Business Lunch Podcast Episode Summary: "Beyond Discounts: The Future of Black Friday"

Release Date: December 10, 2024
Host: Roland Frasier

Introduction

In the episode titled "Beyond Discounts: The Future of Black Friday," Roland Frasier engages in a dynamic discussion with his co-host, Ryan, exploring the evolving landscape of Black Friday and its implications for modern businesses. Recorded on Cyber Monday, immediately following the Thanksgiving holiday in the United States, the conversation delves into the transformation of traditional shopping behaviors, the effectiveness of current sales strategies, and innovative approaches businesses are adopting to stay competitive.

The Evolution of Black Friday

Historical Context and Changing Perceptions

Ryan begins by reflecting on how Black Friday has diverged from its original concept. He provides historical context, explaining that traditionally, Black Friday was characterized by in-person shopping marathons where consumers would queue from the early hours to snag the best deals, often leading to chaotic scenes of competition for limited high-demand items.

"Black Friday was what started off the Christmas, the holiday buying season, and this was the reason it's called Black Friday is this is when retailers got back into the black, got into profitability."
[02:11] - Ryan

However, Ryan observes that the essence of Black Friday has diluted over the years, especially for younger generations who may not recall its original frenzy.

Shift Away from Traditional Models

Roland adds that there's a noticeable shift away from the traditional Black Friday model, particularly among non-retail and B2B service-based companies. He notes that while retailers might still find value in Black Friday sales, many modern businesses are opting for alternative strategies that don't rely solely on deep discounts.

"It seemed like the trend was non retail companies. So a lot of B2B service based companies, they had kind of gotten into the Black Friday game as well this year. It seemed like more and more non traditional retailers, they were specifically rejecting the Black Friday type game."
[05:47] - Roland

Shift from Discounts to Lead Generation

Rejecting the Discount Culture

Ryan shares insights from mastermind groups, highlighting a general sentiment of underwhelming deals this year. He emphasizes that excessive discounting can devalue a brand's offerings and condition customers to wait for sales events rather than purchasing organically throughout the year.

"People who own businesses realize that ultimately if you discount your services, you're training people not to buy until those events when you discount your services."
[07:07] - Roland

Innovative Approaches: Free Offerings and Lead Generation

Roland recounts a successful strategy employed by an influencer brand that chose not to participate in Black Friday sales. Instead, they offered a valuable product for free, generating over 1,700 new leads and projecting $150,000 in revenue. This approach not only attracted potential customers but also built goodwill, positioning the brand in a "blue ocean" strategy away from the competitive "red ocean" of discounting.

"Deals are a red ocean. Giving something away totally for free is a blue ocean."
[07:38] - Roland

He introduces the "zigzag question": "When is it appropriate to follow the herd?" This concept encourages businesses to evaluate when to conform to industry standards and when to innovate by deviating from common practices.

New Marketing Strategies: Bundles, BOGOs, and More

Bundle Offers and Increased Order Value

Both hosts discuss the rise of bundled offers as a way to enhance perceived value without resorting to deep discounts. Bundling popular products with less popular ones or higher-margin items helps increase the average order value while maintaining profitability.

"Bundles that combined some sort of popular product at a discounted price... the average order value was greater."
[18:14] - Roland

Buy One, Get One (BOGO) Innovations

Ryan introduces the term "But Go" (Buy Two, Get One), a variation of the traditional BOGO offer. This strategy encourages customers to purchase more by providing additional value without significantly impacting the retailer's margins.

"BOGO and But Go were very prevalent."
[19:45] - Roland

Role of Technology and Personalization

Personalized Marketing and AI Integration

Roland notes an increase in personalized marketing efforts, leveraging AI to tailor offers based on individual browsing and purchasing behaviors. This hyper-targeted approach ensures that promotions resonate more deeply with consumers, enhancing the likelihood of conversion.

"Personalized offers to the extent you can leverage any data that you've got."
[20:28] - Roland

Enhanced Advertising Tactics

The hosts discuss advancements in advertising, such as targeted ads that eerily align with personal interests, sometimes predicting purchases for customers' family members. While effective, this raises questions about privacy and the fine line between helpfulness and intrusion.

"The ads that I was shown this year were oddly scarily targeted towards me like in ways that it kind of shouldn't be."
[15:49] - Ryan

Advice for Businesses Going Forward

Maintaining Momentum and Extending Sales Cycles

Roland advises businesses to extend their sales periods beyond the traditional Black Friday to Cyber Monday window. Starting promotions earlier and maintaining them longer can capture a broader audience and mitigate the effects of consumer fatigue.

"If you're not offering flexible payments, your competition probably is. If you're not starting in November... then you're probably missing out there."
[07:07] - Roland

Flexible Payment Options

The rise of "Buy Now, Pay Later" (BNPL) services like Klarna is transforming purchasing behaviors, especially for higher-ticket items. Offering flexible payment plans can increase accessibility and drive sales, even in uncertain economic climates.

"BNPL buy now, pay later... had a lot more takers than usual because people... are not spending on high ticket, luxury and discretionary items as much."
[20:59] - Roland

Tiered Pricing and Limited-Time Offers

Implementing tiered pricing strategies encourages customers to spend more by offering better value at higher price points. Additionally, creating urgency through countdown timers and limited-time offers can prompt quicker purchasing decisions.

"Tiered pricing... encouraging you to buy more... made me want to spend more."
[24:19] - Roland

Conclusions and Key Takeaways

The episode concludes with Roland and Ryan synthesizing their discussion, emphasizing the importance of innovation and adaptability in modern retail and service-based businesses. Key takeaways include:

1. Reevaluate Traditional Models: Businesses should assess the effectiveness of traditional Black Friday strategies and consider alternative approaches that align with current consumer behaviors.

2. Leverage Technology: Personalized marketing and flexible payment options are critical in enhancing customer engagement and driving sales.

3. Create Value Without Discounts: Offering bundles, BOGO deals, and free valuable offerings can attract and retain customers without eroding brand value.

4. Extend Sales Cycles: Starting promotions earlier and maintaining momentum through December can maximize reach and profitability.

Roland encourages listeners to experiment with these strategies, such as offering free lead generation during sales events, to discover what resonates best with their target audiences.

Final Thoughts

"Beyond Discounts: The Future of Black Friday" provides insightful analysis and actionable strategies for businesses navigating the evolving retail landscape. By moving away from traditional discounting and embracing innovative marketing tactics, companies can better position themselves for sustained success in an increasingly competitive market.

Notable Quotes:

• "Deals are a red ocean. Giving something away totally for free is a blue ocean."
  [07:38] - Roland

• "Bundling popular products with less popular ones helps increase the average order value."
  [18:14] - Roland

• "Buy Now, Pay Later is transforming purchasing behaviors, especially for higher-ticket items."
  [20:59] - Roland

For more insights and strategies on growing your business, tune into future episodes of Business Lunch with Roland Frasier.