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For years we have tried to boost summer sales but the problem is that the same reason that makes sales low also makes your advertising less responsive thus more costly. It's tough enough to have a good ROI when sales are good.
For the past two years we have dropped trying to use advertising to build sales this time of year and have accepted the drop. We use this time to focus on building affiliate relationships and improving our site's functions.
However, if your sales dropped 40%, I'd be concerned about it. The most we have ever dropped is 15%. Usually only about 5%. The thing we notice the most is the lack of growth. Only in May, June and July have we ever had stagnant or lost sales.
If you can, go back to old sales, check the referrer and see if the links still exist.
I'm very curious about how July is going to be. For the last 2 July's, we've had killer sales that month (almost matching the holiday season!). We were running our 10th anniversary special and then decided to do an 11th year one on whim. It was the type of thing where we give away a free small item, ~$10 retail, with a $50 or $75 purchase. However, the sales seemed out of proportion for the special. We're not planning to run one this year, partially because I'm wondering how much impact they really had.
We've had some sort of sale going every month for the last year, thinking it was a "requirement" to get people to buy. But I got lazy this month and didn't run any kind of discount and have been astounded by the sales results so far this month. Kind of gives me the incentive to skip the "Take $10 off any $100 order" stuff for a while.
Overall traffic was up last week sharply from the previous week and above the average for the last month.
So if this is a bad month, I can't wait for a good one!