Selling or Buying – which is it?

The action of selling is the only business activity that brings money into a business. Thus the effective management of the selling process is fundamental to ensuring that costs, investment and use of assets are minimized, while the level of profitable income is maximised.

The art of successful selling lies in differentiating at an early stage, between those who are there to buy, those who would buy if they recognised that they had a problem that could be resolved to their advantage, and those who while they show interest and curiosity, are simply not in the market to buy at that time.

When asked, many people complain that they do not like to be “sold to”, and when they feel that sales people are “selling” to them, they prefer to walk away. Aggressive selling may have short term positive results, but will often prevent repeat sales, because its manner may alienate the customer. The process of selling does not come without costs, and like every other activity used in producing income, it needs to be effectively managed.

Business to business transactions usually require sales staff to invest in market research to identify new markets and potential customers. Having understood the general make-up of the selected market, the profile and the requirements of potential customers have to be defined, with a clear understanding of how the product or service on offer would benefit them and meet their needs. Opportunities then have to be sought to meet the potential customer, to confirm their requirements and then to present and demonstrate their solution. While repeat sales may simply be a case of confirmation and order taking, making the initial sale in a business to business environment, may take several meetings over a prolonged period. Where businesses are involved in long-term contracts, (perhaps a major engineering project), the initial sales meetings will often progress into negotiations and then contract meetings, all of which may take months or longer to complete.

For the manager responsible for managing assets and resources for producing sustainable profitable income, often the most costly part of producing income is prospecting for future sales. How much money should be invested in “bid and proposal”, is an important question.

Selling is more successful if the customer comes to the supplier with the intent to buy, than if the supplier goes to the customer with the intent to sell. In most consumer markets, potential customers are largely self selecting in that they choose to enter the selling arena of a shop or a web-site. By so doing, potential customers indicate that they have an initial interest in the product or service on offer, even if they are not disposed to buy at that time. The sales assistant may then guide the customer to the product required, thus securing the sale.

In business to business operations, the costs of identifying and contacting potential customers can be high. Establishing when the potential customer is able, ready and above all willing to buy is all important. Unlike consumer selling, which is usually one to one, business to business selling often requires sales meetings with the buyer, the specifyer and the user. Businesses to business sales do not usually have “shop windows”, although increasingly this is possible in a virtual manner via the internet. Yet while business to business sales may be made directly through the internet for such things as office supplies and some consumables, in the main they provide a portal for interested parties to contact the supplier and engage in dialogue which may result in sales. Similarly, trade exhibitions enable suppliers to exhibit their wares and services to a self selecting audience, that is actively seeking information and potential suppliers. Thus trade stands may be used for completing trade sales or initiating effective meetings for prospective future business.

Advertising, with the exception of direct response advertising, does not create sales. What is does is to 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. In business to business transactions, advertising brings awareness to potential clients that help to “open doors” for the opportunity of business discussion.

Making potential customers aware of products and services and thus encouraging them to come and buy, tends to be more cost effective than trying to sell to prospective customers who may not be in the mood to buy.

The best salesmen don’t sell, but recognise those customers who want to buy.

www.contractmarketingservice.com (Business development performance consultants)

If sales aren’t where they should be, start asking why.

All businesses at sometime or other are subject to variations in their volume of sales and level of income. Depending on the type of business undertaken, most commercial organisations would recognize that there are trading or sales cycles during the course of their trading year. In many consumer businesses, the run up to Christmas is a major trading period of high sales and income. However, January tends to be a slacker trading month, usually enlivened by “sales” which increase volume, but with discounted prices that reduce the level of potential income.

Selling is the foundation of business. But some people have a wrong attitude about the process or profession of “selling”. There are those who consider that, to be a salesman,(male or female), is demeaning, that the process of “selling” makes people buy things they don’t want. But commerce and economic well-being depend on selling. When Governments want to grow the economy, they often forget that in order to generate national income, people have to work harder to be more successful at selling goods or services, in order to produce the income.

Selling is a business skill. To be successful in selling relies on the ability to identify a customer’s need, to understand their underlying problem and to provide a solution that overcomes the problem and satisfies the customer’s requirement. Successful sales executives also require a personal confidence to meet new customers, and not be put off by the rejections that inevitably occur. Selling can be a lonely business, which requires careful management to ensure that sales staff are properly directed, trained and motivated, because the future of the business depends on their success. Sales executives often operate in a more isolated and exposed position than others in a company, and without sensitive and effective management, may tend to “Game the system” for their own benefits rather than that of the business.

