If anything can go wrong, – it will
There is what may be called a â€śnatural lawâ€ť, known by various names such as â€śMurphyâ€™s or â€śSodâ€™sâ€ť law which states a simple observation that if anything can go wrong â€“ 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 â€ślawâ€ť to be a pessimistic statement, it is in reality often seen to be true. The reasons why this â€ślawâ€ť 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 â€śMurphyâ€™s or â€śSodâ€™sâ€ť 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 individualâ€™s lethargy; the attitude that â€śit will be alright – no need to botherâ€ť.
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 customerâ€™s requirements and expectations, with many opportunities for things to go wrong if not carefully managed.
Advertising and promotion are ripe areas for â€śMurphyâ€™s Lawâ€ť 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 Murphyâ€™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 â€“ 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 Murphyâ€™s Law cannot be entirely eliminated. If anything can go wrong â€“ 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.
Â© 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
Decisions in business should be made on the basis of firm knowledge and information. In practise it is more often the case that business decisions are made on assumptions rather that verifiable knowledge. Anticipating and satisfying customer requirements not only requires knowledge of the customer, the market and the competition , but also the â€śknow-howâ€ť that comes from experience which is not easy to replicate. But how can the extent of an organisationâ€™s corporate knowledge and â€śknow-howâ€ť be assessed?
It comes as a surprise to many organizations, that the greater part of their corporate knowledge which is necessary for the continued success of their business, is not readily accessible. While many organisations may have an archive of important data on their customers, their market and other subjects, the fact is that much of the important knowledge on which the organisation relies for its successful operation, resides in the experience and personal knowledge of its workforce.. Such information is rarely written down or recorded, and while businesses may have specific procedures for employees to follow, situations and experience often results in their modification on application. Problems arise through the natural turnover of staff, when important and experienced employees leave or retire, so that
vital knowledge is lost. In recent years, many organisations have been run on minimal staffing, and this is especially the case in small businesses. While minimal manning makes sense in terms of efficiency and controlling staffing costs, it has inherent dangers, when individual employees become crucial to the running of the business because of their unique knowledge and experience. When individuals are away on holiday or sick leave, organisations often struggle to manage because a particular individual has specific knowledge and experience which is essential for the efficient running of its operation. Using experienced and qualified interim executives may help to ameliorate the problem when individuals are absent, but they do not have that specific experience and knowledge on which the organisation relies. Business organisations need to recognise that nobody is irreplaceable, but while the replacement may be qualified, they will not have the accumulated experience specific to the particular organisation.
For the commercial manager, responsible for all those business operations that support and satisfy customer requirements, maintaining and retaining the necessary corporate knowledge and experience is of great importance, although one which frequently is given a low priority.
In terms of an organisationâ€™s strengths and weaknesses, the extent of corporate knowledge and experience can be an intangible but very important strength. Conversely, if much of that knowledge and experience resides with only a few individuals, it should be regarded as a distinct weakness, if any of those individuals should leave the organisation.
Unless the commercial manager, takes steps to ensure that such knowledge and understanding of the business, the market, its customers and the commercial environment in which it operates, is up to date, wrong assumptions will be made and poor decision making ensue. While experience will always reside with individuals, corporate knowledge should be maintained and accessible within the organisation. Corporate managers need to establish as far as possible the nature, extent and location of the organisationâ€™s corporate knowledge, as well as what is known and unknown. The effectiveness of business decision making is firmly based in the depth of the commercial functionâ€™s knowledge of its market, competition and its own procedures.
In order to keep the corporate knowledge base accessible and up to date, commercial managers should undertake on a regular basis, a detailed â€śCommercial Auditâ€ť, or â€śMarketing Auditâ€ť as it was more frequently known. The purpose of such an audit is to establish the depth of knowledge that the organisation has and to highlight those areas where its knowledge is limited or nonexistent, so that decisions may be based on confirmed information rather that assumptions or guesswork. A Marketing Audit is a â€śself administeredâ€ť method for identifying and realizing under-utilized marketing resources, comprising the analysis of the market, the business, the organizations own strengths and weaknesses , the economic environment, the marketing environment and the competition. The process should include questions on the marketing strategy and the planning process, the product/service range, company performance (in terms of strengths weaknesses) the market size and structure the buying process and the competitive climate as well as many other areas where knowledge is essential or desirable for informed decision making.
While the commercial manager may not be able to secure the corporate experience held by individual employees, they do have the ability to maintain and develop the necessary corporate knowledge and â€śknow-howâ€ť, through the regular application of a Marketing Audit.
