Beyond Discounts: The Future of Black Friday

0:00Yeah, I thought it would be fun just to share some of the things that we liked, some things that we saw that maybe was different. because it seems like every year we move further and further away from what Black Friday was. And for anybody who's under the age of 30, you don't remember what Black Friday was. Just to give you some historical context, what Black Friday was.

0:33Hey, everybody. Welcome to another episode of Business Lunch. We are recording this on Cyber Monday. immediately after the Thanksgiving holiday here in the United States. Ryan, I know you had quite an adventure. I'll ask how you're doing cautiously. Oh, I'm doing so great. So great. Love, love, love. I will tell you this. I think that Thanksgiving is the single most overrated holiday. I've always felt that way. It just, but yeah, we can leave it at that. How about you? How about you? I feel like Columbus Day is the most overrated. Anyway, my, my, or maybe it's, I don't know. There's so many great holidays.

1:11I have this calendar that has all the holidays on it. Like, you know, to give you ideas of promotions and things to talk about and stuff. And some of them are just, just hilarious. I mean, like the major ones, you know, like of the, of the real ones that like, you know, you do things. Right. You're like forced to hang out with people you don't normally want to hang out with. And all you do is kind of eat food and then there's a lot to clean up. and then you're like, can we go now? I don't know. Well, today, we know it's Cyber Monday, which of course is not a holiday in itself. It's an event. But I'll tell you what, I just checked.

1:46And today is National Mutt Day. National Mutt Day. Yeah. So for all of those illegitimately spawned pets that are out there, there you go. We celebrate and salute you. That said, speaking of Cyber Monday, you had a great idea, which was for us to just kind of bat back and forth Black Friday stuff since it just happened. Tell me what you saw and what you're thinking. Yeah, I thought it would be fun just to share some of the things that we saw that we liked, some things that we saw that maybe was different. Because it seems like every year we move further and further away from what Black Friday was.

2:29And for anybody who's under the age of 30, you don't remember what Black Friday was. Just to give you some historical context, what Black Friday was is, you know, people would wake up early. I mean, you'd wake up at like 5 o 'clock in the morning on Friday, the Friday after Thanksgiving here in the States. and you'd stand in line out in front of the Walmart or the Kmart or the Sears or wherever would have the best deals. And so that you could be there right when they opened those doors and you were throwing elbows, you were punching people in the face so that you could get that, you know, flat screen TV or whatever the hot item was at the best possible deal.

3:14and you could walk out with it. It just, that killer bargain. Black Friday was what started off the Christmas, the holiday buying season. And this was the reason it's called Black Friday is this is when retailers got back into the black, got into profitability. And so that's where it all began was this retail in-person shopping experience. And there would always be, it was fun to go and watch the news Friday evening because it was always just people punching other people so they could get that laptop or that flat screen TV. I feel like we are now so far away from that. And this year in particular, what I noticed more than I've noticed any other year were companies rejecting the traditional Black Friday model.

4:04Companies overtly saying it's Black Friday and we're not doing a Black Friday sale and doing something completely different from Black Friday. Did you notice that at all? Or was this just my inbox? I did not. But I noticed that across the board, both in the email lists that I'm on and retail out there in general that I see, that the deals are not very good. That generally across the board, the deals that used to be amazing are meh, like not much better than you could get any other time. Now, my wife did tell me yesterday, cause I was telling her that she said, Oh no, no, no, no, the deals were good.

4:52And I did see a spike in the credit card over the weekend, a fairly, you know, significant spike. Um, but, um, she found all kinds of stuff when she was looking for, she was doing Christmas shopping for other people. And, um, so, so two different stories there. But that's my experience and my son's experience, like across the things that I'm buying, you know, like, you know, typical guy stuff, you know, from electronics and gadgets and games and, you know, hardware-y kinds of things. I didn't really see anything, even computers and stuff. I didn't see anything that was like, man, that's amazing.

5:28Gotta have it. She found that kind of stuff with home goods, like, you know, glasses and, you know, kitchen stuff and things around the house, you know, some appliances, knives and things like that that she was buying for our kids and stuff. But yeah, that was our experience. Yeah. So what we're seeing is, and this has been happening for a while, Black Friday getting stretched out further and further. So it's starting earlier. It's getting stretched out longer. The deals aren't as good because I kind of felt the same way. I mean, retailers were still doing the typical Black Friday type thing. But it seemed like the trend was non-retail companies.

