The opportunity for a merger or take-over can often be seen as a quick way to make a bigger and therefore stronger company. However, the resulting organisation and its benefits is not the sum of the constituent parts, but may often result in something less.
Mergers and acquisitions are never simple. At least 50% fail to meet their initial objectives and expectations â€“ sometimes leading to expensive de-mergers. According to KPMG and Wharton studies, 83% of mergers and acquisitions failed to produce any benefits – and over half actually ended up reducing the value instead of increasing it. Businesses undertake mergers and acquisitions for a number of reasons, but all embark upon the process in the expectation of the benefits that they seek will be achieved. So why do so many fail?
Perhaps more time is spent on arranging a suitable and advantageous deal than is spent on
considering the actions necessary to implement the combination of two separate organisations successfully or its potential consequences
Businesses can be divided into two functional areas which may be described â€śOperationsâ€ť and â€śSupportâ€ť. â€śOperationsâ€ť involves all those areas and activities directly and indirectly related to anticipating and satisfying customer requirements, while â€śsupportâ€ť provides the necessary resources, namely purchasing, finance, IT and personnel.
While the integration of differing and perhaps incompatible IT systems, can be a major problem, it is arguably the integration of the respective â€śoperationsâ€ť areas that result in the success or failure of the resulting combined organisation. The integration of purchasing, finance, and personnel may be difficult, but because these are not customer orientated organisations, the necessary change over may only require a change of procedure rather than a change of culture and attitude.
For the commercial manager responsible for getting and maintaining the income of the business, the merging, integration and consolidation of two previously separate business organisations, is more difficult, due to the variety of activities involved. Mergers and acquisitions produce a number of opportunities, but with potential consequences. The opportunities may include increased income and market share, as well as improved profitability through rationalisation of organisation and costs.
If the merged or acquired company is a competitor, there will be the advantage of having removed a competitor with the opportunity of gaining their previous customers. However, the integration and rationalisation of previously competing products, does not guarantee the retention of all the acquired customer base. While acquisitions and mergers may bring in new customers, there is no guarantee that the loyal customers of the acquired company will move their purchasing to the offered alternative products. With service based companies, their main asset is likely to be their knowledgeable and experienced personnel. If for any reason the personnel leave before or after the merger, then the acquisition may become an expensive â€śhollow oneâ€ť where the desirable â€śassetâ€ť has effectively vanished perhaps taking their customers with them
Success of merger and acquisitions depends largely on the reaction of customers and the respective employees. All customers should be kept informed about how the changes will affect them, especially concerning the continuance of the product and services on which they have come to rely.
Commercial managers need to consider;
* In the new organisation which will be the dominant constituent, for personnel, culture and procedure?
* How are duplicated organisations to be integrated and rationalised? Is there an action plan?
* How should the respective product ranges be merged? – If products are scrapped or rationalised, their existing customers may go elsewhere, diminishing the projected increased customer base and market share.
* If the acquisition supplies a different market which may or may not be related, how is the commercial aspect to be managed? – Will it remain independent but reporting to the Commercial manager, or can part of the support organisation be merged and rationalised to achieve improved profitability and efficiency?
* If the acquired product range is in a wholly different market, then it needs to be evaluated in relation to the demand from its customer base and the market in general in terms of its profitability, its contribution to its profit centre, and the opportunities for profit and market development.
* If the acquired product range exists within the same market, it should be evaluated on its strengths and weaknesses when viewed as competitive products. – How do the acquired products compare with the existing range? Are these products direct competitors, – is so, which if any of them are any of them superior to the existing products, and could be incorporated into the product line? Are any of the acquired products complimentary to the existing products and could therefore be used to expand the existing product range?
* Different organisations have different business cultures and practices, which takes time to change. Sudden and significant change may demoralise staff, and cause resentment leading to distraction and confusion. Maintaining employeeâ€™s morale and commitment is essential to minimise the impact of the reorganisation on both the employees and the customers while maintaining the level of customer service.
* Maintaining the morale and commitment of employees by regular and effective communication helps prevent damaging and destabilising rumours. Customers should also keep aware of changes, to retain their confidence.
The success of a merger or acquisition depends of the clarity of the objectives, in terms of intended synergies and financial results, a clear plan for its execution, and the people from both organisations who implement the process. Thus the effective motivation and management of all staff from both constituent organisations, especially those involved in getting and maintaining business and income, is essential if the merger is to succeed and profitable income maintained and increased.
Â© N.C.Watkis, Contract Marketing Service 29 Nov 13
December 5, 2013 Tags: performance measurement indicators Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators, Uncategorized Comments Closed
Why do companies insist on changing the content or specification of their successful products without the consent or request of their customers?
Microsoft made the disastrous product upgrade from the successful, popular and reliable Windows XP to the unpopular and unreliable Vista, which then in turn had to be hurriedly replaced with the successful Windows 7. Kelloggâ€™s altered the recipe for their Special K product and received numerous public complaints by customers because they liked the product as it was and did not want it changed. Fans of Sailor Jerry Spiced Rum in the UK launched an internet campaign to force brand owners First Drinks to change its formula back to the way it was before the productâ€™s re-launch. Then there was Coca Colaâ€™s launch of New Coke, replacing their original product, which then had to be returned following customersâ€™ rejection of New Coke.
