BFCM, Revisited

In last week’s newsletter, we spent time talking about how returning customers behaved during BFCM compared to the rest of the year.

In it, we discussed our analysis showing brands with loyalty programs see returning customers display more subscription-like tendencies—even if they don’t have subscription programs.

We wrote: “This is a pretty compelling development and a major win for brands looking to improve predictability from their existing customers. The results of this predictably can mean better LTV modeling, better demand planning and higher margins.”

Which had our team thinking: What about subscriptions? What happens to them during BFCM?

In a great LinkedIn post last week, KnoCommerce CEO Jeremiah Prummer noted that more than 73% of people who purchased on BFCM had made purchases for themselves. (That’s according to self-reported data from nearly 250,000 people who answered the KnoCommerce survey question of “Who is this purchase for?”). You’d guess, then, that—if Kno’s data is reflective of the larger consumer landscape—subscriptions take a hit, right? After all, with more than 25% of all orders being gifts, you’d have to imagine that most gifters aren’t buying subscriptions.

They do, but not as drastically as you might think.

In our analysis of new customer transactions, we indexed new customer order volume by order type (subscription versus one-time purchase), and found the average increase in one-time purchases from new customers was nearly 3X baseline while the average increase in subscription purchases from new customers was about 1.7X.

So, new customers still stock up on subscriptions—but not as much as they stock up on one-time purchases of the same products.

What’s interesting, though, is that this is a pretty significant change in consumer behavior. Notice on the chart that for much of the second half of the year (about Prime Day forward), new subscriptions outpace new one-time purchases. And even earlier in the year, when subscriptions track below one-time purchases at a few points in time, the gap between the two is not pronounced. It’s basically even.

In other words, while new subscriptions jump during BFCM, the share of subscriptions drops significantly, because one-time purchases jump so much more. Combining Jeremiah’s datapoint with the reality that most companies end up offering better deals on one-time purchases, it begins to make sense.

The takeaway here is a pretty illustrative response to the “Why are BFCM customers so bad?” crowd.

It’s not that they’re bad customers; it’s that, at least in the case of businesses where subscription is a meaningful part of the business model, their behaviors don’t fit the business assumptions.

So, what do you do about it?

First, you accept that the customer you acquire during BFCM isn’t like the customer you acquire during other parts of the year. Then, you account for their differences.

There are a bunch of likely motivators for those differences, but the reality is most of those motivators are either pulling sales forward (stocking up because of substantial savings) or shifting transactions from the real customer to an intermediary (gift givers are less likely to buy a subscription). In either scenario, purchase frequency is likely to change.

Knowing how follow-on purchase behavior differs provides you with a new lens on BFCM retention. The definition of success needs to be a little different, yes, and the way you achieve that success needs to look a little different, too.

For example: You’re going to end up with “new” customers in Q1 who were gifted your products during Holiday, and you’re going to have returning customers in Q1 who might have been subscription customers if not for better deals on one-time purchase deals.

Your retention tactics, of course, would need to vary between the two examples: For the first example, you need to make it as easy for the “new” customer as possible—but your path to them is likely through the gifter. For the second example, you need to convince the customer that it’s better to convert to a subscriber than remain as a one-time purchaser.

Often, these types of highly personalized flows aren’t created, because the amount of time to create them is viewed as too time consuming and not worth the returns. The solution isn’t to work harder; it’s to work smarter by letting automated analysis and dynamic content creation do much of the heavy lifting.

At Stamped, this is why we’re so bullish about our acquisition of Repeat.

Being able to intelligently personalize retention messages (not just content, but timing) can make these efforts a lot easier and deliver results that provide a kickstart to the new year.