If you want new business, - go and find it!

We now live in a global market place. Historically, businesses have always had the ability to operate in foreign markets, but communications and costs have meant that comparatively few have ventured into business beyond their own locality or national borders. Modern communications and especially the internet have changed business perceptions. Companies now can and do outsource their administration wherever it may be advantageous so to do, even to the other side of the world. At the same time, businesses can now present their products and services to customers and potential clients via the internet enabling substantial businesses to be developed as mail-order via the internet in a cost effective manner that was previously impossible only twenty years ago.

Using the internet is an effective way of passive selling. It enables potential customers who know what they want, to see and access products and services displayed on web-sites. This is a great advantage for small specialist businesses which have limited markets within their home territory, allowing them to have access to specialist demand on a global scale via the internet.
While it costs relatively little to set up a web-site for goods and services, which can be enabled to be accessed throughout the world, it is not a substitute for old fashioned market and marketing research. Different countries around the world have different problems and needs. While a product may be very successful in its country of origin, because it answers specific problems, those same problems may not exist in other countries, or may not be considered sufficiently important. Similarly, there are potential customers overseas that may be unaware of the products and services available to them that would satisfy their needs. Just because a business displays its products and services on a web-site, does not make its potential markets aware of its existence. Direct advertising and promotion in other countries can make a potential market aware of a product, but unless that market has a need for that product, the investment in marketing communication will have been wasted. Ultimately, there is no substitute for old fashioned marketing research to establish the nature and level of need.
So what should be done? Why do market research, when the internet can make direct contact with potential customers?
The internet is an excellent tool, but the sources of the information are not always reliable, and the information may not be suitable for decision making. Desk research should still be the first port of call, but it is amazing that so many businesses do so little if any market research. “Reconnaissance is never wasted”, and so it is in the commercial world that research always pays dividends and saves on unnecessary costs.
The Internet is a good initial source for information about countries, needs, and existing competition, and may give indications for the direction of further research, but caution must always be exercised regarding the reliability of the accessed web-site and its information. British Chambers of Commerce are a useful source of information about foreign markets, and can provide a wealth of information from their commercial libraries. Trade associations also provide insight into other markets and the UK government provides a wealth of information and advice to would be exporters through the “UK Trade and Investment” organization.
The first questions that need to be asked are:
1. Is there a market for the product in the selected territory? How do you know?
2. How big is the market?
3. What is the size and nature of the completion?
4. Is the product suitable for the market or would it need to be adapted?
5. Are the unique selling points and branding suitable for the target market?
6. Would the market bare the extra cost of freight and transport, packaging and agent’s commission and still allow a competitive price?
7. Are there any potential trade barriers or restrictions?
A lot of in- country market research can be obtained by through the Commercial Attaché’s at the British Embassies or High commissions. Not only can the Commercial Attaché’s provide market and local information, but they are also able to find and introduce potential contacts and agents. So the executive responsible for developing business income has a number of sources for potential help in investigating and launching into new overseas markets.
Chambers of Commerce frequently organise trade missions to overseas markets, providing a cost effective way of visiting new territories as well as finding potential partners, distributors, and agents. Visiting trade shows abroad can facilitate an initial assessment of the business opportunities, as well providing an opportunity to meet potential contact and assess competition
If the market research is favourable, it will be necessary to prepare a marketing plan specifically for that area, taking into account, local values, customs, language and currencies will all impact on business activities.
There are many opportunities to develop profitable income from the global market, but businesses must be prepared to invest in some research and make the effort to find them.


© N.C.Watkis, Contract Marketing Service 13 Dec 11

Customer strategy: Contact with the enemy makes all plans obsolete!

Defining business mission statements, strategies and objectives, is a relatively easy if at times laborious process undertaken by those in charge of getting and maintaining business income. Every year, countless books and training courses are devoted to the subject of business strategy and planning, and the training industry gains a lot of business in supplying programs to meet the needs of businesses and executives who want to understand and improve their planning process.

Unfortunately all the planning in the world does not guarantee the desired results. Carl Von Clausewitz said that in war, contact with the enemy makes all plans obsolete. Business is not war, but there is an element of truth that in the world of commerce, changing factors can soon make business plans obsolescent.

As a manager responsible for getting and maintaining business income, setting income objectives to support the overall business plan is relatively easy. However, achieving those income objectives may be easier said than done.

Assuming that a business has identified a “need” in its market; has developed a product or service that provides a solution that satisfies that “need”, and at a price that potential customers are prepared to pay, then in theory, commercial success should be assured. In reality, business is never that simple. However detailed and comprehensive business development plans may be, their success depends on in the ability and motivation of personnel to deliver the actions and results required.

Managers responsible for bringing in income to the business have to know how they are progressing in relation to their business targets. Those business targets may be financial, or related to other factors such as profitability, orders placed, new customers gained, market share, or numerous others. Measuring performance is an important factor in effective management. But performance measurement shows only what has been achieved in the past. Past performance measurements may, by extrapolation, indicate a trend in future performance, but they do not guarantee it. Achievement is produced by business leadership and effective management. But what does effective leadership and management mean in the world of business?

Leadership is essentially about encouraging others to act willingly in a particular way for a specific purpose and benefit. In business, leadership is about encouraging others to work to achieve the objectives for the benefit of the business. Management is about using resources efficiently and effectively to achieve business objectives. Leaders need not be good managers, and managers may not necessarily be good leaders.

In most businesses, “leadership” largely belongs to Chief executives, as it is their responsibility to define the objectives of the business and to inspire the willing support of the employees. However, executives responsible for getting and maintaining business income generally have to manage their staff and resources effectively, rather than provide them with leadership. The executive’s ability to motivate their staff, to maximize their efficiency and productivity, is therefore of great importance. Ensuring that what is being asked is attainable, and that sufficient resources and training have been provided will help to build necessary moral and confidence, which is especially important for staff who deal directly with customers and potential clients.

Getting the best out of people, starts with an effective coherent plan, with achievable quantified objectives. Ideally, staff should be involved in the planning procedure so that their contribution helps to develop their commitment to the objectives and actions required.

There are many books available on “management style”, all claiming to be the answer to effective management and while every book may have its merits, none can provide the perfect answer because business conditions and culture differ in every situation. However, there are principles which will help the executive responsible for producing business income, maintain the morale of employees, and motivate them to work efficiently and effectively, which include the following:
* Ensure that your own standards of conduct and performance exceed those which you set for your staff.
* Make the work important to them by telling them why it’s important to others.
* Ensure that individual responsibilities are clearly understood.
* Set agreed obtainable objectives and delegate responsibility.
* Assess performance with quantified measurements.
* Ensure that staff are provided with the resources necessary to undertake their work and achieve their objectives.
* Regularly assess individual performance, with positive and negative feedback.
* Promote their successes and minimize their failures. More is achieved by genuine encouragement and praise than by overt criticism.
* Encourage staff to be creative and to devise new ideas and methods of working.
* Having set objectives and allocated resources, leave staff to get on with their job. Be available to assist if requested, but otherwise do not interfere.
It is said that “In life, you get what you expect.” If you expect the best from your staff, and give them the proper resources and direction, they are more likely to perform at the level required of them. Confidence breeds confidence and success breeds success.


© N.C.Watkis, Contract marketing Service 22 Nov 11

LIFE CYCLES ARE NOT RESTRICTED TO PRODUCTS

It is generally accepted that product and services have a “life cycle”. From the time a product or service is launched into a market, it will grow with increasing sales, before entering a period of “maturity” as its market becomes “saturated”, after which sales start to decline as demand decreases and competitive products arrive.

Product life cycles can be long or short. Some “fashionable” products may only last for a matter of weeks or months, while others may last for decades. But what is certain is that demand for any product or service is finite and at sometime or other demand for the product will be replaced by different requirement.

For the manager responsible for getting and retaining profitable income for a business, awareness of product life cycles is very important. An appreciation of where a product or service may be, in relation to its life cycle, is essential for future business planning. Can the product or service be modified to extend its life, or is it becoming obsolete owing to changing conditions or competitive technology?

Businesses exist only to make money. Making products or supplying services is only the manner in which a business produces its income. Being alert to changes in customer demand is of primary importance for the manager of income development. Internal business indicators may help to illuminate the position of a product in relation to its market, but declining sales figures can be indicative not only of a possible reduction in demand, but also of other factors including organizational inefficiencies.

