Money is not everything.

Anyone who has seen the news recently will know that the BBC has been seriously embarrassed after having to publicly disclose how much it pays its top executives and employees. The embarrassment was caused by the great discrepancy between men and women on its payroll, despite the enactment of equal pay legislation some 20 years ago. The general publicity focused attention not only on a gender pay-gap, but also on the high level of executive pay in some quarters in comparison to average earners.

Employees are at the centre of every business which cannot function without them. They have the essential knowledge of the customers, the product or service, and the business process. Companies rely on their employees to understand their customer’s requirements and to deliver the product which produces the income. Thus retaining and motivating the employees on which the business relies is of major importance. Retaining and rewarding good employees is cheaper than recruiting and training new ones who will still lack the essential knowledge of the customers and the business.

Commercial managers have the responsibility of producing and maximising profitable income for the long term future of the business, by anticipating and satisfying customer demands, but to achieve this, they rely on their employees. To grow and maintain a successful business, the commercial manager must ensure that the morale and motivation of the workforce is maintained.

Crucial to the morale and motivation of employees is the relationship they have with the company and its management. Enthusiastic and committed employees make successful businesses. It is well known that people who are happy in their work in which they take a pride, are more productive and committed in their contribution than those who are only there for the money.

Ideally, jobs should be evaluated on their contribution and importance to the organisation and paid accordingly. Employees should be paid for the job they do, the responsibilities they carry and the necessary experience they have. Regardless of their gender; men or women doing the same job should get the same pay. Individuals may get differential increments based on their relevant qualifications and experience, while bonuses should be paid at an agreed rate related to performance. However, while pay is important, it is not the sole motivator. Through leadership and good management, commercial managers need to create the conditions where employees feel that they can contribute to their maximum potential

In order to develop and maintain the moral and motivation of all those employees engaged in anticipating and satisfying customer requirements, a commercial manager should:
* Ensure that each employee has a job description that states their responsibilities, and their reporting chain,
* Take time regularly to speak to employees at their work stations, listening to understand their opinions, concerns and suggestions. If they have problems, offer assistance.
* Be approachable and let employees know that they can talk to you in confidence whenever they need to.
* Give employees the authority to make their own decisions, such as providing service for a client up to a certain point without needing to get prior approval
* Regard mistakes as learning opportunities.
* Treat all employees with the importance and the respect that they deserve.
* Give employees more of a say in how they do their job. Ask for their input and get suggestions on how they can improve their performance. Use regular employee reviews to discuss these improvements, and be prepared to take their advice and implement it.
* Offering training that gives employees the skills they need to climb their career ladder. Grooming young employees to move on to better opportunities also develops a company’s reputation as a good place to work.

* By recognising good work, giving praise where it is due, and rewarding success, staff will know that their contributions are valued and that management is confident in their capabilities, helping to inspire greater creativity and initiative.

The best assets that a commercial manager has to produce the necessary profitable income are well, trained, committed, creative and enthusiastic employees. Developing and maintaining the motivation of those employees on which the business relies should always be of particular importance to every commercial manager.
© N.C.Watkis, Contract Marketing Service 04 Aug 17

August 9, 2017   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

Business vulnerabilities from Social Media

Business vulnerabilities from Social Media

Attacks on businesses through social media are becoming more common. In 2010, Nestle’s sourcing of palm oil was attacked by Greenpeace through social media. Since then it is not unusual for businesses to be attacked through social media by persons of malicious intent who seek to damage or blackmail an organisation

In any business, the commercial manager, has the responsibility of producing a sustainable flow of profitable income for the long term future of the organisation. Amongst the many aspects that effect modern business, the risks and threats posed by social media and computer communications have potential to do serious damage. Thus it is increasingly important that the commercial manager, as well as other senior managers have a policy and plan for dealing with any problem caused by social media or a breach of computer security.

Social media can very quickly become extremely damaging, when manipulated by those with malicious intent. Recent IT attacks originating in Ukraine have spread rapidly across Europe and beyond, affecting both Government departments and commercial businesses. Companies find themselves facing attacks not only against their IT systems but also against their operations from social media.

Businesses are increasingly represented on social media because it has proved revolutionary for launching advertising and promotional campaigns and is an ideal way to interact with customers, clients and prospects. However it is just as easy for the attacker to use an organization’s hashtags as a means to target the organization, its employees and customers. Social media provides an ideal platform for attackers to launch highly effective technical or behavioural attacks, for the purpose of phishing, malicious impersonations or malware, because of the trusted nature of social networks. Attackers can distribute malicious links to amplify their message to their target audience, hijacking legitimate internet traffic, and distributing malware on an organization’s hashtags.
The principal targets for attacks are an organization’s publicly facing accounts. If an attacker gains control of an account, they can do serious damage, be it slander, malware or phishing. By planting malicious links where users are interacting, discussing and sharing, attacks can spread organically and touch a wide array of potential victims.
Malicious attackers often target an organization’s customers by posing as customer support or providing fake offers, so that it is difficult for the average user to distinguish between a coupon and a phishing or malware link. These actions undermine trust in the organisation and can result in the loss of previously loyal customers.
Corporate and executive impersonations also operate in social media. Here a well-made account can send phishing links and malware to associates, slandering the company, as well as scamming customers or employees. While businesses may be well aware of the dangers of external attacks via IT or social media, it is often the case that the real threat comes from within, where errors and misjudgements on the part of employees create vulnerabilities that are open to malicious exploitation.

Having outlined the potential threats from social media, there are a number of things that the commercial manager should do.
* Recognise that the security of the computer systems is not the sole responsibility of the IT manager. Security of customer and commercial data is the responsibility of the commercial manager.
* Train and Empower Staff, to identify and resolve problems before they escalate to online channels, with regular refresher training.
* Organizations need to be watching social media for unauthorised usage of their logo, verbiage and brand when assessing all types of social media threats.
* Have a Social Media Policy to clearly outline guidelines for employee conduct and stressing the importance of responsiveness, respect and integrity in all communications. Include a crisis management component that identifies responsibilities and communication channels.
* Protect social accounts like any other high-value asset. Two factor authentication and robust passwords are critical first steps, but organizations need to be actively monitoring their own accounts for indicators of compromise.
* Prevent hacking by creating strong passwords, maintaining different passwords for each social network, and changing them regularly. Limit admin rights to administrators and senior managers.
* When an employee leaves, ensure that all admin rights are withdrawn promptly.
* Use alerts and monitoring tools to keep track of mentions, and conduct periodic reputation audits by searching your company or brand name.
* If there are complaints about staff or policies, don’t wait for things to escalate to resolve the problem. If the problem cannot be resolved satisfactorily, be transparent with customers and compensate generously when performance fails customer expectations.
* Publish a Response to a complaint, to explain what happened, and how it is being rectified. Post it to your website, blog or wherever you’re receiving the brunt of criticism, and direct inquiries there.
Social media and computer hacking exploits any errors made by employees, which can cause serious problems. Commercial managers while exploiting the potential of social media to benefit the business, must ensure that employees are trained to understand and avoid its potential dangers, and to have a policy for dealing with attacks from social media and computer security.
Social media is now firmly a part of the business equation, thus the commercial manager must take it seriously and regard it as a potential resource, but one over which they have limited control or influence.
© N.C.Watkis, Contract Marketing Service 4 Jul 17

July 7, 2017   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 measurement indicators, Uncategorized  Comments Closed

If you don’t like the message, Don’t shoot the messenger

Of communication, Air Chief Marshal Sir Hugh Dowding, victor of the Battle of Britain said “ If a junior officer puts forward a suggestion, the implication is that the senior officer ought to have thought of it and didn’t. The response given is that the proposal has been thoroughly considered by wiser heads and rejected for good reasons. After being squashed a sufficient number of times, the junior officer ceases to put forward unwelcome suggestions.” While this observation was related to military forces and government organisations, it applies equally to commercial businesses.

Good communications are at the heart of every successful business. Commercial managers know how important it is to get the business message out to the market and the customers. But good communications requires a two way traffic, talking to the market but also listening to the returning message. Problems arise when senior management don’t want to listen to opinions that are contrary to their thinking, and may often block or ignore inconvenient information.

That returning message may come directly from the customer or indirectly through market research and other means. Good news from the market is always welcome and develops confidence within a company, but bad news, however unwelcome can bring useful results. Unfortunately, bad news is generally unwelcome, especially if it is contrary to the ideas of senior management, and can often be ignored if considered inconvenient, resulting in negative consequences. The only bad news is not knowing unwelcome information.

In business as in everything else, good leadership requires the balancing of the needs of the task, the team and the individual. Leadership and management are not interchangeable as they are not the same thing. Good leaders are not necessarily good managers, and good managers may not be good leaders. Leadership is about inspiring others to achieve specific goals, while management is about organising people and resources to complete tasks efficiently. True leadership does not supress criticism or discourage constructive dissent, but encourages the discussion of alternative views

Commercial managers are responsible for producing and maximising profitable income for the long term future of their business by anticipating and satisfying their customer requirements. To achieve this, commercial managers must have the ability to see and assess situations as they are rather than how they are imagined to be. Thus it is necessary for them to ensure that they receive all relevant information and news regardless of its origin. Having such insight should always be both dispassionate and questioning.

