Article

Charlie Casey
Charlie Casey 14 October 2021

Building Customer Lifetime Value for Black Friday 2021 and Beyond

Over the past couple of years there has been a great deal for ecommerce retailers to feel unsure about. From pandemics to privacy updates, the goalposts haven’t remained in the same place for long. However, amidst all these changes, there is one thing you can be absolutely sure of - the countdown for Black Friday Cyber Monday (BFCM) is on!

The event has become one of the most divisive topics in UK retailing. Whilst once a feel-good Friday of deals, our research found that the now month-long event is one that customers no longer trust. Traditionally a golden opportunity to acquire new shoppers, BFCM is in danger of leaving existing customers feeling undervalued, underappreciated and deprioritised.

Whilst some see the sale as the moment that they can fly the flag for their brand, the excessive discounting and lack of customer loyalty can have a lasting negative impact. Retailers will be left with narrow profit margins and could harm the customer relationships they’ve built with both new and existing customers. 

On the other hand, other brands take a far more measured approach to the event, leveraging extensive sales growth opportunities. The fact that the pressure to discount is unrelenting means that retailers are torn, but they shouldn’t be. Black Friday is a great opportunity to build customer lifetime value, by offering experiences as well as discounts. 

There’s an opportunity to do things differently and not just to meet, but to beat customer expectations and to form long-term emotional connections with shoppers. Although once viewed as an opportunity to simply acquire new customers, it’s a pivotal time of the year to protect your profit margins and build the lifetime value of your existing customers.

But how do consumers really feel about Black Friday and Cyber Monday deals?

Disappointment Reigns Amongst UK Consumers 

Our research found that over half (57 percent) of consumers feel that BFCM discounts are never as good as they expect them to be. 58 percent reported that products they want aren’t usually discounted making the retail event less relevant to them. A significant number (58 percent) also felt that BFCM discounts pressure them into making purchases they wouldn’t have otherwise made. 

Negativity Towards Brands Dishing out BFCM Discounts

Even more concerning than shopper sentiment towards discounts, were the feelings targeted at brands peddling these reductions.

54 percent of UK consumers expect brands to push lower quality products during BFCM. Meanwhile, 53 percent said that the deals and offers provided during this period impacted their trust in brands. Just over half (56 percent) of the consumers surveyed felt that brands care more about selling products over supporting causes or living their values during BFCM, disappointing given the rise in conscious consumerism.

Furthermore, 55 percent felt that brands focus on winning new customers over making their existing customers feel special during BFCM. 

Poor Preparation Cited by Consumers as Key Issue

Despite the months of planning that go into BFCM preparation and strategy, consumers still don’t feel brands have got it right. 54 percent feel that brands don’t do enough to prepare for the rush of orders they’ll receive during BFCM. 50 percent believe that they don’t communicate enough post-BFCM purchase with them.

On the flip side, 54 percent feel that brands send too many promotional messages in the run up and during the BFCM period. 

Make Black Friday Shopping Enjoyable Again

Rather than being seen as another brand with blanket discounts, you should strive to be the brand that delivers great experiences that shoppers won’t expect. This will help you kickstart long-term relationships that result in repeat purchases, higher average order values and a greater degree of advocacy. 

Use Alternative Incentives to Build Customer Lifetime Value

This year, rather than purely eating into your profit margins, balance the impact of BFCM discounts by using alternative incentives to build customer lifetime value and create emotional connections.

Our research suggests that incentives, such as free or discounted shipping (78 percent), loyalty points (73 percent) or early access to new products (65 percent), can be just as effective as discounts in encouraging customers who have abandoned their carts to return.

This will result in you winning back at-risk customers who haven’t visited the site for a while, and encouraging customers to make a commitment in the form of either starting a subscription or joining a loyalty program. 

To Wrap Things Up...

Discounts undoubtedly have a place in your strategy. They deliver the feel good factor consumers are looking for and get customers through the door – particularly at times like BFCM. However, they also leave you on the back foot, with customers who are less likely to return and make future purchases at full price, or take the time to build a bond with your brand. 

This BFCM, the winners will be the brands who look to the long-term: strategically deploying alternative incentives alongside discounts to drive sales and demonstrate that customers are valued at a time when they’ve told us they typically feel otherwise.

That might be offering their most valuable customer cohorts early access to sales and new products or offering free or discounted delivery to those who have abandoned their carts. Alternatively, why not encourage existing customers to start a subscription with additional loyalty points or by letting them contribute to a cause they care about.

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