Missed Opportunities With Holiday Shoppers
Thanksgiving weekend has come and gone, along with any doubt on just how much the holiday retail landscape has changed. Overall, signs are better for e-commerce companies than for brick-and-mortar stores, as seen in the results from the holiday weekend: while Black Friday in-store traffic slipped, online shopping surged, up 18 percent on Black Friday and beating forecasts to hit $3.07 billion in sales on Cyber Monday.
So yes, the Black Friday/Cyber Monday weekend is still an important retail event, especially for e-commerce companies. It’s important to note that the draw of the shopping weekend hinges entirely on the promise of slashed prices and deep discounts. This an unsustainable business model. Deep promotions often draw in bargain-hunters instead of customers looking to invest in your brand, which hampers long-term business success.
To test this theory, Retention Science analyzed 6 million orders placed by over 3 million consumers over the holiday season to figure out just what kind of shoppers retailers fight over each year. The results were a mix of expected and surprising, and outline areas where retailers should move quickly to drive success.
Expected: Black Friday/Cyber Monday Shoppers Are (Really) Fickle
Don’t expect too much bang for your acquisition buck. The study found that first-time Black Friday customers are 19 percent less likely to purchase again during the holidays compared to other customers, and they make 20 percent fewer purchases over time. Black Friday shoppers were also quick to leave, churning 274 percent faster than customers acquired any other time of the year.
Cyber Monday shoppers are even worse. First-time customers on Cyber Monday are 26 percent less likely to purchase again, and they make 23 percent fewer purchases than other customers. They’re even quicker to say goodbye, churning 296 percent faster than the average customer.
During the noisy holiday season, the cost of acquisition is especially high. Retailers can’t afford to keep throwing acquisition dollars on customers who already have one foot out the door. Still, the research revealed some surprising results that imply there are bigger opportunities at stake.
Surprising: Excitement Drives Faster Conversions … And Higher Spend
The most interesting results of the study build a convincing case towards investing more in Black Friday/Cyber Monday shoppers. For one, customers who first purchase over the holiday weekend spend an average of 12 percent more than other customers through the rest of the year. In other words, most Black Friday/Cyber Monday shoppers ditch pretty quickly, but the ones that do stay spend more.
Furthermore, there's a visible effect of holiday shopping excitement on how quickly consumers go from registering to converting. One month before Thanksgiving, the average time to first purchase is 23 days. One week before the shopping holiday, this period shortens 56 percent to 13 days.
More significantly, the time to first purchase interval stays consistently low for at least three weeks after the holiday weekend. This means there's a clear window of opportunity to re-engage Black Friday/Cyber Monday shoppers to get them to keep shopping. If you do, chances are they’ll turn out to be worth the investment.
Save Christmas: Act Now to Keep Momentum Through (and Past) the Holidays
With this new data in mind, the course of action is clear: Work on re-engaging newly acquired customers by finding ways to stay top of mind. Incentivize repeat purchases throughout the rest of the holiday season.
Most importantly, stop thinking of Black Friday/Cyber Monday shoppers as a one-weekend fling. For long-term success, retailers must approach holiday shoppers with multitouch, multichannel communications. Use the holiday shopping season window to build rapport — and lasting, profitable relationships.
Jerry Jao is the co-founder and CEO of Retention Science, a retention marketing firm that helps retailers and brands understand, engage and retain their customers.
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