Multichannel Forensics: Sales Forecast
One of the most simple yet important elements of any Multichannel Forensics project is the five year sales forecast. Our job is to help the Executive team (the "C-Suite", for those of you predisposed to the language of the day) understand what happens to the future trajectory of the business.
This is done by evaluating probabilities. Let's keep things simple, looking at just the twelve month file.
Say we have 100,000 customers who purchased during 2007. In 2008, 50% of these customers purchased again, spending $300 each.
- Sales = 100,000 * 0.50 * $300 = $15,000,000.
Often, 70% of the benefit of a program is in the retention rate ... while 30% is in spend per repurchaser. Your mileage may vary, but this is sort of an average that you can use to track performance.
Here's what you can expect.
- Sales = 100,000 * (0.50 * 1.07) * ($300 * 1.03) = $165.
The impact of the 3,500 customers are multiplied out over the course of five years, yielding a "truer" level of impact on the business.
As an example, download this three-channel spreadsheet, a spreadsheet I generate for the majority of my Multichannel Forensics clients. You'll get to see the long-term impact of short-term changes in strategy.
Labels: Multichannel Forensics
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