In every business the workforce have a day to day understanding of how the business operate. While senior management may provide overall direction, business operations are carried out at a lower level.

For the commercial manager, this means that the detailed understanding of customer requirements and how they are satisfied resides in the employees who are generally in closer contact with customers and the market than senior management.
It follows that employees with that knowledge will be the first to know when things go right or wrong, and how processes may be failing or be improved. Commercial managers must foster trust, so that employees can freely comment directly to them on activities, including bad news and uncomfortable truths. Employees should be encouraged to ask questions and engage in valid criticism of actions and processes that affect the customer and the efficiency and effectiveness of business operations. By encouraging employees to speak out, commercial managers will have the advantage of being able to assess divergent points of view and be better able to assess solutions to problems, based on a clear-sighted appreciation of business realities rather than business illusions.

Getting employees to speak freely in order to voice criticisms and positive ideas requires commercial managers to exhibit leadership by developing and fostering a culture of openness in the business environment. To achieve this commercial managers need to develop mutual trust and confidence between their staff and themselves. While some may advocate team building exercises, the development of trust and confidence between the commercial manager and their employees, is better served by the commercial manager taking an active interest in employees as individuals. This means that commercial managers should:
* take an interest in the work of every employee,
* give appreciation to individuals of their activities and contribution
* Provide objectives and direction, while involving staff with every level of operational planning and fulfilment.
* Make sure that employees understand that they are not simply “cogs in the wheel”, but an integral part of achieving the business success that sustains the income and thus their livelyhoods
* Remember that while final decisions rest with the commercial manager, the making of the best decisions and taking the necessary actions is dependent on the information and actions derived from all employees.
* Get staff to identify problems and suggest solutions.
* Explain the objective or problem and invite employees to engage in discussion, and encourage constructive dissent.
* Encourage employee confidence by listening to concerns while providing help and advice when and where needed.
* Admit mistakes and encourage others to do likewise.

In an era where fake new abounds it becomes increasingly important to distinguish false information from true fact. This is especially important for the commercial manager, as wrong assumptions based on inaccurate or false information produces bad decisions which could affect future income.

When evaluating information employees should be encouraged to ask some important questions.
* How reliable is the source? How do you know?
* How credible is the information? Is the information probably or likely to be true? How do you know?
* Is the information confirmed by another source, is that source reliable? How do you know?

When information is received via social media or e-mail the following additional questions must be considered.
* Is the URL real or a closely matched look-alike? Has it been checked?
* Is the story written by a source that you trust for reputation or accuracy? Can the source be verified as the originator?
* Is there unusual formatting? – Many false news sites have misspellings or awkward layouts.
* Apparent confirmation from other social media sites does not imply accuracy or truthfulness as the reliability of all social media sites is questionable.

For the benefit of the business, it is important that communication goes up to management as well as down to the employees Enabling employees to have the confidence to give their views and to give constructive dissent when necessary based on their experience and understanding, is a valuable asset for any commercial manager in order to make better informed decisions and judgements. Even if you don’t like the message, don’t shoot the messenger, because the message might be true.

© N.C.Watkis, Contract Marketing Service 22 May 17

May 28, 2017   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

Adapt to Survive

Business schools generally consider large companies for their case studies in order to try and identify successful best practice. Looking at the companies that inhabit the FTSE 100 list, there is a general assumption that by copying the practices of these firms, smaller firms can replicate their success. In reality, small businesses can learn very little by copying the ways of large firms, because while the principles may be transferable, the practices generally are not, as the circumstances under which large and small firms operate are different.

In any business large or small, the commercial manager has the task of producing and maximising profitable income for the long term future of the organisation.
While their initial priority will the maximising of current profitable income, their major concern will be the source and production of future revenue. In consumer markets in particular, changes in fashion, technology and economics occur more quickly than ever. Product life cycles in many cases become shorter, so that the opportunity to produce profit is reduced while the costs of development, bids and proposals increase.

In a volatile commercial market, smaller companies can have an advantage over their bigger rivals by being or becoming more agile and adaptable. It is easier for small businesses to innovate and adapt quickly to changing markets and circumstances than it is for larger organisations. However to become more agile and adaptable in a volatile business world requires an element of analysis and foresight by the commercial manager.

