Budgets and Plans go hand in hand

Every business organisation needs to a detailed financial plan or budget for the effective control of financial resources in order to operate efficiently. While financial controllers are responsible for the management of financial resources, commercial managers have the responsibility of producing the profitable income on which the organisation depends. Planning how that income is to be produced is fundamental to deciding what financial resources will be necessary for its production, and what returns will be generated as a result.
Although budgets and plans should be prepared from the bottom up rather than imposed from the top down, for the commercial manager, it starts with a financial objective, which is derived from the corporate plan. The corporate plan will set out the income and profit objectives, together with a corporate budget that will outline the uses of financial resources and investment.
The commercial manager has the responsibility of preparing and executing a commercial plan for the achievement of the financial objective. While corporate plans are usually set to cover for a period of three to five years, with perhaps an annual progress review, commercial plans are normally considered to be short term, usually for twelve months.
The purpose of every business is to make money, by anticipating and satisfying customer requirements profitably, for the benefit of its owners and for the employees on whom the operation depends. The commercial manager’s responsibility is to produce the profitable income on which the business survives. A commercial plan, is therefore a necessary tool for the effective management of resources to achieve the objectives, and against which performance may be continually compared.
Preparing a commercial plan, requires input from all those different activities involved in producing profitable income from customers, so that as far as possible the plan should be prepared and written by those who have to execute it. That way, having been given an objective by the commercial manager, they have the responsibility and ownership of the pathway to achievement.
Ideally, a commercial manager would be given a financial objective, and would then prepare a plan and propose a budget for its achievement. This would then be submitted to the senior management for acceptance and funds allocated accordingly. In practice, it is more often the case that the financial controller, on behalf of the senior management hands down a “Departmental budget” to the commercial manager, which is simply an allocation of money for the commercial operation, This allocation may have little to do with the actual commercial situation, but the commercial manager has to make a workable plan within the financial limits.
The financial target of the commercial plan needs to be clearly stated and understood by everyone involved in the plan’s production. While targets for product sales, market share and other market related objectives are important, it should be remembered that income comes from customers, thus the target customer base must be clearly defined, as well as the strategies to be employed to engage the customers.
A commercial plan should ideally contain the following elements:
* A clear statement of the financial objectives.
* A statement of the commercial objectives in terms of product, market, promotion and price,
* A description of the markets over the 12 months of the plan, with an appreciation of the economic and other trends.
* A statement of the commercial policies to be followed over the period, e.g. the markets to be engaged and the methods of engagement.
* A list of principle contracts to be achieved over the period on which the greater part of the income plan depends.
* An appreciation of the critical internal factors that could adversely effect the commercial achievement of the next 12 months
* An Action Plan listing what commercial actions have to be taken , by whom and when.
* Sales/Revenue forecast prepared as a Profit and Loss account by month.
* Commercial Budget comprising an estimated schedule of commercial expenditure for the period, including travel vehicles, living expenditure, advertising, P.R., exhibitions, entertainment etc. N.B Having got to this stage in the planning, if the estimated budget required for the plan exceeds that of the Departmental allocation, the commercial manager will either have to revise the plan within the allocation, or use the plan to request additional resource from senior management.
Commercial managers need to ensure that the assumptions on which the plan is based are clearly understood as are the adverse external risks. If anything can go wrong it will. Therefore there should always be a contingency plan and fund to deal with unexpected circumstances.
© N.C.Watkis, Contract Marketing Service 30 Jun 16

July 3, 2016   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, performance management  Comments Closed

The Key to Future Business?

Innovation is a word very much to the fore, in the business press and media. So what is important about innovation, what does it actually mean and how should a commercial manager develop it?
Innovation can provide creative solutions to today’s commercial requirements in ways which yesterday’s answers cannot. Business growth and development is often considered dependent on future innovation.
The Oxford English Dictionary defines Innovation as: To make changes in something established, especially by introducing new methods, ideas, or products:
The results of innovation may be seen every day with new products and ideas being presented to the potential customer. In business to business markets, innovation often takes place along lines of technological improvements for efficiency and effectiveness. But in consumer markets, innovation is often driven by fashion promulgated through social media. A new IPhone appears every few months, with new features and apps, which appeals to customers who like to be first with the latest technology, and who therefore change their phones regularly in order to have the latest model.
Change and development in commercial markets is probably faster now than at any other time. Developments, especially in IT and communications, such as social media, have been rapid. The skill of successful entrepreneurs lies in their ability to have seen the potential of new ideas and innovations and to have exploited them profitably, in advance of their competitors.
Developing new products with new technology may often take a longer time than there is available in which to recoup the investment and produce profit, before being superseded by later models. This is especially the case in the IT and communication markets, where investment in product development is essential for organisations to maintain their place in the market, or risk becoming seen as obsolescent.
Business exist to make money for the benefit of owners and the workforce, by anticipating and satisfying the demands of customers, who ultimately provide the income on which the business depends. Satisfying customers is not the purpose of business, but is the way by which businesses make money.
Commercial managers are responsible for producing profitable income for their respective businesses with the objective of maximising profitable income for the long term future while minimising costs and the use of assets and investment. Innovation is not solely confined to the development of new products and services, but is about finding new ways to do things better, more productively, more profitably and more efficiently. Thus in a rapidly changing commercial environment, developing innovation is especially important to satisfy customer requirements, and produce efficiency in order to maintain the flow of profitable income.
While product innovation is often seen as the key to satisfying changing customer requirements, it is not in itself a guarantee of financial success and may require considerable investment. Maintaining and improving profitable income may involve the development of new products and services, but more often it requires doing things differently and more efficiently to meet changing circumstances and situations. Developing creative ideas involving doing things differently, through efficiency and productivity may increase profitable income at minimal cost.
How can a commercial manager encourage and develop innovation to maintain efficiency and sustain and increase levels of profitable income? If a commercial manager is by nature more analytical rather than creative, then it pays them to employ and encourage those with more creative abilities. Such creative minds should be encouraged to develop new ideas for the commercial manager to assess for their practicability.
To encourage an atmosphere in the workplace where innovative ideas can develop, commercial managers need to:
* Keep abreast of changes in technology, fashion, and customer requirements.
* Encourage staff to question processes and invite suggestions for improvement.
* Use “brain storming” sessions to review all the commercial processes that relate to satisfying the customer, including media communications, delivery, payment methods, product development and others, in order to assess the need for change and development.
* Realise that small and achievable changes in business processes can have cumulative beneficial effects e.g. By reducing costs by 1%, increasing prices by 1% and increasing sales by 1% the cumulative increase of profit can be as much as 24%
* Develop a working environment that encourages staff to develop new ideas, together with an organization which is adaptable enough to enable change to take place quickly and easily.
Commercial managers need to be aware that innovation requires being alert to changes and development that effect customers, the market environment, and their competition as well as their own business. Being aware of those changes can stimulate creative new ideas to ways of working as well as developing new products and services.

© N.C.Watkis, Contract Marketing Service 31 May16

May 31, 2016   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  Comments Closed

Who makes the sale?

The prime purpose of every business is to make money for the benefit of the owners and the workforce, regardless of whether it is a business for manufacturing, retail or professional services. Businesses make money by producing goods and services which customers want to buy. Commercial managers have the responsibility of managing resources to produce profitable income from sales, by anticipating and satisfying customer requirements.

However good the product, service and brand image may be, the ability to make income from sales is fundamental to the success of every business, Over time, businesses have increased both in the size and complexity of their organisations, such that they have many elements that collectively contribute to producing the sales income on which the company owners and workforce depend.

Traditionally, selling to the customer has been done on a personal basis by trained sales personnel. There are now many businesses that do not use personal selling to provide their income, but rely on other impersonal means, such as through the internet, direct mail, catalogue or social media.

Considering that successful selling is fundamental to the producing of profitable income, it is important for commercial managers of such businesses, to understand which activities are involved in generating customer interest and its conversion to income producing sales, in order that the process is effectively managed.

The process of making a sale may be broken down into four principle actions

a. Engaging the attention of the potential customer.
b. Establishing the customer’s interest.
c. Developing the customer’s desire for the product or service.
d. Guiding the customer to easily complete the purchase.

These actions form the basis of every professional sales person’s approach to making and completing a sale with a customer.

However, the principles of this process still apply when selling through the internet, direct mail, catalogue or social media. In all these cases, the message to the customer is conveyed by the words of a copywriter and the presentation of a designer. Whereas a salesman can adapt their personal selling approach to the circumstances of the interaction with the customer, this is not possible when selling via the internet, direct mail, catalogue or social media. While interactive media may allow the selling message to be “personalised” to some extent, there still has to be a process that engages the prospective customer’s interest and guides them to completing a purchase. That success is entirely dependent on the words of the copywriter to effectively convey the sales message and the brochure or web-designer to direct and hold the interest of the potential customer.

It must be remembered that the effectiveness of web-sites, direct mail, catalogues and social media sites as selling tools is only as good as the designers and copywriters that produce them.

