Ready for the holidays? We sat down with RetailMeNot to get their expert insights on how the holidays have changed, what to expect this year, and how advertisers can build deals that convert customers. Read this in-depth case study to learn from experts at the Rakuten Affiliate Network and RetailMeNot!

Holiday shoppers make a game out of saying “the holidays seem to start earlier and earlier every year!” at the first sign of Christmas lights or festive wreaths going on display. But, according to RetailMeNot Vice President of Operations Kim Read, they’re not that far off.

“There’s been a gradual expansion of when people start to shop [for the holidays],” Read explained. “There’s a noticeable uptick just after Halloween, and we see user activity start to really pick up the Monday before Thanksgiving.”

The season has expanded beyond the top shopping days, and that’s not the only change during the holidays. Consumers formerly waited almost up until Black Friday to see the ads and deals; now many of them are “leaked” early on to drive interest and excitement. Retailers are switching up the use of specific savings vehicles – whether it leveraging codes, sales, or other promotions. The savviest savers know how to stack and combine these different types of promotions to maximize their potential savings. Consumers love gift cards as a sure-fire gift solution, and now more than ever they have access to buy discounted gift cards as an additional way to save.

The holiday shopping season trends have changed, and with plenty good reason – consumer buying habits have shifted. To best prepare for the holiday season, we sat down with RetailMeNot’s Kim Read to discuss why these changes came about, what these changes mean for advertisers and publishers, how they can create opportunity and drive sales through these changes, common holiday trends, and what cutting-edge strategies and solutions advertisers and publishers should be taking advantage of this season.

“Won’t Get Fooled Again”: How Consumers Drove the Holiday Season Changes

The holidays have a lot of familiar traits to them: Santa Claus finds himself advertising both Coke and Pepsi products, Christmas movies and music dominate broadcasting mediums, and streets are lit up with string lights of bright white or multi-colored bulbs. And, of course, consumers everywhere are looking for the best deals they can find.

Finding the best deal may not change, but advertiser’s promotional efforts can change from year to year.

“Two years ago we saw discounts from some of our popular retailers that were the same discounts they had already run several times throughout the year,” Read explained. “One of the pitfalls of employing the same discounts repeatedly is that advertisers risk losing the customer to the competition. Consumers respond best to what they perceive as better value, and it’s in the retailer’s best interest to mix offers up to excite consumers.”

But what about the customers who are loyal to the brand? Wouldn’t they endure a subpar deal for the sake of brand loyalty? Not according to Read.

“For consumers, it’s all about the quality of the offer. When they are not impressed, it’s common to see them visiting other retailers across our site.” Quality offers are characterized by 3 main factors: relevance, type of offer, and barriers or restrictions.

Independent research from eMarketer highlights how a lackluster deal doesn’t equate to the customer saving their money. Research shows a growth from 2013 to 2014 in total holiday spending (the year that had uninspiring deals), this didn’t mean that consumers ended up spending less money because their brand wasn’t offering a great deal – they just took their business elsewhere.

Read said that retailers seemed to take notice, and last year saw a reinvigorated offering of Black Friday/Cyber Monday promotions.

“Compared to the prior year, we saw a 6% increase in average discounts from coupon codes.”

Bigger and Better: Keeping Deals Fresh to Continually Entice Customers

With customers shopping earlier, and Black Friday ads “leaking” earlier, there’s a game of trying to entice customers to shop earlier and, if they don’t want to buy earlier, keeping them engaged down the line. The last thing any advertiser wants is to have a customer see a good offer early and then dismiss it because three days later they saw a better offer from a competitor. It’s an advertising game of poker, where advertisers have to find ways to up the ante and get the customer to go in on their product.

The path to victory in this game is to keep your offers fresh.

“Be competitive,” encourages Read. “More frequent offers with shorter duration periods will keep your customers coming back to check out that next promotion. The average duration we typically see across our site is 3.5 days.”

You can also leverage other promotions on top of what you’re already offering. Free shipping is a great one and something that consumers actively search for. Now more than ever, shipping costs are often a reason we see shopping carts abandoned. A study from eMarketer last September explored the different types of coupons that customers hoped to find and the number one response was free shipping without a minimum. While this was the top response, a lot of things that customers look for can be combined with other offers (discounts on multiple item purchases, a free gift with a purchase, even free shipping with a minimum). This creates “stackability” (a topic we’ll be reviewing next) and creates the idea that customers should buy now.

There are many roads you can take to continually “up the ante” for customers leading up to Black Friday, but the most important thing is to make sure that your customers feel that your offers are fresh, competitive, and relevant to them.

Understanding How Promotions Drive Consumer Behavior, Stackability, and Restrictions

While the holiday season is one of the most well-known times for finding great sales, deal-savvy shoppers are going to get as much out of their purchase as possible. Finding ways to stack offers is a strategy that more consumers are taking advantage of, and it’s a great way to convert a customer who might like the idea of a 20% off $100 or more offer, but needs something extra to get them to purchase.

