How Black Friday & Cyber Monday Sales Can Hurt You
Sales, sales and more sales. Call it Black Friday, Small Business Saturday or Cyber Monday – special sales hung around the Thanksgiving weekend in hopes of jumpstarting holiday buying have expanded, as have store hours to accommodate consumers’ schedules.
With roughly one-quarter to one-third of their annual results tied to holiday buying, retailers must pull out all of the stops. If consumers don’t purchase from them, they’re buying from competitors.
Whether you’re a small or large business that sells to consumers or businesses, there are lessons to be learned. All this holiday related promotion isn’t necessarily good marketing or business. (BTW–here’s how to create a promotional calendar.) The problem is that no one dares ask if your bottom line is increasing.
Thanksgiving and Black Friday sales combined increased 2.3% to $12.3 billion according to ShopperTrak LLC. To put this in perspective, this is roughly the amount that the US retail industry increases each year.
Online sales break out as follows based on IBM data.
- Online sales for Thanksgiving Day and Black Friday sales were up almost 20% over 2012. The average Black Friday order value was $135.27, up 2.2% since 2012.
- Mobile traffic accounted for 40% of all online traffic. Smartphones drove Black Friday browsing activity with 25% of all online traffic while tablets drove 14% of all online traffic.
- Mobile sales were 22% of total online sales. Tablets drove 14% of all online sales, twice the amount of smartphones (7%). Tablet users spent an average of $132.75 per order and smartphone users spent an average of $115.63 per order. Of note, iOS drove more traffic, higher sales and larger average sale than Android.
Since prospects do their pre-shopping research on PCs, smartphones and tablets, it’s no surprise consumers also buy there. The problem is that this is a channel shift, not overall industry growth.
Are the people camped outside your store for Black Friday your best customers? I don’t need to interview them to know they’re not. They’re waiting for your best possible price (and possibly notoriety on the local television news). The problem is that these sales can hurt profitability because you’ve got increased costs due to longer hours and lower margins due to competitive prices.
Despite this, holiday season revenues typically account for a quarter to a third of annual sales. Therefore, you must maximize sales opportunities before you enter the holiday frenzy. To this end, assess your promotional plans to determine where you can create unique sales opportunities.
While you may need their business this year, you need to plan ahead to avoid this promotional trap next year. Here are 10 actionable small business tactics to achieve holiday sales freedom.
- Know your target audience. Understand who your buyers are and why they’re interested in purchasing from you by creating a marketing persona. To this end, take a page from Amazon’s Jeff Bezos who ruthlessly focuses on the customer experience.
- Build your customer base for the long term. This translates to relationships. You must grow your list of prospects and others interested in your products and related content.
- Nurture your customers and leads. Give them the information they want to learn more about your products and services. Treat prospects and customers differently. Although it’s important to understand that you can use the same content and information to achieve these 2 different objectives.
- Treat your best customers special. Take the time to analyze your customer base and understand who your best customers are. Most businesses have two categories of top customers. Your top tier customers who drive the most sales and your second tier customers who have the potential to become your best customers. At a minimum, create a list of your customers from least profitable to most profitable and divide them into deciles. What can you do to encourage your best customers to engage with you more often and buy from you more frequently?
- Segment your prospects and customers. Track your customers based on how you acquired them, what they buy and how frequently they buy. Of course, this assumes that you have the ability to track these results.
- Take care of your email list. Marketers know that sending out an email drives sales. The problem is over-emailing your list so that people unsubscribe in droves. It’s like killing the goose that laid the golden egg.
- Understand your price dynamics. Don’t stick your head in the sand and tell yourself you’ve got an accountant or finance department. You must know how much your products cost to buy or to create and how much you spend on promoting them. If you don’t, then you risk selling your product at a price that looses money. (Here’s now to measure costs.)
- Maximize every marketing opportunity. Since you don’t have a crystal ball to tell you which promotions will drive the most sales and which will fall flat, it’s critical to pull out the stops with each promotion. Ask yourself, what can you do to drive more sales with each special offer.
- Create ways to upsell and cross sell existing customers. Don’t just stop at the purchase. Make your prospect a related offer. Sell the product in another color or related product or accessory where it makes sense. My mother excelled at this type of shopping. If the green top fit well and was a good price, why not buy another one in a different color? Include links to related pages on your product page and related content.
- Measure marketing results. Track your results against the past year as well as your budget. Keep good notes related to external events such as major promotions and environmental issues.
Like customers rushing the door at their local Best Buy, Target or Walmart, when everyone is pushing at the same time in the same way, it’s time to think outside of the gift box or risk getting run over in the stampede.
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To compete in the new environment of always connected, highly informed consumers, retailers need to leverage five trends to realize higher conversions and larger transaction sizes.
Find out how you can apply these 5 trends to your business.
- Retailers that embrace and facilitate social where customers are discovering, considering, and buying, can increase wallet share.
- Millennials are driving the way retailers think about consumers and create shopping experiences.
- With mobile, consumers have become an always-on opportunity for retailers to tap.
- Retailers with a successful omni-channel strategy will experience less showrooming and achieve greater market share across all channels.
- Big data will allow retailers to change the consumer experience, boost conversions, and improve margins.
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