For the past 40 years or so, businesses have increasingly been dominated by financial control to create the â€śbottom lineâ€ť. This is understandable because the sole purpose of any business is to make money, but for whose benefit? Is it only to provide shareholders with an income or is it to grow the business so that the value of the shareholdersâ€™ investment is increased? What about investment in the business? What about the customers who provide the income or the workforce who make it possible? Commercial managers have the responsibility of producing and maximising profitable income for the long term future of the business, by anticipating and satisfying customer demands, but also of maintaining the right balance of the competing requirements of shareholders, employees and customers.
The owners of a business are the shareholders, who provide the initial finance that initiates and enables the business to operate. Shareholders invest for both the long and the short term, with the intention of gaining a profit or income. The value of the shares generally depends on the performance of the company and its ability to make profits in both its short and long term future. But for the short term investor, it is the immediate profits of a company, which may affect the share value or the size of its dividend, and dictate how and when they buy and sell. Other shareholders see shares as a long term investment which they hope will produce a good return when ultimately sold, based on a growth in the value of the business, with â€śinterestâ€ť paid in the form of dividends.
Customers are the life blood of every business because they alone provide the source of income. Satisfying the needs of its clients is how businesses make income but how well they do it dictates whether they make a profit or loss. Customers have to know that they have entered a fair exchange in their purchase transaction where they receive the value in goods and services that equates with the money they have paid. When customers are convinced of a fair exchange of goods and services for their money, they become repeat customers. However, if the customers thinks that they have been short changed in the transaction, they are unlikely to become repeat purchasers. In addition, in and age of increasing use of social media, while good service may be lauded by satisfied buyers, what is perceived to be poor service can quickly be widely broadcast, doing serious harm to a business operation.
Growth of income only comes from customers buying more or through an increase in the number of customers. Maintaining and increasing the customer base is a prime requirement of the commercial manager, but there will always be a natural wastage of customers through time, change of requirement or of circumstance. Thus it is incumbent on the commercial manager always to be seeking new customers if only to offset the natural wastage and maintain the number of customers on which the business income is based. Good customer relations are the basis of retaining customers and the foundation for obtaining new ones. However, problems can arise when businesses take their customers for granted by changing their product or service, to the disadvantage of the purchaser, thus undermining the relationship. In a competitive market, the dissatisfied customer can always go elsewhere. Obtaining new customers is always more expensive that retaining existing ones.
While the objective of the commercial manager is to maximise profitable income for the long term future of the business, it is counterproductive to do so at the expense of existing customers. Although there may be short term gains in such action, the long term consequences can be seriously negative. Increasing the level of profit for the bottom line is important, but money is only made by satisfying the customers who provide the income. Satisfying customers is only made possible by the employees who make it happen.
Employees are at the centre of every business. They have the essential knowledge of the customers, the product or service, and the business process. Companies rely on their employees to understand their customerâ€™s requirements and to deliver the product which produces the income. A business cannot function without employees. Retaining and rewarding good employees is cheaper than finding recruiting and training new ones who will still take time to acquire the essential experience of the customers and the business.
To grow and maintain a successful business, the commercial manager must ensure that
* Profitable income is maximised for the long term.
* The requirements of Customers are anticipated and satisfied.
* The morale and motivation of the workforce is maintained to ensure efficiency.
Businesses make money not only for the benefit of the shareholders, but also for re-investment in the business. Developing a profitable business provides income and security for the workforce, and also provides products on which the customers rely. Balancing the requirements of the shareholders with those of the customers and the employee, on whose work the income, profits, share price and dividends depend, is essential if the commercial manager is to maximise profitable income for the long termâ€™
Â© N.C.Watkis, Contract Marketing Service 28 Oct 16
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November 1, 2016 Posted in: business development, business efficiency, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators Comments Closed
About every five or ten years, articles appear in the business press on the subject of how to align sales and marketing. Why this subject should arise with such apparent regularity would suggest that old outdated ideas of business still prevail and that a silo mentality still persists amongst many involved in business development.
Whatever maybe the perceived importance of specialist business activities, the prime purpose of any business is to make money, for the benefit of the owners and the workforce, regardless of whether it is a business for manufacturing, retail or professional services. Businesses make money by producing goods and services which customers want to buy. Whatever a business makes or type of service it provides, money is only produced when the goods or services are actually sold to a customer. It is only from the act of selling that income is derived for the business in question, thus the ability to â€śsellâ€ť is crucial to the success of every business.
