What comes to your mind when you read the words, “Black Friday?” Most likely, you envision lines of shoppers sitting outside mega-retailers in the dark of night waiting to stampede into the store—giving credence to the term doorbusters—at the stroke of midnight for their chance to buy a flat-screen television, available in limited supply, for 80 percent off.
In other words, pure pandemonium.
What comes to your mind when you read the words, “Cyber Monday?” Most likely, you picture your inbox inundated with offers for 25, 50, 75, even 85 percent off everything from sneakers to software, to vacation packages to pest control services.
In other words, digital madness.
Undoubtedly, Black Friday and Cyber Monday are November traditions as established in our cultural fabric as pecan pie and turkey trots, and, yes, they can help some brands to boost year-end revenue. Understand, however, that while every brand can take advantage of Black Friday and our inherent search for opportunities, deals, and investments the weekend after Thanksgiving, not every brand should offer drastic discounts as a way to endear themselves to prospective buyers.
Read that again. There are reasons why you may not want to discount your products and services on Black Friday.
If your entrepreneurial spirit is fueled by the moments where you go left when everyone else goes right, then we’re appealing to your innovative sensibilities. If you’re following marketing 101 guidance that tells you to offer holiday discounts to boost sales volumes, then we’re about to make you a believer that Black Friday discount strategies are not created equal.
The Value in Selling a Premium Product
Think of a brand that you annually see running Black Friday Deals. You’re probably thinking about Target, Amazon, and JC Penny. Now, think of a brand that you never see running Black Friday deals. Search the annals of your mental marketing database, and you will find some very notable brands. Here’s one: Apple. You’ll never see Apple flashing neon pink 70 percent off the newest iPhone pop-up banners or flooding your social feed with Cyber Monday deals and discounts. Why not?
Apple is a premium brand. It is arguably the premier provider of personal technology devices in the
country world. Simply put, Apple does notneed to discount. They’re loyal brand evangelicals, and even new buyers will gladly pay a premium for the latest iPhone, MacBook, or iPad because they believe that Apple is worth it.
We know Apple is a trillion-dollar brand, and you’re a start-up grappling for brand recognition, market share, and new customer acquisition. Still, think long-term. Ask yourself what type of brand you want to be. A premium, high-value brand that can demand top-tier pricing and sets the standard for offerings in its sphere, or a commoditized product or service provider that competes against its direct competition based on price and price alone?
Don’t misunderstand; our economy is built on the foundation of a free marketplace with the opportunity of service and solution parity. However, if your dream is to be a six-figure personal brand or the next Apple of your space, then there is value in not diluting your brand by playing the deep discount game every Thanksgiving.
If you want to compete on value (and we think you should because we know you’re awesome), then you should want your customers and prospects to buy from you because you sell a premier product—not because you’re the cheapest—even if only for a day. This factor marks the critical point of differentiation between a product-driven company and a value-driven company.
Don’t be a Lemming
If you feel like you should offer a massive Black Friday deal because everyone else is doing it, resist the temptation. Don’t be a lemming.
Side Note: The idea of lemmings following one another blindly off a cliff in a disastrous attempt to fall in line with the behavior of those around them is only a myth. That means no rodents were harmed in the making of this blog. However, we’re still going to lean into this trope because it’s meaning resonates with our strategic Black Friday recommendations.
If you are a coach, consultant, or provider of one-to-one services, resist the urge to participate in deeply discounted Black Friday shenanigans because you’re seeing big-box retailers like Old Navy and Macy’s waving their 80 percent off banners like awards. Look around to your direct and indirect competitors and determine if other consultants and educational leaders in your space are discounting their books, classes, and events. We bet you’ll find that whomever you consider the leader in your space is not offering a site-wide mega discount.
Accept that not all eCommerce and retail strategies are created equal and that the Black Friday deal is not warranted for products and services that cannot compete on a commoditized scale.
It’s Not Worth Your ROI (or Time)
The easiest marketing lever to pull may be discounting, but what’s best is not always what’s easy.
