Readout: State of the US Economy w/ Jim Swift

All right, well welcome everybody to this week's Sales Globe Rethink Sales Roundtable where we're rethinking and looking at the future of sales. And I'm Mark Danolo with Sales Globe and with me is Michelle Seeger.

Hello everyone. Welcome.

And we're real excited this week. We've got a great guest, Michelle. But before we get into introducing our guests, let's talk a little bit about who we are.

Yeah. So Sales Globe, we are what we call a problem solving firm for sales. And what that means is that we solve the biggest challenges that organizations face with their sales organization. We, we consult in areas like account planning, segmentation and targeting. Some of that you're going to be hearing today how you identify and understand your total addressable market sales capacity. We focus on sales strategy, coverage model. Oh gosh, anything your sales process, alignment of your process to your technology. You'll see. We've written a few books, everything from problem solving for sales, innovative sale book, essentially account planning, what your CEO needs to know about sales, compensation and of course quotas. So really what these roundtables are about are solving your greatest sales challenges. And that is what our guest is about today.

That's right. So as we know, Michelle, and we keep telling everybody on every session, we don't know what's going to be happening in 2021, we don't know what's going to be happening in the future. But what we do know, what we have on all the whiteboards around the office here, is that there are a lot of indicators, right? And so if we know what the indicators are, we know where things are leading and we become good data driven, creative problem solvers, then we're going to be well equipped to deal with whatever's coming. So we're going to be talking about some of those indicators today with our special guest. So Michelle, why don't you introduce Jim.

That's right. So with us today is Jim Swift from Corterra. He is CEO and founder of the company. And what Korterra is, is they are a credit data and insights business, insights company. And what you're going to be hearing and what you're going to be seeing today is data that you might not be leveraging today to help you understand things like your total addressable market and segmentation like what Mark said, we know that the future is uncertain and anything that you use today to understand your total addressable market in 2020, what we're hearing from clients is it's not really, really helpful as they start planning for 2021. So we're going to look at data a little bit differently and we're going to start by talking about the state of the economy. Everyone that is on, we invite you to share any questions you may have for Jim in Q and A. And he'll be taking your questions live throughout. So, Jim, welcome.

Thank you very much.

Yeah, we're really happy to have you here today. And one of the things that we've been solving for is how do we build relationships virtually? It's a question we get asked every day. So in order for you to start to build rapport with people that are listening to us today, I thought it would be a great idea for you to just share a little bit about yourself. So some fun fact or something interesting about yourself that people may not know other than the fact that you are a self proclaimed data geek that I do know.

Yeah, that's boring. So I'm a member of the Bills mafia and I am probably the biggest Buffalo Bills fan on the planet. And when the Bills win the super bowl this year, which is February 8th, I believe in Tampa, Super Bowl 55, I'm going to get my first tattoo and it's going to be the standing Red Buffalo with LV for 55 for the super bowl in it. And we have an open pool on where what body part I should get this tattoo.

That was going to be my next question.

Undecided? It's to be determined.

That's so funny. I think we should take a poll so we could, we could take a poll with everyone that's listening today by the end of the call and so you can submit your Q and A where you think he should put his tattoo. Anything that's not good, you know. Right. We won't, we won't share the information. So it's. That's a good question. Oh, my gosh. So that's interesting. I went to when the super bowl was here in Atlanta many years ago when it was Dallas and Buffalo. Do you remember that?

Roughly? Yes.

Well, it was a long time ago. I was young, so I'm from New York. Right. And I was so excited. And I go down there, I'm like really excited. My husband had great tickets. He was an exact with this company and we were bringing clients and we were close. Right. Oh, my God. I get down there and you talk about culture. We had all the Dallas people and then my New York people. Right. So you've got all the Dallas babes, right? And they're all decked out. I'm telling you, they were decked out. I felt underdressed. I was wearing a Super bowl sweatshirt and jeans, and I felt like a kid in high school. They had on rhinestone hats and beautiful blouses, and they're all decked out in their boots and. And then you had the New Yorkers, right? Men and women alike, they're wearing their big buffalo hats, going, ooh, ooh, ooh. I mean, it was just, like, so funny. I'm like, oh, my God. Anyway, you brought up that memory for me.

I think we all have that in common, though. We're all from upstate New York. So I'm from Binghamton myself.

Yes.

You're from the Albany area, right?

Yes, I am.

Yeah.

Yep. So where are you from originally?

I'm from the Rochester area.

Ah, Genesee country.

Yeah, yeah. Jenny Cremail.

Yeah, that's right. Oh, gosh. So my grandfather used to be on the executive team there years ago. Genesee Cremel. Yeah, yeah, I remember that. Anyway, so. Oh, yeah. And you collect beer cans. I'm sorry, I don't have any for you.

Only empty ones.

Darn right. Okay.

Old empty ones.

Anyway, so thank you, Jim, for sharing your time with us today. We'll get right to the topic of today, which is the state of the economy in the United States. Why don't you give everyone just briefly a background of the information that you have, where it's kind of coming from, and we'd love for you to start to share some of the big insights that we have from the state of shutdown until. Until now.

Sure. So we track business spending on things other than payroll. So what a company spends on materials, what they spend on shipping and other things. And the reason we do that is because I feel like it gives us a really good view into our customers, whether it's a prospect we're trying to sell, whether it's an existing customer we're trying to make a credit decision on or track the health of going forward. What you buy, I think, is what you are. I learned that in the consumer world a long time ago, and I think it applies to businesses. So we track about $1.7 trillion in spending between businesses in the US which is a healthy chunk of the B2B economy. And in the numbers that we're seeing for the October spending, first of all, in March, we saw the world bottom out. We went down 13% in year over year spending. And for the past five months, we've slowly climbed the ladder to try to get out of that hole. And we've gone from 13% down to 8% to 4% to 2% to 2% better than last year. And then in October we're actually businesses were spending 4% more on non payroll things than last year. So it doesn't mean that we're out of the woods because when you look at the industry breakdown, about 60% of industries are still underwater compared to last year, but 40% are doing so well that they're bringing up the overall averages.

So how does that work, Jim, where you've got the spending increase from last year, yet not everybody is up. You would think everybody would be up, but it must be really uneven then.

Yeah, yeah. And it has been the entire time. You see some industries have been severely impacted by the lockdown. So airlines and hotels and restaurants just completely underwater from last year, 47% down in the case of hotels, year over year. And then you see some industries though, where right from the beginning of the pandemic they actually did better. So most of these are tied to work from home areas. Companies that are involved with anything it related has just gone through the roof. Spending on it in our Data is up 130% year over year. It's more than doubled and it's been that way for the last six months. We thought it would be a blip at first as companies bought laptops for their employees and people equipped themselves with better bandwidth routers and whatever. But it's persisted the entire time. And so industries like that are way up. Internet shopping is up dramatically. And a lot of these are going to be permanent changes because the way that we work is going to be different. We're all seeing that. I don't think anyone even pretends that we're going to go back to the same nine to five, five days a week in the office grind that this country's been on for 50 years or more. I think it's changing. It's forcing companies to think about what they want that to look like. The way we shop, the way we shop for food, dramatically. You know, I think of early on in the Internet we used to argue about whether e shopping e tailing was a real thing or not, which seems kind of ridiculous now, but it wasn't that long ago. And then, okay, you can order food. And it seemed like only people in New York City and San Francisco ordered their food online. The rest of us were fine going to the grocery store. And now you look at how that's continued to change. And I think there's been enough time that we've broken a lot of these habits that we've had of shopping a particular way or another. And we're seeing it in the numbers for any kind of Internet retail. It's up. Another area is around building materials and home improvement related things. So if your Home Depots and your Lowe's of the world continue to be up every single month, and part of this is tied to work from home home improvement projects, and it's another area, we thought it would just be a short term blip and it's turned out to be something that's recurred every single month. So that's why you see these relatively, or at least a minority of businesses, industries are spending more than others and that's why the overall numbers are up. So that's where you really have to decompose it too. And you have to look, you have to look by industry, by geography, by size of business. Because small businesses, for example, they're still down year over year, they're down 2% in their spending, whereas large companies are up 8.5%. So it's one of those things, depends on where you are, whether or not you're doing well as a result of the recovery of the pandemic or whether you're not doing so well yet.

So that's a little counterintuitive in that on one hand you could say the large companies are up because they've got deep pockets and so they can afford to continue the spending. But with the PPP program, small businesses were the ones that got the funding.

Right.

And you would think they would be okay to a certain point. But it sounds like they're still maybe more cautious if you break out the sectors, take out restaurants as an example, you break out the sectors, it sounds like they're just being more cautious than large businesses.

Well, I think you have a lot of factors going on. So the PPP loans that came out did go largely to smaller businesses. We saw a spike in the closure of small businesses right away the first two months of the pandemic though, April, May. And what we think happened is it was really a weeding out of the weakest businesses. And so the closure rate has actually decreased. It's still a little higher than last year, but it spiked the first couple months after the pandemic. So those are mainly smaller businesses that churn anyway. So part of it is they're gone. Part of it is also big companies have, they just have more buying power. You know, they're able to get the inventory that they need over a small business. When you remember when we first couldn't get Toilet paper, you're much more likely to get it at Costco or Walmart than you were at your local grocery store. So you have factors like that that have played into the advantage of larger businesses. You're right. They have better cash reserves, they have better marketing, they have better brand awareness, and they have a better ability to adapt to changes in supply chain disruptions. And if you think about all the things that have happened with the way that we buy and the way companies interact with each other, it's pretty dramatic. Just the move from going away from a restaurant several days a week to going to a grocery store more often means that the way the food has to get to the grocery store changes as opposed to the restaurant. Right. Your packaging changes, your transportation changes, your distribution changes. And big companies are more equipped to deal with that. So lots of factors going on.

So you said some of the behaviors are changing. Those behaviors are going to stick. A lot of those are going to stick. So there are some big ones, obvious ones like, wow, I can order things online shopping, right? Wow, I can buy groceries online. Are you seeing any patterns or indicators of what other things might stick? For example, work from home, you know, is that going to stick? We're seeing some headlines about that. And then this idea that while companies are saving so much money in commercial real estate, are they going to start reinvesting back into commercial real estate? Or maybe are they going to go to more shared space where people can, you know, do things locally? Are you seeing indicators that are telling you any other patterns that might stick?

Well, you don't know for sure because things can change. But whenever we see behaviors repeat month over month over month, history tells us that that tends to be a sign of stickiness. When you see a blip or one or two month blip and a return to normal, okay, that's out of our system. So an example are the business closures. When we saw that jump in business closures and then it stopped, we were like, well, wait a minute, restaurants are still closed. Why aren't more closing? And then we started to look into it and it's like, okay, well again, the weaker businesses were flushed out and the other ones adapted and they changed the way they were doing things. And so that was a blip. When we see persistent long term increases month over month in spending on things like IT and Internet shopping, those are two areas where the longer it goes on, the more likely it is to become normal. And so there will be some, I think, response where we're back in offices and that'll affect real estate like you just mentioned and it'll affect the general work from home. But there's going to be at least some level of flexible hours and shifts and other things that go on. I think safety, you know, at first was safety. All of the ppp, all of the cleaning fluids, all the different supplies that you see that are safety related, that going to be a blip. But now we walk around in our lives and you can see a lot of things are going to stick the way that cashiers at grocery stores are. Just think of all the dividers you now see and it's mass transit, all those things. When companies go and implement all of that, consumers become used to it and it's there for safety. And so I think there are several things that are going to stick and, and I don't know all of them but when I just as a rule, when I see the same kind of patterns repeating month over month over month over month, I'm like, okay, that is just going to become second nature. Because we're humans, we're creatures of habit and when things start to lock in like that, we just become comfortable with them. Taking your shoes off at the airport, right? That was really, really annoying for a couple of months and now, now I don't get nearly as annoyed as I did when that started.

Well, I don't because I'm not flying nearly as much as I used to. So that made me think about sales. We are that, you know, they're still not on the road yet. We are starting to see some of our clients have got some salespeople that are going on the road but not as much. And we think that that might be something that will stick as well. More of these hybrid type of roles where I'm not as much on site as I was before.

You're going to be more selective about how that, how and when they travel.

Right.

So doing it more strategically. So I think maybe, maybe gone are the days of the machismo around the road warrior that you've got to be out there and it's going to be more selective about why do I need.

To be out there.

Yeah, you know, it's been a long time coming in a lot of different areas. So definitely for sales and I think about consulting. We have a lot of friends at the, at the big four and they're saying that that five day a week on site model, gosh, when I did it, it was seven days sometimes they're seeing that it's working not to have people on site five days. So that's good news for industries like that for people who want to go into those types of careers. So let's talk about. I want to have a couple things that I'm curious about. We discussed that people are more comfortable buying online. We also talked about a little bit earlier, we discussed that, you know, we're starting to leverage. So we leverage Cortera's data for everyone listening. We leverage their data to help us provide insights to our clients as well. And what we have found is that in some of these areas like retail, let's call that out for a moment, there are things like appliances, so not even, you know, computers we get at the home. But think about like washers, things like that, what they call white goods that's up in the B2B spending, which I believe is correlated to what consumers must be buying. I'd love to get your take on that, Jim, like what the correlation looks like and what is it that consumers seem to be buying outside of just the normal. That what we're thinking about around computer technology and ordering food online, maybe what else might we be seeing out there?

Yeah, there are, there are 13, I believe it is different sectors of retail that the government tracks within the NAICS codes. And every month they put out a report, the retail sales report, that is a survey of retailers that assesses the change month over month and year over year, change in consumer sales at the retailers. And so early on in the pandemic we started started to track our data to that and it allows you to see, it makes sense that if a consumer comes in your store and buys something, you're going to buy more goods in order to sell to the consumer. So it might be time shifted a little bit where they buy things before you replenish inventory or you buy things before they do. But there should be a correlation between the two. And we clearly see across almost every category alignment between those curves. Some things I mentioned, the building materials and equipment, garden equipment they call it, that is it's clear that they're stocking their stores and consumers are coming in and buying a lot of that. For a long time clothing and furniture were way down because the stores were closed. And then we saw furniture come back a little earlier. And I think it's because people are equipping home offices and doing whatever they're doing around their homes. And just this past month we saw a big spike in clothing. And so now I think it was 17% year over year growth by clothing store spend. So we haven't seen that in the consumer spend yet. But we should this month because as the stores get ready to go for the holidays and reopening and just. And frankly a need to survive. You know, we're seeing that in a lot of the data. It's something that you just have to think about whenever you're looking at the data. You have to think of it through the lens of the American spirit, which is no one's going to kick us around. We're going to survive. I had the guts to start this business and dammit, I'm going to do everything I can to make it successful. And so you have to factor that in. It can be an illogical twist in the data, but an area like clothing stores, they're open. We're going to try to do it.

Michelle, you'd. Oh, go ahead, Jim.

Sorry. No, sorry. Go on.

Michelle. You had mentioned you had been to a department store, Jim, several weeks ago, and you said it looked like the clothing, none of the lines had changed, everything had been the same. Like it stopped in time. And maybe what you were seeing was what Jim is saying is that nothing had happened. And now we're starting to pick up.

Yeah, it was crazy. So I hadn't been out since March 13th. Right. So I'm like, I guess a lot of people, I buy some stuff online. Everybody knows my favorite designer. It came out on one of the roundtables and I. But. And they don't happen to be here in Atlanta. But anyway, I just wanted to get out and I went in and it was really weird. You know, I was in one of the major department stores in Macy's and then I went to Dillard's, but it was like the shelves were a little empty. It was just weird. And so what they were saying to me, and I actually went over and there was a sign and, and I said, where are those boots? Like, I couldn't find a pair of boots. I was looking for boots. And she said, hmm, we might be getting those in the next maybe two or three weeks. And I thought, what the heck? You know, that never really happens. So I find that really interesting too. You're right. It's like it was lagging. So maybe now we'll have.

And what we saw in the curves is that the retail spending on clothing went down almost 80% between March and April and business spending went down but less. So if you think if you're a clothing store retailer, you have to clear that inventory out. And so you're going to, you're going to lower your prices, you're going to have some empty shelves if you need to. And then we started to see the business spend increase before the consumer spend coming back and now it continues to exceed that pace. So each, you know, I like to look at these correlations between business spending and consumer spending and also the different components of supply chains because you have a manufacturer, you have a distributor, you have a transportation company, you have a retailer and they all work in concert, but not at the same time. And they all have different cost structures, they have different hiring and training requirements. So for example, a manufacturing company, they don't want to get rid of people if they don't have to because it's more expensive to find and train a new employee. And so they're slower to cut heads as opposed to a retailer where they're very quick to cut their staff if they need to, but then it's easier for them to rehire. And so the way they spend both on people, which we see through the unemployment data, and on non people, which is what we see through our data, that tells us an interesting story of what's happening. And one really big bright spot through all of this that I don't see talked about about a lot is the resilience of our supply chains. Going back to the example of food, it's not like you couldn't find any food once in a while. We had a little bit of paper towel shortage and you can't find Lysol cleaner. A couple of things, when you think about the sheer number of products that we buy that are food and other goods related, it's been amazing. They had to be totally repackaged. And when you're dealing with food, that's not a trivial thing because you have all kinds of safety requirements. And we've been able to do that. So the packaging suppliers have responded to that and then all the transportation providers, the truckload shippers, the less than truckload, we've seen air freight have a resurgence because they have really responded to the need to deliver certain kinds of things. In particular it related stuff. And so we've seen them respond. And so I think when people look back at this period of time, that's going to be one of the things that is going to be impressive about the way all of our business relationships really work.

So Jim, you guys do this great thing you call bounce curves. And Michelle and I have, you know, we'll sit over lunch and go through bounce curves and kind of, you really do know. But industry by industry, we see kind of a similar pattern, which is sort of what you're saying, which is the retail is coming back. But then below it you see the, the distribution, the wholesale, and you see the manufacturing. And in computers and peripherals, as one example, we looked at that the other week and we thought, wow, okay, so if retail and spent retail purchasing of computers is coming back, but manufacturing isn't keeping up with that, what happens? Do inventories go down? Do they have to find supply offshore or do the manufacturers really pick up pace? Because it looks like retail is really leading the manufacturing.

And this is where, if you were to think back to your economics classes, this is where you get into pricing, price, inflation, depletion of inventory and these other factors. Because if retailers go and buy everything out of the stores and the manufacturers can't respond fast enough to replenish the shelves, your inventory goes down and your prices go up. So all, you know, all these things start to happen. But if you look at just, just in October, what we saw is that computer wholesalers, the distributors of computer, computer related things, their spending went up over 300%. The electronic stores where people are likely to get things are up 55%. So people are going and buying more IT equipment in stores. Businesses tend to buy direct or they buy straight from the distributors. So you have that mix going on. And then we've seen the biggest jump that we've seen in a while in computer manufacturing, which went up 7%. So for a while the computer manufacturing wasn't going up as much as the consumption of the equipment. So we were wondering if we were going to run into some inventory issues. And so now we're seeing, now that I'm seeing all three of those pieces go up. Okay, that tells me that not only do you have movement on the one end where you have purchases, but for manufacturing to increase, you need to have demand. You need to have confidence that the demand will persist. Otherwise I'm not going to fire up my assembly lines and pay for materials to make things if I don't think I can sell them. And so when I see all those pieces ticking up, it tells me that that supply chain is thriving and pretty confident that it's going to continue to thrive. When you see manufacturers maybe pull back, it's because they can't get materials or they don't really think this is real and they're going to go ahead and they're going to let the shelves go. So, I mean, I'm geeking out again.

But no, no, that's, I think that's helpful for people to understand. Yeah, that's an insight. I didn't think About.

So if you're, if you're a sales leader, then Jim. Or you're a salesperson and you're looking out. You know, just take the US as an example, and you're looking out and you're saying, what sectors? And we already talked about the ones that are coming back. But what sectors should I be focusing on? Where is my addressable market moving? Because we're, you know, what we're thinking is total addressable market is not in the same place now as it was last year. And where is that moving geographically? So if I'm ahead of sales, I'm looking out over the U.S. where do I want to start to point my resources? Certain geographies, certain industries where you'd say, place your bets there.

