Andrew Ross Sorkin’s Too Big to Fail, the New York Times best sellerand now HBO movie that chronicled the 2007-2008 economic crises, portrayed an environment in which executives too often had to make decisions in an environment where information, data and insight were fleeting and – sometimes – deceiving. Similarly, executives in Utah and across the U.S. find themselves in an eerily similar situation. Both our state and national economy are riddled with data points and news stories that are both bullish and bearish about our near-term economic prospects, leaving one to wonder whom to believe. They key to sifting through this conflicting news and market data is to harness a firm’s own customer data along in conjunction with prospective customer data to accurately and quickly measure demand and growth opportunities.
The conflicting market data can be confusing. At the U.S. level, Federal Reserve Chairman Ben Bernanke said in his recent press conference to discuss the Fed’s decision to leave the Fed Funds rate unchanged that he was optimistic about the prospects for growth. He said this in the same press conference in which he simultaneously downgraded the U.S. growth forecast for 2011 and 2012. The Equipment Leasing and Finance Association offered a similarly antithetical assessment of growth, reporting that business borrowing and investment had risen while confidence in the prospects for growth that drove these investments had fallen. On the banking front, the Wall Street Journal reports that business lending is increasing as bank executives and investors seek the revenues and returns that come from commercial loans, which would seem to be an indicator of happier times. However, regulators are watching these banks’ activities with increasing vigilance due to what they view as too much risk being ingested by banks that have lowered their standards to go out and exceed their shareholders’ demands for the returns.
At the state level, Utah’s government leaders continue to boast about the state’s relative performance across a key number of categories, and with good reason. In the recent Governors’ Economic Summit, Utah’s relatively strong employment rate and big-name companies such as Adobe, Electronic Arts, Reckitt Benckiser and Proctor & Gamble that have opted to open a significant presence in Utah were all highlighted as proof that Utah’s economic fortunes have turned the corner. Nevertheless, Utah’s recently released Economic Summary reveals that Utah’s housing market is still in a state of recession, with home values declining another 5.2% over the previous 12 months. This decline, coupled with the apartment vacancy rate that is a percentage lower than the national average, suggests that the prospect of filling those homes does not appear to be improving any time soon. Also, the Economic Summary revealed that the foundational industries of construction, financial services, and hospitality have shed thousands of jobs, resulting in nearly a 6% change to the negative in employment year over year in those categories. And, as recently as early July 2011 new jobless claims in Utah rose 16% as compared to a national jobless claim decline during the same time period.
Such dichotomies of forecasts and results lead business owners in Utah to wonder who to trust and to which source of information to turn. The answers likely lie within a company’s own information systems. In an environment where economic indicators, forecasts and talking heads all tell a different story, no approach to gathering information can substitute for collecting and measuring actual customer information – data on the people or businesses with whom a firm is actually transacting or with whom they have the prospect of transacting.
Even in a recessing economic environment, money for products and services is exchanging hands. The responsibility and opportunity of a business leader is to learn who is buying what and position his or her product or service in the most compelling way so as to earn a greater proportion of the national or local wallet share. And, more and more firms specializing in aggregating this data are finding new and better ways to track, package and deliver that information to companies so that demand can be measured and investments in sales and marketing can be appropriately allocated.
Various companies locally and nationally provide individual-specific or organization-specific demand estimators that can be licensed and harnessed along with a firm’s own internal information. Firms such as InfoGroup, D&B, and iBehavior to name a few all are in the business of tracking consumer and business consumption and packaging that data together so that firms who have or can acquire the right expertise in-house or through 3rd parties can effectively identify the value a market segment can render. Knowing the value and probability of a return prior to making the investment makes all the difference in the world when planning to allocate precious sales, marketing or distribution investments.
Without a smarter approach to the market, executives may be doomed to hoping their hunch and intuitions are correct, which those of you who read or saw Too Big to Fail know is a very risky proposition. Contact these third party firms that have or can access this type of expertise and get the market share of which you are capable.