6:14So a lot of B2B service-based companies, they had kind of gotten into the Black Friday game as well. This year, it seemed like more and more non-traditional retailers, they were specifically rejecting the Black Friday type game. And what that told me is that maybe that wasn't as effective for them last year as perhaps it had been in the past. So perhaps retailers, it still is as effective. But I know for some of our brands, I know, for example, with Epic, we opted to do more of an event-based. Hey, we're not doing a Black Friday sale this year. Instead, we're going to be doing this free event.

6:57And I saw a lot of brands across the board that are in more of the service based areas in more B2B do that this year. Yeah, I think there's a couple things that drive that. I agree with you on that. And I saw feedback across several mastermind groups that I'm part of and that we're part of, of people saying, meh, you know, it wasn't, it wasn't very strong, not, not very, not a lot of stuff happened. And I know there, a lot of those people are putting on discounts, but I think the thing is, is that, that people who own businesses realized that ultimately, if you discount your services, you're training people not to buy until those events when you discount your services.

7:43So I've always hated discounting. I like, here's some bonuses, you know, or here's some extensions or enhancements or something like that. But, but I think it's, it's just not a good business practice to teach people not to buy your stuff unless there's a big event. Cause you could lose all of August, September, and October with people waiting for this November event. And I think that did start to happen. And so that's also why I think you're seeing a move to Cyber November, where it's the whole month of November. We've extended from Black Friday forward to Small Business Saturday to Cyber Monday, and then back to Thanksgiving sales, then pre-Thanksgiving sale.

8:25And now it's like we're starting a week early. And I saw some that started at the end of October. And I thought that was a big deal. But I think that's part of it. It's just not good to make people wait. Yeah, I saw somebody I know, I don't want to reveal who it was because I didn't get his permission, but he was posting all over. It's a brand that some people would know, but more of an influencer type brand. He was posting all of his social accounts. you know, I'm not doing a Black Friday sale this year. Instead, I'm just going to give away, you know, this, this thing that's worked really well for me, you know, if you want it here, you know, here it is.

9:12And, and in some cases he was telling people to go to a page where they could download it. In some cases he was saying, you know, drop some keyword in there and they were, you know, responding to send, to send it out. And, and I asked him, I hit him up. I was he generated over 1 ,700 new leads from this campaign. And I asked him, what do you think that's going to result in, in terms of sales? And he said that should result in around$150 ,000 in revenue generated from those leads, if they perform anywhere close to. And he had actually discounted what he would normally do. He's anticipating them to not perform as well as other leads were.

9:57He's just like, I don't know, maybe because they're coming in for a totally free thing during Black Friday. I'm assuming they're not going to perform as well, but typically in the past when he's done a quote unquote Black Friday sale, he might get 50 ,000. So even if it performs less well, triple what it would normally do. And he generated 1 ,700 new leads coming through and generated a tremendous amount of goodwill. And the point that he made, I asked him, I was like, why did you decide to do this? And he said, deals, his quote, and I thought this was really good. He said, deals are a red ocean.

10:33Giving something away totally for free is a blue ocean. And I just thought that was such a really, really, really good point. And I think, you know, it kind of brought up this question in my mind. And I think that this is a good question for all business owners to ask. And I'm calling it the zigzag question. When is it appropriate to follow the herd? Like there are times in business where you don't want to be creative at all. And there are times in business where you're like, I should absolutely just do what everybody else is doing. And I think that those times are when you don't have a competitive advantage or when the market is not going to value what you're doing.

11:16Right. So doing something differently is not going to be valued by the market. But there are times when it makes sense to zig when everybody else is zagging. Right. And I do think that it is important to ask, is this one of those times? And so it kind of that's a question now that I want to start asking more often, like, when does it make sense to zig when everybody else is zagging? And obviously, for him, he felt like Black Friday was a good opportunity to zig when everybody else was zagging. Yeah, it's interesting. I think, I mean, we did a, so he's basically saying that's going to come out at roughly$100 a lead.