Lean start-ups have to maximize every marketing effort to protect their budget and their time. Unless you’re a mega-retailer with millions in your coffers, running a Black Friday deal is likely not going to produce the kind of positive ROI that will blow your year-long revenue generation efforts out of the water.
From a digital ad spend perspective, Black Friday is a veritable pay-per-click (PPC) black hole. Black Friday weekend typically results in increased media costs as more advertisers are bidding on a relatively fixed amount of inventory. According to Smartly.io’s aggregated global customer data, last year, ad costs per thousand (CPM) increased on Black Friday by 50 percent and 38 percent on Cyber Monday. CPMs increased in the days leading up to Thanksgiving weekend too. In 2018, social CPMs were seven percent higher than usual two days before Black Friday and 19 percent higher one day before, with pricing rates on the Saturday and Sunday of Black Friday weekend at 33 and 32 percent, respectively.
What about email marketing, you may be wondering. It’s essentially a free marketing tactic. Too true. However, with an estimated 116.5 million emails sent on Black Friday, 106 million on Cyber Monday, and 95 million on Thanksgiving, how confident are you that your message will stand out among promises of deep discounts on flat-panel televisions, airline tickets, and fitness equipment?
If You Don’t Compete on Price, Where Should You Focus?
In a word, reputation. You may be wondering how you can motivate prospects to give your products or services a try if you can’t lure them to your shopping cart using the magic of a sale price. Indeed, people want to feel that they are getting as much product or service as possible for as little money as possible. However, many consumers desire something else even more, and that is the promise of a reliable purchase. If you want to get a prospect over the hurdle of purchasing from your brand for the first time, you could offer 50 percent off, to your financial detriment, or promise 100 percent satisfaction with a money-back guarantee.
With this guaranteed approach, your prospects stand to gain even more because you eliminate the risk and fear of a dissatisfied purchase, and really, is there anything worse? Ask yourself if you would prefer to be stuck with a car you got for $500 that disappoints you on performance, style, and comfort, or if you’d rather pay $8,000 for a car knowing that if you don’t love it, you’ll get all your money back. In the end, wouldn’t you rather pay full price for a car you’ll love, risk-free, without fearing the hassle of a complicated return process, or worse, being stuck with a product you wouldn’t have spent $5 on, let alone $500?
If you’re like most shoppers, there is significant value in a risk-free purchase and one that outweighs the potential benefits of the cheapest option. Besides, if a customer isn’t over the moon with their purchase, they’re not likely to become a repeat customer. Average lifetime value is crucial to long-term business success, and not even a mega Black Friday deal will save your bottom line.
When Should You Run a Black Friday Deal?
There are exceptions to every rule (even the rule that says you shouldn’t do what everyone else is doing). For this reason, we must tell you that it may be wise to run a Black Friday deal if (and only if) the promotion is a tactic within a broader business strategy.
Regular, or seasonal discounts, such as Black Friday, can be a powerful strategic marketing technique specifically when selling a consumable product. Brands can use a discount to get a prospect to give their brand a try, and (hopefully) turn them into a routine buyer, willing to pay full price time and time again. This is most effective when businesses know their numbers like stick rate, churn rate, etc. and can forecast a net positive impact on their revenue as a result of their discounting strategy.
For products and services that don’t fall into the “add to deal dash button” landscape, if you discount too frequently, you run the risk of training your buyers to hold out and wait for your seasonal sales before buying again.
Take, for example, the company that, in a last-ditch attempt to sell user conference seats, waits until the final weeks before their even to reduce ticket prices by 50 percent. If they apply this last-minute discounting tactic year-after-year to make their attendance number, their customers will eventually catch on. They will learn that if they wait long enough, they’ll be able to register for 50 percent off. What reason would they ever have to buy at full price if they know they can always get the same content and access for less, just by waiting a few weeks?
