Black Friday and Cyber Monday pose a massive opportunity for ecommerce brands, with U.S. retail holiday sales projected to hit a record $75 billion this year. However, navigating the largest sales event of the year can be a daunting feat. In order to capitalize on the traffic, marketers need to form a robust game plan well in advance of that fateful Thanksgiving weekend.

Of the many elements that make up a successful BFCM strategy, incentives are one of the most crucial. Harvard Business Review found that incentives were a major decision factor for three out of four U.S. online shoppers in 2023.

However, simply offering steeper discounts won’t drive profits during the peak season. To make the most of your incentives, it’s imperative to use data to strike the right balance between attracting customers and maintaining profitability.

In this guide, we’ll walk you through 5 key tips on how your brand can execute a profitable and data-driven BFCM incentive strategy this year.

Our 5 tips for a winning BFCM incentive strategy

Understanding how to strategically use incentives is more important than ever during peak sales periods. To help consumer brands navigate the surge in consumer spending ahead, we’ve analyzed the data and strategies of the dozens of DTC brands we work with.

Here’s what we found.

Tip #1: Tailor your expectations

BFCM sales are strong even when compared against other holiday sales events with similar incentives, such as Labor Day. In 2023, BFCM saw a 164% increase in incremental sales, compared to just 11% for Labor Day. Meanwhile, the incentives offered were 106% higher during BFCM versus 70% on Labor Day. While the incentives offered may be marginally better during BFCM, the incremental sales are disproportionately higher.

In other words, you can expect a substantial bump in sales during BFCM, even if your Labor Day wasn’t particularly successful. Instead of benchmarking your expectations off Labor Day, use last year’s BFCM performance as a guide to set realistic goals for this year.

Tip #2: Start preparing early

The ramp-up to BFCM begins long before Thanksgiving weekend. Sales and incentives typically increase starting in early November, with many customers preferring brands to start even sooner. According to a customer survey by Klaviyo, over 50% of shoppers prefer holiday sales to start a month before November.

The shift in customer preference is being mirrored by brand behavior. Our data shows that brands are ramping up discounts by 1.5x their average discount in the first weeks of November. These discounts continue to ramp up through the month and culminate with BFCM. To capitalize on this demand, consider ramping up personalized incentives in October or early November.

Tip #3: Discover your peak ROI before BFCM hits

Before you consider ramping up your incentives, make sure the strategy will maximize your ROI. Amongst our customers, brands that increased incentives by 60% to 160% during BFCM enjoyed the largest gains in net sales. On the other hand, those who increased their incentives by less than 60% saw similar results to brands offering incentives over 160%.

Understanding what the relationship between discount percentage and incremental sales looks like for your brand is crucial. You can even take it a step further by segmenting your audience to identify these peaks for different customer groups. This approach allows you to tailor incentives to meet the unique needs of various cohorts, enhancing relevance and boosting results.

But the true magic of maximizing ROI lies in personalization and deploying incentives that are tailored at the individual level. You can track how different offers impact performance for each of your customers. This kind of real-time optimization is especially valuable in the weeks leading up to BFCM. Knowing your customers’ peak ROI can position you to deliver the right offers during the holiday season.

Tip #4: Anchor your strategy based on your brand’s incentive category

If your brand isn’t looking to lean into a more unique strategy this year, aligning your approach with your brand’s incentive category is a reliable way to navigate the season. We find that brands typically fall into three categories:

1. Promo-Curious: These brands rarely offer incentives outside of BFCM (0-5% on average). They typically increase their average incentive by 3.2x during BFCM.
2. ‍Promo-Dabbler: These brands offer occasional incentives throughout the year (5-10% on average). It’s common for them to increase their average incentive by 2x during BFCM.
3. Promo-Aficionado: These brands regularly offer incentives (>10% on average). Increasing their average incentive by 1.5x during BFCM.

The intuition behind the different incentive strategies brands take during BFCM is anchored in profitability and margin. A brand that maintains a more conservative incentive posture during the year has much more room to increase offers during the weekend sale. On the other hand, brands that offer high discounts throughout the year are still bound by margin considerations and have relatively less flexibility to offer much more generous BFCM incentives.

Tip #5: Know your BFCM customer profile

BFCM brings an influx of new customers—280% more on average, to be exact. However, these new customers may look different than those who purchased for the first time during other sales events.

Based on our research, the “new” BFCM customers have an average order value that is 5% lower than the order value of their ‘Pre BFCM’ peers, and they will make 7% less orders in the six months after the first order. The good news is that if they come back for a second order, they will do it a little faster. Put together, “new” BFCM customers are expected to have a lifetime value that is 12% lower than non-BFCM customers.

To retain your new shoppers, be mindful of their price sensitivity when creating post-BFCM offers. You can use Monocle to monitor their response to incentives and adjust your strategy accordingly.

Are you ready to unlock a more profitable BFCM incentive strategy?

BFCM presents huge opportunities for growth, but it’s easy to get swept up in the holiday season and over-discount. We hope these tips help you approach your incentive decisions with confidence. Our team is here to help—feel free to reach out with any questions as you refine your strategy. Here’s to a successful, profitable BFCM!

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