N.B. For all the questions that you are ever likely to need for an effective marketing audit, the best source to refer to â€śThe Marketing Audit Handbookâ€ť Aubrey Wilson, published by Kogan Page 2002
Â© N.C.Watkis, Contract Marketing Service 13 Mar 15
March 16, 2015 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance management, business performance measurement, marketing management, Uncategorized Comments Closed
However good business or marketing plans may be, they can sometimes go awry because of unexpected events. For the commercial manager, responsible for producing profitable income for the business, any failure to achieve the planned business results and income could be a serious situation for the business, which might bring into question the commercial managerâ€™s position. How a commercial manager deals with such a situation when things go wrong will mark them out as either an effective manager or as someone who according to the Peter Principle, has reached the level of their own incompetence,.
The Deepwater Horizon oil spill in the Gulf of Mexico has been both a financial and public relations disaster for British Petroleum. Marine oil spills are an expected although rare event in the oil extraction industry. No doubt BP had contingency plans to deal with such a problem, but results suggest that they were inadequate. The engineering solution to cap the leaking well, proved more difficult and protracted than expected, and the company lost control of the media story, which seriously damaged public relations. Given the nature and extent of the accident, could the situation have been better handled? In hindsight, probably yes. Better risk assessment and contingency planning, including the having necessary resources readily available might have saved time and reduced the environmental damage. Perhaps a more considered approach regarding how the public might view the company and its actions could have guided BPâ€™s press relations, and thus blunted to some extent the negative perceptions and reactions of the media and public.
When things go wrong in business, they can either happen quickly or slowly. Events that develop slowly are those which should more easily be managed. Provided the procedural processes are in place, progressive changes in the business and market environment should be expected, observed and effectively managed. However, it is the rapid and unexpected development, either externally or internally, which usually compromise business and marketing plans and potentially form a serious crisis for the company. Being able to deal with the unexpected change of circumstance as they arise, is therefore an important attribute for every commercial manager,
Changing situations and unexpected event may provide opportunities as well as threats to business operations and both may require quick decision making and action if opportunities are not to be missed or threats become dangerous. It should therefore, be a normal part of the planning process to identify potential threats and opportunities and specifically, to prepare contingency plans and resources to deal with them should they be required. It should never assumed that all will go as planned; customers may provide new opportunities or may fail to complete on expected orders; sales may not reach targets; promotional programmes may yield unexpected demand that creates production problems or alternatively, fail to produce the expected result for the investment made. These are the sorts of events that should be anticipated as potential problems which would require a rapid and planned response to ameliorate the potentially damaging results. But what about other unexpected or unplanned events? A full planning process should incorporate both a SWOT (strengths, weaknesses opportunities and threats) and a PEST (political economic social and technological) analysis but these tend to be restricted to the immediate business and its environment. However, there may be scope for widening the opportunities and threat into a business risk assessment to identify the nature and breadth of vulnerability to potential risk, while considering the potential and nature of unexpected opportunities.
Every business should have a publicity plan to deal effectively with both positive and negative media coverage. By using media specialists, a commercial manger is better placed to deal with any potentially damaging media stories in an effective manner. Alternatively maximising the use of positive media stories, such as new products and developments can develop a positive perception of the company in the business environment.
Umpteen problems can arise quite suddenly and create enormous difficulties. For example, a mistake with a customer, a product failure, or a negative media story could create damaging publicity which can spread quickly and widely, especially through the internet and social media. But not all unforeseen events produce potential dangers; some if acted upon quickly, can provide profitable opportunities; for example, a competitor ceases trading or withdraws support for its customers, the arrival of new technology, or access to new markets.
While specific events may not be foreseen, potential types of events and risks can be identified. Then an assessment of the potential risks may be made and contingency plans in outline and detail prepared accordingly.
The commercial manager should always plan for the best, but be prepared for the worst events.
* One cannot plan for every possible eventuality, but by using risk assessment it is possible to identify the sorts of unexpected events and assess the probability of their fruition.
* Consider the events that have greater risk of occurrence and make contingency action plans including identifying the necessary resources required to deal with the situation quickly.
* Be aware that most â€śunexpected eventsâ€ť come from external sources, such as economic, legal, and therefore are more generally predictable rather than unexpected. Unexpected events might be accidental, e.g. a major supplier is destroyed by fire, or freak weather disrupts transport.