Although the term â€śsellingâ€ť is clearly defined in The Oxford English Dictionary as â€śmaking over or disposing of in exchange for money,â€ť there is no universally accepted definition of Marketing. The Chartered Institute of Marketing (CIM) defines Marketing as â€śthe management process that identifies anticipates and satisfies customer requirements profitablyâ€ť. Anticipating and satisfying customer demands requires many customer related activities including, advertising and promotion, marketing research, product development, brand management, and distribution but also includes making the sale, which is the executive function that ultimately brings in the money.
While the ability to sell is fundamental to business success, businesses frequently refer to â€śmarketingâ€ť goods and services when they actually mean advertising and selling, as though there were something wrong with the action of selling. Articles in the business press would also suggest that many marketers seem confused about their role, appearing to have limited objectives, in the highly specialized disciplines of social media, communications and brand image, but having little or nothing to do with selling.
However to be effective, the generation of sustainable profitable income for the long term future of any business requires the collective management of all the customer related activities under a single manager.
The internationally famous management consultant, the late Peter Drucker once saidâ€ť if you canâ€™t measure it you canâ€™t manage itâ€ť.
If managing assets and resources to produce profitable income is the responsibility of a commercial manager, then using performance measurements not just for sales but across all customer related activities is essential for their effective management. In all probability the majority of businesses would be hard pressed to quantify how much they actually spend or invest in getting and retaining business and might be surprised at the true costs involved.
If marketers aspire to reach senior management as commercial managers with the overall responsibility for producing profitable income, they must learn to speak the language of senior management, namely profit, revenue and costs. Marketers must be able to quantify and demonstrate in relevant performance measurements, the contribution to the business of their various customer related activities, both for the immediate and the long term, and not confine themselves to their own particular specializations. This means that they must be able to understand and manage all the resources necessary for producing income, including the sales function, in an integrated manner. In short, if marketing is a management function, then it requires professional managers to operate it. To that end, marketers will have to prove themselves be good leaders, managers and motivators, able to think strategically for the long term development of the business.
Sales managers are taken seriously by senior management because they can produce clear measurements of their performance in sales figures that relate directly to the levels of profitable income produced. Effective commercial management also relies of relevant performance measurements. Those who consider marketing to be about brand and communications, especially through social media, limit themselves and the importance of their contribution. Such performance data that they produce rarely relates clearly to income produced. Business is about profit and profit is about revenue and costs, not brand and image.
If marketers confine themselves only to the language of brand, image, and CRM they are unlikely to qualify themselves for higher management.
Â© N.C.Watkis, Contract Marketing Service 16 Sep. 16
September 26, 2016 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators Comments Closed
Small businesses by their nature have simple organisations, but as they become larger with greater manpower, they are organised into specialist departments that collectively contribute to producing income. Much of an organisationâ€™s planning and projections will be based on information provided by these departments to the commercial manager, responsible for producing the profitable income on which the future of the business depends. As these departments evolve, so a corporate culture, mentality and team spirit develop and while this is in general a good thing, it also brings the potential danger of the phenomenon known as â€śGroup Think. â€ś
What is Group Think? It is the term given to a group of people who collectively tend to like and use the same assumptions and thus hold the same collective opinions. Group Think manifests itself with collective answers to situations without considering alternative solutions or recognising changed conditions.
The Cambridge Dictionary defines Group Think as:
the process in which bad decisions are made by a group because its members do not want to express opinions, suggest new ideas, etc. that others may disagree with:
Group Think is plainly visible when governments enact and continue with policies that are plainly failing, or when companies adopt foolish strategies that produce massive losses.
While team building is good for promoting and delivering business objectives, close – knit teams have danger of group think. Where Group think develops there is a tendency to develop assumptions that are both wrong and without foundation. What everyone in the team knows to be true, frequently isnâ€™t and may be a false and outdated assumption.
For the commercial manager, responsible for input into the corporate plan and for the delivery of income to meet the corporate plan objectives, being aware of group think and its dangers is especially important, in order to counter its potential effects.
Since first described by Alex Osborn in the 1950â€™s Brain Storming has been considered an excellent way to generate ideas. However, more recent research tends to show that people working in groups actually produce fewer ideas that are innovative and actionable than would have been produce had worked individually alone. As soon as one person states a potential solution, it tends to influence the memory of everyone else in the group in ways that make them think about the problem in a similar manner, which is the basis of Group Think.
To counter this problem of potential group think, there are a number of actions that the commercial manger can implement.
1. Build a critical thinking culture. When people stay silent in group discussion, they do so because they think that their reputations will suffer and that they will be punished, not rewarded, for disclosing information that differs from the majorityâ€™s position.
