November 29, 2020

Does The COVID-Bump Help You In 2022?

If you are a restaurant in Los Angeles, you don't get a COVID-Bump. You get to be closed, with no assistance from anybody. Good luck!!

But if you are a direct-to-consumer e-commerce brand not selling apparel, you might still be benefiting from a massive COVID-Bump, fueled mostly by new customers. You are stunned by what has happened in 2020. What will likely be 400,000 deaths and millions of hospitalizations netted you +50% or +100% sales gains. As I was told earlier this fall ... "I'm torn between feeling awful for society and feeling blessed because my company is performing well and I have a job."

What is the question I'm asked to analyze most often this Fall?

  • "What does the COVID-Bump mean for my business in 2022?"
The answer is a simple one. If your Annual Repurchase Rate is under 40%, the benefit of the COVID-Bump evaporates quickly, giving you a small sales increase in 2022 and nothing thereafter.

If your Annual Repurchase Rate is greater than 50%, well, it's a whole different world. You get to enjoy the magic of Compound Interest for several years. God smiled upon your business model.

For any business, however, 2021 is a "setup year". It's like in baseball when you have a 4-2 lead in the 8th inning. You bring in your setup relief pitcher. It is his job to bridge the gap between the 7th inning and the 9th inning, when you bring your closer in to finish off the game. If you want 2022 to be as successful as possible, you need to set up 2021 to be as successful as possible.

  • Until there is a vaccine, keep your foot on the Customer Acquisition gas pedal.
  • Welcome Program ... Welcome Program ... Welcome Program. Convert customers to a second purchase IMMEDIATELY. This is non-negotiable, and if your Marketing Leader tells you that you do not need a Welcome Program, go find another resource to do this for you.
  • Keep the customer clicking via email marketing.
  • If you have print, separate out those who need print to purchase from everybody else, and only spend money/resources on customers who need print to purchase.
Use 2021 as your "bridge year" ... so that you are as ready for a "New Future" in 2022 as you can be. Customer behavior is likely to fundamentally change and not go back to where it was. Why not influence customer behavior as much as possible in 2021 so that you play an active role in creating the future you need to create?

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