Unless you have been living under a rock, it has been impossible to avoid the Black Friday and Cyber Monday hysteria in the media. Based around the shopping habits of Turkey filled Americans post Thanksgiving it has over the last decade filtered its way over to the UK.
This started as a consumer focused frenzy but this year it was noticeable that even on a local level businesses that sell to other businesses (B2B) were trying to get in on the act.
Discounting their services when selling business to business is something we encourage our clients to think carefully about before implementing. The goal is to create urgency and stimulate demand and get customers to “buy it now”.
This holiday period we have seen a number of B2B operators do this successfully, however generally this is because they operate on this constant discounting model most of the year round or they have a recurring revenue that comes from this limited time discount.
The Discounting Cycle
Think about it, if your client knows you are going to discount then they may actually wait until your next sale before buying. This makes your business dependent on small time windows putting pressure on fulfilment and impacting your cashflow balance.
There may also be a negative reaction from customers who bought outside of the sale window, that they are being punished for buying your product on their own terms.
Finally we must also consider the effect this has in the marketplace and how it can devalue the core offer. The classic example of this is the consumer furniture industry where there seems to be a permanent sale, this is because they have fallen into a cycle of constant discounting to the point where buying at “full price” is unlikely to be acceptable to the majority of customers.
From this perspective If you are willing to charge less for your product does it now become this price in the minds of your customer permanently? When negotiating with suppliers this is something we have raised with them and successfully got the sale price, long after the window for it had expired.
After all why would we pay more for something we know a business is prepared to sell for less?
Should You Offer Black Friday/Cyber Monday Style Discounts
Successful discount pricing strategies have launched businesses, however before embarking down this road a business should consider if it is right for their business.
The answer to this question is dependent on the individual business, who their target customer is and how they are likely to react to the discount. Most importantly, how this will affect the long term prospects of the business.