Identifying Growth Opportunities in 2015

1

These Slides are Dedicatedto Helping You Find More Growth in 2H’15

U.S. EconomyTrends Shaping U.S. Economy

Growth in 2015

Targeting Strategies to Capture

GrowthSize

$17.4T---

Growth2.4%

---Labor Force

156M

Employment Growth

Decline in Energy Prices

Companies without Enough Capital

Significance ofWeb Presence

Buyer Journey Moving Upstream

Seven (7) tangible ideas

you can leveragestarting tomorrow

Growth Requires Understanding atNext Level of Detail▶ Our customers seek to grow faster than the market

• Forecasters estimate the U.S. economy will grow 300 basis points in 2015o 60 basis point rise from 2014 (actual) growth rateo 40 basis points below the forecast six months earlier

▶ To do this, they must “de-average” their views• U.S. economic growth is accomplished through divergent growth rates

among industries and regionso Most “growth industries” (e.g., high-tech, biotech) include sub-industries or segments that are

not growing at allo Moreover, the highest-growing “sub-industries” (e.g., P2P lending $2.2B @ 40,000 bps, tele-

health $2.6B @ 35,000 bps) fall under industries that are far lower-growth

• Executives seek to “de-average” their view of markets• An essential element of strategic and financial planning is taking closer

account of critical trends and risks – with sensitivity to key macroeconomic indicators, government policy responses, and firm-level signals

RecommendationsAre Based on “Trends” and “Spends”

We Look at TRENDS

that Impact Businesses

We Compare TREND

toACTUAL SPEND

for $20B+ Revenue from 30,000+

100-1,000 Employee

Companies

We Outline What “Factors” Suggest

a Business will CHANGE ITS

ACTUAL SPEND based on TRENDS

in the economy

Trend #1: Job GrowthBut few companies are doing all the hiring

U.S. Employment is Rising in Aggregate

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91128000

130000

132000

134000

136000

138000

140000

Tota

l pay

rolls

(mill

ions

)

May 2014

May 2014 marked a turning point in the labor market – as all private non-farm jobs lost since the beginning of the ‘08 crisis were reclaimed

Source: U.S. Bureau of Labor Statistics

However, U.S. Employment Has Returnedin Different Ways

Smaller companies (<499 employees) employ more people than in 2008,

while larger companies (1,000+ employees) employ fewer people than 2008

Source: U.S. Bureau of Labor Statistics, ADP

This Was Evident Again in March 2015in the Government’s Employment Statistics


This Was Evident Again in March 2015in the Government’s Employment Statistics


If It Is Not the F500, then Who Are the Companies Adding All of the Jobs?

Employment Growth Comes in Three (3) Forms

Mom & Pop…& Friend

Add Some Extra Help

Growth Stories

1

2

3

Real Employment Growth Comes from Very Few Companies

Among 100-1,000 person companies, less than 10% of companies expanded at >5%

Share of Companies

Share of Employment

Growth

-25

0

25

50

75

100

20%+ Employment Growth

5%-20% Employment Growth

<5% Employment Growth

No Employment Growth

Negative Employment Growth

Perc

en

t of

Tota

l


While the economy is

growing at ~3%, a small number of

companies are responsible

for the growth

Real Employment Growth Comes from Very Few Companies

These 10% of companies are responsiblefor 75% of the new jobs


Share of Companies

Share of Employment

Growth

-25

0

25

50

75

100

20%+ Employment Growth

5%-20% Employment Growth

<5% Employment Growth

No Employment Growth

Negative Employment Growth

Perc

en

t of

Tota

l

Actively Hiring Companies Spend More

Hiring

Average Spend Per Account, Index

1. Total spend in 2012-2014 with all suppliers/# accounts with non-zero spend with any supplier in any yearNote: Hiring defined as Aggressively/Significantly/Moderately Hiring

All AccountsAll Accounts 250-500 Employees250-500 Employees100-250 Employees100-250 Employees500-1000

Employees500-1000

Employees

Low orNo Hiring

RapidHiring

100

77%

177

Low orNo Hiring

RapidHiring

72

85%

133

Low orNo Hiring

RapidHiring

120

33%

160

Low orNo Hiring

RapidHiring

203

34%

272

Actively Hiring Companies Spend More

Hiring


1. All accounts (100-1000 employees)

20132012 2014

100

219

106

213

113

205

Not Hiring Hiring

20132012 2014

100117

102 112102111

20132012 2014

100

142

102

194

108

160

Example AHigh-Tech Company

Example BBiz Services Company

Example CBiz Services Company

Implications for Targeting1. Apply Sales & Marketing Activity to “Growth

Companies”• Buy lists against “growth companies”• Acquire contacts from “growth companies”• Create acquisition plays against “growth companies”• Score leads highest when they come from “growth

companies”

