Now the clocks just changed, you are probably already fully focused on this year’s peak trading period, the almost non-stop 57 day Holiday Sales period including Black Friday, Cyber Monday and the January Sales.
But unless you work out now how you are going to get value from the inevitable bargain hunters your deep discounts will attract, you risk wasting most of the effort and money you invest. Yet there is hope. That is, if you get your bargain shoppers to bring you good clients, then you can save your Holiday Sales. Here is how.
It's going to be a big deal
Adobe has forecasted this year’s Holiday Sales will drive US$91bn in sales in the US with US$3bn on Black Friday alone. The same period is predicted to drive £24.3bn in the UK. However you look at it that is a big deal.
So as well as meeting with your IT team to make sure your site stays up, external courier companies to ensure parcels get delivered on-time and working out how to deal with all those inevitable returns, you will also be putting the final touches to your customer acquisition campaigns. You will probably already be thinking about what you are going to do with all those new customers, planning a welcome CRM campaign with carefully tuned email and text messages to make them feel at home with you. But you should also be thinking about the type of customers you will get and how you will get long term value from them.
The Problem with Bargain Hunters
While you are hoping that your short term margin sacrifice will tempt good customers into your stores to begin a long term and profitable relationship, the reality is that deep discounts during the Holiday Sales mostly attract price sensitive bargain hunters with little notion of brand loyalty.
What makes this even worse, is that we have now educated a whole generation to just expect discounts and armed them with smart phones and price comparison apps to squeeze every last penny of discount from the cheapest seller. So the risk is that your newly and expensively acquired price sensitive shoppers will surgically strip your real or virtual store shelves of every deep discounted loss leader and then disappear forever.
Get the bargain hunters to work for you
At Buyapowa, we have long preached against dumb discounting and argued that scatter-gun discounting risks attracting the price sensitive switcher rather than loyal customers. But we don’t expect that you will stand firm and refuse to lower prices when all your competitors are leading with 50%-70% off everything.
But a smart retailer will work out how to get loyal customers from discounting. The surprise might be to learn that it is not too difficult to do that thanks to advances in Refer-a-Friend technology. The solution is simply to realise that every bargain hunter has plenty of friends, family and colleagues they could refer to you, many of whom are not as price sensitive or not even price sensitive at all. And what is more, if your new customers refer friends, not only are their communications more likely to reach the intended recipient, they are more likely to be read, trusted and acted upon.
But to do this effectively, you need to have a best in class referral scheme in place that engages and empowers all of your customers to bring you new ones. One that makes it easy to refer across any medium your customers want, including email, SMS, Whatsapp, Facebook Messenger, Snapchat, Pinterest etc. One that encourages each referrer to go the extra mile to get as many friends to shop as possible. And finally, realising that up to 80% of your referrals can come from less than 20% of your customers, your scheme needs to identify and challenge potential super-referrers to compete to win money can’t buy prizes.
A business that gets it
An example of a business that gets this is Heals, which has adopted the Buyapowa Refer-a-Friend platform to enable and empower all its customers to refer friends. It does this by offering £25 of store credit for each successful referral, with a 10% saving on the referred friend’s first shop. To get customers referring again and again, a £50 bonus is awarded for every third new customer they introduce. Heals is also driving sales in-store by crediting referrals that lead to a purchase in one of their famous furniture and furnishing stores.
Heals is just one example of many leading brands and retailers like PrettyLittleThing, Space NK, and Amara that have realised that an effective referral scheme can mean that Black Friday or Cyber Monday won’t only bring you price-senstive switchers, but also loyal customers with high lifetime customer value.
If you want to know how we can help ensure your Holiday Sales are a success then, give us a shout.
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Image: Creative Commons - Daniel Case