Why my forecast is far off

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The forecast does not match reality. Six causes, and five of them are the data rather than the method.

Symptoms

  • Volume consistently over or under what arrives.
  • The shape of the day is wrong even when the total is close.
  • Particular days are always wrong.

One: not enough history

A new deployment forecasting from a few weeks. Expected, and fixed by importing history rather than by changing anything.

Two: abnormal periods in the history

An outage, a campaign, an unusual month. The forecast learned that those are normal and predicts them again.

Exclude them and regenerate.

Three: holidays not configured

The classic cause of "particular days are always wrong". A missing holiday is a quiet day the forecast treats as a collapse in demand, every year.

Four: business hours wrong

If the hours do not match reality, contact arriving outside them is either ignored or attributed oddly. The shape goes wrong before the total does.

Five: something changed in the business

A new product, a price change, a marketing push, a channel added. The forecast is predicting the old business faithfully.

This is not a fault; it is the forecast needing to be told.

Six: the method does not suit the pattern

Last, not first. Only worth changing after the five above are ruled out, because a different algorithm on bad data produces a differently wrong answer.

How to find it

Look at which intervals are wrong. Whole days wrong points at holidays or hours. Peaks wrong points at seasonality. Everything wrong by a similar proportion points at a change in the business.

See also

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