Center for Management of Emerging Companies

Hyperlinks and Frames on Your Business Website

Hyperlinks and frames are an important design element for many business websites.  Read the attached summary to learn more about legal issues to be considered when tapping into content available on other websites.

Why You Need a Chief Revenue Officer

A number of well-known fast growing companies have created the title of chief revenue officer ("CRO") as part of their executive team.  The CRO is charged with ensuring that the company remains focused on identifying and exploiting all potential revenue streams for the company's products, services and other core competencies (e.g., technology).  In order to accomplish this task the CRO must be given authority to intervene in and oversee the activities of several different departments, each of which will also have its own executive and top management group, including product development, sales, marketing and customer service.  The CRO should be involved in every major new business development project and should have a say in which customers receive top priority and when and how the company sacrifices profitability in order to increase revenues, market share and customer loyalty.  For example, the CRO should commission the research necessary to determine which customers have the highest potential for long-term revenue growth and should work with various functional departments such as sales and customer service to make sure that those customers are serviced properly.  The CRO should also decide whether it is worth pursuing a new sales channel through a discounting strategy that may reduce margins in the short-term yet expose the company and its products to a whole new group of customers.  Obviously the CRO must be highly effective in creating and managing cross-functional teams and reconciling the divergent views of managers in different departments.  It is also essential for the company to provide real incentives for senior managers of departments such as sales and marketing to follow the direction established by the CRO.

The content in this post has been adapted from material that will appear in Business Transactions Solutions (2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

Marketing and Product Development for Emerging Companies

The marketing group within an emerging company plays a crucial role in the development process for the company’s initial products.  Unlike established firms, emerging companies have no existing product line or track record and thus have no room for error as they develop their products and look to introduce and sell them to customers that have no familiarity with the company or any brand reputation upon which to base their purchasing decision.  It is therefore essential for emerging companies to seek and obtain feedback from prospective customers as soon as possible to make sure that there requirements are recognized and integrated into the product development process at an early stage.  The marketing group should take responsibility for identifying and qualifying potential lead customers that can be part of the feedback process.   Qualification is an important point since listening to the wrong customers at this point can send the development process off in the wrong direction and lead to an emphasis on features that are ultimately perceived as having little value by most of the parties in the target market.

The marketing group serves a valuable purpose in keeping an emerging company focused on identifying and vigorously pursuing carefully defined product niches in order to gain a foothold that can ensure early survival and provide the company with the freedom to eventually expand into newer and larger markets using the core competencies developed during the launch phase.  Emerging companies lack the financial and technical resources, as well as the time, to satisfy all of the needs of all of its potential customers and the key to success is to concentrate on one segment of the market at a time.  From a marketing perspective this means getting to know customers in that segment intimately and discovering the product specifications that meet their needs and which can be readily and efficiently distinguished from competitors.  Differentiation is essential since a small company that simply offers essentially the same product as entrenched incumbents cannot hope to compete on price or reputation.  Of course, differentiation alone is not sufficient unless it touches on a feature that is valued by the customer.

Finally, the marketing group should use the information that it collects from prospective customers to develop strategies and tactics for distributing and supporting the company’s products, both areas that are often dominated by opinions from the sales group.  While obtaining feedback from the marketplace on product features the marketing group should also survey customers to determine their preferences with respect to the procurement process and their expectations regarding service and support once the decision has been made to purchase and use the specific product.  Without having appropriate channels and support system in place even the most innovative product will prove to be a hard sell and may lead to erosion or complete loss of any advantage the emerging company might have had by being the first to market with new technology and/or features.

The content in this post has been adapted from material that will appear in Business Transactions Solutions (2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

Emerging Companies Need a Strong Marketing Group

New companies obviously have no brand recognition.  While this is a liability in the short-term, it should be embraced as an opportunity for the company to build its own brand identify from the very beginning and style a message that it wants to convey to each of its stakeholder groups including specific customer segments.  Since a start-up typically has limited resources to invest in traditional marketing tactics such as advertising and promotion the best way to get started with branding is to make sure that the company’s products meet real and important requirements of customers and that the sales group accurately conveys a credible message to customer regarding the features, benefits and performance of the products.  In other words, customers must be trained to trust what the company says about its products so that they company is eventually perceived as a reliable vendor that can deliver on its promises and representations.

