In the News
Media
BRW
BRW
The glorious increase in clients' budgets will not mask the deeper issues that face marketers and advertising agencies. By Simon Lloyd.
Marketing
The issue of how marketing can prove itself as central to company earnings has been the main priority for senior marketers in 2004. It will be again next year. In August, The Australian Marketing Institute (AMI) published a long-awaited discussion paper about the development of a uniform set of marketing metrics for companies, with the objective of providing marketers and non-marketers, particularly company board members, with a set of standard measures by which the value and effectiveness of marketing could be demonstrated.
AMI's president, Roger James, says: "We will be pushing ahead with the development of a marketing metrics tool kit, the major task for 2005.
The founder of the Chief Marketing Officers Forum, Dianne Davis, agrees with James that metrics will remain critically important for the marketing industry in 2005, but she says marketers should not allow the issue to sideline them from another key question they face next year: how to nurture brands not just externally, through their relationship with consumers, but internally. Davis says internal branding - communicating and upholding the values ad culture of a brand to company employees and shareholders - is only in its infancy in Australia. She says that in 2005 many companies, particularly in the services sector, will be paying much closer attention to the role of internal branding as a factor in overall brand health.
Davis says: "Internal branding is a key strategic issue that is still at an immature stage of evolution, but I am convinced we will see a real thrust in this area next year. Marketers will need much closer involvement with the human resources function to drive that.
For service companies particularly, their people, how they are groomed and looked after, and how they communicate brand values and deliver on the brand's promise is becoming the one way that can differentiate their brand in an era when differentiation is more and more difficult."
The Australian Financial Review
The Australian Financial Review
Beefing up a tender spot
Australia's premier and major mid-tier law firms are still playing catch-up with the big accounting firms, says Dianne Davis despite their best efforts to narrow the gap. For an activity that consumes thousand of hours a year, both for professional staff and specialist in-house business development and marketing resources, there is remarkably little accountability when it comes to tendering.
In other words, there is no clear linkage between tendering investment and actual performance or key performance indicators achieved. Moreover, the level of sophistication in tendering processes and techniques within law firms still lags, for the most part, behind the major accounting firms.
While the top five or six law firms have certainly closed the gap in recent years, the Big Four accounting firms still retain the edge in the art of tendering.
In the late 1980s and early 1990s, the then Big Six accounting firms invested significant intellectual capital in developing the processes and infrastructure for advanced tendering. The industry benchmark was set by Price Waterhouse (now PricewaterhouseCoopers) with its "Refuse to Lose" tender methodology.
The "sophistication" gap between the legal and accounting sector is most notable in several areas. This includes the need for a consistent application of robust "decision to bid assessments", with strategic and candid assessment of the quality and probability of tender opportunities before actually committing to participate. Other areas in which law firms lag are:
- Undertaking solid research and analysis on the tendering organisation's specific needs and the industry in which it operates.
- Adequate preparation and rehearsal for briefing sessions and tender meetings.
- The production of tender documents that are effective communication tools. A lot of documentation is still too generic, often repetitious and replete with unsubstantiated assertions and claims.
There is also a need for proper planning and rehearsal for oral presentations. And there need to be consistent, formal and full post-tender evaluations and debriefs and the inclusion of tender education in partner and senior associate training programs. Firms also need to develop tender tools and systems to increase efficiency and effectiveness, such as tender databases that contain an electronic library of relevant tender documents, tender process templates, CVs, precedents, firm operating procedures and current performance statistics.
Many law firms especially in the mid-tier still focus their resources and effort on producing the physical tender document, and insufficient focus on strategically assessing the opportunity and leveraging relationships. Law firms are understandably reluctant to divulge their tender success rates, but a well-oiled tendering capability should be achieving an overall strike rate of 60 to 70 per cent.
The need for law firms to get smarter and more strategic about tendering is now greater than ever.