2. Initially decline to express an opinion.
Commercial managers should decline to state a firm view at the start of any discussion, in order to allow others to share their thoughts more freely. By emphasizing their desire to hear all points of view, including dissenting opinions commercial managers are more likely to learn what they need to know. Numerous studies suggest that a groupâ€™s opinions are frequently swayed by information that is common to most or all their members regardless of whether it is right or wrong.
3. Concentrate on group, not individual, success –
Group members often fail to disclose what they know because they believe they wonâ€™t personally benefit from speaking up. People are far more likely to disclose what they know when they feel that they have everything to gain from a correct group decision. But if group members concentrate on their own prospects, rather than that of the group, the group is far more likely to make an incorrect decision…
4. Give group members distinct roles
If a commercial manager wants to know what group members are thinking, it helps to give people distinct roles and to tell members, before deliberation begins, that everyone has different, and relevant, information to contribute. Encourage team members to test decisions and opinions with alternative ideas and questions.
The most important questions for any commercial manager to ask should be:
* What do I need to know, even if I donâ€™t want to hear it?
* â€śHow do you know?â€ť
* Where and what is the evidence?
For the commercial manager it is essential that decisions that affect the income and the future of the business, are not adversely effected by group think mentality but are reached by unbiased and clear assessment of all available information
Â© N.C.Watkis, Contract Marketing Service 29 Jul 16
August 3, 2016 Posted in: business development, business efficiency, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing performance measurement Comments Closed
Every business organisation needs to a detailed financial plan or budget for the effective control of financial resources in order to operate efficiently. While financial controllers are responsible for the management of financial resources, commercial managers have the responsibility of producing the profitable income on which the organisation depends. Planning how that income is to be produced is fundamental to deciding what financial resources will be necessary for its production, and what returns will be generated as a result.
Although budgets and plans should be prepared from the bottom up rather than imposed from the top down, for the commercial manager, it starts with a financial objective, which is derived from the corporate plan. The corporate plan will set out the income and profit objectives, together with a corporate budget that will outline the uses of financial resources and investment.
The commercial manager has the responsibility of preparing and executing a commercial plan for the achievement of the financial objective. While corporate plans are usually set to cover for a period of three to five years, with perhaps an annual progress review, commercial plans are normally considered to be short term, usually for twelve months.
The purpose of every business is to make money, by anticipating and satisfying customer requirements profitably, for the benefit of its owners and for the employees on whom the operation depends. The commercial managerâ€™s responsibility is to produce the profitable income on which the business survives. A commercial plan, is therefore a necessary tool for the effective management of resources to achieve the objectives, and against which performance may be continually compared.
Preparing a commercial plan, requires input from all those different activities involved in producing profitable income from customers, so that as far as possible the plan should be prepared and written by those who have to execute it. That way, having been given an objective by the commercial manager, they have the responsibility and ownership of the pathway to achievement.
Ideally, a commercial manager would be given a financial objective, and would then prepare a plan and propose a budget for its achievement. This would then be submitted to the senior management for acceptance and funds allocated accordingly. In practice, it is more often the case that the financial controller, on behalf of the senior management hands down a â€śDepartmental budgetâ€ť to the commercial manager, which is simply an allocation of money for the commercial operation, This allocation may have little to do with the actual commercial situation, but the commercial manager has to make a workable plan within the financial limits.
The financial target of the commercial plan needs to be clearly stated and understood by everyone involved in the planâ€™s production. While targets for product sales, market share and other market related objectives are important, it should be remembered that income comes from customers, thus the target customer base must be clearly defined, as well as the strategies to be employed to engage the customers.
A commercial plan should ideally contain the following elements:
* A clear statement of the financial objectives.
* A statement of the commercial objectives in terms of product, market, promotion and price,
* A description of the markets over the 12 months of the plan, with an appreciation of the economic and other trends.
* A statement of the commercial policies to be followed over the period, e.g. the markets to be engaged and the methods of engagement.
* A list of principle contracts to be achieved over the period on which the greater part of the income plan depends.
* An appreciation of the critical internal factors that could adversely effect the commercial achievement of the next 12 months
* An Action Plan listing what commercial actions have to be taken , by whom and when.
* Sales/Revenue forecast prepared as a Profit and Loss account by month.
* Commercial Budget comprising an estimated schedule of commercial expenditure for the period, including travel vehicles, living expenditure, advertising, P.R., exhibitions, entertainment etc. N.B Having got to this stage in the planning, if the estimated budget required for the plan exceeds that of the Departmental allocation, the commercial manager will either have to revise the plan within the allocation, or use the plan to request additional resource from senior management.
