Black Friday Customers – do you really want them?

In what seems to be only a couple of years the Black Friday phenomenon has established itself in the UK sales and marketing calendar.
Reports on the impact of Black Friday 2014 were generally negative – the overwhelming conclusion of most of the businesses that took part was that they had simply brought forward planned purchases at a heavily discounted rate.
Whatever the merits or not of participating in Black Friday, there are more general promotion lessons that can be learned.
Beware the customers who buy only on price.
As a rule, people make their buying decisions on the basis of price when they don’t perceive any difference in value. Assuming your brand does offer some added value over the competition, your prospects who can become good customers should be considering more than just the price point. Anyone can (and probably will) drop their price – the customers you win will desert you as soon as one of your competitors offer a bigger discount.
At the risk of stating the obvious, promotions work by generating enough incremental profit from purchases that otherwise wouldn’t have been made to cover the reduced profit on the sales that would have happened anyway. This has proved to be the big weakness of Black Friday – it didn’t generate any new sales, just brought them forward and the cost of all the discounts hit the profit margin.
Rewarding disloyalty
Too much focus on winning new customers with a price discount can encourage price sensitivity and also annoy existing, loyal customers – we’ve all been on the receiving end of this, with Insurance, Utilities and Mobile network brands amongst the guilty.
Once you’re in it’s hard to get out
Finally, once you start discounting it can be difficult to stop, especially if it is tied in to an event like Black Friday. Customers can predict when you will offer discounts and hold back their purchases until the price drops. Also, competitors start to predict your offers and out-do them. Over time, the scale of discount increases and they start earlier and run for longer. Retail sales used to be the ‘January Sales’, then they started on Boxing day, and in recent years some have started on Christmas Eve.
This isn’t to say that all promotion, even discounting is a bad thing. There may be situations when it is a viable and profitable option. But it is important to think it through carefully and consider if there are ways to generate better results from loyal customers who appreciate the value of your products and services more than just the price and the discount,