Consumers are expected to spend $630.5 billion this holiday shopping season. Local merchants are fighting tooth and nail to take back a larger share of that revenue from their ecommerce competitors. With only one in four shoppers planning to “shop small” this season, small business retailers are having to get creative as they search for new ways to get customers through their doors.
Many Main Street merchants are using incentives or rewards to lure in holiday shoppers, but coming up with the right strategy — one that brings in first-time customers without discounting merchandise too significantly and putting the bottom line at risk — isn’t always an easy task. We asked four industry leaders what types of incentives work best for encouraging shoppers to make holiday purchases at local retail businesses instead of big-box stores or ecommerce sites. Here’s what they said.
1. Offer rewards with no strings attached. “When targeting consumers, it’s important to give them a no-strings gift. This gifting technique leverages the power of reciprocity. The theory is that if you give someone a gift, that person will feel a sense of obligation, lifting up the chance that he or she will become a long-term customer. Furthermore, if you are able to embed tracking technology identifying the person who visited with the gift and automate a thank you card or note to the customer, then you’ve added a multiplier that increases loyalty.” (Brian Mattingly, Welcomemat Services)
2. Boost incremental spending with escalating rewards. “An effective small business holiday promotion is an escalating shopping reward program that pushes customers to one purchase level and then nudges them even higher to a second spending plateau. It works like this: Customers receive an extra 10 percent off a purchase over $100, but they are then eligible for bonus perks like free gift wrapping or another special gift if they push their purchase over $125. Overspend will drive the actual purchase nearer to $150. Soft perks, layered on to hard rewards, will drive significant incremental spending.” (Walter Dubowec, Firefly Rewards)
3. Create holiday packages or bundles. “We know — and our merchants know — that the holidays are the biggest shopping time of the year, [and] package rewards tend to work well. For example, we have a few tanning salons that are bundling their services for a flat rate. For what normally would cost $60, they are offering five tanning sessions, a gift bag, and a set of retail products for only $25. Many businesses can take advantage of packaging deals by combining products or services for one discounted price, as opposed to charging customers separately at a normal rate.” (Rebecca Weinberg, flok)
4. Offer discounts on follow-up visits. “During the holidays, businesses could offer better rewards at lower point values for a limited time. Something like a 15 to 20 percent discount off the customer’s next purchase, valid for December only. That could get the customer back in for that ever-important second visit before the season is over. Obviously, these special offers are only as good as the marketing around them. Our customers promote these limited-time holiday offers on their website, newsletters, social media pages, etc. for maximum exposure.” (Marty Regan, Perkville)
5. Be strategic with consumer targeting. “Merchants should target those consumers who have the highest probability to become loyal. People going through life changes, such as moving or having children, are likely to change brand loyalties. If a business or service can capture a customer going through life changes, then that business is likely to earn a customer who is willing to give his or her long-term loyalty and become a full-paying customer.” (Brian Mattingly, Welcomemat Services)
6. Promote gift card sales with BOGO deals. “One of our clients, a locally-based women’s clothing boutique in the Midwest, has had incredible feedback on a recent holiday campaign. If you purchase a $40 gift card, the store will gift you with a $40 gift card for free. BOGO is huge when it comes to the type of rewards that consumers appreciate. The boutique sends out these offers through push notifications to their customers who use flok.” (Rebecca Weinberg, flok)
Stephanie Miles is a senior editor at Street Fight.
Interviews have been edited for length and clarity.