Today’s post is written by Guest Author, Mike Ryan – Head of Retail Insights at Smarter Ecommerce. It is also the final installment to our August series on Q4 PPC planning. Thanks for tagging along this month!
Black Friday has transformed from a quirk of American brick-and-mortar retail into a global omni-channel phenomenon. For merchants in most B2C verticals, it’s a promotional period that can make or break the year, and where success is therefore imperative.
As online shopping has captured increasingly large shares of retail revenue, the holiday has changed – extended over the weekend to include Cyber Monday, and also seeing weeks of promotion before the date itself. This change was accelerated in 2020 as many consumers said “no thanks” to in-store experiences, as Shippageddon strained supply chains, and also as Amazon shifted Prime Day to an October slot just weeks before Black Friday. It was a heck of a year.
What will 2021 hold for large eCommerce businesses? Let’s discuss that by way of key strategic focal points within the intersection of operations and marketing. In a nutshell, businesses that take an integrated and end-to-end approach to their Q4 offering will outpace those who do not.
If you haven’t begun preparing for Black Friday/Cyber Monday (BFCM) by late August, it’s not a cause for panic, but now is the time to start. In years past, when BFCM was primarily an offline retail event, the traditional tactic was to bottle up demand into a pure frenzy that started the holiday shopping season. Online, however, promotional periods are starting earlier every year to match longer browsing behavior from consumers. The effect is that, while there is still an acute spike in holiday shopping activity, the ramp-up phase is catching more revenue and more customer attention than ever before.
Additionally, up-and-coming retail events like Singles’ Day on November 11 or Amazon’s October 13-14 Prime Day last year are helping to reinforce that early timeline. Research can begin in September already, and for a growing share of consumers, BFCM marks the end of their holiday shopping rather than the start.
Be there for these customers.
One way online retailers can help grow their business in Q4 is to ensure that they have the best product mix possible to match demand. For marketing teams that want to support this effort, Google offers valuable resources in the form of relative demand benchmarks and historical bestseller reports, both enhancements to the classic Merchant Center bestseller report. You might also consider using BigQuery data transfers to help connect your MC reports, including bestseller information, with other business intelligence sources. Google Trends and Rising Retail Categories are additional sources for drilling into categorical or query volume.
Pricing and Profit
Black Friday has met criticism from economists who argue that the event only serves to consolidate existing demand into a tight timeframe where steep discounting is expected by consumers and logistical challenges further damage profits. The event has achieved a critical mass that makes it too big to ignore, and the cost of not participating is higher than the cost of participating. Ouch.
Profit is of course an outcome of every function across a business, ranging from purchasing and warehousing, to sales and fulfillment. Marketers can support by gathering and integrating benchmarks from Google’s price competitiveness report, or data from category managers or external aggregators. For example, products priced low relative to the benchmark could be selected for promotion even if they are not on sale. Non-competitive products can be de-emphasized to reduce budget waste.
If margin data is available, this can be combined with planned promotions to maximize profit.
While conversion rates are typically favorable during Black Friday and Cyber Monday relative to other periods, don’t let this make you complacent. Now is the time to check your baseline and make improvements so that your webshop is already optimized and stable for the holiday period. While most ecommerce analytics setups focus on tracking conversions and micro-conversions and A/B testing for optimization, there’s another dataset you might be overlooking: anti-conversions. By tracking unwanted user behaviors and page errors in your analytics platform, you can gather valuable data to help contextualize and troubleshoot conversion rates. This data can also provide diagnostic value for your marketing campaigns.
Supply Chain and Fulfillment
Almost nothing is more damaging for Q4 success than a mismatch between promotion and logistics. Stock-outs are part of life, but they can also imply either missed revenue from bad demand forecasting or excessive promotion (and therefore missed profits). Overstock is not much better. That’s why high-quality product and inventory data are vital to the success of BFCM campaigns. Not only will this data help you avoid operational pitfalls, it will help you utilize the full potential of your various ad formats.
Additionally, with global supply chains and distribution networks under continued strain, alignment between marketing and logistics has never been more important.
Customer acquisition and customer retention are often thought of as two different beasts, and organized accordingly. However, coordinating these functions is essential to growing market share and increasing customer lifetime value; otherwise it’s like catch-and-release fishing, where you keep expending effort to catch the same fish over and over – or once and never again. Try reframing these two areas under one common goal, “customer capture”: catch and hold.
This kind of end-to-end thinking will increase profit and also help you build your 1st-party audience data, which is increasingly crucial as the future of third-party tracking is called into question. Companies that most effectively amass 1P data are at a tremendous advantage if they can activate it across their value proposition, customer experience, and commercial optimization.
Among all the planning and hustle of this season, infrastructure and security might be the last thing on your mind. However, in 2020 we saw an uptick in cyberattack incidents during key holiday periods and click fraud is also a perennial concern. Now is the time for marketing to sync with IT. Consider a worst-case scenario and the roles and responsibilities of both parties – from campaign activities to customer communication. The impact of a denial-of-service attack can reach beyond lost revenue by affecting trust and brand perception. Now is the time for marketing to sync with IT. Be sure to take preventive measures and consider a worst-case scenario covering the roles and responsibilities of both parties – from campaign activities to customer communication.
If you liked this post, be sure to check out the rest in our Q4 PPC Planning Series: