Head of Strategic Accounts and Partnerships

James Staddon, our Head of Strategic Accounts and Partnerships, dives into the benefits of building strategic and long-lasting partnerships. 

The Power of Strategic Partnerships for Sales Growth

Senior Director of Strategic Partnerships

<h2>Key takeaways</h2>
<blockquote class="quote">A successful pitch email captures a prospect’s attention instantly, and should prompt a response by highlighting a problem or opportunity that resonates with them.</blockquote>
 
<blockquote class="quote">Before writing a pitch email, research the prospect’s industry and their company, and make sure you understand how your solution offers value.</blockquote>
 
<blockquote class="quote">Including industry research and an associated chart in your sales emails can make them stand out, but be sure to keep it simple, find the right datapoint for the context, incorporate your value props and provide a clear CTA.</blockquote>
 
 
A great sales email is compelling, engaging and elicits a response. Our hopes for every pitch email we send as <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-master-enterprise-sales/99/1127/" target="_blank">sales professionals</a> are that our prospect will (from least to most desirable outcome):
<ol>
<li>Not delete it straight away;</li>
<li>Open it;</li>
<li>Read it; and</li>
<li>Act on it.</li>
</ol>
Considering you have about half a second to capture someone’s attention when they scan their inbox, it’s mission critical to catch their eye right away.
 
Across the thousands of email exchanges I’ve had in my career, I’ve noticed that high-level executives’ responses are usually short, punchy, all lower-case and to the point. The best replies from your prospects are the one-sentence questions that clearly mean you’ve hit the mark with the correspondence you’ve sent and maybe even struck a nerve by touching on a problem they want to solve.
 
So, how can you create that two-way engagement?
 
Hook them early.
 
And how do you do that?
 
Make sure your email stands out.
 
There are plenty of guides out there for crafting the perfect email – one of my favorite sales trainers, John Barrows, even wrote a guide just on <a rel="noopener" href="https://www.salesforce.com/blog/email-subject-lines-for-sales/?d=7013y000002ODGOAA4&amp;gad_source=1&amp;gclid=Cj0KCQiA84CvBhCaARIsAMkAvkIDbWNs1n83J1S4dgm50D_dJBwzlumu8OqKoVooxrX4m3iy8bUXXTcaArkQEALw_wcB&amp;gclsrc=aw.ds" target="_blank" data-anchor="?d=7013y000002ODGOAA4&amp;gad_source=1&amp;gclid=Cj0KCQiA84CvBhCaARIsAMkAvkIDbWNs1n83J1S4dgm50D_dJBwzlumu8OqKoVooxrX4m3iy8bUXXTcaArkQEALw_wcB&amp;gclsrc=aw.ds">email subject lines</a>! I’m going to leave the nitty gritty of A/B testing and open rates to the <a rel="noopener" href="https://blog.hubspot.com/marketing/email-marketing-guide" target="_blank">email marketing</a> experts, and instead focus on the ways you can incorporate industry research early in a sales email to help your message stand out in a prospect’s overflowing inbox.
 
I wish I could give you a copy-and-paste, pre-written pitch email that includes industry research, but here’s the thing: it’s really specific to each scenario. That said, the specificity is also what makes it such a valuable tool! Taking information about your prospect, their company and their industry and using it to reinforce the value of your solution is a winning combination.
 
What I can offer you is a template that will help you write engaging and enticing pitches, my top tips for incorporating industry research, and some examples of emails that hit the mark.
 
Download the resources on the right for a repeatable template (including a list of the best kinds of industry data to include in your pitches) and start writing emails that get the attention they deserve!
 
<h2>What to know before writing a pitch email</h2>
<h3>Know your prospect and their industry</h3>
I’ll keep this one short, since we talked about it in my previous article on <a rel="noopener" href="https://www.ibisworld.com/blog/industry-research-for-salespeople/99/1127/" target="_blank">industry information in sales conversations</a>; do your research! <a rel="noopener" href="https://www.ibisworld.com/blog/identifying-prospects-in-your-target-markets/99/1127/" target="_blank">Finding prospects</a> is one thing, but learning who they are, what they do and what their industry environment looks like is crucial to evaluating whether they’re a viable lead or a non-starter, and how best to gain their trust and interest in what you’re offering.
 
<h3>Know your value propositions</h3>
To effectively pitch your product or service you need to understand what it can actually offer your prospect. This means knowing your solution’s value props and how they apply to the <a rel="noopener" href="https://www.ibisworld.com/blog/leveraging-customer-personas/99/1127/" target="_blank">customer persona</a> of the person or company you’re targeting.
 
<h2>Using industry research in pitch emails</h2>
Here are my top five tips for incorporating industry research into your sales emails.
 
<img src="https://content.ibisworld.com/media/ywynz3r4/top-5-tips-for-crafting-pitches.jpg?width=720&amp;height=720" alt="An infographic that summarises the five top tips Isaac is sharing. The diagram is made up of five coloured boxes stacked on top of each other in table format. From top to bottom, they read: 1. Keep it simple; 2. Find THE datapoint; 3. Incorporate your value props; 4. Use a visual; 5. Include a clear CTA." width="720" height="720">
 
<h3>1. Keep it simple</h3>
This one might be the most important tip I can give you – don’t overcomplicate it! Your prospect shouldn’t have to work to make the connection between the industry stats you included and their business or your solution. The link should be clear enough to spark an ‘aha!’ moment without requiring several paragraphs of explanation.
 
This also applies to the questions you ask your prospect. Be sure you’re not accidentally asking two or three questions wrapped up in one and clouding your actual message. Making it difficult for your prospect to engage with your email, the information you’re providing and the questions you’re asking is an easy way to lose a deal before you even have a conversation.
 
Having a goal in mind for the industry information you choose helps you keep your message focused, relevant and easy to understand. An attention-grabbing data point or trend should fall into one of these categories:
<ul>
<li>A positive benchmarking stat (i.e. something they do better than the industry average)</li>
<li>A negative benchmarking stat (i.e. something they do worse than the industry average)</li>
<li>A fact they may NOT have known</li>
<li>A fact demonstrating something they do know but wouldn’t normally hear in pitches, and they’re impressed that you ALSO know</li>
</ul>
 
<h3>2. Find THE datapoint</h3>
One great datapoint overshadows a bunch of fluff. Knowing what you know about your prospect, what’s that one piece of information you can bring to the forefront that will make a business leader pause and give some thought to what you’re saying? How can you help them think differently? Or, better yet, how can you emphasize a problem that may already exist?
 
In this example, we’ll say you’re working in sales for a local marketing agency, ABC Advertising, that is targeting Janitorial Service companies. You want to highlight your agency’s ability to help companies expand their reach into the residential sector.
 
You could craft a pitch like this:
 
Hi [Head of Sales],
While the bulk of cleaning companies’ revenue typically comes from commercial cleaning contracts, did you know that over $8 billion in annual revenue nationally comes from residential interior cleanings?
 
I noticed your website is geared towards the commercial side and wanted to ask if you’d be interested in learning about a program that could help you secure some of the residential market?
 
ABC’s janitorial clients typically see [x%] increase in residential services revenue after engaging with our services.
Would you like to set up a call to talk about how we can help?
 
[Signature]
 
<img src="https://content.ibisworld.com/media/hyshqcow/56172-janitorial-services-in-the-us-product-services.png?width=720&amp;height=508.6315789473684" alt="A donut chart showing the breakdown of industry revenue in 2024 for Janitorial Services in the US by product and service segments. The largest segment is Commercial cleaning services ($US67.3bn or 73.4% of revenue). The second largest segment is Residential interior cleaning services (US$8.4bn or 9.2% of revenue)." width="720" height="508.6315789473684">
 
The key datapoint that’s going to get your prospects interested is the $8 billion annual revenue in the residential sector. There’s a good chance they weren’t aware that figure is so high and now want to know how to claim a share of that market!
 
<h3>3. Incorporate your value props</h3>
You can incorporate your value props in two ways:
<ul>
<li>Start with the value prop and find the data or trends that highlight the problem you’re trying to solve.</li>
<li>If you’ve already found the right data, work out which of your value props addresses it.</li>
</ul>
Let’s say your company, XYZ Workforce, sells payroll software and is reaching out to a prospect in the Industrial Equipment Rental and Leasing industry. Your software includes rostering tools that analyze workforce, revenue and customer booking data to determine the most efficient way to allocate staff across the available shifts. The value prop, in this case, would be optimizing labor costs and preventing over- or under-staffing.
 
In reviewing the IBISWorld information for this industry, a statistic that immediately stands out is that wages are the largest cost to this type of business, accounting for 23.2% of revenue. Furthermore, wages are projected to grow by 2.7% annually for the next 5 years (2023-28) versus just 0.6% on average in the last 5 years (2018-23).
 
Taking this information, it would be great to open a conversation with the following:
 
Hi [Head of HR],
Wages, on average, take up a staggering 23.2% of all revenue in the Equipment Rental and Leasing industry and are projected to continue to increase 2.7% per year through 2028 – that's over 4x the rate of the previous 5-year period!
 
Has this become an area of concern for [Prospect’s company name]?
 
What we’re seeing from similar companies in your space is a need to be more precise than ever when it comes to payroll management, with our clients saying they need to maximize their workforce’s efficiency and hire the right number of people for the right number of jobs.
 
XYZ Workforce helps bring that 23.2% figure down by creating rosters based on your business’s resources, revenue and booking data to optimize your labor costs and cover critical tasks without over- or under-staffing. Feel free to book out some time on my calendar so we can discuss further if you’re interested in learning more.
 
[Signature]
 
<h3>4. Use a visual</h3>
Sometimes the right visual will convey what words can’t. I’ve always found that being able to include a visual about the prospect themselves immediately draws an interest. When working with extremely localized businesses (think those that primarily sell their products or services within their state, or even a smaller radius of just their county), being able to share some information about their immediate market and focal points – like the <a rel="noopener" href="https://www.ibisworld.com/products/state-and-provincial/united-states/" target="_blank">industry revenue in their county</a> – will absolutely turn heads.
 
For example, if you’re sending an email to someone in <a rel="noopener" href="https://www.ibisworld.com/us/industry/alabama/stone-mining/15510/" target="_blank">Alabama who works in the Stone Mining industry</a>, this graphic is sure to generate interest due to its specific focus on their area:
 
<img src="https://content.ibisworld.com/media/a0eng5hy/stone-mining-in-alabama.jpg?width=720&amp;height=459.086078639745" alt="A screenshot of an IBISWorld geographic heat map of Alabama, with counties color-coded according to their share of industry revenue in the state. Shelby county is highlighted on the map." width="720" height="459.086078639745">
 
 
From here, you can create a hyper-focused question based off the data and their location:
 
Hi [Prospect],
 
While looking at the Stone Mining Industry in Alabama, I noticed that in Shelby County, where your business is located, revenue is expected to decline by an average of 9.1% this year.
 
123 Purchasing helps businesses like yours optimize your procurement strategy so that you can get ahead of the downward trend and maintain your profit margins.
 
Are you interested in setting up a call to learn more? Reply here and we’ll organize a time to chat!
 
[Signature]
 
<h3>5. Include a clear call to action (CTA)</h3>
You’ve laid out the industry data and what you’re offering, but if you don’t clearly state what the next step is for your prospect, you’ve made it really hard for them to take it! Remember, the goal is to make responding as straightforward and appealing as possible for the recipient. The most effective pitch emails have one CTA that is direct, easy to spot and offers a clear benefit for taking the action. The CTA should stand out visually as well; consider formatting it differently by using bold text or a hyperlink in a contrasting color (bonus points if it’s your company’s brand color).
 
Your CTA might look like something like these:
<ul>
<li>Book a 15-minute call to discuss your needs. Include a booking link so that your prospect can immediately schedule time to discuss further.</li>
<li>Reply with any questions. Make it easy for your prospect to get in touch by making it clear that they can reply directly to your email.</li>
<li>Start your free trial and join hundreds of [industry] businesses using [your product] to [benefit]. If your organization offers user-initiated trials, encourage your prospects get a feel for what you’re offering for themselves. This CTA also incorporates social proof, showing that other clients are already getting the benefits of your solution (and your prospect is missing out).</li>
<li>Does Wednesday at 3pm or Thursday at 10:30am work for you? If your organization doesn’t use a booking program, suggest two meeting times for your prospect to choose from. Having meeting times in front of them removes the friction point of having to list out their availability and gets you one step closer to a productive conversation.</li>
</ul>
 
<h2>Final thoughts</h2>
Effective pitches are crucial to meeting <a rel="noopener" href="https://www.ibisworld.com/blog/from-planning-to-execution/99/1127/" target="_blank">revenue goals</a>, particularly for professionals in <a rel="noopener" href="https://www.ibisworld.com/blog/rebuild-gtm-strategy/99/1127/" target="_blank">sales-led growth organizations</a>. By leveraging industry insights, presenting a tailored solution to the recipient’s unique challenges and making it incredibly easy for them to take the next step, you set the stage for meaningful engagement and a potential partnership.
 
Remember, the goal is to spark interest and facilitate a conversation, opening doors to your <a rel="noopener" href="https://www.ibisworld.com/blog/preparing-for-a-meeting/99/1127/" target="_blank">first meeting</a> with a new prospect and beyond. Keep your pitches personal, relevant and concise – and don’t forget to incorporate industry information!

Discover top tips for using industry research to write pitches that get results with IBISWorld’s Senior Director of Strategic Partnerships, Isaac Satten.

How To Use Industry Research to Craft Compelling Pitches

Vice President - Commercial Banking

<h2 class="contentH2" aria-level="2">Key takeaways </h2>
<blockquote class="quote">With our current economic condition, sales leaders need to be proactive about finding new prospects.</blockquote>
<blockquote> </blockquote>
<blockquote class="quote">To jumpstart your prospecting strategies, find and target the industries that match your ideal client profile.</blockquote>
 
<blockquote class="quote">Using tools like IBISWorld’s Industry Wizard, assess industries for their profitability, revenue stability, capital intensity and risk to find your best clients. </blockquote>
 
With the Federal Reserve raising interest rates in order to combat inflation, many sales leaders have had to adjust their prospecting strategies to find good opportunities in an environment with both tighter access to capital and constrained budgets. 
 
For many companies, gone are the days of frequent referrals and customers regularly knocking on your door to ask about buying. If you’re a sales rep looking to close deals in 2024, you need to be more proactive about finding the right customers with the right needs that you can help them solve. 
 
There are several tools on the market that can help a sales leader find company names, org charts, and contact info, but as many reps are generalists, where do you even start looking for the right companies? 
 
Identifying the right industries to target first can be an impactful starting place when trying to drum up fresh prospects, but there are a few key steps that your sales or marketing team should take before executing a <a rel="noopener" href="https://www.ibisworld.com/blog/rebuild-gtm-strategy/99/1127/" target="_blank">go-to-market strategy.</a>
 
Using IBISWorld's Industry Wizard tool, we created a list of the top 50 industries sales teams should target right now. To check it out, download the list on the right. 
 
<h2 class="contentH2">Step 1: Define your market territory </h2>
<img src="https://content.ibisworld.com/media/iyuju5dh/shutterstock_2127801893-1.jpg?width=720&amp;height=277.7470775770457" alt="" width="720" height="277.7470775770457">
 
The first step to proactive prospecting is defining your business territory by pinpointing select regions, states, or counties where you aim to concentrate your efforts. Then, using research tools, you can identify the industries prevalent in these areas to capitalize on opportunities and broaden your reach. Finding one new opportunity is great, but if you target industries with multiple companies in your territory, you can parlay success with one client into multiple wins. 
 
It's also important to dive into<a rel="noopener" href="https://www.ibisworld.com/blog/understanding-your-external-environment/99/1127/" target="_blank"> the factors that contribute to industry concentration within your market</a>, allowing you to incorporate emerging trends seamlessly into your sales strategies. If you've already uncovered that there’s a lot of competition, can you help the customer win more market share in some way? Here are some key questions you might ask your prospect: 
<ul>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="4" data-aria-level="1">Are competitors in your industry offering products that you don’t currently sell?  </li>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="5" data-aria-level="1">Are there demand industries or consumer demographics they can be targeting that the customer isn't currently? </li>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="6" data-aria-level="1">Are there any industry threats to be made aware of? </li>
</ul>
By adopting a strategic approach to defining market territories and understanding industry dynamics, your team can more effectively streamline its prospecting efforts, ensuring a more targeted and successful outreach. 
 
<h2 class="contentH2">Step 2: Analyze profitability metrics </h2>
Facing budget pressure is all too common and you don’t want to spend time with customers that don’t have the cash flow to make it worth your while. Along with considering the industries that are concentrated in your territory, you should analyze each industry's <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-profitability-analysis-and-why-is-it-important-to-businesses/44/1127/" target="_blank">profitability metrics</a> like profit margin and net cash after operations to determine where to target your efforts. For example, looking for a profit margin of 9+%, currently above the national average, might be a good place to start in your prospecting efforts.  
 
When analyzing profitability metrics, remember not to confuse sectors for industries. The hospital industry for example, despite being part of the lucrative healthcare sector, may not necessarily be cash-rich itself. 
 
<h2 class="contentH2">Step 3: Assess revenue stability  </h2>
<img src="https://content.ibisworld.com/media/fppfxkuk/shutterstock_1940806792.jpg?width=720&amp;height=325.18597236981935" alt="" width="720" height="325.18597236981935">
 
Another crucial aspect of conducting thorough industry research involves acquiring the skills to identify seasonal and volatile revenue trends within various sectors. It's important to note that numerous small businesses operate on a seasonal basis or are influenced by the fluctuations of <a rel="noopener" href="https://www.ibisworld.com/products/business-environment-profiles/" target="_blank">macroeconomic factors</a>, such as commodity prices and consumer sentiment. The Oil Drilling and Gas Extraction industry, as an example, is highly dependent on oil supply and prices, heightening the industry’s revenue volatility.  
 
A reliable, long-term client, however, typically demonstrates consistent cash flow instead of experiencing significant fluctuations. One example of this type of client can be found in the Electricians industry, which has consistent demand across a variety of industries and consumers. It's also worth remembering that industries characterized by high revenue volatility are typically higher risk and may require more scrutiny from credit analysts, investors, or accountants. 
 
<h2 class="contentH2" aria-level="2">Step 4: Evaluate capital intensity  </h2>
Along with the attributes mentioned previously, your targeting efforts are likely to be more successful in industries with the right level of <a rel="noopener" href="https://www.ibisworld.com/blog/getting-intense-how-high-interest-rates-will-affect-capital-intense-industries/1/1126/" target="_blank">capital intensity</a>. For example, financial and lending services are best suited for prospects with high demand for more plants, property, or equipment that have ongoing financing needs. Clients in industries like Corn Farming, which is highly dependent on heavy equipment such as tractors, combine harvesters, and storage mills, pose an opportunity for you to establish long-term relationships by offering tailored financing solutions that align with their growth strategies. Meanwhile, software and services related to human resources management or employee productivity are best suited for buyers that are not capitally intensive and have higher labor costs. By understanding their specific needs and providing continuous support, you can become a trusted partner in their business development journey, leading to sustained success. 
 
<h2 class="contentH2">Step 5: Utilize industry risk assessments </h2>
<img src="https://content.ibisworld.com/media/qcdd1ph3/shutterstock_1445360741.jpg?width=720&amp;height=433.0712008501594" alt="" width="720" height="433.0712008501594">
 
Once you’ve found a strong list of prospects matching the above criteria, the final piece to understand are the various headwinds facing each industry. Using industry research and risk assessments, you should pre-screen prospects to ensure suitability and leverage risk insights to tailor sales strategies and mitigate other potential risks. Products like IBISWorld's Industry <a rel="noopener" href="https://www.ibisworld.com/products/industry-risk-rating/" target="_blank">Risk Rating Reports</a> can help you position your solution to solve relevant problems. For instance, IBISWorld currently categorizes the Wood Product Manufacturing industry as higher risk due to a high level of competition around product pricing. Therefore, if you're offering a product that can help wood product manufacturers cut costs in other areas of their business, the current risk in this industry is actually a reason to include, rather than exclude, them in your ICP. 
 
<h2 class="contentH2">Final thoughts  </h2>
In response to the challenges posed by the changing landscape, a shift towards proactive customer acquisition is necessary in the face of dwindling demand. To achieve success in 2024, sales leaders must concentrate on identifying and leveraging opportunities within specified market territories. This approach enables reps to become <a rel="noopener" href="https://www.ibisworld.com/blog/becoming-a-trusted-advisor/99/1127/" target="_blank">trusted partners</a> by offering solutions aligned with the clients' growth strategies and navigating through industry-specific risks efficiently. 
 
As more and more sales orgs go into 2024 with strategies that are very different from the previous ten years, IBISWorld’s <a rel="noopener" href="https://www.ibisworld.com/products/industry-wizard/" target="_blank">Industry Wizard</a> can be a valuable prospecting tool that saves reps from hunting for opportunities in the wrong industries. Why go hunting for good prospects across 1,400+ industries when there are really only 40 or 50 industries in your ICP that make for profitable, long-term customers anyway? Whether you’re a marketing team member looking to create industry-specific content for the commercial customers or a sales rep looking to book more meetings, using a tool like the Industry Wizard can help you understand which industries best suit your strategy.

Explore how to pinpoint your ideal prospects through industry research with Matt Murphy, our Vice President of Commercial Banking.

How To Identify Prospects in Your Target Markets

Senior Vice President - Business Development

<h2>Key Takeaways:</h2>
<blockquote class="quote">Success in sales hinges on thorough research and understanding of your prospect and how your product addresses their needs.</blockquote>
 
<blockquote class="quote">Asking targeted questions, actively listening and concluding meetings with clear next steps are crucial for maintaining momentum and demonstrating value.</blockquote>
 
<blockquote class="quote">Timely, personalized follow-up communications will help solidify trust and build lasting relationships.</blockquote>
 
To access a step-by-step guide to preparing for your first meeting with a prospect, download the template on the right. You can use this guide for each new meeting and maximize your chances of success!
 
Imagine stepping into your first meeting with a potential client. The pressure is on. This encounter can either open doors or shut them tight. Trust me, I've been there. That first greeting and the initial words exchanged are more than formalities; they are vital to establishing trust and credibility.
 
In corporate sales, excelling in your first meeting with a prospect is like <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-master-enterprise-sales/99/1127/" target="_blank">laying the foundation</a> for a solid structure. Not only does it have a lasting impact on future interactions with that prospect, but it goes a long way to establishing that you understand their needs and know how to address them. As the SVP of Business Development at IBISWorld, with over 15 years of experience in prospect interactions, I've learned that trust is the cornerstone of successful business relationships.
 
Drawing from my wins and losses over the years, I will share the tips, tools and strategies I use to nail my first meetings. From preparation to follow-up, I take these steps to help me get off to a winning start.
 
<h2>Step one: The preparation stage</h2>
Preparation is the crucial first step; it sets the scene for how well your first meeting will go, so don’t underestimate the importance of strong preparation. Your success hinges on you putting in the effort long before you step into that first meeting, so here’s how to ensure you’re ready.
 
<h3>Study up</h3>
Before you even think about shaking hands, <a rel="noopener" href="https://www.ibisworld.com/blog/industry-research-for-salespeople/99/1127/" target="_blank">research your prospective client</a>. I like to deep-dive into their background, find out what’s going on in their <a rel="noopener" href="https://www.ibisworld.com/blog/from-planning-to-execution/99/1127/" target="_blank">industry landscape</a>, and try to understand their unique challenges and specific needs. Knowing your prospect's business environment is crucial to addressing their concerns and earning their trust.
 
By researching your prospect’s industry, you can identify current trends and developments that impact their business, and position your product or service in a way that aligns with their needs. This makes your offering more relevant and appealing, and gives you a better chance of closing the deal.
 
Knowing who the key players are in your prospect’s industry and understanding their strengths and weaknesses is also key. It helps you differentiate your offering from competitors and identify areas where you can provide <a rel="noopener" href="https://www.ibisworld.com/blog/rebuild-gtm-strategy/99/1127/" target="_blank">unique value</a>.
 
Doing your homework beforehand sets the stage for a better connection, so investing time in thorough research is a must. It can make the difference between sealing a deal or walking away empty-handed.
 
<img src="https://content.ibisworld.com/media/ipjnc55m/shutterstock_629204405.jpg?width=720&amp;height=480.51009564293304" alt="Man prepares for a meeting on computer" width="720" height="480.51009564293304">
 
<h3>Pre-meeting work</h3>
Once you have a better idea of who your prospect is, this is usually where I like to start putting together a plan, beginning with a summary of ‘what we know’ and ‘what we want to understand.’ A plan for a sales call can serve as a guide, but it doesn’t have to be finished upfront. It can help pinpoint the key information you’re missing about the prospect - so during the meeting, aim to gather this information and add it to the guide as you go.
 
This method sets you up to be organized, prepared and shows you’re a valuable partner, setting the stage for a productive sales cycle. It also helps you answer any possible questions or objections, thereby boosting the prospect's trust in your skills.
 
<h3>Use available resources</h3>
In my downtime, I like to keep updated on local and world news. The effect of interest rates on the economy is one issue I’m keeping my eye on. At IBISWorld, I’ve learned a lot about <a rel="noopener" href="https://www.ibisworld.com/blog/leveraging-customer-personas/99/1127/" target="_blank">specific client pain points</a>, like how external factors such as interest rates impact our clients and their customers.
 
For instance, our <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/commercial-banking-industry/" target="_blank">Commercial Banking in the US</a> report has given me insights into how higher interest rates from the Federal Reserve have affected loan growth. These insights have secured multiple meetings as banks confront new challenges in a higher-rate economy, especially when they’re seeking to benchmark businesses against their industry and identify industries that align with their newly adjusted risk tolerance. By weaving this knowledge into my initial pitch, I've shown expertise and empathy for potential customers' challenges.
 
I’m not an expert in all our client’s industries, but that’s okay. Tools like <a rel="noopener" href="https://www.ibisworld.com/blog/modern-research-experience-demo/99/1131/" target="_blank">IBISWorld’s industry reports</a> are there to help you show prospects that you have a solid understanding of their industry, pain points and growth goals. Utilizing the collective knowledge within your organization is another smart way to prepare for meetings. Your colleagues can offer insights on roles, industries and use cases that can boost your preparation.
 
With that said, don’t fall into the trap of tunnel vision. Relying solely on internal preparation for prospect meetings could limit your perspective, so it's key to balance internal ideas with external viewpoints.
 
<h3>Phone a friend</h3>
Beyond tapping into internal resources, I’ve found another great strategy: bringing a team member to sales calls. In the early stages of my sales career, I had this notion that outnumbering prospects in meetings meant 'too many cooks in the kitchen', but experience has since changed my opinion. I now think bringing in support can lead to better results, as long as all attendees have something valuable to contribute or a specific role to play.
 
For instance, I've had our <a rel="noopener" href="https://www.ibisworld.com/blog/generative-ai-content-creation-for-business/99/1127/" target="_blank">EVP of Product Development, Jocelyn Phillips</a>, join calls to discuss future solution roadmaps with prospects. This helps to align their needs with our offerings, while also showcasing our commitment to customer-centric growth.
 
You should also share your meeting agenda with all involved, including the prospect. Whether introducing a <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">new product</a>, tackling current issues, or sealing the deal, having clear goals for all involved helps guide the conversation. Clarity on discussion topics and mutual agreement guarantees that the most important topics are going to be covered, enhancing the overall productivity of the meeting.
 
<h4>Key takeaways</h4>
<ul>
<li>Do some solid research on potential clients to customize your pitch and solutions to fit their specific needs and challenges.</li>
<li>Have a flexible meeting plan ready that pinpoints any missing information about the prospect to gather during the meeting.</li>
<li>Use external resources like industry reports to get a better grip on client pain points and show your expertise.</li>
<li>Work together with team members before sales calls to make sure everyone knows their role and contributes effectively.</li>
</ul>
 
<img src="https://content.ibisworld.com/media/c5ri2zlb/shutterstock_1395353048.jpg?width=720&amp;height=480.51009564293304" alt="A sales meeting around a computer screen" width="720" height="480.51009564293304">
 
<h2>Step two: The execution stage</h2>
Now, it’s time to make things happen. When you’re moving into the execution stage, several critical aspects must be considered. It may seem obvious, but begin by setting up a mutually agreed-upon start time and duration for the meeting. Ensure you accommodate your prospect's schedule, which may be filled with competing priorities.
 
<h3>Plan tailored questions</h3>
Remember when we talked about noting ‘what we know’ and ‘what we want to know’ during the preparation stage? Well, now it’s all about putting together a set of questions based on this information to help you get the results you’re after. Before diving into these questions, double-check the prospect’s objectives – the reason for the call may have shifted. This will ensure that the conversation stays beneficial for both sides and clear of any hint of one-sided interrogation.
 
After allowing the prospect to outline additional agenda items, I kick things off by asking questions before jumping into solutions. I usually start with something like,
 
<blockquote class="quote">“What are the goals of your department/role over the next quarter and the next 12 months?”</blockquote>
 
As the relationship matures and key <a rel="noopener" href="https://www.ibisworld.com/blog/stakeholder-analysis/99/1127/" target="_blank">stakeholders are identified</a>, I ask when our solutions could be put into play at their company. For example, if knowing when a competitor’s contract ends is important, I might ask,
 
<blockquote class="quote">“Could you please share when your current contract with [competitor’s name] is up for renewal?”</blockquote>
 
Anticipating the prospect's future needs with strategic and planned questions helps you to gather relevant information smoothly. By covering key details in the meeting, you can avoid returning to missed topics.
 
<h3>Actively listen</h3>
Remember to listen to your prospects' responses to your questions. Selling IBISWorld’s solutions gives me a significant edge, offering a range of information in various formats across thousands of industries. But sometimes, too much information can be overwhelming. That’s where active listening comes in.
 
Good salespeople personalize their pitch to meet their prospect’s needs, understanding how their own solutions can help their prospect reach their goals. It’s about picking up on what prospects want in those first chats and tweaking your presentation. And in customer meetings, keep it clear and concise, giving them the information they need without drowning them in unnecessary details.
 
<h3>Conclude with clarity and confidence</h3>
As you wrap up your initial meeting, make sure everything is crystal clear to avoid any confusion. Lay out the next steps and set expectations for the future. Use this as a chance to address any questions or concerns that may have popped up during the meeting. Consider asking for referrals if the prospect seems interested in your product or solution.
 
Recap any to-dos from the meeting, like commitments to follow up on specific topics or arranging further discussions with colleagues. Value the prospect’s input and make sure you cover all their immediate questions, asking them,
 
<blockquote class="quote">"Is there anything else you were hoping to cover in today's meeting?"</blockquote>
 
This is how you wrap up with clarity and confidence.
 
<h4>Key takeaways</h4>
<ul>
<li>Get the meeting off to a good start by agreeing on when to kick things off and how long to chat, making sure it suits everyone’s schedule.</li>
<li>Ask the right questions based on what you already know and what you want to find out, keeping the conversation flowing smoothly and avoiding making it feel like an interrogation.</li>
<li>Wrap up the meeting with a clear plan for what comes next, summarizing what you’ve already discussed and sorting out any issues that may have been raised.</li>
</ul>
 
<h2>Step three: The follow-up stage</h2>
You’ve just concluded a promising meeting with a potential client. What happens next can make all the difference. If you don’t follow up quickly, you might miss a chance to reinforce the value you discussed and address any concerns.
 
Be sure to maintain regular contact with the prospect, as per your scheduled agreement, adjusting for the different sales cycles of your products or solutions. It’s key to stay on the radar and stand out. However, a generic approach doesn’t cut it, especially in follow-up messages. Tailor your follow-ups to match each prospect’s unique interests and preferences for a lasting impact. Share relevant industry insights and show you’re focused on their business needs to make it stick.
 
<h3>Personalize your outreach</h3>
In my follow-up messages to prospects, I like to include key factors that directly impact their business, taken from the key performance section of our industry reports. This way, I can show how we can address their concerns and explain why their <a rel="noopener" href="https://www.ibisworld.com/blog/business-competition/99/1127/" target="_blank">competitors</a> might use our services.
 
<img src="https://content.ibisworld.com/media/gh5p01cf/key-takeaways.png?width=720&amp;height=474.3646408839779" alt="A screenshot of the performance section of IBISWorld's reports." width="720" height="474.3646408839779">
 
By including these insights, I make sure that the follow-up speaks to both tactical and strategic stakeholders. This helps smoothly transition from immediate needs to long-term objectives, highlighting the flexibility and effectiveness of our solutions.
 
<h3>Set the next steps</h3>
It’s important to lay down clear next steps to continue with the momentum. This could include scheduling a follow-up call or meeting to discuss specific details, answer additional questions, provide trial access, or start the next sales phase by outlining a contract. By defining specific action items and timelines, you and your prospect remain focused and aligned on achieving a win-win result.
 
<h3>Utilize your sales tech stack</h3>
At IBISWorld, we streamline our follow-up game by leveraging our sales tech stack with Gong. It captures and condenses meetings on Microsoft Teams for comprehensive summaries, helping us spot key points like questions, objections and discussions.
 
In a recent chat with a private equity firm, I faced some challenging questions that fell outside my expertise. Rather than improvising, I returned to the Gong recording to fish out the answers to those questions and forwarded them to our Client Services team. This enabled me to fulfill my follow-up commitment and avoid losing the prospect's trust.
 
<h4>Key takeaways</h4>
<ul>
<li>Make your follow up messages unique to each prospect and include industry insights to showcase your understanding of their business.</li>
<li>After your first chat, nail down the next steps so you both stay on track and keep the ball rolling.</li>
<li>Use handy sales tech tools like Gong to follow up efficiently, tackle questions, and keep the trust intact.</li>
</ul>
 
<h2>Final word</h2>
A successful first meeting relies on solid preparation, engaging conversation and a strategic follow-up. Trust-building and a solid first impressions are key to nurturing sales relationships. Sales professionals need a blend of knowledge and empathy to navigate discussions with prospects smoothly.
 
After your first meeting, personalized follow-ups strengthen commitment to ongoing success. Watch out for common pitfalls like poor planning and take action early. While you can’t control everything, focus on what you can, such as your next steps and communication. Focusing on what you can influence will pave the way for better sales outcomes.

James Mulvihill, our SVP of Business Development, takes you through the steps of preparing for your first meeting with a prospect.

How To Nail Your First Prospect Meeting: A Step-by-Step Guide

IBISWorld recently had the privilege of presenting at the Illinois Bankers Association ONE Conference in Peoria, where over a hundred bankers gathered to collaborate and network on a variety of topics, including Lending, Leadership, Marketing, and Risk. In attendance, were banks of varying shapes and sizes - community and regional banks headquartered in Illinois, as well as large national players with branches and operations there.
 
Regardless of a bank’s size, it’s always great to see bankers from different institutions get together to discuss the topics impacting them most at any given time. It’s something we’ve observed at many of the conferences we’ve attended since the pandemic, as well as at our own <a rel="noopener" href="https://www.ibisworld.com/blog/deposit-strategy-summit/1/1127/" target="_blank">Deposit Strategy Summits</a>, where bankers have shared ideas with one another on how to grow commercial deposits specifically.
 
At the ONE Conference, we presented on the different ways IBISWorld clients have been using industry, economic, and state-specific research to:
<ul>
<li>Create targeted lists of customer industries within their footprint for Marketing &amp; Sales Strategy</li>
<li>Better prepare sales teams to have meaningful conversations with businesses in those industries</li>
<li>Develop loan packages for Credit teams with up-to-date financial benchmarks and risk ratings</li>
</ul>
Download the presentation here to learn how industry research can power your banking strategies. If you have any questions, please contact matt.murphy@ibisworld.com.

Learn about our presentation at the Illinois Bankers Association ONE Conference in Peoria, and get access to the full slide deck to gain new insight on your banking strategies.

No Time to Waste: Targeting the Right Customer Industries for Commercial Deposits & Loans

Head of European Operations

Explore how to bring your revenue strategies to life with Stuart Baillie, our Head of European Operations.

How To Take Revenue Strategy From Planning to Execution

Industry Research Analyst

<h2>Key takeaways</h2>
<blockquote class="quote">SWOT stands for strengths, weaknesses, opportunities and threats.</blockquote>
 
<blockquote class="quote">SWOT analysis is a framework that guides strategic planning by identifying the internal and external factors that have the potential to be helpful or harmful to your objectives.</blockquote>
 
<blockquote class="quote">Engaging key stakeholders in gathering relevant data helps to pinpoint internal and external factors, leading to more insightful analysis.</blockquote>
 
<blockquote class="quote">Regular, updated SWOT assessments equip businesses with the agility to adapt to changing market conditions and maintain competitive advantage.</blockquote>
 
 
It's easy to get bogged down in the details if you're working day to day in the same organization. Breaking down your company’s performance using frameworks like SWOT analysis can help you take a step back and see the bigger picture.
 
<h2>What is a SWOT analysis?</h2>
SWOT analysis is a strategic planning tool that helps organizations identify helpful and harmful factors, both internal and external to their operations. SWOT stands for strengths, weaknesses, opportunities and threats.
 
<img src="https://content.ibisworld.com/media/tnzlcga0/swot-analysis-template.jpg?width=720&amp;height=720" alt="A diagram breaking down the components of SWOT analysis, The diagram breaks SWOT into a two by two grid and illustrates that strengths (S) are helpful and internal; weaknesses (W) are harmful and internal; opportunties (O) are helpful and external; and threats (T) are harmful and external." width="720" height="720">
 
Businesses at various stages use SWOT analysis to help understand their position in their industry. Using the SWOT framework can help you reassess the state of your business, and evaluate where you want to take it moving forward. The results of your analysis help you craft strategies that capitalize on your organization’s strengths and manage weaknesses, while responding effectively to your business environment.
 
<h2>What are the components of a SWOT analysis?</h2>
<h3>Strengths</h3>
Strengths are what the organization does well, especially those that make it stand out from the rest of the industry. Since this relates to internal factors of a company, a strength could be its employees, its financial health or its technological capabilities.
 
<h3>Weaknesses</h3>
Weaknesses are the internal limitations that stand in the way of greater success. These can be anything from outdated technology to a lack of expertise in specific areas.
 
<h3>Opportunities</h3>
Opportunities are factors that an organization can leverage for success, but are outside its control. Examples might include a favorable exchange rate for a company that primarily exports its products, or changes in consumer behavior that offer new paths to success.
 
<h3>Threats</h3>
Threats are the external factors that put the organization’s success at risk. For example, a company that’s dependent on a raw material produced across the globe faces the risk of <a rel="noopener" href="https://www.ibisworld.com/blog/supply-chain-basics/99/1127/" target="_blank">supply chain</a> disruptions, while a business that sells non-essential products could face challenges if <a rel="noopener" href="https://www.ibisworld.com/au/bed/real-household-discretionary-income/34/" target="_blank">discretionary income</a> levels decline sharply.
 
<h2>What are the benefits of SWOT analysis?</h2>
<h3>Organizational awareness</h3>
SWOT analysis encourages businesses to critically assess their position within the competitive landscape. It prompts companies to explore new opportunities for growth and innovation by leveraging their unique strengths, while also addressing vulnerabilities that could hinder progress.
 
In other words, performing a SWOT analysis helps you see your business through a fresh pair of eyes. Separating the state of your company into strengths, weaknesses, opportunities and threats can offer up new perspectives and possibilities that inform stronger business strategies.
 
<h3>Flexible framework</h3>
SWOT analysis is applicable across a broad range of decision-making scenarios, from strategic planning and marketing to <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">product development</a> and operational improvements. Regardless of the specific context, SWOT analysis provides a structured framework for evaluating options, reducing uncertainty, and enhancing the overall strategic direction of the company.
 
<h3>Risk management</h3>
SWOT analysis is instrumental in <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/" target="_blank">risk analysis</a> and <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">management</a>. By identifying potential threats to the business, companies can develop pre-emptive measures to mitigate these risks, ensuring greater resilience in the face of market fluctuations and environmental changes.
 
<h3>Supporting other analysis</h3>
SWOT analysis can be used in conjunction with other frameworks, like the <a rel="noopener" href="https://www.ibisworld.com/blog/3-step-pestle-analysis/99/1127/" target="_blank">PESTLE analysis</a> or <a rel="noopener" href="https://www.ibisworld.com/blog/using-porter-s-five-forces-to-develop-business-strategies/99/1127/" target="_blank">Porter’s Five Forces</a> model, for a more comprehensive understanding of your business’s standing.
 
Once you have considered opportunities and threats, you can go a step further by conducting a <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/99/1127/" target="_blank">competitive analysis</a> to identify your top competitors or calculating a company's industry market share to reevaluate competitiveness. SWOT analysis is also a key component of <a rel="noopener" href="https://www.ibisworld.com/blog/stakeholder-analysis/99/1127/" target="_blank">stakeholder analysis</a> and a useful tool in other project management applications.
 
<h2>How to do a SWOT analysis step-by-step</h2>
Now that we know what a SWOT analysis is and why it’s so useful, let’s break down how to actually conduct one.
 
<h3>1. Assemble a diverse team</h3>
While a good SWOT analysis typically starts with the management team, anyone from CEOs to interns can provide input. In fact, the more collaboration, the better. Remember that a SWOT analysis is intended to reveal fresh perspectives, so bringing in strategy-minded employees across a range of teams can help bring new information to light.
 
<h3>2. Identify strengths</h3>
Brainstorm the things within your organization’s control that it does well. These will be internal factors related to staff, finances, operations, processes, value propositions, and your products or services.
 
Questions to ask to identify your organization’s strengths:
<ul>
<li>What is the main source of our success?</li>
<li>What does our company do better than the competition?</li>
<li>What resources do we have that our competitors don’t?</li>
<li>In what areas do our customers consistently give us positive feedback?</li>
<li>Which aspects of our operations are the most efficient?</li>
</ul>
 
<h3>3.  Spot weaknesses</h3>
Make a list of the elements that your organization struggles with or could improve on. Like strengths, these will be internal factors.
 
Questions to ask to spot weaknesses:
<ul>
<li>What can we do to improve how we run our company?</li>
<li>What is stopping us from being more successful?</li>
<li>Which of our <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">business processes</a> could be more efficient?</li>
<li>What do our competitors do better than us?</li>
<li>Where do we see the lowest return on investment?</li>
</ul>
 
<h3>4. Find opportunities</h3>
Assess your business landscape and make a note of any opportunities that you could capitalize on. Unlike strengths, opportunities are external factors that are outside of your organization’s control, and might relate to economic factors, market trends, the level of competition in your industry or regulatory changes.
 
Questions to ask to find opportunities:
<ul>
<li>Is there an untapped market we can target?</li>
<li>Are we taking full advantage of the <a rel="noopener" href="https://www.ibisworld.com/blog/market-sizing/99/1127/" target="_blank">demand for our goods or services</a>?</li>
<li>Can we leverage changes in technology, regulations or market conditions?</li>
<li>Do our target customers have emerging needs that we can meet?</li>
<li>What market trends align with our business strengths?</li>
</ul>
 
<h3>5. Pinpoint threats</h3>
Catalogue any external threats in your business environment that are outside of your organization’s control.
 
Questions to ask to pinpoint threats:
<ul>
<li>How could shifts in consumer preferences or behaviors affect demand?</li>
<li>What emerging technologies could disrupt our business?</li>
<li>Which new or established competitors could threaten our market position?</li>
<li>How could economic conditions or regulatory changes negatively affect our business?</li>
<li>How strong are our <a rel="noopener" href="https://www.ibisworld.com/blog/sme-cyber-security/99/1127/" target="_blank">cybersecurity practices</a>?</li>
</ul>
<h3>6. Analyze and plan</h3>
With the SWOT matrix completed, analyze your findings to identify patterns or strategic implications. Your goal is to determine how to leverage strengths and opportunities while addressing weaknesses and protecting against threats. This phase involves critical thinking and <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">strategic planning</a> to prioritize actions and allocate resources effectively.
 
Prioritize actions based on the urgency and impact of addressing weaknesses and threats. This prioritization ensures that your business allocates resources efficiently, focusing first on areas that could have immediate benefits or prevent significant risks. High priority actions might include training programs to address skill gaps or investing in technology to improve operational efficiency.
 
It’s important to set goals that are not only ambitious but also achievable, given your company's current capabilities and market conditions. Develop action plans based on the analysis, assigning responsibilities, establishing or updating processes, and setting timelines. You’ll also need to allocate appropriate resources to ensure success.
 
Let’s say you’re Head of Product Development at a company that manufactures cleaning products. If your SWOT analysis shows that the company has strong research and development capabilities and demand for environmentally friendly products is increasing, you might decide to invest in developing a new line of dishwasher tablets. You might even be able to address the weakness of having a gap in your product offerings in the process, and avoid the threat of stricter regulations on single use plastics by using alternative materials to meet these calls for more eco-friendly options. You’ll need to decide how to prioritize this project against other potential tasks, assign staff, and allocate the necessary resources to R&amp;D, production and marketing to ensure the new line is a success.
 
<h3>7. Implement and monitor</h3>
Put your plans into action. This stage requires regular monitoring to track progress, adapt strategies as necessary and ensure that the organization is moving towards its objectives.
 
Effective SWOT analysis is not a one-time activity but an ongoing part of strategic planning. Regularly revisiting and updating your SWOT analysis ensures that your strategies remain relevant and responsive to changing internal and external environments. By following these steps, your business can harness the insights from SWOT analysis to make informed decisions, enhance performance, and achieve strategic goals.
 
<h2>Example: Amazon SWOT analysis chart</h2>
For a real-world application of this framework, take a look at this example SWOT analysis. This breakdown evaluates Amazon.com Inc.’s (Amazon) performance in the Online Small Appliance Sales industry in the US.
 
<img src="https://content.ibisworld.com/media/lykhgvzp/amazon-swot-analysis.png?width=689.2682926829267&amp;height=720" alt="A screenshot of the IBISWorld Company Benchmarking report for Amazon.com, showing the company's SWOT analysis. Strengths: profitibaility; product diversity; productivity vs. segment average. Weaknesses: market share growth; revenue trend; productivity vs industry average. Opportunities: growth life cycle stage;low imports;high profit vs sector average; low customer class concentration; low product/service concentration. Threats: Low and steady barriers to entry; low and steady level of assistance; high competition; high capital requirements." width="689.2682926829267" height="720">
Source: IBISWorld's <a rel="noopener" href="https://www.ibisworld.com/products/company-benchmarking/#consulting" target="_blank" data-anchor="#consulting">Company Benchmarking</a> solution.
 
In this analysis, we can see that one of Amazon’s strengths is its product diversity, meaning that the company is less vulnerable to changes in demand or supply chain disruptions for individual product lines. However, Amazon’s industry-specific market share has declined, and the company faces the threat of high competition.
 
<h2>Final thoughts</h2>
The purpose of a SWOT analysis is to start from the basics so that you can view your organization with a new approach. While it might seem like an oversimplification, stripping away the details of the organization helps decision makers overcome preconceived notions. SWOT analysis helps you move from a casual discussion about business improvements to smart and informed strategic planning.

SWOT analysis is a framework used to analyze your organization's position in its industry. Use this how-to guide to view your business with a fresh perspective. 

How To Do a SWOT Analysis

The IBISWorld Team

Stakeholder analysis is an invaluable project management tool. Learn what it is, why it’s important and how to use it to streamline strategy and communications.

What Is Stakeholder Analysis and How Can It Benefit Your Project?

<h2>Key takeaways:</h2>
<blockquote class="quote">Enterprise sales demands a forward-thinking approach to understanding client needs, and aligning those needs with your solution amid complex negotiations and stakeholder management.</blockquote>
 
<blockquote class="quote">Economic trends intensify the enterprise sales environment, urging professionals to prioritize strategies that resonate with customer desires over mere enthusiasm to sell.</blockquote>
 
<blockquote class="quote">Successful enterprise sales require meticulous preparation, understanding stakeholders, and structuring negotiations to navigate complex deals successfully.</blockquote>
 
Securing an enterprise deal involves navigating complex negotiations, managing stakeholders and adapting to specific client requirements. Multiple factors complicate the task, including organizational structure, decision-maker concerns, pricing, contracts and competition. This demands a forward-thinking approach to understanding clients' needs and aligning them with your product or solution.
 
Current economic trends have led many businesses to make difficult choices, like “doing more with less.” <a rel="noopener" href="https://www.ibisworld.com/blog/rebuild-gtm-strategy/99/1127/" target="_blank">The current economy</a> has inevitably intensified the environment for enterprise sales professionals. Sales professionals can overcome these challenges effectively by adopting strategies that align with your customer’s desire to buy, over the salesperson’s enthusiasm to sell.
 
<h2>What are enterprise sales?</h2>
Often referred to as complex or solution sales, enterprise sales cater to the complex needs of large-scale businesses or organizations. These sales transactions are not mere purchases; they represent strategic investments by the client. The stakes in these deals are high and often involve significant financial commitments and intricate integration of products or services into the client’s existing systems.
<h3>Transactional sales vs. enterprise sales</h3>
Transactional sales are straightforward, often involving a single decision-maker and a simple exchange of goods or services for payment. The value of referrals and reviews – often shared as customer testimonials – has always been crucial for transactional deals. These positive endorsements are used across various marketing platforms to build trust. However, the dynamics shift significantly in enterprise sales:
<ul>
<li>Transactions have higher-stakes</li>
<li>Sales cycles last longer</li>
<li>Multiple stakeholders are involved in the buying process</li>
<li>Decision-makers are different from buyers</li>
<li>The approval process may require department-specific evaluations</li>
<li>There is a heightened need for customization</li>
</ul>
 
<h2>How does the process differ for enterprise sales?</h2>
<h3>Laying the foundation</h3>
Benjamin Franklin has been quoted as saying, “By failing to prepare, you’re preparing to fail.” Understanding your client’s needs and customizing how your solution will fit those needs, coupled with well-documented preparation, leads to better results. <a rel="noopener" href="https://www.ibisworld.com/blog/from-planning-to-execution/99/1127/" target="_blank">Initial preparation</a> requires exploring the unique challenges faced by the client and tailoring your approach specifically to the client.
<h4>Strategies in action</h4>
As an example, let’s consider my experience with a commercial bank. I followed their marketing efforts to identify where they were focusing their growth strategies. Most of this bank’s advertisements focused on gaining new deposits for the bank, including their rates and their emphasis on client knowledge. Knowing this was their primary focus, I started the conversations by asking questions about this goal, such as:
 
<blockquote class="quote">“I’m looking to understand the bank’s goals for initiatives aimed at increasing deposit accounts. Can you provide insight into the overall strategy, numerical goals, or any other factors you assess to attract new accounts?”</blockquote>
 
The answers to these questions allowed me to dig deeper into the challenges that they were facing and tailor my future communication around their specific pain points.
 
This approach is critical in enterprise sales, where the stakes are considerably higher. Clients are taking on additional risks regarding financial investment and need assurance that the solution will seamlessly integrate into their complex business environment.
 
As budgets are tightened, economic woes persist and the role of procurement has become stronger, it takes a lot less for a deal to fall through. To close big deals, enterprise sales people must refine their processes and deepen their account knowledge, employing adaptive strategies to succeed.
<h3>Understanding the stakeholders</h3>
Another task of enterprise salespeople is understanding the <a rel="noopener" href="https://www.ibisworld.com/blog/leveraging-customer-personas/99/1127/" target="_blank">key players and their motivations</a> in the decision-making. This goes beyond identifying your decision-maker. This involves recognizing the stimuli of each stakeholder, from end-users to department heads to economic buyers.
 
This understanding becomes crucial in crafting a compelling value proposition that resonates with the diverse needs of the enterprise. What challenges keep the decision-maker up at night? What features will help solve a recurring pain point for the end-users? Understanding industry trends affecting their business helps build stronger relationships and better align your solutions with their desired outcomes.
<h4>Strategies in action</h4>
In 2020, I collaborated with a Chief Credit Officer (CCO) at a bank heavily invested in commercial loans linked to <a rel="noopener" href="https://www.ibisworld.com/industry-statistics/employment/long-distance-freight-trucking-united-states/" target="_blank">long-distance freight trucking</a>. There was considerable optimism about industry growth during the pandemic, but concerns about fluctuating diesel prices and declining demand arose.
 
To address regulatory concerns about a substantial balance in this industry, the CCO utilized IBISWorld’s Industry Outlook and Key Success Factors. This highlighted profit volatility stemming from surcharges and commodity value, demonstrating the loan portfolio’s resilience to regulators which wouldn’t have been possible without deep diving into the specifics.
 
Simultaneously, we learned that a Market President needed help transitioning from commercial real estate to C&amp;I lending. They were tasked with attracting businesses with large deposits for reserves, as instructed by the bank’s Chief Lending Officer. We crafted a list of lower-risk industries with robust net cash flows tailored to his team's geographic market to ease his burden.
 
Despite differing needs, we addressed the CCO’s and Market President’s concerns by tailoring our message to directly tackle their challenges within the same organization.
<h3>Structuring the negotiation</h3>
After gaining the trust of decision-makers and key influencers, the enterprise sales process often involves navigating through intricate contract negotiations. The journey typically involves engaging the economic buyer and then extends to procurement and legal for final negotiation and sign-off.
 
The need for a meticulous and well-structured negotiation process is amplified as enterprise-level contracts come with higher stakes and greater scrutiny. The salesperson needs to align the business proposal with the prospect’s goals, risk tolerance and a robust case to justify the price against procurement’s cost-cutting efforts.
<h4>Strategies in action</h4>
In our enterprise sales process, I’ve incorporated user feedback and an understanding of the organization’s goal for structured negotiation. For example, previous trial participants' feedback highlighted how our reports have facilitated discussions on their clients' challenges, providing valuable insights for salespeople.
 
After compiling and organizing feedback, we address the procurement team's objective of reducing the license fee. The return on this modest investment would be worthwhile while supporting the team in achieving and surpassing the revenue targets.
 
Preparation in negotiations is essential. Preparation ensures a smooth transition from initial discussions to the final agreement. Thriving in enterprise sales requires continuous improvement of skills and adaptive strategies beyond just closing deals. During intricate negotiations, sales professionals can enhance the effectiveness of the process by integrating real-world insights, like feedback and aligning them with strategic objectives.
 
<img src="https://content.ibisworld.com/media/rwcpvqw4/group-5662-2.png?width=720&amp;height=568.9456869009584" alt="A pyramid illustrating the process of building enterprise sales success." width="720" height="568.9456869009584">
 
<h2>How do the typical sales challenges differ for enterprise deals?</h2>
Selling is tough, no doubt about it. Every salesperson faces obstacles, regardless of their target market or product. However, some of these challenges are intensified or take on different forms in enterprise sales.
 
1. Competing for attention
Enterprise sales challenges differ as they involve intense competition. Cutting through the noise of other sellers, especially those relying solely on conventional techniques, requires a thoughtful and creative approach. Salespeople not only compete with other businesses, but they also grapple with the increased stakes of enterprise deals. Decision-makers often juggle pitches from multiple vendors, which amplifies the difficulty of capturing their attention.
 
The presence of <a rel="noopener" href="https://www.ibisworld.com/blog/productive-sales-prospecting/1/1127/" target="_blank">numerous stakeholders</a>, each with unique needs, further complicates this. Successful enterprise sales require understanding the company's structure and culture, tailoring messages accordingly and demonstrating value beyond standard scripts. Additionally, they necessitate building strong relationships with key stakeholders.
 
2. Tailoring the pitch
While going in blindfolded might be acceptable for transactional salespeople who know their market well, there are other options for enterprise sales professionals. We must tailor our messaging, emphasizing what is important to each customer's unique goals and aspirations. Efficiently landing enterprise deals requires a balance between time dedicated to research and outbound activities; an imbalance can reduce the salesperson's efficiency.
 
Enterprise sales demand a deep understanding of the client’s specific challenges, industry dynamics and strategic objectives. These deals involve multiple decision-makers with varying priorities, necessitating a versatile pitch. The sales cycle is longer for enterprise sales and changing circumstances over time may require pitch adjustments. Therefore, enterprise sales require higher customization, flexibility and a keen understanding of changing clients' needs.
 
3. Access to decision-makers
Transactional sales can sometimes be closed without directly engaging with the decision-maker. However, that’s rarely the case for enterprise deals. Even when they aren’t involved at the start of the relationship, a decision-maker is usually brought into the sales process. This is because their higher-level goals and direction for the business need to align with larger purchases.
 
This can work to the salesperson’s benefit. Each interaction provides an opportunity to refine the sales pitch. Suppose your initial contact offers insight into the goals and priorities of the decision-maker. In that case, you can use this information to tailor your pitch, aligning it closer to the overarching business objective.
 
4. Building trust with contacts
Given the size of enterprise deals, a higher level of trust is required. Salespeople must understand the <a rel="noopener" href="https://www.ibisworld.com/blog/industry-research-for-salespeople/99/1127/" target="_blank">value of industry knowledge</a>, which serves as the foundation for establishing trust with clients. With competitors addressing similar industry challenges, differentiation lies in understanding the specific nuances, including regulations, trends, challenges and <a rel="noopener" href="https://www.ibisworld.com/blog/understanding-your-external-environment/99/1127/" target="_blank">competitive landscape</a>.
 
This knowledge allows for consistent communication and showcases expertise, positioning yourself as a <a rel="noopener" href="https://www.ibisworld.com/blog/becoming-a-trusted-advisor/99/1127/" target="_blank">trusted advisor</a> rather than just another vendor. By staying abreast of industry trends and anticipating regulatory hurdles, salespeople can align their offerings with the enterprise's strategic direction, ensuring relevance and longevity.
 
5. Long sales cycles
Enterprise sales also present unique challenges due to their extended sales cycles. Unlike smaller deals, these transactions often stretch over months or years. This is largely due to the involvement of various stakeholders. Each of these stakeholders requires specific communication and approval, which adds complexity.
 
Successfully navigating efficiency requires:
<ul>
<li>Identifying key stakeholders</li>
<li>Understanding each stakeholder’s needs</li>
<li>Handling negotiations adeptly</li>
<li>Working through the bureaucratic processes</li>
</ul>
This tests patience and persistence and demands a deep understanding of the client’s organizational structure for a successful enterprise deal.
 
<h2>How enterprise sales have changed</h2>
Imagine an enterprise sales executive from a software company seeking to engage with a significant organization. In the current landscape, buyers are highly informed and often conduct their own research on platforms like Gartner’s Digital Marketplace or G2. This behavior could discourage buyers from engaging if the focus is on educating them about solutions rather than understanding their unique challenges and objectives. Enterprise sales have shifted from predominately data-driven, focused on metrics like calls and market fit, to a more nuanced approach. Now, enterprise sales are about the art of execution. This evolution reflects that buyers have become well-informed and inclined to conduct their research on products.
 