Commercial managers need to ensure that the assumptions on which the plan is based are clearly understood as are the adverse external risks. If anything can go wrong it will. Therefore there should always be a contingency plan and fund to deal with unexpected circumstances.
Â© N.C.Watkis, Contract Marketing Service 30 Jun 16
July 3, 2016 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, performance management Comments Closed
Innovation is a word very much to the fore, in the business press and media. So what is important about innovation, what does it actually mean and how should a commercial manager develop it?
Innovation can provide creative solutions to todayâ€™s commercial requirements in ways which yesterdayâ€™s answers cannot. Business growth and development is often considered dependent on future innovation.
The Oxford English Dictionary defines Innovation as: To make changes in something established, especially by introducing new methods, ideas, or products:
The results of innovation may be seen every day with new products and ideas being presented to the potential customer. In business to business markets, innovation often takes place along lines of technological improvements for efficiency and effectiveness. But in consumer markets, innovation is often driven by fashion promulgated through social media. A new IPhone appears every few months, with new features and apps, which appeals to customers who like to be first with the latest technology, and who therefore change their phones regularly in order to have the latest model.
Change and development in commercial markets is probably faster now than at any other time. Developments, especially in IT and communications, such as social media, have been rapid. The skill of successful entrepreneurs lies in their ability to have seen the potential of new ideas and innovations and to have exploited them profitably, in advance of their competitors.
Developing new products with new technology may often take a longer time than there is available in which to recoup the investment and produce profit, before being superseded by later models. This is especially the case in the IT and communication markets, where investment in product development is essential for organisations to maintain their place in the market, or risk becoming seen as obsolescent.
Business exist to make money for the benefit of owners and the workforce, by anticipating and satisfying the demands of customers, who ultimately provide the income on which the business depends. Satisfying customers is not the purpose of business, but is the way by which businesses make money.
Commercial managers are responsible for producing profitable income for their respective businesses with the objective of maximising profitable income for the long term future while minimising costs and the use of assets and investment. Innovation is not solely confined to the development of new products and services, but is about finding new ways to do things better, more productively, more profitably and more efficiently. Thus in a rapidly changing commercial environment, developing innovation is especially important to satisfy customer requirements, and produce efficiency in order to maintain the flow of profitable income.
While product innovation is often seen as the key to satisfying changing customer requirements, it is not in itself a guarantee of financial success and may require considerable investment. Maintaining and improving profitable income may involve the development of new products and services, but more often it requires doing things differently and more efficiently to meet changing circumstances and situations. Developing creative ideas involving doing things differently, through efficiency and productivity may increase profitable income at minimal cost.
How can a commercial manager encourage and develop innovation to maintain efficiency and sustain and increase levels of profitable income? If a commercial manager is by nature more analytical rather than creative, then it pays them to employ and encourage those with more creative abilities. Such creative minds should be encouraged to develop new ideas for the commercial manager to assess for their practicability.
To encourage an atmosphere in the workplace where innovative ideas can develop, commercial managers need to:
* Keep abreast of changes in technology, fashion, and customer requirements.
* Encourage staff to question processes and invite suggestions for improvement.
* Use â€śbrain stormingâ€ť sessions to review all the commercial processes that relate to satisfying the customer, including media communications, delivery, payment methods, product development and others, in order to assess the need for change and development.
* Realise that small and achievable changes in business processes can have cumulative beneficial effects e.g. By reducing costs by 1%, increasing prices by 1% and increasing sales by 1% the cumulative increase of profit can be as much as 24%
* Develop a working environment that encourages staff to develop new ideas, together with an organization which is adaptable enough to enable change to take place quickly and easily.
Commercial managers need to be aware that innovation requires being alert to changes and development that effect customers, the market environment, and their competition as well as their own business. Being aware of those changes can stimulate creative new ideas to ways of working as well as developing new products and services.
Â© N.C.Watkis, Contract Marketing Service 31 May16
May 31, 2016 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement Comments Closed
The prime purpose of every business is to make money for the benefit of the owners and the workforce, regardless of whether it is a business for manufacturing, retail or professional services. Businesses make money by producing goods and services which customers want to buy. Commercial managers have the responsibility of managing resources to produce profitable income from sales, by anticipating and satisfying customer requirements.
However good the product, service and brand image may be, the ability to make income from sales is fundamental to the success of every business, Over time, businesses have increased both in the size and complexity of their organisations, such that they have many elements that collectively contribute to producing the sales income on which the company owners and workforce depend.
