Top Holiday Season Digital Trends

The holiday season is nearly in full swing. How will it be different than past seasons? The most striking difference is not in what consumers are buying, it’s how they are shopping. Consumers have been gravitating toward digital over the past decade, but this year, shoppers have indicated that they will pass a new threshold.

The holiday season is nearly in full swing. How will it be different than past seasons? The most striking difference is not in what consumers are buying, it’s how they are shopping.

Consumers have been gravitating toward digital over the past decade, but this year, shoppers have indicated that they will pass a new threshold. For the first time, they anticipate making the majority (51 percent) of their holiday purchases online, according to a study by Synchrony Financial*. This has been steadily increasing over the past three years, up from 47 percent in 2015 and 49 percent last year.

Synchrony Holiday Season Shopping StatsWhich devices will they be using to make these purchases? Consumers indicate that one in five holiday purchases will be made on their mobile device. So, not only is shopping trending toward online purchases, many shoppers are planning to do it on-the-go.

Shoppers like mobile because, quite frankly, it’s easy and always around. The mobile device is with the shopper continuously. Whether riding on a bus, waiting in line for coffee or binge watching your favorite Netflix show. If you think of the perfect gift for Aunt Helen, you can order it immediately. And, not to worry about keeping track of your purchases — half of mobile shoppers say they use mobile because they can easily view the confirmation in their email.

And, discount hunting via mobile is ubiquitous. More than one-third (36 percent) of shoppers say they will shop via mobile during the holiday season because they can more easily link their email offers and coupons to their purchases. So, bargain hunters don’t have to worry about missing out on a good deal. The ability to scan available coupons and download offers gives shoppers confidence that they are getting the best price.

With the ease of shopping online and the widespread availability of next-day shipping, consumers may be less rushed to get their shopping done early this holiday season. Only 44 percent of consumers say they will be shopping earlier this year. Last year, 53 percent said they would be shopping earlier than in the past.

And, shoppers are less likely to be “hunting for a deal” on specific days like Thanksgiving, Black Friday or Cyber Monday. This is perhaps due to the prevalence of deal hunting throughout the season. Consumers have been less hooked on shopping on specific days, if they are certain they can find the best price on any given day.

How are retailers responding to these trends? One way is having websites that are optimized no matter which device consumers use — laptop, tablet or mobile. Retailers are spending time and resources building websites that are easy to navigate and intuitive. The experience is important — the top reason shoppers delete a retailer app is due to poor functionality, according to the Synchrony Financial 2017 Digital Study.

Also, shipping will be a big element of the online shopping experience this year. Many retailers have graduated from two- to three-day shipping to one-day, or next-day shipping. And, since shoppers say they will be shopping later in the season, this will be a big deal this year.

Finally, and perhaps most important, bargain hunting remains a key ingredient in the shopping habits of consumers, whether they are early bargain hunters or last minute deal seekers. The ability to check product reviews, compare prices and use coupons is a key part of the holiday shopping experience. If the consumer can do it all on one website, great! If not, off they go to the next retailer.

* Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial. All references to consumers and population refer to the survey respondents from the Synchrony Financial 2017 Pre-Holiday Study unless otherwise noted.

Should You Create a Mobile App?

As a marketer, you’ve created a Web page, established a social media presence and even experimented with mobile marketing. Is it time for the next step? Should you create a mobile app so your customers can engage with you more easily?

Mobile appsAs a marketer, you’ve created a Web page, established a social media presence and even experimented with mobile marketing. Is it time for the next step? Should you create a mobile app so your customers can engage with you more easily? According to the “Synchrony Financial 2017 Digital Study,” 63 percent of the U.S. population over the age of 15 have downloaded a retail app. The average adult has two retail apps on their phone at any given time.

Why People Download Mobile Apps

What are the driving forces causing customers to download retail apps? According to our study, the top reason why people download a mobile app was because they frequently shop at the brand — 51 percent said they downloaded an app for this reason. As a marketer, your most loyal customers are the best targets for an app.

The second reason was to make a purchase, at 48 percent, followed by the desire to browse and compare prices, at 37 percent. So, if you are planning on launching a mobile app, ensure that it’s easy to buy and browse products on it. These are driving factors for your customers.

Who are most likely to download mobile apps? You guessed it, it’s the Millennials. Millennials are downloading apps in huge numbers. Eighty-one percent of those aged 26 to 35 said they have downloaded a retailer app on their phone. The top reasons are the same, to browse, buy and compare prices.

