Measuring the Impact of Holiday Sales on Small Businesses

The holidays are big business. That’s not going to come as a shock to anybody — but just how important are they to America’s economy? The latest figures from Adobe Analytics show that from November 2023 to December 2023, Americans spent more than $222 billion shopping online. That activity was largely driven by an increase in total purchases.

Translation: Americans want to spend during the holiday season. The businesses that can tap into this strong demand are much more likely to set the table for a strong start to the new year.

Since 99.9 percent of businesses in the U.S. are small businesses, this also illustrates how critical the holiday season is to the continued success and viability of the SMBs that power our communities. At Constant Contact, we wanted to better understand how small businesses tackle the holiday season, so we polled 500 SMB executives across a variety of industries to get their thoughts. We also asked 500 consumers about how their interest in shopping small changes before, during and after the holiday season.

Here are the stats and trends we uncovered, along with some additional findings from our Small Business Now report that help illustrate what small businesses can do to start 2024 on the right foot.

Small Businesses Depend on Holiday Sales to Hit Their Annual Goals

• 75 percent of retail SMBs rely heavily on holiday sales to meet annual revenue goals.
• 58 percent of retail SMBs say holiday customers are “extremely important” to the overall success of their business.
• 50 percent of SMBs get at least one-quarter of their annual revenue from holiday shoppers, and that number jumps to 73 percent for retail SMBs.​

However, Most Shoppers Don’t Realize How Vital Their Holiday Spending is to Small, Local Businesses

• Supporting small businesses and their communities is the No. 1 reason why Americans choose to visit or buy from a SMB.
• However, only one-third of shoppers feel that visiting or purchasing during the holidays makes a significant impact on a SMB's livelihood.

The Holiday Season is a Great Time to Attract New Customers

• The top goals for SMBs heading into the holiday season were acquiring new customers (63 percent), retaining current customers (52 percent), and planning for next year (45 percent).
• 84 percent of consumers planned to visit a “new to them” small business last holiday season.
• 87 percent of consumers say they're more likely to return to a small business in the future after visiting/buying during the holidays.
• Personalized emails and text messages (52 percent), social media ads (42 percent), and sales or discounts (40 percent) are the most popular marketing tactics SMBs use to grow their customer base during the holiday season.

During the last three months of the year, small businesses see waves of new customers both in-person and online. These shoppers are highly engaged and looking for reasons to visit or buy. This makes the holiday season a terrific time for SMBs to capture people’s attention and grow their customer base.

Most SMBs Don't Have an Effective Marketing Strategy to Nurture, Retain and Convert Their Holiday Customers in 2024, and it Could Be Holding Back Their Growth

• 81 percent of consumers are more open to receiving marketing messages from a small business after visiting or buying from them during the holidays.
• 93 percent of SMBs feel that retaining new holiday customers into the following year is important, but just 18 percent feel their Q1 strategy is highly effective.
• 14 percent of SMBs do not have a post-holiday retention strategy.
• Less than half (49 percent) of shoppers receive an email after making a purchase from a SMB, and 27 percent never hear from the business again.

Most SMBs are heavily focused on reaching new customers and growing their lists during the holiday season, but equally important is how those customers are nurtured once the calendar turns to January. The key to making the most of the holiday season is having a good customer retention strategy in place.

So, what have we learned? The holiday season isn’t just a big deal for small businesses — it’s absolutely vital to their success. Every dollar goes a long way and might make the difference between a good year and a bad one. With shoppers looking for excuses to visit and buy from SMBs during the holidays, it’s critical that those businesses market themselves and communicate their value.

It’s also important to keep marketing once the holidays end. Americans showed similar interest in supporting small businesses in the new year as well, and many were turned off after never hearing from a business again after making a purchase. We see our customers dial up tactics like loyalty programs, events and contests in an effort to activate their audience and turn holiday customers into repeat buyers in the following year.

Dave Charest is the director of small business success at Constant Contact, which delivers everything small businesses and nonprofits need to build, grow and succeed.