The process of selling may be considered as either passive or active. Passive selling involves shops, the internet, or mail order, or anywhere where the customer comes to the point of sale, to meet the sales executive. Passive selling tends to be consumer related, although not exclusively so. Active selling, which generally tends to relate to industrial and business to business trading, involves sales people actively seeking out and making direct contact with the potential customer or buyer. Whether active of passive, usually the sale is confirmed by the actions of a sales executive “closing” the sale with the customer. Successful selling is a skill that not everyone can acquire, even with training. Ultimately, the ability to sell may well determine the success or failure of a business, as it is only the act of selling that brings in the necessary financial income.

Of all the management processes which produce sustainable profitable income, by anticipating and satisfying customer requirements, the effective management of the selling activity is potentially the most important.

Before targeting and directing sales staff, managers need to have a realistic expectancy of sales opportunities and ideally have accurate forecasting, as far as that is possible. Such sales forecasts, cash flow projections, market profiles, targets etc, should all be detailed in a Business Development or “marketing” plan. Managers need to be aware of the selling conditions that they can control, such as target customer selection, the product or service package offered, the pricing policy, all of which used to be collectively known as “the 4Ps of the Marketing Mix”. Selling conditions which they cannot control, but which may have a profound effect on their selling opportunities include, competitor activity, economic situation, new and competing technology, legislation and many others.

Having tasked, trained, equipped and directed the sales force with the resources that it needs, the task of the manager is to measure the results. Vigilance in comparing results against the planned forecast is essential. If sales aren’t where they should be, start asking why, because it is important to identify and understand the reasons when income differs from that which was planned.

Managers should always have an alternative plan to put quickly into place, if sales and income perform in a markedly different way from that which was planned. It should be remembered that in terms of income and profits, it can be equally problematic if sales are above the forecast, as it can be if sales are below forecast. If sales are below their forecast, then income and hence profit, will be below that which is required. If sales are above the forecast, additional costs may be incurred which could reduce overall profits and lower profitability.

The continuous flow of income, which businesses need for their long-term future, is derived from sales. No sale,- no income. No income, – no business. Thus the ability to sell is of primary importance to the success or failure of a business.

Effective selling is fundamental to producing business income, but only effective management can make sustainable profits from that income, for the long-term future of the business.

Contract Marketing Service, (Marketing Performance Consultants)

March 21, 2012 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators No Comments

Is talk of a marketing-sales fusion debating the wrong issue?

In December 2011, the Chartered Institute of Marketing put the cat amongst the pigeons of the marketing press when it published a discussion document “Marketing and Sales Fusion”.

The document proposed that the function of marketing should be merged into the sales function if it was to have a future. Unfortunately, the document ignored the CIM’s own definition of marketing, which it defines as “the management process that anticipates and satisfies customer requirements profitably”, and which therefore includes the process of selling. Does this proposal matter? In reality, no, because this has become an academic argument which has little purpose and achieves no practical result. However, the importance of , “the management process that anticipates and satisfies customer requirements profitably”, whatever it is called by academics, is fundamental to the existence of any business no matter how large or small.

Whatever the size of any business enterprise, someone will be responsible for getting and retaining necessary trade to produce sustainable income for that business, regardless of whether or not their executives are called marketing or sales managers. About 80% of all businesses are considered to be small. In small businesses, all the activities of market research, development, advertising, promotion and selling tend to be closely integrated, simply because they have fewer personnel available. It is generally in larger companies that the various disciplines that comprise the “marketing” process become separated into differently managed activity areas.

Whatever job title they have, the executives responsible for producing profitable income, must show themselves to be efficient and effective in producing sustainable profitable income for the long term future of the business. Ultimately, their contribution to their business will be measured on the amount of profitable income produced, and how much cost and investment was used to produce it

The purpose of any and every business is to make money; businesses exist for no other reason. Understanding the problems and requirements of customers, both present and future is the first requirement of every business. Using that understanding to supply answers that meet customer’s needs and to do it profitably is essential for the existence and future of every business. Contrary to what some may believe, customer satisfaction is not the main objective of business. Customer satisfaction is important, but customers can be satisfied by the provision of free goods and services. However, unless customers can be satisfied profitably the business will fail.

The most important question which should be asked of every activity in the marketing process is “how will it add to profit?” in other words, how will this activity or investment, impact on the production of sustainable profitable income for the long term? Many activities will have a direct impact on income, such as the management and direction of sales. But other important activities may contribute collectively, but not directly to the production of income. Advertising, other than direct response advertising, assists the development of sales by making the market aware of the product, but does not directly induce the customer to buy.
Similarly, product and market research help to identify customer requirements, and are therefore an important investment, but it will be the ability to provide a product or service solution to the identified requirement, and to deliver it to the customer in a profitable manner that will decide the level of future income.

