Black Friday, Cyber Monday, Groupon, Are Sales & Discounting The Only Way For Small Businesses To Get Ahead?

The question I'm most often asked when I speak about my book How To Sell When Nobody's Buying is how important are sales and discounting (like Groupon) in growing my small business?

The answer of course is not simple but there are some key ideas thatyou should consider.

Black Friday sales were up 9% over last year according to Comscore and online purchasing on Thanksgiving day was up a whopping 28%. There is a definite move to shopping online and this may be one ofthe most important thoughts to come out of all of this data. You must focus on selling your products online, not just from your website but also through other distribution sites like Amazon.com and affiliate programs if you are the manufacturer of the items yousell. If you are a reseller then you must focus on creating an inviting website that is well designed and easy to find in the search engines. Buyers are spending less time in stores and more time online small businesses must be sure they are properly prepared to get their part. The writing is on the wall, if people can't find you online and buy from you during their search there is a high likelihood that they will buy from a competitor.

So, what about Black Friday or Cyber Monday sales and discounting through sites like Groupon or Living Social? If you are not familiar with Groupon or LivingSocial click the links and sign up to see and take advantage of what people are discounting in your city. Living Social even gives you $5 in free cash to use for your first purchase when you click the link and sign up. It is important as a small business that you review and understand how these services work. But in a nutshell, a certain number of the deals need to be purchased for the deal to be active and for you to get the discount. So, in order to be sure to get the discount you are encouraged to send the deal to as many of your friends and family as possible so they can take advantage too.

There is no question that in this economy people are moved by sales and discounts. Sales done properly are definitely OK, but to have a sale you have to ask yourself the question, what do I hope to accomplish by having this sale? Is it to blow out inventory? Is it to lead with a product where you can upsell or where add on or impulse purchases at full price will help offset the discount? Are you doing it to bring more people into the store so you can increase the customer base you can market to directly (and are you collecting names, emails, addresses and phone numbers when they come in)?

How much will it cost to have the sale? In the case of Groupon or LivimgSocial it will cost you 50% of the sale price for them to expose you to their network in your town. So the real cost of the discount is 75% off of retail which may work depending on the lifetime value of your customer and what else you can sell them when you get them in the door. It is also very important that you have a systematic upsell process once you get them into your establishment. If you don't put them through a sales process, conversion to regular consumer is dismally low. And, you must get them into your marketing funnel by gathering their name, address, email and telephone number so you can market to them on an ongoing basis. But before you do any sale or coupon, ask yourself, if people only come in and buy the sale item and buy nothing else, is this still a good deal for me? People who are conditioned to buy on sale often only buy things on sale or negotiate heavily. 

Black Friday and Cyber Monday sales take advantage of mass consumer buying behavior and massive attention from national and local media talking about the sales companies are doing. A lot of customer pre-persuasion is done for you. Now it is up to you to create urgency using persuasion principles like scarcity (limiting time or quantities available) or reciprocation (giving a gift for buying a product). These sales work because people are on auto-pilot, they are ready to buy and they'll buy not only what is on sale but other things in the store because they are already there. This is where small businesses must have sales staff on hand to up sell and cross sell those people who are there. Another key is to be sure that you deliver an amazing experience when people shop with you. Experience is everything and often the first thing to go in a crust of customers is the amazing experience you normally deliver, don't let it go, focus on experience first and last.

When done properly sales can have a powerful impact on the bottom line both in terms of new dollars created but also in new customers created. Just be careful, don't over do it. A sale every week isn't a sale, it simply conditions people to buy your products when they are less expensive. Reward loyalty. Have a pre-Black Friday sale for your best customers, offer them an opportunity to come in Thanksgiving evening to get a very limited quantity taste of what you'll be offering on Black Friday. Only invite customers who've purchased something from you in the past, limit the quantity and the time, if they miss it they can come to Black Friday or Cyber Monday. 

It is very tempting to discount a lot and often in this economy, but don't over do it. Conditioning people to buy from you because of sale prices will only lead to to the expectation that you'll always have sale prices, even when the economy comes back around.

Comments

[Lisa Rothstein]

I love Groupon, because it introduces me to establishments, experiences and activities I would not have tried otherwise. I do think it is true that once you've enjoyed something at a discount you're reluctant to pay full price...however, I have gone back to a few places I've tried using Groupon, and I have definitely recommended them to others. So all in all, if it gets new customers in the door, I think it's probably a good strategy, especially for businesses with an off-the-beaten-track location.

[Denise Wakeman]

I'm a bit of a Groupon addict and I occasionally find a deal I want on Living Social. I always ask the merchant how the promotion is going for them and most are positive about the experience. I've only encountered one merchant who was angry and felt mislead by the Groupon sales person. I think they did not have the right offer for their specific business. That being said, I cannot think of one business that has asked me for my contact info so they can follow up with me. I routinely spend more than the amount of the offer (since I buy mostly restaurant deals) but I'm always shocked that no one ever follows up. That is a major missed opportunity and a reason why these promos don't work for some businesses. Small local businesses have a lot to learn about online marketing and follow up systems. Great post, Dave, thank you!

