Advanced Strategies for Building a Marketing Forecast

Category

Marketing

Read Time

16 min

Published

14 March, 2024

Building a marketing forecast allows you to make informed and educated decisions about the effectiveness of future strategies within a specific target market.

By conducting marketing research and collating data from previous campaigns, you can gather enough insight to forecast how future initiatives will work.

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Whilst no marketer on earth can be 100% sure of the effectiveness of any campaign, they can feel confident in their decision making by using marketing forecasting as a guide.

Instead of using the marketing budget on a whim, and employing a bit of a trial and error approach to slowly figure out what lands and what falls flat, this process uses real data to direct the focus of marketing efforts going forward.

Building a marketing forecast can sound tricky, as you;re trying to predict what the future might hold, and inevitably, a lot can change.

However, by using the guide contained in this blog post and employing some of the marketing forecasting techniques that we’ve listed,

Let’s start by defining exactly what is meant by a marketing forecast.

What Is a Marketing Forecast and Why Is a Marketing Forecast Important?

Marketing forecasting is projecting future trends, characteristics, and numbers in your target market so that you can predict or ‘get a feel’ for what is going to work.

This process gives you expected numbers based on past campaigns and market research, instead of leaving everything down to chance.

Without this anticipated information, it’s difficult to gauge how well a particular marketing campaign or tactic will perform as you’re pretty much hoping for the best. However, if you can look back on a similar campaign using historical data, it’s a good benchmark for how this sort of thing has worked in the past.

For example: Let’s pretend you’re a bakery. Did you spend a lot of money on a TV advertising campaign last year only to realise that the majority of your customer base were more active on social media? Did this lead you to identify that a TikTok campaign would have been more effective as this is where the majority of your engagement comes from?

Using the scenario above, looking back at this expenditure helps with your marketing forecasting as you would be silly to make the same mistake twice.

You have the data and you know TV advertising didn’t really work, so you can better allocate your marketing budget into social media instead. You’re using the past to forecast the future.

A marketing forecast is not just important for the marketing team; it’s an essential process for the entire business as you want to be confident that you’re contributing to company-wide goals.

We’re breaking down some other reasons as to why marketing forecasting is key:

Revenue brand growth strategy

Business Benefits of Creating a Marketing Forecast

Whilst marketing forecasting can take some time as you need to collate past data and conduct market research, there are lots of benefits to the process.

And as we’ve mentioned above, these aren’t just benefits for the marketing department but the business as a whole. If the product team has an idea for something new, then it’s your job to make sure this is viable before they spend lots of time and money creating it.

Other benefits of creating a marketing forecast are outlined below:

Be more focussed with campaigns

Using predictive customer analytics allows you to better understand user behaviour including how these behavious are likely to generate higher conversion rates. This information enables you to create more tailored campaigns, refining things such as your pricing and product packaging.

Mixpanel Segmentation is a predictive analytics solution which uses advanced algorithms to establish correlations between specific user behaviours and conversion outcomes.

For example you may find that users arriving at your landing page from email campaigns demonstrate a higher likelihood of subscribing to a paid plan. With this in mind, you can allocate additional resources to improve and refine your email marketing strategies.

Marketing forecasting, supported by predictive analytics, provides an in-depth understanding of which marketing channels are set to be the most effective.

Gain a deeper understanding of future trends

Analysing market and consumer data for trend forecasting is a strategic approach to anticipate changes in customer behaviours and purchasing habits over a period of time.

This not only keeps you ahead of competitors but also allows you to pivot to any shifts in the market.

For example, you can anticipate fluctuations in demand for certain products and adjust your strategy to suit. Aside from that, trend forecasting provides important insights into predicting changes in customer behaviours and expectations, offering the opportunity to refine your strategy accordingly.

Improve customer retention rates

Marketing forecasting can help you find customers who might stop using your product or service by looking at churn rate groups.

Once these at-risk customers are identified you can start implementing measures to improve retention and build loyalty. It’s basically your way of pinpointing who is becoming disengaged by your offering, so that you can tailor your approach.

This might include offering them special deals or addressing their concerns to make sure they stay satisfied with your product/ service. You might have to experiment with various marketing campaigns to see which is the most effective.

For example, let’s say you’re a news outlet where people can upgrade to a subscription service to receive the latest stories and insights. For customers who you have identified as having a high churn rate, you might offer them 3 months free. For customers with a medium churn rate, you might offer them 20% discount, and for customers with a low churn rate, you might just encourage them to renew.

It’s about using inverse pricing depending on how likely people are to stop using your products/ services.

infographic showing the impact of inverse pricing

Take a proactive approach to planning

Being proactive in your approach involves anticipating and planning for different scenarios including unforeseen events such as sudden market shifts.

This extends to both external and internal factors, covering changes in economic trends, customer sentiments, technological advancements, or unforeseen challenges in supply chains.

For example, a company prepared for economic downturns might expand its product offerings to cater to a broader range of customer needs, thereby diversifying its revenue streams.

This forward-thinking strategy ensures a robust response to unexpected changes, improving overall business stability.