Why should companies that have products that are long established, valued by their customers and profitable to their business, seek to â€śimproveâ€ť and change them, not because their customers want them to do so, – but because they can? Is the change to benefit the customer, improve the profitability, or to satisfy the personal achievement aspirations of an ambitious executive?
Unnecessary changes to established brands and image can produce a serious back lash from loyal customers, and seriously damage the business.
The principle task of every business is to make money, by the provision of products and services that are designed to provide the solutions to problems that customers have. Successful businesses have to understand customerâ€™s problems and to adapt to meet their changing needs. Yesterdayâ€™s products were designed to solve yesterdayâ€™s problems and without development, may no longer be the solution to the problem that the customer has today.
While products and their brand image are developed and owned by companies, they are paid for by the customers who buy them. In purchasing the product, the customer expects that the product will satisfy their requirements, whatever they may be. Regular customers expect that the product will deliver to their expectations every time and they come to rely on that expectation. Thus, in a sense, the customer has ownership of the product. Customers have the money, but if the product does not meet their expectation, they do not have to buy it..
Some products are relatively unchanged after many years, because they fully meet customer requirements and there is no benefit to be gained either by the customer or manufacturer in changing them. Other products change and develop to meet evolving customer needs, or improved production methods and materials.
While customers may have an initial resistance to a change in the products that they buy, they generally accept them, if they can be shown how the change actually benefits them. However, simply adding additional features to a product or service that does not clearly benefit the customer, will not increase its value in the customerâ€™s eyes.
For the commercial manager, responsible for producing and maximising profitable income, change is an important factor of business. Making changes to the product or the manner of its delivery may be necessary in order to be more efficient, improve the product or service with additional or improved customer benefits, or perhaps to modernise its appearance, especially with a long established product.
So how should the commercial manager consider the need for change?
Before embarking on any change, however small, the commercial manager should consider several questions, because of the potential consequences.
1. Who is advocating the change â€“ which individuals, what are their reasons?
2. Are changes necessary to meet the changing needs of the customer or the requirement of the product/service provider?
3. If the underlying problems are understood, would a change to the product, its image or the company procedure be an effective answer?
4. A change to a product or service may improve efficiency and profitability, but what would be the effect on the customersâ€™ satisfaction or their perceived image of the business?
5. Who benefits from the proposed change, the customer or the company? â€“ How do they benefit?
6. If the change is cosmetic, how will it benefit the customerâ€™s perceived image of the product and company? How do you know?
For the commercial manager, responsible for the long term income of the business, there is always danger in the possible long term consequences of accepting change that are not customer driven. Many changes that are made by organisations in both the public and private sectors are frequently instigated by executives who â€śwant to make their markâ€ť in the organisation, using it as a stepping stone of achievement to the next job, and moving on before the consequences of their decision making are apparent. All changes to product and service cost money, thus it is important to trial changes wherever possible to ensure that they are acceptable and beneficial to the customer, before committing to irrevocable and expensive investment. Customers provide the business income and it they who decide on the acceptability of change, by maintaining or withholding their custom.
Established and successful products may still need to change over the course of time in order to meet changing conditions and customer requirements. But experience shows that change for the sake of it, especially to satisfy the whims of ambitious executives can easily be damaging to the product and the companyâ€™s fortunes. In the eyes of the customer, the product that is â€śNewâ€ť and â€śimprovedâ€ť may not be as good as the original, in which case, perhaps companies should consider that â€śif it ant broke, donâ€™t fix it.â€ť
Â© N.C.Watkis, Contract Marketing Service 28 Oct 13
October 31, 2013 Tags: business efficiency, business performance indicators, business performance management, business performance measures, Corporate Income development, marketing development, marketing performance measurement, measuring business performance, profit development Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance measurement Comments Closed
The Pareto principle, generally known as the 80â€“20 rule, states that, for many events, roughly 80 per cent of the effects come from 20 per cent of the causes. Applying the principle in business analysis can prove to be a very effective business tool, and one of its many areas of application is in that of sales.
It is a common opinion in business; that 80 per cent of an organisationâ€™s sales come from
20 per cent of their clients, thus when applying the 80/20 rule to a customer base, it is often thought that the 20 per cent of the customer base which provide the most profitable income is the area on which the business should concentrate, rather than the 80 per cent which have low profitability.
However, it should be considered that the 80 per cent of the customer base, also contribute to overall income production, but that some customers are more productive than others. Before making any rash decision regarding the customers which constitute the less profitable 80 per cent, it is important to consider how exactly those customers contribute to the interests of the business.
On first glance it might seem that following the application of the 80/20 rule, customers could easily be divided into those which are more profitable, and those which are less so.
This often results in the simplistic idea that it is better to concentrate time and investment where it already shows more profitable results rather than where the results are less profitable. However increasing investment in such a manner and to effectively starve or ignore the less profitable areas without understanding why they are less profitable, can be counterproductive and potentially expensive.
Businesses exist to make money by anticipating and satisfying customer demand. For the commercial manager responsible for producing a continuous stream of profitable income for the long-term benefit of the organisation, balancing the need to make profitable income against the interests of the customer is paramount. Ultimately it is the customer which has the power, because they have the money. The objective of the commercial manager is to maximize the level of profitable income for the long term while minimizing the use of assets and investment. by managing all resources efficiently and effectively.
