The Importance of Effective Business Communication

The Importance of Effective Business Communication

Effective business communication is all about interacting with stakeholders the right way. Read this post to learn why it’s crucial for your business success.

With an increasing number of internal communication tools being introduced nowadays, you might be asking yourself why effective business communication is essential for your business?

Without effective business communication, you’ll likely fall short in reaching your business goals.

Business communications include almost all the areas of business operations such as corporate and interpersonal communications, sales and marketing, and supplier relations.

This post will take you through the essentials of business communication and its importance.

Let’s get started.

Elements of Effective Business Communication

Sender, Business Information, Receiver, and Feedback are the core elements of effective business communication.

These elements represent business communication as a process in which the information is shared among different stakeholders of an organization.

Effective business communication involves different levels of organizational hierarchy and management functions including, planning, coordinating, organizing, directing, and controlling.

Business communication is divided into four types to manage communication among all these business functions.

Here are the types of business communications.

Internal Upward Communications

Internal upward communication is a part of the bottom to top management approach. This includes the information flow from subordinates to managers.

For example, marketing team members can do an email marketing competitor analysis and communicate the same to the CMO with a report. The plan includes competitors’ strategies and an outranking approach. This helps the CMO make the right decision.

The purpose of internal upward communication is to provide the management/superiors with timely feedback, suggestions, requests, etc.

Internal Downward Communication

Internal downward communications are just the opposite information flow of internal upward. Here the information is usually in the form of instructions and tasks.

The flow of information from the management to subordinates can be done via oral or written mediums. The oral form includes face-to-face conversations, team meetings, telephonic communications, scrum calls, etc.

Whereas the written form of downward communications can take place via different manuals, notices, emails, corporate messaging tools, videos, etc.

Internal Lateral Communication

Internal lateral communication is crucial to achieving business goals. This form of business communication happens among employees having an equal hierarchy level.

The purpose of internal lateral communications is to seek mutual cooperation and help.

For example, the marketing chief of an organization communicates market trends and future customer demands to the production head to get their insights.

Another example can be the communication between employees.

External Communication

As the name suggests, business communication outside the organization lies under this type. This form of communication is generally pointed towards customers, shareholders, suppliers, regulatory bodies, and partners.

For instance, note how this example from Moosend shows how a business communicates its latest developments with its audience.

The Importance of Effective Business Communication

Image via Moosend

External communications can take place via the company website, advertisements, press releases, social media channels, annual reports, etc. Modern marketers use online marketing tools like ClickFunnels to make external communication more effective.

How Business Communication Can Drive Your Fortunes?

Both internal and external business communications play a significant role in cumulative business growth.

Here are the key benefits of effective business communication.

Mitigates Workplace Conflicts

The main cause of workplace conflicts is poor communication. Unclear expectations and misunderstandings can result in employees feeling disregarded and believing that they do not perform as expected.

This not only leads to poor team morale but also reduces employee productivity. In fact, better communication leads to about 20-25% improvement in productivity.

The Importance of Effective Business Communication

Image via McKinsey

For instance, if one team member is asked to make 30 cold calls a day and another member in the same hierarchy is asked to make 40 calls, the employee with the most calls might feel taken advantage of.

However, if their team leader individually communicates the reason behind different sets of expectations to these team members, it could clear out the miscommunication.

Increases Employee Engagement

Effective upward and downward flow of business communication paves the way for clear information flow, which ultimately, opens lines for communication between employees and the management.

With clear lines of communication, management can better understand the goals and needs of employees.

This helps management upskill and recognize their employees’ accomplishments, which results in a more enjoyable work culture and better employee engagement.

Improves Customer Relations

External business communication directly affects customer relations. Organizations that are effective in communicating their brand messages to their customers are more likely to strengthen relationships with them, resulting in more customer retention. You need to measure customer satisfaction timely to avoid any adverse impact on your business.

In fact, according to 71% of customers, the best customer service experiences are those where their issues are resolved quickly. And this can only happen when your communication is clear and effective.

The Importance of Effective Business Communication

Image via Gladly

That’s why it’s essential to have a marketing communication degree holder manage your client communications. This can play a major role in improving your customer relations.

For example, you can run a referral campaign and ask for referrals for your brand from your existing customers to get new customers. It will help you generate new leads as well as a good customer base for your business.

Strengthens Relationship with Suppliers

An effective business communication strategy should always incorporate suppliers. With the rise of business models like ecommerce marketplaces and on-demand businesses, it’s crucial for such businesses to plan external communications for suppliers.

A recent example of effective external communication comes from Uber when the taxi booking app enabled drivers to see the drop locations. This decision was taken after receiving feedback from drivers (who are essentially suppliers for Uber).

Uber when the taxi booking app enabled drivers to see the drop locations

Implementing Effective Business Communication

Although the benefits of effective business communication are promising, businesses need to improve their approach to reap the benefits. You should take away the following useful tips that will help you infuse effectiveness into your business communication strategy:

  • Ensure employees are heard at work
  • Employee appreciation and recognition should be prioritized
  • Set up frequent meetings with your subordinates
  • Ask for feedback from your clients as well as suppliers

So, start revolutionizing your business communication now.