Seasonal Demand Adjustment Methods

See how easily you can project monthly volumes, predict your business's revenue patterns with precision and plan your production and budget accordingly. Understanding and calculating the seasonality of your revenue can transform how you manage your financial planning. Why Measure Average Volume Demand? Measuring the average volume demand helps you identify patterns in your demand over different periods. By recognizing these patterns, you can adjust your forecasts and budgets to reflect more accurate expectations, preventing potential issues like overcapacity or underproduction. Steps to Calculate Average Seasonality: 1. Collect Data: Gather historical revenue data for multiple years. 2. Calculate Monthly Averages: Determine the average revenue for each month across the years. 3. Compute Overall Average: Find the overall average revenue across all months and years. 4. Determine Seasonal Indices: Divide each monthly average by the overall average to get the seasonal index for each month. Benefits of Applying Seasonal Indices: • Prevent Overcapacity: By anticipating peak periods, you can manage resources better and avoid production bottlenecks. • Optimize Production: Ensure that production schedules align with demand, reducing waste and improving efficiency. • Enhanced Forecast Accuracy: More precise forecasts lead to better financial planning and decision-making. This technique is not only useful when creating monthly budgets and forecasts, but also when crafting long range plans. When we apply the monthly seasonality to the yearly projection, we are able to achieve a granularity that will show us more clearly other aspects of our plan that we are not able to see from the yearly perspective. The capacity constraint is one example. In this case, I have this insight even years ahead to either increase capacity, improve capacity distribution along the year (if possible) or even plan better the volume production. To help you get started, I've created an Excel template for calculating seasonality. You can download it from the link below and integrate it into your budgeting process. https://buff.ly/44WU3tV

Blindly following Google's seasonality adjustment guidance? You're burning budget too fast. Google's own guidance on seasonality adjustments is dangerously oversimplified. They suggest if you expect a 50% conversion rate increase, you should set a 50% conversion rate adjustment. What actually happens is your average CPC increases by roughly that same percentage. This can deplete your budget way too quickly on high-volume days like Black Friday. Instead, here's how the pros approach this: 1. Look at your historical data from previous major sales events. 2. Calculate your actual conversion rate increase (e.g., from 2.2% to 3.36% = 52% increase). 3. Check what happened to your average CPC during that same period (e.g., 25¢ to 31¢ = 24% increase). 4. Review your impression share metrics to see if you maintained visibility. 5. Set your seasonality adjustment based on this complete picture, NOT just on expected conversion rate increase. In many cases, you'll want to be more conservative than your expected conversion rate jump. If your impression share was already high last year with a 24% CPC increase, setting a 30% adjustment (not 50%) might be optimal. This approach prevents prematurely exhausted budgets while still capturing the sales opportunity. Remember: Only use seasonality adjustments for significant events (Black Friday, Cyber Monday), not for minor promotions. And always configure them at the campaign level for maximum precision. Comment "SEASONALITY GUIDE" below to get my detailed step-by-step process for setting up perfect seasonality bid adjustments for the upcoming holiday season. (Side note: Please send a connection request so I can share the guide directly with you - it'll help us avoid delays in getting you this information!) #GoogleAdsStrategy #PPCOptimization #EcommerceMarketing #Seasonalityadjustments #PPC #SEA #SEM

NOT all replenishment methods are created equally. This infographic shows 7 replenishment methods and when to use them: # 1 - Demand Forecasting ↳ Based on: demand ↳ When to use: variable demand, long lead times, or seasonal trends to prevent stockouts or overstock ↳ Replenishment Trigger: inventory required per demand plan    # 2 - Reorder Point ↳ Based on: stock level ↳ When to use: consistent demand patterns, lead times and safety stock can be calculated reliably ↳ Replenishment Trigger: inventory reaches a level that considers average daily sales, lead time, and safety stock    # 3 - Min-Max ↳ Based on: stock level ↳ When to use: stable demand, inventory is used consistently, but occasional fluctuations need buffer coverage ↳ Replenishment Trigger: inventory reaches the minimum level set; the order is to get to the max level.    # 4 - Periodic Ordering ↳ Based on: time period ↳ When to Use: predictable and relatively stable demand ↳ Replenishment Trigger: regular intervals: weekly, monthly, etc   # 5 - Anticipation ↳ Based on: expectations about future outlook ↳ When to Use: high seasonality, promotional campaigns, or events requiring large, proactive stock buildup ↳ Replenishment Trigger: seasonal inventory, expected demand peak, new system implementation   # 6 - Top-off ↳ Based on: production activity and stock levels ↳ When to Use: ensuring storage or line-level inventory readiness before a surge in production or demand ↳ Replenishment Trigger: in down time, bringing inventory forward to reach capacity levels   # 7 - Just-In-Time (JIT) ↳ Based on: demand, consumption ↳ When to use: consistent, predictable production schedules and reliable suppliers ↳ Replenishment Trigger: inventory required for production Any others to add?