Traditionally, selling to the customer has been done on a personal basis by trained sales personnel. There are now many businesses that do not use personal selling to provide their income, but rely on other impersonal means, such as through the internet, direct mail, catalogue or social media.
Considering that successful selling is fundamental to the producing of profitable income, it is important for commercial managers of such businesses, to understand which activities are involved in generating customer interest and its conversion to income producing sales, in order that the process is effectively managed.
The process of making a sale may be broken down into four principle actions
a. Engaging the attention of the potential customer.
b. Establishing the customerâ€™s interest.
c. Developing the customerâ€™s desire for the product or service.
d. Guiding the customer to easily complete the purchase.
These actions form the basis of every professional sales personâ€™s approach to making and completing a sale with a customer.
However, the principles of this process still apply when selling through the internet, direct mail, catalogue or social media. In all these cases, the message to the customer is conveyed by the words of a copywriter and the presentation of a designer. Whereas a salesman can adapt their personal selling approach to the circumstances of the interaction with the customer, this is not possible when selling via the internet, direct mail, catalogue or social media. While interactive media may allow the selling message to be â€śpersonalisedâ€ť to some extent, there still has to be a process that engages the prospective customerâ€™s interest and guides them to completing a purchase. That success is entirely dependent on the words of the copywriter to effectively convey the sales message and the brochure or web-designer to direct and hold the interest of the potential customer.
It must be remembered that the effectiveness of web-sites, direct mail, catalogues and social media sites as selling tools is only as good as the designers and copywriters that produce them.
If the objective of web-site pages, direct sales brochures, catalogues or social media sites is to sell products or services, then the process must be simple, clear and easy for the potential customer to use. If the process becomes complicated, it can impede the sales message to the potential customer and potentially lose the sale.
For the commercial manager, with overall responsibility for getting and maintaining profitable income, ensuring that the sales message used in impersonal selling is effective, is of great importance. It follows that designers and copywriters must be fully briefed about the message they are to produce and the objective that is to be achieved, namely sales. Many web-sites and other media frequently confuse telling what the business wants to say about itself and its products, with what the potential customer actually wants to know.
Whatever medium is used the copywriter and designers need to develop the sales process through four stages.
a. The first stage should describe the particular problem which the customer is likely to have.
b. The second stage should show how the features of product or service can solve the problem.
c. By showing how the potential customer would benefit from using the product or service, encourage the customer to want the solution.
d. Finally, by making ordering and completing the purchase a simple process, guide and encourage the customer to complete the purchase action.
All sales processes need to have performance measurements to ensure that they can be effectively managed. So while the sales message will be devised by the copywriter, methods of performance measurement will need to be developed and incorporated by the designers, especially in the design of web-pages and social media sites. While the act of selling may be delegated to specialist sales personnel, or in the case of businesses without a sales organisation, to the copywriter of the message and the designer of the media, the ultimate responsibility for producing the income from sales still lies with the commercial manager.
Â© N.C.Watkis, Contract Marketing Service 9 Apr16
April 11, 2016 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators Comments Closed
In March this year the Chartered Institute of Marketing (CIM) will hold an inaugural â€śBrand Summitâ€ť conference at the British Museum, London. The conference will concentrate on the value of brand, as well as how to create and manage brand experience for customers.
The subject of brand image is important as indicated by the CIM conference, but then so are many other commercial factors. Concentrating too closely on any one business area may result in other important factors being overlooked, which may bring their own dangers,
Commercial managers are responsible for producing a continuous flow of profitable income, by anticipating and satisfying customer requirements. While others play important parts in managing finance, supplies, and personnel, commercial managers have the responsibility of using asset and resources to create the essential income on which the business, the workforce and the owners depend. To be successful, they need to have a wide range of customer related skills over and above understanding the value of brand in order to generate and maintain levels of profitable income. But while they have control over the use of assets and resources, they have no control over those outside factors which directly and indirectly affect the business. However good the commercial manger, the product and the supporting staff may be, it is the outside forces that can conspire to undermine even established and successful businesses. It is vital to be aware of changes in technology, law and the economic environment and to be able to assess their potential effects on current and future business. Failure to detect and understand these changes can bring profound effects.
An obvious example of this is the newspaper industry, which completely failed to foresee the effect that the internet would have on the way news is consumed, and continued with a traditional increasingly out dated approach. With advertising revenues continuing to fall Trinity Mirror closed seven regional newspapers last year. Meanwhile, Huffington Post, Twitter, Buzzfeed, and a multitude of other young companies have made big inroads into the newspaperâ€™s market.
Commercial managers need to be aware of developments in their markets at an early stage, because change may be rapid. Technology is changing the way people shop, consume and live through the use of SMS marketing (short message service marketing), social media, and on-demand media. Companies that ignores the changes in their market can soon disappear like famous names such as, Woolworths and Comet.
Producing profitable income at a high level day to day, requires managers to have an intense operational focus, but to continue to produce income for the future, they need to have a broad awareness of their commercial environment and what may be called peripheral vision.Â
Peripheral vision is to be aware when new threats or opportunities emerge on the edge of their usual business environment. Monitoring what is happening in other industries, distant markets, new research, emerging business models, and remote demographic data may at first seem to have little relevance to the business portfolio, but may reveal the early warning signs of impending change that could threaten a companyâ€™s long-term survival.Â Developing peripheral vision is about being able to anticipate change, by sensing where to look for clues, understanding how to interpret weak signals, and having the courage to act when those signals are still ambiguous.
Recognising signs of change is not easy especially in areas that may only effect a business indirectly, therefore commercial managers should seek to:
* Be vigilant in looking for potentially significant developments at the periphery of their business, e.g. related industries, suppliers, related technology.
* Search beyond the boundaries of current, prevailing views, regarding developments in law, economy, technology and communications.
* Seek ways to recognize potential changes before the competition does
* Consider multiple hypotheses about the causes of change
* Encourage staff to think independently and voice alternative ideas.
* Remain vigilant and curious about signals from many spheres that might impinge directly or indirectly on business activity.
Concentrating too much on any particular internal aspect of a business can easily distract the commercial manager from the changes and developments in their own business environment. Developments in communications and technological can happen quickly, and businesses that are slow to recognise the signs may not have time to adapt quickly enough
If commercial managers are to stay ahead of the game, and continue to produce profitable income for the future, they must remain vigilant in order to detect the signs of change at an early stage.
Â© N.C.Watkis, Contract Marketing Service 26 Feb 16
March 3, 2016 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators Comments Closed
Commercial managers are responsible for producing the flow of profitable income for their business. As such, they are responsible for managing all those various activities which collectively anticipate and satisfy customer demand profitably. In larger companies, many of these particular activities will be managed by specialists, while in smaller businesses, the commercial manager may have direct responsibility for some or all of these specific areas.
In principle, the core elements of customer related business, that is, marketing research, product development, advertising, promotion and product fulfilment, remain the same. However, the development of new technology, especially in relation to the application of IT to business operations, has and is changing rapidly. Nowhere are these changes and developments more apparent than in the areas of advertising and promotion, which have been revolutionised by the rapid emergence of social media and customer relationship management. The use of Twitter and Facebook have become major customer communication channels, and an essential part of customer related activity especially in consumer markets. Keeping up with these developments may be difficult but is essential if commercial managers are to be able to control their total responsibilities effectively.
Although commercial managers may be professionally qualified as accountants, engineers, or as marketers, and while many of them may also have MBAs , they also need to have at least a rudimentary working knowledge of all the activities for which they have overall responsibility, especially in these new areas of social media and on-line business. The responsibility for motivating and managing those subordinates who undertake such specialist activities, lies with the commercial manager, thus it is vital that they have at least a working knowledge of these areas in order to oversee them effectively. Where commercial managers are reliant on employees with superior expertise in specific fields, it is important that they do not try to micro manage those areas but allow subordinates to be free to carry out their responsibilities within the constraints of their job description and targets, while monitoring performance through regular reports and frequent dialogue,
However, problems arise when senior managers do not fully understand the activities for which they have overall responsibilities. A lack of necessary understanding can often discourage senior management from asking relevant and informed questions, either through over confidence in their sub-ordinate executivesâ€™ abilities, or through fear of revealing their own ignorance to better qualified employees.
To maintain satisfactory understanding of all aspects of their total responsibilities, commercial managers need to ensure that they;
* Educate themselves through reading or by attending courses to extend their knowledge of new technology and its practical applications, as well as any other business subject they think necessary.
* Ensure that responsibilities for specialist commercial activities are delegated to suitably qualified employees
* Question employees to get them to explain in plain language, new methods, processes and ideas in order to establish mutual understanding.
* Determine with specialist subordinates what inputs and outputs can be effectively measured to establish levels of performance.
* Ensure that all reports are written in plain language, without the use of â€śjargonâ€ť to ensure clarity and understanding.
* Maintain informed dialogue with subordinates responsible for specific activities. This will help to establish mutual trust and understanding between both parties.
