Of course, being at that knee is associated with a marked increase in the public’s concern for everyone’s safety compared to a week or two ago. However, there continues to be little in the way of practical and fact-based guidance and information for marketing professionals to come up with concrete measures that probably should be undertaken now.

In last week’s blog (click here), I published a compendium of factual information sources. I suggested a) separating accurate reporting of the current public health crisis from media and political attention, and b) 8 practical planning steps for an organization. Many of those planning assumptions rest on the macroeconomic outlook, which in turn depends on an estimate of how much bigger the epidemic will become – or public perceptions of it as that also drives the economy.

How bad will it get?

In that vein of trying to publish rational, fact-based analysis, in the last section of this blog is my prediction of where we stand right now. It paints a milder picture. My review below suggests that the reproduction number (i.e., the number of new people infected by one infected person) in the US has already dropped from a high of 7 or 8 to now almost 2. If this trend continues, it would suggest we’ll be hitting the inflection point of when the epidemic’s growth will begin to decelerate reasonably soon.

One would thus hope for a moderate economic disruption, but don’t forget the economic effects of sensationalizing and fear. A lot of what companies do now depends on their expectations of how bad the economy will get. Depending on that assessment, companies then need to re-forecast Q2 and the rest of the year accordingly. So, the rest of this blog deals with some practical steps marketing and sales leaders can take to accomplish this re-forecasting quickly, as well as with an illustration of how an analyst could assess the epidemic’s likely ultimate size in the US.

A quick, practical approach to re-forecasting 2020 B2B bookings and pipeline

Here is a step-by-step process:

Marketing – Create a top-down booking and pipeline forecast:

1. Take your monthly or quarterly pipeline forecasts for 2020 and make percentage allocations to distribute them into four new, post-COVID-10 buckets:
   1. % of quarterly bookings with no change, i.e., they stay as is
   2. % price reduction needed, i.e., how much that portion of the pipeline is reduced
   3. Reduce closure rates by a %age, either by delaying lead and sales velocities to model later close dates or canceling deals altogether
2. Create high, medium, low estimates of the above, estimated % changes
   1. E.g., segment these four buckets by vertical and grow the forecasts for likely coronavirus gainers (e.g., healthcare, bidets, select tech sectors, etc.) and reduce the ones for losing verticals (e.g., hospitality, some manufacturing, travel, etc.)
3. That results in a new, top-down pipeline and bookings forecast for 2020

Sales – Create a matching, bottom-up forecast for at least the next two quarters:

1. Estimate which deals are at risk of delay, price reduction, and cancellation
2. Create four new columns next to the expected bookings for each deal, i.e., no change, price drop, delay, or cancel
3. Enter the deal amount into one of those columns.
4. And then add up the new totals for each of the four columns to create a unique, bottom-up forecast.

Compare and align bottom-up with top-down forecasts.

1. It is essential to calibrate both approaches against each other because the sales team may have an incentive to forecast low to create a safety cushion. While marketing has an incentive to forecast high to avoid the pressure of having to dramatically ramp up pipeline production to make up for anticipated reductions
2. After calibrating the two approaches against each other, it will be useful to make high, medium and low estimates of the resulting, combined forecasts to model different economic outlook assumptions (see above and bottom)

Plan and model compensatory measures to make up for likely forecast reductions:

1. Identify sales reps and territories that are most likely going to lose or delay sales and focus lead generation on them.
2. Shift marketing spend from events-based lead generation to digital sources (i.e., SEM, social media campaigns, email marketing) and teleselling
3. Ramp up content production, and in particular thought leadership content that is not self-serving in this crisis; people remember who helped them when times were tough

Rerun your forecast/revenue model and implement spend shifts

1. Model in all anticipated changes described above
2. Then layer in the budget shift to/from sales from/to marketing
3. And budget shifts within marketing (e.g., from events to digital)

Handoff to the finance department so they can rerun their company cashflow model and growth projections

As already said, the extent to which you’ll use an approach like the one outlined above to modify your forecast down (or up?) will depend on your assessment of the macroeconomic outlook. This, in turn, should be correlated with the extent of the ultimately resulting epidemic.

However, this raises an interesting dilemma: If you listen to some media coverage and watch stock markets plunge, the world economy may well crater, and we should all prepare for a recession. Which would suggest cutting your forecast to the bone (indeed, one of my pro-bono client’s head of sales just proposed a 90% cut; talk about cya). However, with that comes to the inevitable budget cuts or, worse, layoffs. Once those are executed, it will take months to turn the demand generation machine back on.

