Model Summary
The Purchase revenue component converts the customers acquired each month (from the “Customers” page) into sales transactions.
For Instance, if you are forecasting 100 customers per month, that means you are also forecasting 100 sales transactions per month (in a simple scenario). Other revenue models work differently, so please refer to the appropriate model for additional details.
Each customer acquired will be added to your customer base for that particular revenue stream and will make repeat purchases at a rate specified by the “Rate of Return Customers” field. Alternatively, customers will leave the customer base, and stop making repeat purchases, at the rate specified in the “Customer Churn” field.
To turn forecasted customers into revenue from purchases just complete this simple 3 step process:
- Link the appropriate Customer Sources to the revenue stream
- Input your assumptions for the required fields
- Click “Save”
| MODEL INPUTS |
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Customer Sources ('Add Source' link)
The specific customer acquisition channels (from the “Customers” page) that will end up purchasing this product or service.
% of Customers from Source
The % of customers acquired from a given channel that will make a purchase through this revenue stream.
Launch
The month you plan to launch this revenue stream and start generating revenue from customers.
# of Purchases per Customer
The average # of purchases made by a customer each month they make any purchase.
Example: If “# of Purchases per Customer” is 3, then each month a customer makes any purchase, they on average make 3 purchases.
Price
The price, or average price, of purchases made by customers.
Transaction Fees
Transaction fees as a % of total sales for this revenue stream (if none enter zero).
# of Days to Get Paid
The number of days between the day a purchase is made and the day the money from the sale is in your bank account.
Rate of Return Customers
Allows you to select the type of repeat purchases you expect customers to make (if any).
Periodic - Indicates a more consistent rate of repeat purchases. Selecting "Periodic" will allow you to establish a repurchase period (i.e. monthly, quarterly, yearly). This is a good option for contract purchases that end after a specific period of time.
Occasional - Indicates a more sporadic rate of repeat purchases. Selecting "Occasional" will allow you to calculate repeat purchases as a monthly percentage of your total customer base. For example, a 100% rate would mean every customer makes a new purchase each month.
Purchase Frequency (if "Periodic")
Allows you to specify the amount of time in between repeat purchases. Calculations are based on "Cohorts," which means customers are separated into groups based on the month they're acquired, and will only make repeat purchases after the period has elapsed.
Customer Churn per Period (if "Periodic")
Specifies the rate at which customers leave before coming back to make the next purchase. This percentage is based on the period specified in the "Purchase Frequency" field.
Customers at Launch (if "Occasional")
The number of customers in your customer base that will make purchases the first month this revenue stream is launched.
Monthly Returning Customers (if "Occasional")
The amount of returning, or recurring, customers each month as a % of your overall customer base. Your customer base consists of all customers that previously made any purchase from you for this revenue stream (less customer churn).
Example: If you had 100 customers each of the previous 6 months, then your total customer base is 600 customers (excluding customer churn).
Customer Churn (if "Occasional")
The monthly rate at which customers leave your customer base and no longer make any repeat purchases.
Example: If at the beginning of the month you have 100 customers in your customer base, and your customer churn is 5%, then at the end of the month there will be 95 customers left in your customer base (provided you didn’t add any new customers for that month).