Consequently, enterprise sales professionals now require a robust foundation that prioritizes the buyer's aspirations and problems. This is where industry knowledge becomes crucial. Understanding industry standards, trends and more can preemptively address buyers' potential reservations or biases toward the enterprise salesperson's offering.
 
Additionally, the advent of artificial intelligence (AI) has <a rel="noopener" href="https://www.ibisworld.com/blog/understanding-ai/99/1127/" target="_blank">revolutionized the sales landscape</a>, energizing sales professionals with <a rel="noopener" href="https://www.ibisworld.com/blog/mastering-business-intelligence/99/1127/" target="_blank">data-driven insights</a>, predictive analytics and automation capabilities. However, relying only on AI has considerable pitfalls. The salesperson needs to ensure that they deliver concise, accurate, thoroughly researched information. If you’re perceived as a salesperson focused solely on the quick sale, rather than a trusted advisor who truly understands the buyer’s business, you risk losing trust. Losing the buyer’s trust makes the sales journey considerably more challenging.
 
<h2>Final thoughts</h2>
Mastering enterprise sales requires a holistic approach that goes beyond traditional tactics. Understanding client needs, navigating complex sales cycles and adopting innovative strategies are key to success. As the landscape continues to evolve, sales professionals must stay agile, leveraging technology and research while honing their interpersonal skills to thrive in this challenging yet rewarding career.

Optimize enterprise sales with strategic insights and adaptability, ensuring successful negotiations, stakeholder management, and tailored pitches for high-stakes deals.

How To Master Enterprise Sales

Commercial Banking Manager

<h2 class="contentH2">Key takeaways</h2>
<blockquote class="quote">The importance of using 3rd party tools to prepare for prospect and client meetings cannot be overstated in 2024, and moving forward. </blockquote>
 
<blockquote class="quote">In a high-rate/low-loan-volume environment, credit opportunities do not present themselves as frequently, and so it’s important to take an outbound approach to prospecting and generating new business. </blockquote>
 
<blockquote class="quote">Banks can optimize their deposit strategies by utilizing market intelligence, with a keen awareness of granularity, as certain industries within sectors may prove to be either advantageous or disadvantageous.</blockquote>
<blockquote>
 
After two successful events in Boston &amp; Dallas, IBISWorld co-hosted its third Deposit Strategy Summit in Palm Beach with partners from <a rel="noopener" href="https://www.ibisworld.com/blog/ibisworld-relpro-deepen-partnership/1/1131/" target="_blank">RelPro</a> and <a rel="noopener" href="https://www.barlowresearch.com/index.php" target="_blank">Barlow Research</a>. In attendance was an intimate group of about twenty Florida-based bankers from community, regional and national institutions, including Senior Commercial Leaders, Chief Marketing Officers and Relationship Managers. 
 
Since the failure of Silicon Valley Bank almost 12 months ago, growing and retaining deposits has been a major topic for banks and credit unions of all shapes and sizes. This has presented a big shift in priorities for bankers who had spent the past several years focused on loan growth in a low interest rate environment. 
 
Knowing we had customers with similar priorities and challenges, IBISWorld and its two partners organized <a rel="noopener" href="https://www.ibisworld.com/blog/bringing-together-bankers-with-a-common-goal/1/1127/" target="_blank">the first summit in Boston</a> with the goal of gathering like-minded leaders in a forum to share the current deposit trends, as well as best practices for selling deposit products. 
 
<h2 class="contentH2">Strategic insights for deposit growth  </h2>
Barlow Research, which specializes in surveying the sentiment of business owners and financial decision makers, started the evening by highlighting a number of eye-opening statistics about just how many small and middle-market companies have been shopping for new deposit accounts in 2023, and shared stats of the plans of those same businesses in 2024.  
 
When companies are looking for a new banking provider, the two most important factors are competitive rates and the bank’s overall stability. 
 
Many banks invested marketing efforts in 2023 to highlight their financial stability in the wake of <a rel="noopener" href="https://www.ibisworld.com/blog/bank-failures-and-concentration-risk/1/1129/" target="_blank">bank failures</a>, in an effort to attract new deposit customer and maintain existing relationships. However, in these efforts, many bankers found their rate offerings to be similar to the competition. 
 
To avoid a race to the bottom on rates and separate themselves with value-led conversations, lenders are seeking resources to help them better understand their customer's needs.  
 
With this in mind, IBISWorld was able to expand on Barlow’s statistics by discussing how bankers can target deposit-rich industries and create that differentiation. 
 
Gone are the days of zero rate lending, and so bankers are pivoting to a more proactive approach of business development. In the current low-volume lending environment, credit opportunities don't present themselves as often, causing less cross-selling into deposits. Outbound prospecting is the fastest way to build a deposit pipeline, but, before you begin dialing everyone in the yellow pages, it's important to target your efforts to businesses that will net the greatest returns. Enter the importance of targeted industry research.  
 
Oftentimes, bankers will think in terms of sectors such as <a rel="noopener" href="https://www.ibisworld.com/healthcare-sector/" target="_blank">Healthcare</a>, but within those sectors are particular industries that have their own nuances and deposit needs (for instance, within <a rel="noopener" href="https://www.ibisworld.com/healthcare-sector/" target="_blank">Healthcare</a>: <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/chiropractors-industry/" target="_blank">Chiropractors</a>, <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/optometrists-industry/" target="_blank">Optometrists</a>, or <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/physical-therapists-industry/" target="_blank">Physical Therapists</a>). On the other hand, there can be industries within a deposit-rich sector like Healthcare that bankers may actually want to avoid for deposits, based on their typical financials (e.g. <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/hospitals-industry/" target="_blank">Hospitals</a>). 
 
In a state like Florida with a dense population of <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/law-firms-industry/" target="_blank">Law Firms</a>, this example came up frequently as a deposit-rich customer that many attendees were actively investigating. Since national averages rarely match local performance, it's crucial to understand the scope of an industry in a given geography. Sure, law firms exist in every state, but the concentration within Florida outpaces most states, making the opportunity base much larger and worth targeting.  
 
Not only does IBISWorld's State and County data help effectively identify opportunities, but, once a meeting is booked, attendees also described how impactful the tool has been to impress a customer with knowledge on their industry, and how it provides clear benchmarking metrics to reference in strategic planning conversations.  
 
Bankers are increasingly looked to as Centers of Influence by their customers - more so than lawyers or accountants - so being well-versed on your customers is sure to earn you a valuable seat at your customer's table for their financial decisions.  
<h2 class="contentH2">Making client connections </h2>
In addition to targeted prospecting, understanding what your client’s financial situation might be, based on their industry, can be a key strategy in standing out from the crowd of competitors.
 
Key industry metrics to discuss with deposit clients include Revenue Growth, Seasonality, Profit Margins, and Net Cash After Operations. 
 
However, just asking pointed questions about your customer’s current strengths and weaknesses can be a great way to develop the necessary trust that can forge a strong relationship, and keep a customer from shopping around. 
 
At the summit, <a rel="noopener" href="https://relpro.com/" target="_blank">RelPro</a> was able to give insights into how bankers can go beyond their client’s industry and gather information specific to certain companies and their key employees. The company information that RelPro provides can help bankers identify industry operators within their specific geographic footprint, which institutions they may have done business with in the past (via UCC filings) and what you need to know about their executives to build rapport with them (how long they’ve worked there, previous positions, where they went to school, etc). 
 
<h2 class="contentH2">Final thoughts </h2>
Overall, the Deposit Strategy Summit was a great way for bankers concerned about a similar topic to come together, share ideas and ask questions of their peers and research providers. 
 
See below for the various takeaways from Barlow Research, IBISWorld and RelPro. If you’re interested in attending an event like this in the future or wish to inquire about other matters, please feel free to contact <a rel="noopener" href="mailto:Jim.Fuhrman@ibisworld.com" target="_blank">Jim.Fuhrman@ibisworld.com</a>.  
  
Barlow Research 
<ul>
<li data-leveltext="" data-font="Symbol" data-listid="4" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Businesses are actively shopping for new deposit accounts. </li>
<li data-leveltext="" data-font="Symbol" data-listid="4" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1">Bank stability is important, but <a rel="noopener" href="https://www.ibisworld.com/blog/five-tips-to-grow-your-commercial-services/1/1127/" target="_blank">competitive rates</a> are essential. </li>
<li data-leveltext="" data-font="Symbol" data-listid="4" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="3" data-aria-level="1">Most deposits are held by a small portion of businesses. </li>
</ul>
IBISWorld 
<ul>
<li data-leveltext="" data-font="Symbol" data-listid="5" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="4" data-aria-level="1">Banks can use market intelligence to target the right industries for deposits </li>
<li data-leveltext="" data-font="Symbol" data-listid="5" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="5" data-aria-level="1">Granularity is important – certain industries may be winners or losers within a single sector </li>
<li data-leveltext="" data-font="Symbol" data-listid="5" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="6" data-aria-level="1">Bankers can deliver compelling, value-added insights to <a rel="noopener" href="https://www.ibisworld.com/blog/lenders-and-leaders/" target="_blank">connect with customers</a> and build more meaningful relationships </li>
</ul>
RelPro 
<ul>
<li data-leveltext="" data-font="Symbol" data-listid="6" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="7" data-aria-level="1">Target companies in cash-rich industries to quickly identify new commercial deposit opportunities </li>
<li data-leveltext="" data-font="Symbol" data-listid="6" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="8" data-aria-level="1">Being viewed by your prospects/clients as a trusted advisor will lead to new business and cross-selling opportunities </li>
<li data-leveltext="" data-font="Symbol" data-listid="6" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="9" data-aria-level="1">Leveraging technology to integrate company, executive and industry insights enables you to differentiate your prospecting approach, identify market gaps and save bankers precious time </li>
</ul>
</blockquote>

Explore recent patterns in deposits, optimal strategies for marketing deposit offerings, and effective methods for distinguishing yourself while fostering robust connections.

The Deposit Strategy Summit, Part 3: Bringing Together Bankers with a Common Goal

<h2>Key takeaways:</h2>
<blockquote class="quote">Understanding a potential customer’s industry can help you determine whether they’re a viable prospect or a non-starter.</blockquote>
 
<blockquote class="quote">Learning about a prospect’s industry landscape, the challenges and opportunities they face, and the factors outside their control helps you unlock more meaningful, productive sales conversations.</blockquote>
 
<blockquote class="quote">Preparing a few questions related to the prospect’s industry before your call gives both you and your prospect confidence that your solution fits their needs.</blockquote>
<h2> </h2>
<h2>“Do you even know what I do?”</h2>
It was 2008. I was a fresh out of college sales professional, calling businesses to explore whether they might be interested in my solution.
 
But that comment stopped me dead in my tracks – no, in fact, I had no idea what this business actually did (or if they would have an application for what I was selling).
 
While it was a tough lesson to learn at the time, I’m grateful for this encounter in hindsight. Being asked this question so directly really enforced the need to be well-researched and prepared going into every call. When I started working at IBISWorld years later, I remembered that interaction as I realized that understanding the business environment of the person you’re calling is just as important as who you’re calling.
 
<img src="https://content.ibisworld.com/media/oxrllbl5/industry-research-benefits-for-salespeople.png?width=720&amp;height=639.6599362380447" alt="An infographic titled &quot;What You Can Learn From Industry Research.&quot; 6 icons with text labels are arranged around a central circle. The labels read &quot;Industries and regions to target for best results;&quot; &quot;Whether a prospect is viable;&quot; &quot;Industry profit and revenue trends;&quot; &quot;How your prospect measures up;&quot; &quot;How external forces affect your prospect;&quot; and &quot;Common pain points.&quot;" width="720" height="639.6599362380447">
 
<h2>Why do I need to know about a prospect’s industry?</h2>
While confidence, a personable approach and a solid product will get you some of the way to closing the deal, it’s also crucial to tailor your pitch to each client or prospect. With uncertain economic conditions and budget constraints front of mind for most businesses, <a rel="noopener" href="https://www.ibisworld.com/blog/productive-sales-prospecting/1/1127/" target="_blank">productive prospecting</a> and a strong sales strategy are more important than ever. I get it – today, there are A LOT of tools out there to help the sales professional. But at the end of the day, that question my counterpart on the other end of the phone asked me in my first year of selling still holds true for each and every interaction. This makes <a rel="noopener" href="https://www.ibisworld.com/blog/the-complete-guide-to-industry-research/99/1127/" target="_blank">industry research</a> an important part of your prospecting and meeting preparation. So what can you learn from it?
 
<h3>Know who to target</h3>
We’re all a little short on time these days, so why wouldn’t you want to make sure the person on the other end of the phone is actually a viable prospect before you schedule a call? Having a strong understanding of their wider industry environment is an invaluable addition to your sales toolkit. Knowing whether their industry is growing, mature or declining, how they measure up to average industry performance, and which key external forces shape their industry can help you determine which industries (and which companies within them) to focus on.
 
As the saying goes, "people buy from people." Individuals choose to purchase products or services for the benefit they offer or the problem they solve. Nailing down the <a href="https://www.ibisworld.com/blog/leveraging-customer-personas/99/1127/">customer persona</a> of the person you're speaking to is crucial to making sure that you are addressing the right pain points or value-adds. Looking back on that not-so-successful interaction, I can see that I was likely calling the wrong person at that company, or maybe even the wrong company altogether. If I’d done better research, I could have realized that my product wasn’t fit for purpose to solve their unique problems and saved myself and my prospect valuable time.
 
<h3>Know what to ask</h3>
Armed with the proper information, you can answer the question that tripped me up in the early days of my career – “do you even know what I do?” –  and you can also understand where they do it, who they do it for, and what key things they need to have front of mind to do it as successfully as possible.
 
Wherever you are in your sales career, understanding the trends and forces at play in a prospect's industry opens up a world of possibilities for your calls. If you’re a more experienced sales professional, you’ll be able to integrate these tidbits into your existing knowledge of your product and its application, unlocking conversations that lead to genuine needs analysis and discovery. And if you’re newer to the profession, industry information gives you the confidence that you do know what the company you’re calling upon actually does, and can work that immediately into the dialogue.
 
<h2>So, what should you know?</h2>
We’ve established that being well-prepared heading into a call is critical. But what are some of the key areas you should be well-versed on? <a rel="noopener" href="https://www.ibisworld.com/blog/using-porter-s-five-forces-to-develop-business-strategies/99/1127/" target="_blank">Porter’s Five Forces</a> offers a useful framework to better understand your lead or prospect’s industry. This framework gives you insights into the factors outside of their control, like the threat of new entrants or substitutes, buyer and supplier power, and competitive rivalry. Let’s unpack some of the other key industry analysis you can review to level up your meeting prep before that first call.
 
<h3>Profit and revenue trends</h3>
First, which way is this business trending? No matter how good your solution is, it’s going to be tough to sell to a struggling company in an industry that has declined by double digits for the past few years. Using industry research to benchmark your prospect or lead’s performance will help you plan the questions you ask.
 
<img src="https://content.ibisworld.com/media/1jtpmtl2/revenue-trends.png?width=697.0306748466259&amp;height=720" alt="A screengrab from an IBISWorld report demonstrating revenue trends in an industry. The screengrab shows several data highlights and a revenue line chart." width="697.0306748466259" height="720">
 
A company in a growing industry that performs higher than the industry average is likely to be in a strong position to consider your solution, with the budget to invest in growth and development.
 
Speaking to a prospect from a company that operates in a declining industry (or one that has recently faced significant challenges) but has recorded strong performance allows you to start on a positive note right out of the gate by complimenting their growth despite the challenges in their industry.
 
On the other hand, a company that is struggling in an otherwise steadily growing industry could also be a great prospect. Learning about their pain points gives you the opportunity to show that you understand the challenges they are facing and can help them better compete with other businesses in their space.
 
Your research will guide the kinds of questions you ask, so tailor them to the prospect’s unique industry situation:
<ul>
<li>“Wow - industry averages for revenue growth in your space are typically around 5%, but it seems like you're nearly triple that. Would you mind sharing how you’re achieving that?"</li>
<li>“The average revenue across your industry has dropped by about 6% over the last five years, but you’ve managed to grow yours by 2.4%. What did you do differently than your competitors to work through those challenges?”</li>
<li>“Your industry is expanding steadily, but it looks like your revenue growth is lower than the average. What are you looking to change this year to bring that back up?”</li>
</ul>
Whichever situation your prospect is in, asking these questions and listening to their successes and pain points will help you tailor your solution.
 
<h3>Industry outlook</h3>
Next, you’ll want to understand what the future looks like for this space. What changes are expected to take place over the next few years? Is technology causing rapid shifts? Industry research answers those questions. Understanding the outlook gives you the foundation of knowledge you need to ask forward-looking questions:
<ul>
<li>“Your industry is set to grow rapidly over the next few years. How do you plan to scale your operations to meet demand?”</li>
<li>“Have you instituted any changes to combat the possibilities of AI replacing part of your service mix?”</li>
<li>“We expect to see a lot of changes in your industry in the next 5-7 years. What are you doing to get in front of the ones that could pose a threat to you?”</li>
</ul>
 
<h3>Business locations and market geography</h3>
If you’re a territory-focused sales professional, one of your highest priorities is understanding which geographic areas you should dedicate the most time to. Industry research can help you uncover the hotbed regions inside your territory that will be most beneficial to focus on. Understanding the geographic breakdown of an industry can also help you determine if companies in one region perform better than the same type of companies in another.
 
<img src="https://content.ibisworld.com/media/eprpmrqy/geographic-breakdown.png?width=720&amp;height=549.719222462203" alt="A screengrab from an IBISWorld report showing a map of the US, with states color-coded based on the percentage of businesses in a specific industry located there." width="720" height="549.719222462203">
 
Deciding whether to pursue a lead isn’t the only use for this kind of industry information. You could use data on business locations to ask questions that speak to your prospect's regional conditions:
<ul>
<li>“You’re located further from upstream suppliers than most businesses in your industry. How does that affect your access to the products and services you use?”</li>
<li>“The number of businesses in your industry located in your state is growing rapidly. How are you setting yourself apart from the competition?”</li>
<li>“Many of the businesses you sell to are in locations that make them vulnerable to <a href="https://www.ibisworld.com/blog/supply-chain-basics/99/1127/">supply chain</a> disruptions. Do those disruptions put the brakes on them buying from you?”</li>
</ul>
 
<h2>How to use industry research in your sales conversations</h2>
One of the most important aspects of preparing for a conversation is deciding on the 3-5 key questions you want to ask during that interaction. They need to be targeted, specific and relevant to the prospect’s business. While there are endless possible questions that you could ask, asking an uninformed or uninspired question can be enough to lose your prospect's confidence or interest, costing you the deal in the blink of an eye. Asking an informed, thoughtful question at the right time can build trust and rapport with your prospect and open up the conversation.
 
<h3>“How did you know that?”</h3>
I’ll be the first to admit that my knowledge when it comes to injection molding is pretty much limited to the Creepy Crawlers I used to make as a 9-year-old.
 
However, in my early years at IBISWorld, I found myself in conversations with one of the leading injection molding manufacturers in the US. The company wanted their <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-master-enterprise-sales/99/1127/" target="_blank">sales team</a> to better understand some of the markets they were selling into. Their hope was to determine which industries were growing and had higher purchases budgets. Once they identified those factors, they then needed talking points for their sales reps to bring into the dialogue regarding some of the threats that the industry was facing.
 
Problem was, I didn’t know a thing about injection molding – but what a great opportunity to wow their Senior VP of Sales by showing him how quickly I could get up to speed in his space.
 
<img src="https://content.ibisworld.com/media/ci0gnsl2/industry-structure.png?width=720&amp;height=502.19804134929274" alt="A screengrab from an IBISWorld report, demonstrating a table breaking down the level and trend of industry conditions like concentration, barriers to entry and innovation." width="720" height="502.19804134929274">
 
In just a few minutes, I prepared four questions to bring up in my conversation based on facts I pulled from IBISWorld reports:
<ul>
<li>“It seems as though your industry has gone through some technology change in the last few years – have there been any challenges as your own product offerings have shifted?”</li>
</ul>
<ul>
<li>“Would you say a lot of your clients buy from you because of the speed at which you can deliver products from concept to design?”</li>
</ul>
<ul>
<li>“I saw that the injection molding space is made up of a lot of different companies without any major players. How have you tried to differentiate yourselves from all that competition?”</li>
</ul>
<ul>
<li>“Profit margins in your industry have been trending downward the last few years. I’d be curious, are you doing anything as a business to try and counteract that?”</li>
</ul>
 
<img src="https://content.ibisworld.com/media/4rjloxic/profit-trends.png?width=720&amp;height=715" alt="A screengrab from an IBISWorld report demonstrating profit trends in an industry. The screengrab shows several data highlights and a profit line chart." width="720" height="715">
 
While the responses to my questions were important to our conversation, the fact that I was able to exhibit such a deep knowledge of this prospect’s business from the start of the call blew them away. Once I completed my questioning, the SVP asked me, “How did you know that?” Well – I’ll give you one guess as to what my response was! Just five minutes of reviewing the <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/contract-injection-molding-manufacturing-industry/" target="_blank">Contract Injection Molding Manufacturing</a> title on IBISWorld gave me everything I needed to have a great first call with an SVP who had been in the industry for over 20 years.
 
Your questions will be a little different to mine, depending on which industry factors looked most promising in your research. You’ll be able to use the answers your prospect gives to these questions to build out your knowledge of their circumstances and pain points to tailor your solution to their needs.
 
<h3>Demonstrating your solution and asking for the sale</h3>
Next, it was easy to show the SVP how we could create a targeted list using the <a rel="noopener" href="https://www.ibisworld.com/products/industry-wizard/" target="_blank">IBISWorld Industry Data Wizard</a> to identify the top 30-40 industries his sales operations team and reps should be focusing on that met his criteria (growing industries in the manufacturing sector that spent a large amount of their budget on purchases).
 
The next step was highlighting trends and data to pull from those industries that could be brought up in conversation, much as I had done with him on his own industry. At that stage, the rest of the deal came together pretty quickly. As he said to me, “If my reps are able to have half the knowledge about the businesses they’re calling that you just showed me, it’s going to go a long way to securing the opportunities we need to hit our revenue goals.”
 
I tell this story to highlight how industry research opened up opportunities in my conversation:
<ul>
<li>I showed the person on the other end of the phone that I knew about his industry, and built trust and rapport by proving that he wasn’t just another call for me to tick off my to-do list that day.</li>
<li>I was able to find valuable, data-backed reasons why he needed the solution I was offering (which, in this case, happened to be industry research).</li>
<li>The <a href="https://www.ibisworld.com/blog/rebuild-gtm-strategy/99/1127/">company’s sales staff</a> would be able to use industry research to have equally informed and productive conversations with their own prospects, improving their win rate and getting them on track to hit the targets set out in their <a href="https://www.ibisworld.com/blog/from-planning-to-execution/99/1127/">revenue strategies</a>.</li>
</ul>
Not everyone is selling an industry research solution, so what might this step look like for you?
 
This is the part of the <a rel="noopener" href="https://www.salesforce.com/au/resources/articles/sales-process/" target="_blank">sales process</a> where you would discuss and demonstrate your solution, using both your knowledge of your prospect’s industry and the insights you gathered from asking those industry-focused questions earlier in the conversation.
 
If you’re selling a solar power solution, you might use your insight into the industry’s high utility costs and the company’s energy needs to determine which combination of panel arrays and energy storage solutions are right for this specific prospect. If you’re selling IT consulting services, learning that your client’s heavily server-reliant industry is growing rapidly and adapting to new data privacy laws will indicate that they need help future-proofing their infrastructure.
 
At this point, you’ve had valuable, insightful conversations and established that you understand your prospect’s needs. You’ve taken their unique situation, goals and pain points on board and tailored your solution to suit them. It’s time to ask for the sale!
 
<h2>Final thoughts</h2>
Preparation is key to securing the sale, and your product knowledge is only as good as your prospect knowledge. A few minutes of research to better understand your prospect and their industry environment can be the difference between advancing the opportunity and it being a non-starter from the get-go. There’s no excuse for being caught uninformed!

Learn how to leverage industry research to build trust, uncover pain points and close more deals with our Senior Director of Strategic Partnerships, Isaac Satten.

How To Use Industry Research To Level Up Your Sales Conversations

<blockquote>
<h2>Key Takeaways:</h2>
</blockquote>
<blockquote class="quote">Explore how SCCU's advisors leverage IBISWorld for efficient research, unraveling the secrets to their team's success.</blockquote>
 
<blockquote class="quote">Uncover how IBISWorld empowers SCCU's strategic partnerships, unlocking growth potential for their members.</blockquote>
 
<blockquote class="quote">Discover how your business can leverage data-driven insights to provide winning guidance and advice.</blockquote>
 
Space Coast Credit Union (SCCU), founded more than 70 years ago, has grown from serving a small membership to helping more than 600,000 members and businesses across 34 counties in Florida. As their membership has multiplied, so too have their services.
 
In 2017, SCCU established a dedicated team of business advisors that act as local partners to their business members. The team understands how important it is for a business to run smoothly and efficiently. To help businesses succeed in their coastal Florida communities, they provide expert advice and consultation services free of charge to business members.
 
Their advisors go into every consultation with a deep understanding of the business member's goals and challenges, and specialized knowledge of how to solve them.
 
It’s been our honor to serve SCCU through the rise of their business advising program, providing the industry intelligence they need to offer strategic solutions that address goals and challenges of all sizes.
 
After more than six years serving SCCU, we sat down with their team to learn why their business advisors count on IBISWorld to jumpstart their consultations.
 
<iframe width="560" height="315" src="https://www.youtube.com/embed/6ku4pcu0odQ?si=S4CbKxVXe0bgUNRa" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe>
 
<h2>Part 1: The Challenge</h2>
Business owners come from all kinds of backgrounds. Some are masters of their craft, masters at crunching the numbers, or master marketers. Only in rare cases do business owners have everything it takes to make their business a true success. That’s where business advisors come in.
 
Cultivating long-term success can look different from industry to industry. For business advisors to be able to offer specialized action plans, they need to understand the exact forces at play within each industry. If this sounds like a tall order to you, that’s because it is. Being the expert in one industry is hard enough. For a credit union serving just about every sector of the economy, offering expertise in dozens of different industries is a massive undertaking.
 
<h2>Part 2: The Solution</h2>
Having the resources to measure and react to shifting market dynamics and industry forecasts is a tremendous help when consulting with members. Getting up to speed on the economic headwinds, competitive landscape and market dynamics affecting a specific industry could take several weeks without efficient tools. Using IBISWorld’s online reports that cover thousands of industries, advisors can wrap up their research in a matter of hours.
 
<h2>Part 3: Why IBISWorld?</h2>
IBISWorld’s longstanding reputation across business and finance communities played a big part in SCCU’s decision to bring us on board.
 
The information in an IBISWorld report is designed with consultations in mind. We make it easy to present complex industry data in a practical way, facilitating strong communication and building trust between advisor and business owner.
 
<h2>How IBISWorld helps SCCU’s advisors the most</h2>
Preparation: To prepare for a consultation, advisors like Yorling Hurtado spend about an hour gathering research on the member and their industry, checking IBISWorld several times for key facts and data. Then, before heading into a meeting, Yorling and her peers review IBISWorld’s At a Glance chapter to help them line up their talking points with confidence.
 
Credibility: Bringing credible data to the table makes all the difference when advising a member on potentially life-changing strategies for their business. Being able to offer information and statistics right from IBISWorld’s reports puts both the business owner and the advisor at ease. SCCU’s business advisors have become masters when it comes to spotting hidden opportunities and red flags that business owners aren’t always aware of when they walk through the door.
 
Action: The goal of every consulting engagement at SCCU is to offer a thorough action plan and next steps for each member. Using detailed information on major markets and lucrative product lines from IBISWorld’s reports, business advisors like Yorling help business owners excel. She remembers an occasion where the insights from IBISWorld’s Products and Markets chapter helped one business owner expand his clothing store to capitalize on the women’s apparel market. In another example, Yorling was able to help a limousine company understand where their untapped revenue streams were most likely located and which competitors they would need to look out for when pursuing new markets.
 
<h2>Part 4: A Future with IBISWorld</h2>
We closed out our chat with SCCU on a particularly high note, with Business Services Manager Vanessa Sablon remarking that,
“Being able to make recommendations that help businesses grow is really our passion, and bringing value to our members – outside of just product or lending recommendations – is really what makes our credit union unique. Without access to IBISWorld’s industry data, we wouldn’t be able to offer the quality of service our members have come to expect from us.”
 
As IBISWorld continues to evolve and make our products more powerful than ever, we look forward to helping SCCU’s dynamic team of financial experts and business advisors reach new heights.
 
<hr />
 
You can learn more about SCCU’s business advising services and find your future business advisor right on their website: <a href="https://www.sccu.com/small-business/business-advisors">https://www.sccu.com/small-business/business-advisors</a>

Discover how industry insights empower business advisors, offering efficient research and credible data. 

Customer Story: How Space Coast Credit Union Builds Strong Business Partnerships

Head of US Industry Revenue

<h2>Key takeaways</h2>
<blockquote class="quote">An effective GTM strategy describes the steps needed to succeed in a desired market, requiring the careful calibration of marketing, sales and client services functions. </blockquote>
<blockquote> </blockquote>
<blockquote class="quote">Choosing a GTM strategy is dependent on your goals and audience, and often involves incorporating aspects of different types of GTM strategies. </blockquote>
<blockquote> </blockquote>
<blockquote class="quote"> To successfully execute a GTM strategy, you need to break siloed functions and move in lock step as an organization.  </blockquote>
  
<blockquote>
“You don’t have a sales problem, you don’t have a marketing problem, you don’t have a client service problem -- you have a Go to Market (GTM) problem.”
 
These words hit me like a truck.
 
“But my LinkedIn says I’m a GTM Strategist. How could I have a GTM problem?”
 
As it would turn out, those words perfectly describe the challenges facing many modern organizations. In 2023, the <a rel="noopener" href="https://www.ebsta.com/blog/data-studies/b2b-sales-benchmarks-2023-h1-update/" target="_blank">sales environment changed drastically</a>. Quotas were harder to hit, buying groups increased, as did sales cycles. The buyer journey changed on a dime and “budget pressure” became an all-too-common phrase.
 
As our sales team worked out how to adapt to this new reality, it soon became clear that our entire GTM strategy was in the crosshairs. We were traditionally a <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-master-enterprise-sales/99/1127/" target="_blank">sales-led growth</a> organization, but was that still effective in today’s world? — what does product-led growth look like for us? And how does community-led or ecosystem-led growth fit in?
 
If your sales organization can relate, read on to find out how to evaluate your GTM strategy. There is no one-size-fits-all strategy, and it will take careful collaboration to rebuild and optimize the foundation of your GTM plans.
 
<img src="https://content.ibisworld.com/media/l1qbefpj/key-go-to-market-strategies.png?width=720&amp;height=583" alt="Infographic showing summaries of the four key Go To Market Strategies: sales-led, product-led, ecosystem-led and community-led." width="720" height="583">
 
<h2>What is a GTM strategy?</h2>
Go to Market (GTM) strategy is a tactical action plan involving sales, marketing and client services that outlines the steps necessary to succeed in a target market. It originates from the need to bridge the gap between the <a href="https://www.ibisworld.com/blog/product-development-process/99/1127/">development of a product</a> or service and its successful launch in the market. It allows organizations to identify their value proposition, target customers, and sales and marketing tactics needed to reach their audience effectively.
 
A sales-led GTM strategy relies heavily on a <a href="https://www.ibisworld.com/blog/industry-research-for-salespeople/99/1127/">sales team to drive growth</a>. In this model, the sales team is responsible for demonstrating the value of the product or service to <a rel="noopener" href="https://www.ibisworld.com/blog/productive-sales-prospecting/1/1127/" target="_blank">potential customers</a>. This approach is often used by B2B companies with complex offerings, where personalized demonstrations and negotiations play a significant role. Companies such as Oracle and SAP have successfully employed a sales-led GTM strategy.
 
Product-led GTM strategy, on the other hand, focuses on the product itself as the primary driver of customer acquisition, conversion, and expansion. In this strategy, the product serves as the main channel through which customers appreciate the value of the offering, leading to increased usage and advocacy. Companies like Slack and Dropbox have significantly benefited from the product-led approach, which helped them grow by delivering products that customers love.
 
An ecosystem-led GTM strategy is about building and nurturing a network of partners who can complement and supplement your offering. Here, the emphasis is on creating symbiotic relationships that allow for mutual growth and success. This approach is often used by technology companies who build platforms which other businesses can use to offer their services, such as Microsoft's partner network.
 
Lastly, a community-led GTM strategy involves leveraging a community of users to drive adoption and growth. This strategy hinges on creating a loyal user base that not only uses the product or service but also actively advocates for it within their networks. Companies like GitHub and StackOverflow have successfully employed a community-led GTM strategy, harnessing the power of their user communities to drive growth.
 
<img src="https://content.ibisworld.com/media/vpnmp21q/shutterstock_2198821103.jpg?width=720&amp;height=349.67056323060575" alt="Jigsaw puzzle" width="720" height="349.67056323060575">
 
<h2>Finding the right fit</h2>
Choosing the right GTM strategy for your organization should be a carefully considered process that takes into account several key factors. Here are some aspects to consider:
 
<h3>1. How complex is my product to use?</h3>
Understanding the nature of your product or service offerings is crucial. If your product is simple, user-friendly, and its value can be easily understood by the customer, a product-led strategy might be the best fit. This approach focuses on showcasing the product's features and benefits to drive customer adoption, often offering a free version of the product to get them started.
 
On the other hand, if your product is complex and requires demonstration or negotiation to effectively communicate its value, a sales-led GTM strategy would be more beneficial. This strategy involves a more hands-on approach, where sales teams engage with potential customers to address their specific needs and guide them through the buying process.
 
<h3>2. How complex is my product to onboard?</h3>
Consider the onboarding process for your product or service. If it requires extensive training or support to get customers up and running, a sales-led GTM strategy, paired with a customer success team, could be appropriate.  If the product requires integrations to function appropriately for the customer, an ecosystem-led strategy can help you overcome some of the barriers to delivering value.
 
<h3>3. What are the characteristics of my user base?</h3>
Understanding your customer base is crucial in determining the right GTM strategy. If you have a highly engaged user community that is eager to share their positive experiences with others, it might be worth considering a community-led approach. This strategy harnesses the power of word-of-mouth marketing and advocacy to drive growth. Conversely, if your product solves a problem for multiple users within an organization, a product-led approach could allow you to build groundswell, especially if you can get users hooked on a free version of your product.
 
<h3>4. What are the characteristics of my decision-makers?</h3>
Consider the key decision-makers involved in the purchasing process. Understanding their needs, preferences, and decision-making criteria can help shape your GTM strategy. For example, if your target audience consists of C-level executives who prioritize ROI and long-term value, a sales-led GTM strategy that emphasizes the financial benefits and strategic value of your offering could be effective.
 
By carefully considering these factors, you can find the right GTM strategy that aligns with your product, target audience, and overall business goals.
 
<img src="https://content.ibisworld.com/media/f4wlfzxx/shutterstock_1350371054-1.jpg?width=720&amp;height=480.51009564293304" alt="Business meeting" width="720" height="480.51009564293304">
 
<h2>Addressing IBISWorld's core GTM issues</h2>
At IBISWorld, we wanted to incorporate a hybrid GTM strategy, but to be sure, we needed to reassess how our buyers operated. Looking at our sales funnel, it was clear that buying cycles had changed and buyer behavior with it, leaving room for improvement. We were also getting ready to launch the next evolution of our product, but we weren't 100% ready to let it sell for us, and we were only in the infancy of building our ecosystem-led approach. All these factors indicated that while we’ll continue to build a multi-channel approach, sales-led was still the core foundation of who we were.
 
Once we reaffirmed <a rel="noopener" href="https://www.ibisworld.com/blog/from-planning-to-execution/99/1127/" target="_blank">how our GTM strategy would evolve</a>, we turned our attention to rebuilding 3 key elements of that strategy.
 
<h3>Adapting to today's buyer</h3>
From the beginning of ‘22 to beginning of ‘23, we saw a decrease in <a rel="noopener" href="https://business.adobe.com/blog/basics/sales-velocity-the-critical-sales-metric-your-team-probably-isnt-measuring" target="_blank">sales velocity</a>, a metric that helps businesses understand how effective they are at generating revenue. As we pulled apart the core components of velocity, we identified our biggest issue to be opportunity creation. We simply weren't generating enough quality opportunities to support our sales cycle. Of the ones we did generate, too many were lost early in the funnel, but there was no clear trend in the reason for these losses.
 
So, we kept digging; we broke down all performance metrics over the past 5 years in our core markets and analyzed which characteristics indicated they’d convert above baseline. Some of these key characteristics included LTV, tier, vertical, sub-vertical, revenue, employee size and much more. What felt like a painstaking, never-ending journey helped us truly understand that our best approach was staying true to our core markets and allowed us to better understand what our Ideal Client Profile (ICP) looked like.
 
From there, our Marketing team spent time analyzing who our buyers are, their behaviors and what matters to them most, in order to update our <a rel="noopener" href="https://www.ibisworld.com/blog/leveraging-customer-personas/99/1127/" target="_blank">customer persona maps</a>. This left revenue staff with a clear picture of who we were speaking to and, more importantly, how to speak to them, with one singular voice. We began to use this data and insight to better structure our content to support the buyer's journey, recreating our content calendar to support our seller and align with our ICP and buyer personas.
 
<h3>Questions to ask yourself:</h3>
<ul>
<li>How effective is our current strategy in generating quality opportunities in the sales funnel, and what factors contribute to any decrease?</li>
<li>Do we have a clear understanding of our Ideal Client Profile, considering factors like LTV, tier, vertical, sub-vertical, revenue, employee size and core buyer behaviors?</li>
<li>Who are our core buyers, and how do we effectively communicate with them?</li>
<li>How have our core markets performed over the past 5 years, and should we explore new markets or focus on strengthening our position in core markets?</li>
<li>Are our territories, playbooks, and reporting structures aligned with insights from performance metrics and buyer behaviors, and how can we leverage <a rel="noopener" href="https://www.ibisworld.com/blog/granular-data-in-industry-analysis/99/1127/" target="_blank">data-driven decision making</a> to support our sales team?</li>
</ul>
 
<h3>Aligning Seller Motions</h3>
Once we became comfortable with who our core buyers were and how we wanted to communicate to them, it was time to look at all our motions. What were the biggest roadblock in our funnels? How could we increase conversion at each stage? Did we have the right resources and visibility?
 
We started to identify key roadblocks in our funnel. Knowing we had an early-stage conversion problem, we began to rebuild and optimize our lead forms and create on-site product tutorials to assist in the buyer journey.
 
After we created a clear process for how and when a lead should move from stage to stage and the tools required to execute, our Enablement team was able to rebuild how our tech stack supported the seller’s journey. We relaunched and onboarded some key tools that better addressed glaring issues, bringing closer both the buyer and seller experience.
 
These processes allowed us to create a core common language across functions. This simple outcome proved to be quite impactful, limiting the need to rehash definitions every time we spoke and ensuring each stage and key metric had an owner. We left this exercise with two clear processes for how our inbound and outbound motions should look, shared amongst cross functional teams.
 
<h3>Questions to ask yourself:</h3>
<ul>
<li>What are the major roadblocks in our sales funnels, and how can we enhance conversion at each stage?</li>
<li>Do we have the right resources and visibility throughout the buyer's journey?</li>
<li>How can we create a common language across functions to streamline communication and processes?</li>
</ul>
 
<h3>Breaking the silos of core functions</h3>
As 2024 drew closer, it became time to put it all together. We had successfully rebuilt our sales-led approach, focusing on high value content to support the buyer journey, a singular voice throughout all motions and complete and clear process pre- and post-sale. We had begun integrating our product-led strategy via self-led product trials, product tutorials and enhanced lead forms and at the same time, we began building our ecosystem-led strategy, whose core goal is to provide a <a rel="noopener" href="https://www.ibisworld.com/blog/modern-research-experience-demo/99/1131/" target="_blank">better experience for our users</a> and join partners who have the same, customer-obsessed ideals that we do.
 
For us, some of the initiatives we took on were completely new, and not all functions sit under the same roof; therefore, this quickly became about collaboration and communication. One of the most important things we did on this journey was a dedicated week spent with senior leaders from around the business to discuss how all the parts blended.  This brought together months of work, aligning everyone around a brand-new picture of how we wanted to go to market, solidifying a shared vision and ensuring a unified approach across the organization.
 
<h3>Questions to ask yourself:</h3>
<ul>
<li>Have we clearly defined our go-to-market strategy?</li>
<li>How are we fostering collaboration and communication among different functions, especially when they may not be physically located under the same roof?</li>
<li>Have we invested time in educating and aligning senior leaders and key stakeholders on new initiatives and strategies?</li>
<li>Are we consistently communicating and collaborating throughout the implementation of new initiatives, or are there gaps that need to be addressed?</li>
</ul>
 
<h2>Final thoughts</h2>
One thing is clear: the world around us has changed forever, and for the organizations who want to be successful, the emergence of GTM roles and functions is of utmost importance. Profitable, efficient growth is at the core of every robust GTM strategy, making it imperative that revenue leaders, CROs, CMOs and CEOs be very clear and specific about who they are and how they want to grow.
 
GTM is evolving into an artistic form, with many moving parts that need to be orchestrated harmoniously. It's going to take dedicated leaders to drive and own the entire journey, bringing together multiple functions, roles and people. The importance of that task and the weight of its challenges should not be taken lightly, and I hope more and more organizations take it head on.
</blockquote>

Looking to alter your Go To Market strategy? Our Head of US Industry Revenue reflects on the most important factors and insights needed to make a strategic transformation.

How To Rebuild a GTM Strategy

Senior Industry Analyst

Discover the seven stages of new product development, which will help take your ideas from simple concepts to big successes.

Product Development Process: 7 Steps You Need to Know

<h2>Key takeaways</h2>
<blockquote class="quote">Supply chains encompass the entire process of creating a product, from the production of raw materials to the sale of goods or services to consumers.</blockquote>
 
<blockquote class="quote">Well-managed supply chains can improve profitability, efficiency and customer relationships.</blockquote>
 
<blockquote class="quote">The complexity of modern supply chains leaves them vulnerable to disruptions, which makes effective risk analysis and supply chain management crucial to success.</blockquote>
 
Supply chains function at the core of business operations and shape the success of industries worldwide. Whether you’re running a small business or working in procurement for a multinational corporation, understanding – and properly managing – your supply chain is critical. Let’s start at the beginning.
 
<h2>What are supply chains?</h2>
Supply chains are dynamic systems made up of stages that, collectively, connect raw materials to end consumers. Every stage is essential for business operations and they are all interdependent, requiring careful management to create a seamless flow of goods.
 
<h2>What are the stages in the supply chain?</h2>
Each supply chain is different depending on the goods or services being produced, but they generally follow the same path. To break down the interconnected stages in a typical supply chain, we’ll use a wooden desk as an example product.
 
<img src="https://content.ibisworld.com/media/b54ajgxk/supply-chain-steps.jpg?width=720&amp;height=668.7353878852285" alt="An infographic breaking down the steps of a supply chain. The diagram is structured as a series of arrows, each representing a step in the supply chain and leading to the next. The diagram summarizes the next section of article text in this article." width="720" height="668.7353878852285">
 
<h3>Procurement</h3>
Sourcing the raw materials that make up the product is the first stage in the supply chain. If the product is a service, the first stage involves procuring the equipment needed to perform the service. In the desk example, procurement would include <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/timber-services-industry/#IndustryStatisticsAndTrends" target="_blank" data-anchor="#IndustryStatisticsAndTrends">growing</a> and <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/logging-industry/" target="_blank">harvesting the timber</a> used to form the structure of the desk, and <a rel="noopener" href="https://www.ibisworld.com/au/industry/iron-ore-mining/65/" target="_blank">mining</a> and <a rel="noopener" href="https://www.ibisworld.com/au/industry/iron-smelting-steel-manufacturing/222/" target="_blank">smelting the metals</a> needed for the screws and any metal fastenings.
 
<h3>Production</h3>
The raw materials then progress to the manufacturers that produce the components of the end product. A wood producer might take <a rel="noopener" href="https://www.ibisworld.com/canada/market-research-reports/sawmills-wood-production-industry/" target="_blank">timber logs and cut them to size</a>, while a metal fabricator <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/fastener-screw-machine-product-manufacturing-industry/" target="_blank">turns spools of metal wire into screws</a>.
 
<h3>Assembly</h3>
In this stage of the supply chain, product manufacturers assemble the components. In our example, a manufacturer would <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/office-furniture-manufacturing-industry/#Performance" target="_blank" data-anchor="#Performance">build the desk</a> using the wood and screws or metal parts. The manufacturer in this stage might instead predrill holes and stack the finished wood to create a flat package that ships with the necessary screws.
 
<h3>Distribution</h3>
After manufacturing, the finished product needs to reach the end user. This is where distribution comes in. Depending on a company’s business model, the product may be routed via wholesalers to retailers or it may ship directly from manufacturers to retailers – and even consumers. In this example, the manufacturer sells the desk to a <a rel="noopener" href="https://www.ibisworld.com/au/industry/furniture-floor-covering-wholesaling/380/" target="_blank">wholesaler</a> who then sells it to a <a rel="noopener" href="https://www.ibisworld.com/nz/industry/furniture-retailing/411/" target="_blank">furniture store</a>.
 
<h3>Consumption</h3>
Consumption of the product, whether a good or service, is the final stage in a typical supply chain. In this step, a consumer purchases a product from a retailer (or directly from a manufacturer) for individual use, or purchases and uses a service from a service provider. For example, in this step a customer goes to a furniture store and purchases the desk to use in a home office.
 
<h2>How do supply chains vary across industries?</h2>
Supply chains can vary drastically depending on the product or service being produced. Broadly speaking, products tend to follow a similar supply chain as the wooden desk example, although complex products like machinery or electronics naturally involve more components from a wider array of sources.
 
The supply chain for a service is slightly different, in that clients or customers aren’t purchasing a physical product. For instance, in the tech industry, software development replaces the production stage, while cloud-based access and consumer downloads represent distribution and consumption. Understanding service supply chains requires a shift in perspective, focusing less on physical flow and more on the flow of information and interactions that create and deliver value to the customer.
 
<h2>Why are supply chains important in business?</h2>
Supply chains are more than just a way to move products: they function as critical channels that connect companies with their customers. Supply chains are also a key component of a business’ strategy, and can substantially affect profitability and customer relationships.
 
<h3>Efficiency and profitability</h3>
Ultimately, planning the most efficient strategy to get from raw material to end consumer can save resources – including time – and minimize stress. An optimized supply chain leads to operational efficiency, which in turn improves <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-profitability-analysis-and-why-is-it-important-to-businesses/44/1127/" target="_blank">profitability</a> by reducing costs associated with production, transportation and storage.
 
<h3>Customer satisfaction</h3>
Supply chains also directly affect the customer experience. A well-managed supply chain ensures that customers receive products quickly, at the price and quality they’re looking for. Getting these aspects right improves customer satisfaction and helps build customer loyalty.
 
<h3>Competitive advantage</h3>
Having an effective supply chain can be a significant competitive advantage. Companies stand out from the competition when they deliver products faster and with fewer errors, at a higher quality or at a lower cost.
 
<h3>Risk management</h3>
By integrating <a href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/">risk analysis</a> into supply chain planning, businesses can identify potential weaknesses or disruptions in the chain and implement pre-emptive measures to avoid or minimize damage. If you’re a supply chain manager or procurement professional, you’ll want to consider implementing a <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">risk management framework</a>.
 
<h2>How does the concept of supply and demand affect supply chains?</h2>
The economic principle of supply and demand reflects the relationship between the availability, or supply, of a particular product and the demand or desire for it among consumers at various prices. The principle has a significant effect on supply chains.
 
A range of factors can influence supply, including raw material availability, production cost, labor market dynamics and technology advancements. Consumer preferences, income levels, and price of substitute goods are some of the factors that affect demand. Returning to the desk example, supply might decline if a major manufacturer goes bankrupt – or increase if new, low-cost manufacturers enter the industry. Meanwhile, demand might decrease if consumer confidence or incomes fall, or increase if more people start to work from home.
 
In an ideal market scenario, the intersection of supply and demand determines the price of the product or service. Understanding this principle is crucial for effective supply chain management as it helps businesses forecast market trends, improve inventory levels and make strategic decisions to ensure profitability and customer satisfaction.
 
<h2>What is supply chain management?</h2>
Supply chain management (SCM) is all about overseeing and optimizing the flow of goods, data and finances as they move between suppliers, manufacturers, wholesalers, retailers and consumers. At its core, SCM aims to maximize efficiency and minimize costs.
 
<img src="https://content.ibisworld.com/media/qcxkdlpm/supply-chain-warehouse-image.jpg?width=720&amp;height=404.7608926673751" alt="A supply chain manager is reading a shipping log on a tablet. She is standing in a warehouse and wearing a hard hat and high-vis vest over her blue shirt.." width="720" height="404.7608926673751">
 
Supply chain managers use a range of strategies and tools to achieve these goals:
<ul>
<li>Demand forecasting predicts whether customers will want a product or service, how much they’ll purchase and what they’re willing to pay for it. Performing this analysis will mean that businesses can have enough stock or service capacity to meet demand while at the same time reducing waste by not overstocking or having more staff and infrastructure than is necessary.</li>
<li>Inventory management ensures a company has enough product on hand (or staff to provide services) to meet demand – but not too much.</li>
<li>Logistics planning helps supply chain managers figure out the most cost-effective way to get products from point A to point B (and then to point C, point D and beyond).</li>
</ul>
Supply chain management is a complex juggling act that requires careful coordination, <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">strategic planning</a> and meticulous execution. When done well, it can reduce costs, improve efficiency and increase customer satisfaction – a win-win for businesses and customers.
 
<h2>Challenges in supply chains</h2>
Supply chain managers and procurement professionals face many challenges on a day-to-day basis, simply due to supply chains’ complex nature.
 
<h3>Demand forecasting</h3>
One of the biggest challenges in supply chain management is demand forecasting. Accurate demand forecasting is crucial for maintaining the right inventory levels and preventing waste. However, it’s often difficult to execute due to factors like changing market trends, fluctuating economic conditions and unpredictable consumer behavior. A retailer deciding how many desks to order, for example, needs to consider factors like the number of people currently buying desks, whether that is likely to change based on the time of year and how quickly customers’ design preferences will change.
 
<h3>Supplier relationship management</h3>
Businesses often need to deal with multiple suppliers – each with their own timelines, quality standards and delivery processes. Coordinating all these elements to ensure a smooth flow of materials is an ongoing challenge. A furniture manufacturer buying screws to assemble a desk might have plenty of suppliers to choose from but will have to weigh things like the quality of the screws, where they were made and how cost-effective they are, in addition to whether and how to maintain relationships with multiple suppliers in case of disruptions.
 
<h3>ESG factors</h3>
<a rel="noopener" href="https://www.ibisworld.com/blog/the-rising-importance-of-esg/1/1127/" target="_blank">Environmental, social and governance (ESG)</a> has become an important consideration as governments introduce and tighten legislation regarding environmental impacts and human rights, and consumers base more of their purchasing decisions on ethical, social and environmental concerns. Businesses are increasingly expected to reduce waste, minimize their carbon footprint and ensure ethical sourcing. But achieving these sustainability goals while maintaining cost-effectiveness and a tight grip on efficiency can be challenging. Questions consumers might ask about the desk, for example, could include:
<ul>
<li>Is the timber sustainably sourced?</li>
<li>Are the workers who assembled the desk paid a living wage?</li>
<li>Is the packaging recycled or recyclable?</li>
</ul>
 
<h2>Disruptions in supply chains</h2>
While our earlier desk example was relatively straightforward, the reality is that most supply chains are very complex, which makes them susceptible to disruptions. Every component within every stage is part of its own interconnected supply chain: from the logging equipment used to harvest timber to the computers that supply chain managers use to order materials, to the trucks that transport the finished desk to the furniture store. This also means that there are multiple ways that every stage can go wrong, with the potential to create severe bottlenecks.
 
Disruptions might occur due to:
<ul>
<li>raw materials shortages, either because of a sudden decrease in supply as a result of natural disasters, conflicts or crop failures, or a significant increase in consumer demand in response to an emergency or unexpected trend emerging;</li>
<li>manufacturing standstills like factory closures linked to equipment failure, fires or financial issues; or</li>
<li>logistics breakdowns arising from conflicts, worker shortages, international trade disputes or severe weather events like fires or floods.</li>
</ul>
 
<h3>COVID-19 and supply chains</h3>
The <a rel="noopener" href="https://www.ibisworld.com/blog/supply-chain-and-labour-challanges/61/1133/" target="_blank">COVID-19 pandemic</a> demonstrated how vulnerable supply chains are to disruption. On the supply side, high infection rates and stay-at-home orders meant that many people were unable to work, dramatically reducing manufacturers’ and suppliers’ capacity to produce materials, components and end products. These production decreases had a domino effect across the supply chain: reduced access to raw materials limited component production, which in turn constrained the manufacturing of end products and availability of services.
 
On the demand side, consumer spending habits changed dramatically. The sudden increase in the number of people working from home caused a spike in demand for home office equipment (like our wooden desk). With limited access to outside entertainment, demand for products like home entertainment systems, game consoles and exercise equipment soared. Meanwhile, demand for medical supplies surged as the pandemic spread, while medical personnel and consumers alike struggled to secure supplies of masks and hand sanitizer.
 
Supply chains struggled across the board to keep up with the rapid and severe changes in demand, made worse by significant disruptions to production at all stages. Logistics challenges compounded these issues, with circumstances like border closures and infection rates disrupting shipping and freight movements around the globe.
 
<h2>What is the role of technology in supply chains?</h2>
Technology plays a pivotal role in the optimization of supply chains and continues to change the way businesses manage them by offering greater efficiency, visibility and accuracy throughout the process.
 
<h3>Communication and coordination</h3>
Technology can greatly enhance communication between companies in a supply chain, thereby improving coordination across its different interconnected stages. Digital platforms and cloud computing allow suppliers, manufacturers and retailers to exchange information instantly. This seamless communication helps prevent disruption and ensures smooth transitions from one stage to the next.
 
<h3>Product tracking</h3>
Modern technology has also provided the ability to track and trace the movement of products throughout the supply chain. While this improves efficiency by allowing businesses to quickly identify and address any issues that may arise, it also promotes transparency in supply chains, which is becoming increasingly important as legislation and consumer preferences change.
 
<h3>Predictive analytics</h3>
Predictive analytics help businesses anticipate demand and manage inventory effectively. By analyzing past trends and market data, businesses can forecast more precisely and make informed decisions about production and distribution.
 
<h3>Automation</h3>
Typically the first factor that comes to mind when considering supply chain optimization, automation can reduce manual labor, speed up processes and minimize errors. Depending on the supply chain, automation may include introducing software that manages the planting or harvesting process of grain, for example, or implementing more advanced manufacturing machinery.
 
Let’s apply these concepts to the wooden desk example. Improved communication technology allows businesses at each stage of the supply chain to exchange materials and information more readily, preventing bottlenecks and reducing the cost of producing the desk. Product tracking allows retailers to provide consumers with information about the working conditions of the people who built the product and whether the timber was sustainably sourced. Predictive analytics allow the manufacturer to determine how many desks to produce and give the retailer insight into how much stock to order, while automation makes the processes of manufacturing the screws or cutting the wood more efficient.
 
As technology continues to advance, it becomes indispensable for smooth and streamlined operations across supply chains, giving businesses a competitive edge.
 
<h2>Final thoughts</h2>
In many ways, supply chains are the foundation of any business operation, linking raw materials to the end consumer. Effective SCM involves a delicate balance of managing relationships with suppliers, predicting customer demand, mitigating risks and striving for sustainability. Despite their inherent complexity, well-orchestrated supply chains drive efficiency, reduce costs and promote customer satisfaction, making them a critical component of business success.

Supply chains are crucial to the functioning of local and global economies. Learn what they are, how they work and the challenges they pose.

Supply Chain 101: From Concept to Consumer and Everything In Between

<h2>Key takeaways:</h2>
<blockquote class="quote">Use business intelligence (BI) to make informed business decisions by collecting, analyzing and visualizing data.</blockquote>
 
<blockquote class="quote">Drive operational efficiencies by leveraging BI insights to quickly adapt to market changes and optimize resource allocation.</blockquote>
 
<blockquote class="quote">Incorporate BI successfully by setting clear objectives, prioritizing quality data and fostering a data-driven culture.</blockquote>
 
Getting the right information at the right time is crucial to making sound decisions. That’s where BI comes in. Unlike <a href="https://www.ibisworld.com/blog/big-data-analytics/99/1127/">big data</a>, which refers to the sheer volume of data, BI is about leveraging strategies and advanced technologies to dissect this data effectively. It provides key insights into your operations, markets and customers, enabling your business to make well-informed decisions.
 
<h2>What is business intelligence?</h2>
BI is a technology-driven process that involves analyzing business data to provide insights. Executives and managers use BI to make informed, data-driven decisions based on historical and current data. BI focuses on analyzing company data to improve operations, using various techniques such as data mining, process analysis, performance benchmarking and descriptive analytics. The process utilizes software that ingests this data and presents it in user-friendly formats such as reports, dashboards, charts and graphs. This process of converting your raw data into meaningful information allows you to strategize and make better operational choices.
 
<h2>How does business intelligence work?</h2>
BI consists of several interconnected processes including data collection, data analysis, data visualization and decision-making. Understanding how these components work will help you turn data into actionable insights, helping you make confident <a href="https://www.ibisworld.com/blog/making-fast-business-decisions/99/1127/">business decisions</a>. Let’s break them down.
<h3>Data collection</h3>
In the first step, you’ll gather raw data from a multitude of diverse sources. These sources may include internal databases, transaction records, social media platforms, customer feedback and market research reports. The goal is to collect as much relevant information as possible to provide a solid foundation for your analysis. The data is then cleaned and converted into a format suitable for analysis.
<h3>Data analysis</h3>
Once you’ve collected your data, you’ll need to thoroughly analyze it. This process involves utilizing a wide range of tools and techniques to explore the data, such as statistical analysis and data mining. The goal is to identify patterns, trends, irregularities and relationships within the data. Machine learning algorithms are regularly used here to help uncover valuable insights.
<h3>Data visualization</h3>
The next step is to present your findings in a visual format. This involves creating charts, graphs, or other visual representations of data that make complex information more digestible. These visualizations make it easier for you to evaluate the data, understand the data at a glance and draw conclusions about your business.
<h3>Decision-making</h3>
The ultimate goal of BI is to facilitate informed and timely decision-making. Employing data-driven approaches helps minimize the risk of errors while enhancing operational efficiency. Use the insights you gained through your data analysis and visualization to make strategic decisions with greater confidence.
 
