As you roll out your new products and services to the market, it will be helpful to set goals and create business projections (also called forecasts) your business. Setting achievable, research-based goals and forecasts will help you to project your business growth and determine your business needs over time. I like to create annual and 3-year forecasts. Many companies find value in 5-year forecasts, and that may be a good idea for you as well. I believe that with a small business things can change very quickly, so if you do plan to create 5-year, and often even 3-year forecasts, you should also be prepared to adjust them up or down as your business evolves. When you set your goals and create your forecast, you can either use a top-down approach where you forecast total sales and then assign percentages to each element of your marketing mix, or you can use a bottom-up approach where you forecast each individual element and add up those numbers to get your total. Either method works well, but if you want to dig into the details of your marketing, bottom-up forecasting is great for that.
When you are researching your goals and creating your forecasts, use a combination of internal and external data. What were your sales last year for a similar product? What percentage of your total sales come from this product or service? Are your total sales on an upward trajectory? If so, by what percentage? Is your overall industry growing? By what percentage? How much of the total market do you capture? Will this grow with the introduction of your new products or services? By what percentage? Use these and similar questions to create a spreadsheet (or whatever you use) to forecast your sales in both units and dollars. Estimate your costs based on the fixed and variable costs of your business.
Next, look at your marketing mix. Where do you reach the majority of your customers? Can you pull that lever for your business to increase your overall traffic? Will your conversion rate change if you increase the traffic? If so, by how much? Can you increase your conversion rate? Can you increase the average order value? How will you do those things? Look at each element of your marketing mix to create a plan for how you will achieve your business goals. If you found in your research that you've gained a lot of organic traffic from Pinterest lately, perhaps it's time to try out promoted pins. Or, if you see a significant decrease in traffic from your Facebook ads, maybe you should spend your ad dollars somewhere else until you determine how to better motivate that audience.
If you run a promotional campaign, evaluate your campaign at least once midway through to determine whether you will meet the goals you've set and make adjustments if necessary, particularly if your sales projections are running low. If you begin to fall short of your goals, look at the actual numbers and dig into what needs work. Are your conversion rates especially low for one platform? Exactly which promotions do not meet your expectations? How can you improve those promotions now, or if you choose to run them again? For example, if your Pinterest campaign didn't work out and you used a horizontal image, try using a vertical image to see if that improves the overall Ad performance. Digital campaigns, especially social media campaigns are usually easy to change midway through. Email campaigns can be tested using an A/B process where you send different versions of the same message to large groups of potential customers. If you have multiple emails throughout a campaign, you can make changes to later emails based on the feedback you receive from the first emails. Print campaigns can be costly to change, so it's often better to analyze a print campaign after it ends.
Do you need help with forecasting? We can analyze your sales data and create forecasts for you. Reach out on the Contact Us page and let us know how we can help you estimate the sales for your new products.