In the past five years, market developments such as increased pressure on fees, the involvement of procurement functions in tenders, greater due diligence in tender evaluations, the decreasing number of genuine opportunities for non-incumbent firms and the need to demonstrate pro bono commitment, mean firms must lift their game.
Lawyers must be trained in tender strategies and processes. Equally, business development resources should focus more on research and analysis, tender databases and other tools to enhance efficiency and effectiveness.But win, lose or draw, full tender debriefs that genuinely explore a firm's strengths and weaknesses are critical.
BRW
BRW
Dianne Davis - AGE: 46.
THEN: Head of marketing, ASX.
NOW: Principal, Davis & Associates
Can a marketing consultancy last the distance, or will the novelty lose its shine? According to Dianne Davis, emotional maturity and an entrepreneurial spirit are the keys to a long and successful life for a marketing consultancy. Davis, 46, started her consultancy, Davis & Associates, in 1998 and says she is still powering along six years later. Davis was the Head of Marketing at the Australian Stock Exchange and, before that, Director of Marketing at Price Waterhouse (now PricewaterhouseCoopers).
Davis says: "I always had a strong entrepreneurial flair and had wanted to run my own business. I had the emotional maturity to do it. Having that is crucial. Many marketers will know that you get to a level in your career where you are doing three things: getting embroiled in internal politics - whether you like it or not, managing and defending your budget and playing 'nanny' to your staff.
It becomes frustrating not to be able to get involved in key marketing initiatives, and you almost lose the skill of actually doing the work. A lot of marketing people I know agree with that. To be honest, there is a tendency among marketers not to want to move outside their discipline. But the reality is, if marketers want to get on boards and ascend to the chief executive position, then they need broader line management experience."
As a consultant running her own business, Davis finds it satisfying to meet clients face to face and to be listened to far more attentively than what is usually the experience of a marketing head in a big company. She says: "Your clients know they're paying for your time, and because you're a consultant you have the ability to make honest and candid observations about a client's business. You are not part of their politics. You have no fear of that and that is what clients want from you."
The Australian Financial Review
The Australian Financial Review
Mid-tier firms stay middle of the road
What do the mid-tier accounting firms have in common? Everything. And that's the problem, argues Dianne Davis.
There is no sustainable difference between firms like PKF, Bird Cameron, Pitcher Partners, Grant Thornton, BDO, William Buck or Horwaths.
No firm stands out or really stands for something.
The mid-tier accounting sector is positioning itself around more face-to-face partner time with a client than the client is likely to experience with a Big Four firm, more competitive fees and being an "adviser of choice" to the SME market.
At a time when there is unprecedented potential for growth, the sector is characterised by low brand awareness and weak or confused brand differentiation. No firm has managed to positively differentiate itself in a crowded market.
Differentiation is one of the cornerstones of effective branding, particularly within professional services. A strong brand is what distinguishes an organisation so that they effectively own distinctive positionings and attributes.
Good examples include Macquarie Bank, which has become synonymous with being entrepreneurial, Gilbert + Tobin with being innovative and Deloitte with putting people first.
Differentiation is also a strong driver of a brand's ability to command premium fees and attract quality recruits and co-branding partners.
Yet partnerships in professional services firms often maintain that differentiation really only applies to retail brands. Nothing could be further from the truth. This attitude fails to recognise a fundamental market reality.
Brand is a sustainable source of differentiation in a professional services environment, where products and technologies are effectively commoditised and quickly replicated and surpassed.
Moreover, creating and maintaining a strong internal culture which supports and reinforces behaviours aligned to the brand's core values differentiates a professional services brand and its people.
Macquarie Bank, McKinsey, Deloitte, JB Were, Goldman Sachs and Minter Ellison are all good examples of strong internal cultures effectively contributing to strong brand positioning and recognition.
Nor is size critical. Many of the most strongly differentiated brands are not the largest players in their industry. Virgin (especially Virgin Blue), ING, again Macquarie Bank, Deloitte, Ferrier Hodgson and St George clearly demonstrate this.