The marketing and sales groups are the key players in developing and communication messages about the company’s products to potential customers.  It is essential that marketing and sales each understand the roles that they play and how their activities interrelate with each other.  If an analogy can be made to a military campaign, the marketing group is akin to the air force in that it is responsible for creating messages about the company’s products that can be disseminated throughout the target market to soften up potential customers so that they are ripe for capture when they are eventually engaged by the company’s army of sales personnel.  For established companies with more financial resources the “air campaign” of the marketing group can take the form of advertising campaigns that notify and educate customers in advance about the features of the company’s new products.  However, since start-up companies rarely are able to finance this type of promotional push the marketing group has to think and act more strategically and provides its value by becoming experts in customer requirements and making sure that customer needs are meant during product development and the sales group has the tools necessary to demonstrate to customers how their needs can and will be satisfied by the company’s products.   

In order to build credibility with customers and create strong brand recognition there must be a high level of coordination and communication between the people working in the marketing and sales areas.  The best way to achieve these objectives for a new company is to have one senior executive responsible for both marketing and sales and to make sure that each group is fully versed as to their specific roles and the types of communication that needs to occur across functional boundaries.  As for the marketing side, it should take the lead in studying the market and building links with customers in order to truly understand what customers are looking for in the business area in which the company is operating.  At the highest strategic levels the marketing group provides significant input into which market segments the company should target initially and should create a blueprint for product design and promotion that can be vetted and endorsed by the entire executive team and then dispatched to each of the functional departments for execution.  While the sales group will certainly have its own views on product features and pricing, there is tendency for sales to argue based on what was heard at the last customer visit in order to close the next deal.  It is the responsibility of the marketing group to take a long-term view and impose the discipline necessary to begin building a permanent company message and brand reputation.  However, marketing certainly cannot ignore sales and, in fact, should treat the sales group as a key internal customer and provide it with the tools and information necessary for them to be successful when engaging with prospects.

Growing companies should establish procedures to monitor how well the marketing and sales groups are collaborating and how effective each of them are being in fulfilling their specific roles in relation to identifying and satisfying the needs of customers.  One way to evaluate the work of the marketing group is to look at whether or not it is perceived by the sales group as contributing value to the customer relationship process.  One thing to look at is whether the marketing group invited to sales group meetings that include brainstorming about how to approach new customers.  If marketing is included in these sessions that is a sign that the sale group values the information that marketing has collected about customer requirements and the knowledge that marketing has regarding specific product features and the way in which sales can differentiate them in the minds of customers.  Another measure of the value of the marketing team is what percentage of its time is spent communicating with customers as opposed to dealing with internal issues.  If marketing personnel are not in touch with the market they have little or nothing to contribute to the sales process and the sales team will ultimately come up with its own ideas for describing what the company is and why the company’s products are different.  Finally, the value of members on both teams can be assessed by how often they are consulted by their counterparts on the other team regarding customer needs and how well the company’s products are satisfying those needs.  For example, a salesperson who is continuously contacted by the marketing group for input on marketing decisions is likely well attuned to customer requirements and thus serves a valuable role in both areas.

The content in this post has been adapted from material that will appear in Business Transactions Solutions (2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

User Surveys for Outside Marketing Services Relationships

I’ve been discussing relationships with public relations and advertising firms.  In each case, it is important for the parties to regularly evaluate the progress of the relationship.  One way to do this is to have involved parties from the “client” (i.e., the company that has contracted for services from the public relations and/or advertising firm) answer a series of standard questions such as the following:

1. Has the firm fulfilled the promises made during the selection process regarding staffing of the account?  Are the people working on the account responsive?  Does the client have ready access to senior level executives and managers from firm?
2. Has the firm adhered to the budget agreed upon by the parties for marketing-related activities?  Does the firm keep detailed records of the work performed and provide the client with clear and fully itemized invoices?  Are the charges in each invoice consistent with written activity reports for the same period?
3. Do the people working on the account communicate regularly and proactively with the client regarding the status of various projects?
4. Has the agency consistently completed projects on a timely basis and within the budget parameters agreed upon in advance by the parties?  Has the amount of rework and revisions to materials prepared by the agency been minimal or extensive?
5. Has the agency been providing the client with new and creative ideas during the course of the relationship, as opposed to simply executing the originally-agreed statement of work?  How well has the agency done in identifying opportunities and offering innovative solutions?
6. Has the agency demonstrated that it has adequate knowledge and understanding of the client, its organization, and the industry within which the client is operating?  Has the agency worked effectively with other functional groups within the client organization (e.g. sales)?
7. Has the agency been open and transparent in its dealings with the client?  Has the agency made an effort to understand and adhere to the client’s ethical values and policies?  Has the agency fairly represented the client in communications and relationships with third parties (e.g., media outlets and advertising agencies)?
8. Has the agency cooperated in the development and use of mutually agreed metrics to assess the performance of the agency and specific campaigns and tactics in achieving the marketing objectives of the client?

The results of this survey should be used to create an agenda for regular meetings between the principals from both sides to discuss how the relationship is going and to make necessary adjustments in the way that the parties interact with one another.

The content in this post has been adapted from material that will appear in Business Transactions Solutions (May 2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

Agreements for Advertising Agency Services

In my last post I discussed some of the issues that arise when negotiating a contract for public relations services.  Another important partner in the marketing area is an advertising agency and that relationship will also require some form of services contract.  Since the advertising agency is chosen to become a key partner in any company’s efforts to develop and distribute information regarding its products and service through various media channels the agreement should address how the agency will assist the company in planning, preparing and placing advertising for the company’s products and services.  The scope of the services to be provided by the agency should be based on an analysis of the company’s current and proposed products and services and the markets in which those products and services will be promoted and sold.  The agency will be responsible for dealing with the parties that control the platforms on which the advertising will appear (e.g., newspapers, magazines, radio and television stations, and online advertisers).  Compensation to be paid to the agency will generally be a mix of commission and fixed hourly charges as specified in the agreement.  The agreement should also address billing procedures, rights of ownership and use in intellectual property created by the parties while developing the advertising materials, the rights of the agency to work for competitors, and the term of the agreement and events that might trigger early termination of the agreement (and the consequences of early termination).

In general, advertising agencies are compensated on a commission basis, at a percentage agreed upon in advance by the parties, for placing advertising with the media and for arranging for procurement from third parties services or properties necessary for the conduct of the advertiser’s marketing campaign.  The advertiser maintains control over the compensation by virtue of the fact that it must authorize advertising placements and the procurement activities enumerated in the agreement.  Activities not compensated on a commission basis will be compensated at an hourly rate negotiated by the parties; provided, however, that the agency has agreed in advance to a cap on the hourly rate.  Before proceeding with any special projects that would be covered by the hourly rate arrangement the agency will normally be required to provide the advertiser with an estimate of the cost and a schedule. 

In general, advertising agency relationships are reviewed no less frequently than annually and performance should be measured against objective metrics mutually agreed upon by the parties before the relationship begins.  Typically each party is allowed to terminate the agreement by providing advance written notice to the other, assuming that the agreement has not been breached.  In the event either party defaults under any material obligation owed to the other party the defaulting party will have the specified cure period to remedy the situation and if this does not occur the non-defaulting party would have the right to terminate the agreement.  In most cases the parties will be prohibited from terminating the agreement until a minimum period of time has passed absent a material default during the initial period.  The contract should describes the steps that need to be taken upon termination of the agreement, for any reason, and require that the agency transfer, assign and make available to advertisers all property and materials in agency’s possession to which advertiser is entitled provided that advertiser has made all required payments under the agreement.  Since termination often occurs because the advertiser decides to employ another agency the agency should be required to cooperate with the transfer of contracts and agreements with media, suppliers and talent that may be necessary in order for the advertiser to continue forward with its marketing campaign.

