, it will be increasingly difficult for managers to make the right decisions
* When managers cannot make sound decisions, production efforts can become disjointed and not-effective
* Production efforts that are disjointed and not-effective will increase costs and reduce profits
* Therefore, it makes sense to have a clear understanding of the costs and investments associated with all the activities involved in anticipating and particularly satisfying customer requirements.

With this information, the head of corporate income is in a position to identify and make cost savings from where there is waste or inefficiency in the system. Having a lean and efficient operation for producing profitable income for the long term, they are in a position to make a detailed account of how costs and investments are used and to what effect. Thus they are able to show precisely how cuts to expenditure and investment will effect the production of income and the potential consequences that will result.

Performance measurement is an essential tool of management, by enabling decision making to be based on quantified rather than qualitative information. Ultimately, the CEO may insist that cuts are made to costs and investment, so that the head of corporate income has no option but to comply. However, in such a position the executive should be able to outline the consequences of such actions, so that senior management are under no illusion of the consequences of their decisions, particularly as to how they affect the ability to produce the required level of sustainable profitable income for the long term future of the business.

The call to cut costs may be justified, but is often a simplistic answer to more complex problems that are manifested by falling profits. Rising costs may result from a weak control of expenditure, or increased inefficiency through poor management which reduces profitability. But when falling profit results from falling sales, a reappraisal of the business strategy and operations is the right approach rather than a panic call to cut costs. Continual performance measurement of all related activates should ensure the head of corporate income is always able to justify expenditure and to show how its reduction is likely to affect income production.

© N.C.Watkis, Contract Marketing Service 24 Aug 12
Contract Marketing Service, (Profit Development Specialists)

September 3, 2012  Tags: , , , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, Uncategorized  No Comments

Assumptions – to assume makes an ass out of you and me

Assumptions – to assume makes an ass out of you and meIt often seems that many business problems have their origins in assumptions that prove to be wrong. Whether it is the banking crisis, inept government actions, or failed business ventures, analysis often shows that the decisions made, while apparently logical and justifiable at the time,  have subsequently proved to be wrong having  been made on false assumptions. Assumptions in management often stem from misplaced trust, lack of understanding ,  and idleness, where an attitude of, “it will be alright” encourages complacency.

For those responsible for producing sustainable profitable income for any  business, assumption is a dangerous luxury. Business plans are always based on some assumptions because it is impossible to be certain about all future circumstances. But it is important to define those assumptions on which plans are based, and where possible test their validity and probability. But as anyone involved in producing sustainable profitable income will tell you, making or maintaining the wrong assumptions will result in poor decision making, which can have expensive consequences. When considering those assumptions required for planning, clarity is necessary and verification desirable, but it is often the general assumptions of management that can be the cause of failure.

What precautions should be taken by the executive responsible for  producing corporate income and the  associated managers, in order to limit the effects of false assumptions? The simple answer is to “check” and check again by asking the right questions, but reality is never that simple.

One of the objections to frequent questioning of subordinates,  is that it can undermine their confidence and morale, particularly if the same question is repeated.  Some people regard being questioned about their work and responsibilities as being in some way insulting and demeaning, implying a lack of trust. But managers need to know and understand how their subordinates are performing, to understand where the problems lie, and to be able to provide help where and when it is required.

So how should this be done in order to achieve a full understanding of the situation, while at the same time not appearing to micro manage subordinates and their responsibilities? One answer is to have robust and regular reporting systems so that performance may be recorded . This is particularly important regarding the costs and investment in getting and retaining business. Making and maintaining full records of customer contact are essential in developing customer relations and to enable the anticipation of their potential future requirements.

The task of the head of corporate income is to produce the maximum sustainable profitable revenue, while minimizing the level of assets, costs and investment. It is important therefore that business reporting systems provide detail at all levels of the business to indicate the contribution of different aspects of the business to justify the level of cost and  investment.
Business income is produced by anticipating and satisfying customer’s requirement. The ability to anticipate and satisfy  is dependent on the knowledge of customers in particular, and the market in general, as well as the knowledge of competitors, their products and methods. To obtain that information, one has to ask questions. It is important to be certain of what facts are thought to be known, and to be able to verify them, and to be clear about what is not known or which is assumed to be known but is not or cannot be verified. Questioning should be seen as a way to clarify understanding and not as a way to entrapment and blame.

Market research and knowledge from customer account executives may provide  much of the external information that will aid anticipating and satisfying customer needs,  but what about those internal actions within the company that may be crucial to retaining good customer relations in the future?

Is there a system for checking that goods and services are despatched correctly and on time? Do you know if the goods or services were received in good order, on time and to specification? Are you sure that the customer was satisfied with what they received and how they received it? Is there a procedure for checking that invoices are correct, including any special terms, and that all errors are reported on regularly? Are you sure that everything about your customer service is as good as it should be? How do you know? If you don’t know where things may go wrong, you will not be best placed to be able to correct them.

In a world hedged about with increasing amounts of legislation governing business and customer relations it is important that all employees are clear on how legislation impinges upon their actions. Training and verification that it has been received, understood and implemented is important. Businesses need to have a record of all decisions and actions that are taken regarding contact with customers.

Whether in Business or anything else, one cannot know all the answers, however hard one tries, so assumptions have to be made to cover gaps in knowledge. But as far as possible those assumptions should be tested, and where necessary contingency plans should be in place if key assumptions prove to be false.

© N.C.Watkis, Contract Marketing Service 22 Jul 12
Contract Marketing Service, (Marketing Performance Consultants)

August 1, 2012  Tags: , , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement  No Comments