2. When Engaging, Emphasize “Infrastructure” – as Growth Spend is Disproportionately Biased Towards These Categories• In high-tech, emphasize client system, server, and other fleet

buys• In business services, emphasize furniture, facilities and other

infrastructure areas

Trend #2: Decline in Energy PricesCapture growth driven by increased consumer spend

Energy Created 25% of New Jobs in 2014

The Energy Sector Has Been a Bright Spot

CleanTech Created Lots of High-Paying Jobs in

2014

Metro Area

New Clean Tech Jobs, 2011-2014

1. Albany-Schenectady-Troy, N.Y. 10,0922. Knoxville, Tenn. 8,1843. San Francisco-Oakland-Fremont, Calif. 13,9174. San Jose-Sunnyvale-Santa Clara, Calif. 6,1925. Greenville-Mauldin-Easley, S.C. 3,7236. Kansas City, Mo.-Kansas 3,9327. Toledo, Ohio 2,1758. Chicago-Joliet-Naperville, Ill.-Ind.-Wis. 7,6429. Charlotte-Gastonia-Rock Hill, N.C.-S.C. 2,30910.Cleveland-Elyria-Mentor, Ohio 2,396

Median Wage

Lots of Jobs

Clean Tech ($54K)

All Other ($38K)

Shale Exploration

Energy& Texas

Oil ExportsPort of Houston

becomes #1 export market (was NYC)

Source: Wall Street Journal, Bloomberg, Dallas Federal Reserve Bank

Most Lattice Customers Captured Significant ‘10-’14 Growth from This Segment

Manufacturing

Healthcare

Prof Services

Energy

0 20 40 60 80 100 120

Source: Lattice Customer Data

Growth Index

However, Energy Prices are Declining Globally

Crude Oil Prices 2002-2014, $ per Barrel

0

20

40

60

80

100

120

140

160

2002 20082004 2006 2010 20142012

Brent - Europe

West Texas Intermediate

Source: Bloomberg

Crude Oil Prices 2014 by Month, $ per Barrel

Job Cutsby Industry

Job Cutsby State

As a Contrast to 2014, In 2015 The Energy Industry Is Reducing Employment

Source: Bloomberg

In 2015, Companies Should ConsiderTargeting Strategies for Other Industries▶ Peer-to-Peer Lending Platforms

• 2014 industry revenue: $2.5B• Projected revenue growth (2014-15): >40

percent• Why: Small businesses and consumers are

expected to continue pursuing loans from non-traditional sources as prime interest rate increase.

▶ Medical Marijuana Stores• 2014 industry revenue: $2.6B• Projected revenue growth (2014-15): >40

percent• Why: Growth due to aging population and

growing acceptance of products as treatments for chronic illnesses.

▶ Tele-health Services• 2014 industry revenue: $1.8B• Projected revenue growth (2014-15): >50

percent• Why: Affordable Care Act and other legislation is

expected to raise federal support for tele-health services, helping industry revenue grow

▶ Motion Capture Software• 2014 industry revenue: $1.8 billion• Projected revenue growth (2014-15): >60

percent• Why: Desire for automation in manufacturing

and media industries drives demand for software and components to detect signals

▶ Manufacturing: Silicon• 2014 industry revenue: $4.8 billion• Projected revenue growth (2014-15): >30

percent• Why: Maximum capacity led to rise in prices in

2014; new capacity comes online in 2015 to address appetite from solar and health industries

▶ Manufacturing: Medical Devices• 2014 industry revenue: $15.8 billion• Projected revenue growth (2014-15): >15

percent• Why: Weakening dollar, combined with lower

excise taxes from EU countries, from UK, and from India create expanding market for U.S. production

Source: Economist

Implications for Targeting

3. Create Sector-Specific Target Campaigns• Determine likely needs by industry (e.g., MedDevice needs

high-performance client systems, P2P needs cloud-based IT solutions, tele-health needs access to high-performance servers)

• Create need-aligned plays

4. Expand Customer Database• These industries have thousands of new companies in the past

two years – leading many Lattice customers to find these companies systematically under-represented in database

• Expand database to add new entrants demonstrating high-growth characteristics

Trend #3: Growing Companies Need CapitalFinancing the right companies will drive further growth

Mid-Market and Small Businesses Incurred Most of Job Losses in ’08-’09 Recession


Federal Government Programs ‘09-’13 Pushed $300B of Capital to This Sector

However, Segment Sees Less Capital Due to Lending Standards + Reduced Loan Profitability