Before making any decisions that might adversely affect the customer base, there are a number of questions and actions that the commercial manager should consider:
1. How many customers are there, that constitute the 20 per cent and the 80 per cent? â€“ It is important to know how many customers there are and whether or not the customer base is growing, or shrinking?
Concerning the 80 per cent of the customers, commercial managers should consider:
2. Where are they? â€“ Knowing where customers are geographically located and the potential for growing the customer base in those areas is important when considering transport and delivery opportunities and costs.
3. Is the geographical distribution of customers a factor in their lower profitability? – Are there other potential customers in the vicinity of isolated customers that collectively could be developed to greater profitability?
4. What do these customers buy? How much do they spend? How frequently? â€“ This information may enable changes to be made to the service which would benefit the client and improve the level of profitable income produced.
5. Are all customers being offered the right product mix for them? – Would customers benefit from other products or services that could be provided, – how do you know?
6. Consider what might be done for the smaller customer that would encourage them to increase their level of purchase of their existing orders. â€“ Could their order size be increased with the encouragement of discounts or improved credit facilities as an incentive?
7. Do all customers meet the companyâ€™s trading requirements in size, order size capability, location? Can this be improved by altering conditions or servicing through other methods?
8. Are credit terms suitable or would a change improve cash-flow and profitability?
9. Analyse and establish the real reasons behind low profitability with the customers that comprise the less profitable 80 per cent?
10. Establish if and how the admin/service costs of the 80 per cent might be reduced without affecting the customers? â€“ Ask the workforce how they would improve the administration system that they work with.
All customers contribute to the size of the business in their contribution to its overall market share. That size of the organisation affects its influence in the market, which also affects confidence of potential customers and ultimately their buying decisions.
Allowing the more numerous but less profitable customers to wither by neglect, in order to concentrate investment on the less numerous but more profitable ones increases over reliance on a smaller customer base, which increases an organisationâ€™s financial vulnerability. At the same time, concentrating resources on the more profitable customers is likely to result in the law of diminishing returns, where additional investment may only result in a marginal increase in income, but with reduced profitability.
The advantage of thoughtfully applying the 80/20 rule is that it enables the customer base to be evaluated in terms of its overall contribution to profitable income, costs, geographic coverage, and market share. As such, those customers which might be deemed less profitable, may well be considered as opportunities for potential growth, rather than seen only as sources of cost and low productivity.
Â© N.C.Watkis, Contract Marketing Service 18 Sep 13
October 1, 2013 Tags: Bpm, business analysis, business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, business performance measures, Corporate Income development, improve profit, marketing performance measurement, performance measurement indicators Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement Comments Closed
Business organisations exist in order to make money for their owners, but also to benefit their employees and their customers. It is the employees that enable the business to operate, and it is the customers who provide the income on which the business survives.
Commercial managers are responsible for producing a flow of profitable income for the long term benefit of the business. The objective of the commercial manager is to maximise profitable income while minimizing costs and the use of assets. To ascertain how well a business operates, it is usual to use a number of management ratios and performance measurements to determine its efficiency.
Performance measurements may show the commercial manager that all appears to be well as confirmed by the results, but could they be better? Are there threats and opportunities that the performance measurements do not cover? Does the commercial operation work as well as it should or could? How do you know?
Performance is measured by results past and present, presented as quantitative data,
but this does not tell the whole story of how well an organisation is operating. Quantitative data can indicate where performance meets, falls short of or exceeds expectations, but while such data might hint at an underlying cause, it cannot illuminate causes which may be qualitative in nature or that originate in employee organisation and management.
How does the method of working and organisation meet the needs of employees and employers? Is the work process efficient and effective? Does the methodology and levels of responsibility motivate or demotivate employees? Do you know what employees actually do or how they contribute to the commercial objectives?
Order processing, dispatch and credit control, are continuous processes which actively contribute to producing business income. But what about other activities, such as planning, market and sales analysis, advertising and promotion? All these activities contribute directly or indirectly to producing income, but many can now be automated. Are all personnel gainfully employed, or have changes in organisation and business technology necessitated a reassessment of the effective use of time and resources? Generally, when employees are fully and constructively occupied, they tend to be well motivated and effective. However, when this is not the case, employees can easily become de-motivated and begin to game the system to their own benefit, rather than that of the organisation
Formal job descriptions are sometimes considered to be too limiting and prescriptive, but clear job description define necessary responsibilities and expectations for the benefit of both employer and employee and also enable employeeâ€™s performances to be assessed. However, the tasks and responsibilities that are written in an employeeâ€™s job description may differ from what the employee perceives to be their tasks and responsibility, and may differ again from what they actually do.
However, unless periodically reviewed, the tasks engaged in by both managers and staff can expand and following â€śParkinsonâ€™s Lawâ€ť, drift into areas of interest and convenience and away from the planned requirements of the business.
In this situation, there are a number of actions that the commercial manager should routinely and periodically undertake.
1. Consider the business and commercial objectives.
2. Assess the resources available, – are they sufficient for the tasks, are they organized effectively? How do you know?
3. Get all employees to write their own job descriptions, defining what they see as their prime responsibilities, areas of interest and lines of reporting.
4. Compare each employeeâ€™s own job description with their official one, and with others.
5. How do the job descriptions relate to the task? Where do these job descriptions overlap? Are there any gaps in capability? Where are the gaps?
