The Secret to Maximizing the Lifetime Value of Your Holiday Shoppers

Nov 29, 2016

The holiday shopping season is a buyer’s market. Every retailer knows that it takes steep discounts and bargains to lure consumers to your store in this competitive world unless you’re Warby Parker, that is. (They never discount during the holidays.)

On top of lower prices, retailers need to deal with higher ad spends. In fact, with everyone vying to attract hungry holiday shoppers, costs of acquisition increase by a whopping 39% on mobile and 180% on desktop during the holiday period.

Offering discounts and spending more to acquire customers works out for retailers since volume often makes up for the reduced margins. Holiday shoppers also tend to spend more than off-season shoppers by as much as 17%. All in all, this translates into retailers generating close to a quarter of their annual revenue during the holiday season.

So, you might be wondering, what’s the problem?  Retailers spend more but they also make more. Isn’t that a good thing?

The problem is thinking only of the “A” in AOV. The average consumer spends enough during the holiday season to more than offset the increased acquisition costs. But if you slice your visitors into segments (which, of course, you should be doing), you’ll notice that some segments spend way above what it costs to get them to your site; others fall below this threshold. This latter group are the bargain hunters, the drive-by shoppers who purchase just once and don’t return to the scene of the buy until the following holiday season. You shouldn’t be pouring as many resources into acquiring this group as you would the big spenders; you should be deploying a suite of strategies to turn the bargain hunters into repeat visitors and shoppers.

To reduce costs and improve yields during the holiday season, retailers should segment users as they arrive at the site and personalize experiences accordingly. Here’s how you do it.

  1. Lower ad spend on bargain hunting holiday shoppers.
    Retailers should lower their ad spend on shoppers who have only shopped in their store during the previous holiday season. This can be accomplished by segmenting the ads being served based on CRM or 1st party data.
  2. Maximize post-click conversion
    If a retailer knows a visitor is a price sensitive holiday shopper, optimize the category or grid page by showing the prices “low to high” by default or trigger a real-time message offering free shipping. In an age of instant price-comparison shopping, subtle UX customizations can be the difference between a user completing a purchase or leaving your website to play the field, never to return again.
  3. Optimize the merchandising
    Mitigate the risk of negative CLTV by pushing sale products that have high margins. This way, even if these holiday sales shoppers don’t return until the following year, you’ve made those customers happy with a discount while keeping your ROI in check.

Keeping Your Buyers in the Holiday Spending Spirit

While the holiday season yields massive uplift in traffic across platforms, the ho-hum of winter is coming. To survive better than a Stark, it is vital to continue to engage your holiday buyers year round, even the ones you might’ve written off as “bargain hunters.” If they’re retargeted properly,  there is a good chance they stick to your brand.

Here are a few strategies you should consider  in order to retain as many of them as possible.

  1. Provide incentives to come back through segmented or personalized messages.
  2. Increase brand awareness through personalized retargeting ads.
  3. Offer incentives to buy more using coupons, such as “20% off your next order.”
  4. While you got them on your site during the holidays, encourage them to subscribe to your email newsletter.

While the holiday season is a huge boon to eCommerce sales, this doesn’t mean you should pursue every customer at all costs. Segment and personalize wisely and you’ll get the most out of all of your shoppers during the holidays and beyond.

The Secret to Maximizing the Lifetime Value of Your Holiday Shoppers
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