* Ensure that media specialists are kept informed of all developments at all times, so that they can manage the companyâ€™s business news to best effect.
Most commercial events are predictable to a greater or lesser extent, thus the commercial manager should always have prepared contingency plans that can immediately be enacted. Ultimately, when things go wrong, it is the responsibility of the commercial manager to reduce the negative effects and to exploit and maximize any opportunities that unexpectedly arise. Unexpected events may not be the fault of the commercial manager, but their management actions are fundamental to making matters better or worse. Having a prepared action plan for the â€śwhat ifâ€ť situation, is an essential requirement for the commercial manager and for all senior managers.
Â© N.C.Watkis, Contract Marketing Service 31 Jan 15
There is nothing new in the principles of business, the sole purpose of which is to make money in the form of profit. This basic process of business can still be seen in the markets of the Middle East and North Africa where buyers and sellers haggle over the price of goods until agreement, a deal is struck and both buyer and seller are satisfied with the result. Over time and especially over the past hundred years, the process of making business transactions has become very much more complicated, although the underlying principles remain the same.
Customers provide income on the completion of the sale of goods or services that satisfy their requirements. While getting the sale is the ultimate act which provides the income, the sale itself is not synonymous with customer satisfaction. Customer satisfaction is the primary necessity as it encourages repeat sales, and customer retention.
When purchasers initially decide they want something, they then seek to find their requirement from a shop or web-site, or in the case of business to business actions, from a supplier. As potential purchasers, they have made a decision to buy, provided that they find a suitable product or service that fulfils their requirements. Satisfying the customer and completing the sale satisfactorily depends on the suitability of the product package and the manner in which it is presented to them as the solution of their problem.
When making a purchase through a web-site, the purchaser has already made a decision to buy a product that meets their requirements. If the web-site is easy to navigate, and the process of purchase easy to effect, then the sale usually completes without difficultly. If, on the other hand the web-site proves difficult for the customer to navigate, so that the order process is complicated and protracted, the customer may easily be lost and the order taken elsewhere. It is important therefore that web-sites should provide sufficient information to the would-be buyer, to enable them to decide to order the product, and then to make ordering a quick and easy process to their satisfaction.
Similarly, in most cases, when potential customers enter a shop, they do so with the intension of looking for something that they require or desire, so they already have the inclination to purchase. Many shops are now self-service, but in those shops that rely on personal service, it is the sales staffs that help the customer find and select the solution to their requirement and then close the sale. Frequently, it is the way that the sales personal act with customers that influences customer satisfaction to complete the transaction, and the opportunity of repeat sales.
The customerâ€™s desire must be serviced by the development and production of products which are priced at a level that the customer is prepared to pay. Social media, advertising and publicity all assist in creating awareness, interest and possibly desire for a product with a potential buyer, but only the action of closing the sale actually brings in the money, However, until the product or service has been delivered to the customer to their satisfaction the transaction is not complete. Getting the sale and the payment may be a straight forward process, which secures immediate income for the short term, but if customers are not satisfied with the delivery, specification, payment process, product support and general attitude of the supplier, a hard won customer may be lost to future repeat sales. A satisfied customer is a good ambassador for any supplier, but an unsatisfied customer is not only lost, but their communicated experience can damage a supplierâ€™s reputation and image.
The commercial manager responsible for getting and maintaining profitable income, needs to ensure that the relationship between a supplier and its customers is the principle influencer of the customerâ€™s satisfaction, loyalty and repeat business. While obtaining sales income is a prime objective of the sales team, customer satisfaction should be at the centre of all those other activities that support the customer, such as production, service support, distribution, payment and credit control. This requires the effective management of all those activities which directly and indirectly effect customer relations.
A sale is not synonymous with customer satisfaction. Concentration on achieving sales can bring short term benefits of income, but only concentration on customer service and satisfaction can bring long term benefits of customer retention and profitable income for the future,
Â© N.C.Watkis, Contract Marketing Service 11 Dec 14
December 17, 2014 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance management, business performance measurement, marketing management Comments Closed
Producing profitable income, requires the effective management by the commercial manager of all those resources that collectively identify, anticipate and satisfy customer requirements. Part of the commercial managerâ€™s responsibility is the effective communication with the market, as well as existing and potential customers.
Observation of the business and marketing press suggests that organisations spend a lot of time and money on what are generally called â€śmarketing communicationsâ€ť, in order to send their message to potential and existing customers. Such communications may be through the traditional media of advertising and public relations, but now increasingly involve social media, the internet and customer relationship management activities.
