The holiday season has arrived, again bringing its promise of feast or famine for online merchants. This period represents a significant portion of annual sales revenue for e-tailers. (Jupiter reported that the 1999 holiday season represented 44 percent of total online shopping for the year.)
For many e-tailers, the costly setbacks of last year are indelibly burned into memory. Victims of their own success, many e-tailers were taken completely by surprise last holiday season by the tremendous volume of online shoppers. Fulfillment problems, poor customer support, and difficult site navigation were the main sources of customer frustration and reduced holiday sales. Hoping not to make the same mistakes this year, many e-tailers have invested heavily in building up operational infrastructures.
Forrester predicts $10.7 billion in holiday 2000 online sales in the United States; $19.5 billion worldwide. Here are some insights based on a study by Lot21’s strategic planning team to help make this holiday season a successful and profitable one.
Infrastructure and marketing. Don’t do one without the other. Don’t ignore the impact marketing efforts will have on driving sales. Providing back-end support alone does not guarantee profit for online merchants. Marketing efforts and operational efficiencies work collectively to optimize the customer shopping experience and go a long way in building loyalty and brand equity, especially during the all-important holiday spike.
Experienced buyers offer more and demand more. Experienced online buyers present the largest opportunity for e-tailers in terms of future sales growth simply because they tend to purchase more frequently and buy products with higher price points. Forrester reports 93 percent of this holiday season’s Internet shoppers will have been online for at least one year and will spend an average of $603 per household. However, while they typically spend more, experienced buyers also demand more from e-tailers, hence the need to strengthen back-end support.
Online merchants must provide customers topnotch service during this holiday season to retain customers for future purchases and to build loyalty. Jupiter reported that 38 percent of tenured buyers were only somewhat satisfied with their online experiences, citing low customer service and shipping delays as top complaints.
Think different, spend smart. Since experienced buyers will represent the growing majority of sales for online merchants this season, e-tailers that need to prioritize holiday efforts should focus on cost-effective and performance-based online marketing rather than expensive broad-reach campaigns like television ads. Experienced buyers are already familiar with the Internet as a sales channel and do not need convincing of its merits.
Focusing on this customer segment rather than newbies will make the most of valuable marketing dollars. Start by targeting your most loyal customers using in-house back-end data and customer profiling; then widen your net by targeting experienced buyers who need to know where to find what they want. This is a smart strategy that can be achieved through cost-effective, targeted marketing campaigns.
Spend early. The shopping season for e-tailers peaks before that of brick-and-mortar retailers because buyers know they must allow sufficient time for shipping. This means media planning for holiday placements should begin immediately.
Time frames for securing ad space across offline and online media vary widely: Online bookings begin in September, peaking in October; print magazines may need upwards of two months; newspapers and radio have much shorter lead times, allowing for greater flexibility; and broadcast TV is the most rigid, with up-front media buying occurring in the second quarter of each year. Marketers should set aside some incremental advertising funds for last-minute opportunities such as comarketing deals and promotions.
A Good holiday hangover. Marketing spending in the fourth quarter often creates a lasting impression and builds consumer momentum that spills over into subsequent months, resulting in continued spending. Buyers are in a good mood coming off of a holiday and are still receptive to retailers’ ads. Online merchants should capitalize on this opportunity to convert gift buyers into repeat self-purchasers. Consumers are more likely to shop with merchants from whom they have successfully purchased in the past.
Trust is a must. Cautious holiday shoppers value trust over price, so advertise accordingly. An e-tailer’s advertising should establish and reinforce the credibility of the brand ahead of loud price promotions. According to Jupiter, 51 percent of online shoppers cite recognition and trust as leading determinants of which e-tailers they will buy from; 39 percent would buy from online merchants whose stores or catalogs they had bought from in the real world; and this holiday season, 37 percent plan to buy from online merchants they’ve bought from in the past. E-tailers who speak to issues that resonate most with customers — trust, dependability, and security — will surely gain repeat customers.
Get a holiday game plan. Here are some tactical reminders guaranteed to help attract customers, drive sales, and build loyalty:
- Dress your web site up for the holidays. Provide holiday products and content within a specific gift section to attract attention and provide added convenience.
- Offer products that are sold exclusively through your web site (for merchants with both an offline and online presence). This will help drive loyal store customers to your web site.
- Leverage affiliate partnerships by providing them with holiday-specific creative and promotional links that take customers directly to your product pages and not your home page.
- Provide value-added services to enhance the customer experience. Examples include: free gift-wrapping, overnight delivery, flexible return policy, etc.
- Brick-and-click e-tailers should allow customers to return products purchased over the Internet at offline stores, prominently communicating this policy on the site. The added convenience will deepen relationships with your customers.
- Define, establish, and track data metrics to assess your success in meeting business goals, and set benchmarks for future performance (for example, revenue growth, profitability, customer acquisitions, loyalty, brand building, etc.).
- Make sure inventory is accurately reflected on your web site to avoid customer disappointment relating to product availability.
The best Santa is an honest Santa. Lastly, and this can’t be stressed enough, Lot21 advises e-tailers to be honest. Don’t make promises you can’t keep. If you can’t make the delivery on time, let your customers know immediately, and offer them the option to cancel their order. While you might lose a sale in the short term, you will definitely preserve the credibility of your brand, which is worth far more in the long run. Remember: A satisfied customer will tell 4 friends of their experiences, but a dissatisfied customer will tell 11 friends.