More accurate budgeting

You can improve your business’s financial management by using budget forecasting which allows you to spend money smarter in different areas.

To do this, cross-reference your sales forecasts with both short and long-term expense projections. This allows for smarter budgeting for different costs, including paid advertising, marketing campaigns, product launch events, and product expenses.

When considering larger investments such as developing new products, the element of risk becomes a significant consideration.

But by having a clear understanding of your company’s future financial landscape it can reduce the level of uncertainty. For example, with reliable budget forecasting, you can confidently make informed decisions, ensuring that a marketing budget is directed towards efforts that align with your business goals.
two cartoon people talking and holding magnifying glass

What Data Do You Need for Your Marketing Forecast?

To create an accurate projection, you will need to consider multiple factors and metrics.

These include:

  • Historical data and market data
  • Market size
  • Target audience

It’s important to be as accurate as you possibly can otherwise you can make costly mistakes.

Overestimating success leads to wasted time and effort but underestimating leaves you unprepared to meet demand.

Let’s start by looking at the importance of collating data.

1.Historical and market data

To create a robust marketing forecast, you need to look into historical data that shows your past marketing performance.

With this, you can analyse trends and patterns from previous campaigns to get an insight into what strategies were successful and which ones fell short.

This retrospective examination helps you understand consumer behaviours, identify peak seasons, and pinpoint any recurring patterns that may affect future marketing efforts.

You should also consider current market data to understand the industry landscape. This involves staying informed about market trends, competitors’ activities, and upcoming opportunities.

By using a combination of historical data with real-time market insights, you can tailor your marketing forecast to align with the changing dynamics of your industry. This ensures that your projections are rooted in both past experiences and current market conditions, thereby improving the overall accuracy of your marketing forecast.

2. Market size

Determining market size involves understanding the potential number of customers for your product. The total addressable market (TAM) represents the maximum revenue a product can generate by multiplying potential customers by the price of the product.

The key to this is knowing who your actual customers are and their genuine spending capacity.

Don’t assume you can easily capture a small percentage of the total market size. Instead you need to show how your product can specifically reach and cater to a particular audience.

Marketing forecasts also demonstrate market potential, indicating your room for growth.

For example, if your sector is real estate or property then fluctuations in housing market interest rates could impact your customers’ willingness to invest in your home improvement tools.

Before making business decisions, analyse such trends to maintain a balanced growth strategy. Additionally, be mindful of natural market fluctuations and sales cycles when pursuing new opportunities, avoiding overreliance on temporary trends.

3. Target audience

Creating buyer personas is an effective way to refine your product’s market positioning by breaking down your target audience into segments.

A buyer persona is a detailed portrayal of a specific customer which allows you to humanise audience data. This involves creating hypothetical individuals that represent different demographics and verticals.

Whilst creating these personas might seem like a time consuming task, once you’ve nailed whom you’re trying to target, it becomes an essential tool that significantly improves your marketing projections.

It’s important to highlight that buyer personas should be flexible. Your target audience is prone to change, so consider the factors influencing their purchasing decisions at different points.
custom illustration showing a woman on a laptop

How to Create a Marketing Forecast

Creating an effective marketing forecast involves a systematic process to ensure you’ve got the right information required to look forward.

We’re taking you through the key steps to help you define your goals, gather historical data, identify key variables, and ultimately build a robust marketing forecast.

Whether you’re predicting sales, understanding market share, or anticipating customer demand, this will help you make an informed and strategic marketing forecast.

Define your goals

Gather historical data

  • Gather information related to the goals you have defined in step one such as sales figures, customer demographics, promotional activities, and any external factors affecting your business.
  • Make sure the data is accurate and complete. Conduct a ‘clean uo’ exercise and discount any data that is not valuable to your marketing forecast.

Identify variables

  • Anlalyse what variables have an affect on your business, such as seasonality, economic conditions, customer behaviours and preferences.
  • Categorise these variables based on their importance and influence. You should also rank them in order of priority so you know what weighting they carry on the effectiveness of your marketing strategies.

Choose your marketing forecasting methods

  • Select the right forecasting methods based on the nature of your data and goals. We’re listing these methods below so choose the right one for your business.
  • Consider the strengths and weaknesses of each method and choose a combination that suits your forecasting needs.

Carry out market research

  • Supplement quantitative data with qualitative insights by carrying out market research, surveys, and competitor analysis.
  • Explore customer preferences, buying behaviour, and nY emerging market trends to improve the accuracy of your marketing forecast.

Build your marketing forecast

  • Develop your marketing forecast using your chosen methods and tools, such as statistical software or spreadsheets.
  • Check your forecasting model by adjusting parameters and testing against historical data to make sure it is reliable.

Make tweaks where necessary

  • Validate the accuracy of your marketing forecast by comparing your predicted outcomes with actual results.
  • Adjust your model based on results, making sure to include feedback from key stakeholders and addressing any concerns.

Consider external factors

  • Monitor external factors that may impact your forecast, such as economic changes or shifts in regulatory environments.
  • Incorporate scenarios and sensitivity analyses to account for uncertainties stemming from external influences.

stationary icons pointing upwards

Marketing Forecasting Techniques

Unless you have a crystal ball, predicting the future is impossible!

