Reforecasting Live
A tool to interpret results of a mailing in its early days
Reforecasting Live is a computer model to help interpret the early
days of a mail promotion. Each day, the model looks at sales to date and reforecasts demand for the life of the mailing. It provides two main benefits: 1) labor savings compared with current methods, and 2) reduced temptation to overact to early (and temporary) fluctuations in sales results.
Day-to-day variations in the early "take-off" of
mail promotions often make it difficult to reliably gauge their success, and especially the success of
individual products, until well along into their life. Reforecasting Live cuts that time to just a few days.
How it works, in a nutshell
Although managers often throw up their hands about timing uncertainties in mail order, many aspects of customer buying behavior are predictable. As a simple example, sale catalogs sell faster than regular ones because customers know that supplies may not last. At certain times of year they buy more slowly than others, and so on.
In the first days after a promotion goes "live", many managers have a strong urge to react to what they perceive as "market strength" or "market weakness". But, this urge may cause more mischief than good, because different factors could be causing that supposed
strength or weakness. If sales are running ahead of expectation, for example, the forecaster needs to judge if that means demand is greater than predicted or if this particular mailing is running "early" for some reason. Reforecasting Live automates those judgments based on models of how
those factors have worked in the past. It balances the uncertainty of demand with the uncertainty of timing to make a best-guess prediction of the promotion's true demand.
Implementation
Reforecasting Live is supplied as either a web-based service or a custom-fitted add-in for Microsoft Excel. Either way, you enter the daily sales and the system creates a new forecast of the ultimate demand for the promotion (or the item, if it's being applied to individual products).
Reforecasting Live requires an initial calibration based on your company's history, which typically takes 2 - 3 weeks.
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