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It’s hard to believe but Halloween is this weekend, with the giant Thanksgiving shopping spree (dubbed by some “shopping hell week”)—Black Friday, Small Business Saturday, Sofa Sunday, and Cyber Monday— just around the corner, December creeping up sooner than you know, and the last-minute Christmas Eve procrastinators’ buying frenzy a forgone conclusion to the season. But wait, enjoy your Christmas Day, and then there’s more! The after-Christmas return barrage and hunt for mega-discounts, the year-end clearance sales that wind up 2015, and before you know it you’ll be on to 2016 with an entirely new sales and marketing year to plan.

Whew! Take a breath, and then consider how your small business is poised to take advantage of the most active buying season of the year. If you have a strategy and promotions in place already, you are off to a timely start. If not, it’s time to play catch-up. Believe it or not, several recent surveys show that 18-40% of consumers have already begun their holiday shopping. In fact, one study conducted in August 2015 found that 18% of holiday shoppers (those who planned any holiday-related purchase) had already begun their buying, while 34% planned to start around Thanksgiving. Another survey, the 2015 National Retail Federation (NRF) Holiday Spending Survey, notes that almost 40% of holiday shoppers report starting holiday shopping before Halloween, with another 41.5% planning to start in November, and just 18.7% planning to wait until December.

Of course that doesn’t mean that they will finish quickly. While the PwC 2015 Retail & Consumer Holiday Outlook reports that 29% of holiday shopping will be completed before Black Friday, a September, 2015 poll of holiday shoppers found that 55% (and 60% of online shoppers) plan to finish their shopping in December, and 20% don’t expect to finish until Christmas Eve, while just 4% expect to finish in October.

So, even if you missed the first wave of early-birds there is still plenty of time to maximize your holiday sales. Whether you’re just now crafting a strategy, or whether you are refining existing campaigns, the following studies and resources will help you make the 2015 holiday season a success for your small business.

 

Holiday Shopping Statistics

While past performance is no guarantee of future success, and old behavior patterns are not necessarily accurate predictors of current consumer preferences, looking at bygone holiday shopping seasons can be instructive. Also instructive are current polls of people who expect to do, or have already started, holiday shopping this year.

 

2014 Holiday Shopping Statistics

  • In 2014 holiday shoppers spent an average of $802 (on gifts, decorations, and other holiday related items), compared to $767 spent in 2013. (Source: NRF 2015 Holiday Trends and Expectations)
  • 78% of 2014 holiday shoppers used the Internet for research. (Source: think with Google)
  • During the 2014 holiday season 21% of online orders were driven by a free search result; and 17.5% were driven by a paid search result. (Source: Custora E-Commerce Pulse Holiday 2014 Recap)
  • In 2014 almost $1 trillion in all (not just holiday) retail sales (28%) were influenced by shopping searches done on mobile devices. (Source: think with Google)
  • 54% of 2014 online holiday shoppers have used ship-to-store at least once, and of those 43% made an additional purchase once in the store. (Source:UPS Pulse of the Online Shopper-2014)
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  • Free shipping was ranked as either important or very important to 86% of holiday shoppers in 2014, second only to low prices (90%). (Source: NRF 2015 Holiday Trends and Expectations)
  • In 2014, 1 out of 4 online purchases was completed on a mobile device, and on Black Friday mobile devices accounted for just over 30% of purchases, even more than on Cyber Monday (22%). (Source: Custora E-Commerce Pulse Holiday 2014 Recap)
  • During the November – December 2014 holiday shopping season email drove 17.7% of online orders. (Source: Custora E-Commerce Pulse Holiday 2014 Recap)
  • Over 50% of holiday shoppers reported being open to purchasing from a business they had not used before, and 41% actually bought from a new retailer. (Source:think with Google)

 

2015 Holiday Shopping Survey Statistics

In 2015 there are 29 shopping days between Thanksgiving and Christmas, compared to 28 days in 2014 and 33 days in 2013. Here’s how people plan to use them:

  • 90% of Americans are planning holiday purchases this year, an increase from 82% in 2014. (Source:International Council of Shopping Centers 2015 holiday forecast)
  • A majority of people enjoy holiday shopping, with 58% overall claiming to enjoy it, 22% being neutral, and 20% not enjoying it. Millennials are the most enthusiastic with 69% reporting enjoying it, and only 11% not enjoying it. Men overall were the most shopping-averse group with 26% giving holiday shopping a thumbs-down. (Source:PwC)
  • A NRF survey reports the following breakdown of expected average holiday-spending: $462.95 on gifts for family members, $77.85 on gifts for friends, $25.95 on gifts for co-workers, $28.05 on other gifts, $53.02 on decorations, $28.67 on cards and postage, and $107.80 on holiday food. (Source:NRF)
  • In 2015, 55.8% of holiday shoppers will splurge on themselves and/or others for non-gift items, and will spend an average of $131.59. (Source:NRF)
  • Gift cards are the most popular gift among all income levels. (Source:PwC)
  • 58% of consumers look at products online and then purchase them in stores, and 90% do at least some of their holiday shopping in stores while only 77% do at least some of their shopping online from a traditional computer, 51% online from a tablet, and 29% online from a smartphone. (Source:Epsilon 2015 Consumer holiday shopping outlook)
    NOTE: Another survey puts the percentage of people holiday shopping in stores at 95%.
  • Almost 60% of consumers will do holiday shopping in person at stores because they want to see, touch, and try the merchandise. 49% of shoppers reported that easier checkout is the #1 thing retailers can do to improve the in-store shopping experience. (Source:PwC)
  • 16% of Millennials will choose same-day delivery when making holiday purchases online, compared to just 7.8% of the rest of the population. (Source:NRF)
  • Consumers’ most preferred promotion types are free shipping (27%), flat dollar discounts off a total purchase (25%), and a percentage discount off a total purchase (24%). (Source:Epsilon 2015 Consumer holiday shopping outlook)
  • 42% of consumers won’t shop at a store that has experienced a security breach. For millennials it is 52%, and older shoppers seem less concerned with security with only 38% of those over 35 reporting that a breach would keep them away. (Source:PwC)
  • Holiday shopping “moments” are replacing holiday shopping “marathons.” 54% of holiday shoppers report planning to shop on their smartphones in spare moments throughout the day like walking or commuting. (Source:Google Holiday Intentions Study)
  • On average, mobile shopping searches are 18% higher on Sundays than the rest of the week. (Source:Google search data, Global, Q3 2015)