What happens in this scenario is that the annual sale diminishes the value of the offering. Customers equate the event’s worth with the lower price and will never be willing to pay more, even if it means skipping the annual conference when the company finally stops their last chance 50 percent off sale tactic. In the end, both the customer and the company lose. It’s unfortunate when you consider that the loss could have been avoided if the brand had never begun its final discount strategy in the first place.
But What About COVID-19?
If COVID-19 disrupted your marketing, product, service, or event strategy in 2020 and you need something, anything, to help mitigate the financial loss you’re on pace to reflect on your balance sheet this year, go ahead and run a year-end or Black Friday discount sale. An anomaly offer such as this in a year of a global pandemic is understandable. However, if you want to maintain your position as a value brand, commit to ensuring your 2020 Black Friday discount remains a rare offering in a year in which you and your customers struggled. Resist the urge to turn to discounting every time you feel like you want to eke out just a few more purchases from your fans and followers.
You can smartly leverage discounting as part of a cogent strategy, but don’t make it a kind of unhealthy marketing addiction. Otherwise, you might find that the only time you see sales blossom is when you run a discount promotion. Find yourself in this dark place, and your brand has already lost its reputational value, and you’ll be hard-pressed to get anyone to pay full price for your products and services repeatedly.
To Black Friday or Not to Black Friday. That is the Question.
If you’re still not sure where you stand from the line we’ve drawn in the sand between value- and product-based brands or have some product and services for which you want to charge a premium and some that could be commoditized, you may be unsure how to proceed. Here is an exercise that will help: Look at your numbers.
Do the math (sorry) and determine the average lifetime value of your typical customer. Determine what a new customer will be worth 30, 60, and 90 days from their initial purchase. Do the numbers justify a Black Friday discount? Could you effectively reduce your product’s cost? If you learn that the hit on revenue that you’d take is not worth the brand awareness exposure you could gain from splattering the Internet with discount messaging, then turn around and walk away.
What Are My Other Options?
If you’re dead set on running a Black Friday promotion—for a justifiable reason—then be creative. Ask yourself what else you could offer prospective buyers that would not require you to lower the cost (and by virtue, the value) of your brand or services. Some options may include free shipping if you have a physical offering or adding a bonus offer to each purchase—something of low cost that will help your buyer maximize their use of your products or services.
Another option may be to add on a free individual consulting session when a customer buys a ticket to your upcoming virtual event. With this strategy, the only thing you need to offer is your time, and you don’t have to compromise on what you’ve strategically determined to be the value of your core offering.
Black Friday is predicated on the shopping psychology of wanting to feel like one is getting a deal—more for less. You can give shoppers an equitable feeling of satisfaction that comes from lowering the price of a product or service by giving them something additional, even if it’s time, insight, exposure, or behind-the-scenes content.
Alternatively, suppose you are in the professional services space. In that case, you could encourage customers to lock in another year of their current retainer rate if they commit to another annual contract before you increase your rates or pricing structure.
Showcase Your Year-End Gratitude
The end of the year is the ideal time to deepen your relationships with your customers. Not only will such tactics help you set a foundation for customer retention next year, but your relationship-based marketing will cut through the clutter of flashing discount graphics and give customers a genuine, feel-good engagement opportunity. If we’re honest, this year, more than ever, we all need sincere connections and trustworthy relationships with brands, companies, and one another.
Instead of discounting on Black Friday, give back to your customers or community. Embrace a charity project that has been on your mind, start a mentorship program, host a free webinar, or make time for one-on-one catch-ups with your most valuable customers, or every customer, depending on your size and scale.
Final Words of Wisdom
We know that being a start-up is fraught with challenges, but if you want to become a six or seven-figure brand, understand that over-leaning on price discounting is a lazy approach to brand building. To become a value-based leader in your space, you must do what’s best for your brand—not what’s easiest to motivate purchases. It may be easier to offer a product for $50 than to prove why it’s worth $100, but in that effort lies the key to becoming a lauded, proven, and trusted premium brand. Don’t take the path of least resistance. Prove your worth and build the types of relationships with your customers that will leave them willing to pay what’s truly fair to do business with you.