Beyond Black Friday
As Black Friday and Cyber Monday approached, we saw retailers scrambling to prepare for the official start of holiday shopping. The stakes are high and competition is fierce. Everyone from Wal-Mart to Macy's leaked their best deals well in advance of the big weekend (see www.blackfriday.com), and retailers such as Target, J.C. Penney, Toys R Us and Best Buy opened their doors on Black Friday Eve (previously known as Thanksgiving Day) for additional sales.
With all the mass discounting in the market, must targeted marketing campaigns follow suit? How can direct marketing programs participate (and win) during this essential season? In this article, we highlight a few alternatives to deep discounting that may boost your targeted marketing program beyond Black Friday and Cyber Monday and support continual growth well beyond December.
The Pitfalls of Deep Discounting
Deep discounting through mass channels for Black Friday and Cyber Monday are now table-stakes for many businesses; if you skimp here, you are out of the game. These deep discounts can hurt a business as well. At Analytic Partners, we worked with a multichannel, high-end retailer developing a targeted strategy for Black Friday and Cyber Monday.
In previous years, they had participated in the industry-norm of deep discounting, but results were not favorable. The strategy led to inconsistent profitability for the retailer; in some years the deep discounts hurt margins far enough that the return on investment was unacceptable. In addition, research showed the high-end image of the brand was tarnished somewhat by these deep discounts, even during this promotion-heavy weekend. Over time, it appears new customers brought in through these promotions were less valuable to the company overall and suffered a shortened lifespan with the brand, further decreasing their lifetime value. We have witnessed similar concerns within apparel and electronics industries as well.