With the holiday shopping season rapidly approaching, retailers are gearing up for their most wonderful time of the year (at least in terms of sales numbers). Shoppers will soon be flocking to stores and websites looking for deals on everything under the sun, particularly during Black Friday weekend (which encompasses Thanksgiving day, Black Friday, Small Business Saturday, and Cyber Monday).
The major draw for holiday shoppers during this time is financial savings, with nearly every retailer running sales or other incentivized purchasing campaigns at some point during this two-month stretch. While many of these campaigns are likely to reach the mailboxes and inboxes of existing customers (ideally with a personalized touch to drive engagement), if marketing has done its due diligence and subsequently pushed the right buttons, these campaigns will also draw in first-time shoppers. For clarity, we are defining first-time shoppers as consumers who are making their first-ever purchase with a business, either in-store or online.
Busy holiday season brings big results
As all retailers know, the goal is to convert as many of these first-time shoppers into repeat customers as possible, which is why customer retention and brand loyalty are hugely important business focus areas. Converting first-time shoppers presents a real opportunity for retailers to grow their customer base and generate sales. And during this time of year, the volume of shoppers and the money they spend on their purchases are at their year-long highest levels.
How high, you ask? Let's use the 2018 holiday shopping season as a point of reference. The National Retail Federation (NRF) reported that retail sales in the United States topped $701 billion during that time period last year (which it categorizes as Nov. 1 through Dec. 31), with $146.5 billion (21%) of that coming from online/non-store purchases. The NRF also reports that 165 million Americans shopped in-store or online during just the Black Friday weekend period in 2018 and spent an average of $313, and these numbers are projected to rise in 2019.
While no exact data is available on what number of those 2018 Black Friday weekend purchasers were first-time shoppers, lets theoretically put this number at a fairly conservative 1%. If this were the case, that would equate to over $510 million in just that that five-day period. While this is an impressive number, as previously noted, the goal is to convert these first-time shoppers into returning customers that continue to generate revenue for the brand.
Returning customers have been proven to spend more per purchase than first-time shoppers. And when it comes to online shopping, return customers account for one-third of all online shopping revenue despite making up only 15% of all online shoppers. So while reaching potential new customers is critical for retail success, devoting resources into retaining them is equally as, if not more, important.
Turn first-time shoppers into loyal customers
Consumers have a huge variety of purchasing options today, which makes customer retention far more more than just a buzz-phrase. In our three-part 2019 Holiday Shopping Series, we'll be examining the value in retaining first-time shoppers as well as tips for craft a customer retention strategy. This is part one of the series. Be sure to check out part two to learn some best practices on how to increase customer retention.
