Helping You Make Promises You Can Keep
When setting growth goals, it is important to seek behavioral evidence over attitudinal data, to avoid the “Emperor has no clothes” problem. If you say you are wearing a beautiful set of clothes, people will let you believe that. They don’t want to argue, they simply won’t buy. It is up to you to get genuine feedback.
This is a thread about How to Leverage the Marketplace Forces that Matter Most for Business Growth. Eight crucial marketplace forces have been identified and are being explored in depth in this series.
Where is Your Behavioral Evidence?
Very early in my career, I learned it was having behavioral evidence and comparables that made it possible to set realistic sales goals and growth expectations for new products. I was on the team that designed and launched Prodigy, the first consumer online service. Having a large research budget, I very quickly discovered that what people said they valued (attitudinal data) did not match how they were spending their time online (behavioral data).
Saying What They Think You Want to Hear
It’s human nature. No one wants to tell you that your “baby” is ugly. When it is clear what you want to know, it is with good intentions that people will tell you what you want to hear. That’s why research techniques and questions have to be constructed carefully. Yet, it goes deeper than this.
Conceal Your Intentions
This was driven home by a research technique we used called the “electronic store”. We invited targeted prospects to our store which had several new technologies on display, including ones where purchase behavior data was known. The prospect didn’t know which one was our “baby” so a more honest answer was forthcoming.
Using Known Comparables
However, the real value of the electronic store approach was that we could compare what the prospect “said” was their likelihood to purchase, against the “actual” adoption rates for the known technology. This gave us a behavioral measurement to discount the prospects’ tendency to overstate their likelihood to purchase. The discount factor was BIG. Ever since, I always look for behavioral evidence and comparables when sizing markets.
Web Analytics Provide Comparables
Today, web analytics make readily available a vast array of behavioral data in traffic pattern and click-through analysis. The web also enables testing of all sorts to be accomplished cost effectively, including A/B testing and offer optimization. So gathering behavioral evidence and comparables has never been easier or cheaper.
Do the Math
The first thing I do when I review a business plan is to make a few comparable calculations. For example, how much revenue is being projected per employee? I then compare it to the known behavior of industry-leading companies. The vast majority of the time, the new business is projecting revenue that is far greater than any known behavior. There is very low probability that promise will be kept.
I have many conversations with emerging business owners explaining that the fastest way for an entrepreneur to lose his or her company is to miss what comparables can help us understand. Behavior evidence is a key to being able to make promises you can keep. Take a fresh look at the assumptions driving your growth targets. Then seek out the behavioral evidence and comparables that can help you plan and spend wisely.