A Different Approach to Revenue Estimates Leveraging Alternative Data

The latest Data Score Newsletter has been posted.

Explore a fresh approach to revenue forecasting using alternative data, by focusing on the customer journey rather than short-term trends.

In the realm of investment, successful alpha generation?can often hinge on the effective use of alternative data to generate an edge. This article offers an approach to leveraging alternative data, transcending the common usage of transaction data for predicting quarterly revenue. Instead, focus on a wider array of datasets that offer insights into customer acquisition and retention, viewed through the prism of a customer acquisition funnel.

Transaction data has historically been the dataset type that investors have relied on to understand the trends in revenue before the companies report. There are multiple credit and debit card panels available in the US, as well as receipt panels (e-receipt and physical), which generate a lot of use. The feeling from the majority of investors on the buyside?is that it’s getting harder to generate alpha from individual US-focused transaction data providers without more creativity.

Instead of following the traditional strategy around the quarter, I would propose a different approach. While monitoring the point of purchase is important because it’s the critical culmination of any business's ability to monetize their goods or services, there are digital signs throughout the customer journey to understand the underlying trends that are on the path to purchase. Collecting, cleansing, and enriching these digital markers makes it easier to catch inflection points early to get ahead of multiple quarters of results beyond the upcoming quarterly results...

For more details checkout the free post on Substack:

https://thedatascore.substack.com/p/a-different-approach-to-revenue-estimates

Check out past entries of The Data Score here: https://thedatascore.substack.com/