 

2015 Holiday Shopping Projections

There is no dearth of reports on holiday shopping this year, and for every survey done there are dozens of newspapers, magazines and blogs writing about them—often with completely different slants on the exact same data.

For example, Deloitte recently published a retail holiday sales forecast that estimated 2015 holiday sales would increase 3.5-4% over 2014, and noted that this growth rate was below the 5.2% gain realized in 2014 over 2013. Two well-respected news outlets, The Washington Post and Inc. Magazine, covered this report from completely opposite angles. The Post article, Holiday retail sales forecast a bit less merry than last year, emphasized the smaller growth rate and chalked it up to shoppers feeling like they have limited disposable income, despite rising home values and lower gas prices. While the Inc. post, 2015 Forecast Points to Happy Holidays for Retailers, highlights the expected $965 billion in holiday spending (a 4% increase over 2014), and notes that it is due to rising incomes and lower gas prices improving consumer sentiment. Go Figure! And, insert your favorite quote about statistics here.

However, appropriate skepticism aside, the following projections—all based on at least some hard data—may be instructive as you plan holiday promotions.

  • 53% of people will spend about the same as last year on holiday shopping, while 32% will spend more. 47% of millennials will spend more this holiday season and will spend 24% of their holiday budget on themselves. (Source:PwC)
  • Holiday shoppers will spend an average of $702 each in 2015, up from $677 in 2014. Of that $575 will be spent on gifts, and the remaining $127 on decorations, greeting cards, and other holiday-related items. (Source:International Council of Shopping Centers 2015 holiday forecast)
    NOTE: Yes this differs from the NRF recap of 2014 cited above, which calculated $802 spent per person.
  • Digital interactions will influence 64% ($434 billion) of retail store sales this holiday season. People who shop on mobile devices while in stores are more likely to make a purchase and spend more overall. And, nearly 80% of shoppers report engaging with a retailer or brand through digital channels before going to the store. (Source:Deloitte)
  • U.S. retail sales in November and December will grow 5.7% over 2014, reaching up to $885 billion, making 2015 one of the best increases in total U.S. retail sales in several years. (Source: eMarketer projection)

Predictions aside, if you want to stay up to date on how the 2015 holiday season is actually progressing for online shopping check the Custora E-commerce Pulse dashboard at the start of each month (or subscribe for updates). It reports on e-commerce revenue, number of orders, average order value, orders by device type and platform, and orders by channel. It compares the previous month’s data to the same month in 2014, as well as providing rolling comparisons to last year’s holiday season. The Data is derived from over 500 million anonymized shoppers, $100B in e-commerce revenue, and 200+ online retailers. Even if your business does not use e-commerce sales, this is a great barometer for how the overall holiday shopping season is progressing.

 

Crafting Sale Prices

Conflicting slants on research aside, your customers are clearly primed to buy this holiday season, and they are clearly looking for good deals. Sounds like time for a holiday sale!

So, just start slashing prices on your most popular items and you’re off, right? Not so fast; there is an art and a science to successful sale pricing. Unless you can afford to generate traffic with loss leaders (sales that actually cost you money) in expectation of full-price purchases offsetting the loss, then you need to make sure that even your sale prices allow you to at least break-even, and ideally generate some profit even if that profit is smaller than usual. You also need to ensure that slashed prices don’t make customers think that there is something wrong with the product. (Luckily a holiday discount is a tried, true, and expected reason for a sale, so the season has you covered on that front.) And, if you’re a service business you need to make sure that any reduced price offers you make during the holiday don’t significantly impact your cash flow in the coming year.

While it is generally best to put your customers’ interests first, when it comes to pricing the smart move can often be to trick customers by taking advantage of common thought-process weaknesses. A recent blog post, The Psychology of Pricing: A Gigantic List of Strategies, provides a comprehensive overview of 29 pricing tactics you can use to make your customers think they are getting a great deal, remove barriers to closing the sale, and generate a reasonable profit. These range from little things like leaving the dollar sign ($) off prices, making prices look smaller by using a relatively small font ,and removing the comma from large numbers, to more strategic moves like framing your offer effectively and using installment plans to make high prices seem less onerous.

The following are some time-tested pricing strategies that can be helpful when creating your holiday sales:

 

Setting Prices for Profit

Before you can start fiddling with sales prices to find a winning offer, you need to tackle the basics of finding a discount price point that allows you to generate profit or at least break even. Hopefully you have been through this exercise before, when setting regular prices for your products and services, and have easy access to your cost. (For help see this post for calculating product cost, and this one for calculating cost of revenue for a service business.)

Once you have cost, you can use one of many pricing strategies ranging from a simple cost+ model, to a high profit luxury pricing mode. (See this post for a discussion of 8 common pricing models.) To go the simple route, try the Mark-up vs. Margin calculator to quickly test a range of pricing scenarios.

