Written by Canny Creative – a regular exhibitor at our marketingSHOWCASE events
Building a marketing forecast allows you to make informed and educated decisions about the effectiveness of future strategies within a specific target market. By conducting marketing research and collating data from previous campaigns, you can gather enough insight to forecast how future initiatives will work.
What Is a Marketing Forecast and Why Is a Marketing Forecast Important?
Marketing forecasting is projecting future trends, characteristics and numbers in your target market, so that you can predict or ‘get a feel’ for what is going to work.
This process gives you expected numbers based on past campaigns and market research, instead of leaving everything down to chance.
Business Benefits of Creating a Marketing Forecast
Whilst marketing forecasting can take some time as you need to collate past data and conduct market research, there are lots of benefits to the process.
Using predictive customer analytics allows you to better understand user behaviour including how these behaviours are likely to generate higher conversion rates. This information enables you to create more tailored campaigns, refining things such as your pricing and product packaging.
Marketing forecasting, supported by predictive analytics, provides an in-depth understanding of which marketing channels are set to be the most effective.
Gain a deeper understanding of future trends
Analysing market and consumer data for trend forecasting is a strategic approach to anticipate changes in customer behaviours and purchasing habits over a period of time.
This not only keeps you ahead of competitors but also allows you to pivot to any shifts in the market.
Improve customer retention rates
Marketing forecasting can help you find customers who might stop using your product or service by looking at churn rate groups.
Once these at-risk customers are identified you can start implementing measures to improve retention and build loyalty. It’s basically your way of pinpointing who is becoming disengaged by your offering, so that you can tailor your approach.
This might include offering them special deals or addressing their concerns to make sure they stay satisfied with your product/ service. You might have to experiment with various marketing campaigns to see which is the most effective.
More accurate budgeting
You can improve your business’s financial management by using budget forecasting which allows you to spend money smarter in different areas.
To do this, cross-reference your sales forecasts with both short and long-term expense projections. This allows for smarter budgeting for different costs, including paid advertising, marketing campaigns, product launch events, and product expenses.
When considering larger investments such as developing new products, the element of risk becomes a significant consideration.
What Data Do You Need for Your Marketing Forecast?
1. Historical and market data
This retrospective examination helps you understand consumer behaviours, identify peak seasons and pinpoint any recurring patterns that may affect future marketing efforts.
2. Market size
Determining market size involves understanding the potential number of customers for your product. The total addressable market (TAM) represents the maximum revenue a product can generate by multiplying potential customers by the price of the product.
The key to this is knowing who your actual customers are and their genuine spending capacity.
3. Target audience
Creating buyer personas is an effective way to refine your product’s market positioning by breaking down your target audience into segments.
It’s important to highlight that buyer personas should be flexible. Your target audience is prone to change, so consider the factors influencing their purchasing decisions at different points.
How to Create a Marketing Forecast
Define your goals
- Understand the goals of your marketing forecast, such as predicting sales, understanding market share or anticipating customer demand
- Drill down into the specific products, services or geographical regions you want to include in the marketing forecast
Gather historical data
- Gather information related to the goals you have defined in step one such as sales figures, customer demographics, promotional activities and any external factors affecting your business
- Make sure the data is accurate and complete. Conduct a ‘clean up’ exercise and discount any data that is not valuable to your marketing forecast
Identify variables
- Analyse what variables have an affect on your business, such as seasonality, economic conditions, customer behaviours and preferences.
- Categorise these variables based on their importance and influence. You should also rank them in order of priority so you know what weighting they carry on the effectiveness of your marketing strategies.
Choose your marketing forecasting methods
- Select the right forecasting methods based on the nature of your data and goals. We’re listing these methods below so choose the right one for your business.
- Consider the strengths and weaknesses of each method and choose a combination that suits your forecasting needs.
Carry out market research
- Supplement quantitative data with qualitative insights by carrying out market research, surveys, and competitor analysis.
- Explore customer preferences, buying behaviour, and nY emerging market trends to improve the accuracy of your marketing forecast.
Build your marketing forecast
- Develop your marketing forecast using your chosen methods and tools, such as statistical software or spreadsheets.
- Check your forecasting model by adjusting parameters and testing against historical data to make sure it is reliable.