6. Consult with employees to establish where and why there are overlaps and gaps. Seek their suggestions for improvement. Evaluate the answers and adjust tasks and responsibilities accordingly with the cooperation of the staff.
7. Ensure that all job descriptions have clear objectives and responsibilities that are subject to regular progress review.
8. Are personnel sufficiently trained to meet current requirements?
9. What training might they need? What training do they consider they need to be more effective with current business situations?
Following such a review, a reorganisation of tasks and responsibilities to maintain efficiency may be considered necessary, but change for the sake of change is generally expensive and usually counterproductive. Employees are essential but expensive assets, who provide necessary capability and accumulated experience. All commercial managers need to re-assess from time to time how well these assets are used to ensure their effective contribution to income generation. Capability is generally easy to replace as required, but accumulated necessary experience is by definition harder to replace or replicate, but is easy to lose.
Â© N.C.Watkis, Contract Marketing Service 31 Aug 13
September 3, 2013 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, performance management, performance measurement indicators Comments Closed
The Menâ€™s final at Wimbledon demonstrated how both opponents require intense concentration, in order to anticipate their opponentâ€™s moves as well as the trajectory and speed of the ball. Within the confines of the tennis court, each player must â€śkeep their eye on the ballâ€ť constantly monitoring all the variables in the game situation if they are to counter their opponentâ€™s moves and to successfully dominate and win their match.
Although professional tennis is a commercial business, commercial businesses are not tennis, but for the manager charged with producing profitable income for a business, it is essential that they also â€śkeep their eye on the ballâ€ť. However, unlike the tennis player, the commercial manager has more than one ball to keep their eye on. But what does this phrase really mean when applied to producing income?
To maximise the level of profitable income, while minimizing the costs and the use of assets, is the objective of every commercial manger. Producing income requires the involvement of many activities which collectively enable a business to anticipate and satisfy customer requirements profitably. Thus unlike the tennis player who has only one ball to watch, the commercial manager has the equivalent of many balls, having responsibility for many of the activities that are collectively involved in producing income.
How many balls does the Commercial manager face? There are a number of â€śballsâ€ť which may be equated to those distinct activities involved in producing profitable income.
First, there are all those activities involved with defining the product or service provided, such as:
â€˘ Research and development,
â€˘ modification and product differentiation.
Then there are all those activities to do with pricing the product or service, involving;
â€˘ credit and market price.
Satisfying customer requirements involves:
â€˘ customer and market communication,
â€˘ promotions and special offers.
Understanding the market served requires activities to seek and acquire information on:
â€˘ market trends,
â€˘ economic outlook
â€˘ competitor activity.
Commercial managers must therefore â€śkeep an eyeâ€ť on all these subjects in order to anticipate trends in customer demand, prepare responses to change, and react quickly to resolve problems. Unlike the tennis player, who is responsible only for themselves, the commercial manager is responsible for a â€śteamâ€ť of people who collectively work to produce the necessary income, as well as a variety of investment and assets. Thus the commercial manager must first and foremost manage the people involved but also to a greater or lesser extent exhibit necessary â€śleadershipâ€ť to coordinate the various activities to produce the desired result of profitable income which is sustainable for the future.
Within the business organisation, the commercial manager needs to exhibit not only capable managerial qualities, but also some elements of leadership. For while leadership of the business is vested in the Chief Executive Officer (CEO), who sets the objectives and direction of the organisation, the Commercial Manager is responsible for achieving the income objectives set by the CEO and with motivating the staff and managing the resources necessary for that achievement.
It is often forgotten, that those who are directly involved in those activities that impinge on satisfying customer requirements, are frequently best placed to identify where problems arise, and where solutions may be found. Therefore the commercial manager who actively involves operational staff in identifying problems and suggesting solutions will be more effective as a motivating leader and effective manager. Encouraging staff to question processes which they think to be unhelpful or inefficient, does not undermine authority, but helps to ensure that those with practical experience maximise their contribution to the well being of the business. While businesses make profits for the benefit of share holders and owners, the business cannot exist without the skills of the workforce. Thus ensuring that all the staff involved in every aspect related to producing income is fully motivated, tasked, directed, equipped, trained and remunerated is essential if the commercial manager is to achieve the objectives and income targets.
Effective communication with customers in particular and the market in general is essential in being able to anticipate customer and market demand. Keeping aware of economic trends, and the effect they may have on customerâ€™s demand help to maintain a clearer understanding of the market environment in which the commercial manager operates.
Commercial managers will ultimately be measured on their results, – how much income they produce and how efficiently in terms of costs and investment. Performance measurements are a prime tool of management control, and when interpreted correctly, may provide an indication of performance relative to the planned requirement. Over time, such measurements can highlight trends in performance as well as identifying areas where underperformance may indicate problems. But performance measurements are only indicators of past and present performance, and do not give guidance regarding how the performance should be maintained and improved in the dynamic of the commercial market where there are many variables over which the commercial manager has little or no control or influence.
Producing a steady stream of profitable income for any business is a complex process. Commercial managers have to keep their eyes on many subjects at the same time, without letting their concentration be distracted and allowing important â€śballsâ€ť slip past unnoticed, which may adversely affect their results.
Â© N.C.Watkis, Contract Marketing Service 26 Jul 13
The purpose of all businesses is to make money in the form of profits. Even so called â€śnot for profitâ€ť organisations have to make money, which is re-invested. Profits are derived from income and income originates from the sales of goods and services to customers.