If the objective of web-site pages, direct sales brochures, catalogues or social media sites is to sell products or services, then the process must be simple, clear and easy for the potential customer to use. If the process becomes complicated, it can impede the sales message to the potential customer and potentially lose the sale.

For the commercial manager, with overall responsibility for getting and maintaining profitable income, ensuring that the sales message used in impersonal selling is effective, is of great importance. It follows that designers and copywriters must be fully briefed about the message they are to produce and the objective that is to be achieved, namely sales. Many web-sites and other media frequently confuse telling what the business wants to say about itself and its products, with what the potential customer actually wants to know.

Whatever medium is used the copywriter and designers need to develop the sales process through four stages.

a. The first stage should describe the particular problem which the customer is likely to have.
b. The second stage should show how the features of product or service can solve the problem.
c. By showing how the potential customer would benefit from using the product or service, encourage the customer to want the solution.
d. Finally, by making ordering and completing the purchase a simple process, guide and encourage the customer to complete the purchase action.

All sales processes need to have performance measurements to ensure that they can be effectively managed. So while the sales message will be devised by the copywriter, methods of performance measurement will need to be developed and incorporated by the designers, especially in the design of web-pages and social media sites. While the act of selling may be delegated to specialist sales personnel, or in the case of businesses without a sales organisation, to the copywriter of the message and the designer of the media, the ultimate responsibility for producing the income from sales still lies with the commercial manager.

© N.C.Watkis, Contract Marketing Service 9 Apr16

April 11, 2016   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  Comments Closed

Do You Have Peripheral Vision?

In March this year the Chartered Institute of Marketing (CIM) will hold an inaugural “Brand Summit” conference at the British Museum, London. The conference will concentrate on the value of brand, as well as how to create and manage brand experience for customers.
The subject of brand image is important as indicated by the CIM conference, but then so are many other commercial factors. Concentrating too closely on any one business area may result in other important factors being overlooked, which may bring their own dangers,

Commercial managers are responsible for producing a continuous flow of profitable income, by anticipating and satisfying customer requirements. While others play important parts in managing finance, supplies, and personnel, commercial managers have the responsibility of using asset and resources to create the essential income on which the business, the workforce and the owners depend. To be successful, they need to have a wide range of customer related skills over and above understanding the value of brand in order to generate and maintain levels of profitable income. But while they have control over the use of assets and resources, they have no control over those outside factors which directly and indirectly affect the business. However good the commercial manger, the product and the supporting staff may be, it is the outside forces that can conspire to undermine even established and successful businesses. It is vital to be aware of changes in technology, law and the economic environment and to be able to assess their potential effects on current and future business. Failure to detect and understand these changes can bring profound effects.
An obvious example of this is the newspaper industry, which completely failed to foresee the effect that the internet would have on the way news is consumed, and continued with a traditional increasingly out dated approach. With advertising revenues continuing to fall Trinity Mirror closed seven regional newspapers last year. Meanwhile, Huffington Post, Twitter, Buzzfeed, and a multitude of other young companies have made big inroads into the newspaper’s market.
Commercial managers need to be aware of developments in their markets at an early stage, because change may be rapid. Technology is changing the way people shop, consume and live through the use of SMS marketing (short message service marketing), social media, and on-demand media. Companies that ignores the changes in their market can soon disappear like famous names such as, Woolworths and Comet.
Producing profitable income at a high level day to day, requires managers to have an intense operational focus, but to continue to produce income for the future, they need to have a broad awareness of their commercial environment and what may be called peripheral vision. 
Peripheral vision is to be aware when new threats or opportunities emerge on the edge of their usual business environment. Monitoring what is happening in other industries, distant markets, new research, emerging business models, and remote demographic data may at first seem to have little relevance to the business portfolio, but may reveal the early warning signs of impending change that could threaten a company’s long-term survival.  Developing peripheral vision is about being able to anticipate change, by sensing where to look for clues, understanding how to interpret weak signals, and having the courage to act when those signals are still ambiguous.
Recognising signs of change is not easy especially in areas that may only effect a business indirectly, therefore commercial managers should seek to:
* Be vigilant in looking for potentially significant developments at the periphery of their business, e.g. related industries, suppliers, related technology.
* Search beyond the boundaries of current, prevailing views, regarding developments in law, economy, technology and communications.
* Seek ways to recognize potential changes before the competition does
* Consider multiple hypotheses about the causes of change
* Encourage staff to think independently and voice alternative ideas.
* Remain vigilant and curious about signals from many spheres that might impinge directly or indirectly on business activity.
Concentrating too much on any particular internal aspect of a business can easily distract the commercial manager from the changes and developments in their own business environment. Developments in communications and technological can happen quickly, and businesses that are slow to recognise the signs may not have time to adapt quickly enough
If commercial managers are to stay ahead of the game, and continue to produce profitable income for the future, they must remain vigilant in order to detect the signs of change at an early stage.

© N.C.Watkis, Contract Marketing Service 26 Feb 16

March 3, 2016   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  Comments Closed

If you don’t understand, then you won’t be in control.

Commercial managers are responsible for producing the flow of profitable income for their business. As such, they are responsible for managing all those various activities which collectively anticipate and satisfy customer demand profitably. In larger companies, many of these particular activities will be managed by specialists, while in smaller businesses, the commercial manager may have direct responsibility for some or all of these specific areas.
In principle, the core elements of customer related business, that is, marketing research, product development, advertising, promotion and product fulfilment, remain the same. However, the development of new technology, especially in relation to the application of IT to business operations, has and is changing rapidly. Nowhere are these changes and developments more apparent than in the areas of advertising and promotion, which have been revolutionised by the rapid emergence of social media and customer relationship management. The use of Twitter and Facebook have become major customer communication channels, and an essential part of customer related activity especially in consumer markets. Keeping up with these developments may be difficult but is essential if commercial managers are to be able to control their total responsibilities effectively.
Although commercial managers may be professionally qualified as accountants, engineers, or as marketers, and while many of them may also have MBAs , they also need to have at least a rudimentary working knowledge of all the activities for which they have overall responsibility, especially in these new areas of social media and on-line business. The responsibility for motivating and managing those subordinates who undertake such specialist activities, lies with the commercial manager, thus it is vital that they have at least a working knowledge of these areas in order to oversee them effectively. Where commercial managers are reliant on employees with superior expertise in specific fields, it is important that they do not try to micro manage those areas but allow subordinates to be free to carry out their responsibilities within the constraints of their job description and targets, while monitoring performance through regular reports and frequent dialogue,
However, problems arise when senior managers do not fully understand the activities for which they have overall responsibilities. A lack of necessary understanding can often discourage senior management from asking relevant and informed questions, either through over confidence in their sub-ordinate executives’ abilities, or through fear of revealing their own ignorance to better qualified employees.
To maintain satisfactory understanding of all aspects of their total responsibilities, commercial managers need to ensure that they;
* Educate themselves through reading or by attending courses to extend their knowledge of new technology and its practical applications, as well as any other business subject they think necessary.
* Ensure that responsibilities for specialist commercial activities are delegated to suitably qualified employees
* Question employees to get them to explain in plain language, new methods, processes and ideas in order to establish mutual understanding.
* Determine with specialist subordinates what inputs and outputs can be effectively measured to establish levels of performance.
* Ensure that all reports are written in plain language, without the use of “jargon” to ensure clarity and understanding.
* Maintain informed dialogue with subordinates responsible for specific activities. This will help to establish mutual trust and understanding between both parties.
While the principles of business remain the same, managers and commercial managers in particular need to keep up to date with rapidly changing and developing ideas especially with the application of technology. For this reason continual professional development is increasingly regarded as a general requirement for all executives in companies.
If commercial managers do not have the knowledge or sufficient understanding of all those activities for which they hold ultimate responsibility, they will not be in a position to ask relevant and purposeful questions. In the fast changing areas of social media, supply chain management, and CRM (customer relationship management), knowledge is power but a lack of knowledge shows a weakness, leaving the commercial manager vulnerable to the charge of not being fully in control of their responsibilities. If the commercial manger does not know about or understand an activity for which they hold responsibility, they have no excuse for not asking relevant questions.

© N.C.Watkis, Contract Marketing Service 07 Jan 16

January 10, 2016   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  Comments Closed

Rogue Activities Could Threaten Your Business

The news that Volkswagen (VW) has apparently engineered its diesel engine management software to give false emission readings, has created world-wide astonishment and anger. VW said that it will now recall at least 8 million vehicles which will need modifications, for which the company will have to pay. The financial cost to VW will be enormous, but the damage to the company and its reputation will not stop there. There are likely to be many legal cases brought against the company by governments for fraud and by individuals who find that their vehicle’s resale value to be nearly worthless.
This situation where a company is brought into serious difficulties or even total collapse through the rogue actions of individuals is rare but not unusual. In recent years such cases have usually been confined to the financial sector. In 1995 the actions of Nick Leeson, a futures trader in Singapore, lost $1.4bn in derivatives trading, which brought about the total demise of Barings Bank. Other financial institutions such as Allied Irish Bank, Japan’s Daiwa Bank, SociĂ©tĂ© GĂ©nĂ©rale of France, and UBS, the Swiss banking giant have all been seriously damaged by the unauthorised actions of individual employees. How did these situations arise? What are the lessons from which all businesses can take note and benefit?
It would seem that in most of the cases involved in the finance sector, rogue traders manipulated the system in order to increase their potential for earning high levels of commission by taking unauthorised risks. Thus their motivation was for personal financial gain. In the case of VW, it would seem unlikely that by manipulating the engine management software to give false emission readings, individuals would gain any financial benefit. It may be that the decision to engineer false emission readings was to cover up and avoid the embarrassment that VW engines did not meet the required Government emissions standards, which would have affected sales.
The commercial manager is responsible for producing and maintaining the levels of necessary profitable income for the continued development of the business. Therefore it should be their specific interest to ensure that all the workforce understand that individually and collectively, their actions affect customer perceptions and satisfaction, which ultimately effects the level of income on which they all depend. Instilling enthusiasm, motivation creativity and expertise is not simply a matter of communication, but of effective management and leadership. When effective leadership and management break down, opportunities arise for individuals to game the system to their own advantage and to the disadvantage of the business.
Whenever there are serious management problems the buck stops with the chief executive officer, but when it involves any relations with the customer, the responsibility ultimately rests with the commercial manager. To prevent rogue activities, it is important to recognise how such situations can arise, as there is no real excuse for not knowing. When rogue activities are uncovered, the commercial manger must immediately establish the extent of the problem, the damage caused, and implement the necessary remedial actions.
Problems arise when senior managers do not fully understand the activities for which they have overall responsibilities. Such situations discourage senior management from asking relevant informed questions, either through over confidence in their sub-ordinate executives’ abilities, or through fear of revealing their own ignorance to better qualified specialists.
Large organisations especially, can develop a “silo mentality” amongst their different departments, which can foster individuals gaming the system to their own advantage and the potential development of wayward activities.
The principle cause that allows rogue activities to occur, is bad management through:
* Lack of attention and supervision
* Lack of fore sight of the potential damage, and consequences of rogue activities
* Company organisation where a “silo” mentality prevails such that internal communications and cooperation are poor.
When detrimental rogue activities are uncovered it may already be too late to prevent their negative consequences. If such activities are shown to be illegal or damaging to customer relations, there are immediate actions which the commercial manager needs to take to try to mitigate their effects.
* Identify the business areas involved
* Establish if the activities involved deliberate actions to deceive, or to cover-up embarrassment.
* If possible, identify which individuals were responsible and deal with them according to their employment contract and employment law. If the actions were illegal or seriously damaging, – immediate suspension and dismissal may be necessary.
* Ensure that sufficient publicity is given to the uncovering of the problem and the subsequent actions to rectify it.
Prevention is always better than cure.
What should the commercial manager do to prevent rogue activities?
* Have a full understanding of all the processes for which the commercial manager has overall responsibility
* Ensure close supervision of all activities but avoid micro management.
* Develop an integrated team spirit so that all problems are discussed.
* Ensure that those earning commission cannot game the system to their own advantage
* Try to develop an atmosphere where mistakes and error may be identified and dealt without rancour.
* Ensure there is a regular reporting system that identifies all important activities, the relevant progress and highlights any problems.
The commercial manager is responsible for all those activities involved in producing profitable income by anticipating and satisfying customer requirements. When things go wrong through the actions of individuals, the commercial manage has the final responsibility of knowing how the business is being conducted at all times. For the commercial manager, there is no excuse for not knowing.

© N.C.Watkis, Contract Marketing Service 19 Nov 15

November 30, 2015   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  Comments Closed

Creating Income – and art or a science?

For many years the major supermarkets have enjoyed annual increases in turnover; like for like sales and overall profits. Now those same supermarkets are reporting falling sales and profits, while their managements are trying to understand why this has happened and what to do about it.

It is a mistake to assume that the upward trend in sales and profits will always continue, or to base planning on that assumption. Forecasting the future based on past performance is always a problem. Are the conditions the same, improving or worsening? Where is the evidence?

To be successful the commercial manager needs to remember that while income can go up as well as down, they also need to understand why. What are the underlying factors? Markets and demand are finite, customers’ requirements change, markets get saturated, and both products and services have a finite life.

Peter Drucker the world famous management consultant said “if you can’t measure it you can’t manage it”. While that statement remains true, the statement refers only to the management of resources, it does not refer to the generation of profitable income. However,
performance measurement remains an important tool for effective management of resources.