Now, what if the epidemic will be milder than it’s hyped up to be (as I’m suggesting in the following section based on China’s precedence and some virus propagation modeling)? If your marketing and sales budgets are cut to the bone, you’d be handing market share to your deeper-pocketed competition if they can hit the ground running faster than you can since they didn’t cut back as deeply.

So, the emotional knee-jerk reaction to the coronavirus of cutting way back risks being a massive over-reaction that would cost you market share. On the other hand, if the economy does indeed falter and you didn’t cut back budgets, you’ll risk making painful losses.

How you square that dilemma all depends on what you think the economic impact will be, and in the sea of contradictory, unclear, and sensationalized information, that’s hard to do. Hence, I’m concluding this post with a description of how I created my estimated outlook of the epidemic’s likely course in the US for the next one or two months as a way to calibrate and ground my thinking in all the noise.

The Estimated Epidemic Spread in the US

Please note that I am not an epidemiologist nor otherwise an expert of pandemics, and I am not a trained medical professional, nor am I trying to render an official prediction here. I am, however, illustrating a reasonably straightforward process a trained analyst could go through to form his/her own opinion, which is needed right now. Your management or board will want your advice on where this is all headed because they need to decide how to adjust the 2020 budgets and growth expectations. This blog aims at helping with the formulation of a well-reasoned response that can be replicated. Vs. Simply reacting from the gut or, worse, from a place of fear.

With that said, my estimation of the pandemic in the US suggests that the inferred reproduction rates underlying the daily infection statistics do not paint a doomsday scenario. I had used the same model with the Chinese infection statistics back in January and February, which predicted a stabilizing of their crisis by the end of March. This is indeed what has been happening there since late February.

Now, applying the same model to the current US data (as of March 15, 2020) suggests that the number of additional patients that a new patient infects has dropped from initially almost 8 to now near 2 (this number is called the “reproduction number” or R₀; for an explanation refer to this Wikipedia link). Once R₀ drops below 1, then more patients exit the infected pool than enter it and the epidemic will begin to die out. Here is the graph of my estimated R₀ for the US for the first 15 days in March:

In China, the similarly estimated R₀ had dropped below two by the end of January when about 8K to 10K patients were infected, and the epidemic peaked out a month later at 81K infected. I.e., an 8X to 10X multiple compared to the number of infected when R₀ had reached 2 for the first time.

Now, assuming that the voluntary quarantining in the US works as well as the government-imposed quarantine worked in China (in either method, the virus runs out of other people to infect), and assuming that similar social contact rates and discipline apply, this would suggest that the US’ total patient count would peak at between 30K and 40K infected (i.e., 8X to 10X over the 3,800 on March 15).

March 27, 2020 Update

Since we published the above estimate, it has become apparent that the number of undiagnosed cases was much more significant than had been published. With an acceleration of the growth of reported infections having additionally come from wider spread testing, not just the underlying spread of the epidemic. You can see the resulting update to the US’ reproduction rate estimate R₀ in the new graphic below.

There is good news and bad news: The good news is that R₀ is falling again in the US (of course, subject to the availability of accurate infection data), and is now again around 1.5. Still, an R₀ of 1.0 or below needs to be reached for the epidemic’s growth to be reversed. The bad news is that two weeks since the last estimate went by without consistently implementing the needed quarantining measures, and between the higher discovery rate due to wider spread testing now and the lack of social distancing (i.e. continued travel, the Miami beach episode, etc.), the virus continued its course mostly unperturbed.

Thus we now have over 100K infected, and assuming by now infection data is accurate and quarantining measures hold consistently (two big ifs, admittedly), and applying the above 8X multiple again would now suggest that the number of infected people in the US should peak out at around 800,000 people.

In these two weeks, the cost of inaction and indecision is these 760K people increase in the size of the ultimately infected population; that’s unfortunately how epidemics work. Second, it has made a damaging economic impact a self-fulfilling prophecy. Dealing with 40K infected and a roughly 4 to 6-week quarantine would have been one problem, coping with 800K+ infected, unprecedented layoffs, and economic contraction is now another. Funny what a difference two weeks make ?

Here is my most current R₀ estimate:

Now, this model’s purpose is to illustrate a simple estimation technique that a marketing forecaster can run to visualize R₀, a critical leading indicator that one should watch if one wants to have a sense of where the epidemic is trending. This model is not an official forecast.

However, if you are interested in a serious simulation of the epidemic, a MUST WATCH for anyone seeking to understand how COVID-19 spreads and what to do to minimize its impact is Grant Sanderson’s “3blue1brown” (deserves a huge Shout-Out). He has produced THE most coherent, yet easy to grasp video of how this epidemic grows and how to contain it. It’s 23 well narrated minutes and can be found here (link).

