The holidays can account for as much as 30% of retailers’ total sales. To say this is an important time of year would be an understatement. In 2016 the National Retail Federation predicted US holiday sales (that is, in November and December) would be up 3.6% to $655.8 billion. Bain & Company largely agreed with this number, placing its own prediction between 3.5% and 3.9%. These numbers were somewhat encouraging. Selling in an “up economy” is certainly easier, but 2016 wasn’t in a post-recession boom like 2014. Success still depended on brands being able to execute their strategy.
How Did Your Brand Do?
Successful retailers know a good holiday season isn’t enough to hit revenue targets—it takes a well-executed brand strategy and efficient operations to reach your goals. Now that the holidays are over, how did your company fare? Which parts of your strategy worked? Which parts of your holiday strategy did you execute well? Where did your brand fall down?
Regardless of your performance the most important question you need to ask is, “How could we have done better?” Whether or not you hit your holiday targets, most brands have room to grow in three main areas: operations, customer obsession, and financials.
Even the best plans can fail. One of the biggest struggles retailers face is knowing when to adjust their plans. Sometimes that holiday promotion just didn’t perform as well as expected. Mistakes happen, and sometimes pages need to be updated, catalogs refreshed, and prices adjusted. For some, changing directions midflight isn’t easy.
Many ecommerce solutions are built with developer flexibility rather than business users in mind. Those applications can be extended and customized by your IT team, but business users fight with the interfaces and struggle to perform essential management tasks. Operational efficiency isn’t necessarily about new features and functions, but about usability, speed, and the ability to change directions when situations require it.
Sticking with a mediocre holiday strategy is a recipe for mediocre revenues. Today’s digital reality requires brands to constantly evaluate what they’re doing and change directions quickly. When it comes to ecommerce, speed should be the new strategy.
The second area where many retailers will find they could improve is their customer focus or, more accurately, their customer obsession. Most sites are built to sell products rather than help a customer meet a need. One of the tell-tell signs that a company has a product focus rather than a customer focus is that channels are viewed independently. Ecommerce gets optimized apart from the in-store experience, which doesn’t consider what happens via social channels or in the call center. Customer-obsessed companies design their customer experiences with a different mindset. Let me explain why the entire experience must be considered, not just the individual touchpoints.
The chart above shows a set of buyers whose experience spans multiple channels. Individually, each touchpoint has an acceptable satisfaction rate. If the overall buying experience is the product of the individual touchpoints, moderately successful individual engagement leads to poor overall quality. An extremely customer-focused orientation is the only way to grow a loyal customer base today. Most shoppers have given up on brand loyalty because they believe they can always get a better deal elsewhere. Brands that nail customer engagement will create loyalty that lasts through your next competitor’s sale.
Profit and loss management within ecommerce gets a lot of attention. Profitability is becoming the primary metric of success, and although most profit growth is driven by revenue growth, for many brands, the cost and structure of your commerce contract could be reevaluated for major cost savings. Legacy on-premises systems often have annual support costs that are equal to, and in some cases greater than, a software-as-a-service annual subscription without any of the operational or financial benefits. Similarly, most SaaS-based solutions force you to give up a significant portion of revenue once you’re on board. That pricing model may not be the best fit for your business, especially if you have high-value, low-volume transactions.
Now that the holidays are over, it’s time to consider whether your platform is helping your business. Ask yourself these questions: