The COVID-19 pandemic turned the business and marketing world upside down in 2020. To constrain the spread of the coronavirus, governments instituted, relaxed, and then reimposed mandatory business closings, stay-at-home orders, and a plethora of other business restrictions and public health measures.
The U.S. economy gyrated wildly in 2020. Real GDP growth fell by an astounding 31.4% (annualized rate) in the second quarter and then grew by an equally astounding 33.4% (annualized rate) in the third quarter. While some companies experienced tremendous revenue growth in 2020, a much larger number of businesses saw their revenues fall dramatically.
The good news is, December 2020 marked the "beginning of the end" of the COVID-19 pandemic. The U.S. Food and Drug Administration granted emergency approval for two COVID-19 vaccines, and as of January 8th, about 6.7 million Americans had been vaccinated according to CDC data.
As I noted in my last post, the U.S. economy is expected to grow substantially in 2021, after a lackluster start in the first quarter. The biggest challenge for marketers in 2021 will be to design and execute marketing programs that will enable their companies to take full advantage of the improving economic and business conditions. To achieve this objective, marketing leaders will need to use an agile approach to marketing planning.
Assess Likely Business Conditions for Your Company
While the outlook for the U.S. economy in 2021 is good, estimates of overall economic performance aren't specific enough to enable marketers to develop sound marketing plans. Economic growth in 2021 is likely to be broader than the growth that occurred in the second half of last year, but it will still be uneven. The timing and pace of growth will vary for different products and services, industries, and geographic markets.
Given the unevenness of the economic recovery, it's essential for marketing leaders to base their plans for 2021 on a thorough assessment of the business conditions their company is likely to be facing over the course of the year. The centerpiece of this assessment should be a forecast of the revenue the company can potentially earn in each quarter of the year.
Revenue forecasts can be created in a variety of ways, but for most B2B companies, the best method is a bottom-up approach. In my experience, it also works well to begin with revenue sources that are most reliable and then move to sources that are less certain. Therefore, I typically recommend that marketers estimate revenues from the following sources in the following order:
- Recurring revenues from existing customers
- New sales to existing customers
- Sales to new customers