As the holiday shopping season approaches, a recent study from Constant Contact reveals that small businesses are set to attract new customers—but many may not be fully prepared to retain them. The annual Small Business Now Holiday Report explores how small businesses and consumers are navigating economic challenges this holiday season, shedding light on actionable insights for small business owners looking to capitalize on this critical period.

More than three-quarters of small business owners express confidence in hitting their revenue goals, buoyed by a successful previous holiday season. However, despite this optimism, a staggering 70% of owners have no plans to invite new holiday shoppers to join their email lists or loyalty programs. This oversight could hamper their ability to convert first-time visitors into lifelong customers.

Frank J. Vella, CEO of Constant Contact, emphasizes the importance of turning the holiday rush into a sustained growth opportunity. “Small business owners are confident, and shoppers are ready to show up and support these businesses this holiday season,” he states. “The businesses who come out ahead will be the ones with a plan to bring those customers back in February and again in June.”

The report highlights several crucial findings that every small business owner should consider as they prepare for the holiday season.

Many small business owners are recognizing inflation as a significant concern, with 31.5% of consumers and 30.1% of business owners citing it as their top obstacle. To counter this, 38.1% of small business owners plan to offer discounts, a strategy that resonates with consumers since 52.6% indicate that sales and discounts guide their shopping preferences.

Interestingly, the study reveals a growing alignment between consumers and small businesses in understanding the unique advantages that smaller retailers possess. About 48.5% of consumers prefer small businesses for their unique offerings, while 43.9% value the more enjoyable shopping environments they provide. Additionally, flexibility regarding pickup, returns, and shipping is also increasingly important, with 44.1% of consumers highlighting these factors as essential when choosing a retailer.

As small businesses prepare for the influx of holiday shoppers, technology, particularly artificial intelligence (AI), can play a pivotal role in enhancing customer experiences. The report indicates that more than 68% of small businesses plan to use AI to streamline their operations, particularly in marketing efforts. Small businesses are utilizing AI to create content, product imagery, and even predict inventory demand, often in ways that customers find acceptable and helpful.

However, the report also uncovers a potential pitfall: while many businesses plan to use AI during the holiday rush, only 39% have plans to follow up with their new customers post-holidays. With about 53.4% of surveyed businesses noting that more than a quarter of their holiday customers tend to return, the lack of a robust follow-up strategy means that many businesses could leave potential repeat customers untapped.

Vella notes, “Small business owners are being smart about AI; they’re using it where it saves the most time behind the scenes and keeping the personal touch where customers want it. The follow-up is where those two come together.” A well-planned follow-up, especially one that utilizes AI to draft messages while maintaining a personal touch, could significantly increase customer retention rates.

The report gathered data from over 1,800 small business owners and more than 2,600 consumers across the U.S., Canada, the U.K., Australia, and New Zealand, reinforcing the global significance of its findings.

For small business owners, the message is clear: capitalize on the holiday traffic without overlooking the long-term opportunities that come from establishing relationships with new customers. With strategic planning focused on both discounts and engagement, small business owners can transform fleeting holiday shoppers into loyal patrons well into the new year.

To explore the full details of the Small Business Now Holiday Report, visit Constant Contact’s website here.

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This article, “Small Businesses Risk Losing Holiday Shoppers Due to Engagement Gap” was first published on Small Business Trends