The holiday season is often one of the most crucial times for an online business’s bottom line. In our 2015 Ecommerce Holiday Trends report, we found that around 20% of the retail industry’s annual sales occur in November and December, and that those months generate an average monthly revenue that is 30% greater than the average revenue in the first ten months of the year. 

For this reason, retailers often go the extra mile and (more importantly) spend the extra dollar to ensure the holidays are more like a stuffed stocking — and less like a lump of coal. Before doing so, however, each retailer should first ask, “does this make sense for my business?”, and then, “am I making the right decisions to improve my business?”

Those questions are often quite difficult to answer – not unlike the question “What should I buy my family for Christmas or Hanukkah this year?” This article will tackle some approaches that will help retailers come to a better conclusion.

Be aware of your industry and business model

When preparing for the holidays, companies should be aware of both their industry and their business model. In that same 2015 Ecommerce Holiday Trends report I mentioned above, we identified that the Apparel/Accessories and Computers/Electronics industries are most sensitive to the holiday season. A company in one of those industries is likely to notice a larger impact during the holidays than an organization in other industries — based purely on the nature of those product lines making for better gift items.

A company’s business model also has an effect on the importance of this season. For example, consider Company A, which sells ugly sweaters through an online retail store, and Company B, which sells ugly sweaters using a monthly subscription model. Company A’s business is very likely to spike during the holidays (who doesn’t love a nice ugly sweater holiday party?). On the other hand, while Company B might see some increase in subscription sign-ups during the holidays – I’ll chalk that up to the specific type of clothing – it is unlikely they will see as big an uptick in business as Company A, because Company B will be generating loyal customers throughout the year.

The holidays, for many companies, can be a time of record revenue and through-the-roof customer enthusiasm. For others, the holiday season is business as usual. While these are certainly not the only factors, a company’s industry and business model are often good predictors of its holiday season performance compared to the rest of the year.

Get to know your customer

Another big factor when preparing for this season is knowing the purchasing behavior of holiday buyers. Are holiday-acquired customers placing more orders than customers acquired during the other seasons? Do they place higher-value orders? Do they return their holiday purchases more frequently (guilty!)? Do they rely on promotions or deeply-discounted coupon codes throughout their lifetime (also guilty!)? Answering these types of questions are important in understanding the true value of customers acquired during the holiday season, and understanding the true value of customers acquired during the holiday season is important for shaping marketing strategies during and after the holidays.

For example, consider Company X, whose past holiday performance has revealed:

  • Their holiday orders are returned 20% more often than non-holiday orders, and
  • Their holiday-acquired customers, on average, place 30% fewer orders in their lifetime compared to the customers acquired outside of the holiday season.

Moving forward, Company X should not treat these holiday orders and holiday-acquired customers the same as their non-holiday counterparts. To prevent an increase in returns, perhaps the marketing department should promote products known for a very low return rate. To encourage repeat purchases, perhaps Company X should offer a coupon code that expires after 45 days to all new customers acquired during the holidays.

Knowing how a typical holiday buyer acts is imperative for strategizing before, during, and after the holiday season. (And while every business is different, here is a spoiler alert if you haven’t read our 2016 Ecommerce Holiday Customer Benchmark report yet: customers acquired during the holidays are not that much different than other customers.)

Our past findings, insights and tips

Analyzing commerce data during this season is a bit of a ritual for us. If you’d like to review our past findings – some of which I’ve referenced already – check out the following articles: