The most comprehensive BFCM and end of year planning guide for commerce brands.
The most comprehensive BFCM and end of year planning guide for commerce brands
Wow, we're here again aren't we? 🎄🎁📈💰
In our view, this is one of the most exciting periods for commerce brands. Filled with opportunity for the wise and despair for the foolish.
This guide and tool covers everything you will need in order to set yourself up for success across the holiday months.
“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
The guide itself it broken into several sections:
1. Strategy & Planning - Goals and strategies
2. Offers & Promotions - Tips on managing offers and promotions
3. Trends & Insights - Insights to give you a competitive advantage
4. BFCM - Tactics and insights into the period
5. Remarks - Closing insights on ecommerce and business
Strategy & Planning
Optimisation, planning, strategy are all valuable.
However, before we do any of this. It is important we establish what success actually looks like for your business and stage of growth.
⚡ TIP: The the absolute first thing we must do is ask with why we are focussing on a specific strategy. We know it will be competitive and we must also assume our competitors are thinking in a similar manner - So why do we think this is the right strategy and the right time?
Examples of goals for this period:
📈 Grow our total customer base.
In this case, we're happy to break-even. Perhaps we know we have a new product coming into the market in the first quarter of the new year and we want to be in a strong position for that period
👀 Prepare for the first quarter of the new year by capturing data and insights
Test, test, test. There is no better time than the toughest period to be testing to see if your strategies, tactics and products work
🤑 Ensure profitable growth
Brands can easily over-discount and deliver loss-making growth. Our favourite goal over this period is to focus on profitable growth with our founders.
Offers & Promotions
Once you've established a clear strategy and goal for the period the next step is to consider any relevant offers or promotions.
Should you discount?
Should you offer $ off?
How about a gift with purchase?
These are important questions, but fundamentally these questions can only be answered once we have established our goal. This is because a promotion for customer growth will be different to a promotion that focusses on profitability.
⚡ TIP: Despite what you may think, there has been no fundamental change to the customer. The modern consumer is a sum of growing economic pressure and increasing competitive options.
A discount isn’t the only way to create an incentive for customers to purchase. In fact, there are many other ways that brands can create effective promotions without discounting.
Firstly, let’s look at how pricing and promotions drive purchase decisions. More than ¼ of all consumers value a promotion.
Promotional Strategies Overview
- Dollar value discount
- Percentage discount
- Second purchase discount
- Buy one get one
- Gift with purchase
- Free Shipping
- Repurchase discount
- Progressive discounts
🤑 Dollar value discount
A dollar value discount, such as offering $10 off, can make customers feel like they’re getting “free money” rather than just saving it. According to one study cited by Entrepreneur, a dollar value discount can generate up to 170% more revenue and have up to a 72% higher conversion rate than a percentage discount.
You can make this discount static, or make it dependent on how much a customer spends, such as concurrently offering $10 off orders over $100 and $25 off orders over $150. The latter strategy can increase average purchase value by encouraging customers to add more to their carts to receive a bigger discount.
✨ Percentage discount
A percentage discount can be versatile; you can choose to offer a certain percentage off of a specific product, or off of an entire order. You can use smaller percentage discounts to pique customer interest, while larger discounts (think 50% off or more) are good for liquidating inventory that isn’t moving otherwise.
Shopify recommends the following strategy to choose between offering a percentage or dollar value discount for individual items: If the item that you are discounting originally costs less than $100, use a percentage discount. If it costs more than $100, use a dollar discount. This strategy helps result in the most perceived value on behalf of the customer.
👀 Second purchase discount
Similar to percentage or value discount. Except it is applied only if the customer purchases two products or more.
This type of discount can be useful for brands or products where you know the user may find value in purchasing a second product at the same time.
🏆 Buy one get one
“Buy one, get one 50% off,” while another might be “Buy two shirts at full price, receive the third for $10.”
This deal format encourages customers to buy additional items and spend more than they may have originally planned.
🎁 Gift with purchase (GWP)
Offering a free gift with purchase (GWP) is another great way to boost sales.
This is also a good way to move inventory that isn’t selling on its own by offering it as a gift. This gift can either be a surprise or a known item, though researchers from the University of Miami found that for certain industries, offering a mystery gift with purchase is more likely to prompt people to buy than ruining the surprise.