Important Caveats

1. As mentioned, this is not an official prediction; it is merely my modeling, which only has predicted well once thus far (China). I am not guaranteeing this outcome, and I instead want to illustrate a rational estimation process a business planner could go through.
2. Given the irrationality in the market right now as no one has a good feeling for how big the pandemic will get, the markets’ fears may well make a recession a self-fulfilling prophecy. I can’t model that.
3. And, most importantly, this more optimistic picture should not be taken as a suggestion to not self-quarantine; quite the opposite: The only way to keep R₀ low enough is precisely for everyone to stay home; probably for about the next four weeks if the Chinese experience is any guide (note that four weeks also is roughly the sum of the incubation period plus the probable outer limit of the time one is sick with coronavirus, i.e. it is the outer limit of the time an infected person can pass on the virus).
4. Last, this estimation is only as good as the officially available data. If the hidden number of infections in the US is much higher than what is being reported, the ultimate size of the epidemic would have to be adjusted upward accordingly, but not its principal behavior and timing if the self-quarantining holds.

So, what’s your choice: Hoist more sails, stay your current course, or turn into port?

The post Weathering the COVID-19 storm – How to Quickly Reforecast to not Get Blown Off Course appeared first on Premonio.

And it will mean both challenges as well as opportunities for marketing departments as they will most likely be the ones on the visible frontline of most organizations’ external (and internal) responses to this growing epidemic. Our research suggests that there is little in the way of available guidance out there for marketers, and thus we decided to publish a list of planning steps and information resources grouped around eight key questions you will probably be asked. We homed in on sources of practical information and advice for marketing practitioners so they can stay ahead as this evolves.

1) How bad is it really?

As you’re being asked to craft your organization’s response to COVID-19, it is important to separate the ongoing media event, sadly served up with too much sensationalizing and fake news, from the facts around this epidemic, as well as from personal / employee health risks and estimates of likely business and economic impact. Here are some useful resources grouped in those four categories of information:

• Public health data: This Wikipedia page contains daily information and further links.
• Personal / employee health risks: The Centers for Disease Control and Prevention (CDC) offers guidance for communications and precautions for employees.
• Economic / business impact: McKinsey & Company is maintaining a regularly updated analysis of the virus’s economic implications and the likely business impact.
• News and media fact-checking: A good source is FactCheck.org; enter “coronavirus” here.

2) How bad will it get?

To put the volume of media coverage in perspective, it’s useful to know a bit about how epidemics like the Coronavirus go viral, so to speak. For that, it helps to understand the mathematical propagation models that are quite good at forecasting growth rates, and that also allows modeling the impact of various containment techniques (e.g., quarantine, isolating infected folks, hygiene, etc.).

The links below lead to some beneficial models that you can peruse to deepen your understanding in 30 mins or less, which will help when you’ll be asked the inevitable question of “how bad will it get?”:

• A really useful, 8-minute video about the rate at which viruses propagate to help you intuitively understand the underlying science and modeling.
• The best, up-to-date expansion map for the US and elsewhere is at this propagation map.
• If you’re planning to travel, this interactive map shows airports with the highest risk of spreading the virus; click on “USA” and look for the high-risk airports.
• Coronaviruses: An overview of their replication and pathogenesis.
• And for you geeks, a model of the coronavirus epidemic in a city using Python.

3) What about us? – Revise your growth forecasts to estimate business impact

Now that you know more about how bad the virus epidemic already is and likely will still get, and you have your hands on the pulse of a few, fact-based sources of information, you should partner with sales to see what changes there might need to be made to your short- and medium-term forecast for Q2 and 2020. Here are some considerations:

• Model delayed sales velocity
  Past economic data from similar crises have shown that demand doesn’t necessarily go away and can rebound later. Now, that’s of course not the case for, say. Service industries (an unsold airline ticket can never be sold again), but for software purchases, for example, this crisis may only spell a delay in sales, not a complete cancellation.
• Not attending events
  Events are getting canceled, or attendees are choosing to stay away. It’s prudent to model the compensatory lead generation activities you should launch to make up for lost events leads. For example, how can you make up the difference using, say, online ads, a stronger social media presence, free promotions, or an increase in email marketing?
• Model supply constraints
  Even if you are not producing hardware and you might not be directly impacted (e.g., your team can work from home without loss of productivity), business models that require people to gather will most likely be impacted, some severely (like the travel and hospitality industries). So, if your vendors might be impacted, you should take that into consideration in your updated forecasts, as well.