While internal indicators show how the product is reacting to the market, external indicators show how the market is reacting to the product. By comparing trends in sales with those of market growth and market share, it is possible to assess whether demand for a product is increasing, maturing or is in decline. Changes in the economic climate at local, national and international level can often have direct effect on the demand for specific products and services. Proposed and actual changes in legislation may affect the nature and substance of products and services, or impinge directly on how they are delivered. Similarly, being aware of how trends in consumer fashion may ultimately affect demand, especially with fast moving consumer goods. An advance in technology may make a product obsolete overnight.

Changes in customer demand may be slow and subtle, or may be quick and direct, but for a business to be and remain successful; it needs to anticipate change before it happens. In whatever business an organization is involved, customer demand will always be evolving as needs and perceptions change. For the manager this means that looking ahead is essential, in order to be suitably prepared either to modify the product or service to meet changing needs and expectations, or to develop new products or services to be the solution to different problems.

Getting and retaining business requires many processes and actions in order to maintain the flow of necessary income. But as the economic, social, and market conditions continually change and develop, so the method by which business is secured may become less suited or inefficient to meet the prevailing commercial climate. The principle of “lifecycles” does not only apply to the product or service that produces the income, but also applies to the processes involved in getting and retaining business.

How effective is the organisation in getting business? How efficient is it in producing income? What is certain, is that in a changing world of commerce, the processes and methods used successfully yesterday, although tried and trusted, may not be as effective under today’s conditions. It is important therefore, that managers should regularly examine and question their methods and processes, to ensure that they are efficient and effective. Are the ways that are used to seek and engage customers still as effective as previously? How do you know? If the results are less than they were despite the same investment of effort, perhaps they need to be modified or adapted to meet changed conditions. Alternatively, perhaps new methods and processes need to be employed in order to develop and maintain business. Only Constant monitoring and analysis of quantified business performance indicators from both internal and external sources will enable business performance and income to be maintained and maximized.

The principle of lifecycles applies to products and services, but equally to the markets that are served and the business processes involved in satisfying customer demand.

© N.C.Watkis, Contract Marketing Service 18 Oct 11
Contract Marketing Service, (Marketing Performance Consultants)

Ignorance is no excuse

In the “phone hacking scandal”, News International managers appear to have assumed that the gaoling of Goodman and Mulcaire, had ended any illegal practices amongst their staff. But did those managers make efforts to confirm that illegal practices had not only ceased but did not reappear, or did they simply assume the answer they wanted? Do you know how the law relates and affects your business practices? Do your employees know and understand how the law relates and affects their activities in getting and retaining business? How do you know?

There is so much law involved in all commercial transactions, that it has become a veritable minefield for the unwary manager responsible for getting and maintaining business. Although buyers and sellers should be free to engage in business as they please, the law is there to make a reliable framework in which business may be transacted for their mutual benefit. Many managers would consider that they know how the law affects their business activities, but this is potentially a dangerous assumption. Not only should a manager responsible for producing the income of the business be aware of all the laws that affect that process, but they also need to ensure that employees and contractors are equally aware of the relevant regulations that impinge on their actions.

While managers responsible for getting and retaining business may not be responsible for the manufacture of the product that they sell, they need to be aware of the law relating to their business. Legal regulation may relate to the sourcing and use of material, or in the case of the food industry a whole specialist area of food and hygiene regulations. Any transgression of legal regulation in the production area could result in the interruption of product supply, and damage to the reputation and image of the business. In the food industry, any failure under food and hygiene can have catastrophic results for the producer, especially if they are a small business. Similarly, managers need to be aware of legislation relating to product labelling as well as how the Health and Safety of the product might affect the customer.

Legislation also affects how products are presented to the marketplace, regarding the type and material of packaging used, and its future disposal. But probably the biggest areas for potential legal problems lie in advertising, promotion and customer relations.

In Britain, while standards in advertising are policed by the Advertising Standards Authority, much of the legislation regarding advertising relates to specific product groups such as alcohol tobacco and financial services. But when trading in other countries, it is important to be aware of the legal practices and constraints which may be very different from those in Britain.

With many businesses operating via the internet, using “social marketing” tools, as well as more traditional methods such as direct mail, many businesses will have amassed a considerable amount of customer information. All such data and information is likely to be covered by the Data Protection Act, regarding its storage, security, and access. Infringement of the Act can result in a criminal prosecution and fine.

Two recent acts of Parliament may set considerable and expensive traps for the unwary; the
new Bribery Act of 2010, and the Olympic 2012 Act.

While there have been anti corruption laws in Britain since the 1880’s, the new Bribery Act of 2010 is far reaching. The Act makes companies liable for the actions of their employees as well as agents and intermediaries worldwide, even if none of its employees knew about bribes being paid out on its behalf by an associated person. The company's only defence is to show that it had 'adequate' anti-corruption procedures to prevent bribery. Companies will have to have clear policies regarding gifts and corporate hospitality, both of which will have to be carefully controlled. Meanwhile the Olympic Act which is set up to protect corporate sponsorship, severely limits non sponsoring businesses using the Games to further their business. The Act means that for a business, even using the words, Games, medals, gold, 2012, sponsor and summer which while innocuous in themselves, if combined in any form of advertising could result in a statutory £20000 fine.

Managers responsible for getting and maintaining business income must be aware that they will be held responsible for the manner and process of obtaining business, regardless of the level of their involvement. Managers in such positions would be wise to elicit a survey to cover all their activities involved in getting and maintaining business income, to ensure that all their procedures and products meet legal requirements and to identify any weaknesses where legal problems may arise. If the company has its own lawyers then it should be dealt with internally, otherwise external help should be sought. Having established in detail, the legal framework in which the business operates, the manager must ensure that all staffs involved in getting and retaining business income are aware of how the law affects their work and operation, perhaps with the provision of a relevant checklist or aide-memoire.

When things go wrong, managers must be prepared. Ignorance of the law is no excuse, neither is turning a blind eye to illegal or unacceptable practices. By keeping abreast of relevant law and ensuring that employees and contractors are fully aware of their legal responsibilities, managers will have a strong defence for themselves and their employers should the worst happen. When managers fail to be aware of the legal obligations in getting and maintaining business, the results can be seriously damaging to the business its brands and workforce, and in the most serious cases may, like the News of the World. force the closure of the business,

© N.C.Watkis, Contract Marketing Service 06 Sep 11
Contract Marketing Service, (Marketing Performance Consultants)

Ignorance is no excuse

In the “phone hacking scandal”, News International managers appear to have assumed that the gaoling of Goodman and Mulcaire, had ended any illegal practices amongst their staff. But did those managers make efforts to confirm that illegal practices had not only ceased but did not reappear, or did they simply assume the answer they wanted? Do you know how the law relates and affects your business practices? Do your employees know and understand how the law relates and affects their activities in getting and retaining business? How do you know?

There is so much law involved in all commercial transactions, that it has become a veritable minefield for the unwary manager responsible for getting and maintaining business. Although buyers and sellers should be free to engage in business as they please, the law is there to make a reliable framework in which business may be transacted for their mutual benefit. Many managers would consider that they know how the law affects their business activities, but this is potentially a dangerous assumption. Not only should a manager responsible for producing the income of the business be aware of all the laws that affect that process, but they also need to ensure that employees and contractors are equally aware of the relevant regulations that impinge on their actions.

While managers responsible for getting and retaining business may not be responsible for the manufacture of the product that they sell, they need to be aware of the law relating to their business. Legal regulation may relate to the sourcing and use of material, or in the case of the food industry a whole specialist area of food and hygiene regulations. Any transgression of legal regulation in the production area could result in the interruption of product supply, and damage to the reputation and image of the business. In the food industry, any failure under food and hygiene can have catastrophic results for the producer, especially if they are a small business. Similarly, managers need to be aware of legislation relating to product labelling as well as how the Health and Safety of the product might affect the customer.

Legislation also affects how products are presented to the marketplace, regarding the type and material of packaging used, and its future disposal. But probably the biggest areas for potential legal problems lie in advertising, promotion and customer relations.

In Britain, while standards in advertising are policed by the Advertising Standards Authority, much of the legislation regarding advertising relates to specific product groups such as alcohol tobacco and financial services. But when trading in other countries, it is important to be aware of the legal practices and constraints which may be very different from those in Britain.

With many businesses operating via the internet, using “social marketing” tools, as well as more traditional methods such as direct mail, many businesses will have amassed a considerable amount of customer information. All such data and information is likely to be covered by the Data Protection Act, regarding its storage, security, and access. Infringement of the Act can result in a criminal prosecution and fine.

Two recent acts of Parliament may set considerable and expensive traps for the unwary; the
new Bribery Act of 2010, and the Olympic 2012 Act.

While there have been anti corruption laws in Britain since the 1880’s, the new Bribery Act of 2010 is far reaching. The Act makes companies liable for the actions of their employees as well as agents and intermediaries worldwide, even if none of its employees knew about bribes being paid out on its behalf by an associated person. The company's only defence is to show that it had 'adequate' anti-corruption procedures to prevent bribery. Companies will have to have clear policies regarding gifts and corporate hospitality, both of which will have to be carefully controlled. Meanwhile the Olympic Act which is set up to protect corporate sponsorship, severely limits non sponsoring businesses using the Games to further their business. The Act means that for a business, even using the words, Games, medals, gold, 2012, sponsor and summer which while innocuous in themselves, if combined in any form of advertising could result in a statutory £20000 fine.

Managers responsible for getting and maintaining business income must be aware that they will be held responsible for the manner and process of obtaining business, regardless of the level of their involvement. Managers in such positions would be wise to elicit a survey to cover all their activities involved in getting and maintaining business income, to ensure that all their procedures and products meet legal requirements and to identify any weaknesses where legal problems may arise. If the company has its own lawyers then it should be dealt with internally, otherwise external help should be sought. Having established in detail, the legal framework in which the business operates, the manager must ensure that all staffs involved in getting and retaining business income are aware of how the law affects their work and operation, perhaps with the provision of a relevant checklist or aide-memoire.

When things go wrong, managers must be prepared. Ignorance of the law is no excuse, neither is turning a blind eye to illegal or unacceptable practices. By keeping abreast of relevant law and ensuring that employees and contractors are fully aware of their legal responsibilities, managers will have a strong defence for themselves and their employers should the worst happen. When managers fail to be aware of the legal obligations in getting and maintaining business, the results can be seriously damaging to the business its brands and workforce, and in the most serious cases may, like the News of the World. force the closure of the business,

© N.C.Watkis, Contract Marketing Service 06 Sep 11
Contract Marketing Service, (Marketing Performance Consultants)

It is easier to lose business than to get it

Businesses are not philanthropic institutions: they exist to make money in the form of profit. To make money businesses have to anticipate and satisfy customer’s demands, so that customers provide the necessary income to the business in return for the goods or services that they require. Identifying enough potential customers who have the requirement for the goods and services on offer, is the primary problem for every business. Having identified the potential customers, the next difficulty is to convert them into customers that pay for their goods and services.

It often costs businesses more than they realize in order to gain a new customer – and considerably more than it does to retain them, so it is surprising how businesses can often take a casual attitude to their customer relations and to retaining customers for their repeat business. Gaining and retaining customers is a privilege not a right. Customers don’t have to give their business and they are not obliged to remain customers, especially if the marketplace is filled with competing offers for products and services.

Providing special offers may help to maintain customer loyalty in the short term. Money off vouchers and other incentives in the world of consumer sales may help to maintain repeat purchases, but it can be a two edged sword, especially if special offers, gifts and discounts are perpetuated. If incentives are perceived by the customer to have become the normal result of their purchase, it becomes difficult for a business to discontinue them without harming their image in the eyes of their customers. In that case the incentive has ceased to be a reward or encouragement, but has become part of the product/ service package, and must be costed and treated accordingly.

Maintaining customers depends largely on how the product or service is delivered. As a minimum standard customers should always receive their goods and services at the price agreed and delivered in the manner and time expected. This is certainly the case in business to business transactions, where delivery to price and specification have particular importance to companies involved in manufacturing, or where their supplies inventories work on “just in time” deliveries.

From time to time, mistakes will be made; - products may fail to meet their specification, deliveries are incorrect or are late, or perhaps there are mistakes in the invoicing.
When a customer complains, the customer is not always right. But customer complaints need initially to be treated in the first place, as if the customer were right. It is easy for some employees not directly involved with the customer to treat such complaints as a nuisance, but complaints are a valuable source of information about how customers perceive the product and service for which they are paying.

It is all too easy for employees not directly in contact with the customer to be unaware of how their actions can alienate both potential and existing customers; for example a delivery not being made on time, a credit level exceeded that prevents delivery, incomplete orders.
When such events occur, provided that customers are informed of the problem at the earliest opportunity and kept informed about progress to its resolution, the harm to customer relations will be minimized. The worst situation is to not inform the customer of any problem, but allow the customer to find out the hard way, which may create problems for the customer, and breaks the trust of reliability between the customer and supplier.

For managers responsible for getting and retaining business, it is important to ensure that all employees understand that however remote their jobs appear to be from a direct relationship with the customers, their actions can have a significant role in the acquisition, retention or loss of a customer’s business. Getting customers and retaining their custom is hard work which can easily be undone and negated by others who don’t appreciate the consequences foreseen or unforeseen of their activity or lack of it.

If a customer complains, and there is shown to be a problem, the first action is to admit it to the customer and apologise. It is the job of the manager responsible for getting and retaining business to investigate the complaint, its possible causes, and to provide a swift remedy for the problem. In doing so, managers should consider the following principals:

* Don’t assume that approved business procedures are followed, always check.
* Can procedures and policy it be verified?
* How do you know?

Managers who are responsible for getting and retaining business, must take ultimate responsibility when customers are lost through failings of company staff. Managers must check that the policies, procedures and results are maintained by their employees, and be ready to help when foreseen and unforeseen problems arise that effect the customers. All businesses make mistakes, but how those mistakes are handled may often decide whether the business retains or loses its customers.


© N.C.Watkis, Contract Marketing Service 02 Aug 11
Contract Marketing Service, (Marketing Performance Consultants)

How well do you understand your business?

What do you know about your business? More importantly, what do you know about getting and retaining the business that produces the income for your company? The initial answers will often be “no one knows our business better that we do “– but is that a satisfactory answer? How do you know? Does your knowledge of your customers and your own business organization and methods bear close examination?

For those responsible for maintaining and developing the financial income of any business, the efficiency of getting and maintaining business and a full understanding of the process is all important. So, how should this be attained?

Research is the obvious process for obtaining information to establish a clear understanding of the business environment and current customers. But the validity of the knowledge obtained will be dependent on the nature of the questions asked, of whom they are asked, and who asked the questions.
Managers need to be clear about what they know, with certainty and evidence, and what they think they know, especially where “facts and opinions” are taken for granted. To paraphrase Donald Rumsfeld, in business, there are the things we know, the things we don’t know and the things that we don’t know that we don’t know, - i.e. those aspects of the business and market of which we are unaware.

Effective management derives from making assessments of conditions and evidence, then framing decisions and actions. To do this it is important to have as complete an understanding as possible regarding how the business operates in finding and serving its customers and how much is really understood about its own business operations in getting and retaining customers and profitable business.

Is the management of all those resources involved in getting and maintaining the necessary income for the business efficient and effective? How do you know? Performance, whether by an organization or individual, may only really be measured by their results in comparison to those planned. Many businesses still plan on the basis of making a percentage increase in sales income with little regard to market condition, or the efficiency or effectiveness of their organization in producing income or profit. Business development planning is essential for every business, but it must be based on quantifiable objectives and not qualitative statements and ideals. Management achievement may then be compared with that which was planned.

Effective business development planning should be about balancing the resources and investment available, with the potential revenue opportunity. Embarking on a selling exercise which produces orders in excess of what the business is able to produce has the potential to be seriously damaging to the business. An inability to fulfil customer orders may have long term damaging effect on the company reputation and future business. Similarly, the requirement to fund unplanned expansion to meet unexpected demand could undermine the business financially.

All business planning should show what money is to be spent and where, and to what effect, so that all planned actions should have clear and quantifiable deliverables.
Most importantly, Business development plans require some prime objectives on which the plan is based together with a time table for their achievement. In addition those plans should include detailed contingency actions if the prime objectives have not been achieved by the target date. Successful managers cannot afford to wait for “something to turn up” if specific objectives are not fulfilled on time and must be able to enact a “plan B” immediately and smoothly, to replace unachieved income.

Understanding the requirements of both the existing and potential customer base is very important. A clear understanding of each customer’s business may reveal existing and potential opportunities to resolve their problems and increase sales. An analysis of sales by product or service, according to market segment and application can help to show how the customer base both purchases and uses the product. Regular customer surveys also help to show how product and services are perceived and received, which may bring to light weaknesses in the product and especially in customer service. Having a clear understanding of the customer base in terms of its trade or industry, its geographical distribution, and cost per sale can help in the effective management of order size and customer credit requirements.

Managers cannot know too much about how their business actually works. Effective Business decisions should only be based on quantifiable evidence. Managers must be clear about what they know about their own business, their competition, and especially their customers, but they also need be clear about what things they don’t know, and not make decisions based on unqualified assumptions. It is not just what you know, but what you don’t know which determines how well you understand your business.