Customers buy products that give them benefits. But the way that businesses react with customers often guides customers into how they make their purchasing decisions.
All products whether goods or services, have an element of support from the provider which facilitates the sale of the product to the customer. The size and importance of the support element varies according to the requirement of the customer and the nature of the product provided.
The quality of the customer support is dependent on sales people, and account managers, as well as a host of others involved in call centres, delivery and credit control, who collectively both directly and indirectly support total package that the customer purchases.
People cost money, so when organisations are looking for efficiencies and cost reduction, manpower is often the first target to be cut. The contribution of those people who indirectly help satisfy customer requirements is often undervalued because its importance in the satisfaction of customer requirements is often not understood. Unfortunately because their contribution is under appreciated they can often be seen as an easy target for cost reduction through reduced manning. But while it is often easy to make a case for reducing the costs, reductions in experienced manpower can have a profound and negative effect on the quality of service as perceived by the customer.
When it comes to reducing manpower as a cost reduction exercise, commercial organizations and public bodies frequently retain or even increase the numbers of managers and administrators at the expense of those who supply and support the service. This is not only a false economy, but tends to perpetuate â€ślittle empiresâ€ť, and encourage bureaucratic inefficiencies. Frequently it is those personnel involved in providing direct and indirect product support to the customer, who retain the corporate knowledge and experience which is essential in maintaining customer satisfaction. Where competition amongst suppliers is high and where product differentiation is low, the quality of customer support can be the principle deciding factor that maintains customer loyalty to the product and supplier.
Organisations often under appreciate the importance of the unseen but essential part, played by those elements that provide the product support package that the customer buys. If, in an effort to reduce its manpower costs, a business loses its knowledgeable sales people and specialists, the quality of the customer support may be reduced, thus undermining the customerâ€™s confidence, to the detriment of sales and income. It is essential, therefore, that the wide nature of what constitutes the product support that the customer seeks is fully understood. If that network of support is damaged or reduced the client may go elsewhere.
There are many elements which go to make up support to the product, which may include:
* Ease of access to the Web-site, especially in finding named contacts, the ability to file questions and complaints, and the speed and accuracy of response.
* The ability for customers to access sales contacts, and account managers who understand their business and requirements can be of major importance to them.
* Dehumanising customer contact by the use of automated telephone systems, or referral to web-sites may be cost efficient, but it can be counter-productive if it starts to alienate customers, by making direct contact difficult.
Commercial managers responsible for producing profitable income need to able to:
* Identify all those activities that are directly and indirectly related to customer support
E.g. sales personnel, technicians, consultants, customer advisors, credit controllers, delivery systems etc.
* Assess the efficiency and effectiveness of these elements through performance measurement, and understand their contribution to the overall customer service.
* Understand why the customer comes to them, what makes them return, as well as the customerâ€™s perception and value that the business or organisation provides to them.
Every business organization requires a minimum number of sales people and specialist providers who collectively provide the service support for the product/ service package. Below that number the product/ service package that the customer buys is compromised and altered from that which the customer bought. It then becomes something different that the customer may not accept.
Commercial managers need to remember that while they have overall responsibility for producing profitable income efficiently, it is those people who directly and indirectly have customer contact, that have the experience, corporate and customer knowledge, that collectively gains and maintains customer loyalty that secures the flow of income. If you cut the support, you may lose the sale.
Â© N.C.Watkis, Contract Marketing Service 24 June 13
June 26, 2013 Tags: Bpm, business analysis, business development, business efficiency, Business Marketing, business performance improvement, business performance management, business performance measures, Corporate Income development, marketing audit, marketing budget, marketing business development, marketing development, marketing performance, marketing performance measurement, performance improvement, performance management, performance measurement indicators, profit development Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement Comments Closed
Businesses exist only for the purpose of making money. 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 â€śsellâ€ť is fundamental to the success of every business.
The Oxford English Dictionary defines â€śsellingâ€ť as, â€śmaking over or disposing of in exchange for money.â€ť However, in some ways, this definition is limited. In its broader sense,
â€śSellingâ€ť can also be seen as a process of influencing thought, action and attitude, to produce a desired action.
While selling is fundamental to business success, it would seem that somehow businesses want to disassociate themselves with the act of selling. Businesses frequently refer to â€śmarketingâ€ť goods and services rather than selling them, as though there were something wrong with the action of selling. Selling and marketing are different. Marketing as defined by the Chartered Institute of Marketing is â€śthe management process that identifies anticipates and satisfies customer requirements profitablyâ€ť. Thus marketing is a management process, in which selling is the executive function. Selling is a skilled and serious occupation which produces the income for every business, but the attitude that some businesses appear to have would suggest that they view it differently.
The media often seems to vilify or demean sales people with stories of â€śpressure sellingâ€ť to vulnerable people or the â€śmiss-sellingâ€ť of financial services. While not defending either of these practices, it is important to realise that sales people work under the direction of managers. If sales methods or procedures result in pressure selling or miss-selling, it is the fault of managers who either give false direction and leadership, or fail to control wayward sales employees.
With the growth of e-selling is the art of selling now redundant? Some might think so, but that would be to misunderstand the nature of on-line sales. The answer is emphatically, No.