The content in this post has been adapted from material that will appear in Business Transactions Solutions (May 2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

Agreements for Public Relations Services

In my last post I discussed some of the issues that might arise when negotiating the terms of engagement with a public relations firm.  In this post I want to provide a more comprehensive list of the issues that need to be considered.  Specifically, the executive responsible for marketing activities should be sure that any agreement for public relations services covers the following areas:

1. Scope of Work.  Among other things the firm will usually be expected to make introductions to, and establish relations with, specified public relations targets such as editors, industry analysts, broadcast producers, representatives of print or broadcast media and others. Consider including an attached addendum which spells out in more detail the elements and budgetary allocations associated with the specific public relations program that the firm intends to pursue on behalf of the client.
2. Term, Renewal and Termination.  It is common to provide for a 12-month term followed by automatic renewals for additional 12-month periods unless one of the parties decides to terminate the agreement.  In contrast to this type of “evergreen” approach the parties may simply agree on a single fixed term without automatic renewal and thus force new negotiations on salient points in the contract.
3. Compensation.  One common method is to provide for payment of a minimum monthly fee, a “retainer,” in recognition of the fact that the firm will be providing continuous attention to developing and implementing a public relations campaign on behalf of the client.  Other alternatives for a fee structure include a fixed project fee, hourly arrangement with advance, and hourly arrangement without advance.  Billing and payment procedures should also be developed and described.
4. Expenses.  The parties should create procedures for reimbursement to the firm for expenses incurred in connection with services provided by the firm.  Examples of expenses associated with the service provided by the firm include mechanical and art costs (including typography, artwork and comprehensive layouts), news distribution costs (including wire services and mailing houses), audiovisual production costs (including photography, slide and video production), research activities (including market research fees, on-line database charges, clipping services, and focus group costs), producer’s or packager’s fees, and third party spokesperson fees and expenses).  These expenses are passed on at cost plus a pre-agreed mark up.
5. Intellectual Property.  The agreement should include rules for allocating rights to ownership and use of creative work developed during the course of the relationship.  Since the client is commissioning the creative work done by the firm it is natural for the parties to agree that all intellectual property rights associated with that work will vest in the client provided that the firm has, in fact, been paid for the services associated with creation of the work.  In turn, the agreement should make it clear that the firm retains ownership of its own proprietary information and tools including media lists and its own set of third party relationships.

Other sensitive business issues that might need to be addressed include whether or not the firm will be the exclusive provider of public relations services, inclusion of restrictions on the right of the firm to conduct public relations services for competitors of the client, and inclusion of restrictions on the rights of the parties to solicit or hire employees or contractors of the other party. 

The content in this post has been adapted from material that will appear in Business Transactions Solutions (February 2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

Public Relations Firms

While companies generally develop and maintain an in-house department that handles various aspects of creating and implementing marketing campaigns, including relations with media outlets, one of the most common and important strategic relationships in the marketing area is with a public relations firm.  Companies may go through an extensive search procedure in order identify and select a public relations firm that suits their requirements with respect to the specific activities and ability to work within a reasonable budget.  The initial phase focuses on finding possible candidates and includes obtaining recommendations from business partners and researching the relevant trade journals to see what firms might have experience in the company’s industry and with the specific target audience.  The next step might be to create and disseminate a request for proposal (“RFP”) for public relations and marketing services.  Each RFP should be customized to the requirements of the specific company; however, it is essential that the document include some background on the business and mission of the company, the current public relations and marketing challenges for the company in the eyes of senior management, an outline of the proposed scope of work, a list of the minimum qualifications to submit a proposal, and a brief description of the procedures that will be followed with respect to reviewing proposals and ultimately making a decision.

Once proposals have been received from prospective public relations firms the company should move forward through a formal selection process including additional interviews with the principals of the firms that appear to be the best fit and perhaps asking the firms to complete a basic assignment so that they company get a better idea of the quality of their work and how they relate to clients.  Once the selection has been made the parties should enter into some form of contract or agreement that outlines their relationship.  Contracts with public relations firms generally include a description of the scope of work, timeline and protection language (for both parties).  The contract should be clear on fees and expenses (i.e., hourly rates vs. flat fees and procedures for monitoring expenses), confidentiality and ownership and usage rights with respect to deliverables created by the firm during the engagement.  It is not industry standard to enter into long-term contracts and both parties should expect that the relationship will be revisited no less frequently than annually.  In some cases the contract will take the form of a simple letter agreement.  As with any form of services agreement the parties need to reach agreement on the scope of work and the form of any deliverables that the client expected to receive from the PR firm.  Payment terms, early termination and changes to the statement of work should also be covered in the agreement between the parties.  With larger engagements the parties may negotiate a much more elaborate contract that includes detailed provisions regarding ownership of intellectual property, reporting, the right of the firm to work with competitors, and the consequences of termination. 