© N.C.Watkis, Contract Marketing Service 06 Jul 11
Contract marketing Service, (Marketing Performance Consultants)

Managers have to manage; they don’t need to be creative.

Every commercial business started as an idea for the purpose of making money. Successful entrepreneurs are good at identifying problems of society and individuals; seeing opportunities to make money by finding solutions which induce customers to buy, in order to relieve their discomfort.

Seeing and recognising an opportunity may be the spark of an idea that creates a business, but in order to start, every business needs some initial capital. Income is not produced without the investment of labour or money, and usually requires both. Getting business costs money, and maintaining that business also costs money – you don’t get something for nothing.

Businesses exist to make money, which is produced as a result of satisfying customer demand. Satisfying customer demand requires knowledge of the customer and their problems, the production of a solution to those problems and the ability to convey that solution to the customer so that they are willing to accept and pay for it. The procedure described may seem simple enough, but on examination it is frequently more complex, because it requires the use of many resources and activities, even for a small business.

If a business is to make money, it requires the effective management of all those resources and the necessary assets involved in producing and delivering a product or service to a customer. But what are these resources and assets? Generally, those resources are defined in financial terms as the money allocated to budgets for the specific activities involved directly or indirectly with producing income. Tangible assets involved in getting and maintaining income are usually limited to wholly owned and dedicated IT hardware related to the administration of selling, and wholly owned business vehicles dedicated to customer liaison and delivery.

Businesses are traditionally organized into separate areas of responsibility. In manufacturing businesses, organizations tend to be formed on the basis of finance, personnel, production and sales, while retail and service businesses tend to organize around finance, personnel, and sales functions. While this sort of organization is understandable it tends to encourage blinkered and protective thinking amongst those who manage these separate areas, rather than integrated management for the benefit of the whole business.


Business activities can be divided into those which support the delivery of the product or service to the customer, and those which provide the necessary resources for the business.
In recent years it has become fashionable to declare that the customer is at the “centre of the business” without really defining what this means. Customers provide the income on which the business survives. However, every activity which directly or indirectly helps to satisfy the customer’s requirement creates a cost that is necessary for the production of income. Customer related activities include research, product or service development, advertising, sales, promotion, delivery, as well as credit control, amongst others. Those activities that provide the necessary resources to enable the satisfaction of customer requirements include finance, personnel, and purchasing.

Logically, it follows that rather than the traditional organization previously described, business functions ought to be organized according to whether they are parts of the business operations that are involved in producing income, or supportive functions that are involved in the provision of necessary resources. Business organizations could then be organized into two distinct areas; Operations, which are customer related, and Support, involved in resource provision. Being responsible for those activities which ultimately generate income, the function of business operations ought to be seen the driving force of every business, and should be managed accordingly. Thus all the activities of business operations ought to be managed as a single area with one manager having overall responsibility for the getting and maintaining the necessary level of financial income.

While producing suitable products and services to meet customer demand always requires creativity and imagination, managers of business operations need primarily to be effective and efficient managers, rather than being creative themselves. As effective managers they have a responsibility to encourage, direct and manage those with the necessary creative talents who are often less suited to management tasks. Financially literacy is also essential for efficient management, in order to understand the costs of income generation. As executives responsible for generating income, managers of business operations should be judged on the amount of money produced and their financial efficiency in its production. While brand awareness and market share may have their importance, only sustainable profitable income provides businesses with long term viability, and their employees and shareholders with a future.

© N.C.Watkis, Contract Marketing Service 07 Jun 11
Contract marketing Service, (Marketing Performance Consultants)

To Lead or Manage, - that is the question.?

Government organizations local and national spend a lot of money on leadership training, aping so it seems what is done in business. But it is clear from repeated reports from the National Audit Office, that both at national and government level money is frequently wasted through bad organization and decision making. This suggests that for all the money spent on leadership training, the problem of waste and poor decision making lies in poor management. Leadership and management are not the same, and training in leadership will not produce good managers or management practise.

In the continuing search for some “holy grail” for business success, there has emerged what may be described as the cult of business leadership, which has developed into an industry of leadership training and coaching.

A report on the training market by Keynote, published last year estimates that the amount spent on off-the-job training by UK private and public sector employers was £19.39bn in the year ending April 2010 including around £2.5bn spent on external trainers. Whilst there is no known information on the type of training being bought by UK businesses, it is considered that from the prominence given to leadership training in training providers’ portfolios, that the amount spent on it must be substantial.

For the training and consultancy industry, leadership provides a new opportunity. For like every other business, training providers are not philanthropic institutions, but businesses whose sole purpose is to make money. Training companies and consultants are adept at producing packages to meet the “training need” as perceived by the market, regardless whether the need is real or imaginary.

What is surprising, is that so many business executives appear so gullible to believe that there really is a “magic button” which guarantees business success and that expensive training courses will enable them to access it. Executives who run successful businesses ought to be able to assess whether a training course enables them to do something that they previously could not, or is merely extolling a fashionable business philosophy.
Why has “leadership” become so important to business success? Certainly leadership has an importance, but to what extent does it really affect business success? Leadership in business is often expressed in the form of “Leadership Strategies”, as variously described by business psychologists. But leadership and management are two different things. There are good leaders who are poor managers and good managers who are poor leaders.
Where is the evidence that training in “business leadership,” actually improves business performance? Inspiring people with “vision statements” and other leadership ideas will not achieve the financial objectives of the business, only the effective management of resources and the motivation of the workforce will ensure success. The cult of leadership in business seems to have more to do with vanity than developing business efficiency. Peter Drucker said “the business world doesn’t need leaders. It needs managers “— people who can actually manage a team of people.”
The principles of leadership derive from military thinking and practice, where its purpose is to instil confidence and direct troops in extreme circumstances of life and death, inspiring them to do things that in normal circumstances they would not do; - such conditions do not exist in business. So is this “leadership” approach sensible in the commercial world, where there is no life or death struggle, only the need to produce profit from a stream of profitable income for the long term future of the business?

Employees are not generally interested in “gimcrack” leadership theories. As the workforce that drives the business, their interest is that the business should exist for the long-term in order to provide them with reliable income, as well as the opportunity to develop their careers, dreams and aspirations. To that end they rely on successful management to provide them with the training they need to do the job, confidence in a product to sell that the customer wants, together with the knowledge that with the right management they can produce the level of profitable income that will guarantee the future of the business for the long term and the future employment on which they rely.

The most important activity of any business is to maintain and develop profitable income for the long-term future of the business and the security of its employees and investors, so all other business activities should support directly or indirectly this activity. Therefore, the most important activity in any business is to manage the resources effectively to maximize the amount of profitable income for the long term future of the business, and minimize the use of assets and investment.
In the world of commerce, businesses are there to produce income. That income is produced by a workforce that understands what its customers want and need, and which seeks to provide a solution that those customers will buy, thus converting their product or service into the cash which the business requires. To do this successfully, a workforce needs to be properly trained in how to achieve the result, have the necessary equipment, have confidence in their product and its delivery, and be properly motivated, directed and remunerated. All this requires effective management of personnel and resources. Leadership may inspire, but it is only effective management which gets things done and ultimately produces income.
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© N.C.Watkis, Contract Marketing Service 27 Apr 11
Contract Marketing Service, (Marketing Performance Consultants)
Nicholas Watkis is a Fellow of the Chartered Institute of Marketing, and a member of the Institute of Consultancy

“If you are not in business for profit or fun why are you here?”

“Up the Organization” written in 1970 by Robert Townshend the then chairman of Avis Rental cars, was a worldwide best seller. Townshend analysed and commented on the structure and organization of businesses and its operation in a humorous and anarchic manner, but also showed how he had organized and managed Avis in ways that appeared radically different from the accepted business norm.

Re reading the book shows how much in business is the same, despite computerization,
e-mail and the internet, and much of his observations and maxims are still valid. Why? Because business is run by and for people, and people do not change in their motivations, habits, prejudices ambitions and fears.

The structure and organization of most businesses probably may not have changed much in more than a century. The organizations of Small and Medium sized Enterprises (SMEs) are probably the most efficient, because they have to be flexible to adapt to circumstance and they have no “slack” in the system. While people in SMEs have specific job responsibilities, they also work closely together to get the job done. In SMEs, people tend to be more aware of the need to get and retain customers to produce the income for the business which pays their wages.

As company workforces increase, so there is a tendency towards a bureaucracy of little empires, with all that that entails. But bureaucracies create inefficiencies, increase cost, reduce profits, and cause employees to lose sight of the purpose of the business which is to produce money. This in turn leads to the workforce becoming more remote from the customer who provides the money on which the organization survives.

Since the early 1970s, probably the most important person in a company next to the chief executive has been, and generally still is, the financial director. While financial management is vitally important, balancing the books does not make income. Finance is simply a resource that enables business and income production to take place.

Next to them in recent years, thanks to layers of employment and health and safety legislation, have been the company secretary and the director of personnel, now called human resources. Yet none of these executives is responsible for producing the income on which the business and ultimately their jobs survive.

If businesses are about making money, then the process of producing income should be central to those organizations. Instead, many businesses give the impression of being organized as a series of largely unrelated activities with the purpose of producing a product and retaining a structure, rather than producing profitable income efficiently. Many companies could still be considered to be product orientated while others might claim that they are customer oriented, in order as Tom Peters said, to “Delight the customer”. Such sentiment is all very commendable and quite important, but does not in itself produce the continuous profitable income for the long term future of the company

Businesses are there to make money, which is why they were set up. They are not there to make products or, strangely enough, to satisfy customers. Satisfying customers is only a means to an end to produce profitable income for the benefit of shareholders and employees.

In nearly every business organization, the management structure illustrates what they do, but not what they contribute. Thus businesses have separate departments of production, finance, purchasing, personnel and sales. Each department tends to develop a silo mentality where it relates to its own limited objectives. Production seeks to maximize production, sales seek to maximize the volume sold finance seeks to balance the books, but who is responsible for producing profitable income?

If businesses want to become more efficient at producing profitable income, then producing sustainable profitable income for the long term, must be the foundation of their organization and management.. One option would be to reorganize the business structure into two management areas, Business Operations and Business Support. All the activities that directly and indirectly produce income – production, research, development, and sales, would be subsumed into a Business Operations area. Finance, purchasing and personnel and all the other activities which provide the necessary resources for the Business Operations area, would be subsumed into a Business Support area. Dividing a business organization into management areas of operations and support, would enable better integration of those activities which directly and indirectly contribute to producing profitable income by satisfying customer requirements. At the same time, by integrating finance, purchasing and personnel under one management area of Business Support, employees would have a clearer role in supporting the Business Operations area, which produces the income on which the future of the business and their employment depends.

If maximizing profitable income is the primary purpose of every business, then businesses ought to be organised, structured and managed, accordingly.


© N.C.Watkis, Contract Marketing Service 31 Mar 11
Contract Marketing Service, (Profit Development Specialists)

Marketing isn’t war, its management

There have been a number of books in recent years suggesting that successful business is like warfare, e.g. Mark McNeilly’s “Sun Tzu and the Art of Business,” and likening business leaders to successful generals. But while both business and warfare require leadership, the type of leadership required is very different. Leadership in battle takes place in extreme conditions, but leadership in business and commerce is not a life or death struggle.

However, successful businesses and successful military campaigns do have two things in common. Both require their leadership to select and maintain an aim. They also require the maintenance of morale amongst those who are to achieve the aim. Leadership provides the inspiration and direction but management provides the means of attainment.

While some think “marketing” is another name for promotion and communication,
The Chartered Institute of Marketing defines the word as “The management process responsible for identifying, anticipating and satisfying customer requirements profitably”. It makes it quite clear that while the purpose of marketing is to produce profitable income, by satisfying customers, the nature of marketing is one of management. Thus successful marketing is about the efficient and effective management of investment and resources to produce profitable income by anticipating and satisfying customer demand.

So how should marketers go about managing their assets and investments to produce profitable income? Peter Drucker said that “if you can’t measure it you can’t manage it.” While this statement may perhaps be simplistic; for those whose responsibility is producing income, then the demonstration of effective management will require quantifiable measurements of “inputs” and “outputs”. In other words, effective marketing requires the measurement of those activities which directly or indirectly produce income, together with the amount of income produced

In small and medium sized enterprises (SMEs), those responsible for producing the income may have very few staff, other than those employed in selling and sales administration. However marketers may be termed, whether sales manager, sales and marketing manager, or marketing manager, they may often have sole responsibility, with minimal assistance, for all the specialist areas of marketing, such as research, communications and customer relations. Marketers in small companies are usually fully occupied having to be involved in all the activities which assist directly and indirectly with producing income. Thus because few people are involved in marketing in SMEs, marketing can be more effectively controlled.

In larger businesses, where there are specialist marketing staffs, management becomes more of a problem. While marketing is about the effective management of assets and investment to produce profitable income, it also requires the effective management and motivation of people. Since Marketing has always attracted creative people, who generally do not like to be constrained by quantified objectives or performance measurement, their effective management can be difficult.

Until the advent of the desk top computer, virtually all businesses were managed through manual data systems and processes. To produce a sales forecast could take days of work, marketing and business plans could take weeks or months to prepare, and be obsolescent by the time they were complete. However, the developments in computer based automation have revolutionized business operations especially in marketing organizations. Those activities that previously took days or weeks to prepare are now done in hours or minutes. Where does that leave the marketing specialist? For the executive responsible for managing marketing resources the question must be, what do the people involved in the marketing department do that contributes to producing sustainable profitable income for the long term? How are they employed? Is their time used efficiently and effectively? Because so many activities are automated, are they fully occupied? What do they do all day? How do we know?

One thing that the executive responsible for managing the marketing staff should do is to establish exactly the detail of each employee’s job. This can be done by getting them to write their own job descriptions, detailing all the activities for which they believe they have responsibility, and which they actually carry out. Making a comparison of their own job descriptions with their official descriptions can make interesting reading, as it will highlight job overlaps, mistaken authority, and gaps in performance and responsibilities. By ensuring that all staffs have clear job descriptions and objectives to achieve, managers have better control over all their resources.

Although marketing specialisms cannot easily be quantified in their direct contribution to income production, marketing managers must demonstrate the efficiency and effectiveness of their specialist staffs with quantified performance data. Both marketers and marketing organizations must justify their existence as well as their use of assets and investment. Those that fail to demonstrate their contribution and efficiency are likely to find that they are surplus to requirements.

Analysis of what is done by marketers and how they do it may invite radical change. While technological change has produced innovative ways to communicate with potential and existing customers, as well as produce market research, marketers must expect that similar changes to working methods and organization are inevitable. Regardless of whether a company is large or small, their aim is to produce money, not just for shareholders but to benefit employees and invest for the long term future.


If “marketing” is really about managing resources to produce profitable income, then the executives responsible need to become effective managers. Effective marketing management requires quantifiable performance measurement, with the ability to motivate specialist staffs to efficiently contribute to producing profitable income, for the future of the business.


© N.C.Watkis, Contract marketing Service 28 Feb 11

Cash flow is king

When considering any business, the two principle documents which are consulted are the Balance Sheet and the Profit and Loss account. These two documents give a thumbnail sketch of the business operations, in terms of its trading results and its general solvency. However, neither of these documents tells the reader how good the organization is at getting and maintaining its profitable income.

If “marketing” is defined as “The management process responsible for identifying, anticipating and satisfying customer requirements profitably”, then “marketing “ is the management process responsible for producing sustainable profitable income for the long term future of the business. The efficiency and effectiveness of marketing management is therefore of crucial importance so that measurements of marketing performance ought to be seen in the Profit and Loss account, balance sheet or somewhere else, but they aren’t...

Marketing practitioners frequently talk about “adding value” to the business, without defining what that “value” is. Is “brand value” any more relevant than “goodwill” in a balance sheet as neither are tangible assets? Strong brand names do not guarantee the survival of a business. In the airline industry, TWA and PanAM, were not only considered world famous companies but as “brands” in themselves. But however valuable the names may have seemed, it did not stop either of them being liquidated and the names going to oblivion.

While “brand image” may help to condition the prospective customer, it does not make money or produce cash flow. Logos may visually help to identify a brand, and provide recognition for the customer but they are costly to change, and do not add to business income. While logos may have some importance in the world of fast moving consumer good, as product identifier, they have little relevance in the business to business sector.

Whether a business is large or small, its long term future will depend on the amount of income it makes and the amount of profit it retains. Brand names and logos may help to produce the image of a product or service, but it is the managers of “marketing” who have the responsibility for producing profitable income. As managers, their performance should be measured on the amount of profitable income they produce, not on the questionable value of an intangible asset such as a brand name.

For large companies the balance sheet is of major significance in that it shows its solvency in its ability to pay creditors from its assets if the need should arise. For smaller companies, especially those started within the last twenty years or so, the balance sheet has less importance, because many will have minimal assets. The nature of the modern office and IT equipment means that it is often more economically attractive to lease offices and equipment rather than buy them which reduces the asset value on the balance sheet. In addition, leasing contracts often have the attraction of providing for regular updating of equipment, thus avoiding problems of equipment obsolescence and disposal. For most small and medium sized businesses, the profit and loss account with its ability to monitor the cash flow for the business, has greater importance than the balance sheet. Maintenance of cash flow is therefore one of the primary responsibilities of the marketer, who will need to manage a number of factors that affect it, including:

1. Number of enquires
2. Conversion rate of enquires to order
3. Total Value of orders
4. Cost of processing orders through to delivery
5. Credit days allowed before payment
6. Amount of credit days from suppliers
7. Volume and value of bad debts.

In order to improve cash flow marketers need to seek ways to:
1. Increase suitably qualified enquires
2. Improve conversion rates
3. Increase order size in order to increase income value and reduce processing costs.
4. Reduce credit days by early settlement discounts or other incentives.
5. Maximize credit with suppliers.
6. Minimize the cost of sales calls and customer contact without damaging the customer relationship.

Managers of “marketing” will have specific interest in both the “Balance Sheet” and the “Profit and Loss account”. While in some large businesses, managers of “marketing” may be involved in building the “value” of their Brands as intangible assets, the main responsibility for all such managers in both large and small businesses remains the maximizing profitable income for their long term future, with the minimum use of assets and investment. In reality the performance of managers of marketing will be measured on to their contribution to the Profit and Loss account of their respective businesses, in terms of the amount of profitable income produce they produce and the efficiency with which they produce it, rather than on a “brand valuation” on the Balance Sheet.

© N.C.Watkis, Contract Marketing Service 04 Feb 11

Mumbo Jumbo damages marketing credibility

Recent papers published during this year by the Chartered Institute of Marketing (CIM) and its respective publishing partners, Deloittes and Accenture, make interesting reading.

The papers “The Future of Marketing Capability” and “Improving Marketing Effectiveness” appear to concentrate on the problems of marketing accountability and the perceived relevance at board level for strategic planning. Yet another publication, “In Search of Strategic Marketing,” published by the CIM and Accenture claimed research with leading marketing heads of 50 major international businesses, representing some 16000 marketing practitioners in the development of its findings.

Important as these reports may be, one is struck by the relevance or otherwise that they have to the majority involved in marketing. According to statistics for 2008 from the UK Office of National Statistics, small and medium sized enterprises (SMEs) with fewer than 50 employees made up 98% of all registered business enterprises, while companies with over 250 employees made up just 0.4% of all business enterprises. Thus these three publications would appear to be relevant to perhaps just 0.4% of all registered business enterprises.

From these statistics it would seem that the majority of marketing practitioners are probably employed in the 98% of registered businesses known as SMEs. Within SMEs, marketers are more likely to be involved in all aspects involved in getting and maintaining business, as the nature of SME organization does not generally allow for the development of wholly separate functional departments. Whereas in large organizations, the marketing function may be a wholly separate department which may or may not include selling. Thus in the SME sector, marketers may have a broader responsibilities, with greater direct involvement in overall business planning than their counter-parts in large companies.

The sole purpose of every commercial business is to make money; commercial businesses exist for no other reason. Responsibility for producing the income is therefore the most important activity of any business.

Marketing as defined by the Chartered Institute of Marketing is “the management process of anticipating and satisfying customer demand profitably.” Given that the purpose of every business enterprise is to make money, perhaps the emphasis of the CIM’s definition should be changed to read that “marketing” is the management process that produces sustainable profitable income, by anticipating and satisfying customer demand. The purpose of marketing is therefore the production of profitable income for the long term future of the business.

Over recent years there has been a concentration by marketers on the needs of the customer, and for making businesses customer orientated. In many ways this is understandable, but while the “customer is king” is a laudable business statement, the fact is that the purpose of effective marketing is to produce profitable income and not the satisfaction of customers. The anticipation and satisfaction of customer demand is only the manner by which income is achieved.

Judging from the new CIM White paper, “The Future of Marketing Capability” perhaps it is time for marketers to define their activities and how they are relevant to a business. Is their purpose to produce sustainable profitable income for the future of their business, or do they consider that their prime activity is the development of strategy, brand development and “value”, however that may be defined?.

Many recent academic reports and papers give the impression that marketers appear to spend a lot of time “navel gazing” on the importance of “marketing” and the need to explain its benefits in brand image, “value” and market share. While brand , value, CRM, and advertising, have their importance, they can be a convenient diversion from the hard fact of producing sustainable long term profitable income. What senior management need to know is, how much profitable income has been produced what it cost to produce, and how the income may be maintained? For marketers involved in SMEs, answers to these questions have immediate importance. Developing “marketing strategies” may sound important, but unless the strategies are turned into specific attainable objectives, with a clear action plan for their achievement and measureable results, the actual contribution to the business is negligible.

Marketers who have the responsibility to produce the income for the business by anticipating and satisfying customer demand, and wish to be taken seriously at senior management and board level, may have to eschew the term “marketing” altogether. Marketers aspiring to senior management must be seen as managers of income production and trade development, by conducting their business with performance measurement and quantifiable results, while communicating in clear English, rather than “marketing and business speak”

Marketers claim that they want recognition and to be an influence to senior management and board members, yet they seem incapable of expressing themselves in plain English. So much of this type of writing seems to be on the premise of “bullshit baffles brains”, yet it makes one suspicious that behind the “smoke and mirrors” of this impenetrable language, there is very little substance, and that this would be highlighted if it were written in “Plain English”.

The document “The Future of Marketing Capability” is a case in point. If it is an important document why do the authors make it so difficult to understand? Written as it is in a columnar format and published on the web in PDF, its format is wholly unsuitable for on screen reading requiring constant page movements up and down, making it difficult to follow and read. The report also seems to be incapable of using plain English. Every opportunity is made to use jargon, and “marketing and business speak”. Perhaps the writers believe that it is fashionable and adds to their credibility in the closed world of marketers, but in the open world of business decision makers, such writing is easily dismissed because it obscures meaning as well as relevance and credibility with readers. Marketing practitioners who indulge in writing reports in similar “mumbo jumbo”, damage the credibility of their profession, thus potentially barring their involvement at board level decision making.

If the “smoke and mirrors” effect that results from the use of “marketing” language, as demonstrated in these reports, has produced the image which excludes marketers from senior management and the boardroom, then marketers have only themselves to blame.

© N.C.Watkis, Contract Marketing Service 30 Dec 10

Can marketers game the system?

Both the marketing press and academia appear to concentrate on the marketing structures and organizations of larger companies, rather than that of small and medium sized enterprises (SMEs).

According to statistics for 2008 from the UK Office of National Statistics, SMEs with fewer than 50 employees made up 98% of all registered business enterprises, while companies with over 250 employees made up just 0.4% of all business enterprises. Marketers responsible for getting and retaining business will tell you that it is hard work, especially if they are employed in an SME. In most SMEs, marketers will not have the luxury of marketing departments supporting them, but if they have responsibility for getting and maintaining income, they will have to be masters of many disciplines, unless those disciplines can be sub-contracted. In such circumstances, the marketer may be directly involved in all the specialist disciplines, including selling and negotiations. What is certain is that the performance of the marketer working in an SME can be directly measured in terms of the sustainable profitable revenue that is produced and the costs and investment required producing it. In most SMEs, every penny counts, so marketers have to be clear about what they do, how they do it, what it costs and how much money they contribute.

However in larger firms, the responsibilities and accountability of marketers can be quite different. In these firms and organizations, the marketing department can be a place where some people build successful careers by developing their own image, but potentially wasting time and money by avoiding the scrutiny and the quantified measurement of their their real contribution. How do they do it?

There are still many marketers who while publically agreeing that marketing performance should be measureable, privately consider marketing to be an art that does not lend itself to meaningful measurement and will do their upmost to ensure that it stays that way.

The enthusiastic pursuance of various marketing fads, such as unsuitable CRM packages, ventures into “Total Quality Marketing,” or unnecessary and expensive re-branding exercises that do nothing to increase income, but add substantially to costs, are just some the activities where time and money is wasted . These activities may be summed up in the term “Gaming the system”.

“Gaming the system” is a term that refers to the way people in organizations will, if allowed to, operate the corporate organization to their own advantage, rather than to the advantage or objectives of the organization in which they are employed. Gaming the system can operate in all aspects of an organization, and is the result of weak management.