While internet on-line sales are growing, the nature of the transactions are really only an electronic form of catalogue selling, with all the same advantages and disadvantages.
E-selling works best when customer already know what they are seeking and only require to find a suitable price and source of supply.
However, in most cases customers seek solutions to their problems, needs, requirements and aspirations, and it is the task of the salesperson to try to find a satisfactory solution for them.
In consumer selling, when customers come to a shop, it is clear that they have a particular interest in the type of product on offer to resolve a specific need. In business to business selling the vendor usually goes to the customer, so with the exception of responding to a customerâ€™s enquiry, a sales person cannot assume the particular interest of the potential customer.
Effective selling requires the ability to identify potential customers, their possible needs, requirements and aspirations, and to be able to present the benefits of the specific product or services in a way that the customer perceives them to be as the best solution to their demand. One of the most important attributes of effective selling is to be able to distinguish between a potential customer whose interest is genuine but whose requirement is not immediate and one who has an immediate interest in a potential purchase, and can therefore be actively engaged in the process of selling. In this regard, sales people need to be trained in the art of effective selling in order to know how to make this differentiation before engaging in presenting the product or closing the sale. All too frequently, sales training for many businesses is a misnomer for product training. While product training is necessary, without the ability to engage successfully with a customer, the sale will not be achieved, and the income not produced.
Commercial selling is an occupation that can be immensely rewarding, in terms of finance and job satisfaction. While some people appear to despise and look-down on salesmen and women, because they have no understanding of the job, selling is immensely important and fundamental to all commercial activity.
Businesses only survive on good selling. Commercial selling depends on finding potential customers with a need and proving to them that the supplier has the solution. Many good business ideas fail as commercial ventures purely because entrepreneurs or business staff do not have sufficient sales skills or abilities. While some people may appear to have a natural sales ability, all staff engaged in customer selling should receive proper training in order to conduct a selling engagement to a successful conclusion. Nobody ever bought anything which they did not think at the time that they wanted. Good sales people identify genuine need and seek to fulfil it.
Successful sales people should be well rewarded, because the job is difficult, often conducted in some isolation which requires a lot of self discipline and self motivation. While the Commercial manager is ultimately responsible for producing the profitable income for the business, it is the sales person who has to find and successfully engage with the customer to affect the sale and produce the money.
Businesses are there to make money. They survive and thrive by providing goods and services of a quality and at a price that satisfies customer requirements. However, it does not matter how good a product or service may be, if the business does not invest in the skills to sell its products successfully to produce the income, it is doomed to failure.
Â© N.C.Watkis, Contract Marketing Service 27 May 13
Contract Marketing Service, (Business Development Specialists)
May 28, 2013 Tags: Bpm, business analysis, business development, business performance improvement, business performance indicators, business performance measurement, business performance measures, Corporate Income, Corporate Income development, marketing budget, marketing performance measurement, performance measurement indicators Posted in: business development, business efficiency, business performance improvement, business performance indicators, business performance management, marketing development, marketing management, performance measurement indicators, Uncategorized Comments Closed
Whenever a company is not performing or when product sales appear in decline, one of the choices of remedial action is for a product â€śre-launchâ€ť or image change. For the newly appointed executive responsible for business income, the idea of â€śre-bandingâ€ť a product or a company has its attractions in showing that the executive is making a mark on the business and pursuing new actions.
But the road to hell is full of good intentions. For while â€śRe-Brandingâ€ť may be the right answer to falling sales income in some cases, the reasons for declining sales is rarely the result of an â€śoldâ€ť image. In the majority of cases, when products and services fail to meet the planned sales and income projections, there will be a number of underlying and usually quantifiable reasons.
But what is branding? It’s not just a logo or new packaging design. To a business organisation, the image of its brand is a symbol that defines it for trust, innovation, and quality. Based on their aspirations, imagination and association with their own self-image, the perception of a brand image creates a customer loyalty. Organisations use brand image to convey an identity and value, with which customers will want to be associated. Customers also want reliability and consistency, which the image of long established brands helps to convey. Thus customers associate themselves with brands which they think define in part the image that they believe others have of them, in terms of fashion, quality, money and status. Any change in the brand image will therefore affect the customerâ€™s relationship. The image of successful brands is in effect â€śownedâ€ť by the customers rather than by companies.
An established brand image is not a prime factor in producing profitable income, but it is a supportive one. The level of profitable income is dependent on the quality and reliability of the product or service on offer, as well as the price, the communication with the market and the ability to deliver to the customer in a manner that meets their needs.
The objective of a commercial manager is to maximize profitable income while minimizing costs and the use of assets. To do this effectively, commercial managers require careful analysis of quantified performance data from all the activities involved in anticipating and satisfying customer demand. Only by careful analysis of performance data may proper conclusions be drawn on the strengths and weaknesses of the business operation, and proposals made for improvement.
Where does brand image fit into this? Image helps sales but only indirectly. While advertising helps to initiate or re-enforce brand and company awareness with the customer, with established brands and companies, image should promote confidence in the customer of continuity and standards. Any change in the brand or company image may therefore affect the confidence that the customer has in the continuity and standards of the business. Thus any change in that image may affect the relationship that the customer has with the image and the loyalty that they have to it.
There have been many misconceived image changes to established and successful brands, for often no more reason than a desire for change, that have proved wastefully expensive and unnecessarily damaging.