Yeah, I think you have to look at that combination. I don't think you can say these states are hot. I think you have to look at the combination of the state and the industries in the state or at least factor that in, because the two go hand in hand, different parts of the country. They might be manufacturing driven, they might be transportation driven. Within that, it might be more retail. Florida is much more of a retail consumer economy than anything else, but it's got pockets of it and other things in it. So really drilling in and understanding what happens in that state or even a more narrow geography, I think is. Is really helpful. And the two things to look at, I think, are the types of companies and what they're buying. Because not all sales is vertical. Right. Some people only sell to certain kinds of companies. Others, like, if I'm selling transportation services, I'm selling those to all kinds of companies. And so I want to know. So historically, I've always known the kinds of industries that buy transportation, but I waste a lot of time too, not understanding exactly which companies in those industries do and don't buy. So this combination of what do they buy in addition to what kind of company they are, I think, and then the where they are can help you with all your territory alignment because you can size. You can see who are the buyers, who are the real buyers, what are they buying? When you see things like packaging, for example, some people sell packaging, other companies sell to companies that make packaging, or other companies sell to businesses where the amount they spend on packaging is a good indicator of whether they're growing or not. So if I'm selling to. If I sell to manufacturing companies, one of the key spends I want to see is what are they spending on packaging? Because the more of that they're buying, the more they're moving. So now there's a capacity to buy, there's an intent or a timeliness to buy my products. And I can go in and there's a general happiness probably, and I can go in and I want to sell to that company. So all these factors, the trick is being able to manage the information and not be afraid of it. You know, we've always whined that we didn't have enough data about businesses. So now that we're coming up with more and more data now we need to make sure that we're figuring out with the right tools and the right resources in our companies, how to go and leverage these pieces so that we can win.

So if you're looking at it in a general sense, so if you pretend we're selling a generic business service and we want to look geography geographically, what states are tending to come back stronger than others. Right now, in terms of B2B purchasing.

If you look overall, there's no rhyme or reason to some of this. California businesses are spending more, Michigan businesses are spending more, and they're both kind of locked down. Florida businesses are spending more. Pennsylvania and they're opening up a little bit more. So there's not always a correlation to the amount of shutdown and reopen. Louisiana is a state where the businesses are spending more overall, but they're kind of in this mix. They're shut down largely. You look at the industries in those different places, though, Michigan is automotive, which is actually rebounding still below last year, but has rebounded dramatically. There's also a lot of agriculture that happens there. There's a lot of ag that happens in Florida. There's a lot of tourism. So now you start to look at the still life of businesses in each one of these states and then you can figure out where you want to based on your business, where you want to put your salespeople.

So it's just a whole different way of looking at data. I mean, it's relevant data, it's new data, it's not static. But just looking at this B2B purchasing can tell you a lot about how you can pivot your own organization.

Yeah. Where are the buyers?

Yeah.

This goes back to things we've talked about in the past where a lot of sales and marketing targeting is still based on the industry code and our guess at the size of the business, which makes sense because if I sell transportation services and and my best customers are manufacturing companies with more than $100 million in sales, that's where I want to target. But that data Is notoriously inaccurate. You know, putting a good label on someone and it's not very nuanced. If we really want to up our game, then let's factor in information about, well, what do those companies really buy and how does that change over time? Because it's not as broad as manufacturing. It's manufacturing companies that don't have a fleet of their own trucks that are growing, that package their products in a certain way so that it fits in. Maybe I sell truckload services. So there's far more intelligence that we can gain that can help us refine that view. And we don't want to throw away the industry and the company size view because that's how our brains work. What do they do and how big are they? But there are more accurate indicators of those two factors. We are what we buy. Just like people, we are what we buy. You know, so I buy overalls, you buy suits. So not maybe. And so it tells other things about what we're. What we're all about. And businesses are the same way, right? You go buy 20 fancy suits and it's one. It tells me one thing, and I buy four pairs of Levi coveralls, whoever makes them, and that tells you something else.

So basically, it doesn't matter if I'm selling, oh, I don't know, security services. If I want to understand my total addressable market, Just understanding in the B2B space what accounts, what companies are buying can help me understand the health of the business and can help me understand if they may need my product or service. That's what I'm hearing.

Yeah. As well as other factors like where they operate. That might be a factor, too. Do they have facilities in multiple different states and that's all part of it. Do they have their own fleet of trucks that will influence the kind of security services that you offer them? You know, what kind of neighborhoods are they in? All these. All these factors. There's so much data around us, it's being able to harness that. But I've always believed that the strongest signal is what you buy, just like.

People, you know, you made me think about something when you were talking about the supply chain and you know, we're talking about. One of the things we discussed is that people are buying a lot more groceries, right? And even online groceries, whether it be curbside pickup or they're having it delivered to their home and not eating out at restaurants as much. And that completely shifts how the supply chain even works. Can you talk to us a little bit about that? Because I just think that's really insightful and not something that I've really thought about before, because that can also impact the product and services that you may offer into those types of businesses.

Sure, If. If I'm a food manufacturer and I go through a distributor, and the distributor historically had a certain percentage that they sold to restaurants. Well, the packaging that the restaurant buys things in is different than the packaging that you buy things in at the grocery store. You know, you buy. You buy a small container of ketchup or whatever it is that you're buying. You don't buy a giant slab of turkey. Your packaging is smaller. The packaging is smaller. And that's done for cost reasons because restaurants don't need pretty packaging. They don't need to spend on all this. But the minute we took that mix and we moved it from restaurants to grocery stores, we had to react really fast in terms of packaging things up. And then they go in different kinds of transportation. So instead of maybe a truckload going somewhere, now I have to go with a pallet to 20 locations. So the manufacturer had to adapt and get packaging. Well, the packaging company that sold them the containers had to go and quickly make more of those. They had their own equipment that they had to buy. So you think of the ripple effects through all of our supply chains. I need conveyor belts and different equipment and more, all these other things in order to make the packaging. At the same time, the food manufacturers making and preparing things in different sizes, those have to converge. Now I need different boxes to put that stuff in. I need different transportation providers who all need to get their capacity. They need more trucks, maybe they need more smaller trucks. And the flex that went on with that was incredible. And then it gets out to the stores. Now the stores, they have to change everything. Because at the grocery store, the mix of what they're selling is different than it was a year ago. Because there are a lot of things that were bought more in a restaurant that are now being bought more in the store. And so it opens up opportunities. And this is why I think you haven't seen just a destruction in the number of businesses in the US because there's lots of opportunity for people to start new businesses. That's just food. You think of all this stuff around safety that's going on right now and all the flux that's happening there. It going back to the transportation example, just knowing that your customers are in a certain industry is one thing. But picture the opportunity that transportation companies have had over the last few months. And we've watched many of them really capitalize on this. The whole IT distribution and volume world changed because companies demand for it went through the roof, all the hardware and this is where air freight and truckload and less than truckload all increased. But air freight really jumped because they've got these planes and they've got room for cargo. And companies that buy it are more likely to want it sooner. It's a smaller package, it's a higher value. And so they're more likely to ship that by air freight than a pallet full of bricks. And so things like that start to happen and we don't even see it. But that's the kind of thing that happened and rippled through really quickly. And it created new business opportunities for the people who saw it and were able to leverage the data to know where it was. And so as we think about how do we manage our sales teams in times like this, it's how can we see where the puck is going to go, what kinds of things are happening, what's new that's happening, what's sticking? Is it only a two month opportunity and so I shouldn't invest a permanent infrastructure change or should I rethink the way that I deploy my sales resources? Because a lot of these things are going to be more permanent. That's where data comes into this.

That is really fascinating and it's something that, it's funny you would have thought we talked about this in advance because we are coaching and working with sales leaders on that very idea that it's time to do some discovery within your own business and understanding your business model, how you can recraft and rethink some of the products and services that you are offering out into the market. So it is a great, you know, what is it they say about during times of crisis, it spurs innovation and opportunity.

It certainly does.

Yeah.

Yeah. So we definitely are seeing that pricing.

Is another dimension to that too, by the way, you know, because if you're the first to move in there, you can also, you can come up with creative new pricing strategies to improve your overall profitability. So it's not just where your sales resources are in the sales execution and the prioritization of prospects, but it's also these more strategic things around product positioning and pricing or service positioning and pricing. And that's, that's something that you don't get a lot of opportunities to reset that with your customers. Right. Because you have this inertia of how you've always done business, how your companies operate. But when you see something like this that just Happened. Well, you can go in and you can carve out a whole new space for yourself.

So we were talking about this tool that Corterra has, the economic impact tracker. And Jim, we've been on and played around with this a bit and are we going to get a chance to take a look at this?

Oh we are because it's something that everyone that's listening today can actually access. And we'll send.

I love this. This is available as I understand it Jim, to pretty much everybody that can try this out. But everybody that's watching this, you can geek out on this thing. But Jim, maybe you can kind of give us a test drive and show us how it works and what people can learn from this information.

Sure. Can you see it on my screen?

Yep.

Yes.

Great. So yeah, when the pandemic first started we were getting all kinds of requests for just insight into what was happening and we couldn't answer them fast enough. And we had a lot of our own questions and so we said, you know what, let's take a lot of data and let's put it out there. And so we came up with a series of information around the purchase behavior of businesses and the payment behavior of businesses. And you can slice it by industry, by size of business and by geography. And we're like, you know what, that's going to answer a whole lot of questions. And if people have more detailed needs then they can always come to us. And we have all kinds of other views into it. But if you just go to corterra.com right on the homepage you can click on this. And so one of my favorites is the change in the average spending. So this is looking at the businesses in this case in a state and you can see month over month the change in the average spending. And this data is updated every, every week so you can go in and see the freshest. But I can look at this and I can see overall all industries. You can see New York, see Montana, Wyoming, other places here that are the biggest declines and then areas like Washington that are the biggest gainers. And then I can isolate and I can just look at just small medium businesses, less than 500 employees. And you see Texas, Florida actually doing a little bit better than the overall averages. I can then cut this down, look at certain industries. So these are three digit NAICS codes. So I can go in and look at restaurants and you can see small restaurants. Who's hardest hit? Louisiana. I don't want to be a restaurant owner in Louisiana right now. You also see Maine and New Hampshire and you roll over and you see the values. I can look at overall businesses and see what's happening. So the larger restaurant chains in Louisiana are doing better than the smaller ones. I can also look and see what's happening with, with payment speeds. As I mentioned, these have come back down and here you see the spike. So the late payments went up and then they quickly came back down. And this is why, from a risk standpoint, you can't always trust payment behavior data. Not alone, because what happened, a couple things went on. Weak businesses failed and stronger businesses with more of an ability to pay demonstrated that ability. And the other thing is suppliers kind of forced their customers to pay on time. If you want your next shipment from me, you better pay me for the last one. And so we've seen that come back down. But I can take any of these values and then I can drill in by state. So, so I can just click and here's the state of Florida and I can look at any of these over time for the state, by county. And so again, you've got the geography, the industry, the size of the business, and then several different items around what they buy or how much they're buying and how they pay for it. And then we also have the unemployment rates in here as well, because there is a correlation between the two and it's more than a correlation, there's a relationship. So for example, retail jobs have come back. We're still at unemployment rates that are significantly higher than a year ago, 6.9% with 700,000 new claims yesterday. So it's still high. And in a lot of that we've seen this before. We saw it in 01, we saw it in 08. Just because the economy comes back doesn't mean the jobs do. And when the jobs come back, it doesn't mean they're the same. So after 08, companies realized they didn't need as many people in many cases in order to deliver their goods, they're like, okay, well we're smaller, let's stay lean. And a lot of the job growth that happened over the last 10 years has been in retail related things and consumer services. And that's why those were quick to go away again. So one of the key indicators we watch is manufacturing jobs and they haven't recovered to last year's level. They're still about 5% below where they were last year. So we see the manufacturing spend increase and that's awesome. Next I want to see the manufacturing jobs return because that is the next factor. Right. So Then you have retail demand for my goods. And so the manufacturers gear up and they spend more on the things like packaging and materials they need to make their products. We see that go up and if they believe it's still going to continue, then what's the next thing you do? You hire people. And so you, you have all those different views right here and it allows you to dig around and track and see what's going on.