Mark-up percentage is the percentage above the cost of the item for which it is sold. For example, if an item costs $10, and you sell it for $15, your mark-up percentage is 50%. Your actual profit in dollars is $5 per item.

Profit margin is the percentage of the total selling price that is profit. Thus in the above example, your profit margin is 33.33% ($5 actual profit/$15 selling price = 1/3 = 33.33%)

The calculator, enables you to enter a unit cost price (your cost) for an item, and then creates a table that contains selling price, profit margin, and actual profit for a range of mark-up percentages. You can set the tool to start calculating at between 5 and 25% mark-up, and then increment in 1,2,3,4 or 5 percentage points. The results table provides 27 different pricing scenarios based on the range you entered.

PUT IT TO USE: A good way to determine a starting place for your holiday sale price is to enter your current unit cost price into the tool, then locate your regular selling price (or the closest price to it) in the table. Then, look at other lower pricing options in the table, and find a price point where you are comfortable with the mark-up/margin and use that as your baseline sale price. Then employ the tactics below to tweak it.

IMPORTANT NOTE: Don’t forget to factor in holiday promotion costs such as advertising or increased labor costs for sales and fulfillment when determining your break-even point.

 

number 9, number 9, number 9

Ever wonder why you see so many prices, and particularly sale prices, that end in 9? The simplistic theory is that most people suffer from a “left digit effect” in which they give more weight to the left most number in a price such that “$59.99 is thought of as $50 and is processed by the brain as significantly lower cost than an item priced at $60 would be. That’s a win for a merchant who essentially uses a brain-tick to generate $10 more in profit from a customer by discounting only a penny.

It seems counter-intuitive, but research bears it out. Whether using the .99 cent trick, or simply ending the price in a 9 (i.e. $39, $99, $599), you can increase sales by 24% versus the nearby “rounded” price points.

But, the effect goes farther than that. One study from MIT and University of Chicago researchers actually found that the same item priced at $39 sold better than when priced at $34. The researchers posited that people have been conditioned to view “9” as a number indicating a sale or discount, and thus the mere presence of the 9 at the end of the price makes the brain view the item as a good deal. The same study found that 9 could be defeated by calling out a sale price, but that if the sale price called out ended in 9 it would out-perform a sale price that didn’t.

PUT IT TO USE: Once you decide upon your optimal sale price, subtract a penny to end in “.99” or subtract a dollar to end in 9. To make this tactic even more effective, position the sale product against similar higher priced products ending in round numbers. Or use a reverse approach and put a non-sale product with a price ending in 9 next to a rounded, but lower, sale price. You might just sell more of the higher priced item.

 

Anchoring, Framing, and Relative Pricing

Anchoring refers to the brain’s tendency to rely most heavily on the first piece of information it encounters when making a decision and to give less weight to all the details it gathers later, no matter how objectively persuasive.

In terms of marketing, anchoring is commonly leveraged by displaying very high “regular” prices that are crossed out or otherwise replaced by significantly lower sale prices. (In some cases the “regular” prices are total fiction, but the anchoring is still effective.)

Framing is related to anchoring, and refers to the need for a frame of reference when making a purchase or evaluating a price. You’ve probably heard people say that the best way to sell a $500 item is to put it next to a similar $5000 item– that’s the framing effect. A classic example of framing is the William Sonoma Bread Maker case study in which the company experienced poor sales of a newly introduced electronic bread maker. When they introduced a second bread maker with slightly enhanced features at double the price, sales of the original bread maker took off. This is explained by people having no reference for whether the original bread maker was worth the price and lacking that key first piece of information choosing to take no action; but when seeing the two items together deciding that compared to the more expensive model the original model was a good value.

Relative pricing refers to offering the same or similar merchandise at the same or similar prices in order to drive sales of your preferred option. One basic example of relative pricing is offering a range of options with one “useless” price point. This video describes an actual study in which a web-only subscription is offered at $59, a print only subscription at $125, and a combined print and web subscription at the same $125. When the three options were offered 16% chose web only, 84% chose combined, and no one chose print only. When the “useless” print-only option was removed, 68% chose the less expensive web-only option, while just 32% chose the combined option. The lesson– the “useless” option actually served to reinforce the value of the combined option, and drove higher price (and theoretically higher-margin) sales that would have been lost were it not included.

PUT IT TO USE: Don’t just take your most popular item, slash the price, and run a sale. Strategically group your sale items with non-sale items to frame value (and be sure to list regular prices next to sale prices). Also use grouping of similar items at different price points to drive higher margin sales. For example, if you advertise a low-end loss leader sale item to attract customers and place it next to a regular price mid-range item and a slightly discounted (but significantly higher priced) high-end item, you may just end up selling more of the full price mid-range item than the loss-leader. Service businesses in particular can leverage relative pricing by offering “useless” price levels. For example, a bookkeeping service might offer tax preparation for $500, a cash-flow analysis for $800, or a combination tax/cash-flow package for $800. The perceived “value” will likely drive customers who might otherwise purchase only tax preparation to take the combined package because of the draw of a “deal.”

 

Innumeracy (You Customer’s Won’t Do Math)

Studies have shown that in general people just won’t do unprompted math, and as a result clever (and even not so clever) pricing schemes can end up giving customers a perception of value when it is not really there. That’s why customers immediately perceive the value of “buy one get one free” offers, but struggle with the value of “half off” or “50% off” promotions. (Yes, the latter two are the same.)

