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Identifying Growth Opportunities in 2015

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All companies are looking to grow revenue. This presentation explains five trends and offer recommendations on how to grow your business.

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Identifying Growth Opportunities in 2015

  1. 1. These Slides are Dedicated to Helping You Find More Growth in 2H’15 U.S. Economy Trends Shaping U.S. Economy Growth in 2015 Targeting Strategies to Capture Growth Size $17.4T --- Growth 2.4% --- Labor Force 156M Employment Growth Decline in Energy Prices Companies without Enough Capital Significance of Web Presence Buyer Journey Moving Upstream Seven (7) tangible ideas you can leverage starting tomorrow
  2. 2. Growth Requires Understanding at Next Level of Detail ▶ Our customers seek to grow faster than the market • Forecasters estimate the U.S. economy will grow 300 basis points in 2015 o 60 basis point rise from 2014 (actual) growth rate o 40 basis points below the forecast six months earlier ▶ To do this, they must “de-average” their views • U.S. economic growth is accomplished through divergent growth rates among industries and regions o Most “growth industries” (e.g., high-tech, biotech) include sub-industries or segments that are not growing at all o Moreover, the highest-growing “sub-industries” (e.g., P2P lending $2.2B @ 40,000 bps, tele-health $2.6B @ 35,000 bps) fall under industries that are far lower-growth • Executives seek to “de-average” their view of markets • An essential element of strategic and financial planning is taking closer account of critical trends and risks – with sensitivity to key macroeconomic indicators, government policy responses, and firm-level signals
  3. 3. Recommendations Are Based on “Trends” and “Spends” We Look at TRENDS that Impact Businesses We Compare TREND to ACTUAL SPEND for $20B+ Revenue from 30,000+ 100-1,000 Employee Companies We Outline What “Factors” Suggest a Business will CHANGE ITS ACTUAL SPEND based on TRENDS in the economy
  4. 4. Trend #1: Job Growth But few companies are doing all the hiring
  5. 5. U.S. Employment is Rising in Aggregate 128 130 132 134 136 138 140 Jan-07 Oct-07 Jul-08 Apr-09 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13 Jul-14 Totalpayrolls(millions) May 2014 May 2014 marked a turning point in the labor market – as all private non-farm jobs lost since the beginning of the ‘08 crisis were reclaimed Source: U.S. Bureau of Labor Statistics
  6. 6. However, U.S. Employment Has Returned in Different Ways Smaller companies (<499 employees) employ more people than in 2008, while larger companies (1,000+ employees) employ fewer people than 2008 Source: U.S. Bureau of Labor Statistics, ADP
  7. 7. This Was Evident Again in March 2015 in the Government’s Employment Statistics Source: U.S. Bureau of Labor Statistics, ADP
  8. 8. This Was Evident Again in March 2015 in the Government’s Employment Statistics Source: U.S. Bureau of Labor Statistics, ADP If It Is Not the F500, then Who Are the Companies Adding All of the Jobs?
  9. 9. Employment Growth Comes in Three (3) Forms Mom & Pop…& Friend Add Some Extra Help Growth Stories 1 2 3
  10. 10. Real Employment Growth Comes from Very Few Companies Among 100-1,000 person companies, less than 10% of companies expanded at >5% -25 0 25 50 75 100 Share of Companies Share of Employment Growth PercentofTotal 20%+ Employment Growth 5%-20% Employment Growth <5% Employment Growth No Employment Growth Negative Employment Growth Source: U.S. Bureau of Labor Statistics While the economy is growing at ~3%, a small number of companies are responsible for the growth
  11. 11. Real Employment Growth Comes from Very Few Companies These 10% of companies are responsible for 75% of the new jobs Source: U.S. Bureau of Labor Statistics -25 0 25 50 75 100 Share of Companies Share of Employment Growth PercentofTotal 20%+ Employment Growth 5%-20% Employment Growth <5% Employment Growth No Employment Growth Negative Employment Growth
  12. 12. Actively Hiring Companies Spend More Hiring Average Spend Per Account, Index 1. Total spend in 2012-2014 with all suppliers/# accounts with non-zero spend with any supplier in any year Note: Hiring defined as Aggressively/Significantly/Moderately Hiring All Accounts 250-500 Employees100-250 Employees 500-1000 Employees Low or No Hiring Rapid Hiring 100 77% 177 Low or No Hiring Rapid Hiring 72 85% 133 Low or No Hiring Rapid Hiring 120 33% 160 Low or No Hiring Rapid Hiring 203 34% 272
