As CMO, the responsibility of the marketing department falls solely on your decisions and predictions. Part of your responsibility is to give your best prediction for the future performance of the marketing and sales team. The executive team and board rely on your marketing forecast to predict future performance and optimize your product and strategies. Your marketing team should map out your goals each year & assess goal achievement quarterly. A clear understanding of what direction you want your team to go and how achievable these goals are will serve as a strong guide for more accurate forecasts.
What is Marketing Forecasting, and Why is It Important?
Marketing forecasting is defined as an analysis that projects the future trends, characteristics, and numbers in your specific target market. This provides your team with anticipated numbers that a company expects based on market research.
The use of historical data and market research will help your marketing team with expectation setting, forecasting, and predicting future sales, different growth targets, and other KPIs. A marketing forecast is not just important for marketers; it’s important for the entire business.
Reasons Why Marketing Forecasting is Important
- Set timelines to achieve goals
- Identify any issues early on
- Track progress against forecasts
- Spend and allocate your marketing budget more efficiently for the possible ROI
- Optimize marketing plans and campaigns
- Better allocation of marketing budget
- Insight into future trends in your market or industry
- Encourage growth
What Data Do You Need?
To get accurate measurements, you will need to consider numerous factors and metrics. Some of these include:
- Funnel metrics - web visits, leads, MQLs, SQLs, sales, revenue (Download Your Funnel)
- Goals as defined by you and your marketing team
- Take into account seasonality or any other outside factors that affect performance (Pandemic, Recession)
9 Steps Toward More Accurate Marketing Forecasts
1. Define Your Goals
To forecast marketing plans effectively, you must begin by setting specific, measurable goals for your team. There are several different frameworks for setting marketing goals, but you should ensure that they are always very specific, measurable, and achievable. (i.e., SMART goals) If your goals fail to satisfy the smart criteria, then you will certainly have analytical problems. Be sure to take a look at our eBook on Goal Setting.
2. Choose Metrics
When it comes to forecasting, you will want to pick the best KPIs and metrics to accurately measure the success of a business relative to your goals. Forecasting marketing metrics helps you benchmark those metrics to track moving forward as your marketing plan unfolds.
3. Scenario Forecasting
Prepared marketing teams will use scenario planning for best and worst case circumstances. In scenario forecasting, you create underachievement and overachievement scenarios. This helps account for quickly adapting to changes in the market landscape or new corporate initiatives.
4. Leverage Historical Data
Companies can use data from past marketing plans and campaigns. Make sure your data is being pulled from reliable tools and platforms.
5. Industry Benchmarks
Use data from other companies or industry data. By using comparable companies with your industry, niche, or market, you can get a better idea of your forecasts moving forward.
6. Create a Marketing Plan
Your marketing plan will contain your campaigns and marketing channels. When creating scenarios for your marketing plan, your first step is to define a new set of goals based on under- or over-performance. Once the objectives are established, create a set of goal-based scenarios triggered by pre-defined potential outcomes. These scenarios are designed to prepare you for dealing with bumps in the road that cause underperformance or leverage overperformance to supercharge your marketing. You can read more here.
7. Allocate Budget
Setting your budget is an important aspect of marketing forecasting. Your budget directly affects the success of marketing plans. Furthermore, you must allocate a marketing budget to forecast campaigns and channels.
8. Factor in Your Marketing Expenses
Make sure you are including all expenses when going through the marketing forecasting process. This includes all employees and contractors, software, platforms, and tools - all of which will help you execute your new marketing plan or campaign.
9. Set Forecasts
Once you have followed the steps above, you can set your marketing forecasts.
Track Your Progress
As you move forward with your plan, track your progress against your forecasts. Can overachievement or underachievement be explained?
Your forecasts do need to be set in stone. Rather, they should be adjusted or updated as needed. It’s important to reset your forecasts as needed.
To get more accurate marketing forecasts, here are some techniques to use.
Correlations are useful for marketing forecasting. Correlation analysis is a technique that aids marketers in making more impactful predictions based on patterns in data, analyzing the strength of a relationship between two variables.
Predictive forecasting is an extension of forecasting, providing people with helpful analytics and insights through estimating or predicting future trends and events using current and historical data.
Consumer surveys can help get a better understanding of how customers feel about existing products or services.
Industry Expert Opinions
These are simple knowledge-based opinions you can obtain from well-informed executives in your company and external experts in your industry. While they may not have hard numbers to “prove” their opinions, their extensive experience lends much weight to their views and can be helpful in forecasting.
Working with your sales team, you can leverage sales patterns. You can also talk to the members of the sales team to get their opinions and insights.
In Closing: Getting Accurate Forecasts
An accurate forecast is very important not only to your marketing team but to your entire organization. Luckily, there are plenty of resources available, including your own historicals and data from competitors within your industry. You should make sure your team is consistently tracking progress against goal achievement.
Adjustments to your forecasts may be needed, but as long as you continue to show great communication with other members of the C-suite and board, your relationship should grow stronger, and you will begin to build trust among the rest of your team.