Part 2, The Holidays in 20/20: How to Increase Revenue
BVAccel is focused on all things eCommerce, which is why we’re taking a full-service approach to helping you prepare this holiday season.
We’ve gathered insights across all of our teams, and are about to uncover what we consider to be the best and top tactics from a perspective that combines storefront strategy, marketing, creative, user experience (UX) design, Amazon, and more.
Welcome to Part Two of our six-part content offer, The Holidays in 20/20: How to Increase Revenue.
When it comes to the holidays (or really any time of year), every eCommerce merchant wants to see a spike in revenue. After all, ‘tis the season to capitalize on those gift shopping, last-minute stressing, higher-than-normal discretionary income spending consumers… is it not?
According to NRF, the holiday season accounts for 20% of the retail industry’s annual sales, and is often responsible for up to 30% of some individual retailers’ total annual sales.
But the real question is, how can you increase metrics like conversion rate, and also guarantee an increase in revenue? It’s no secret that the link between conversion rate and revenue is a delicate line; if you slash your prices, conversion rate is sure to go up… but overall revenue will plummet.
As we highlighted in Part One: Increasing Conversion Rate, step one is planning ahead.
Knowing how and when you’re going to sell more this holiday season, based on your own historical data and target audience, is critical. It is important to understand trends in which products need to be discounted in order to sell, which customers tend to buy at full price, and which dates, holidays, or times your target audience is most likely to purchase.
Then, once you’ve successfully crushed the holidays, you can work off the momentum created by this spike in revenue to convert those one-time holiday shoppers into lifelong customers, thus increasing customer lifetime value (CLTV). But, let’s not get ahead of ourselves - more to come on CLTV in Part Four.
Here are our top 5 tips and tricks when it comes to increasing revenue during the holiday season:
- Demystified! The Link Between Conversion Rate & Revenue
- How to Sell More Stuff on Amazon
- Why You Need the Amazon Buy Box
- Discounts, Promotions, Deals, Oh My!
- Referrals, Loyalty Programs, & UGC
1. Demystified! The Link Between Conversion Rate & Revenue
When it comes to increasing revenue, conversion rate plays a critical role. Last week, in Part One: Increasing Conversion Rate, we shared our top tips for increasing conversion rates. Go check it out if you missed it, we’ll wait.
Today, we build on that advice and drill down into the importance of looking at overall revenue in addition to conversion rate when setting and reaching your holiday goals.
So how can you use the tips we discussed last week to increase conversion rate, but at the same time increase revenue?
Well, the first thing you should look at is your historical data. “You want to understand how people purchase, and try to identify patterns,” says JJ Banasch, Senior VP of Marketing Services, BVAccel. “If you understand why people abandon their cart and why they convert, you can leverage tools like email and paid social campaigns to make sure you are getting in front of the right people at the right time."
In addition, this same data can also help you identify which groups of consumers purchase at the highest order values.
“On the media side, you can actually be pretty selective in who you’re going after based on the types of products you’re promoting, so really understanding where higher average order value (AOV) is coming from and focusing on those areas can help out quite a bit.” says Bannasch.
So, once you understand the trends in your historical data, what should you do next?
First, you should identify which products should NOT be discounted - if you can sell products at full price, why sell them at a lower price with less room for profit?
You can also use sales, promotions, and deals (see section 4 below for more). Timing is critical here, and so is deciding the type of discount that will resonate most with your audience without chipping away at your margin. For example, maybe you offer free overnight delivery to customers who spend at least “x” dollars. This threshold must be specific to your product, and you’ll want to calculate a cart value that will offset the cost of overnight delivery and still make room for profit.
Another idea is to think about incentivizing conversions or higher order value by offering a post-purchase service. For example, if you’re a jewelry brand, rather than discounting your rings, offer free resizing - which only costs you a few dollars out-of-pocket.
Overall, it’s important to think through the holidays with a big picture mindset; you can’t just focus on conversion rate, at the expense of revenue. Planning ahead and coming up with creative offerings that incentivize your customers and their specific needs will help you overcome this balancing act and ultimately increase your bottom line.
2. How to Sell More Stuff on Amazon
“If a net new customer is going to purchase from your brand for the first time, let them do it whichever way is easier,” says JJ Banasch, Senior VP of Marketing Services, BVAccel. “If it’s on your DTC storefront - great. If it’s on Amazon - that’s great too. As long as you’re getting that new customer through the door (or through the cart in this case), that’s really what matters.”
Amazon can play an important role in acquiring new customers, since it’s where many consumers start their online shopping process. Why? Because customers trust Amazon; based on Feedvisor’s Consumer 2019 Survey, two-thirds of respondents (66%) typically start their search for new products on Amazon, while only one-fifth (20%) start on a search engine such as Google.
Step one to utilizing Amazon during the holidays is to launch all of your products in September or October. This allows a couple months until Black Friday and ensures that you'll have enough time to optimize all the basic foundations around your Amazon product launch, from product photography to product description.
Another reason you want to start early is to accumulate as many reviews as possible. Positive user reviews can turn into a snowball effect because of social proof. The more people see that others love your product, the more they will buy your product themselves.
Lastly, one more Amazon tip straight from our Amazon Business Lead, Riane Sanchez - we highly recommend adding Amazon DSP to your marketing mix, a demand-side platform that enables advertisers to programmatically buy display and video ads.
“During the holidays, a lot of people go to your Amazon pages so you have a really big retargeting pool,” Sanchez says. “By leveraging DSP, you can retarget people that have visited your Amazon pages and direct them to your direct-to-consumer (DTC) storefront to convert.” says Sanchez.
**Pro-tip, if you really plan ahead, you can also use DSP to retarget consumers who visited your pages during Amazon Prime Day (in July) with your Black Friday / Cyber Monday (BFCM) promotions as well.
3. Why You Need the Amazon Buy Box
When it comes to generating more revenue through Amazon, we strongly suggest that you prioritize winning the Amazon Buy Box.
The Buy Box is the white box to the right side of the Product Detail Page (PDP) where consumers can add items to their cart or “Buy Now”
Since there is no limit on how many sellers can use the Amazon platform, multiple merchants (or resellers) often end up selling the same item.
*Queue* competition for the Buy Box.
There really is no questioning the value of this real estate. In fact, 82% of Amazon sales go through the Buy Box, and the percentage is even higher for mobile purchases. Thanks to this stiff competition, only businesses with the best seller metrics are eligible to win the Buy Box, an achievement that is imperative to your holiday success according to Riane Sanchez.
Before you can ensure people can buy your product, you need to get people to your page. Amazon Advertising to do just this on the platform via Amazon Marketing Services (AMS). In Part 1 of this 20/20 series, we expressed the importance of the content which lives on your product listings. You’ll leverage these content keywords into your SEO strategy on Amazon. The kicker, you cannot win the AMS bid if you are not winning the buybox.
So how do you win the Amazon Buy Box? Well there’s no fixed formula, but here are a few ways to improve your chances and beat out the competition:
- You need a Seller Account and consistently high performance levels (including customer service, a perfect seller record, and strong customer metrics).
- Competitive pricing. Although price is not the only factor, it does play a role in Amazon’s Buy Box algorithm. Make sure you do your research on the competition to ensure that yours is one of the lowest offers.
- You can only sell new products (not used). This is so that Amazon can be confident in the quality of your product and its condition.
- Plenty of inventory in stock. Amazon needs to be sure that there’s no risk of a detrimental “out of stock” message when it comes to moving your product.
- Pro tip: get a head start with Fulfillment by Amazon (FBA). Although this doesn’t guarantee a shot at the Buy Box, it certainly gives you an advantage.
4. Discounts, Promotions, Deals, Oh My!
Percentage discounts, buy-one-get-one (BOGO), tiered discounts, product bundling… the list goes on! How can you possibly decide which combination of discounts, promotions, and deals is right for your brand and your overall revenue?
As we touched on in Part One: Increasing Conversion Rate, your choices should reflect your brand’s goals. Many of the promotional strategies are aimed at either increasing conversion rate or AOV, both of which funnel up to, and impact, overall revenue.
Here are some of our favorite types of promotions and how you can leverage them:
Product Bundling: Product Bundling is a great way to increase AOV and total revenue. But as with everything, you must return to your handy-dandy holiday planner and look at your Google and Shopify analytics in order to craft the right bundle.
You want to bundle products together that your target consumer will be interested in, and items they might not have purchased had it not been offered at the discounted rate within the bundle. This is also a great way to expose consumers to new products that they may not have tried on their own.
Look at what your users are currently purchasing, and identify other offerings that are an opportunity for a cross-sell. Additionally, it’s the holidays… so remember that people are looking for convenient ways to find and choose gifts which makes product bundling even more effective.
Free shipping, overnight delivery, get it by the holidays: Customers now expect fast and free shipping year-round, thanks to Amazon.
About 88% of Amazon shoppers said the promise of free shipping is what compels them to shop with Amazon. This new standard in order delivery has changed consumers’ expectations. Today, according to a study from the National Retail Federation, 75% of consumers expect delivery to be free even on orders under $50, an increase of 13% from last year.
"With fast and free shipping as a key driver for online and cross-channel purchases for the fifth year in a row, the biggest opportunity for brands and retailers lies with creating more efficiencies in the supply chain," according to a study by Walker Sands.
