The Wall Street Journal reported recently (September 25) that third-quarter earnings are expected to fall for the sixth straight quarter. By now, the economy was supposed to be accelerating and earnings were supposed to be rising, not falling. Is a recession looming over the horizon? Nobody knows, but probably not. However, declining earnings could be a problem. With less money to spend, businesses may tighten their belts and actually spend less. What’s a planner to do?
First, even though you don’t control these external factors, you need to understand how economic and market conditions affect your business. You also need to understand the timing of this relationship. How do you do this?
Second, do the same type of analysis using data on factors that you control. Compile your data on:
Put all of the data in Excel, create lagged versions of every data series, and calculate the correlation coefficients. Select the versions of each marketing and sales activity that yield the best correlation coefficients, and view the data graphically. Regressions will further clarify the strength of the relationships.
Finally, you can combine these elements and others (e.g. prices, technological change, competition, seasonal factors, etc.) into a statistical model that explains most of the variation in your business activity historically. You can calculate impacts, and you can make better decisions about next best activities to boost your pipeline opportunities, bookings or revenue. These topics will be addressed in future blog posts.
Editor's note: For more information about planning considerations for b-to-b sales, marketing and product leaders, download SiriusDecisions' 2017 Planning Assumptions Guides.