A major goal of business reporting is to keep leaders apprised of things that could influence their decision making, so it makes sense that trend reporting should be part of the toolbox. It's important to make predictions about where the business is heading so leaders can capitalize on the opportunities that are presenting themselves. Many people rely on gut feeling when trend spotting, but the best analysis is backed by hard facts and figures.
Create a Hypothesis
What trends are you forecasting? Trend or trending reports can cover just about any area of the business, from how your sales are doing relative to your competitors to what interior decorating colors your customers are going to be choosing next season.
Some businesses have the technological capabilities to plug in every last number they can and let the software identify trends they may not even have thought about. For smaller businesses, you likely will need to start with a hypothesis or a specific item that you wish to forecast.
For example, you might look at your customer data and see how their shopping habits are changing, or you might look at a specific business area and see if your financial performance is aligned to the general direction of your industry.
Data Provides the Fuel
To get a picture of your customer or industry landscape, you need to get hold of every piece of data available to you. Your own financial records are a good start, and you can access up-to-the-minute sector and company data fairly easily online. It also pays to talk to customers. Could you send out a survey to gain valuable insight about possible changes in their needs and behaviors?
Most businesses don't become successful by following the crowd. They find ways to break new ground. Thus, observing your competitors can give you a good picture of their business strategy and what trends they are following. Analyzing your competitors does not have to be hard. By simply reviewing their website, social media and customer reviews, you can get a good idea of what they are doing well or doing poorly.
Digital Tools for Different Types of Trend Analysis
These days, there are a wide variety of analytical tools available to help you crunch the data and see what customers and your competitors are doing online. For instance, Google's Keyword Planner allows you to discover the most-popular search terms used by your target audience, and Google Trends can give you a long-term overview of trends in your industry or market.
For internal trends, a year-over-year comparison indicates how the business is doing on certain metrics against the same time period last year. For instance, you might measure sales of a certain product in February 2019 against February 2018 and February 2017 to predict sales growth in the future. Year-over-year trends are useful, as they neutralize seasonality.
Graph the Data
After describing your hypothesis, the most important part of a trend report is to graph or chart the data. This allows readers to see at a glance the direction of the trend you're analyzing and its likely trajectory in the future. Provide a summary of the trends observed in the graphs. Is this a sudden, strong trend or a trend that has been building over time?
Finally, you need to draw conclusions from your analysis. What's the story behind the trend? What financial, competitive, organizational, technological or other factors explain it? For example:
- Did the business push hard or pull back on its marketing efforts?
- Has there been increased competition in the industry?
- Is the company transitioning out of the growth stage of its life cycle?
- Has the company experimented with sales techniques that have (or haven't) paid off?
- Are customer tastes permanently changing, such that a product is (or isn't) in demand?
The report should end with your best guess as to why the data is showing what it is showing. The best consumer and sales trend analysis writing will always provide context to the data.
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