Managers have to understand how to manage the various activities that collectively produce the income of the business. They must learn to manage their resources so as to maximize the volume of profitable income, while minimizing costs and the use of assets and investment.
Debates about the purpose of marketing and its integration with sales or other activities is a redundant academic argument, which has little relevance to the majority of businesses whether large or small. The most important question is how to maximize profitable income by using assets and investment efficiently and effectively.

The Oxford English Dictionary defines “Business” as, trade, buying and selling. It would seem logical therefore that companies should consider organizing all their customer related activities under a “Business Manager,” responsible for “the management process that produces sustainable profitable income by anticipating and satisfying customer requirements”, supported by a Resource manager, responsible for finance, purchasing, personnel and supplies. A debate on how more integrated management structures could maximize profitable income more efficiently, would be more beneficial than more pointless discussions on the merits of separating marketing and sales, which continue to abound.

If you want new business, – go and find it!

We now live in a global market place. Historically, businesses have always had the ability to operate in foreign markets, but communications and costs have meant that comparatively few have ventured into business beyond their own locality or national borders. Modern communications and especially the internet have changed business perceptions. Companies now can and do outsource their administration wherever it may be advantageous so to do, even to the other side of the world. At the same time, businesses can now present their products and services to customers and potential clients via the internet enabling substantial businesses to be developed as mail-order via the internet in a cost effective manner that was previously impossible only twenty years ago.

Using the internet is an effective way of passive selling. It enables potential customers who know what they want, to see and access products and services displayed on web-sites. This is a great advantage for small specialist businesses which have limited markets within their home territory, allowing them to have access to specialist demand on a global scale via the internet.
While it costs relatively little to set up a web-site for goods and services, which can be enabled to be accessed throughout the world, it is not a substitute for old fashioned market and marketing research. Different countries around the world have different problems and needs. While a product may be very successful in its country of origin, because it answers specific problems, those same problems may not exist in other countries, or may not be considered sufficiently important. Similarly, there are potential customers overseas that may be unaware of the products and services available to them that would satisfy their needs. Just because a business displays its products and services on a web-site, does not make its potential markets aware of its existence. Direct advertising and promotion in other countries can make a potential market aware of a product, but unless that market has a need for that product, the investment in marketing communication will have been wasted. Ultimately, there is no substitute for old fashioned marketing research to establish the nature and level of need.
So what should be done? Why do market research, when the internet can make direct contact with potential customers?
The internet is an excellent tool, but the sources of the information are not always reliable, and the information may not be suitable for decision making. Desk research should still be the first port of call, but it is amazing that so many businesses do so little if any market research. “Reconnaissance is never wasted”, and so it is in the commercial world that research always pays dividends and saves on unnecessary costs.
The Internet is a good initial source for information about countries, needs, and existing competition, and may give indications for the direction of further research, but caution must always be exercised regarding the reliability of the accessed web-site and its information. British Chambers of Commerce are a useful source of information about foreign markets, and can provide a wealth of information from their commercial libraries. Trade associations also provide insight into other markets and the UK government provides a wealth of information and advice to would be exporters through the “UK Trade and Investment” organization.
The first questions that need to be asked are:
1. Is there a market for the product in the selected territory? How do you know?
2. How big is the market?
3. What is the size and nature of the completion?
4. Is the product suitable for the market or would it need to be adapted?
5. Are the unique selling points and branding suitable for the target market?
6. Would the market bare the extra cost of freight and transport, packaging and agent’s commission and still allow a competitive price?
7. Are there any potential trade barriers or restrictions?
A lot of in- country market research can be obtained by through the Commercial Attaché’s at the British Embassies or High commissions. Not only can the Commercial Attaché’s provide market and local information, but they are also able to find and introduce potential contacts and agents. So the executive responsible for developing business income has a number of sources for potential help in investigating and launching into new overseas markets.
Chambers of Commerce frequently organise trade missions to overseas markets, providing a cost effective way of visiting new territories as well as finding potential partners, distributors, and agents. Visiting trade shows abroad can facilitate an initial assessment of the business opportunities, as well providing an opportunity to meet potential contact and assess competition
If the market research is favourable, it will be necessary to prepare a marketing plan specifically for that area, taking into account, local values, customs, language and currencies will all impact on business activities.
There are many opportunities to develop profitable income from the global market, but businesses must be prepared to invest in some research and make the effort to find them.

