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December 14th, 2015

4 Ways You’re Misreading New Holiday Customers

I hope this year’s holiday sales drive scores of new customers to your brand. But as the holiday season comes to a close and you step back to analyze your efforts—to understand who your new customers are and what channels and tactics drove them to you—you may want to take a moment to reassess your assumptions. If you’re like many marketers, you could be operating under the influence of these four common misperceptions, listed below, of who holiday customers are and the value they deliver.


Misperception #1: It’s the Most Wonderful Time of the Year.

Each year, marketers undertake major initiatives to up their customer acquisition over the holidays—under the assumption that the year's peak buying season is also the optimal time to attract new customers. But perhaps that assumption is incorrect. After all, your best Lifetime Value (LTV) might not come from a cohort seeking a selection of once-a-year gifts at the lowest possible price.

Research supports this holiday-skeptical point of view. According to a Neustar MarketShare/Bain & Company analysis, holiday customers typically spend only 61% as much as non-holiday new customers over the course of the year. Meanwhile, the study finds that off-season new buyers have a 1.5x Lifetime Value versus holiday-season new buyers, and that customers earned through off-season remarketing repurchase more than twice as often as their holiday new-buyer counterparts.

(Of course, the value of capturing each additional new customer greatly depends on your Q4 goals—whether you’re focused on marketshare, short-term revenue, or long-term customer nurturing.)

Misperception #2: All Buyers are Customers

Many shoppers will buy from you and never return to purchase again. True customers, on the other hand, forge an ongoing relationship. Unfortunately, many retailers incorrectly conflate customers with one-and-done purchasers, and misread new customer acquisition rates as a result.

Marketers’ confusion over “who’s a customer” is understandable, given how surprisingly difficult differentiating customers from buyers can be. For a back-of-the-napkin checklist of indicators to look to, consider these:

  • Repeat Purchase Rate - The threshold will vary from one company to the next for how many repeat purchases it takes to go from “buyer” to “customer.” As rule of thumb, though, if a customer comes back to buy several times, you'll likely want to acquire more customers like her.
  • Product Return Rate - Don’t just look at how much your new purchaser bought. To get the full picture, you also need to see how frequently new purchasers ended the relationship by returning the products they buy.
  • Email Opt-Out Rate - Email is amongst the most direct ways to maintain customer interest and loyalty. Conversely, people who unsubscribe from your email list are telling you they no longer count themselves among your brand's loyal fans. This is precisely why email opt-outs are a powerful metric to tell purchasers from customers.

Misperception #3: You’re Keeping Track of the Growing Relationship

While most brands agree that they need to track the course of customer relationships, most brands don’t realize how much they could be observing but are not. To be sure, many brands do record some kind of basic relationship metrics, such as email open rates over time. But there are many more long-term questions that marketers simply are unable to answer about the customers they’ve acquired. How much will a new customer spend on your brand over the course of the year? What kinds of items will she buy? What kinds of price receptiveness will she exhibit over time?

Many of the answers to these questions involve more than just changing approach. They require serious technology investments to orchestrate and analyze data across marketing platforms, CRM, and more.


Misperception #4: “Seasonal Buyers” Only Shop in One Season

I’ll end with some cheer.

Over the years, I’ve encountered many clients who were convinced of the existence of the “seasonal shopper”—a class of consumer who loves a particular type of merchandise, but awakens only once a year to seek it out. I’ve challenged that assumption time and again.

The reality is that certain consumers are more likely to have a particular need at a given time of year—whether
that’s a birthday, an anniversary, back-to-school, or holiday shopping. But it’s equally true that the right segmentation and attribution can uncover “seasonal” shoppers who are actually quite likely to buy again at other times. These and similar approaches can also show what marketing actions it will take to nudge those customers to a repeat purchase. I’ve seen firsthand how effective this kind of analytics can be.

In other words: the holiday season doesn’t need to end with Q4. By properly analyzing holiday shoppers, this year's holiday season can fuel the next as well. And with the right analytics approach—along with effective execution—you might just get Christmas in July.


Post was updated Sept 23, 2019

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