The content in this post has been adapted from material that will appear in Business Transactions Solutions (February 2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

Duties of Marketing Managers

Many companies are launched by a founding group that includes at least one member with a strong marketing background and he or she will generally become the foundation of the company’s marketing function as the organization grow.  In any event, the marketing function for any company, regardless of its size, must have a senior manager and personnel carrying out necessary activities in several key areas:

• Collection and analysis of market information, which refers to marketing personnel that are engaged in marketing research activities;
• Product and segment management, which refers to marketing personnel with specific responsibility for coordinating marketing activities relating to particular products and/or customer markets (e.g., product managers);
• Marketing communications, which refers to marketing personnel responsible for developing and executing tactics designed to disseminate the marketing messages of the company (i.e., advertising, public relations, direct response, packaging etc.); and
• Marketing fulfillment, which refers to marketing personnel responsible for fulfilling promises made during the course of marketing campaigns such as distributing coupons, gifts and prizes.

Ideally the marketing function will have one or more experienced persons who can deal with each of the areas described above and larger companies may have entire units that focus only on market research.  As the marketing function grows it will develop its own complex hierarchy including a senior marketing executive, or “chief marketing officer,” one or more marketing directors; and managers and supervisors.  Outside parties, such as a public relations firm and often a separate advertising agency, will also become ad hoc members of the marketing organization.

Someone in the position of marketing director would be given substantial responsibility for conceiving and implementing the company’s marketing and public relations strategies including some or all of the following duties:

• Developing and implementing multi-media marketing campaigns using a variety of tactics and strategies including direct mail, print, radio, television and/or the Internet;
• Actively managing ongoing marketing programs to meet changing marketing conditions and implementing strategies for addressing competitive threats;
• Working with senior management and other key personnel in the marketing and sales functions to develop a sales and marketing business plan for use in budgeting, strategic planning and achievement of customer growth and revenue goals;
• Managing multiple advertising agency and public relations firm relationships to support the successful execution of the sales and marketing plan;
• Managing marketing expenses and forecasts to ensure realization of growth goals and financial targets; and
• Developing and implementing programs and events in communities where the company has a presence to position the company as a strong local neighbor and asset for these communities.

Marketing directors will generally be supported by one or more managers who will provide assistance to their directors; support the sales department; manage relationships with channel partners to grow existing accounts; conduct training and development activities for junior members of the marketing team; participate in bid/quote negotiation of marketing materials; participate in the creation and production of collateral materials; assist in the execution of advertising campaigns; work with public relations firms and directly with members of the media; and supervise the marketing team.  Marketing managers typically must have a diverse background in areas such as research, graphic design, technical writing, planning, preparation of reports, and photography.

The content in this post has been adapted from material that will appear in Business Transactions Solutions (February 2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

Tracking Results of Marketing Activities

Once the campaigns outlined in the marketing plan have been launched the company must carefully and continuously track the results to determine whether the tactics are effective in changing the behaviors of the target audience.  In order for tracking to be meaningful the marketing plan must include data points that can be reviewed for each major tactic or initiative.  For example, information should be collected on how many persons attended specific events, how many calls were received through a toll-free information number and how many visitors have their been to the company website.  Additional feedback on the effectiveness of the marketing campaign can be obtained through surveys, interviews and direct observations of potential customers as they are exposed to the company’s messages.

The data collected regarding the marketing activities should be used to answer several key questions:

• Is there evidence that progress is being made in achieving the overall objectives of the marketing plan?
• Are some target audiences or portions of target audiences responding better than others?
• Which tactics and activities have been the most successful and which have been the most disappointing in terms of response?
• What are the relative costs and benefits (i.e., ROI) of each tactic or activity?
• Which tactics and activities should be continued and strengthened, and which should be dropped or substantially changed?
• Is there any new or different information that has been collected during the marketing campaign that should be incorporated into the messages?

Even the best planned marketing campaign will not turn out as expected and preparation should be made in advance to regularly review the data and other feedback to determine if changes should be made regarding the message, tactics, schedule, audience, or other aspects of the campaign.  If changes are made they should be carefully documented as an amendment to the marketing plan and all applicable monitoring and evaluation procedures should also be updated to take the changes into account.

The content in this post has been adapted from material that will appear in Business Transactions Solutions (February 2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.