January 13, 2012 Tags: Bpm, business analysis, business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, business performance measures, improve profit, interim executive, marketing audit, marketing budget, marketing business development, marketing development, marketing metrics, marketing performance, marketing performance measurement, marketing ROI, measuring business performance, performance improvement, performance management, performance measurement indicators, profit development, temporary management Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance management, marketing management, marketing performance measurement, Uncategorized No Comments

Customer strategy: Contact with the enemy makes all plans obsolete!

Defining business mission statements, strategies and objectives, is a relatively easy if at times laborious process undertaken by those in charge of getting and maintaining business income. Every year, countless books and training courses are devoted to the subject of business strategy and planning, and the training industry gains a lot of business in supplying programs to meet the needs of businesses and executives who want to understand and improve their planning process.

Unfortunately all the planning in the world does not guarantee the desired results. Carl Von Clausewitz said that in war, contact with the enemy makes all plans obsolete. Business is not war, but there is an element of truth that in the world of commerce, changing factors can soon make business plans obsolescent.

As a manager responsible for getting and maintaining business income, setting income objectives to support the overall business plan is relatively easy. However, achieving those income objectives may be easier said than done.

Assuming that a business has identified a “need” in its market; has developed a product or service that provides a solution that satisfies that “need”, and at a price that potential customers are prepared to pay, then in theory, commercial success should be assured. In reality, business is never that simple. However detailed and comprehensive business development plans may be, their success depends on in the ability and motivation of personnel to deliver the actions and results required.

Managers responsible for bringing in income to the business have to know how they are progressing in relation to their business targets. Those business targets may be financial, or related to other factors such as profitability, orders placed, new customers gained, market share, or numerous others. Measuring performance is an important factor in effective management. But performance measurement shows only what has been achieved in the past. Past performance measurements may, by extrapolation, indicate a trend in future performance, but they do not guarantee it. Achievement is produced by business leadership and effective management. But what does effective leadership and management mean in the world of business?

Leadership is essentially about encouraging others to act willingly in a particular way for a specific purpose and benefit. In business, leadership is about encouraging others to work to achieve the objectives for the benefit of the business. Management is about using resources efficiently and effectively to achieve business objectives. Leaders need not be good managers, and managers may not necessarily be good leaders.

In most businesses, “leadership” largely belongs to Chief executives, as it is their responsibility to define the objectives of the business and to inspire the willing support of the employees. However, executives responsible for getting and maintaining business income generally have to manage their staff and resources effectively, rather than provide them with leadership. The executive’s ability to motivate their staff, to maximize their efficiency and productivity, is therefore of great importance. Ensuring that what is being asked is attainable, and that sufficient resources and training have been provided will help to build necessary moral and confidence, which is especially important for staff who deal directly with customers and potential clients.

Getting the best out of people, starts with an effective coherent plan, with achievable quantified objectives. Ideally, staff should be involved in the planning procedure so that their contribution helps to develop their commitment to the objectives and actions required.

There are many books available on “management style”, all claiming to be the answer to effective management and while every book may have its merits, none can provide the perfect answer because business conditions and culture differ in every situation. However, there are principles which will help the executive responsible for producing business income, maintain the morale of employees, and motivate them to work efficiently and effectively, which include the following:
* Ensure that your own standards of conduct and performance exceed those which you set for your staff.
* Make the work important to them by telling them why it’s important to others.
* Ensure that individual responsibilities are clearly understood.
* Set agreed obtainable objectives and delegate responsibility.
* Assess performance with quantified measurements.
* Ensure that staff are provided with the resources necessary to undertake their work and achieve their objectives.
* Regularly assess individual performance, with positive and negative feedback.
* Promote their successes and minimize their failures. More is achieved by genuine encouragement and praise than by overt criticism.
* Encourage staff to be creative and to devise new ideas and methods of working.
* Having set objectives and allocated resources, leave staff to get on with their job. Be available to assist if requested, but otherwise do not interfere.
It is said that “In life, you get what you expect.” If you expect the best from your staff, and give them the proper resources and direction, they are more likely to perform at the level required of them. Confidence breeds confidence and success breeds success.

November 24, 2011 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance management, business performance measurement, marketing development, marketing management, marketing performance measurement, performance management, Uncategorized No Comments

LIFE CYCLES ARE NOT RESTRICTED TO PRODUCTS

It is generally accepted that product and services have a “life cycle”. From the time a product or service is launched into a market, it will grow with increasing sales, before entering a period of “maturity” as its market becomes “saturated”, after which sales start to decline as demand decreases and competitive products arrive.