However, by extracting the right data and having access to key information about your customers, you can make an educated decision.

There are a range of marketing forecasting techniques which help you gather this information, ensuring your efforts are as strategic and as successful as possible.

Conducting customer surveys

Knowing what your customers think and feel about your product or service is essential.

This is where customer surveys come into play as they allow you to explore potential customers’ views on new products and/ or assess their satisfaction with existing ones.

This helps you with:

  • Understanding customer preferences
  • Collecting insights about your target audience
  • Identifying the price range preferred by customers
  • Gauging perceptions of your brand and its reputation
  • Evaluating the effectiveness of current marketing tactics

Once you have this data, conduct analysis to understand customer sentiments. For example, if a significant majority expresses enthusiasm or excitement for your new product, you can expect a surge in sales when this is launched.

Knowing how your product or service is going to be received in advance is valuable as it’s an indicator of what to expect in sales numbers and profit.

Analysing correlations

You can discover valuable insights by delving into correlational analysis. Essentially, this is a tool that highlights the relationships between your customers and your product.

When looking at the data, you can find how specific features integrated into your website lead to either positive or negative impacts on the overall customer experience. This process is valuable for product managers as it gives them an understanding of the factors within their product line that either contribute to or impede customer engagement.

With this in mind, they can optimise their products for the better to ensure higher levels of engagement. That said, correlational analysis also goes beyond product considerations to cover your marketing efforts.

For example, you might find that customers from referral programs show a notably higher customer lifetime value (CLV) compared to those from social media. This understanding allows you to refine your marketing strategies accordingly, tailoring your approach for improved success.

Seeking executive and expert opinions

Some of the best insights to form your marketing forecast can be gathered from those people sitting right next to you!

Insights from well-informed executives within your company are key as they often know the industry and market better than anyone.

Despite not having concrete numbers to “prove” their opinions, their level of experience gives weight to their perspectives which is very useful when creating your marketing forecast.

A level of accuracy is of course still key, so these opinions should be collected and carefully analysed. One way is using thematic analysis, a method that extracts common themes from qualitative data such as interview transcripts.

Using such detailed techniques improves the reliability of knowledge-based opinions, making your marketing forecasts more informed.

Moreover, integrating these opinions into your forecasting strategy not only adds depth to your insights but also provides a deeper understanding of industry trends from those at the forefront of it.
Internal brand growth strategy

Gathering information from your sales team

Your sales team has valuable insight into the performance of your products, the effectiveness of your marketing strategies, and the overall sentiment of your customers as their job revolves around speaking to customers on a daily basis.

This can be golden when it comes to marketing forecasting so make sure you conduct interviews and surveys with them to extract the information.

However, we should point out that your sales team can only comment on existing products and ongoing marketing efforts. Nevertheless, using the information they give you, along with insights from your sales funnel, allows you to consider how future marketing activities might fare.

Predictive analytics

This marketing forecast technique allows you to build groups based on certain characteristics or behaviours that help you pinpoint product and marketing improvements to enhance conversion rates.

This technique can also help you tailor your messaging for a specific audience, cross-sell and upsell different products based on previous data, and create your pricing structure so that your offering is adorable for your target market.

Implementing time series techniques

Analysing sales patterns through time series techniques allows you to identify trends across different periods, such as the past month, quarter, or year, which can be valuable in predicting future sales.

Understanding growth in the past such as a consistent 3% increase in sales annually for the past three years allows you to anticipate similar growth in the upcoming year.

Having insight into specific time periods is crucial for making strategic decisions in product development and marketing, ultimately contributing to the expansion of your market share. For instance, you can project the volume of items to be sold through your ecommerce channels or estimate the number of customers likely to upgrade to the premium version of your digital product.

Advanced Strategies for Building a Marketing Forecast

Building an accurate marketing forecast is key not only for your marketing team but also for your entire company as it helps you identify what’s working against what’s not so you can better allocate resources.

We’ve provided numerous examples throughout this blog, but it’s pointless consistently spending money on any area of marketing that doesn’t generate any value for the business, whether this is increased market share or higher sales.

Every marketing activity should be contributing to the growth of the business in some way; that’s why understanding your goals is step one of your marketing forecast so you know exactly what to work towards.

Luckily, there are plenty of resources available for you to build a marketing forecast such as speaking to your sales team, seeking expert opinions, and using historical data from past campaigns.

At Canny, we treat your marketing budget as if it were our own, spending it in the areas that generate the most return on your investment. By understanding your goals, monitoring key metrics, and producing in-depth reports, we give you an insight into exactly what’s performing vs what’s not. With this insight, we can build even more strategic campaigns going forward, ensuring your budget and resources are utilised in the right places. Get in touch with our team for an informal chat about how we can help you with your marketing forecast.

Hi, I'm Amy, Content Strategist at Canny. In my day-to-day role, I'm responsible for creating content that gets you noticed and makes you stand out from the competition. Naturally, I love writing and creating engaging copy that brings your brand to life.

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