One of the most important functions of a Product Manager is forecasting the product development. In order to do that, you need to know how to approach the subject. Today, TimeCamp presents the best forecasting practices for Product Managers.
What Are The Best Practices To Improve Forecasting?
There are 5 ways of improving forecasting:
- Forecast at the right level. Make sure your forecasting is adjusted to the environment. It’s good to take a look at it at least once a month and evaluate whether your forecasting objectives are adjusted to the project’s need. This includes such aspects of forecasting as region or people.
- Review forecasts at an aggregated level. You may be tempted to look at each item’s forecast separately. And there’s nothing wrong with that. But you have to be cautious. If you tally up the forecast for all your items or projects, you have to make sure the forecasts’ objective is clear and consistent. Otherwise, you’ll create a mess. When looking at forecast at an aggregated level, you can easily compare the history of your budgets, projects, and achievements.
- Involve the right people. DMS claims that “whatever mechanism is used to gather the forecast intelligence it must be timely, systematic, and allow for analysis of forecast accuracy.” And you should take that into account when choosing the people who will be your right hand in forecasting. Your team needs to have certain skills in order for forecasting to be competent.
- Review forecast by exception. Make sure that you’re focused on those forecasts which are the most important. Take care of these products that have extremely low or high forecast. Such type of reviewing will make your forecasting more effective.
- Measure and report forecast accuracy. Analyze forecast. See how it changes over time. Check on the team’s progress, who’s doing good and who’s being unproductive. You can create graphs to motivate people. Regularly create reports as it helps to have an insight into forecasts from different periods.
Choosing The Right Forecasting Technique
Troubles on the market, sudden changes in the economy, or seasonality pose challenges to product managers. For these reasons, it’s important to choose the right forecasting technique adjusted to the product and environment. There are many techniques but it’s important to pick the one that corresponds to the business type. We’ll discuss three basic types of techniques: qualitative, time series analysis and projection, and causal models.
This technique is used when there’s little data available. Mostly in the situation when the product is being implemented and introduced to the clients. The most important source for forecasting is using customers’ opinion and human judgments, sometimes a group of experts can be brought together to turn qualitative information into a quantitative evaluation. Moreover, the past data is used to predict future outcomes.
Time Series Analysis And Projection
Time series analysis and projection technique works best if there is a larger data on the product available, even several years. It’s based on the reports from past years and uses them to forecast future results. It also uses mathematic approach. It helps to determine whether there are any irregularities and repeating patterns on the market as well as what are the trends in data and their growth.
Casual models seem to be more complex. The forecast is based on varied factors, for example, the environment, social background, the economy, etc. It combines the data to predict what customers would like to see in the product. However, this technique is more self-governing. It doesn’t require any sophisticated mathematical algorithms.
Forecasting And Revenue
Forecasting is not only about finding the right technique. It’s also about revenue. All you have to do is to take it into consideration while predicting product’s success. And here’s what you can do with it:
- First of all, engage your team in forecasting – simply by co-operating with them on their tasks. Involve them by informing them about the outcomes. It’ll be good for the business and your revenue may increase
- Use the data already collected, especially the one on budgeting. It can help to predict how much money your company will have to spend on the product and how much can be saved.
- Create different models of your product. People are different and the needs and expectations may vary. Also, combine forecasting techniques. You may be surprised how positively it’ll affect the product reception.
- Use time tracking software, such as TimeCamp. Not only for the sake of time tracking but because it has the features of invoicing and project budgeting. With this, you always keep a hand on company’s budget and revenue.
Forecasting requires involvement and openness to different variants. If you found the one that suits you the most, that’s great! But if you feel like you need more, try applying the above tips to your work. Tell us what works best for you in the comment section. Or maybe you have some useful tips? Let us know!
2 thoughts on “Forecasting Best Practices For Product Managers”
Awesome article. Thanks for sharing such amazing tips on Forecasting Best Practices For Product Managers..
Thank you, Rik! We’re happy if it helps!