Where size does need to be countered by the mid-tier accounting firms is in their ability to project the brand in the marketplace on a consistent basis to generate continuing levels of awareness with key target audiences. This requires investment and the mid-tier players simply don't have the balance sheet of the Big Four.
But they could be more effective by investing in marketing and brand communication tools which provide superior reach, greater longevity, leveragability and measurability to build and sustain awareness.
Examples include public relations, partnering or co-branding with key business organisations or thought leadership initiatives.
Medium to smaller professional services firms who have done this particularly well, include Ferrier Hodgson, Gilbert + Tobin, Arnold Bloch Liebler and Korda Mentha.
Too many mid-tier firms believe brand is really logos, brochures and promotions. They haven't yet recognised that brand is about everything connected to the essence of the firm; its people, physical visual presence, reputation, associations, logo, endorsements, client perceptions and the sum total of its communication.
Nor is there any real understanding of the business benefits that a strong brand delivers. It enables a firm to successfully introduce new products and services to a loyal client base, to command premium prices and to be attractive to potential licensing candidates and alliance partners. Equally, it reduces vulnerability to price wars. Organisations that have nurtured their brand internally and externally, like Macquarie Bank and Allens Arthur Robinson, have little difficulty attracting and retaining the best and brightest people.
Shareholder and stakeholder demands for greater transparency and independence in the auditing process, coupled with a strong focus on good governance, represent significant opportunities for mid-tier accounting firms.
Unfortunately, none have managed to differentiate their brands in the marketplace as alternatives to the Big Four.
The Australian Financial Review
The Australian Financial Review
Marketers are not speaking boardroom language
Brand awareness and advertising expenditure top the list of the metrics that marketers report to their Chief Executives and boards. But the metrics that senior executives are most interested in - such as return on investment - are largely ignored.
A new survey claims marketers are preoccupied with reporting traditional measures of success, such as sales volume, market share, customer satisfaction and customer acquisition/retention, when they should focus on measures that are more financially orientated.
The inaugural Marketing Measures survey was conducted by the Chief Marketing Officers' Forum among 30 of its members, including Ford Australia, AMP, Telstra, Accenture and St George Bank.
It looked at the four marketing measures of brand, customer focus, sales and employee brand and satisfaction and to whom they were reported.
The CMOF concluded that marketers operated from a "redundant" measurement framework.
"Marketing as a profession needs a clear set of measurement metrics. Marketing doesn't speak the language of boards, but it can," said the Director of Marketing at Accenture Asia-Pacific, Caroline Trotman.
Just over half the respondents reported results to the board, while 41 per cent reported to their Chief Executive. Although 88 per cent were on the senior executive team, only 6 per cent were board members.
"Very large organisations participated in this survey and one would think they would have more sophisticated measures, but the results show they are still almost at an elemental level," said a marketing consultant and CMOF member, Dianne Davis.
"Until marketers get accountability and credibility around hard measures, we won't get the ear of the CFO, CEO and board."
The most commonly reported brand measures were relative pricing, brand preference, brand usage, retention, purchase intent and availability. Brand valuation ranked last.
Among customer measures, customer satisfaction was the most popular reporting measure, followed by customer retention and acquisition.
Spending behaviour was given little attention.
In sales measures, sales volume and market share were the most common measures. Cost of sales per customer ranked last.
Speeches
The Art of Effective Tender Documentation: APSMA Seminar
Tendering: Key Practices, Processes and Tools. APSMA Conference
Tendering: Wider Business Development Process
Primary Influences: Tender Decision-Making
Critical Success Elements
- Research & analyse thoroughly organisation’s culture, business imperatives, needs
- Choose right team / people
- Align strategy with "client" needs-outcomes/keep it flexible
- Effectively manage target / client interface
- Strong project management ( inputs, client/target interface, resources,key components of tender process, timing, budget )
- Evaluate / monitor proposals performance
Key Components in the Tender Process. Putting It Into Perspective:
Key Stages in the Tender Process
Key Stages
(a) Request For Tender ("RFT")
- Establish process / framework for responding to tenders
- Influence tender specifications: services firms tender continually develop body of expertise / knowledge
- Where appropriate, develop "Tender Guidelines" for tendering organisation conduct efficient tender process
Key Stages
b) Assessing Tender Opportunities: Apply "Risk Management" process at 4 levels:
- Assess whether opportunity is aligned with your organisation’s strategic priorities & focus
- Assess relationships with decision-makers / key "buyers"
- Assess health / probity of company, management, Board
- Assess opportunities for cross-selling / revenue extension.
