— August 9, 2017
Any savvy ecommerce company understands the importance of using data to grow faster and more efficiently. While every merchant’s journey is different, one thing always proves true: All customers are not created equal. A high-value, loyal customer can easily generate more than 10 times the revenue of a typical buyer.
This is especially true during the fast-approaching holiday season, when new customers can take on challenging characteristics like decreased loyalty and an increased appetite for sales and discounts. Meanwhile, merchants are under immense pressure to grow revenue and add customers at a faster rate than the rest of the year. These factors combine to create a challenging situation, but thankfully, data can support a more meaningful strategy.
If you’ve been in business for a year or more, you are sitting on a wealth of data about your customers, your products, and the buying habits that unite them. Using a business intelligence tool, you can study this data to better understand the opportunities and pitfalls of your holiday strategy.
When it comes to holiday strategy, data rules. Here are four tips to get started:
Think of your customers in terms of their Customer Lifetime Value (CLV), not just the revenue from their first purchase. A customer’s repeat purchase rate has a major impact on their CLV and should change how much you’re willing to pay (or discount) to acquire them.
Study the impact of discounts on loyalty. Is a shopper who makes a first purchase with a coupon, or who buys sale item, less likely to return? Or will they only return during another sale? This doesn’t mean sales are a bad idea–it just means the economics are different for those customers. They should be studied as their own cohort.
Slice your Customer Lifetime Value data by dimensions like geography, acquisition source, and products purchased. You may find customer segments that perform far better over the long term and want to focus your acquisition energy on those populations.
Talk strategically about what you’re trying to maximize. Is it revenue? Customer count? Margin? Profit? Your ideal tactics could vary based on this answer.
For more on taking advantage of this year’s holiday shopping season, download your copy of Holiday Commerce Outlook: Unwrapping Strategies & Tactics for a Winning Shopping Season today.
Magento Head of Business Intelligence Bob Moore also contributed to this post.