<img src="https://content.ibisworld.com/media/h3ybcrmy/business-intelligence-steps.png?width=720&amp;height=583.0393198724761" alt="Infographic showing the four components of business intelligence: data collection, data analysis, data visualization and decision-making" width="720" height="583.0393198724761">
 
<h2>Business intelligence vs. business analytics vs. business process analysis</h2>
BI, business analytics (BA) and business process analysis (BPA) share some characteristics, but are each separate processes. Broadly speaking, business intelligence looks at past and present data to shape decisions about your business’s current operations. <a href="https://analytics.hbs.edu/blog/business-intelligence-vs-business-analytics/">Business analytics</a>, on the other hand, uses tools to make predictions about future performance to drive strategies for business growth. <a href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/">Business process analysis</a> specifically focuses on reviewing and optimizing the internal processes that keep your business running day to day.
 
<h2>Why does business intelligence matter?</h2>
Understanding the advantages of BI allows you to move away from guess-work and formulate strategies based on factual data, improving your business’s overall performance. It can help with:
<ul>
<li>Informed decision-making: When you base your decisions on data, you're acting on facts, not assumptions. This means your choices are grounded in reality, giving your business a solid foundation to build upon.</li>
<li>Maintaining a competitive advantage: You can position your business for success by identifying trends before your competitors. Leveraging data doesn't just keep you in the game, it puts you ahead of it.</li>
<li>Operational efficiency: Data can reveal inefficiencies in your processes that you might not have noticed. Optimize these areas and you can save time, reduce costs and focus your resources where they're needed most.</li>
<li>Risk management: Data also helps you foresee potential <a href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/">risks and challenges</a>. This allows you to prepare and respond effectively, safeguarding your business from unexpected setbacks.</li>
<li>Customer insights: Use business intelligence to gain valuable insights into your customers' behavior, preferences and needs. This enables you to deliver personalized experiences, fostering customer loyalty and driving revenue.</li>
</ul>
 
<h2>Tips for incorporating business intelligence</h2>
Incorporating BI into your <a href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/">strategic planning</a> can seem like a daunting task. Keep these tips in mind to make the process smooth sailing.
<h3>Define clear objectives</h3>
Set clear objectives to better align your BI strategy with your overall business goals. The first step is to define what you hope to achieve. Are you looking to improve operational efficiency? Do you want to enhance customer satisfaction? Or perhaps you’re aiming to gain a competitive edge?
<h3>Prioritize data quality</h3>
The insights you gain from BI are only as good as the data you feed into it, so it’s essential to ensure the quality of your data. Make sure you develop robust data collection and management processes to maintain accuracy and consistency for the best results.
<h3>Foster a data-driven culture</h3>
To cultivate an environment that embraces a data-driven culture among your team, integrate BI software into your operational framework to instill a data-driven culture. Prioritize the utilization of BI insights for decision-making to ensure that your team relies on specific data points and analytics, rather than guesswork or intuition.
<h3>Regularly review and adapt</h3>
Continuously evaluate your BI initiatives to ensure they remain aligned with your business objectives. Be prepared to make necessary adjustments to accommodate shifting market trends and changing business needs. Keep an eye on emerging technologies and industry best practices to make sure you’re getting the most out of your BI processes. This proactive approach will help you stay ahead of the curve and maximize the value of your BI investments.
 
<h2>How does business intelligence help teams?</h2>
BI provides a platform where all team members can access and share data. This facilitates better collaboration, fostering an environment where everyone is working towards shared goals with the same information. For instance, your sales team can share insights with your marketing team to tailor campaigns that resonate with target audiences more effectively. Moreover, your teams no longer need to rely on gut feelings or instinct. Instead, they have access to data-driven insights that enable them to make informed decisions.
 
Your team can also use BI to identify bottlenecks and inefficiencies, improving workflows and increasing productivity. Your customer service team might use BI to identify peak call times and adjust staffing levels accordingly, ensuring efficient handling of customer queries. Additionally, with access to real-time data and insights, your team members are better equipped to perform their roles. They can proactively identify opportunities and challenges, making them feel more empowered and engaged.
 
BI also encourages continuous learning and improvement by providing objective performance data. Your team can review their performance, learn from successes and mistakes and continuously strive to improve. For example, your operations team could leverage BI data to assess the efficiency of a newly implemented customer support system and make appropriate refinements.
 
<h2>Selecting the ideal business intelligence solution</h2>
Incorporating BI into your business involves weighing up different software solutions. When doing so, it’s important to consider a few factors:
<ul>
<li>Ease of use: Look for platforms that are user-friendly and intuitive with a clean interface and straightforward navigation. Remember, the goal is to simplify data interpretation, not complicate it.</li>
<li>Integration capabilities: Your chosen platforms should seamlessly integrate with your existing systems. This ensures that your data flows smoothly from one platform to another, providing your business with timely and accurate insights.</li>
<li>Scalability: As your business grows, your data requirements will too. Opt for solutions that can scale with your needs, allowing you to add more data sources or users as necessary.</li>
<li>Security: Protecting your data should be a top priority. Ensure the platforms you choose have <a href="https://www.ibisworld.com/blog/sme-cyber-security/99/1127/">robust security measures</a> in place, including data encryption and user authentication.</li>
<li>Support and training: A good provider will offer comprehensive support and training to help you maximize the benefits of their platform. This could include tutorials, webinars or even a dedicated support team.</li>
</ul>
 
<h2>Final thoughts</h2>
BI integrates technology and strategy to help your business make informed decisions by transforming raw data into actionable insights. By embracing BI, your business can navigate the complexities of your industry, adapt to changing trends and take positive steps towards your goals.

Empower your organization with business intelligence to benefit from informed decisions, operational efficiency, a competitive edge and enhanced customer satisfaction.

Mastering Business Intelligence: Your Guide to Data-Driven Decision Making

<h2>Key takeaways:</h2>
<blockquote class="quote">Deflation is an ongoing, broad decline in the prices of goods and services across the economy.</blockquote>
<blockquote> </blockquote>
<blockquote class="quote">While lower prices may seem like a good thing, ongoing deflation can limit consumer spending, stunt economic activity, reduce investment and cut wages.</blockquote>
<blockquote> </blockquote>
<blockquote class="quote">Breaking out of deflation requires targeted monetary and fiscal policy measures, but individual businesses can prepare for periods of economic downturn with smart strategic decisions.</blockquote>
<blockquote> </blockquote>
<h2>Introduction</h2>
Inflation is a hot topic, but we don’t tend to hear much about its opposite force – deflation. Understanding deflation is crucial for strategic planners, business analysts and financial professionals. So, what is deflation in economics and what would it mean for your business? Let’s dive in.
 
<h2>What is deflation?</h2>
Put simply, deflation is the exact opposite of <a rel="noopener" href="https://www.ibisworld.com/blog/understanding-types-of-inflation/99/1127/" target="_blank">inflation</a>. The economic phenomenon is a sustained, broad-based decline in the overall price of goods and services in an economy. It goes beyond just a one-time drop in prices and occurs when the inflation rate falls below 0%. This means that the economy is going through a period of falling prices. On the surface, lower prices seem like a net benefit, but they can have disastrous consequences for the economy if prices drop for a long time. Before we get into the consequences of deflation, let’s unpack how it occurs.
 
<h2>What causes deflation?</h2>
Several factors can cause deflation by pushing down the overall level of prices across the economy. Each factor has its own distinct impact. Many of these factors are tied to a decrease in the money supply, which is the total amount of money circulating in the economy at a given time.
 
<h3>Reduced demand</h3>
When consumers cut back on spending, the overall demand for goods and services decreases. This decrease in demand creates a surplus of products in the market, reducing prices as businesses try to stimulate sales.
 
<h3>Increased supply</h3>
An oversupply of goods and services in the market can surpass the level of demand. This oversupply of goods and services puts pressure on businesses to lower prices in order to clear their inventories and remain competitive.
 
<h3>Technological innovation</h3>
New technologies often bring about increased efficiency and productivity. This reduces production costs for businesses through automation or, more recently, <a rel="noopener" href="https://www.ibisworld.com/blog/understanding-ai/99/1127/" target="_blank">artificial intelligence</a>. As businesses save on costs, they can pass on these savings to consumers in the form of lower prices.
 
<h3>Government Policies</h3>
Certain fiscal and monetary policies can contribute to deflation. For instance, a government reducing public spending or a central bank increasing interest rates can slow economic activity and put downward pressure on prices.
 
<h2>The deflationary spiral</h2>
While lower prices can benefit consumers and save businesses money on inputs, sustained decreases can eventually lead to a downward spiral.
 
Imagine you want to buy a new laptop. You’ve done your research and identified the one you want, but you notice that laptop prices have been falling for the past few months. Instead of buying now, you decide to wait, expecting that the prices will drop even further in the near future. This is a perfectly logical decision on your part.
 
Now, multiply this behavior by millions of consumers. This collective delay in consumption reduces the overall demand for goods. As a result, businesses lower their prices further to stimulate sales. However, this often has the opposite effect. When consumers expect prices to keep falling, many delay their purchases even longer, resulting in a further fall in demand. This is how the economy ends up in a deflationary spiral.
 
<h2>How does deflation affect the economy?</h2>
Deflation has far-reaching implications for the broader economy. Ongoing deflation can stunt economic activity, potentially leading to a recession. This downward spiral can decrease investment, reduce wages, and increase debt burdens for individuals and households.  Deflationary pressures can hinder central banks' efforts to stimulate economic growth, making it harder for policymakers to maintain price stability and foster sustainable development.
 
<h2>How does deflation affect businesses?</h2>
Deflation can create a difficult economic environment for businesses to navigate. As prices decrease, businesses may struggle to maintain profitability amid reduced consumer spending and investment. Additionally, deflation can increase the real value of debt, making it more difficult for businesses to repay loans.
 
<h2>Historical examples of deflation</h2>
<h3>Deflation in the US</h3>
The United States experienced a period of deep deflation in the 1930s during the Great Depression. Prices of goods and services plummeted and production output dropped significantly, contributing to economic hardship and stagnation. Sectors across the economy, from agriculture to manufacturing, felt the effects of deflation, prolonging the recovery process.
 
<h3>Deflation in Japan</h3>
Japan in the 1990s is another notable example of a deflationary period. Following the burst of an economic bubble in 1991, Japan experienced a prolonged period of deflation, often referred to as the Lost Decade. During this time, prices fell continuously, causing a significant decrease in economic activity. Despite attempts by the Japanese government and central bank to stimulate the economy, deflation persisted for more than a decade. This led to a stagnation in wages, high unemployment, and a persistent state of economic uncertainty. Japan has continued to face periods of deflation throughout the 21st century.
 
<h2>How to manage deflation</h2>
To counteract deflation, central banks often implement monetary policies like lowering interest rates, increasing government spending or <a rel="noopener" href="https://www.bankofengland.co.uk/monetary-policy/quantitative-easing" target="_blank">quantitative easing</a>. While you can’t singlehandedly pull the economy out of deflation, you can develop strategies to help your business navigate economic downturns.
 
<img src="https://content.ibisworld.com/media/eynlsccy/business-person-learning-about-deflation.jpg?width=720&amp;height=479.7449521785335" alt="A person develops strategies to manage deflation. They have a laptop open in front of them to research and they are writing notes on a clipboard." width="720" height="479.7449521785335">
 
<h3>Diversification and innovation</h3>
Diversifying your product and service offerings can help your business meet changing consumer demands among both your existing customer base and prospects. Robust <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">product development processes</a> that focus on innovation and research will keep you ahead of your <a href="https://www.ibisworld.com/blog/business-competition/99/1127/">competition</a>. Introducing new products or improving existing ones helps you provide more value to your customers and differentiate your business.
 
<h3>Operational efficiency and technological investment</h3>
Efficiency is key during periods of deflation. Streamlining your <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">business processes</a> and eliminating waste can significantly improve operational efficiency. This includes negotiating better deals with suppliers to reduce costs, which will be easier if you've built strong relationships with them. Investing in technology and automation can further increase productivity and decrease overhead expenses. These strategies will help you maintain profitability even when prices are falling.
 
<h3>Customer engagement</h3>
Customer loyalty becomes even more important during a prolonged economic downturn. If you haven’t already, make time to define and understand your business’s key <a rel="noopener" href="https://www.ibisworld.com/blog/leveraging-customer-personas/99/1127/" target="_blank">customer personas</a>. Understanding your customers wants, needs and pain points will help you provide exceptional service and personalized experiences that cater specifically to your markets. Implementing effective marketing and advertising campaigns can also play a vital role in maintaining your market share during challenging economic times. These strategies can help you retain your existing customer base and attract new buyers or clients.
 
<h3>Strategic planning and market expansion</h3>
Keeping an eye on economic indicators and trends allows you to anticipate deflationary risks and <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">plan your strategies</a> accordingly. This could involve adjusting your pricing strategies to remain competitive without compromising your business’s <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-profitability-analysis-and-why-is-it-important-to-businesses/44/1127/" target="_blank">profitability</a>. You might also consider seeking opportunities for strategic partnerships or acquisitions to expand your market reach, which can allow you to tap into new customer bases and increase your revenue streams.
 
<h2>Final thoughts</h2>
While individual businesses don’t have a lot of control over whether the economy is in deflation, you can take steps to ride out periods of economic downturn. Start by understanding the phenomenon so you can recognize the signs of deflation, then implement strategies to manage its effects and protect your business.

Deflation poses a unique set of challenges for businesses and the economy. Learn more about deflation and what your business can do to manage it.

Understanding Deflation: Why it Happens, What it Does and How to Survive It

<h2>Key takeaways:</h2>
<blockquote class="quote">Small and medium-sized enterprises (SMEs) face increasing cyber threats due to perceived vulnerabilities, requiring a keen understanding and proactive approach to address these risks effectively.</blockquote>
 
<blockquote class="quote">Despite limited resources, SMEs can fortify their cybersecurity by prioritizing various methods, all without compromising on effectiveness.</blockquote>
 
<blockquote class="quote">The NIST Cybersecurity Framework empowers SMEs with structured standards across five functions, enhancing risk management, improving cybersecurity and safeguarding digital assets.</blockquote>
 
<a rel="noopener" href="https://www.ibisworld.com/blog/optus-cyber-attack/61/1126/" target="_blank">Cyberattacks</a> are on the rise, and cybersecurity concerns are no longer exclusive to large corporations, as SMEs increasingly find themselves vulnerable to cyber threats. SMEs are often viewed as easy targets, and must understand and address these risks to safeguard integrity, ensure continuity and to foster brand trust. Despite limited resources, cost-effective strategies are available to fortify cybersecurity without compromising effectiveness.
 
The <a href="https://www.ibisworld.com/blog/cybersecurity-demand-surges-covid19/61/1126/">rise in remote work</a> since the outbreak of COVID-19 has contributed to a surge in global cybersecurity investments. Several sectors relating to cybersecurity have experienced <a rel="noopener" href="https://www.ibisworld.com/blog/emerging-industries/61/1127/#Cyber" target="_blank" data-anchor="#Cyber">significant growth</a> due to heightened demand for advanced solutions, which are often costly.
 
<h2>Understanding cybersecurity challenges for SMEs</h2>
If you run a small to medium business (or work with clients who do), you’ll know that SMEs often operate with limited resources, including budget constraints and lack of IT staff. These limitations make it challenging to implement comprehensive cybersecurity measures. Resource constraints also mean that a cyberattack on your SME can be particularly devastating, potentially causing significant financial losses, reputational damage and even business closure.
 
Understanding these challenges is the first step towards addressing them. By conducting a thorough risk assessment, recognizing your business’s vulnerabilities and the potential impacts of cyber threats, you can start to develop a proactive approach to cybersecurity, focusing on both prevention and response.
 
<h2>Risk analysis and risk management frameworks</h2>
<a rel="noopener" href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/" target="_blank">Risk analysis</a> is a crucial component of any robust cybersecurity strategy and allows you to understand your business’s vulnerabilities and prioritize defensive efforts. It's an ongoing process, as new threats emerge and business environments evolve. Regular reviews and updates are vital to maintaining the effectiveness of your cybersecurity measures. Implementing a strong <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">risk management framework</a> can help your business stay on top of cybersecurity risks.
<h3>How does the NIST cybersecurity framework enhance cybersecurity risk assessments?</h3>
The National Institute of Standards and Technology (NIST) provides a framework specific to managing cybersecurity threats. The <a rel="noopener" href="https://www.nist.gov/cyberframework" target="_blank">NIST Cybersecurity Framework</a> offers a set of industry standards and best practices, and comprises five core functions: Identify, Protect, Detect, Respond and Recover.
<ol>
<li>Identify: Understand your business context, resources and risks.</li>
<li>Protect: Implement safeguards to protect the delivery of critical services.</li>
<li>Detect: Develop activities to identify the occurrence of a cybersecurity event.</li>
<li>Respond: Take action regarding a detected cybersecurity incident.</li>
<li>Recover: Restore capabilities or services impaired due to a cybersecurity incident.</li>
</ol>
 
<img src="https://content.ibisworld.com/media/xzvchroc/frame-1.png?width=720&amp;height=595.2816153028693" alt="" width="720" height="595.2816153028693">
 
This framework aligns with the risk assessment process, offering a structured approach to understanding, managing, and reducing cybersecurity risks. By adopting such a framework, your business can enhance its risk management processes, improve its cybersecurity measures and better protect its digital assets against potential threats.
 
<h2>Essentials of cybersecurity practices for SMEs</h2>
<h3>Incident Response Plan</h3>
An incident response plan (IRP) is an indispensable aspect of cybersecurity - NIST offers a <a rel="noopener" href="https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-61r2.pdf" target="_blank">free guide to incident management</a> that can help you develop a tailored IRP. This plan consists of a detailed set of protocols to follow in the event of a security incident, such as a data breach, malware attack or system outage. Regular testing of the IRP is crucial to ensuring its effectiveness. You can test your IRP through tabletop exercises, which are simulations of security incidents.
 
The IRP should clearly outline roles and responsibilities, step-by-step processes for responding to an incident, communication plans and recovery measures. Your business should also run regular training sessions to ensure all staff members understand their roles and responsibilities during a security incident.
<h3>Employee education</h3>
Prioritizing employee education is both critical and cost-effective. <a rel="noopener" href="https://www.enisa.europa.eu/topics/incident-response/glossary/what-is-social-engineering" target="_blank">Social engineering</a> refers to any tactic used to get a person to reveal information or carry out an action that puts a business at risk, and is one of the greatest cybersecurity threats any business faces. Social engineering tactics, and human error more broadly, often serve as gateways for cyberattacks. This makes the workforce your organization's first line of defense. Conduct regular training sessions in-house or through affordable online platforms to educate employees about the various forms of cyber threats such as phishing scams, malware and ransomware.
 
Employees should also be taught how to identify suspicious emails, use secure passwords and practice safe internet use. This includes not downloading unverified software, avoiding clicking on unknown links and being cautious of email attachments from unfamiliar sources.
 
Implementing robust password policies is another simple yet effective measure. Encouraging the use of complex, unique passwords and two-factor authentication can greatly enhance account security; requiring a second form of verification in addition to a password provides an added layer of security.
 
In addition to these measures, your business also needs to have a comprehensive cybersecurity policy that includes guidelines on securing both physical and digital assets. You can do this with existing resources or with minimal additional expense. Every aspect of your business that interacts with the digital world should be covered under this policy, from securing Wi-Fi networks and IoT devices, to managing customer data and proprietary information.
<h3>Firewalls and antivirus software</h3>
Firewalls are a primary line of defense that monitor and control incoming and outgoing network traffic based on predetermined security rules. They act as barriers between a trusted internal network and untrusted external networks.
 
Antivirus software is another essential tool that helps detect, isolate and eliminate malware from a computer system. These programs scan files and systems for patterns that may indicate the presence of malicious software. They provide comprehensive protection against a range of threats, including phishing attacks, ransomware and other forms of malware.
 
Incorporating firewalls and antivirus software into your cybersecurity strategy allows your business to create a protective shield against cyber threats. This approach ensures a safer digital environment without overstretching your budget, allowing your business to confidently and securely operate with robust protection.
<h3>Regular software updates and patch management</h3>
Regular software updates and effective patch management not only enhance the features of existing software but also address any security vulnerabilities that may have been identified since the last update.
 
Software developers often release patches, which are updates meant to fix or improve their existing software. These patches can address various issues, including security vulnerabilities, bugs and other performance or usability issues. For instance, Microsoft has a regular schedule known as ‘Patch Tuesday’ for releasing updates to their software that address any identified security issues.
 
Patch management is a key aspect of maintaining system integrity. It involves the process of acquiring, testing and installing multiple patches on an administered computer system. This ensures that systems are updated regularly and protected against known vulnerabilities.
<h3>Secure Wi-Fi networks</h3>
Unsecured Wi-Fi networks can provide an easy entry point for cybercriminals to access sensitive company data. To secure a Wi-Fi network, you should adopt several key measures:
<ol>
<li>Changing the network's default name and password is essential to prevent unauthorized access.</li>
<li>Enabling Wi-Fi Protected Access 3 (WPA3), the latest and most secure protocol currently available, can help encrypt data on the network.</li>
<li>Creating a separate network for guests or non-essential devices can further enhance security by limiting potential exposure to the company's primary network.</li>
<li>Regularly updating router firmware is another important step in maintaining network security. Many manufacturers release updates to fix vulnerabilities and improve performance. You should also consider using a virtual private network (VPN) for additional security, especially when accessing the network remotely.</li>
</ol>
<h3>Data backup</h3>
Regularly backing up data ensures that your organization’s important information can be recovered in the event of a data loss incident, whether it's due to a cyberattack, hardware failure, or human error.
 
An on-site backup involves storing your data on local storage devices like external hard drives or servers. While this method provides quick access to backed-up data, it may not protect against physical threats like fire or theft. Cloud backup, on the other hand, involves storing data on remote servers accessible via the internet. Services like Google Cloud, Microsoft Azure and Amazon Web Services offer secure cloud storage options that are scalable and cost-effective.
 
Implementing a 3-2-1 backup strategy can provide robust data protection. This strategy involves keeping three copies of data, stored on two different types of media, with one copy kept offsite. Regular testing of backup procedures is also crucial to ensure your data can be effectively restored when needed. By prioritizing regular data backups, you can safeguard your business's valuable data, ensuring continuity even in the face of unforeseen incidents.
<h3>Multi-factor Authentication</h3>
Multi-factor authentication (MFA) adds an extra layer of security by requiring users to provide two or more verification factors to gain access to a resource such as an application, online account or a VPN. The most common method of MFA involves using something you know (a password), something you have (a trusted device that is not easily duplicated, like a phone) and something you are (biometrics, such as fingerprints or facial recognition).
 
Many services that SMEs already use, like Google Workspace, Microsoft 365 and most banking applications, offer MFA options at no additional cost. You can also integrate other inexpensive standalone MFA solutions like Duo Security and Authy with many applications for enhanced security.
 
<h2>Securing SME growth</h2>
From adopting multi-factor authentication to developing an incident response plan, cybersecurity practices are fundamental to protect your business and its assets from various cyber threats. While some of these measures may seem complex or costly, there are several budget-friendly solutions and resources available that can help you improve your business’s cybersecurity posture. By investing in these essential practices, your organization can not only safeguard its operations but also build customer trust, enhance its reputation and ultimately drive growth.

Explore multi-factor authentication, incident response plans and cost-effective measures to fortify your business against cyber threats.

Building Cyber Resilience: A Guide for Small and Medium Enterprises

Explore how to create and use customer personas to enhance your business strategy.

Leveraging Customer Personas for Business Strategy

<blockquote class="quote">“The IBISWorld industry data is dynamic and frequently updated.”</blockquote>
 
<blockquote class="quote">“All of the industry information I could ever think about needing is right in one place.”</blockquote>
 
<blockquote class="quote">“I would definitely recommend IBISWorld. The company’s thorough, up-to-date industry coverage is always in-depth, yet easily accessible.”</blockquote>
 
Banks and credit unions must be able to make informed lending decisions as the financial landscape evolves. <a rel="noopener" href="https://www.myfsb.com/" target="_blank">Farmers State Bank</a>, a longstanding institution with a rich history dating back to 1910, is no exception. With its deep commitment to personal service and a warm, family-like atmosphere, Farmers State Bank of Alto Pass serves the Southern Illinois community with dedication and care.
 
Farmers State Bank recognizes the importance of staying ahead of industry trends, accessing up-to-date and relevant industry data, and having efficient tools at their disposal. It was in pursuit of these objectives that the bank turned to IBISWorld.
 
Through the eyes of Katie Barter, a credit analyst with over 20 years in the field, we gain insight into the bank's experience, and how IBISWorld's industry data has become an indispensable asset in the completion of credit presentations.
 <iframe width="560" height="315" src="https://www.youtube.com/embed/HWWgoal6I94?si=guCmuo-Xfd37jI9J" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe>
 
Join us for a recap of our recent discussion with Katie to learn how Farmers State Bank uses industry data to make confident lending decisions, create lasting financial stability, and build stronger client relationships.
 
<h2 class="contentH2">Part 1: The challenge</h2>
A credit analyst's role is integral to maintaining the financial health of a bank. This responsibility is one that grows even more important when discussions of financial crisis are all around.
 This is the setting for our talk with Farmers State Bank. With a string of bank failures in the rear-view mirror and interest rates soaring to new heights, banks are doing a delicate dance to stay prosperous despite these challenges.
 A higher level of scrutiny for loan applicants can shrink the pool of qualified borrowers, making it more important than ever to offer top-tier service and other perks that attract clients.
 
<h2 class="contentH2">Part 2: The solution</h2>
Working through loan applications quickly and efficiently can be a big differentiator for banks that are looking to stand out.
 At Farmers State Bank, Katie Barter is a master at using all resources at her disposal to research, evaluate and present her findings in a timely fashion.
 Here’s where Katie turns for help:
 Executive summaries simplify the task of gathering industry data during the analysis process. Katie frequently relies on IBISWorld's Executive Summary section to obtain quick, concise insights into various industries. These summaries, typically spanning three to four paragraphs, serve as a valuable resource when crafting credit presentations.
 Benchmarking tools support comparative analysis. IBISWorld's <a rel="noopener" href="https://www.ibisworld.com/products/segment-benchmarking/" target="_blank">Segment Benchmarking</a> product is another indispensable tool on which Katie heavily relies. By zooming in on the exact segment of the industry where a client operates, she can conduct in-depth comparative analyses that show her precisely where a client stands in the context of peers. Having this data at her fingertips has motivated Katie to create a Segment Benchmarking table template. The tables in this template illustrate industry versus company data.
 <a id="video" data-anchor="#video"></a>Early Warning System makes proactive decisions possible. IBISWorld's <a rel="noopener" href="https://www.ibisworld.com/products/early-warning-system/" target="_blank">Early Warning System</a> keeps the bank informed about industry trends, empowering them to make proactive decisions and address potential risks. Using this tool has allowed Katie to develop a quarterly data compilation table. The spreadsheet summarizes the bank’s top number of loans by NAICS code. This data is compared to IBISWorld risk categories and directions of risk.
 
Local data makes FSB the expert on niche and unfamiliar industries. Katie recalls a time-sensitive situation where IBISWorld played a pivotal role in delivering localized data. When the SBA department urgently needed <a rel="noopener" href="https://www.ibisworld.com/products/state-and-provincial/united-states/" target="_blank">specific industry data</a> for a hotel in Florida, Katie was able to swiftly deliver.
 
“I was able to drill down using IBISWorld – quickly and efficiently – to provide the specific data on Florida’s hotel industry, along with data for the county,” remembers Katie. “To me, that is unprecedented,” she adds.
 
<h2 class="contentH2">Part 3: Why IBISWorld?</h2>
Farmers State Bank came to IBISWorld in 2016, upon Katie’s recommendation. The unique product mix that’s <a rel="noopener" href="https://www.ibisworld.com/solutions/ibisworld-for-commercial-banking/" target="_blank">tailor-made for banks</a> has delivered success to Katie and her colleagues time and time again.
 When reflecting on the bank’s decision to onboard IBISWorld, Katie highlights four instrumental benefits:
<h3 class="contentH3"> 1. Time savings</h3>
One of the standout benefits of using IBISWorld is the unparalleled efficiency it brings to the process of accessing industry data. Through the platform, Katie and her colleagues can quickly obtain the specific information they need to make informed lending decisions. The time saved in data retrieval and analysis has been substantial, enabling the bank to serve their clients more promptly and efficiently.
<h3 class="contentH3"> 2. Streamlined data</h3>
IBISWorld's data is designed with banks in mind. With industry insights already prepared in familiar formats for credit analysts, Katie can create comprehensive industry summaries for credit presentations without the headache. The ability to access detailed industry insights and refine them into clear, concise reports has not only improved the quality of service provided by Farmers State Bank but also their efficiency. Not to mention, the clarity and depth of these reports contribute to a more informed decision-making process.
<h3 class="contentH3"> 3. Frequent updates</h3>
Outdated data serves no purpose in the banking world. Fortunately, IBISWorld puts up-to-date industry statistics in the hands of credit analysts like Katie. “I feel like the IBISWorld industry data is dynamic,” she says, “meaning that it's regularly updated – and frequently updated, really.” It’s the timeliness of data that makes all the difference for the bank when navigating high stakes lending decisions and balancing the bank’s financial health with the interests of their clients.
<h3 class="contentH3"> 4. Great customer service</h3>
The support offered by the IBISWorld team has proven to be another invaluable benefit. The responsiveness and timeliness of customer service have been particularly noteworthy. Whenever Katie or her colleagues have questions or require assistance, the IBISWorld team is readily available to provide informative and helpful responses. This level of support ensures that Farmers State Bank can fully utilize the platform and make the most of its resources.
 In closing, Katie emphasizes that “IBISWorld helps us stay informed and remain relevant through data, uncompromised.” These benefits collectively underscore the tremendous value that IBISWorld brings to Farmers State Bank.
 
<h2 class="contentH2">Part 4: A future with IBISWorld</h2>
With measured success for their credit analysts, Farmers State Bank will emphasize IBISWorld’s platform to their team of lenders next. Recognizing that industry data has the potential to boost client meeting prep, the time is right to extend access across the bank.
 In a climate where qualified borrowers can be hard to find and intense competition looms, being able to speak knowledgeably about the challenges within a borrower’s industry can be the assurance they need to choose one bank over the next. Educating lenders on the ins and outs of the industries they serve helps foster longer-lasting relationships as commercial clients come to view their lenders as trusted advisors.
 As the team gears up for this initiative, IBISWorld's unmatched data integrity and comprehensive industry coverage are poised to be instrumental in Farmers State Bank's journey toward sustained competitiveness and relevance.
 Entering her eighth year at Farmers State Bank, Katie is thrilled to continue helping the bank succeed in its mission to provide the highest quality financial services to their communities.
 
<hr />
 
To learn more about Farmers State Bank and their offerings, <a rel="noopener" href="https://www.myfsb.com/" target="_blank">visit their website</a>.
 
If you're interested in sharing your success story with the IBISWorld team, please email <a href="mailto:customersuccess@ibisworld.com">customersuccess@ibisworld.com</a> to start the discussion!

Through the eyes of Katie Barter, a credit analyst with over 20 years in the field, we gain insight into the bank's experience using IBISWorld's industry data.

Customer Story: Farmers State Bank Boosts Efficiency and Relevancy with IBISWorld

Global Head of Product Development

<h2>Key Takeaways</h2>
<blockquote class="quote">The generative AI landscape is changing rapidly, and it’s time to think about how your business will respond.</blockquote>
<blockquote> </blockquote>
<blockquote class="quote">Balancing the risk and reward of GenAI starts with understanding how it works and what its strengths and limitations are.</blockquote>
<blockquote> </blockquote>
<blockquote class="quote">GenAI can be a valuable solution for businesses looking to scale content production, personalize existing content, or create multiple versions of documents.</blockquote>
 
Stories of chatbots falling <a rel="noopener" href="https://www.nytimes.com/2023/02/16/technology/bing-chatbot-microsoft-chatgpt.html" target="_blank">in love</a> with journalists. Actors striking to demand ownership of their <a rel="noopener" href="https://www.wired.com/story/hollywood-actors-strike-ends-ai-streaming/#:~:text=Back%20in%20July%2C%20studios%20claimed,rest%20of%20eternity.%E2%80%9D%20(AMPTP" target="_blank" data-anchor="#:~:text=Back%20in%20July%2C%20studios%20claimed,rest%20of%20eternity.%E2%80%9D%20(AMPTP">digital likenesses</a>. AI-generated authors at <a rel="noopener" href="https://futurism.com/sports-illustrated-ai-generated-writers" target="_blank">legacy media giants</a> publishing questionable content. If you’re involved in the business of content creation, these aren’t just the latest eye-catching headlines; they’re the backdrop to the quality, veracity, scale and value questions that the latest round of technological advancements – collectively labeled generative AI or GenAI – pose. User expectations and the technological environment surrounding content creation are both changing rapidly. Case in point: since I’ve started writing this article, I’ve had to go back and revisit assumptions and the current landscape on a daily – and sometimes hourly! – basis.
 
By now, you’ve probably heard everyone you know sharing their take on GenAI in one form or another. You might even be considering implementing it in your own content creation processes – or you already have. Wherever you stand on GenAI, now is the time to be talking about its impact on content creation at a business level; so, let’s talk about it!
 
<img src="https://content.ibisworld.com/media/2jelh1kw/integrating-genai-in-content-processes.png?width=720&amp;height=583.0393198724761" alt="An infographic explaining the steps to integrate generative AI into content production processes. The IBISWorld logo is in the top left corner. The title is centered at the top of the image and reads 'Integrating GenAI into content production.' The infographic is made up of three boxes and summarizes the three steps explained in the article: explore, implement and review." width="720" height="583.0393198724761">
 
<h2>Exploring generative AI as a business solution</h2>
If you’re considering adding GenAI to your workflow or content creation processes, you’re likely aware that you’ve got a pretty big decision in front of you. At this point in the journey, you and your team will need to answer some fundamental questions before you dive in.
 
<h3>Can generative AI solve your problem?</h3>
It’s one thing to be open to integrating new technology into your content creation, but another thing entirely to define the problem you’re trying to solve and figure out whether GenAI is the right solution. Answering this question requires a deep understanding of your <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">business processes</a> and any inefficiencies. You’ll need to ask yourself where automation can bring the most value, and which content processes – present or future – could benefit from speed and scale. Once you’ve clearly defined the problem, you can turn your attention to solutions.
 
To decide whether GenAI is the right solution for your business, you need to assess whether it suits the problem. If the task at hand involves using a template to produce content at scale, personalizing existing content, or creating multiple versions of a document, GenAI could be a perfect fit. Remember, the goal isn’t just to integrate AI, but to do so in a way that brings maximum value to your business.
 
For most of the forty-plus years that IBISWorld has been publishing industry research, our analysis has been longform. Our team of 100+ research staff write and update thousands of industry reports that run to 30-40 pages each. Driven by user demand and enabled by improved back-end technology, we’ve spent the past two years neck deep in our digital transformation project, the <a rel="noopener" href="https://www.ibisworld.com/blog/modern-research-experience-webinar/99/1134/" target="_blank">Modern Research Experience</a>.
 
One key part of that transformation involved our research team converting our paragraph-style analysis into list-style insights grouped together under thematic headlines. Our primary goal was to make it easier for our clients to quickly find the specific nuggets of information they really need to craft a credit analysis, valuation memo or pitch deck.
 
As much as anyone in <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">product development</a> might harbor the secret dream that every user will love every feature that we put so much thought and development effort into, we also know that constructive feedback is what’s REALLY useful. After we launched the Modern Research Experience, we dug into survey feedback and found that we had a small (but meaningful!) subset of users whose primary <a rel="noopener" href="https://online.hbs.edu/blog/post/jobs-to-be-done-examples" target="_blank">job to be done</a> required paragraph-style analysis – they would copy and paste or API call our content directly into their own longform document templates. We knew it wouldn’t make sense for us to double our research team or reduce how frequently we updated our reports just to have analysts write the same content in both list form and paragraphs. This was the problem we needed to solve, so we decided to evaluate whether GenAI could be the solution.
 
My role as the global Head of Product Development for IBISWorld – a company that strives to be the premier provider of industry information – involves grappling with the questions that GenAI poses every day. My team and I have been exploring, experimenting with and learning about the real-world applications of GenAI, and large language models (LLMs) in particular, for over a year.
 
Of course, in the world of product development, learning about and rapidly small-scale testing new additions to the tech stack comes with the territory. But a couple of factors set GenAI apart from previous advancements: these tools continue to develop at a faster rate than ever before, and they’ve become easier for stakeholders to experiment with, even without any coding knowledge. The pace of iteration and learning has skyrocketed for many of us, with no sign of slowing any time soon. As the GenAI landscape continues to evolve, we're choosing to embrace change one step at a time, making sure that our processes support both our adaptability and our commitment to quality and accuracy.
 
<h3>The GenAI cost-benefit analysis</h3>
Like any new technology, GenAI pushes us to weigh the <a rel="noopener" href="https://www.ibisworld.com/blog/understanding-ai/99/1127/" target="_blank">risks and rewards</a> of both early and late adoption. Being an early adopter of GenAI can give your organization a competitive edge, allowing you to position your business at the forefront of innovation and reap the rewards of streamlining your processes before your competitors. However, early adopters are also the first to encounter the potential risks and challenges that emerge – and the first to bear the costs, financial or otherwise, of taking the leap.
 
The wait-and-see approach allows you to watch what happens when other businesses adopt GenAI, so you can learn how to translate their successes to your business and avoid the mistakes they made. But wait too long and you risk being left behind by competitors that have already had time to work through the teething issues that arise when introducing any new element to daily operations.
 
Finding the balance between risk and reward is key, and the question of whether the timing is right for your business can depend on factors like your industry landscape, key markets, <a href="https://www.ibisworld.com/blog/business-competition/99/1127/">competitors</a>, resources and goals. It also depends on which pros you value the most, and whether they outweigh the cons for your organization. The benefits might include:
<ul>
<li>Better efficiency: GenAI can speed up your current operations and free up valuable time for your team to focus on higher value tasks.</li>
<li>Cost savings: Automating content production (or, more realistically, elements of it) can help your business produce more content without hiring more staff.</li>
<li>Scalability: Using GenAI can help your business scale operations more effectively and has applications for small and large businesses and teams.</li>
<li>Personalization: GenAI can personalize content for individual users, improving the customer experience.</li>
</ul>
On the other hand, GenAI can expose you to risks surrounding:
<ul>
<li>Quality and accuracy: No GenAI model is perfect, and the content they generate can sometimes be inaccurate or lack substance.</li>
<li>Data privacy: Some GenAI models feed the information you give them back into their own database, potentially exposing sensitive personal or company data to other users.</li>
<li>Regulation: Copyright laws and other regulations surrounding GenAI lag behind its adoption and may pose challenges for businesses as legal frameworks catch up.</li>
<li>Intellectual property: Debates about who owns AI-generated content and the ethics of training models on scraped data are unresolved and may pose risks to content ownership in the future.</li>
</ul>
After carefully weighing the pros and cons, we decided to test the capabilities of GenAI within our content process, in a project that has come to be known as Paragraph Builder. Realistically, enterprise-level GenAI solutions are still in their infancy, and we have a commitment to providing our clients accurate, human-verified analysis and forecasts, so we had a few conditions that the task needed to meet to move forward. The criteria included:
<ul>
<li>A simple user problem: In this case, the problem was that users needed content in a different format, so we only needed to turn bullet points into paragraphs.</li>
<li>No new content creation: The information had already been written and verified by analysts, so we didn’t need GenAI to create new analysis and risk the model introducing inaccurate content.</li>
<li>Limited and well-structured training data: LLMs benefit from being trained on well-structured, clearly labelled datasets. IBISWorld reports are structured around a consistent, easy-to-navigate framework across our collections, making the process of training the model much more straightforward.</li>
<li>A human-verified fail safe: Even trained on a verified and well-structured data set, today's GenAI outputs aren’t always perfect. By publishing both the list-style analysis and the AI-generated paragraphs, users could always flip back to the human-verified content to clarify any language errors that crept in.</li>
</ul>
With these boxes checked, it was time to work out some of the finer details.
 
<h3>Choosing an AI model</h3>
Like picking any supplier, software or tool, deciding on a GenAI model requires research. Consider factors like:
<ul>
<li>Ease of use</li>
<li>Integration with your existing systems</li>
<li>Options for customization</li>
<li>Whether the functionality meets your needs</li>
<li>Ongoing costs</li>
<li>Data privacy safeguards</li>
</ul>
Once we’d examined our options for GenAI models – and our engineers brought the product team’s lofty dreams of building our own back down to earth – we quickly agreed that creating this functionality on top of <a rel="noopener" href="https://openai.com/blog/best-practices-for-deploying-language-models" target="_blank">OpenAI’s LLM</a> was the best fit for this project’s purpose.
 
<h2>Implementing generative AI for content creation</h2>
Okay, say you’ve defined your problem, made it through the <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-a-cost-benefit-analysis-and-how-should-you-use-it/44/1127/" target="_blank">cost-benefit analysis</a> and decided that GenAI offers a worthwhile solution. Now it’s time to implement it! Your implementation process will vary depending on your use case, but it’s likely to follow a fairly standard course.
 
<img src="https://content.ibisworld.com/media/socbhqdv/developer-training-genai-model.jpg?width=720&amp;height=404.7608926673751" alt="" width="720" height="404.7608926673751">
 
<h3>Gather data</h3>
Find, sort and clean the relevant data that your model will use as inputs. Depending on the kind of GenAI model you’re using, this might include your previous content, transactional data, user feedback, customer behavior data or sensor data.
 
<h3>Train the model</h3>
Once you’ve gathered your data, feed it to your GenAI model of choice. This teaches the model to recognize patterns and structures. Over time, the model will learn and improve, and eventually be able to create content that aligns with the patterns it has learned.
 
<h3>Test and refine</h3>
Test your model by having it create sample content. Review the results and refine the model until you reach a standard of content that you’re happy with, and that fulfils the goals you set out to achieve.
 
<h3>Roll out the model</h3>
Going live with your GenAI model looks different depending on what you’re doing with it. If you’re using GenAI to create marketing content, you’ll need to integrate it with other tools, train your teams to use it, implement a quality control process and then publish the content you produce.
 
<h3>Our process: from problem to Paragraph Builder</h3>
Because the aim of Paragraph Builder is simply to rewrite existing content, we already had our industry reports and their associated datasets close at hand, which made our data-gathering phase simple. Next, our team wrote prompts that queried the right content and returned results in line with IBISWorld’s style and tone guidelines. We ran the model across a variety of our reports and chapters, and iteratively honed the prompts to improve the responses.
 
Even with our best prompt engineering and OpenAI’s world-class model, the nature of GenAI as it stands means that inaccuracies sometimes creep in. Basically, an LLM is a massively scaled up version of your phone’s predictive text function. It takes huge amounts of text data and uses it to determine which words are most likely to come next. Sometimes, these models get it wrong. Our clients rely on accurate data, so our project management team audited the model’s output to assess the scope of the errors. This process gave us the confidence that the issues were infrequent, minor and manageable enough to launch, and allowed us to create informative guides for our users to explain these instances.
 
For us, rolling out the model looked a bit like a standard product launch. Our client support teams reached out to users to build a beta test group, while our designers and developers created the front-end interface elements that made Paragraph Builder easy to use. Marketing collaborated with our data team to create FAQ guides and communications that would educate our beta testers, and we went live!
 
<h2>Reviewing generative AI: did it work?</h2>
As with any new process or technology you implement in your business, you’ll need to monitor the results and make changes as necessary. Staying on top of improvements or changes in the world of GenAI is crucial to ensuring that your solution continues to meet your business’s needs in the future. Depending on your use case, you might request feedback from your users and customers, or track relevant metrics like engagement or conversions.
 
At the time of writing, Paragraph Builder has been available for our beta testers for just over 24 hours, so it’s too soon to know where it’s hitting the mark and where it needs more work. As we eagerly anticipate the user feedback rolling in, the team has already reaped the benefits of what we’ve learned about GenAI and integrating LLMs into content creation – benefits we’re already planning to use in our next set of discovery and experiments. Check back for Part 2 of this series in a few weeks to find out how things are shaping up!

Wondering what the deal is with generative AI? Our Global Head of Product Development discusses key considerations and lessons learned during her recent journey with GenAI.

Generative AI, Large Language Models and the Business of Content Creation

<h2>Key takeaways:</h2>
<blockquote class="quote">Big data analytics extracts insights from large datasets, providing a competitive edge.</blockquote>
 
<blockquote class="quote">Effective data collection and preprocessing ensure the accuracy of analytical insights.</blockquote>
 
<blockquote class="quote">Scalable technology and talent acquisition address common challenges in leveraging big data.</blockquote>
 
Relying on intuition and guesswork is not a viable option for lasting business success – that’s where big data comes in. Big data analytics is the practice of extracting valuable insights from complex datasets, allowing you to detect trends, reveal correlations and make informed and confident <a href="https://www.ibisworld.com/blog/making-fast-business-decisions/99/1127/">businesses decisions</a>. This kind of analysis allows your organization to understand your <a href="https://www.ibisworld.com/blog/understanding-your-external-environment/99/1127/">external environment</a>, target audience, competitors and industry dynamics, and incorporating this analysis into your strategies can help you to gain a competitive edge and boost revenue growth.
 
<h2>What is big data analytics?</h2>
Big data analytics is the process of examining large and complex datasets to extract insights, patterns and trends. It differs from traditional data analysis methods or <a href="https://www.ibisworld.com/blog/granular-data-in-industry-analysis/99/1127/">granular data</a> analytics in that it tackles vast amounts of structured and unstructured data, providing a comprehensive view of a subject. The key characteristics of big data are:
<ul>
<li>Volume: Refers to the size of the data being analyzed, often measured in petabytes or exabytes.</li>
<li>Velocity: Describes the speed at which data is generated, collected and processed.</li>
<li>Variety: Encompasess the diverse types of data sources and formats, including text, images, videos and more.</li>
<li>Veracity: Indicates the reliability and trustworthiness of the data, emphasizing the need to address inaccuracies, uncertainties and inconsistencies in the analysis.</li>
</ul>
These four ‘Vs’ define the scale, speed, diversity and reliability of data and are central to the concept of big data analytics.
 
<img src="https://content.ibisworld.com/media/wyzlft0n/big-data-one.jpg?width=568&amp;height=516" alt="An infographic on the four V's of big data." width="568" height="516">
<h2>Steps to leverage big data analytics</h2>
<h3>1.      Data collection:</h3>
Big data analytics starts by gathering and integrating structured and unstructured data from a range of sources, such as social media, sensors and transaction records. These sources encompass a wide array of information, including customer behavior, market trends, competitor activities and economic indicators.
 
Taking a holistic approach to data collection ensures that you can examine every facet of the market. Prioritizing the collection of data that is applicable to your specific industry, target audience and objectives is important to obtaining relevant insights.
<h3>2.      Data processing:</h3>
The process of transforming raw data into insights requires data cleansing and preprocessing. Raw data is often riddled with inaccuracies, duplications and inconsistencies that can muddy the water.
Ensuring data integrity is essential, as the quality of your analysis is only as good as the data you start with. Utilize advanced tools and algorithms to clean, standardize and harmonize your datasets. This step is crucial to ensure the quality of the information you’re analyzing.
<h3>3.      Data cleaning:</h3>
Market data analysis involves applying algorithms, statistical models and machine learning techniques to identify patterns, correlations and trends within the dataset. Whether it's customer retention rates, sales trends or market share, targeted analysis will provide you with insights that guide your decision-making process.
<h3>4.      Data analyzing:</h3>
Big data analytics allows you to understand the past and make educated predictions of the future. By sifting through large datasets, you can discern emerging market trends and uncover patterns that might elude less data-savvy competitors. This predictive element of big data analytics allows you to take proactive steps in response to market shifts, positioning your business for success.
 
<img src="https://content.ibisworld.com/media/3dtikfxa/group-5632.png?width=720&amp;height=472.8586609989373" alt="An infographic depicting how big data analytics can be transformed into decisions." width="720" height="472.8586609989373">
<h2>Benefits of big data analytics</h2>
<h3>Scalability</h3>
One of the advantages of big data analytics is its scalability. Your organization can start small and gradually expand your analytical capabilities in line with the company’s growth. For example, cloud-based solutions enable you to easily scale your infrastructure to accommodate increasing data volumes and complexity. This flexibility means makes cloud-based solutions a highly cost-effective approach to generating insights and making data-driven decisions.
<h3>Improved decision making</h3>
The insights derived from big data analytics allow you to identify trends, understand customer behavior and make strategic decisions that align with your business goals. Cutting-edge tools and platforms enable real-time data processing, reducing the time needed for meaningful analysis. Integration of AI and ML enhances accuracy, identifies patterns and uncovers hidden opportunities
<h3>Increased operational efficiency</h3>
Big data analytics can highlight potential bottlenecks in your <a href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/">business processes</a>, allowing for targeted improvements. Monitoring system performance in real-time allows you to take proactive measures and keep operations running smoothly, driving cost reduction and fostering sustainable growth.
<h3>Better customer service</h3>
Big data analytics can also help you build a better understanding of your customers. By analyzing customer data, you can identify buying patterns, preferences and behaviors, which can be used to improve customer service and create personalized marketing campaigns.
 
<h2>Challenges of big data analytics and how to overcome them</h2>
<h3>Regulations</h3>
The moment you start collecting and analyzing data – let alone in the vast quantities you need for big data analytics – safeguarding sensitive information becomes a top priority. Your business must comply with regulations like <a href="https://gdpr.eu/">GDPR</a> or <a href="https://www.ag.gov.au/rights-and-protections/privacy">The Privacy Act 1988</a>, depending on the industry, to protect customer data. Implementing robust encryption, access controls and regularly auditing your security measures will help build trust with your customers and partners.
<h3>Talent acquisition</h3>
Finding the right staff for the job can be tricky in any position, but it’s particularly tough when we’re also facing a shortage of data science and analytics talent. To improve your chances, invest in talent acquisition strategies, training for existing staff and partnerships with educational institutions. By nurturing a data-savvy workforce, you can use big data analytics to its full potential and drive your business forward.
<h3>Technological infrastructure</h3>
Establishing the right technology infrastructure means investing heavily in computing, storage solutions and specialized software. Striking a balance between scalability and cost-effectiveness is key. Cloud-based solutions offer flexibility and can help businesses avoid the burden of on-premises infrastructure. Carefully plan your infrastructure to ensure it aligns with your business goals and budget.
<h3>Accuracy and relevance</h3>
Data cleansing and preprocessing, as we’ve already discussed, are processes that help maintain data quality. Regularly evaluate your data sources and be prepared to adjust and adapt as market dynamics shift. This ensures that your predictions are based on current and reliable information.
 
<h2>Case studies of predictive analysis</h2>
<h3>Amazon’s supply chain optimization</h3>
<a href="https://www.ibisworld.com/us/company/amazoncom-inc/350104/">Amazon</a> leverages vast amounts of historical purchase data and employs sophisticated algorithms to forecast customer demand accurately. This foresight allows the e-commerce giant to optimize its supply chain, ensuring the right products are stocked in the right locations.
 
Amazon uses predictive analysis to reduce inventory costs by stocking items based on anticipated demand, which minimizes overstocking or stockouts. This approach streamlines operations and enhances customer satisfaction by ensuring products are readily available. The combination of data-driven insights and supply chain optimization has positioned Amazon as an industry leader, showcasing the transformative impact of predictive analytics on revenue, operational efficiency and customer satisfaction.
<h3>Netflix’s personalized content recommendations</h3>
<a href="https://www.ibisworld.com/us/company/netflix-inc/410977/">Netflix</a> demonstrates the value of predictive modeling in enhancing user experience and driving subscriber growth. By looking into users’ viewing history and preferences, Netflix’s algorithms predict the type of content individual subscribers are likely to enjoy. This personalized recommendation system has become a foundation of the company’s strategy, contributing to customer retention and attracting new subscribers.
 
Netflix’s predictive analysis enables the company to align its vast content library with individual tastes, creating a more engaging and tailored viewing experience. The company’s utilization of this tool illustrates how predictive analytics, when applied to user behavior and content consumption patterns, can be a potent tool for boosting customer satisfaction and sustaining business growth.
 
<h2>Final thoughts</h2>
Effectively applying market insights and predictive analysis can open new pathways to business success. Taking a data-driven approach can offer your organization a competitive advantage, by giving you a deeper understanding of your market and boosting your potential revenue.

Drive business growth through effective big data analytics and overcome challenges. 

Big Data, Better Decisions: Unlock Market Insights That Drive Growth

<h2 class="contentH2">Key Takeaways</h2>
 
<blockquote class="quote">Financial ratios help build a comprehensive picture of a company’s performance.</blockquote>
 
<blockquote class="quote">Business professionals can use financial ratios to benchmark a company against its competitors and wider industry averages.</blockquote>
 
<blockquote class="quote">The four key categories of financial ratios are liquidity, profitability, leverage and efficiency ratios.</blockquote>
 
If you’ve ever worked in an investing, auditing, business valuation or credit risk analysis role, or perhaps in the procurement process, you’ve had to put on your analysis goggles and critically evaluate a business’s financial information. Financial statements can be stuffed full of figures, making it difficult to get to the bottom of a company's performance.
 
To get the most out of a financial analysis, you need capable tools on your side. You might turn to a <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-swot-analysis/1/1127/" target="_blank">SWOT</a> or <a rel="noopener" href="https://www.ibisworld.com/blog/3-step-pestle-analysis/99/1127/" target="_blank">PESTLE</a> analysis to assess a business and its environment. These are handy tools to have inside your toolkit, but a financial analysis is never complete without financial ratios. Financial ratios act as a decluttering tool and enable you to extract the most valuable and relevant information.
 
Financial ratios are also a useful tool to benchmark a business against other companies, or even against its broader industry. They’re an important instrument in the analysis process and help guide major business decisions and strategies. Let’s unpack what financial ratios are, and how they can help you.
 
<h2 class="contentH2">What are financial ratios?</h2>
Financial ratios take key financial information from a business’s financial statement, such as income statements and balance sheets, and express them as percentages to create a more meaningful figure for your analysis. These percentages create an even playing field for you to <a rel="noopener" href="https://www.ibisworld.com/blog/financial-benchmarking/99/1127/" target="_blank">benchmark a business</a> against its peers. 
 
The standardized nature of financial ratios makes them an invaluable tool during your financial analysis, whether you work in accounting, procurement, business valuation, consulting, or almost any field in the business world. They help professionals in these roles identify red flags in a business’s financial statements and diagnose the financial wellbeing of a company. These revelations help influence important business decisions, shape crucial strategies, and determine risk assessments and credit analyses.
 
<h2 class="contentH2">The most important financial ratios</h2>
 
<img src="https://content.ibisworld.com/media/ttqhwur5/types-of-financial-ratios.png?width=720&amp;height=657.2582359192348" alt="An infographic summarizing four different types of financial ratios discussed in the rest of the article." width="720" height="657.2582359192348">
 
There are <a rel="noopener" href="https://www.ibisworld.com/blog/financial-ratios-how-to-use-them/99/1127/" target="_blank">many types of financial ratios</a>, and each is useful in a range of circumstances. The four most common financial ratio categories are:
<ul>
<li>Liquidity</li>
<li>Profitability</li>
<li>Leverage</li>
<li>Efficiency</li>
</ul>
<h3 class="contentH3">Liquidity ratios</h3>
Liquidity ratios shed light on how quickly a business can access cash to meet its short-term needs. This shows how prepared a business would be if it suddenly needed to pay its debts. If it has high liquidity, it can easily deal with an unexpected financial problem. However, if a company has low liquidity, it would be forced to sell assets at unfavorable prices to raise money.
 
Low liquidity sets off some alarm bells during a financial analysis, as it limits potential strategic flexibility, and can indicate more worrying factors like cash flow issues.
 
Liquidity ratios include:
<ul>
<li>Current ratio: indicates whether a company can service its current debt, if needed</li>
<li>Quick ratio: a more conservative measure of liquidity than the current ratio</li>
<li>Inventory turnover: measures the number of times inventory is turned over during the year</li>
</ul>
<h3 class="contentH3">Profitability ratios</h3>
Profitability ratios, also called operating ratios, highlight a company’s performance compared to competitors and reveal how well a company can make money when you consider all its costs. That means the higher a company’s profitability ratio, the better it is performing relative to its competitors.
 
Some profitability ratios to consider include:
<ul>
<li>Return on equity (ROE): measures how capable a company is at generating profit</li>
<li>Return on assets (ROA): indicates a company's profitability relative to its total assets</li>
<li>Profit margin: The percentage of sales left over after all expenses are paid</li>
</ul>
<h3 class="contentH3">Leverage ratios</h3>
Leverage ratios look deeper into the long-term health of a company by considering how much of their money comes from borrowing. Leverage ratios are important when you’re sizing up the financial health of a company because companies rely on a mixture of their own equity and debt to keep things running.
 
Leverage ratios to consider:
<ul>
<li>Fixed assets/ net worth: measures the extent to which owner's equity (capital) has been invested in plant and equipment (fixed assets)</li>
<li>Debt/ net worth: express the relationship between capital contributed by creditors and that contributed by owners</li>
</ul>
<h3 class="contentH3">Efficiency ratios</h3>
Efficiency ratios reflect a company’s ability to effectively use its assets and resources to manage its liabilities and debts. While there are several efficiency ratios, they are all similar because they measure how quickly a company can turn its assets into cash. 
 
Some efficiency ratios to consider include:
<ul>
<li>Asset turnover: measures the value of a company's revenue in relation to the value of its assets</li>
<li>Account receivables turnover: measures the number of times account receivables turns over during the year (also known as sales/receivables)</li>
<li>Days’ sales turnover: measures the average numbers of days a company takes to turn its inventory into sales</li>
</ul>
<h2 class="contentH2">How to apply financial ratios</h2>
Now that we’ve broken down what financial ratios ARE, let’s look deeper into how you can add them to your financial analysis toolkit. The best way to understand how to use them is to see them in action. We know financial ratios are used in many different roles, but for this example let's say that you're a <a rel="noopener" href="https://www.ibisworld.com/blog/elevate-your-procurement-strategy-with-industry-data/99/1127/" target="_blank">procurement professional</a>.
 
