Most retailers are preoccupied with sales during the festive period, but increased pressure to provide discounts in the Christmas lead up have hurt margins. Large retailers can make profit due to high volumes, but smaller stores often struggle to see benefits.

Rather than viewing the festive period through a short-term sales lens, increased focus on customer acquisition can prove more profitable. Discounting can be an effective tool for attraction but is best accompanied by a loyalty plan.

As statistics by Invesp Consulting show, a 5 per cent increase in customer retention can raise profits by as much as 95 per cent — indicating the dividends of a long-term approach.

Christmas customers searching for unique items are more likely to visit a store for the first time, giving excellent opportunities for re-engagement. Making the most of every customer interaction over the holiday can offer gifts for the rest of the year.

Customers are for life, not just for Christmas

Christmas loyalty strategies start by collecting and analysing data.

Details including email addresses, dates of birth and locations are easily recorded by online sellers, while physical retailers can offer discounts in return for adding customers to a mailing list.

Once collected, this data offers a wealth of opportunities to re-engage. For instance, a florist could set up targeted emails to coincide with Mother’s Day, while a chocolatier could send offers around Easter.

During data collection, it’s important not to ask for too much. Customers are increasingly concerned about sharing their info, and more questions can cause friction. Collection methods need to be quick and effortless to avoid frustration and potential shopping cart abandonment.

The best way to record data is to use digital tools that provide functionality to re-engage customers.

A tablet equipped with cloud software can allow shop assistants to quickly add in customer credentials in-store and attach purchase details to their record. Loyal customers can then be offered benefits including online punch card programs, special discounts or birthday gifts.

Many cloud business tools can now be integrated with each other to automate tasks and boost productivity. For example, when POS software records sales transactions, this information can automatically be updated in an accounting app.

The year in reviews

Being the busiest time of year, Christmas is an excellent time to enhance your online profile through reviews. As a study from Bazaarvoice has shown, 100 per cent of brands experience a lift in revenue per visitor when customers can access testimonials.

Encouraging reviews on commonly used platforms including Google and Facebook by following up after a sale, can encourage consumers to contribute. Of course, this will only work if customer service is excellent — a difficult task at the busiest time of the year.

Common pitfalls of the Christmas period include inadequate staffing, late deliveries and lack of stock. As things can be unpredictable around the festive season, having a level of flexibility through seasonal staff and back-up options is key. This makes it particularly important to ensure customer service is not impacted by discounts.

For online retailers, it’s also important to ensure a website can cope with demand. This year, JB Hi-Fi experienced website issues on Black Friday, leading people to express dismay on social media. Having cloud technology and tools in place means websites can be scaled quickly on demand, reducing the risk of negative feedback and a loss of sales. It can also keep track of sales and expenditure helping retailers be more proactive over the Christmas period. Having a constant view of business activity allows faster decisions.

Only 365 sleeps left to go

While the trend for intense and heavy discounting over Christmas shows no sign of slowing, this does not mean retailers must enter a race to the bottom. Seeing discounting as part of a long-term customer acquisition and retention strategy is the best approach.

Christmas is a key part of the year for sales, but it can also drive purchases throughout the year if retailers plan correctly. Treating the festive period as a critical component of an annual customer acquisition strategy can bring the best results.

By Alex Alexandrou, general manager, business group at Reckon