The 2021 holiday shopping season confronts retailers with a unique set of challenges. Here is a framework to navigate this critical period successfully.
This was originally published in the No Best Practices newsletter on 10.9.2021.
Does this make you uncomfortable? Be honest: how confident would you feel going into the holiday season with no sales or promotions planned?
Maybe you’re entering Q4 with less inventory than expected. Maybe your cost of goods was higher than normal due to the current crunch in overseas logistics and production.
Maybe you’re nervous about your ability to move inventory due to Facebook performance declines after iOS 14. Maybe you have no control over financial planning in your organization, and you are simply being told to do more with less.
Don’t get me wrong, I think the Holiday period is over-hyped and the customers you acquire are typically low quality. “Just ignore holiday”/ “don’t discount” is the type of no holds barred hot take that I would love to give you…if I thought it would be helpful to most people reading this.
Instead, I want to use this edition of the newsletter to take a more nuanced look at Holiday strategy, specifically Black Friday/Cyber Monday (BFCM). Everyone is entering this critical season with a different set of variables. To determine the best strategy for your brand and your team, you need to take all of those variables into account.
The Narrative vs You
Until this year, the prevailing narrative around Holiday was high stakes and winner-take-all. Pundits, vendors and agencies offered two contradictory talk tracks: On one hand, Holiday consumers are out there practically begging you to take their money. On the other hand, it’s the most competitive time of the year–one wrong move will jeopardize your business.
The truth: I have worked or provided consulting for 8-10 brands in my career so far. Holiday was inconsequential for about half of them. Even if your peak sales season is Thanksgiving through Christmas, DTC brands doing less than $100M in revenue have different considerations than the Best Buys and Walmarts of the world.
If you’re a DTC brand with limited and strategic wholesale distribution, you are primarily competing against yourself during BFCM. You don’t need to “beat” everyone in your competitive set, and you don’t need to “beat” the offers on Amazon, Walmart or Target if your products aren’t even sold there.
If you do happen to work for a multinational big box retailer, the rest of this content doesn’t apply to you. If most of your revenue comes from wholesale and you are in a weak negotiating position with those partners (i.e. Walmart runs your life), you are going to find the rest of this hard to implement. But it still may be worth reading.
For the rest of you it will (hopefully) make Holiday 2021 a bit more sane.
Who Is The BFCM Customer?
So who is shopping your brand during holiday, and why are people generally more likely to convert? 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.
Structuring A Successful Offer
To run a strategic, successful offer during BFCM you need to consider who you’re selling to. For most DTC brands you’ll be concentrating on existing customers, casual observers and gifters. To get the most impact for the lowest cost, focus on getting the word out to these groups before November, when media costs rise and attention spans drop.
Ideally you would be working all year to get out the message that your brand is unique, useful, beautiful and meaningful. But on a more tactical level, you should use August-October to invest in new customer acquisition, community activation and PR. You want to go into November with a stockpile of recently acquired customers and a swelling audience of intrigued fans. These will become your holiday shoppers.
Now for some guidelines on the offer itself (assuming you plan on running one):
Keep It Simple: your offer needs to be straightforward enough to digest in three seconds or less. That doesn’t mean it has to be a sitewide promo. But this is not the time for “buy more, save more” offers or “25% off category X and up to 50% off category Y”.
Rule of thumb: if you can’t run it coherently using the old 20% text rule for Facebook creative, it’s probably too complicated.
Make It Special: to convert casual observers and activate as many existing customers as possible, the offer has to feel meaningful. People need to feel like this is the only time of year when they’ll be getting this offer on this product.
To do this effectively you need to take your entire promo calendar into consideration. If you frequently end the year with a clearance sale on most of your stock (cough…fashion brands…cough), then 25% off site-wide is not going to feel special.
On the other hand, Glossier rarely went on sale outside of BFCM until recently. So a 20% off site-wide offer felt like a win for their audience.
Maximize Your Return: once you’re confident that you’ve crafted a compelling BFCM offer, use it as an acquisition hook and loyalty-builder. Consider giving you best customers early access to the offer, or even a deeper offer/more limited or valuable benefit. If you’re feeling confident, you can even limit your promotion to best customers or email subscribers.
You can also run email acquisition ads on Facebook/IG in the lead up to BFCM. Target recent site visitors and lookalikes of your best customers. Let them know that signing up will give them early access to the deals. And then actually follow through.
It Doesn’t Have To Be A Promo: if your brand or product is really desirable and you’re less concerned with converting fringe customers, the “something special” you offer during BFCM doesn’t have to be a promotion. It could be an exclusive product release or colorway. It could be a gift set. Or it could simply be a guarantee that the item will arrive before a certain date.
Just Because You See It, Doesn’t Mean It Worked: I think BFCM offer swipe files can be a useful brainstorming tool, but don’t take them too seriously. Just because a large or highly hyped brand is running an offer, it doesn’t mean the offer worked. And even if it did, that’s no guarantee the offer will work for you.
Whenever you receive advice, always frame it within the context of your own brand, your category, your past history of promotions, and your customer.
Special 2021 Considerations
Your approach to holiday this year depends on two variables: how much inventory you have on hand, and your confidence in your ability to sell through that inventory.
Some brands who produce overseas have a lot less inventory than anticipated. Some brands who relied heavily on Facebook advertising are a lot less confident in their ability to sell.
Based on current reports of supply chain disruption, I think it is reasonable to predict a holiday season where many in-demand brands and items produced overseas sell out before mid-November. But do I think that DTC brands serve as a natural replacement? Not necessarily.
If junior just has to have a Playstation 5, will mom and dad substitute a case of artisanal seltzer or a Crossnet because the PS5 is sold out? Probably not. They’ll give cash or another form of IOU.
The majority of holiday demand is still driven by brand awareness and desirability. Consumers are more likely to convert, but it is because they feel more justified in purchasing the things they’ve been lusting for all year. Not because they’re desperate to buy anything and everything.
My recommendation is to take a measured approach. Even if you’re confident that you’ll sell out before the first Turkey hits the fryer, it doesn’t hurt to have a backup plan ready. And when it comes to this critical season, some of the standard advice still applies:
- Lock your plan by the end of October. Iterating up to the buzzer yields diminishing marginal returns and will burn your team out when you need them at their best.
- Have a Plan A and a Plan B in terms of offers in case Plan A is a non-starter.
- Have all your ads and visual assets staged and ready in your various advertising platforms at least 1-2 weeks in advance. You will experience technical difficulties.
- Make sure your eCom platform, your customer care resources and your fulfillment resources are prepared for the demand you project +10-15% for good luck.
- Related: have a comms plan and messaging in place for a potential site outage, surge in cancelled orders or delays in fulfillment.
- If you do decide to run marketing or UX testing during holiday, bear in mind that the results won’t be applicable outside of this period.