3 mistakes you may be making in developing your forecasts

1890736_thumbnailsmallSunny with a slight chance of failure?  Does that sound like a forecast you have been putting together for your affiliate program?  With the fourth quarter running rapidly at us, our team is working on their forecasts for each of our clients.  It’s an extremely important aspect of affiliate management, and one that drives the strategy for the month, quarter and year to come.

We create a forecast each year for our clients, then update it on a quarterly basis.  In our affiliate manager training program, MyAffiliateCoach, we spend an entire module on forecasting and goal setting.  During that module we talk about some of the mistakes made in developing a forecast, and that’s what I’d like to talk about today.

But let’s start off with a small confession.  Each and every one of these mistakes I have personally done…… many, many times.  Hi, my name is Jamie, I have, in the past, been a horrible forecaster for my programs.  Ok, I feel better now.

All kidding aside, forecasting is difficult and important.  If you have yet to put together a forecast for your programs, maybe we can help.

There are many ways you can mess up a forecast, let’s go over three of those most common errors:

  • Isolation – Creating a forecast within a vacuum.  I’ve personally created, and seen many affiliate managers create forecasts without any input from other marketing channels or taking into consideration the activities of the entire company.  The foundation of a forecast tends to be historical data, but if you aren’t looking at things such as Catalog drop schedule, consumer promotion schedule, retail store openings, overall online sales forecast, seasonality, nationwide events (elections for example) and other things outside of the affiliate silo, you’ll really be missing out a lot.
  • Identifying your key drivers – There are actions, events, and other items that directly effect the sales of your affiliate program.  Things like how many producing affiliates, average order size, number o contacts and outreach you make, catalog drops and orders per affiliate, are drivers of your affiliate program sales.  Now, yours may be different, but you need to identify those things that directly drive sales and effect the amount of sales of your program.  You need to be a bit scientific about your forecast.  How many affiliates product 5 sales a month, how many $5000 in sales, how many active affiliates producing our average sale amount do we need to hit X amount of sales?  Not identifying these things will make your forecast less accurate, and will increase the difficulty of creating a plan to reach the forecast you create.
  • No trust in the gut – I have put together countless forecasts where I included all my drivers, all the seasonality and even a daily sales schedule based on catalog drops and store openings, only to be told “you need to be 20% higher.  When asked why, the response was – “it just needs to be, my gut tells me we can do more”.  The first time I heard this, after spending about 40 hours developing a scientific forecast, I was like “ok, what the heck, why did I got through this process in the beginning if the sales goal was going to be pulled out of a…. hat?”  Sometimes you either need to work back from a sales number you just have to hit, or you just have to trust your gut and work back from there.  Don’t be too discouraged, use that number, identify your drivers, and work your way back to identify how many and how much of each of those drivers you need to hit those numbers.  Then you can create your plan.

We spend a lot of time developing solid, accurate and achievable forecasts.  When we begin our quarterly planning process, this is where we begin.  It doesn’t necessarily have to be a daunting task, but avoiding the mistakes above is important to be successful.

We’d love to help you develop a forecast and reach it.  If you are interested in our outsourced affiliate management services, contact us at jamie@jebcommerce.com.  Want to learn more about our MyAffiliateCoach program, contact coach@myaffiliatecoach.net.