For consumer brands, the holiday season is time to go. The high-energy two-month period that begins on Black Friday and Cyber Monday (BFCM) could see as many as 19% of a brand’s total annual retail salesaccording to the National Retail Federation.
While brands have visions of profits dancing in their heads, there’s another side to the holiday season they need to keep in mind. Holiday shoppers tend to be the worst when it comes to lifetime value (LTV). Too many buyers will buy from your brand once and then disappear. They may return next year in some cases. Other times they are gone forever.
How do you take lapsed buyers and turn them into loyal brand advocates? The answer lies in the treasure trove of business data you collect.
Let’s look at four ways your sales data can help you craft the right pre-holiday strategy and drive repeat business after the holidays.
Pre-holiday: Optimize your marketing spend
The right segmentation leads to better personalization during the holiday season.
In light of growing uncertainty about the effectiveness of digital advertising, brands should keep a close eye on their marketing spend data in November to see if they are on track for success or failure this holiday season. Your ROI should increase the closer you get to BFCM. If it isn’t, you need to adjust quickly to optimize your holiday profit margin.
At a high level, you want to monitor the performance of each marketing channel during the holidays. One of the most useful metrics to track is return on ad spend (ROAS), a performance barometer that shows how much revenue you’re generating for every marketing dollar spent. Break down return on ad spend (ROAS) by channel and watch for any sudden fluctuations or red flags so you can make real-time adjustments.
To see if your marketing efforts are producing profitability and bringing the right customers to your website, you can go a step further by running a cohort analysis that measures the LTV:CAC ratio. This calculation will give you valuable insight into your customer lifecycle so you can identify the ROI for every dollar you spend on customer acquisition.
To do this, you’ll need to create time-based cohorts of “first-time buyers” and compare them year-over-year. Since the exact dates of BFCM are variable, we recommend starting by making Black Friday Day 0, then counting backwards (-1, -2) before BF and forwards (+1, +2) every day after BF. This also works to do an LTV:CAC cohort analysis for Christmas sales using Christmas as day 0.