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CEO Lessons from Election Night

Posted by Rob Granader

Nov 15, 2016 9:00:00 AM

glassesonanalysis.jpgFive days after the close of a month, I sit at my desk and go through our P/L (profit and loss) statement looking for signs, messages, trends, clarity.

I suspect many in the political world are doing the same.

I print out all the pages that show what we call the “monthly trend” so I can see how we’ve done in previous months, with a final column comparison to the budget.

I take out a wooden ruler from my drawer, and I follow each line asking myself questions about what I expected. Does it jive with what I was told? Does it go along with the narrative I heard over the previous 30 days?

If the election were my P/L, here is what I would consider:

  1. Why did renewal rates go down?
  2. Customers told a different story than sales and marketing
  3. Customer appetite for risk should be a KPI (key performance indicator)

Democrats had a low renewal rate

In a recurring revenue business, we sell a subscription once and hope that with positive and attentive service, the customer will renew the following year. We are not surprised when a customer renews; we often budget for an 85% renewal rate. The surprise is when they cancel.

In the lead up to the election, there was an assumption that most of the electorate would renew the Democrat in the White House and perhaps the Democrats would even pick up some new customers in the House and the Senate. Instead, something was brewing with the customer base — they didn’t like the new operating system or the upgrade, and so they saw Election Day as a chance to cancel.

Whoever we were listening to got it wrong

When we are in the midst of a slump or a bad sales month, I ask people around the company what they are hearing. The sales and marketing team often describe similar scenarios like fewer sales days than the previous year, where the holidays fell, a top performer is on vacation, or budget season. The reasons follow a pattern and fill in a familiar narrative that makes us feel like we know why people are acting a certain way.

The media and pundits listened to one another and tossed away the outliers and began hearing the same anecdotes and seeing the same numbers. They all told the same story, and it backed up their assumptions, which turned out to be wrong.

Risk is not a KPI

There is restlessness in the world right now, business or otherwise. Maybe the electorate is a reflection of it, or business is nervous because voters are. Either way, customers are more fickle, brands matter less, customization matters more, history holds less weight, and the next thing is more interesting. 

People are willing to take risks on something new even if they aren’t sure it will get them what they want. All they know is what they have doesn’t get them what they need. It’s hard to measure. We need to gauge the appetite for risk.

In business, it’s called disruption.

In politics, it’s called a new administration.

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About the Author: Rob Granader is the CEO and Founder of MarketResearch.com, a leading provider of global market intelligence products and services.

    

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