The 2020 holiday season is widely expected to see record-setting e-commerce sales. The global events of this year – not least the COVID-19 pandemic – have caused major changes in consumer behavior, accelerating the shift to digital in remarkable ways. For example, McKinsey reports that during the first quarter, e-commerce penetration in the US more than doubled.
While some regions are slowly returning to a degree of normalcy amid the ongoing COVID-19 pandemic, we expect people will do much or all of their shopping online or in apps this year. Experts predict that digital will account for 30% of sales during the upcoming holiday season, up from 14% in 2019.
Another cause for change in holiday e-commerce this year is Amazon’s decision to reschedule its annual shopping event, Prime Day. Rumored to take place in mid-October, the proximity of Prime Day to the holidays should push consumers to make holiday purchases earlier this year.
In order to capitalize on the e-commerce growth opportunity this holiday season, marketers need a scalable, diversified, and brand-safe way to reach, engage, and convert customers. Partnership fills that need very well. Further, brands should look to partnership to reach customers at scale and at every stage of the customer journey, from seeding initial awareness and consideration to the moments just before conversion.
Here are six strategies to transform partnership into a thriving profit center for your business this holiday season
1) Start Promoting Earlier
Over the past several years, holiday partnership sales have shifted earlier and earlier. In the US, for example, 2019 data from our toolsets indicate that US sales in the three days before Thanksgiving exceeded those in the three days after Thanksgiving. That’s a very impressive development, especially when you consider that the second period includes Black Friday and Cyber Monday.
As mentioned, Amazon’s rescheduled Prime Day will pull major holiday demand forward even earlier. That may have a significant effect on top holiday shopping days this year. Consider that in 2019, Prime Day generated over $7 billion in sales with 70% of shoppers saying that at least one item they purchased was a holiday gift. A recent report from Salesforce suggests that an October Prime Day event could potentially steal up to 10% of Cyber Week’s digital revenue.
The deal-seeking frenzy generated by Prime Day can have a halo effect on other shopping and e-commerce sites as consumers comparison shop and look to buy direct from newly discovered brands. The previously mentioned McKinsey study also said that as a result of COVID-19, 75% of shoppers have tried new e-commerce sites, and 60% expected to integrate new brands into their shopping repertoire. Last year, some advertisers on the Partnerize platform ran promotions that coincided with Prime Day (July 15-16). Across the Partnerize platform, both conversions and order value were well above the daily average for the month on Prime Day, at 40% and 44% respectively.
Tip: Work with your partners to plan and execute holiday promotions earlier. Consider Prime Day actions in that planning. Ensure your promotions align to inventory, in case supply chain issues due to COVID impact product availability. Align your commissions to your specific KPIs. For example, maximizing revenue, maximizing profit, attracting new customers, driving higher AOVs, etc. Work with your technology team to ensure you are ready for increased traffic and conversions on peak days.
2) Fully Leverage Partnerships with Premium Content Publishers & Influencers
The COVID-19 crisis increased demand for quality publisher and influencer content. In addition to scaling early holiday programs by activating coupon and cashback partners, advertisers can make meaningful connections with potential customers by engaging via trusted and authoritative content.
Many content publishers have seen big increases in viewership as people spend more time at home during the pandemic. The same is true for social media influencers. A recent study of US consumers indicated that 18% are more interested in shopping via social media this holiday season compared to last. For brands targeting millennials, the news is even better, with 63% saying they’ve made a purchase over social media since COVID-19 began. According to the Pepperjam Affiliate Marketing Sales Index, content partners have delivered a 64% revenue growth year to date for affiliate marketers. The opportunity to promote offers through direct publisher partnerships has never been higher.
Another reason to focus on content publishers and influencers: these environments are often less discount- and offer-focused than traditional affiliates. Thus, both content and traditional affiliates can play a key role in maximizing profitable revenue for the holiday. Further, data indicate that content publishers and influencers deliver strong average order values, and can significantly broaden the audience that sees and engages with your offers.
Tip: If you already work with content partners and influencers, ensure that you develop programs and plans specifically for the holidays. If you don’t, quickly diversify your partner mix purposefully to drive engagement within trusted content and influencers for your audience. If your brand’s influencer programs are managed by the social or brand marketing team, collaborate with them to determine how to leverage their traffic and credibility to drive direct sales.
3) Make Conquesting Customers a Priority
There has never been a better time to take customers away from your competitors. Think about the previously mentioned McKinsey stats: 75% of US consumers have tried new stores, websites, or brands during the COVID-19 crisis, with 60% of those consumers planning to continue using the new brands. The same study also reported that Gen Z and high earners are most likely to switch brands and retailers.
