BENCHMARK REPORT

Ecommerce Sales: How Relationship Building and Planning Impact BFCM

Black Friday and Cyber Monday (BFCM) impact every ecommerce business. For many, it’s peak selling season; but even if BFCM isn’t a make-or-break time for your business, there’s no ignoring it. Each year, more people spend more money online between Thanksgiving and Christmas, huge proportions of it during those critical first few days.

In 2018, online holiday season sales increased 19% from the previous year, to over $850 billion in revenue. Of this amount, $20.5 billion was generated during BFCM weekend. In fact, Monday, November 26, 2018 was the biggest online shopping day in American history, and Klaviyo alone represented about 1% of US BFCM sales that day. We expect that number to be larger in 2019.

Despite the heavy spending and growth in online sales, there’s a downside. The competition for consumers’ attention is more intense during BFCM than it is at any point in the year. Fierce competition means higher acquisition costs and reduced margins. Some estimates put the cost of acquiring new customers during the holidays at a whopping 25% premium over any other time of the year.

Given these market conditions, we wanted to learn what the best brands did to ensure their success in such a hyper-competitive environment. To find out, we took a look at 12 of the fastest-growing brands in our portfolio across the top four ecommerce verticals. Our study spanned $300 million in ecommerce sales across 4 million orders in 2017 and 2018. Our analysis revealed one indisputable similarity that these leading brands had in common:

Their success with BFCM sales was determined just as much by the marketing they did outside of the holiday season as it was by their holiday marketing strategy. Their actions prior to the holidays were arguably more important than anything else they did.

Our benchmark report covers:

  • The impact existing vs. newly-acquired customers have on BFCM sales
  • The consumer signals that indicate a high-value BFCM shopper
  • A look at how existing vs. newly acquired customers behave after BFCM

You’ll also find a section of dedicated tips designed to help you implement the same strategies top brands have used to build their BFCM success.

Existing Customers Drive BFCM Sales

48%

of 2018 BFCM sales came from customers first active between Q1 ’17 and Q3 ’18


Customer acquisition tends to take up the most time and energy when it comes to ecommerce marketing, especially around the holidays. Yet, our analysis proved that focusing on acquisition at the expense of tapping into your existing email subscribers is a costly mistake. Our top ecommerce businesses drove 48% of their BFCM sales in 2018 from people who first engaged with them between January 2017 and October of 2018. That’s right: nearly half of their sales came from people who already had a relationship with their brand.

Moreover, when it comes to holiday shopping, consumers who only recently engaged with your brand by either making a purchase or engaging with marketing materials contribute less than those with longer relationships with your brand.

The takeaway: if you are looking to drive sales during the holidays, then you should get your existing customers and prospects (subscribers to your email list who have not made a purchase) to buy from you much earlier in the year since the smallest percent of BFCM sales came from the most recent customers and prospects. Only 10% of overall BFCM sales came from customers that engaged with the brand within six months of BFCM. On the opposite end of the spectrum, nearly a quarter of all sales our leading brands generated came from shoppers who engaged with them a year or more prior to BFCM 2018. In other words, you need to invest in building and nurturing customer relationships well in advance of the holiday season.

 

 

% of BFCM Sales by Customer Relationship Age*





*The data used to pull this report is two years worth of customer data (2017 and 2018) from some of the largest ecommerce brands in Klaviyo’s portfolio. For the purposes of this report, we established BFCM to be from November 22-26 2018.

Not all relationships are equal

17%

higher average BFCM order value for those who first clicked an email between Q1 ’17 and Q3 ’18


When developing and evaluating a relationship with a customer or prospect it is important to not take a cookie-cutter approach. Doing this the right way requires constantly iterating and paying close attention to how your customers and prospects are interacting with your messaging because not every customer interaction with a brand is weighted equally.

We looked at two of the most common relationship engagement signals while preparing this benchmark report; opening and clicking on an email. We did this to understand whether the way that a consumer engaged with an email mattered.

It is evident that getting a consumer to open an email from your brand prior to making a purchase during BFCM drives sales during this time period. An eye-opening 89% of 2018 BFCM purchases were made by customers who opened an email beforehand. This amount was almost evenly split between those that first opened the email prior to October (44%) and those that first opened during Q4 (45%). Since this is prime shopping season, there’s a stronger connection between opening a message and making a purchase than any other time of the year.

On the surface, it may appear that it doesn’t matter when a customer opens an email as long as they open it. However, customers that open an email prior to Q4 tend to make larger purchases. In our study, customers that first opened an email prior to Q4 and later made a purchase during BFCM, had a 9% higher average order size than those that first opened and bought during BFCM in Q4, and a 16% higher average order size than BFCM shoppers who had never opened an email.

The lesson: customers who have a longer-standing relationship with your brand are more likely to make bigger purchases. That means that building trust with consumers throughout the year pays dividends when it comes to BFCM sales.

We know that engagement matters, but exactly how much more important is it to get a click than an open? The results are somewhat surprising when it comes to holiday shopping: opens are more or less equal to clicks. Those that first clicked and made a purchase between Q1 2017 and Q3 2018 had a 17% higher average order value than those that had not opened or clicked an email prior to making a purchase (a 1% higher average order value than those that first opened an email prior to Q4 2018). However, far more important than the difference between opens and clicks is getting those interactions to happen well in advance of the holidays.

Simply by creating and serving relevant content throughout the year (hint: do this through segmentation), you will be directly impacting the value that your customers bring during BFCM.

 

 

% of BFCM Sales by Customer Engagement Type*





Average Order Size (AOV) Based on Customer Engagement Type*

 

Average order value (AOV) % AOV lift from no prior engagement
First opened email before Q4 $148 16%
First opened email in Q4 $134 7%
First clicked email before Q4 $149 17%
First clicked email in Q4 $140 11%
Never clicked email $128 3%

*The data used to pull this report is two years worth of customer data (2017 and 2018) from some of the largest ecommerce brands in Klaviyo’s portfolio. For the purposes of this report, we established BFCM to be from November 22-26 2018.

First Time BFCM Engagers

70%

of first time 2017 BFCM buyers have not bought again with the brand


We recognize that half of the BFCM sales from the leading brands that we studied came from customers that were first active during BFCM. So we wanted to gain an understanding for what these customers did after BFCM. Does a relationship that starts during BFCM look the same as one that develops between a brand and a consumer during another time of the year? The answer is an emphatic no!

To arrive at this answer, we measured what percentage of first time 2017 BFCM buyers bought again at any point from the initial BFCM purchase date. We found that 70% of first-time buyers during BFCM did not make a subsequent purchase with the brand.

The learning: If you only rely on first-time purchasers to drive your BFCM sales, you will get repeat business from only 30% of them. This will put tremendous stress on your business to acquire new customers consistently throughout the year, which is costly and time consuming. Obviously, all customers drive revenue, but first-time BFCM customers are not as valuable as customers that come in during other parts of the year. Ultimately, building strong relationships with consumers before the holiday season can start today. This is the secret not only to maximizing BFCM sales, but also towards optimizing your margins and growing cost-effectively.

The set-up for a successful holiday season

To help you jump-start your BFCM success today, we have compiled a collection of some of our best resources, tips and references to build lasting relationships that drive value:

  • Create customer engagement tiers. By identifying the engagement level of your customers, you will be able to provide more relevant messaging to your customers and prospects, which will help you build relationships with them.
  • Build out a strong Welcome Series. A Welcome Series is a critical moment in the customer lifecycle because it’s your opportunity to introduce new prospects to your business and start to build a relationship with them.
  • Build a dedicated segment of customers that were first active with your brand in Q4. Knowing that this group of customers is likely more price sensitive than others, you can offer this segment of customers more aggressive deals throughout the year in an effort to build a lasting relationship with them.
  • Develop a content strategy. When you plan strategically and send your customers and prospects timely and relevant content that they are interested in, they will be more likely to open and engage with it and with you.
  • Create a bounce-back flow. By setting this up, you will be automatically sending a message to a customer that purchased within certain parameters that you set (i.e. for the first time on BFCM) prompting them to buy again after a defined period of time has lapsed.
  • Develop a post-purchase flow. A customer is still highly engaged after a purchase, so they will be more likely to open an email from you. An example of an action from a post-purchase flow would be to prompt the customer to leave a product review. This is a way to start developing a relationship with the customer early on in their life with your brand and get them in the habit of engaging with communications from your brand.

Conclusion

If you want to make this year the most successful BFCM season for your business, your work starts now. It takes time to develop relationships, but it’s worth it, because around half of your BFCM sales will come from existing customers. For our top brands, existing customers and prospects have proven to be more valuable than customers who make their first purchase during Q4.

We understand that most marketers are stretched thin. It is easy to discount a customer or prospect that was first active with you over 12 months ago. But these longer-term relationships are valuable to your business. Plus, you can communicate with them on your own email channel, so they cost nothing to target. Simply by taking the time to develop segments of customers and automated flows, you are taking the right steps towards developing lasting relationships with customers that will drive sales.

Log in now to your Klaviyo account to start building relationships with your customers now to win the holiday season.

Build Relationships That Drive BFCM Sales

So, what the heck is Klaviyo?

It’s pronounced “clay-vee-oh.” We’re a data-driven email automation platform that makes it easier to communicate with your shoppers and customers by sending incredibly targeted messages with minimal effort — and track exactly how much revenue each email is driving for your store. On average, for every dollar an online store spends on Klaviyo, they generate $94 in store revenue. Learn more at Klaviyo.com

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