Do you make a family ritual out of grabbing Black Friday deals at 4am the day after Thanksgiving? Or do you despise the fact that American’s blow past Thanksgiving to get to Christmas shopping? Either way, as a business person, Black Friday is fascinating.
In addition to the sheer volume of participants and revenue, it is amazing to watch businesses simultaneously lose money of products or reduce their margins to almost nothing in hopes that customers will buy additional items while they are in the store. This is true for both online and brick and mortar businesses.
While Black Friday, and its younger sibling Cyber Monday (which many online companies have turned into ‘cyber week’) are usually wildly successful for companies and often touted as a indicators as to the health of the US economy, you have to ask yourself if offering deep discounts and ushering mobs through your “doors” is the most efficient way to increase profitability.
Are Online Communities Your Business’s Anti-Black Friday Strategy?
Online customer communities where prospects, customers, and employees can educate and learn from each other about best practices, products, and problems they are having are increasingly popular strategic investments for companies who want to avoid giving their products away by offering big price breaks.
The marketing lessons from Black Friday are not about holiday sales strategies. Companies face similar pricing, promotional, and CRM decisions year round.
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What we are talking about here are two very different mindsets. One is based on transactions and the other is built on relationships. It is true that most organizations don’t have to choose one over the other. However, making the choice does help you prioritize your initiatives.
Would You Rather Have an Online Community or a Black Friday Campaign?
Though Black Friday is mainly known as a retail phenomenon, both business-to-consumer and business-to-business companies can benefit from this analysis.
Black Friday Mindset
High one time total purchase
Incrementally higher repeat purchases for life
Value to Customers
Deep discounts to get the product or service cheap
Content, connections, and conversations to become more successful
How is Awareness Built
Segmented messages to customers based on social crm data
Benefits After Initial Interaction
Repeat purchases, brand advocacy, product feedback
I don’t pretend to fully understand the complex procurement algorithms that go into making Black Friday profitable for large companies, but it is clear that for most businesses building an active online customer community should be a higher priority than running short-term discount campaigns.
In the same way that daily deal sites, like Groupon and LivingSocial, build awareness, but don’t create lasting relationships, companies that choose deep discounts over building community risk the double loss of low margins (read: profits) on the sale items without the platform to drive repeat purchases.
Online Community Takeaway
While sales with big discounts on your products or services create buzz and get people shopping, it is rarely the right long-term profit strategy. Though your company will need to switch from campaign-based thinking to community-building mode, online communities provide a foundation for ongoing financial growth based on trusting and helpful relationships.
Where Do You Stand?
If you had to prioritize one over the other, would you rather have an online customer community strategy or Black Friday discount campaigns? Add your thoughts and experiences in the comments below.