Christmas ad spending is set to hit a record high this year, with the Advertising Association reporting a 40 per cent rise over the past seven years. However, customers who make their first purchase with a brand during the Christmas season are 19 per cent less likely to make a second purchase than customers who make their first purchase at any other time of the year, according to data from Optimove.
Seasonal advert spend continues to grow, as retailers are under increasing pressure to match their competitors and bring in new customers over the Christmas season. While retailers spend a lot of money and energy on acquiring new customers during the Christmas period, they also need to focus on following up and retaining these customers throughout the rest of the year, says Optimove.
Pini Yakuel, CEO of Optimove added, "many marketers see the Christmas period as a key time to acquire new customers, spending out on adverts and slashing prices to bring in new spenders. And, in the short term, it works very well. Brands will see first time shoppers make 50 per cent more transactions during the Christmas season than the rest of the year.
"But if this extra 50 per cent rise in new customer purchases doesn't continue into the future, it holds little long-term value for retailers. Customers acquired in the Christmas season represent untapped future potential – if they can be persuaded to keep returning, they can offer a much greater lifetime value to the brand. Retailers have spent a lot through advertising and discounts to persuading these new customers to buy into the brand. It is much easier to encourage them to keep returning, generating longer-term value, than start again on acquiring other new customers.
"Retailers hold a large amount of data on these customers, which they can use to create a unique retention strategy for each person. One method is to target the big Christmas spenders, offering personalised rewards for their loyalty, encouraging customers to stay with the brand for longer.
"But to make the most of new Christmas customers, these acquired customers need to be kept interested for the rest of the year. Retailers have to focus their efforts on retaining these new customers throughout the rest of the year – to make sure all their hard work at Christmas doesn't go to waste."