A new beginning for Buzzwordy

Day Two

When I introduced Buzzwordy to the world yesterday, I promised to share with all of you my first Cranium Booster tale. It always cracks me up when I think about how insane some of the companies deal with their Profit Margin issue. So lets take a peek together,

Buzzwordy, the insightful marketing whiz kid was summoned into his company's weekly business status review meeting. Before he could barely situated into a chair, a dull and half-dead finance person speaking in a monotone voice informed everyone in the conference room that the company's beloved sales team has managed to book a huge order from one of the target accounts. A great revenue upside for the company. It was time to celebrate and rejoice. Buzzwordy scratched his head a bit before urging the crowd to give him their undivided attention. For such an enormous order, Sales was able to convince the executive team to overlook the standard margin required for this particular product. Since this account was viewed as a strategic account for Buzzwordy's company, the management team was willing to forgo the short-term profit in exchange for a key vendor spot within this account while enjoying the huge revenue ride. Buzzwordy began to shake his head in disbelief as the crowd continued to cheer for a job well done.

Guess what? Since this account happens to fall within the medical industry and each product life cycle has an average life span of 8 to 10 years, Buzzwordy's company will be earning an average profit margin of 1% for each product sold and throughout the entire product life cycle. At a minimum, his company requires a profit margin of 25% just to stay afloat. Sadly, this important point was completely overlooked as a result of the euphoric booking by the sales team. When this meeting came to a close, Buzzwordy told everyone there that such an action will bring havoc to the company's bottomline and there will be price to pay in time. He coined this incident as "Blunderbuzz".

Lo and behold, the company ended up paying a steep price 2 years after the product has gone into production. Finance was fighting with manufacturing because too much money has been spent and the company was bleeding like crazy. The beloved sales team had a major re-org. and the executive team went into an internal brawl, and some of the team members ended up leaving the company. Unfortunately, the company had signed a long-term supplier contract with this account and could not back out of it. It was a long and painful journey for everyone. Buzzwordy witnessed this mishap and understood every bit of it. He plunged deep into his office chair after a long day of meetings and emails, and suddenly, his eyes gazed at a hand-written Post-it note from the meeting which he attended 2 years ago. "Blunderbuzz, what a blunder for Buzz to see!"

I'll be in touch on Day Three.

Buzzwordy