Reaping revenue from roving holidays Oct 1, 2007 12:00 PM
, by Gina Valentino
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Are you counting the days until Christmas? You should be — consumer merchants this year receive an early “gift” in the form of an additional selling day. In 2006 there were 31 selling days between Thanksgiving and Christmas; this year there are 32. With an extra day to generate additional revenue, are you modifying your marketing efforts to encourage higher sales? Are you taking advantage of Christmas falling on a Tuesday to manage deliveries on Monday?
Certainly any holiday will affect marketing efforts, but the Thanksgiving-Christmas countdown (or Thanksgiving-Hanukkah) is not the only roving holiday. Many catalogers also need to manage the Valentine-Easter selling season.
Easter is probably the most volatile date because it is based on the Ecclesiastic full moon — the first full moon after the Vernal Equinox. Easter can range from March 22 through April 25. For candy and gifts catalogers and, to some extent, apparel mailers, more selling days between these two holidays yield stronger results, since with more time, additional contacts to customers generate higher sales. As the actual selling days fluctuate, however, response rates and average order values will be affected.
To illustrate this point, if the timing between Valentine's Day and Easter 2007 is seven and a half selling weeks, presume there were two mailings and six e-mails supporting the Easter holiday to yield $5 million. Looking at the 2008 calendar, there are only five selling weeks from Valentine's Day to Easter. Do you assume you can contact the customers in 2008 with the same frequency as 2007, or do you mail less and take a planned reduction in revenue? Is there a different way?
One way to manage the contact strategy is to identify when the mailings occurred compared to the actual holiday. Start with the mailing closest to the holiday. If Drop 2 had an in-home date three weeks before the holiday, and the in-home for Drop 1 was six weeks prior to the holiday, look at the order curve for each.
The transferable information is the combination of the order curve and the timing of the mail date to the holiday. Since Easter 2008 is March 23, if we plot Drop 1 as three weeks prior to the holiday, the in-home is March 3. Plotting backwards for Drop 1, the six weeks prior to the holiday indicates an in-home of Feb. 11. This won't work for Easter mailings, since the in-home is before Valentine's Day.
If the Easter order curve of Drop 1 hits the apex at three weeks, a reasonable option is to be in-home Feb. 18 which is five weeks prior instead of six. This adjustment will salvage a majority of the performance.
For e-mail contacts, the same methodology applies. In 2007 there were six e-mails for the seven and a half selling weeks. For 2008, the e-mail campaigns will probably need to be reduced to four or five, since there are only five and a half selling weeks.
One way to overcome the shortfall is to aggressively communicate the pending holiday. Create an urgency to buy now, and provide unique gifts, specific delivery dates, variety of price points, etc. Including an incentive will also help boost performance. Determine what type of offer will best motivate the potential customers while managing the bottom line.
Offers always have at least three criteria as you determine the strategy: what you want to achieve (response or dollars); what segments are targeted; and how the segments usually perform. If the incentive requires a minimum purchase, make sure you recognize the purchasing threshold — not so high that it turns off customers, and not lower than the segment's average order value.
From a planning perspective, Easter and Thanksgiving always fall on a specific day of the week. While the date may change, the static nature of the day of the week allows you to rely on specific aspects of the order-response curve with greater surety — in particular, customer behavior during the final two weeks leading to the holiday. This helps when analyzing activity and planning for the order cutoff for regular delivery as well as for expedited delivery; and how best to influence last minute purchasers.
In planning for holidays that have a specific date such as Valentine's Day and St. Patrick's Day, the number of selling days within the month remain constant. This consistently provides accurate month-to-month comparisons, but it doesn't account for selling periods. If Valentine's Day falls on a Sunday, overnight deliveries need to be cut off early; when Cupid's holiday is during the week, customers benefit with last-minute shopping and delivery on the actual holiday. Plan accordingly and you can develop campaigns — catalog, direct mail, online, retail — to strengthen performance around holidays.
When the shift of a roving holiday falls in a month different from a prior year, the issue has a larger impact. Monthly sales comparisons and monthly cash flow affect the entire business. For example, with Easter arriving in March of 2008 vs. April of 2007, what selling event can offset cash flow for April 2008? Since there is no holiday in April 2008, will you omit contacts to customers in April '08 and take a decrease in sales for the month vs. 2007? Will you be proactive and develop a campaign to initiate a reason to buy in April?
Another consideration is the affect of the timing from Easter to Mother's Day (always the second Sunday in May — another roving holiday). This can widen the selling gap to create a void in April 2008. Since it probably doesn't make sense to mail Mother's Day campaigns at the end of March, you'll need to adjust mail plans for April 2008 and May 2008. As outlined for the Valentine's-Easter mailings, review the contact plan for 2007 Mother's Day, analyze the order-response curves, and plot the in-home dates for 2008.
Circulation planning is not limited to choosing segments and renting lists for prospecting. The responsibility also includes monitoring the in-home dates or mail dates, the timing and relationships of the mailings, and the historical performance of the segments.
