The Black Friday to Cyber Monday weekend can be a crazy time in eCommerce. Running a killer Black Friday Offer Strategy can bring you a disproportionate share of your annual revenue in just a long weekend!
The truth is that doing it well is a bit harder than you think. With inboxes and news feeds spammed with offers from every retailer, some offering eye watering discounts, its actually the hardest time of the whole year to stand out. The urge to offer huge store-wide discounts just to compete is a strong one, but ultimately by no means the smartest one.
I’ve seen countless eCom owners get excited by the blip in revenue, only to lament a slump in profits due to the combination of margin-savaging discounts and seasonal increase in ad costs.
Are Massive Store-Wide Discounts Ever a Good Thing?
There is really only one good reason to offer deep ‘store wide discounts’ for Black Friday, and that’s kind of like the tried & true loss-leader strategy on steroids. Basically, you’re leveraging the feverish demand to acquire new customers. You know you’ll lose money on that first transaction, but the long-term value of that customer is much higher. If your brand offers consumable products like snack bars, supplements, cosmetics or coffee, this can be a great strategy so long as you combine it with outstanding follow up.
In this article though, I’d like to offer some alternatives to this standard Black Friday offer strategy. This I hope will be useful to the vast majority of brands who either can’t support 50% + deals, or who have much lower returning customer rate (and probably both).
1. Swap out Store-Wide Discounts for Targeted Offers.
If you’re doing’ it right, for the majority of the year your marketing has been about getting the right product in front of the right person at the right price. You’ve invested in showing them how it solves their problems and probably built sales funnels with customer data. Why throw all that great work to the wind by offering everyone everything for less?
If you were thinking of offering a 20% store wide discount, here’s some targeted strategies to try instead:
- Leverage all the people that have interacted with one of your product offers over the past year in to a retargeting audience, and offer them a specific discount on that product instead. You can use the same ‘narrative’ in your creative, just adjusted to introduce the Black Friday sales event. If your normal retargeting is say 15%, offering a 20 or 25% may well be enough to entice them if they were already interested.
- Along the same lines, run out an email campaign to all people who have opened and clicked a product promotion email or specific product page. Be very specific in your email copy. For example: “Hey, I know you were interested in my Superman Socks earlier in the year. Just thought I’d let you know that we have a 1-Day Deal on them for Black Friday where you can get them for just $X. If you’re interested, here’s a code….”.
- Set up specific Exit-Intent offers for Black Friday that re-enforce your message. If you’re set up with a CRM like Klaviyo, you can show specific Exit-Intent messages based on which campaign they are from, but otherwise a site-wide exit intent will do.
2. Leverage Free Shipping Instead of Deep Discounts
With the Global Disaster that is shipping and logistics at the moment (probably more so in Australia than anywhere else), consumers are increasingly scared off by high shipping costs and the uncertainty of when their package will arrive. I covered in a recent article how concerns over order shipping as one of the biggest drags on store conversion. You can bet your last dollar that standard shipping services are going to take a LOT longer than normal by Black Friday.
In this context, offering free shipping may actually be more valuable to the customer than a standard coupon discount deal. Can you amplify it even further by offering free Express Shipping, thus addressing both concerns at once? Like anything you’ll need to run the numbers on whether this is cost effective for you.
3. Focus Your Strategy on Increasing AOV not Getting More Transactions
Once of the most consistent themes among the brands I work with is a constant focus on increasing Average Order Value (AOV). I view this as being one of the four cornerstone metrics in eCommerce. Discounts of course end up diminishing your AOV in exchange (you hope) for increased transactions and thereby a spike in revenue.
Here are three great ways to engineer a Black Friday Offer Strategy that will help you increase your AOV while still encouraging improved store conversion:
Obviously, you want to encourage people to check out with values higher than your regular store AOV. For example, if your AOV is $80, you could say “Black Friday Deal! Save $30 on every order over $150!”. Lets look at the maths of that:
Order Value: $80
Ad Cost: $20
20% Store Discount
Order Value: $80
Ad Cost: $20
$30 Order Discount
Order Value: $150
Ad Cost: $20
This simple example highlights a couple of important points.
In the case of offering a store-wide discount, while you’ve offered the customer 20% off, you’ve actually reduced your dollar profit from $40 to $24 – i.e., by 40%! Herein lies the peril of blanket discounts!
Compare that to the incentive that encourages a bigger order. Even though the customer saves nearly twice as much on this offer, you actually make 50% more profit than on an average order, and a massive 160% more profit than on a store-wide discount!
The calculus of creating a Black Friday bundle is just the same as the order value offer above, only you’re curating a package that makes sense rather than letting the customer roam free to pick what they want. Sorry to say, but freedom of choice does not always equate to increased conversion!
So long as your bundle is a value-adding collection of things that makes sense to your avatar, you’ll probably find this type of offer converts better that leaving the customer free to make their own selections.
If your store offers a wide variety of products, or perhaps a monthly theme, you could consider collecting up a series of items and creating random surprise packages.
This can work well for reasonably well-known brands, luxury brands or brands with very high engagement in a niche. Trust or desirability of owning something from the brand outweighs the inherent risk of not knowing exactly what you’re going to get. For example, a fishing tackle store could package up ’30 of our best flies’.
It can be a great way to increase your AOV as well as clean out some of the slower-selling stock items.
4. Free Gifts & Bonuses
Offering exclusive bonuses can add perceived value to an offer, and can be a great alternative to straight discounts. You can also combine the two strategies, getting away with offering a lower discount than you would otherwise have offered. Bonuses work best when the bonus item is a high perceived value low real cost item. For example, if you’re selling a slinky pencil dress, why not offer a matching belt for free?
This is one of the few areas where I think Gift Cards have a useful role. For the most part, Gift Cards generally suck as eCom products in their own right (unless you’re a big box retailer).
However, since they only cost you money when a new sale is made, they are the ultimate in high-perceived-value, low-cost items! PLUS – over 60% of Gift Cards are actually passed on to other people, which means you get a potential new customer. That’s 2 for the price of 1 in your acquisition funnel!
Another great strategy, especially if you offer consumable products, is to offer a kind of free sneak peak at an upcoming new product you plan to release. For example, if you plan to release a coconut flavoured protein bar in December, why not offer an exclusive deal to get a fee 6-pack when the customer buys a 12 pack of your existing flavours. This gives them the feeling of exclusivity, and gives you an avenue for early reviews & feedback on your new product.