In 1985 in an apparent attempt to appeal to younger consumers, Coca-Cola rebranded its flagship soft-drink with the introduction of â€śNew Cokeâ€ť. However, a strong consumer backlash forced the company to bring back the original formula under the name, Coca-Cola Classic.
In 2010, clothing retailer, Gap abandoned its ubiquitous logo consisting of a blue box with â€śGAPâ€ť written in white inside, for a slightly altered new version. However, the subsequent volume of online criticism by customers forced the company to revert to its original logo within a week.
Ill-conceived changes to a company’s packaging or logo aren’t the only ways to generate criticism. In 2001 the Post Office disastrously changed its name to Consignia, in preparation for operating independently from state control. Consignia was picked because brand researchers believed it conveyed trustworthiness and honour. However, the public though otherwise and the name was changed that of Royal Mail, which had public approval.
The temptation to tinker with logos, names and strap-lines can lead firms to ‘fix’ what isn’t broken. It cost British Airways’ ÂŁ60 million to repaint the tail fins of its fleet of aircraft with a variety of ethnic themes designed to reflect its international reach. However, the down-playing of the British flag as part of the paint scheme, was seen to have undermined the â€śBritishâ€ť identity of the brand, and within four years, the artwork was quietly dropped.Â
â€śIf it ainâ€™t broke, donâ€™t fix it.â€ť Radical change of an established brand image should only be contemplated as a last resort. Any changes to brand image ideally should be incremental and carefully done. If the business and product are producing profitable income as planned, why do you want to change the image?
Before embarking on a re-banding or a change to logos, names and strap-lines, commercial managers need to ask:
* If the product or business is meeting its planned projections, -Why change? – If profitable income is in line with the business plan, the image cannot be an adverse problem. If a business is not performing as it should, the answer will lie in the analysis of business performance measurements.
* How will such a change help? What will it achieve? How do you know?
* Why do you want to change?
* How will it improve the sales income? – How do you know?
* What will it cost to effect the change?
* Is there a budget to do this?
* Are all the risks known and understood?
Changing an established image is frequently an unnecessary cost, which may actually harm customer relations and reduce income. The only people who really benefit from changes to logos, names and strap-line are the design agencies whose business is to promote and sell expensive change to businesses that should know better.
May 2, 2013 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators, Uncategorized Comments Closed
Effective communications with customers are vitally important especially for consumer based businesses. For Commercial Managers, responsible for producing a steady flow of profitable income, â€śmaking the customer the centre of the business,â€ť has been a mantra for decades.
But in reality, what does it mean to have the customer at the centre of the business?
The sole purpose for any business is to produce profit. That profit is for the benefit of the owners, but it is also for the benefit of the employees, without whom the business would not be possible. Customers also benefit, because profitable businesses remain in being and are therefore able to continue to provide the products and services for the customers. So where do the customers fit in?
Businesses make profits by anticipating and satisfying customersâ€™ requirements. Customers provide the income to the business in exchange for the goods and services provided. However, the purpose of a business is to make money, satisfying customers is not its purpose but only the way in which it gains profitable income.
Customer relationship management (CRM) is largely about managing data regarding customer requirements and buying habits, rather than communicating with them. A good relationship between customer and supplier relies on the service delivered and especially the quality of communications between them. However, in many cases while the bulk of communication may be expected to be from the supplier to the customer, the level of communication from the customer is often impeded by the difficulty of making effective contact with the supplier.
Many companies often give the impression that communication from customers, other than for placing orders and remitting payment, is generally not of interest and is possibly discouraged. Companies appear to hide contact links on web-sites, and make contact phone numbers difficult to find. In some cases, standard answers to Frequently Asked Questions (FAQs) may resolve customer requirements, but in other cases, only direct communication with the company will prove satisfactory. While Twitter and other media have their place on modern business and customer communications, they are still no substitute for direct personal customer contact.
Information from customers is vital for every business. Customers are not always intent on complaints. Many loyal customers want to help their suppliers with ideas, suggestions and other positive information, because it is in their interest to assist them to continue to supply the goods and services they require. Yet somehow, some businesses seem to treat their customers as â€śthe enemyâ€ť, so that some refuse to give individual contact names on the grounds of â€śsecurityâ€ť. But customers want to know the identity of an individual who can answer questions and resolve problems, even if that individual answers through a pseudonym for â€śsecurityâ€ť reasons.
How should the Commercial manager assess the companyâ€™s communications with customers and what actions might be needed to improve them?
* Are all telephone numbers for customer service easily accessible? How do you know?
When away from the office, try telephoning, e-mailing and texting the company while acting as if a customer. Ask for help and see how well the system does or does not work. â€“ How easy is it to identify someone in authority and to contact them, how long does it take?
* How easy is it for customers to find contact points on a Web-site, in order to send in an e-mail enquiry/? – If directions are not clear and simple, the customer may give up trying, and important information lost.
* Are full contact details of key personnel available, including telephone, e-mail and postal address? If not, why not? Unnecessary secrecy is a barrier to commercial trust. (If security is a problem, provide pseudonyms).
* Are all telephone calls answered by personnel capable of giving adequate answers or referral to other authority?
