Annual Sales Planning is an important art, one that has been largely lost in the e-commerce era, as traditional web analytics packages focus on conversions, and not on actual customer behavior measured over time.
Strategically, we want to know what the future holds. We need to be able to react to business trends that are within our control.
In this example, a soft 2009 yields a customer file that is likely to generate a 4.4% decrease in annual sales.
So, what can we do to get business back on track?
First, let's calculate how many new customers we need, in order for the business to be at the same size as last year. In this case, if I increase new customers from 228,094 to 271,500, the annual sales total is constant.
Now, given that new customers dropped from 263,006 to 228,094 from 2008 to 2009, there must be a valid strategy in place to cause new customers to increase to 271,500.
As an analyst, your job is to communicate to your CEO, CFO, and/or CMO what it would cost to acquire enough new customers to keep the business at a flat sales level. If that cost is prohibitive, then it is reasonable to assume that the business will decline.
Next up --- we'll look at what has to happen across customer retention metrics, in order to keep the business flat.