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Guide to forecasting e-commerce and in-store promotions

Sales forecasting is used in marketing and sales to size resource requirements. Indeed, the performance of a company is primarily judged by its cash flow capacity. It allows the company not only to meet the needs of its customers, but also to allocate additional resources in case of unexpected events. However, controlling cash flow does not always make businesses prosperous and profitable. In order to maximize sales and increase revenue, an organization must implement targeted strategies towards its customers. One of the most effective strategies is to optimize promotions. Let's find out how to improve the forecasting of in-store and online promotions.

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Promotion forecasting: what are the principles and challenges?

Presenting the principles and issues of promotion forecasting means exposing, on the one hand, the bases on which promotion forecasting is based and, on the other hand, the benefits that companies can draw from it if the process is carried out according to the rules.

The fundamentals of promotion forecasting

The forecasting of promotions appears to be fundamental nowadays in view of the realities that companies have to face. Studies have shown that more than 50% of organized promotions are not profitable; that is, they do not increase sales. This is the reason why most companies struggle to reach their annual financial and commercial objectives.

Paradoxically, these same promotions account for nearly 20% of sales in supermarkets. If this is a great opportunity for companies to relaunch themselves and to make important profits, they should know how to take advantage of it. A bad conception and realization of promotional actions can be detrimental to their activities. On the other hand, a well planned promotional offer will allow them to generate important profits.

Thus, the fundamental principles of promotional forecasting are:

  • recueillir des données fiables sur la clientèle grâce aux stratégies de contacts multicanal ;
  • utiliser un logiciel CRM, des modèles prédictifs ou une technologie d’apprentissage continue disposant de l’intelligence artificielle (IA) pour modéliser les comportements des consommateurs ;
  • opter pour un mix promotionnel ;
  • adopter la bonne stratégie de pricing.

The challenges of promotion forecasting

Promotional forecasting is beneficial to all businesses, regardless of the industry in which they operate. It allows you to anticipate the needs of your customers and to offer them products that they would absolutely like to acquire. It can also sometimes be about items that they had not even thought of yet. Thus, it is safe to say that one of the challenges of promotion forecasting is to put in place a promotional offer that meets with consumer approval.

The other challenges of promotion forecasting are financial and economic, but also commercial, strategic and tactical. They are:

  • Designing smarter promotions: by using machine learning algorithms to predict promotions, the company will increase the conversion rate of leads. This will lead to an increase in the number of visits to the points of sale and improve their profitability at the same time;
  • Maximizing sales: forecasting allows to create promotions that attract existing and new customers. This will reduce inventory levels and therefore maximize the company's sales on different types of products;
  • Increasing sales: the challenge of any sales forecast is to allow a company to make profits by marketing products that are in high demand by customers. A well-developed promotional offer will facilitate the sale of an assortment of products and therefore maximize the company's sales in this product category. This will contribute to increase its turnover in the medium or long term;
  • Gaining market share: gaining market share is also a major issue in forecasting promotions. Indeed, thanks to a targeted and personalized promotional offer, a company can conquer a market segment and make it evolve. It can thus improve its profitability and make significant profits.

In-store promotions: what strategy to adopt?

Setting the context

Les marques sont de plus en plus confrontées aux défis de la mondialisation avec l’avènement d’Internet et l’évolution des modes de consommation. Ainsi, la fréquentation des magasins a considérablement baissé. Les campagnes promotionnelles sont mises en place pour inverser la tendance. Mais, les choses ne se passent pas toujours comme prévu face à ce nouveau contexte. À moins d’appliquer les techniques de bonne gestion des promotions en magasin ou de recourir à la prévision des promotions, les entreprises doivent assister impuissantes à la baisse de leur chiffre d’affaires.

Brands are increasingly faced with the challenges of globalization with the advent of the Internet and changing consumer patterns. As a result, store traffic has dropped considerably. Promotional campaigns are put in place to reverse the trend. But, things do not always go as planned in this new context. Unless they apply the techniques of good management of in-store promotions or resort to promotion forecasting, companies have to watch helplessly as their sales drop.

Key performance factors of a promotion forecast

While these techniques generally limit inventory loss, they do not guarantee product sales. This is why promotion forecasting is the most appropriate solution to problems of declining sales levels. In a store or in a point of sale, the forecasting of promotions will allow to anticipate the consumers' demand and to identify the products most likely to be sold. To increase the likelihood of a sale and to generate more and more customer demand, a company must:

  • collect sufficient customer data: to do so, it is sufficient to opt for an approach that involves not only the mobilization of logistics, but also of personnel management. Omnichannel allows the optimization of all the communication channels used, which allows the company to mobilize all its sales contacts and therefore to have a significant flow of data;
  • use a CRM software, a predictive model to facilitate the modeling of customer behaviors: with the use of Big Data, the company ensures that it has enough reliable data so that its predictions are still accurate. The only way to manage Big Data is to acquire a self-learning tool or a predictive model. Otherwise, the use of a powerful CRM software is recommended to process the information and transform it into statistics that can be easily interpreted by business leaders;
  • appropriate the techniques and methods of data management and processing: it is totally counterproductive to navigate between the different solutions of data management and processing. The best thing for a company is to appropriate its own tool, to master it and to make it evolve (if possible) in order to adapt it to its needs;
  • use internal and external data to guarantee the effectiveness of predictions: for realistic predictions, a company must process internal and external data. Taking into account the competitive environment and the evolution of the market will allow the company to make fairly realistic predictions about its future promotions.

Using machine learning to boost in-store sales

When it comes to forecasting promotions, machine learning technology can be a great asset for a company, regardless of its size and the sector in which it operates. Indeed, thanks to its algorithm, it will enable it to determine precisely the type of promotions to adopt in order to maximize its sales, maintain its margin and increase its turnover.

The choice of the promotion includes discounts, flash sales, batches and an additional free service, if not to elaborate a promotional mix to increase the interest of consumers for the products in promotion.

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What strategy to adopt for e-commerce promotions?

As mentioned above, consumption patterns have evolved. Today, customers are more sensitive to what they buy and want to know more about the products they are offered. This leads them to constantly compare offers in order to select the one with the best quality/price ratio. The concept of loyalty is therefore no longer very fashionable, especially as consumers have the choice between different ways of consumption. Indeed, we are witnessing more and more the decline of physical stores and the growth of other solutions such as the drive and online sales.

Thus, the majority of brands have a website on which they offer their product catalog. However, although it is very trendy, online sales do not guarantee an explosion of sales and an increase in turnover for companies. Therefore, they resort to the strategy of promotion to make their activities profitable.

In order for the organized promotional campaigns to be a success, these 6 techniques of good management of e-commerce promotions can be applied. Another solution is to forecast promotions. It is an exercise that generally leads to more conclusive results when it is well conducted. To optimize its e-commerce promotions, a company is invited to take into account the key performance factors that have been listed above, namely:

  • collecting enough reliable data;
  • using a predictive model or CRM software;
  • learning data processing techniques;
  • using internal and external data to ensure reliable predictions.

The use of machine learning technology is also highly recommended especially in the case of e-commerce sales where the collection of customer information follows an automated process.

In conclusion, promotion forecasting is an exercise that companies who want to make big profits on their sales and increase their market share must engage in. The important thing is to know the principles behind this activity in order to get more out of it.

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