How to Rethink Your Black Friday Strategy.

Ecommerce Strategy, Black Friday

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Black Friday (BF) strategies have almost always consisted of the same. Sell more, more, more. Push budgets down into your bottom of funnel, sales and activation ads and then let your discounts do the rest.

Now, this strategy has worked in the past. But as consumer sentiment, the retail landscape and online expectations evolve, so does our BF advertising.

In order for us look forward, it's useful to look back at how this all came about.

History of Black Friday.

The first use of the term "Black Friday" was by factory managers in America who would see a huge number of workers calling in sick to work the day after Thanksgiving. Although still not a federal or national holiday, the day after Thanksgiving is often given as a day off by employers and the retail industry saw this an an huge shopping opportunity.

High street retailers would use this shopping opportunity to clear their warehouses and stores of stock in order to restock new items for Christmas. These huge savings would create enormous purchase intent for consumers, especially for electronics and furniture; items which could be unaffordable usually.

But it seems that the days that thousands of customers queuing from midnight outside of stores are gone. So are the days of quick 24hour sales periods. Now we see Black Friday & Cyber Monday as a weekend vent or even Black November where retailers and brands are choosing to lessen discounts but extend sales periods over a longer stretch of time. We also can't ignore the shift from queueing outside a store and battling other customers for limited stock to being able to shop Black Friday deals from your computer or phone.

So with that in mind, let's look at how Black Friday should fit into your digital strategy.

Black Friday Should Not Replace Your Customer Acquisition Strategy.

Black Friday should be used as a tool, not as a replacement for your usual activity. The acquisition of new customers through the promotional activity of BF throws up some interesting challenges which brands may want to avoid.

You may acquire customers who would never be able to afford your products at full price. Therefore their LTV is limited. They may only purchase from you once a year (on BF) or only when you are running sales.
You could be lessening the value of your top performing products. Running a sitewide discount on every single product could affect the perception of your best-sellers or staple products which never go out of season. Seeing them at a lower price means some my be reluctant to pay the extra margin when the sale ends.
Inviting huge amounts of new discount customers could drastically affect your profit margins. Say you operate at a 30% profit margin and are offering 20% discount across products for BF. Generally, in order to generate the same amount of revenue, you'll need to sell 200% more units. (You can read more about that here.). So if we take this in conjunction with point 1, you'll need to be selling even more and more units each year to meet annual growth targets.

So if we're not using Black Friday to gain new customers, then what should we be doing with it?

Now, this strategy has worked in the past. But as consumer sentiment, the retail landscape and online expectations evolve, so does our BF advertising.

In order for us look forward, it's useful to look back at how this all came about.

History of Black Friday.

So with that in mind, let's look at how Black Friday should fit into your digital strategy.

Black Friday Should Not Replace Your Customer Acquisition Strategy.

You may acquire customers who would never be able to afford your products at full price. Therefore their LTV is limited. They may only purchase from you once a year (on BF) or only when you are running sales.
You could be lessening the value of your top performing products. Running a sitewide discount on every single product could affect the perception of your best-sellers or staple products which never go out of season. Seeing them at a lower price means some my be reluctant to pay the extra margin when the sale ends.
Inviting huge amounts of new discount customers could drastically affect your profit margins. Say you operate at a 30% profit margin and are offering 20% discount across products for BF. Generally, in order to generate the same amount of revenue, you'll need to sell 200% more units. (You can read more about that here.). So if we take this in conjunction with point 1, you'll need to be selling even more and more units each year to meet annual growth targets.

So if we're not using Black Friday to gain new customers, then what should we be doing with it?

Struggling to acquire new customers at scale? Learn more about how we've helped brands just like yours. Click here.

Clear Stock and Old Lines.

As mentioned previously, Black Friday used to be an opportunity to clear down old stock, ready for new releases and new lines. If your brand runs a seasonal model where new lines and stock are ordered for the seasons (SS23/24 - AW24-25 for example), you can still certainly use BF as a means of selling remaining stock at a lower price. Or did you over estimate the popularity of an item and now have thousands sitting in a warehouse waiting to be sold. BF is the perfect opportunity to move those units.

The same can be said for older lines or product categories which might not be your bread and butter.

Reward Your Most Loyal Customers.

Possibly one of the most powerful ways you can be using BF is as a reward system for your most loyal customers.

If you're using the RFM method of segmenting your current customer base within your CRM, you'll be aware of who your most valuable and loyal customers are.

Not familiar with RFM? Its stands for Recency, Frequency and Monetisation. Who are your most recent customers, your most frequent customers, and those who bring in the most money to your business? These are your most valuable customer.

Reward these top segments with exclusive discounts for Black Friday. There are a few reasons why this is such a powerful strategy.

These are customers who we know will pay full price so we know that this will not be negatively affecting LTV
It helps build a sense of trust and community. Plus as humans, we love to be rewarded for our actions. Knowing that they have been recognised by your brand provides a sense of personalisation which as marketers, we know is a strong conversion tool.
We can't underestimate the power exclusivity. Customers knowing that there has been a discount but not being able to access it, creates the fear of missing out and could prompt further spending in order to be included for the next exclusive promotion.

Should My Brand Take Part in Black Friday?

Unfortunately this a question that we cannot answer for you. But it is an important question to ask yourself. More and more brands are removing all kind of association with Black Friday citing it as encouraging excessive consumption, unnecessary spending and promotion fast fashion etc. (These are by no means our opinion on BF).

But if we look at it from a purely revenue-generating stand point, if your brand finds that the reduction in price has a substantial affect on your profit margins to the point where it doesn't add any value, it may not be worth it.

It may also depend on your industry and what the expectations are from your customers. Luxury or designer brands may want to take a step back from Black Friday in order to save brand reputation or protect the value of their products.

We're also seeing a trend where brands are extending the Black Friday period over a longer stretch of time with a less substantial discount. And whilst this may help avoid the affect on profit margin, it reduces the scarcity or time pressure which has pushed consumers in the past, to purchase. Sometimes affecting performance to a point where it is having little impact on your bottom line.

Long Story, Short.

Black Friday is changing and has been over the course of the past 5 years.

You shouldn't be using Black Friday to recruit large amounts of new-to-brand customers.

Check the effect heavy discounting is having on your profit margins.

Rewarding your loyal customers is one way to continue Black Friday with less negative knock on effects.

You might want to think about whether Black Friday forms part of your strategy next year and beyond.

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