The holiday season nearly always promises an uptick in sales for eCommerce and subscription-based businesses. In the midst of the COVID-19 pandemic, people continue to lean on online retailers and service providers to send gifts to their loved ones. This is fantastic for business owners, but retaining those seasonal customers can be a challenge in the new year.
In our virtual roundtable, Kyle Iwamoto from Dollar Shave Club, Anish Shah from Bring Ruckus, and Retina’s own Emad Hasan covered three topics we get asked about the most:
- What acquisition strategies should I use during the holiday season?
- What changes are expected this holiday season and how do I retain customers in the new year?
- What growth strategies should subscription and eCommerce businesses use?
We’ve collected our key takeaways from the roundtable, including answers to the questions above, to help guide your strategy this holiday season. For a full recording of the webinar, click here.
Identifying loyal, high-value customers
Our experts dove right in, highlighting the importance of understanding customer value from their first interaction with your brand. Prioritization is the name of the game, and understanding your customers’ buying behavior is a crucial part to building out your holiday and post-holiday strategy.
“What leads to building a quality lifecycle is testing,” said Anish Shah. “You can segment out your [customer] list and can look at people who’ve only made purchases at a discount of X percent or above, and run very specialized tests to those audiences. You could [perform] a 50/50 test… 50 percent of that cohort is going to continue getting discounts and the other 50 percent will get zero discount.”
This kind of testing allows you a unique insight into the loyalty of your customers to your brand and how motivated they are to continue moving through the funnel. In the eCommerce world, this is a great Litmus test to establish where your target audience stands. For subscription-based businesses, this looks a little bit different.
“What [we’re] alluding to is thinking about your customer journey and having and testing iterations. Maybe thinking about discounting not just one time but thinking about discount flows,” said Emad Hasan. “How often have you gone back and looked at what has worked? Thinking about Black Friday, of the people we acquired last [year], which ones of those customers did we actually end up retaining and what about them is unique? [This is as simple as] are people buying gifts or pursuing promotions?”
“Because [subscription-based businesses] have this ecosystem of repeat purchasers and numbers, there are two unique behaviors that are happening,” said Kyle Iwamoto. “Your evergreen, day-to-day purchase…, and you have these funny off-cycle moments of gifting, so maybe Valentine’s Day, maybe Father’s Day. So one thing we typically will do is try to understand, of our membership, who is likely to make that incremental purchase? And where are they sending it to?”
These are crucial questions to ask about your clients as you begin strategizing for Q1 2022. Retaining holiday customers in the new year is all about understanding what attracted them to your brand in the first place and how loyal they are to it.
Changes in the 2021 holiday season
Because so much of the world is still struggling with the COVID-19 pandemic, this holiday season will look different than the ones we’re used to and different still from the 2020 holiday season. In addition to the pandemic, changing privacy policies and regulations have changed the way businesses approach data and targeting their customers online.
“This is going to be, in my opinion, the most unpredictable holiday season given so many different trends that are going on,” said Emad. “When we talk about ‘so many different trends,’ I mean you have iOS privacy changes that are having a huge impact on signal loss, or Facebooks and Googles and Snapchats and Twitters of the world,… so we’re looking at where that will end up.
“And then you have the whole supply chain issue going on where things are just not making it [where they need to go]. You might actually convert people, but good luck getting [their order] to them on time. So I think this is going to be one of those holiday seasons that might be very different from everything we’ve seen in the past.”
It’s hard to know exactly how this year will play out, especially in comparison with 2020. Last year’s holiday season was fairly straightforward to predict, knowing that people would have to order early and rely on online shopping and carriers around the world to get packages to their loved ones. This year provides a similar backdrop but with the additional obstacles of the supply chain issues and lack of data for companies to use in their marketing campaigns.
Prioritize, prioritize, prioritize
The one constant in all of the chaos this holiday season is that knowing your customers’ value has never been more important. Without third-party data and knowing that the supply chain will limit your ability to reach your customers, you have to figure out which customers to prioritize.
In the long run, is it more economical for your business to discount your product in an effort to sell out and try to beat the inevitable rush to the post office, or should you prioritize your customers based on their loyalty to your brand and their likelihood to convert, regardless of a discount?
Prioritizing the customers that remain loyal to your brand may be the key to success this year. This group of customers wants to buy from your brand and have been reliable in this pattern of behavior. This group will continue to do so, even in a year with as many obstacles as this one. Arm yourself and your business with as much data about your customers and their value to your business as you can in order to target the people that will actually convert.
Customer Lifetime Value, or CLV, is the metric that can provide you with the context needed to prioritize your customers year round. Whether you want to understand a customer’s long-term value in relation to your marketing spend or if you’re just looking to understand how your customers move through the funnel, CLV is an invaluable piece of the marketer’s toolkit.
Retina AI’s CLV Academy teaches everything you need to know about CLV, including how to calculate it and apply it to your business. Get started today!