The objective of the commercial manager is to generate and maximize profitable income while minimizing the use of assets resources and investment. Performance measurement can show what has been achieved in a specific period and in some cases show the efficiency of producing profitable income in real time. As such, performance measurement can give an indication of what commercial actions have been successful in the past and even currently. But future commercial performance is not based on a straight extrapolation of a graphical line. The market place is in a constant dynamic motion that may be slow or rapid. Yesterday’s answers, and even those of today, may or may not be suitable for tomorrow’s market situation. Commercial mangers must bear in mind that customer’s requirements change, established products and services are superseded by new designs and technology changes, markets become saturated, and competitors become stronger or weaker.

While commercial managers must strive for efficiency in the use of assets and investment as indicated in performance measurements, they must also concentrate on how to maintain and increase the level of sustained profitable income. The perpetual problem for the commercial manager, is how to maintain and increase profitable income while managing resources effectively? Income comes from customers who collectively comprise the market in which the business operates. Therefore it is essential that commercial managers should be continually aware of the development of individual customer requirements and the changes to existing and potential market opportunities and threats. Understanding this information is fundamental to the preparation of future business planning, as is creativity and imagination.

How can the commercial manager maintain or increase profitable income?
There are no simple answers to this question that guarantee success, but there are principles which if applied can provide profitable outcomes.

* Businesses need to strive for continual growth in order to replace the natural wastage of customers.
* Understanding customers’ changing needs, requirements and motivations.
* Use direct export and the internet to expanding into bigger geographical areas.
* Diversify into new areas especially if the market is saturated or declining.
* Develop new products to compliment an existing product range or replace obsolete ones.
* Develop customer and market communications through social media and the internet to complement established media advertising and public relations.
* Consider expansion by takeover. (While take overs can bring income, new customers and increased market share, they can also bring short term inherent risks and costs.)
* Apply lateral thinking to threats and opportunities, to find new solutions.
* Encourage creativity and imagination amongst the workforce to develop new ideas and opportunities.

Commercial managers are paid to manage assets which are measured in financial and numerical value to produce income efficiently. How such assets are used effectively is dependent on the knowledgebase and proficiency of the staff employed. The effective management, direction and motivation of professional experienced staff that have entrepreneurial thinking, imagination, and flare especially in communications and business development, is therefore essential

While performance measurements show how resources are being used efficiently, and sales trends give a guide to changes in demand, only good customer relations can indicate future developments and opportunities, which performance measurements cannot do.

Efficient and effective management is essential for building and maintaining a continuous flow of profitable income, but successful business also requires the art of being able to see and foresee potential opportunities and to be able to exploit them quickly.

Finding and exploiting opportunities to create income is largely an art, but making that income profitable requires efficient and effective commercial management,

© N.C.Watkis, Contract Marketing Service 20 Oct 15

October 23, 2015   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  Comments Closed

Successful Business is not just a numbers game.

For many years the major supermarkets have enjoyed annual increases in turnover, like for like sales and overall profits. Now those same supermarkets are reporting falling sales and profits which they attempt to counter with competitive pricing, but is this enough?

The objective of the commercial manager is to generate and maximize profitable income while minimizing the use of assets resources and investment. Peter Drucker, the world famous management consultant said “if you can’t measure it you can’t manage it”. While that statement remains true, it is only relevant to the management of resources, it does not refer to the generation of profitable income.

To be successful, the commercial manager needs to remember that while income can go up as well as down, they also need to understand why. What are the underlying factors? Markets and demand are finite, customers’ requirements change, markets get saturated, and both products and services have a finite life. It is a mistake to assume that the upward trend in sales and profits will always continue, or to base planning on that assumption. Forecasting the future based on past performance is always a problem. Are the conditions the same, improving or worsening? Where is the evidence?

Measuring performance is important in order that the commercial manager may understand
and manage effectively all those activities which collectively produce the necessary income.
Performance measurement can show what has been achieved in a specific period and in some cases show the efficiency of producing profitable income in real time. As such, performance measurements give an indication of what commercial actions have been successful in the past and even currently. But future commercial performance is not based on a straight extrapolation of a graphical line. The market place is in constant dynamic motion that may be slow or rapid. Yesterday’s and even today’s answers may or may not be suitable for tomorrow’s market situation. Commercial mangers must bear in mind that customer’s requirements change, established products and services are superseded by new designs and technology changes, markets become saturated, and competitors become stronger or weaker.

