Are You an Ethical Presenter? Oh, Really? (#2)

Mar 16, 2014

Yes, we’re still looking at Constant Contact’s (Nasdaq: CTCT) investor presentation (click here for the original document), and the topic is still how tiny changes in the way we present numbers can have a significant impact on how our integrity and our ethics may be perceived.

The example for this post is the following pair of graphs, presented side-by-side on the same slide, showing paying customer additions. Note the main takeaways CTCT wants you to have, in the titles at the top of each graph. The color coding in the left-hand graph appears to be intended to enable you to make year-over-year comparisons of the four quarters of 2013 versus 2012:

Now look more closely. The left-hand graph does not show customer additions in each quarter – every value in that graph is 35,000 or higher, and every quarter-to-quarter change in total number of paying customers shown in the right-hand graph appears to be less than 25,000. Perhaps the left-hand graph is some measure of year-over-year change, but even if that’s the case, the left-hand and right-hand graphs do not tie to each other in any way that I have been able to figure out. (Perhaps labeling the axes might have helped.)

Also, note the comment below the left-hand graph: “Customer counts rounded to the nearest 5,000.” I can’t think of a valid, honest reason why CTCT would choose to round a bunch of numbers – none higher than about 50,000 – to the nearest 5,000, when it’s obvious that they have the exact numbers of new customers at their fingertips.

Lastly, note the heading above the left-hand graph – “Four consecutive quarters of year-over-year growth. . .” This statement could be the equivalent of saying, “One consecutive year of year-over-year growth.” That just doesn’t seem impressive. Why are they bothering?

Here’s the overall problem: Rather than simply giving investors the raw data – and letting the investors calculate their own derivative metrics – CTCT has chosen to cherry-pick its metrics, present the information imprecisely (i.e., rounded on the left and hard to read accurately on the right) and in a way that the reader can’t get back to the raw numbers, and put a hard-to-validate spin on the results. Even if CTCT’s reasons are completely innocent, their approach is guaranteed to provoke suspicion in the minds of some.

Again I ask: Is the potential benefit of spinning your information worth the potential impact on how you are perceived as a presenter?

“Painting with Numbers” is my effort to get people to focus on making numbers understandable. I welcome your feedback and your favorite examples. Follow me on twitter at @RandallBolten.

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