In competitive, marketing-driven businesses, tactics and spend matters. The ability to attract new customers and retain those customers drive the customer lifetime value.

Your revenue comes from two streams:

1. Returning customers who come back to renew or buy additional, cross-sold, products

2. New customers, who come to your business through a variety of marketing tactics

Each stream is worthwhile estimating, but requires a slightly different approach. Luckily, you're in a strong position of experience and have the data to back it up.

From your past experience, you should have a rock-solid cost of customer acquisition. The number of new customers you can expect in the next year is directly related to the amount you plan to invest in acquiring new customers. With your marketing budget in hand, simply divide:

1. The marketing budget by

2. The cost of acquiring a single customer

Which results in a target number of new customers. Great.

Based on past experience, you should have a good idea about how much a new customer will spend. To estimate sales from new customers, multiply:

1. The estimated number of new customers (from above), by

2. The average spend by a new customer

Is this approach perfect? No. Your cost of customer acquisition could vary wildly between tactics (e.g. viral marketing vs. paid search engine traffic) and demand from your competitors who could drive the prices next year up. Leverage these uncertainties to create a solid high and low case for your forecast.

Simply add your estimates from returning customers and new customers (for both the target case, high, and low cases) to reach a top-level sales estimate. You may need to break it down into meaningful segments, or try a few times to get it right. You're building your business on these forecasts, so they're well worth the effort!

Getting stuck? You can always reach out to a business coach for hands on guidance.