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Chapter 1: What promotional strategies are effective on Cyber Monday?
Breakfast Business with Enterprise Ireland on Newstalk.
with Susan Hayes-Cullerton in for Joe Lynham today. Well, we had Singles Day in Asia, Black Friday all over the world last Friday. We had Small Business Saturday in Mayo and today is Cyber Monday. It's a day for businesses to offer all sorts of sales.
Chapter 2: How do discounts influence customer behavior and emotions?
But the question is, how should business leaders know what kinds of promotions work best and what are the pitfalls that they should be hoping to avoid? So with me now to take us through all of this is Jenny Miller, CEO of Untapped Pricing. Good morning, Jenny. Good morning.
Well, Jenny, I was looking at the Black Friday sales data and Salesforce found that online Black Friday US sales grew 3% to $18 billion. Shopify's offline sales data collected from its point of sale channel saw 26% growth year over year in the US. How are customers reacting behaviourally to price promotions?
Well, I think discounts don't just change the price. They change how we feel. So when we spot a good deal, our brains give us that little dopamine hit and we think we're getting something for less than it should cost.
Chapter 3: What are the risks of extending promotional periods like Black Friday?
And perhaps a bit of FOMO as well. Fear of missing out.
Exactly that. So Black Friday in particular turns shopping into a game. So you've got those countdown clocks, limited stock, early access codes. And that all plays into our fear of missing out and I think nudges us to act quickly, especially when everyone's talking about those bargains and we don't want to be the only one paying the full price later.
But also, I must ask, Black Friday used to be a Friday and now I've certainly seen things to do with Black Friday deals being offered long before. So some might argue that if the deals go on for long, they kind of lose their urgency and appeal. What do you think?
Yeah, I think the Black Friday period has extended and extended as retailers are trying to reshape what the promotional period means for them.
Chapter 4: How do promotions affect long-term customer value perceptions?
And how can promotions then shape customer expectations and particularly value perceptions long term?
Yeah, so I think promotions don't just move when we buy. They can reshape our sense of what things are worth. So let's say we see our favorite trainers at 75% off in November, then paying full price for them in February is suddenly going to feel like you're being wildly overcharged and we start to resent paying that much.
So I think if brands discount too regularly or for extended periods of time, especially on products that were selling just fine, customers can start thinking the original price is never fair. And that's when you start to get some long-term damage to brand trust and value perception.
But also too, Jenny, since we have as much data and comparison websites, et cetera, at our fingertips today, Is there a sense then that people can also feel, well, is this really 75% off? I mean, if I looked at this three months ago, is it really 60% off? Do you think that retailers, through experiences like Black Friday, are they positive or negative over that brand trust sort of experience?
Yeah, so I think some discounts are absolutely as they seem, but others sometimes they aren't. So retailers can make a discount look bigger sometimes, by briefly inflating the original price or using up to X percent of savings. So the deepest discounts apply to very few items. But my advice is quite simple.
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Chapter 5: What common marketing mistakes should businesses avoid during sales?
Check the price history, look across retailers and really focus on the products that you'd buy anyway. So you can avoid those hype traps.
And that's very useful advice from a consumer perspective. But from a business perspective, what do they need to do or not to do? What should they be avoiding either in terms of marketing mistakes?
So there are a few pitfalls that we see every year. So I'd say the biggest one is training customers to wait for a deal. So if you go too big every November, people will delay buying and only show up when everything's on sale. So either you attract discount only shoppers who won't be back until the next sale or Black Friday ends up shifting the time of purchases.
So instead of increasing total revenue during the Christmas season, it just pulled forward that purchasing at a discounted price and lower margins.
Well, it's interesting you say that because a couple of weeks ago I went into, and I will keep this nameless, a beauty brand provider because I wanted to get a specific thing done. And they said to me, the person who was there, the receptionist at the place, she said to me, well, you know, the deals will be a lot better in Black Friday. And I was going in ready to buy at that stage.
So then I promptly walked out and waited indeed for Black Friday. Now, what advice would you give to that person?
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Chapter 6: How can retailers build trust through loyalty schemes?
To that type of sales training technique, because fundamentally it shifted the consumption, but also, of course, created the space then for me to go to a competitor.
Did. Yeah, I think that's another classic mistake is discounting the wrong products. So slashing prices on items that would have sold anyway. And I think that destroys margin on the products with the healthiest demand. And just as you did, you may then consider delaying the purchase or going elsewhere. So as a result, I think a retailer's revenue headlines can look fantastic for Black Friday.
But once you strip out those discounts and returns, the profit story looks a lot less exciting.
And that's a very, very good point because we tend to focus on what were the sales. In fact, even the data that I presented at the beginning of our conversation didn't investigate into the profitability of it. Now, I did mention Singles Day earlier on as well in our conversation. It's the biggest retail day in the year, far outstripping Black Friday.
It has its origins in Asia and it certainly puts the emphasis on treating oneself rather than on snapping up deals. So what pricing or other techniques do you see typically at this time of year?
Quite a mix.
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Chapter 7: What practical advice should consumers consider during sales events?
So I think the big headline offers are still there, say 50% off or 75% off key products. So very deep discounts that are quite easy to shout about and they drive traffic quickly. Some retailers lean more on bundles or multi-buy offers. So you'll buy one, get the second half price because that's quite good at lifting basket size. without slashing the margin across the board.
And I think loyalty schemes are also taking centre stage. So supermarkets, beauty brands, sports retailers are offering the best deals to members through apps or early access windows. And that's quite a smart move because it turns Black Friday into a relationship building moment.
Well, from a relationship building point of view, do loyalty schemes fundamentally reshape the asymmetric nature of the relationship because then the company knows an awful lot more about the customer than the other way around?
They can do. They can do. I think if retailers are clear on why they're running a promotion... That might be to sort of bring new customers into that loyalty scheme or reward existing customers or shift specific stock. Then, you know, if they have data on and permission to contact a particular individual, then those moments to influence their behaviour and build recognition of that brand extend.
Sorry, Jenny, we're right up against time there. It's been really interesting to talk to you and some Fantastic practical information there to take away. Thank you very much indeed for joining me today. That is Jenny Miller, CEO of Untapped Pricing.
And still to come on Breakfast Business this morning, we hear from UCD Smurfit School following news they remain Ireland's top-ranked European business school.
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