That being said, the closer you get to the holidays, the more of an incentive fast and free shipping becomes. Tying this to spend minimums can help you increase AOV and conversion rate, while at the same time providing a positive customer experience for your customers rushing to get their gifts in-hand by the holidays.
Scarcity tactics: We talked about this in more depth in our Part One: Increase Conversion Rate but it definitely deserves an honorable mention here as well.
Implementing scarcity tactics into your user experience (UX) can take the form of timed shipping offers, limited-time offers with a countdown timer, flash sales, or by labeling items as “limited in stock.”
Up-Selling / Cross-Selling: The holidays provide the perfect opportunity to start up-selling and cross-selling, if you aren’t already.
Upon checkout, you should be implementing algorithms to track behavioral data that will make intelligent, personalized product recommendations to users in the midst of their purchase.
With the help of a platform like Findify, your digital storefront can easily leverage behavioral data in order to make cross-sell recommendations that best suit the unique customer making the purchase. This type of technology can look at location-based searches, previous searches, where users spend the most time on your storefront, and monitor what items are frequently purchased together by similar customers. Talk about smart shopping!
5. Referrals, Loyalty Programs, & UGC
Loyal customers have the potential to be your biggest revenue drivers. With a tiered loyalty program, you can incentivize customers to become more frequent purchasers. A referral program then takes it a step further by presenting a way for these loyal customers to become your brand ambassadors.
By giving your loyal customers a discount or a deal in return for a new customer referral, you’re creating a win-win situation. You’re not only gaining an email contact for a potential new customer, but you’re also creating an incentive for both that new customer and the loyal customer to further shop.
As UX Designer, Grace Anello, BVAccel explains, “Make sure your customers can refer their friends, and then give both a discount off their next purchase. Incentivize them to buy, refer, and increase spending.”
In addition to referrals and loyalty programs, try promoting and utilizing user-generated content (UGC). Here are some tips for collecting content and for maximizing its effectiveness over the holidays.
Start Early and Never Stop: While we are especially interested in preparing UGC for holiday, the best way to actually do this is to put pressure on yourself and your team to collect high-quality UGC year-round. We recommend using the content you collected last holiday season to promote your products this year, as it is likely more relevant to the mindset of this year’s holiday shoppers.
While you can collect amazing content in Q3 for Q4, you are unlikely to get reviews that anoint your product as “the best holiday gift” or images of it coupled with candy cane wrapping paper. Instead, starting in October, go through your reviews and content from last year and feature them on your site and in your acquisition strategies.
Allbirds leverages UGC from Instagram on its DTC storefront
Use Competitive Creative in Ads: UGC can be the key to standing out in a sea of holiday themed ads. You can kick up the quality of your UGC this year by creating photo and video contests that feature your product. To make the most of these competitions, offer a prize to the winner and clearly define your brand in your requirements for the competition. This way, you will get a lot of high-quality entries that you can use in your ads.
Focus on CLTV with an Ambassador Program: There is no better way to increase lifetime value and the quality of your UGC than starting an ambassador program.
You can offer an ambassador program with a low barrier to entry. Start by sharing a discount code and exclusive information with your ambassadors in exchange for content they share on your social media platforms of choice. This strategy will have the aggregate effect of creating more loyalty from your current fans and also grabbing the eyes of their friends who are likely to identify with your product or service.
ThirdLove utilizes a Yotpo referral program landing page
And last, but not least, remember that UGC can be used to leverage “Ingroup Bias,” a psychological primer which causes your customers to frame their decisions based on what others are doing around them. Help your guests make the best choice this holiday: YOU!
Conclusion: Who Feels Ready to Sell More This Holiday Season??
So now that you’ve learned everything you need to know about increasing revenue this holiday season, what should you do next? START PLANNING!!! Our team strongly recommends that you plan for the holidays at least two months in advance, especially if you’re going to test any optimizations or changes to your storefront.
We’re hopeful that some of the ideas we’ve shared in this article, Part Two of The Holidays in 20/20 will help you maximize revenue this holiday season in ways that benefit you and your brand for years to come.
Stay tuned for parts two through five of The Holidays in 20/20. Up next, “How to AOV & Profit Margin.” Subscribe now and receive notifications direct to your email.
The most wonderful time of the year is coming FAST, and it’s time to get ready. Happy holidays, and happy planning!
Part Two, The Holidays in 20/20 Was Brought to You By:
- JJ Bannasch - Senior VP of Marketing
- Dax Young - Associate Director, eCommerce Strategy
- Riane Sanchez - Amazon Business Lead
- Grace Anello - UI/UX Designer
- Justin Kevalaitis - eCommerce Optimization Analyst