Forecast Final Christmas Results Now

Dec 06, 2006 2:44 AM  By

Early holiday 2006 results are in…which means you should be able to accurately predict your final results through year-end. By doing so now, you can tweak your marketing and merchandising if necessary to meet your year-end sales and profit numbers.

The basic tool to forecast your results from your holiday catalogs is an accurate response curve. The best holiday curve to use is last year’s actual holiday response curve, assuming your mail dates were roughly the same. So if last year your holiday catalog mailed on Nov. 10 and sales were 30% complete as of Dec. 1, you can use that response curve to project this year’s final sales. If your mail dates changed significantly from last year, however, you need to estimate a response curve based on your best guess using last year’s holiday response curve.

Then you should look at your sales for this November and December compared with last November and December. Are you running ahead or behind last year? You should be able to forecast sales to year-end by taking sales as of Dec. 1 (or sales from Nov. 1 to Nov. 30) and forecasting December sales based on November’s year-over-year performance. In other words, if November 2006 sales were up 18% from those of November 2005, you can reasonably expect that sales for December 2006 will also run about 18% ahead of those for December 2005. The late holiday season (typically the month of December) usually tracks very closely to the early holiday season (the month of November) if your catalog circulation, promotion mix, and number of e-mail contacts are roughly the same.

Of course, there are other factors to take into consideration when projecting sales based on last year’s performance. For instance, how do your peak days this year compare with last year’s? What were this year’s sales from Cyber Monday compared with last year’s? Have your peak days been better, the same, or softer than last year’s?

In terms of specific products, how accurate is your product-by-product sales forecasting? Have some items really taken off and require reorders? Do you see sales accelerating in certain products or product groups in the latter part of the holiday season?

Based on all this information, you can determine if you need to take some markdowns online, send out any late-season e-mail blasts, or consider other strategies to perk up late-season sales.

Jim Coogan is president of Santa Fe, NM-based consultancy Catalog Marketing Economics.