In the absence of a crystal ball, commercial managers must rely on information obtained from market knowledge and internal data, on which to base their interpretation, judgements and decisions. Over the past decade or so, especially in consumer related markets, there has been an increasing use of information derived from social media and Customer Relationship Management (CRM) programs. In the Business to Business area, while there has been an increase in information derived from CRM, there is still a greater reliance on that originating from direct customer contact. The reason for this difference is that companies such as Amazon which deal directly with consumers, may well have many thousands of customers, while an engineering company in the business to business sector, might have a customer base of hundreds.

In order to secure business income for the future, the commercial manager has to have a detailed understanding of the vagaries of the market and the changing needs of the customer base. Changes in the customer base may be indicative of the level of demand for the type of product in general or the acceptability of the company’s product in particular. A falling customer base may indicate a reducing market, but a reduced customer base may result in an over reliance on specific customers.

What is generally known as the 80/20 rule, reveals that in any customer base, approximately 80 % of the profitable income comes from about 20% of the customer base. The convention is that businesses should then concentrate on the 20% that produce the revenue, rather than the remainder where profitability tends to be lower. However, it may be that the 20% are at maximum capacity for sales, and so more effort and resources concentrated on them would produce disproportionately little result. Alternatively, the other 80% might produce more with more attention, but equally, might be an indication of declining demand and different requirements.
For future planning, commercial managers need to be aware of their current position in the product life cycle especially for technical products, where development can be expensive but the life cycle short. Similarly, understanding the position regarding growing, maturing or declining markets is essential for planning investment requirement and income potential.

While on-line surveys may provide some insight into customer intensions, they may often be biased to those with strong views or complaints, as most customers will not spend the time to fill in on line questionnaires or paper based forms. However, there is still no real substitute for the personal connection to customers as provided by professional salespeople which can provide valuable insight into the customers’ requirements both present and future.

In order to understand the present situation and plan for the future, commercial managers need to:

* Encourage staff to continually seek ways to improve their service and efficiency
* Engage directly with customers to understand their current and future needs
* Be aware of the opportunities and threats in customers markets as well their own
* Consider alternative products and services their strengths a weaknesses and how to exploit them.
* Encourage staff to look for alternative ways to work and organise to maximise efficiency and flexibility.

In the current business situation, demand and markets are in frequent and rapid change.
If firms are to survive they need to be able to detect change and be adaptable to meet such change. Commercial managers are expected to produce income for long term, and thus must constantly be looking for the threats and opportunities that will affect it. To achieve this they need to look for and identify the indicators of change, to consider their implications and act accordingly.

© N.C.Watkis, Contract Marketing Service 12 Apr 17

April 18, 2017   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

Management Requires Performance Measurement.

How effectively business assets are managed may often be the difference between profit and loss. For the commercial manager with the responsibility of producing profitable income for the long term future of the business, being able to manage the customer related assets efficiently and effectively to anticipate and satisfy customer demand is essential .
There is no magic formula for managing the use of customer related assets in a business, but it was the world famous management consultant, the late Peter Drucker who said “ you can’t manage it if you can’t measure it”. Thus using performance measurements across all the customer related activities would seem to be the basis for their effective management.

Measuring performance other than sales levels has never been a strong point with those involved with marketing. Terms such as metrics, benchmarks and measurements are frequently used interchangeably as if they were the same, when they are quite different in meaning. However, the sensible and forensic use of performance measurements, not only enables a commercial manager to see and analyse how efficiently and effectively customer satisfaction is being achieved, and to produce business plans based on sound information.
When it comes to verifying their contribution to the business and justifying the investment, Commercial Managers must look at their contribution to the whole of the business getting and retaining activities and not consider their functions and contribution in isolation. Reporting on business performance must therefore be across the all the activities involved in getting and retaining customers and their profitable revenue. Commercial managers must include all areas of the business that directly relate to anticipating and satisfying customer demand, even if they have no direct management responsibility for them, which may for example include production and credit control.

The only measurements which have true value are those which are quantifiable which are usually of inputs and output; such as costs, investments and revenue. In order to achieve these, Commercial Managers need to list all the activities that provide direct and indirect support to sales and customer satisfaction as well as quantify separately all the costs involved in providing both direct and indirect support

Commercial Managers must provide a detailed analysis of the contribution that all the various business areas collectively make to the gaining and retaining of business. This should include an analysis of all sales made by: product, customer group, customer market, market sector, market segment, geographical area. In addition it should identify the source of sales including web produced, direct sales, agents, etc.

The overall cost of sales must be carefully analysed. This analysis should include all costs relating to product, customer group, customer market, market sector, market segment, geographical area. It should identify the cost of sales by direct sales, agents, and web page.