A successful procurement department depends on a robust supply chain. As a procurement professional, you can’t control the supply chain, but you can use your skills to <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">manage the risks</a> of the external environments to make sure you’re choosing the most reliable suppliers.
 
This is where financial ratios become a handy tool to have, because assessing the financial health of a current or potential supplier can make or break your supply chain. Procurement professionals use a range of financial ratios in their analysis process — let’s take a look at which ones you can use and how to use them.
 
<h2 class="contentH2">Examples of ratios in action</h2>
Let’s say you are a procurement professional in the process of reassessing your <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/hand-tool-cutlery-manufacturing-industry/" target="_blank">Hand Tool &amp; Cutlery Manufacturer</a>. The companies you are considering include <a rel="noopener" href="https://www.ibisworld.com/us/company/procter-gamble-co/8920/" target="_blank">Proctor &amp; Gamble Co</a> (P&amp;G) and <a rel="noopener" href="https://www.ibisworld.com/us/company/stanley-black%C2%A0-decker-inc/10407/" target="_blank">Stanley Black &amp; Decker</a>, Inc. (SB&amp;D). You want to choose the most reliable supplier to ensure a <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-value-chain-analysis-and-why-is-it-important/44/1127/" target="_blank">strong value chain</a> for your business.
 
<h3 class="contentH3">Current ratio</h3>
The current ratio, which is part of the liquidity ratio group, is an indicator of how well a company can cover its short-term debts using its current assets. Think of it as the cash-readiness of a business.
 
<h4 class="contentH4">Current ratio parameters:</h4>
<ul>
<li>Less than 1: suggests a company may not have the capital on hand to meet its short-term obligations if they were all due at once</li>
<li>More than 1: suggests a company has the financial resources to remain solvent in the short term</li>
</ul>
To calculate a business’s current ratio, you need to divide current assets by current liabilities.
 
<h4>Current ratio = current assets ÷ current liabilities</h4>
 
Current assets are those that can be turned into cash in less than a year, such as accounts receivable, inventory and any other liquid assets. Current liabilities include wages, taxes payable and accounts.
 
For our example, this is what the current ratio looks like (as of December 2021):
 
<h4>Current Assets</h4>
<ul>
<li>P&amp;G: $25,545,000</li>
<li>SB&amp;D: $6,036,000</li>
</ul>
<h4>Current liabilities</h4>
<ul>
<li>P&amp;G: $38,027,000</li>
<li>SB&amp;D: $4,558,300</li>
</ul>
<h4>Current Ratio:</h4>
<ul>
<li>P&amp;G: 0.7</li>
<li>SB&amp;D: 1.3</li>
</ul>
Based on these metrics, SB&amp;D looks like the more reliable supplier because it has a greater ability to meet its short-term obligations. That’s not the end of the story, because the current ratio only provides a snapshot of a supplier’s liquidity; it doesn’t give us the full picture.
 
To get to the bottom of the story, you have to look a bit deeper. You have to use your skills to determine the type of current assets a company has and how quickly they can be converted into cash if it really needs to. This could involve asking questions like ‘how quickly can a company collect its accounts receivables?’.
 
<h3 class="contentH3">Days' receivables</h3>
The days’ receivable ratio tells you how many days on average it takes for customers to pay a business. If the days’ receivable ratio is high, the company takes a long time to collect money, which could point to late payments or problems with customers paying up.
 
Days’ Receivables = 365 ÷ (sales/receivables)
 
<h4>Net sales</h4>
<ul>
<li>P&amp;G: $76,118,000</li>
<li>SB&amp;D: $13,057,700</li>
</ul>
<h4>Trade receivables</h4>
<ul>
<li>P&amp;G: $5,241,000</li>
<li>SB&amp;D: $1,164,500</li>
</ul>
<h4>Sales/receivables</h4>
<ul>
<li>P&amp;G: 15.0</li>
<li>SB&amp;D: 11.4</li>
</ul>
<h4>Days’ receivables</h4>
<ul>
<li>P&amp;G: 24.3</li>
<li>SB&amp;D: 32.0</li>
</ul>
P&amp;G took 24.3 days on average to get paid for their sales, while SB&amp;D took longer at an average of 32 days. Now that we know how Proctor &amp; Gamble and Stanley Black &amp; Decker compare to each other, how do they stack up to other businesses in their industry?
 
<h3 class="contentH3">Benchmarking company performance</h3>
You can benchmark the companies you're looking at against the industry average to give better context to their financial health and performance and get a sense of how they measure up to their peers. For example, both P&amp;G and SB&amp;D’s days’ receivable ratios are lower than the industry average of 53.5.
 
Current Ratios
<ul>
<li>P&amp;G: 0.7</li>
<li>SB&amp;D: 1.3</li>
<li>Hand Tool &amp; Cutlery Manufacturing industry average: 1.6</li>
</ul>
 
Days’ Receivable
<ul>
<li>P&amp;G: 24.3</li>
<li>SB&amp;D: 32.0</li>
<li>Hand Tool &amp; Cutlery Manufacturing industry average: 53.5</li>
</ul>
When looking at both the days’ receivable and current ratio, it's not clear which company will be the most reliable supplier, so you have to keep digging before you can settle on one or the other. Next, you should investigate the companies’ ability to handle their debts, their net worth, and fixed assets to net worth ratios.
 
To wrap up our example, while P&amp;G has a good days’ receivable ratio, its current ratio is below the industry average. On the other hand, although SB&amp;D's days’ receivable is higher than P&amp;G's, it is still lower than the industry average. It also has a current ratio above P&amp;G's (but lower than the industry average), which may make it more appealing as a supplier. To make a smart business call, you would need to examine these differences and consider other financial ratios.
 
Whether you’re investing, lending, contracting or procuring, without reviewing all available information and boiling it down to standard comparisons, you could be missing key indicators about the financial health of a company and its industry. Using financial ratios to benchmark companies against the industry average is a tool that professionals in any role need in their financial analysis toolkit.
 
<h2 class="contentH2">Wrapping up</h2>
Overall, financial ratios are an essential part of any professional’s toolkit, and help you get deeper insights into the financial health of a business compared to another business, or its industry as a whole. Using financial ratios to analyze a business or compare different companies is an effective way to elevate your financial analysis and make sure you're making the right decisions for your business.

Learn how to apply liquidity, profitability, leverage and efficiency ratios to maximize your financial analysis and inform important business decisions. 

Using Financial Ratios to Benchmark Company Performance

Founder at MK Insights2Action, LLC

<h2 class="contentH2">Key takeaways</h2>
 
<blockquote class="quote">Retail businesses have a bright outlook, providing ample opportunity for bankers to harness their fast growth.</blockquote>
 
<blockquote class="quote">Knowing current retail trends can help you understand the challenges these businesses face and build stronger relationships.</blockquote>
 
<blockquote class="quote">Incorporating unique insights into your conversations with retail business owners can help you grow your share of this segment.</blockquote>
 
If you've been a banker for a few years, you've probably learned that it's more difficult to lend to a retail business, so you don't proactively focus on this segment. You might still be reeling from that experience where you had to tell a long-time customer that you could only give them half of the line of credit that they applied for. 
 
Unfortunately, that experience may have led you to shy away from one of the largest industry segments in the US. With more knowledge about the top trends impacting these businesses, you can successfully serve and grow this segment of your banking portfolio. 
 
<h2 class="contentH2">The retail landscape</h2>
<img src="https://content.ibisworld.com/media/1linmc5p/group-1.png?width=720&amp;height=720" alt="" width="720" height="720">
 
While there are large players in retail, it’s primarily composed of small businesses with an average of 7 employees that produce annual revenue of $2.6 million. Among small retailers, especially, physical locations are no longer the norm. The shopping experience has moved entirely online for some stores.
 
If your portfolio already includes a number of brick-and-mortar retailers, it might be time to look for prospects in the online space. There are plenty of retailers that operate solely online, affording them lower overhead costs and helping them circumvent the high barriers to entry that brick-and-mortars face.
 
Either way, revenue across<a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/retail-trade-industry/" target="_blank"> the retail sector has been increasing at a 5.2% rate and is expected to grow 3.4% annually by 2028</a>. Currently, the sector experiences low revenue volatility and above average growth.
 
Retail businesses offer ample opportunity to build strong deposit balances and fee income from payments. <a rel="noopener" href="https://www.barlowresearch.com/mybarlow/viewanalystsjournal.php?item=14091&amp;id=8371456" target="_blank" data-anchor="?item=14091&amp;id=8371456">47% of small businesses and 41% of middle market companies</a> have actively shopped for new deposit accounts over the prior six months. Harnessing this growth, however, takes an understanding of the key trends impacting the broader retail sector. 
 
<h2 class="contentH2">1. Consumers are still spending, and opting for costlier products </h2>
Comparing year-to-date spending in 2019 and 2023, this year’s total retail spending has exceeded pre-pandemic levels. In the face of high interest rates and housing prices, an increasing number of consumers believe that home ownership is out of reach and are, in turn, spending more on smaller-ticket purchases. Prices are up in retail, and even with higher labor and inventory costs, profit is generally rising across the retail sector. 
  
As a banker, consider asking these questions during talks with potential retail customers: 
<ol>
<li>How is strong consumer spending impacting your revenue and overall profitability?   </li>
<li>How do you gauge your ideal customers' preferences?</li>
<li>Have you have raised your prices? If so, how has your pricing strategy worked?</li>
</ol>
<h2 class="contentH2">2. Consumers want to shop online, and they’re using social media to find new products</h2>
Many physical retailers have websites, allowing customers to conveniently shop from home. Retailers with an online presence have found an increasing percentage of revenue coming from online sales using credit card payments. During last year's holiday shopping season, <a rel="noopener" href="https://www.experian.com/marketing/resources/2023-holiday-shopping" target="_blank">33% of purchases were made online</a>, and <a rel="noopener" href="https://squareup.com/us/en/the-bottom-line/reaching-customers/retail-trends" target="_blank">81% of retailers reported that they plan to expand the number of digital channels that they sell on</a>. 
  
Here are questions you can ask: 
<ol>
<li>What percentage of your sales are made online?</li>
<li>Do you plan to make any enhancements to your eCommerce platform this year? If so, how?</li>
<li>Can you explain any digital marketing strategies you have in place for your business?  </li>
<li>How do you track and analyze online sales to make decisions about inventory and pricing?</li>
</ol>
<h2 class="contentH2">3. Customers shopping in person place higher value on experiences</h2>
To entice consumers to shop at their brick-and-mortar stores instead of online, retailers often focus on providing unique, branded experiences for in-person shoppers. They might offer special in-store deals or involve their patrons in an activity. Some examples include wine tastings at a wine shop or hosting space for local businesspeople to network at a coffee shop.
 
In addition to creating memorable in-person experiences, many retailers also implement customer loyalty programs as a key strategy to encourage repeat visits and build lasting relationships with their patrons. These programs often offer rewards, discounts, or exclusive perks to shoppers who frequently visit the brick-and-mortar stores, thereby incentivizing customer loyalty and fostering a sense of belonging within the brand's community. 
 
Some questions you might ask: 
<ol>
<li>Do you offer any special incentives to keep customers coming to your physical locations?</li>
<li>What do your customers have in common and are you leveraging those similarities to promote community-based experiences?</li>
<li>Do you have a loyalty program so that you can assess how many new customer relationships you might be building to increase your revenue?</li>
</ol>
<h2 class="contentH2">4. Subscription and membership packages are gaining ground </h2>
Though this is more common with food and beverage stores and health and beauty goods, it's extending to home goods, fashion and apparel and pet food and services. Subscriptions are effective in lifting sales and keeping members more engaged in terms of frequency and variety in their purchases.
 
As brands increasingly offer subscription packages, they can make better forecasts for revenue and profit growth, setting them up for success. Even for business models that don’t support straightforward subscription packages, automatic replenishment options or curated assortments of repeat purchases are a way to establish a more predictable stream of cash flow.
 
A conversation about this trend might include these questions:
<ol>
<li>What value could you see in offering your customers a subscription service? If 5% of your customers tried a subscription, how would that impact your business? </li>
<li>How do you encourage steady, ongoing revenue if not through subscriptions?</li>
</ol>
<h2 class="contentH2">5. Consumers are increasingly health-conscious </h2>
Many of the leading food and beverage retailers are rushing to stock more fresh, local, organic, gluten-free products. This increases the cost of goods sold and a growing array of products requires more rigor in their inventory management.
 
You might inquire about the following:
<ol>
<li>How do you plan to keep costs and profit in check while catering to health-conscious consumers?</li>
<li>How has demand for health-conscious goods impacted your supplier relationships and payment practices?</li>
</ol>
<h2 class="contentH2">6. Consumers are starting their holiday shopping earlier </h2>
In 2022, <a rel="noopener" href="https://nrf.com/blog/2023-holiday-shopping-outlook" target="_blank">46% of holiday shopping started before November</a> and this season is expected to follow that trend or start even earlier. As inflation has hurt consumers' ability to save for holiday shopping, consumers are expected to take advantage of the many physical store and online sales occurring prior to November.
 
The availability of BNPL, coupled with the certainty of installment payments, may also be contributing to more holiday shopping occurring before November, <a rel="noopener" href="https://www.paymentsdive.com/news/buy-now-pay-later-bnpl-holiday-spending-square-afterpay-payments/695445/" target="_blank">as 21% of consumers report that they would consider using a BNPL option to stretch their holiday shopping budget</a>. Be aware that the consumer is responsible for payment on the BNPL plan, but a retailer should be cautious and ensure that they comply with FTC regulations regarding unfair or deceptive practices.
 
Consider asking: 
<ol>
<li>With holiday shopping beginning earlier, how are you building inventory and how will that impact your cash flow? </li>
<li>With holiday sales often requiring increased staff, have you found new ways to attract and retain employees?</li>
</ol>
<h2 class="contentH2">Final thoughts</h2>
As bankers, you can gain trusted advisor status by developing familiarity with industry trends. Before you speak to or visit a retail business, review their website and understand how they handle online sales. Review these 6 key trends and sprinkle some of these questions into your conversation to establish credibility. You'll be that much closer to winning a new relationship in a profitable, growing industry and solidifying your existing customer relationships.
 
For more information about MK Insights2Action, visit <a rel="noopener" href="https://mkinsights2action.com/" target="_blank">the website</a>.

Dive into six trends shaping the future of retail, and how bankers can take advantage of the sector's growth.

Six Key Retail Trends for Bankers

Senior Account Executive at RelPro

<h2 class="contentH2">Key takeaways</h2>
<blockquote class="quote">Bank failures in early 2023 highlighted liquidity challenges and pushed banks to focus on deposit growth.</blockquote>
 
<blockquote class="quote">Rising interest rates devalued bonds, leading to losses in banks' portfolios and increasing risks for CRE loans.</blockquote>
 
<blockquote class="quote">Bankers can turn to C&amp;I loans to strengthen their portfolio and foster stronger relationships through personalized service.</blockquote>
 
The <a rel="noopener" href="https://www.ibisworld.com/blog/bank-failures-and-concentration-risk/1/1129/" target="_blank">challenges banks faced</a> early in 2023 amid high-profile bank failures highlighted liquidity issues and pushed many banks to focus on deposit growth. Additionally, economic conditions in the aftermath of the COVID-19 pandemic, including rising interest rates and an increase in remote work, have put additional pressure on banks, particularly those that are heavily concentrated in Commercial Real Estate (CRE) lending.
 
These <a rel="noopener" href="https://www.reuters.com/markets/us/moodys-downgrades-10-us-banks-warns-possible-cuts-others-2023-08-08/" target="_blank">pressures have led to credit downgrades</a> for some banks, causing them and others to look towards a diversification of their lending portfolios with Commercial and Industrial (C&amp;I) loans playing an increasing role.
 It’s important to understand where we are today, and how we got here, so bankers looking to <a rel="noopener" href="https://www.ibisworld.com/blog/five-tips-to-grow-your-commercial-services/1/1127/" target="_blank">grow their business</a> can successfully navigate the current landscape and develop stronger, sustainable lending relationships.
<h2 class="contentH2"> The lending landscape</h2>
<img src="https://content.ibisworld.com/media/40zaj01i/calculator-lending.png?width=720&amp;height=478.72340425531917" alt="lending landscape calculated" width="720" height="478.72340425531917">
 
Increased bank reserve requirements passed in the wake of the financial crisis in 2007-08, required banks to maintain a Liquidity Coverage Ratio (LCR) sufficient to fund cash outflows for 30 days (100% of projected cash outflows in a stress scenario). These liquid assets were classified as cash (reserves at the Central Bank), certain mortgage-backed securities, liquid corporate bonds and governmental securities. Many banks started buying bonds to get a return on their money.
 The rising interest rates instituted by the Federal Reserve to combat inflation over the past year have been seemingly effective in slowing inflation, while thus far avoiding a recession. However, the aggressive pace of these rate hikes (more than 500 basis points over 16 months) put pressure on those assets, particularly bonds. The inverse relationship between interest rates and bond price led to a devaluation of those bonds and losses in banks’ treasury portfolios.
 At the same time, higher interest rates are causing trouble for CRE loans. Generally, CRE loans amortize over 20 years, but they mature 5, 7 or 10 years from origination, at which point the bank typically renews the loan under a similar structure. The rising interest rate environment poses risks to both borrowers and banks, in that borrowers with loans reaching maturity and renewal will experience a significant increase in their rate and payment. If increased costs lead to increased defaults, the unpaid loans put further stress on the CRE lenders.
<h2 class="contentH2"> Diversifying lending by increasing C&amp;I loans</h2>
For lenders, the challenge now is to adjust to the current environment and adapt business development strategies for successful growth. There are ample opportunities for banks to lend, particularly in the middle market, where <a rel="noopener" href="https://www.middlemarketcenter.org/performance-data-on-the-middle-market" target="_blank">60% of business owners</a> are looking to invest in their businesses in the coming year. With C&amp;I lending, banks can support these company initiatives, providing necessary cash flow and funding for capital expenditures. As these loans are backed by collateral that is not tied to real estate, banks avoid the risks associated with CRE.
 Additionally, the shorter terms in C&amp;I remove the risk of defaults due to the ballooning payments at maturity characteristic of CRE lending. Utilizing C&amp;I lending as part of a bank’s business development strategy can help strengthen the lender’s portfolio from a risk management perspective, and enhance relationship development. To do this, bankers need a strategy to identify prospective companies and reach out with timely messaging.
<h2 class="contentH2"> Identifying opportunities</h2>
<img src="https://content.ibisworld.com/media/cqzlf2hr/banking-analyst-looks-at-computer-screen.png?width=720&amp;height=480" alt="industry data used in a bank setting" width="720" height="480">
 
As you seek to <a rel="noopener" href="https://relpro.com/solutions/web-platform#identify-new-leads" target="_blank" data-anchor="#identify-new-leads">identify and target prospect companies</a> for new lending opportunities, it’s essential to know what you’re looking for and where to look. When searching for companies that fit your bank’s ideal profile, whether that’s based on <a rel="noopener" href="https://www.ibisworld.com/products/state-and-provincial/united-states/" target="_blank">geography</a>, revenue, employee count, loan filings or some other factor, having access to that information can help you refine your target list. Once you find your target companies, you also need to know who to contact and <a rel="noopener" href="https://www.ibisworld.com/blog/building-relationships-takes-a-focus-on-prospecting/1/1127/" target="_blank">what is important to them</a>.
 
You can also leverage industry intelligence to get a deeper understanding of the challenges specific to your prospect and their business.
<h2 class="contentH2"> Final thoughts</h2>
The past year has delivered its share of challenges for banks and for businesses. While interest rate increases and economic uncertainty have impacted banks and their CRE business, lending opportunities still remain. Mid-market businesses are optimistic heading into the next year and plan to grow and invest in their companies, and they will need capital to do this. Through C&amp;I lending, banks can diversify their loan portfolio to strengthen their business.
 This article was originally published by RelPro. You can view the <a rel="noopener" href="https://relpro.com/blog/diversifying-with-c-and-i-lending" target="_blank">original version</a> on their blog. To learn more about RelPro’s relationship development solutions, visit their <a rel="noopener" href="https://www.relpro.com/" target="_blank">website</a>.

Discover how banks can find growth and mitigate risk with an increased focus on commercial and industrial loans. 

Diversifying with C&I Lending

<h2 class="contentH2">Key takeaways</h2>
<blockquote class="quote">Using Porter’s Five Forces model leads to effective strategic planning and informed decision-making.  </blockquote>
<blockquote> </blockquote>
<blockquote class="quote">Businesses use Porter’s Five Forces framework to assess a company's external environment.</blockquote>
<blockquote>  </blockquote>
<blockquote class="quote">Integrating industry research refines Porter’s Five Forces analysis, helping business leaders develop better strategies, mitigate risk and identify opportunities.</blockquote>
 
Strategic planning isn’t really optional; it’s a necessity to ensure your company’s survival and prosperity. When it comes to strategizing, it can often be challenging to determine the initial steps. Thankfully, frameworks like the Porter’s Five Forces model can help.
<h2 class="contentH2">What are Porter’s Five Forces?</h2>
Similar to the <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-swot-analysis/1/1127/" target="_blank">SWOT framework</a>, Michael Porter’s Five Forces model helps guide <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">strategic planning</a> by looking at the threats and opportunities a company faces. At its core, the model is a structured approach for <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/99/1127/" target="_blank">competitive analysis</a> and understanding the dynamics of your industry.
 
Here’s a quick summary of the five forces that make up this model:
<ul>
<li>Threat of new entrants: This force refers to the potential for new competitors to enter your market. It prompts you to consider factors such as economies of scale, brand recognition and regulatory hurdles that might discourage new players from challenging your position.</li>
<li>Bargaining power of suppliers: Suppliers are a crucial consideration for any business, and their influence on your operations can’t be understated. This force examines the leverage your suppliers possess in negotiations, as well as their ability to affect your costs and supply chain.</li>
<li>Bargaining power of buyers: Your customers hold considerable power, especially in today’s information-rich era. This force assesses the strength of your customers in influencing prices, quality expectations and product choices.</li>
<li>Threat of substitutes: Alternatives to your product or service can pose significant threats to your business. This force encourages you to identify potential substitutes that could lure your customers away and is a reminder to continually innovate and provide superior value.</li>
<li>Competitive rivalry: This force helps you to evaluate the level of competition within your industry. Factors like the number and aggressiveness of competitors, market growth rates and industry consolidation all play a part in determining the intensity of this rivalry.</li>
</ul>
 
<img src="https://content.ibisworld.com/media/r5ubn2le/shutterstock_2331425017.jpg?width=720&amp;height=576.15302869288" alt="A diagram of five forces model" width="720" height="576.15302869288">
 
<h2 class="contentH2">How Porter’s Five Forces model gives you a competitive edge</h2>
Why use Porter’s Five Forces model at all? The answer lies in the unique insights it provides. By examining each force, you gain a holistic understanding of your business environment. This understanding empowers you to:
<ul>
<li>Identify opportunities: Discover untapped market niches and customer segments.</li>
<li>Mitigate risks: Anticipate and proactively address potential threats to your business.</li>
<li>Craft tailored strategies: Develop strategies that are not only effective but also finely tuned to the nuances of your market.</li>
</ul>
<h2 class="contentH2">When should you use Porter’s Five Forces model?</h2>
Strategic decisions are not universally applicable, as the right strategies vary depending on the specific factors within your industry and market, as well as your own goals. So, when is the right time to apply the model to your business?
<ul>
<li>Entering a new market: When considering expansion into a new market or industry, Porter’s Five Forces model can help you identify the key factors that influence <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-profitability-analysis-and-why-is-it-important-to-businesses/44/1127/" target="_blank">profitability</a> in your industry. The model helps you evaluate and prepare for the potential barriers to entry, competitive landscape and dynamics of this unfamiliar territory.</li>
<li>Evaluating competitive threats: By periodically assessing the model, you can stay ahead of emerging competitive threats, whether from new entrants or substitutes, and take proactive measures to safeguard your market share.</li>
<li>Strategic planning and re-evaluation: Successful business owners understand that strategic planning is an ongoing process. Regularly revisiting Porter’s Five Forces model allows you to adapt to changing market conditions, revise your strategies, and ensure your business remains resilient.</li>
<li>Navigating economic shifts: Economic downturns or upswings can significantly impact your industry’s competitiveness. During such times, Porter’s Five Forces model helps you make informed decisions to navigate risk or capitalize on economic booms.</li>
</ul>
<h2 class="contentH2">What does industry research have to do with Porter’s Five Forces model?</h2>
Comprehensive <a rel="noopener" href="https://www.ibisworld.com/blog/the-complete-guide-to-industry-research/99/1127/" target="_blank">industry research</a> can complement your Five Forces analysis, providing the data to make your strategic decisions even more precise. Industry research empowers you to take your strategic analysis to the next level, as it provides the rich context, data and understanding necessary to using Porter’s Five Forces model effectively.
<ul>
<li>Informing your analysis: Industry research equips you with a wealth of knowledge about market trends, key players, and critical factors affecting your industry. This data is the bedrock upon which your Five Forces analysis is built.</li>
<li>Enhancing accuracy: The accuracy of your analysis depends on the quality and depth of your information.</li>
<li>Uncovering hidden forces: Beyond the traditional Five Forces, industry research can unveil additional forces that may impact your business, such as regulatory changes, technological advancements, or shifting consumer preferences.</li>
<li>Spotting opportunities: Industry research helps your business identify growth opportunities and emerging markets that may not be immediately evident from Porter’s Five Forces alone.</li>
</ul>
<h2 class="contentH2">How can you apply industry research to Porter’s Five Forces analysis?</h2>
Through integrating industry research and strategic insights, you gain the capability to transform data into actionable strategies, enabling you to make better informed decisions.
 
Step one: Gather relevant industry data
<ul>
<li>Identify key data points such as your market size, industry revenue breakdown and historical performance. These will form the foundation of your Five Forces analysis.</li>
<li>Save yourself time by leveraging industry reports from a comprehensive database. Familiarize yourself with market trends, growth forecasts and competitive dynamics.</li>
</ul>
 
<img src="https://content.ibisworld.com/media/rkpe4izr/picture1.png?width=535&amp;height=365" alt="A graph of revenue increase for Domestic Airlines in the US industry" width="535" height="365">
 
Step two: Identify key industry trends and drivers
<ul>
<li>Dive into research to uncover the trends and drivers shaping your industry. Are there technological advancements, regulatory changes, or shifting consumer preferences that you need to be aware of?</li>
<li>Pay close attention to emerging opportunities and potential disruptors. These may not always align neatly with the traditional Five Forces, but they are crucial considerations in today’s business landscape.</li>
</ul>
 
<img src="https://content.ibisworld.com/media/yymn30dq/picture2.jpg?width=720&amp;height=298.4059511158342" alt="Key Takeaways diagram for the external environment for the Domestic Airlines in the US industry" width="720" height="298.4059511158342">
 
Step three: Assess the impact on Porter’s Five Forces
<ul>
<li>With industry knowledge at your disposal, assess how the trends and drivers you’ve identified impact each of the Five Forces. For example, changing consumer preferences might influence buyer power, while regulatory changes could affect the threat of new entrants.</li>
<li>Consider how shifts in market dynamics may create new competitive threats or open doors to innovative strategies.</li>
</ul>
 
<img src="https://content.ibisworld.com/media/wuyn1cez/picture3.png?width=720&amp;height=688.6291179596175" alt="A supply chain infographic depecting the suppliers and buyers for the Domestic Airlines in the US industry" width="720" height="688.6291179596175">
 
<h2 class="contentH2">Analyzing the US Airline industry with Porter’s Five Forces</h2>
As an example, imagine you operate a domestic airline in the United States. You’ve just read <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/domestic-airlines-industry/" target="_blank">the Domestic Airlines in the US industry report</a>, which highlighted a surge in demand for low-cost, regional flights.
 
How does this fit into your Five Forces analysis?
<ul>
<li>Threat of new entrants: The trend could attract new, smaller airlines that focus on regional routes. Assess how this may impact the barriers to entry.</li>
<li>Bargaining power of suppliers: Aircraft manufacturers might face increased demand, potentially impacting pricing and availability of aircraft for your airline.</li>
<li>Bargaining power of buyers: Passengers seeking low-cost options may have increased bargaining power in negotiating fares and services.</li>
<li>Threat of substitutes: The rise of low-cost regional flights could serve as a substitute for traditional domestic routes, so consider the impact on your passenger base.</li>
<li>Competitive rivalry: Expect heightened competition from both traditional and new entrants in the low-cost regional segment. Craft strategies to maintain your competitive edge.</li>
</ul>
By marrying industry research with Porter’s Five Forces model, you have a dynamic strategic framework that empowers you to proactively respond to market shifts, seize opportunities and navigate the unique challenges of your industry.
<h2 class="contentH2">Final word</h2>
Porter’s Five Forces model unlocks valuable insights into the intricacies of your industry. This model serves as a reliable guide to your business landscape, allowing you to make strategic decisions with precision.
 
Comprehensive and reliable industry research transforms raw data into strategic assets. It equips you with the ability to gather essential insights and identify trends, then leverage this knowledge to inform your strategic analysis so that you can not only respond to market forces, but also shape them.

Harness Porter’s Five Forces for strategic planning, integrate industry research, anticipate market shifts and secure your competitive edge.

Using Porter’s Five Forces to Develop Business Strategies

<h2 class="contentH2">Key takeaways</h2>
<blockquote class="quote">Price and contract terms are not the only outcomes procurement needs to worry about.</blockquote>
<blockquote> </blockquote>
<blockquote class="quote">Strategic sourcing helps procurement professionals achieve better results using an array of internal and external data.</blockquote>
<blockquote> </blockquote>
<blockquote class="quote">Using industry data helps you seize opportunities and minimize your exposure to supply chain risks through strategic sourcing.</blockquote>
<blockquote> </blockquote>
Procurement negotiations are often laser focused on one thing: price. But every sourcing manager knows that the lowest price doesn’t always get you the best quality, the greatest efficiency or the lowest total cost of ownership. To meet those goals, procurement needs a wide array of internal operations and external market data to make informed decisions and be confident going into negotiations.
 
It’s easy to overlook industry-level data. During the frenzy of purchase orders and bids, it’s easy to fixate on specific details, examining each one under a microscope. By zooming out and expanding your research during the procurement process, you can gain a wealth of information and additional perspectives that influence the buyer-supplier relationship. Using broader industry data can help transform negotiations from a tug-of-war over pennies to a strategic alignment of values, trends and long-term gains.
 
<h2 class="contentH2">What is strategic sourcing?</h2>
Strategic sourcing provides a framework for procurement organizations to seek better results, and enables teams to focus on maximizing the value suppliers add instead of attempting to obtain goods and services at the lowest possible price. This framework involves using internal spend data, market analytics, and qualitative and quantitative data to develop supplier relationships and contracts that align with the organization’s broader objectives. When objectives shift from cost to value, strategic sourcing empowers procurement professionals to become <a rel="noopener" href="https://www.ibisworld.com/blog/becoming-a-trusted-advisor/99/1127/" target="_blank">trusted advisors</a> to their organization.
 
Industry data serves as one key facet of a well-developed strategic sourcing framework. Such data can help to illuminate market trends, potential risks, supplier standings and emerging innovations that go far beyond immediate cost. By integrating market and industry data into the sourcing process, procurement teams can make well-informed decisions that are proactive, optimized and aligned with the larger industry landscape.
 
Let’s look at four key elements of a strategic sourcing process and how you can elevate them using industry data.
 
<h2 class="contentH2">1. Analyze costs and prices</h2>
Many factors influence a supplier’s costs, how they price their product or service, and where they can be flexible in negotiations. Yet suppliers are not always transparent with those facts and figures, forcing buyers to negotiate on assumptions and research into sources that may be biased or out of date. Industry data can help you build and validate those assumptions, so that you can approach negotiation meetings with confidence.  
 
<h3 class="contentH3">Macroeconomic cost factors</h3>
Global geopolitical events, like international conflicts or changes to trade policies, can cause sudden shifts in your variable costs. Staying attuned to financial policy, global trade patterns, and industry growth rates grants you a predictive edge. <a rel="noopener" href="https://www.ibisworld.com/list-of-business-environment-profiles/" target="_blank">Price drivers</a> like interest rates, commodity prices or the trade-weighted index can all influence how much you will pay over the course of a contract. Staying ahead of these drivers can help you anticipate price changes instead of being surprised by them.
 
<h3 class="contentH3">Cost modeling</h3>
Cost modeling is another way to prepare for price negotiations. Creating a <a rel="noopener" href="https://www.gov.uk/government/publications/should-cost-modelling-tools-and-templates" target="_blank">should cost model</a> involves breaking down a product into its component parts and estimating the cost of materials, labor, overhead and profit margins to determine a likely price. Industry data, such as the average cost structure for market operators or average wage data, can help you develop a cost model, and can illuminate areas where suppliers may be quoting you more than the fair price for their products or services.
 
The key takeaway? Costs and prices aren't static figures. They aren’t set in stone, and they change in response to a vast array of industry dynamics. By diving into this data and anchoring decisions in the broader context, procurement evolves from a transactional function to a strategic powerhouse, driving value and innovation throughout the organization.
 
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<h2 class="contentH2">2. Gain visibility across the supply chain</h2>
Supply chain management is a key element of strategic sourcing. Global supply chains are complex and interconnected. It’s important to analyze your own supply chain from a wider perspective, such as international trade patterns that will determine where to source and assemble your products, just as it’s critical to zoom in to your keystone supplier points across the chain so you know where to mitigate risk through your contract terms. Data provides an integral perspective to your supply chain analysis at every level.
 
<h3 class="contentH3">Holistic supply chain perspectives</h3>
Understanding the overview of a product’s supply chain may seem like an obvious requirement, but it’s often overlooked. You may be familiar with the flow of goods for established products, but risk and opportunity exist at every stage along that path. All supply chains are interconnected; if you focus only on the suppliers directly in your own chain, it’s easy to miss the push and pull of other industries that are part of the network, whether they’re relying on the same upstream suppliers or being kept afloat by the same downstream buyers.
 
What’s the cost of such oversight? Just ask anyone who was impacted by global shortages of inputs like <a rel="noopener" href="https://www.ibisworld.com/blog/how-the-semiconductor-shortage-is-affecting-automobile-manufacturing/1/1126/" target="_blank">microchips</a>, <a rel="noopener" href="https://www.ibisworld.com/blog/the-state-of-the-canadian-lumber-market/124/1126/" target="_blank">lumber</a> and oxygen gas in recent years. No single industry caused these shortages, but they were all forced to adapt to the effects of supply chain issues that rippled across the economy. Holistic visibility into your own supply chain and those that are interconnected to it can help you prepare for risks, spot inefficiencies and optimize your purchases to deliver the best value.
 
<img src="https://content.ibisworld.com/media/2dodjf0p/supply-chain.jpg?width=720&amp;height=404.7608926673751" alt="A person in a safety vest and hardhat using a tablet in a wharehouse" width="720" height="404.7608926673751">
 
<h3 class="contentH3">Responsive procurement</h3>
In today's fast-paced world, adaptability is king. Organizational red tape can prevent you from <a rel="noopener" href="https://www.ibisworld.com/blog/making-fast-business-decisions/99/1127/" target="_blank">responding quickly</a> to every market shift, but a lack of timely data and analysis can prevent you from acting and reduce the value of the moves you do make. Leveraging industry insights enables procurement to become a responsive entity, quick to react to market changes and disruptions. Real-time data helps you pivot strategies on the fly, ensuring continuity and resilience.
 
Supply chain management is a complex process, but industry data can help shine a light on the structure and changes that will impact your business. Industry data demystifies the intricacies of a supply chain, allowing procurement professionals to navigate its complexities with more confidence and agility.
 
<h2 class="contentH2">3. Conduct supplier risk management</h2>
Effective strategic sourcing involves a focus on building supplier relationships that align objectives for both companies and are built to last for the long term. To invest in lasting supplier relationships, buyers must always investigate their suppliers’ <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">risk management practices</a>. Diligent risk management protocols should always account for the fact that there are external forces outside of a company’s control. Pairing qualitative analysis of the industry with quantitative financial benchmarks can help create a robust <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/" target="_blank">risk analysis</a> of your prospective suppliers.
 
<h3 class="contentH3">The wider industry landscape</h3>
Supplier risk goes beyond a company’s individual operational capabilities. Understanding the <a rel="noopener" href="https://www.ibisworld.com/blog/understanding-your-external-environment/99/1127/" target="_blank">external environment</a> of the industry in which they operate is crucial to assessing a company’s risk. Is <a rel="noopener" href="https://www.ibisworld.com/blog/business-competition/99/1127/" target="_blank">business competition</a> a viable threat to their revenue streams? Are they heavily reliant on a single downstream buying market? While some risk factors might be universal for every supplier in the industry, it is still important to understand the broader industry risks, and to evaluate how the supplier protects themselves against those risks.
 
<h3 class="contentH3">Using financial data</h3>
Assessing supplier risk should also include analysis of their financial position. However, it’s important to note that what constitutes a good financial ratio in one industry might be a bad ratio for businesses in another industry. Using industry <a rel="noopener" href="https://www.ibisworld.com/blog/financial-ratios-how-to-use-them/99/1127/" target="_blank">financial benchmarks</a> can help you assess the financial status of a potential supplier in the context of their market and peers. Financial risk isn’t static, so reviewing this type of data every few years can support the decisions to entrench your existing relationships or diversify your supplier base.
 
In essence, supplier risk management isn't just about understanding the suppliers you work with today, but anticipating the challenges of tomorrow. Incorporating industry data into your risk analysis process allows you to identify and mitigate risks and seize opportunities, ensuring resilience and adaptability in an ever-evolving market.
 
<h2 class="contentH2">4. Assess technology and trends</h2>
Technological advancements are moving faster than ever. Even in mature industries, technology has changed the landscape of product and service delivery. While no one can predict what technology will dominate in the years to come—or which companies will rise and fall on the back of their investments—it pays to keep a finger on the pulse of emerging technologies and industry trends. Waiting until new trends have settled can result in missed opportunities or, worse, getting left behind.
 
<h3 class="contentH3">Predictive advantages</h3>
Embracing industry tech trends can drastically improve your foresight in negotiations. Whether it's the adoption of <a rel="noopener" href="https://www.ibisworld.com/blog/understanding-ai/99/1127/" target="_blank">AI-driven analytics</a>, blockchain for traceability, or IoT for real-time monitoring, these technologies are more than just buzzwords. They provide actionable insights, streamline operations, and open new avenues for cost-saving and efficiency by supporting your <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">business process analysis</a>. Staying up to date allows you to anticipate changes, adapt faster and position your organization as a leader rather than a follower.
 
<h3 class="contentH3">Innovation as a negotiation tool</h3>
Think about the weight your negotiations carry when you're aware of (or even ahead of) the curve on industry innovations. It’s not just about leveraging the latest tools but understanding how these innovations might influence supplier operations, contribute to your larger goals or open new possibilities for collaboration. Being knowledgeable about current and upcoming trends positions you as a forward-thinking partner, influencing discussions and allowing for strategies that capitalize on innovation.
 
Staying ahead of technology and industry trends shouldn’t be an afterthought, but a central part of the procurement research process. By actively integrating these insights into your procurement strategies, you ensure that your approach isn't just reactive to today's needs but is primed to harness the opportunities of tomorrow.
 
<h2 class="contentH2">Final thoughts</h2>
Procurement decisions can and should involve a wide range of perspectives and data to help arrive at the best possible option for your organization. Strategic sourcing frameworks help to accomplish this outcome, and it’s important to utilize thorough industry research and data to bolster this process. By gathering reliable information at the outset of your purchasing process, you can maximize negotiation leverage, align on the right outcomes, and drive efficiency and value across your organization’s purchases.

Learn how to elevate your strategic sourcing and gain valuable insights into industries across your entire supply chain.

Elevate Your Procurement Strategy with Industry Data

Director of Capital Markets, SouthState Bank

<h2 class="contentH2">Key takeaways</h2>
<blockquote class="quote">Cash management customers are typically a bank's most profitable clients due to their low-interest rate sensitivity, long-lasting balances, and fee income generation potential.</blockquote>
 
<blockquote class="quote">Cash flow stability and the number of payments processed are two key factors influencing cash management profitability.</blockquote>
 
<blockquote class="quote">To maximize your highly profitable clientele, bankers can use data to identify target industries that align with their ideal size, geography, and product offerings.</blockquote>
 
<hr>
 
When it comes to banking, not all customers are created equal. Some customers are more profitable than others, and if you are out to build a more profitable bank, it pays to have a tactical plan to go after more profitable customers. The <a rel="noopener" href="https://southstatecorrespondent.com/banker-to-banker/treasury-cash-management/5-steps-to-better-treasury-management/" target="_blank">treasury or cash management customer</a> is usually a bank’s most profitable customer on a risk-adjusted basis.
 
In this article, we discuss cash management profitability and rank the most profitable industries for banks to go after.
<h2 class="contentH2">Putting cash management in context</h2>
It is no surprise that what makes a good cash management customer is a good deposit customer. We ranked the <a rel="noopener" href="https://southstatecorrespondent.com/banker-to-banker/deposits/the-top-20-deposit-rich-industries-for-2023/" target="_blank">Top 20 Deposit-Rich Industries</a>. However, that is not purely the case. For starters, a customer may carry large balances but not generate franchise value if those balances are all in high-paying money market accounts or are highly volatile.
 
The value driver in cash management is that it is usually some sort of operating account at the bank. As such, operating accounts have low-interest rate sensitivity. Low-interest rate sensitivity equates to a higher liability duration and often positive convexity so that balances go up as rates go up – the exact tandem that a bank wants. Almost equally important is when a customer cares about cash management, balances tend to stick around longer, and lifetime value increases.
 
Cash flow stability is also a factor in cash management profitability. The more stable the day-to-day and the month-to-month cash flow is, the longer duration the account is and the more confidence a bank can have to invest those funds for a longer period. An account that maintains a stable $5M is more valuable than an account that fluctuates from $0 to $25M in any given month, all else being equal.
 
Finally, there is the fee piece. An average cash management customer generates about $13k of fee income, while a good cash management customer can generate $300k or more per year. As you can see in the chart below, one major marker of cash management profitability is payments. The more transactions processed, the more fee income that is generated and the higher balances that are left on deposit. ACH, Wire, real-time payments (RTP), and FedNow (as of July) alone drive almost 40% of the total cash management fee income at a bank. Thus, if there is one thing you want to know when prioritizing cash management sales leads, it’s the number of payments sent and received.
 
<img src="https://content.ibisworld.com/media/uiwgym3h/image-8.png?width=611&amp;height=439&amp;mode=max" alt="" width="611" height="439">
<h2 class="contentH2">How cash flow stability impacts profitability</h2>
Let’s explore the concept of fee generation and balance stability one level deeper, as it makes a difference in how you target, manage, and price customers when it comes to cash management.
 
Take the two clients outlined below. Both clients have about the same average balance, and both clients are highly profitable. However, these are two different clients, and it merits a proactive choice by the bank of which of these two clients you should pursue.
 
As can be seen below, Client 2, because of the nature of their industry, has much greater variability in their cash flow. Client 1 builds balances as rates increase, while Client 2 is negatively impacted by rates. As mentioned before, all things being equal, Client 1 is almost twice as profitable as Client 2 based on balances alone.
 
Of course, all things are rarely equal. Client 2 needs cash management, particularly payment services. As such, payments generate more fees. More importantly, the customer is more service-sensitive and has more engagement with the bank. Between the two customers, Client 2 is much less likely to require a higher interest rate in one of its accounts.
 
The takeaway here is that Client 1 has simpler cash management needs and is better for a bank without a robust cash management platform. Client 2 may be perfect for a bank highly committed to cash management and one that can support a certain service level and payment capabilities. In reality, if priced correctly, Client 2 has a lifetime customer value of about 30% more than Client 1.
 
<img src="https://content.ibisworld.com/media/qyqh5cqg/group-5717.png?width=596&amp;height=372&amp;mode=max" alt="" width="596" height="372">
<h2 class="contentH2">What industries should you target?</h2>
Banks should be proactive in what industries they should target. Banks need to find the intersection of three circles:
<ul>
<li>What profitable clients are available to the bank due to size, geography, and product set?</li>
<li>What client does the bank want and can service?</li>
<li>What clients want the bank and are likely to move to your bank?</li>
</ul>
Finding this intersection is the key to the efficient use of sales and marketing resources. This is where IBISWorld comes in handy for setting bank strategy as you can look up any of the below industries to see their <a rel="noopener" href="https://www.ibisworld.com/products/state-and-provincial/united-states/" target="_blank">geographical dispersion</a>. For example, if you are a bank in California, Florida, New York, or Pennsylvania, going after private schools, colleges, or insurance companies should be considered due to not only the large number of target institutions but also the size of those institutions, which lends itself to having multiple banks.
 
Once you have an idea of the type of customers that you want and that they might want you, you can use the following list to target those customers with above-average profitability.
 
If you remove financial institutions, municipalities, and e-commerce companies (all these organizations are highly cash management profitable), the following are the top 25 most profitable cash management industries based on balances, deposit performance, and fee income generation. We have also included the IBISWorld 2024 <a rel="noopener" href="https://www.ibisworld.com/products/industry-risk-rating/" target="_blank">risk ratings</a> to provide some context for the credit and operating risk of the counterparty.
 
<img src="https://content.ibisworld.com/media/jsrnpuyd/group-5716.png?width=495&amp;height=701&amp;mode=max" alt="" width="495" height="701">
 
<h2 class="contentH2">What profitable cash management accounts want</h2>
A recent survey by <a href="https://gtreasury.com/blog/news/report-finds-cfos-and-treasurers-remain-optimistic-focus-on-reducing-inefficiencies-and-streamlining-operations/">GTreasury</a> found that 70% of treasury departments have five or fewer team members. As such, chief financial officers (CFOs) cited reducing overall business costs as the most critical strategic objective (49%). For these teams, access to technology emerged as a clear area of interest for achieving operational efficiency. These businesses need help with cash flow forecasting and need a banking platform with a wide variety of services coupled with superior service.
 
In the survey (below), respondents were asked what they needed in a treasury management relationship. Many CFOs and treasurers identify access to a “full-service” treasury platform as a major objective, with AR/AP support, financial planning/analysis (FP&amp;A), and instant payments as top priorities. In terms of payments, 82% of companies deemed payment automation as extremely important. Electronic payments ranked as one of the top three areas of planned technology investment, along with banking transaction integration and improved enterprise resource planning (ERP) systems.
 
<img src="https://content.ibisworld.com/media/ngnj1wdl/image-9.png?width=612&amp;height=419&amp;mode=max" alt="" width="612" height="419">
<h2 class="contentH2">Want more information about cash management?</h2>
If you’re ready to start the discussion about improving your cash management profitability and capabilities, <a rel="noopener" href="https://www.southstatebank.com/personal" target="_blank">SouthState Bank</a> can help.
 
Start the process today by taking this <a rel="noopener" href="https://southstatecorrespondent.com/cash-management-survey/" target="_blank">20-minute survey</a>.
 
To learn how your institution can gain access to the industry data and risk ratings provided by IBISWorld, submit your <a href="https://www.ibisworld.com/membership-inquiry/">membership inquiry</a> or free <a href="https://www.ibisworld.com/free-demo/">demo request form</a> today.
 
This article was originally published by SouthState Bank. You can find the <a rel="noopener" href="https://southstatecorrespondent.com/banker-to-banker/treasury-cash-management/these-are-your-most-profitable-cash-management-customers/" target="_blank">original version</a> on their website.

Understand cash management profitability in commercial banking and find the industries where your most profitable cash management clients operate.

These Are Your Most Profitable Cash Management Clients

Dig into granular industry data: what it is, how to use it and why you should pay attention to it.

Dig Into Details: Leveraging Granular Data in Industry Analysis

Key Takeaways:
Building trust and demonstrating consistency with your clients elevates your partnership from transactional to enduring.
Becoming a trusted advisor doesn’t happen overnight, but it opens the door to new opportunities to success for you and your clients.
Use reliable, forward-looking industry research to build your expertise, add value and give your clients a reason to keep coming back.
 
In today's dynamic business landscape, earning the trust of your clients is key to establishing enduring partnerships and driving sustainable success. For business leaders, corporate strategists, and anyone in a client-facing role, becoming a trusted advisor holds unparalleled value.
 
<iframe width="560" height="315" src="https://www.youtube.com/embed/IkIPaUTqwO0?si=yyCBz20wcyD0ODiG" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe>
 
When taking on the role of a trusted advisor, you embark on a journey to establish credibility that goes beyond products and services. This credibility translates into loyalty, advocacy, and sustained business relationships that weather the test of time.
 
<h1>Why is it important to be a trusted advisor?</h1>
All clients require your services and your attention, but they value when that service level goes beyond a typical buyer-supplier relationship. Positioning yourself or your business as a trusted advisor is not just a wise strategic move—it’s also a commitment to excellence, innovation and client-centricity. As a trusted advisor, you’re not confined to addressing short-term needs; you gain the privilege of being an integral part of your clients' growth strategies and decision-making processes. Let’s unpack some of the benefits of rising to this level of mutual trust and support.
 
<h2>Credibility and differentiation</h2>
In a sea of businesses vying for attention, credibility is a valuable beacon that draws clients towards you. By positioning your business as a trusted advisor, you go beyond simply offering products or services and step up to provide reliability and expertise. This credibility isn't built overnight; it's cultivated through a history of delivering value, demonstrating your understanding of clients' needs and consistently exceeding expectations. When you offer them more than a solution at a price, you give your clients the opportunity to form a strategic partnership they can rely on.
 
<h2>Nurturing long-term relationships</h2>
In transactional relationships, clients can come and go as they continuously evaluate what’s in their best interest. Even when a client is seemingly locked in, due to a long contract term or high switching costs, transactional business relationships allow them to reevaluate the partnership at every chance they get. However, in strategic business relationships, the goal of both parties is to form a partnership that will endure for the long-term. Often this is encouraged with an incentive-based pricing structure, whereby your own compensation will depend on the results you help your client achieve. However, this structure alone is not enough to guarantee that you will be seen as a trusted advisor. By establishing deep-rooted relationships, you become more than a vendor; you become a partner invested in the growth and prosperity of your clients. This depth of partnership fosters loyalty that goes beyond price points and fleeting economic trends. Clients trust you with their challenges and you offer insights, solutions, and a sense of unwavering support.
 
<h2>From problem-solving to strategic collaboration</h2>
As a trusted advisor, you become the first external point of contact for your clients when they face challenges or are seeking guidance. Rather than seeking solutions in isolation, your clients will look to collaborate and work with you to navigate their challenges together. This level of involvement transforms you from a service provider into a strategic collaborator. By offering holistic problem-solving approaches, you showcase your commitment to your clients' success, which solidifies your role as an indispensable asset.
 
<h1>How do I become a trusted advisor?</h1>
To successfully position yourself as a trusted advisor, you need to employ a measured approach that incorporates deliberate strategies and a deep commitment to your clients' success. With that in mind, let’s look at some actionable steps you can take to move in the right direction.
 
<h2>Understanding your clients</h2>
Truly understanding your clients is the cornerstone of becoming a trusted advisor. Active listening and empathetic engagement can take you beyond simple conversation and demonstrate your investment in your clients’ needs. By delving into their challenges, goals and pain points, you can offer solutions that are tailored to their unique circumstances. Is your client struggling in a crowded market? Do they need to <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-competitive-intelligence-and-why-is-it-important/44/1127/" target="_blank">learn more about their competitors</a>? Are they evaluating and refining their <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">business processes</a>? Gaining a deep understanding of their industry landscape enables you to provide insights that showcase your expertise and foresight.
 
<h2>Consistent and transparent communication</h2>
Communication is the bedrock of any relationship. To be viewed as a trusted advisor, it's imperative to maintain a high level of transparency and consistency, as these attributes innately foster a sense of trust. Regular updates, progress reports, and candid discussions about challenges establish an environment of openness. This transparency nurtures trust and enables you to seat yourself on the same side of the table as your client, and helps to assure them that your goals are aligned with their own.
 
<h2>Offering value beyond transactions</h2>
Elevate your role. Instead of simply offering solutions that are part of their contract, add value through your interactions with your clients. Share industry insights, thought leadership pieces and relevant information that showcase your expertise. If your organization offers resources such as additional training, webinar series, or other content, sharing these with your clients can help to position yourself as a resource rather than just a vendor. Additionally, customizing solutions to align with your clients' specific goals demonstrates your commitment to their success, further solidifying your advisory role.
 
<h2>Problem-solving and innovation</h2>
As a trusted advisor, you're not just handed problems. Instead, you're presented with opportunities to collaborate on solutions. Approach challenges with a mindset that encourages shared problem-solving, and engage your clients in collaborative discussions that leverage both your expertise and their insights. This dynamic interaction establishes a strong foundation for effective solutions and showcases your dedication to working together for mutual success.
 
<h2>Building personal connections</h2>
In the digital age, personal connections still hold immense value. Networking efforts and genuine relationship-building activities establish a sense of camaraderie that goes beyond business interactions. Treat your clients as long-term partners rather than transactional entities. By understanding their personal aspirations and professional journeys, you forge connections that resonate on a deeper level and help your clients feel confident in turning to you again in the future, whether they’re facing a challenge or <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">developing a new product</a>.
 
<img src="https://content.ibisworld.com/media/jw5dldgl/strategy-meeting-with-advisor.jpg?width=720&amp;height=404.7608926673751" alt="Two people watch a trusted advisor write a plan on a whiteboard. They are in a bright, modern office with large windows." width="720" height="404.7608926673751">
 
<h1>Tools and Information Businesses Need to Be a Trusted Advisor</h1>
Becoming a trusted advisor isn’t as simple as just calling yourself one. Equipping yourself with the right tools and information is crucial to developing credibility and offering value. Whether you’re a business owner, strategist, consultant or a professional in another role, you can harness external resources to solidify your advisory role.
 
<h2>Industry analysis and insights</h2>
Maintaining expertise in your clients’ industries requires a commitment to continuous learning. Stay updated on industry trends, emerging technologies, and shifts in consumer behavior. Conduct thorough research to understand the challenges your clients face, enabling you to offer well-informed guidance. If your clients operate across a wide range of industries, utilize <a rel="noopener" href="https://www.ibisworld.com/" target="_blank">industry research</a> to understand their landscapes and gain valuable insights. Building and maintaining comprehensive industry knowledge empowers you to demonstrate your expertise and the relevance of your insights.
 
<h2>Data and analytics</h2>
Data has become a driving force in modern business landscapes. Utilize data analytics to uncover valuable insights that inform your recommendations. By presenting data-driven solutions, you reinforce the credibility of your advice and underscore the rationale behind your <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">strategic proposals</a>. Data empowers you to be more than intuitive; it enables you to provide precise and reliable strategic advice.
 
<h2>Effective communication tools</h2>
Effective communication forms the bedrock of any advisory relationship. Employ diverse communication channels – emails, video calls, webinars – to facilitate seamless interactions. Leverage technology to bridge geographical gaps and facilitate real-time conversations. Learn and implement the principles of <a rel="noopener" href="https://www.ibisworld.com/blog/business-writing-101/99/1127/" target="_blank">strong business writing</a> to ensure effective communication outside of client calls. These tools ensure that your expertise and advisory services are easily accessible.
 
<h2>Customer Relationship Management (CRM) systems</h2>
A well-implemented CRM system is more than just a database; it's a repository of client interactions, preferences, and history. Leverage CRM insights to personalize interactions, recall previous discussions, and tailor your advice to individual client needs. This personalized approach demonstrates your commitment to understanding and addressing your clients' unique circumstances.
 
<h2>Continuous learning and development</h2>
Commit to <a rel="noopener" href="https://mitsloan.mit.edu/ideas-made-to-matter/how-continuous-learning-keeps-leaders-relevant-age-ai" target="_blank">continuous personal and professional development</a>. Invest in workshops, seminars, and online courses to expand your skill set and deepen your expertise. Surround yourself with a <a rel="noopener" href="https://www.ibisworld.com/blog/recruiting-your-dream-team-internally/99/1127/" target="_blank">team of diverse talents</a>, each contributing a unique perspective to your advisory services. A well-rounded team enhances the breadth of solutions you can offer, positioning you as a comprehensive resource.
 
<h1>The challenges of becoming a trusted advisor</h1>
Embarking on the journey to become a trusted advisor is a commendable pursuit, but it's not without its share of challenges. As business leaders, it's vital to recognize and address these potential obstacles head-on.
 
<h2>Overcoming skepticism and building trust</h2>
Trust isn’t built instantly. Instead, it develops through consistency, transparency and results. Clients might initially be skeptical of an advisory role, especially if they're accustomed to transactional relationships. To overcome this, deliver on promises, communicate openly and showcase your industry knowledge. Gradually, as clients witness the value you bring, skepticism evolves into trust.
 
<h2>Balancing advisory and operational roles</h2>
As you transition into an advisory role, you may grapple with finding the balance between your new responsibilities and your operational ones. It's essential to designate time specifically for advisory interactions. Delegate operational tasks where possible to ensure that your advisory commitments receive the attention they deserve.
 
<h2>Adapting to diverse client needs</h2>
Your clients may come from a variety of industries, each with their unique challenges and requirements. Adapting your advisory approach to suit diverse needs can be challenging. To tackle this, you’ll need to use your industry resources and research skills to quickly gain insights into new sectors. Tailor your solutions based on the individual needs of each client while emphasizing your ability to adapt and provide custom strategies.
 
<h2>Communicating complex concepts</h2>
As a trusted advisor, you’ll often deal with intricate concepts and strategies. Translating these into understandable terms for your clients can be a hurdle. Utilize relatable analogies, visual aids, and real-world examples to simplify complex ideas. Effective communication bridges the gap between expertise and comprehension, fostering trust in your ability to guide your clients effectively.
 
<h1>Final thoughts</h1>
In the realm of business, the distinction between a transactional partner and a trusted advisor holds the key to enduring success and meaningful impact. As business leaders and strategists, the path to becoming a trusted advisor is a transformative journey that demands dedication, strategy, and a deep commitment to the relationships you forge.

Ready for clients to turn to you for guidance they can rely on? Learn how to leverage industry expertise to build credibility and become a trusted advisor.

Through Thick and Thin: Becoming Your Client’s Trusted Advisor

<h1>Key takeaways</h1>
Making fast decisions is crucial to seizing opportunities and staying ahead of the competition.
Empowering your team and building efficient decision-making frameworks reduces the risk involved in making quick decisions and can help your organization thrive.
Accurate, timely data and analysis helps you make informed decisions quickly.
 
