We are well into 2021 and for many businesses, optimism has been renewed, plans have been made, and in a review of 2020, things are better than expected.
A recent proprietary study of small business CEOs seems to confirm this prognosis: 45 percent of respondents indicated that their business has grown in the past 24 months, and 27 percent have seen flat results over that time. That means more than two-thirds of businesses have the impression they’ve dodged the proverbial COVID bullet.
Be honest with yourself
But, can businesses be sure that taking an optimistic view is not akin to believing in a mirage? Are your business growth trends actually real?
Here’s an example of why a broad view might not be accurate. Consider a business that one year ago recorded $10 million in annual revenue. Today, the CEO takes a look at the P&L and notes the business has posted $11 million in revenue. The mindset can easily be, “We’re up 10 percent! We’re good! We made it through COVID!”
But this gauge doesn’t tell the full story. It doesn’t depict the path from Point A to Point B, and certainly doesn’t track those outliers or one-offs that may have caused an unexpected windfall or shortfall in a particular season.
That’s why we advocate applying a formula to track the trends along the way. We prefer one from our friends at ITR Economics, the “3/12 and 12/12” rate-of-change, which track short-term and long-term growth, respectively.
In times like these, looking at the 3/12 rate-of-change—a measure of revenue posted in 90-day intervals and tracked over time—as a leading indicator is vital. Likewise, tracking the 12/12 rate-of-change—a measure of revenue posted in 12-month intervals, also tracked over time—as the lagging indicator is equally important.
It’s this lagging indicator illustrated in the 12/12 trend that can spotlight whether a company currently is in a recession, or beginning to grow, or in the full throes of growth, or starting the slide toward declining revenues. The 12/12 rate-of-change tells businesses where they are right now! The 3/12 rate-of-change constitutes a forecast, a firm read on the direction in which your business growth is pointed.
Computing these measurements will help CEOs know—with a fair amount of certainty—whether they’ve truly sidestepped the COVID A-bomb, and that the growth they’re seeing is real and lasting. As counterintuitive as this sounds, please take this to heart: just because a business posted 10 percent growth over last year does not actually mean the business is growing.
If a CEO has affirmed the company’s upside, congratulations! Now, let’s stay there, and if growth is moving in a less desirable direction, let’s do something about it. Regardless of the state of the union, here are the steps for getting on top and staying there:
SWOT at success
The worst thing a business can do is to let its guard down. Instead, this is a great time for introspection and analysis. This is a chance to look at the market and your place in it.
What factors are promoting growth, and potentially inhibiting even greater success? One of the best tools to do that is the good old SWOT analysis: the Strengths, Weaknesses, Opportunities, and Threats in play at your company and in the external marketplace.
Why is it important to play the devil’s advocate in this way? Because it requires CEOs to shove aside the smoke and mirrors, or the dependency on a hope or a vision of an oasis in the desert, and look at the real and tangible.
As an example, “My customers love me” may be a proud boast, but it is simply wishful thinking, not a Strength. Conversely, things like our bargaining power with suppliers, in the midst of a rebounding economy, are true Strengths by this measure. Complete this exercise with the same type of candor and honesty, and the business will have the foundational insights needed.
Give the gut the heave-ho
Now, it’s time to break that old habit of running the business on instinct. Using the force is best left to science fiction. CEOs need to be logical about decision-making, relying on real facts and figures to ensure they’re making good decisions.
Chances are CEOs have all kinds of historical revenue and client-based data, market insights, research and so on. This is the starting point. Add to this some surveys, and businesses won’t have to hire a fancy marketing research firm or expensive marketer to do this. Survey Monkey, for example, is an easy and free tool that anyone can use. Then, call clients and engage in real fact-finding conversations, with the goal of discovering:
Do we really understand how our clients view us?
What do they dislike about our products and services?
Where are our blind spots?
Why do we lose prospects?
What is the competition doing in the COVID world?
Why do we lose business to a particular competitor? And what does that mean?
What unmet needs do our clients and prospects have that we don’t know about?
All of those kinds of questions will lead you to garnering the sort of insight that will make a huge difference and help you set the right strategies.
Double-down on the customer journey
Our recent survey found that only 18 percent of CEOs had a concrete strategic marketing plan and measurable outcomes. In our view, you can’t effectively pack a bag for the customer journey without this important strategic step.
Remember, the customer journey only kicks into gear when they become aware of the company and start to evaluate if they’re a potential fit. Without a means to get this information, it becomes impossible to evaluate merits, and the journey stalls before it starts.
Getting started needn’t be a heaven-and-earth moving exercise. Call the customer. Find out what makes them tick. Look at your mailings, publications, websites, sales sheets, and other marketing assets, and make sure they tell a compelling story.
They should not only kick-start the customer journey but provide reinforcement at waypoints along the road. Keeping a client engaged through compelling marketing messages will not only help close the deal but help them visualize the expectations and value of a relationship with your company and its people.
Remember, getting to the other side of the COVID conundrum has taken guts and effort. Don’t squander the lead you’ve gained by turning a blind eye to the market forces that will shape your future.
Adriana Lynch and Paul Sparrow are chief marketing officers with Chief Outsiders, a leading fractional CMO firm focused on mid-size company growth.