Black Friday 2022 is only 90 days away. Read on for stress-free planning advice and tips on how to use product to increase your conversion rate.
This content was originally published in the No Best Practices newsletter on 08.28.2022.
“Holiday” is just around the corner–Black Friday is only 90 days away as of this mailing. That means you really only have 9 weeks left to lock your holiday plans in place.
If you’re a long time reader, you already know my opinions about “holiday”. TL;DR: I think the season doesn’t deserve the hype it receives. People are naturally more “shoppy” so It’s a great moment for driving the top line, but those customers rarely come back and buy again.
But every year I put my ~personal feelings~ aside and write a piece on Holiday strategy because we can’t just throw up our arms and tell BFCM to go f*ck itself out of principle. Before we dive in, I would encourage you to read this piece about actively managing your growth, and start thinking of ways to diversify your revenue and growth out of the Holiday period.
Side note: remember this time last year when DTC think-fluencers were telling brands not to run any sales for BFCM because the entire retail landscape would be so strapped for inventory that sales wouldn’t be necessary? Life comes at you fast.
I’m going to cover a few topics that are going to make your holiday planning easier and increase your chances of a favorable outcome.
The Best Way To Plan For Black Friday 2022
Many retailers, from startups to centenarian behemoths, suffer from a lack of introspection about their growth. And that’s because retail has been blessed with close to three decades where traffic only went up.
So “holiday planning” in many orgs amounts to two things:
- Get more traffic (who cares from where)
- Run a deeper promo than last year, and than our competition
This results in a lot of stress and unpredictability. If you’ve ever set up a “Holiday War Room” or (in the remote work era) “Holiday Bridge Conference Line” and spent hours debating the minute details of your BFCM promo, you know what I’m talking about.
Harsh truth: most of your BFCM success is locked in three to six months before the big day. All of those sleepless nights and hand-wringing are executive theater. If you’ve been subjected to it, you should get angry at your superiors. There’s a much better way to do things.
To plan for BFCM, you need two data pulls–one for November, and one for December. A sample output with sample/fake data is provided in the screenshot below. I’ll walk you through how to use this for stress-free BFCM planning.
How To Read This Chart: This chart illustrates what percent of November 2021 revenue was driven by customers whose last purchase took place within various timeframes. The first column (“Last Purchase”) outlines the different timeframes we’re analyzing.
For example: In November 2021 customers who last purchased within the 30 days of November spent an average of $121 each. There were 8,000 total customers in the file who made a purchase within 30 days of November 2021, but only 520 of them converted.
This analysis shows you two things:
- How well you’re utilizing your total retention opportunity aka your customer file.
- How different levels of customer recency contribute to your total sales.
If your retention marketing program is effective, your customer file utilization (the “% Converted” column) should improve over time.
How To Use This To Prep For Holiday:
- Project how many customers will be in your file across each bucket for November 2022. You are using customer-based planning, right?
- Plug in last year’s utilization percentages. Decay last year’s utilization for customers who purchased 183+ days ago by 0.75 to reflect the fact that your customer file is larger, which is likely to make your baseline less effective. This will give you a projected returning customer count for November 2022.
- Plug in last year’s Spend/Customer numbers. This will give you a projected returning customer spend for November 2022.
- Look at your AOV trend for the past 12 months. If it’s been trending up or down, make a slight adjustment to the spend/customer number for November 2022.
Now you have a good projection of how much revenue you can expect to generate from your returning customers this Holiday. If this number is short of your goal, you are going to have to accelerate customer acquisition over the next three months.
You’ll find that most of each month’s retained customer revenue comes from customers who purchased in the last 30-90 days. The best way to get those active customers at scale is to acquire them.
You may choose to work on engaging various segments of your customer base so they’re “primed” for BFCM. And if BFCM is your deepest offer of the year, then it may be your most effective lapsed customer reengagement opportunity of the year. But if you’re trying to grow more than 10% YoY, acquisition is probably the only way to do it. Don’t fall into the “growth through retention” trap.
