Guest post by B. Michelle Pippin
The enthusiastic revolt of independent business owners against big box retailers’ Black Friday discounts began in 2010 with the creation of Small Business Saturday. Their rallying cry was for shoppers to support small, local businesses with their holiday budget during one of the biggest shopping weekends of the year. And — at first glance — it worked. The question lingering in the minds of business owners, however, is this:
In a buying landscape littered with daily deal sites such as Groupon and Living Social, and soon — another Black Friday — we know that deep discounts move product. But at what cost?
Last year, American consumers committed to “shopping small” on Small Business Saturday collectively brought in a total of $5.5 billion worth of sales. The National Federation of Independent Business (NFIB) reported that the average small business saw a sales increase of about 20% – 25%. This is most certainly cause for celebration, and perhaps even a heartfelt thank you card to the team at AMEX for initiating this small business tradition.
But the net loss associated with buying customers at a deep discount — whether through a daily deal site, an attempt to compete with big box stores for a one-day Black Friday sale, or their own Small Business Saturday promotion — is sometimes too much to bear. The once-elated business owners looking over their sales for the day can quickly become deflated when they see the net gain or loss after the flurry of post-sale activity. Fortunately, for savvy business owners, there can be a very handsome silver lining to these crowds of deal-seeking consumers. They just have to implement the following strategies:
First, planning is essential. My team contacted no less than 50 independent businesses in Hampton Roads, Virginia via phone and email and reached out to countless businesses through social media to find creative Black Friday deals to share with Inside Business readers. Only two businesses responded. One of these is Timorah Beals of Yorktown, who will be offering an incredible photography package for discerning Hampton Roads families wanting unique holiday pictures.
Good for Timorah! But what about all of those other businesses? The ones who responded with an “I hadn’t thought that far ahead” comment or something similar?
The truth is, price slashing is almost always a knee jerk response for business owners. When they see competitors slashing prices, they feel pressured to do the same, “just to compete.” They notice a decline in sales, and they slash prices. Getting nervous about meeting next month’s payroll leads to a call to one of those daily deal sites for another surge of income.
But, business success isn’t about sales as much as it is about profit. I’ve long joked that I’m unwilling to be busy AND broke. I can be broke while sitting on a beach somewhere. But while I’m running a business, I’m going to insist on being profitable. This approach doesn’t forego the option of deep discounts, but it does demand business owners go in with a plan. So, know what you’ll offer, who you’ll offer it to, and how you’ll get the word out about your offer.
Second, decide what you want these holiday-inspired deal seekers to do next. In other words, give them a reason to return to your establishment; preferably one not based on another profit-robbing sale. Consider a creative event designed to get your ideal clients coming back. A restaurant could teach a “roll your own sushi” class while a veterinarian hosts a class on doggy massage and a cosmetic surgeon offers a Wrinkles In Winter event. Many of these deal seekers don’t return simply because you’ve not given them a blatant reason to do so. Invite them to return.
Third, collect their contact information. The hearts and minds of your consumers on a one-day, deal-fueled shopping trip are dominated by two things: their budget and their shopping list. Frankly, these two opponents are too formidable to compete with successfully. So, let them shop and invite them to what’s coming up next. But, get their contact information so you can remind them to visit you again.
Quick note: Don’t be remiss in pre-scheduling and orchestrating this follow up sequence. For one day a year, you’ll be visited by enough consumers to keep your business humming all year long — if you follow up with them relationally, creatively, authentically and strategically. Don’t go about the follow-up process in a manner than can best be described as willy-nilly. Give it some thought. Your profit will be built upon it.
Finally, roll out the red carpet for your holiday-inspired deal seekers. Don’t treat them as if they’re paying half. Treat them as if they are paying double. Because the truth is this: In a deal-driven economy, where almost everyone is competing on price, the business that stands out in service will be remembered as the one worthy of future visits.
Three final words of wisdom to actively create the silver lining behind Black Friday sales:
1. This silver lining will be created — by you. It will not simply be found by lucky accident.
2. If you’ve tried daily deals before and found them to be huge profit robbers, you’ve not followed these four steps. Try it again, but this time more deliberately.
3. If you have staff, let them know what your plan is for these Small Business Saturday and Black Friday shoppers. Let them know what you expect, so that your future customers are treated like gold and celebrated, rather than grubby, deal-seeking cheapskates and tolerated. A lot of this, Mr. and Mrs. Business Owner will be based on how you plan for and talk about your own special offers.
B. Michelle Pippin is a passionate small business advocate and strategist based in Hampton Roads, Virginia. Her website is www.bmichellepippin.com.