Beyond Black Friday
Create Urgency for Mid-Tier Customers
Another targeted strategy to consider in lieu of deep discounting is to provide a limited-time offer to drive urgency for mid-tier customer segments. In another case, we found mid-tier customers valued and purchased the core product offerings at a retailer, but were reluctant to purchase the accessories and additional sublines as well. These accessories had high margins, so the company decided to offer modest discounts through email on those accessories, but with the added value that many accessories were available for a limited time in November (while supplies last). This approach met the value needs of these consumer segments with marginal discounts, and appealed to the Black Friday sense of urgency. Results of this approach were favorable. In the short-term, the retailer saw 10 percent to 15 percent lift in topline revenue from this approach. But the long-term impact was even greater, as the effort pushed many mid-tier customers up the value chain as they expanded their purchases into accessories.
Save Deep Discounting for Developing Segments Only
Finally, I do not recommend that you completely disregard deep discounting in targeted marketing; save this approach for your under-developed customer segments. For one apparel manufacturer, we used customer segmentation to identify a "High Potential" group of customers that, based on their shopping history, appeared on the cusp of becoming avid purchasers for the brand. When developing their Black Friday direct mail and email campaigns, the manufacturer customized the deeper discounts for only this under-developed segment to draw them in for the holiday season.
Results of this strategy were very positive, creating a 40 percent sales lift versus prior year and substantial savings from limiting discounts to the other segments. We continue to monitor the long-term impact on the developing customers, but initial analysis suggests that the customers remained engaged throughout the year and have made highly profitable purchases since this Black Friday promotion.