How do Marketers “Game the System”? There are many ways, often related to “visionary ideas” that do not relate to the purpose of producing sustainable profitable revenue, either in the present or the future. Here are just a few:

* Maintaining the idea that marketing and sales are two different disciplines, rather than accepting sales as being that integral part of the marketing function, which is directly concerned with customer satisfaction and income production.

* By eschewing responsibility of sales, marketers can avoid being accountable for income generation.

* By pretending that marketing is a strategic expense without which a company withers and dies, rather than in the management process that that requires investment to produce sustainable profitable income by identifying, anticipating and satisfying customer demand.

* When sales go up, claiming that it was the money spent on advertising and communications that produced the increase in sales. Alternatively, when sales go down, claiming that without advertising and communication, sales would have been worse. Since in most cases the effect of advertising and promotional activity can rarely be quantified accurately, these views are difficult to contradict.

* By ensuring that all reports are written with the latest jargon and “business speak” in order to confuse the reader and disguise the paucity of the argument.

* By convincing the company that its future development depends on a large budget to “invest” in a new corporate image, logo and vision statement, all of which are expensive, but not necessarily contributively to producing profitable revenue

* Ensuring that all performance measurements are based on activity not results, thus avoiding any performance measurement that would allow management to assess the overall contribution in a quantified manner. Defending the need for large budgets, but ignoring the need to quantify the resulting contribution.

It is very easy for marketers to spend money to develop brand, market share and customer relations, but it is much harder to demonstrate directly how such investment contributes to producing profitable income. “System gamers” may have no difficulty in demonstrating what and where they have spent money, but justifying what was spent, in the amount of profitable income produced may be a lot harder.

“Gaming the system” works contrary to the business interests of a firm, because it wastes time and investment. Therefore recognizing how “Gaming the system” can manifest itself in marketing organizations is important, if management are to effectively counter its effects. To do this,
managers responsible for getting and retaining business need to;

* Accept that getting and retaining business costs money and therefore all investment, costs and assets must be used efficiently and effectively

* Ensure that all activities involved have quantifiable performance measurements based on results.

* Ensure that marketing staff have clear job descriptions with defined areas of interest and responsibilities.

Marketers have an important role in every business, as they have to produce the income on which it will survive and grow. Those with ability will prove their worth in the income they produce and the efficiency with which they do it. Those that “game the system” will ultimately be found out, either by diligent management, or their firm’s bankruptcy resulting from their failure to produce the profitable income necessary for its long term future.


© N.C.Watkis, Contract Marketing Service 26 Nov 10
Contract Marketing Service, (Marketing Performance Consultants)

If you don't do this, you won't succeed

If you don’t do this, you won’t succeed

Most marketers would consider their role in a business to be one of creativity, especially regarding advertising, promotion, customer relationship management and networking.
But the marketer with the mandate to get and retain business also has the responsibility for managing resources to achieve the objectives of the corporate plan. Business exists in the dynamic of the market, so a marketer needs to be able to constantly adapt resources and actions to meet changing market conditions.

The marketer tasked with getting and retaining business must be able to show how they are using assets and resources efficiently and effectively to achieve this. Thus the most important activities for the marketer are the establishment of marketing objectives, a plan for their achievement, a budget to support the plan, and the management of assets and resources to achieve the objectives. Why is this? It is because it is in these areas, that many marketers will be assessed and may be found wanting.

Preparing a marketing plan to achieve the marketing objectives is a complex process, and should not be confused with producing a marketing budget. However, it is not unknown for even large companies to confuse the production of a marketing plan with that of producing a budget. There is an erroneous assumption, that a spread sheet of numbers relating to allocated spending on the various activities of the marketing function is sufficient to be called a marketing plan; - it isn’t! Such a spread sheet may illustrate how money is to be spent, but does not include the actions required to produce income. What then should a marketing plan include?

Setting objectives is the first priority, because it defines what is to be achieved to support the requirements of a firm’s corporate plan. Peter Drucker is quoted as saying that “if you can’t measure it you can’t manage it.” So the setting of marketing objectives should be largely quantifiable and thus measureable. Unfortunately, many marketing objectives are subjective statements and therefore not measureable. Alternatively, objectives may be quantifiable, but may not be usefully comparable to other measurements, which may ultimately prove difficult for the marketer, especially when asked to give proof of their contribution to the business.

There are a number of components that are essential for a marketing plan. First the objectives of the marketing plan both financial and marketing must be clearly stated. Financial objectives should state the monetary objectives of the plan in terms of the target revenue, the net profit and the required return on assets. These are all terms that will be understood by both the CEO and the CFO, and are therefore particularly important. Marketing objectives will relate to the “4 Ps” of the marketing mix, namely product, price, promotion and place or market, but should also include quantifiable objectives such as marketing contribution and optimum performance.

Marketing planning should not be done in a vacuum, yet how many plans are written without any description of the market and economic situation in which the plan is supposed to operate? Marketers need to ensure that the assumptions made about the prevailing economic and market environment are clearly stated, and the potential risks highlighted. As both the market and economic situations are dynamic and evolving, so it must be expected that plans, especially those for the longer term will need to be adapted to meet those changes.

Having set out the objectives, the most important part of the planning process is the listing of the actions necessary for their achievement. To be effective, each action needs to have a completion date, together with the identity of those delegated with the responsibility for the action. Setting completion dates for actions helps to concentrate the mind, because their successful competition may have a profound effect on other important actions and the achievement of objectives. For instance, achieving a major contract may be a major part of the revenue objective. Thus knowing when that contract needs to be confirmed is of major significance, especially if things go wrong and the expected income has to be found from elsewhere.

Preparing alternative actions to be used when the unexpected happens or the contracts fail to materialize, is an important planning process that is frequently forgotten. Marketers must be able to change tack or divert resources into other alternative actions, and to do it quickly, if the primary actions fail to produce the results; being able to do this effectively is the art of good planning and successful management.

Finally, to illustrate how assets and investment are to be used to achieve the objectives of the marketing plan, a profit and loss projection is required together with a detailed marketing budget showing the allocation of resources.

Chief marketing officers (CMOs) and marketers will be increasingly be measured by their results, so it is essential that they set quantifiable objectives and detailed plans for their achievement. If marketers don’t do this, they will have failed in their responsibility and they won’t succeed in their task.

© N.C.Watkis, Contract Marketing Service 25 Oct 10

Can you spend nothing on Marketing?

The leader article in September’s edition of “The Marketer”, titled “Who needs money?” suggested the idea of “marketing “without money. The article cited several companies which claim that they started or continue to have a marketing budget of zero, amongst them being the IT companies Google, Linux and Facebook. It also claimed that it was not only hi-tech businesses that were innovative and successful by doing “marketing” with a zero budget, but that some service companies such as McKinsey did not have a marketing organization, to which could be added Timpson’s, the high street heel bar retailer. But is it really true that successful “marketing” can be done without money? However attractive the idea may be, the idea that “marketing” may be done without a budget does not stand up to simple scrutiny, unless one has little or no real understanding of what is involved in “marketing.”

It is a truism, that you cannot get something for nothing. There is always a cost to someone, somewhere, and so it is with “marketing.” Surprisingly, for the magazine “The Marketer”, it seems that the Chartered Institute of Marketing (CIM)’s definition of marketing has been forgotten or not understood.

“Marketing,” as defined by the CIM, is the management process that anticipates and satisfies customer demand profitably, essentially being a process of managing resources and assets to produce profitable income. Thus the CIM’s definition involves a great deal more than simply promotional activities or even selling. But many people allegedly involved in “marketing” make this confusion. In “marketing” the importance is to anticipate and satisfy customer requirements to produce income, which requires a whole range of specialist disciplines including marketing research, product development, promotional communications, and especially selling.

The article in “The Marketer” suggests it is possible for even large companies to declare that they have zero or very low marketing budgets, but this is not actually the case. The truth is that many companies, perhaps a majority, have little idea what it actually costs them to get and retain business. There are many reasons for this, but a misunderstanding of the nature and purpose of marketing by both marketing staff and senior management is probably a primary cause.

In addition, the traditional departmental organization in companies means that the responsibilities of marketing organization are generally restricted to sales and sales support, rather than to the wider requirements involved with anticipating and satisfying customer demand. Investment in good marketing research is necessary to understand the market trends and anticipate customer demand. Satisfying customer demands includes other areas not thought of as part of the traditional “marketing” area of responsibility, such as product development, (guided by market research), production, and distribution. In addition, the area of credit control can have an important role to play in customer satisfaction. Thus “marketing” budgets are often at best incomplete in their scope, being derived from responsibilities of the marketing organization within the organizational structure, rather than from all those activities collectively involved in satisfying customers to produce income.

The purpose of “marketing” is to get and retain business to produce sustainable profitable income. “Marketing” is not another name for promotion or sales; there are many activities and disciplines involved. It is possible to have a minimal or zero promotional budget, as some successful IT companies do, but it is not possible to have a zero marketing budget if everything is properly accounted for. In its simplest form, the sole trader making his own goods and selling them on a free pitch on a street, may have spent nothing on promoting his business, but if “marketing” is about getting and retaining business, that trader has to make the goods and spend time selling them. He may not consider it, but there is a cost to him in getting and retaining business because of the cost involved in working time whether or not it is paid for.

Perhaps the reason for thinking that it is possible to have a zero promotional budget stems from the desire, from some marketers, to avoid having to measure the return on their investments, so there is an attraction in the idea of a zero investment. But the purpose of marketing is to generate money. Marketers will be measured on how much income they generate and how much it cost to produce it. Marketers must therefore be fully aware of what is involved in all the activities required to anticipate and satisfy customer demand profitably, and not delude themselves into thinking that they can get and retain business without cost.

© N.C.Watkis, Contract Marketing Service 27 Sep 10
Contract Marketing Service, (Marketing Performance Consultants)

Marketing – making it happen

The fundamental requirement for a successful business is to understand the potential customer’s problem. Customer’s have problems which they seek to resolve to make their lives easier. The job of the marketer is to identify existing and possible problems of potential customers, anticipate the resolutions that potential customers seek and by providing product and services which resolve their problems and fulfils their needs, produce income.

In theory, if the potential customer has been identified and their problems fully understood, a product or service that resolves their problem or satisfies their need should result in an automatic sale. But things are never that simple. Unless a product or service is made specifically to each individual customer’s requirement, a mass produced product or service is going to require some compromise on behalf of either the customer or the producer.
Convincing a customer to accept some compromise and to commit themselves to purchase is the process of “Selling.”

Having a marketing strategy, a plan and a target for sales and income are all important but they are not enough to ensure that a business is successful. Ultimately the only way that a strategy is followed, a marketing plan adhered to and sales and income targets achieved is by “Making it happen.” Putting it simply, the ability of a manager to “make it happen”, is the deciding factor that divides successful from unsuccessful businesses. But what does “Making it happen”, in terms of producing income, actually require? The answer in part depends on the size of the business and its resources.

A lot of books and theory regarding marketing (that is, about producing profitable income by anticipating and satisfying customer demand) consider the large company model, where the organizational size allows for specialist departments such as sales, purchasing, finance, and manufacture. The family tree structure of separate departments helps explain how different business disciplines can be organized to work together. But whereas in large businesses, each department on the family tree may be manned by a large number of people, in small companies, those departments may be managed by less than a handful of people, and possibly by only one.

In the larger company, the executive responsible for getting and retaining business, who may be the chief marketing officer (CMO), will have overall responsibility for a sales organization. Selling organizations may consist of direct selling through a sales team as well as non personal selling through the internet, direct mail, and direct sale advertising, all of which require specialist management to be successful. In larger organizations, the CMO may therefore manage a team of sub-mangers responsible for different areas of the sales organization.

The effective management of a sales organization in larger companies, requires the CMO to be competent in the selection and training of salespeople, planning, direction and targeting, performance measurement, to have the ability to motivate personnel and be able to demonstrate effective leadership. The abilities of the sales organization are fundamental to business success, thus its effective management is of major importance. CMOs will be judged on their ability to produce the required level sales income, thus their management skills and leadership attributes will be fundamental to the success or failure to “Make it happen.”

In small and very small companies, the chief executive (CEO) may have to do much of the work themselves, having very few specialists to whom they may delegate responsibility. The person responsible for producing the income may be the senior salesman, or even the CEO themselves. To produce the necessary income in a small business requires the same skills as in the larger business, but on a different scale. In many ways the executive of a small business has to have more skills than their approximate counterpart in the large company, because to be successful, not only do they have to be jack of all trades, they also have to be competent at them, if not actually masters.

For the small business, selling is probably the most important activity, because it produces the necessary cash-flow, for the day to day running of a business which will not have the financial resources of its larger counterparts. It follows that if they want to be successful in producing income, those executives responsible for its production need to be competent in their selling ability. Small businesses have not got the time and resources to rely on trial and error to produce sales revenue. Therefore if those responsible for producing sales income in small businesses don’t have formal sales training, but are themselves directly involved in selling to customers, they should undertake formal training in selling as soon as possible. In small businesses, “Making it happen” will depend on the individual abilities of perhaps a very small number of people actively involved in selling.

While “Making it happen”, in large companies relies on the CMO’s management skills and leadership attributes to produce results, in small companies, “making it happen” often relies on perhaps one individual’s necessary motivation, self confidence, self reliance and above all, their selling ability to produce the necessary income.

© N.C.Watkis, Contract Marketing Service 01 Sep 10
Contract Marketing Service, (Marketing Performance Consultants)

If you want to be heard, speak the language

In the present trading climate, getting and retaining business will continue to be difficult for the foreseeable future. Companies expect that sales income will probably be less than previous years, and that they will have to work harder to maximize their potential income. Demonstrating efficiency and effectiveness in obtaining that income will have increasing importance.

It has been said, that everyone in a business is involved in “marketing.” But if “marketing” is the process of producing profitable income by anticipating and satisfying customer demand, then clearly, not everyone in a business is directly involved in the process. Businesses exist to make money, but not all employees are directly responsible for producing income. People involved in finance, personnel and purchasing, provide the necessary resources for a business to operate, by providing money, people, and supplies. Business employees involved in development, production, sales and sales support, are directly involved in activities which “anticipate and satisfy customer demand profitably”, and are therefore involved in “marketing.” Where does this leave the professional marketer? Are professional marketers needed?

If “marketing” is as undervalued as marketers often claim, what should they do about it? The world does not owe marketers a living. Marketers must prove themselves and demonstrate how their profession is not only relevant to a business, but is an essential function for its development. Marketers often consider themselves experts at marketing communications, yet if they are so good at communications, why are they apparently misunderstood and “marketing” undervalued?

Marketers have to be clear about what they do and to quantify what they contribute to a business. It was said of the late Lord Weinstock, when he was chairman of GEC that he would telephone his senior managers daily to ask how much money they had made. The story may be apocryphal, but the principle is a good one for marketers, in that they should be able to demonstrate and quantify, their contribution to the production of profitable income.


The task of the chief marketing officer (CMO) is to produce and maximize sustainable profitable income, while minimizing the use of assets and investment. In reality, many marketers do not have overall responsibility for producing sustainable income, but are involved in what might collectively be called sales support or the specialist areas of E-marketing and internet selling. For marketers whose jobs do not have an easily quantified outcome, justifying and demonstrating their contribution is more problematic.

The only thing that the Chief Executive Officer (CEO) really wants to know is, how much profitable revenue has been produced and how much it cost to produce it?
Business reports and other communications must clearly show what marketers are contributing and how these actions directly or indirectly assist in the production of profitable income. For many marketers, communication actually is the problem. Examination of many marketing reports and articles leaves the impression that they are written by marketers for marketers, rather than for non marketers who need to read them in order to make informed management decisions. Marketing jargon and “Corporatese” which fill such articles and reports with fashionable words and meaningless phrases such as, “blue sky thinking”, “leveraging”, “alignments” and “stakeholders”, to name but a few, confuse and bore the reader. Thus potentially important documents are easily dismissed by readers as “so much irrelevant waffle”. This poor communication, devalues the contribution of the process of marketing and the work of professional marketers. What can marketers do about this?

Marketers have to be clear about what they do and contribute to the business. For that, they need to have clear job descriptions that define their responsibilities and provide for quantified outcomes. It should be remembered that “marketing” is not confined to advertising, promotions or public relations, but is a function of management to control assets and investments to produce profitable revenue, by anticipating and satisfying customer demand. As such, the value of “marketing” and the contribution of marketers must be measured by results.

The purpose of communication is to impart knowledge and understanding to its recipient. Marketers must communicate what they do, how they do it and with what results. To convey this, marketers need to present their results, in the language of finance for the benefit of the CEO, showing how much income was made and how much it cost to produce it. But every other form of communication needs to be given in plain English devoid of “corporatese,” “marketing speak,” and fashionable jargon, so that anyone is able to read or hear with complete understanding. By communicating in plain, intelligible English, marketers will gain credibility from their audience and be valued for their contribution and professionalism by their employers.


© N.C.Watkis, Contract Marketing Service 28 Jul 10
Contract Marketing Service, (Marketing Performance Consultants)