Congratulations - you’ve made it through your busiest weekend of the year. Marketing plays have been executed, deals have been snapped up by hungry buyers, and order fulfilment is now dialling down.
But the bad news is, the hard work is only beginning. You’ve just won some of your least valuable customers ever. New buyers have been introduced to your brand, but at a cost to your margin - and how many are actually coming back?
For large established players, the Black Friday weekend is a calculated risk designed to boost short-term revenue towards the end of the year. Walmart has the scale to offer crazy 50% discounts to high ticket items, and understand you won’t be returning to buy the same thing at full price next week.
For smaller brands, however, the numbers are a little different. Lesser scale and tighter margins means it might only make commercial sense to offer 20-30% discounts on product. And with retention and loyalty often defining which young DTC players live and die, a short term revenue spike isn’t as beneficial as it can be for larger businesses.
Brands go hard on acquisition during Black Friday… 💵
Yet for almost all brands, regardless of size, acquisition is still the name of the Black Friday game. Throughout November each year, businesses spend 2x more on marketing than they do in a typical month. What’s more, 72% of small brands say they plough the majority of their holiday ad spend into bringing in new customers.
As a result of this spending spree, marketing is not cheap - auction-based ad platforms like Adwords, Google Shopping and Amazon PPC thrive off the competitive environment created by Black Friday. On the day itself, it is 2.6x more expensive to show a Facebook ad to 1,000 people than at any other time of year.
Why then, do brands spend big when it's most expensive? Well, because it pays off - at least in the short-term. On average, merchant revenue on Black Friday increases 348% compared to a typical day in October. ROI on marketing spend jumps by as much as 55%, whilst the average cost-per-acquisition reduces by up to 16%.
...But forget about retention 🤦♀️
These are all great sounding numbers - particularly if you are a large company seeking to hit year-end targets or satisfy stakeholder expectations. However, the shiny stats also obscure the limited value of these newly acquired customers long-term. For 64% of brands, buyers won during the Black Friday weekend have a lower lifetime value (LTV) than those engaged at any other time of year.
Smaller eCom vendors on limited marketing budgets, must do more to maximise the LTV of customers won during Black Friday. Whilst acquisition is the key to starting your car, retention is the fuel to keep it running.
This isn’t just a convenient sounding metaphor - it’s a commercial reality. On average, it is 6-7x more expensive to win a new customer than it is to keep an existing one, and the cost of customer acquisition has increased 50% in the last 5 years. Whilst earning new business is clearly still important, smart DTC brands are also placing an emphasis on retaining it after the Black Friday dust has settled.
What does post Black Friday retention look like in practical terms? 🤷♂️
In an ideal world, you’d retain every customer who comes to your brand this weekend. In reality, during an event characterised by opportunistic bargain hunting, that isn’t going to happen. What you can do is focus on keeping as many of them as possible, in the knowledge that boosting retention even slightly drives disproportionate revenue benefits.
The Harvard Business Review suggests a 5% rise in customer retention could increase profitability by up to 75% over the long-term. Gartner’s research also indicates that 80% of your company’s future revenue will come from just 20% of your existing customers.
Ergo, it is worth dialling down some of that hefty Black Friday acquisition spend in favour of a long-termist approach centred around retention.
Transform post Black Friday retention via SMS 📱
To turn a customer’s first interaction with your brand into many, you must make their initial experience count. Whilst 93% of consumers are likely to buy again from companies who’ve delivered a positive experience, 33% will churn after just one instance of poor service.
"You've got to really understand the lifetime value of a customer: if they're a low-value customer, how do you turn them into a high-value customer? You don't just stop after you've sold them; once you've sold them those sneakers, did you follow up? Did you make sure they fit? You're following up with the whole of your brand, and you then build a relationship around a high performance experience overall that opens the door to the second conversation.” Simon Mulcahy, Chief Innovation Officer at Salesforce
This goes way beyond offering a juicy deal on a great product. A promo will draw in opportunistic buyers, but how you make them feel will determine whether they stay or not. This means your service delivery around your product must be timely, convenient, communicative and above all, memorable.
And the most effective, innovative way to achieve that is by using SMS. Smart DTC brands handling consumer interactions through SMS are turning Black Friday acquisitions into long-term retention through one end-to-end text-based channel. A typical customer journey might look something like this:
A prospect receives a promo offer via SMS, replies with a pre-order product question and, after receiving a reply from the brand, decides to make a purchase through a one-click interface. So far so acquisition.
This new customer is then sent post-purchase delivery information and brand engagement collateral, plus AI-powered reordering prompts and loyalty incentives further down the line, thus facilitating long-term retention within one frictionless channel.
Each customer would be treated like the individual they are, on a conversational, one-to-one basis via a convenient platform which they’re already carrying around in their pockets.
What’s more, the vast majority of consumers have never interacted with a brand in this way before. 65% of eCommerce vendors have no plans to implement an SMS strategy of any kind. This means that by doing so, your brand will not only deliver an exceptional consumer experience, it’ll be one that most of your peers can’t compete with and your first-time customers will truly remember.
In doing so, you will break the feast and famine cycle which characterises the Black Friday weekend for many small businesses, in favour of sustainable growth driven by long-term retention.
To find out how brands are using SMS to transform their LTV post Black Friday, take a look at what we’ve been building.
You can also check out some great (and not so great) examples of how eCommerce brands have incorporated SMS into their marketing strategy here.