Tuesday, March 20, 2012

Take a Normative View

Quick: Is $28m in sales a good thing?

Well, the answer depends on a whole host of other factors the two most important being 1) what did we expect the number to be and 2) how does that stack up against similar plans.   Both expectations suggest that relative or normative assessments are as critical as an absolute figure.

If expectations were for $20m in sales, then the $28m is likely a good thing.
If the marketing plan used to generate the estimate typically generates $40m in sales then there is a potential issue to resolve.

One of the distinct advantages a supplier/vendor can bring to the table is a pan-industry view to help provide context and set expectations for performance.  Once upon a time I worked for BASES and we combined marketing plans and survey results to predict first year sales.  Our clients could have replicated the math but chose not to for two reasons:  they could kill the messenger if the results weren't up to par and they really wanted to know how their ideas stacked up against industry norms.

So, ask your vendor to tell you how your programs, plans, products stack up.  They should be glad to help you understand.

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