While the principles of business remain the same, managers and commercial managers in particular need to keep up to date with rapidly changing and developing ideas especially with the application of technology. For this reason continual professional development is increasingly regarded as a general requirement for all executives in companies.
If commercial managers do not have the knowledge or sufficient understanding of all those activities for which they hold ultimate responsibility, they will not be in a position to ask relevant and purposeful questions. In the fast changing areas of social media, supply chain management, and CRM (customer relationship management), knowledge is power but a lack of knowledge shows a weakness, leaving the commercial manager vulnerable to the charge of not being fully in control of their responsibilities. If the commercial manger does not know about or understand an activity for which they hold responsibility, they have no excuse for not asking relevant questions.
Â© N.C.Watkis, Contract Marketing Service 07 Jan 16
January 10, 2016 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators Comments Closed
The news that Volkswagen (VW) has apparently engineered its diesel engine management software to give false emission readings, has created world-wide astonishment and anger. VW said that it will now recall at least 8 million vehicles which will need modifications, for which the company will have to pay. The financial cost to VW will be enormous, but the damage to the company and its reputation will not stop there. There are likely to be many legal cases brought against the company by governments for fraud and by individuals who find that their vehicleâ€™s resale value to be nearly worthless.
This situation where a company is brought into serious difficulties or even total collapse through the rogue actions of individuals is rare but not unusual. In recent years such cases have usually been confined to the financial sector. In 1995 the actions of Nick Leeson, a futures trader in Singapore, lost $1.4bn in derivatives trading, which brought about the total demise of Barings Bank. Other financial institutions such as Allied Irish Bank, Japan’s Daiwa Bank, SociĂ©tĂ© GĂ©nĂ©rale of France, and UBS, the Swiss banking giant have all been seriously damaged by the unauthorised actions of individual employees. How did these situations arise? What are the lessons from which all businesses can take note and benefit?
It would seem that in most of the cases involved in the finance sector, rogue traders manipulated the system in order to increase their potential for earning high levels of commission by taking unauthorised risks. Thus their motivation was for personal financial gain. In the case of VW, it would seem unlikely that by manipulating the engine management software to give false emission readings, individuals would gain any financial benefit. It may be that the decision to engineer false emission readings was to cover up and avoid the embarrassment that VW engines did not meet the required Government emissions standards, which would have affected sales.
The commercial manager is responsible for producing and maintaining the levels of necessary profitable income for the continued development of the business. Therefore it should be their specific interest to ensure that all the workforce understand that individually and collectively, their actions affect customer perceptions and satisfaction, which ultimately effects the level of income on which they all depend. Instilling enthusiasm, motivation creativity and expertise is not simply a matter of communication, but of effective management and leadership. When effective leadership and management break down, opportunities arise for individuals to game the system to their own advantage and to the disadvantage of the business.
Whenever there are serious management problems the buck stops with the chief executive officer, but when it involves any relations with the customer, the responsibility ultimately rests with the commercial manager. To prevent rogue activities, it is important to recognise how such situations can arise, as there is no real excuse for not knowing. When rogue activities are uncovered, the commercial manger must immediately establish the extent of the problem, the damage caused, and implement the necessary remedial actions.
Problems arise when senior managers do not fully understand the activities for which they have overall responsibilities. Such situations discourage senior management from asking relevant informed questions, either through over confidence in their sub-ordinate executivesâ€™ abilities, or through fear of revealing their own ignorance to better qualified specialists.
Large organisations especially, can develop a â€śsilo mentalityâ€ť amongst their different departments, which can foster individuals gaming the system to their own advantage and the potential development of wayward activities.
The principle cause that allows rogue activities to occur, is bad management through:
* Lack of attention and supervision
* Lack of fore sight of the potential damage, and consequences of rogue activities
* Company organisation where a â€śsiloâ€ť mentality prevails such that internal communications and cooperation are poor.
When detrimental rogue activities are uncovered it may already be too late to prevent their negative consequences. If such activities are shown to be illegal or damaging to customer relations, there are immediate actions which the commercial manager needs to take to try to mitigate their effects.
* Identify the business areas involved
* Establish if the activities involved deliberate actions to deceive, or to cover-up embarrassment.
* If possible, identify which individuals were responsible and deal with them according to their employment contract and employment law. If the actions were illegal or seriously damaging, â€“ immediate suspension and dismissal may be necessary.
* Ensure that sufficient publicity is given to the uncovering of the problem and the subsequent actions to rectify it.
Prevention is always better than cure.
What should the commercial manager do to prevent rogue activities?
* Have a full understanding of all the processes for which the commercial manager has overall responsibility
* Ensure close supervision of all activities but avoid micro management.
* Develop an integrated team spirit so that all problems are discussed.
* Ensure that those earning commission cannot game the system to their own advantage
* Try to develop an atmosphere where mistakes and error may be identified and dealt without rancour.
* Ensure there is a regular reporting system that identifies all important activities, the relevant progress and highlights any problems.
The commercial manager is responsible for all those activities involved in producing profitable income by anticipating and satisfying customer requirements. When things go wrong through the actions of individuals, the commercial manage has the final responsibility of knowing how the business is being conducted at all times. For the commercial manager, there is no excuse for not knowing.
Â© N.C.Watkis, Contract Marketing Service 19 Nov 15
November 30, 2015 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators Comments Closed
For many years the major supermarkets have enjoyed annual increases in turnover; like for like sales and overall profits. Now those same supermarkets are reporting falling sales and profits, while their managements are trying to understand why this has happened and what to do about it.
It is a mistake to assume that the upward trend in sales and profits will always continue, or to base planning on that assumption. Forecasting the future based on past performance is always a problem. Are the conditions the same, improving or worsening? Where is the evidence?
To be successful the commercial manager needs to remember that while income can go up as well as down, they also need to understand why. What are the underlying factors? Markets and demand are finite, customersâ€™ requirements change, markets get saturated, and both products and services have a finite life.
Peter Drucker the world famous management consultant said â€śif you canâ€™t measure it you canâ€™t manage itâ€ť. While that statement remains true, the statement refers only to the management of resources, it does not refer to the generation of profitable income. However,
performance measurement remains an important tool for effective management of resources.
The objective of the commercial manager is to generate and maximize profitable income while minimizing the use of assets resources and investment. Performance measurement can show what has been achieved in a specific period and in some cases show the efficiency of producing profitable income in real time. As such, performance measurement can give an indication of what commercial actions have been successful in the past and even currently. But future commercial performance is not based on a straight extrapolation of a graphical line. The market place is in a constant dynamic motion that may be slow or rapid. Yesterdayâ€™s answers, and even those of today, may or may not be suitable for tomorrowâ€™s market situation. Commercial mangers must bear in mind that customerâ€™s requirements change, established products and services are superseded by new designs and technology changes, markets become saturated, and competitors become stronger or weaker.
While commercial managers must strive for efficiency in the use of assets and investment as indicated in performance measurements, they must also concentrate on how to maintain and increase the level of sustained profitable income. The perpetual problem for the commercial manager, is how to maintain and increase profitable income while managing resources effectively? Income comes from customers who collectively comprise the market in which the business operates. Therefore it is essential that commercial managers should be continually aware of the development of individual customer requirements and the changes to existing and potential market opportunities and threats. Understanding this information is fundamental to the preparation of future business planning, as is creativity and imagination.
How can the commercial manager maintain or increase profitable income?
There are no simple answers to this question that guarantee success, but there are principles which if applied can provide profitable outcomes.
* Businesses need to strive for continual growth in order to replace the natural wastage of customers.
* Understanding customersâ€™ changing needs, requirements and motivations.
* Use direct export and the internet to expanding into bigger geographical areas.
* Diversify into new areas especially if the market is saturated or declining.
* Develop new products to compliment an existing product range or replace obsolete ones.
* Develop customer and market communications through social media and the internet to complement established media advertising and public relations.
* Consider expansion by takeover. (While take overs can bring income, new customers and increased market share, they can also bring short term inherent risks and costs.)
* Apply lateral thinking to threats and opportunities, to find new solutions.
* Encourage creativity and imagination amongst the workforce to develop new ideas and opportunities.
Commercial managers are paid to manage assets which are measured in financial and numerical value to produce income efficiently. How such assets are used effectively is dependent on the knowledgebase and proficiency of the staff employed. The effective management, direction and motivation of professional experienced staff that have entrepreneurial thinking, imagination, and flare especially in communications and business development, is therefore essential
While performance measurements show how resources are being used efficiently, and sales trends give a guide to changes in demand, only good customer relations can indicate future developments and opportunities, which performance measurements cannot do.
Efficient and effective management is essential for building and maintaining a continuous flow of profitable income, but successful business also requires the art of being able to see and foresee potential opportunities and to be able to exploit them quickly.
Finding and exploiting opportunities to create income is largely an art, but making that income profitable requires efficient and effective commercial management,
Â© N.C.Watkis, Contract Marketing Service 20 Oct 15
October 23, 2015 Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing development, marketing management, marketing metrics, marketing performance measurement, marketing ROI, performance management, performance measurement indicators Comments Closed