With the dynamic nature of the current shopping environment, how will your brand stand out and offer the experience consumers need this holiday season?
Give the Gift of Experience this Holiday Season
As we head into Holiday season 2020, you’d be hard pressed to identify a business that hasn’t been impacted by COVID19; regardless of the industry, regardless of the life stage of the business, regardless of the specific challenge. Some businesses have thrived – not without challenges of their own - while others struggled, and the causes of the struggle are varied. But, Holiday 2020 represents an opportunity for many businesses to bounce back as the country fights to reopen and consumers indicate a willingness to spend.
With experts reporting that the pandemic has accelerated growth of ecommerce sales by 4-6x, preparing for this season requires more planning than ever; inventory and fulfillment planning, advertising and expense planning and communication planning. Where will demand and sales come from? And, are the consumers who buy from me today the same ones that will buy from me next year and the year after and the year after?
Holiday season represents revenue streams from three distinct groups of consumers: new customers, lapsed customers and active customers.
Acquiring new customers is not typically, at least initially, the main driver of sales. These consumers don’t have experience with your brand (yet) and certainly don’t have loyalty. In fact, it costs 16 times more to build a long-term relationship with a new customer, compared to keeping existing.
Once you acquire them though, you have that chance to win them over for good which is why evaluating new customers based on lifetime value (LTV) is so important. Especially today. Carefully evaluate your new customers. Why are they buying from you? What are they buying from you? Does this represent ongoing engagement or in this COVID-19 time, is it one and done? For example, if a new customer engages with you to buy a mask or hand sanitizer, they may not provide that strong LTV.
Lapsed customers are a good group of consumers to target. They know you and have had an experience with your brand. They are familiar with what you have to offer. But they lapsed for a reason and in many instances you don’t know why. As they re-engage, it may with some trepidation. They may be “re-testing” your brand, and for that reason also do not represent the main driver of sales.
That brings us to your active and current customers. Here’s where the majority of your sales will come from. They know you. They are satisfied with the experience(s) they’ve had with your brand. They have indicated a willingness to spend this Holiday season and you need them to spend with you. As you plan for how you are going to maximize sales from your current customers consider the following information.
As mentioned above, your current active customers are satisfied with the experience(s) they’ve had with your brand. It’s important to maintain that level of satisfaction. Sometimes that may mean, prioritizing your best customers. Many businesses are dealing with inventory issues where demand is high. How can you make sure you are able to fulfill and deliver orders on time for your best customers?
From personal experience, I have a longstanding relationship with an online retailer. An item I wanted to buy is currently “out of stock”. Bummer. The day that inventory became available again, I got an email letting me know accompanied by a “special offer” for my patience. I’ve even seen brands send a ‘thank you’ message to let consumers know that the brand cares about them and appreciates their patience in this unusual season. Perfect!
Consumers are looking for experiences that are safe and easy. Consumers are returning to retail stores. Travelers are returning to the sky. Diners are returning to restaurants. Communicate and promote those things you are doing to keep your customers safe; curbside pickup, liberal return policies, sanitizing practices, outdoor seating, limiting number of in person patrons.
This holiday season, consumers will focus on value, looking for promotions and sales and looking for them early. Quite often, discounts and special offers are provided to potential customers as an incentive to get them to give your brand a chance. Don’t forget about your customers as they have stuck by you during tough times. Perhaps now is the time develop, promote and / or enhance your loyalty program. Many of your best customers may be dealing with unemployment or some degree of lost income and although ready to spend, may need to be more conservative with their spending.
And last, consumers buy from people they like. What do your customers like about you? Stay true to your brand as authenticity remains critical.
The effort and cost associated with maintaining a relationship with an existing customer is nothing compared to the effort and cost associated with acquiring a new customer, not to mention the return you get from your most loyal customers. Try to remember that always as you plan for this very important Holiday season.