* Do all e-mails and letters have a timely response? â€“
All e-mails should at least have an automatic response, giving details of when a full reply can be expected. â€“ Why? Because there is nothing worse for customer relations than for e-mails and letters not to be at least acknowledged in a timely manner. Such inaction simply creates frustration and irritation with those who seek to correspond with the organisation.
* Are the number and type of received customer responses monitored and analysed? How they are dealt with? Is the level of comment indicative of a problem or a customer requirement?
Using pre-recorded answering systems may appear to be cost effective. However, consider what effect it has on callers and prospective customers, when faced with a menu and press button selection, followed by more menus and press button selection? It creates annoyance and the impression that the company is not interested. Similarly, being put onto automatic telephone hold, while being told that â€śtheir call is really important to usâ€ť clearly demonstrates to the caller the exact opposite attitude
While businesses exist to produce money which they obtain from customers, customers should not be taken for granted. Showing that the views, comments, and interests of the customer are important and valued, encourage the customer to continue to return, even if they have encountered problems. It is easier and cheaper to keep existing customers than to have to replace them.
â€śHe who has the money makes the rulesâ€ť. It is the customer that has the money which the business wants. Business and customers are in partnership, but if the customer concludes that a business considers their opinions of little importance, they can always take their business and money elsewhere.
Â© N.C.Watkis, Contract Marketing Service 28 Mar 13
Contract Marketing Service, (Business Development Specialists)
April 1, 2013 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance management, business performance measurement, marketing management, performance management No Comments
A recent visit to the optician prompted the thought that we often see what we want to see or expect to see, but can be blind to the reality. In business it is equally true that management will see what it wants to see but be blind and in denial of the true situation.
When businesses fail, it sometimes comes as a surprise, yet analysis may show that the writing had been on the wall for some time and that the warning signs of problems were there, but were either not appreciated, were misinterpreted, or simply ignored.
The commercial world is highly volatile especially in consumer markets, and change in fashion, technology and other trends, tends to be rapid and increasingly frequent.
For the commercial manager, responsible for getting and maintaining profitable income, the frequency of change and development is a continual problem. The solutions to yesterdayâ€™s problems may still be valid today, but is todayâ€™s situation the same as yesterdays? How do you know? If todayâ€™s situation is not much different from yesterdayâ€™s, then yesterdayâ€™s solution may suffice, or need only minimal adaptation, but if todayâ€™s situation is very different, then a new solution will need to be found.
Recognising that a new problem requires a new solution, may create the additional problem that the new solution may require a change in organisation or in the way operations are conducted. The idea of change is one that generally creates most resistance, either from the management or the workforce or both. However, as the world and the commercial environment are constantly changing, businesses have to change and adapt if they are to survive. Difficult trading conditions require leadership and motivation, so that radical changes should be avoided unless absolutely necessary, as they are disruptive and demoralising. But if management is to be effective, then performance should be continually monitored and change effected by flexible evolutionary development, adjusting actions to the changing business environment. This approach to change is successfully demonstrated by the number of family owned businesses, mainly in Britain and Europe that have remained in continuous operation for over 300 years. In every case these businesses continue to exist because they have continued to adapt to changing market and trading conditions.
For the commercial manager, responsible for managing the diverse activities that anticipate and satisfy customer requirements, to produce the profitable income, the ability to see and assess things as they are, rather than how they are imagined to be, is paramount. That insight should always be both dispassionate and questioning.
Measuring the performance of all business activities is essential, because as Peter Druker saidâ€ť If you canâ€™t measure it you canâ€™t manage itâ€ť. But performance measurement is only an indicator that shows how effectively resources are being used and the return that is made. Management decisions must be based on the interpretation of facts and measurements, avoiding preconceptions and personal prejudices.
Education for business can do a lot to increase understanding of the commercial environment, as well as the detail and process of business operations. But while academic qualifications are important as indicators of study and learning, they are not qualifications of competency.
What sort of knowledge base should the Commercial manager possess or seek to acquire?
To understand the commercial environment, a commercial manager needs to:
* Use market research to understand the market.
* Study independent reports to qualify own research
* Study the performance of key customers to ascertain their current and future requirements
* Study competitors to understand their business philosophy, products and operations
* Be aware of new technologies and developments in order to assess how they might affect future business development.
* Be clear about what information can be verified and what is based on assumption
* Ensure that all assumptions regarding the business environment, the markets served, and the customer are identified and defined.
Additionally, a commercial manager should have the following competencies
* A good understanding of statistics
* A good understanding of the markets served
* A good understanding of the problems and requirements of customers
* The ability to read and understand a balance sheet and accounts in general
* A good working knowledge of all the elements of the marketing mix
* The ability to select and use performance measurements to enable management decisions to be based on quantitative data, rather than qualitative opinion.
Commercial managers should encourage employees to ask questions and engage in valid criticism, as they are often in closer contact with customers and the market than senior management and may well have better insight into the realities of customer relations and the market.
By so doing commercial managers will have the advantage of being able to assess divergent view points of the problems and better able to assess solutions, based on clear-sightedness of business realities rather than business illusions.
Â© N.C.Watkis, Contract Marketing Service 28 Feb 13
Contract Marketing Service, (Business Development Specialists)
March 6, 2013 Tags: Bpm, business analysis, business development, business efficiency, business performance improvement, business performance management, business performance measurement, business performance measures, improve profit, marketing performance measurement, profit development Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing management, Uncategorized No Comments