I think in today’s world that we need to ask PR people to be not just literate, but numerate. What does that mean?
- They need to do basic math correctly. Most PR people think that going from size $100K to size $700K is 700% growth. It’s 600%. I cannot tell you the number of times I have caught this error. Growth % = ((year N+1 / year N) -1). 2.4x is 140% growth. 1.3x is 30% growth.
- They need to understand the law of small numbers as well understanding the scale of large ones. It’s not hard to grow 1000% off a tiny base. And the typical reader response to mega-growth claims is not “wow, look how big you are this year,” it’s “oh, I didn’t know how small you were last year.” In addition, PR needs to understand the scale of large numbers — i.e., that 10% growth off $1B is $100M. Technically speaking whenever company A is growing faster than company B, company B is losing relative market share. However, remember that if you compare a $10M startup that doubled to a $1B that grew 10%, the latter company still had 10x the new sales of the former. So you need to be careful making claims in that light.
- They need to understand how people will react to the numbers. There is tendency in PR to throw out any numbers you can because, sadly, much of the Silicon Valley trade press will consume them wholesale. But PR needs to be careful. Some analysts (e.g., the 451 group) are famous for detailed note-taking and cross-checking and will challenge you if your own figures are inconsistent over time. In addition, there are fairly normal ratios for, e.g., sales/salesperson or revenue/employee so saying one thing definitely implies another. Savvy readers will try to triangulate things like revenue, bookings, or cashflow based on the tidbits you hand out. And if the triangulation produces inconsistent results, it’s going to be a headache for your company and drive credibility questions about the figures and your claims.
- They need to understand what metrics mean. One favorite PR trick is talk about undefined metrics like sales (e.g., “company reported that sales grew 57% last year”). It sounds good. But wait a minute — what’s “sales”? Do you mean revenue (and if so, why not say it) or bookings (and if so, how you define it). Another is to discuss poorly defined product-line growth rates, where companies try to classify anything they can as related to the BNI (big new initiative — e.g., cloud at most mega-vendors). What do those numbers actually mean? If a purchase order has products 1, 2, and 3 on it and has $100K at the bottom, how does the company allocate the sales across product lines and does it do so consistently over time. Product line sales figures might sound meaningful but they are often not. Another favorite is three-division company growing 10% where each division says they’re growing 30%. Hey, wait a minute — that’s not possible.
If you net all this out, the best advice is that PR needs to become more like IR (investor relations). IR people know their numbers. They’re consistent about what they release over time. They understand how people will triangulate and the implications of so doing. And they ensure consistency of the message as told by both the English and the math.
[Rewritten and decomposed from a prior interim version, focusing the content to better align with the title. I removed the “beware of SaaS Companies talking bookings” meme as, while it remains a great topic that raises interesting yellow/red flags, it’s not one you can reasonably expect a PR person to understand or control.]