Do We Still Spend More on Holidays? 8 Reasons Why and How to Use Them

Do we still fall for special holiday offers and spend more on holidays? I mean, I do. Moreover, since Claspo is one of the most convenient tools for promoting special offers, we also observed an increase in the use of our widgets. 

What Do Stats Say?

I'm not an expert in holiday marketing (at least, not yet), but I understand that an example of two doesn't establish a pattern. Also, the world's political and economic situation could significantly change people's spending patterns. Thus, let's check the data rather than just make assumptions. Of course, the first thing to do is ask the GPT chat for statistics.

• Holiday sales in the United States have been steadily increasing year over year, with consumers spending over $789.4 billion during the 2020 holiday season alone, marking an 8.3% increase from the previous year.
• A Deloitte survey found that 61% of shoppers are swayed by sales and discounts during their holiday purchases. This highlights how promotions and special offers significantly influence consumer behavior and brand loyalty. 
• According to the National Retail Federation, the average American planned to spend around $998 on holiday gifts, decorations, and food in 2021. That’s a lot of festive cheer!

Let's also ask Gemini, just in case: 

• Year-over-Year Increase: Following a period of high growth, retail and e-commerce sales during the holiday season in 2022 still witnessed a significant increase of 4.8% compared to the previous year.

Then I decided to go old school and googled the question because the stats are from 2022, and I had a strong feeling that the situation could be different this past year.

• The prediction for the 2023 holiday season was: The leading retail industry group said holiday sales, including e-commerce and non-store sales, would rise between 3% and 4% to $957.3 billion and $966.6 billion during November and December. This compares with a 5.4% rise last year and a 12.7% jump in 2021.
• The actual numbers: Holiday sales across both brick-and-mortar and online channels rose to $964.4 billion in the November through December period, coming in at the high end of the NRF's prior expectation of a rise between 3% and 4%, in the range of $957.3 billion to $966.6 billion.
• Interesting fact: The Americans surveyed in 2023 claimed that they expected to spend less on gifts than the previous year. It seems the prediction came true: people spent less money on gifts – but more on everything else, as the prices of entertainment and going out keep rising. 

So yes, the holiday spending pattern did change, but the numbers speak for themselves, and we can see that people spend more during the holidays no matter what. Yet, these stats don't explain why this happens. Why do I set aside money in advance only to spend it all on holidays and then find it's still not enough? 

And yes, I'll be completely honest with you – I'm asking this question not to cure myself of shopaholism, although maybe I should, but to enhance my professional skills and:

1. Provide valuable information to Claspo users, both existing and potential, and
2. Propose better ideas for Claspo's holiday campaigns so we can all become millionaires.

The Psychology of Holiday Spending

So, why do we spend more during the holidays from the perspective of neuromarketing and psychology?

1. Emotional Connection

Holidays often evoke strong emotions and memories. Neuromarketing studies show that emotional engagement can significantly increase purchasing behavior, as people are more likely to buy products that resonate with their feelings and experiences during these times. Yes, that's why we've seen so many Disney remakes lately.

According to Harvard professor Gerald Zaltman, 95% of purchasing decisions are subconscious: "Emotion is what really drives the purchasing behaviors, and also, decision making in general." 

How to use that in your holiday marketing: 

Ads promoting an emotional response are 23% more effective than those focusing on rationality. So, during the holidays, marketers effectively tap into our emotional motivators: enjoying a sense of well-being, belonging, security, and success. 

Often, when I work on holiday campaigns, I find myself drawing on my emotional motivators and memories, sometimes even unconsciously. For instance, one of my vivid and warm memories involves sharing a single chocolate bar among four family members. We didn’t have money for more, but we cherished the act of sharing. I tapped into this memory while crafting an ad campaign for a sushi delivery service a few years ago. We highlighted the joy of gathering with friends or family and sharing delicious food, underscoring the pleasure of communal meals.

The idea has also been used many times before in different ways, such as in this amazing H&M 'Come Together' campaign directed by Wes Anderson.

2. Social Proof

The holiday season is filled with trends and traditions that act as social proof, compelling individuals to shop to fit in or contribute to shared experiences. Seeing others engage in holiday shopping spurs similar behavior.

According to Robert Cialdini, author of Influence: The Psychology of Persuasion, "We view a behavior as more correct in a given situation to the degree that we see others performing it." So, for most of us, the holiday shopping fever is contagious. And, well, personally, I'd rather spend a couple of bucks on a present for that one family member I don't even like rather than endure the awkwardness and disapproval from the rest of the family if I don't. Just kidding, I love all of them. My family is the best. Some of them may read that, so I have to be careful.

How to use that in your holiday marketing: 

Leverage user-generated content, reviews, and testimonials in your campaigns to show others enjoying your products during the holidays. Highlight how popular your items are as gifts or showcase them being used in festive settings, which encourages others to make similar purchases.

One of the most famous campaigns leveraging user-generated content to boost holiday sales is Starbucks with its #redcupcontest. Starbucks managed to gather more than 35+K Instagram posts by encouraging customers to take photos with their cups for a chance to win a gift card. That’s quite a social proof!

3. Scarcity and Urgency

Limited-time holiday offers and the fear of missing out (FOMO) create a sense of urgency. Psychological principles suggest that real or perceived scarcity can lead to increased desire and impulsive buying. Back in 1975, Worchel, Lee, and Adewole conducted an experiment and found that people rated cookies as more desirable when they believed they were scarce. 