  13. 13. Actively Hiring Companies Spend More Hiring Average Spend Per Account, Index 1. All accounts (100-1000 employees) 20132012 2014 100 219 106 213 113 205 Not Hiring Hiring 20132012 2014 100 117 102 112102111 20132012 2014 100 142 102 194 108 160 Example A High-Tech Company Example B Biz Services Company Example C Biz Services Company
  14. 14. Implications for Targeting 1. Apply Sales & Marketing Activity to “Growth Companies” • Buy lists against “growth companies” • Acquire contacts from “growth companies” • Create acquisition plays against “growth companies” • Score leads highest when they come from “growth companies” 2. When Engaging, Emphasize “Infrastructure” – as Growth Spend is Disproportionately Biased Towards These Categories • In high-tech, emphasize client system, server, and other fleet buys • In business services, emphasize furniture, facilities and other infrastructure areas
  15. 15. Trend #2: Decline in Energy Prices Capture growth driven by increased consumer spend
  16. 16. Energy Created 25% of New Jobs in 2014 The Energy Sector Has Been a Bright Spot CleanTech Created Lots of High-Paying Jobs in 2014 Metro Area New Clean Tech Jobs, 2011-2014 1. Albany-Schenectady-Troy, N.Y. 10,092 2. Knoxville, Tenn. 8,184 3. San Francisco-Oakland-Fremont, Calif. 13,917 4. San Jose-Sunnyvale-Santa Clara, Calif. 6,192 5. Greenville-Mauldin-Easley, S.C. 3,723 6. Kansas City, Mo.-Kansas 3,932 7. Toledo, Ohio 2,175 8. Chicago-Joliet-Naperville, Ill.-Ind.-Wis. 7,642 9. Charlotte-Gastonia-Rock Hill, N.C.-S.C. 2,309 10.Cleveland-Elyria-Mentor, Ohio 2,396 Median Wage Lots of Jobs Clean Tech ($54K) All Other ($38K) Shale Exploration Energy & Texas Oil Exports Port of Houston becomes #1 export market (was NYC) Source: Wall Street Journal, Bloomberg, Dallas Federal Reserve Bank
  17. 17. Most Lattice Customers Captured Significant ‘10-’14 Growth from This Segment Manufacturing Healthcare Prof Services Energy 0 50 100 150 Source: Lattice Customer Data Growth Index
  18. 18. However, Energy Prices are Declining Globally Crude Oil Prices 2002-2014, $ per Barrel 0 20 40 60 80 100 120 140 160 2002 20082004 2006 2010 20142012 Brent - Europe West Texas Intermediate Source: Bloomberg Crude Oil Prices 2014 by Month, $ per Barrel
  19. 19. Job Cuts by Industry Job Cuts by State As a Contrast to 2014, In 2015 The Energy Industry Is Reducing Employment Source: Bloomberg
  20. 20. In 2015, Companies Should Consider Targeting Strategies for Other Industries ▶ Peer-to-Peer Lending Platforms • 2014 industry revenue: $2.5B • Projected revenue growth (2014-15): >40 percent • Why: Small businesses and consumers are expected to continue pursuing loans from non- traditional sources as prime interest rate increase. ▶ Medical Marijuana Stores • 2014 industry revenue: $2.6B • Projected revenue growth (2014-15): >40 percent • Why: Growth due to aging population and growing acceptance of products as treatments for chronic illnesses. ▶ Tele-health Services • 2014 industry revenue: $1.8B • Projected revenue growth (2014-15): >50 percent • Why: Affordable Care Act and other legislation is expected to raise federal support for tele-health services, helping industry revenue grow ▶ Motion Capture Software • 2014 industry revenue: $1.8 billion • Projected revenue growth (2014-15): >60 percent • Why: Desire for automation in manufacturing and media industries drives demand for software and components to detect signals ▶ Manufacturing: Silicon • 2014 industry revenue: $4.8 billion • Projected revenue growth (2014-15): >30 percent • Why: Maximum capacity led to rise in prices in 2014; new capacity comes online in 2015 to address appetite from solar and health industries ▶ Manufacturing: Medical Devices • 2014 industry revenue: $15.8 billion • Projected revenue growth (2014-15): >15 percent • Why: Weakening dollar, combined with lower excise taxes from EU countries, from UK, and from India create expanding market for U.S. production Source: Economist
  21. 21. Implications for Targeting 3. Create Sector-Specific Target Campaigns • Determine likely needs by industry (e.g., MedDevice needs high- performance client systems, P2P needs cloud-based IT solutions, tele-health needs access to high-performance servers) • Create need-aligned plays 4. Expand Customer Database • These industries have thousands of new companies in the past two years – leading many Lattice customers to find these companies systematically under-represented in database • Expand database to add new entrants demonstrating high-growth characteristics
  22. 22. Trend #3: Growing Companies Need Capital Financing the right companies will drive further growth
  23. 23. Mid-Market and Small Businesses Incurred Most of Job Losses in ’08-’09 Recession Source: U.S. Bureau of Labor Statistics
  24. 24. Federal Government Programs ‘09-’13 Pushed $300B of Capital to This Sector
