Why waste marketing dollars targeting an unprofitable segment? Instead, use last year’s Black Friday customer data to maximise return on ad spend (ROAS) and margin this year. We’ll show you how.
There’s no bigger event in the annual retail and ecommerce calendar than the Black Friday / Cyber Monday (BFCM) week. In 2022, Shopify reported $7.5B in sales worldwide through merchants on their platform over the BFCM weekend. A staggering volume of sales, yet still 17.5% up on the previous year. Black Friday itself topped record sales of $9bn and some predictions think 2023 could be even bigger.
Black Friday is so firmly imprinted in the minds of consumers. With their heightened readiness to spend it’s a huge commercial opportunity and a veritable goldmine of customer data.
Stores worldwide experience a huge uplift in visitors and purchases. And every single purchase, engagement, click and visit all paint a picture you’re going to want to see.
So, the important question is:
Are you ready for it?
The challenge presented by the enormous revenue and engagement opportunity of Black Friday is one that every commercial department in every customer-facing business needs to tackle. Customers expect you to have something for them. In return, they’ll not only spend money or engage with your services, you’ll also get a ton of their data.
And there’s gold to be found in Black Friday data.
Start planning this year’s Black Friday strategy
In preparation for this season of shopping, every department whether that’s fulfilment, brand, merchandising, marketing or finance needs to have their Black Friday strategy locked in.
Your brand values should guide how you position your store for Black Friday, so choose an approach that reinforces your principles (or at least, doesn’t undermine them!). There are several different strategic options, such as:
- Focus on new customer acquisition
- Upsell & cross-sell existing customers
- Drive up average order value (AOV)
- Shift end of season’s stock at a discount
- Launch a new offer or subscription service with an introductory price
- Positively impact loyalty to extend customer lifetime value (CLTV)
The key to a successful Black Friday strategy is to implement a strategy that both aligns with your brand and meets the commercial goals of the business. We see brands all the time that go for the new customer acquisition strategy, with little thought given to profitability and long term revenue.
To avoid an unprofitable Black Friday this year and create a strategy that works commercially, the best place to start is last year’s customer data.
Use last year’s data to create this year’s success
It’s easy to plough hundreds of thousands of marketing dollars into the acquisition of new customers over Black Friday weekend. But how do you know if they are worth it? You need to know your costly bargain hunters, who actually cost money to service, versus your loyal shoppers who are back for more and enjoy the treat of a discount or reward.
Whether your brand specifically engaged in Black Friday last year or not, you’ve got customer transaction data from BFCM week to use as your starting point. BFCM shopping week usually attracts a cohort of new customers whether you’re targeting them or not. It’s likely you’ll also have transactions and engagements from existing customers who have a higher probability of shopping during this frenzy.
If your store is on Shopify, you can connect Distil’s Free Shopify App as the first step to gaining more insight on your customers.
But regardless of your tech stack or ecommerce platform, here are 5 commercially-led insights you can create from last year’s Black Friday customer data that will help you plan this year’s campaign.
5 ways to use Black Friday customer data in your planning
- New customer vs repeat customer average order value (AOV)
Look at new customers acquired during Black Friday vs purchases made by existing customer cohorts. Was the AOV higher or lower? If you’re offering additional incentives such as free shipping or tiered discounts, you need to be especially careful to investigate AOV to maintain a focus on profit.
- Highest vs lowest performing products
Consider product sales from both a unit volume and profit perspective. How many units were sold and at what margin? It may be a valid strategy to acquire customers with a loss leading product, but to validate this approach you need to pair this insight with point 5, customer lifetime value.
- Marketing channel return on investment (ROI)
Investigate which marketing channels drove product sales, and which delivered the greatest ROI. You need to go beyond a last-click attribution model to truly understand the role each channel plays in the user journey and therefore where to place this year’s budget. Using a linear or data-driven attribution model will give you the best picture.
- Returns rates by product line, marketing channel or customer status
Some Black Friday sales are notorious for doubling or tripling product return rates, which only eats into the margin of the entire sale period. Using customer data from your fulfilment platform, or Shopify itself, you can determine return trends by product line or collection. This can help you decide where best to focus this year’s Black Friday activity.
- New customer vs repeat customer lifetime value (CLTV)
CLTV is the ultimate metric for assessing how well any customer cohort is performing, not just those acquired during Black Friday. Lifetime value gives a holistic picture of the contribution a customer has made to your business over their lifetime of being a customer. Compare the Black Friday customer cohort with other cohorts acquired during the year to see how much value new customers contribute to your overall success.
With these 5 insights, you can build a picture of some of the key commercial elements of last year’s Black Friday sale activity, which can help you plan this year’s Black Friday strategy.
Why Distil last year’s Black Friday customer data?
Even if you weren’t connected to Distil last year during Black Friday, we can still help you use last year’s customer data to plan this year’s Black Friday strategy.
Connect as many customer data sets as you have – transaction data, engagement data, returns data, customer service data. If you have structured data in a system somewhere, we can probably extract it. All these data sets come together to form your Single Customer View.
From there, you can segment the browsers from the buyers, the bargain hunters from the loyal customers, and the inactive shoppers from the active purchasers. This means you can truly see whether or not your marketing dollars have been well spent.
Delve into the Black Friday impact on loyal customers
If you’re deliberately targeting your existing customers with an incentive that rewards loyalty, you’ll naturally want to know how well that campaign has performed. But how will you find those loyal customers in your list of transactions, and what’s the best offer for them?
With Distil, the AI will automatically apply the ‘active loyal tag’. With that tag, you’ll be able to build a segment of those loyal customers who also purchased during BFCM.
But if you want to think about a multifaceted journey that identifies your loyal customers, Distil can handle that too. However you want to define loyalty, if it’s in the data, we can find the customers who match it.
What if your brand doesn’t do Black Friday?
For some brands, the mass-consumption nature of BFCM weekend doesn’t really fit with their principles and we get it. If you want to do Green Friday and focus on sustainability, or you want to avoid the acquisition of new customers and focus on rewarding loyal customers, you still need a way to identify them.
The Distil AI can identify and tag loyal, active and high-value customers or any other custom behaviour you want. Conversely, those at risk of churn, low value or inactive can also be identified. Want to segment customers who only purchase from your luxury product range? Done. How about customers who only purchase during BFCM weekend? No problem.
However you want to approach Black Friday, Distil can help you discover the right audience and how best to speak to them.
Not ready to think about Black Friday data this year?
We get it, times are crazy right now. If you simply don’t have the bandwidth to delve into Black Friday data this year, we have a simple solution. Install our Free Shopify app. Just being connected means you’re capturing all the data you need ready for the post-holiday analysis.
If you don’t have a Shopify store, it’s no problem. We can still get you hooked up to Distil and all that juicy Black Friday engagement data won’t be lost.