How to use that in your holiday marketing: 

Black Friday sales and any other limited-time holiday offers increase purchases by creating a sense of urgency. 60% of people admit to making reactive purchases because of the FOMO effect. Our conscious mind might tell us we don't need the third artsy notebook, but if the sale ends in two hours, our hand is already reaching for the wallet.

4. Reward System Activation

Buying gifts for others (and ourselves) during the holidays activates the brain's reward system. Dopamine makes the shopping experience more pleasurable and addictive. What's also interesting is that dopamine is not released when we have our reward but rather when we anticipate it. Ordering things online makes us wait—and waiting's half the pleasure. When we buy a gift for someone else, we also anticipate their reaction. 

Jessica Andrews-Hanna, an associate professor of psychology at the University of Arizona, claims, "Evidence from brain imaging also suggests that both giving gifts and receiving gifts activate core areas of our brain associated with reward and pleasure. These brain regions also stimulate the neurotransmitter dopamine." So, we are biologically wired to like buying stuff and exchanging it as gifts. I can't thank you more, Jessica Andrews-Hanna, for this explanation.

How to use that in your holiday marketing:

Position your products as perfect gifts that bring joy to others. Highlight how giving your product as a gift can make holidays special for both the giver and receiver, activating the reward system with feel-good dopamine releases.

Take inspiration from this joyful Amazon Holiday ad (I hope I will be similar to these ladies when I grow up):

5. Social Identity 

Holidays allow people to express their social identities through specific purchases, whether buying the best gifts or decorating their homes. This aligns with the psychology of wanting to belong to a group and share in its norms and values.

Klein and Kleine's (1993) research suggests that our consumption choices are one way to express who we are. They also help us stand out from the crowd and demonstrate our conformity and affiliation with a particular group. So, holiday shopping allows individuals to showcase their cultural and familial identities through specific purchases.

How to use that in your holiday marketing:

Tailor your campaign to reflect the values and identities of your target groups. A great example is the 2020 Etsy ad. It features a gay black couple arriving to meet the family of one of the partners for a festive gathering. Genuine and emotional (many can imagine the stress of meeting the parents during the holidays), it also effectively uses its cast and message to target gay people, POC, and their progressive allies, reinforcing their social ties and feelings of belonging. 

6. The Halo Effect and Mood Congruence

Holiday marketing often associates products with positive holiday themes and emotions. This association can improve perceptions of those products, making them seem more desirable.

A study shows that "the current emotion, especially positive emotions, is mainly responsible for the consumer’s decision to buy and invest." So, even if we weren't planning on making a purchase, our general uplifted holiday mood can nudge us towards it.

How to use that in your holiday marketing:

Associate your products with positive holiday themes like joy, peace, or charity. This can elevate customer perception of your brand, making your products seem even more appealing during the festive season.

Samsung's Mother's Day ad campaign is an excellent example of marketing. It effectively highlights the less obvious joys that a mobile phone can evoke.

7. Decision Fatigue

With the overwhelming number of choices available during the holidays, consumers might experience decision fatigue. This makes them more susceptible to persuasive marketing and simpler decision-making, which often leads to more purchases.

Decision Fatigue: Dr. Barry Schwartz, author of The Paradox of Choice, suggests that too many options can lead to decision fatigue, which is particularly relevant during the holidays. Retailers simplify decisions through curated holiday gift guides, which have been shown to increase sales by providing a simpler shopping process.

How to use that in your holiday marketing:

Simplify the buying process with gift guides based on interests or demographics, curated holiday bundles, or easy-to-navigate promotional categories. This can help alleviate the overwhelming choices faced by shoppers, making it easier for them to decide and purchase.

8. Reciprocity Principle

The act of giving gifts is rooted in the reciprocity principle, where people feel compelled to return the favor of a gift, leading to more purchases during the holiday season. 

"The tendency among humans is that we want to give back to those who have given to us," says Dr. Cialdini, a Marketing and Psychology professor. We are socially compelled to return the favors and look down upon those who don't. Moreover, the price of gifts also plays a role both in terms of reciprocity and social norms. We implicitly understand that we spend more money on people who are closer to us and that the value of the gifts exchanged should be in more or less the same price range. Scientists claim, “Giving too much, too little, or too late can strain a relationship to the point of dissolution.” So, if you got something nice from a friend or a loved one, you can't help but open your wallet. 

How to use that in your holiday marketing:

Honestly, I had to ask ChatGPT about that, as the whole idea of being compelled to return the favor is not close to my values — my psychologist did a great job.

Anyway, here's some advice that seems pretty ethical to me: Encourage the purchase of gift cards or create promotions where buying a gift for someone provides a small discount or benefit to the purchaser. This capitalizes on the reciprocity norm, encouraging more transactions.

My Conclusion

The deeper I delve into the topic, the more questions emerge:

• What’s the right amount for a business to invest in holiday campaigns if they're not on the scale of Coca-Cola?
• Why, when you Google 'holiday marketing stats,' do you get the numbers only for the November-December holiday season and not for the rest of the holidays we have during the year? Does that mean that only this holiday season can boost your sales?
• How do you pinpoint the holidays that will boost sales, especially when your business could theoretically tie into many of them? 
• Can businesses afford to overlook holidays, or are they expected to roll out special offers?

To uncover these answers, I’ll continue my research and share my findings and thoughts. 

If you have more questions about holiday marketing that you’d like me to explore or any other insights you’d like to share and discuss, I’d be thrilled to read them in the comments below the article or on my LinkedIn. I hope you’ve also enjoyed my jokes and personal touches; I've read and convinced myself that good content equals genuine content nowadays.