Don’t Overlook Your Existing Customers During the Holidays
With U.S. retail sales projected to reach the highest point ever this holiday season, retailers across the country are looking for different ways they can capture their share of the growth. While there are endless marketing tactics to choose from, most retailers still struggle to answer one key question: “Should I focus my holiday strategy on attracting new customers or existing customers?”
According to industry estimates total U.S. retail sales will climb 3.8% to $1.008 trillion, making it the first-ever trillion-dollar holiday season, while U.S. retail ecommerce spending will rise 13.2% to $135.35 billion.
To help answer the question we examined 2018 holiday[1] and [2]post-holiday visitation trends for 13 national retail brands across big box stores, department stores, off-price retailers and luxury retailers, and compared shopping trips between existing customers[3] and new holiday shoppers[4].
Existing customers were outnumbered by new holiday shoppers but shop more often!
In terms of volume, new shoppers outnumbered existing customers across all 13 brands during the 2018 holiday season – from 20% higher up to 12 times more. However, when it comes to frequency of visits, existing customers visited upwards to 2.5X (FIG. 1) than new holiday shoppers during the same period.
Figure 1
What happens when the mistletoe comes down and the tree lights are put away?
On average, retailers experienced a whopping 29% drop in foot traffic after the holidays. In comparison, 44% of the existing customers visited again post holidays, comparing that to a mere 20% of the new holiday shoppers. When it comes to post-holiday visit frequency, existing customers also shopped almost twice as often than that of new holiday shoppers.
Figure 2
[1] Nov. – Dec. 2018
[2] Jan. – Feb. 2019
[3] Visitors who were seen two-month before holiday season AND during holiday season
[4] Visitors were ONLY seen during holiday season but NOT before holiday
With the pace of competition only accelerating, retailers who don’t convert new holiday shoppers into loyal customers or under serve their current customers, will lose them to more progressive rivals this holiday season. While maintaining growth in the era of digitization has its challenges, at the end of the day it’s still about acquiring customers and retaining existing customers to drive more visits and sales.
Taking this into account, smart retailers shouldn’t be paying for impressions this holiday season if they don’t translate into actual shopper visits. Instead, retailers should be rethinking their marketing strategy to match the KPI that matters most — visits. Retailers can do this by:
