So let's take some time to share a few tips with you.
First, I want you to analyze how business shifts over time. Compare 2008 to 2012, and look at three time periods:
- Month of November Demand, Excluding Cyber Monday.
- Cyber Monday Demand.
- Month of December Demand, Excluding Cyber Monday.
Here's an example I witness, often:
- 2008 November = $10,000,000.
- 2008 Cyber Monday = $1,000,000.
- 2008 December = $9,000,000.
- 2008 Seasonal Totals = $20,000,000.
So far, so good. Now let's look at 2012:
- 2012 November = $9,000,000.
- 2012 Cyber Monday = $2,500,000.
- 2012 December = $9,000,000.
- 2012 Seasonal Totals = $20,500,000.
What do you observe?
If all things are equal, then Cyber Monday grew from $1,000,000 to $2,500,000 ... but the total business grew by $500,000.
This tells us that $500,000 / $1,500,000 = 33% of Cyber Monday business is truly incremental, and new to the business.
In other words, you gave away the farm (i.e. 30% off plus free shipping) to gain $1,500,000 of business, when $1,000,000 of it would have happened anyway.
Your profit and loss statement is likely to look like a catastrophe, assuming you give free shipping away in Nov/Dec - assuming the 30% off is due to Cyber Monday.
- Incremental Demand = $500,000.
- Discounts on Gain of $1,500,000 = $450,000.
- Gross Margin = 50% = $250,000.
- Net Contribution = $500,000 - $450,000 - $250,000 = ($200,000).
So - Tip #1 is an easy one ... quantify how much of Cyber Monday is incremental, is truly new business. Run a profit and loss statement (the one above is terribly simplistic, for illustrative purposes), and measure if you are actually helping your business.
Contact me (email@example.com) for your own Cyber Monday analysis.