A Customer-First Approach to Navigate the Holiday Season (and Beyond)

This blog was written as a guest contribution by Ansira, originally published on Iterable – the growth marketing platform for cross-channel customer engagement. Download Iterable’s Personalization Playbook on Workflow Building for more on this topic.

We saw quite a few firsts during the 2019 holiday season:

• The first-ever trillion-dollar holiday season, with total retail spending up 3.7%.
• Cyber Monday sales topped $9.4B, growing 20% YOY, and earning its place as the heaviest online spending day in history.
• Consumers spent a record-breaking $50B+ via smartphones, 37% more than the 2018 holiday season and representing 84% of 2019 online growth.
• Plus, Christmas Day exceeded $1B in sales for the first time.

What factors contributed to the record-setting success of 2019’s holiday season? The booming economy, for one, as well as the shortened calendar causing many retailers to begin their holiday marketing efforts earlier. The 5-day period between Thanksgiving and Cyber Monday saw record growth in Buy-Online-Pickup-In-Store (BOPIS) purchases, up 35% YOY.

The weather was also an important factor: On Black Friday, states that recorded more than 2 inches of snow saw a 7% increase in online sales.

Looking back on 2019, the 2020 holiday season has some big shoes to fill! If historical sales didn’t set the bar high enough, we are currently working through a state of social, health, and political unrest posing continuous changes to consumer mobility and challenging brands’ economic resilience.

Not to mention the shift to digital commerce, which was already challenging brick-and-mortar sales, was accelerated at breakneck speed due to COVID.

But brick-and-mortar shops are not completely out of the picture – they still drove the majority of 2019 holiday spending. Even if we don’t have additional lockdowns, it’s still fair to say that COVID has ushered in a new era of digital, bringing new consumer expectations that are here to stay.

What to Expect This Holiday Season

Looking ahead to the 2020 holiday season, Deloitte forecasts that holiday retail sales will likely increase between 1% and 1.5%, with e-commerce sales growing by 25-35% YOY, compared to 14.7% growth in 2019.

However, Deloitte also lays out two very different holiday scenarios that could play out and drive higher or lower results, depending on consumer confidence:

• Scenario 1: Consumers continue to feel anxious about health and finances and spend less on holiday in order to reserve funds for essential items.
• Scenario 2: Consumers’ confidence levels rise and money saved from cutting travel and limiting experiences are funneled toward holiday gifts.

eMarketer forecasts an even bigger e-commerce growth of 35.8%, representing an incremental $50.19B over last year, crediting mobile media, mobile retail app experiences and mobile checkout as the biggest drivers.

Hopefully, retailers have resolved some important digital infrastructure elements that surfaced early-on in the pandemic and are prepared for larger online browsing volume, responding to supply chain issues, expanded purchase options and virtual shopping experiences. These are going to be crucial for smaller retailers competing with giants like Amazon, Walmart, Target and Best Buy.

The cost-conscious consumer will be looking to stretch their holiday dollars through promotions, coupons, sales and savings on shipping costs. This is where data will play a huge role and brands will do well to attempt to profile, model or segment the cost-conscious shopper needing a discount, from the last-minute spender who might not.

Optimizing when, where and to whom to extend discount offers will help retain as much margin as possible in a time where shipping costs and delivery surcharges are on the rise. According to the NYT:

“Parcel companies like FedEx and UPS already struggle to handle extra orders each holiday season, and they’re expecting Christmas 2020 to stretch them to the limits. To try to discourage deliveries they can’t handle, the delivery companies have announced larger-than-usual additional fees for larger retailers during the holiday.”

What does that mean for retailers? That’s the question Ray Wimer, professor of retail practice at Syracuse University, is asking:

“Are you going to all of a sudden pass that off? Because we do know from past that customers abandon when they see they’re being charged the shipping costs. So I would think that retailer is going to take on that cost, which further lowers margin.”

At Ansira, we take a customer-first approach, not only to data and personalization but also to experiences. We believe customer experience (CX) is everything, and that is of increased importance around the holidays when timing is of essence, stresses are heightened, and more customers may be shopping with your brand for the first time.

So, we’ve pulled together three things (few but mighty) to focus on NOW to improve experiences this holiday season and throughout 2021.

