BFCM Math - Feels a bit uncomfortable?

“We’ve had such a great BFCM campaign this year. Our revenue was 20% higher than last year.”

How many times will we hear something like this in the coming weeks?

Likely too many marketing teams will be celebrating, while they ended up poorer than before.

It’s not their fault. Each team is limited by the context they have.

Marketing teams can calculate ROAS, MER etc.; but very rarely have any view into the cost side of things.

“But, we acquired so many new customers who will eventually rake in the long term revenue.”

That might not be true either.

Okay, so then what?

This year, take a step further. At least measure your unit economics and your customer outcomes.

i.e What you actually took into your bank. And how many of those new customers you acquired in the month turned out to become good customers.

It's really as simple as that.

You’ll realise that you’ve truly smashed it.

Or you’ll learn for next year.

How would I do it?

Below is purely based on my experience working with businesses through BFCMs, and also having seen many sets of numbers intimately.

There are, of course, several nuances that I don't intend to cover in this post. The intent here is to demonstrate the thought process that aligns to a 'better commercial outcome' rather than many vanity metrics.

Here's how I’d structure my offer :

1 : Deep discounts to move non performing / ageing products. - This gives me an appealing “Up to X% off” position.

2 : Incentive based discounts on core lines (e.g : Buy any 2 get x% off, buy 3 get y% off)

Takeaway : Never devalue your core line directly. People get used to it.

How I’d approach customers with my offer :

• Top customers : Early access to above discounts for my top customers. Let them get the best stock, size options. Also, let them know in advance that they will have this privilege.
• Prior customers who have now churned : (i.e not been shopping for, say, the past year) : Slightly deeper discounts in a win-back attempt (while still maintaining gross profit). I wouldn't be spending any ad costs on them, but instead use those $$ on the win back. The win back campaign should ideally try getting them with the standard offer first, and then add in that additional discount as the final attempt. Even if these customers never purchase again after this, they have still made you some incremental profit.
• New Customers : Add another small x% cash back (let’s say a unique coupon code in the order confirmation email) for their future purchases within the next Y months. We truly want these customers to come back. Remember, that you'll incur this additional cost only on the good ones that actually come back.

Some 'not to miss' audience tips :

Churned customers.

Don’t forget to *exclude* your churned customers from your Ad audiences. (Or at the minimum apply very strict frequency caps.)

It’s unlikely that spending more ad $$ on them will suddenly make them your ideal customer.

They have already shopped with you and have chosen to not engage after that. Instead reach them via email or other owned channels.

Existing and active customers.

Don’t forget to also frequency cap ads to your existing and active customers. These are already engaged, and you could be reaching them via your owned channels (SMS / Email, Push notifications etc.) instead.

If you do have the capabilities and some RFM data, you could actually break this group down into segments; and have different frequency cap strategies based on how frequently and recently they shopped with you.

For e.g : If someone shopped frequently or recently, they will likely already be receptive to you on your free channels such as email. So you don't need to hound them on social and ad channels.

Measurement :

There’s a ton of numbers that you will be shown after the BFCM weekend to showcase how well it went.

Stellar conversion rates, increased revenue, ROAS, MER and so much more.

Below are the two core things that matter.

1) Unit economics

Does the below equation hold true for you?

i.e Did you end up sending more money in the bank than usual? Don’t celebrate if this isn’t happening!

2) Customer retention

Retention : What % of newly acquired customers during the BFCM campaign end up repeating in the coming months?

This needs some good cohort analysis.

Revival : How many of your prior churned customers did you revive?

Parting words:

The above calculation sounds simple, and quite fundamental.

But it's common to see teams not having the means or the data to actually do this. In the same world where we run programmatically optimised ads, AI created content and all the tech wizardry.

But it need not be that difficult.

Make friends with your Finance or inventory team if you don't have a view of product costs.

Your ecommerce platform should tell you how much was given away in discounts.

You already know how much you sold and how much you spent in marketing.

Do that math.

It might be an uncomfortable truth.

But one that'll make you wiser.