With all of these customers up for grabs and brand loyalties in question, it’s a perfect opening to attract new customers. Partnership provides an opportunity to efficiently reach new customers during research and exploration, and by strategically commissioning toward this goal, your partners will work hard to deliver.
Tip: Make sure you have a strong brand presence with partners that determine where people compare before they buy. Traditional affiliate categories like cashback, coupons, and comparison sites are very strong here. Shake things up with more varied offers. Communicate differentiated value to new audiences and reward partners more for attracting new customers.
4) Right-Size Offers to Ensure Partnership is a Profit Center for Your Brand
In 2019, shoppers said promotions and coupon codes are the number one factor influencing their holiday purchases. With the high demand for deals, there may be multiple teams within your business building promotions, offers, and partnerships. The likelihood of running a high volume of deals across many channels brings the potential for offer stacking. This strategy is used by super-savvy shoppers looking to maximize their savings on a purchase by stacking one offer on top of another for maximum savings. If you don’t want or plan for offer stacking, it can put a serious dent in margins. Collaborate with other teams in your org to set appropriate promotion levels to achieve your targets.
Although shoppers will start buying earlier this year, the “Cyber 5” – Thanksgiving Day through Cyber Monday – will be big spending days. eMarketer predicts that Thanksgiving and Singles Day will be the top gaining days for revenue this year. Retailers should plan enticing promotions during this period, and commission to their most important KPIs. For example, use creative commissioning to move specific inventory, pair hotter categories with less hot, acquire new customers, drive repeat purchases, or increase order value. Data, analytics, and optimization will be crucial to finetune deals during this time.
Tip: Collaborate with internal teams to ensure you prevent offer stacking. Make sure you deliver compelling offers and deals across the “Cyber 5.” Carefully monitor performance and competitor activity during the “Cyber 5” and adjust offers and pricing as necessary to ensure you meet your goals.
5) Plan for Shoppers Celebrating Differently
A year of lockdown and social distancing is going to have a ripple effect on how the holidays are celebrated in 2020. Family gatherings will be smaller as people opt out of major air travel and are required to observe maximum gathering sizes by national and state governments. Other events that typically bring people together, i.e. gift exchanges, cookie swaps, ugly sweater parties, friendsgivings, etc., will sometimes become micro-events and Zoom calls.
How will this affect your business? It depends, of course, on the business you are in. For example, a luxury retailer might choose to focus more on smart casual apparel versus formal outfits. A spirits retailer might change the assortment they emphasize, and communicate flexible shipping options to distribute goods for virtual gatherings. A great place to start for this sort of planning is to consider changes in your most popular items since the advent of COVID. Party supply companies might choose to emphasize goods assortments appropriate for smaller occasions. The list goes on.
For brands with current partnerships with other leading brands, consider opportunities to co-promote for the events your target audience is planning. For example, a direct-to-consumer wine retailer and apparel brand could cross-sell to each other’s customers for party provisions and attire.
Tip: A great place to start for this sort of planning is to consider changes in your most popular items since the advent of COVID. Using this data as a foundation, think through how changes in holiday occasions will affect the likely purchases of your customers and prospects. Look at holiday celebrations through new optics and get creative with brand partnerships that will help people connect this holiday season.
6) Brace Yourself for the Mobile Shopping Surge
While total e-commerce has accelerated during COVID, mobile commerce is spiking even more steeply. Mobile app orders were up 56% in June versus March, with mobile shopping during the pandemic surpassing previous holiday shopping levels. Data from the Partnerize Platform show that holiday conversions on mobile devices were already on the rise last year, with a 33% uptick on the Partnerize platform year-over-year on Black Friday.
With the expectation that consumers will buy more on mobile devices this year, delivering seamless shopping journeys on mobile sites and apps is paramount. Retailers must make it seamless for shoppers to not only convert but utilize offers and promotions on mobile web and in-app. In addition, for affiliate and partner marketers, deploying tracking that can capture these sales is important for understanding the value of each partner and optimizing accordingly.
Tip: Get your mobile house in order for the holidays before it’s too late. Invest now in technology that removes shopping friction and accurately tracks mobile partnership activity in apps or on the mobile web.
Final Thoughts
The coming holiday season will be a pivotal time for businesses and partnership provides the perfect vehicle for scale diversity and performance necessary to make this channel a primary profit center. This is just the first in a series of holiday posts we will be doing this year. Watch this space for more insights.