Commercial Managers should be able to report regularly on the general performance of business getting activities in terms of:

* Orders: number, average value, total value – to establish the productivity of the sales organisation
* Enquiry/quotation conversion rate –- to indicate the level of customer acceptance of the sales price with the sales proposition

* Quotation/order conversion rate – to establish the level of customer satisfaction with the sales proposition

* Analysis of lost orders – why lost – is there a trend?

* Levels of product return – does this indicate a problem in quality control.
* Order/delivery time – how long does it take, is it too long?
* Invoice to payment time – how much time is given for payment?
* Total marketing cost per order – what are the total costs involved in getting and completing an order?
* Operating Profit – what is it and how is it calculated?
* Net Profit/unit sale – are all sales profitable? If not why not?
* Debtors/sales- how much or the expected income is unpaid debt?
* Stock Turn – how many times is the stock turned annually?
* Growth in Customers – what is the annual growth/ shrinkage of the customer base?

Where Commercial Managers do not have senior executive responsibility for generating revenue, they must be the providers of all the quantified “sales and marketing” information on a continuous and regular basis to the senior decision makers. Reporting data for the sake of it is counter productive and wasteful. Always the marketer must ask “What do we need to know? Who needs to know? For what purpose is the information required and in what form will it be needed?” Commercial Managers must ensure that those decision makers have suitable performance indicators in order to prompt the necessary questions that enable informed decisions to be made.

(747) © N.C.Watkis, Contract Marketing Service 15 Feb 17

February 16, 2017   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, m, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators  Comments Closed

The past is but a prologue to the future’

While January may not be the start of an organisations commercial year, it is still an opportunity for the commercial manager, to consider the opportunities and threats which a new year might bring. Although it is important to continually be looking to the future, in order to prepare for situations and opportunities that present themselves, it is equally necessary to consider the performance of the previous twelve months.

Generally, most businesses appear to concentrate on their future business plans, and give little detailed attention to an analysis of their past performance. However, a proper critical analysis of commercial performance is essential if in future, mistakes are to be avoided and good performance identified, maintained and developed. While it is easy to criticize under performance, by asking obvious questions, over achievement against the business plan, may have equally bad repercussions, of which the commercial manager should be aware.

Commercial managers have the responsibility of producing and maximising profitable income for the long term future of the business, by anticipating and satisfying customer demands. Ideally, the commercial manager should have a range of relevant performance measures, in the form of management ratios to cover every aspect of the commercial activities for which they are responsible, so that performance analysis can be based on quantified data.

Looking back over the previous year, there are many things which the commercial manager should consider.
* How did performance compare with the relevant business plan?
* Where did performance vary?
* Were the results above or below the planned objective?
* Can the reasons for performance variance be identified?
* Were the reasons for underperformance internal, such as the commercial plan being over or under ambitious?

It is important to realise that while an underperformance of sales against target, has a negative effect on income, over performance of sales against target, can have serious repercussions on cash-flow and production, which can put a strain on company resources and customer relations.

Looking at how the market and the market environment developed over the past year,
* Were the changes anticipated?
* If not anticipated were there indicators that could or should have been identified at an early stage?
* What trends in the market, technology, or competitor activity were identified in the past year that may be expected to continue and develop into next?

* How did the market perform – was it growing, contracting or steady?
* What was performance like in comparison to the market, – was it better, the same or less?
If business growth was less than that of the market, it would suggest that sales resulted from increased demand rather than effective selling. Any growth in sales should at least be in step with any growth in the market, if market share is to be maintained.

Commercial managers are responsible for producing and maximising profitable income by anticipating and satisfying customer requirements. It is important therefore that they should consider the state of customer relations over the past year.
* How many new customers were gained?
* How many old customers were lost?
* Is the customer base growing or shrinking?
Such information is a good indication of the state of customer relations, and their satisfaction.

Similarly it is important to know:
* The numbers of bad debtors?
* The total value of bad debt

This information gives a good indication of the quality of the customer base and the reliability of its cash flow. It is as important to understand why customers are gained as it is to know why they are lost. Continuing to win new customers is necessary to replace those lost through natural wastage. However, it is also more cost effective to maintain the existing customer base than have an expensive drive to gain new customers at the expense of the existing ones.

Considering the economic outlook for the New Year, commercial managers should seek forecasts from many differing sources, before making their own assessment.
It should be remembered that economics is more of an art than a science and that 2016 saw the predictions of many economic “experts” confounded, by events. Thus all economic forecasts have limited reliability.