In the business world, making swift decisions can spell the difference between seizing opportunities and watching them slip away. Being able to adapt, pivot and capitalize on emerging trends is what sets thriving businesses apart from the rest.
 
Market conditions, consumer preferences and technological advancements are rapidly reshaping industries. In this environment, businesses simply can’t afford to let slow, bureaucratic processes hold up essential decisions. Now, we aren’t suggesting that you throw caution to the wind and tear down established decision-making channels in your organization. What we can recommend, however, is taking a proactive and agile approach to stay ahead of the curve and remain competitive. This approach benefits organizations of all sizes and sectors, from the freshest startup to the most established commercial banks.
 
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<h1>Why is it important to make fast business decisions?</h1>
It’s difficult to overstate just how important swift decision-making is, as it often differentiates successful companies from those left trailing in their wake. If your organization can adapt quickly to changing circumstances, you gain a competitive advantage that you can leverage to capture new markets and outperform competitors.
 
Making prompt decisions entails a certain level of risk, but it also opens doors to innovation and progress. Embracing a culture that values swift decision-making builds trust and cohesion within your organization and enables employees at all levels to take initiative and respond proactively to challenges. Employees feel empowered when their opinions are valued, leading to increased motivation and a sense of ownership over the outcomes. This, in turn, encourages teamwork, collaboration and a shared commitment to success.
 
Conversely, slow decision-making can cause your business to stagnate and lose market share to companies that are prepared to move quickly. Timely decisions allow companies to seize fleeting opportunities, pivot when necessary and capitalize on first-mover advantages. However, swift decision-making doesn’t mean you have to make hasty or impulsive choices. Instead, your organization needs a well-defined decision-making framework that ensures that you can act efficiently without compromising your quality or reputation. Establishing clear goals, defining roles and responsibilities and setting realistic timelines are essential components of this framework.
 
<h1>What strategies can you use to make faster decisions?</h1>
Let’s explore some effective strategies that your organization can adopt to make decisions quickly and with confidence.
 
<h2>Develop a decision-making framework</h2>
To make rapid and effective choices, you need a well-defined decision-making framework. First and foremost, this framework must clearly articulate the goals and objectives of the decision to be made. This step ensures that everyone involved understands and is working towards the intended outcome.
 
As part of this process, you should also assign specific roles and responsibilities by identifying decision-makers and establishing their authority levels to avoid bottlenecks and confusion. Your process should also involve setting a realistic timeline for each outcome. Some decisions require immediate action, while others may allow for more extensive research and analysis. Striking the right balance ensures that people in your organization can make decisions promptly, without sacrificing the quality of information those choices are based on.
 
<h2>Foster a culture of quick decision-making</h2>
<img src="https://content.ibisworld.com/media/kath0kox/business-decisions.jpg?width=720&amp;height=479.7449521785335" alt="Three people sit in front of a laptop, discussing a decision. One woman is pointing at data on the screen while the other two people look on." width="720" height="479.7449521785335">
 
A culture that encourages prompt decision-making empowers employees at all levels to take ownership of their responsibilities. Granting autonomy within defined parameters allows team members to act swiftly when situations demand it. These circumstances not only expedite the decision-making process, but also nurture a sense of responsibility and accountability among your team.
 
Open communication and collaboration are crucial pillars of any organization, and they’re particularly important to an agile decision-making culture. Your organization should encourage team members to share ideas, perspectives and concerns. The collective intelligence of a diverse group can lead to innovative solutions and faster problem-solving.
 
Of course, whether or not you’re using best-practice decision-making processes, you’ll encounter less-than-ideal outcomes from time to time. Embracing failures as valuable learning experiences is vital to cultivating a culture of quick decision-making. Encourage teams to reflect on the outcomes of their decisions, whether successful or not, and derive valuable insights to improve future choices. This mindset helps your team members learn from mistakes and continuously improve their decision-making skills.
 
<h2>Streamline decision-making processes</h2>
Complex and convoluted decision-making structures can hinder agility. To speed up the process, streamline decision-making hierarchies and delegate authority where appropriate. This ensures that the right people are making decisions at the right levels and helps your team avoid unnecessary escalations that clog decision pipelines.
 
Effective information flow is critical in making swift decisions, so your business needs streamlined internal channels for gathering and disseminating relevant data and analysis. Decision-makers need to have access to <a rel="noopener" href="https://www.ibisworld.com/products/industry-research/" target="_blank">up-to-date and accurate data</a> to ensure they have the necessary knowledge to act promptly and confidently.
 
Once decision-makers have the information they need, bureaucracy and excessive approval processes can contribute to decision paralysis and prevent your organization from moving quickly. Identify areas where approvals can be streamlined or eliminated, while maintaining necessary checks to prevent hasty decision-making. Removing unnecessary barriers accelerates the entire decision-making process.
 
<h1>What kind of tools speed up decision making?</h1>
While the pressure to make fast but effective decisions may seem overwhelming, the good news is that a range of powerful tools can significantly enhance decision-making speed and accuracy. By leveraging these tools, your company can stay ahead of the competition and adapt swiftly to ever-changing market conditions.
 
<h2>Data-driven decision-making</h2>
In the age of big data, information has become an invaluable asset for anyone seeking to make fast, informed decisions. By collecting and analyzing relevant data, you can gain valuable insights into customer preferences, market trends and operational performance. Turning raw data into actionable intelligence empowers decision-makers to navigate complex challenges and seize emerging opportunities.
 
Data visualization tools play a pivotal role in using data to speed up decision-making processes. These tools transform complex datasets into visually intuitive representations, making it easier for stakeholders to understand and interpret critical information quickly. Instead of drowning in a sea of numbers and statistics, effective data visualizations help decision-makers more easily identify patterns and trends, enabling them to make confident choices based on timely insights.
 
Furthermore, forward-looking analysis takes data-driven decision-making to the next level, enabling businesses to forecast potential outcomes and assess the <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-a-cost-benefit-analysis-and-how-should-you-use-it/44/1127/" target="_blank">costs and benefits</a> of different decisions. Armed with this foresight, leaders can <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">proactively shape strategies</a> and stay one step ahead in a rapidly evolving market.
 
<h2>Technology-enabled decision-making</h2>
Automation and artificial intelligence (AI) have revolutionized how businesses operate, streamlining processes and increasing productivity. Businesses in many industries can now automate tedious and repetitive tasks. Automation frees up time and energy for your team members to focus on strategic decisions that require human expertise.
 
Collaborative tools have also become essential components of technology-enabled decision-making. These platforms offer seamless communication and cooperation among members of your team, regardless of their physical location. Real-time collaboration can empower decision-makers in your organization to access relevant, timely information and diverse perspectives, paving the way for more comprehensive evaluations and faster resolutions.
 
Shared information databases, often referred to as <a rel="noopener" href="https://hbr.org/2017/05/whats-your-data-strategy" target="_blank">single sources of truth</a>, are central to ensuring that decision-makers have access to accurate and up-to-date information. These databases centralize data and analysis to reduce confusion and prevent contradictory data from hindering the decision-making process. Decision-makers can rely on these trusted repositories to make faster, well-informed choices without needing to validate multiple sources.
 
<h1>What do you need to make fast decisions?</h1>
To navigate through uncertainty and seize opportunities, you need access to the right information at the right time. From timely and accurate data to market research and customer insights, information plays a pivotal role in empowering you to steer your organization towards success.
 
<h2>Access to timely and accurate data</h2>
Whether it's sales figures, market trends, or operational metrics, having the latest information at hand enables your organization to respond promptly to changing circumstances. Timely data empowers you to identify emerging opportunities, <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/" target="_blank">analyze risks</a> and assess the effectiveness of ongoing strategies.
 
Inaccurate or outdated information can lead to misguided decisions that may have negative consequences for your company. To ensure accuracy, your organization must invest in robust data collection processes, validation procedures and quality assurance checks. By relying on trustworthy data sources, the decision-makers in your organization can have the confidence they need to make accurate and informed choices that align with your company's objectives.
 
<h2>Market research and competitor analysis</h2>
Understanding your business’s market and competitors is crucial to making fast, well-informed decisions. <a rel="noopener" href="https://www.ibisworld.com/blog/market-research-methods/99/1127/" target="_blank">Market research</a> plays a pivotal role in gathering valuable insights into consumer behavior, industry trends, <a rel="noopener" href="https://www.ibisworld.com/blog/market-sizing/99/1127/" target="_blank">market sizing</a> and emerging demands. Armed with in-depth knowledge of your market and competition, you can proactively adapt your strategies to cater to changing customer preferences and capitalize on emerging opportunities.
 
<a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/99/1127/" target="_blank">Competitive analysis</a> is also vital for swift decision-making. By monitoring and evaluating the actions of your competitors, your business can gain a competitive edge. Whether you’re in the process of <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">developing a new product</a> or aiming to improve your bottom line, understanding competitor strengths and weaknesses allows you to position your business strategically in the market and differentiate your products and services.
 
<h2>Customer feedback and insights</h2>
Customers are the lifeblood of any business and their feedback is an invaluable asset for swift decision-making. Gathering customer feedback provides critical insights into your customer’s preferences, pain points and expectations. By actively listening to your customer’s opinions, your organization can identify areas for improvement, address issues promptly and create products and services that resonate with your target audience.
 
Customer insights go beyond simple feedback, and encompass analysis of customer behavior and engagement patterns. By leveraging data-driven customer insights, you can anticipate customer needs, personalize experiences and tailor your offerings to better suit specific customer segments.
 
<h1>Wrap up</h1>
In the fast-paced world of business, making swift decisions can be the key difference between success and stagnation. With a well-defined decision-making framework, a culture that encourages collaboration and innovation, and an appropriate mix of data, technology, and information, you can more confidently steer your business through turbulent times.
 
Striking the right balance in decision-making processes can be tricky. You’re aiming for swift, but not hasty, and efficient, but not uninformed. Using IBISWorld’s independent, comprehensive and up-to-date industry information helps you spend less time on data analysis and more time setting your organization up for success by making fast, intelligent business decisions.

Making fast decisions is crucial to business success. Learn why moving quickly matters and how to speed up decisions in any organization.

A Need for Speed: How to Make Fast and Confident Business Decisions

Key Takeaways:
Financial benchmarking involves comparing a business’s key metrics to its competitors or industry averages.
Using financial benchmarking to identify the areas where a business excels or has room for improvement can provide crucial insights and support success.
Professionals in a range of fields can use financial benchmarks to make informed decisions around strategy, resource allocation, merger or acquisition opportunities, and business processes.
 
<h2>What is financial benchmarking?</h2>
Financial benchmarking is one way to assess a business’s financial health. The process involves comparing key metrics in the company’s financials, such as profitability, liquidity or growth, against competitors or industry averages. These comparisons help you understand where a company is doing well and identify areas for improvement. Financial benchmarking can also offer guidance to business owners that want to improve their company’s finances to achieve stronger growth and greater success.
 
<img src="https://content.ibisworld.com/media/0krmevak/financial-benchmark-meeting.jpg?width=720&amp;height=480" alt="Four people in business attire are gathered around a meeting table in a large office. One person is standing, while the person seated beside them points to data on a notepad. The two other people look on. Another high-rise office building is visible through the large glass windows behind the table." width="720" height="480">
 
Whether you’re evaluating your own business, a client’s company or a competitor, financial benchmarking provides a clear picture of how a business measures up to other players in its industry. You can also use the information you gather to make decisions that maximize return on investment, evaluate merger or acquisition prospects, and identify potential risks and opportunities.
 
In short, benchmarking helps companies stay ahead of the curve to maximize their success.
 
<h2>What outcomes can you achieve with financial benchmarking?</h2>
Financial benchmarking provides a framework to assess a company’s performance against the competition. For the purposes of this article, we’ll run through the process of benchmarking your own company, but these steps can easily apply to those working in a consulting, advisory, auditing or lending capacity. It’s an essential process to help enhance or sustain business performance, and can help you:
 
1. Identify strengths and weaknesses
Financial benchmarking shines a spotlight on your company's performance, highlighting areas where it excels and those that require improvement. By comparing key financial metrics, you can identify what sets your business apart and where it may be falling short. This knowledge helps you decide on targeted actions to enhance your strengths and address weaknesses head-on, and is a key component of <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/99/1127/" target="_blank">competitive analysis.</a>
 
2. Optimize efficiency and profitability
Insights into industry best practices help uncover strategies that you can implement to optimize your operations and boost profitability. Financial benchmarking can help you identify innovative approaches that top-performing businesses use, allowing you to analyze and fine-tune your <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">business processes</a> and boost efficiency. This, in turn, helps your business becomes a well-oiled machine, benefitting your bottom line.
 
3. Allocate resources strategically
Even the largest companies have finite resources, and making sure they’re allocated in the right places is key. Financial benchmarking empowers you to understand how your performance measures up against industry standards, so you can identify areas where investment would yield the greatest returns. Strategic allocation of resources propels your growth and offers your business a competitive edge in the marketplace.
 
4. Mitigate risks and adapt to market changes
Benchmarking allows you to <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/" target="_blank">analyze potential risks</a> and market changes early on, so you can adapt your strategies proactively and stay ahead of the game. Comparing your performance with industry peers enables you to observe market trends and adjust your operations accordingly. This foresight can help you respond to evolving industry dynamics and mitigate potential threats by putting robust <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">risk management frameworks</a> in place.
 
5. Enhance decision-making
Quantifiable data empowers you to make informed decisions. Whether you need to evaluate potential partnerships, assess merger opportunities or identify risks, financial benchmarking equips you with the insights and evidence you need to navigate the ever-changing business landscape with confidence.
 
<h2>Key methods for financial benchmarking</h2>
Now that we’ve broken down what financial benchmarking is and why it’s important, let’s look at some methods for comparing your performance against an industry or sector average, or even a specific competitor.
 
Analyzing Cost Structure
Analyzing cost structures is the process of evaluating and comparing your business’s spending with that of a competitor or an industry or sector average. Cost structure analysis highlights areas to improve efficiency and reduce expenses. This involves examining direct costs, such as raw materials and labor, and indirect costs, such as overhead expenses, as well as how those expenses are trending over time. Identifying areas where your company’s spending is not in line with the industry average or direction can provide insights into the different processes or strategies used in the industry. For example, growth in industry average overhead costs may indicate that your competitors are investing in tools and automation. Cost structure analysis can help you identify such discrepancies, and can be part of a wider analysis using a framework like <a rel="noopener" href="https://www.ibisworld.com/blog/using-porter-s-five-forces-to-develop-business-strategies/99/1127/" target="_blank">Porter’s Five Forces</a>.
 
Assessing Financial Ratios
<a rel="noopener" href="https://www.ibisworld.com/blog/financial-ratios-how-to-use-them/99/1127/" target="_blank">Financial ratios</a> are essential indicators that provide insight into a company's financial health. These include:
<ul>
<li>Liquidity ratios, such as the current ratio and quick ratio, which assess a company's ability to meet short-term obligations</li>
<li>Coverage ratios, such as interest coverage ratio and times interest earned, which determine a company's ability to pay its debts</li>
<li>Leverage ratios, such as debt-to-equity ratio and debt-to-asset ratio, which measure a company's debt levels and financial risk</li>
<li>Profitability ratios, such as gross profit margin and return on assets, which help gauge the effectiveness of a company's operations and management</li>
<li>Operating ratios, such as inventory turnover and accounts receivable turnover, which measure the efficiency of a company's day-to-day operations.</li>
</ul>
By comparing these ratios with industry peers, you can identify areas where your business excels or falls short, and make data-driven decisions to improve performance.
 
Examining Key Ratios
Key ratios offer you an in-depth understanding of how your company's performance metrics relate to one another, and how they measure up to your competitors’ performance. Some common key ratios include net profit margin, which is the percentage of revenue left after accounting for all expenses; revenue per employee, which is the amount of revenue your company generates for each person it employs; and wages as a share of revenue, which is the percentage of a company or industry’s revenue that is spent on employee wages. These ratios are useful when comparing your business to others of a similar size within your industry, and can help to identify bloat or underperformance due to inefficient use of resources. Comparing these ratios against broader industry benchmarks allows you to gain a clearer picture of your competitive position and identify areas for improvement.
 
<h2>The Financial Benchmarking Process Explained</h2>
The financial benchmarking process consists of several key steps that enable businesses to effectively analyze performance and draw valuable insights. Let’s break down the process.
 
<img src="https://content.ibisworld.com/media/dj4l5w2e/financial-benchmarking-steps.png?width=720&amp;height=524.8884165781084" alt="An infographic breaks down financial benchmarking. The title reads 'Step by step: financial benchmarking.' The infographic shows six numbered steps that summarize the process in the section of text following the infographic..." width="720" height="524.8884165781084">
 
1. Define objectives
The first step in the financial benchmarking process is to clearly define the objectives and goals of the analysis. This helps you focus on the most critical areas of your business’s operations and ensure the benchmarking exercise yields actionable insights.
 
2. Identify Key Performance Indicators (KPIs)
Next, select the relevant KPIs to measure your business’s performance against industry standards and competitors. These KPIs can include financial metrics such as revenue, profit margin and return on investment (ROI), and operational metrics such as productivity, efficiency and customer satisfaction.
 
3. Collect data
After you’ve identified the KPIs, you need to collect accurate data, both internally and externally. Internal data comes from your company's financial records and systems, while external data is typically sourced from industry reports, surveys, and other research materials. Make sure that the external data you source is credible and up-to-date to ensure that your insights are meaningful and reliable.
 
4. Analyze data
With the required data in hand, conduct a thorough analysis to compare your business’s performance against industry benchmarks and competitors. This involves calculating relevant ratios, identifying trends, and determining areas where your company excels or lags behind its peers.
 
5. Develop an action plan
Based on the insights gained from the data analysis, develop an action plan to address any identified weaknesses and capitalize on your strengths. This plan should outline the specific steps and resources required to achieve the desired improvements. Make sure you return to the plan regularly to assess your progress.
 
6. Keep improving!
Financial benchmarking shouldn’t be a one-time exercise. Instead, it should be integrated into your company's ongoing <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">strategic planning</a> and performance management processes. Regularly updating benchmarks and conducting comparisons allows you to be proactive and continuously refine strategies, ensuring sustained success and competitiveness in the market.
 
<h2>Financial benchmarking in action</h2>
We can see that financial benchmarking is an extremely valuable tool for businesses of all sizes, so it’s worth looking at an example of financial benchmarking in use.
 
<img src="https://content.ibisworld.com/media/x4tbxq42/software-developers.jpg?width=720&amp;height=479.7449521785335" alt="A software developer sits in front of a computer at a row of desks. The developer is typing, and code is visible on one of the monitors in front of them. Another person sits beside them, looking at the screen." width="720" height="479.7449521785335">
 
Picture a growing software development company that wants to take their industry by storm. They have a solid understanding of their <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-measure-total-addressable-market/1/1127/" target="_blank">Total Addressable Market</a>, but they’re ready to dig a bit deeper. They decide to use financial benchmarking to figure out how they measure up to the competition and identify ways to improve.
 
First, they set their sights on improving profitability, increasing market share, and optimizing operations. To get there, they look at key performance indicators (KPIs) like revenue growth, net profit margin, return on equity, and employee productivity. They gather data from their records and <a rel="noopener" href="https://www.ibisworld.com/" target="_blank">industry reports</a> to see how they stack up against the competition.
 
After crunching the numbers, they find out they're doing well in some areas. Their net profit margin and employee productivity are above average, which is great news. But their revenue growth and return on equity could use a boost.
 
So, they get to work. They invest in sales and marketing to drive revenue growth, and they tighten up their financial strategy to increase their return on equity. They keep tabs on their progress by updating their benchmarks and analyzing their finances regularly.
 
Using financial benchmarking, this software development company has analyzed where they stand and developed strategies to help them succeed.
 
<h2>Wrap up</h2>
Financial benchmarking is a powerful tool that offers valuable insights into your competitive landscape, by comparing key performance indicators and financial ratios against industry and sector averages. These insights allow you to identify areas for improvement, capitalize on strengths, and make informed strategic decisions.
 
When integrated into your company's ongoing strategic planning and performance management initiatives, the benchmarking process fosters continuous improvement and enhances competitiveness. Embracing this process gives you an advantage in navigating ever-evolving market dynamics and maintaining a strong position within your industry.

Learn how financial benchmarking can help your business stay competitive and succeed in the long run. 

Financial Benchmarks: Elevate Your Decisions With Data

Senior Client Manager 

Key takeaways
 
When credit quality deteriorates, risky lending conditions and stricter oversight on loans can make it difficult for relationship managers to grow their book of business. 
 
With fewer qualified loan candidates out there, the pressure is on for relationship managers to stand out from the competition.  
 
Today’s commercial banking professionals are learning more and more about potential candidates’ industries to better advise and partner with their business clients. 
 
 
In today's rapidly evolving economic landscape, financial institutions and their relationship managers face a critical challenge: navigating declining credit quality.
 
If you’re in relationship management, you already know how difficult it can be to grow your book of business when credit quality is suffering. Finding qualified loan candidates is that much more challenging when businesses across the board are hurting.
 
This guide examines some revealing survey data on emerging trends in banking, and discusses several ways for lenders and relationship managers to leverage industry research in today’s challenging and competitive environment.
 
Behind the decline in credit quality
In recent years, businesses have faced significant challenges, and the ongoing changes in the economy have only continued to threaten their livelihood. Economic volatility, triggered by geopolitical tensions, trade disputes and policy changes, has made it harder for businesses and individuals to meet their financial obligations.
 
On top of this, rising interest rates, industry-specific challenges and <a rel="noopener" href="https://www.ibisworld.com/blog/identifying-sources-and-impacts-of-risk/1/1134/" target="_blank">regulatory changes</a> have caused credit quality to slide.
 
Why relationship managers are losing sleep
1. Risky lending conditions
Part of maintaining a well-balanced loan portfolio is lending to creditworthy clients. In today’s environment, with credit quality on the decline, a greater level of scrutiny is required to ensure the financial health of any business coming on board at your bank or credit union.
 
This means devoting more time and effort to assessing the creditworthiness of potential clients.
 
Doing preliminary research before reaching out to a prospective client can help you <a rel="noopener" href="https://www.ibisworld.com/blog/productive-sales-prospecting/1/1127/" target="_blank">pre-qualify their business</a>.
 
2. Difficulty in meeting performance targets
Driving <a rel="noopener" href="https://www.ibisworld.com/blog/five-tips-to-grow-your-commercial-services/1/1127/" target="_blank">loan growth</a> at your institution can feel nearly impossible when credit quality is suffering on a large scale. Riskier borrowers may be unable to access credit or become more cautious about taking on additional debt.
 
Trying to maintain or increase loan volumes without compromising credit quality is a delicate balancing act. Targeting some of the more deposit-rich industries and resilient sectors across the economy may help focus your prospecting and bring some balance to your world.
 
3. Strained client relationships
As credit quality declines, you may find yourself facing tough conversations with clients about their financial health, loan delinquencies or potential default scenarios. Such conversations can strain the trust and rapport you’ve built over time with clients.
 
In some cases, this can lead clients to seek out alternative banking partners.
 
Building a solid foundation, and showcasing your unique knowledge and ability to advise businesses like theirs, can help you secure customer loyalty.
 
Survey says…knowing your customers is key
Industry research is no longer just for underwriters. These days, relationship managers also need to understand the dynamics of their clients’ industries.
 
How do we know this? A recent survey showed that business owners are now expecting more from their bankers. According to <a rel="noopener" href="https://www.barlowresearch.com/index.php" target="_blank">Barlow Research</a>, roughly 70% of small business and middle market customers they surveyed expressed that their banker’s knowledge about their industry is a top priority or very important to them.
 
<img src="https://content.ibisworld.com/media/2dbfmtbv/group-5749-1.jpg?width=720&amp;height=720" alt="Importance of bankers' industry knowledge" width="720" height="720">
 
At IBISWorld, we’ve seen bankers’ appetite for industry information grow over the years. From 2022 to 2023 alone, we witnessed a 200% increase in traffic to our platform, specifically from banking users. We’re no longer just serving underwriters and credit analysts, our user base has grown to include relationship managers too.
 
If you’re wondering whether the extra research is worth your time, consider this: In a Barlow Research survey of nearly 3,200 middle market companies, 82% said they had been solicited by financial institutions they don’t already work with. The vast majority of the respondents reported hearing from five or more institutions.
 
<img src="https://content.ibisworld.com/media/if3d4ikm/group-5748.png?width=720&amp;height=720" alt="Businesses solicited by banks" width="720" height="720">
 
With potential clients hearing from multiple institutions, being able to speak knowledgeably about the challenges within a client’s industry can make your bank the obvious choice. When qualified clients are hard to come by, the pressure is on to <a rel="noopener" href="https://www.ibisworld.com/blog/building-relationships-takes-a-focus-on-prospecting/1/1127/" target="_blank">make every conversation count</a>.
 
Leveraging industry research
Hundreds of banks and credit unions rely on <a rel="noopener" href="https://www.ibisworld.com/solutions/ibisworld-for-commercial-banking/" target="_blank">IBISWorld’s industry research</a> to assist in all stages of the loan cycle. For relationship managers looking to outshine the <a rel="noopener" href="https://www.ibisworld.com/blog/business-competition/99/1127/" target="_blank">competition</a>, IBISWorld can be help with the following:
<ul>
<li>Build and Strengthen Relationships – With so many businesses now solicited by by 5 or more financial institutions each year, knowing your client’s industry can help you stand out from the next bank or credit union.</li>
<li>Benchmark Against Industry Averages – Providing more specific information for a client can help you build trust. IBISWorld offers <a rel="noopener" href="https://www.ibisworld.com/products/industry-financial-ratios/" target="_blank">industry benchmarks</a> by asset size, helping you advise your clients by showing them <a rel="noopener" href="https://www.ibisworld.com/products/benchmarking-pro/" target="_blank">exactly where they stand</a>.</li>
<li>Prospect New Types of Clients – With loan growth slowing over the last quarter, deposits and other noninterest revenue have been a large focus for relationship managers. Looking at the cash conversion cycle (CCC) in an industry can help identify performance gaps and aid in best practice recommendations. Other metrics, like <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-profitability-analysis-and-why-is-it-important-to-businesses/44/1127/" target="_blank">profit</a> or net cash after operations, can signal that an industry is rich in deposits.</li>
<li>Prospect by Your Territories – Bankers love our focused state- and county-level data on the standout industries in their backyard. IBISWorld <a rel="noopener" href="https://www.ibisworld.com/products/state-and-provincial/united-states/" target="_blank">State Reports</a> allow you to spot fast-growing industries by revenue or establishment growth, down to the local level.</li>
</ul>
 
Looking ahead
To effectively manage credit quality in this challenging environment, relationship managers must embrace a proactive approach. Accurately assessing risks associated with different industries, evaluating the creditworthiness of borrowers, and implementing robust risk management strategies are essential.
 
By staying informed about the specific risks and vulnerabilities of different sectors, lenders can make more informed lending decisions and tailor their credit strategies accordingly. Having access to comprehensive <a rel="noopener" href="https://www.ibisworld.com/products/industry-research/" target="_blank">industry reports</a>, <a rel="noopener" href="https://www.ibisworld.com/united-states/economic-profiles/" target="_blank">economic analysis</a>, and <a rel="noopener" href="https://www.ibisworld.com/products/industry-risk-rating/" target="_blank">risk assessment tools</a> allows lenders to proactively identify emerging risks, adapt their lending practices, and implement measures to mitigate credit risks.
 
<hr>
 
Want to use IBISWorld at your bank or credit union? <a rel="noopener" href="https://www.ibisworld.com/contact-us/" target="_blank">Reach out</a> to learn all about our industry intelligence for bankers.

Learn what’s behind declining credit quality and how to leverage industry intelligence for stronger, smarter lending decisions.

From Crisis to Opportunity: How Relationship Managers Are Navigating Poor Credit Quality

No industry operates in isolation, so staying on top of external forces that affect your industry keeps your business ahead of the competition.

Seeing the Bigger Picture: The Importance of Understanding Your External Environment

Founder & CLO, Anthony Cole Training Group 

In analyzing those bankers who are successful year after year, we find significant consistencies in prospecting behavior and practice management. These top sales producers adhere to the fact that prospecting is an "A" priority.
 
Successful lenders and relationship managers service accounts just like everyone else. They also have fires to put out and meetings to attend, but nothing gets in the way of consistent outreach to build new relationships.
 
Four Best Practices for Building Relationships
 
1. Schedule a time each day to make phone calls and stick to the schedule. 
First thing in the morning works well. The longer you procrastinate, the better chance there is of something getting in the way of this critical activity. You don't have to like prospecting; you just have to do it. Every day. The more of this activity you do, the more proficient you will become.
 
2. Don't look, act or sound like every other banker.
Create a unique approach and put yourself in your prospect's place. Would you take your phone call and be responsive? If not, work on your strategy and script. For example, when you get your prospect on the phone, say “Hello Tom.” and wait for the prospect to respond. They will typically say something like “Hi, what can I do for you?” They have engaged.
 
Buyers are conditioned to hear, “Hello. This is Joe from ABC Company and I am calling you to …” Prospects hear this, immediately recognize a sales pitch, and quickly disconnect.
 
How do you make your opening call unique and compelling? Do your homework on the company, their industry, trends and challenges, using tools like IBISWorld. <a rel="noopener" href="https://ibisworld.com/blog/questions-bankers-should-ask-customers/1/1127/" target="_blank">Your opening positioning statement</a> could refer to one of those areas to quickly demonstrate that you’re knowledgeable in the subject and understand their industry. A reference to a problem you’ve solved for a similar client is also a strong point of credibility.
 
3. Successful bankers understand that the purpose of a call is to set an appointment with a qualified candidate.
Stop selling on the phone. Stop seeing just anyone who will see you. <a rel="noopener" href="https://ibisworld.com/blog/productive-sales-prospecting/1/1127/" target="_blank">Make sure the prospect qualifies</a> or has a potential reason to do business with you. On the phone call, identify that the prospect has a problem and ask them to invite you to come and talk about it.
 
The quality of the phone call determines the quality of the appointment. At this point, your goal is to identify if your prospect has a problem that you can solve. Ask questions like, “Can you tell me about the problems you’re experiencing?”
 
Ask the question, “Why is this problem a problem?” so that the prospect reinforces in their own mind that this is something they need to address. If they can’t answer this question, chances are the problem isn’t big enough for them to spend time and money on it.
 
Ask the question “How much is this problem costing you?” Asking this will make the potential prospect put dollars to the problem. If the money involved is more than, or equal to the price of your product, they will be more willing to invite you to visit. Establish that they would like to fix the problem. At this stage, you are trying to see if they have enough information and “pain” to justify a meeting.
 
Keep the following questions handy when you are on prospecting calls. They will help you discover if a prospect is really a prospect.
<ul>
<li>Tell me about your current problems. For example, “Tell me about your problems in your cash management system?”</li>
<li>How long has this been a problem?</li>
<li>What have you done to fix it?</li>
<li>When you spoke with your current banker, what did they say?</li>
<li>What have they done to make this problem go away?</li>
<li>What happens if you don’t fix this?</li>
<li>How much is it costing you?</li>
<li>Is that a problem?</li>
<li>Do you want to fix it?</li>
</ul>
4. Understand that business owners want to meet professionals through introductions, not cold calls.
Always ask for introductions as your first prospecting strategy. Ask your best client advocates the simple question “If you were doing what I do, who would you talk to?”  Then, ask them if they would be willing to make a call on your behalf. You can find more information on <a rel="noopener" href="https://anthonycoletraining.com/getting-introductions-sales-brews" target="_blank">How to Get Introductions here.</a>
 
We all know that prospecting is essential to finding and building relationships. And you know that you can't consistently grow your business unless you consistently prospect. You can't count on market conditions or new products or low rates to create opportunities. You must find prospects that fit your profile, call them and see if they qualify to do business with you.
 
So ask yourself, which of the above might help you most today? Implement this change for the next 30 days, until it comes naturally. Commit yourself to changing one prospecting behavior or business practice that will dramatically impact your business.
 
<hr />
Tony Cole started Anthony Cole Training in 1993 by training and consulting with sales teams at Merrill Lynch and Acordia Rauh. Upon starting Anthony Cole Training, he authored and delivered his proprietary materials and customized sales training curriculums to insurance companies.
 
Since 2002, Tony has been adding to his team of sales development experts to help educate all types of corporations, banks and professional service providers. Today, Anthony Cole Training Group continues to grow. It is now woman-owned and WBENC-certified with offices located in Cincinnati, Ohio.
 
Learn more at <a rel="noopener" href="https://anthonycoletraining.com/" target="_blank">anthonycoletraining.com</a>

Discover four best practices for building relationships. Schedule effective calls, stand out with a unique approach, set qualified appointments and master introductions. 

Building Relationships Takes a Focus on Prospecting

On June 7, 2023, IBISWorld co-hosted the Deposit Strategy Summit in Boston with partners from <a rel="noopener" href="https://www.ibisworld.com/blog/ibisworld-relpro-deepen-partnership/1/1131/" target="_blank">RelPro</a> and <a rel="noopener" href="https://www.barlowresearch.com/index.php" target="_blank">Barlow Research</a>. In attendance were several New England bankers from community, regional and national institutions, including Senior Commercial Leaders, Chief Marketing Officers and Relationship Managers.
 
Since the failure of Silicon Valley Bank in March, growing and retaining deposits has a been a major topic for banks and credit unions of all shapes and sizes. This has presented a big shift in priorities for bankers who had spent the past several years focused on loan growth in a low interest rate environment.
 
Knowing we had customers with similar priorities and challenges, IBISWorld and its two partners wanted to organize an event that offered an opportunity to share the current deposit trends, as well as best practices for selling deposit products.
 
Barlow Research, which specializes in surveying the sentiment of business owners and financial decision makers, started the evening by highlighting a number of eye-opening statistics about just how many small and middle-market companies have been shopping for new deposit accounts in the past six months.
 
When doing that shopping, the two most important factors those companies were looking for in a new banking provider were:
<ol>
<li>Competitive rates</li>
<li>The bank’s overall stability</li>
</ol>
Many banks have spent recent months touting their financial stability in the wake of <a rel="noopener" href="https://www.ibisworld.com/blog/bank-failures-and-concentration-risk/1/1129/" target="_blank">bank failures</a>, but they also find themselves offering products and rates similar to their competition.
 
It can be difficult for a banker to differentiate themselves in all the noise.
 
IBISWorld was able to expand on Barlow’s statistics with a few ways that bankers can target deposit-rich industries and create that differentiation.
 
Oftentimes, bankers will think in terms of sectors such as <a rel="noopener" href="https://www.ibisworld.com/healthcare-sector/" target="_blank">Healthcare</a>, but within those sectors are particular industries that have their own nuances and deposit needs (for instance, within <a rel="noopener" href="https://www.ibisworld.com/healthcare-sector/" target="_blank">Healthcare</a>; <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/chiropractors-industry/" target="_blank">Chiropractors</a>, <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/optometrists-industry/" target="_blank">Optometrists</a>, or <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/physical-therapists-industry/" target="_blank">Physical Therapists</a>). On the other hand, there can be industries within a deposit-rich sector like Healthcare that bankers may actually want to avoid for deposits, based on their typical financials (e.g. <a rel="noopener" href="https://www.ibisworld.com/united-states/market-research-reports/hospitals-industry/" target="_blank">Hospitals</a>).
 
Pinpointing the winners and losers within a sector can save you from spending time prospecting the wrong businesses.
 
In addition to targeted prospecting, understanding what your client’s financial situation might be, based on their industry, can be a key strategy in standing out from the crowd of competitors.
 
Industry metrics to discuss with deposit clients include:
Revenue Growth, Seasonality, Profit Margins, and Net Cash After Operations.
 
However, just asking pointed questions about your customer’s current strengths and weaknesses can be a great way to develop the necessary trust that can forge a strong relationship, and keep a customer from shopping around.
 
Lastly, at the summit, <a rel="noopener" href="https://relpro.com/" target="_blank">RelPro</a> was able to give insights into how bankers can go beyond their client’s industry and gather information specific to certain companies and their key employees. The company information that RelPro provides can help bankers identify industry operators within their specific geographic footprint, which institutions they may have done business with in the past (via UCC filings) and what you need to know about their executives to build rapport with them (how long they’ve worked there, previous positions, where they went to school, etc).
 
Overall, the Deposit Strategy Summit was a great way for bankers concerned about a similar topic to come together, share ideas and ask questions of their peers and research providers.
 
See below for the various takeaways from Barlow Research, IBISWorld and RelPro. If you’re interested in attending an event like this in the future or wish to inquire about other matters, please feel free to contact <a href="mailto:matt.murphy@ibisworld.com">matt.murphy@ibisworld.com</a>.
 
Barlow Research
<ul>
<li>Businesses are actively shopping for new deposit accounts</li>
<li>Bank stability is important, but <a rel="noopener" href="https://www.ibisworld.com/blog/five-tips-to-grow-your-commercial-services/1/1127/" target="_blank">competitive rates</a> are essential</li>
<li>Most deposits are held by a small portion of businesses</li>
</ul>
IBISWorld
<ul>
<li>Banks can use market intelligence to target the right industries for deposits</li>
<li>Granularity is important – certain industries may be winners or losers within a single sector</li>
<li>Bankers can deliver compelling, value-added insights to <a rel="noopener" href="https://www.ibisworld.com/blog/lenders-and-leaders/" target="_blank">connect with customers</a> and build more meaningful relationships</li>
</ul>
RelPro
<ul>
<li>Target companies in cash-rich industries to quickly identify new commercial deposit opportunities</li>
<li>Being viewed by your prospects/clients as a trusted advisor will lead to new business and cross-selling opportunities</li>
<li>Leveraging technology to integrate company, executive and industry insights enables you to differentiate your prospecting approach, identify market gaps and save bankers precious time</li>
</ul>
<hr />
 
<a rel="noopener" href="https://www.ibisworld.com/solutions/ibisworld-for-commercial-banking/" target="_blank">Explore our website</a> to learn more about IBISWorld's solutions for bankers.

Discover the latest deposit trends, best practices for selling deposit products and how to differentiate yourself and build strong relationships.

The Deposit Strategy Summit - Bringing Together Bankers with a Common Goal

Key Takeaways:
Providing more competitive rates on deposit and loan products can be a natural avenue to attract new customers.
 
It’s a top priority to have a Relationship Manager that’s knowledgeable about customers’ industries.
 
Smart Relationship Managers will make new technologies and their ease of use a top selling point.
 
Many banks have begun 2023 racing to grow deposits to support new loan origination and cover any potential default losses should the economy enter choppier waters. As Relationship Managers look to grow their list of commercial clients and the products they’re providing them (commercial loans, commercial savings &amp; checking, treasury management), many are looking for ways to set themselves apart from the pack.
 
<img src="https://content.ibisworld.com/media/hmxpqo4c/shutterstock_2148952465.png?width=720&amp;height=564.6758767268863" alt="" width="720" height="564.6758767268863">
 
Below are five tips that can help you stay focused on what’s most meaningful to new and existing commercial customers, as well as a video from IBISWorld’s Director of Customer Communications, Isaac Satten, on how our industry research database can help:
 
1. Competitive pricing
It’s the obvious one, so let’s get it out of the way. Depending on an institution’s offerings, providing more competitive rates on deposit and loan products can be a natural avenue to attract new customers.
 
However, in an environment where a bank’s competitors are also aggressive, this strategy is likely only appropriate when you pair it with other strategies listed here. Many business owners are being called on by multiple banks, offering them similar rates, so competitive pricing will only stand out when the banker’s messaging also does.
 
2. Be the trusted advisor
Relationship Managers need to focus on building strong relationships with their commercial customers. According to Barlow Research, having a Relationship Manager knowledgeable about their industry is a top priority for 72.0% of companies.
 
This involves understanding their business needs and providing customized solutions that meet those needs. By building trust and providing value-added services, bankers can deepen customer relationships, leading to increased deposits and loans.
 
3. Cash &amp; treasury management services
As part of being a trusted advisor, bankers can offer cash or treasury management services to their commercial customers. These services help customers manage their cash flows more efficiently, which can also lead to increased deposits.
 
It also positions the bank as a reliable partner that can help a company reduce financial exposure during uncertain economic times.
 
4. Marketing
Targeted email campaigns, social media ads, and other marketing tactics that reach a bank or credit union’s commercial customer base have become popular ways to generate inbound inquiries from local businesses. If your institution has a dedicated marketing team to help create this content, are they using tactics like this?
 
If not, Relationship Managers can create their own eye-catching email campaigns that address the industry conditions that might keep a business owner up at night or their social media posts promoting their personal brand and expertise.
 
5. Promote convenience
Banks and credit unions can make it easy for their commercial customers to deposit funds by offering online banking and mobile banking services. These services allow customers to deposit funds remotely, saving them a lot of time and effort.
 
Smart Relationship Managers will make these new technologies and their ease of use a top selling point.
 
Check out Isaac Satten's walk-through of IBISWorld's industry research database <a rel="noopener" href="https://help.ibisworld.com/s/article/IBISWorld-for-Commercial-Lending" target="_blank">here</a>:
 
<div class="mceNonEditable embeditem" data-embed-url="https://www.youtube.com/watch?v=EeSYrPxYh6c" data-embed-height="240" data-embed-width="360" data-embed-constrain="false"><iframe width="360" height="203" src="https://www.youtube.com/embed/EeSYrPxYh6c?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" title="IBISWorld for Commercial Lending"></iframe></div>
 
<hr>
 
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More relationship managers are looking to grow their list of commercial clients. Check out IBISWorld's top five tips to stay focused on fostering meaningful client relationships.

Five Tips to Grow Your Commercial Services

Chief Customer Officer

Contents
<a href="#internal-or-external">Internal or external hires? What’s best?</a>
<a href="#good-hire">What makes a good internal hire?</a>
<a href="#transfer">Managing the transfer</a>
<a href="#skill">Training the skill</a>
<a href="#pitfalls">Avoiding pitfalls</a>
<a href="#final">Final thoughts</a>
 
With a skills shortage and an all-time low unemployment rate globally, talent acquisition seems to be a top concern for every CEO. How your business stands out as a potential destination for new employees has never been more competitive.
 
Why should someone work for you? What are you going to offer that they can't get elsewhere?
 
The transactional nature of remote work, which is more and more common in today’s climate, has leaders everywhere wondering how to build their dream team.
 <img src="https://content.ibisworld.com/media/o3pdtvax/unemployment-data-ibisworld.png?width=720&amp;height=506.9777306468717" alt="Unemployment rates by geography, including AU, US and EU" width="720" height="506.9777306468717">
 
Explore the full data set on our <a rel="noopener" href="https://www.ibisworld.com/us/list-of-business-environment-profiles/#domestic-economy" target="_blank" data-anchor="#domestic-economy">website</a>
 
Over a year ago, I started a new role as the head of our global customer success department and had to build a whole team from the ground up. Of course the work is exciting. The chance to take our clients’ suggestions and deliver them a <a rel="noopener" href="https://help.ibisworld.com/s/article/2023-product-roadmap" target="_blank">modern and intuitive experience</a> brings me a great deal of pride. Being able to <a rel="noopener" href="https://content.ibisworld.com/media/sbumomlt/ibisworld-the-modern-industry-research-experience.pdf" target="_blank">launch new features</a> that make their lives easier is really rewarding. As we strive for a more 360 experience, we find <a rel="noopener" href="https://www.linkedin.com/feed/update/urn:li:activity:7016871097207853057" target="_blank">new ways to communicate</a> and build community in the industry research world – an added bonus.
 
But the thing that has made it my most gratifying role yet? Curating a team of passionate individuals who all work toward a common purpose. It wasn’t easy growing our team from one marketing support role to nearly a dozen marketing and customer success positions.
 
<a name="internal-or-external"></a>Filling 10+ roles at a time may be the norm for <a rel="noopener" href="https://www.ibisworld.com/global/industry-trends/biggest-industries-by-employment/" target="_blank">labor-intensive industries</a><a id="internal-or-external" name="internal-or-external"></a> but it wasn’t something I had ever experienced while working at IBISWorld. Knowing that it was a new department, I wanted to stay very close to the hiring process. Our usual recruitment strategies would need to change to build the right team.
 
As I started looking at the exact skills we needed, I discovered that taking a hybrid approach would be the best path forward.
 
Approaching hiring by looking at your existing talent first can help ease the pressure of onboarding new faces. Promoting from within and upskilling people who are already a culture fit is a great way to find talent, especially in a tight job market.
 
Internal or external hires? What’s best? Depending on what hiring trends look like, you might not have much choice. But a tight labor market doesn’t mean you’re stuck with second-string. Promoting, or recruiting internally, comes with perks of its own that might make a tight job market the best thing for building a highly effective team.
 
Some key collateral benefits that I've found while working in an organization that hires from within include:
 
1. Shorter time-to-performance While some skills need to be learned when a staff member jumps into a new role, the basics of the product, the company's goals and initiatives and simply the way that things get done are already checked off. There's a lot that you don't need to train, and that allows an effective person to jump right in and start performing quickly. 
2. Better staff retention Nobody wants to feel like they are working at a dead-end job. Even those that aren't ambitious ladder climbers gain confidence by seeing their peers get promoted, and many hopefuls will work harder and be more engaged, knowing that it might open doors for them. 
<a id="good-hire" name="good-hire"></a>3. Deeper institutional knowledge In a global business that is transforming to adopt a product-led growth strategy, sometimes there are a lot of cooks in the kitchen. But as any <a rel="noopener" href="https://ibisworld.com/blog/product-development-process/99/1127/" target="_blank">product or project manager</a> knows, missing just a single piece of the puzzle can be a major roadblock. Having so many people with varied knowledge of our business, systems and stakeholder needs has allowed our big projects to come together much more seamlessly, with every aspect fully covered.
 What makes a good internal hire?
Watching for talent around the business has become a sport. The clever ones understand that every day is an opportunity to interview for your next job or, as a leader, to find your next hire. Your interactions around the workplace count, so always pushing your conversations a bit deeper can help you identify specific characteristics of high performers no matter what role they currently play.
 
Characteristics of high performers: 
 
1. Challenging the status quo Have you ever found yourself talking to someone about one thing, only to move on to another subject or get three levels deeper. Why? Why? Why? Every conversation is a chance to start another. I find the highest performers ask a lot of questions and follow up questions. Curiosity around why we do things, what has historically worked (or not) and how we can be better, is a sign of forward-thinking. 
2. Creative problem solving In the business world, creativity is more than artistic expression. <a rel="noopener" href="https://hbr.org/2023/01/cultivating-the-four-kinds-of-creativity" target="_blank">Creativity</a> can be varied ideas, resourcefulness, aspirational thinking and other lines of thinking that require imagination. When you have an entire team of creative problem solvers, one thought sparks another, and suddenly you have a whole list of solutions for each problem that are usually 10x better than your own. People who solve problems, not just point them out, can make all the difference in driving outcomes for your team.
 
3. Working outside the job description We’ve all had that employee who can’t work outside their job description. But flexibility is key when you’re looking for internal hires, or even external hires who you’re hoping will grow. While sticking to the job description can be necessary to keep everyone on track, it can also be a sign of rigidity or an inability to be agile. 
4. Hard work This one is a no brainer. And while every generation seems to have their own definition of hard work, we all know hard work when we see it. Baby Boomers may have popularized good old-fashioned hard work, but Millennials are agile and ready to rise to the occasion – any occasion. The <a rel="noopener" href="https://ibisworld.com/blog/managing-gen-z/99/1127/" target="_blank">fast-growing Gen Z workforce</a> has proven they can take on adversity; they’re no stranger to putting in long hours of work for a little recognition. 
5. Self-starting Self-starters are intrinsically motivated, which can be hard to gauge in an interview setting. Look for the candidates that take initiative to grow and learn. Education and certifications are freely available in many cases. Exceptional workers don’t hesitate to learn a new skill and they won’t bank on the ever-slow cultivation of experience to be their teacher. 
6. Kindness Don’t promote or hire jerks . From bullies to power trippers to gaslighters, jerks come in all shapes and sizes. While they sometimes look good on paper, their demeanor and how they engage with others – everyone from the boss to the janitor – can easily undo the benefits of work experience or natural talent. Jerks have a way of seeding discontent among your team, making it hard for your high performers to thrive. <a id="transfer" name="transfer"></a>They also have a tendency to prioritize their opinions over others, skewing team decisions and undermining the value of teamwork altogether. A high performing team does their best work in a <a rel="noopener" href="https://www.forbes.com/sites/forbestechcouncil/2021/07/05/the-kindness-imperative-creating-an-intentionally-kind-culture/?sh=669ef66d6ad7" target="_blank" data-anchor="?sh=669ef66d6ad7">culture of kindness</a>, where everyone feels empowered to share their ideas.
 
It’s easy for an external hire to promise these characteristics and more. But when hiring internally, you have the opportunity to observe these traits firsthand, making your chances of choosing the right fit that much better.
 Managing the transfer
 
<img src="https://content.ibisworld.com/media/v4jji3db/managing-the-transfer.png?width=656&amp;height=453" alt="interview held between two employed persons and one hopeful hire" width="656" height="453">
 
When done right, your decision to transfer someone into a new role should be better for both their own career growth and a clear benefit for the company overall. However, internal politics can sometimes come into play.
 Respecting hierarchy and reporting lines is crucial when recruiting talent from other departments. You never want to put another team's success at risk because you've poached a keystone member, nor do you want to anger another manager by removing their opportunity to have a say in the decision or the exit process. Speaking to the right leadership and stakeholders is essential for the company's success. Follow your HR policies and procedures for the internal transfer process.
 And remember, if the employee was successful and satisfied in their old role, keep a backdoor option on the table so they feel comfortable enough to take the leap. If things don't work out, and they dislike the new role or can't reach your performance expectations, you should be prepared to make an effort to rehome them. <a id="skill" name="skill"></a>Chances are, the talent and drive that attracted you in the first place can only benefit the company as they move to another department or job title.
 
Training the skill So you’ve hired the attitude – now you need to train the skill! If the role requires technical skills, make sure that you have a game plan to upskill in that area. Whether that's a robust training plan or enrollment in an online course, give them plenty of opportunities to share what they are learning. Doing so will help you confirm they’re building the right skills to adequately serve your business outcomes.
 But sometimes the skills required aren't exactly technical ones with a certification waiting at the end of a course. Remember that talent can’t be taught. <a id="pitfalls" name="pitfalls"></a>It’s the natural ability someone has to do something a certain way. But talent is a building block for skill, and sometimes talent can fill in for skill while your new hire is learning.
 To make this work, it’s essential to look at your team’s talents and align them with their strengths. Weaknesses will always show up. But to run a high-performing team, a person's natural strengths and their potential should match the job skills required perfectly. Avoiding pitfalls Hiring internally comes with its perks, but there are also some unique challenges to prepare for when you promote from within. 
 
Bracing for the likely case of imposter syndrome <a href="https://en.wikipedia.org/wiki/Impostor_syndrome">Imposter syndrome</a> is a psychological phenomenon where someone’s sense of self-doubt regarding their work accomplishments, skills and talents causes them near-constant worry that they will be exposed as a fraud. Employees who suffer from imposter syndrome are more prone to burnout, trying tirelessly to reach impossible goals to prove they’re legitimate. As a leader, it’s important to remind your employees – especially those you’ve hired internally – that the skills they bring to the table are valuable, and help them skill up in areas where they don’t feel as confident. It’s also important to remind your team that it’s not about knowing the answer to every question, but having the skills to find the answer. 
Fear of teaching marketable skills that take your employees elsewhere Good leaders inspire growth. Your job, as a leader, is to make your team members the best versions of themselves. If you hold back honing their skills for fear of losing them to your competition, you’re also depriving your business of valuable time with a rising talent. If one of your hires chooses to take their skills elsewhere, be proud that you were part of their career and helped them go further. If you’ve routinely been upskilling internal staff, then it shouldn’t be long before you find your next rising star. You should always be succession planning and scoping out your next hire. I said it before: Finding talent around your business can be a sport, if you make it one. 
Sometimes, it just doesn’t work out We have a saying at IBISWorld that you must kiss a few frogs before finding your prince. That gives me the confidence to take chances on people around the business. But even the most well-intentioned and well-planned promotions can fail.
 
Having open conversations about someone’s performance is important to ensure you’re either helping them succeed or helping them find the right next fit. Regularly reflecting on your employee’s work, and inviting them to offer their own input on their performance, gives them the power to change course when things start getting bumpy. Taking a chance can be positive. <a id="final" name="final"></a>But once you’ve identified that it’s not going to work, my advice is to move quickly. No one likes to fail. At their core, people just want to be successful. Although you might need to make a hard decision, letting go of an employee when it’s not working out gives both parties a chance at success. Moving fast will help you, them and the team move forward more productively.
 
Final thoughts Whether you’re facing down pitfalls or watching your vision unfold as planned, the key to making your dream team a true success is communication.
 Open communication is a crucial aspect of building strong and effective teams. By promoting a relaxed environment where team members feel comfortable expressing their thoughts, ideas and concerns, teams can increase their understanding of each other, improving cooperation and collaboration.
 Not to mention, when teams communicate effectively, they can complete tasks more efficiently and make better decisions as a group.
 When hiring internally, you get the chance to test out the dynamics of a team and get a sense for culture fit, work ethic and communication style.
 So before you talk to recruiters or head to the internet to post your next job opening, remember that rising talent, a fresh perspective, or your next visionary could be right under your nose.
 
<a rel="noopener" href="https://www.ibisworld.com/newsletter/" target="_blank">Sign up to our newsletter</a> and follow <a rel="noopener" href="https://www.linkedin.com/company/ibisworld/" target="_blank">IBISWorld on LinkedIn</a> to keep up to date with our latest insights and market research guides.

How does your organization find talent in a tight job market? If you're considering hiring internally to fill skills gaps, then this guide to promoting from within is a must-read.

Recruiting Your Dream Team – Internally

Key Takeaways
Learn the fundamentals of how AI works
 
Discover the ways in which AI can significantly benefit a wide range of industries
 
Understand the potential risks associated with the use of AI
 
Artificial Intelligence, or AI, is rapidly changing how we live, work and interact with technology. With AI algorithms and machine learning, this technology is revolutionizing a wide range of industries by improving efficiency, accuracy and decision-making processes.
 
So, what exactly is AI, and how does it work?
 
The idea of <a rel="noopener" href="https://sitn.hms.harvard.edu/flash/2017/history-artificial-intelligence/" target="_blank">AI has been around for decades</a>, but recent advancements in technology and data processing have created truly intelligent systems. AI's goal is to build machines that can think, learn, improve and ultimately make human-like decisions.
 
Can machines learn?
Machine learning is a crucial component of AI and involves using algorithms that allow machines to learn from data and improve their performance over time. This type of AI differs from traditional programming, where a computer follows a set of rules to perform a task. With machine learning, the computer uses data to identify patterns and make predictions, becoming increasingly accurate over time.
 
The decision-making process in AI is centered around predictions. AI algorithms analyze data and make predictions based on that information. These predictions can then be used to guide decision-making in a variety of industries, from healthcare to finance.
 
<img src="https://content.ibisworld.com/media/ha3fflmt/untitled-design-58.png?width=720&amp;height=487.3963868225292" alt="Machine Learning Chart" width="720" height="487.3963868225292">
 
Algorithms: The building blocks of intelligent machines
AI algorithms are the building blocks of intelligent machines. These algorithms process data, learn from it and use that information to make decisions. There are several types of AI algorithms, including supervised and unsupervised learning, as well as reinforcement learning.
<ul>
<li>Supervised learning algorithms are trained on a labeled dataset, where the correct answer is provided for each input. The algorithm uses this labeled data to learn the relationship between inputs and outputs and then uses that knowledge to make predictions on new, unseen data. This type of AI is commonly used for classification tasks, such as image recognition or spam filtering.</li>
<li>Unsupervised learning algorithms, on the other hand, are trained on an unlabeled dataset. The algorithm must find patterns and relationships in the data without the help of a labeled answer. This type of AI is commonly used for tasks such as cluster analysis or anomaly detection.</li>
<li>Reinforcement learning is a type of AI that focuses on making decisions based on rewards and penalties. In this type of AI, the algorithm learns from its experiences, making decisions based on the outcomes of its previous actions. Reinforcement learning is commonly used for decision-making in gaming, robotics, and autonomous systems.</li>
</ul>
 
AI applications: Transforming industries
AI has already significantly impacted several industries and has the potential to revolutionize many more. Here are a few examples of how AI is currently being used:
<ul>
<li>Healthcare: AI algorithms are used to analyze medical data, including patient histories, lab results and imaging studies. This information is then used to predict disease outbreaks, <a rel="noopener" href="https://www.pwc.com/gx/en/industries/healthcare/publications/ai-robotics-new-health/transforming-healthcare.html" target="_blank">diagnose diseases</a> and develop personalized treatment plans.</li>
<li>Finance: AI is transforming the world of finance by improving the accuracy of financial predictions and reducing the risk of fraud. AI algorithms are used to analyze market data and predict financial trends.</li>
<li>Retail: AI is changing how retailers do business by providing valuable insights into customer behavior and preferences. AI algorithms analyze customer data and predict buying patterns, enabling retailers to offer personalized recommendations and improve the shopping experience.</li>
<li>Manufacturing: AI is refining the efficiency and accuracy of manufacturing processes. AI algorithms are used to monitor production lines, identify potential problems and predict production outcomes.</li>
<li>IT: AI plays a vital role in IT security by detecting and preventing <a rel="noopener" href="https://www.ibisworld.com/blog/optus-cyber-attack/61/1126/" target="_blank">cyber-attacks</a>, improving network performance and automating repetitive tasks. AI algorithms are used to analyze vast amounts of security data and make predictions about potential threats, enabling IT professionals to respond quickly and effectively.</li>
</ul>
These are just a few examples of how AI is transforming industries and improving lives. With AI's ability to analyze vast amounts of data and make increasingly accurate predictions, the potential for this technology appears almost limitless.
 
<a rel="noopener" href="https://www.weforum.org/agenda/2020/10/dont-fear-ai-it-will-lead-to-long-term-job-growth/" target="_blank"><img src="https://content.ibisworld.com/media/inmjzelw/0aipa4lf1g8bnxu2dhhwc1fzqxvfxpl3rh-ijavxykc.png?width=720&amp;height=660.3188097768332" alt="50% of all employees will need reskilling by 2025, chart." width="720" height="660.3188097768332"></a>
 
The future of AI: Limitless possibilities come with significant concerns
Although AI has the potential to play an important role in our collective futures, there are also significant <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/" target="_blank">risks</a>. As this technology becomes increasingly prevalent in our lives, concerns grow regarding the risk of job losses as automation increases, the potential for AI to be used for malicious purposes and the ethical considerations surrounding the use of AI in <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">decision-making processes</a>.
 
