By Pini Yakuel, Optimove
If your business is like the majority of online retailers, most of your sales this past holiday season came from new customers, as opposed to your previously existing customer base. According to our data – gathered from millions of online shoppers representing a cross-section of retail categories – online retailers experienced 50% more transactions during the holidays from new customers compared to the monthly average for the rest of the year. Existing customers, by comparison, made only 17% more purchases during the holiday period as compared to their rest-of-year monthly average.
In other words, your existing customers were mostly shopping elsewhere for their holiday gifts. Not only that, but they failed to increase their purchase amounts during the holidays with online retailers that they had shopped at previously — on average, repeat customers spent the same amount on purchases during the holidays as they spent during the rest of the year.
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Now, here’s the real kicker: Our data also shows that new customers who make their first purchase during the holidays have lower survival rates than new customers who make their first purchase during any other period. First-time holiday customers turned into repeat customers 19% less frequently.
We know that advertising costs during the holidays aren’t cheap. With all the competition for those holiday dollars, it might be the most expensive time of year for the overall cost of user acquisition. Add to that the fact that many online retailers employ a strategy of slashing prices in order to attract those new customers, and the outlook for long term ROI and profit margins becomes even darker.
And yet, all is not lost. Now is the time to conduct an effective marketing and retention campaign specially designed to engage those new customers and keep them shopping with you over the long run. If you can turn a new holiday shopper into a lifelong customer, then the advertising cost you spent to acquire them and the bargain deal you gave them on their holiday purchase will seem like it was all well worth it.
These customers now have a familiarity with your brand and have formed the basis of a relationship with you. Your job at this point is to analyze their behaviors, study their preferences, and develop personalized, one-to-one campaigns that will show them you care about taking that relationship to the next level. By offering customized product recommendations, relevant deals and discounts, and creating elegant communications that reinforce your brand and make you stand out from the crowd, you can extend the lifetime value from those new holiday shoppers and turn them into lifelong customers.
And next holiday shopping season, before you go spending all sorts of money to acquire new customers, remember that your biggest source of revenue might just be the people who have been shopping with you all along.
Pini Yakuel, founder and CEO of Optimove, a profitable and rapidly-scaling business, has over a decade of experience in analytics-driven customer marketing, business consulting and sales. His passion for understanding what drives customer behavior led him to spearhead the development of Optimove, the industry’s leading Customer Marketing Cloud, empowering marketers to maximize their customers’ value. Optimove is used by 180+ businesses, including Zynga, Caesars Interactive, Lucky Vitamin, and Outbrain.
