Use Customers Gut Instinct to Forecast Demand NOW!
Demand dropped by large for many enterprises. Other businesses just went into survival mode to by on the “save“ side. My observation is that business now tend to assume the worst. Of cause that’s an exercise needed to protect liquidity and let it survive.
But surviving short-term does not equal survival midterm. To survive mid and long-term, you need to be objective. You to size challenges if they are present. Size demand as it comes back. Understand changing customer needs fast.
In other words, flight-mode “on sight” is only viable when you are moving slow enough. So slow that you can get out of the way when a obstacle appears. Now, the speed of your journey is not in your hands. You need a fog light. The stronger the better.
Which fog lights do companies using?
- They look at China
China is 6 to 8 weeks ahead, depending where you are at the global. Many companies observer where they are and how demand evolves.
Clearly the approach has its merits. Still it only looks 6-8 week ahead. It assumes things are same in other reasons. Also it assumes that western worlds is similarly successful to fight the virus as China.
- They take Lehman Crisis as comparison
Companies take the rear view mirror and compare how long it took 2007/2008 that demand came back. This however is an even more odd comparison. The underlying reason for the recession had been quite different.
- Use Data Science for Forecasting
Some companies use data science to predict order income. We at Success Drivers also implemented such systems. Actually the demand forecast e.g. in automotive are pretty impressive. In automotive we calibrated everything at a 3 month horizon. Social and search figures show good predictive power towards short-term demand.
But predictive models -no matter if machine learning powered or not- work only in the boundaries of the known data ranges. A demand drop of 50% have never been witnessed in the data at hand. That’s why those models are quite unreliable right now.
Embracing the Customers Gut
Conventional forecasting approaches are not enough for todays “fog”. But there is a well know method that can complement the existing toolset: Explore customers gut instinct!
Think election polls. There is a poll method call “prediction market” that is collecting the gut feeling and collective wisdom. This method is amazingly accurate in predicting real poll outcomes. Its proven in hundreds of scientific publications.
Lets say you need a car. When someone ask you whether you will buy a car you may say “Yes”. But in economic uncertainty your gut may hesitating to buy. This gut instinct is a great predictor. It summarizes all you know about the future in one readymade feeling.
Tapping on this feeling can help to bring your forecasting to the next level. Is it a crystal ball? Its not as some unpredictable political circumstances may intervene.
Still it is the BEST forecast we can make. It is the BEST information we can base our decisions on. It is the BEST fog light enabling us to drive faster than ever.
How does it work?
When you ask someone a question and then put him under time pressure, people tend to react instinctively. When you then measure to the time needed t answer you have a measure how intuitive the answer has been. That’s the rational of a well-researched psychological instrument called Implicit Association Test.
It is so powerful that it can even reveal hidden, unsaid prejudices against race or sex. We compared implicit predictions with real market dynamics and found it amazingly precise.
Try it by yourself. Its easy to get started and a pilot is affordable to any enterprise.
Think about it 😉
Frank
p.s. if you are in doubt, send me an email to Buckler@success-drivers.com