How to build a successful post-holiday retention strategy in just 5 steps

As the holiday season winds down, all sights turn to the year ahead. January can often be a low period for retailers after the sales high of the holidays. In reality, it's the perfect time to start on your most valuable gain from the season - customer retention. 


Customer acquisition costs are rising, and it can cost up to five times more to acquire a new customer than to retain an existing one. You've spent a lot of time, resources, and money acquiring customers between Black Friday and the holidays. So now it's time to think of how you'll reap the rewards. 


After all, the probability of selling to an existing customer is around 60-70% compared to just 5-20% for a new one. Existing customers are also 50% more likely to try new products and spend 31% more. 


So, let's talk about post-holiday retention strategies. We've worked with our friends at Tydo to learn more about how best to use all that data you gathered over the holiday season and Omnisend on how best to use those direct, owned channels. Plus, we've included how to engage with gift recipients and improve your returns process. 


Let's get started.


#1 - Analyze and understand your holiday data



Data is a powerful asset for Shopify merchants. The holiday season is a high time to drive sales—and collect customer insights. 


Analyzing and understanding patterns is a crucial step in planning a marketing strategy. 


One of the best ways to understand customer behavior? Cohorts! 


cohort is a collection of customers grouped based on specific criteria. For example, the month they made their first purchase. 


By looking at your cohorts, you can answer critical questions about your business: 

  1. Once a customer buys, what happens? Do they continue to buy, or do they churn? 
  2. Is there a specific cohort that's buying more often? If so, why? 
  3. Are there certain products or campaigns that you should double down on? 
  4. Is there a cohort that's frequently dropping off? Why and how can you reduce churn? 
  5. How can you refine your retention strategies to increase LTV? 


Pro tip: Retention is equally important as (if not more important than) acquisition—which can cost up to 5x more.


Cohort analysis shines a light on retention vs. acquisition efforts, product performance, and customer loyalty.


Digging into cohorts is one way to see if the number of new customers (and sales) increases over time. If these numbers aren't on the rise— it might be time to double down on acquisition efforts. 


Cohort analysis can also illuminate your best-performing products. Determine which products bring in the most customers, drive the most repurchases, and increase the average customer spend. 


You might find one product is better for keeping people around (retention), and another is better for getting people in the door (acquisition). 


Did your holiday sales bring in loyal customers? Cohort analysis will tell you if new customers are turning into repeat customers—and when the best time to remarket to them is. 


Ready to get started using cohorts? Try Tydo's modular data platform for free and learn how to build your own. Stay tuned for new modules in 2023 that double-click into your data and show a clearer picture of your retention marketing efforts.


#2 - Engage with gift card recipients


The end of the year is significant for sales and acquisition in ecommerce. And the primary reason for this? Gifting. People are out in force buying gifts, often for more than one person at a time, which means you have a unique opportunity to engage with the original customer and the recipient of the gift they purchased. Engagement is the key to retaining both, as without it, they'll move on in the new year. 


Let's dig deeper into the audiences we need to engage with to boost retention. It may seem straightforward at first - original customers and their gift recipients. However, there are many different segments and scenarios that exist within both:


  • - Existing customers who purchased a gift for someone else
  • - New customers who bought a gift for someone else
  • - Gift recipients who have heard of your brand before but have not yet made a purchase
  • - Gift recipients who have heard of your brand and previously made a purchase
  • - Gift recipients who have never heard of your brand


These are just a few of the customers you will be engaging with. They all have varying levels of familiarity with your brand and products and different levels of interest.


The key is to use every touch point with all these customers. Some other brands and products will be similar, so you must show these customers why your experience is worth their continued attention. 


Let's focus first on gift recipients. Specifically, we will look at those who received digital gift cards. This audience is easier to engage with as you have more potential touch points than a recipient who was gifted a physical product. 


Before a gift card is redeemed, you should do the following:


  • - When the gift card has been sent, send another email introducing your brand and some product recommendations for how they can spend their gift card. 
  • - If they're an existing customer, populate recommendations based on their previous purchases and browsing history. 
  • - Send balance reminders to recipients based on time triggers, i.e., one week after, one month after, and so on. The holidays are busy, so gift card recipients will appreciate reminders.


Once a gift card is redeemed, look at the following:


  • - Add gift card recipients into a welcome email flow if they're new to your brand. They'll need more information than a usual customer, as they won't have done any research that gives them context for your products. 

  • - For existing customers, add them to a seasonal "welcome back" flow that will give them any updates from their last purchase, recommendations, and any loyalty points they may have earned on their purchase. 

  • - Include material in their package that thanks them for their purchase and welcomes them to your brand's community. This can include QR codes to learn more about loyalty programs or receive an incentive for their next purchase.

  • - If there is any remaining balance on the card, send them reminders directly after purchase and a few weeks afterward.


By making the most of these touchpoints, you can engage the gift recipient and build a strong relationship, even if they're brand new to your store. 


As for the original customer, there is still more you can do here to strengthen that relationship. You won't be able to accurately gauge their level of interest, especially if they're new to your store. After all, there's a chance they're just buying for someone else who is interested in your products. However, you can still improve your chances of retention by engaging them meaningfully rather than just categorizing them as "too tricky" to retain. 


  • - Add these customers to an automation for gift products that thanks them for sending a gift and offers additional information about your product and brand. 

  • - In January, send high-value customers a gift card as a sort of "here's a gift from us to you!". High-value may mean existing customers or those who meet a certain spend threshold, e.g., bought a gift card over $100. 

  • - When relevant holidays come around, email these customers about gift products based on their previous purchases. 


Gift products are a unique opportunity for merchants with high rewards. That is if you know how to make the most of them. Doing more to engage customers and their gift recipients will double your chances of retention and potentially earn their loyalty. 


#3 - Think about how to promote replenishment


It isn't just the direct aftermath of the holiday season that offers opportunities for retention, but weeks and even months into the new year. Some people will have been gifted products that will eventually run out or will purchase those products with a gift card. This will be especially true for categories such as beauty, health and wellness, and food and beverage. 


Replenishment is an ample opportunity, as the recipient will have had the chance to experience your product, love it, and want more. For this audience, you want to target them around the time they may realistically start to consider a top-up. 


The most accessible audience to target for this is those who purchased products using a gift card. You have a direct channel to engage with them and know what they bought. Create reminder email workflows for gift card recipients focussed on products you sell that have a more predictable use cycle. For example, if you sell coffee beans and the average replenishment cycle is around one month, you can target gift card users around 3-4 weeks post-purchase. Part of this flow may include gift card balance reminders if they have any remaining. It may also include incentives to encourage another purchase. That incentive could be another gift card, a discount code, free products, or loyalty tier/points bonuses. 


Those gifted a product physically are more challenging to engage, but not impossible. Your only real touch point will be with the original customer who bought the product as a gift. In this case, you can target that original customer with incentives and offers for replenishment of products. They may use those offers for themselves if they're an existing customer. However, if they only purchased something as a gift with no further interest in your products, they may pass on those offers to their gift recipient. 


#4 - Make the most of your direct, owned marketing channels



You’ve already heard the news: customer acquisition costs are high due to holiday competition and the worsening reach (thanks, Tim Apple). However, many ecommerce merchants already have something in their arsenal that can bring in $45 for only $1 spent: email marketing.


Email marketing helps you nurture your existing subscribers, turn them into customers, and improve retention by keeping those customers around for longer. But email marketing is now more than email: you can combine SMS and push messaging with an email to reach your customers in more ways.


And customers are loving it. In fact, omnichannel research shows that using three or more channels in a campaign earns brands a 494% higher order rate than using a single-channel campaign.

One of the most effective is to use a four-part abandoned cart workflow that sends two emails at first, then a text message, and finally another email. 


You can also use a two-part birthday email workflow, where the first message is a text wishing the customer a happy birthday and letting them know to check their email for a special surprise.

Abandoned carts are great for converting shoppers into buyers, and birthday workflows are great for upping your retention rate. As many other marketers have said (which is especially true in this economic climate):


Retention is the new acquisition.


When you keep an existing customer and get them to make repeat purchases, you're winning in a few ways:


  • Higher revenue52% of customers will buy from the business even if another company is cheaper and more convenient
  • Lower business costs: studies show that it's 5-25x more expensive to acquire a new customer than to keep an existing one
  • More effective customer acquisition: up to 86% of loyal customers will recommend your business to their networks


Using your owned marketing channels post-holiday

The new year is a great time to keep yourself laser-focused on engaging and retaining your customers, both post-BFCM and post-holiday. 


You've most likely gathered a good amount of signups during those busy shopping periods. And of those signups, you have two general audiences:


  1. Those that signed up but didn't convert
  2. Those that converted once


For those who still need to buy, make sure you use the space email provides to tell your brand story. Introduce them to the founders to humanize the brand. Talk about the sourcing and the design process. 


Really sell them on what makes your brand unique by using a special welcome email workflow (say, at least three emails) segmented for specific audiences. For example, you can target subscribers who signed up during the BFCM period but are yet to purchase. This will make them much more likely to buy from you if they feel they know you.


For the second group, you'll want to do something similar. Change the focus of the language from conceptual to practical since these customers already have your products in hand. Still, explain to them what those products are (sourcing, packaging, etc.) and why they're special. 


You can use segments that target customers from a specific time period (let's say BFCM) and who bought once. You can personalize it further using BFCM-specific language ("Get that Black Friday feeling again…").


With the right strategy and good email marketing tools like Omnisend, you can get new customers and keep them around for longer.


#5 - Use returns as an opportunity to engage and learn from your customers


The holidays are full of surprises. Customers plan out special gifts, keeping everything top secret until the big reveal when their recipient opens it up. Sometimes, those surprises don't quite work out - a shirt size too large, an incompatible piece of tech, or the classic "already has one." And so comes everyone's favorite post-holiday process, returns, and exchanges. In 2021, post-holiday returns in the US topped $100 billion


Returns are often seen as unfavorable, but they're an opportunity to create a meaningful customer moment and learn for the future. 


It starts with clear, effective, and regular communication about your returns process. In the weeks after the holidays, send emails that detail the process. 


  • - Go through each option, explaining how it works, the time frame, and the solutions available. 
  • - Have a separate process for returns for gifts purchased by one customer but dispatched to another.
  • - Consider special conditions for the holiday season, such as extended return periods. This can make all the difference to customers who may have purchased earlier than usual. 
  • - Offer various solutions such as store credit, exchanges, and refunds.


This also allows you to develop a "store-credit first" approach to returns. For example, your usual returns window may be 30 days from purchase, but during the holiday season, you add 14 days when the customer can process the return and receive store credit. Or you could offer a "top up" if the customer opts for an exchange over a refund, so they'll receive an extra $5 store credit when they decide to exchange. 


You should also use returns as an opportunity to learn about why customers are processing returns. After the holidays, retailers almost always see their highest concentration of returns for the year. This presents the perfect chance to learn and adapt for the year ahead. You can do this using simple questionnaires as part of the returns process. Ask if the order was purchased as a gift or for personal use and the reasons for returns. If there's a high number of returns for one particular product or cause, this may warrant further investigation. 


However, many returns after the holidays result from a customer not knowing enough details about their recipient. Buying the wrong size is common, as they want the gift to be a surprise and don't want to ask their recipient for their clothing size. 


You may want to invest in the gift-buying experience and add features for the future that can help to prevent this scenario. Govalo offers a giftable products feature where the original customer can send a product as a gift without selecting specific variants. Their recipient is sent an email, much like a gift card, and prompted to provide their preferred variant along with shipping information. This can prevent common mishaps in the gift-buying process, reducing returns and improving the customer experience. 




The holiday season gives merchants the best opportunity to boost sales and acquire more customers to end the year on a high. What they do after, however, is just as important. Post-holiday retention strategies can set you up for an even more successful year ahead and earn you a whole host of newly loyal customers. 


Thank you to our friends at Tydo and Omnisend for contributing to this article.

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