How to Avoid Common Forecasting & Planning Mistakes for Brand Launches
How Do You Forecast a Brand Launch? 4 Crucial Steps to Follow
Launching any brand can be a major challenge—and for many of the businesses we’ve worked with, forecasting is the toughest part. AmpliFi’s Jake Chapman recently sat down with our co-founder Nick Lipetzky to walk through some of the most common pitfalls companies experience during the launching stage—and how to avoid them.
Mistakes like relying on past product launches and failing to monitor your product’s performance can lead to costly mistakes that your business simply can’t afford. Here are the four key things you need to keep on your radar when forecasting and planning your next product launch.
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Be cautious and realistic about your goals
The first step in determining how to forecast a product launch is to be both cautious and realistic. As financial consultants to DTC businesses, we see this go in both directions: companies setting a forecast that’s too low often underperform, and companies that set too high of goals may waste capital along the way. Having models developed that account for a variety of scenarios will help you react with confidence and save capital that would otherwise be wasted.
It’s wise to assume your forecast will be wrong, but having models ready for any bumps in the road or unexpected demand will ensure you’re able to maximize profits and adjust your capital allocation accordingly. Remember that new products can take three to six months to really stabilize. Up to that point, your focus will be on building awareness through media and/or online ad campaigns. Building velocity, which we’ll cover below, is an unpredictable process that will need constant tinkering and optimizing.
Of course, it’s nearly impossible to accurately forecast a new product launch. But doing your due diligence to thoroughly monitor and adjust your spending as needed will set you up for success in the long run.
Keep your forecasts as flexible as possible
Building in as much flexibility will provide forecasting models that can adjust quickly to new information from performance, insights from sales and marketing teams, etc. As we said before, it’s rare for a forecast to be correct when launching a new product, so you’ll need to prioritize flexibility and make adjustments as new information comes in.
If you come from the buyer side of things in retail, you know how important flexibility is during a product launch. Buyers are aware of the pitfalls and warning signs of product performance and We‘ll often work with business leaders who aren’t as familiar with the realities of retail and find that they are more likely to believe the buyer and build forecasts around their expectations. They take the buyer’s word for performance expectations and won’t be as diligent with monitoring and adjusting.
By keeping your forecasts flexible and knowing you have to approach a launch with a good amount of caution, you’ll be able to make adjustments that optimize your sales process. You’ll be able to tweak price points, ad spend and promotional offers as needed to meet your buyers where they are.
Rely on the right metrics
Picking the right metrics and information will be a critical part of how you forecast a product launch. Perhaps the biggest metric to avoid while forecasting is revenue or performance of past product launches. We consider both of these to be lagging indicators that don’t reflect the current market or buyer behavior. While revenue is a valuable point of reference, it really has more to do with the retailer’s success—it should never be the guiding factor while making adjustments to your forecasts. Using your strategies from a past launch will mean copying outdated processes and can lead to a set-it-and-forget-it mindset that usually results in underperforming launches and wasted capital. Instead, look at how much your business wants to make this year, and form your forecasts around that goal.
Instead, turn your focus to sales velocity, or how quickly you’re making money off your new product. This is a more forward-focused indicator and can help you truly optimize your sales process.
As we mentioned above, a new product can take several months to stabilize in the market. That means you may not reach your target velocity for a while. And once you do, it’ll be up to your team to decide whether or not to raise the velocity. Sometimes only a certain velocity can be sustained with certain retailers, so it may end up plateauing.
Don’t set it and forget it
Launching is a lot of guesswork, and it’s not easy to merge the data with your goals. But you should never just set a goal and hope for the best. The only way product launches can succeed is by constantly monitoring and adjusting your forecasts, taking into account things like promotional spend, ads, digital marketing, etc. This information all needs to come together in order for you to make the right decisions on the fly. The more information you have available, the better equipped you’ll be to optimize your sales. You’ll know how much inventory is needed at certain times, and if any bumps should come up along the way, your forecasts will be flexible enough for you to accommodate without losing too much capital.
How you forecast a brand or product launch will vary depending on business to business, and as we’ve covered, it will never be a perfect process. If this discussion has helped you identify some issues within your own operation, it might be worth contacting the team at AmpliFi for help smoothing over some of these common pitfalls. Our team is made up of experts who have seen the forecasting of new products time and time again and have helped hundreds of clients navigate even the toughest of challenges.