The Black Friday Mistake: Don’t Take Your VIPs for Granted
When preparing for the holiday season shoppalooza, many companies focus on luring in new customers with discounts and offers. An Optimove research shows how important it is to turn your efforts to your existing VIPsPosted in Customer Retention, E-Commerce, Data Analysis on 9 November 2017 by:
Have you ever wondered about the origin of "Black Friday?" A quick online search suggests law enforcement officers coined the term for the last Friday of November after policing the crowded city centers and traffic jams. But for the sake of this blog, the most suitable origin comes straight from the books. The accounting books. In their ledgers, accountants used Black ink to signify profit when recording each day’s book entries. Red represents a loss.
It’s quite obvious that companies and retailers can’t ignore Black Friday, at least not without a solid explanation, or a book full of Black ink to show for it. And although there are other takes on that subject—those of you who advise against making a fuss on this day—there’s a good chance you are about to miss something, something possibly more important than profit and revenue: a sort of a promise to your customers, who otherwise, will go and enjoy it somewhere else.
The Very Important Ones
Most companies still put in a great deal of time and effort surrounding Black Friday and Cyber Monday, as Thanksgiving weekend sales are on the rise year after year. But one of the participation disadvantages is the way VIP customers feel about the designated nab-a-bargain-day. From our previous studies we've learnt that most e-commerce companies do not pay enough attention to their elite customers during this period of time, which is unfortunate, since VIP customers usually have a higher expected value than other customers, making them a real asset to any company.
Going deeper with this thought, we conducted a new research using data from over 14M customers from different e-commerce companies, for which we defined VIPs as the top 3% of customers who had the highest order amounts that year.
We gathered some informative stats:
* On Black Friday, VIPs completed orders that on average were worth 28% more than non VIP customers, and bought 85% more items.
* Additionally, VIP customers made 4.7 times more orders than non VIPs on Black Friday.
* Out of all non VIP customers, 4.5% made a purchase on Black Friday. Out of the VIPs, 12.34% purchased on Black Friday.
An important thing we know about VIPs is their strong brand loyalty. Let’s take a look at their loyalty compared to other Black Friday shoppers:
The 100% on the vertical axis signifies all customers who made purchases on Black Friday, and the horizontal axis signifies the months following Black Friday (starting in December). We can clearly see that more VIP customers continue shopping with a specific brand than non VIPs. The difference between VIPs and regular customers is at least 22%. For example, one month after Black Friday, 51% of VIPs bought additional items, while 17% of non VIPs made another purchase.
Just Another Day
The top line in the graph above represents VIP customers who bought items on Black Friday. But what about the VIPs who made purchases on Black Friday compared to those who didn’t? In this next graph, we can see some interesting figures:
The numbers on the horizontal axis represent the months of the year – 1 is for January 2 for February etc. – and the vertical axis is the percent of customers who made a purchase during that month (out of all the customers in that group). For example, in May, almost 70% of the VIPs who bought on Black Friday placed an order after the holiday, and almost 50% of VIPs who didn’t buy on Black Friday made a purchase.
From these numbers we learn that the VIP customers who bought items on Black Friday have a much higher chance of making a purchase every month. That alone reflects their loyalty – VIPs who buy on Black Friday are more devoted to your brand, more precious to your company. It’s crucial to preserve them. Hence, brands must give them the attention they need. A good way to avoid this problem is to reach out to your VIP's in advance, let them know what's coming, and offer them special items and discounts long before the actual day. It will generate that special feeling of attentiveness for your VIP's, and you'll ensure the items themselves won't run out of stock.
In conclusion, VIP customers are, as always, one of your biggest growth engines. They are loyal, make a significant amount of orders and spend a lot of money in your virtual store. Every company should invest in their VIPs and make them feel special – not only on regular ‘boring’ days, but during special times as well.
Contributor: Maya Sha'anan