How to Interpret Sales Revenue and Economic News

I am having a disconnect with the bad economic news being reported.  Perhaps these conditions aren’t like this where you live and work, but here’s what I see all the time:

• Can’t find a place to park at shopping malls because they are jammed;
• Every flight I take is full;
• There are lines of cars waiting to purchase fuel at gas stations;
• The restaurants are packed;
• Sporting events are sold out;
• Concerts are sold out;

Perhaps the disconnect between what I see and what is being reported is simply this.  While there are some isolated geographies and industries that are doing poorly, others are doing quite well.  But when we look at the overall numbers, they just don’t provide an accurate reflection of what is actually taking place.

We heard that only 54,000 new jobs were created in May.  Shouldn’t news of 54,000 new jobs, most created by small and mid-market businesses, be a good thing?  The reality is that there hasn’t been much new job creation from blue-chip and other large companies.  The slow job growth is an isolated problem, not a widespread one.

Even the slumping stock market is only a reflection of one segment – investors – and only one kind of investor.  Obviously, the other kind is continuing to infuse huge amounts of cash into growing companies.

And I know the housing market is still slumping. But like I said before, it is a single industry and not representative of the whole.  But the three isolated numbers the government likes to provide us with, stocks, home sales and gas prices drive the overall numbers way down.

As a result, the overall numbers simply don’t reflect what is really taking place.  And that brings me to sales numbers.  Do your overall sales numbers reflect what is really going on?

Take a look at your sales revenue by salesperson for the year to date.

Look at the numbers for some of your top salespeople and review the data to answer these questions:

• What percent of the total represents sales to existing customers?
• What percent of the total is low-margin business?
• What percent of the total might include an unusually large, one-time sale which, if taken away, would actually make the numbers unimpressive?
• Which of these opportunities were in the pipeline for one or two quarters too long, meaning that the revenue was not the result of a recent selling effort?
• How many new customer opportunities are in their pipeline going forward?

Now look at the numbers for some of your mid-tier salespeople and dig through the data to find these answers:

• What percent of the total represents brand new customers/accounts?
• What percent of the total is higher-margin business?
• Are there any unusually large sales that might skew the results?
• Is their pipeline going forward looking nice and solid?

If you come up with the answers I am expecting, then you’ll see that you must approach the sales revenue numbers with the same degree of skepticism and isolation as you should when listening to economic reports.  The total is not representative of what is really taking place.