So say I'm a person who sells restaurant supplies, right. So I ended up in a really bad spot. How could you drill down to understand that? So you might say, okay, what do restaurants look like in terms of their purchases nationally? And then you could take a particular state and you could look there and see geographically because most of them are probably small and mid sized businesses. A lot of them are. And you could probably see the concentration of where the hot areas are geographically.

Exactly. So this is all industries. If I just want to see restaurants in New York by county, I can see different parts, what's happening in each one. And this, you have different factors that are going on. And this will change tonight because they're reimplementing curfews in the New York City area tonight. So yeah, here you can just see color coded based on the spending overall average spending by restaurants, by county.

So I'm looking for greens, right? So I'm restaurant supply salesperson or sales vp. I'm looking for greens. So I'm looking at Long island and I'm looking at certain parts of upstate.

You're looking at Buffalo. You're really looking at Buffalo chicken wings. And it's all about playoff preparation in Buffalo.

Interesting. Okay, so you can literally use this tool to do that and say, okay, I'm going to start moving in that direction. And hopefully, you know, there's a trend week to week that starts to make sense. So it's not jumping all over the map.

Yeah, yeah. And then, and this is where the two sides come in. So in this view we're showing overall what, just what their spending levels are. But in our data we also understand what they're buying. So for those restaurants we know, are they buying food, are they buying beverages, are they buying equipment and supplies? You know, different, your purchases of different things mean something different. One of the encouraging signs in the data for manufacturing companies is they're spending more on equipment, which means, you know, they're, they're upgrading their facilities. Those are investments in future growth and future production, which are positive. So, you know, you can, you can decompose it because as A rule. If the restaurant's spending more, the rising tide will lift all boats. No matter what I sell to that restaurant, I should be in a better position. But it's nice to get a little more granular. And if I'm a food supplier, are they buying more on spending more on food?

Okay, so the manufacturing, I could look at manufacturers and I don't know if you'd look, if you'd be more accurate at like small and mid sized manufacturers because that's going to be more geographic than major manufacturers. But I could tell which manufacturers are up geographically as well.

Exactly. So I can say computer manufacturers. I can look nationally and here's what's going on with computer manufacturers. I can look at just the small ones and see how the map changes. I can change that to food. Food's different. Food is a mix of agriculture as well as livestock and other things. So it has some big swings in it. So you can see that small business California. California small business. Food manufacturing is down 2% year over year and so is their overall. So this comes back to what kinds of businesses are in that state and even that you can get pretty specific about the types of businesses. Is it an ag state or what is it that they're doing? And you can do that across all the different manufacturing 3 digit NAICS codes on, on this site we track it even more detailed. You know, we have it down to the business level so we know which restaurants and which companies are spending what on what and so you can dial things in down to that leaf node.

This is a really helpful tool. So everyone listening, you can look at it, you know today and just like Jim said, you don't want to look at like one week of data and say oh here's my leading indicator. But look at what's happening over time time and you can see some good indicators that might help you understand a little bit more about your business. Now I believe we've got some questions that came in through Q and A. Anyone else? If you have any questions please submit them. But Caitlin's going to give us some of those questions to look at. You're on the hot seat now Jim. The first one. How much of the equation has to do with consumers receiving federal aid during the pandemic? As far as spend are some of corterra economic findings tied to the CARES Act? If Congress doesn't pass another round of aid, how will that affect B2B spending? Good question.

Yeah, it varies by industry but clearly the consumer stimulus helped some businesses. It helped general merchandise stores. Those are the Walmarts and the Costcos of the world. They've done really well. It helped the pharmacy stores, the health and safety goods, the spending by those has gone up because we've gone and we've bought more of those things or we've shopped for more things in those. So giving a check to consumers, that's the kind of store they're going to go spend it on. Probably some Internet, probably some clothing. But when you look at retail, that's the first place that that consumer stimulus will help. There will be some trickle through and you can look at that by different kinds of supply chains. And then there are areas where it doesn't necessarily help like gasoline stations. So when you look at the petroleum, the distributors, the petroleum manufacturers, the gasoline stations, when people are locked at home, it doesn't matter if they have more money in their pocket, they're not going to go spend it on the gas station because they don't have any place to go. So it definitely helped some industries did not help others. But overall obviously it helped because we pumped a lot of money into the economy. When it comes to main street lending, all the other programs that went straight to businesses, ppp, there are lots of different programs. We've looked at it and there's a lot of talk about the fraud in the system. There's always fraud, right? Whenever there's money, there's fraud. So okay, of course we want to get all this guys. But interesting trends we saw when we looked at the different kinds of industries. No one knew who was going to get impacted. Right? When we look back to March and April, none of us knew who was going to be hurt the most. So we can look back now and say you didn't need that money. But a lot of businesses weren't so sure. And so I don't think systematically there was a massive amount of fraud that way. You know, lots of questions around who got the loans based on the banks they worked with and all those questions valid. But when you look at it, there were some industries that it turned out they didn't need it as much as others. Restaurants clearly needed it. They would never have survived. The failure rate would have been much higher other ones. Now we're seeing declines in construction spend but at the time we didn't because what happened early in the pandemic is a lot of heavy construction and a lot of other construction related projects went on or they actually accelerated because I have an office building, my people are working from home, this is a great time to repave the parking Lot. So there were a lot of specialty trade contractors, smaller businesses in the construction industry that took PPP loans where you could look back and say, well, you didn't need it, but they didn't know. So I think on the whole it absolutely helped.

