“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Ned Blaine, performance strategy manager at Turn.
When Christmas Tree Shops opened in the ’50s, the Massachusetts-based store sold Christmas merchandise in the months of July and August. It played holiday music and wished confused customers a merry Christmas. Eventually, the owners went into bankruptcy.
It took a visionary entrepreneur, Charles Bilezikian, to realize the idea’s potential, recasting the chain as a sort of dollar store emphasizing bargains, albeit with a seasonal bent. He sold the chain to Bed, Bath and Beyond for $200 million in 2003, proving that you can make a viable year-round business even if it’s nominally focused on one day of the year.
Not every business is so extreme, but generally speaking there are two types of businesses: seasonal and nonseasonal. For seasonal marketers, the question is, how can I lay the groundwork for a specific buying season? For nonseasonal marketers, the question is, how can I keep momentum for demand year-round?
Fortunately, both problems are solvable. Seasonal businesses that post the bulk of their sales within a quarter or even a month might assume that the best marketing approach is to heavy up on advertising right before that period and lay low the rest of the year.
The problem is the consumer awareness phase of the customer decision journey happens over months, not weeks. It generally takes a long period of engagement before consumers convert. Think of marketing a seasonal business as analogous to farming. You need to plant crops and water and fertilize them throughout the year before you harvest them. If you just harvest them with an empty field, you won’t get the same returns.
For instance, jewelry retailers may have the bulk of their sales occur between Thanksgiving and Valentine’s Day, a period known as “engagement season.” However, it’s safe to say that consumers who are planning to take part may mull their purchase for months beforehand. I have seen cases where as many as half of seasonal converters engaged with a brand several months before making a purchase, such as by visiting the retailer’s website. Some even made multiple purchases over the holiday season.
In this respect, retargeting advertising aimed at consumers who had sought information about engagement rings can act like a harvester machine for retailers, drawing in consumers who might otherwise drift away. Such a seasonal campaign occurs in phases in which the brand builds awareness, but then at a certain point the messages switch to conversion.
It also makes sense to continue to advertise toward converters to a limited extent, rather than simply exclude them. Even when retail sales slow in January, it can be effective to focus on them rather than find new customers.
For 2016 seasonal marketers, their eventual holiday customers are mostly those being reached today. If these marketers have not already increased their reach and exposure rate, their upcoming marketing efforts will not be as impactful as possible.
If marketing a seasonal business is like farming, then marketing a nonseasonal business is more like driving a locomotive. That is, lacking a prime season for purchasing, the idea is to continue to ratchet up momentum. If you’re trying to build sales, you need to have the engines going for a long time before you hit top speed.
When it comes to targeting individual consumers, meanwhile, the same rule applies: Purchases tend to come after a long period of engagement. For a financial services advertiser, for example, it can take nine months or more of engagement before there’s an actual conversion. In practice, this means essentially applying the seasonal approach on an individual level but taking seasonality out of the equation. The challenge is identifying who is at which stage in order to tailor both campaign messaging and targeting accordingly.
One of the advantages that programmatic advertising offers is that the wealth of data available can help identify and engage likely future converters long in advance. For example, someone shopping for auto parts is three times as likely to be shopping for both a new car and insurance in the next few months.
It’s also important to look at buying-cycle data. Don’t automatically exclude consumers who just made a purchase, for instance, since the data often shows that consumers convert multiple times.
Listen To The Data
Those, of course, are general answers to a reductionist approach to the business. Many people have preconceived notions about what works for a seasonal or nonseasonal business, but the data allows us to test those notions against reality. The best way to learn is to dive in.
What’s often the case is that, like the Christmas Tree Shops, businesses find that their “seasonal” business is really a year-round venture. Every step of the customer journey is critical, from awareness, to buying through loyalty, and data should be informing marketing strategies at all times.