This Economist article highlights several experiments that exemplify the math deficit. In one, researchers sold 73% more hand lotion at the same price per ounce when it was offered in a bonus pack containing more lotion at the regular price than when it contained the regular amount of lotion at a discount off the regular price. In another, test subjects viewed two deals on loose coffee beans: 33% extra free or 33% off the price, as equivalent when in fact the latter is actually a significantly better deal. A third study demonstrated the effect of “double discounting.” In this study subjects judged a product reduced by 20%, and then by an additional 25%, as a better deal than the same product reduced by a single 40% (even though the two offer equivalent discounts).

PUT IT TO USE: First, if you really want to attract customers, do it with language they easily understand. Favor “buy-one-get-one-free” or even “buy-two-get-one-free” promotions over those requiring math for understanding like half off, or 33% off. Second, use innumeracy to your advantage. For example, instead of offering 40% off, use a two pronged offer of 20% off plus an additional 20% off. Your customers will likely view it as equivalent, but your revenue and profit will be higher with the latter offer.

 

Strategic Coupon Use

Even more than sale prices, people love coupons! According to a Forrester research study on coupons, 60% of respondents agreed that they “Love to Receive Digital Coupons” and 50% report being more likely to visit a store if they receive a coupon. Another study from PwC found that 46% of all respondents, 49% of women, and a whopping 61% of millennials (age 18-34) report being “happy” to receive coupons and other holiday offers on their mobile phones. (This is a case where it is important to know your customers. There are very few “neutrals” on emailed coupons; people either love them or hate them, with 35+ year old males heading the hates with 39% of them not wanting emailed coupons.)

Additional findings from the Forrester study show that 59% of respondents agreed that digital coupons and coupons codes are the promotion types mostly likely to influence their purchase. The study also found that 78% of people state that “coupons close the deal” if they are undecided on a purchase; and that most digital coupons that are redeemed are redeemed within three days with almost a third being redeemed immediately.

Coupons don’t just drive sales from existing customers; they can help generate new customers as well. In the Forrester study, 47% of respondents were very or somewhat likely to try a new brand because of a coupon, and 36% would switch brands because of a coupon. Coupons help to increase sales revenue too. 55% of respondents in the Forrester study report spending more than they had planned when shopping with a coupon; and 44% spent $26-$50 more than anticipated.

According to the Forrester study, email sent by the merchant is by far the most common way people get their coupons. Other popular methods include using online search to find coupon codes, installing a coupon application on a computer or mobile device, visiting coupon and deal sites, or texting to get a code. A study conducted this June found that 74% of holiday shoppers planned to use coupons received via postal mail, and 67% planned to print coupons received via email and take them to the store. Interestingly, coupons obtained via social media sites were way less common than other sources.

Regardless of how the coupon or code was obtained, consumers expect that coupon to be honored (and honored easily) in any way they choose to shop: online, via phone, or in person at a store, and irrespective of the way they present it: on paper or on a mobile device.

PUT IT TO USE: Definitely make coupons and discount codes part of your holiday sales plan. Make sure you email them to your customers (unless you know your customers don’t want them via email), and make it frictionless for customers to redeem them on your website or in person at your store. Also, don’t forget to create coupon codes designed to attract new customers, and advertise them (or include them for free if available) on popular coupon sites. (See this list of the 15 top coupon sites for October, 2015) And keep in mind that based on the Epsilon survey cited in the 2015 stats section above, you are more likely to succeed with discounts off a total purchase than you are with a dollars-off discount on a particular item or service.

 

Shipping Optimization

While only applicable to merchants that sell goods that need to be delivered (i.e. selling online or via mail/phone order), shipping is such an important factor in those purchasing decisions that it merits a section here.

Concern #1 is offering a free shipping option. The bottom line is that not only do customers want it, they have come to expect it, and not having it can lose a sale. In fact, one study by a Wharton professor (done back in 2006) found that a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10.
Some other free shipping stats to consider:

  • 83% of holiday shoppers say standard free shipping would make them “extremely likely” to make a purchase. (Source:PwC)
  • 93% of online shoppers have taken an action to qualify for free shipping including adding more items to an order to qualify (58%), choosing the slowest transit time (50%), searching for a free shipping promo code (47%), or delaying a purchase to wait for a free shipping offer (30%). (Source:UPS Pulse of the Online Shopper-2014)
  • High shipping rates were the #1 reason cited for shopping cart abandonment at 58%, not qualifying for free shipping came in at 50%, and 5 of the top 8 reasons cited for cart abandonment were shipping related. (Source:UPS Pulse of the Online Shopper-2014)

While standard free shipping is clearly a customer favorite, using limited free shipping is almost as effective and is a great way to use a free shipping offer to increase sales. (This case study documents how one eCommerce website increased its orders by a 90% when it added a free shipping threshold.) Thus, it is a bit surprising that according to the PwC study 36% of all businesses, and 44% of smaller businesses (revenue<$1 billion/year), have no plans to offer free shipping this year. Of those who will offer free shipping, most will have some type of minimum purchase requirement.

So, how do you determine how to implement a free shipping policy that will increase your sales but not end up making them unprofitable? Consider your shipping costs, the costs of your products, the margin you make on each one, and the percentage of margin you are willing to lose in order to offer free shipping. If you can use flat rate packaging from major shippers like FedEx, UPS, and the US Post Office, determining shipping cost can be easier. If not, each of these carriers has shipping calculators based on weight and distance available on their websites.

Once you have cost data, it is time to do a break-even analysis. This 2009 Practical eCommerce post is a bit old, but it includes a very useful formula for determining whether your margins can support a free shipping offer. (But don’t pay attention to the section suggesting you turn shipping into a profit center—that is old advice!) One simple place to start is to look at your average order value and the profit you make, the cost of shipping, and how much higher (if any) that order needs to be to support free shipping. Once you have that number, set your free shipping threshold.

For example, if your average order is $100 which nets you a $15 profit (about 15% margin), and shipping will cost you on average $10, you’ll end up making $5 on the sale (about 5% margin). However, if you set the threshold for free shipping at $150 and shipping costs are the same for both orders, you’ll end up with about a $23 profit on the product order (at about 15% margin), and you’ll end up making $13 on the sale after shipping for a net 8.6% profit margin.

This post provides several other detailed examples of free shipping offers that you can test in order to come one with one that works for your business.

If your margin will not allow for free shipping, one option is to raise your product prices (though this is ill advised if your customers know your standard pricing well, or if they are price shopping without considering shipping costs) enough to offer it. In one pricing test, raising prices across the board by about 10% and offering free shipping resulted in an 18% conversion rate increase, a 15% increase in average order value, but only a 5% decrease in margin/order which taken together yields a 26% increase in net margin.

One other free shipping option is “ship-to-store” in which the customer orders online but picks up the item in person. While it may seem to defeat the purpose of online shopping, the practice is becoming increasingly common. According to the UPS survey of 2014 holiday shoppers, 54% have used the ship-to-store option at least once, and 43% have made additional purchases at the store when picking up items. According to the 2015 NRF survey, of those who plan to shop online, 46.5 percent say they will take advantage of retailers’ buy online pick up in store or ship-to-store options. If you can manage the logistics, this is a great free shipping option that can turn into a major revenue generator.

If you absolutely can’t offer any free shipping, your next best bet is to make sure that your shipping charges are reasonable, and not a surprise. The UPS survey found that 37% of shoppers cited shipping and handling charges being disclosed too late in the purchase process as a reason for cart abandonment and, as noted above, 58% cited shipping costs making the purchase more expensive than expected as the reason for abandonment. If you can use flat rate shipping as your low-cost shipping option and clearly disclose it prior to a customer starting the check-out process, that is definitely your best option. If you use a sliding shipping scale based on order value and shipping speed, make sure there is a prominent link in your site navigation and product pages that customers can use to see these rates prior to the check-out process. Another option is to include a shipping calculator in your cart that customers can use to estimate shipping (and tax too) prior to checking out.

Finally, don’t try to trick customers by listing low prices and then tacking on handling charges, or other fees at the end of the checkout process. People are too savvy for that these days, and it will very likely make your company look untrustworthy and cost you sales. Remember, with online shopping setting and meeting expectations is the key, and surprises (unless they are last minute discounts) are your enemy.

Once you’ve addressed free shipping, you also need to address timely shipping—for many it is just as important that they be able to get a product quickly (in a day or two), and to know (or select) the exact date on which the package will arrive, as it is to get shipping for free. In fact, many people are willing to pay for expedited shipping, as long as there is a slower free option available. For example, the PwC survey found that 25% of all respondents, and 37% of millennials, were willing to pay more for next day shipping. While the UPS study found that 90% of people are willing to wait one extra day to get free shipping, and 57% are willing to wait 3 additional days, only 33% are willing to wait five or more days for free shipping.

A good strategy is to use the low cost option for your free or base shipping rate, then provide your customer with expedited shipping options as well, and charge for them. That not only makes the free option look more valuable, it can also drive customers to pay a small upgrade fee to get their order more quickly. (See Anchoring, Framing, and Relative Pricing above.)

PUT IT TO USE: If you possibly can, include a free shipping option for your online orders (and your mail orders too). It doesn’t matter if the shipping method is slow, or if the minimum purchase you need to impose to cover the cost is a bit high (just don’t make it totally unreasonable). If you do need to charge for shipping, make sure the cost is shown to the customer as early in the purchase process as possible. A flat shipping rate displayed prominently on every product page is the best choice, and if that is not feasible a shipping calculator accessible in the cart is your best option. If you don’t want to offer free shipping to anyone who happens upon your site, consider using a coupon for free shipping and mail or email it to your customers as well as posting it on coupon and deal sites. (See Coupons above). Also, make sure that your customers clearly understand how long it will take to get their order, and ensure that you live up to those expectations.

 

Using Email for Holiday Promotions

According to the Custora E-Commerce Pulse Holiday 2014 Recap, email marketing drove 17.7% of all online orders during the 2014 holiday period (November – December 2014). Email was the primary online order driver during Thanksgiving weekend (the five days from Thanksgiving to Cyber Monday, including Black Friday), accounting for 27.3% of Black Friday online sales, 23.9% of Cyber Monday online sales, and 23.1% overall for the weekend. This trend is holding true for 2015, with Custora documenting email as the driving force behind 16% of online sales in September.

Additionally, as noted above, the  PwC survey found that 46% of all respondents report being “happy” to receive coupons and other holiday offers on their mobile phones; the Forrester study reported that email was the primary way consumers received coupons; and the Epsilon study reported that promotional email (tied with television advertising at 22%) was the type of advertising most likely to influence holiday gift purchases.

The rise of mobile has made email promotions even more valuable and helped to merge the online and offline shopping experience. Now customers don’t need to print an offer in order to redeem it in store (where many people prefer to shop), but can instead simply show the offer on their mobile device to the cashier. Thus it is not surprising that the Forrester study reported that 50% of people who prefer to receive coupons on their phones redeemed those coupons in-store.

Successful email marketing is a vast topic that we can’t begin to cover here. It should most definitely be combined with the pricing and promotion strategies discussed in this post, and used as one of your key holiday promotion channels. If possible, employ tried-and-true strategies like segmenting your list and tailoring promotions based on a customer’s purchase history or expressed interests, and using follow-up emails as reminders and to cement relationships after the initial sale. For an email marketing primer see 5 Websites to Help You Learn Email Marketing and the recent tip post 11 Mobile Email Statistics Your Small Business Should Know & How to Take Advantage of Them. For tips specific to the holiday season, check out Plan Cyber Monday 2015 Email Now from Practical eCommerce.

PUT IT TO USE: Holiday shoppers love email promotions about as much as they love coupons and free shipping. Put them together in an email offering a coupon for free shipping and you have a winner. Just be certain that all your purchasing channels can support the coupon so that your customers can redeem it online (from a desktop computer, phone, or tables), can call to order with the coupon code, can print it and take it to the store, or can pull it up on a mobile device at your instore checkout. And, don’t forget to track coupon redemptions and follow-up with additional offers during the holiday and throughout the year.

 

Leveraging Online Shopping

Just a few years ago online shopping actually meant simply making purchases online. And, while e-commerce stores and their online sales certainly remain important (and growing) components of holiday sales, the web is no longer just for buying—it is for browsing, product research, price comparisons, and even retail store information (such as contact numbers, location, and hours) as well.

In fact, the NRF survey found that almost half of holiday shopping will be done online: average consumers say 46 percent of their shopping (both browsing and buying) this holiday season will be conducted online, up from 44 percent last year. And, according to the Epsilon survey, 58% of consumers look at products online and then purchase them in store.

Additionally, the UPS study of 2014 holiday shopping found that while 60% of shoppers are single-channel (39% both browsing and buying online, and 21% both browsing and shopping in store), a full 40% use multiple channels such as buying online and picking up in store, or browsing in store and buying online, to complete their holiday purchases, with the most common multi-channel approach being searching online and buying in-store (13%).

As the UPS study notes, we are now truly in an omni-channel age.

If you sell products and services online
this means that you are not only competing with other e-commerce retailers on price and service, but with traditional brick-and-mortar stores as well. That’s a challenge for your website and customer service department, because replacing the human interactions customers have with salespeople in the store is very difficult to do online, as is replacing the ability to see, touch, and feel actual products in person. Strategies such as detailed product videos (see below), and extended online Chat can make a big difference in that regard.

However, even with in-person sales still going strong, the NRF predicts a strong 2015 holiday for online sales. Its recent report estimates that holiday online sales will increase between 6 and 8 percent over the 2014 holiday season, totaling over $105 billion. And, even though it is a bit early in the holiday shopping season to read too much into Custora’s statistics for September, 2015, it is encouraging to note that e-commerce revenue was up 11%, and # of orders up 12%, vs. September 2014.

To make online holiday sales a success for your business, be certain to plan your sales early and implement email and marketing plans to support them. (See above for tips on email). And, while it may go without saying, be sure to give your website a check-up prior to the busy season and make sure that your pages load quickly, your images all show up, and your shopping cart works flawlessly. Nothing makes a sale disappear more quickly than a slow site, or an error during the checkout process.

Use the pricing strategies discussed above to create sales and promotions on your site, and if you ship products consider one of the free shipping strategies to help increase your sales. If you also have a retail store, seriously consider adding a ship-to-store and/or pick-up in store option. According to the NRF survey, 46.5% of people who plan to shop online will pick items up in the store themselves instead of having them shipped to a home or gift-recipient address. And as noted above, the UPS study found that 43% of those people will make additional purchases when they pick up their items.

If you don’t sell online
DO NOT ignore your website as part of your 2015 holiday promotion plan. (If you don’t have a website, don’t wait another minute to get one up and running. See Tips for Launching a Small Business Website to get started.) Even if they plan to buy in a store, your customers will most likely check your website for product and service offerings, prices (and compare them with competing prices at online and other retail stores) your holiday hours, and likely coupons or promotion codes that they can use for in-store discounts. Don’t disappoint them!

Additionally, with so many people shopping online, consider a special holiday promotion for gift cards/certificates. These can be easily delivered via email, so no shipping charges are involved, and with minimal work you can craft high-value packages such as 10 individual gift cards for the price of 9, or a 20% discount on gift card face value. According to the NRF survey, gift cards are the most requested item for holiday 2015, with 58.8% of respondents wishing to receive them. This is a particularly good option for service businesses, especially those in the entertainment, travel, or other “experience” related markets such as spas and salons. According to the PwC survey, 52% of millennials’ holiday spend (and 30% of older shoppers’ spend) will go toward experience-related purchases.

You can make this type of offer using a code delivered via email, or even a nicely designed PDF gift certificate that your customer can print and give to the gift recipient. You also don’t need a sophisticated online shopping cart to take orders and collect payment. One option is to advertise the gift card promotion on your website, but take the actual orders over the phone. The other is to use a very simple online payment form that is accessed from a “buy now” button on your website. Check with your credit card payment processor to see if they offer this type of functionality. It is fairly common, so they just might. (For example, PaySimple includes a securely hosted PCI compliant online payment form that can be custom-branded for your company. We also provide code for easy-to-use payment form links and buttons that you can simply paste into your website, marketing emails, or social media posts.)

PUT IT TO USE: Turn your website into a holiday promotion for your small business. Leverage the omni-channel shopping experience to maximize sales and customer satisfaction. Use your website to highlight your holiday sales and special offers, so that price-shopping customers consider your company whether or not you sell online. If you have a retail location, offer an extra discount for ordering online and picking up at the store, as chances are you’ll more than make up for the discount with additional revenue when the customer picks-up. Also consider promotions for gift cards/certificates—they are one of the most popular gifts, they can be delivered last minute without any shipping charge, and they can turn the gift recipients into long-term loyal customers.

 

Make it a Mobile Holiday

Today, talking about online is also talking about Mobile. Consumers are using mobile devices for just about every online activity, and if your business is not ready to accommodate that, then chances are you’re losing sales. According to the NRF survey, 21.4 percent of smartphone owners will use their device to purchase holiday merchandise this year, which is the highest percentage reported since NRF first asked in 2011. Additionally, 37.9% will use smartphones to research products, 28.4% will use them to look up store information such as hours and directions, and 20.3% will use phones to look up product information while shopping in stores.

The PwC survey goes into even more detailed behavior, and finds that 44% of 2015 holiday shoppers report that they will use a mobile phone to search for products, 41% will use a mobile phone to price shop in stores to ensure they are getting a good deal, 24% will use a mobile phone to track shipment of a purchase, and 25% of all respondents (35% of millennials) are comfortable allowing themselves to be tracked in stores via their phones if it means being offered additional discounts while shopping.

While tablet owners don’t typically plan to take their devices on shopping trips, don’t discount tablets for holiday shopping. According to the NRF survey, nearly half (47.5%) of holiday shoppers will use their tablets to research products and 34.5% will use their tablet to make a holiday purchase of some kind, and 23.5% will check for in-store availability from their tablet.

Also remember, as mentioned in the statistics above, that mobile shopping (and especially smartphone shopping) is now more of a session than an event. As noted by the Google Holiday Intentions Study, many people pick up their phones when they have a bit of downtime and do some shopping. If your discount offer happens to show up in email during one of these mobile “shopping moments” there is a good chance your customer will act on it immediately, if the offer resonates.

Google research also indicates that mobile shopping searches are highest on Sundays, so experimenting with increased PPC search ads targeted to mobile browsers on that day is worth testing.

All of this mobile use means that it is critically important that you take mobile into account when you design your website and create your email offers. See tip post 11 Mobile Email Statistics Your Small Business Should Know & How to Take Advantage of Them for resources that will help you optimize your email promotions. Check out the Mobify Ultimate Mobile Shopping Experience Design Guide for help with making your website mobile-friendly, and test how your page appear on mobile devices using the Google Mobile Friendly Test tool.

PUT IT TO USE: Make sure that every touchpoint in your is mobile friendly. This means optimizing everything from promotional email to your website for smartphone and tablet mobile browsers, running both iOS and Android. It also means training your staff to redeem coupons presented on mobile devices, and even to expect to entertain price matching requests based on competing prices found by customers using their phones. Also consider upping your mobile PPC spend on Sundays, and sending email on Sunday with a special promotion to snag those Sunday mobile shoppers. Additionally if you have a retail location, take steps to ensure that you are found in local search and that your business appears when potential customers check maps on their phones. At a minimum ensure that you have created a listing for your company on Google My Business.

 

Video Seals the Deal

According to the Google 2015 Holiday Trends Report, 26% of shoppers report that online videos are their go-to source for gift ideas, and 32% report planning to use online video for holiday purchases. Videos are particularly relevant for electronics buyers, with Google reporting that 64% of consumer electronics shoppers watch relevant videos on YouTube one week before they purchase.

One of the most popular types of video are “unboxing videos” in which people literally unseal the box on a new product and demonstrate setting it up and/or starting to use it. In 2015 alone, Google reports people in the U.S. have watched 60M hours of unboxing videos on YouTube, totaling 1.1 billion views.

While many of these videos are done by actual consumers, businesses are increasingly contributing their own videos to the mix. Uploading a YouTube unboxing video for your product may just be the tipping factor for your holiday promotion that pushes the customer to the final “buy” decision.

While it is certainly a great idea to have your customers create and share unboxing videos of your products on their own, or to invite a select group of customers to create unboxing videos which you will post and promote, you can also create them yourself. To get started you’ll need a YouTube account (and ideally a channel for your business), and you’ll need to know how to upload and keyword tag videos. (See the YouTube Help Center for assistance if you need it.) This post provides basic instructions for creating unboxing videos for your products, along with some good examples; and this one not only provides tips for creating the videos but for promoting them as well. Once you’ve created your video, don’t forget to tag it with “unboxing” and “un-boxing” along with other keywords related to your products. (As a plus, your videos will likely show up in Google search results if someone searches for your company or your product by name.)

What if you sell services, software, digital content, or anything else that doesn’t come in a box? Testimonial videos are a great alternative. According to Google 80% of people who used video as part of holiday shopping watched product reviews and ratings, with 68% preferring peer reviews and only 45% preferring expert reviews. To support your holiday sales, try to get your best customers and loyal Promoters (based on Net Promoter Score) to record testimonials for you. (See the PaySimple User Reviews page for examples). You can then upload them to your YouTube channel, as well as encourage your customers to share the videos themselves.

Finally, don’t stop at YouTube. Definitely put your videos on your website. They are particularly valuable on product or service description pages, as well as in a special “user reviews” or “testimonials” section. Also consider including videos in your email marketing campaigns, and sharing them on your blog, Facebook, Twitter, LinkedIn and other social media outlets. Once posted on YouTube, the YouTube embed code makes doing this fast and easy.

PUT IT TO USE: Run a pre-holiday contest for the best customer video about your products and/or services. Have your customers upload videos to your website (or have them sent to you and you can upload them), and then let anyone vote on the best one, and give a prize to the winner—a holiday gift basket, a gift certificate for your company, or some popular electronics item like an iPod or tablet. If you have business customers, let the talk about their business in the video as well so that the promotion works for both companies. Be sure to post your videos on YouTube, and other social media channels, so that they show up in search engine results. Alternately (or in addition), create videos for each of your products/services and put them on your website where customers make buying decisions. Remember, with products you want to make videos as detailed as possible as you are essentially providing a substitute for an in-store see, touch, compare experience.

