Why Both B2B and B2C Companies Lose Profits During the Holiday Season

November 5, 2014

Every year, we keep about 100 advertisers from losing out big time on conversions and profits.

When marketing people think of the “holiday season”, they think of retail sales and peak consumer shopping. They think of Black Friday and Cyber Monday. They think about holiday advertisements and running sales to encourage purchasing.

While all of these are a big part of what constitutes the season, there is another big factor that sways the balance of profitability,and it applies to both B2B companies and well as B2C retailers.
It’s a phenomenon that happens for different reasons in certain industries and can happen at other times of the year. For many, it happens the most during spring and autumn, but it’s wildy notorious for happening in November and December.

Done guessing?

We can call it the “remorseless buying behavioral factor.” That’s not an official name for it, but the effect is very real, and it’s important to know that it happens to both companies who sell B2B and B2C.

Remorseless buying happens when a buyer’s purchase is accompanied by a secondary gain that makes the sale make more sense right now than at any other time of year.

Take retailers for instance: they all know that more people are going to be doing more buying and more shopping, but they often forget that much of these purchases are being done for other people.

When we shop for ourselves, we pay way more attention to the details in the offer and the price vs the value. We price-shop more and we often don’t stop until until we are certain we have the best deal.

When we shop for other people during the holiday, we buy with far less discrimination and since we typically have a ton of shopping to do, we just buy feverishly and jump at the first deal that seems reasonable.

When people buy with less discrimination, there is a natural drop in cost per acquisition (CPA) or cost per sale.

During these buying times, it is of utmost importance that marketers artificially increase their exposure level beyond what is appropriate for all other times of the year. While increasing the marketing cost would normally lead to purchases being unprofitable, remorseless buying lets sellers take advantage of exponential sales at the same profit per sale level.

So it’s easy to surmise that retailers could have a huge advantage to increasing budgets and bids during peak seasons, B2B companies have the same advantage but for a slightly different reason.

The pressure of the buyer to purchase without remorse is still there, but B2B companies are buying for themselves. The urgency to buy doesn’t come from a pending holiday deadline, but rather the deadline of their tax year.

Companies who are looking to make purchases and sign up for new services anyway can receive a tax deduction advantage by expensing the money before the tax year ends. Most business tax years end on December 31st. And the more money they can expense prior to that date, the less taxable income there will be to report.

So for both B2B and B2C companies, there is a heightened season for remorseless buying. By not increasing exposure levels during these times, both business types would forego increased total profits.

Ways to increase exposure in Adwords include: raising bids to increase ranking, opening budgets more to accommodate higher spends, unpausing keywords, that are normally not profitable, and opening up match types and ad scheduling.

NOTE: While there is a distinct advantage to opening up the cost and exposure level during times of remorseless buying, there is a worse threat to keeping them opened up when the seasons are over. Because remorseless buying eventually ceases, it is the marketers responsibility to scale down the campaigns in a reverse manner to keep them from over-spending later. We keep a watchful eye on our advertisers always, but more so during the beginning and end of the remorseless buying season.

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