Product life cycles can be long or short. Some “fashionable” products may only last for a matter of weeks or months, while others may last for decades. But what is certain is that demand for any product or service is finite and at sometime or other demand for the product will be replaced by different requirement.

For the manager responsible for getting and retaining profitable income for a business, awareness of product life cycles is very important. An appreciation of where a product or service may be, in relation to its life cycle, is essential for future business planning. Can the product or service be modified to extend its life, or is it becoming obsolete owing to changing conditions or competitive technology?

Businesses exist only to make money. Making products or supplying services is only the manner in which a business produces its income. Being alert to changes in customer demand is of primary importance for the manager of income development. Internal business indicators may help to illuminate the position of a product in relation to its market, but declining sales figures can be indicative not only of a possible reduction in demand, but also of other factors including organizational inefficiencies.

While internal indicators show how the product is reacting to the market, external indicators show how the market is reacting to the product. By comparing trends in sales with those of market growth and market share, it is possible to assess whether demand for a product is increasing, maturing or is in decline. Changes in the economic climate at local, national and international level can often have direct effect on the demand for specific products and services. Proposed and actual changes in legislation may affect the nature and substance of products and services, or impinge directly on how they are delivered. Similarly, being aware of how trends in consumer fashion may ultimately affect demand, especially with fast moving consumer goods. An advance in technology may make a product obsolete overnight.

Changes in customer demand may be slow and subtle, or may be quick and direct, but for a business to be and remain successful; it needs to anticipate change before it happens. In whatever business an organization is involved, customer demand will always be evolving as needs and perceptions change. For the manager this means that looking ahead is essential, in order to be suitably prepared either to modify the product or service to meet changing needs and expectations, or to develop new products or services to be the solution to different problems.

Getting and retaining business requires many processes and actions in order to maintain the flow of necessary income. But as the economic, social, and market conditions continually change and develop, so the method by which business is secured may become less suited or inefficient to meet the prevailing commercial climate. The principle of “lifecycles” does not only apply to the product or service that produces the income, but also applies to the processes involved in getting and retaining business.

How effective is the organisation in getting business? How efficient is it in producing income? What is certain, is that in a changing world of commerce, the processes and methods used successfully yesterday, although tried and trusted, may not be as effective under today’s conditions. It is important therefore, that managers should regularly examine and question their methods and processes, to ensure that they are efficient and effective. Are the ways that are used to seek and engage customers still as effective as previously? How do you know? If the results are less than they were despite the same investment of effort, perhaps they need to be modified or adapted to meet changed conditions. Alternatively, perhaps new methods and processes need to be employed in order to develop and maintain business. Only Constant monitoring and analysis of quantified business performance indicators from both internal and external sources will enable business performance and income to be maintained and maximized.

The principle of lifecycles applies to products and services, but equally to the markets that are served and the business processes involved in satisfying customer demand.

October 25, 2011 Tags: business analysis, business development, business efficiency, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing metrics, marketing performance measurement, profit development Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance measurement, marketing development, marketing management, marketing metrics, marketing ROI, performance management, performance measurement indicators, Uncategorized No Comments

Ignorance is no excuse

In the “phone hacking scandal”, News International managers appear to have assumed that the gaoling of Goodman and Mulcaire, had ended any illegal practices amongst their staff. But did those managers make efforts to confirm that illegal practices had not only ceased but did not reappear, or did they simply assume the answer they wanted? Do you know how the law relates and affects your business practices? Do your employees know and understand how the law relates and affects their activities in getting and retaining business? How do you know?

There is so much law involved in all commercial transactions, that it has become a veritable minefield for the unwary manager responsible for getting and maintaining business. Although buyers and sellers should be free to engage in business as they please, the law is there to make a reliable framework in which business may be transacted for their mutual benefit. Many managers would consider that they know how the law affects their business activities, but this is potentially a dangerous assumption. Not only should a manager responsible for producing the income of the business be aware of all the laws that affect that process, but they also need to ensure that employees and contractors are equally aware of the relevant regulations that impinge on their actions.

While managers responsible for getting and retaining business may not be responsible for the manufacture of the product that they sell, they need to be aware of the law relating to their business. Legal regulation may relate to the sourcing and use of material, or in the case of the food industry a whole specialist area of food and hygiene regulations. Any transgression of legal regulation in the production area could result in the interruption of product supply, and damage to the reputation and image of the business. In the food industry, any failure under food and hygiene can have catastrophic results for the producer, especially if they are a small business. Similarly, managers need to be aware of legislation relating to product labelling as well as how the Health and Safety of the product might affect the customer.

Legislation also affects how products are presented to the marketplace, regarding the type and material of packaging used, and its future disposal. But probably the biggest areas for potential legal problems lie in advertising, promotion and customer relations.

In Britain, while standards in advertising are policed by the Advertising Standards Authority, much of the legislation regarding advertising relates to specific product groups such as alcohol tobacco and financial services. But when trading in other countries, it is important to be aware of the legal practices and constraints which may be very different from those in Britain.

With many businesses operating via the internet, using “social marketing” tools, as well as more traditional methods such as direct mail, many businesses will have amassed a considerable amount of customer information. All such data and information is likely to be covered by the Data Protection Act, regarding its storage, security, and access. Infringement of the Act can result in a criminal prosecution and fine.

Two recent acts of Parliament may set considerable and expensive traps for the unwary; the
new Bribery Act of 2010, and the Olympic 2012 Act.

While there have been anti corruption laws in Britain since the 1880’s, the new Bribery Act of 2010 is far reaching. The Act makes companies liable for the actions of their employees as well as agents and intermediaries worldwide, even if none of its employees knew about bribes being paid out on its behalf by an associated person. The company’s only defence is to show that it had ‘adequate’ anti-corruption procedures to prevent bribery. Companies will have to have clear policies regarding gifts and corporate hospitality, both of which will have to be carefully controlled. Meanwhile the Olympic Act which is set up to protect corporate sponsorship, severely limits non sponsoring businesses using the Games to further their business. The Act means that for a business, even using the words, Games, medals, gold, 2012, sponsor and summer which while innocuous in themselves, if combined in any form of advertising could result in a statutory £20000 fine.

Managers responsible for getting and maintaining business income must be aware that they will be held responsible for the manner and process of obtaining business, regardless of the level of their involvement. Managers in such positions would be wise to elicit a survey to cover all their activities involved in getting and maintaining business income, to ensure that all their procedures and products meet legal requirements and to identify any weaknesses where legal problems may arise. If the company has its own lawyers then it should be dealt with internally, otherwise external help should be sought. Having established in detail, the legal framework in which the business operates, the manager must ensure that all staffs involved in getting and retaining business income are aware of how the law affects their work and operation, perhaps with the provision of a relevant checklist or aide-memoire.

When things go wrong, managers must be prepared. Ignorance of the law is no excuse, neither is turning a blind eye to illegal or unacceptable practices. By keeping abreast of relevant law and ensuring that employees and contractors are fully aware of their legal responsibilities, managers will have a strong defence for themselves and their employers should the worst happen. When managers fail to be aware of the legal obligations in getting and maintaining business, the results can be seriously damaging to the business its brands and workforce, and in the most serious cases may, like the News of the World. force the closure of the business,

September 27, 2011 Tags: business analysis, business development, business efficiency, business performance improvement, business performance indicators, business performance measurement, marketing audit, performance measurement indicators Posted in: business development, business efficiency, Business Marketing, business performance indicators, marketing development, marketing management, performance management, performance measurement indicators No Comments

It is easier to lose business than to get it

Businesses are not philanthropic institutions: they exist to make money in the form of profit. To make money businesses have to anticipate and satisfy customer’s demands, so that customers provide the necessary income to the business in return for the goods or services that they require. Identifying enough potential customers who have the requirement for the goods and services on offer, is the primary problem for every business. Having identified the potential customers, the next difficulty is to convert them into customers that pay for their goods and services.

It often costs businesses more than they realize in order to gain a new customer – and considerably more than it does to retain them, so it is surprising how businesses can often take a casual attitude to their customer relations and to retaining customers for their repeat business. Gaining and retaining customers is a privilege not a right. Customers don’t have to give their business and they are not obliged to remain customers, especially if the marketplace is filled with competing offers for products and services.

Providing special offers may help to maintain customer loyalty in the short term. Money off vouchers and other incentives in the world of consumer sales may help to maintain repeat purchases, but it can be a two edged sword, especially if special offers, gifts and discounts are perpetuated. If incentives are perceived by the customer to have become the normal result of their purchase, it becomes difficult for a business to discontinue them without harming their image in the eyes of their customers. In that case the incentive has ceased to be a reward or encouragement, but has become part of the product/ service package, and must be costed and treated accordingly.

Maintaining customers depends largely on how the product or service is delivered. As a minimum standard customers should always receive their goods and services at the price agreed and delivered in the manner and time expected. This is certainly the case in business to business transactions, where delivery to price and specification have particular importance to companies involved in manufacturing, or where their supplies inventories work on “just in time” deliveries.

From time to time, mistakes will be made; – products may fail to meet their specification, deliveries are incorrect or are late, or perhaps there are mistakes in the invoicing.

When a customer complains, the customer is not always right. But customer complaints need initially to be treated in the first place, as if the customer were right. It is easy for some employees not directly involved with the customer to treat such complaints as a nuisance, but complaints are a valuable source of information about how customers perceive the product and service for which they are paying.

It is all too easy for employees not directly in contact with the customer to be unaware of how their actions can alienate both potential and existing customers; for example a delivery not being made on time, a credit level exceeded that prevents delivery, incomplete orders.

When such events occur, provided that customers are informed of the problem at the earliest opportunity and kept informed about progress to its resolution, the harm to customer relations will be minimized. The worst situation is to not inform the customer of any problem, but allow the customer to find out the hard way, which may create problems for the customer, and breaks the trust of reliability between the customer and supplier.

For managers responsible for getting and retaining business, it is important to ensure that all employees understand that however remote their jobs appear to be from a direct relationship with the customers, their actions can have a significant role in the acquisition, retention or loss of a customer’s business. Getting customers and retaining their custom is hard work which can easily be undone and negated by others who don’t appreciate the consequences foreseen or unforeseen of their activity or lack of it.

If a customer complains, and there is shown to be a problem, the first action is to admit it to the customer and apologise. It is the job of the manager responsible for getting and retaining business to investigate the complaint, its possible causes, and to provide a swift remedy for the problem. In doing so, managers should consider the following principals:

* Don’t assume that approved business procedures are followed, always check.

* Can procedures and policy it be verified?

* How do you know?

Managers who are responsible for getting and retaining business, must take ultimate responsibility when customers are lost through failings of company staff. Managers must check that the policies, procedures and results are maintained by their employees, and be ready to help when foreseen and unforeseen problems arise that effect the customers. All businesses make mistakes, but how those mistakes are handled may often decide whether the business retains or loses its customers.

August 15, 2011 Posted in: business development, business efficiency, Business Marketing, business performance indicators, business performance management, business performance measurement, marketing management No Comments

How well do you understand your business?

What do you know about your business? More importantly, what do you know about getting and retaining the business that produces the income for your company? The initial answers will often be “no one knows our business better that we do “– but is that a satisfactory answer? How do you know? Does your knowledge of your customers and your own business organization and methods bear close examination?

For those responsible for maintaining and developing the financial income of any business, the efficiency of getting and maintaining business and a full understanding of the process is all important. So, how should this be attained?

Research is the obvious process for obtaining information to establish a clear understanding of the business environment and current customers. But the validity of the knowledge obtained will be dependent on the nature of the questions asked, of whom they are asked, and who asked the questions.
Managers need to be clear about what they know, with certainty and evidence, and what they think they know, especially where “facts and opinions” are taken for granted. To paraphrase Donald Rumsfeld, in business, there are the things we know, the things we don’t know and the things that we don’t know that we don’t know, – i.e. those aspects of the business and market of which we are unaware.

Effective management derives from making assessments of conditions and evidence, then framing decisions and actions. To do this it is important to have as complete an understanding as possible regarding how the business operates in finding and serving its customers and how much is really understood about its own business operations in getting and retaining customers and profitable business.

Is the management of all those resources involved in getting and maintaining the necessary income for the business efficient and effective? How do you know? Performance, whether by an organization or individual, may only really be measured by their results in comparison to those planned. Many businesses still plan on the basis of making a percentage increase in sales income with little regard to market condition, or the efficiency or effectiveness of their organization in producing income or profit. Business development planning is essential for every business, but it must be based on quantifiable objectives and not qualitative statements and ideals. Management achievement may then be compared with that which was planned.

Effective business development planning should be about balancing the resources and investment available, with the potential revenue opportunity. Embarking on a selling exercise which produces orders in excess of what the business is able to produce has the potential to be seriously damaging to the business. An inability to fulfil customer orders may have long term damaging effect on the company reputation and future business. Similarly, the requirement to fund unplanned expansion to meet unexpected demand could undermine the business financially.

All business planning should show what money is to be spent and where, and to what effect, so that all planned actions should have clear and quantifiable deliverables.
Most importantly, Business development plans require some prime objectives on which the plan is based together with a time table for their achievement. In addition those plans should include detailed contingency actions if the prime objectives have not been achieved by the target date. Successful managers cannot afford to wait for “something to turn up” if specific objectives are not fulfilled on time and must be able to enact a “plan B” immediately and smoothly, to replace unachieved income.