While organisations may be very effective in the outward communication of their message, there is often reason to question is how good are they in receiving communications from their customers? Customerâ€™s interests should be at the heart of every business, as it is they who provide the income which makes profit for the owners, income for the employees, and on which the long term future of the business depends. Yet increasingly from anecdotal reports, it would seem that the last thing many organisations wish to have, is uninvited communication from their existing and potential customers. The evidence for this situation lies in many areas.
While it may not be a deliberate organisational policy to limit effective communication from existing and potential customers, it is frequently an organizationâ€™s management processes that can make it difficult. For many existing and potential customers, the problem of effective communication with an organisation, starts in finding their address, and identifying responsible individuals within to whom they can address their concern and questions.
Business web-sites generally give lots of information about respective organisations, what they do, and frequently how to make an order or request standard information. However, when it is necessary to contact the organisation and identify a responsible individual, there may be difficulties. Contact information on web-sites can often be hidden away so that it is difficult to find. Customers may be invited to contact a customer service centre via e-mail or telephone which may in fact be out sourced to a different organisation entirely, rather than be part of the companyâ€™s own office structure. In such a case, the customer will have great difficulty in finding and accessing the responsible individual that they seek.
When customers telephone business organisations, they are frequently answered by call management systems, rather than a person. While call management systems are often installed by organisations on the grounds of efficiency and cost effectiveness, they frequently create irritation with the customer, especially when they are subjected to multiple menus which create confusion and frustration. When callers are able to facilitate a connection to a specific individual, it seems that they are frequently connected to a voice mail system, regardless of whether the individual is present or not. Worse still, is when the customer is confronted with a company policy that refuses to identify responsible individuals on the grounds of its â€śsecurity policyâ€ť.
For the commercial manager, responsible for producing profitable income, anticipating and satisfying customer demand is essential. Thus while managing the organisationâ€™s effective communications regarding its image and its offer to its market is of prime importance, it is even more important to maintain and improve the channels of communication from the customers and potential customers to the organisation. Most organisations if asked, will state that they have good two way communications with their market, but the question is, â€śhow do you know?â€ť For the commercial manager, it would be wise to assume that the channels of communication from the market are probably not as good as may be thought, and probably need improvement.
There are a number of things that a Commercial manager should do;
* Have the organisationâ€™s web site independently evaluated for clarity, coherence, ease of access and contact information.
* Ensure that all company brochures contain full contact details.
* Ensure that all communications from existing and potential customers are answered promptly.
* Use secret callers to establish the ease of access via telephone and to evaluate the response, as well as the response to e-mail and letters.
* Use the information from secret callers, and website evaluation to formulate a clear company policy for receiving outside contact to improve customer perceptions and channels of communication.
The way that a company responds to communication from its existing or potential customers indicates the level of importance that they give them. If customers consider that they are regarded as of little or no importance, from the response or lack of it that they receive, they can quickly go elsewhere and take their money with them.
Â© N.C.Watkis, Contract Marketing Service 02 Nov 14
The fundamental purpose of every business is to make money. Businesses of every kind make money by producing goods or services that customers are prepared to buy, but everything comes at a cost. In order to make money, something has to be invested, whether it is money, time or other resources.
The responsibility of every commercial manager is to produce a sustainable flow of profitable income for the long term future of the business. They have the responsibility for getting and retaining the custom which produces the necessary income. Thus the subject of investment has a particular importance for commercial managers as they are assessed on their ability to maximise profitable income while minimising costs, investment and the use of assets.
Governments are always encouraging businesses to invest, in order to help develop a countryâ€™s economy, but investment does not guarantee an increase in productivity or economic benefit. Every type of investment carries some form of risk, as the outcome of investment initially depends on where it is employed, how it is used and to what purpose.
Before considering any investment, commercial managers should be fully aware of the market and economic situation in which they operate, and understand the strengths and weaknesses of the business operation as well as the opportunities and threats to its future.
Investment in business usually implies the use of finance, but this is not necessarily so, as required investment might simply be the provision of time and energy to get things done and tasks completed
Before considering any investment, the following should be considered;
* What is the objective?
* What investment is required, – is it more time, money or other resources?
* If the investment is financial, how much would be required?
* How would the investment be applied and to what purpose?
