In recent catch-ups with founders, we’ve heard a lot about the extent of competitor discounting in the run up to Christmas. This has been reflected in our annual tracker Black Friday survey with our brand community where respondents echoed the sentiment.
When asked what they did, more decided to offer deeper discounts, opted for 50%+ off, launched earlier (one-third in the first one or two weeks of November), and discounted on all products rather than just high stock and old season ones. In tough times such as these, cashflow can trump brand value.
What was clear is that the perception and the practical reality of Black Friday are at odds. Here are a few (seemingly reconcilable) conflicts. While 79% believe that Black Friday is an important tool, 75% think it can be brand damaging. 66% don’t think their customer relies on the sale to make purchases affordable, but 66% say that their business would be smaller without it. Nearly 80% ideally wouldn’t do it but and almost everyone (91%) will be doing it again next year.
The most popular motivations for discounting are customer acquisition (60%), getting rid of old stock (52%) and taking advantage of the demand (52%). Interestingly, customer retention (44%) also features strongly. Where a brand has customers that only buy on discount, it’s important to understand them.
When asked if customers acquired over Black Friday have the same retention as customers acquired at other times, 37% said that they have the same value, while 29% said they don’t monitor the lifetime value of Black Friday acquired customers. Understanding future behaviours of these customers is critical to make the right decisions next year.
When we asked what the respondents saw as the future of Black Friday, the results were mixed. Some foretold its demise while others expect it to grow even larger. Many talked about using it more carefully to align with brand values but most brands are slow to adopt this. Hardly any brands included anything purpose-led into the deals.
Ultimately, Black Friday was thrust upon smaller brands by the likes of Amazon. They now feel obliged to take part and think customers expect it, but know that it can be at odds with their brand values and long-term sustainable growth. We hope that increasingly brands are not just taking part for the sake of it and using it with purpose to benefit long-term plans. Half of brands in the survey reported higher sales and better stock clearance but not profitability. Unpicking discounting’s impact on the business model is pivotal.
Our three tips for navigating the Black Friday confusion are:
- Have a strategic agenda as to why you’re doing it (brand, sales, profitability) and that everyone in the team is aligned around it.
- Even if you are discounting, find ways to make the event relevant to your brand purpose, values and tone of voice.
- Mine your data to understand new and repeat Black Friday customers and how to nurture them.
Do you have any thoughts on this? Please get in touch with our Sustainability & Communications Manager, Georgia Jones – Georgia@piper.co.uk.