11:53He's thinking out of those 1 ,700 leads. And if he does a third of that, then he's still about where he would have been anyway. So, you know, so that works out well. And I look at, we did a live Zoom call that was free, that had a ton of value. And we broke down a bunch of, you know, deals and things like that. And then made an offer. And we're in the follow-up now. And it looks like the leads so far are worth about 48 bucks a piece on those free leads that came in. And you and I talked about it before we decided what offer to run there and decided not to run the offer that the marketing team was thinking of running because we felt like it was, it didn't do what you're just talking about.

12:39And so we basically kind of made that decision. And I think, I think we're, we're looking good right now. And, you know, there's a chance at close, which is still two days, still day and a half away that will, that will basically double that. I think that's a fair, and then in follow-up for sure, we'll double that. So, you know, we'll get to about that, I think,$100 a lead mark there as well. And I think that was a way better way to go than just offering a discounted thing, which is what we were kind of talking about. You know, so this is like an email campaign with no value, just buy my stuff.

13:12You can buy it for a little bit less. Instead, hey, here's a new way to think about things. And it's free. And we're going to give you a lot of value and then offer the thing. I think that's definitely a good way to go. There were a couple of interesting things I thought that there was a big push in the things that I saw that were coming my way for flexible payments, which I think recognizes that people generally, and the stats I've seen said that people are not spending on high ticket luxury and discretionary items nearly as much as they're spending on staples, consumables, and necessities. And that that's really where a lot of the buying was.

14:04And that's what the data says. What the data also said, and I observed, and I'd love to hear what your thoughts are on it too, was that BNPL, buy now, pay later, you know, Klarna, all of those kinds of things. If you were offering that, you had a lot more takers than usual because people, because of higher interest rates and inflation and uncertainty and all, uh, also unemployment for a lot of white collar folks, uh, you know, and mid managers is becoming more of an issue as well, that that was, that was a big deal. And then continuing the things like, you know, free shipping and stuff like that.

14:39That I thought was interesting. And I looked at what was different from what was happening in prior years. That was a big thing. The fact that the deals are happening earlier and then just, and I'm watching us do it too, and then we're extending longer. That's something that if you're not doing and you're a business owner, your competition probably is. If you're not offering flexible payments, your competition probably is. If you're not starting in November, like the beginning of November and extending probably into the second week of December, maybe all the way into the holidays, then you're probably missing out.

15:21There also, I don't know if you got this, but I noticed a lot more personalized marketing based on things I had done before. So I think AI is alive and well at, or tagging even, you know, at personalizing the offer. Like I didn't get a lot of shop here and save this amount. I got, you know, Hey, you've been looking at these things. Uh, now they're on sale. Here's the things that were in your cart. You know, now they're on sale, those kinds of things. Certainly from an advertising perspective. Um, I felt like the ads that I was shown this year were oddly, um, scarily targeted towards me, like in ways that, um, it kind of shouldn't be like, there were things that were targeted to me.

16:09It's like, that would be, that's exactly something that my daughters would be interested in, you know, that I don't even quite remember, you know, where I would have seen that or visited that. It's not necessarily like something that, I'd be in. And I, and I, and I bought, I bought one of them for, I was like, that would actually, my daughter would, would love that. And, and to your point, your, your previous point, it was like a$26, you know, kind of kitcheny gadget. Cause one of my daughters really loves to, to, to bake bread. They offered me a payment plan on that on a$26 item. Now I know they just offer across the board, but a$26 item, like a payment plan.

16:50Like, wow. Yeah. Yeah. Maybe, maybe you shouldn't be buying that$26 gift if you need a payment. Right. I mean, you should just be able to swing that one. But yeah, I didn't, I didn't see it as much on the, on the email front. You know, that was just kind of the same inundation that it always is. But on the ad front, it seemed scarily targeted as I was scrolling through my different social feeds. it's it's really interesting um the other thing was what kinds of offers seemed to be like what was i getting and like i said i wasn't really getting um i the the big retail stores were all doing discounts but they were doing very unappealing discounts to me like it wasn't discounts on stuff that i wanted it wasn't discounts on the stuff that that is the latest stuff it was kind of like let's move out the things that aren't selling type discounts which you can't blame them for but that's one reason I felt like most of it fell flat for me was that even though it was speaking to me and it was stuff maybe I had looked at it wasn't it was a categorically the stuff I was looking at but it wasn't what I wanted of the stuff I was looking at does that make sense yeah I mean that's always the case for me especially if it's clothing and size wise being a person of lesser heightedness it's always like we've got a great deal in this It's like, yeah, but you don't have it in my size, jerks.

18:14But a couple of things I did notice, and I did a little bit of research, and it seems like it supports that bundles were really one of the biggest things. that offering bundles that combine some sort of popular product at a discounted price or a popular product with a less popular product or a popular product with a significantly higher margin product so that the perceived value was significantly greater, the average order value was greater, but the discount or the value in terms of what they were offering was actually something that was gonna be profitable for them instead of like a lost leader.

18:56Yeah. And a lot of what I was seeing was what was advertised was the lower ticket. But when you went there, there was the bundle that was the higher ticket on the page. So they were advertising the lower, less expensive one that seemed like the crazy good deal. And then when you got there, you're like, it's not that much more. Still a great value. I'll take the more expensive item, especially if there's a payment plan. Yeah. And the other was multiples like BOGOs, buy one, get one. and what I'm going to...

19:28Yeah, I'm going to call it Butgo. Buy one, get... Buy two, get one. B-U-B-I-T-2-G-1. Yeah, Butgo. So, Vogo and Butgo were very prevalent. A lot of Butgo in my inbox. Yeah, that's Butgo. That's going to catch on. I think we should just talk about it out of context and we'll see where it goes from there. You're going to see that. So what do you think this means next year for the different retail e-commerce companies out there? What do you think they should take from this? Let's assume that the economy is, let's say it's about the same. You know, maybe it's doing a little bit better, but consumers haven't necessarily, they're not necessarily feeling it.

20:21They're still a little bit scared. You know, do you think kind of doing the same type of stuff? Bundling? I think maintaining momentum into December, like we talked about, I think the personalized offers to the extent you can leverage any data that you've got. The thing that what you said about your daughters, I thought was really interesting that probably is being done or could be done would be, wow, how cool to basically have available data on what your daughters are being offered and connect them to you so that it can show you what they're looking at for you to buy for a gift. And now I think about it, I bet that's exactly what they did.

21:02Yeah. I don't know how. That's exactly what they did. but man that's meta they know everything that's that's pretty cool um i think highlighting the value of of the discount bundle bonus you know but go bogo uh is a is a good thing that flexibility continuing to offer you know even like especially if things haven't changed but i think things will get brighter um but uh but clearly by now pay later is is a big deal for people sustainability sustainability is still, I saw in a lot of things and I noticed the packages we were getting were not very well done in terms of like, they would fall apart, like sustainable things you would expect to.

21:44So a lot of the things were less, um, maybe a little less pretty in packaging, but the, the pitch was sustainable. I hate to admit it, but it doesn't really make me buy or not. I'm buying for the product. I hope that, I hope that they will be responsible corporate citizens, but it's not going to be the, I'm not like shopping based on that as a, as a criteria. The other thing is that I did not get much of that. I think is a big missed opportunity is promoting gifting where you're saying, you know, get this as a gift for you got it. It sounds like with the stuff of your daughters or, or did it just show it to you and you made that conclusion?

22:23almost all of the ads that i saw were gift informing me to to buy it as a gift okay i didn't get any of that so so clearly meta knows that i am far more generous than you are yeah i mean it's it's no it's the only logical explanation in the world it's i mean it's like that's not that's not it knows that you're a miserly bastard and that i am highly generous i mean it sounds right to me. The other would be that creating a sense of urgency, limited time offers, countdown timers, so that you like on the deals and staggered deals is the other thing that I think is important is that like, it's not, Hey, here's a great promotion.

23:07It's available for the last part of October, all the way until the new year, by any time you like it's, Hey, almost like drop culture, right? You know, we're dropping this and also get it before your size. I got a lot of that stuff with clothing and things that were sized, you know, get it, get it while, you know, uh, most popular sizes selling fast, that kind of stuff. But I think that that times drop episodic, um, almost like a calendar within your calendar of, of, uh, holiday promotions is really important with the urgency, um, tools like countdown timers, countdown timers, I think. Great. And then, um, And then that going into, you know, into post-holiday selling.