Investing in additional staff might increase capability, but will also increase costs. However,
investment in training with existing staff can help maintain and improve the standards of efficiency and customer service. Spending management time with all employees improves communication and should encourage the contribution of ideas and observations of where change and improvement might be made. Investment in plant, machinery and production may improve efficiency and cut costs, thus improving profitability. However, investment that increases production, without an increase in customer demand or the ability to satisfy it, is likely to prove wasteful. Although an important contributor to the production of profitable income, investment in advertising and promotion must always be regarded as somewhat speculative, as its potential effects cannot by ascertained with any certainty in advance. In markets where growth is minimal or flat, or where the growth of income is likely to come from increased market share, would an investment designed to gain market share be economically sound?
The commercial manager needs to know what customers want and what they may require in the future. Understanding the market, customerâ€™s requirements and the ability to anticipate and satisfy their demands profitably requires knowledge of all these aspects. Thus the preparation of market research and the making of bids and proposals requires money for which there may or may not be a return â€“ especially if the bid or proposal is ultimately rejected by the potential customer. In such cases, it is a matter of judgement regarding how much time and money would need to be invested in a bid or proposal, together with an estimate of the chance of its success, before a decision is made.
Every type of investment should always contribute to improving profitability, reducing costs and increasing profitable income in some measurable way. Unless investment is carefully targeted to achieve specific objectives, it can often be wasted with disappointing results. Thus money spent on targeted marketing research is seldom wasted, as it will indicate where further investment in time and money may be profitably directed.
The most important questions for any commercial manager contemplating further investment are: How would a proposed investment contribute to increasing profitability? Do you have the evidence?
Throwing money at problems does not solve them. There is no simple answer, and additional investment is not a guarantee of business; a bad investment can make matters worse. The commercial manager must identify problems, analyse them and devise solutions, which may require investment. It may be that financial investment is not the solution required, but that a reorganisation and re-allocation of resources, or by simply doing things differently, would be more beneficial and economic.
Â© N.C.Watkis, Contract Marketing Service 19 Sep 2014
Performance Marketing is a method of interactive advertising which pays on a â€śperformanceâ€ť basis, but only on a completed action. That completed action can be a sale (Cost Per Sale) or a lead (Cost Per Lead), but can also be other revenue models including Cost Per Download. While Performance Marketing is similar to Affiliate Marketing, the latter is generally a cost-per-sale, revenue sharing model where affiliates receive a portion of the sale of any product.
The meanings of words develop and change over time, especially in business and commerce and it is obvious from these two definitions that the word â€śmarketingâ€ť has supplanted the word â€śadvertisingâ€ť in general use.
In 1976, the Chartered Institute of Marketing (CIM) defined the term â€śMarketingâ€ť as being â€śthe management process that identifies anticipates and satisfies customer requirements profitablyâ€ť. However, for most people, marketing does not refer to a management process, as in the CIMâ€™s definition, but has various meanings, none of which are clearly defined, such as social marketing, e-marketing, and digital marketing. While in America, marketing usually refers to activities involved in â€ślead generationâ€ť for the separate activity of selling.
Measuring performance in marketing is a subject that has returned periodically over the past 20 years or so. But as over time, the meaning of â€śmarketingâ€ť has apparently changed, so terms like Performance Marketing, Marketing performance and other similar ones have become more difficult to differentiate.
Measuring performance in marketing depends on how marketing is defined. If Marketing now is just another word for advertising and promotion, then all performance measurements will relate to the effectiveness of advertising and promotion. However, measurements of advertising and promotions are of limited use to the Commercial manager with the wider responsibility for maximising and producing profitable income through the efficient use of investment and resources.
The level of profitable income produced is dependent on the customerâ€™s existing and potential requirements, and the ability of an organisation to service those requirements in an efficient and profitable manner. The customerâ€™s existing and potential requirements are affected by the external factors of the economic and technical environment, over which the commercial manager has no control. However, it is essential that the commercial manager should be continually aware of economic trends and technical developments, especially in volatile markets, and to use suitable measurements to monitor them.
Most performance measures are about internal factors over which a commercial manager does have a measure of direct and indirect control. Such measures relate to the use of assets and resources, from which trends may be extrapolated. Even when such detail can be produced in near â€śreal timeâ€ť, the results relate largely to what has happened already, and can only act as indicators as to where judgement and decisions may need to be applied.
In the general confusion of â€śmarketing definitionsâ€ť, commercial managers need to be clear on the specific definitions they use and not make assumptions that others have a similar understanding. Terms that have specific definitions are not interchangeable without causing confusion, especially when measuring performance. â€śMetricsâ€ť are the standards for measurement, providing target values that a company must achieve to reach a certain level of success. While â€śmeasurementsâ€ť are the raw outcome of a qualification process, such as a companyâ€™s numbers, ratios and percentages, benchmarks are the very best measurement to which to aspire and the standard by which all others are compared. Thus benchmarks are used to establish the value of metrics for measuring satisfactory performance. The â€śReturn on marketing investmentâ€ť (ROMI), and the â€śreturn on investmentâ€ť (ROI) are examples of important terms for performance measurement which, if used indiscriminately without clear definition, can be a cause of confusion. Frequently these terms, ROMI and ROI are used in relation to communications programs, seeking to relate the results of advertising and promotion to the investment involved. However, for the commercial manager, ROMI and ROI relate to the profitable income produced by the total investment in all the activities involved in identifying, anticipating and satisfying customer requirements.
Most commercially available â€śperformance marketingâ€ť or â€śmarketing performanceâ€ť programs appear to be designed specifically to measure the effectiveness of web-site related business. The increase in the numbers of these programs indicates the growing importance of web-based communications in producing and maintaining customer business. These programs may have many different elements of measurement, but generally include net sales billed, the number of product or design registrations, and brand surveys to measure brand awareness. By monitoring and analyzing marketing performance data, managers can increase their competitive intelligence, assessing their market strengths and weaknesses, and make calculated budgetary decisions across their resources. But while specialist computer programs may provide performance measurements in detail, they cannot make the necessary management judgements and decisions that produce profitable income. As such these programs are an aid to management, but not in themselves the secret to business success.
As Peter Drucker observed, â€śIf you canâ€™t measure it you canâ€™t manage itâ€ť. Performance measurements are an essential tool for the effective management of resources and investment, but they only relate to past and current performance. Only informed management decisions can influence future performance. The successful commercial manager needs to understand performance measurements, but then crucially, be able to apply judgement and take decisions to maximize profitable income for the future.
Â© N.C.Watkis, Contract Marketing Service 30 Jul. 14
Investment in new resources or arranging a possible take-over can prove expensive and potentially risky, but the opportunity to collaborate by sharing resources with suitable partners may have considerable benefits for all parties.
Commercial mangers have the responsibility of maximising profitable income while minimising costs and the use of assets. However, new opportunities to maximize profitable income may require additional resources in people, skills, knowledge and finance which the organisation may not currently have. Collaboration with a suitable partner may provide a cost effective solution to maximizing profitable income while minimizing costs and investments.
Collaboration can take many forms, allowing all parties to maintain their independence while cooperating to mutual advantage. One option might be to agree to co-operate with another business in a limited and specific way, perhaps by pooling the resources of their respective distribution networks, while another option might be to set up a joint owned company, or a limited liability partnership. Such collaboration may provide access to new markets and distribution networks, increased capacity, or give access to specialised staff, technology and finance as well as the sharing of costs and risks.
There are many examples of successful collaboration. Aircraft manufacturers have cooperated to dilute the investment in expensive aircraft development, while Microsoft cooperated with Nokia on the development of mobile platforms, and on a different scale, many small breweries cooperate to centralize their bottling requirements.
Before considering the possibilities that might ensue from a collaboration project, the commercial manager, needs to ensure that the business objective is clearly identified and the benefits of any collaboration for all potential parties understood .
Collaboration and joint ventures are not without risk, because the necessary organisation may be complex. Commercial managers need to select suitable partners that have the necessary complementary resources skills and assets, and to ensure that the specific business objectives of all the collaborators are clearly understood by all involved. They also need to recognise that in any collaborative venture, there is likely to be an imbalance in the levels of expertise, investment or assets provided by the different collaborators, who are also likely to have differing management styles and culture which may be problematic for good integration and co-operation. In addition the respective partners need to provide sufficient leadership and support especially in the early stages of the venture, in order for collaboration to be successful.
Suitable collaborative partners may initially be sought amongst existing customers or suppliers, where there may be already be an established long-term relationship providing a good understanding of their objectives and operations. Once identified, Commercial managers will need to consider the overall business performance of the potential partner regarding their attitude and level of commitment to the collaboration, their business objectives, their potential contribution and general business reputation. Some limited â€śdue diligenceâ€ť should then be undertaken regarding the prospective partnerâ€™s financial security and credit rating, the compatibility of their management team, overall business performance, reputation with customers and suppliers, and history of previous or current collaboration.
