Black Friday Marketing: Here’s Why It’s Wrong To Prioritize New Customer Acquisition During the Holidays (at the expense of existing customers)
Marketing leaders love to talk about emphasizing "retention" and "loyalty". But when it comes to the holiday/shopping season, most will go back to old-fashioned, perhaps outdated, tactics. Even though the data begs otherwise
Earlier this year, CommerceNext conducted a large-scale survey among retail marketing leaders. And while, as we mentioned a few weeks ago – many marketers like to talk about how important Retention, Customer Data Platforms, and Actionable Data are – when push comes to shove, most will revert to old-fashioned, perhaps even outdated, tactics.
For example, “Retention/Loyalty Marketing” was named the area where CMOs are looking to increase their investment the most. And within it, “scaling segmentation” – an essential requirement for a proper retention/loyalty strategy – came in second as the biggest challenge in retention marketing.
But, when asked about prioritizations for the all-critical, make-or-break, Holiday/Shopping-Season, that same “Retention/Loyalty” was named the 3rd most prioritized aspect during the holidays by Digital First retailers. “Incumbent” retailers named it just 4th.
Losing to, of course, “Acquisition”, which came in distant first – especially among “Digital First” retailers, surprisingly enough.
This is the result, at least to some extent, of a known phenomenon among peoples, societies, even companies: in times of stress, there is a tendency to go back to “what we’ve always been doing.” Even in cases where these “old habits” are at the heart of what caused the stressful situation in the first place. Forward-thinking is hard, let alone when the stakes are higher.
But that’s the point – and what is really so surprising here – because you might expect a group of unrelated CMOs to behave a little less like a “society in distress” and more like the data-driven professionals they usually are. An underlying element worth mentioning here is that we’re talking about retail CMOs. Had this survey been conducted among iGaming CMOs, for example – an industry that is natively digital and on average way more tech-savvy and technologically sophisticated/advanced – you would probably see different results.
The Data Couldn’t Be Clearer
Because, when it comes to making decisions regarding marketing prioritizations during the holiday season, the data could not be clearer: “new customers” should not be your top priority during the holidays. It’s just not the strategy that would yield the most revenue. As simple as that.
The best marketing strategy for any “high/peak season” – whatever that means for your business – must have a much better balance between “acquisition” and “retention,” with the latter having the edge in terms of resources, better offers, etc. And, when we say “retention,” we mean everything that falls under CRM Marketing, as in sending campaigns to different types of “existing” customers, from VIPs to Churned.
Here are a few reasons why your holiday season/peak times marketing strategy should prioritize some of your existing customers ABOVE new ones:
- Reactivation is higher: Customer reactivation rates double during the week of Black Friday.
- Retaining “holiday new customers” will take way more effort – Holiday First Timers are 19% less likely to stick around.
- VIPs matter more: They spend more (5X), buy more (4X), and order more times (2X).
Oh, there’s more…
- Between Thanksgiving and the end of that year, existing customers’ average order amount per customer is usually between 15-20% higher on average compared to “holiday new customers.”
- Existing customers’ number of items per order is more than 20% higher than the average.
- Existing customers not only buy more during the holidays, but they also tend to retain a greater loyalty to the brand.
Here it is in nice visuals for easier consumption:
(“Repeat Customers” = Existing Customers)
Furthermore, the distribution of customers according to the total order amount demonstrates that new customers tend to purchase at the lower end of the spectrum. In contrast, existing customers’ relative majority is pronounced at the highest transactions.
And so, after taking literally billions of data points into consideration in our Strategic Service’s in-depth research of how existing and new customers behave with relation to holiday/peak seasons – here’s what an intelligent – DATA-DRIVEN – prioritization for your Black Friday/Cyber Monday/Peak Season should look like:
Now, when you decide that your strategy should be prioritized in a way similar to the pyramid above, there are a few things you’d need to know.
One such thing is that you will have to develop separate “strategies” according to “activity” customer segments. Optimove research, which shows that “repeat rates” differ wildly when segmenting customers according to “activity,” makes such motivation a no-brainer:
Eventually, though, we recommend building an overarching strategy that would serve you for all “peak” times – regardless of the holiday. For that, our strategic services team have found that further segmenting your customers not only by their “activity” (VIPs, Active, New, Churned, One Timers), but also according to their “holiday buyer score,” – a score taking into account the “importance” level of a holiday with the customer’s tendency of spending during it – is a strong strategy to making the most out of holiday and other peak times.
To complete that strategy, we recommend going by the following guidelines:
One Plan To Rule Them All
Then, from building awareness campaigns to your “One-Timers” over email prior to the holiday and giving some “early access” to your VIPs…
through creating urgency with “Active,” “Reactivated,” and “Churned” customers…
to sending “stay up to date,” “loyalty bonuses,” and “back in stock” messages…
and finally, incorporating things like “extended holiday sales,” and “Thank you” emails to all your customer base – the marketing plan has endless options.
But, as long as you keep it aligned with the principles above – of prioritizing your VIPs and “Active” customers before “New” ones, of raking/scoring customers according to their activity levels in different holidays, and of creating bespoke campaigns to each segment, in a before-during-after the holiday timeframes, you’ll be on the best track possible to making the most of the holiday shopping season.
To learn more about what it can look like precisely, contact our Strategic Services team.