Sir Winston Churchill said: ‘the past is but a prologue to the future’. While the past does not define the future, analysis of past performance, provides indicators for the commercial manager to improve potential results.

© N.C.Watkis, Contract Marketing Service 12 Jan 17

January 17, 2017   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

The past is a prologue to the future

The month of January marks the beginning of a new year. Originally the first month of the Roman calendar, Januarius as it was known was the month dedicated to Janus, the Roman god of doorways, gates and beginnings. Janus was depicted as having two faces looking
forwards and backwards simultaneously.

While January may not be the start of an organisations commercial year, it is still an opportunity for the commercial manager, to consider the opportunities and threats which a new year might bring. Although it is important to continually be looking to the future, in order to prepare for situations and opportunities that present themselves, it is equally necessary to consider the performance of the previous twelve months.

Generally, most businesses appear to concentrate on their future business plans, and give little detailed attention to an analysis of their past performance. However, a proper critical analysis of commercial performance is essential if in future, mistakes are to be avoided and good performance identified, maintained and developed. While it is easy to criticize under performance, by asking obvious questions, over achievement against the business plan, may have equally bad repercussions, of which the commercial manager should be aware.

Commercial managers have the responsibility of producing and maximising profitable income for the long term future of the business, by anticipating and satisfying customer demands. Ideally, the commercial manager should have a range of relevant performance measures, in the form of management ratios to cover every aspect of the commercial activities for which they are responsible, so that performance analysis can be based on quantified data.

Looking back over the previous year, there are many things which the commercial manager should consider. First should be how performance compared with the relevant business plan.
Where did performance vary, and were results above or below the planned objective? Can the reasons for performance variance be identified? It is important to realise that while an underperformance of sales against target, has a negative effect on income, over performance of sales against target, can have serious repercussions on cash-flow and production, which can put a strain on company resources and customer relations. Were the reasons for underperformance internal, such as the commercial plan being over or under ambitious?

Looking at how the market and the market environment developed over the past year, were the changes anticipated? If not anticipated were there indicators that could or should have been identified at an early stage? How did the market perform – was it growing, contracting or steady? What was performance like in comparison to the market, – was it better, the same or less? If business growth was less than that of the market, it would suggest that sales resulted from increased demand rather than effective selling. Any growth in sales should at least be in step with any growth in the market, if market share is to be maintained. What trends in the market, technology, or competitor activity were identified in the past year that may be expected to continue and develop into next?

Commercial managers are responsible for producing and maximising profitable income by anticipating and satisfying customer requirements. It is important therefore that they should consider the state of customer relations over the past year. The numbers of customers gained, lost and especially retained, can be a useful indicator of customer satisfaction. Similarly, the numbers of bad debtors, and the total value of their debt, give an indication of the quality of the customer base and the reliability of the cash flow. It is as important to understand why customers are gained as it is to know why they are lost. Continuing to win new customers is necessary to replace those lost through natural wastage. It is also more cost effective to maintain the existing customer base than have an expensive drive to gain new customers at the expense of the existing ones.

Looking forward to the New Year, commercial managers should consider the economic outlook from several sources. However it should be noted that 2016 saw the predictions of many economic “experts” confounded, largely because it is often forgotten that economics is more of an art than a science. Thus all economic forecasts have limited reliability.

Sir Winston Churchill said: ‘the past is but a prologue to the future’. While the past does not define the future, the commercial manager will benefit by identifying the successes, failures and missed opportunities of the previous year, with a view to learning from mistakes, and building on success in order to develop and improve performance in the coming year.

© N.C.Watkis, Contract Marketing Service 10 Jan 17

January 11, 2017   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

The unexpected happens or did you miss the signals

The apparently unexpected result of the Brexit referendum last June, and the U.S. Presidential election in November, seem to have stunned and surprised the world. Both outcomes were not predicted by either the media or the political establishment, and yet all the signs were there that the unforeseen outcomes had a high probability of happening.

In business as in other activities, the unexpected can happen, sometimes with disastrous consequences. Part of being an effective manager is the ability to manage risk. For the Commercial Manager, responsible for producing and maximising the flow of profitable income for a business, the successful management of risk is of major importance. It is therefore useful to see what lessons might be learnt from the Brexit referendum and the U.S Presidential election.

It would seem that any similarities between the Brexit referendum and the U.S. Presidential election were superficial. The subjects of each vote were entirely different. However, there were similarities, the most obvious being outcomes which were not contemplated by the media or the political establishment. In Britain, successive government administrations had discouraged including the public in any debate about the nation’s involvement in Europe, after joining in 1972. This resulted in an alienation of increasing numbers of the electorate, who saw their rights and freedoms being eroded by European laws that were not of their making.

