December 19, 2014, 11:10 AM

What are those new holiday customers worth?

Consumers who buy from an online retailer only during the holiday season are often deal-seekers, likely to provide little profit in the year ahead. But smart marketing can make some of those shoppers valuable customers.

The holiday season represents the last mile of the retailer’s path to profits. While this is a make-or-break time of year for brands, shoppers acquired during the holidays may not be as valuable as they seem. In fact, unless retailers take action, holiday shoppers can be a winner’s curse and actually cost retailers money. Data from AgilOne, a leader in predictive marketing, shows that shoppers acquired during the holidays are much less loyal and much less valuable than those acquired during other times of the year

Doorbusters: Holiday Shoppers Look For Deals and Often Never Come Back

Although the winter holidays are the biggest shopping days of the year, many customers don’t return to brands and retailers after the season. During the last few days of holiday shopping, retailers will have acquired millions of new customers. Yet they expect only 30 percent of them will return without additional marketing.  As a result, holiday shoppers provide significantly lower lifetime value for companies than those acquired at any other time of the year.

For instance, customers acquired during the winter holiday shopping season (December 4 through 23) have a 22 percent lower retention rate and 14 percent lower lifetime value than customers acquired at other times, according to AgilOne’s analysis of over five million consumer profiles. In addition, AgilOne found that new Cyber Monday customers have an 11 percent lower retention rate and ten percent lower lifetime value. Finally, holiday shoppers averaged lower order values on Black Friday, Cyber Monday, and the weeks leading up to Christmas than during the rest of the year.

Reverse These Trends by Engaging With Customers Throughout the Year

Historically, many retailers have been very focused on customer acquisition. However, this analysis shows that acquisition without follow-up retention efforts can lead to losses. There is much retailers can do to increase the lifetime value of shoppers, including those acquired during the holidays. A skin care company recently launched an e-mail marketing campaign to increase brand loyalty for Cyber Monday customers and their resulting lifetime value turned out to be five percent higher than the company average. By understanding customer data, the company was able to create the effective offers and discounts to drive loyalty.

Perhaps the most overlooked aspect of holiday marketing is how to follow up to ensure that sales and customer loyalty grow throughout the year. If done right, by harnessing customer data from the holiday season, merchants can begin to predict what shoppers plan to buy next with a certain degree of confidence and get smarter with each customer engagement. 

Therefore, to cash in on the holiday season, brands can and must advance customer engagement throughout the year to improve the brand loyalty and lifetime value of holiday shoppers or risk losing money despite their efforts.

How do you plan to bring holiday shoppers back in the New Year?

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