Assuming that a suitable collaborative partner has been identified, and a successful approach made, it is important that the terms and conditions of any such venture should be agreed and confirmed by both sides and a legal agreement drawn up, in order to prevent misunderstandings once the collaborative venture is in progress. Such an agreement should cover;
* The structure of the collaborative venture, – whether it is set up as a separate business where the collaborators are shareholders.
* The objectives of the collaboration.
* The contributions that each of the collaborators will make in terms of finance, assets, resources, management, skills and personnel.
* The ownership of any intellectual property created by the collaboration.
* The management and control of the operation concerning the respective processes and responsibilities to be followed.
* How profit, loss and liabilities are to be shared, and how disputes are to be resolved.
Any agreement should also include an exit process for all respective collaborators, which should include;
* Resolving the distribution of shared intellectual property.
* The protection of confidential information.
* The distribution of any future income arising from the collaboration activities.
* The administration of continuing liabilities such as debts, and guarantees to customers.
Producing income costs money. However, sharing resources and the necessary investment with suitable collaborators can produce additional profitable income at a lower cost than would be required for a solo venture. Collaboration ventures may provide profitable opportunities for the commercial manager at a lesser risk than would be involved in a conventional expansion or take over.
Â© N.C.Watkis, Contract Marketing Service 16 Jun. 14
June 24, 2014 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance management, business performance measurement, marketing management Comments Closed
It does not matter how good your marketing plans are, how good your product or service is, or how much money you have to spend, the only real asset any business has is the people who can use its resources effectively to produce profitable income.
The sole purpose of any business is to make money. To make money, a business needs to identify, anticipate and satisfy customer requirements profitably, which requires a wide variety of business activities. Some of these activities are banded together under the term of â€śmarketingâ€ť or â€śsales and marketingâ€ť. Without getting into the perennial and pointless argument over what marketing is or is not, if a business is to produce profitable income, then all those activities which directly and indirectly contribute to satisfying customer requirements, ought to be managed collectively under the overall direction of one senior manager.
In the past, many businesses have often been product or service orientated, and have suffered because they have not been sufficiently aware of their customersâ€™ needs and the changing trends in their market. In more recent times, businesses have become financially driven, often becoming fixated with â€śthe bottom lineâ€ť and the level of short term and immediate profit. However, even this financially driven attitude to business, which concentrates on the profit objective, often tends to ignore the fact that it is the customers who provide the income, and the employees who do the necessary work to get it.
New business practices such as â€śsocial marketingâ€ť, â€śe- businessâ€ť, and even CRM (customer relationship management) tend to concentrate on the communication of the business message and the acquisition of customers. Such activities can be very successful in promoting a message and delivering the customers which produce the income in the short-term. However, while new and inventive methods may initially produce more customers and income, it is generally the more traditional methods of doing business that will retain customers and maintain the flow of profitable income for the future. Generally, it is ability to maintain the reliability of the product and service that retains customerâ€™s loyalty and their willingness to continue to purchase. Thus being aware of all those activities which directly and indirectly affect the delivery of the product or service to the customer is a fundamental to ensuring customer satisfaction and retention.
For the commercial manager who is responsible of producing the income, managing, motivating and directing all the personnel collectively responsible for satisfying customer requirements, is essential for success. While ideally the commercial manager should have charge over all those activities involved in everything that relates to the customer, other than finance, personnel, supply and IT, this is rarely the case. In most cases, commercial managers sit along-side production managers, distribution mangers and others, because that is the way that the business is structured. However, because it is the commercial manager who is responsible for producing profitable income, the actions and effectiveness of those managers who have responsibility for other customer related areas, will be of direct interest to them, as their actions will directly affect profitable income.
Leadership should provide direction and inspiration, but only good management produces tangible results. Commercial managers need to measure all aspects of their areas of responsibilities and as far as possible, those other areas where they have interest but no direct responsibility
Performance measurement is an indispensible part of commercial management. Used properly, performance measurements should be used to illuminate not only performance within a business organisation, but also to indicate where changes are taking place with customers and the trading environment. However, management which is driven by performance measurements alone is likely to erode employeeâ€™s confidence and motivation, which will have a negative effect on their overall performance. At the same time performance measurements can help employees maintain and develop their own achievement.
An effective commercial manger will keep their staff motivated by listening to their concerns, assisting with their problems, ensuring that they have the resources and necessary training, and encouraging their involvement in identifying potential improvements as well as problem resolution.
What actions should the Commercial manager undertake to maximize and motivate performance?