In America, it appears that there were large groups of the electorate who had good reason to feel increasingly forgotten and ignored by political organizations that seemed unconcerned about their living conditions and future. In both Britain and America, it was these two groups that separately produced the surprising result. But why was it a surprise? The result was only a surprise because the political establishments in both countries, and to some extent elements of the media that had become less independent minded and more politically biased, had become blinkered in their outlook and refused to acknowledge unpalatable truths. In both countries, “the powers that be” had come to believe their own rhetoric, such that there could only be two opinions, – theirs and the wrong ones.

In any business, it is all too easy to become blinkered in outlook, and to believe your own view to the exclusion of others. For the commercial manager, it is essential to be open minded to alternative possibilities, in order not be caught out by the unexpected or to make wrong decisions

One of the prime sources of commercial information is provided by market research on which many a business decision is based. But how much reliance should be put on that research? Election opinion polls are a form of market research, but recent results have shown them to be significantly unreliable, predicting the wrong result in both the Brexit referendum and the U.S. Presidential election. In principle, market research correctly carried out is usually accurate in its result, but it does depend on how well it is enacted in selecting a representative sample and the suitability of unbiased questions. Market research ought always to be corroborated from other sources to verify its findings.
In order to reduce the risk of making wrong assessments and subsequent decisions Commercial managers should:

* Develop and maintain strong customer relations in order to fully understand their requirements both current and future.
* Use market research, but always treat with caution and seek to verify its findings from other sources.
* Keep up to date with economic reports.
* Review political reports that may affect the economy or the particular market.
* Review relevant market reports especially regarding current and future trends.
* Maintain intelligence on competitors.
* Regularly undertake a SWOT analysis on own business, major competitors and the market in general.
* Seek to identify and consider all aspects that could or do affect the business.
* Seek peer group review of any assessment as it is easy to be deceived by one’s own opinion.

Commercial managers need to be confident in their decision making based on a careful assessment of the commercial situation, drawn from an analysis of all relevant information.
The most important questions regarding accepted truths and opinions is “How do you know? Where is the evidence?

Wishful thinking or the avoidance of inconvenient facts or opinions, leads to bad decision making for which there is no excuse.

© N.C.Watkis, Contract Marketing Service 29 Nov 16

January 2, 2017   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

Maintaining the balance

For the past 40 years or so, businesses have increasingly been dominated by financial control to create the “bottom line”. This is understandable because the sole purpose of any business is to make money, but for whose benefit? Is it only to provide shareholders with an income or is it to grow the business so that the value of the shareholders’ investment is increased? What about investment in the business? What about the customers who provide the income or the workforce who make it possible? Commercial managers have the responsibility of producing and maximising profitable income for the long term future of the business, by anticipating and satisfying customer demands, but also of maintaining the right balance of the competing requirements of shareholders, employees and customers.

The owners of a business are the shareholders, who provide the initial finance that initiates and enables the business to operate. Shareholders invest for both the long and the short term, with the intention of gaining a profit or income. The value of the shares generally depends on the performance of the company and its ability to make profits in both its short and long term future. But for the short term investor, it is the immediate profits of a company, which may affect the share value or the size of its dividend, and dictate how and when they buy and sell. Other shareholders see shares as a long term investment which they hope will produce a good return when ultimately sold, based on a growth in the value of the business, with “interest” paid in the form of dividends.

Customers are the life blood of every business because they alone provide the source of income. Satisfying the needs of its clients is how businesses make income but how well they do it dictates whether they make a profit or loss. Customers have to know that they have entered a fair exchange in their purchase transaction where they receive the value in goods and services that equates with the money they have paid. When customers are convinced of a fair exchange of goods and services for their money, they become repeat customers. However, if the customers thinks that they have been short changed in the transaction, they are unlikely to become repeat purchasers. In addition, in and age of increasing use of social media, while good service may be lauded by satisfied buyers, what is perceived to be poor service can quickly be widely broadcast, doing serious harm to a business operation.

Growth of income only comes from customers buying more or through an increase in the number of customers. Maintaining and increasing the customer base is a prime requirement of the commercial manager, but there will always be a natural wastage of customers through time, change of requirement or of circumstance. Thus it is incumbent on the commercial manager always to be seeking new customers if only to offset the natural wastage and maintain the number of customers on which the business income is based. Good customer relations are the basis of retaining customers and the foundation for obtaining new ones. However, problems can arise when businesses take their customers for granted by changing their product or service, to the disadvantage of the purchaser, thus undermining the relationship. In a competitive market, the dissatisfied customer can always go elsewhere. Obtaining new customers is always more expensive that retaining existing ones.

