October 19, 2020

But First, 2021

Let's just use a simple example.

You'll have to forecast where 2021 is headed. It's probably not wise to forecast productivity gains (yet) until the customer proves that the customer spends more in January/February ... probably best to forecast 2019 performance.

But you have all these 2020 customers ... and they need to be forecast properly ... meaning that the QUANTITY of those customers needs to be forecast properly, but potentially using 2019 productivity.

Simple example.

  • 2019 = 10,000 good customers spending $30.00 average in 2019. Value = 10,000*30 = $300,000 actual.
  • 2020 = 10,000 good customers spending $45.00 average in 2020.  Value = 10,000*45 = $450,000 actual.
  • 2021 = 15,000 good customers.
You have choices:
  • 2021 = 15,000 customers * $30.00 spending average from 2019 = $450,000 forecast.
  • 2021 = 15,000 customers * $45.00 spending average from 2020 = $675,000 forecast.
  • 2021 = 15,000 customers * $XX.XX spending guesstimate = ????.
If it's me, I'm going with somewhere between $30.00 and $XX.XX. I'd probably sandbag my forecast and start with $30.00 until somebody in Finance / Merchandising screamed at me in-person or typed a message IN ALL CAPS ... and then I'd budge toward $XX.XX in a begrudging manner, clearly stating what my hesitancy was(is).

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