How to build revenue projection?

We've covered the necessary concepts for building revenue projection. Recapping them:

1. Calculate projections bottom-up by calculating them separately for different cohorts (for returning customers) and different channels (for new customers), rather than calculating them top-down.

2. Use historical data (or industry benchmarks, in absence of past data) to create baseline projection for the 3 input factors: a. Retention Rate b. Purchase Frequency c. Average Order Value

3. Apply scenario-based corrections, if historical data doesn't capture them already e.g. impact of seasonality, impact of new price changes, impact of new promotions/campaigns, etc.

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Conversely, common pitfalls for revenue projection are violating these rules:

1. Calculating it top-down e.g. 40% year-on-year growth of current customers/revenue

2. Not considering historical data or industry benchmarks while creating baseline projection

3. Over-estimating impact of new initiatives when they are already factored in the baseline data.