I remember my first Black Friday as a retailer.
It was 2003. The holidays kinda snuck up on us.
We had no idea that we had to strategize this entire month. We came up with a few last-minute deals. We sent out a few last-minute emails. WE WERE COMPLETELY BLOWN AWAY WHEN THAT DAY’S REVENUE TOPPED All OCTOBER’S COMBINED.
Since that first Black Friday in retail, my holidays have never been the same.
Gone were the Christmas cheer and caroling and chestnuts by the fire. Now all I see are competitors’ promotions, vendors that won’t ship on time, and skyrocketing acquisition costs.
“It’s the most wonderful stressful time of the year!”
Everything about this season is designed to stress out you, the marketer.
Journalists crank out articles about “maximum deals.”
These work your customers into an absolute deal frenzy. Those customers start to pig-pile on you.
Then your vendors jump on the pile. They jam more blog posts down your throat about how you have to “maximize sales” across every conceivable marketing channel.
You can hardly breath under that pig-pile at this point. So let me try to dig you out from under there …
Maximizing deals and sales are cool … but what about maximizing profits?
Yeah profits. As in what you are going to use to buy your kid the best holiday gift ever.
At Karmaloop, the company increased sales yearly on Black Friday from 2010-2014!
Each year it had bigger deals too!
You know what happened in 2015? The company went bankrupt!
Increasing revenue is BS if every year you increase discounts more. (My boy Hillstrom hammers the point home here — worth a skim.)
So before you get buried under the pig-pile this week, let’s take a step back and think this one through …
About 15 years of ecommerce Black Friday / Cyber Mondays have taught us some things:
You never want three “oh crap” moments. Put it this way … Eisenberg’s deli in the Flatiron has a salad on the menu called the Triple Threat: scoop of egg salad, scoop of chicken salad, and a scoop of tuna salad.
Well Black Friday / Cyber Monday presents a Holiday Triple Threat to your profits.
You were hoping to add new demand over this week? Sorry, it’s just reallocated demand from October and November. That’s your egg salad.
Oh and in reallocating that demand you are moving it from high-margin to low-margin purchases. There’s the chicken salad.
And finally, if you depend at all on paid acquisition, your customer acquisition costs are going to skyrocket. Tuna salad.
Hope you are hungry because the Holiday Triple Threat just triple-screwed you.
It’s why many (most?) retailers are unprofitable this week. Will you be one of them?
All this stuff about delis has a couple of implications for you, the intelligent marketer:
Whatever you do, make a note to measure how your Black Friday / Cyber Monday offers perform. Do it twice: once at the end of next week and a second time in February after you’ve processed all your holiday returns.
How? Use my ROI spreadsheet. It will help here because it takes discounts into account (as you should).
Oh, and carve a small control group out of your holiday offer craziness. Who knows, you may be lucky enough to discover your merch is so compelling it doesn’t need a discount. Armed with that knowledge, you’ll make money hand over fist in Holiday 2018.
Above all, don’t buy the hype. Be a skeptical marketer.
Look at your own data. Avoid getting sucked into running unprofitable promotions.
And have a turkey leg. Watch some football. Enjoy a stress-free Thanksgiving!
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