23:51The other two things that I noticed was definitely people that used to not be using that pricing strategy of, you know, like 59 versus 60. It seemed like there was a little bit of a trend in things I was buying to round to the actual price that it typically is not to go down. and so that that pricing was back a little bit more in the things I was looking at. And they were also, as you mentioned, I think - Sorry, just because you're saying they were back at the nines? Yes. Yeah, yeah, I've seen that too. It's like for a year or so, everybody decided that it was uncool to do that. And then everybody realized, yeah, but it works.

24:32There's a reason. It works. Like the psychology of if it's a buck less than it's$59, I get it. You don't think it's cool, but people are people and they just haven't changed. And 59 is going to convert better than 60. My wife, if, if something, if a house is, uh, is a million, it's a million. If it's 999 ,999 dollars and 99 cents, it's 900 K that's a hundred. I mean, and I'm serious. I'm not kidding. Like that's a, it's a hundred thousand to million dollar, depending on the threshold, swing at that level. And at lower levels, it can be a thousand dollar swing. The difference between 99, 99 and 10 ,000, the difference between 999 and a thousand.

25:19I mean, it's significant. So it works for sure. The other thing that I wanted to mention, and we did this and we talked about it because the original price we were thinking of offering, one of the things we did for Black Friday was, I think,$14.50 or something like that. Maybe it was$14.95. I think$14.95. Yeah,$14.95. $1 ,495. And then we said, well, let's try tiered pricing because what could we do to make anybody that wanted to buy the$1 ,495 thing buy a more expensive thing? We wrestled with prices, I think between$29.95 and$5K and ended up at$39.95. So basically either, let's call it, I'm just going to use non-rounded numbers to make this talk easier,$1 ,500 or$4 ,000.

26:11And so far, everyone who bought, bought the$4 ,000 thing or the conversation that we had with them led them to buy something more expensive. One person came in talking about that and bought a $21 ,000 thing. So I'd say it's important if you've got an opportunity to do tiered pricing, even if your tiered pricing introduces other concepts that we talked about, like BOGO or BUTGO or something like that, or a freebie. There were several things that were encouraging you to buy more. So like I would, I was on a sock site looking for good socks. And, um, I, uh, I, you know, found some that I wanted and put them in the cart.

26:55And then it's like, you know, yeah, but if you buy three, you get one free. And I was like, well, of course I'm going to buy three because, you know, and, and for me, it wasn't that much because you're talking about, you know, 30, 40 bucks for a really, really nice pair of socks. Um, so am I going to spend$120 now to get four pairs of socks yeah you know versus 40 and not get one because i'm like well that's you know whatever that there's no way to know what the math is on it you know 40 divided by three but whatever that mysterious number like you know it's like pie it doesn't mean anything whatever that number is it made me wanted it made me spend more it made me spend literally three times more so um so mixing and matching those kinds of things i think is important and then cart notifications that the cart, you know, you put these things in your cart and rather than a persistent cart forever during the holidays, I actually am going to go against what I normally say is I think you're insane not to do persistent carts generally because how many times I've watched my wife have 30 things they shop within the cart and then they decide what they're going to buy from what's in the cart later.

28:07And when they wipe out the cart, she's just done with it. All the work that she's put into it is gone. So I think that, uh, but I, I think during the holidays, it's these items, uh, were in, I got a couple of things like this. These items, uh, will only be in your cart until blank. So that was another way of creating urgency. And it's good to give notice because then somebody like my wife is going to be like, Oh crap, I gotta, I want to do that. And she's going to go back, which she would have done probably eventually, but now she's doing it sooner and you're getting your sale on the time that you want.

28:40So I think that's actually a big thing that people should be thinking about for next year or the rest of the show. Real quick, because I know we're coming up on time, any advice changes that you would give to our more service-based portfolio company, so non-retail? Do you think they still go at it and try to lean into the Black Friday stuff by running a sale, maybe not a discount, but a bundle? Or do you think zig when they're zagging and do more of an event-based model, like what we did at Epic. Well, I like zigging when others are zagging, but I also think that you're insane to buck the trend of the momentum.