Get to know your audiences

We perform Needs State Analyses using a combination of big data and small data; first-party data and a synthesis of secondary research. First-party analysis will help identify key behaviors that naturally create breaks or segments of customers in the data. That leads to various hypotheses that we try to validate through primary research, getting to the “why,” not just the “what.”

Our customers’ needs states are mapped along a spectrum that is usually focused on a sense of urgency or range of pain points. However, it depends a lot on what the brand is trying to solve for the customer.

It is possible to do a quick-and-dirty version of a Needs State Analysis! For the holidays, you are likely to have four basic consumer groups, identified by historical transactional data:

1. Gifters (only buy around the holidays)
2. First-time Buyers
3. Infrequent Shoppers
4. Loyal Customers

Put yourself in each of these consumers’ shoes and create a matrix of their functional needs, emotional needs, activities, triggers and key motivators. To impact this holiday season, focus first on your highest value segments.

For illustration, we’ll focus on Gifters.

They could be on a spectrum of the type of Gifters:

• Last-minute/Oops Gifter
• Prepared Gifter (who shops all year long)
• Unique Gifter (who loves to give special gifts; they take pride in it)
• Get-This-Over-With Gifter (who will probably buy a gift card, candle or picture frame for everyone on their list)

If you have the luxury of appending additional third-party data, you can not only validate your need-state hypotheses, but you can dimensionalize them even further with an understanding of their household information, specific barriers, lifestyle attributes as well as media habits and behaviors.

For example, our friends at Resonate looked at Black Friday and Cyber Monday shoppers and found the following insights:

“Those shoppers are 29% more likely to rely on delivery service rather than in-person shopping. 59% are avoiding physical stores to a moderate extent, while 35% are avoiding physical stores to a large extent. However, one of their top values is obeying laws and fulfilling obligations, which means they’ll likely follow your in-store COVID precautions—and, as our data tells us, they will expect you to have those in place.”

Perform a Customer Experience Audit

Once you know your audiences, assess and document successes and gaps or friction points in the current experience through the lens of each audience segment by performing a Customer Experience Audit.

This exercise is typically driven by a business need or challenge, but the evaluation of each interaction is done through the eyes of the customer. The goal is to ensure you are offering personalized experiences across touchpoints that ultimately drive results for the brand.

Continuing to use our Gifter audience as an example, during the holidays you may want to increase their average order value. Therefore, you could select a channel, like your website, and map the path to purchase from:

Browsing → to adding to cart → to check-out → and post-visit communications

You may have to separately map mobile or app experiences and don’t forget to also note potential negative paths, like cart abandonment. You will visually capture each experience and scrutinize each step for barriers a customer may encounter.

When you view through the lens of our Gifter audience, and account for actions, mindsets, emotional needs, and functional needs from our Needs State Analysis, you will start to see where there are gaps or opportunities to personalize the experience with messaging, content and offers targeted to the Gifter.

To learn more about how to do a full CX audit, read our blog post.

For the 2020 holidays, prioritize mobile and web experiences for segments with the biggest growth opportunities.

Data is the fuel required for the experience engine to run!

Data determines the segments for your Needs State Analysis, helps define which experiences to assess and the order in which gaps and opportunities are prioritized. Most importantly, data is crucial for driving personalized communications.

It is a given that you are tracking sales, but what about the following?

• Are you looking at email opt-ins and marketing engagement?
• Do you monitor average order value across lifecycle segments and purchase channels?
• Is your product catalog set up to be able to promote commonly gifted items to your Gifter audience?
• Do you need to heavy up media in your social channels for our now, and activate local messaging closer to the holidays?
• Do you have test plans in place for content and offers throughout the journey
• Do you know which customers are comfortable shopping in store (and what location is their nearest store) and which prefer to shop online?

All these data points should help inform the timing, channel, messaging, content and frequency for your marketing communications to stay top of mind and meet your holiday goals and beyond.

It’s okay if you don’t have your data tagged to track and monitor all these things now, but consider putting a Data Taxonomy Audit on your roadmap; it will go a long way in supporting marketing automation in the future. In fact, we would recommend adding all three steps to your roadmap.