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Good news! Through early December, the 2010 holiday season is shaping up to be pretty good for most specialty-food companies. On average, the companies we track are up 9.4% in sales and 7.2% in orders. Therefore, they will go into 2011 with more current buyers (the lifeblood of a direct marketing business) than they did last year, so sales growth is all but guaranteed for early 2011.
I was speaking with a new client the other day, and he asked me, “Now that the holiday season is almost over, what do we need to do to get through the next nine months?”
As I thought about his question, I realized he is not alone: almost all specialty-food companies run flat-out in November and December. The rest of the year they hope and pray they don’t lose everything they made during the holiday season as they gear up for the next one.
Given this reality, we decided to devote this issue of the FBMIU to presenting tips and techniques to survive the long and slow offseason.
Concentrate most of your offseason marketing efforts on generating more orders from your past 12-month buyers. Marketing to these customers will generate the highest return on investment of any part of your marketing plan. Focus on selling into the major gift-giving events in the offseason—Valentine’s Day, Easter, Passover, Mother’s Day, and Father’s Day. Use postal mail to send catalogs and/or post cards to your past 12-month buyers and buyers who have purchased a gift in each of these offseason gifting events in the past two to three years. If you are mailing catalogs, use simple and low-cost dot whacks on the cover to present a promotional or discount offer such as free shipping on Valentine’s Day candy or 10% off gifts for Mother’s Day. Support your postal mail with event-specific emails. Use email to remind customers of the shipping cutoff date and offer expiration dates for each gifting event. Most specialty-food marketers send between 2 and 4 emails a month in the offseason. Just like your postal mail list, it’s absolutely critical to segment your email list based on each customer’s purchase history and/or the preferences they set up on your website. Looking at paid search, be sure to bid on branded terms throughout the year. These terms cost next to nothing to bid on, generate a very high ROI, and they give you a greater share of screen space on search engine result pages (SERPS). Get very specific with your non-branded paid search terms. For example, instead of bidding on “hand-made chocolate gifts,” bid on “hand-made chocolate gifts for Valentine’s Day.” By adding the gifting event to the search term you are bidding on, you will generate more targeted traffic to your site, which will lower your cost per click and increase conversion rates. Build event-specific landing pages and direct paid search traffic to these pages, rather than to your home page or a general category page. It’s not too early to start gearing up for the next holiday season.
One of the best uses of down time is to have your staff start to clean up your customer list for your holiday gift list mailing. The gift list mailing is pure gold if it’s done correctly and if your list is squeaky clean. However, if your list is not clean and accurate, this mailing can alienate your best customers—the ones who send the most gifts. Perform a thorough and detailed analysis of the holiday 2010 season.
At a minimum, look at changes in your gross margin percent, fulfillment expenses, and marketing expenses compared to the prior year and your plan. If expenses changed at a faster rate than sales grew, dig deep to see what’s going on with your numbers. Evaluate unit and dollar sales at the SKU level comparing this year to last year—look for trends and patterns that will help you better merchandise your site and catalog for holiday 2011. Perform a matchback analysis to evaluate your customer and rental list performance—again, look for patterns. Are your customers responding at a higher or lower rate than the prior year? Are rental lists bringing in customers at the same cost per new buyer as last year? Did you test offers, and if so, did you find a new winner to rollout with in 2011? Dig into your website analytics to see what’s working and what’s not on your site. Where are you losing customers? What pages are “broken?” Is there a common problem you can see with the top exit pages? Make a list of the top 5 or 10 things you want to change on your site to make it better for holiday 2011, and begin work now.
Sales will come to a grinding halt by Dec 21 this year; yet there will be huge bills to pay in January (UPS/Fed Ex come to mind). As you end the year, make sure you have budgeted for enough cash and/or have enough borrowing capability to cover the following working capital requirements:
Finance offseason losses, including large “hang over” bills from December. Build inventory for the holiday 2011 season. Create holiday 2011 marketing programs (e.g., website improvements, and catalog creative, printing and postage). Gear-up operations for the upcoming holiday season including hiring and training seasonal staff, and adding equipment and fulfillment capacity to support growth in sales and order volume.
If you need help working on your own offseason survival plan, give us a call, we would love to help.
Warmest regards and happy holidays,
Tony Cox
President
5th Food Group
ABOUT 5TH FOOD GROUP
5th Food Group helps specialty-food companies grow and make more money by developing, managing, implementing and analyzing their online and catalog marketing programs. We are the only catalog/Internet marketing firm that works exclusively in the specialty-food industry. Helping smaller companies or large companies with small mail-order or online divisions is what we do best.
While on our site, make sure to download a copy of our free booklet, The Seven Habits of Highly Ineffective Catalogers, and check out our fully guaranteed introductory Jump Start program.
If you will be attending the Fancy Food Show in San Francisco in January, please plan to attend our half-day workshop on Saturday, January 15th, from 1pm - 5pm on using e-commerce to grow specialty-food companies sponsored by the NASFT. Get detailed course descriptions and information on the Winter Fancy Food Show. |
5th Food Group