Make tweaks where necessary
- Validate the accuracy of your marketing forecast by comparing your predicted outcomes with actual results.
- Adjust your model based on results, making sure to include feedback from key stakeholders and addressing any concerns.
Consider external factors
- Monitor external factors that may impact your forecast, such as economic changes or shifts in regulatory environments.
- Incorporate scenarios and sensitivity analyses to account for uncertainties stemming from external influences.
Marketing Forecasting Techniques
Unless you have a crystal ball, predicting the future is impossible!
However, by extracting the right data and having access to key information about your customers, you can make an educated decision.
There are a range of marketing forecasting techniques which help you gather this information, ensuring your efforts are as strategic and as successful as possible.
Conducting customer surveys
Knowing what your customers think and feel about your product or service is essential.
This is where customer surveys come into play as they allow you to explore potential customers’ views on new products and/ or assess their satisfaction with existing ones.
This helps you with:
- Understanding customer preferences
- Collecting insights about your target audience
- Identifying the price range preferred by customers
- Gauging perceptions of your brand and its reputation
- Evaluating the effectiveness of current marketing tactics
Once you have this data, conduct analysis to understand customer sentiments. For example, if a significant majority expresses enthusiasm or excitement for your new product, you can expect a surge in sales when this is launched.
Knowing how your product or service is going to be received in advance is valuable as it’s an indicator of what to expect in sales numbers and profit.
Analysing correlations
You can discover valuable insights by delving into correlational analysis. Essentially, this is a tool that highlights the relationships between your customers and your product.
When looking at the data, you can find how specific features integrated into your website lead to either positive or negative impacts on the overall customer experience. This process is valuable for product managers as it gives them an understanding of the factors within their product line that either contribute to or impede customer engagement.
With this in mind, they can optimise their products for the better to ensure higher levels of engagement. That said, correlational analysis also goes beyond product considerations to cover your marketing efforts.
For example, you might find that customers from referral programs show a notably higher customer lifetime value (CLV) compared to those from social media. This understanding allows you to refine your marketing strategies accordingly, tailoring your approach for improved success.
Seeking executive and expert opinions
Some of the best insights to form your marketing forecast can be gathered from those people sitting right next to you!
Insights from well-informed executives within your company are key as they often know the industry and market better than anyone.
Despite not having concrete numbers to “prove” their opinions, their level of experience gives weight to their perspectives which is very useful when creating your marketing forecast.
A level of accuracy is of course still key, so these opinions should be collected and carefully analysed. One way is using thematic analysis, a method that extracts common themes from qualitative data such as interview transcripts.
Using such detailed techniques improves the reliability of knowledge-based opinions, making your marketing forecasts more informed.
Moreover, integrating these opinions into your forecasting strategy not only adds depth to your insights but also provides a deeper understanding of industry trends from those at the forefront of it.
Gathering information from your sales team
Your sales team has valuable insight into the performance of your products, the effectiveness of your marketing strategies, and the overall sentiment of your customers as their job revolves around speaking to customers on a daily basis.
This can be golden when it comes to marketing forecasting so make sure you conduct interviews and surveys with them to extract the information.
However, we should point out that your sales team can only comment on existing products and ongoing marketing efforts. Nevertheless, using the information they give you, along with insights from your sales funnel, allows you to consider how future marketing activities might fare.
Predictive analytics
This marketing forecast technique allows you to build groups based on certain characteristics or behaviours that help you pinpoint product and marketing improvements to enhance conversion rates.
This technique can also help you tailor your messaging for a specific audience, cross-sell and upsell different products based on previous data, and create your pricing structure so that your offering is adorable for your target market.
Implementing time series techniques
Analysing sales patterns through time series techniques allows you to identify trends across different periods, such as the past month, quarter, or year, which can be valuable in predicting future sales.
Understanding growth in the past such as a consistent 3% increase in sales annually for the past three years allows you to anticipate similar growth in the upcoming year.
Having insight into specific time periods is crucial for making strategic decisions in product development and marketing, ultimately contributing to the expansion of your market share. For instance, you can project the volume of items to be sold through your e-commerce channels or estimate the number of customers likely to upgrade to the premium version of your digital product.
Written by Canny Creative – a regular exhibitor at our marketingSHOWCASE events
