Love it or loathe it, Black Friday and Cyber Monday (BFCM) sales are mere days away with some retailers starting their sale period early.
While it’s tempting to jump on the bandwagon and discount everything in sight, you’ll need a solid BFCM discounting strategy.
- How much revenue do you need to meet your financial goal?
- How much profit do you expect to make for each order?
- Have you included advertising costs in your projections?
- Ideally, any discount you apply should be tested against your budget to lower the chances of losing money on the deal.
The following discount strategies are designed to make your customers happy without breaking the bank:
1. Buy more, save more: Unlike a fixed site-wide discount, giving customers a purchasing threshold can help you maintain profitability. Example messaging: “Get 20% off when you spend $75 or more”.
2. Change it up: If you’d like to offer a big splashy discount without hurting your bottom line, try offering a mixture of discounts. Ask customers to ‘roll the dice’ on their purchase by rotating 5%, 10% or 50% discounts when they hit buy.
3. Reward your loyal customers: Choosing to give larger discounts to those who’ve purchased your products multiple times will ensure your brand is top-of-mind with the customers most likely to support your small business all year round.
But seller beware. Don’t feel like you need to keep up with what your competitors are doing here. While discounts and sales can be a powerful part in a sales strategy, attempting to keep up with what your competitors are doing is a guaranteed race to the bottom. Lowering the price of a premium product each year could devalue your brand and train your customers to only buy during promotions.
Here are a few considerations:
- If you have an ecomm site – is it up to scratch? Can it handle large orders and a large volume of shoppers?
- More sales mean more business transactions to categorize—and more room for error. Keep your accounting records tidy (Please!)
- Discounts are great, but they’re certainly not your only option. Other great deals include BOGO offers, giveaways, and coupon codes. Extra perks can be great bonuses for people who buy a service. Offering freebies is yet another effective way to stand out.
- Remember, there are also dangers in discounting with the biggest threat being to your profitability and reputation.
- Consider the example below. If you have a GP of 40% and you discount by 10%, then you may only gain a 33% increase in business. Alternatively, if you increase by 10% you may lose 20% of your customers. But who would you lose? Most likely those who just want a cheaper product or service.
| add 10%
|-20% of customers
After all this, you have an opportunity to turn Black Friday shoppers into loyal customers. There are pros and cons but you need to consider all of these relative to your business and financial position. As your accountant, it is our job to shed light on these considerations. Don’t be disheartened if you feel you have missed this opportunity. Take the time to plan it out for next year. Talk to us about future planning and strategies for your business. We’re here to help.