Automation has the potential to replace large numbers of human workers in certain industries. This could lead to widespread unemployment, which would significantly impact the economy and society as a whole.
 
Additionally, AI can be used for malicious purposes, such as cyber-attacks or spreading false information. This highlights the need for proper regulation and oversight to ensure that AI is used responsibly.
 
Finally, there are ethical considerations surrounding the use of AI in decision-making processes, such as the potential for bias and perpetuation of bias in AI algorithms, as well as the responsibility of AI systems when they make mistakes.
 
These concerns must be considered as AI evolves and becomes an increasingly integral part of our lives. It will be important to carefully consider this technology's ethical and social implications, and to work to ensure its benefits are widely shared.
 
Wrap up
AI is a rapidly growing field with tremendous potential. From medical diagnosis and treatment to environmental protection, AI can revolutionize our work and lives.
 
However, it is important to approach this technology cautiously and consider the potential risks and ethical concerns surrounding its use. As AI and how we use it continue to evolve, it will be up to us to ensure its benefits are widely distributed and its <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">risks are minimized</a>.
 
By carefully considering the impact of AI on our world, we can work together to ensure that it becomes a positive force for change and growth.
 
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Learn the fundamentals of how AI works, discover the potential benefits and risks of AI technology and learn about its future.

Understanding AI: Risk vs Reward

Key Takeaways
Inflation is an essential and inescapable fact of doing business
 
The three different types of inflation – demand-push, cost-pull and built-in – have different causes and effects
 
Understanding inflation will help your business manage the effects and employ successful strategies
 
<img src="https://content.ibisworld.com/media/uvxbjd1q/inflation-chart-graphic.jpg?width=720&amp;height=449.90435706695007" alt="" width="720" height="449.90435706695007">
 
What is Inflation?
Inflation affects everyone in one way or another, yet many people may not fully understand what it means. Simply put, inflation refers to the general increase in prices of goods and services over time. You’ve probably been hearing a lot about inflation lately, and it’s part of the reason your morning coffee or your daily commute keep getting more expensive. Generally speaking, with inflation on the rise, your money probably feels like it’s buying less and less.
 
Understanding the different types of inflation can be a valuable tool for individuals and businesses. Knowing the causes and effects of inflation can help you make informed financial decisions, such as how to save, invest, or plan for the future. Moreover, inflation affects the economy as a whole, and a solid understanding of its various forms can help you stay informed about economic trends and developments. Let’s start by looking at the different types of inflation.
 
What are the three types of inflation?
<ol>
<li>Demand-pull inflation</li>
<li>Cost-push inflation</li>
<li>Built-in inflation</li>
</ol>
Each inflation type has unique causes, effects, and implications for businesses and the economy, so it's essential to understand the differences between them.
 
<img src="https://content.ibisworld.com/media/3ejl1ysw/3-types-of-inflation-01.jpg?width=720&amp;height=494.2826780021254" alt="Infographic showing the three types of inflation. The title reads Understanding Inflation: The Three Types. Underneath the title are three headings across the page. Under each heading is an icon and a short description of each type of inflation. The first type, demand-pull, is in blue on the left. The icon shows a chart with an increasing line, a stack of banknotes, and a point-of-sale card reader. The description reads 'demand for goods exceeds supply and drives prices higher.' The second type. cost-push, is in the center in green. The icon shows a shopping trolley, a truck at a warehouse and an invoice with an arrow pointing up. The description reads 'higher production costs increase the prices of goods.' The third type, built-in, is on the right in red. The icons show a set of cogs, a wallet, and 3 people linked by lines. The description reads 'Expectations of further inflation prompt wage increases and price growth.' The IBISWorld logo is in the bottom right corner." width="720" height="494.2826780021254">
 
Demand-Pull Inflation
What is demand-pull inflation? Demand-pull inflation occurs when there is an increase in demand for goods and services, causing prices to rise. This can happen, for example, during times of economic growth when more people have money to spend and are willing to pay more for goods and services.
 Causes of demand-pull inflation
Some of the main causes of demand-pull inflation include a growing population, increasing consumer confidence, and government spending. Additionally, a rise in exports or an increase in tourism can also contribute to demand-pull inflation.
 Effects of demand-pull inflation The effects of demand-pull inflation can be both positive and negative. On the positive side, increased demand can lead to job creation and economic growth. On the negative side, higher prices can reduce purchasing power and erode the value of people's savings. It can also increase the cost of borrowing, making it more difficult for people to take out loans or mortgages.
 
Business Strategy In the case of demand-pull inflation, businesses may benefit from increased consumer spending. However, it’s still important to consider the effects of inflation in your <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/" target="_blank">strategic planning</a>. You may find that you can consider strategies such as diversifying your product offerings, investing in new technologies, and improving supply chain management to reduce costs and maintain profitability.
 
Cost-Push Inflation
What is Cost-Push Inflation?
Cost-push inflation refers to a situation where the cost of producing goods and services increases, forcing businesses to increase their prices. This can be caused by factors such as rising wages, increased taxes, and higher raw material costs.
 
Causes of Cost-Push Inflation
Some of the main causes of cost-push inflation include increased labour costs, supply chain disruptions, and changes in government policies. For example, if workers demand higher wages, companies may need to raise prices to cover the additional cost and preserve profitability. Similarly, if a major supplier raises its prices, it can cause a chain reaction throughout the entire supply chain, leading to higher prices for consumers.
 
Effects of Cost-Push Inflation
The effects of cost-push inflation can be negative for consumers, as they must pay more for goods and services. It can also decrease demand, as people are unable to afford as much as they could before. This decrease in demand can then limit economic growth and potentially even lead to job losses. Additionally, cost-push inflation can make businesses less <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/99/1127/" target="_blank">competitive</a>, as they must raise their prices to cover their costs.
 
Business Strategy
If your business is facing cost-push inflation, you consider several strategies to adapt, including conducting a <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-profitability-analysis-and-why-is-it-important-to-businesses/44/1127/" target="_blank">profitability analysis</a>, reducing costs, increasing efficiency through <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">business process analysis</a>, and passing on some of the increased costs to consumers in the form of higher prices.
 
Built-In Inflation
What is Built-In Inflation?
Built-in inflation refers to the expectation of future price increases that are built into the economy. This expectation can lead people to demand higher wages or prices for goods and services, further driving up inflation.
 
Causes of Built-In Inflation
Some of the main causes of built-in inflation include previous experience with high inflation, government policies, and public expectations. For example, if people expect prices to keep rising, they may demand higher wages to keep up with the rising cost of living. Similarly, if a government announces plans to increase spending, people may anticipate higher taxes and inflation in the future.
 
Effects of Built-In Inflation
The effects of built-in inflation can be persistent and difficult to reverse. If people expect prices to keep rising, it can create a self-fulfilling prophecy, as their expectations drive up prices. This can lead to a vicious cycle of increasing prices, higher wages, and further price increases. Additionally, built-in inflation can make it more difficult for a government to control inflation through monetary or fiscal policy.
 
Business Strategy
To adapt to built-in inflation, you may need to re-evaluate your pricing strategies and adjust for higher labour costs. You can also consider investing in automation and technology to increase efficiency and reduce costs.
 
Final thoughts
Inflation is an unavoidable factor in doing business. It helps to keep the potential effects of inflation in mind when preparing a <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-write-a-business-plan-for-a-loan/99/1127/" target="_blank">business plan</a>, conducting <a rel="noopener" href="https://www.ibisworld.com/blog/the-complete-guide-to-industry-research/99/1127/" target="_blank">industry research</a> or <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/" target="_blank">analyzing risk</a>, and comes into play when conducting a <a rel="noopener" href="https://www.ibisworld.com/blog/3-step-pestle-analysis/99/1127/" target="_blank">PESTLE analysis</a>.
 
Understanding the different types of inflation and the strategies to adapt to them can you’re your business maintain profitability and protect against the negative effects of inflation. Some of these strategies include reducing costs, increasing efficiency, adjusting pricing strategies, investing in technology and alternative forms of payment, and seeking protection from currency volatility.
 
By taking the time to understand the different types of inflation and developing effective adaptation strategies, your business can better prepare for the challenges of an ever-changing economic landscape.
 
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Inflation is an inescapable fact of business life. So, what actually is it? Let's unpack the different types and what they mean for your business.

Raising Your Business IQ: Understanding Inflation

Key Takeaways
Gen Z is passionate about making a difference. Giving them more responsibility and higher benchmarks to hit gives them purpose and a tangible path to success.
 
Gen Z will forge partnerships whether you intend it or not. Creating a culture of teamwork and holding regular team meetings will help you harness their collaborative genius.
 
Gen Z wants full responsibility of their outcomes. Don't hold them back – even if they're not ready, they will step up more than you anticipate.
 
Your 20s are the time in your life when you really start growing up. They’re the pivotal years when being an adult becomes very real, very fast. At 24, I was lucky enough to land my first management position. My own managers had seen something special in me and decided to take a chance. Now, 11 years later, I find myself doing the same.
 
After managing a number of different generations, personalities and job titles, there’s no denying that Gen Z is different. But any good leader knows that differences have their upsides. <a href="https://www.fdmgroup.com/blog/how-diversity-of-thought-solves-business-challenges/">Diversity of thought</a> is essential to innovating and avoiding blind spots of the past.
 
With a new-found perspective, you’ll find that working with Gen Z is not a hindrance but an opportunity. Once you learn who Gen Z is and what they want out of work, it’s easy to play to their strengths and build a high performing team.
 
Who is Gen Z?
The <a href="https://www.collinsdictionary.com/dictionary/english/generation-z">Collins Dictionary defines Generation Z</a> as "members of the generation of people born between the mid-1990s and mid-2010s who are seen as confident users of new technology."
 
They’re a growing <a href="https://www.linkedin.com/pulse/millennials-75-workforce-2025-ever-anita-lettink/">part of the global workforce</a> that will eventually catch up to the Millennial population over the next decade or so.
 
<img src="https://content.ibisworld.com/media/jt4gvvhi/1.jpg?width=724&amp;height=581&amp;mode=max" alt="" width="724" height="581">
 
While there is some debate on where Millennials end and where Gen Z begins, I tend to agree that the difference between these two generations is their relationship with the internet.
 
As a Millennial in my mid-30s, I can clearly remember our family’s first computer. I was 13 when we got it and saw it more as a purveyor of Pac-Man than access to the world. There was no internet connection – even dial-up internet was a few years away for us.
 
Meanwhile, most of my employees in their 20s have never known a world without the internet. To them, technology is an extension of the physical world; they blend together in one experience.
 
Gen Z and the internet dilemma
Raised on the internet, it’s no surprise that Gen Z is more tech savvy than many of their predecessors. They come in with knowledge on the latest apps, analytics and social media platforms, and are often happy to mentor their colleagues on these technologies.
 
This can be a huge perk, an essential step in staying ahead of the curve and <a href="https://www.ibisworld.com/blog/business-competition/99/1127/">remaining competitive</a> in your industry.
 
But proximity to the internet has also introduced some friction between generations, especially with the pandemic having flipped a switch in academic and corporate settings where professional skills were once taught in-person.
 
This creates some incongruity in the workplace where Boomers, Gen Xers and even Millennials are used to certain communication styles that Gen Z just can’t replicate.
 
In the generations preceding Gen Z, it’s been common to approach digital communication with some skepticism. I did a bachelor's degree in PR, and was taught the importance of communication through body language, tone and delivery. Through the changing workplace of scheduled online meetings and a generation that finds talking to a screen normal, it’s become increasingly difficult to use my communication skills effectively.
 
So I made the effort. Making ad hoc calls to my team, without a scheduled agenda and regardless of reporting line, has allowed me to get to know them and, most importantly, they’ve gotten to know me. These casual calls with my team, and my team’s team, have taught me a great deal about Gen Z and what they want out of work – a critical first step in learning how to manage them.
 
Characteristics of a Gen Z professional
As a department leader, it’s my responsibility to build a highly effective team that drives business outcomes. In growing a team that regularly welcomes <a href="https://www.ibisworld.com/blog/board-diversity/61/1126/">diverse</a> personalities and talents, I’ve become keenly aware of what Gen Z brings to the table.
 
Gen Z’s unique mix of drive, curiosity and an appetite for fairness and equality makes them a pleasure to work with, once you understand them.
 
Here’s a few things to remember when managing your Gen Z team: 
Gen Z wants control of their destiny
Each generation has its version of dreamers and the Gen Z dreamers are driven. They are dreamers who become doers. More so than their Millennial predecessors, Gen Zers don’t mind getting started without a road map or blueprint to success.
 
Their innate feeling of curiosity fuels innovative thinking and empowers them to move forward without much guidance or know-how. It’s important for leaders not to squash this, but instead enhance it by giving more authority and ownership to their outcomes.  
 
Gen Z doesn’t want to do work that they feel is meaningless; they love a good passion project. They’ve also grown up in a world where climate change, social inequality, and other <a href="https://www.ibisworld.com/blog/the-rising-importance-of-esg/1/1127/">environmental, social, and governance (ESG)</a> issues are widely acknowledged as major global challenges. As a result, many Gen Z professionals have a strong sense of social responsibility and want to make a positive impact in the world.
 
Find out what makes them tick and try to play to those strengths whenever possible. Point the outgoing people-person towards <a href="https://www.ibisworld.com/blog/productive-sales-prospecting/1/1127/">prospecting</a>, or see if your creative problem-solver might thrive in <a href="https://www.ibisworld.com/blog/product-development-process/99/1127/">product development</a>. The Gen Zer on your team who loves seeking out information could be best suited to a <a href="https://www.ibisworld.com/blog/the-complete-guide-to-industry-research/99/1127/">research</a> role, while the methodical, process-driven new hire would rise to the challenge of <a href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/">risk analysis</a>.
 
Regardless of what their interests are, the things Gen Zers care about play a big role in everything they do. Gen Z’s best outcomes arise when they get to mix passion with a paycheck.
 
It’s a dog-eat-dog world, but not for Gen Z
We have all heard the saying “attitude over skill.” In years past, I was used to hiring more independent and autonomous workers, your getting-down-to-business types. Now I have a new dimension to consider when hiring: whether new hires will be friends with the team.  
 
Gen Z will forge partnerships whether you intend it or not. They’re resourceful and will seek out advice and insight from their peers whenever possible.
 
I learned this by accident when I assigned my team a series of solo projects and realized that they were holding regular meetings together, sharing their feedback and helping each other with decisions. I was grateful it happened by accident and having seen it work so well, I wouldn’t dare break it.
 
The reality is that Gen Z isn’t willing to climb on others’ backs to reach the top. They want to get there together, so make sure you’re cultivating a team environment that supports this.
 
Pressure makes diamonds, but it also bursts pipes
Challenging your team to be more creative, set higher goals and aspire to great things is key to maintaining their growth trajectory.
 
But it’s a balance.
 
I’m not talking pressure like the old days: long hours, wondering if you’re being noticed, thinking you’ll lose opportunities if you’re not in the right place at the right time. This path to success just isn’t sustainable for Gen Z.
 
For Gen Z, it’s less about politics and more about output. When you encourage them to incrementally step up their quality of work to a higher and higher level, you might just find that you’ve inspired a masterpiece.
 
Gen Z wants to make a difference. Giving them more responsibility and higher benchmarks to hit gives them purpose and a tangible path to success.
 
But remember, whatever path you put them on must be reasonable. Gen Z is the generation that values work-life balance the most. They are quick to identify unhealthy behaviors or relationships as “toxic,” and the “toxic workplace” is no exception.
 
To them, a toxic workplace is one where they aren’t treated with respect – whether that’s respect for their time, their results or the value of their labor.  
 
<img src="https://content.ibisworld.com/media/vqjht00y/2.png?width=587&amp;height=357" alt="" width="587" height="357">
 
Coaching Gen Z to greatness
In an increasingly digital world where hybrid and remote work have become the new norm, it’s harder and harder to utilize hands-on mentorship as a means of upskilling.
 
Here’s what I suggest for coaching and motivating your Gen Z team:
 
1. Rethink your training program
When you report to work in person, it’s usually easy to spot the movers and shakers, the ones who seem to have the respect of everyone, or at least a rapport with them.
 
Nowadays, observing professional discussions across the office or between your superiors is much less common from behind the laptop screen. The teaching of communication skills and office dynamics should be more explicit.
 
If you notice that networking, communication and soft skills aren’t quite up to snuff among your Gen Z hires, add these to your training program. Much of Gen Z has navigated higher ed and the professional environment almost entirely online. As a result, prioritizing tasks, troubleshooting systems, time management and <a href="https://www.ibisworld.com/blog/business-writing-101/99/1127/">business writing</a> may not come naturally to them.
 
Training on these essential skills might look different for each new hire or cohort. Designing a soft skills training should start with <a href="https://elearningindustry.com/soft-skills-in-the-workplace-develop-train">an assessment</a>. Start this assessment by asking your Gen Z employees to set their own goals and spot their own areas for improvement, rather than doing it for them.
 
2. Motivate with meaning
If you’re used to managing Gen Z’s predecessors, you might be used to monetary bonuses, physical plaques and awards, overtime offers or other traditional motivators. But Gen Z is seeking more than just money, they’re seeking out meaning.
 
To motivate with meaning, make sure your Gen Z cohort gets plenty of facetime with their peers and managers. Gen Zers want connection and not to feel like a number.
 
They are also eager to learn and make an impact. Giving them the opportunity to work through problems, share recent successes or even personal anecdotes with their peers will bring meaning to the workplace and keep them invested in the team.
 
Organize regular team check-ins and don’t skip the small talk. Sometimes the buzz of catching up with their peers is just what they need to get a project or deal back on track.
 
3. Constant education
I’ve already mentioned Gen Z’s innate curiosity, which makes them ravenous learners. Professional development is of utmost interest to Gen Z. They want the tools for success, especially if you’re funding it!
 
In my experience, the <a href="https://www.ibisworld.com/blog/what-is-a-cost-benefit-analysis-and-how-should-you-use-it/44/1127/">cost benefit analysis</a> checks out. Setting aside budget for professional development or coursework will pay for itself when your team comes back stronger and more set up for success.
 
4. Career planning
More so than their Millennial counterparts, Gen Z is eager to know what’s next. Millennials will take 12 months before they slyly enter my office, without notice or preparation, asking for my advice on how to move up. With Gen Z, I’m finding it’s as early as 3 months along, and sometimes even on day one they are asking what’s next?!
 
While you may not be ready to make them your next director, these early discussions are an opportunity to chart out their path at the company.
 
Most of the time, they don’t know what they want, they just want purpose and meaning. It’s your job to hear them out on their interests at the company and show them how they can get there while matching the business objectives. Help them invest in their careers and make them responsible for the outcome. Once they reach their end goal, it’s much more rewarding knowing they had a big hand in it.
 
Final thoughts
I’ve been fortunate enough to manage eight different departments in my leadership tenure, and all were special to me. This team, however, is the most exciting. Even though we’re all embarking on a new <a href="https://help.ibisworld.com/s/article/2023-product-roadmap">digital transformation for our clients</a> that’s unlike anything we’ve done before, I couldn’t be more thrilled to do it with a group of young people who are as passionate as I am about our work.
 
Working together has never been so rewarding. So rather than questioning if you should build your next team with inexperienced talent, I advise jumping right in! You’ll learn just as much as they will.
 
There’s a saying, “you can go fast alone, or far together.” Gen Z will take us even further.
 
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Learn how to effectively manage Gen Z in the workplace. Discover their passion for making a difference, their desire for responsibility, and their eagerness to collaborate.

The Ins & Outs of Managing Gen Z

<img src="https://content.ibisworld.com/media/b5hhk4wd/shutterstock_2048237270-edited.png?width=720&amp;height=404.7608926673751" alt="" width="720" height="404.7608926673751"> 
Key takeaways:
The business world is increasingly embracing ESG principles, both to do the right thing and to outperform competitors.
 
The Australian Government does not yet properly regulate ESG, but some new regulations and legislation are in the pipeline.
 
IBISWorld’s ESG Tracker can help businesses benchmark themselves against their industry, and help investors understand risk in an ESG framework.
 
In the ruthless world of business, nice guys are supposed to finish last. Until recently, this sentiment reflected the common school of thought in business and economics; influential twentieth century thinkers believed that businesses suffer financially if they mitigate their environmental impacts, or go above and beyond for their employees. But more recent research reveals that being one of the nice guys in business usually carries financial benefits. For example, <a rel="noopener" href="http://faculty.london.edu/aedmans/Rowe.pdf" target="_blank">one landmark study</a> from the US found that, between 1984-2009, companies with outstanding employee satisfaction outperformed their competitors by 2.1%.
 
The business world has increasingly pursued nice guy aims over the past decade, seeking to safeguard the environment, develop fair relationships with clients and employees, and maintain just and appropriate corporate governance structures. The recent surge in interest in Environmental, Social and Corporate Governance (ESG) is at the heart of this trend.
 
What is ESG?
ESG is a framework for recognising the social and environmental value companies produce, aside from their direct financial results. ESG includes a business’ sustainability, its social impacts and working conditions, and the capacity of stakeholders to have their say on how the business is run.
 
The recent interest in ESG is the latest in a longer lineage of concerns about how commercial activity affects the world. For example, in the 1970s and 1980s, many companies across the globe refused to engage in business dealings with South African companies because of the apartheid racial regime. Over subsequent decades, corporate social responsibility principles have inspired businesses to pursue ethical and philanthropic aims. ESG has emerged out of these existing movements, but with far more wide-ranging goals.
 
ESG essentially assesses how businesses make society – and the economy – function better as a whole. Environmental considerations relate to land, one of the <a rel="noopener" href="https://corporatefinanceinstitute.com/resources/knowledge/economics/factors-of-production/" target="_blank">factors of production</a> needed for economic activity. These considerations include managing water, waste and carbon emissions, and using clean technology and renewables. As the environment thrives, it provides a platform for societies (and economies) to flourish.
 
Social considerations include ethical supply chains and data security, as well as workers’ health, safety and personal development. Corporate governance includes the revenue spent on executives’ salaries, tax transparency and ESG reporting, the diversity of workers and board members, and the protection of human rights through company policy. Although social and corporate governance criteria may seem idealistic, they reflect more than just the moral fibre and long-term viability of a company’s operations. Much like ESG principles more generally, they also frequently correlate with short-term risk management.
 
For example, prior to high-profile data breaches in 2017 and 2018, Equifax and Facebook scored low on ESG ratings for data security. Clearly, the capacity of large tech firms to protect people’s data is not only an ethical issue – it is a matter of risk. Share prices tanked for both companies after the breaches. Beyond these examples, ESG measures often correlate with how well a company is run and how well the company is insulated against risk, which explains the relationship between nice guy corporations and success.
 
Government regulation
Nonetheless, the government does not yet comprehensively regulate ESG in Australia at any level. While ESG themes are laced throughout the Australian legal system, many significant gaps remain. Regarding environmental regulations, <a rel="noopener" href="https://www.pc.gov.au/research/supporting/precaution/precaution.pdf" target="_blank">the precautionary principle</a> and <a rel="noopener" href="https://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e1421" target="_blank">the principle of intergenerational equity</a> have been included in some regional statutes since the 1980s. In the absence of the kind of clear regulation around sustainability reporting and performance that exists in parts of Europe, Australian companies often adhere to various non-standardised ESG frameworks and only report under them voluntarily.
 
The new Albanese government has pledged to address this issue, bridging these gaps with additional regulations and legislation. While the new government is seeking to address pay equality, they are mainly proposing indirect methods, such as <a href="https://www.ibisworld.com/blog/jobs-and-skills-summit/61/1126/">strengthening union bargaining powers</a>. New rules relating to ethical supply chains will also likely pass under the new regime. However, the Modern Slavery Act already forces companies earning over $100 million annually to provide detailed reports on their supply chains, ensuring that they avoid ethical issues relating to labour exploitation around the globe.
 
The new government has also pledged to institute more robust requirements protecting Indigenous cultural heritage and reducing carbon emissions. This change will affect many sectors, perhaps none more so than mining. Across the mining sector, Australian companies have adopted the Towards Sustainable Mining ESG framework, primarily designed to assess sustainability. After the destruction of several Aboriginal cultural heritage sites in recent years, mining companies have also self-consciously sought to develop better relationships with Aboriginal groups and engage more respectfully with Aboriginal lands. So government intervention would not only follow some highly publicised failures to manage risk, it would also reflect existing trends that seek to address recent shortcomings.
 
In September 2022, Prime Minister Albanese promised to introduce legislation to reduce carbon emissions in the resources sector. These regulations would affect coal production in the long term, as the Australian economy transitions towards renewables. But ESG is actually quite poorly situated to address the overall environmental and social impacts of industries like coal mining. ESG-related laws and regulations are often porous and haphazard in Australia, which can leave space for some industries to <a rel="noopener" href="https://dictionary.cambridge.org/dictionary/english/greenwashing" target="_blank">greenwash</a> by applying selective ESG frameworks.
 
Even beyond government restrictions, ESG contains a key limitation; it assesses the effects of how a company operates, completely ignoring the products it sells. Even so, ESG is an important framework for investors and companies to assess their current success and predict future risks. Paying attention to ESG is becoming more important; it is gathering momentum, both among companies and in the public domain.
 
IBISWorld’s ESG Tool
IBISWorld has developed an ESG Tool to help companies benchmark themselves against their wider industries, help investors decide which industries to invest in, and inform companies of risks in their procurement supply chains. The ESG Tool provides a score out of 9 for each Australian industry or sector, including a breakdown of 15 different inputs, which draw data from sources including the Australian Bureau of Statistics, the Workplace Gender Equality Agency and government departments. The tool takes the average from these inputs, producing a score for each of the three categories of Environmental, Social and Corporate Governance.
 
<img src="https://content.ibisworld.com/media/bgaldr1z/esg-tool-screencap.png?width=720&amp;height=302.9968119022317" alt="" width="720" height="302.9968119022317">
 
For example, the mining sector scores a 7 for the Environmental inputs of Commitment to Environmental Initiatives, Energy Efficiency and Greenhouse Gas Emissions. This score is relatively high, reflecting mining’s below-average performance in these categories. Nonetheless, for Waste Management and Water Efficiency, the mining sector scores a 3 and a 4, respectively, due to improved water and waste management practices in recent decades. Overall, mining scores a 5.6 under the Environmental aspects of the ESG framework.
 
Under the Social category, the sector’s strong performance in Indigenous Participation, Pay Equality and Workplace Composition has offset weak ratings in Fair Labour Standards and Leave Benefits, producing an overall Social score of 4, which is better than average. However, under Governance, the sector scores worse than average for Regulatory Complexity, Tax Corruption, Fines, Penalties and Enforceability, and Trade with Risky Geopolitical Regions. Despite a slightly better than average rating for Modern Slavery, the sector scores 6 overall for Corporate Governance, signalling (for example to potential investors) that the sector carries higher than average risk in this category.
 
The future of ESG
ESG is here to stay. As wealth passes increasingly from the Baby Boomer generation to their children, more people are investing in industries that are perceived to be conducting business ‘the right way’. This recent turn to ESG is investor-led and companies will go where investors take them – or else risk being overlooked and left behind.
 
For investors and procurement departments too, accessing reliable information on ESG is more important than ever. Although the internet provides vast quantities of data on the environmental and social impacts of investments and supply chains, online information can be notoriously partisan, misleading or otherwise unreliable. In this post-truth internet era, virtually limitless amounts of information produce new decision-making challenges relating to ESG. In this context, sources like IBISWorld objectively assess different industries and sectors, cutting through the information overload – this ESG assessment is essential, whether you want to put your money behind the nice guys or become one of them.
 
<a rel="noopener" href="https://www.ibisworld.com/newsletter/" target="_blank">Sign up to our newsletter</a> and follow <a rel="noopener" href="https://www.linkedin.com/company/ibisworld/" target="_blank">IBISWorld on LinkedIn</a> to keep up to date with our latest insights and market research guides.

Stay ahead in the business world with ESG. Learn about regulations, use industry benchmarking tools, and reduce risk.

Nice Guys Finish First: Getting Ahead of the Competition with ESG

Key Takeaways
Your business will face multiple kinds of competition, and understanding your competitors and the threats they pose is key to staying ahead of them
 
Competition isn’t all bad news, as it can also drive innovation, prompt businesses to improve efficiency, improve variety and push operators to offer quality products
 
Putting strategies in place can help you overcome the challenges of business competition
 
When it comes to the business world, competition is inevitable. Whether you're just starting out or are a seasoned pro, understanding the dynamics of competition is crucial for success.
 
Competition can take many forms, from other companies offering similar products or services to changes in technology and market trends. But what does competition mean for your business? How do you navigate this ever-changing landscape to stay ahead of the game?
 
What are 3 types of business competition?
Your business could come up against a range of different kinds of competitors. Some of the most common types include:
<ul>
<li>Direct competition</li>
<li>Indirect competition</li>
<li>Replacement competition</li>
</ul>
 
<img src="https://content.ibisworld.com/media/q5njhyen/shutterstock_443900779.jpg?width=720&amp;height=514.1764080765143" alt="" width="720" height="514.1764080765143">
 
Direct competition
A direct competitor is a business that offers similar products or services as yours, targeting the same customer segment. For example, Nike and Adidas both sell footwear and athletic apparel, making them direct competitors.
 
Direct competitors’ are your most direct and obvious rivals, and their actions and strategies will affect your business. It's crucial to keep an eye on them to better understand the market and your position in it.
 
Indirect competition
These are businesses that offer products or services that are not exactly the same as yours, but can be used as substitutes by your customers. Ride-sharing services are indirect competitors for public transport. While both provide methods to get from point A to point B, public transport services, like buses and trains, operate on set schedules and routes, while ride-sharing services like Uber and Lyft can be summoned on demand.
 
Indirect competition can be a bit more difficult to spot than direct competition, but it is still essential to take into account. By identifying and understanding these competitors, you can adjust your strategy to better appeal to your target market, differentiate your offering, and assess market trends.
 
Replacement competition
These are businesses that offer different products or services that offer a different solution to the same problem as you, and use the same consumer resources. For example, a fast-food outlet is a replacement competitor to a local restaurant, as both rely on the same consumer resources and both solve the problem of hungry customers looking for lunch.
 
These competitors may operate under different business models, but their offerings are still a threat to your business. It is important to understand the replacement competition and try to innovate to counter it.
 
It is crucial to have a competitive perspective and the ability to identify and adapt to the different types of competition. Each type of competition can present different challenges, but learning about the different forms of competition can give you a better understanding of your competitors, and what you need to do to be successful.
 
What are the benefits of competition in business?
While competition may seem daunting, it's worth noting that it isn’t always negative. In fact, there are many benefits to competing in the marketplace. Some of the most notable benefits include:
<ul>
<li>Innovation: Companies that face competition are often forced to innovate and improve their products or services in order to stay competitive. This can lead to new technologies, better products, and improved customer service.</li>
<li>Efficiency: Competition can also improve efficiency as companies strive to lower costs and increase productivity. This can lead to lower prices for customers and better value.</li>
<li>Variety: Competition can lead to a wider variety of products and services available to customers. This allows customers to choose from a range of options and find the one that best suits their needs.</li>
<li>Improved Quality: Companies competing in the marketplace will often try to differentiate themselves by providing high-quality products and services to attract and retain customers.</li>
</ul>
These benefits mean that businesses need to be prepared to adapt, innovate and deliver the best possible products and services in order to succeed.
 
What are the challenges of business competition?
While competition can bring many benefits, it also poses some challenges for businesses. Some of the most common challenges include:
<ul>
<li>Price competition: In highly competitive markets, businesses may be forced to lower their prices to stay competitive. This can put pressure on profit margins and make it harder to sustain a business in the long-term.</li>
<li>Market saturation: With more businesses entering the marketplace, it can become more difficult to gain a foothold and attract customers. Market saturation can make it harder to achieve profitability and growth. Therefore, its critical to understand the <a href="https://www.ibisworld.com/blog/market-sizing/99/1127/">size of your market</a>, or any market you plan to enter and, in particular, accurately identify the <a href="https://www.ibisworld.com/blog/how-to-measure-total-addressable-market/1/1127/">total size of the market that you can service</a>.</li>
<li>Keeping up with the competition: Staying ahead of the competition can be challenging, especially in fast-paced industries where technology and trends change quickly. Being left behind can be disastrous for a business’s bottom line.</li>
<li>Legal and regulatory challenges: Some industries are heavily regulated, and failure to comply with the regulations can lead to fines or other penalties. This can be especially challenging for small businesses that may not have the resources to navigate the legal landscape.</li>
<li>Maintaining brand and reputation: In a competitive marketplace, maintaining a strong brand and reputation can be challenging. Negative reviews, bad press, or a lack of differentiation can make it harder for a business to stand out and attract customers.</li>
</ul>
It’s important to be aware of these challenges and develop strategies to remain competitive.
 
<img src="https://content.ibisworld.com/media/qwckws2l/shutterstock_214254769.jpg?width=720&amp;height=316.00425079702444" alt="" width="720" height="316.00425079702444">
 
How can my business stay competitive?
To succeed in a competitive marketplace, businesses need to <a href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/">develop strategies</a> that set them apart from the competition. Some of these strategies include:
<ul>
<li>Differentiation: By offering unique or superior products or services, businesses can set themselves apart from the competition. This can be achieved through better design, higher quality, or a superior customer experience. To effectively differentiate, its critical to understand what your competitors are doing and how they are doing it.</li>
<li>Focus on the customer: By understanding the needs and wants of customers, businesses can tailor their products or services to meet those needs. This can help to attract and retain customers.</li>
<li>Innovation: By staying ahead of industry trends and investing in new technologies, businesses can <a href="https://www.ibisworld.com/blog/product-development-process/99/1127/">develop new products</a>, improve existing products and services, and increase <a href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/">efficiency in business processes</a>.</li>
<li>Building a strong brand: A strong brand can help a business to differentiate itself, build trust with customers, and attract new customers. This can be achieved through consistent messaging, visually appealing branding, and a strong online presence.</li>
<li>Networking and partnerships: By building relationships with other businesses and industry leaders, a company can access new resources, knowledge and opportunities.</li>
<li>Cost-effective operations: By streamlining operations and cutting unnecessary costs, businesses can increase efficiency and reduce expenses. This can help to increase profitability and improve the bottom line.</li>
</ul>
It's important to remember that there's no one-size-fits-all strategy for staying competitive. Each business is unique and will have different strengths and opportunities. The key is to understand the competitive landscape, identify what sets the business apart, and implement strategies that take advantage of those strengths.
 
The importance of accurate information
In today's fast-paced business environment, staying competitive requires a deep understanding of industry and business information. Accurate and current industry information can help businesses make informed decisions, identify trends, and adapt to changes in the marketplace.
 
Additionally, understanding the specific business information of a company, such as their strengths and weaknesses, can help identify opportunities for growth, expansion and to determine potential risks.
 
Some key areas of industry and business information that businesses should focus on include:
<ul>
<li><a href="https://www.ibisworld.com/blog/market-research-methods/99/1127/">Market research</a>: Understanding the size and growth potential of a market, as well as trends and key drivers, can help businesses identify opportunities and make informed decisions.</li>
<li><a href="https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/99/1127/">Competitive analysis</a>: Understanding a company's competition can help businesses identify threats and opportunities, and develop strategies to stay competitive.</li>
<li>Financial analysis: Understanding a company's <a href="https://www.ibisworld.com/blog/financial-ratios-how-to-use-them/99/1127/">financial performance</a>, including revenue, <a href="https://www.ibisworld.com/blog/what-is-profitability-analysis-and-why-is-it-important-to-businesses/44/1127/">profitability</a>, and growth, can help businesses identify opportunities for growth and expansion.</li>
<li>Industry reports and forecasts: Industry reports and forecasts can provide valuable insights into the current and future state of an industry, including key trends and potential challenges.</li>
</ul>
To stay competitive, businesses should invest in research and analysis to gain accurate, up-to-date information about their industry and their competition. This information can help businesses make better-informed decisions, identify opportunities for growth and expansion, and <a href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/">mitigate potential risks</a>.
 
Final thoughts
In today’s business world, competition is a constant and understanding it is crucial for success. In order to thrive, businesses must stay vigilant, adaptable, and maintain a competitive edge.
 
IBISWorld has a suite of products that can give you insights into your competitors and help you stay <a href="https://www.ibisworld.com/products/">ahead of them</a>.
 
<a href="https://www.ibisworld.com/newsletter/">Sign up to our newsletter</a> and follow <a href="https://www.linkedin.com/company/ibisworld/">IBISWorld on LinkedIn</a> to keep up to date with our latest insights and market research guides.

Understand the dynamics of competition, its benefits and challenges and strategies to stay competitive in business. Boost your competitive edge and with our comprehensive guide.

Business Competition

Copywriter

Key Takeaways
The athlete’s mindset is a set of principles that can help you develop a winning outlook
 
Implement the athlete’s mindset by focusing on developing your strengths, weaknesses, and emotional intelligence
 
Trust that your process and your peers are working toward the same goal and ensure you’re putting others in positions to succeed
 
Evaluate your emotional intelligence and how you deal with challenges and defeat
 
<img src="https://content.ibisworld.com/media/eqzehiro/athlete-mindset-post.png?width=720&amp;height=528.7141339001063" alt="" width="720" height="528.7141339001063">
 
As a former collegiate Division I and NFL player, being a great athlete came naturally to Lou Alexander. But when he found himself leaving professional sports for the sales world, he was faced with a whole new game to master. Or so he thought.
 
After stints in door-to-door sales and sales management, Lou joined ProcurementIQ–a division of IBISWorld–in 2019 and worked his way up to his current position as head of revenue. As it turns out, there are more similarities between professional sports and the <a rel="noopener" href="https://www.ibisworld.com/blog/productive-sales-prospecting/1/1127/" target="_blank">sales world</a> than meet the eye.
 
In this article, Lou shares his playbook for success in the workplace, remembering how his days on the field with Syracuse University and the New Orleans Saints taught him leadership skills and how to overcome adversity.
 
Practice, practice, practice
Preparing yourself by doing <a rel="noopener" href="https://www.ibisworld.com/blog/market-research-methods/99/1127/" target="_blank">market research</a> ahead of a big meeting or negotiation seems simple enough, but setting aside time to practice your playbook and the opposition you’re likely to face is a key difference maker between a successful negotiation and one that leaves you fumbling for your second-best option.
 
“When you put yourself in a position where you want to add value,” Lou said, “that value is only due to the preparation [you’ve done] before you actually put yourself into that position. . . . If you don’t prepare, you don’t add that value.”
 
In football, practice makes perfect as they say. It’s not enough to rely on natural talent or experience. Practicing the situation beforehand–whether it’s a first down or rehearsing the answers to questions you’ll likely face in a tough negotiation–will set you up for success and position you to make the big play necessary to bring your team across the line for a touchdown.
 
<img src="https://content.ibisworld.com/media/ixcnyqdf/shutterstock_582335989-1.jpg?width=720&amp;height=480.51009564293304" alt="" width="720" height="480.51009564293304">
 
Evaluate your strengths and imperfections
In the workplace, we often have a good idea of our co-workers’ strengths and weaknesses. While those observations are important, understanding your own advantages and not allowing your imperfections to hold you back is a key component for success on the field or in business.
 
Lou recalled, “When I stepped into business, one of the things I thought about was, ‘What am I really good at?’ I connected my truth to my story. I knew coaching was something I was really good at.”
 
Evaluating his strengths showed him the path forward. “I sold roof and windows starting off, [coming] from the NFL,” said Lou. He knew that his charm, his work ethic, and his ability to bring out the best in his teammates were his strengths. Door-to-door sales helped him get there. Lou found personal success as a salesperson, culminating in his leadership position at ProcurementIQ, but he knew he couldn’t do everything himself. Nobody can.
 
It showed him that to be a great coach and a great leader, he needed a great team.
 
Delegation as a strategy
When Lou made the transition from sports to sales, he knew the time had come to step into leadership and coaching. Through that, he realized that not only was delegation an important part of any successful team or business, but it was a strategy in its own right.
 
“Sometimes we forget to delegate certain things,” Lou said. “That delegation opens up time for us to do the things we are good at.”
 
In football, Lou wasn’t a quarterback. He couldn’t throw the ball like some of his peers, and he certainly couldn’t throw the ball to himself. Even the quarterbacks couldn’t do it alone. There enters delegation as a strategy. “For myself, Lou said, “it was about being selfless and protecting the quarterback, who can actually throw the ball down the field for us to score.”
 
Utilizing the athlete’s mindset to its fullest potential includes proper delegation so that the people who have the skills to perform a task or “score a touchdown” are put in the best position to succeed. Leaders can conduct a <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-swot-analysis/1/1127/" target="_blank">SWOT analysis</a> on your team to help decide who to delegate to and when.
 
<img src="https://content.ibisworld.com/media/ew0mzwzn/shutterstock_1322288738.jpg?width=720&amp;height=524.8884165781084" alt="" width="720" height="524.8884165781084">
 
Trust your captains
You can’t delegate without first trusting your team and its process. In football, Lou trusted his quarterbacks to throw touchdown passes, they trusted him to protect them, and the coaches trusted the team to run the play as they’d practiced.
 
A team’s coach is the equivalent of Lou’s current position as head of revenue at ProcurementIQ. They design the playbook, develop the skills of their players, and ensure everything runs smoothly on gameday. But they’re not on the field with their players. That’s where the team captain comes in.
 
“There’s always a captain,” Lou said of identifying, or being, a leader within the team. “That captain leads by example. He’s the voice of the players.”
 
The captain doesn’t have to hold a manager or director title to play their role in a sales team. They could be a senior salesperson. They could be a supervisor. They could even sit on an adjacent team, working in a customer success or sales development role, as long as they hold the respect and trust of their peers.
 
“The reason I am the coach is because I have the skill set of leadership and coaching, but it’s completely different than the function of the players.” The captain is someone on the field who’s helping their team score that touchdown or close that sale, even if it they’re not the one who runs the ball across the line. And as the voice of the players, they’re the coach’s most valuable representative off the field. “If the captain is speaking,” Lou said, “then the coach needs to be quiet.”
 
The captain is better positioned to help guide other players from the field. Meanwhile, the coach’s view from the sidelines enables them to see the bigger picture, build the players’ trust in the playbook, and integrate a strong team culture.
 
Develop your skill set
Athletes continually develop their skills, talents, and mentality. They have to. As talented as Lou was when he began his journey, he didn’t make the NFL overnight, and he didn’t start off as ProcurementIQ’s head of revenue. Nobody starts at the top.
 
“Athletes start with development,” Lou said. It’s an area that needs to be emphasized more in sales and business too. Once you’ve outlined your own strengths and weaknesses, make an action plan on how you’re going to track your performance and cultivate your own skill set. Whether it’s learning new technologies or improving your people skills by roleplaying negotiations, striving to improve yourself is the key component Lou credits for his success across many different ventures.
 
But don’t forget: your individual talents are what make you unique. Develop your strengths as often as you work on your weaknesses.
 
<img src="https://content.ibisworld.com/media/eitecaxf/shutterstock_1896956344.jpg?width=720&amp;height=512.6461211477152" alt="" width="720" height="512.6461211477152">
 
Hone your emotional intelligence
Whether it’s on the football field or in a conference room, your mindset is what separates a perceptive and resilient problem solver from someone stuck in their ways. It’s important to develop your skills, build healthy team environments, and accomplish goals, but it’s equally as important to foster a healthy, positive mindset within yourself. That’s what the athlete’s mindset is ultimately about: emotional intelligence.
 
“It’s always good to hear you’re the best,” Lou said. “It’s great for your confidence . . . but you should [strive] to never get too high or too low.”
 
What does it mean to get too high? Overconfidence is a killer on and off the field. It closes your mind to new ideas and separates yourself from the skills development that is so integral to the athlete’s mindset.
 
But you should be wary of getting too low, being too self-deprecating, or getting too down on yourself after a “loss.” That’s where trusting your process, your team, and yourself comes into play. Not every game will result in a win. Not every play will become a touchdown. Working to improve your emotional intelligence and self-talk can make all the difference.
 
A touchdown and a victory should not always be the absolute goal. There will be times when you will face hardship and defeat, even if you made all the right plays. Working on yourself and your inner strength will carry you through these times and set you up for success down the line.
 
“It’s about developing the mentality of pushing through hard times when someone tells you you’re not good enough,” Lou concluded. “When someone tells us we’re not the best, how do we respond?”
 
Your mind is your greatest asset. Developing your skills and talents will only take you so far without the mindset to back it up.
 
<hr>
 
<a rel="noopener" href="https://www.ibisworld.com/newsletter/" target="_blank">Sign up to our newsletter</a> and follow IBISWorld <a rel="noopener" href="https://www.linkedin.com/company/ibisworld/" target="_blank">on LinkedIn</a> to keep up to date with our latest insights and market research guides.
 
This interview was made possible by <a href="https://artofprocurement.com/">Art of Procurement's</a> Mastermind LIVE event, and <a href="https://www.procurementiq.com/">ProcurementIQ</a>, a division of IBISWorld.

Lou Alexander shares his playbook for success in the workplace, remembering how his days on the field with the New Orleans Saints shaped him into the leader he is today.

6 Ways the Athlete's Mindset Can Help You in Business

Key Takeaways
Effective business writing is segmented, direct and approachable. It will help readers save time and absorb the key messages of your work
 
Using a reputable source for your data will improve the credibility of your business writing and presentations
 
Different business writing styles can be used for each type of deliverable, helping you tackle a variety of projects, from industry analysis to opinion articles
 
What is Business Writing?
 
<img src="https://content.ibisworld.com/media/qcze4xi5/shutterstock_578320543.jpg?width=720&amp;height=480.51009564293304" alt="" width="720" height="480.51009564293304">
 
Business writing is a method of communication used to educate and inform clients, co-workers and other professional audiences in a written format. Business writing tends to be direct, well-organized and segmented for easier reading. Strong business writing saves readers time and makes them more likely to retain the main messages of your work. For instance, when using business writing in industry analysis, data and insights need to address an abundance of industry characteristics as concisely as possible.
 
Why is business writing important?
The best business writing successfully communicates your message. You can improve your business writing skills through courses and peer feedback, and support these skills by using business writing templates for different types of written deliverables. Mastering the art of writing concisely and clearly can put you ahead of competitors, streamline internal and external communications and help you stand out to department heads.
 
With remote work arrangements on the rise, it’s more important than ever to be able to clearly communicate your ideas, decisions or point of view in writing. This is where effective business writing is key. We’ve been thinking about this a lot at IBISWorld, and we’re getting ready to launch a new style of writing to better communicate with our clients. So, what is business writing, and how do you do it well? Let’s get stuck in.
 
What does your audience want?
Straight off the bat, your readers want to know why they should continue reading. They want solutions that move the needle. To do this, you must keep your writing direct to add value for clients and co-workers, helping them understand why your ideas – and the research supporting them – have a place in the business. For example, <a href="https://www.ibisworld.com/blog/how-to-write-a-business-plan-for-a-loan/99/1127/">writing a business plan</a> for a loan requires you to make your case clearly and professionally, while referring to supporting evidence.
 
Well-executed pieces have the additional benefit of being a reliable source of record-keeping. This is because the best writing is logically segmented and concise, avoiding clutter. As a result, readers find these pieces easy to navigate and can confidently find the key points.
 
How can writers benefit?
From a writer’s perspective, effective business writing will help you communicate your ideas, and educate others to make clear and quick decisions. Developing a strong reputation by communicating clearly through your writing helps you earn respect in the workplace and may provide new opportunities.
 
In addition, <a href="https://www.ibisworld.com/blog/how-to-do-industry-analysis/61/1127/">industry analysis</a> should be used to support business writing with credible, relevant data sources, to demonstrate accuracy and authority. Credibly referenced writing also has greater capacity to influence downstream business decisions.
 
<img src="https://content.ibisworld.com/media/1ezizkgt/business-writing-styles-infographic-02.jpg?width=720&amp;height=720" alt="" width="720" height="720">
 
When and why should you use the business writing styles?
Informational 
You should use informational business writing to provide readers with insight, prioritising the clarity and efficiency of the document. Informational business writing tends to present facts about a topic from a neutral perspective.
 
Strong informational business writing helps readers navigate and understand the most important information about the topic. It’s important to format such a piece logically to help convey key data insights. The most valuable informational pieces often open with a summary section covering the key points of communication then get more specific in detailed sections later in the piece.
 
<img src="https://content.ibisworld.com/media/w01jjzuv/ibisworld_overview_laptop.png?width=720&amp;height=420.06376195536666" alt="" width="720" height="420.06376195536666">
 
Let’s look at industry analysis as an example. A clear, concise summary is helpful to present high-level information up front. However, this doesn’t mean you should leave out the data or skip the deep dives. Tailoring your industry analysis to reflect the needs of your audience ensures that your reader retains your message and can incorporate it into their work with confidence.
 
<img src="https://content.ibisworld.com/media/nlam4uea/quote-graphic-business-writing.jpg?width=720&amp;height=377.21572794899043" alt="" width="720" height="377.21572794899043">
 
Ask yourself: What do your readers want to know? How you can add value with your piece of business writing? Maybe your reader wants an expert perspective on a specific analysis. Alternatively, they might want an information hub, a piece that touches on all the general information surrounding a topic.
 
Informational business writing examples:
<ul>
<li>Industry analysis</li>
<li>Financial reports</li>
<li>Quarterly reviews</li>
<li>White papers</li>
<li>Conference papers</li>
<li><a href="https://www.ibisworld.com/blog/">Business news &amp; current events coverage</a></li>
<li>Meeting agendas</li>
<li><a href="https://www.ibisworld.com/au/list-of-industries/">Industry research reports</a></li>
<li>Information Hub</li>
</ul>
 
Persuasive 
Sometimes, you need to convince your reader of your premise. Persuasive business writing supports you in making your case, whether it be to your clients, your co-workers or your investors. This style requires a strong knowledge of the audience, as you need to convince them to be open to accepting your proposal.
 
In addition, your persuasive business writing is made stronger by accurate, unbiased data presented throughout your work. As an example, check out <a href="https://www.macrobusiness.com.au/2022/06/thousands-face-financial-ruin-as-home-builder-collapses-mount/">this article from MacroBusiness</a> that uses IBISWorld to support its claims.
 
When operating from a persuasive business writing template, you need to incorporate authoritative, emotional and logical appeals. For example, product development teams in the Soft Drink Manufacturing industry need to <a href="https://www.ibisworld.com/blog/applying-industry-research/">use industry research</a> to get up to speed on <a href="https://www.ibisworld.com/blog/market-sizing/99/1127/">market sizing</a>. This process will strengthen their understanding of consumer preferences and how to present the most convincing arguments to Supermarkets and Grocery Stores. The best pitches present a factual basis, incorporate a reputable source and address a solution for what the reader wants or fears.
 
Ask yourself: What sets your premise apart? It might be a new idea or product that specifically deals with the changing trends of your dynamic environment. Alternatively, it could be a proven strategy used by your competitors that can be adapted to suit your business and address your reader’s needs.
 
Persuasive business writing examples:
<ul>
<li>Marketing content</li>
<li>Sales content</li>
<li>Product copy</li>
<li><a href="https://writingcenter.unc.edu/tips-and-tools/grant-proposals-or-give-me-the-money/">Grant proposals</a></li>
<li>Business proposals</li>
<li>Press releases</li>
<li>External newsletters</li>
<li>Opinion articles</li>
</ul>
 
Instructional 
Have you ever followed a recipe while cooking and found yourself confused about the order of tasks, or how to execute a certain step? If so, you’ve encountered instructional writing that could use a little extra work – and you’ll know how important clarity is when laying out instructions for a reader to follow.
 
The instructional business writing style is used when you want to direct your reader to complete a task. The best instructional business writing can establish your business’s brand as being reliable and credible. You should provide clear and concise instructions; ideally, the reader shouldn’t require additional context to successfully complete the task. Instructional writing often includes numbered lists and visual examples of step-by-step progress, and may include links to other supporting material. You can also help your reader by preemptively flagging problems that they might run into, and providing solutions.
 
Ask yourself: How do you want your reader to use the information you provide? How best can you guide them? For example, you could write strict guidelines for them to follow, such as in user manuals. You could also deliver flexible instructions to be used only as a point of reference, as can be found in a webinar.
 
Instructional business writing examples:
<ul>
<li>Webinars</li>
<li><a href="https://www.ibisworld.com/blog/applying-industry-research/">Guides</a></li>
<li>User manuals</li>
<li>Memorandums</li>
<li>Customer service communications</li>
<li>Training programs</li>
</ul>
 
Transactional
Also known as conversational business writing, you should use this communication style with colleagues, across management levels and occasionally for external business operations.
 
This style of business writing tends to be the most common, making it arguably the most important to master.  Transactional business writing is flexible and can be used in several scenarios, such as to convey good news and bad news, or finalize an agreement.
 
The tone of transactional business writing varies, and you’ll need to adjust it based on the context of the communication. For example, your emails to your colleagues can likely be pretty casual. However, you should take a more formal tone for anything you’re sending to an external reader, or where the document might be referenced down the track, like an agreement or contract. It may feel overly formal, but it’s important that the record of these transactions leaves as little as possible up for interpretation.
 
Ask yourself: How often do you make professional assumptions based on the communication of others? What impression does this writing give the reader? First impressions from email communications can be long lasting. Importantly, unprofessional looking business proposal letters can drastically hurt your chances of settling business agreements.
 
Examples of transactional business writing:
<ul>
<li>Email</li>
<li>Termination and resignation letters</li>
<li><a href="https://business.vic.gov.au/business-information/staff-and-hr/staff-recruitment/write-a-contractual-letter-of-offer">Job offer letters</a></li>
<li>Business proposal letters</li>
<li><a href="https://business.gov.au/finance/payments-and-invoicing/how-to-invoice">Invoices</a></li>
<li>Receipts</li>
<li>Checkout documents</li>
<li>Contracts</li>
</ul>
 
How to produce good business writing
<ul>
<li>Decide on the business writing style needed. (What is your goal?)</li>
<li>Identify the key information your audience needs. (Who, What, When and Where?)</li>
<li>Outline and address key points and provide appropriate evidence.</li>
<li>Edit and refine your writing to make it more precise.</li>
<li>Consistently review your business writing process, make it more efficient. (For example, create templates for the different styles).</li>
</ul>
<img src="https://content.ibisworld.com/media/cd1ck34m/shutterstock_1726494010.jpg?width=720&amp;height=423.8894792773645" alt="" width="720" height="423.8894792773645">
 
Business writing skills
Honing your business writing skills to incorporate credible industry analysis can improve communication and avoid time-wasting queries or revisions. 
 
Improving your business writing takes practice and more than a few tips and tricks.
 
Some of the basics to keep in mind:
<ul>
<li>Write from a reader’s perspective. Ask yourself what you would want to read and go from there.</li>
<li>Create writing templates and collect examples from thought leaders and other reputable sources.</li>
<li>Identify ‘problem’ or ‘discouraged’ words that can undermine your writing goals, then compile them into a checklist for all writers to reference and add to.
<ul>
<li>Being able to easily reference a checklist of discouraged or problem words will help ensure your language is engaging and suits your audience.</li>
</ul>
</li>
<li>Despite the importance of conciseness, don’t sacrifice quality for brevity. Providing sufficient evidence to support your propositions will help you drive toward an outcome, not detract from it.</li>
</ul>
 
Final thoughts
Professional writing is important for a variety of business situations; we do it every day. For the best results, focus on writing with clarity informed by strong analysis. Use these business writing tips to enhance your writing, to make the process easier for you, and increase the value of your work for your readers.
 
<hr>
 
IBISWorld is changing our writing style from academic to informational business writing from January 2023, to streamline the process of incorporating key insights into your workflow.
 
<a href="https://www.ibisworld.com/newsletter/">Subscribe to our newsletter</a> for updates on enhancements, our latest articles and more.

Business writing is a clear and direct approach to written communication that is efficient for both readers and writers. Learn the best practices and level up your communication.

Business Writing 101: How to Write Effectively

Key Takeaways
Business process analysis (BPA) helps companies identify inefficiencies in internal operations
Businesses that launch a new product or undergo corporate restructuring often use BPA
Industry research can be used to identify key performance metrics
 
Business Process Analysis (BPA) is a methodology used to analyze process-related areas of business and improve efficiency. Specifically, BPA helps companies examine internal processes to improve revenue and reduce costs. Although business analysis (BA) and BPA differ in terms of the scope of their analysis, BPA is typically assigned to either business analysts or process architects, or both. Business analysts often analyze the context surrounding the problem and provide data insights, while process architects are directly involved in implementing processes. However, BPA requires more than just a business analyst or a process architect. To change a business process, companies also need to engage management, IT and other professionals. Before we break down BPA, let’s start with the basics.
 
What is a business process?
A business process is an organized group of activities that transform inputs into outputs, and can be formal or informal. Formal processes are documented and followed most of the time. Informal processes are either used due to a lack of formal documentation or because of a need to deviate from formal processes in unusual circumstances.
 
When should companies use Business Process Analysis?
Most often, companies use BPA when launching a new technology or a new process. Before the new technology is launched, an enterprise’s management needs to understand any inefficiencies that the old technology or process causes. These inefficiencies may include shipment delays, poor customer support or a high percentage of defective products. By conducting a cost-benefit analysis, companies are able to determine whether to implement the new technology or focus on other areas that may generate a higher return on investment.
 
Firms have <a rel="noopener" href="https://www.ifc.org/wps/wcm/connect/08f1c445-87af-4868-a77c-29dee3e1ac4e/Report_How_Firms_Are_Responding_And_Adapting_During_COVID-19_And_Recovery_March21-web.pdf?MOD=AJPERES&amp;CVID=nwjXW4G" target="_blank" data-anchor="?MOD=AJPERES&amp;CVID=nwjXW4G">increasingly turned to BPA in recent years</a>, as the COVID-19 pandemic raised demand for certain products and reduced the need for others. Companies had limited time to adapt to the new operating environment, which made BPA crucial in helping organizations shift their focus effectively. For example, many organizations have used BPA to expand their digital offering. Other companies used BPA to offset the negative effects associated with supply chain disruptions. More recently, strong inflationary pressures and economic uncertainty have caused many organizations to utilize BPA to control costs and eliminate inefficiencies.
 
Organizations often turn to BPA as part of a larger <a href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/">strategic planning</a> effort. For example, an organization can use BPA to better understand its internal processes as one step towards a broader objective.
 
What are the benefits of business process analysis?
You can probably already see that BPA is helpful in a range of situations. Here are some of the benefits of using business process analysis:
<ul>
<li>Improve efficiency: For example, BPA can reduce the time and resources required for <a rel="noopener" href="https://www.ibisworld.com/blog/productive-sales-prospecting/1/1127/" target="_blank">productive sales prospecting</a>, onboarding employees, <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">product development</a> or creating marketing campaigns.</li>
<li>Reduce costs: BPA can reduce personnel costs by decreasing time spent on tasks or removing redundancies in processes. BPA can also highlight costs savings for resources and materials.</li>
<li>Clarify and improve policies and governance: For example, BPA can improve <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">risk management</a> and highlight where current IT and device security policies need improvement.</li>
<li>Eliminate or reduce bottlenecks: BPA can help your organization optimize communications and process execution, so that one stage, such as approval, isn’t creating a backlog.</li>
<li>Optimize adoption processes: BPA can highlight the sore points in adopting new technology or processes and provide improvements to training programs, ultimately increasing adoption rates.</li>
<li>Improve release or deployment procedures: We all want campaign deployments and product releases to run smoothly – BPA can work through inefficiencies in these processes and help you put improvements in place.</li>
<li>Assist in focus shifts: BPA can help your organization compete in an increasingly digital world. For example, BPA can assist in optimizing day-to-day processes for using specific technology, moving to remote models of work or smoothing the transition to providing products and services online.</li>
<li>Improve company culture: Optimized processes improve employee experiences in the workplace.</li>
<li>Increase engagement: Better customer service, website interactions or in-store processes strengthen your organization’s reputation and engagement.</li>
</ul>
Happy stakeholders, happy employees, happy customers – happy days!
 
Key steps in Business Process Analysis
So, that’s the basics. What are the steps involved in BPA?
 
<img src="https://content.ibisworld.com/media/kowb2kgg/business-process-analysis-steps_1200.jpg?width=651.4615384615385&amp;height=720" alt="Infographic titled 6 Steps of Business Process Analysis. The title is white and the background is a red to orange gradient. The infographic comprises two columns of white boxes with red to orange gradient text that matches the background behind the boxes. The left column of boxes are narrower and numbered 1 through 6. The right columns each contain the title of the step and a brief description. The steps read: 1. Determine goals: Work out what you're trying to achieve. 2. Define the process: Figure out which process is causing the problem. 3. Analyze the process: Understand the role and value of the process. 4. Identify enhancements: Identify the changes needed to improve the process. 5. Implement the process: Provide resources and make the necessary changes. 6. Monitor the results: Evaluate the changes and watch for opportunities. The IBISWorld logo is in the bottom right corner." width="651.4615384615385" height="720">
 
1. Determine goals
The first step is to determine what needs to be achieved. Conducting a <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-swot-analysis/1/1127/" target="_blank">SWOT analysis</a>, <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/" target="_blank">risk analysis</a> or even a formal <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/99/1127/" target="_blank">competitive analysis</a> could help you identify areas for improvement in your organization. Taking a closer look at your organization’s performance using <a rel="noopener" href="https://www.ibisworld.com/blog/financial-ratios-how-to-use-them/99/1127/" target="_blank">financial ratios</a> can also be a helpful starting point. On a macro level, your goal may be to increase revenue or reduce costs, but keep in mind that BPA focuses on process-related improvements. This means that your goal must focus on a process improvement rather than a macro business change. For example, a BPA goal could be to improve labor efficiency. Highly repetitive tasks can often be automated, leading to a better completion time and fewer errors. In the sales process, for instance, follow-ups can be automated by using sales tracking software. In the case of the sales process, the goal may be to reduce time spent on writing follow-up emails, to improve the response rate, or both. One way to make sure the goal is well-defined is to use the SMART approach, which stands for specific, measurable, attainable, relevant and time-based.
 
<img src="https://content.ibisworld.com/media/plapfeo2/business-process-analysis-smart-approach-graphic_1200.jpg?width=720&amp;height=523" alt="Infographic on a white background. Charcoal-coloured title reads 'The SMART approach to setting goals for Business Process Analysis.' The word SMART is spelt out in large letters. Underneath the S is the word 'specific' and a line icon depicting an arrow in the center of a target; under the M is the word 'Measurable' and a line icon depicting a bar chart with a trend line; under the A is 'Attainable' and a line icon showing a podium with the numbers 2, 1 and 3 above the steps from left to right; under the R is 'Relevant' and a line icon showing a clipboard with several lines representing text and a large tick mark; Under the T is 'Time-based' and a line icon showing a stopwatch. Each group comprising one large letter, one word and one icon. The S group is dark blue, the M group is sea-green, the A group is dark red, the R group is a dark orange, and the T group is purple. The IBISWorld logo is in the bottom right corner." width="720" height="523">
 
2. Define the process
Once the goal is determined, you need to define the process that causes inefficiencies. In the sales process, for example, follow-ups may involve several steps, such as building a template for follow-up emails, adjusting the template based on information obtained from the clients, proofreading the email, and sending the email five minutes following the conversation.
 
When defining the process, make sure that the process scope is not highly extensive. Some process experts use the term end-to-end to define the boundaries of large, important processes. End-to-end design incorporates all activities that must happen to come up with a product concept. One way to break these processes down further is to use process hierarchy. The process hierarchy starts at the level of the entire organization and moves toward the most granular processes. The most common tool used by analysts and process architects during this step is SIPOC, which stands for Suppliers, Inputs, Process, Outputs and Customers. This tool helps summarize the inputs and outputs of one or more processes in a table form.
 
3. Analyze the process
You have several business process analysis techniques to choose from, depending on the defined goal. The most common analysis technique is value analysis, which shows the major and minor elements of the process based on the value added. Value is the ratio of function to costs. Therefore, value can be changed either by improving the function or reducing costs. When performing a value analysis, analysts typically compile a list of functions and costs in descending order. Cost-benefit ratios are often applied to such lists to estimate the net value of each activity.
 
Returning to our sales follow-up process example, the steps with the highest value could be sorted in the following order: adjusting a sales template based on information obtained from the client, proofreading the email, sending the email five minutes following the conversation, and building a template for follow-up emails. In this example, building a follow-up template is the lowest value-added element as it consumes a lot of time and always requires adjustments as new information arises.
 
Other popular analysis techniques include gap analysis, which compares actual performance with potential performance, and root cause analysis, which aims to determine why a problem occurs in the first place, and find a solution to the root cause.
 
4. Identify enhancements
After the process is analyzed and inefficiencies are detected, the next step is to work out what the necessary enhancements are. Often, improvements focus on aspects like eliminating bottlenecks, optimizing high-value processes or improving interaction with customers. For example, to increase the value of building a follow-up email, a salesperson could potentially use external tools that help building customizable emails faster based on client segments or other information.
 
During this step, you’ll need to make sure you take into account any potential externalities. Externalities are indirect costs or benefits caused by your business that affect third parties, which can include individuals or organizations – or even society on the whole. For example, improvements in speed may cause the quality of certain products and services to suffer, which is a cost to downstream users or consumers. Likewise, automation of certain processes may eliminate the ability to customize a product or a service, reducing demand for these products and services. Therefore, analysts must also conduct a thorough cost-benefit analysis before adjusting or introducing new processes.
 
5. Implement the process
Implementation often involves professionals across different departments, from management to analysts and IT professionals. You’ll need to ensure that the implementation team has enough resources to make effective changes. Corrections typically start at a small scale, followed by changes across the connected tasks. For example, to increase the value of building a template for follow-up emails, a sales department could install third-party software that analyzes all past emails and gives suggestions using predictive analytics.
 
6. Monitor the results
The final step is to monitor and control new standards and processes. Do new processes result in better KPIs? Do these processes cause any externalities? For example, third-party software may reduce the time required to write a follow-up email, but it may also reduce the email response rate. In other words, we have to make sure that we take externalities into account. Moreover, additional improvement opportunities may arise during this stage, so it is important to constantly monitor the new processes rather than taking a ‘set and forget’ approach.
 
BPA case studies
Now that we’ve unpacked the fundamentals, let’s take a look at some real-world examples of business process analysis.
Our first example relates to the backlog that French cosmetic company, <a href="https://www.frevvo.com/blog/process-improvement-examples/">Yves Rocher</a>, experienced when processing new candidates. After performing BPA, Yves Rocher noticed that they were hiring twice as many candidates in peak season. To reduce the backlog, the company invested in software that auto-populates and auto-validates data, reducing the time spent internally on processing new candidates.
 
<a href="https://www.fiserv.com/en/about-fiserv/resource-center/case-studies/business-process-improvement-case-study.html">Howard Bank</a>, a locally owned community bank based in the Greater Baltimore area, wanted to improve customer service and employee productivity. After conducting business process analysis, the bank realized that it takes new clients about an hour and a half to open a new account, reducing customer satisfaction and increasing the training required for new employees. The bank was able to reduce this time by 75% by using a new financial software, enabling employees to spend more time with new clients and improving clients’ satisfaction.
 
How can industry research improve BPA?
<a href="https://www.ibisworld.com/products/industry-research/">Industry research</a> allows companies to <a href="https://www.ibisworld.com/products/company-benchmarking/#accounting">benchmark</a> their performance against their competitors and industry metrics. These metrics include revenue per establishment, revenue per employee, wage expenses and profit. Moreover, <a href="https://www.ibisworld.com/blog/how-to-do-industry-analysis/61/1127/">industry analysis</a> is a great tool for tracking overall trends in industry revenue. Companies that grow at a faster rate than their peers typically have a competitive advantage such as strong marketing, loyal customers or differentiated products. In contrast, companies that grow at a slower rate than the industry average can use <a href="https://www.ibisworld.com/products/segment-benchmarking/">segment benchmarking</a> as a starting point to analyze internal processes that cause inefficiencies. Company benchmarking gives you a clear view of your competitors, while <a href="https://www.ibisworld.com/blog/enhancements-state-provincial-reports/1/1131/">state-level industry research</a> provides an additional layer of information to companies seeking to compare their performance to the broader industry.
 
Industry research has been particularly useful following the outbreak of the COVID-19 pandemic, which led many companies to adjust internal processes due to social distancing measures, <a href="https://www.ibisworld.com/blog/supply-chain-and-labour-challanges/61/1133/">supply chain constraints</a> and heightened regulatory environments. For example, businesses across the US have increased their investment in online operations to meet changing consumer needs. By having a clear understanding of ongoing trends, companies with access to industry data were able to more easily detect high value-added processes.
 
Final thoughts
Business process analysis helps companies optimize their internal processes to ultimately reduce costs, increase revenue, or both. BPA typically involves professionals across various departments who work together to make sure the new process flows smoothly across different dimensions. Once a new process is enacted, analysts continuously monitor the performance of the new standard against the previously established KPI. Businesses can use industry research to get the most out of BPA, taking advantage of industry-level metrics such as revenue per establishment and wage expenses.

Business Process Analysis (BPA) is a methodology used to analyze process-related areas of business and improve efficiency. So, how do you actually use it?

What is Business Process Analysis and How Do You Use It?

Key Takeaways
A Risk Management Framework helps your organization prepare for potential problems
The NIST Risk Management Framework is a US government system for creating institutional polices to mitigate risk
A Risk Management Framework is both flexible and cohesive, and a useful tool for organizations of all types and sizes
 
As the world becomes more complex, so too do the potential risks an organization might face. Modern businesses are heavily dependent on a globalized and digital world, and face risks related to IT infrastructure, global supply chains and the general challenges of an ever-changing economic environment. After all, the more intricate the system, the easier it is for it all to come undone. While we can’t eliminate all risks, threats, and sabotage, we should still take as much control of the situation as possible. Putting systems in place to mitigate the various types of risk is crucial for businesses of any size, which is where a risk management framework comes in handy.
 
In this article, we’ll break down the 5 Risk Management Components, which are a general standard for creating a risk management framework that can be applied to a variety of risks across different organizations. After describing the general framework, we will discuss the NIST Risk Management Framework in depth and apply it to specific applications and examples.
 
<img src="https://content.ibisworld.com/media/51ef0o0b/risk-management.jpg?width=720&amp;height=358.85228480340066" alt="" width="720" height="358.85228480340066">
 
What are the 5 Risk Management Components?
<ol>
<li>Identification</li>
<li>Measurement and assessment</li>
<li>Mitigation</li>
<li>Reporting and Monitoring</li>
<li>Governance</li>
</ol>
Risk Identification
First, you need to detail the current and potential risks facing your organization. For this component, brain storm:
<ul>
<li>What are the threats that could harm your organization?</li>
<li>What vulnerabilities could be exploited in your organizations security, procedures or IT systems?</li>
<li>What is the likelihood of each threat occurring?</li>
<li>What effects would these threats have?</li>
</ul>
Tip: <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-swot-analysis/1/1127/" target="_blank">SWOT Analysis</a> can help identify internal weaknesses and external threats.
 
Risk Measurement and Assessment
In the second component of the risk management framework, you’ll create a profile for each of the risks you identified. You can measure these risks in several ways, depending on your organization and industry. For example, <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-competitive-intelligence-and-why-is-it-important/44/1127/" target="_blank">competitive intelligence</a> can help you assess risks associated with competing operators. Alternatively, a third-party risk management framework could measure how much money could be lost, while a cybersecurity risk framework could measure the opportunity cost of replacing the current security system compared with improving it.
 
Once you’ve completed the risk profiles, rank them from least to greatest threat. Keep in mind that risks change as an organization and its operating environment evolves, so you will likely need to repeat this step periodically.
 
Risk Mitigation
With a ranked list of risk profiles, your organization can consider how to mitigate the greater risks, and learn to tolerate the lower ranking ones. For example, an organization creating a supply chain risk management framework would focus on mitigating any potential risks with its biggest supplier, even if it requires devoting less time to its other suppliers.
 
Risk Reporting and Monitoring
The fourth component of the RMF requires regular reporting on risk measures. This component allows your organization to maintain an optimal level of risk and ensure that the mitigation strategies considered in the third component are still valuable and effective.
 
Risk Governance
The last component in the risk management framework is the process of governance. In other words, organizations need to create a formal system that employees use constantly to ensure risks are managed appropriately.
 
What is the NIST Risk Management Framework?
The <a rel="noopener" href="https://csrc.nist.gov/projects/risk-management/about-rmf" target="_blank">Risk Management Framework (RMF)</a> was originally created by the United States military to ensure sensitive information systems in the federal government were secure and maintained safely. Currently, the National Institute of Standards and Technology (<a rel="noopener" href="https://www.nist.gov/" target="_blank">NIST</a>) is in charge of the Risk Management Framework. NIST updates the framework to keep up with technological progress and the increasing complexity of the modern world.
 
While the RMF was initially created for the federal government to deal with information technology systems, it’s a useful tool that can be applied to different types of risk for organizations in the private sector. So, how does the RMF work?
 
The NIST risk management framework is made up of seven steps.  These steps create a functioning, institutional system that can efficiently mitigate risks for an organization. Let’s go through each of them.
 
<img src="https://content.ibisworld.com/media/um5jrvy1/nist-risk-management-framework-infographic-logo.png?width=720&amp;height=376.4505844845909" alt="Infgraphic showing the NIST Risk Management Framework steps. The infographic is made up of 7 arrows arranged in a circle. Each arrow is a different color and contains the name of a step. The steps are Prepare, Categorize, Select, Implement, Assess, Authorize, Monitor, and Prepare. The title of the infographic is in the center of the circle and reads NIST Risk Management Framework." width="720" height="376.4505844845909">
 
What are the 7 Risk Management Framework steps?
<ol>
<li>Prepare</li>
<li>Categorize</li>
<li>Select</li>
<li>Implement</li>
<li>Assess</li>
<li>Authorize</li>
<li>Monitor</li>
</ol>
Prepare
<a href="https://csrc.nist.gov/Projects/risk-management/about-rmf/prepare-step">Preparation</a> is at the core of the interconnected network that makes up the risk management framework. This step gets your organization ready to adopt a formal strategy by identifying risks, establishing risk tolerance and assigning roles to personnel.
While preparation is the first step, you can repeat it at every stage of the process. If something changes, or you realize your assumptions were incorrect, you might find it helpful to go back to brainstorming.
 
You can use the Identification component to lay out the possible risks, threats and vulnerabilities and begin to formalize these ideas into a risk management strategy.
 
Categorize
<a href="https://csrc.nist.gov/Projects/risk-management/about-rmf/categorize-step">Categorization</a> is similar to both the measuring and monitoring and the mitigation components, but is more formal than simply listing out the different risks. In this step, you will formally rank the risks from lesser to greater and from least to most important. This structure is then used to create policies to minimize risk for the organization.
 
Select 
In this step of the process, you <a href="https://csrc.nist.gov/Projects/risk-management/about-rmf/select-step">select</a> the solutions or policies required to prevent or minimize the previously identified risks. These solutions will look different from one organization to another. An enterprise risk management framework might lay out solutions to prevent the theft of intellectual property, whereas a cybersecurity risk management framework will provide measures to fortify a networks firewall.
 
Implement 
The next step is to <a href="https://csrc.nist.gov/Projects/risk-management/about-rmf/implement-step">implement</a> the solutions you’ve selected. This is the part of the risk management framework where you turn your thoughts into actions. Be sure to document the process and procedures so the selected solutions become formal organizational polices.
 
Assess 
At this stage of the risk management framework, you <a href="https://csrc.nist.gov/Projects/risk-management/about-rmf/assess-step">assess</a> the implementation of your risk management solutions. The aim of this step is to verify whether the solutions were executed correctly, and, more importantly, if they created the desired results. If not, you will need to address any weaknesses in risk controls.
 
Authorize 
In the <a href="https://csrc.nist.gov/Projects/risk-management/about-rmf/authorize-step">authorization</a> step, you will give an executive or senior member of an organization an overview of the plan and assessments to receive their formal approval that the system is working as intended. Additionally, the senior members should verify that the risk management framework is in line with laws and organizational policies.
 
Monitor
The last step of the risk management framework can, like the Prepare step, happen at any time. Your organization should continuously <a href="https://csrc.nist.gov/Projects/risk-management/about-rmf/monitor-step">monitor</a> the systems set in place to ensure that they are still relevant, effective and working as intended. If any doubts or new considerations arise, those in charge of maintaining the risk management framework should go back to the prepare step.
 
<img src="https://content.ibisworld.com/media/s1cpjege/pexels-fauxels-3183183.jpg?width=720&amp;height=480.51009564293304" alt="" width="720" height="480.51009564293304">
 
How can we use the NIST RMF for Enterprise Risk Management?
The NIST Risk Management Framework is a great tool for enterprise risk management (ERM), since ERM deals with mitigating risk at an organizational level. ERM can also be a vital step in <a href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/">strategic planning</a> as any decisions made should consider the needs of the entire firm and not just individual segments of the organization. The NIST RMF ensures the entire organization is considered, and provides a model for creating institutional level policies and regulations.
 
Using the Identification component during the Prepare step allows your organization to focus on both internal and external risks. An internal risk could be an outdated information system that happens to only affect one department. An external risk is a general problem that might affect the organization as a whole, as well as the various departments internal structures.
 
Moreover, at an external level, risks can apply to the various business segments in different ways. For example, a change in demographics creates different risks for the sales and marketing department than for the finance department. Similarly, <a href="https://www.ibisworld.com/blog/the-rising-importance-of-esg/1/1127/"></a>
Adding <a href="https://www.ibisworld.com/blog/the-complete-guide-to-industry-research/99/1127/">Industry Research</a> to the identification component of the NIST risk framework makes the <a href="https://www.ibisworld.com/blog/what-is-risk-analysis/1/1127/">Risk Analysis</a> more effective. The more information you have, the better decisions you can make. If demographic or economic factors change, applying in-depth industry research will help connect the immediate facts with overall industry trends.
 
How can RMF be used for Third-Party Risk Management?
Third-Party Risk Management (TPRM) seeks to reduce risk relating to external parties such as vendors, suppliers and contractors. The full scope of the NIST RMF can help minimize this type of risk. A lot of factors are out of your organization’s control when dealing with third parties, so controlling the ones you can is vital. This is where a comprehensive third-party risk management framework is key.
 
If your organization is deeply dependent on a supplier, you face huge risks if they can’t follow through. Being vigilant with the mitigating and reporting and monitoring components is essential, as your organization needs to be ready for any unexpected changes to reduce third-party risk.
 
The NIST risk management framework is useful for creating and sustaining risk management organization policies. Organizational processes that are formalized and made routine reduce uncertainty, which is very helpful in TPRM.
 
How does RMF apply to Cyber Security Risk Management?
As more institutions take up operations in the digital realm, organizations have an ever-increasing need for cybersecurity. Organizations of all sizes, from the corner store bodega to a Fortune 500 company, require a robust cyber security risk management framework.
 
Many types of cyber security risks exist and can vary from one organization to another. System failure is a major risk, and one that applies to all types of organizations. Being vigilant and conducting consistent checks reduces the likelihood of system failure. The NIST RMF is a great tool to mitigate the risk of system wide failure of information networks.
 
Final Thoughts
You can’t make your operations risk free, but there is good news: your organization can do a lot to minimize risks. A robust risk management framework, such as the NIST RMF, is both flexible and cohesive, and is a useful tool for organizations of all types and sizes.

Putting systems in place to mitigate risk is crucial for businesses of any size. A risk management framework helps your organization prepare for potential problems.

What are Risk Management Frameworks and Why Do You Need Them?

Senior Research Analyst

Key Takeaways
Cost benefit analysis is a quick and simple way for businesses to assess the value of potential projects and plans
 
The outcome of a cost benefit analysis is not always simple and more research may be necessary to maximise the value of investments
 
The best way to use a cost benefit analysis is in conjunction with other business tools, such as profitability analysis and competitive intelligence
 
 
Resource allocation is the foundation of the economy and when done correctly can be the cornerstone of a successful business. Large or small, all businesses must make good decisions when deciding how to best allocate their resources efficiently to give themselves the best chance of running things well. This is where cost benefit analysis (CBA) can be useful, giving an indication of the merit of new plans and operations.
 
What is a Cost Benefit Analysis
A CBA is a method of assessing the net outcome of a potential course of action by comparing its benefits and costs. Though some forms of CBA have been done for millennia, <a rel="noopener" href="https://www.jstor.org/stable/1829307" target="_blank">the modern CBA method</a> was pioneered by French economist Jules Dupuit in 1848 when assessing the value of constructing a new roads and bridges.
 
CBA can be used to assess a wide variety of potential actions, such as:
<ul>
<li>Deciding whether to employ a new worker</li>
<li>Evaluating whether or not to buy new capital equipment</li>
<li>Determining whether to move to a new workspace</li>
</ul>
Simply put, CBA involves tallying up the benefits and costs of an action and comparing the two values to determine whether it’s worthwhile or not.
 
For example, in 2012, the UK Department for Transport conducted <a rel="noopener" href="https://publications.parliament.uk/pa/ld201415/ldselect/ldeconaf/134/13402.htm" target="_blank">a CBA to determine if the planned High Speed 2 (HS2) rail project would provide value for money</a>. Key considerations taken into account included the cost of the project, the expected level of demand and key benefits for potential users of the rail line. Ultimately, <a rel="noopener" href="https://www.theguardian.com/uk/2012/jan/10/high-speed-rail-link-minister" target="_blank">the UK government gave the project the go ahead</a>.
 
How to apply a Cost Benefit Analysis
A CBA can be done in four stages.
 
Step 1:
Firstly, it is important to define the overall framework of the action. For example, if you are considering employing new staff, how many? And over what timeframe do you want to measure the merit of the project? If you’re planning on <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">introducing a new product</a>, when do you want it to be ready for launch?
 
It is important to create a framework first so that down the line when you are assessing costs and benefits, you can make better estimates and assess the outcomes properly.
 
Step 2:
The second step is to think up as many benefits and costs to the action as possible. These can be wide ranging, from tangible things like new salaries to intangibles, such as employee wellbeing and <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">a positive impact on business processes</a>. This list needs to be comprehensive – try and think of as many factors as possible.
 
For example, hiring a new employee doesn’t just cost their wages; you must also consider the time it takes to conduct interviews and train the new employee, as well as any potential payments to recruitment firms.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/epjdcmv5/cost-benefit-analysis-flow-chart.png?width=720&amp;height=347" alt="Infographic on a white background. Shows a cost benefit analysis flow chart in an oval shape. The far left box says ‘create a framework for your project’. The top left box says ‘assess what benefits the project will bring’. The top right box says ‘give a monetary value to your benefits’. The far right box says ‘make an assessment of the outcome’. The bottom left box says ‘assess what costs the project will bring’. The bottom right box says ‘give a monetary value to your costs’." width="720" height="347">
 
Step 3:
The next step is to apply monetary values to all the benefits and costs. Some of these will be easy – the price of new piece of capital equipment, the rent for a new office space, the wages for a new employee, etc. However, some can be difficult.
 
To give monetary value to intangibles, you will have to make assumptions based on personal experience and your own research. It can also be difficult to properly forecast future revenues and costs; this can require considerable research.
 
Step 4:
The final step of a CBA is to assess the result by comparing the overall cost of the action with its overall benefit. If the costs outweigh the benefits, it is probably not worth undertaking the project. If the benefits outweigh the costs, then it may be worth undertaking.
 
However, some more analysis may be required before committing to an action. For instance, how certain are your benefit predictions? If you’re relying on increasing revenue from a high-risk and volatile industry it may be worth conducting further research.
 
If the net positive is minor or if it will take a long period of time to recoup the costs, you should consider if there are other actions you can undertake that will yield more value. Because of this, it can be worth carrying out CBAs on a range of different possible actions.
 
Example of a Cost Benefit Analysis
Calceus Shoes Ltd is a handmade <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/footwear-manufacturing-industry/" target="_blank">shoe manufacturing company in the UK</a>. The company is currently experiencing high demand and is considering expanding to increase capacity. It wants to move to a larger factory and hire two new employees, including an in-house HR manager. Will this expansion will be worthwhile over a five-year period?
 
Costs
The company needs to employ two additional workers. IBISWorld estimates that in 2022-23 the average industry wage in the UK shoemaking industry is just under £27,400, but it is projected to increase to around £28,150 by 2027-28. This means that for two new workers, Calceus will spend approximately £277,500 on wages over the five-year period.
 
New capital investment is also necessary to create and upkeep two additional workstations. There will be an initial outlay of £20,000 and, using IBISWorld’s depreciation data, we estimate the yearly upkeep costs at around £2,400. This will create a total capital cost of £32,000 over the period.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/h42fr5yd/chart-1-total-cost-of-expansion-over-5-years.png?width=492&amp;height=490&amp;mode=max" alt="Infographic on a white background. Doughnut chart showing the results of a cost benefit analysis. Title reads ‘Total cost of expansion over 5 years’. Labels for the chart are ‘wages’, ‘rent’, ‘capital, and ‘other’. The IBISWorld logo is in the bottom right corner." width="492" height="490">
 
Calceus currently pays the average industry rent of 4.5% of revenue, a total of £22,500. The new lease will be 15% higher, indicating an annual rent increase of £3,375 and a total cost of £16,875 over five years.
 
The company also needs to consider smaller other costs, including recruitment and training (£3,500), moving costs (£2,000) and legal and administrative fees (£2,500).
 
Benefits
Calceus currently has an annual revenue of £500,000, while demand is 20% higher than its output. This means that revenue is expected to initially rise by 20%, or £100,000. Over a five-year period, this will amount to £500,000.
 
The company also expects there to be <a rel="noopener" href="https://www.gov.scot/publications/about-supply-use-input-output-tables/pages/user-guide-multipliers/" target="_blank">a 10% multiplier effect</a>, with higher sales increasing its reputation and creating more demand. This will result in an additional £55,556.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/o21ht3ft/chart-2-total-benefit-of-expansion-over-5-years.png?width=468&amp;height=472&amp;mode=max" alt="Infographic on a white background. Doughnut chart showing the results of a cost benefit analysis. Title reads ‘Total benefit of expansion over 5 years’. Labels for the chart are ‘wages’, ‘rent’, ‘capital, and ‘other’. The IBISWorld logo is in the bottom right corner." width="468" height="472">
Overall, this means that Calceus Shoes can expect a total benefit of £238,056 to the plan. This is quite a large margin, which will protect from some uncertainty.  Because of this, Calceus Shoes should follow the result of the CBA and complete the expansion project.  
 
What are the limits to using a Cost Benefit Analysis?
Assessing a CBA it is not as simple as comparing the value of costs to the value of benefits. Even with a positive long-term return, a high cost in the present can make a project unworthwhile. In the case that the project includes a substantial initial investment, it would be worth considering the net present value of the return. Each action a business takes has an opportunity cost. Any investment made could be used for alternative actions and it is important to consider a range of options before committing to an investment.
 
When planning a large project that involves many factors it can be almost impossible to evaluate all the indirect outcomes of the project. Because of this, the larger the proposed project, the harder it is the conduct a thorough CBA.
 
Evaluating costs and benefits, especially when trying to estimate indirect outcomes and future revenues, becomes more difficult the more complex a project is. Without good estimates for the value of your costs and benefits, your CBA can result in a misleading outcome and lead to poor decision making. This is why conducting research <a rel="noopener" href="https://www.ibisworld.com/blog/market-sizing/99/1127/" target="_blank">having a good understanding of your market</a> is key creating a robust CBA.
 
CBAs also don’t account for risk. Although all assignments of the future are bound to a degree of uncertainty, the lack of scope to cover risk analysis in a CBA makes it particularly susceptible to uncertain and volatile markets. For example, how would your future benefits be affected by changes to commodity prices? Could demand be disrupted by new technologies?
 
It is vital that before taking an action based on a CBA you do your due diligence and assess the future risks you are exposed to. One way to elevate this is to conduct best- and worst-case scenarios in your CBA.
 
Maximising your analysis
Because of the limits to CBA, you should use it in conjunction with other business analysis tools to maximise the value of your assessment.
 
<a rel="noopener" href="https://www.ibisworld.com/blog/what-is-profitability-analysis-and-why-is-it-important-to-businesses/44/1127/" target="_blank">Profitability analysis</a> is used by businesses to optimise the profitability of various plans and projects. This can help you better understand where your profits come from and therefore better estimate future revenue streams and costs. This can significantly improve the accuracy of a CBA.
 
When conducting research for a CBA, having a good understanding of the market is very important. With <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-competitive-intelligence-and-why-is-it-important/44/1127/" target="_blank">competitive intelligence</a>, you can gain a better understanding of what your competitors are doing, what costs they have incurred and have a better picture of the industry as a whole.
 
As one of the weaknesses of a CBA is its lack of scope for risk assessment, it may be necessary to create a <a rel="noopener" href="https://www.ibisworld.com/blog/risk-management-frameworks/1/1127/" target="_blank">Risk Management Framework</a> (RMF) for your planned project. <a rel="noopener" href="https://csrc.nist.gov/projects/risk-management/about-rmf" target="_blank">RMFs</a> are a method of identifying and measuring potential threats to a business and creating methods to mitigate these risks. This is a vital step in analysing business plans, especially when operating in high-risk industries.
 
Final thoughts
CBA is a useful tool for understanding the strengths and weaknesses of prospective projects. It is a quick way of eliminating unsensible business plans, but should not be used by itself in the approval of future business projects.
 
The strength of a CBA is its simplicity. It is quick, easy and anyone can do it without specific training or qualifications. However, its simplicity is also a weakness. Used by itself it, CBA is incapable of taking in all the possible variations of ever-changing market and when used poorly it can lead to bad decision making. However, when used in tandem with other tools, a CBA can be extremely effective.

Cost benefit analysis is used by businesses to decide whether or not to undertake new projects. Find out what exactly this includes and how can you use it.

What is a Cost Benefit Analysis and How Should You Use it?

Key takeaways
Value chain analysis helps companies consider how each part of their operations adds or subtracts value from their final product
 
Maximising the value at each step of the value chain helps companies enhance customer value and capture market share
 
Conducting a value chain analysis is key to identifying areas where you can gain an advantage over your competitors
 
Value chain refers to the various business processes and activities involved in creating a product or performing a service. A <a rel="noopener" href="https://www.isc.hbs.edu/strategy/business-strategy/Pages/the-value-chain.aspx" target="_blank">value chain</a> can consist of multiple stages of a product or service’s life cycle, such as sales, research and development, and everything in between.
 
Value chain analysis is a means of evaluating each of the activities in a company’s value chain to understand where opportunities for improvement lie.
 
 
What are the components of a value chain?
So, what actually makes up a value chain?
 
According to <a rel="noopener" href="https://www.usitc.gov/publications/332/journals/concepts_approaches_in_gvc_research_final_april_18.pdf" target="_blank">Porter’s Value Chain Analysis definition</a>, all of the activities that make up a firm's value chain can be split into two categories that contribute to its margin: primary activities and support activities.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/h5chiphs/value-chain-anlaysis-flow-chart.png?width=763&amp;height=412&amp;mode=max" alt="" width="763" height="412">
 
Primary activities
Primary activities are those that go directly into the <a rel="noopener" href="https://www.ibisworld.com/blog/product-development-process/99/1127/" target="_blank">development of a product</a> or the execution of a service. They include:
<ul>
<li>Inbound logistics: Activities related to receiving, warehousing and inventory management of source materials and components.</li>
<li>Operations: Activities related to turning raw materials and components into a finished product.</li>
<li>Outbound logistics: Activities related to distribution, including packaging, sorting and shipping.</li>
<li>Marketing and sales: Activities related to the marketing and sale of a product or service, including promotion, advertising and pricing strategy.</li>
<li>After-sales services: Activities that take place after a sale has been finalised, including installation, training, quality assurance, repair and customer service.</li>
</ul>
Secondary activities
Secondary activities help primary activities become more efficient, creating a <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/99/1127/" target="_blank">competitive advantage</a>. They include:
<ul>
<li>Procurement: Activities related to the sourcing of raw materials, components, equipment and services.</li>
<li>Technological development: Activities related to research and development, including product design, <a rel="noopener" href="https://www.ibisworld.com/blog/market-research-methods/99/1127/" target="_blank">market research</a> and process development.</li>
<li>HR management: Activities related to the recruitment, hiring, training, development, retention and compensation of staff.</li>
<li>Infrastructure: Activities related to the company’s overhead and management, including financing and planning.</li>
</ul>
 
What are the different types of value chain?
Value chain activities can be restricted to a company or industry or can be distributed over several locations across the globe. This means that there are three types of value chains.
 
Company level 
The focus in this type of value chain is on business units. It includes all the business activities a firm undertakes to enhance the value of its product and improve its competitive advantage.
 
Industry level
Industry-level value chains include a broad range of activities involved in making a product, from procurement to final delivery. Analysing this value chain helps to assess possibilities of entry into a new market or expansion into an existing market.
 
Global level
Under this value chain type, the businesses operating on a global scale carry out activities connected to designing, developing, assembling or marketing at different locations across the globe.
 
 
Enhancing competitive advantage
Conducting a value chain analysis prompts you to consider how each aspect of your operations adds or subtracts value from your final product or service. This can help you realise some form of competitive advantage, such as:
<ul>
<li>Cost reduction: Making each activity in the value chain more efficient and therefore less expensive.</li>
<li>Product differentiation: Investing more time and resources into activities like research and development, design or marketing, which can help your product stand out.</li>
</ul>
 
How to conduct a value chain analysis
1. Identify value chain activities
The first step in conducting a value chain analysis is to understand all of the primary and secondary activities that go into your product or service’s creation.
 
2. Determine the cost and value of activities
Once the primary and secondary activities have been identified, the next step is to determine the value that each activity adds to the process, along with the costs involved. The value created by activities is synonymous to customer satisfaction and quality of output.
 
For instance, does developing a product from high-quality or sustainable materials make it more desirable to end users? Can the addition of a product feature result in higher sales volume?
 
Similarly, it’s important to understand the costs associated with each step in the process.
 
3. Identify opportunities for competitive advantage
Once the value chain has been compiled and the cost and value associated with each step has been understood, you can analyse the results to enhance your company’s competitive advantage. For instance, if the primary goal is to reduce costs, each piece of your value chain should be evaluated through the lens of reducing expenses.  Similarly, if the primary goal is to achieve product differentiation, it’s important to question which parts of the value chain will better contribute to achieving this goal.
 
 
Why is value chain analysis useful?
Analysing the processes that comprise your company’s value chain can help understand in detail what goes into each of its transactions. By maximising the value created at each point in the chain, your company can be better positioned to enhance customer value while capturing a greater <a rel="noopener" href="https://www.ibisworld.com/blog/calculate-a-company-s-industry-market-share/99/1127/" target="_blank">share of the market</a>. Similarly, gaining a deeper understanding of how your firm creates value can enable you to develop a greater understanding of your company’s competitive advantage.
 
 
How can value chain analysis be used with other tools?
Value chain analysis can be strengthened by the use of other tools, such as <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-swot-analysis/1/1127/" target="_blank">SWOT</a> and <a rel="noopener" href="https://www.ibisworld.com/blog/3-step-pestle-analysis/99/1127/" target="_blank">PESTLE analysis</a>, and vice versa. Understanding your organisation’s SWOT and PESTLE environment can help you better understand which activities alongside the value chain will yield the most impact if addressed.
 
For instance, one of the main competitive strengths of operators in the UK <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/online-flower-retailers-industry/" target="_blank">Online Flower Retailers industry</a> lies in their ability to develop their website and drive customer traffic to their online channels. Investing in hiring highly skilled web developers and SEO specialists can add to the competitive advantage of a company in this industry. Similarly, internet technology capabilities present a weakness for <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/florists-industry/" target="_blank">retail florists</a> that can be tackled through investment in these employees, enhancing their competitive advantage.
 
You can also use value chain analysis alongside <a rel="noopener" href="https://www.ibisworld.com/blog/business-process-analysis/99/1127/" target="_blank">business process analysis</a>, to help improve efficiency in elements of the value chain.  Similarly, using <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-industry-analysis/61/1127/" target="_blank">industry analysis</a> to assess value chains can be essential to fully understanding your company’s operations.
 
 
Digging deeper
Let’s take a closer look at our online flower retailing example. The first step towards conducting a value chain analysis of an online flower retailer would be to understand all of the primary and secondary activities that go into the creation of this service.
 
Primary activities
<ul>
<li>Inbound logistics: Shipping flowers and other flower products from growers to company-owned warehouses.</li>
<li>Operations: Sorting, packaging and labelling flower products.</li>
<li>Outbound logistics: Fulfilling the different orders by distributing the flower product directly to consumers with the use of company-owned vans or third-party couriers.</li>
<li>Marketing and sales: Driving customer traffic to websites, increasing conversion rates, offering discounts, offering subscription services and receiving payment for orders.</li>
<li>After-sales services: Offering online customer service, generating repeat custom, sending out offers and distributing satisfaction survey to customers.</li>
</ul>
Secondary activities
<ul>
<li>Procurement: Sourcing flower products directly from growers or wholesales, based either domestically or internationally. International suppliers are associated with more intricate primary logistics activities.</li>
<li>Technological development: Developing brand and product image, front-end and back-end website development and inventory management using barcoding.</li>
<li>HR management: Recruiting, hiring, training and developing highly skilled employees and outsourcing non-primary activities to contractors.</li>
<li>Infrastructure: Enhancing operational and supply chain efficiency when it comes to fulfilling flower orders.</li>
</ul>
 
Determining the cost and value of activities
The above analysis highlights the importance of technology, HR and logistics operations for online flower retailers. Website development and traffic are essential pillars for a company in this industry to be able to generate revenue. This can’t be achieved without highly skilled tech employees continuously developing, monitoring and enhancing website processes.
 
Inbound and outbound logistics operations are also paramount to the competitive advantage of online flower retailers. Establishing strong sourcing routes with reputable growers is key to customer satisfaction while having fast and efficient distribution routes can enhance satisfaction and profitability.
 
Identifying opportunities for competitive advantage
Given the value that logistics, HR and technology add to the competitiveness of online flower retailers, companies can focus on enhancing these activities to add to their competitive advantage. Increasing the speed and minimising the cost of inbound logistics routes can support profitability by raising output. Investing in the efficiency of outbound logistics routes can reduce delivery times and costs, generating an advantage over competitors.
 
Online flower retailers can also enhance their competitive advantage by hiring highly skilled tech workers that can continuously work on improving website development and conversion rates, allowing for a higher number of orders to be processed.
 
Final thoughts
Conducting a value chain analysis can be essential in fully understanding how to maximise your company’s potential. By looking at how each part of the supply chain adds and takes away value from your business, it is possible for you to make the changes needed to ensure maximum success for your business, whether this be through improvements to primary activities like logistics and operations, or secondary functions like procurement and technology adoption. A successful value chain analysis will help your company gain a competitive edge and boost performance.

Value chain refers to the various business processes involved in creating a product or providing a service. Find out how its analysis can help you running a successful business.

What is Value Chain Analysis and Why is it Important?

Key takeaways:
Oligopolies are dominated by a small number of suppliers. 
 
Market power held by dominant firms is seen as anti-competitive and disadvantageous for consumers. 
 
It is important to be able to identify and understand the characteristics of an oligopoly, in order to gauge the motivations and decisions of oligopolistic firms. 
 
Oligopolies occur when a small number of sellers, producers or service providers exert significant control over prices and output. As with a monopoly, oligopolies are characterised by high barriers to entry and exhibit imperfect competition; however, unlike a monopoly, firms operating in an oligopolistic market are unable to operate independently of each other. Before we break down some real-world examples of oligopolies, let’s take a look at the basics.
 
What are the main characteristics of an oligopoly?
Interdependence of firms
Interdependence between a small number of dominant firms is a key characteristic of oligopolistic competition. In order to protect market share, firms must consider the likely reaction of competitors when making a decision. This includes decisions on price, output and marketing strategy, with economic theory implying that firms will act in their own self-interest to settle on a sub-optimal equilibrium outcome.
 
A useful tool for analysing scenarios in which two agents make decisions that are interdependent is a game theory principle called the Prisoner’s Dilemma.
 
Illustrated below, firm A and firm B must decide whether to raise or restrict output as they seek to maximise profit.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/f4df20xn/chart-1-nash-equilibrium.png?width=720&amp;height=379.51115834218916" alt="" width="720" height="379.51115834218916">
 
<ol>
<li>If firm A and firm B both raise output, each of them will achieve £1,000 profit.</li>
<li>If firm A raises output and firm B restricts output, firm A will achieve £3,000 profit and firm B will achieve £500 profit.</li>
<li>If firm B raises output and firm A restricts output, firm B will achieve £3,000 profit and firm A will achieve £500 profit.</li>
<li>If firm A and firm B both restrict output, each of them will achieve £2,000 profit.</li>
</ol>
If both firms know the equilibrium strategies of the other firm, the dominant strategy for both firms, regardless of the actions of the other firm, is to raise output. As a result, path 1 is the optimal solution, or the Nash equilibrium, with each firm achieving profit of £1,000.
 
The Prisoner’s Dilemma also highlights the potential benefits associated with collusion in an oligopoly. If the two firms cooperate to restrict output, they will each achieve a profit of £2,000, more than the Nash equilibrium achieved in the absence of collusion.
 
In order to protect consumers, the Competition Act 1998 prohibits agreements between two or more businesses which have the effect of preventing, restricting or distorting competition within the UK; the Competition and Markets Authority (CMA) is the non-ministerial department tasked with promoting competition for the benefit of consumers.
 
Price stability
Firms in an oligopoly are prices setters. However, once these prices are settled on, they are fairly resistant to changes in costs and market conditions. Firms operate with a downward sloping demand curve, meaning that as prices fall, demand rises. The price elasticity of demand differs depending on the likely reaction of other firms to price changes, further demonstrating the interdependence between firms in an oligopoly.
 
Theory suggests that firms operating in an oligopoly have little incentive to drastically change their prices.
 
It is assumed that rival firms will not follow price increases by an individual firm, causing the firm raising prices to lose market share and revenue. In contrast, rival firms will match price reductions, limiting any potential increase in demand and causing revenue to fall.
 
This theory is best illustrated using a kinked demand curve, which shows that there is a kink in the demand curve above the prevailing price (P1). The segment above P1 is more elastic, while the segment below P1 is more inelastic. Revenue is represented by the area underneath the equilibrium price and quantity.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/z44file4/chart-2-kinked-demand-curve.png?width=720&amp;height=451.4346439957492" alt="" width="720" height="451.4346439957492">
 
<ul>
<li>Effect of a price increase: If a firm raises its price from P1 to P2, the equilibrium moves from point A to point B, leading to a fall in demand from Q1 to Q2 and a subsequent fall in revenue. This is due to competitors maintaining their price at P1, leading to a loss of competitiveness.</li>
<li>Effect of a price reduction: If a firm lowers its price from P1 to P3, the equilibrium moves from A to C, leading to a slight rise in demand from Q1 to Q3 but a fall in revenue. This is due to rival firms following the price reduction, limiting the scope for the firm to increase market share by lowering prices.</li>
</ul>
Non-price competition
In order to avoid a price war, non-price competition is key for firms to gain an advantage over rivals. Non-price competition makes <a rel="noopener" href="https://www.ibisworld.com/blog/what-is-competitive-intelligence-and-why-is-it-important/44/1127/" target="_blank">competitive intelligence</a> crucial for firms to understand their rivals.
 
Firms invest heavily in advertising, branding and marketing campaigns to distinguish themselves from competitors.
 
Customer loyalty and quality of service are also key points of differentiation.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/2yjphfvn/chart-3-highest-marketing-spend-uk-industries.png?width=720&amp;height=446.07863974495217" alt="" width="720" height="446.07863974495217">
 
The above graph displays the UK industries whose marketing costs are highest. The <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/computer-game-publishing-industry/" target="_blank">Computer Game Publishing</a>, <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/video-downloading-streaming-services-industry/" target="_blank">Video Downloading and Streaming Services</a> and <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/video-games-industry/" target="_blank">Video Games</a> industries are all considered to be oligopolies, demonstrating the importance of non-price competition to firms operating in an oligopoly.
 
Oligopoly examples
Using <a rel="noopener" href="https://www.ibisworld.com/products/industry-research/" target="_blank">IBISWorld reports</a>, potential oligopolies can be easily identified by examining the following traits:
<ul>
<li><a rel="noopener" href="https://www.ibisworld.com/blog/calculate-a-company-s-industry-market-share/99/1127/" target="_blank">Market Share Concentration</a>: A four-firm concentration ratio exceeding 40% indicates oligopolistic competition.</li>
<li>Barriers to Entry: High barriers to entry enable firms to maintain significant control over the industry.</li>
<li>Basis of Competition: Oligopolies are characterised by a high degree of non-price competition.</li>
<li>Cost Structure Benchmarks: Firms in an oligopoly typically dedicate a significant share of revenue to marketing spend.</li>
</ul>
 
Below are some examples of oligopolies from IBISWorld’s collection of industry reports:
 
Supermarkets in the UK
<a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/supermarkets-industry/" target="_blank">Supermarkets in the UK</a> is a clear example of an oligopoly. The industry is dominated by a small number of large firms, with the top four players – Tesco, Sainsbury’s, Asda and Morrisons – expected to account for 54.4% of industry revenue in 2022-23. Reversing a long-term upwards trend, the industry’s market share concentration has come under threat from the emergence of low-cost supermarkets such as Aldi and Lidl over the past decade. Nevertheless, barriers to entry are high, most notably in the form of capital requirements.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/0cmd0s43/chart-4-uk-supermarkets-market-share-2022-23.png?width=438&amp;height=524&amp;mode=max" alt="" width="438" height="524">
 
A key oligopolistic trait displayed by supermarkets is strategic interdependence between firms. Price stickiness means that non-price competition is the key form of differentiation. This has spurred innovation within the industry, with Just Walk Out technology in the early stages of adoption among the top four players.
 
The expected response of rivals is a key consideration for supermarkets when making investment decisions. The firm that moves first shoulders the burden of risk associated with the investment in return for a potential head-start on revenue, while other firms are able to observe the success of the strategy before deciding whether to launch it themselves.
 
Although supermarkets are reluctant to change prices due to the adverse effects on revenue, they have been forced to lower prices in recent years, with price wars breaking out between the big four firms and low-cost competitors.
 
Most recently, Asda and Morrisons have attempted to undercut each other on the price of everyday items. Meanwhile, Tesco and Sainsburys have each committed to price matching low-cost competitor Aldi on hundreds of popular items. Such activity is exemplary of oligopolistic competition, with price reductions constraining revenue over the past five years.
 
Banks in the UK
High-street <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/banks-industry/" target="_blank">banks</a> are dominated by a handful of household names, with the industry displaying key characteristics of an oligopoly. According to figures from UK Finance, in 2020, the UK's six largest lenders – Lloyds Banking Group, building society Nationwide, NatWest Group, Santander UK, Barclays and HSBC – accounted for 71.2% of total gross lending.
 
Following the financial crisis, the Financial Conduct Authority has tightened regulation within the banking sector, with stress-testing introduced in 2014-15 to determine the ability of a bank to cope during adverse economic conditions. Such regulation has increased barriers to entering the industry, helping to maintain the dominance of the largest lenders.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/r1upg2ep/chart-5-monthly-current-account-switches.png?width=720&amp;height=336.663124335813" alt="" width="720" height="336.663124335813">
 
This dominance has spurred several investigations by the CMA in recent years, leading to efforts to reduce concentration and promote competition, including the launch of a seven-day switching service in 2013.
 
However, switching rates have continued to hover around 2% per year since the introduction of the guarantee. Although digital challenger banks, such as Revolut and Starling, have made some inroads into the market, similar products and incentives offered by major banks maintains significant barriers to success for smaller operators.
 
Soft Drink Production in the UK
The <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/soft-drink-production-industry/" target="_blank">Soft Drink Production industry</a> forms part of a global battle between two universally recognisable brands: Coca-Cola and Pepsi. These brands are present in the United Kingdom through respective manufacturing licences held by Coca Cola Europacific Partners Great Britain and Britvic. The dominance of these firms contributes to a top four firm concentration ratio of 56.4% in 2022-23.
 
Barriers to entry are low compared with other oligopolistic industries, with changing consumer tastes presenting opportunities for new firms to enter the market. However, barriers to success are high, with the economies of scale held by larger incumbent firms preventing smaller rivals from competing for market share.
 
There is significant interdependence between the largest brands, particularly Coca-Cola and Pepsi, with the benefits associated with price changes likely to be nullified by the reaction of the rival firm.
 
Since price changes often prove a blunt tool to maximise profit, the industry is characterised by a high degree of non-price competition. Coca-Cola and Pepsi are gripped in one of the most infamous marketing battles in history, with neither brand likely to let its rival embark on a major marketing campaign without undertaking a similar action in response. The rivalry has become so intense that it has been labelled ‘cola wars’, with aggressive marketing strategies adopted including comparative advertisements, product placement and major sponsorship deals.
 
Oligopoly pros and cons
As the examples above depict, oligopolistic competition is present in several major industries and has a considerable impact on UK consumers. As a result, the theory that excessive concentration between a small number of price-setting firms leads to above-normal profit is a significant concern for policy-makers. Reviews of industries, including the Big Four oligopoly in auditing, generally result in greater government oversight.
 
Energy supply case study
Perhaps the most high-profile recent example of government intervention is in the <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/gas-supply-industry/" target="_blank">gas</a> and <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/electricity-supply-industry/" target="_blank">electricity supplier</a> market, in which Ofgem effectively brought the long-standing dominance of six large suppliers to an end. By encouraging consumers to switch electricity supplier in search of a better deal, Ofgem stimulated the entry of independent energy brands, eroding the dominance of the Big Six from 92% in 2014 to 70% in 2019. The sale of SSE's domestic customer book to OVO Energy in January 2020 effectively bought to an end the oligopolistic power of the Big Six.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/zqaevxpi/chart-6-bix-six-energy-providers-market-share.png?width=720&amp;height=337.42826780021255" alt="" width="720" height="337.42826780021255">
 
With the help of the introduction of the energy price cap, this led to more competitive energy prices for consumers. However, <a rel="noopener" href="https://www.ibisworld.com/blog/solving-the-uk-energy-crisis/44/1126/" target="_blank">the current energy crisis</a> has highlighted significant weaknesses in Ofgem’s approach to reducing excessive concentration in the market, with several independent energy suppliers unable to cope with volatile wholesale prices. This has led to millions of customers being transferred back to the largest suppliers, threatening to reinstate the market power previously held by these firms. This is exemplary of the difficulties associated with breaking up oligopolies.
 
In contrast, the Supermarkets industry proves that prices can be competitive in an oligopoly without the need for significant government intervention. That being said, the incentive for firms to collude in search of higher profit is likely to prevail in the absence of government oversight.
 
It’s also important to ensure that consolidation activity between firms in an oligopoly doesn’t lead to further lessening of competition, a concern that caused the CMA to block a proposed merger between Sainsbury’s and Asda in 2019.
 
Overall, the formation of an oligopoly is always likely to benefit the seller or producer at the expense of the final consumer.
Although non-price competition is a key factor in oligopolies, innovation is limited to the research and development activities of a small number of firms, with high barriers to entry preventing the introduction of new ideas into the market. In addition to a lack of price competition, this constitutes one of the main arguments towards government intervention when it comes to oligopolistic competition.
 
For more information on any of the UK’s 500+ industries, log on to <a rel="noopener" href="https://www.ibisworld.com/" target="_blank">www.ibisworld.com</a>, or follow <a rel="noopener" href="http://www.linkedin.com/company/ibisworld" target="_blank">IBISWorld</a> on LinkedIn and <a rel="noopener" href="https://twitter.com/ibisworlduk" target="_blank">IBISWorldUK</a> on Twitter.

An oligopoly is where a small number of sellers, producers or service providers exert significant control over prices and output. Let's look at some real-world oligopoly examples.

What are Oligopolies and How do They Affect the UK Economy?

A well-crafted business plan improves your chances of receiving a loan. So, what are bankers looking for, and how should you invest your time when preparing your plan?

How to Write a Business Plan for a Loan

What is the SCAMPER Technique?
The SCAMPER Technique is a brainstorming method that allows business teams to address potential opportunities and create product development solutions. It emphasizes using old ideas to inspire innovation.
 
SCAMPER is an acronym that stands for Substitute, Combine, Adapt, Modify, Put to another use, Eliminate, Reverse. Each letter symbolizes a different approach to generating new product or process ideas based on existing concepts.
 
<img src="https://content.ibisworld.com/media/4ysnnla5/shutterstock_1441705619.jpg?width=726&amp;height=239&amp;mode=max" alt="" width="726" height="239">
 
The SCAMPER Technique is a proven method that helps both large and small-to-medium enterprises creatively adjust their products or business strategies to maintain and expand their <a href="https://blog.hubspot.com/marketing/how-to-calculate-market-share">market share</a> as often as they need.
 
‘Most ideas are step-by-step children of other ideas.’
<h2 style="text-align: right;">– <a href="https://sujanpatel.com/content-marketing/brainstorming-exercises/">Alex Osborn</a></h2>
 
The origins and success of the SCAMPER Technique can be traced back to Alex Osborn, the <a href="https://www.skymark.com/resources/leaders/osborne.asp">Father of Brainstorming</a>. Taking clear inspiration from Osborn, Bob Eberle refocused some of the key elements of Osborn’s work, creating and popularizing the SCAMPER Technique.
 
The SCAMPER Technique’s productive and versatile nature has reinforced its continued use and importance as a successful problem-solving tool. This method of brainstorming encourages wild creativity and prioritizes idea quantity over quality.
 
So go crazy, think outside the box, or just state the obvious!
 
<img src="https://content.ibisworld.com/media/lkkgjn5m/1.jpg?width=716&amp;height=478&amp;mode=max" alt="" width="716" height="478">
 
The Seven SCAMPER Technique Approaches Explained
 
Substitute
The Substitute approach looks at an element of an existing idea and replaces it with another element.
 
What parts of your production process can you automate? Which staff member’s skills are the most relevant and should be heading your project? What materials can replace each component of the product?
 
Example: Retailers are increasingly substituting wasteful packaging materials for <a href="https://sustainablepackaging.org/">sustainable packaging</a>, targeting environmentally conscious consumers and boosting packaging cost efficiencies in many cases.
 
Combine
The Combine approach analyzes two existing ideas and how best to merge them to reach the greatest possible function.
 
How can you incorporate or emulate your <a href="https://www.investopedia.com/terms/c/competitive_advantage.asp">competitor’s product advantages</a>? Can you implement chemical or technological advancements into your product inputs? Can you make some processes more efficient by merging responsibilities?
 
Example: One of the most revolutionary products of our time, the first <a href="https://www.apple.com">iPhone</a>, combined multiple useful functions for the ultimate consumer experience: a camera, phone, music player, and calculator with internet connectivity.
 
Adapt
The Adapt approach improves an idea by addressing external factors and shifting market trends.
 
What is your target market’s industry outlook, and how does your process need to change? What is the current performance of your supply chain, and how does your cost structure need to adjust? How are the major companies in your industry adjusting their strategic plans, and should you do the same?
 
Example: <a href="https://www.ibisworld.com/blog/how-to-do-industry-analysis/61/1127/">Industry analysis</a> will keep you one step ahead. Investment in <a href="https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality">telehealth</a> services was already prevalent before the COVID-19 pandemic. However, providers such as <a href="https://www.teladoc.com/">Teladoc</a> were quick to adapt their services to the changing conditions, capitalizing on new technologies and the shifting marketplace.
 
Modify
The Modify approach usually involves either magnifying or minimizing existing characteristics.
 
Can you supersize or shrink your product? Can you change the shape of your product in any way? Can you exaggerate any step of the production process to add value?
 
Example: Food and drink products can be scaled up or down, servicing families or travel use respectively. <a href="https://www.pepsico.com/">PepsiCo</a> launched the first two-liter soft drink bottle in 1970, long after their original single-serve drink was created. The two-liter bottle opened new ways for customers to consume the product.  
 
Put to Another Use
The Put to another use approach requires you to zoom out and learn about how unique applications of existing ideas can potentially fill gaps in the market.
 
How can you reach a broader market? How can you add value for your clients in specific segments of your target market? Is your production process well suited to another product or service? What existing material can you repurpose?
 
Example: Companies such as <a href="https://www.3m.com/">3M</a> provide water treatment services. These services include using industrial water filters to remove pollutants and put wastewater to another use in areas of high demand.
 
Eliminate
The Eliminate approach examines areas where you can reduce the work your company does. It’s tempting to look at this approach as just a way of cost-cutting, but you need to be targeted in your ideas. Sometimes dropping a pet project would benefit your company.
 
What is the least necessary element? Can you separate the product into multiple segments? Can you simplify the logistics?
 
Example: Furniture can be extremely expensive to manufacture, requiring both input materials and labor costs. <a href="https://www.ikea.com/">IKEA</a> found a way around this, eliminating the assembly stage from their production and instead offering affordable products that customers can assemble themselves.
 
<img src="https://content.ibisworld.com/media/y4pfuhfn/2.jpg?width=720&amp;height=479.7449521785335" alt="" width="720" height="479.7449521785335">
 
Reverse
The Reverse approach encourages you to think about the improvements you could make by rearranging or reorganizing processes or reversing the purpose of a product.
 
Can you reverse a <a href="https://www.investopedia.com/articles/investing/030116/topdown-vs-bottomup.asp">top-down or bottom-up</a> approach? What would happen if you rearrange the steps in the service process? Can you reverse the product’s intended use or target a different stage of the downstream market?
 
Example: Fast food powerhouse <a href="https://www.mcdonalds.com/us/en-us.html">McDonald’s</a> challenged restaurant service tradition, prioritizing speed by having the customer pay first instead of receiving payment after the meal had been eaten.
 
How to use the SCAMPER Technique
Don’t fall into the trap of only bringing out this tool for product development! Business teams also constantly need to generate new ideas to enhance their internal processes.
 
Setting up your brainstorming team will take work, and you will need to keep it small. However, don’t forget to cover all bases and make the most out of the expertise you have at hand.
 
Marketing teams and production leads need to work together, gathering insight from workers that know either your client or your product the best. Conducting <a href="https://www.ibisworld.com/blog/market-research-methods/99/1127/">market research</a> can also help to understand how your organization can best capitalize on value.
 
Go wild with your brainstorming, the most ridiculous ideas can lead to your greatest innovations!
 
What works for your competitors? How do their organizations’ structures and internal processes differ, and can you adapt them to suit your business? Which groups have your <a href="https://www.shopify.com.au/encyclopedia/customer-segmentation">customer segmentation</a> process shown to be of interest?
 
The SCAMPER Technique can be vital in your organization’s <a href="https://www.ibisworld.com/blog/what-is-strategic-planning/99/1127/">strategic planning</a>. This creative technique will ensure the best plans and models are thought about in the most unique, innovative, and relevant ways.
 
Next Steps
After your successful SCAMPER brainstorming session, you need to put your ideas into action.
 
For instance, we can all agree that generating a new product idea is fantastic. However, designing a new product and conducting a successful <a href="https://www.qualtrics.com/au/experience-management/product/product-launch/?rid=ip&amp;prevsite=en&amp;newsite=au&amp;geo=AU&amp;geomatch=au">product launch</a> is even better.
 
To get the most out of the results of using the SCAMPER Technique, your next steps should be to:
<ul>
<li>Utilize accurate <a href="https://www.ibisworld.com/blog/market-sizing/99/1127/">market sizing</a> techniques to identify your most viable product ideas</li>
<li>Mobilize your organization and efficiently assign responsibility</li>
<li><a href="https://www.surveymonkey.com/mp/product-testing/">Test the functionality</a> of your new product</li>
<li>Notify your target market of your new product’s value with a strong <a href="https://blog.hubspot.com/marketing/marketing-campaigns">marketing campaign</a></li>
<li>Monitor your teams in the production and sales divisions, adjusting plans based on feedback, and <a href="https://www.qlik.com/us/kpi#overview">Key Performance Indicators</a>.</li>
</ul>
 
FREE SCAMPER TECHNIQUE TEMPLATE
To help you get started making the most of the SCAMPER Technique, <a rel="noopener" href="https://content.ibisworld.com/media/c0jf1q5t/ibisworld-scamper-technique-template.pdf" target="_blank" title="IBISWorld SCAMPER Technique Template">download our free template</a>.
 
<img src="https://content.ibisworld.com/media/dxqexarb/3.jpg?width=720&amp;height=479.7449521785335" alt="" width="720" height="479.7449521785335">
 
Final Words
The successful ideas of the past have worked for a reason. Find a unique way to tweak them that suits your business and unlocks potential value for your clients. The SCAMPER Technique’s perspective, paired with other strong business planning methods, will foster successful change in your organization.
 
<h2>‘There is no such thing as a new idea. We simply take a lot of ideas and put them into a sort of mental kaleidoscope. We give them a turn and they make new and curious combinations.’</h2>
<h2 style="text-align: right;"> – <a href="http://www.cmgww.com/historic/twain/">Mark Twain</a></h2>
 
Employing the SCAMPER Technique requires a successful mix of creative thinking and structured implementation. Using the SCAMPER Technique will open avenues for bold and necessary innovation in our ever-changing <a href="https://www.ibisworld.com/products/business-environment-profiles/">business environment</a>.
 
When informed by strong analysis, generating ideas with this methodology will make your team more efficient and open up new expansion possibilities.

The SCAMPER Technique is an idea generation tool that uses existing ideas to develop products or improve processes in creative ways. Learn how to use the SCAMPER Technique.

SCAMPER Technique

Identify and evaluate market leaders. Develop your understanding of a market and it's potential. Recognise and capitalise on trends. Benchmark yourself against the market & rivals.

Applying Industry Research: Market Sizing

Competitive intelligence, also known as corporate intelligence, refers to the ability to collect, analyse and utilise information and data collected on competitors, customers, competitive environment and other market factors that can contribute to a business’s competitive advantage. This information can be used in order to develop efficient, effective and strategic business practices to widen a company’s competitive advantage.
 
Competitive intelligence is important to businesses as it allows them to better understand the competitive landscape in which they operate and be more aware of the potential opportunities and threats that may arise at a sector, industry or market level. Conducting competitive intelligence should not be seen as a bonus, it should be seen as an essential tool to aid the formation of business strategies.
 
How does competitive intelligence work?
Competitive intelligence works by collecting and analysing ethically sourced, actionable data and information and using this data to construct a detailed image of the marketplace in order to pre-emptively prepare and respond to challenges before they arise.
 
Competitive intelligence is essentially a deep dive exercise whereby businesses uncover information about all of the fine points regarding the industry in which they operate, the industry’s and competitors’ customers and products and the business plans and strategies of competitors, among other things.
 
In order to efficiently conduct a competitive intelligence analysis, a business must set objectives for what they want to learn from the exercise. A clear objective will enable researchers to focus on specific data sources that best satisfy the needs of the task. A clearer task or objective will also allow the research team to devise a more detailed and effective plan.
 
Once a key goal or objective has been decided upon, information and data collection strategies must be determined. Data collection strategies help the research team stay within the scope of the project.
 
Now the data can be compiled and analysed. Data should be collected at an industry and company level. This allows researchers to compare their own business with their competitors in relation to the overall industry and can give a more detailed picture of how both fit into the marketplace.
 
Without an understanding of the industry’s context, it may be more difficult to identify strengths, weaknesses, opportunities and threats. The collection and analysis of data is often the most time-consuming aspect of a competitor analysis, but <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/list-of-industries/" target="_blank">IBISWorld’s Industry Reports</a> are here to help.
 
Our reports contain detailed information at an industry level, including information on the direction of the industry, <a rel="noopener" href="https://help.ibisworld.com/s/article/industry-research-reports#ProductsMarkets" target="_blank" data-anchor="#ProductsMarkets">products and markets</a>, <a rel="noopener" href="https://help.ibisworld.com/s/article/industry-research-reports#OperatingConditions" target="_blank" data-anchor="#OperatingConditions">operating conditions</a>, the industry’s <a rel="noopener" href="https://help.ibisworld.com/s/article/industry-research-reports#CompetitiveLandscape" target="_blank" data-anchor="#CompetitiveLandscape">competitive landscape,</a> the <a rel="noopener" href="https://help.ibisworld.com/s/article/industry-research-reports#MajorCompanies" target="_blank" data-anchor="#MajorCompanies">major companies</a> operating within the industry and additional information such as <a rel="noopener" href="https://www.ibisworld.com/products/industry-financial-ratios/" target="_blank">financial ratios</a> and <a rel="noopener" href="https://help.ibisworld.com/s/article/esg-risk-score" target="_blank">ESG risk scores</a>.
 
Once the analysis is complete, themes and insights from the data are relayed to key stakeholders. Depending on who the information is being given to, the method of delivery may differ. For instance, a sales team may benefit more from battle cards, whereas management may prefer a more detailed report. It is important to collaborate with the teams beforehand to determine the most effective way to communicate the findings of the analysis.
 
These findings will allow a business to gain a competitive advantage, synthesise and implement more efficient and informed business strategies in order to better differentiate themselves and closer align to customer needs and expectations.
 
Potential factors to analyse
1. Products
A product is an item offered for sale and can be in a physical, virtual or cyber form. Conducting a competitive product analysis can be done by using a competitor’s website, sales brochure and even going over annual reports. This can allow you to gain an insight into their pricing strategy and allow you to understand how well they are performing in comparison to your own business.
 
When analysing a competitor’s product, key points to look out for are:
<ul>
<li>The key features of the product</li>
<li>The perks associated or included with the product</li>
<li>The technology the product uses</li>
<li>How the product is priced and how this compares to other products within the marketplace</li>
</ul>
It can also be useful to unearth which products and services are most popular within your target industry – this may uncover a potential gap in the market.
 
For example, the <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/payment-service-providers-industry/" target="_blank">Payment Service Providers industry</a>’s most popular product is debit cards, with most payments accounted for by discretionary consumer payments.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/5ommy0o0/chart-1-payment-services-providers-p-s-2022-23.png?width=366&amp;height=453&amp;mode=max" alt="" width="366" height="453">
 
This information, combined with the low level of market share concentration within the industry, indicates that there may be potential opportunities for new entrants and the target market is likely to be consumers.
 
2.Customers
A customer is a person who will purchase goods or services from a business. Understanding the target market within your industry and of your competitors can be used to form strategic plans and make decisions on a number of aspects, including product development, marketing and pricing. However, knowing who your customers are is only part of the story.
 
One metric that customers can offer is Share of Voice. This is the volume of mentions competitors get on the internet and <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/social-media-platforms-industry/" target="_blank">social media platforms</a>, which can be compared with your own and other companies. It is also important to use this tool to gather insight into the sentiment of these mentions, as it is unlikely that all mentions will be positive. This can give you insight into your competitors and their products.
 
It’s also important to understand the locations of customers within the industry, as this may highlight where high levels of market saturation exist and give insight into where untapped markets may exist or where the most demand for your product may be.
 
For instance, the <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/clothing-retailing-industry/" target="_blank">Clothing Retailing industry</a>’s largest market is currently consumers aged between 18 and 34, with women’s clothing being the most popular product type.
 
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://content.ibisworld.com/media/dhxjbayd/chart-2-clothing-retailers-in-the-uk-major-markets-2022-23.png?width=720&amp;height=362.68370607028754" alt="" width="720" height="362.68370607028754">
 
In conjunction with the low level of market share concentration within the industry, it could be inferred that a company wishing to expand their market share could increase their marketing presence within this age group to expand sales of women’s clothing.
 
3.Competitors
Competitors are other businesses that offer similar goods and services to the customers within your industry. Competitors can be differentiated into direct and indirect competitors. Direct competitors offer products that could be regarded as alike to your own and usually operate in a similar geographic region to you. Indirect competitors provide different products to your own, but could satisfy the same customers need.
 
When analysing competitors, important factors to uncover are:
<ul>
<li>Their market share (which may be included in the Major Companies chapter of IBISWorld’s Industry Research Reports)</li>
<li>The products and services they offer</li>
<li>The strategies and tactics they use</li>
<li>Their financial results</li>
<li>How they price their products</li>
<li>The technology they</li>
<li>Who their target market is</li>
</ul>
Furthermore, a <a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-swot-analysis/1/1127/" target="_blank">SWOT analysis</a> can be used within a competitive intelligence analysis to evaluate each component of a competitor’s business to identify any strengths, weaknesses, opportunities and threats. IBISWorld reports include a key threat and opportunity for each industry, as well as industry-level financial ratios, which can be used to assess how a competitor compares with the market as a whole and how they may be at risk given market conditions.
 
4. Industry
An industry refers to the primary activities a business or group of businesses. It is important to understand and analyse the specific industry or market in which you are operating, as the threats and opportunities present differ between industries.
 
IBISWorld reports give an insight into the context of an industry. For example, the Products &amp; Markets section give insight on:
<ul>
<li>What products and services are offered by the industry</li>
<li>Which products and services are the most popular</li>
<li>What markets are targeted by the industry</li>
<li>Which markets are the most popular</li>
<li>Where businesses with the industry are located</li>
<li>The importance of international trade within the industry</li>
<li>Which factors influence demand for the industry’s products or services</li>
</ul>
 
Why is industry context important?
IBISWorld’s Industry Research Reports are designed to give readers actionable data and analysis to assist in conducting a competitive intelligence, as many metrics required are readily available. For example, our reports include a range of financial ratios which can be used to track the performance and give an insight into potential opportunities or threats that the industry faces. These can also be used to make comparative judgements on competitors to identify whether a business is performing above or below the overall industry.
 
IBISWorld reports include liquidity ratios, coverage ratios, leverage ratios, and operating ratios, as well as information detailing industry assets, liabilities and equity.
 
These financial ratios can be used to conduct a profitability analysis, which can be used within a competitive intelligence. It is best to compare the industry-level ratios with an individual company’s ratios to assess whether a business is under- or overperforming compared to the industry average. The reports also contain analysis of ESG at an industry level and can help give an insight to <a rel="noopener" href="https://www.ibisworld.com/blog/why-is-assessing-esg-risk-important-to-uk-industries/44/1127/?utm_medium=social&amp;utm_source=linkedin&amp;utm_campaign=applying_industry_research&amp;utm_content=uk-ind" target="_blank" data-anchor="?utm_medium=social&amp;utm_source=linkedin&amp;utm_campaign=applying_industry_research&amp;utm_content=uk-ind">how and where businesses in a particular industry may be able to strengthen their ESG policies</a>.
 
The first chapter of IBISWorld reports, <a rel="noopener" href="https://help.ibisworld.com/s/article/industry-research-reports#IndustryPerformance" target="_blank" data-anchor="#IndustryPerformance">Industry Performance</a>, details how the industry has performed over the past five years and how it is expected to fare over the next five years. This is done by using data from high-quality and reliable sources to give an insight into how wider market conditions have affected the industry, to what extent and how they or other factors may continue to have a bearing on the direction of the industry in the future.
 
The <a rel="noopener" href="https://help.ibisworld.com/s/article/industry-research-reports#ProductsMarkets" target="_blank" data-anchor="#ProductsMarkets">Products &amp; Markets</a> chapter of IBISWorld reports details the products or services the industry offers and their popularity, the industry’s key markets and their contribution to overall revenue, what factors influence demand for the industry, how much international trade the industry partakes in and its key trading partners and where businesses within the industry are located. This allows readers to quickly dissect key product and customer information, which can be used to compare a business’ products and target market to that of the overall industry, as well as to give an insight into what areas of the business may be saturated or where opportunities may be present.
 
The <a rel="noopener" href="https://help.ibisworld.com/s/article/industry-research-reports#CompetitiveLandscape" target="_blank" data-anchor="#CompetitiveLandscape">Competitive Landscape</a> chapter give an overview of the wider industry conditions, including the level of market share concentration, the level of competition, potential barriers to entry, globalisation and the cost structure of the industry. The cost structure includes analysis of the industry’s average operating margin, wages, purchases and depreciation costs. This information can be used as a benchmark to assess the potential risks or opportunities for a business to enter a new market or how protected existing operators may be from new entrants.
 
The <a rel="noopener" href="https://help.ibisworld.com/s/article/industry-research-reports#MajorCompanies" target="_blank" data-anchor="#MajorCompanies">Major Companies</a> chapter can aid in competitor analysis as the industry-relevant operations of large competitors is discussed. Forecasts on their market share are also given in connection with an analysis of the players performance over the past five years. This can help researchers to identify weaknesses or strengths in competitors.
 
For more information on any of the UK’s 500+ industries, log on to <a rel="noopener" href="https://www.ibisworld.com/" target="_blank">www.ibisworld.com</a>, or follow <a rel="noopener" href="http://www.linkedin.com/company/ibisworld" target="_blank">IBISWorld</a> on LinkedIn and <a rel="noopener" href="https://twitter.com/ibisworlduk" target="_blank">IBISWorldUK</a> on Twitter.

Competitive intelligence, also known as corporate intelligence, is an important tool that can be used by businesses to help combat competitive threats and increase their sales.

What is Competitive Intelligence and Why is it Important?

Senior Research Analyst & Team Leader

What are the main types of profitability analysis and how can they assist businesses with managing their operations?

What is Profitability Analysis and Why is it Important to Businesses?

As a banking institution, your business development strategy relies on unique prospecting criteria.
 
Whether it’s the size of the client organization, their operating industry or sector, risk ratings or the geographic footprint of the organization, your prospecting criteria is shaped around your bank’s specific goals.
 
For 50 plus years, IBISWorld has supported institutions like yours in the development of prospecting strategies that successfully bring new business through the door. Banking clients depend on our industry intelligence to identify industries for new business, prepare for client meetings and benchmark clients against industry averages.
 
If you’re a RelPro user, you can access IBISWorld’s industry information in limited capacity through the RelPro platform. If you're ready for more data, a subscription to IBISWorld provides detailed Call Prep Questions and industry insights—accessible from RelPro’s platform.
 
If you’d like a demonstration or free trial of our products, please complete the form to your right and we’ll be in touch to discuss your research needs.
 
How IBISWorld and RelPro fit together
For banking institutions, pairing IBISWorld with RelPro provides a comprehensive prospecting solution. RelPro offers detailed profiles that include prospect career history, educational background and relationship intelligence collected from news, social media and other online content. These details help you understand your prospect more personally, while IBISWorld’s industry research helps you build context at the company and industry level.
 
Using our industry research, you can create a blueprint of your ideal customer. Then, jump over to RelPro to filter through contacts using granular, banking-specific criteria.
 
<img src="https://content.ibisworld.com/media/dkzbmwoh/relpro-company-advancedsearch-profile.png?width=720&amp;height=467.5026567481403" alt="" width="720" height="467.5026567481403">
 
After narrowing your search and identifying the exact company you’d like to target, you can dig into several IBISWorld reports without leaving RelPro's platform.
 
RelPro houses multiple industry reports for each contact, showing you each operating industry and offering key data and Call Prep Questions. Click into any report to get the lay of the land and start planning your talking points. IBISWorld’s data and insights empower you as the industry expert, so you can stand out among your competitors.
 
<img src="https://content.ibisworld.com/media/kpxd142h/call-prep-questions.png?width=720&amp;height=469.03294367693945" alt="" width="720" height="469.03294367693945">
 
Additional prospecting tools from IBISWorld
With an IBISWorld subscription, you can pick and choose the tools that best support your banking activities.
 
Industry Wizard
If prospecting is at the top of your list, then using IBISWorld’s <a rel="noopener" href="https://my.ibisworld.com/us/en/industry-wizard" target="_blank">Industry Wizard</a> can help you identify industries that are concentrated in a particular market. Search for industries based on revenue growth, profitability, technology change, key ratios and risk profile.
 
State Industry Reports
When you need local data to properly understand a prospect, accessing our State Industry Reports can help round out your research.
 
<img src="https://content.ibisworld.com/media/xwckjwv3/california-heat-map.png?width=720&amp;height=490.4569606801275" alt="" width="720" height="490.4569606801275">
These sophisticated reports help you spot red flags or opportunities associated with your prospect’s location. Now covering county-level statistics, IBISWorld’s state industry collection shows you the most relevant trends to discuss with prospects to build trust and deepen your relationship.
 
<img src="https://content.ibisworld.com/media/pf5l5to0/laggards-leaders.png?width=720&amp;height=284.63336875664186" alt="" width="720" height="284.63336875664186">
 
Ready to step up your prospecting game? <a href="https://www.ibisworld.com/contact-us/">Contact us</a> to learn more about IBISWorld's full suite of industry research and prospecting solutions.

Pairing IBISWorld with RelPro provides a comprehensive prospecting solution for banking institutions. Read on for how your business can create a blueprint of your ideal customer.

Better Together: Integrating IBISWorld & RelPro to Support Business Development Initiatives in Banking

Nearly everyone is strapped for time, with practically every minute allotted for something. However, turning to computers and devices to schedule out time often makes life smoother and easier to manage.
 
As technological services are used across more institutions, more distance is placed between people.
 
For example, to previously get approved for a mortgage, proving to your local banker, a resident fixture in daily life, that you were worth the risk was the only way to go. Nowadays, an automated credit score makes that decision.
 
Bankers can still create a personalized experience for their customers. The modern banker, previously evaluating a customer on their shared neighborhood experiences, is a now banker who must do their homework about their clients’ industries.
 
The modern banker has stopped asking generic questions like “Tell me about your business?” when starting the process of underwriting a loan. Instead, coming up with industry-informed banking questions will lead to being better informed about business owners’ operations, resulting in better questions, and ultimately creating better engagement.
 
Be better informed
Time is short, and being better informed saves time. Instead of wasting time having clients explain their industry, it’s important to learn about the industry beforehand. Time with customers is often better spent focusing on how to fulfill their specific needs.
 
For example, <a rel="noopener" href="https://my.ibisworld.com/us/en/industry/54/about" target="_blank">the Professional Service sector</a> has experienced considerable <a rel="noopener" href="https://www.ibisworld.com/blog/technology-disruption-in-professional-services/61/1131/" target="_blank">technology disruption</a>. A banker entering a conversation with a business owner in that industry without doing any research will likely waste precious time learning about machine learning and artificial intelligence in a rushed manner from a busy client.
 
Coming to the conversation knowledgeable prevents asking shallow questions.
 
<img src="https://content.ibisworld.com/media/debnhzs4/shutterstock_679491061-1-1.jpg?width=769&amp;height=514&amp;mode=max" alt="" width="769" height="514">
 
Even if a client’s industry isn’t using the latest technology, a banker would still benefit from doing research before a call. For example, business owners in <a rel="noopener" href="https://my.ibisworld.com/us/en/industry/81231/about" target="_blank">the Laundromats industry</a> have specific needs tied to the local area they operate in. Despite most laundromats being relatively the same, each one experiences different problems.
 
Therefore, even a banker who has some knowledge about the industry would benefit from researching how their client’s local market is doing, and further, what solutions could be effective for their local issues.
 
Ask better banker questions
The best financial questions to ask clients are the ones that help uncover financial needs. Let’s continue with the Professional Service sector as an example.
 
Business owners in this sector need access to the latest technology. Instead of asking vague questions such as “Why is access to the latest technology a priority?” an informed banker could ask: “What challenges do you think will arise as you keep up with the rising capital intensity in your industry?”
 
Instead of using clients’ time by having them answer the former, time can instead be spent tackling specific challenges.
 
<img src="https://content.ibisworld.com/media/u4vnfflv/banker-questions.png?width=889&amp;height=500&amp;mode=max" alt="" width="889" height="500">
 
Get better engagement 
It’s important to show interest by being informed. With interest, a banker ceases to be an impersonal voice on the other side of the call.
 
Doing homework ahead of time and asking industry-informed banking questions is a return to a time when people had personalized experiences with their banker.
 
Being informed demonstrates why business owners should work with you and not another bank.  By asking better questions, their time is respected, leading to happier clients.
 
To start doing your homework, start with the <a rel="noopener" href="https://www.ibisworld.com/blog/the-complete-guide-to-industry-research/99/1127/" target="_blank">complete guide to industry research</a>, <a rel="noopener" href="https://www.ibisworld.com/blog/understanding-industry-life-cycles/99/1127/" target="_blank">understanding industry life cycles</a> and with why<a href="https://www.ibisworld.com/blog/why-industry-information-matters/99/1127/"> industry information</a> matters.
 
To meet your clients halfway, start learning about the importance of <a rel="noopener" href="https://www.ibisworld.com/blog/measure-industry-risk-with-industry-research/99/1127/" target="_blank">measuring industry risk with industry research</a> before asking them questions.

How can bankers use IBISWorld research to talk to clients and write loans?

Questions Bankers Should Ask Customers

An in-depth guide examining the most prevalent market research methods and their applications in today's economic environment.

Market Research Methods

What is risk analysis and why is it important?
Risk and uncertainty often spell danger or reward; it’s an inevitable part of any business plan. While impossible to eliminate, it can be thoroughly analyzed and managed with the right tools.
 
Risk analysis identifies, categorizes and analyzes potential and expected impacts on a topic of interest, with special attention paid to negative impacts.
 
It focuses on uncertainty and the probability of events, with the aim of limiting the harmful effects of possible outcomes.
 
Risk analysis is essential when making business decisions that maximize rewards and weigh unforeseen risks.
 
When analyzing risk in business, it's essential to distinguish between qualitative and quantitative risk. Measuring risk numerically constitutes the backbone of the risk analysis process.
 
Describing risk qualitatively is a great place to begin and also yields valuable information and frames the risk assessment around questions of interest.
 
Qualitative risk analysis and SWOT
One way to begin the risk analysis process is with a simple SWOT (strengths, weaknesses, opportunities, threats) analysis. To understand the topic of interest, first identify its positive and negative traits.
 
Imagine a conversation with someone heavily involved in the topic of interest and form questions based on your general knowledge.
 
How does a company compare to the competition? Where might it improve? Is it prepared for a worst-case scenario?
 
Categorizing your answers with SWOT helps distinguish between potential rewards and risks. Worded questions, both specific and general, provide insight into potential risks and what metrics to investigate.
 
<a rel="noopener" href="https://www.ibisworld.com/blog/how-to-do-a-swot-analysis/1/1127/" target="_blank">Applying SWOT analysis to Amazon</a>, note that the company’s large workforce enables higher operating capacity compared to competitors.
 
As a result, the company’s market share levels are rising, presenting an opportunity. On the other hand, you may find that Amazon’s average financial risk potentially threatens performance.
 
SWOT analysis offers a solid framework and starting point for identifying rewards and risks. Furthermore, it organizes your post-risk analysis findings for direct comparison between rewards and risks.
 
Starting out with risk ratings 
To make tangible sense of risks, it's best to describe them numerically. Risk ratings offer an easy-to-understand metric to do this. Ratings incorporate various data to describe a general idea. For example, IBISWorld provides structural risk ratings for industries.
 
This score numerically describes the fundamentals of an industry, such as competitiveness, volatility and barriers to entry. The score, on a scale of 1 to 5, gives a simple indicator of low, medium or high levels of risk.
 
Using the same scale, growth ratings combine recent years of growth with forecast growth to determine the strength of the industry moving forward. Sensitivity risk scores account for external factors affecting industry performance.
 
For example, the percentage of Americans with private health insurance and federal funding for Medicare factor into the <a rel="noopener" href="https://my.ibisworld.com/us/en/risk-rating/62211/sensitivity-risk" target="_blank">sensitivity rating of the Hospitals industry</a>, giving an idea of vulnerability to changes in these external factors.
 
Each score contributes to an <a rel="noopener" href="https://my.ibisworld.com/us/en/risk-rating/62211/risk-overview" target="_blank">overall risk rating for an industry</a>. Looking at these ratings, you gain a basic idea of how risky an industry is.
 
Unraveling risk with ratios  
Ratios also enable quick and simple risk assessment. The key, however, is understanding the components of the ratio and how they relate.
 
Ratios generally answer the following question: how much of A accounts for B? Or: how many times could A cover B? For example, when analyzing the Hospitals industry in the United States, ask yourself, <a rel="noopener" href="https://my.ibisworld.com/us/en/industry/62211/key-statistics#key-ratios" target="_blank" data-anchor="#key-ratios">how much revenue is going towards wages?</a>
 
Simply dividing wage by revenue results in a tangible percentage from which you can assess vulnerability to increase wages.
 
Liquidity ratios measure credit risk such as debt coverage and risk of defaults. For example, the <a rel="noopener" href="https://www.investopedia.com/terms/q/quickratio.asp" target="_blank">quick ratio</a> is calculated by current assets minus inventory divided by current liabilities and assesses the ability to cover liabilities over a short period of time.
 
<a rel="noopener" href="https://www.investopedia.com/terms/r/returnonassets.asp" target="_blank">Return on assets</a>, measured as net income divided by total assets, describes operating efficiency and how effectively assets generate sales.
 
These ratios help determine what poses a risk or what could eventually pose a risk.
 
Putting risk into perspective with comparative benchmarks  
Tangible as these numbers may be, compared with some standards, it puts ratings, ratios and risks into perspective. For example, industries and businesses can be considered as outperforming or underperforming a benchmark.
 
The average of a sector serves as one comparative benchmark for industries. For example, revenue for <a rel="noopener" href="https://my.ibisworld.com/us/en/industry/62/industry-at-a-glance" target="_blank">the Healthcare and Social Assistance sector</a> is expected to increase at an annualized rate of 1.9% over the five years to 2021 (latest data available). Revenue for the <a rel="noopener" href="https://my.ibisworld.com/us/en/industry/62133/industry-at-a-glance#key-statistics-snapshot" target="_blank" data-anchor="#key-statistics-snapshot">Psychologists, Social Workers and Marriage Counselors industry </a>is expected to grow at an annualized rate of 5.8% during the same period.
 
Comparatively, the Psychologists, Social Workers and Marriage Counselors industry is outperforming the overall healthcare sector, or in other words, the benchmark.
 
<img src="https://content.ibisworld.com/media/iwefm4x2/jameson-line-2.png?width=730&amp;height=518&amp;mode=max" alt="" width="730" height="518">
 
Within the Psychologists, Social Workers and Marriage Counselors industry, the company <a rel="noopener" href="https://client.procurementiq.com/procurement/reports/us/supplierIQ/financialinsights.aspx?entid=424117" target="_blank" data-anchor="?entid=424117">IBH Integrated Behavioral Health Inc. (IBH)</a> can be compared with industry averages.
 
IBISWorld’s <a href="https://client.procurementiq.com/procurement/?u=k1iRpxkh59uBHuH0XSmvkg==&amp;p=ON6naiFd4wKjeYrR1/kt1w==">Procurement IQ</a> platform offers financial data on private industry operators with a low to high range and confidence indicator for analysis.
 
IBISWorld estimates a low (1.1 times) to high (1.3 times) range for IBH’s quick ratio. Compared to the 1.7 times benchmark for the Psychologists, Social Workers and Marriage Counselors industry, found in the <a rel="noopener" href="https://my.ibisworld.com/us/en/industry/62133/key-statistics#industry-financial-ratios" target="_blank" data-anchor="#industry-financial-ratios">Industry Financial Ratios</a> section, the company poses a higher credit risk, though with a low level of certainty.
 
A simple binary score can collect industry or company metrics compared with benchmarks. Use a 1 to denote outperforming and 0 for underperforming for various metrics, and then compare the sum to the potential total, giving insight into overall risk.
 
Variance and statistical analysis of risk
Scores and benchmarks assess risk levels through comparison. Volatility is essentially how much something changes. One measurement measures absolute volatility.
 
Looking at <a rel="noopener" href="https://my.ibisworld.com/us/en/industry/62211/about/" target="_blank">the Hospitals industry</a>, revenue changed an average of <a href="https://my.ibisworld.com/us/en/industry/62211/key-statistics">$82.1 million per year between 2019 and 2021</a>, or an average of 7.4% per year, indicating high volatility during the period. Both capture the volatility of revenue over a given time.
 
More often, standardizing this change with a benchmark, such as the mean, indicates risk. A useful metric for this is data variance.
 
Calculating variance first requires taking the mean, or average, of a data set. Then, take each observation in the data set and subtract the mean from it to create residuals. Square each of these residuals and sum them to get the variance of the data, and assuming the data is a sample, divide by the number of observations minus one.
 
To get the all-important <a rel="noopener" href="https://www.mathsisfun.com/data/standard-deviation.html" target="_blank">standard deviation</a>, or average distance from the mean, take the square root of your variance.
 
<img src="https://content.ibisworld.com/media/umlbi1kb/jameson-forumulas.png?width=984&amp;height=500&amp;mode=max" alt="" width="984" height="500"> 
 
It is important to measure by how much data tends to stray away from the average. Remember, the average value of a large data set is often thought of as the expected value.
 
In other words, revenue per hospital in the Hospitals industry is generally the revenue expected for a randomly analyzed hospital.
 
If the average is used to make predictions, but there are high levels of deviation from the average, predictions become more difficult and so risk increases.
 
Given a large enough data set, we may assume a <a rel="noopener" href="https://www.investopedia.com/terms/n/normaldistribution.asp#:~:text=Normal%20distribution%2C%20also%20known%20as,appear%20as%20a%20bell%20curve." target="_blank" data-anchor="#:~:text=Normal%20distribution%2C%20also%20known%20as,appear%20as%20a%20bell%20curve.">normal distribution of data</a>, indicating data frequently gathers around the average, or use a histogram to investigate the distribution.
 
Most often, the former is sufficient for business analysis, allowing us to make better use of data in relation to its average. These probability distributions indicate the likelihood of events occurring.
 
A data set with a high standard deviation indicates significant swings and changes, and so higher levels of risk. Standard deviation helps assess outliers in data.
 
For line graphs that chart across a period of time, using standard deviation shows high year-over-year changes in revenue, differentiating a high probability decrease or increase from a low probability, and possibly unforeseen and concerning, decrease or increase.
 
Regarding revenue for the Hospitals industry between 2005 and 2021, we first determine the average and standard deviation. By adding and subtracting one half of the standard deviation to the mean, we get our respective upper and lower bounds.
 
Notice most changes are within one total standard deviation, except for notable outliers including 2009, 2015 and 2020, all particularly volatile years for the industry.
 
<img src="https://content.ibisworld.com/media/1k4nl5rd/jameson-line.png?width=734&amp;height=525&amp;mode=max" alt="" width="734" height="525">
 
Monitoring deviations from the mean also puts ratings, scores and ratios in perspective. With sufficient data over time, comparing one year’s risk rating to the average helps describe that year’s risk.
 
Using standard deviations, we can determine what distance from the mean might qualify as low risk, medium risk, or high risk.
 
The <a rel="noopener" href="https://www.investopedia.com/terms/e/empirical-rule.asp" target="_blank">empirical rule</a> states that, given normally distributed data, around 70.0% of data should fall within a range of mean plus one and mean minus one standard deviations. Further, 90.0% should fall within mean plus two and mean minus two standard deviations.
 
Theoretically, data about one standard deviation above or below the mean should not necessarily be considered high or low risk.
 
Validated segmenting: Early warning system and the risk matrix
Further analysis of data over time enables specific, validated segmenting of risk levels. IBISWorld provides a validated segmenting, calculated from years of data and analysis, of total risk scores and their forecast trends through its <a rel="noopener" href="https://my.ibisworld.com/us/en/lists/early-warning-system/home" target="_blank">Early Warning System</a>.
 
This system places an industry’s total risk score, discussed in the ratings section above, in a low-, medium- or high-risk category.
 
Additionally, the system determines future risk levels and the direction (increasing, decreasing, steady) of risk using forecasts. Including forecast risks to compare with the present also improves risk benefit analysis.
 
This helpful tool enables the construction of a risk matrix to organize information for analysis. A risk matrix categorizes current and expected risk under rows and columns.
 
The Early Warning System places an industry on the matrix based on the current level of risk and the direction its heading.
 
This enables users to easily organize a sector, group of select industries or all industries together based on a thoroughly researched, easy-to-digest measurement of risk.
 
<img src="https://content.ibisworld.com/media/1tegr4to/jameson-line-ews.png?width=894&amp;height=502&amp;mode=max" alt="" width="894" height="502"> 
 
Business decisions must consider the amount of risk, future risk, type of risk and the risk tolerance of the business.
 
By categorizing risk using the techniques discussed in this article, industries and businesses can be categorized based on different types of risk and organized in the risk matrix for comparison.
 
For example, risk exposure to external factors (sensitivity) versus internal risk (ratios), current performance against a benchmark versus forecast performance and other combinations form an easily digestible matrix for analysis.
 
With current and forecast risks in hand, the Weaknesses and Threats sections of the SWOT analysis matrix can be better understood.
 
Main takeaways
These risk analysis tools, like others discussed, describe and categorize levels of risk to improve the decision-making process.
 
They offer insight into factors underpinning risk, comparisons between different industries, and levels of certainty.
 
Once risk is identified and assessed, any next steps taken can be made sensibly and accurately.

A look at different ways to use IBISWorld risks products, including how to apply risk matrixes and different types of business risk analysis. 

What is Risk Analysis?

Industry Analyst

Technological innovation and new sustainable business practices are currently disrupting the Australian economy and emerging as new industries.

Emerging Industries in Australia

According to The B2B Lead, most sales teams waste 50% of their time on unproductive prospecting.
 But where does the time go? Many salespeople waste time pitching to the wrong person: a non-buyer that doesn’t have decision-making power or a potential buyer that’s just not interested in what’s being sold.
 While the solution to this problem may seem simple—find better leads—the lead sourcing process can be long and frustrating.
 If you’re getting tired of chasing dead ends, then it’s time to learn how you can maximize efficacy without spending hours on prospecting. The answer isn’t that easy, but it starts with identifying bad leads and taking them off your list. Time spent on potentially low-reward customers could be better spent turning a high-value lead into a client.
 This sales prospecting guide will help guide you maximize your time, and hopefully bring your company more revenue.
 What is prospecting in sales? Sales prospecting is the process of finding potential clients, known as prospects, and reaching out to them with the goal of making a sale.
 In the sales world, prospects differ from leads because they’ve been qualified based on specific criteria. Prior to this qualification process, the term leads is used until they’ve engaged enough or exhibited specific characteristics that overlap with your client base.
 To show you all the steps that make sales prospecting a success, we’ve included some pointers on how to qualify leads, in addition to several steps that fit squarely into the prospecting process.
 
Step 1: Lead qualification – find buyers that meet your specifications Business development professionals work across lots of different businesses, all with different products. That means your business’s prospecting approach is unique by nature. On top of these differences in products are the differences in business goals, capabilities and other factors that impact your prospecting.
 The best way to navigate prospecting is to start with a rigorous lead qualification program. Working from a clear blueprint of your ideal customer helps you contact prospects that might actually buy what you’re selling.
 For example, if you’re at a niche consultancy selling startup consulting services, then you’re not interested in reaching Fortune 500’s. You’ll want to focus on the lesser-known, fledgling companies in an industry. However, if you’re selling a software product that’s specifically designed for large enterprises with hundreds of users, you’ll be wasting your time pitching to brand new startups. It’s all about knowing your target audience.
 With millions of businesses out there, narrowing them down might seem like a challenge, but sales prospecting tools can make the process less tedious.
<ul>
<li>Social media: Using platforms such as LinkedIn, Facebook and Twitter are all great ways to find new leads. Sharing articles or information on products is a great way to attract potential clients. Viewing social media traffic through tools such as Facebook Insights, LinkedIn Sales Navigator or LinkedIn Premium enables sales teams to generate a lead database. From there, you can determine which accounts interact the most with your social media posts. Then, do a deep dive on their profile to further qualify the contact and prepare to engage with them. Important details to note are job titles, interests and any groups your contact takes part in. If more information is needed, databases like ZoomInfo offer additional details on a contact that can help you determine whether they’re worth pursuing. </li>
<li>Industry research: With the help of market research companies, it’s easier to find contacts that might fit your criteria. For example, IBISWorld's <a href="https://www.ibisworld.com/products/industry-wizard/">Data Wizard</a> is a tool that helps you narrow down a sprawling catalog of available industry information into focused lists that put your business’s best interests first. Say you’re a banking professional that’s looking for borrowers—you might be interested in targeting growing industries that are stable and offer a low likelihood of default. <a href="https://ibisworld.com/blog/why-industry-information-matters/99/1127/">Industry research tools</a> can help you weed out any struggling industries so you can focus on the more promising leads. </li>
<li>Company research: Company information is another way to qualify leads. A good company profile includes revenue figures, location, number of employees and other data that impacts buyer intent. Depending on how your research provider designs their suite of company profiles, you may be able to filter out unwanted contacts and zero in on the qualification factors that are most important to your business. For example, if you’re selling medical products and recently started increasing your sales to nursing home facilities, you could identify a list of companies that mirror your current nursing home clients by using company insights from a market research provider. <img src="https://content.ibisworld.com/media/mdsfp1iz/major-companies-drop-shadow-blog.png?width=720&amp;height=418.8654060066741" alt="a list of nursing home care providers that employ staff of 500 or more workers" width="720" height="418.8654060066741">Source: IBISWorld's Company Benchmarking solution. <a href="https://www.ibisworld.com/products/company-benchmarking/#accounting" data-anchor="#accounting">Learn more</a></li>
</ul>
 
<ul>
<li>Lead scoring tools: In this day and age, lead qualification can also be automated using lead scoring tools that plug in to your CRM. Depending on which factors your company prioritizes—from website engagement, to lead form engagement to social media interactions—you can determine a scoring criteria. Then, your sales support team can integrate your scoring criteria with a lead scoring software or sales enablement app that qualifies your leads without any work from the sales floor. </li>
</ul>
Step 2: Researching your prospect After forming your list of prospects, it's time to research each one specifically.
<ul>
<li>If they’re a public company, all their financial statements are available. Go through SEC filings with a list of key metrics you want to look out for. For private companies, where data is not readily available, news outlets and blog posts can often provide useful information. You can also check a company research database for coverage on private companies. </li>
<li>Find out how the overall industry of the company is doing. Is it dying? Booming? Mature? This is where market research tools can come in handy. Taking a look at the industry as a whole can shed light on your future relationship with the prospect. </li>
<li>While small companies are often confined to a single industry, larger enterprises may span across various industries. Make sure you know the full scope of your prospect’s operations before getting in touch. Below, you can find the different industries WPP Plc operates in compared to a smaller competitor, Levick Public Relations Firm. For a company like WPP, ask yourself this: How does what I'm selling benefit the whole of their operations? Can a solution designed for public relations professionals also benefit marketing consultants? <img src="https://content.ibisworld.com/media/pggagi5p/operating-industries-large-and-small.png?width=720&amp;height=427" alt="the industries WPP PLC and Levick Public Relations Firm occupy" width="720" height="427"> Source: IBISWorld's Company Benchmarking solution. <a href="https://www.ibisworld.com/products/company-benchmarking/#accounting" data-anchor="#accounting">Learn more</a> </li>
<li>Researching a company’s geographic footprint can also help you understand their operating environment. Are there any risk factors associated with the regions where they operate? Are your products even deliverable to all of their locations? </li>
<li>Keep yourself up to date with the latest news in regards to the company. For example, spending time researching a potential lead only to find out that their company is spinning off a major division may be a waste of your time. </li>
<li>Gather personal details about your prospect. In addition to knowing your prospect’s job title and location, there are other details you’ll want to find before reaching out. For example, how long have they been in their current position? Have they worked in other related industries? What roles have they taken on before? Not only should you research their professional background, but be sure to look over your prospect’s background with your company and team. If a colleague has reached out before, make sure to read over their notes for any red flags or get together with them to hear the full story. These types of details can be crucial during your call. </li>
</ul>
Step 3: Understand your prospect’s competition Now that you have a good understanding of your prospect, it's time to research their competitors.
<ul>
<li>Who are their competitors? What are their strengths and weaknesses? How have they been trending in regards to the industry? Have they engaged in merger and acquisition activity or are they slowly divesting assets? The answers to these questions can help you understand your prospect’s position in their industry. If stiff competition poses a threat to your prospect, they may not be a good fit for your services. Will they remain viable? Will you be able to support their shifting needs as they enter new markets? It’s better to find out now. <img src="https://content.ibisworld.com/media/dutdyrkj/matrix-wpp.png?width=720&amp;height=370.81201334816467" alt="" width="720" height="370.81201334816467">Source: IBISWorld's Company Benchmarking solution. <a href="https://www.ibisworld.com/products/company-benchmarking/#accounting" data-anchor="#accounting">Learn more</a> </li>
</ul>
 
<ul>
<li>Comparing companies side by side and identifying key points can help when discussing your product. Maybe your product can help establish ground in a growing industry. Or, if the industry is filled with large players, your product could provide a niche use, helping the company carve out a small but strong customer base. These are all important things to keep in mind before making the initial call. </li>
<li>Does the company’s competitor have a contract with your business or use similar goods and services to keep their operations afloat? If so, this can give you leverage and proof that your product is a necessary buy. If your product has been helpful to other companies, you can use that information to strengthen your pitch. </li>
</ul>
Step 4: Pre call planning Now your research is complete—time to establish the purpose of your call.
 
Calling without a goal in mind will not only make you seem unprepared, but could also steer the conversation in the wrong direction. Remember: You are an extension of the company you represent. Without a clear idea of what your goal is, how can the prospect trust you or your company’s product? Imagine what a successful call should end with and plan accordingly to achieve that result.
 
The approach to the call should be based on what the goal is:
<ul>
<li>Is your goal to establish awareness? If so, get your value props ready and make sure to tailor your summary of the product to meet your prospect’s needs. Try not to be too lengthy, otherwise the prospect might feel overwhelmed. </li>
<li>Do you intend to educate the prospect about your solution? If you plan to educate them during the call, it’s best to have a demo at hand to explain the ins and outs. Keep in mind the company’s objectives and how your product can help accomplish those goals. For example, if an industry is leaning towards automation of data, offering statistics on reduced operations costs and time may be effective in drawing in a potential client. </li>
<li>Are you calling to pitch to an inbound lead who’s already interested? If you’re pitching to a company that has previously expressed interest, then they likely have a basic understanding of what your product does. That means you can go into more detail around what packages you offer and how your current clients get the most out of your solutions.</li>
</ul>
 Step 5: Prepare questions and keep them on hand While your prospect will be the one asking most of the questions, it’s best to prepare your own list as well. Your questions should be tailored based on the company you’re selling to and the product you’re pitching. You should also keep in mind who you’re talking to. Different roles call for different questions.
 Common <a href="https://www.ibisworld.com/products/iexpert/">call prep questions</a> to ask:
<ul>
<li>How does your company’s profit compare to your main competitors?</li>
<li>Tell me about your average day. How would this solution impact your daily work?</li>
<li>What are your next quarter and next-year goals?</li>
<li>How will this product help you achieve those goals?</li>
<li>What’s your timeline for product implementation?</li>
<li>What is a successful outcome to you?</li>
<li>Has your company been exposed to volatility over the past few years?</li>
<li>Is your company impacted by foreign competition?</li>
</ul>
It's important to remember that you’re talking to a real person who is busy, just like you. In some cases you might have just a few minutes to make your case before they head into a meeting or other obligation.
 Find ways to avoid the boring, technical stuff in the early stages to keep your offer fresh and exciting. When you’re pitching or demoing a product, try sprinkling in an anecdote or something that’s personal to your lead. Building relationships is fundamental, not only for securing a lead but for nurturing the lead as well. Establishing trust and assuring your prospect that you have their company’s best interests in mind will go a long way.
 Keep in mind that even if you do everything correctly, you might still face objections or rejection. In those instances, it’s important to remain positive and handle any pushback in a calm and collected manner. There’s always a chance your prospect will change their mind, and being approachable gives you the best shot at re-engaging.
 If your team is ready to up their prospecting game with unique company insights and industry research tools, find out if IBISWorld’s <a href="https://www.ibisworld.com/products/company-benchmarking/#accounting" data-anchor="#accounting">Company Benchmarking</a> or <a href="https://www.ibisworld.com/products/industry-research/">Industry Research Reports</a> are right for you. Our corporate memberships come in all shapes and sizes, working for any organization at any budget.
 
<a href="https://www.ibisworld.com/contact-us/">Talk to us</a> about your business challenges and we’ll find the right products for you.

If you’re getting tired of calling the wrong prospects and chasing dead ends, then it’s time to learn how you can maximize efficacy without spending hours on prospecting.

Your Guide to Productive Sales Prospecting

An overview of what strategic planning is, how to formulate and conduct an effective strategic plan and how it can help your business achieve success.

What is Strategic Planning?

Production Team Leader

Learn how to do an industry analysis, which is a market assessment process that can help you to understand a company’s operations within the context of others like it.

How To Do Industry Analysis

What is ESG?
ESG stands for Environmental, Social and Governance and is a framework designed to measure the degree to which industries and organizations prioritize sustainability and ethicality over profit.
 
Let’s break down each part of ESG:
<ul>
<li>Environmental assesses ecological contribution and how organizations address sustainable issues of climate change, renewable energy, recycled packaging and water management.</li>
<li>Social refers to how businesses respond to human rights and geopolitical issues as well as manage intraorganizational policies related to labor, diversity and working conditions.</li>
<li>Governance informs organizational transparency and ethical business practices and includes reporting on executive pay, corruption, company policies, conflicts of interest and tax strategy.</li>
</ul>
<img src="https://content.ibisworld.com/media/q2xmg11k/graphic-2.png?width=714&amp;height=556&amp;mode=max" alt="" width="714" height="556">
 
Importance of ESG
While ESG has always been on the mind of the public, the COVID-19 (coronavirus) pandemic and war in Ukraine have recently accelerated its importance among individuals as well as organizations.
<ul>
<li>Consumers: According to <a href="https://www.pwc.com/us/en/services/consulting/library/consumer-intelligence-series/consumer-and-employee-esg-expectations.html">PricewaterhouseCoopers (PWC) 2021 Consumer Intelligence Survey</a>, 83.0% of consumers believe companies should be actively shaping ESG practices. Conscientious consumers stated they are willing to spend more on a company’s products or services if they are eco-friendly or socially aware. Conversely, 76.0% of consumers stated they would cut ties with businesses whose standards are not up to par.</li>
<li>Employees: ESG performance can help companies not only attract high-level talent but also make sure they stick around. According to PWC, 86.0% of employees prefer to work for a company that cares about the same issues as they do. Companies that implement a well-organized ESG strategy will be more desirable to work for. This is becoming of growing importance as Gen Z and Millennials make up a rapidly increasing percentage of the labor force; these groups place a higher value on environmental and social issues.</li>
<li>Businesses: Having a strong ESG approach can help businesses reduce operational costs through various sustainability methods, as well as improve their growth and outshine competitors. Investors are rapidly adopting ESG-funds, which have grown rapidly over the last five years to 2021. According to Morningstar Direct, ESG funds reached almost $70.0 billion, an increase of 35.0% from 2020. This also represents a significant increase from 2017, when funds reached only $5.0 million.</li>
</ul>
<img src="https://content.ibisworld.com/media/4zjho3ec/graphic-1.png?width=700&amp;height=506&amp;mode=max" alt="" width="700" height="506">
 
How do companies use and measure ESG?
Companies use ESG as a way to present their various social or environmental impacts, which may not be directly stated in their financial statements. This type of information can be reported in many forms but is most commonly presented as a sustainability or ESG report, which is typically released alongside annual fillings.
 
Companies will often require the assistance of organizations such as the Global Reporting Initiative (GRI) to help disclose ESG related information.
 
The way ESG is measured can vary since operators will be in charge of metrics and usually have their own criteria for determining ratings. For example, MSCI Inc. (MSCI) calculates a company’s ESG rating based on how it compares to its competitors.
Additionally, different criteria can be used when accessing a rating depending on the industry. For example, carbon emissions and environmental footprints are more significant when assessing a manufacturing operator compared with a financial institute.
 
ESG: Banks and regulation
Social and responsible business practices are quickly becoming extremely important within lender-borrower relationships. Although no rules or regulations currently exist at the federal level requiring ESG disclosure, the US Securities and Exchange Commission (SEC) has recently proposed a rule requiring companies to disclose environmental information as it relates to climate change.
 
Despite this proposal, many institutions have already begun using ESG information in evaluating new and existing loans while also actively introducing these same criteria to help manage portfolio risk.
 
Planning ahead
Moving forward, lenders are projected to set aside a greater share of funds for projects and organizations that address ESG concerns. This poses a significant risk to borrowers that are identified as having social or ethical hazards by being shut out of the credit market.
 
Tips for <a href="https://www.ibisworld.com/united-states/market-research-reports/commercial-banking-industry/">commercial banking</a>:
<ul>
<li>Incorporate any ESG-relevant information into credit write-ups.</li>
<li>Offering green loans and continuing to invest in ESG-related projects, including diversity, renewable energy, energy-efficient buildings and affordable housing. With the Biden administration restricting lending for overseas fossil fuel companies, more stringent rules may come in the near future. Banks should keep this in mind when evaluating potential clients. Stay tuned for Part 2 where IBISWorld highlights specific industries that are likely to be affected due to increased ESG importance.</li>
<li>Provide preferential rates for sustainable lending. Banks can draw up sustainability-linked loans that reward companies for meeting ESG benchmarks. These metrics are supplied through internal key performance indicators or third-party companies. In May 2021, US loans linked to sustainability goals reached $52.0 billion, up from $13.3 billion in 2020.</li>
<li>Provide visibility through ESG or sustainability-related reports. While ESG disclosure is not required yet, it has been gaining traction as of late. Getting a head start by generating reports that outline ESG targets, goals, metrics and developments are beneficial for both current and potential clients.</li>
<li>Continue investment in ESG training for employees. Becoming an ESG-centric business starts from the bottom up and staff should be informed on its importance. Transparency on objectives and overall strategy will enable both parties to be on the same page, enabling a smoother transformation.</li>
</ul>

How has ESG grown in importance across the US, and how are companies using it and measuring it?

The Rising Importance of ESG

What is ESG?
ESG stands for Environment, Social and Governance.
 
In business, environmental factors consider the extent to which companies are environmentally engaged, contemplate sustainability issues in modern society when devising operating strategies and can be considered environmentally sustainable.
 
The social pillar of ESG focuses on a company or industry’s policies and practices regarding labour and supply chains to assess the extent to which businesses are socially engaged.
 
Governance refers to how an organisation’s objectives are set and achieved, how risk is monitored and addressed and how performance is optimised. Key factors to consider when assessing the governance factor of a company’s operations include regulatory complexity and involvement in controversy.
 
Investors and key business stakeholders are increasingly applying ESG factors as part of their analysis and risk management processes in order to identify and address both material risks and growth opportunities.
 
 
Why is ESG important to UK industries?
In November 2020, the UK government announced its intention to make financial disclosures aligned with recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) mandatory across the economy by 2025. This will take the UK beyond the ‘comply or explain’ approach adopted under the EU’s Sustainable Finance Disclosure Regulation, which came into effect on 10 March 2021, and build on principles set out in the government’s Green Finance Strategy (GFS).
 
Alongside this, the UK government published an interim report and roadmap towards mandatory TCFD-aligned disclosures, setting out a timeline of planned and potential regulatory actions or legislative measures.
 
At present, UK regulators, government departments and TCFD member organisations are progressing strategies in the roadmap, in particular monitoring the progress of a cross-sectoral implementation strategy to ensure a coordinated approach is maintained. They are also accelerating consultations seeking views on proposals to mandate climate-related financial disclosures.
 
With the government set to provide an update on progress in the 2022 refresh of the GFS, now is the time for business managers and stakeholders to scrutinise and further consider climate-related and other sustainability disclosures and practices in order to ensure full compliance with impending legislation.
 
Contextualising these factors, which form part of the broader ESG theme, is vital in understanding a businesses’ and markets’ vulnerability to possible compliance issues. Further, it provides an indication of businesses’ and markets’ future performance and ESG best practice as the focus on sustainability becomes ever stronger in light of the UK’s transition towards net-zero.
 
 
How can businesses benefit from assessing ESG risk?
<a rel="noopener" href="https://help.ibisworld.com/en/articles/8155720-uk-esg-risk-scores" target="_blank">Assessing ESG risk</a> is important in every industry due to emissions reduction targets, growing regulatory and reporting requirements and rising attention on ESG issues from consumers, among other factors. Companies must ensure they properly address ESG factors in every area of their operations in order to maintain compliance with legislation and attract demand from customers seeking ethical and environmentally friendly companies.
 
Below, we’ve highlighted the ways in which three industries can benefit from placing greater attention on ESG.
 
Accounting and auditing
A growing requirement for companies to disclose ESG-related information in their financial accounts is affecting operations in the <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/accounting-auditing-industry/" target="_blank">Accounting and Auditing industry</a>. While the companies themselves must ensure their accounts contain all the required information, it is also important for auditing businesses to put processes in place to help them assess these areas of a company’s accounts, particularly as ESG reporting requirements are expected to increase in the near future.
 
In particular, the Financial Reporting Council has expressed concerns that disclosures on energy use, costs and emissions are not always clear enough, meaning that users can struggle to understand them or find them relevant. Auditors that are able to conduct a proper assessment of a company’s ESG disclosures will be better able to help companies determine the level of financial risk their operations may be facing, which could be key to attracting clients.
 
Banking
At the same time, businesses such as financial institutions can benefit from drawing ESG risk into business strategies in order to protect cash flow and ensure compliance with both current and future regulation. With regulations relating to the environment growing and ethical issues such as labour standards remaining key, it is important to consider the impact of ESG factors on financial risks and reputational risks.
 
For example, ESG factors must be taken into account in the lending process to help <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/banks-industry/" target="_blank">banks</a> assess which companies are more likely to default on loans, as companies operating in industries with a high level of ESG risk are likely to be riskier investments. Additionally, they can help lenders judge whether or not a client’s operations can be considered sustainable and ethical, which can help protect the bank’s reputation.
 
Clothing retailers
In addition to helping ensure that companies are meeting increasingly stringent regulations, companies’ attitudes towards ESG factors can be influential in attracting demand. Growing environmental and ethical concerns among the general public are driving the ethical consumerism trend and businesses that fall short of consumers’ expectations risk being left behind. Conversely, companies that emphasise their environmental and ethical credentials are likely to fare better.
 
This trend has been increasingly evident in the <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/clothing-retailing-industry/" target="_blank">Clothing Retailing industry</a>, with <a rel="noopener" href="https://www.ibisworld.com/united-kingdom/market-research-reports/fast-fashion-industry/" target="_blank">fast-fashion firms</a> facing scrutiny for promoting wastage and exploiting workers through low wages. In response, many companies have focused on making their operations more sustainable, such as by using recycled materials to manufacture clothing and introducing clothing recycling schemes in stores.
 
 
Conclusion
The growing importance of ESG to both businesses and consumers means assessing ESG risk is becoming ever more important to UK industries. Rising regulations relating to reporting standards and climate change, as well as an increasing consumer focus on ESG issues, mean that companies must ensure their operations meet ESG expectations in order to avoid legislative issues and maintain demand.
 
For more information on any of the UK’s 500+ industries, log on to <a rel="noopener" href="https://www.ibisworld.com/" target="_blank">www.ibisworld.com</a>, or follow <a rel="noopener" href="http://www.linkedin.com/company/ibisworld" target="_blank">IBISWorld</a> on LinkedIn and <a rel="noopener" href="https://twitter.com/ibisworlduk" target="_blank">IBISWorldUK</a> on Twitter.

We’ve looked at why it is important for UK industries to consider the Environmental, Social and Governance factors of their operations.

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