Marketing Audit

The following is a letter published in the Journal of thre Australian Institute of Company Directors in their December 08 Annual report. http://www.companydirectors.com.au.

Very few businesses make a serious attempt at an audit of the returns from marketing expenditure. Why not? in many comapnies it is one of the largest items on the P&L, and it is certainly amongst the most important.

The Editor

Company Director

editor@companydirectors.com.au

 

9th September, 2008.

 

Dear Sir,

I refer to the article entitled “Pulling in the belt” in the current issue of the magazine.

 

Amongst other issues, in the article Mr. Corrigan refers correctly to the temptation for businesses to cut marketing expenditure when things get tight. Generally senior management sees the advertising budget as a fertile field for cutting, and it often is, but the complication is that “marketing” is a far wider question than just the advertising budget, and it goes to the heart of the commercial sustainability of the enterprise.

 

As directors, we spend substantial and increasing amounts of time managing the shape of the accounts of an enterprise, squeezing out other value adding activities that we should engaging in. We generally spend very little time on any sort of detailed review of the basis for marketing decision making that involves the wide range of resource allocation and management decisions that are driven by the competitive environment.

 

I speculate that this is because the accounting function is dealing with quantitative data,   and therefore relatively easy to measure whilst marketing is more qualitative, and far harder to measure, and further outside the comfort zone of many in senior management and sitting on boards, than are the accounts.

 

In many businesses, perhaps most businesses, the largest asset class is the intangibles, usually only crystallized on the sale of a business, but nevertheless, the core of the sustainability of the business. Why is it then that we rarely analyse in any depth the building blocks of these intangible assets, the things that will generate success in the future. 

As the guardians of shareholder interests, it should be incumbent on directors to spend more time considering the future of the business, not just reacting to the past, and a ‘Marketing Audit” should be on the agenda. 

 

Yours sincerely

 

 

Allen Roberts

FAICD

The scalpel or the axe?

 

Take a scalpel to your costs , not an axe, make sure the costs you cut are not the ones necessary to add value to the 20% of your customers that typically deliver 80% of the profits.

The temptation under pressure is to do something, expend a little brain time and make sure it is the right thing.

Help for small business

The following is a response sent to the Australian Financial review commenting on their front page lead on April 2. The extent to which the various authorities impose burdens on businesses whilst seeking to assist is mind-boggling, but what is more disturbing, they do not appear ot understand.

Dear Sir,

Re:  “Budget plan to help small business”, Thursday April 2 front page headline

The article refers to an extension of the current tax investment incentive, an extremely worthwhile measure, labour market schemes to assist employment, also probably useful, although inevitably carrying an administrative burden for the recipient business, and notes the looming difficulty in accessing credit, as the headline issues facing small businesses.

Across the range of small businesses I work with, largely in the relatively mature food industry in one way or another the greatest problem is not any of these three, but the largely unrecognised impact of the compliance costs of the regulatory regimes they groan under imposed, often inconsistently by the three levels of government and their various agencies.

There have been many promises, and some genuine efforts, to reduce the burden of red tape on small business, none have done anything more that fiddle at the edges, and the burden continues to grow with each “initiative” introduced by someone in a striped suit.

If small business owners I work with could take just a small percentage of the time and resources currently devoted to non value adding compliance and regulatory agency revenue raising activities, and put it into the stuff they do best, the crisis would be quickly over.

Small businesses are often called the backbone of the economy. This is usually said in a positive manner. The alternative interpretation is that small business provides the strength upon which much of the rest feeds, diminishing its capacity to create jobs, and wealth by the hard work, innovation, insight, and sheer determination that most display.

Crises are usually the only  time to introduce change that really “sticks” so lets not waste this opportunity that is emerging out of the undoubted pain in the economy, with more to come yet,  for genuine change by being too timid to tackle the real issues weighing down the performance of the ‘backbone of the economy”

cash is The KPI

 

There are lots of forces calling for more and more performance measures, assuming the work to produce the information is easy and cheap.

Rarely is it so.

For a small business owner, being able to go home at night, and get some sleep, is often a function of how he/she feels the business performed that day. How much cash was collected, how much in sales was written, how many transactions were completed. Get those three right, and sleep will usually come.

It is a cliche, but cash is the lifeblood of a business, so knowing your cash position is as important as breathing.

What’s the purpose?

 Your purpose, should be a reflection of why you do what you do and what makes your business unique, and hopefully fun to be a part of. 

It should be an articulation of what you do better than anyone else that creates a “gravity” to which your customers and other stakeholders are attracted. 

 It serves as a filter for ideas, behaviour, and strategy. Anything that does not connect to the purpose, by definition, should not be done, as it is a wate of an opportunity to connect to the foundations of why you are here.