For the commercial manager, the continuing problem is how to maintain and increase
the flow of income while managing resources efficiently to ensure that the income is profitable. Income comes from customers who collectively comprise the market in which the business operates. Therefore it is essential that commercial managers should be continually aware of the development of individual customer requirements and the changes to existing and potential market opportunities and threats. Understanding this information is fundamental to the preparation of future business planning.

How can the commercial manager maintain or increase profitable income?
There are no simple answers to this question that guarantee success, but there are principles which if applied can provide profitable outcomes.

* Businesses need to strive for continual growth in order to replace the natural wastage of customers.
* Understand customers’ changing needs and supplying their requirements.
* Expand into bigger geographical areas through direct export and the internet.
* Diversify into new areas especially if the market is saturated or declining.
* Develop new products to compliment an existing product range or replace obsolete ones.
* Develop customer and market communications through social media and the internet to complement established media advertising and public relations.
* Consider expansion by takeover. (While take overs can bring income, new customers and increased market share, they can also bring short term inherent risks and costs.)

A commercial manager’s success is based on the amount of profitable income that they generate and the efficiency with which it is produced. Maintaining income and developing new business depends on the knowledgebase and proficiency of the staff employed. Thus
the effective management, direction and motivation of professional experienced staff that have entrepreneurial thinking, imagination, and flare, especially in communications, business development, and customer relations is therefore essential

Being able to recognise, foresee and exploit potential income opportunities quickly is an art which requires entrepreneurial thinking, imagination, and flare. Producing income still requires initial capital and the use of other assets so that while creating gross income may be largely an art, making that income profitable requires the good commercial management of all assets and resources.

© N.C.Watkis, Contract Marketing Service 08 Jul 15

July 10, 2015   Posted in: Uncategorized  Comments Closed

The majority’s opinion is not always right

The outcome of the recent British general election was a surprise to every one including the public, the media and the politicians. For months previously, it was accepted by all, that the election would result in a “hung Parliament” with another coalition Government. There was a degree of shock and disbelief when the first exit polls indicated not only a win for the Conservative party, but also one with an overall majority. It was only after the last counted results were declared that the fact was accepted that what the pollsters, politicians and media had assumed as a forgone conclusion, was totally wrong.

A post-election analysis of the poll results by the pollsters themselves, showed that all the polls were in agreement of a hung parliament result, with the exception of one. That one poll was uncannily accurate to the actual result. However, because it was only one poll amongst so many that agreed, it was disregarded. Why? The answer lies in a phenomena, generally known as “Groupthink”. So how did this situation come about and why is it important for every business organisation, especially their commercial managers, to understand its implications.

The Oxford English Dictionary defines “Groupthink” as “The practice of thinking or making decisions as group, resulting typically in unchallenged poor-quality decision-making”. Another and more descriptive definition of “Groupthink” is the tendency of members of a group to yield to the desire for consensus or unanimity at the cost of considering alternative courses of action. “Groupthink” is said to be the reason why intelligent and knowledgeable people make disastrous decisions.

For the commercial manager responsible for producing profitable income for a business, important decision making is based on overall assessments resulting from assumptions, research, and interpretation of fact. If any of these decision making factors is unreliable, then the overall assessment is questionable.

As with any senior management, commercial mangers rely on their staff and engaged outside agencies to provide information on which their assessments and decisions are to be made. However, when confronted by “evidence” from reliable sources that point to a strong consensus of opinion, that opinion is often accepted with little or no question. One of the characteristics of “Groupthink” is the inability to consider that the Group assessment might be wrong or that alternative “rogue” opinion might be right and ought to be dispassionately investigated and considered. In some cases, even daring to question the consensus opinion of experts is to invite criticism or ostracism. Questioning the “expert opinion,” especially if it is that of the managing director or chairman can lead to the career damaging accusation of being a trouble maker and not a team player. Any individual or different opinion from that of the general consensus tends to be ignored.

There are many reasons why people subscribe to the “Groupthink” opinions; sometimes it is laziness, in that it is easier to agree with others rather than make an independent assessment, sometimes it is deference to another, or simply a desire to conform and not be seen as the only dissenting voice. The pernicious attitude of political correctness may also prevent people from voicing dissent and alternative opinions.

How does “Groupthink” manifest itself in the commercial environment? One of the most obvious places is through market research reports. Another prime area is through Business plans where basic assumptions go unchallenged. Experts are not infallible and should be required to give evidence for their opinions

For the commercial manager, responsible for producing the necessary profitable income for the continuance of their business, it is essential that commercial decisions are made from reliable assessments based as far as possible on verifiable facts. To this end, commercial managers should always question consensus opinions and maintain a healthy scepticism of them, because it is possible that the consensus or majority opinion is wrong and the odd-man out might just be right, – but how do you know?