As you build your forecast, you’ll want to think about how your offer may affect average spend per customer. If you ran 30% off sitewide last year, and you’re increasing it to 40% off this year, reduce spend per customer accordingly.
Word of warning: you are never going to double or triple the percentages in your % Converted column without a radical overhaul of your product offering or marketing strategy. Setting up a “lapsed customer winback” campaign isn’t going to cut it. So engage in this planning exercise based on what is likely to happen, not what you want to happen.
Getting The Black Friday 2022 Shopper Hyped
The holiday season changes consumer behavior at the macro level. People are simply more likely to shop for anything. You can use the “forgotten P of marketing” to leverage this change without resorting to promotions. (The forgotten P is Product).
One strategy you can use is to appeal to your VIPs and evangelists–the customers who spent the most in the last 12 months and who absolutely love your brand. Here are some product-based ideas that will make this group do a double-take:
- A limited edition version of your hero product featuring eye-catching colors, creative flavors, or a collaboration with another brand you know that your customers love.
- Unique merch that customers can only receive as part of a multi-product bundle or as a VIP gift with purchase. This set with the branded headband was launched during Holiday.
- Exclusive, experiential gift ideas that carry a high price tag. This could include a trip to your office, lunch with your founder, or something else that ties into the provenance of your brand. The Goop holiday gift guides are a great example of this approach.
- Creative multi-packs. Let the customer buy every iteration of your hero SKU + a new, holiday-only edition. If you sell underwear, make a “day of the week” set. If you sell soda, let the customer buy every flavor in a holiday-themed box. You get the picture.
At the opposite end of the spectrum, you can use product to lure in casual browsers who might be put off by your price tag during the rest of the year. There are a few ways you can approach this:
- If you’re a high AUR brand with a strong brand reputation, create “merch”. Saint Laurent does a good job of this. You don’t need to be a designer brand to leverage this strategy. Just offer something that is priced 30-50% lower than the low end of your AUR range in an unexpected category.
- If you’re a brand that carries multiple flavors, colors, scents, etc., and there is some risk in product acceptance, create a low-AUR sampler. Here is a great example from perfumer DS & Durga.
- Offer pre-packaged gift sets. Skincare brand Lush does this really well. If you need to buy gifts for all your employees, cousins, etc. this is a no-brainer.
Options like this are fun and have the potential to drive word of mouth awareness. You might include these items in your BFCM offers, but you don’t have to. The novelty and limited time frame create desirability.
What To Do With All Those Customers
We all know that the customers you acquire during holiday have some of the weakest LTV numbers of any time-based cohort. They just don’t come back. This has been consistent across every brand I’ve analyzed. But that doesn’t stop many brands from cooking up complicated plans to “maximize the holiday retention opportunity”.
There are a few things you can do if you want to go “all out” and squeeze some extra dollars from this audience, but you might not like it:
Hold a secret clearance sale in January. If you have inventory sitting around that you want to move, set up a “secret sample sale” and promote it to your email list (which should contain a lot of Holiday shoppers). Do NOT promote this on your public-facing site or in paid marketing. If possible, host the sale on a separate instance of your website so it doesn’t pollute your pixels.
Send out a hero product offer. If more than 50% of your holiday customers did not purchase your hero product, send them an intro offer they can’t refuse. Literally say something like “we’re so confident you’ll love this, we’re giving you 50% off”. This works best for consumable products.
Lock in your post-purchase marketing. You have a strategy designed to convert new customers again within 30-90 days, right? What about a direct mail component to capture non-subscribers? If not, test and refine these programs right now.
Most of these strategies are heavily promo-based. If you bring in customers during Holiday with a big, honking promo…they’re going to need another big, honking promo to shop again. Customers rarely buy from you at a discount and then return to buy at full price. Their first purchase is a great indicator of what they’re “willing to pay”.
If you really want to maximize the holiday opportunity, think carefully about what products and offers you’re launching in Q1. You want to include something that might appeal to the casual buyer.
But in reality, there are no “free lunches” in marketing. Most of these customers won’t come back (at least until next Holiday). For the love of god, focus on something else.