The commercial manager should ensure that each employee:
1. Understands their job description, their responsibilities, and reporting lines.
2. Understands the importance of their contribution in the company team and the reliance that other team members will have on them.
3. Understands that the business is there to make money by satisfying customer requirements profitably, and that their individual efforts contributes to making that possible.
4. Is encouraged to express opinions on how improvements may be made in satisfying customer requirements while maintaining and improving profitable income.
The commercial manager should also:
5. Use performance measurements to assist employees maintain efficiency and to indicate change and developments in the business environment.
6. Ensure that all those collectively involved in satisfying customer requirements understand that they must collaborate as a team to produce profitable income and the desired results.
Detailed business and marketing plans, and expensive promotions will achieve little unless the personnel involved are capable, motivated and effectively managed. For the Commercial manager, maximizing profitable income efficiently depends on the effective motivation and management of everyone involved in satisfying customer requirements.
Â© N.C.Watkis, Contract Marketing Service 07 May 2014
Recent political events in the Crimea erupted rapidly and appeared to have surprised Western Governments. Hindsight will no doubt show that the Russian annexation was predictable, if the decision makers had heeded the warning signs that were there to be seen. Political events often change quickly and apparently unpredictably, but in fact this is rarely the case, as vigilance in the observation and analysis of indicators can usually predict the likely chain of events. Can the commercial world draw lessons from that of the political?
In the commercial world, change may be regarded as the only constant. Predictable change can be managed, but it is the unpredictable change that usually causes problems. For the commercial manager, responsible for producing profitable income for a business, trying to anticipate the future , will always be difficult. Changes in demand, resulting from fashion or technology are just two of the problems that confront the commercial manager. But there are also events which may not be obviously predictable, but which may give rise to new opportunities or alternatively, produce unexpected threats to the income supply or to business operations in general.
Commercial managers are responsible for producing the necessary profitable income for their business. As managers, they will be assessed on how much income they produce and how efficiently they mange and use their resources in its production. But to be effective and to maximize the opportunities for income , commercial managers need to be aware of the threats and opportunities that continually arise from events and developments in the business environment. Opportunities and threats may arise internally from within the business, as well as externally from the business environment.
Internal changes in a companyâ€™s performance and capability tend to be those over which the commercial manager may have some control or influence. However, the same cannot be said for the majority of threats and opportunities which stem from external factors that directly affect the business environment. Companies may initiate what is called a PEST analysis, to assess the effects that Political, Economic, Social and Technological factors have on business operations. But to be comprehensive, any analysis of the business environment should also include assessments of competitor activity, new competitive products ,as well as the business and financial strength of customers and the customer base as a whole
While business and general media may be a prime source of information that outlines potential threats and opportunities in the wider business environment, some emerging trends in selected internal performance measurements, may also give timely alerts to potential change and development in the organisationâ€™s specific market. Such indicators are likely to be directly related to sales performance and analysis. Variances from projected levels of enquires in terms of number, type, market segment, location and product group may all indicate developments in the business environment providing both threats and opportunities. Similarly, other useful indicators may also be derived from changes in buying patterns from new and existing customers. Ideally, commercial managers should delegate specialists to monitor and analyse the potential threats and opportunities of the organisationâ€™s business environment. However, they must be prepared to make decisions and to act on the advice of specialists and not ignore them.
Producing the business plan, outlining how investment and resources are to be used profitably, is the commercial manager responsibility. As part of the planning process it is prudent to prepare separate contingency plans to cope with various possible eventualities. This is especially important for large organisations, as their size and organization tends to preclude a rapid response to changing conditions. Whereas, smaller companies tend to have greater flexibility, enabling a faster reaction to changed conditions and opportunities.
What actions should the commercial manager undertake to prepare for the â€ťunforeseenâ€ť event?
* Continually analyse the business environment for threats and opportunities.
* View the trends, identifying potential indicators of change.
* Consider the possibilities
* Outline the best and worst scenarios
* Assess the probabilities of particular scenarios
* Prepare contingency plans to meet the scenarios with higher probabilities
* Maintain the necessary resources to meet contingency plans
* Identify the indicators that would initiate particular scenarios.
* Decide which indicators might call for immediate action
* Be prepared to act quickly
In a rapidly changing world, the successful commercial manager must be vigilant in identifying, observing and understanding those indicators that give rise to both opportunities and threats. The timely enacting of contingency plans can mitigate problems and exploit opportunities.
Â© N.C.Watkis, Contract Marketing Service 7 Apr 14
April 14, 2014 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing management, performance management Comments Closed