Forecasting sales plays an integral role in any corporation’s strategic plan for the future. It impacts, investing, hiring, and the overall strategic outlook of the company.
However, for new businesses, it might be challenging to build a forecast without historical data. In this article, we will discuss the importance of designing a customer journey, the use of benchmarks, and finally how to calculate your cost of acquisition.
Designing a customer journey for forecasting sales
A customer journey is the series of touchpoints experienced by our customers with our brand, from awareness until purchase. For example, a customer journey can begin at a social media post, visiting a store, a referral, a Google search, or watching traditional tv ads, to mention a few. Secondly, it can continue by signing up for a newsletter, receiving a coupon, or by remarketing. Finally, it can come close to purchase by scheduling a meeting, a limited time offer, or other sales strategies.
Furthermore, there are touchpoints that are more important than others. For instance, a test drive in the car sales industry. These important touchpoints are known as moments of truth and should have special strategic planning.
Therefore, it’s important to have a map of all the touchpoints that our customers have with our brand. Firstly, because we should work hard to make sure that each touchpoint generates a positive experience. But also, because having a clear map combined with data, we can project how much money could we require to generate a sale.
For example, if you have an estimation of impressions from social media ads, email marketing and search engine, combined with the industry clickthrough rate, open rate, sign-up rate, and/or bounce rates for different digital touchpoints, you can forecast how many conversions you can potentially get.
Sources of benchmark data
So, where do we get our data? There are different sources of data and different levels of credibility. One of my favorite sources comes directly from Google Analytics. You can select your industry and compare your results. You can also reach out to trade associations, consulting firms, and online reports.
How to use the cost of acquisition to finally forecast sales
Once you have all the touchpoints mapped with all the data you can build a journey and view it as a funnel. By implementing your marketing budget, you can calculate the number of impressions you will receive and how many customers will advance to each step.
In this example, we have US$ 3,800 of monthly digital marketing budget, which generated 28 transactions. You can calculate the cost of acquisition by dividing the US$ 3,800 between the total transactions, which in this case is US$ 140. Is it cost-effective? It depends on your product, desired margins, and ROI. In this example, each product unit is sold for US$ 640, leaving a 371% ROI that will cover other expenses in the business.
When you do this type of analysis, you can determine your weaknesses, and also determine if you need to increase or transfer part of your budget to other areas to be more successful. It allows you to see the big picture in terms of digital customer experience, and identify how to adjust your strategy to improve the profit margins.
I hope you enjoyed this post. If you wish to learn more behavior, you can visit my last week’s post on the theory of planned behavior. If you have any questions, please leave a comment below.