Who is the Holiday shopper, really? And why is he or she more likely to convert?
This is an expanded excerpt from my latest newsletter on Holiday strategy. Most of my newsletter content isn’t published elsewhere, so you should sign up.
We have all heard it before: conversion rates are higher during the Holiday shopping season and visitors are more likely to convert. But why? Who is the holiday customer, and why are these people so eager to click “complete purchase”?
Why Is The Holiday Shopper More Likely To Convert?
Cultural conditioning plays a big part in Holiday shopping behavior in North America. Christmas and Hanukkah are two big gift-giving holidays that typically fall between Thanksgiving and the end of the calendar year. These are occasions where gifting has become a social norm, and retailers are more than happy to play into this tradition.
Aside from end of year traditions, there is also the notion that retailers offer their best prices between Black Friday and Christmas. The truth behind this readily accepted fact is debatable. But it doesn’t stop many people from waiting until the Holidays to make big-ticket purchases.
Many small and midsize businesses also run their fiscal calendar according to the traditional Jan – December calendar. So lots of employees receive their year-end bonuses during the Holiday shopping season. They have more money to spend, so the scale and scope of their shopping increases.
Who Is The Holiday Shopper, And How Are They Different?
So who is actually shopping your brand during Holiday? This is a typical brand’s holiday customer base, starting with the customers closest to the core and working outward:
Core Customers: these are existing customers who buy from you at full price at least sometimes. They would shop with you during Holiday with or without discounts. They may see holiday as an opportunity to treat themselves or share their enthusiasm for you with friends.
Existing Promo-Driven Customers: these are existing customers you acquired during a promotional period. Depending on your promo calendar, they may only shop with you during Holiday.
Casual Observers: they know about your brand and have probably visited the website a few times, but they haven’t been able to prioritize a purchase…until now. Holiday is Treat Yo Self time, so this is their opportunity to buy in. They will probably need a discount to do it though. This group is your biggest opportunity.
Gifters (Friends of Fans): these are people who have been told by friends, family or lovers “I absolutely must have brand X this holiday season!” The size of this opportunity varies based on how giftable your product is. If you sell a well known status symbol, this is also a huge opportunity group.
Fans Of Your Category: these are people who like your category (skincare, fashion, cookware, whatever), but aren’t familiar with your brand. If you run the right offer and secure the right placement, you can convert them during Holiday.
Promo Vultures: plonk a deep discount or low price point in front of this crowd and they’ll at least consider it.
A big myth about Holiday and BFCM is that the entire consumer world is up for grabs. The fact: those you convert will have at least some connection to your brand or product category. But the dynamics of the holiday season do widen the Current Addressable Market for your brand. It becomes easier to convert those outside of your core customer base.
How This Impacts Your Holiday Marketing Strategy
Unless you are a multi-brand, multi-category retailer with hundreds of physical stores, your Holiday shoppers will probably be existing customers, casual observers and gifters.
This means that your biggest competition is you, not competitor brands, and not Amazon/Walmart/et al. Studying the marketplace can be informative, but it should never be prescriptive. You’ll have the most success if you develop different strategies and messaging for each core audience from the prior section you decide to target.
The best way to increase sales during Holiday is to grow your customer file and increase brand awareness in the months leading up to Holiday. Holiday prep starts in Q1 and Q2, when you should be planning PR and performance branding initiatives that will land in August through October.
You’re not the only brand trying to win sales during the Holiday period. This is typically the most competitive time to purchase paid media, and the prices reflect that. If you don’t have a solid wholesale strategy, you may also be competing against your own wholesale partners in a race to the bottom. That’s why doing the majority of the heavy lifting ahead of the main event is the smart move.
The start of the year is also an opportunity to evaluate the role that Holiday plays in your business. Are you planning an increasing amount of growth into the period each year? And is that growth getting more or less profitable over time? You can reduce risk in your business by creating your own tentpole selling seasons when the competition is less fierce. Prime Day, Singles Day and “Back To School” are all examples of this strategy.
In addition to reducing risk, shifting the focus of your business away from Holiday will also help improve customer lifetime value, a major lever in improving profitability. The cultural dynamics of Holiday shopping artificially broaden your CAM, but the result is a cohort of shoppers who typically make lower margin purchases and are less likely to return and buy again.