While the objective of the commercial manager is to maximise profitable income for the long term future of the business, it is counterproductive to do so at the expense of existing customers. Although there may be short term gains in such action, the long term consequences can be seriously negative. Increasing the level of profit for the bottom line is important, but money is only made by satisfying the customers who provide the income. Satisfying customers is only made possible by the employees who make it happen.

Employees are at the centre of every business. They have the essential knowledge of the customers, the product or service, and the business process. Companies rely on their employees to understand their customer’s requirements and to deliver the product which produces the income. A business cannot function without employees. Retaining and rewarding good employees is cheaper than finding recruiting and training new ones who will still take time to acquire the essential experience of the customers and the business.

To grow and maintain a successful business, the commercial manager must ensure that

* Profitable income is maximised for the long term.
* The requirements of Customers are anticipated and satisfied.
* The morale and motivation of the workforce is maintained to ensure efficiency.

Businesses make money not only for the benefit of the shareholders, but also for re-investment in the business. Developing a profitable business provides income and security for the workforce, and also provides products on which the customers rely. Balancing the requirements of the shareholders with those of the customers and the employee, on whose work the income, profits, share price and dividends depend, is essential if the commercial manager is to maximise profitable income for the long term’

© N.C.Watkis, Contract Marketing Service 28 Oct 16

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November 1, 2016   Posted in: business development, business efficiency, 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

Sales and Marketing should not be in separate silos

About every five or ten years, articles appear in the business press on the subject of how to align sales and marketing. Why this subject should arise with such apparent regularity would suggest that old outdated ideas of business still prevail and that a silo mentality still persists amongst many involved in business development.

Whatever maybe the perceived importance of specialist business activities, the prime purpose of any 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. Whatever a business makes or type of service it provides, money is only produced when the goods or services are actually sold to a customer. It is only from the act of selling that income is derived for the business in question, thus the ability to “sell” is crucial to the success of every business.
Although the term “selling” is clearly defined in The Oxford English Dictionary as “making over or disposing of in exchange for money,” there is no universally accepted definition of Marketing. The Chartered Institute of Marketing (CIM) defines Marketing as “the management process that identifies anticipates and satisfies customer requirements profitably”. Anticipating and satisfying customer demands requires many customer related activities including, advertising and promotion, marketing research, product development, brand management, and distribution but also includes making the sale, which is the executive function that ultimately brings in the money.

While the ability to sell is fundamental to business success, businesses frequently refer to “marketing” goods and services when they actually mean advertising and selling, as though there were something wrong with the action of selling. Articles in the business press would also suggest that many marketers seem confused about their role, appearing to have limited objectives, in the highly specialized disciplines of social media, communications and brand image, but having little or nothing to do with selling.

However to be effective, the generation of sustainable profitable income for the long term future of any business requires the collective management of all the customer related activities under a single manager.

The internationally famous management consultant, the late Peter Drucker once said” if you can’t measure it you can’t manage it”.

If managing assets and resources to produce profitable income is the responsibility of a commercial manager, then using performance measurements not just for sales but across all customer related activities is essential for their effective management. In all probability the majority of businesses would be hard pressed to quantify how much they actually spend or invest in getting and retaining business and might be surprised at the true costs involved.

If marketers aspire to reach senior management as commercial managers with the overall responsibility for producing profitable income, they must learn to speak the language of senior management, namely profit, revenue and costs. Marketers must be able to quantify and demonstrate in relevant performance measurements, the contribution to the business of their various customer related activities, both for the immediate and the long term, and not confine themselves to their own particular specializations. This means that they must be able to understand and manage all the resources necessary for producing income, including the sales function, in an integrated manner. In short, if marketing is a management function, then it requires professional managers to operate it. To that end, marketers will have to prove themselves be good leaders, managers and motivators, able to think strategically for the long term development of the business.

Sales managers are taken seriously by senior management because they can produce clear measurements of their performance in sales figures that relate directly to the levels of profitable income produced. Effective commercial management also relies of relevant performance measurements. Those who consider marketing to be about brand and communications, especially through social media, limit themselves and the importance of their contribution. Such performance data that they produce rarely relates clearly to income produced. Business is about profit and profit is about revenue and costs, not brand and image.
If marketers confine themselves only to the language of brand, image, and CRM they are unlikely to qualify themselves for higher management.

© N.C.Watkis, Contract Marketing Service 16 Sep. 16

September 26, 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