[Rob Northrup]

Very timely post, Dave!

I have used Groupon a few times and liked it. The one I use most is Restaraunt.com and they sell $25 off a $35-50 meal certificates for $2-3 during their frequent discount days. These are basically half off and there are some good places in most cities.

You are so right about the need to get the contact info to follow up and sell later.

Rob

[CAROL JONES]

DAVID,

Greetings from rural Australia.

I was a shopper before I became an owner of a small business.

Certain stores trained me to never buy at full price because a sale of some sort was always in progress or about to be in progress.

Other stores never had a sale and if I wanted any of their products I had to pay full price.

And I react accordingly in each store to this day. I wait for sales in some stores and know others will never have a sale.

I've carried this over to my business.

I never put anything on sale. Never have specials. And reluctantly put my prices up when necessary. But never reduce my prices. My last price rise was in 2006. And I put some products up by $1 this year.

My profit margins are modest but my signature product, the Fitz Like A Glove Ironing Board Cover, is amongst the most expensive covers in the world.

And one of the most boring products on earth.

But if you have to iron, discerning ironers simply want the best cover that will make their ironing easier.

It solves a problem.

But it's not for everyone.

My market is very small, very loyal and very, very niche. More than 200,000 men and women around the world iron on my cover. But hundreds of millions of people iron every day.

Yet I grow my worldwide business by a significant % every year. My growth rate beats every retailer in Australia.

It's achieved mostly by word of mouth. And with the help of Google. I'm in the top third of every Google page for my search terms.

One reason is because I have products designed by my partner, who is an architect, so they have a point of difference.

And we have a great story to tell about building a world wide business from broke from our remote property in rural Australia. We've learned to tell this story at every opportunity because people love to hear it.

But more so because my world wide customers consider me to be second to none in product quality and customer service. Including to Amazon and Zappos.

My customers receive a double whammy. A brilliant product that does what it says it will do. And loving customer service.

I simply love my customers and they know I'll walk over broken glass to make them happy. And they reward me with the same sentiment.

I don't have a dream run with customers. The odd ones are hard to please. But by walking over broken glass to make them happy, I remove the reason for their displeasure.

Not everyone can run their business like I do. But it works for me.

Sales are a lazy way to do business. There's a smarter and more rewarding way to grow. But it takes energy, desire and a firm commitment to defy the common denominator and travel a different road.

I always love your thought provoking posts. I also use your book on a regular basis as a model to grow my business.

Best wishes and take care,

Carol

Carol Jones
Director
Interface Pty Ltd
Designers of The Fitz Like A Glove™ Ironing Board Cover
http://www.InterfaceAustralia.com
http://bit.ly/TheIroningDiva
Visit my fundraising website at:
http://www.SimpleSolutionsForDifficultProblems.com
Ready my story "How I Became The Ironing Board Cover Lady" at
http://bit.ly/ThisIsMyStory

[ayantheworld]

I've often thought the only way to get customers is through discounts. This is a good reminder of how the role of discounts is to get people in the door. After that, it's all about delivering on the promise.

Great post!

[cheap calls]

Great article and good question to ask. there is indeed a significant role when we wanted to sell our products. We really have to focus to the market where we are selling them. Having no consumers at all means that what is the use of selling them. This is maybe hypothetical but nevertheless a very informative post. More power and keep it up.

[Sherman Unkefer]

Having a market strategy like the ones used by Living Social will surely attract customers but it should be put in mind that Living Social have to take good care of their relationship with their clients because even if they would give 100 dollars to their clients but the clients will not return, they would still end up as the losers in the game.:)

[Regan Marye]

My friends in Jacksonville are very much into online marketing. They use social sites like Facebook to sell their products. As I see it is, it works very well for the starters and also for a company to reach wider scope of the market. SEO does help to increase your rank but you'd have to start first with branding and social media is the best way to boost it.

[Glenn Evans]

Sales and discounts draw customers not just closer to your store, but also building loyalty. But now, you cannot only see those tags in stores or malls, now you can also see them on online businesses which is more convenient to the market. Advanced technology made our life easier, that even buying can be done through our fingertips. And marketing can spread and reach the world market in less time.

[Macey Prange]

It's amazing how online businesses are made. Since it made the life of business owners easier, somehow. Back in the old days, the business market is a battlefield for every business owners. I have to agree with Glenn, it's really amazing how technology has advanced up to this point.

[new homeowner lists]

It is also very important that you have a systematic upsell process once you get them into your establishment. If you don't put them through a sales process, conversion to regular consumer is dismally low.