Dun & Bradstreet is offering a free Pipeline Risk Analysis to help firms better understand which opportunities are at risk due to the pandemic. The analysis may also be used for supply chain or portfolio analysis. The Health Scan takes a corporate family tree approach to opportunity analysis that leverages Dun & Bradstreet’s global corporate linkages. Thus, it flags accounts where greater than 20% of their locations are in geographies with commerce and population movement restrictions.
The analysis also identifies accounts located in geographies with restrictions, accounts in industries directly impacted by government restrictions, and firms deemed at risk according to Dun & Bradstreet’s predictive metrics (Delinquency Score, Failure Score, or Viability Rating).
“Our predictive models indicate that companies operating with limited margin are likely to face hardships when their normal operating environment is disrupted significantly,” stated the firm. “Our predictive scores show these populations of companies are more likely to struggle to balance all financial obligations, especially if direct sales are compromised through a change in customer behavior.”
As Dun & Bradstreet delivers both risk (credit, supplier) services and sales and marketing solutions, they are better positioned to offer a hybrid solution that evaluates accounts based upon a series of risk factors.
“By adding ‘risk’ as an additional dimension for account selection in addition to fit and intent, organizations can identify accounts that have the highest likelihood of facing financial strain and potentially going out of business. This helps sales teams prioritize their time and helps marketing teams allocate their limited resources more wisely.”Dun & Bradstreet VP of Product Marketing Deniz Olcay
Olcay also noted that there is an information asymmetry that benefits purchasers. Buyers have a much better understanding of their cash position and risk profile than sellers, resulting in “adverse selection,” to the benefit of buyers.
When modeling for Customer Acquisition Cost (CAC), collections risk is usually not a significant factor in the calculation; however, during a recession, collection costs and delays need to be factored into the CAC calculation. Firms become much more guarded with their cash during recessions, extending payment periods to maintain liquidity.
“Marketers and sellers may not be measured on being able to collect payments, but it has a significant impact on the performance of the business,” said Olcay.
Dun & Bradstreet notes that the pandemic demonstrated how interconnected the global economy has become with problems in one region cascading into others. As always, firms should be selecting target accounts based on fit, intent, and risk. While diversifying your portfolio makes sense as a long-term strategy for hedging risk, it is a poor strategy when near-term risk information is ignored.
“As it relates to go-to-market planning, diversifying your target accounts to reduce risk can hardly be sound advice. But, knowing the risk profile for your ‘basket of accounts’ may protect your organization from missing revenue targets. Now more than ever, teams must keep their emotions in check and make sound targeting decisions based on risk.”Dun & Bradstreet VP of Product Marketing Deniz Olcay
Dun & Bradstreet provided a set of recommendations for “protecting your go-to-market engine.” These include maintaining a centralized repository of customer and prospect intelligence that is continuously updated, reassessing the Ideal Customer Profile in light of new risk factors, and reallocating marketing spend to focus on lower-risk opportunities. Dun & Bradstreet also recommends identifying net-new accounts based on pipeline risk and concentrating on upsell and cross-sell opportunities at stable accounts.
Dun & Bradstreet is also offering Business Insights for Business & Government in the Age of COVID-19. I covered this service last week.