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Holiday Customers Don’t Have Long-Term Value. Or Do They?

Posted by | September 22, 2016 eCommerce Blog | No Comments
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At Blue Acorn, we’re big fans of using data as a means to improve online shopping, so we devoured The Ecommerce Holiday Customer Benchmark Report from Magento Analytics. The analysis, which extended across 350 clients, 50 million customers, and 40 billion transactions, set out to compare the value of shoppers acquired over the holidays to shoppers acquired during non-holiday periods.

The study authors hypothesized that the value of a customer acquired during the holidays would be notably inferior compared to the value of non-holiday shoppers (and therefore these customers wouldn’t respond to typical, everyday marketing efforts), since they were likely shopping for a gift, which was also likely on sale. If these new buyers did return, the authors posited, it probably wouldn’t be until the next holiday season.

They were wrong.

Indeed, the study found that while shoppers acquired during the holidays have a 13 percent lower customer lifetime value that non-holiday shoppers, 39 percent of holiday shoppers who make a second purchase do so during that same holiday season.

What’s more, holiday shoppers performed worse than non-holiday shoppers across all metrics, but by a “surprisingly low margin.”

“What’s immediately clear…is how early on in the customer lifecycle customers are making a second purchase. The probability of a customer making a second purchase is highest during the first 30 days, then falls off throughout the year. There’s a small uptick again during the following holiday season, but it’s a small opportunity compared to the earliest days after a customer is acquired,” say the study authors.

The data suggest that brands should develop a retargeting strategy to capture these shoppers early.

So what’s the best way to retarget these buyers and turn them into potential new customers? Blue Acorn doesn’t offer retargeting services, but we do pride ourselves on making ecommerce more effective for your organization, so on your behalf, we reached out to our extensive network of ecommerce experts for pro tips. Read on to learn how to amp up your retargeting efforts for powerful results during the next holiday season.

Chad Ledford

chief revenue officer at AddShoppers, Inc.

To run an effective retargeting campaign, you need to establish your attribution model up front. We’ve found that the average CPM across clients is $3.24, and average CPC is $2.64. Said another way, to run a profitable retargeting campaign based purely on last-click interactions, your site would need to convert over 3%, and your average order value would need to be more than $100 to break even on revenue vs. cost.

One of the biggest benefits to retargeting is the incremental brand impressions and the overall improvement in your site’s conversion rate while running retargeting ads. These ads are typically measured via view-through conversions, which is much harder to put a dollar amount to. If setting up an accurate attribution model isn’t in the cards this season, here’s a simplified example: 100% attribution on click-through revenue – 30% attribution on view-through revenue. Be sure you know how to value both and you’ll set yourself up to make the most from retargeting.

Joe Nicholas

channel relationship manager, dotmailer

A great way to ramp up your retargeting is through abandonment emails. Many retailers already have or are at least familiar with shopping cart abandonment. But, very few retailers utilize browse abandonment. Depending on your email service provider or marketing automation tool, this option might already be at your fingertips. By simply tracking online browsing behavior and retargeting with a simple one to three message series you can capture 50% or more of the revenue you see in shopping cart abandonment campaigns. This can be a great way to bring your holiday browsers back during and after the holiday season.”

Jess Vadino

senior strategist at Monetate

In today’s crowded e-commerce space, retailers are often looking for a way to stand out from the competition. Your brand equity and relationship with the customer helps set you apart. But once the customer leaves your site, there are fewer ways to maintain that connection.

One of the most important things is to be thoughtful in your execution. Retargeting should feel more like a helpful reminder than something invasive or obtrusive. Whether it’s a tactful one-time email, or a more overt ad in a customer’s offsite journey, when retargeting is done thoughtfully, it can have a big impact.

From Greg Zakowicz

senior commerce marketing analyst at Bronto

Retargeting newly acquired holiday shoppers can be big business, but is something many retailers struggle with. We’ve seen consumer behavior shift in recent years, and the early holiday season is now a Gray November, a monthlong start to the holiday shopping season. It comes as no surprise to me that purchasers are making a repeat purchase during the same holiday season. I have been seeing a rise in self-gifting over the years, which is providing ample time to make additional discounted purchases between a first purchase date and the end of the holiday season.

To help in retargeting efforts, retailers should be focused on providing a value-driven post-purchase series for these new customers. These messages can hone in on why they should continue shopping with you, customer service callouts, other holiday gifting recommendations, and other company value adds. These messages can not only help increase brand loyalty, but can further reinforce your brand as a go-to gifting destination beyond the holiday season.

Another tactic retailers can use to effectively retarget customers is to either implement or bring attention to a gift-reminder program. This can not only help you collect additional segmentation data from your new customer, but can also provide relevant year-round gift reminders for that special someone. This info, combined with purchase data, will help you better distinguish between gift purchases and self-purchases, and can help make your future messages or recommendations more relevant.

Read the full study here.

About Amy Hourigan

A skilled marketing and communications professional and national award-winning business writer, Amy Hourigan joined Blue Acorn in 2015 as Director of Marketing. Amy excels at marketing strategy and execution, branding, and crafting clear, compelling communications that drive people to take action.

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