You also listen to my take on Black Friday for Small Businesses via my podcast, Digital Discussions: Unfiltered. Check out the episode at the bottom of this blog post or simple search wherever you listen to your favourite podcasts.
Black Friday is fast approaching and so I thought I’d put together my two-cents and answer the question: Should small businesses take part in Black Friday?
You won’t be shocked to hear the ‘it depends’ phrase from me to begin with, as it is so dependent on so many moving parts which vary from business to business.
For starters, I don’t know your mark ups, profit margins and current conversion rate. However, I did want to share my thoughts and feelings, from an ex-corporate ecommerce executive turned small business advocate , and my experiences. And this blog comes after a conversation with a current client and how we plan to strategically approach Black Friday for her business.
It’s commonly known that it’s much cheaper to retain a customer and turn them in to a repeat buyer than it is to attract new customers, right?
In fact, it can cost five times more to attract a new customer, than it does to retain an existing one. Just think about how much time and effort you’re spending marketing to new customers, that you could be saving if you spent more time and effort trying to turn your current customers in to repeat buyers.
With this in mind, I think it’s important as small businesses to focus on what truly matters to you at whichever stage of the business you’re at. And sometimes that means taking, what can seem like a scary risk.
According to research done by Frederick Reichheld of Bain & Company, increasing customer retention rates by 5% increases profits by 25% to 95%. And I think given the current challenges we all face, profit & money in the bank is pretty critical for small ecommerce businesses. Would you agree?
With all of this vital information I’ve laid out, my personal thoughts on Black Friday for small business is this…
If you approach Black Friday with a long-term mindset, that you’re willing to make a short term sacrifice for, I think it can really do wonders for small businesses.
So, what do I mean by that? Now that we know it’s easier and cheaper to turn customers into repeat customers than it is to constantly attract new customers, I would simply suggest approaching Black Friday with a purpose of gaining new customers, but potentially make less money.
Hear me out!
Depending on if you’re in total control of your pricing or you work to guidelines of your suppliers etc. will very much determine whether you’re working on a markup or margin basis.
For this example, I’m going to talk about profit margins which uses price as the divisor. So for example if you currently sell t-shirts for £20 and they cost you £5, you have a 75% margin (or a 300% markup).
Without going too in depth with markup and margins, my personal opinion on how to get the best from Black Friday for small businesses would be to lower that profit margin for a short space of time (aka. run a flash sale/Black Friday sale) to acquire lots of new customers. And then market to them and turn them in to repeat customers.
Alternatively, and if you’re not prepared to take that much of a ‘punt’ per se, I would actively encourage you to be posting on your social media channels and taking advantage of the buzz that Black Friday creates online.
So there you have it, my two-cents on how I personally think you can get the best from Black Friday for small businesses.
Do you agree or not so much? Let me know by leaving a comment below or I’d love to hear from you over on Instagram!