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How to Run an Effective Ecommerce Holiday Promotion Strategy

The holidays are right around the corner, and you are still trying to decide which promotions to run for your ecommerce business. How can you determine which promotion will be most effective? Should you do what worked last year, or try to figure out what your competition is planning? Whether you settle on a percent discount or free shipping, you can consider this post to be a guide to help you build the promo strategy that will be most impactful for your business.

Before you can begin to discuss free shipping thresholds or free gift cards with a purchase above Rs 5000, you should discuss the following tactical considerations with your team.

What is your competition doing?

This might seem obvious, but let’s consider the ways your competitors’ strategy will impact the success of your promos. One of the largest pitfalls I have seen affect advertisers is offering a promotion that is standard fare for their competitors. For example, if one of your competitors always offers free shipping, running a free shipping promotion on your site brings you to par rather than providing a reason that a customer should purchase from you instead of the competition.

It’s therefore important to look at what specifically your competitors are offering. If your competition offers free standard shipping, for example, a promotion offering free 2-day shipping could be especially compelling.

Also make sure that you have a pulse for the types of discounts your direct competitors are usually comfortable offering. While this is important for planning, it is also equally important for performance management on the day(s) of the promo. For example, if you are offering 20% off sitewide, but the competition is offering 30%, you will likely see worse performance from your promotional ads than if you just ran more generic holiday-themed content.

Also keep in mind that as Amazon increases market share in the e-commerce space, it’s increasingly important to find ways to differentiate your business beyond price and shipping.

How compelling should you make your offer?

This typically depends on industry, but a rule of thumb is that the most impactful discounts tend to be sitewide (20% off everything), while the least impactful are tiered promotions or AOV boosters (Rs 200 off a purchase of Rs 1000 or more). Holiday promotions are the time to hold nothing back, and you can be assured that your competition won’t either. As long as you’re profitable, choose a promotion that will allow you to maximize revenue.

The reason sitewide promotions are so impactful is simply because they are so rare. Users have come to expect that the holidays will provide them with the cheapest prices of the year, regardless of whether this is actually the case. Even if a tiered discount is technically a greater savings, the optics are simply not as compelling.

Note that free gifts tend to provide a mixed bag of performance, but you can generally expect they will still be less compelling than a percentage or dollar discount. Often, a customer is looking for a specific item, and will therefore seek out the cheapest price on that item first, so an extra gift is less of a draw. However, if your ability to offer discounts is limited by MAP pricing, a free gift can be a great way to provide the customer with a compelling incentive like a gift card.

How long do I run my promo?

The answer to this question is obvious for key promotional days such as Diwali and New Year but less obvious after the first big shopping weekend. As a rule of thumb, you can expect the first few days of a promotion to be most impactful. Following that period, you will encounter promo fatigue, which will reduce the impact of your offering. Limited offers are a great way to compel customers to action – if the discount expires at the end of the day, there’s less time to search around for a better offer or decide to “sleep on it” before making a purchase. Many customers will not be willing to make the gamble that they’ll find a better deal later on.

Truly successful promotions require testing to understand what impact they will have on your specific industry and business, and then constant adjustments based on the actions of your competition. When in doubt, test various promotions leading up to the holiday season to determine what is most compelling for your customer base. Then, most importantly, monitor day of performance during the promo and pivot your strategy to maximize your success.

Feeling underprepared for the holiday promo season? Contact us and we are always happy to help

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