We recommend adding a free gift when a customer meets a purchase minimum. This encourages customers to buy more. And, as an added bonus, the Journal of Marketing found that people who got a product for free talked about it 20% more than those who paid for the item
Other others can be to:
- Use GWP as a way to introduce product sampling (useful for beauty categories)
- Use GWP as a way to get users to try a lower value product (i.e. a new tea)
🔥 Free shipping
Free shipping can be one of the most effective types of promotions.
High shipping costs are one of the main reasons that shoppers abandon their carts before completing checkout. While many retailers always provide a free shipping option, offering free shipping as a limited-time discount can be a great strategy for those who don’t.
According to Wharton marketing professor David Bell, customers find a free shipping offer more appealing than a $10 overall purchase discount, even if shipping costs would be less than $10. Requiring a minimum purchase to activate a free shipping discount can also help boost average order value. Just make sure you have the right ecommerce fulfilment strategy in place.
⭐ Repurchase discounts
Repurchase discounts, or VIP discounts can be used to encourage users to repurchase products. This can work especially well in consumption-based categories such as in skincare where a user may need to reorder a product.
🥰 Progressive Discounts
This is another way to encourage the customer to increase the average number of products per order and, consequently, the value spent on e-commerce.
As the name indicates, a progressive discount is the one that increases as the number of products (or value spent) increases. Example: in the purchase of a product, the customer has a 10 % discount, but in the purchase of two products, the customer receives a 20 % discount.
Trends & Insights
Two things are true during the sales and promotion period
1. 📈 Conversion rates increase
2. 💰 Costs increase
So how does a business leverage the increase in conversion rate, while minimising the increased costs? In principle, it is actually a simple process.
You need to acquire these users ahead of the peak season - During a time where it is more cost-effective to do so.
- If you can pay $20 to acquire a customer in September-October and activate them via email, then why would you pay $40 in November?
- CPM's are increasing, which is resulting in higher costs of traffic.
- If you hold back budget for BFCM and then spend aggressively all you will do is spend ineffectively on higher CPM traffic, which results in a higher CPA and a lower MER
Holiday and Gifting Customers are worth less:
Data across our founders show that nearly all BFCM-SOND customers have an LTV that is 20-40% lower than non-holiday customers.
Put more simply, the customers you acquire over this period are less loyal, more price sensitive, and have a lower lifetime value.
⚡ TIP: BFCM and December gifting customers are worth 20-40% less than non-holiday customers.
Favour Mobile First:
Depending on product category, between 70 and 90% of shoppers research what they’ll buy during BFCM on their mobile phones, with 89% of those consumers making a purchase on the very same device. 70% of sales made on Shopify were made via smartphones.
If you missed the Trends and Insights section above, go back and read it.
This is the opportunity where you are reactivating that traffic via SMS, Email and low-cost retargeting. September-November is about acquiring users, BFCM is about conversion.
1. Email is hugely valuable during the BFCM and Oct-Dec period
2. SMS can be used (sparingly) to reactivate customers
3. Remarketing should be used but focussed on efficiency over this period
⚡ TIP: The weekend and days around BFCM weekend is not the time to focus on driving new traffic.
At a strategic level, our focus for email should be to acquire as many high-value email subscribers prior to the BFCM period as efficiently as possible. Then, as we run through the BFCM period, we should be a strong offer and incentive that is compelling to reactivate them.
SMS can be easily seen as spammy if over used. If you use SMS, collect valid phone numbers and make sure your users have legally consented to receive SMS. Test SMS messages should be sent internally and timing of the messaging should be considered.
If in doubt, less is more with SMS.
As discussed in detail, BFCM and the surrounding days is not the time to be spending to acquire traffic if it can be avoided. For this period we should be laser focussed on driving efficiency (CPC) and aggressively remarketing using our compelling offers to support our activation activity through SMS and Email.
The end of year period can be stressful and rewarding for founders and marketing teams.
Strategically speaking, ask yourself if your strategy will beat the market or are you just playing along? Does your strategy has an honest source of advantage or should you reconsider your approach? Have you asked yourself what could go wrong and do you have a plan for it?
⚡ TIP: Don't be afraid to throw out what is not working and completely cease your activities if it doesn't meet your goals. Be bold and don't get sucked into spending just to generate unprofitable revenue.