  25. 25. However, Segment Sees Less Capital Due to Lending Standards + Reduced Loan Profitability 0 200 400 600 800 1000 1200 1400 0% 10% 20% 30% 40% 50% 60% 1995 2000 2005 2010 2012 Small Business Share of Commercial Loans Commerical Loan Balance Small Business Share of Loans at Banks (%) vs. Total Outstanding Commercial Loans ($ Billions) Mid-Sized and Small Business Share of Commercial Loans Source: Federal Deposit Insurance Corporation
  26. 26. Challenged Access to Capital Leaves Many Companies Struggling to Expand & Hire Source: Federal Reserve Bank
  27. 27. Companies With Access to Capital Spend More Funding Average Spend Per Account, Index 1. Total spend in 2012-2014 with all suppliers/# accounts with non-zero spend with any supplier in any year All Accounts 250-500 Employees100-250 Employees 500-1000 Employees No Funding in 2011-14 Funding in 2011-14 100 514% 614 No Funding in 2011-14 Funding in 2011-14 70 735% 585 No Funding in 2011-14 Funding in 2011-14 109 620% 785 No Funding in 2011-14 Funding in 2011-14 198 141% 478
  28. 28. High-Quality Companies Promise Growth – But May Need Additional Capital Source: Lattice Data Cloud; Lattice Customer Data High-Quality Credit Growth Signals No Recent Capital Expansion Average Credit No Growth Signals No Recent Capital Expansion High-Quality Credit Growth Signals Recent Capital Expansion Change in Spend ‘13 vs. ‘14 Segment: 100-250 Employees Industry: All 100 185 380 These companies may be natural candidates for you to extend financing as part of outreach
  29. 29. Implications for Targeting 5. Create “Finance + Product” Campaigns • Key criteria o Growth signals o Strong credit o No external capital • Plays will involve selling product and credit • Best-practice is to complement with email campaign 6. Expand Customer Database • Expand database to add new companies that meet “fit” criteria and have these characteristics
  30. 30. Trend #4: Significance of Web
  31. 31. Shift Towards E-Commerce Creating Lift for Thousands of Mid-Sized Companies +$40B in annual revenues per year Source: US Census Bureau
  32. 32. One Lattice Customer Places “Cold Calls” Based on This – and Has Great Results Source: Lattice Analysis $50M - $100M Retailers Q4’14 Other Leads Lattice-Scored High-Growth Accounts +40%
  33. 33. Companies With More Intensive Web Traffic Spend More Average Spend Per Account, Index 1. Total spend in 2012-2014 with all suppliers/# accounts with non-zero spend with any supplier in any year All Accounts 250-500 Employees100-250 Employees 500-1000 Employees Low Medium High 100 369 203 Low Medium High 78 277 158 Low Medium High 134 371 227 Low Medium High 209 529 346 Web Traffic Web Traffic Web Traffic Web Traffic
  34. 34. “Web Traffic” Is At Least As Good of a Spend Predictor as “Emp Count” High 100-250 Low Medium 250-500 500-1000 Account Size (# Employees) Web Traffic Intensity* 203 268 444 100 355 678 476 291 173 Average Spend Per Account, Index 1. Total spend in 2012-2014 with all suppliers/# accounts with non-zero spend with any supplier in any year *Based on Alexa rank: High – 1 - 1 600 000, Medium – 1 600 000 - 7 000 000, Low – 7 000 000 +
  35. 35. Implications for Targeting 7. Web Traffic Growth is Indicator of Growth • Develop campaigns focused on companies with rapid growth in web traffic – REGARDLESS of whether or not e-commerce
  36. 36. Trend #5: Buyer’s Journey Moving Upstream
  37. 37. B2B Buyers Consult Multiple Sources Prior to Purchase Source: Accenture
  38. 38. Buyers Prefer to Do More & More Research on Their Own Source: Accenture
  39. 39. 67% Of the buyer’s journey may happen online… before they reach you Access to holistic intent data may indicate early buying signals before the buyer even knows they are in the market to purchase. Kerry Cunningham Much Decision-Making May Be Complete Before They Engage Your Reps Source: SiriusDecisions
  40. 40. We Are Experimenting with “Intent Data” to Track Customers’ Web Activity 1Billion+ interactions per month 2000+ topics of interest 1000s of publishers
  41. 41. Five Use Cases Are Targeted with Intent Data Find companies most likely to buy Find your most sales-ready leads ACCOUNT PRIORITIZATION LEAD PRIORITIZATION 2 3 4 Find customers most likely to buy more CROSS-SELL/ UP-SELL 5 RETENTION Find customers most likely to churn PROSPECT DISCOVERY1 Find net new prospects
  42. 42. Implications for Targeting 8. (Future) Leverage Customer Intent Data • Lattice has access to data that captures customer web searches and content consumption for 2,000+ topics • The above can be used in a variety of ways o Source new accounts o Score leads o Find cross-sell opportunities • Lattice can explain how to become a beta customer for this new offering

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