Professor Ian MacMillan: Measuring Consumer Leverage Exposure
Episode Description
The heavy load of consumer debt today poses significant risks to organizations. Even those that dont sell to the consumer market likely have customers who do, creating indirect risk. And even a small rise in consumer defaults could cripple many enterprises that heavily depend on debt transactions. In this short video prepared by Knowledge@Wharton, Ian C. MacMillan, Wharton professor of innovation and director of the Sol C. Snider Entrepreneurial Research Center, offers a simple analytical tool to help managers segment customers into key consumer risk categories just as they segment by demographics, for example -- in order to contain potential losses. The concern is about assessing exposure to credit risk and thats what this tool is all about, MacMillan says. The tool is easy to use and will help enterprises of all kinds to anticipate something that is likely coming down the road fairly soon. This tool can be downloaded free below, or by going to the Discovery Driven Growth website discoverydrivengrowth.com and signing up for the software from the free resources offered there.
Brief Summary
Consumer leverage exposure threatens businesses reliant on credit sales; a new tool helps assess risk and encourages proactive strategies.
Key points
- Consumer Debt Crisis. The average consumer would need 16 months to pay off their debt, highlighting a severe crisis.
- Impact on Businesses. As consumers cut back on credit, businesses will feel the pinch, leading to reduced sales.
- Introducing a New Tool. A simple tool to assess consumer leverage exposure, aimed at helping businesses prepare.
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Episode highlights
- Consumer Debt CrisisThe average consumer would need 16 months to pay off their debt, highlighting a severe crisis.“It would take the average consumer 16 months to pay off their debt.”0:52Dec 17, 2009
- Impact on BusinessesAs consumers cut back on credit, businesses will feel the pinch, leading to reduced sales.“This problem of consumer credit being reduced is going to impact a lot of people.”2:37Dec 17, 2009
- Introducing a New ToolA simple tool to assess consumer leverage exposure, aimed at helping businesses prepare.“We want to be able to give you something that’s easy to use and free.”3:18Dec 17, 2009