 

Putting it All Together: The Killer Small Business Holiday Offer

There’s quite a lot of information here, and at this point your head may just be spinning and wondering how you can possibly put it all together to create the best possible holiday promotion. While it is important to remember that your promotion needs to be as unique as your customer base, we can use some of the common themes discussed above to craft a generic offer that can be customized for your small business.

  • The Timing
    If the surveys and statistics tell us anything it is that holiday shopping is not a short-intense process, but one that is carried out by most in the final quarter of the year (and by some early-birds throughout the year). That means it is a mistake to concentrate on only a few big shopping days like Black Friday, Small Business Saturday, and Cyber Monday. Yet it is also a mistake to ignore these days, because there is plenty of evidence of increased shopping interest and activity on those days.So, if you haven’t started your holiday promotions yet, consider beginning with a pre-holiday “early-bird” sale at the beginning of November, increase activity leading up to the Thanksgiving weekend, create a special limited-time offer for that weekend, and end the holiday season a day or two before Christmas with a special promotion on gifts that can be emailed immediately instead of shipped, as well as deep in-store discounts of any items of which you have excess inventory.
  • The Offer
    Take a multi-pronged approach with your offer and hit your customers on several fronts: Website sales, emailed coupon/discount codes, search engine results, social media posts, and traditional snail-mail.Use the pricing and promotion research to your advantage:

    • Highlight the holidays as the reason for the sale.
    • Put the sale prices next to the item’s regular prices, to establish the value and the deal.
    • End your prices with 9
    • Keep some items at full price, and place them near sale merchandise to help customers frame the deal.
    • Offer free shipping for total orders roughly 20% above your average order size.
    • Create coupon codes that offer a percentage or flat dollar discount off the total order, rather than deep discounts on single items, in addition to free shipping based on a total order threshold.
    • Send the best coupon/promotion offers to your customer base via email, but also provide smaller discount codes to coupon sites to attract new customers.
    • Take advantage of customer innumeracy by using double discounts (such as an additional 20% off items already reduced by 20%) to inflate customers’ perception of the deal.
    • Include a video of your product, or a testimonial for your service, to help customers make the final buying decision.

     

  • The Redemption
    Make it easy for your customers to take advantage of your sales, regardless of how they choose to shop. This means making sure that your staff is aware of all sale pricing on your website, and that they are able to redeem your coupon and discount offers at the register via a printed page, or a mobile screen. It also means making sure that your website and email are all flawlessly executed, that your shopping cart or payment page (if you have one) is functioning properly and able to process all discount codes, and that your content is device-neutral and mobile friendly. If you are shipping orders, make sure that you clearly set expectations for shipping time, and ideally enable your customers to select an exact delivery date. Offering expedited shipping with guaranteed delivery dates (at additional cost) is a useful option as well.Additionally, be prepared to help customers who have problems before and after the sale. This may mean adding additional customer service reps for the holidays, or simply diverting resources to handle higher volume customer interactions. Things happen, particularly around the holiday, many of which are beyond your control, such as packages lost in shipping. Having a friendly person available to help a panicked father track a missing present for his child can mean the difference between a holiday nightmare and a loyal customer for life.
  • The Thank You
    As the surveys have shown, holiday shoppers are planning to buy a bunch of gifts. So, don’t think that your mission is accomplished with just one sale. Use each purchase as an opportunity to thank your customers for their business. This can be as simple as a short email confirming the purchase and providing a delivery date, as well as a thank you. It is also a perfect opportunity to upsell related items or services, offer a special discount for additional purchases during the holiday, or even to help cement customer loyalty with a small gift such as a complimentary service, a free sample of a new product, or just a gift card for a free cup of coffee.

 

Holiday Promotions for Small B2B Companies

This post has largely addressed holiday promotions for retail, service, and other consumer-focused businesses. However, B2B companies can use many of the same techniques to boost sales during the holidays. You may want to frame your promotions as “end of year” events instead of Christmas specials; but that is as good a justification as any for a sale.

For example, now is a perfect time to offer discounted rates for contract renewals; to deeply discount 2015 model inventory to make room for new 2016 arrivals; or to offer a total order discount for total purchases 20-30% over your average sale (or the particular customer’s average purchase).

B2B businesses need to be just as aware of mobile and online purchasing as do B2C businesses, and B2B buyers like coupons and free shipping just as much as their consumer counterparts. Similarly, product video demonstrations and customer testimonials are effective tools for businesses of any type. And finally, using the holiday as a reason to say an extra thank you to your B2B customers is not only a loyalty-promoting practice, it is just good business.

 

Gauging Success

However you decide to approach it, remember that a successful holiday promotion is a win-win for both your customers and your business. If you end up losing money on each sale and/or impacting future revenue, then no matter how much cash you take in, the promotion failed. Likewise, if you rack-up the profits but lose customers to poor quality, slow shipping, or inattentive service, your short-term win is actually a long-term loss. The goal of a truly successful holiday sale is for you to make a reasonable profit and for your customers to feel like they got a special deal that will enhance their view of your company and will instill ongoing loyalty to your small business.

Lisa Hephner

Lisa Hephner

My name is Lisa, and I’m the Vice President of Knowledge, responsible for the management of corporate, product, competitor, marketplace, legal, and regulatory knowledge, and creation and dissemination of knowledge tools using these assets to PaySimple prospects, customers, employees, and partners.

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