4) How should we respond externally?

• We’ve been watching the number of COVID-19 related ads and offers increase. The good ones provide advice, and many additional discounts or offer to accommodate delayed closes in anticipation of their customers wanting to conserve cash during the anticipated economic slowdown.
• However, there is a fine line between well-intentioned advertisements, esp. those with meaningful offers, and “ambulance chasing.” This is a difficult time for many, esp. those who caught the virus and being seen as trying to profit from these problems can backfire. As can overt callousness, which now also seems to be on public display.
• Offer to help: People remember those that helped them when times were hard, and so if it’d be meaningful to your organization or those you support to offer assistance, now is the time to do it. Be that shipping needed goods like masks or sanitizer, volunteering, or donating money to worthwhile initiatives, the recipients of your support will be grateful, and one day may even reciprocate or tell others about your generous support.
• Provide guidance to PR about your internal and external response to COVID-19. For some ideas on how to steer your PR team, this link contains useful suggestions. This also means including your PR Crisis Communications team in any external communications about the company, e.g., about the impact of canceling (or not) of live events.
• You might need to replace team members that have to stay home or, worse, are infected, and so it’s useful to line up replacement resources, e.g., contractors that can pinch-hit, as needed.

5) What are liabilities and legal issues we should be aware of?

• Partner with HR and the executive team on consistent communications regarding employee travel, the need or the ability to work from home, or if any quarantine might be needed. Marketing and sales tend to be the teams in an organization traveling the most, and thus having clear and agreed to answers is essential to manage legal risks and potential exposures.
• Liaise with your employment counsel and HR to review employee protections and employer rights under the Americans with Disabilities Act (ADA) and Family and Medical Leave Act (FMLA) as it relates to COVID-19 (i.e., actual or suspected diagnosis)
• Also include your privacy counsel, as well, to be sure you are in compliance with national and regional employee privacy laws as far as what you can ask or reveal about the situation within the workforce.
• Conduct a review of key contracts in your department to ensure each parties’ ability to meet obligations/timelines (e.g. support, product & service delivery, etc.). What are related termination rights? Find out if COVID-19 can fall under Force Majeure clauses.
  • Ensure communication with customers to let them plan and mitigate potential liability on their end
  • Touch base with vendors to see if their ability to provide you services or products will be impacted
• Check your corporate liability insurance; many carriers are dropping coverage of COVID-19, and you want to avoid counting on the coverage when none is available.

(A big shoutout to the Adaptive Legal Group for their contribution to this section)

6) What are our HR and IT policies?

• You should ask HR to publish guidance similar to this link if they have not already done so regarding travel, large meetings, working from home guidelines, and the availability of remote working infrastructure.
• Publish and set up a real-time newsfeed, esp. maps of areas with many outbreaks.
• If your teams are working remotely, ask IT to set up VPNs for your team so you can share sensitive information.

7) Who is most at risk?

• Large teams, large office settings: The more people that work in physical proximity either at the office or at an event, the higher the likelihood they can be infected or, if they already are infected, can pass on their infection. A 3-person company runs a lower risk of passing on the virus than a campus where thousands of employees intermingle. So, the larger your company, the more urgent the need to manage the potential risk of spreading the infection.
• Mortality risk goes up for persons over 50, esp. if they have other health issues such as weakened immune systems and can’t accommodate a risk of infection. The mortality risk of people over 80 is 100 times higher than for kids below ten years of age.
• Facts around mortality rates are at this Slate article “COVID-19 Isn’t As Deadly As We Think.”

8) What personal conduct and precautions should we suggest to our teams?

Don’t just think about avoiding your infection, also think about not passing it on (e.g., avoid passing around cash, don’t touch surfaces, don’t shake hands).

And, of course, advise staff to take the much-published precautions: Hygiene, don’t shake hands, maintain a distance, avoid crowds – “What You Can Do Right Now About the Coronavirus.”

And finally…

Some say that COVID-19 is nothing more than another flu and that it is being hyped by the media. We beg to differ (not to say that much coverage doesn’t do much more than adding to the collective anxieties): Any epidemic that can cost thousands of people’s lives should be taken seriously, and even if the eventual spread can be contained soon, the economic damage that will be done will likely be significant.

Most importantly: The more we do now in the way of prevention, the shorter the outbreak will be. Part of what can and should be done in the form of external communications can and should fall on the shoulders of marketing. Hence this outline of concrete steps marketers can initiate.

Hopefully, you will find this helpful.

The post Practical Marketing Responses to 8 Likely Questions about COVID-19 appeared first on Premonio.