1995 2000 2005 2010 20120%

10%

20%

30%

40%

50%

60%

0

200

400

600

800

1000

1200

1400

Small Business Share of Commercial LoansCommerical Loan Balance

Small Business Share of Loans at Banks (%) vs. Total Outstanding Commercial Loans ($ Billions)

Mid-Sized and Small BusinessShare of Commercial Loans

Source: Federal Deposit Insurance Corporation

Challenged Access to Capital Leaves Many Companies Struggling to Expand & Hire

Source: Federal Reserve Bank

Companies With Access to Capital Spend More

Funding


1. Total spend in 2012-2014 with all suppliers/# accounts with non-zero spend with any supplier in any year


Employees500-1000

Employees

No Fundingin 2011-14

Fundingin 2011-14

100

514%

614


Fundingin 2011-14

70

735%

585


Fundingin 2011-14

109

620%

785


Fundingin 2011-14

198

141%

478

High-Quality Companies Promise Growth – But May Need Additional Capital

Source: Lattice Data Cloud; Lattice Customer Data

High-Quality CreditGrowth Signals

No Recent Capital Expansion

Average CreditNo Growth Signals

No Recent Capital Expansion

High-Quality CreditGrowth Signals

Recent Capital Expansion

Change in Spend ‘13 vs. ‘14Segment: 100-250 EmployeesIndustry: All

100

185

380

These companies may be natural candidates

for you to extend financing as part of

outreach


5. Create “Finance + Product” Campaigns• Key criteria

o Growth signalso Strong credito No external capital

• Plays will involve selling product and credit• Best-practice is to complement with email campaign

6. Expand Customer Database• Expand database to add new companies that meet “fit” criteria

and have these characteristics

Drag picture to placeholder or click icon to add

Trend #4: Significance of Web

Shift Towards E-Commerce Creating Lift for Thousands of Mid-Sized Companies

+$40B in annual

revenues per year

Source: US Census Bureau

One Lattice Customer Places “Cold Calls” Based on This – and Has Great Results

Source: Lattice Analysis

$50M - $100M RetailersQ4’14

Other LeadsLattice-Scored

High-Growth Accounts

+40%

Companies With More Intensive Web Traffic Spend More


1. Total spend in 2012-2014 with all suppliers/# accounts with non-zero spend with any supplier in any year


Employees500-1000

Employees

Low Medium High

100

369

203

Low Medium High

78

277158

Low Medium High

134

371

227

Low Medium High

209

529

346

Web Traffic Web Traffic Web Traffic Web Traffic

“Web Traffic” Is At Least As Good of a Spend Predictor as “Emp Count”

High

100-250

Low

Medium

250-500 500-1000

Account Size(# Employees)

Web Traffic Intensity*

203

268

444

100

355

678476

291

173


1. Total spend in 2012-2014 with all suppliers/# accounts with non-zero spend with any supplier in any year*Based on Alexa rank: High – 1 - 1 600 000, Medium – 1 600 000 - 7 000 000, Low – 7 000 000 +


7. Web Traffic Growth is Indicator of Growth• Develop campaigns focused on companies with rapid growth in

web traffic – REGARDLESS of whether or not e-commerce

Trend #5: Buyer’s Journey Moving Upstream

B2B Buyers Consult Multiple Sources Prior to Purchase

Source: Accenture

Buyers Prefer to Do More & MoreResearch on Their Own

Source: Accenture

67% Of the buyer’s journey may happen online…before they reach you

Access to holistic intent data may indicate early buying signals before the buyer even knows they are in the market to purchase.

Kerry Cunningham

Much Decision-Making May Be CompleteBefore They Engage Your Reps

Source: SiriusDecisions

We Are Experimenting with “Intent Data” to Track Customers’ Web Activity

1Billion+ interactions per month

2000+ topics of interest

1000s of publishers

Five Use Cases Are Targeted with Intent Data

Find companies most likely to buy

Find your most sales-ready leads

ACCOUNT PRIORITIZATION

LEAD PRIORITIZATION

2

3

4

Find customers most likely to buy more

CROSS-SELL/ UP-SELL5

RETENTION Find customers most likely to churn

PROSPECT DISCOVERY1

Find net new prospects


8. (Future) Leverage Customer Intent Data• Lattice has access to data that captures customer web searches

and content consumption for 2,000+ topics• The above can be used in a variety of ways

o Source new accountso Score leadso Find cross-sell opportunities

• Lattice can explain how to become a beta customer for this new offering