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Black Friday Blues: Rethinking discount-driven loyalty

Back in the day, we had the famous Boxing Day sale.

To use an analogy, it makes sense that turkeys are cheaper in the days after Christmas than before, because of the economics of supply and demand, and because there will always be a few birds that aren’t sold and surplus stock has to go before it becomes outdated and valueless.

Then came Black Friday. Now we have a pretty bleak few weeks of casting the sales net, to attract customers with deals that appear too good to be true. It’s increasingly a case of of getting in there first, and it’s simply not sustainable just putting aside whether the bargains are genuine or not.

So, what should be done? Can retailers buck the trend? It seems like an awfully big risk to take.

The impact on loyalty

Points-based programs are (supposedly) there to reward loyal customers for their repeat business. But when there are major savings to be had elsewhere, a few measly points won’t cut the mustard in terms of a ‘front-of-mind’ buying decision.

It wouldn’t be hard to make a case that that Black Friday and similar sales throughout the year are a primary cause of program breakage and brand abandonment. The accumulation of points simply isn’t enough of an incentive or benefit.

The problem with points is that unless you have a stack load available for real-time redemption against a purchase, the benefit is delayed and people nowadays expect instant gratification. Awarding points on discounted stock can also be a tough nut to crack for the bean counters.

Customers will consciously choose to do business with a brand if they feel pleased, valued and cared-for. It works with friendships and employment, too. Think about it for a moment; if you felt upset, under-valued and forgotten about, you’d be looking for a new job or different friends. It’s the same deal with retail – positive emotions create a bond that can transcend rational factors like price.

Sales are great for new customer acquisition though, right? Wrong! They may buy from you once, but it’s no different to buying a friendship the chances are that it simply won’t assistant helping customer

A not-so-black Friday

So here’s what you might consider as a Black Friday strategy underpinned by proven psychology that harks back to good old-fashioned values of sales and service.

  1. Value your customers for their previous purchases, product reviews and advocacy/referrals, but do it with individualized deals (in the here and now) rather than with loyalty points. 

    It makes sense that the more someone does business with you over their lifetime (which includes a view of the future as well as the past) the better price they should get and/or perks such as free shipping.

    It also makes sense to exchange that value on products they actually want (rather than on things you’d like them to want because it gives you a higher margin). Be customer-centric and think about how much you’re willing to invest in each relationship. Here’s a top tip about that machine learning thing you’ve heard about can help.

  2. Please your customers with helpful buying advice and tips, and make their experience of doing business with your brand a value-added one (note: there are many forms of value).

    A gift wrapping service is a lovely thing to enjoy, especially at this time of year. A concierge service (whether in-store or through online chat) can help customers to make informed buying decisions and reduce basket abandonment.

    And the easiest thing of all, tailor your post-sale communication to reinforce the perception that you know each customer and genuinely want them to have a nice day – the relationship has to be sincere.

  3. Care for your customers when things go wrong – which they will from time to time – and show that you mean it by making things right. You’re not just after their cash, are you?

    We’ve talked about the benefit of positive emotions to grow loyalty, and the same holds true for bad experiences (only in reverse, obviously). The majority of customers will leave, or at best consider going elsewhere, as a result of just one bad experience with your brand.

    The trick is to realise that problems need dealing with quickly and a sincere apology can go a long way towards making things right for the future. This is where artificial intelligence (context and sentiment analytics) and real-time automation technologies can help.

Bringing it all together

Let’s say that over the past three years I’ve bought four Samsung TVs, a Google Nest system and a pretty extensive range of Sonos speakers from you. 

You helped me to pick the Samsung 8000 because, from what you could tell of my room sizes, viewing angles and budget, they offered the best value compared to more expensive QLED models (and I just wouldn’t have been happy with the 7100 series). Your online community of hints, tips, advice and recommendations was very helpful.

My warranties were registered instantly, with no faffing about entering product codes, and the follow-up SMS message to check that installation had gone smoothly was a nice touch. What was really great was the invitation to reply and start a conversation:

“Hey Marlon, just checking that you got those Samsung TVs on the wall OK? I’m sure you’ll be really pleased, but don’t hesitate to shout back if there’s a problem”

I replied to the message, to say that the bolts supplied with a wall mounting bracket didn’t quite fit through into the TV (not a huge deal, but psychologically I relate that frustration back to your brand).

“Actually, you can help. The bolts aren’t long enough to go through the wall mounting bracket into the back of the TV. Can you send me some longer ones?”

By the time I got round to mounting the TVs, it was 9 pm. Your store was closed. But, my SMS was received and replied to instantly. Now that’s what I call service! I didn’t even consider that I might be conversing with a machine I just wanted satisfaction, and the artificial intelligence worked.

“Sorry to hear about that. I’ll have a selection of M8 bolts sent out in the post for delivery tomorrow. Please let me know if they do the trick for you.”

It wasn’t your fault that I bought a cheap bracket with short bolts, but hey – the customer comes first and the cost of sending some bolts is nothing compared to my potential lifetime value.

On the run-up to Christmas, with funds replenished and more electronic wizardry on my mind, who did I turn to first? Why you, of course, because you were so helpful last time. Logging in to my online account I was reminded that as a valued customer I benefit from personalized service.

What does that mean? Well, two things as it happens not only do I enjoy a 15% discount in reflection of my past and potential future value, I get free shipping for the next 12 months in recognition of the few service hiccups there have been throughout the year (and for the online reviews I was kind enough to post).

Yes, it’s discounting but it’s totally individualized to me and my relationship with you. I feel like I’m valued, I feel like I’m cared for, and I can rationalize that my discount is MY discount. It actually makes me feel very pleased (even a little smug) that not everyone gets the same special treatment.

No, they don’t – and yes, they do – because everyone is different and not all customers are equal.

What everybody does get is individualized service and a value exchange based on data science – delivered in a way that makes it feel truly personal, using smart AI and real-time, two-way communication.

Bucking the trend for Black Friday success

Using this strategy will help to:

  • reduce your dependency on flash sales; 
  • improve margin, retention and customer lifetime value;
  • and strengthen the perception of your brand.

And the really good news is that you probably have all the data available to make it happen, right now, ready for next year.

If you still have a loyalty program based predominantly around transactions and points, you’re probably wasting your money (unless you’re an airline). Wake up and smell the coffee.

And for sales? Buck the Black Friday trend and start building long-lasting emotional loyalty using the latest in retail-focused ML, AI and communication tools to show your customers that you care.

Give them something that your competitors don’t, to put smiles on faces and money in the till!.

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