Customer Engagement: Transforming Holiday Retail Strategy

digiflowz Business Blog Post

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The Gist

Early shopping surge. Customer engagement during the holiday season begins earlier, with 50% of US consumers starting in October.
Emotion matters. Emotional connections, not just discounts, significantly enhance customer engagement and loyalty.
Optimizing operations. Efficient operations, like inventory management, are crucial for driving engagement and reducing costs.

Here’s a staggering statistic for all the procrastinators out there — 50% of US consumers began their holiday shopping in October this year (Statista). For some, that seems perfectly normal. And for others, that’s mind-boggling when we are still consumed with candy bars and costumes.

It’s likely so many consumers are spreading out holiday purchases due to current inflation rates — now at 3.2% but down from 6.5% just last year. (US Inflation Calculator) While some conjecture that many consumers are “inflation wary” and thus are spreading out their holiday spend, others like Deloitte predict that holiday spirit and spending will be back to pre-pandemic levels. The catch? Brands must give consumers a reason to engage. That is, they must drive “engagement value.”

But what is engagement value, how is it defined? And more importantly, how do you drive this engagement value for a consumer who has concerns about not only inflation, but other cultural, social, economic and geopolitical happenings? Customer engagement can be a daunting task.

Engagement value is defined as:

A way of measuring how consumer interactions drive business goals.

Driving Customer Engagement Value

So how do retailers in 2023 drive engagement value for consumers? For me, it goes back to the concept of providing a truly immersive customer experience. This means retailers must go beyond surface-level transactional interactions and immerse the customer in a relational experience that creates a trusted, emotional connection during moments that matter. Creating this type of experience, and then measuring the outcome of that experience with business metrics (customer satisfaction scores, net promoter scores, customer lifetime value scores, etc.), is the best way to drive retailers’ business goals — maximizing profit and revenues while driving and fostering long term customer loyalty.

How to Do It

So, how is it done? While there are many aspects, I want to focus on the top three big bucket areas: context, emotion and operations. All of these must be present to drive engagement value this holiday season.

Context

The old saying of “right product, right price, right time” is certainly table stakes for context. And it’s still very true in 2023 — especially given many retailers still struggle with the adage. But to be truly contextual, it’s a great idea to layer on additional capabilities beyond just “personalization” to provide differentiation. These include but are not limited to:

Free shipping

Guaranteed product quality (Warranties)

Available customer reviews

Price matches and guarantees

Widened return windows

A few additional considerations when it comes to providing context.

As inflation creates pricier product sets, retailers (and upstream manufacturers) should consider providing assortments that account for the inflation wary/price sensitive consumer. This includes products with less features but equivalent quality. Skewing the assortment down toward the price conscious consumers provide options for engagement, while keeping overall product quality top of mind.

Along with this, any chance to bundle products, run promotions, or even create the perception that your organization’s prices beat out those of your competition will create a draw to consumers, particularly amongst younger generations, according to McKinsey in its US holiday shopping 2023: Consumer caution and retailer resilience study.

Finally, omnichannel personalization. With many consumers performing “bifurcated browsing,” also called “showrooming,” the need to create a consistent, seamless experience as consumers transition from digital research to in-store purchase (or vice versa) is just as important as it’s always been.

With many consumers performing “bifurcated browsing,” also called “showrooming,” the need to create a consistent, seamless experience as consumers transition from digital research to in-store purchase (or vice versa) is just as important as it’s always been.Sascha on Adobe Stock Photos

Emotion

We’ve talked about the need for context — offering the right product, price and time — to drive conversion. However, product assortment and associated prices is not the only lever that a retailer can pull to drive engagement and loyalty. Increased discounts do not correlate directly to increased consumer spending.

So, what can be layered on top of context to drive purchasing? For me, and many other consumers, this is where emotion comes into play, particularly during the holiday season. Inspiring empathy, feeling or sentiment, and a nostalgia for holidays past. Some brands have done a phenomenal job at this and have elicited positive emotional reactions. Take a look at these spots from Craftsman, Macy’s and Amazon. By evoking emotion, these ads drive a positive emotional correlation to the brand with consumers thinking “this brand gets me,” and is a sure-fire way to drive engagement value.

Related Article: The Emotional Impact of Holiday Shopping

Operations

Context and emotion are certainly two customer experience-related factors for driving engagement value. But what drives engagement value from the business operations side of the coin? Because after all, if you aren’t driving the revenues that your brand or shareholders expect, then expenses must be even more tightly controlled. And believe it or not, it doesn’t have to include staff reductions!

Let’s talk about some ways to do this during the holiday season to drive engagement value:

Engagement Optimization. The value to your business and your consumer of using optimization, especially during the holiday season, cannot be understated. Engaging with your consumers in a responsible manner means not wasting time or resources sending holiday promotions to consumers over irrelevant channels, with irrelevant offers, at irrelevant points in time. It creates frustration, disillusion, and a certain brand distrust.

Inventory Optimization. Not to get into an accounting rabbit hole here, but holding unneeded inventory translates to unneeded expense. Optimization of product quantities by location can be accomplished with demand planning and forecasting solutions. For example, Macy’s is optimizing inventories, partially due to the changing consumer landscape, heading into the holiday season with leaner inventories than in years past.

Process Optimization. Having the ability to control the supply chain more effectively, by extending return periods, centralizing drop shipping and using demand-driven analytical models are just a few ways to optimize for the business while driving engagement value for the consumer.

Related Article: 3 Steps to Integrate Digital Commerce Operations Into the Marketing Machine

Final Thoughts on Customer Engagement During the Holidays

While some retail pundits believe consumer purchases this year will be back to 2019 levels, others believe this will be a tough holiday season economically for retail brands.

However, one thing is certain — providing context, emotion and controlling operations are three key methods for driving customer engagement value. And value for consumers leads to that long-term customer loyalty that every brand desires. Think about ways you can employ context, emotion and operational excellence within your customer experience — and here’s to a great holiday season for your brand!

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