December 20, 2006

Holiday Shoppers, Who Are You?

Several trends have accelerated changes in customer behavior over the past five years.

Catalogers always knew that Christmas shoppers were different than all other customers. Back in the day, the catalog shopper purchased Christmas merchandise between October and late-November. Catalogers knew these customers were different than customers who shopped during other times of the year, and changed the catalog contact strategy to target these individuals less during other times of the year.

Multichannel and Online Retailing changed the rules, making our lives more challenging.
  • The Holiday Shopping Window. Customers now shop for Christmas during the first three weeks of December. Database Marketers need to follow these customers, to see if they behave like all other customers during the remainder of the year.
  • Expedited Shipping. Is the customer willing to spend $27 to have an item delivered next-day to a gift recipient worth more than other customers? In the past, we would say "YES"! These days, the answer isn't certain. The customer may not care about your brand, the customer may simply care that you can deliver an item quickly. You have to run Multichannel Forensics on this customer segment, to understand their future value and behavior.
  • Gift Cards. Has anything mucked-up customer analysis more than gift cards? Is the customer who purchased a gift card worth more than other customers? Does the gift card recipient have any long-term value?
  • Sale Merchandise. We retailers really messed up this one. We declare the day after Christmas as a day for customers to get great bargains. Customers respond by not purchasing full-price merchandise prior to Christmas, delaying purchases for sale and clearance product after Christmas. Retailers see decreased demand prior to Christmas, and accelerate markdowns after Christmas. Brilliant! What does the marketer do with the customer who buys sale merchandise on December 26? What does the marketer do with the customer who buys sale merchandise with a gift card on December 26? Do you define these shoppers as true "customers"?
  • Multichannel Mess. We compromise the potential of the online channel by forcing pricing parity across channels. We provide the customer with a wonderful multichannel online shopping experience on December 26, one that is less profitable for the enterprise.
Today's savvy Database Marketer has no choice but to develop customer profiles that take the Holiday Shopping Window, Expedited Shipping, Gift Card Buyer/Redeemer, and Sale Merchandise Buyer into account.

Once the profiles have been developed, the marketer can determine whether the sale buyer using a gift card on December 26 deserves to receive a full-price e-mail campaign in February, or a 148 page catalog in May.

Just as important, the Database Marketer needs to run Multichannel Forensics on the customer profiles, to understand if there is any potential to get these buyers to purchase full-price merchandise at other times of the year.

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