Black Friday sales have become a boon for online and in-store retailers, with many seeing the date as the start of the ‘Golden Quarter’ for sales – a period which encompasses the three-month run into Christmas and the New Year.
Historically, the sale was seen as an opportunity to drive additional sales around a frenzied approach based on low margins, hoping that the volumes alone would satisfy the bottom line. But does this approach actually create real relationships with customers, and is it making the most of the opportunity for retailers in the long-term?
Results from a One-Poll survey in 2018 revealed that forty-three per cent of shoppers said they often or always returned items after regretting purchases made in short-term sales windows. Twenty-nine per cent admitted to feeling like they had to make a quick decision to take advantage of temporary price drops, leading to sixteen per cent to highlight how they felt enticed into impulse purchases, which ultimately led to “buyer’s remorse.” These statistics aren’t great reading for brands wanting to build healthy relationships with their customers. Instead, they fuel the notion that the approach to Black Friday needs a shift in thinking.
The retailer’s approach to Black Friday needs to pivot, from one of ‘making a quick quid’ to one of ‘how many times can I bring this customer back.’ There’s a reason why the adage is so old – it is easier to keep a customer than to acquire a new one! To extract the most benefit in an already crowded and noisy marketplace, retailers need repeat sales to thrive, and this is only attained by developing sustained relationships with customers.
Competition during the sales period is high, and it can be difficult for smaller brands to compete, lest they risk obliterating their profit margin. Smart retailers should use Black Friday as an opportunity to offer discounts in conjunction with other strategies to further their customer lifetime value (LTV). The simple strategy of offering added-value allows retailers to drive revenue and engender customer loyalty during Black Friday simultaneously. By offering something extra and unexpected to purchases during the sales process, retailers can tap into the Reciprocity Principle of marketing psychology to fuel loyalty and repeat custom.
The Reciprocity Principle centres on the notion that if a brand does something positive for the customer, the customer is more likely to return the favour, thus exponentially increasing the chance for future cooperation. So, by offering added value to new customers, you are opening the checkout or till towards a more fruitful relationship with them. What’s important to understand about the inclination to want to give back, is that it’s often most persuasive when the recipient feels that the gesture is sincere in its attempt to show appreciation and that there’s no expectation of a return gesture. Fortunately, with digital marketing, it’s easy to generate subtle reminders!
For the Reciprocity Principle to have maximum effectiveness, the customer’s perception of your offer should be that it is provided to them based upon their individual preferences or purchasing profiles. Alternatively, allowing customers to select their own ‘added-value’ will enable them to almost ‘self-optimise’ the process to take advantage of the offer that best suits them.
Giving customers a gift that benefits their lives outside of the relationship with your business, or the use of your product, will have a much higher perceived value. Any outreach that is overly geared towards the purchase of more products, without a clear benefit to the customer’s personal situation, will only drive short-term gain or causes it to be ignored completely. In comparison, providing an experience that your customers will remember, imprints both value and creates a crucial human touch to your brand.
The beauty of the Reciprocity Principle is that you don’t have to initiate it in-line with massive discounts; it simply requires a thoughtful, bespoke strategy. Membership rewards cards offer a low-cost way of delivering added-value that customers can enjoy all year round in a multitude of ways that best suit their preferences. Rewards can also be customised to align with each unique customer segment, product, or service. Such an approach significantly enhances the psychological effect of customer loyalty through reciprocity. It extends the life of the relationship with the customer well beyond the initial transaction, as they are regularly reminded of a positive experience with your brand.
In essence, Black Friday discounts are quite simplistic in their approach to customer loyalty, whereas value-adding to the customer experience makes continuing a relationship with them less challenging. Subsequent outreach via an email campaign or other marketing activity is more likely to generate interest. Just make sure to provide simple options for the customer to recommend you to their friends, write a review, or make a subsequent purchase. The Reciprocity Principle’s psychological effect will make them want to do it and encourage customer engagement, loyalty, and repeat sales.
by Jamie Fisher, chief commercial officer, Supercard Worldwide