Risk Assessment: Should you participate in tender?
Key Stages
(c) Establishing the Team
- Team must reflect culture and style of the organisation
- Team leader must have strong communication and interpersonal skills + relevant industry expertise
- Avoid selecting teams / leaders on basis of availability and / or internal politics. Getting the team right is a critical decision in the tender process.
- Use independent member of your firm and / or external coach /es to confirm key qualities, cultural fit client seeks in Service Leader & Team
- As you progress through tender process, team may need to change (e.g. meet additional client needs via specialist resources / skills; client doesn’t relate to nominated team member / s change team composition)
- On major tenders, appoint an "Executive Partner" to act as ‘sounding board’/ independent client contact point.
Key Stages
(d) Developing and Coordinating Strategy
- Strategy must be flexible to incorporate new information, market & competitor intelligence.
- Strategy formulated, driven &"owned" by core group - central tender team, BD / Marketing, Exec. Partner ( also involve key external advisers: coaches, tender consultants )
- Strategy must be dynamic; review / refine on ongoing basis to assess relevance, currency
- Use coach / es to review strategy, tender documentation & oral presentation
- Ensure Service Team focus on strategy, relationship management & presentation, not the tender document
- For major tenders, create right focus & environment - establish a "campaign room"
- Be innovative:"think outside the square" - diverse resources/ thinking / tools (eg. external tender specialists, friendly NEDs, value-add services, new channels / technologies).
Key Inputs
Defensive Tenders: Key Themes
- Candidly review service with client: "assess good and bad"
- Re-present to the client, value you’ve delivered to date
- Demonstrate tangible benefits of incumbency
- Take decisive action to address weaknesses / areas for improvement: commit / re-commit to Client Service Charter
- Emphasise disruption / inconvenience to management & staff due to new service providers ( where possible, quantify )
- Take a fresh perspective: new team members, product offerings, channel delivery.
Pricing Strategies
- Discount core offering / "loss leader" (e.g. audit); or on-sell / cross-sell other services at a "premium price" (e.g. tax, management consulting, corporate finance). Gain strategic entry / market share; grow "share of wallet"
- Maintain fee levels to achieve good margins; compete on service, value & expertise not price.
- Unbundle service offerings: "menu" of options. Increase client’s purchasing flexibility & your service packaging / fee structuring.
- Success component in fee structuring & levels. Demonstrates creativity, commitment & partnering; effective in transaction / deal projects & assignments
Key Stages
(e) Scoping / Information Gathering
Critical opportunity: make a strong impression or create a negative perception.
- In face-to-face meetings, you can: o learn about the organisation’s culture & politics
- Confirm agenda & questions prior to meetings
- In scoping meetings, demonstrate: o good listening skills (learn as much as possible; don’t "sell" / offer premature solutions)
- Don’t be confined to meeting only personnel identified in RFT; seek to meet with all the people you need, to gain a full picture of the organisation, its activities & culture
- In tender situations (particularly government tenders) where scoping opportunities are prescribed / limited, focus on other proposal components (e.g strategy, presentation)
- Plus, if you’ve implemented Targeting Programs, you should’ve established key relationships / obtained information.
o present innovative ideas
o demonstrate enthusiasm & interest.
o positive body language
o knowledge of the organisation & its people, industry dynamics, trends
o intelligent, considered questioning; ability to think laterally / creatively.
Key Stages
(f) Tender Documentation
- Time / energy allocated to document by team is often disproportionate to influence on overall process.
- Document Structure - recommended positioning: o State "Value Proposition" clearly in Executive Summary
- Streamline documentation for medium-small tenders: o standardised proposal covers / folders
o Team section / CVs in first half
o Industry expertise / section in first half
o Fees section in first half
o Technical sections: latter part of document & present diagramatically / visually
o format templates ( "downloadable"/ in soft copy)
o "generic sections" (eg. firm & office profiles; client lists; industry experience - publications, case studies, websites etc) available on Proposals Database.
Key Stages
(g) Oral Presentations
- Start planning & strategy early; work on presentation well before document is submitted
- Try to present first: opportunity to set criteria by which competitors will be assessed
- Check venue: ( layout, seating, lighting, AV/ multi-media )
- Research styles / personalities / priorities of Tender Panel
- Conduct rehearsals: "Mock Panels"/ presentation trainers
- Presentation should reinforce Value Proposition
- Focus on non-verbal communication ( positive "selling" behaviour via body language, facial expressions )
- Maximise time allocated for Q&A showcase knowledge / expertise / "learnings" through questions
- All team members present: never bring someone for show
- Minimise impact of less confident presenters: they present in the middle
- AV support complements not dominates presentation (e.g. "low tech" option may maximise delivery / two-way interaction)
- "Leave-behind" documents assist Tender Panel recall Value Proposition.
Key Stages
(h) Post-Tender Evaluation ("PTE")
- Develop "PTE" checklist for key aspects of tender process
- Monitor proposals performance / effectiveness in the market
- Find out why you won / lost via "PTE"
- Learn from mistakes / build on successes: create knowledge bank database of proposals learnings
- "PTE" conducted by independent party not directly involved in tender (e.g. use Executive Partner, other senior party)
Sample questions:
Scoping / Client Meetings
- What was the team’s general level of preparation for meetings?
- How would you rate the team’s knowledge of your organisation, business objectives, strategy, management team & structure?
Proposal Document
- How would you rate overall content, presentation & format?
- How effectively did the document communicate the ability to add value to your organisation?
- How effective was fees content in communicating "value for money"?
Oral Presentation
- How would you rate the team’s presentation skills in general?
- How would you rate the team’s effectiveness in answering questions?
In Summary: Critical Success Elements
- Research & analyse thoroughly organisation’s culture, business imperatives, needs
- Choose right team / people
- Align strategy with "client" needs-outcomes/keep it flexible
- Effectively manage target / client interface
- Strong project management ( inputs, client / target interface, resources, key components of tender process, timing, budget )
- Evaluate / monitor proposals performance
Outsourcing, Insourcing and Co-Sourcing Marketing Functions: AMI Conference
Key Motivations for Outsourcing, Insourcing and Co-Sourcing
- Access specialist skills
- Improve service quality
- Focus on core competencies
*KPMG Survey, 2000
Definitions
Outsourcing=
Using external contractors / consultants to provide a service, on a long-term basis, through a retainer, long-term contract or service level agreement.
Ownership of the “outsourced” service includes: full ownership by the outsourcing organisation; partial ownership / partnering by the outsourcing organisation; full ownership by the service provider.
(eg. call centres; advertising; printing)
Insourcing=
Accessing external consulting expertise to supplement internal experience and resources for specific projects & timeframes. (eg. pitch development & training; brand strategy; CRM tools & technologies).
Co-Sourcing=
Using a mix of full-time internal resources and contracted external resources, on an ongoing basis, to jointly provide specialist services
(eg. market research; PR; design).
Scope of Arrangements
- Full Ownership (Product Development)
- Partial Ownership (Call Centre; Direct Mail House)
- Joint Development / Partnership (Customer Information Management)
- Retainer (Advertising; PR)
- Long-Term Contract / Project (Printing; Sales Promotion)
- Short-Term Contract / Project (Market Research; Product Launch)
Outsourcing, Insourcing, Co-sourcing Marketing: Why and What?
Always retain internally, a core marketing competency, which has 3 key characteristics * :
- It is a source of competitive advantage
- It is difficult for competitors to replicate
- It has potential breadth of application
* Philip Kotler
- Core marketing competencies include:
- Marketing strategy and planning
- Brand architecture / strategy
- Product development
- Pricing
- Channel strategy
...but organisations should also “insource” these competencies to meet specific circumstances, projects and demands.
Outsourcing of “commodity”, and many communications and customer contact functions is appropriate (eg. printing, sales promotions, advertising, call centres)
Because:
- They are not core competencies
- You need to access external communications skills, where broad experience / fresh perspective is vital
- Maintaining such functions internally involves significant costs re: infrastructure & resources.
Research* shows that amongst financial services marketing:
- 50% outsource marketing activities
- Large institutions spend 40% of budget on outsourcing; medium-sized institutions, 45%; and smaller institutions, 30%
- Activities typically outsourced include: promotions; direct mail; advertising; market research; corporate literature
Activities typically kept in-house include: market planning; product development; strategic planning; brand strategy
* Bank Marketing : USA
Insourcing & Co-Sourcing Marketing
Insourcing is a viable option when:
- A project requires highly specialist marketing skills (eg. customer profitability modelling; email marketing; pitch training; CRM tools; data mining etc)
- When the nature and / or scope of a marketing project is politically sensitive
- There are resource gaps due to resignations, sickness etc.
- Co-sourcing is a viable option when an organisation wishes to retain some internal control, contain operating costs, but also provide the organisation and staff with access to external expertise, resources and industry “best practice”.
E- Business: Outsourcing, Insourcing and Co-Sourcing
E-Business is driving marketers to face the following key issues:
- What kind of business model best enables your organisation to seize new e-commerce opportunities?
- What do you need to do to act quickly to meet customers’ expectations?
- What must you do to be agile and fast moving?
How can you expand your offerings and enter new markets with your current infrastructure?
One of the primary ways these issues are being addressed is via external service providers, and in turn, this is expediting the emergence of “The Virtual Corporation”.
However, the way most marketing functions are still formally structured, hinders the agility, speed and flexibility to keep pace with the market’s evolution and organisational requirements.
Virtual Marketing Organisations (“VMOs”)
- New-style marketing groups know traditional structures can’t drive value in dynamic environments - to keep pace, they rely on a continual process of evolution (ie. the “VMO”)
- The number of VMO managers, the scope of their responsibilities and the people to whom they report, evolves constantly to reflect changing opportunities.
- VMO teams can be drawn from internal resources, recruited from strategic partners, or hired in from outside.
- In the VMO framework - having launched a new product or service, some members of the VMO continue to manage or sustain them, others go back into a pool and are redeployed on a new opportunity, while external resources are disengaged at the completion of the project.
Effective VMOs are based on three critical success factors:
- It is everyone’s job to identify new opportunities
- The best opportunities are prioritised and fast tracked via application of predictive modelling tools and streamlined decision-making by senior management
- To maximise flexibility, people are hired for roles not jobs (and these may be outsourced to external consultants).
Critical Success Factors: Outsourcing and Co-Sourcing
Common themes linked to successful outsourcing and co-sourcing include:
- Tight yet flexible contractual arrangements with well-defined Service Level Agreements
- Maintaining the trust of internal staff impacted by the arrangement
- Good cultural fit between the client and service provider.
Measuring and Monitoring Outsourced and Co-Sourced Arrangements
While every arrangement is different, two key “value” principles should underlie outsourcing and co-sourcing:
- The outsourcer / co-sourcer’s business objectives are kept aligned with those of the client organisation
- The outsourcer / co-sourcer is rewarded for providing value in proportion to the value received.
Common forms of measurement include:
- Straight dollar comparisons
- Cash flow (NPV)
- Efficiency measures (ROA, ROI)
- Value creation (EVA, SVA, Brand Equity).
Outsourcing/Co-Sourcing Management Framework
Newsletters
