COVID-19 is predicted to have a number of significant effects on holiday retail, including a spike in digital sales, shipping delays, and increased demand for flexible customer journeys such as buy-online-pickup-in-store (BOPIS). Here’s an overview of what you can expect for the upcoming holiday season and tips on how to prepare.
The holiday season is the most important time of the year for most brands and retailers.
This year, however, the retail landscape during the holidays will look more different than it ever has before. With the COVID-19 pandemic driving ecommerce growth, changes in consumer behaviors and preferences, and broader economic disturbances, the 2020 holiday season will require innovative thinking to overcome newfound challenges and maximize sales.
To make the most of the upcoming holiday season, we recommend that brands and retailers:
Here’s an overview of the most notable effects of COVID-19 on the holiday season, as well as a deeper dive into our top seven tips for successfully adapting to these effects.
What can you expect for the 2020 holiday season?
The majority of holiday sales are predicted to take place online.
Don’t expect the same in-store holiday rush as in previous years.
This year’s holiday shoppers will likely shop less in-store due to lingering anxiety and restrictions regarding COVID-19.
In fact, one consumer insights survey found that 60 percent of consumers plan to shop less in-store, while 66 percent of shoppers anticipate increasing their online purchases. The same survey suggested that shoppers will be slightly more likely to shop in-store from businesses they knew were following COVID-19 safety precautions, meaning that businesses should take care to communicate their COVID-preparedness if they want to encourage in-store engagement.
This growth in ecommerce was occurring before COVID, but the pandemic has accelerated that growth at a staggering rate. That means that this year’s holiday season will present an incredible opportunity for digital.
Businesses with an already well-established online presence will be in the best position to seize this opportunity—but businesses that have been slow to make the shift will need to adapt as soon as possible to win against their more digitally-savvy competitors.
Shipping delays could cause hiccups in the customer experience.
Delivery providers such as UPS and USPS have been overtaxed since the beginning of the COVID-19 pandemic, and that’s only expected to get worse during the holiday season.
This will likely lead to delays in shipping and order fulfillment, which can wreak havoc on the customer experience if not communicated properly.
Consumers don’t seem likely to change their holiday shopping habits in anticipation of these shipping delays—which leaves the onus on brands and retailers to prepare.
According to one survey, “41 percent of shoppers say they don’t plan to shop any earlier for holiday gifts, meaning that retailers will have no break between the current COVID-19 ecommerce climate and the already overwhelming holiday peak season rush. Retailers should not expect order increases to be stretched out over longer periods of time due to savvy shoppers getting ahead of the game.”
Click here for 12 tips from leading brands on how to communicate with customers about delayed order fulfillment, streamline fulfilment processes, and maintain customer satisfaction even while they’re waiting for their packages to arrive.
7 tips for maximizing holiday sales during COVID-19
1. Prioritize high-value customers.
The holiday season is typically hectic, but you can’t lose sight of your most loyal customers in all the rush.
For most of the brands we work with, we find that the top 20 percent of customers are worth 16x more than the other 80 percent. This disparity in customer value is known as the Pareto Principle or the 80:20 Rule, and it’s a key starting point to maximize the impact of any digital strategy.
When you’re planning your holiday campaigns, start by segmenting your customers based on relative value. Identify your highest-value customer segments and analyze the interests, lifestyles, and purchasing habits of these segments. Using this insight, build personalized holiday campaigns that engage these customers (and audiences who look like them) with relevant offers.
Because these customer segments have already demonstrated interest and provided value to your brand, they’re likely to provide the maximum return at a low cost.
Additionally, these high-value customers are good candidates for proactive, one-to-one outreach and engagement by your sales associates and store managers.
Because many of this year’s holiday shoppers will be shopping online for the first time or reluctant to go in-store, you need to take steps to ensure that in-store customers have the opportunity and incentive to remain loyal to your brand even through digital channels.
With a CDP-powered retail solution such as Lexer, your team can access a detailed history of all omnichannel customer interactions and identify returning shoppers for targeted engagement online.
2. Maintain quality customer service in the face of delivery delays and high shipping volumes.
Because shipping and order fulfillment delays are likely to increase this holiday season, you need to prepare your team to provide exceptional customer service at scale.
With access to a single customer view, service team members can learn detailed information about the person behind each service request—including lifetime value, recent purchases, loyalty membership details, contact history, broader interests, and demographics.
Using these insights, your team can prioritize requests from high-value customers, streamline identity verification, review previous conversations with different agents for context, and send personalized responses via any channel.
Additionally, Lexer’s digital customer service solution enables you to configure the best next actions for specific types of service requests to guide agents’ responses and ensure consistent, satisfactory experiences every time.
For example, if you’re anticipating high volumes of service requests related to holiday shipping and fulfillment, you can set up standard responses and recommended actions today so service teams are well-equipped to efficiently and effectively manage these requests when the holiday rush hits.
3. Promote gift cards as early as possible.
Typically, businesses run gift card campaigns about a week before Christmas to capture last-minute sales.
These “it’s not too late to get a gift card” campaigns are still highly effective for engaging customers who are trying to finish up their gift shopping before the holiday. This year, however, you should begin promoting gift card sales as early as possible to minimize shipping issues.
Digital gift cards don’t require order fulfillment, so they reduce the strain on both your internal fulfillment team and on the delivery services you use. Shipping delays are certain to run rampant this season, so any strategy to shift the strain away from product fulfillment without reducing sales volumes will be key.
4. Offer flexible fulfillment options, including BOPIS or curbside pickup.
Flexible customer journeys will be critical for effective and convenient order fulfillment during the 2020 holiday season.
Instead of putting all of your eggs into the ecommerce basket—or counting on customers to visit retail locations to mitigate issues with shipping and fulfillment—consider offering omnichannel options such as BOPIS or curbside pickup.
By giving customers more convenience and control over their purchasing experiences, you can decrease shipping costs and shipping time, stand out among competitors who don’t offer omnichannel fulfillment journeys, and better serve customers in a time of heightened stress and uncertainty.
To encourage the use of these options and reduce shipping needs, dig into your data and segment your customers based on location. Identify customers who live within reasonable proximity to your retail stores, as well as those who have historically preferred retail channels, and send them communications that highlight your BOPIS or curbside offers.
Segmenting by location and channel preference is easiest when you have access to unified and enriched customer profiles through a Customer Data Platform (CDP) like Lexer. For more information about managing and activating customer data across channels, click here to read 5 Omnichannel Metrics Every Customer-First Brand Should Measure.
5. Rethink your promotional strategy and timing to maximize sales while minimizing in-store traffic.
One of the biggest risks for this year’s holiday season is that the bulk of customers will do their in-store shopping around the same time.
Because many businesses are still required to limit the number of patrons in the store at the same time due to COVID concerns, this rush of holiday shopping can cause dissatisfactory experiences with customers forced to wait outside or try a different location entirely.
To mitigate this risk, consider re-structuring your promotional strategy to begin earlier in the season. With a varied promotion calendar that extends throughout the two-month holiday season, you can drive earlier orders to help with fulfillment and avoid intense in-store peaks on special sales days like Black Friday or Cyber Monday.
For example, instead of offering Black Friday deals on just one day as per usual, Home Depot has decided to offer two months of Black Friday deals through November and December. This strategy is not only effective for encouraging sales and brand loyalty in a digitally-heavy shopping season but also effective for deepening consumer trust in regards to COVID-preparedness and safety.
However, be mindful that you’re not offering discounts to customers who would’ve purchased products at full price. Discounting is largely expected during the holiday season but can erode brand value when applied haphazardly.
To strike the right balance between incentivizing sales and losing margins via discounts, think about alternative offers such as complimentary gift wrapping, access to exclusive events and content, or corporate donations to charitable organizations with every purchase.
6. Use real-time data to understand category preferences and advertise accordingly.
The pandemic has had a major impact on consumer preferences, attitudes, and behavior.
In general, interest in categories such as home goods, comfort clothing, and health and wellness has spiked, and consumers are increasingly favoring local, sustainable, and low-cost brands over others.
Use your data to evaluate the ways in which your customers’ purchasing behaviors have changed in response to the pandemic, and contextualize your holiday communications to cater to these changes.
Our accessible, three-pronged approach to measuring change can help you decipher the differences between pre-COVID and post-COVID customers. It involves:
- Choosing specific customer segments, such as newly acquired and returning customers, to include in your analysis.
- Choosing the attributes to compare. To understand how category preferences have changed, you should compare products purchased, but you could also compare attributes such as demographics or order value for further insight.
- Setting the time period for your analysis to understand behavior prior to, during, and after the change.
For example, we used this framework to help a client analyze the impact of COVID-19 on their sales. We found differences in products purchased, frequency of purchases, average order values, and customer demographics. Click here to learn how to use this framework to measure change and read more about this real-life example.
7. Maintain a human, empathetic, and personalized touch in all customer communications.
Since the start of the pandemic, genuine empathy has been a necessary component of all customer communication. Your prospects’ and customers’ lives have been deeply affected by the pandemic and its associated economic impact, and it’s important to keep this in mind throughout the holiday season.
Every message you send to your customers should be contextualized accordingly. Use your data to gain a genuine and holistic understanding of your customers, including any changes in their attitudes and behaviors due to the pandemic. Personalized, one-to-one communication based on real and recent customer insights will go a long way toward strengthening customer loyalty and maximizing holiday sales.
This personalization includes not only the content of your message but also the channels through which that message is delivered. Because the digital space will likely be saturated with holiday-related messaging, it’s important to orchestrate your communications to reach customers in the channels they prefer. CDPs make this personalized, omnichannel journey orchestration simple with granular segmentation and automated audience activation across every channel.
Looking for inspiration on how to communicate with your customers during COVID-19? Click here to read 7 best practice examples from brands like Warby Parker, Everlane, Uncharted Supply Co., and Mountain Khakis.
Give your customers the exceptional holiday shopping experiences they deserve
The 2020 holiday season may look different than years past, but one thing remains the same: The customer.
Businesses with a genuine understanding of their core customers have and always will be in the best position to deliver exceptional customer experiences—and a CDP is the best tool to help you achieve that understanding.
The Lexer CDP serves as your all-in-one hub for insight-driven marketing, sales, and service. Designed for business users—not data scientists—our easy-to-use tools allow you to orchestrate highly targeted campaigns across every channel, reducing waste and improving engagement. With an enriched single customer view, maintained in real-time and accessible across all platforms, you can genuinely engage customers and drive profitable growth.
As retail experts, we can help you adapt to market disruptions and maximize holiday sales. Use the meeting link below to book a demo of the Lexer CDP.