Understanding the requirements of both the existing and potential customer base is very important. A clear understanding of each customer’s business may reveal existing and potential opportunities to resolve their problems and increase sales. An analysis of sales by product or service, according to market segment and application can help to show how the customer base both purchases and uses the product. Regular customer surveys also help to show how product and services are perceived and received, which may bring to light weaknesses in the product and especially in customer service. Having a clear understanding of the customer base in terms of its trade or industry, its geographical distribution, and cost per sale can help in the effective management of order size and customer credit requirements.

Managers cannot know too much about how their business actually works. Effective Business decisions should only be based on quantifiable evidence. Managers must be clear about what they know about their own business, their competition, and especially their customers, but they also need be clear about what things they don’t know, and not make decisions based on unqualified assumptions. It is not just what you know, but what you don’t know which determines how well you understand your business.

July 15, 2011 Posted in: marketing management No Comments

Managers have to manage; they don’t need to be creative.

Every commercial business started as an idea for the purpose of making money. Successful entrepreneurs are good at identifying problems of society and individuals; seeing opportunities to make money by finding solutions which induce customers to buy, in order to relieve their discomfort.

Seeing and recognising an opportunity may be the spark of an idea that creates a business, but in order to start, every business needs some initial capital. Income is not produced without the investment of labour or money, and usually requires both. Getting business costs money, and maintaining that business also costs money – you don’t get something for nothing.

Businesses exist to make money, which is produced as a result of satisfying customer demand. Satisfying customer demand requires knowledge of the customer and their problems, the production of a solution to those problems and the ability to convey that solution to the customer so that they are willing to accept and pay for it. The procedure described may seem simple enough, but on examination it is frequently more complex, because it requires the use of many resources and activities, even for a small business.

If a business is to make money, it requires the effective management of all those resources and the necessary assets involved in producing and delivering a product or service to a customer. But what are these resources and assets? Generally, those resources are defined in financial terms as the money allocated to budgets for the specific activities involved directly or indirectly with producing income. Tangible assets involved in getting and maintaining income are usually limited to wholly owned and dedicated IT hardware related to the administration of selling, and wholly owned business vehicles dedicated to customer liaison and delivery.

Businesses are traditionally organized into separate areas of responsibility. In manufacturing businesses, organizations tend to be formed on the basis of finance, personnel, production and sales, while retail and service businesses tend to organize around finance, personnel, and sales functions. While this sort of organization is understandable it tends to encourage blinkered and protective thinking amongst those who manage these separate areas, rather than integrated management for the benefit of the whole business.

Business activities can be divided into those which support the delivery of the product or service to the customer, and those which provide the necessary resources for the business.
In recent years it has become fashionable to declare that the customer is at the “centre of the business” without really defining what this means. Customers provide the income on which the business survives. However, every activity which directly or indirectly helps to satisfy the customer’s requirement creates a cost that is necessary for the production of income. Customer related activities include research, product or service development, advertising, sales, promotion, delivery, as well as credit control, amongst others. Those activities that provide the necessary resources to enable the satisfaction of customer requirements include finance, personnel, and purchasing.

Logically, it follows that rather than the traditional organization previously described, business functions ought to be organized according to whether they are parts of the business operations that are involved in producing income, or supportive functions that are involved in the provision of necessary resources. Business organizations could then be organized into two distinct areas; Operations, which are customer related, and Support, involved in resource provision. Being responsible for those activities which ultimately generate income, the function of business operations ought to be seen the driving force of every business, and should be managed accordingly. Thus all the activities of business operations ought to be managed as a single area with one manager having overall responsibility for the getting and maintaining the necessary level of financial income.

While producing suitable products and services to meet customer demand always requires creativity and imagination, managers of business operations need primarily to be effective and efficient managers, rather than being creative themselves. As effective managers they have a responsibility to encourage, direct and manage those with the necessary creative talents who are often less suited to management tasks. Financially literacy is also essential for efficient management, in order to understand the costs of income generation. As executives responsible for generating income, managers of business operations should be judged on the amount of money produced and their financial efficiency in its production. While brand awareness and market share may have their importance, only sustainable profitable income provides businesses with long term viability, and their employees and shareholders with a future.

June 13, 2011 Posted in: marketing management No Comments

« Older Entries

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Ignorance is no excuse

It is easier to lose business than to get it

How well do you understand your business?

Managers have to manage; they don’t need to be creative.

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