Prepare for Holiday? In May? Yes, really. If the holiday season is important for your business, here are the steps you need to take to maximize the opportunity.
This content was originally published in the No Best Practices newsletter on 05.27.2024.
It’s that time again: my annual “holiday planning advice” newsletter. It’s coming in a few months early this year because you should start planning now. This year is shaping up to be ~wild~.
Last year (2023), DTC Twitter was debating the potential for a Q4 recession. That didn’t happen; most brands I worked with and spoke to had a strong Holiday 2023.
But this year has a triple whammy in store for us (at least in the US): it’s a big election year, a recession is still a possibility, and many folks struggled with Meta in Q1 and early Q2.
There are more “known unknowns” and more “unknown unknowns”. So if holiday is an important selling period for your brand, here is my advice on how you should prepare.
Do A Deep Dive On Holiday 2023
I recommend that brands run the following analysis for any promotional event or selling period that drives 5% of annual revenue or more (including BFCM):
- Revenue generated by new vs returning customers by day
- Offer selection by new vs returning customers (Which offer did they choose if multiple offers were running? Did they use an offer at all?)
- Time since last purchase for returning customers–when was the last time they purchased prior to the event?
This analysis is going to help you understand what segments of the customer base are driving your holiday sales volume. It will also help you refine your priorities for 2024 so you can maximize both acquisition and retention.
If repeat customers drove the majority of your holiday sales, you know you’ll have to heavy up on acquisition now to fill your funnel. If new customers drove the majority of your holiday sales, you’ll have to plan for a scenario where holiday CACs could spike more this year than in years past.
Digest Your Forecast And Set/Manage Expectations
Go to finance and get a revenue target for November and December ASAP. If you’re a smaller brand, lock in an initial goal for the period.
Use what you know from your Holiday 2023 analysis to build out an initial forecast of new vs repeat customer sales. Assume nothing about your promotion will change YoY. Use this forecast to project your paid media budget, then compare it to what has actually been budgeted.
If you don’t feel confident in hitting the forecast, ask yourself the following questions:
- Can I start “holiday” earlier this year?
- Can I create separate offers for my existing customers and/or VIPs, and start those earlier than the public offer?
- Is there something I can do to make my offer more compelling? Can I go sitewide this year if last year was limited to certain products? Can I run a deeper discount?
If the goals your business set during annual planning in December 2023 no longer feel realistic in May 2024, now is the time to speak with finance about it.
The answer might be: “too bad, we have inventory to move”. You want to know that now so you can factor it into your offer strategy.
Here are some forecasting resources:
My easy forecasting 101 post (better for small brands w/limited resources)
Dave’s CXL forecasting course (a must for larger, more complex brands)
I don’t get any commission from Dave’s course, I just think it’s really good.
Develop A Plan To Fill Your Funnel
Because most of you reading this depend on Meta advertising, and because the election will push up CPMs, you should consider a strategy to “fill your funnel” ahead of Holiday.
The classic way to do this is investing more heavily in customer acquisition in September and October. The first 30-90 days post-purchase is the “sweet spot” for repeat purchase behavior. So acquiring new customers in the 30-90 days before Holiday increases your pool of potential shoppers.
The election happens in November, so we might see higher CPMs and (possibly) less Meta platform stability start in August and September. So you might want to shift some of this “funnel building” activity into Q2 and early Q3 aka now.
One way to start earlier is to build a qualified audience using a higher funnel objective than conversions. On Meta, I like using ViewThroughs as an objective. On Youtube, I like creating an audience of folks who did not skip the ad during pre-roll.
These objectives are much, much cheaper than a Meta conversion, because these folks are not “in market”. They’re simply interested enough in your content to watch it.
You can try to get this audience on to your site to build up your cookie pool, or you can simply target them in a conversion campaign with your Holiday offer when the time comes. Because of the unique dynamics of the holiday period, you’ll see a higher conversion rate than you would normally.
That said, this strategy is still going to have a lower conversion rate than targeting “in market” shoppers during Holiday. So you have to build up a big pool of people–I’d aim for an audience of at least 500k.
The content of your video advertising is going to influence the quality/relevance of your audience and how receptive they are to your offer. Founder story videos, especially those that have been vetted in a conversion campaign, can work well. If you’re a problem/solution brand, you can also test engaging and informative content about the problem.
I’ve seen a Meta “cost per view through” of $0.01 – 0.06 for the campaigns I’ve run. So you can build up an audience of 500k people for $8-30k. Some folks may view the same video twice, so one ViewThrough doesn’t translate into one new audience member. You can split the expense over multiple months.
Consider A VIP Offer & Keep It Simple
A VIP sale preview is one of the most effective tactics I’ve ever run. I’ve used it on multiple brands across several different categories, and it always works.
The execution is simple: send a plain text email to your best customers one or two days before the public launch of a big sale. This tactic increases the odds that your VIPs will see the sale (plain text is a pattern breaker with better deliverability). It also increases the odds that your VIPs will shop the sale more than once.
To really increase your chances of VIPs double or triple dipping, run a separate VIP offer. Make your VIP offer deeper than your public offer, but require a higher AOV threshold to unlock the maximum discount.
Here is an example:
- Site AOV: $85
- VIP Offer: 35% off orders of $150+, 25% off orders <$150
- Public Offer: 25% off sitewide
Your VIPs really do get a better deal than anyone else as long as they hit the AOV threshold. And because VIPs tend to have higher AOVs and purchase frequency, this should be a no-brainer.
But if your VIPs forget something during the private sale, or your email marketing tells some good stories around gifting, VIPs might come back and buy again during the public sale.
Start A Tradition
Lenox has their annual ornaments. JC Penny had snow globes (RIP). Cadbury has Easter eggs. Starbucks has the pumpkin spice latte.
These are moments that create loyalty and mental availability for your brand. Consider developing a special product that you only sell during the holidays, or that has an “annual” component like the ornaments/snow globes.
The product actually has to be good. And it has to resonate with your customer base. But this can be a really powerful lever for retention, new customer acquisition and brand awareness.