The 10 laws of forecasting to help brand leaders run their business

Share this story with other MarketersShare on LinkedIn
Linkedin
Share on Facebook
Facebook
Share on Google+
Google+
Tweet about this on Twitter
Twitter
Email this to someone
email
Print this page
Print

Most brand leaders are not very good at forecasting. They either over-think or quite frankly, under-think the forecast.  You have to know your Business:  I do believe that writing a Monthly Report is smart practice. It helps keep your finger on the pulse of the business. 

You need to know the underlying key performance indicators, match those up to the in-market realities of customer market orders on the surface and shortly.  Stay close to your sales team to hear the collection of details that will impact your forecast. 

And as the leader of the team, you have to steady the ship and avoid creating your fluctuations. An excellent question I always ask is “So what has changed since last month that makes us change our number?”  You will find that many times, the number has changed, yet not very little on your business has changed. That makes no sense. Why would you change the forecast?  

Avoid the panic or over-reaction. Communicate with supply chain your high/medium/low thinking so they can decide on inventory to avoid missed sales versus excess inventory.  Help them manage the risk. 

Here are the ten laws of forecasting:  

1. Your forecast will always be wrong.  

Knowing your forecast is wrong the second you release it, will focus you on finding midpoints, not on exactness. The only question that matters is “how wrong is your forecast?” Get the forecast accurate enough that it doesn’t hurt the business too much when it is within a reasonable variation.  

2. Correct predictions are not proof that the forecast method is accurate.

It could have been luck. Don’t just look at the results; look at your methodology. An excellent, reliable method produces consistent forecasts, which month after month will be more important than nailing one period.  Process matters.  

3. All trends eventually end.

No matter how accurately the trend is forecasted, at some point in the future, it will be wrong. Consider what might cause a trend to change (seasonality, new competition, saturated market, etc.) when evaluating a forecasted trend.

4. Complicated forecast methodologies can be dangerous.

Simple forecasting methods are easy to explain, understand, analyze and debug. Complicated methods tend to obscure key assumptions built into the forecast, which can lead to unexpected failures.  It’s ok if your supply chain experts use complicated formulas, but balance that with your instincts. Once you let go of your instincts, your forecast will get worse.

5. The underlying data in the forecast are nearly always wrong to some degree. 

Like forecasts being wrong, so too is the data that you are basing it on. You can have better data. But you will never have perfect data. It is just a question of how far off it is. Therefore, the more data in the forecasting process, the more likely some critical error will be missed.

6. Data that has not been regularly used is almost useless for forecasting.  

Data quality is usually directly proportional to the number of times it has been used on your business. Without regular usage, data errors remain undetected, and inconsistencies develop. It’s better to use reliable data in a forecast even if additional assumptions have to be made in order to use it.

7. Most forecasts are biased in some way — usually accidentally.

It is challenging to eliminate all bias in a forecast since the forecaster always has to make certain assumptions about which factors to include, how strongly to weight them, and which to ignore. And sometimes the bias is intentional.

8. Technology will not make up for a bad forecasting strategy.

Create an appropriate strategy first, then use the technology to make it better. Everyone always thinks the technology will help with forecasting, but if you don’t use your brain and think, the better system will just get you a bad forecast faster.  

9. Adding sophisticated technology to a bad model makes it worse.

If the model is bad, anything you add to it — statistical methods, time-series methods, neural networks, etc. — will make your forecast worse. And now, it will be harder to figure out what is going wrong.

10. Large numbers are easier to forecast than small ones.

With forecasting, everything gets easier as the numbers get bigger. A forecast of unit sales where there is an average of 1,000 units sold per month is a lot easier to get right than one where average sales are 2 per month. It is more about the variability than the size itself.

 

To read how to write a monthly report, click on this link below:

How to write the ideal Monthly Report for your brand. And, why you need one.

 

My new book, Beloved Brands, coming this spring.

How this Beloved Brands playbook can work for you. The purpose of this book is to make you a smarter brand leader so your brand can win in the market. You will learn how to think strategically, define your brand with a positioning statement and a brand idea, write a brand plan everyone can follow, inspire smart and creative marketing execution, and be able to analyze the performance of your brand through a deep-dive business review.

 

 

 

Beloved Brands: Who are we?

At Beloved Brands, our purpose is to help brands find a new pathway to growth. We believe that the more love your brand can generate with your most cherished consumers, the more power, growth, and profitability you will realize in the future.

The best solutions are likely inside you already, but struggle to come out. Our unique engagement tools are the backbone of our strategy workshops. These tools will force you to think differently so you can freely generate many new ideas. At Beloved Brands, we bring our challenging voice to help you make decisions and refine every potential idea.

We help brands find growth

We start by defining a brand positioning statement, outlining the desired target, consumer benefits and support points the brand will stand behind. And then, we build a big idea that is simple and unique enough to stand out in the clutter of the market, motivating enough to get consumers to engage, buy and build a loyal following with your brand. Finally, the big idea must influence employees to personally deliver an outstanding consumer experience, to help move consumers along the journey to loving your brand.

We will help you write a strategic brand plan for the future, to get everyone in your organization to follow. It starts with an inspiring vision that pushes your team to imagine a brighter future. We use our strategic thinking tools to help you make strategic choices on where to allocate your brand’s limited resources. We work with your team to build out project plans, creative briefs and provide advice on marketing execution.

To learn more about our coaching, click on this link: Beloved Brands Strategic Coaching

We make Brand Leaders smarter

We believe that investing in your marketing people will pay off. With smarter people behind your brands will drive higher revenue growth and profits. With our brand management training program, you will see smarter strategic thinking, more focused brand plans, brand positioning, better creative briefs that steer your agencies, improved decision-making on marketing execution, smarter analytical skills to assess your brand’s performance and a better management of the profitability of the brand.

To learn more about our training programs, click on this link: Beloved Brands Training

If you need our help, email me at graham@beloved-brands.com or call me at 416 885 3911

Graham Robertson bio

 

Share this story with other MarketersShare on LinkedIn
Linkedin
Share on Facebook
Facebook
Share on Google+
Google+
Tweet about this on Twitter
Twitter
Email this to someone
email
Print this page
Print

Published by

Graham Robertson

Graham spent 20 years in Brand Management leading some of the world’s most beloved brands at Johnson and Johnson, General Mills and Coke, rising up to VP Marketing. In his career, he has won numerous Advertising, Innovation and Leadership awards. Graham played a major role in helping J&J win Marketing Magazine’s prestigious “Marketer of the Year” award. Graham brings a reputation for challenging brand leaders to think differently and to be more strategically focused. Graham founded Beloved Brands in 2010, to help brands find growth and make brand leaders smarter. He leads workshops to help define your Brand Positioning, build your brand’s Big Idea, and write strategic Brand Plans that motivate and focus everyone that works on the brand. Our Beloved Brands training programs will help your team, produce exceptionally smart work work that drives stronger brand growth and profits. We cover everything a brand leader needs to know including strategic thinking, planning, positioning, execution and analytics. Our robust client roster has included the NFL Players Association, Reebok, the NBA, Acura, Shell, Miller Lite, 3M, Jack Link’s and Pfizer. His weekly brand stories have generated over 5 million views.

Comments: have your say