Retailer App EngagementMost Important Mobile App Features

OK, so you’ve launched your mobile app. Now, you want to get people to use it, right? Well, do you know which features are most important to your customers? Below are the top-rated app features:

  • 69 percent — access to discounts and coupons
  • 30 percent — ability to order products quickly
  • 27 percent — product search feature
  • 23 percent — ability to make payments and check balances

So, the number one feature customers want from an app is the ability to save money and access to special offers. Other features that rate highly are speed, product search and payment-related features. If you want your customer to regularly use your mobile app, keep these features in mind. A few surprise and delight perks are always great ways to get customers interested and engaged.

Why Good Mobile Apps Go Bad (or Get Deleted)

The top reason mobile apps get deleted was due to poor functionality. Thirty-five percent of people deleted apps for this reason. If your app has poor functionality, doesn’t meet your customers’ needs or customers have a bad experience, your app will most likely get deleted. There is only so much space on a smartphone and today’s digital consumer doesn’t have much patience for a dysfunctional mobile app.

Coming in as a close second reason for deletion was simply that the app didn’t provide enough value. Thirty-four percent of consumers said they deleted a mobile app because they didn’t see the value in keeping it. This is a warning sign! Even if you spend the time and effort developing an app that runs great, if you don’t provide enough perks or benefits, it just won’t matter — it will get deleted.

In our hypercompetitive world of digital engagement, it’s important to prioritize our digital programs. One of the strategies to explore is engaging with your customers through your own mobile app. If that’s the case for you, be aware of the delighters and pain points for mobile app usage. It can be a great way to engage, but it can also be a lot of work for a minimal amount of gain, if not done correctly.

Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial. All references to consumers and population refer to the survey respondents from the Synchrony Financial 2017 Digital Study unless otherwise noted.

How Do You Decide What to Test in Direct Mail? 

Do you have three tested direct mail packages waiting in the wings to use when your control starts to fatigue? If you don’t, you should. It’s never a question of if a control will die, it’s when. So what is most important to test now to get to that breakthrough package? Here are some ideas.

Direct mail testDo you have three tested direct mail packages waiting in the wings to use when your control starts to fatigue? If you don’t, you should. It’s never a question of if a control will die, it’s when. So what is most important to test now to get to that breakthrough package? Here are some ideas.

Smart direct mail marketers are constantly testing. It may be the offer, positioning, format or anything else — but what variable gets you the biggest bang for the testing dollar? And which test delivers the most favorable cost per acquisition?

Traditional mail testing can be very expensive, time consuming and yield limited insight if not executed correctly.

After personally overseeing and writing multitudes of direct mail packages, it’s still tough to choose just one variable to test. The reality is that several variables should be tested all at the same time to get to a new control faster. These are the types of tests I’ve found most successful in revealing key attributes for a new control:

  • Your offer is highly influential in your response. If you’re testing price (most typical), you can test dollars off or percent off. I’ve found offering dollars off to be best, but every market is different.
  • Are you including a bonus or free gift?
  • Repositioning your product — or testing a new unique selling proposition — can reinvent your complete message and offer to produce sizeable increases in response rates.
  • A new production format can refresh an existing control. Perhaps you’ve used a #10 outer envelope for a long time. A simple switch to a #9 or #11 envelope can make a difference.
  • I like to include showstopper text and graphics on my envelopes, each worth about a half-second of time for the recipient to pause and study the OE. I’ve found elements such as faux bar codes, handstamps and seals yield favorable impact.
  • Evaluating data overlays from models or profiles will return tremendous information and insights. But if you don’t spend the time to interpret it and imagine the possibilities, you can overlook great new ideas.

So with all these test possibilities and data, what variables should you test?

In my last column, I shared a new Bayesian Analytics methodology that I think will upend direct mail testing as we know it today. Bayesian Analytics isn’t new, though its current applications are new and spreading to many fields, including weather forecasting, insurance risk management and health care policy. Later this month I’m moderating an online session on this topic (learn more at my website).

A/B testing is effective, but usually builds a new control quite slowly (how many times have you tested, only to find the test performed under your control?). Multivariate testing enables you to isolate variables and achieve a new control more quickly, but it still takes several packages to confidently identify the winner. But the use of Bayesian Analytics in direct mail gathers substantially more testing insight and produces more cost savings, while taking less than half the time of traditional testing.

I believe in taking out the guess-work of testing where it’s possible. Otherwise it is easy to incorporate our own personal emotional appeals and biases, like when we say “I’d never respond to that!” We’re probably not our own market. We’re often wrong, even as informed as we are about our products and audiences.

My point is this: You must keep testing. Test outside your comfort zone. Let your prospective customers tell you what variables they’d respond to by using Bayesian Analytics methodology to deliver the emotional insights that big data can’t deliver.

If you don’t have at least three tested packages, or knowledge of what variables form the magic combination necessary to increase response rates, Bayesian Analytics will save you a lot of time and resources.

Download my new report, “Predicting Direct Mail Results Before You Mail” to learn more about Bayesian Analytics.

Full-Price Customers: How to Get, Keep Them

The refrain from retail CMOs has been consistent and almost deafening. They say: “We don’t just need more customers, but the right customers.”

Full-price customers, Mike FerrantiThe refrain from retail CMOs has been consistent and almost deafening. They say:

“We don’t just need more customers, but the right customers.”

“We need to grow margins.”

“We need to reduce our dependency on discounts.”

Even during this year of economic recovery, luxury brands in particular have been seeking to improve margins and sales by selling more full-price purchases — all while retail, at large, has been crushed.

But the high-end isn’t the only one that desires full-price sales. Remember not too long ago, JCPenney infamously tried to eliminate discounting and offer a fair, low price every day? We know how that worked out.

Starting shortly after the Great Recession in 2008, as both business and consumer spending dried up, marketers were forced to adopt traditional strategies for creating incremental revenue in a difficult environment. The range of tactics deployed was extensive; yet, pricing became more important and varied than ever before.

This phenomenon, you remember, was so widespread, that an entire category was born — “flash sale” websites like Totsy, Groupon, Gilt, Rue La La and Zulily. eCommerce juggernaut Amazon came out its their “Golden Box” and more recently, ushered in PrimeDay.

The Customer Is in Control

While price cadences, markdowns and closeouts are not new, something more fundamental began happening among consumers. It was the confluence of accelerating globalization, mass adoption of the Web and the deep scarring from the recession — that began driving up savings rates and reducing debt, which appears to have infused a new ethos among consumers and their perception of bargains.

Millennials today refer to saving money as a sort of “hack.” The Internet is filled with “life hacks” and more relevantly: “savings hacks.” Even if they are spending that savings on going out at night — that, too, has spawned what may be a generational interest in getting more for their money. It’s a badge among them to find the cleverest ways to pay less and get more.

While walking to a meeting, I realized I had not put collar stays in my shirt collar. I was going to stop at a retail store on the way, and instead of Googling where to buy them as I did (I’m a Gen Xer, and that’s what I would do) a Millennial did a different search, and we stopped at Starbucks. He came out with a wooden stirrer, and snapped off a piece to fit each side. Then he started on where I could buy custom dress shirts for 30 percent less than what I was likely paying. (He was right.)

This anecdote isn’t intended to communicate how clever this was. It’s intended to illustrate a new consumer behavior, born of the intersection of rising influences of “digital natives,” mobile tech, cloud computing, and the impossible rate of change that comes with it.

If you don’t sell to Millennials today, odds are you will be targeting them soon. Today, the oldest Millennials are entering the accessible- and luxury-buying brackets, and they will take their toll on them. I’ve already worked with clients who are offering products designed to entice new buyers of their brands into trial, they are not discounted products, but new products designed to appeal to the more price-conscious Millennial. These new offerings are changing the way brands market and sell.

Existing Full-Price Buyers

Our recent internal study looked at the impact of eliminating sale items for a brand that typically sells to more affluent customers. A few things happened almost immediately:

  • With sale items gone, on-site searches skyrocketed, as the price-conscious consumer hunted for the sale
  • The conversion rate plummeted for consumers who looked for and could not find a sale
  • Full-price purchases went up as a percentage of sales — yet revenue declined

The short-term effect was that revenue dropped materially at the outset. It was essentially the same behavior of discount buyers at other organizations that abruptly “eliminated” sale pricing. The longer-term impact is still unfolding, but surely not every customer is a full-price buyer, and some will never return — unless the sale returns.

Further analysis illustrates there are at least three types of buyers when it comes to price:

  • Full-Price Buyers (price inelastic)
  • Discount Buyers (price elastic)
  • Both (buyers who consume incentives and buy at full price)

Strategies for these different types of customers range from simple to exhaustive. In short, our goal is to understand the elasticity of demand associated with each customer and the goods she purchases. The best place to start is with a simple segmentation of each of the types of buyers based on their consumption of discount promotions.