19 Dec Holiday Study: Existing customers spend more, more often
Every year, major news publications dutifully report the steady expansion of the holiday shopping season. Like the waistline of many Americans – including mine – Black Friday has slowly ballooned, gobbling up time once reserved for Thanksgiving seconds and stretched into a weeklong sale still misnamed “Cyber Monday.”
This year, reports have been mixed. Some sources say that retailers saw an overall decline in foot traffic and sales. Others reported that because of the lateral expansion of the holiday shopping season, numbers from November trended upwards overall. However, one thing that all talking heads agreed on: a startling number of Americans ditched the crowds and did their shopping online.
According to Comscore, eCommerce Thanksgiving Day and Black Friday numbers soared 32% and 26% respectively. Moreover, Cyber Monday was the biggest eCommerce shopping day in history, growing 17% and topping $2B for the first time. These numbers pack a punch, but aren’t really surprising: major retailers have been investing in their online presence, and Amazon continues to expand its empire into other retail categories.
That said, despite the influx of reports, very little of this research provides any actionable feedback for marketers. While overall sales figures serve as an indicator on economic health, they do little to highlight the actual increase or decrease in efficiency for retailers. Unless you’re in a declining industry, sales are going to trend up year over year with minimal marketing effort.
After examining the habits of millions of shoppers across our network of eCommerce customers, we pulled together some stats around how repeat customers drive holiday sales, how holiday sales figures differ from average days, and what discounts are redeemed. These figures give a better idea on how marketing campaigns directly affect holiday sales and how marketers can improve the next time around.
1. Existing customers spend more.
Where we saw the most interesting impact is in the role of existing customers on overall holiday sales. Studies have repeatedly shown that your current customers are worth more than newly acquired ones. Our numbers support this research, and help quantify it. For the Black Friday to Cyber Monday period, existing customers spent 30% more than newly acquired shoppers. Not only that, they were 16% more likely to buy multiple times during that period. Some of the increased spend can be attributed to a 12% increase in Average Order Value (AOV) for repeat customers.
2. Shopping holidays live up to the hype, sales-wise.
On average, our eCommerce customers saw a 649% jump in gross sales for the period of Black Friday to Cyber Monday, compared to average Friday to Monday periods. They experienced a noticeable increase in AOV of 22% as well. This means that holiday promotions not only brought more people through the door, they also incentivized shoppers to spend more per order.
3. But beware of discounts that eat away at profit.
An important question to ask is: do discounts negate the increased revenue generated from holiday sales? We found that the average discount amount used more than doubled – 10.5% to 22.1% – which, depending on business margins, can really eat away any additional revenue gained from increased business. It’s important to track the business margin of items you put on sale to prevent any losses; the movement of a lot of low-margin merchandise can cripple the amount you actually make. One way to compensate is to incentivize high-margin merchandise instead.
These results have actionable takeaways for marketers: keep up your holiday marketing and promotions – clearly, they work – but keep a strict eye on your profit margins. Our key takeaway from this study, however, is that repeat customers spend more, order more at a time, and return more often. This underlines that fact that companies need to increase their focus on developing the customer base they already have; doing so increases the efficiency of growth overall.