💰 Sales Strategies To Turn Black Friday From A Margin Killer To A Bank Balance Filler!

You are reading this as Black Friday is kicking in. Oh, how I hate Black Friday! It stands for everything I hate about weak sales strategies and poor branding!

I know there will be some of you reading this wondering what I am talking about as you are gagging for the chance to buy things cheaper! But I am talking from the perspective of a business owner about the irreparable damage that is done to businesses that embrace and rely on discounting.

There is a theory that the name Black Friday originates from the practice of retailers marking their accounting records from red (indicating a loss) to black (indicating a profit) after the busy holiday shopping season.

I am not sure if that was true back when the concept first started, but that is certainly a load of bollocks now for most retailers who slash their prices to the floor in desperation to get some cash in the till, with no real regard to the true economics of the exercise.

The problem with periods of discounting nowadays is that they have been stretched out to last so long!

I remember, as a kid, being super excited for the 26th of December when the after-Christmas sales started. It lasted only a few days for a restricted number of items. And when it was over, then it was over. Back to full price and normal life.

Today? It’s not Black Friday; it’s more like Black November and Black December merged in to one! And when they are over, it rolls into some other cleverly titled name to hide the fact that it is another desperate discounting period.

So why do I hate discounting so much? Why is it so bad for business?

Erosion of profit

Successful businesses need to be able to generate high margins and strong profits. That is how they grow and thrive. How they have money to invest in research and development, in new staff, in capital equipment, in pay rises, and in distributions to their owners.

As you eat away at the business's ability to generate strong margins, you hamper its ability to do any of those things.

And that is what excessive discounting causes.

Conditions customers for price sensitivity

Repetitive discounting trains customers to expect lower prices, making them less willing to ever pay full price. You know this yourself. How many businesses do you buy from that you know have so many different discounts throughout the year that it causes you not to buy today at full price, as you know you probably need to only wait a matter of days before getting it much cheaper?

This expectation of discounting reinforces a price-sensitive mindset, which then devalues the product in the eyes of the customer and ultimately damages any brand equity the business has. The business becomes reliant on discounting as the only way to generate sales and creates a vicious cycle of declining margins and reduced profitability, and it can never get out of this spiral.

This also leads to a reduction in the lifetime value of each customer.

Damage to brand perception

I have already mentioned the damage to a brand that discounting can do. But just going a little deeper on this, what happens is that the brand no longer has a value proposition. Customers now perceive the brand as a discount brand, making them less likely to want to be associated with it, and loyal customers who are willing to pay premium prices are lost for good.

Price wars and industry devaluations

Price wars are never a good thing, and in competitive industries, this is exactly what excessive discounting starts. Companies are in a race to the bottom, which ultimately leads to an industry-wide devaluation of products and services, making it impossible for any of the players to achieve sustained profitability. Agriculture, steel, telecommunications, and airlines are just some of the industries that have such terrible economics now due to a lifetime of price wars.

So how can you combat it? What strategies can you employ in your business to drive sales while maintaining margins?

An important fact for you here before we go on: 68% of Black Friday shoppers are not motivated by price. Let that sink in for a minute.

Now let’s look at some strategies to drive trade without discounting.

Add Value

If customers aren’t motivated by cheap prices, then what are they motivated by? VALUE. They want to feel they are getting great value, not a bargain basement price on a second-rate item. So instead of simply cutting prices, how can you offer value-added promotions that provide additional benefits to customers without reducing the perceived value of the product or service? Think about things like free shipping, bundled products, and including extended warranties, for example.

Customer loyalty programs

Loyalty programs are everywhere now, and you should be looking at them for your business. Not only do they reward repeat customers and encourage brand loyalty, but they are also great for data collection. By offering exclusive discounts, early access to new products, and personalised perks, businesses can cultivate a customer base that is willing to pay full price for the value they receive. And by having the data, you can understand what each customer values and reacts to, so that you can tailor your marketing to them.

Emphasise customer service and experience

In a world of commoditised products and so many similar offerings, focusing on exceptional customer service and creating a memorable customer experience is an essential way to differentiate a company from its competitors. Build strong relationships with customers, and you will be able to command premium prices without relying on discounts.

Product differentiation and innovation

I mentioned earlier that strong margins were essential to having cash to be able to invest in business growth, and this is where it becomes a virtuous circle. If you can invest in product development and innovation, you can create unique offerings that stand out in the market. By providing products or services that customers perceive as having superior value, you can avoid the discounting trap and command higher prices. Prime example: Apple. When do you ever see a discount in an Apple store? NEVER! And customers line up down the street to wait to get into the shop!

If you have a business that can only sell its products when discounted, then you don’t have a brand. You are just a commodity retailer, and you won’t last in business for long.

I am not saying you must never, ever discount. (Although Louis Vuitton doesn't, and they managed to still achieve revenues of over £20 billion last year!) But I am saying that if you do, it needs to be carefully planned and short-lived. Need a bit of extra cash in the till? Sure, there is nothing wrong with a 1 or 2 day flash discount to generate some quick extra revenue. Just don’t make it so ingrained in your business model that people will only shop with you when your discounts are on.

Now go take advantage of the discounts of all the businesses who don’t take my advice are giving away all their stock! Reply to this email and tell me what you have bought!

Welcome to the newest edition of Friday's newsletter: Sauna Strategy Sessions – where business meets sweat and success! If you follow me on social media you will have seen me lately, sat in the sauna recording a lot of content. Multi-tasking at its finest! In these sessions, I'm dishing out some top-notch tips and killer advice on all things business strategy. But, it's not just me talking at you; I'm here to answer YOUR burning questions. Whether you're hungry to learn something new, need a fix for a business headache, or just want to dive deeper into something I've said, these sessions are all about catering to your business needs. So, let's sweat it out, and get ready for a combo of brilliance and a touch of heat-induced inspiration!

This week's focus: SALES STRATEGIES. Let's go:

1. Patience is key: You can’t close every client on day 1. But don’t be lazy and walk away from opportunities that need you to apply the long game. Success is a gradual process, much like the warmth building up in a sauna. Embrace the heat, endure, persist, and let your efforts mature. Patience, the unsung hero, pays off big time in the long run.
   

2. Embrace Challenges: Stepping into the scorching heat mirrors facing business challenges head-on. Dive into difficulties because the most valuable lessons arise from overcoming tough situations. Go the extra mile for your customers – turn challenges into growth opportunities.

So, this week, let's sweat out impatience, embrace challenges, and emerge with a refreshed perspective on sustained success. It's not just about making deals – it's about enduring the heat, mastering patience, and building resilience that can take on anything.

If you have a topic you want me to dive in to in a future episode or a question you need answering then reply to this email or message me on social media.

matthaycoxdaily

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Tell me, do you love the ease of online bargains, or are you a die-hard fan of elbowing your way through shops? Are you the crack-of-dawn deal hunter, or do you take a more chill approach to Black Friday? Let’s see if this stat resonates with you lot too!

P.S…… I know some of you are big fans of this newsletter because you email me and tell me about it. But you still aren’t sharing it with your friends! So use the link below to spread the word and you’ll qualify for some goodies soon!

Ta.