“Consumers want to maximize their savings,” Read noted. “And retailers have many options to incentivize these consumers.”

Retailers have to balance: beating competitors, controlling margins, and enticing customers. As far as holiday shopping season goes, that’s the slot machine triple 7s for advertisers.

Being strategic means meeting those three goals through use of different types of promotional strategies, while also balancing the ease of use for customers.

“Coupons can be confusing when they are paired with long lists of detailed restrictions, which reduce the chance of success for the customer,” explains Read. Read goes on to cite how one of RetailMeNot’s main features is the ability for users to vote up and down on a coupon, and ones that are hard to use often get voted down, even if they are valid, working deals. When the goal is converting customers through an offer, having one that’s overly complicated can cost you that conversion.  During the holiday season, we see an 8% increase in negative comments on offers with specific restrictions.

It’s also important to understand how customers will respond to the different variables in your coupons and deals, and that will influence their success. A “20% off any one item” versus “20% off any one item $100 or more” have two extremely different results. Read advises that you need to pay careful attention to how these different variables impact performance, and to continually run tests to understand the trade-off.  For example, you may be able to drive up your AOV by adding a higher minimum purchase requirement, but at the expense of what percent decrease in the overall conversion rate and volume of orders?  Knowing the impact is critical, which is why we have invested in tools to allow retailers the ability to test and learn with their promotional strategy.

Timing is Everything

“There really is no ‘too early’, but advertisers need to be strategic,” Read stresses when asked if there was too early of a time to start promoting holiday deals. The reason that coming out too early with an offer isn’t as big of a concern is because some customers like to shop early, and will gladly take 15% a few weeks in advance even if it means they missed out on 30% on Black Friday.

The focus, Read explains, should be on the quality of the deal. Last year we saw an average of 19% increase in effective discounts during Cyber Week compared to any other week of the year.

Both the value of the discount and the convenience of using it when they want, where they want are important to consumers.  While Cyber Monday is huge for online shopping, most days throughout the holiday season customers are going to expect a mix of both online and in-store promotions.

Timing also plays a role what is relevant to your customer.  When shopping for last minute deals, we see our users focus on accessories, books, gifts, beauty, personal services and sports and fitness.  Therefore, you should focus offers around those relevant categories during that time to help boost sales towards the end of the season. You can also use this window to take advantage of smaller items, such as offering 10% off stocking stuffers, to help boost sales late in the holiday shopping season.

The importance of understanding timing stems from consumer behavior and buying habits. You can’t offer free shipping a few days before Christmas because the product won’t get there, nor should you be focusing on pushing stocking stuffer deals too early because consumers are more focused on hunting down big ticket items.

All for One: The Omni Strategy

While discussing customer behavior during the holiday shopping season, Read observed that “we know they’re in the [buyer’s] journey, but they may not have made a decision on whether they will buy online or in-store.” In other words, they are still making decisions based on the deals available.

Read isn’t referring to what point the customers are at from a buying perspective, she’s focusing on where the customer is physically looking to make the purchase – online or in store. These are two different buying situations, and in both the customer is looking to get the best deal he or she can find.

An eMarketer study explored this buying behavior recently and found that most consumers are either visiting a retailer’s website or app or using a search engine to conduct their research on their purchase, with many not even stepping foot in store before going in to buy the product they’re looking for. Because this research is starting with one buyer path and possibly ending with another, this is all the more reason for an omni strategy. (Click the graph to the left to enlarge).

“[Advertisers] lose customers by choosing one or the other, online or in-store,” she explains. “The reason omni deals perform well is because it then becomes relevant to 100% of customers, wherever they are and whatever intent they have.”

This is crucial for advertisers to recognize. Shoppers come in all varieties and prefer flexibility with their purchasing decisions. Being able to provide universal offers helps ensure that a customer can take advantage of a deal and purchase on their terms. It’s all about being relevant and valuable at the time and place they consider making a purchase.

The holidays are a critical time of year for retailers, and having the latest strategies and insights on consumer trends is critical for success during the biggest shopping season of the year. From understanding how consumers are researching and shopping for products, to recognizing what consumers do (and don’t) want in their deals, the importance of a well thought out sales strategy cannot be overstated enough. The insights in this case study are an excellent starting point, but they should not be the only place you go to look. Reach out to your Rakuten Affiliate Network account manager, or work with your RetailMeNot contact to help build a coupon strategy for a successful holiday season. 

If you are a retailer and would like more insights specific to your brand or category, RetailMeNot has a team of experienced Merchandising Strategists who can provide additional information and recommendations. Promotions should be strategic and both retailers and consumers can win when done right. Advertisers, use SID 1872550 to reach out to RetailMeNot on the Rakuten Affiliate Network!