It's not rocket science to do this properly, but it does take patience and, of course, the right tools and materials.
Here's a breakdown of the stages involved and some accompanying photos:
First we raked out all the rotten soft wood and left the hole to dry overnight
Next we applied 3 coats of liquid wood hardener inside the hole, as directed
When it had solidified the area we were able to back-fill it with a 2-pack styrene filler
After this, a second skim-fill was applied, left to harden then rubbed down with medium, then fine sandpaper
Finally, we applied the appropriate primer, undercoat and topcoats. Et viola! Good as new!