Okay, next question. Are you surprised by any particular industry that did well during COVID Are you surprised by an industry that's underwater during COVID Anything counterintuitive in any of your findings? These are smart questions.

Yeah, I love the counterintuitive stuff. The rest of it. Yeah. One of the ones that jumped out was all the home improvement related stuff. Yeah, interesting. I didn't see that one coming. And I guess I understand it now. People have more time, their commutes down, they're spending more time at home, they're doing things like that. So that was definitely a surprise. I think the persistence of the IT related spend we've talked about, I think I didn't expect. I guess I didn't think it would be going on as long as it is. And so I was conditioned going into it to think that it would be more of a blip. But that's definitely been a surprise. I think air freight being nimble and tweaking their customer base and their sales processes in order to pick up some of that freight spend that needed to find a home. I think that was an interesting surprise. Through the mix of it. Yeah, lots of interesting things, but yeah, those are some of the first things that come to mind.

How are companies using your economic impact tracker to make spending decisions?

And you can.

And can you tell us a little bit about that awesome guitar on your wall? It's a two part question.

So yeah, I play guitar in a rock band. I should have been a rock God, but I wasn't good enough. But still I enjoy playing guitar in a band. I'm a Gibson Les Paul guy that's obviously modeled after a Fender Stratocaster, but those are. That's a board where I keep the various pins of hard rock cafes I've been to around the world. So it's everywhere from India to France and England and all over the United States. So that's the story behind that guitar. And that's why it goes there, because it makes me happy. As far as spending decisions, I think a lot of people are looking at the tracker from the mindset of first of all, credit and sales, which are hand in hand. Right. Credit exists because we're selling new customers. We don't know otherwise. I don't have a credit process. I start with the sales process and then I hire someone to watch my back for the credit process. And so I think that's where people tend to start to use it is who is this company? Where do we need to worry? What kinds of geographies are being hit particularly hard? Or where can we get a little riskier and give bigger credit limits? The salespeople are where do I spend my time and what's happening? So the, that's where they start to get into the actual spending of things. I think it's more around what kind of suppliers do I have to worry about. So I rely on these kinds of businesses to make my business work. Do I have to worry about some kind of supply chain disruption? And that's how people are starting to use the data for gauging their spending. You know, I want to make sure that I just don't have those disruptions. I'm spending money for a reason or where can I help people out? You know, where can I help my suppliers out? Because it's painful to have a disruption. So is there something that I should be aware of where, you know, they might have a hard time getting, getting materials to me that I need to make my products?

Now this question is, I don't know what you can share around this. Where do you get your purchasing data? Who pulls it? Where does it come from?

Yeah, we're a credit bureau. So companies, they share information with us so that they all understand it's all anonymized so they understand the health of the businesses. This is how the consumer credit world works. This is how the insurance world works. This is how the business credit world has always worked. And as I mentioned, credit and sales are companions in this fight. And so it's really just looking at the data through a different side of the Rubik's Cube.

Well, that's, I think all that we have today, all that we really have time for today. And this has been a really interesting discussion. Jim, thank you so much for sharing your time with us and sharing these insights. Anyone remember? Everyone listening. You can go to cortera.com to access the Economic Impact Tracker. Please call us if you have any questions because we do leverage that data and we like to leverage that data for segmentation targeting. We can talk to you about how you can leverage it as well. But we really hope that this has been informative to you. Our next session, we're going to take the next two weeks off with the holiday coming up. Our next session will be December 4th with Mike Figliolo.

Yeah. And we're going to talk about some cool stuff. He wrote a book called the Elegant Pitch, which is about how to get your message across, which is really pertinent now, being able to do that virtually.

Yeah.

Mike comes from a great background, does a lot of teaching in that area. So I think we're going to learn a lot with Mike.

It'll be a lot of fun. And all of you, we want to hear your feedback from Jim Swift. We are going to be sending out the video. Please forward it on please like us or follow us on the Sales Globe YouTube channel and follow our Sales Globe on LinkedIn as well because you can access videos like this. Jim, thank you so much and all. He'll be back. He'll be back in January as we give the state of the year. And then we, we got him on the hook to come back quarterly to give a quarterly readout. So thank you so much for sharing your time with us.

Thank you, Jen.

It was ext. Extremely valuable.

Thanks. Go Bill.

Thanks, everybody.

Thank you, everyone. Have a wonderful weekend.