When it comes to evaluating market research, there are a number of things that the commercial manager can do to verify the reliability of any Business plan or marketing research report.
Here are some factors for consideration.

* Who made the report, how reliable are the authors,
* How was the report compiled, – what sources were used, how were they selected, and when.
* Were the right questions asked
* Was the information qualitative , quantitative and verifiable
* What assumptions were used, – why were they made and on what evidence.
* Were the consequences of action or inaction considered
* Are there possibly alternative conflicting conclusions – what are they, have they been tested?

The sole purpose of every business is to make money, for which the commercial manager is a principle decision maker. Being aware of the possibility of “Groupthink” when evaluation reports or making decisions is therefore vital if correct decisions and the best results obtained. Experts are not always right, neither are majority opinions always reliable and the lone dissenting voice is not always wrong, but might be the only one that is right.

(849)© N.C.Watkis, Contract Marketing Service 31 May 15

June 3, 2015   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing management  Comments Closed

If anything can go wrong, – it will

If anything can go wrong, – it will

There is what may be called a “natural law”, known by various names such as “Murphy’s or “Sod’s” law which states a simple observation that if anything can go wrong – it will. For the Commercial Manager, responsible for producing the profitable income on which every business depends, it is especially important.

While many people might consider this “law” to be a pessimistic statement, it is in reality often seen to be true. The reasons why this “law” often appears to be true can lie in a number of areas such as communication failures, wrong assumptions, the unexpected event, misunderstandings and probably many others. However, when things go wrong for the commercial manager, the result can be expensive and may have long-term repercussions.

It is not possible to guard against every eventuality. To attempt so to do might well be futile and may lead to micro-management, which is generally counter- productive. The effective commercial manager is one who includes contingency actions in normal business planning, to be enacted when some part of the plan fails to materialise as envisaged. However, when something that is considered obvious or unquestionably reliable, on occasions is found to be the exact opposite, the observation of “Murphy’s or “Sod’s” law tends to be apparent.

There are many examples of how this may come about; perhaps a verbal instruction that was either not clearly given or not understood. Badly drafted orders that were clear to the writer, but on examination would be far from clear to the reader. For example, at the Battle of Balaclava in 1854, the written order given to the Light Brigade, was badly drafted. While its intentions were clear to the writer, the wording was ambiguous and easily misunderstood, which sent the Light Cavalry Brigade to its destruction.

Quite often many of those things that go wrong result from misunderstandings and wrong assumptions. Generally it is the little things that go wrong that create larger problems. There may be many underlying reasons why there are wrong assumptions or misunderstandings, but often the reason lies in an individual’s lethargy; the attitude that “it will be alright – no need to bother”.

For the Commercial Manager, responsible for producing profitable income for the organisation, satisfying customer requirements profitably is paramount. The success of every customer transaction depends on a series of activities, ensuring that the product or service meets the customer’s requirements and expectations, with many opportunities for things to go wrong if not carefully managed.

Advertising and promotion are ripe areas for “Murphy’s Law” to wreak havoc. What may seem a clever advertising slogan may be open to deliberate misinterpretation or potential ridicule. Some product names do not translate well in other languages, e.g. the Vauxhall Nova car, when no va in Spanish means no go!

What should the Commercial Manager do to minimize the effect of Murphy’s Law?
* Look at every process and break it down to its constituent parts.
* Identify the crucial actions on which all the other actions depend.
* Identify the weak spots – these might appear insignificant, such as sending a confirmatory e-mail, or ensuring that there is more than one key available to access some vital equipment or facility.
* Check that the words of all communications, including advertising and promotional material convey the intended meaning and understanding of the sender to the recipient. It is not what we say, but what is understood that is important.
* Where resources are critical to a successful outcome, ensure that there are spare or backup resources available if needed.
* Encourage staff to review processes to identify from their perspective, those crucial weak points, however apparently insignificant, which could have a significant effect on the outcome of the process.
* Encourage and foster the attitude with the staff that only the best performance in customer related processes is good enough.
* Encourage staff to confirm their understanding of instructions.

The results of Murphy’s Law cannot be entirely eliminated. If anything can go wrong – it will, but it is for the Commercial Manager together with the workforce, to take positive steps, wherever possible, in order to minimise the opportunities for this to happen, especially when dealing with customers.

© N.C.Watkis, Contract Marketing Service 23 Apr 15

April 24, 2015   Posted in: business development, business efficiency, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing management, Uncategorized  Comments Closed