The State of Retail: Black Friday & Cyber Monday

0:00cocaine, heroin, drugs are effectively borrowing all of your tomorrow joy and compressing it into this moment. and then that leads to depression and bad things down the road. It will be interesting to see if the logic of the more I spend, the more I save during this discount period damages sales going forward. If it's basically just borrowing from tomorrow and compressing. I don't know based on everything that I've seen that it was that people were waiting for Black Friday to unleash a torrent of buys. How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who share their biggest secrets on how they think and achieve success?

0:49Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Dice.

0:57Welcome to another episode of Business Lunch. And today's a snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website, and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com, www.businesslunchpodcast.com, and you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

1:32Hey, everybody. Roland Frazier here with Business Lunch and Ryan Dice. How are you doing today, Ryan? I'm doing exceptionally well. How about you? Excellent. Just coming off of the heels of Black Friday and looking at some stats, which I'm going to do from memory, and then we can see how close I came. As I recall, online was up, depending on who you check, between 7.5 % and 9 % year over year, and in-store up 2.5 % year over year from last year. Is that close to correct? Your memory, as always, is exceptional. Yeah, which I was surprised by. I kind of thought it'd be down year over year. I did too.

2:15I haven't seen the stats yet. I think they said the average person was going to spend$567 or$576, something like that, that was up from last year as well. And it turns out that they were right. Cyber Monday, they said, was going to be, what did they say? There was another stat I saw that was basically 60 versus 51%. I don't remember if it was total sales, but it was pretty close that Cyber Monday was almost as big as the Black Friday. And so we're, as we speak, we're literally in Cyber Monday right now. And anything else in the market that you thought was interesting before we get into kind of some specifics of us?

3:07I mean, I just, I keep going back to the fact that I thought everything would be down year over year. Yeah. How did now, yeah, sorry, go ahead. And how did a couple of the companies in the portfolio that we've been tracking, how did they do? Were they up or down from last year? Did you tell? Up? Yeah, up pretty much across the board, up year over year. Now, a lot of that was execution. So two of our portfolio companies last year just laid a freaking egg on Black Friday. One of them tried to do a bunch of new stuff, even though it had always worked. So, boy, let's innovate. Well, the good news is it's not really a time that's important in terms of sales.

3:51So, you know, it's not like, yeah, caution to the wind. What's the worst that could happen? Yeah, no, so definitely up. But I think what it speaks to just kind of macro economically speaking, and what I had forgotten is last year was when really we were starting to see inflation go up a lot. Gas prices were up, food costs, and I think everybody was a bit shell-shocked. And they were like, whoa, what does this mean? which makes sense. And I guess at this point, everybody's sort of gotten used to it a little bit and they're using this. What I'd read is people are using this as an opportunity to get deals and bargains.

4:27So they're seeing it like, no, no, I'm doing this. I'm shopping on Black Friday because I'm frugal. I don't know if that's the right thing, but what I did see is, and I think you had some stats on this as well, the buy now, pay later, all the after pay, all those things were way up. Yes, 76%, I think. So yeah, let's, let's, my wife, I think she heard it somewhere. So I'm not trying to attribute this to her. But but for me, it's attributed to her. She said that basically, cocaine, heroin, drugs are effectively borrowing all of your tomorrow joy and compressing it into this moment. And then that leads to depression and bad things down the road.

5:14It will be interesting to see if the logic of the more I spend, the more I save during this discount period damages sales going forward. If it's basically just borrowing from tomorrow and compressing. I don't know based on everything that I've seen that it was that people were waiting for Black Friday to unleash a torrent of buys. It seems more like this was an excuse to give yourself permission to say, well, if I don't, if I buy it now at 50 % off, then I'm going to buy a new TV anyway, eventually, and I need one. So why would I pay twice as much for it? I'm going to buy it right now. And let's use buy now, pay later to do it because my credit cards are already maxed out, right?

6:02So it's, and if I pay the buy, now pay later over this many months, it's no interest and no cost, you know? So I'll figure out how to make that happen. That's tomorrow's problem. I think that might be what we saw. What do you think? It'll be interesting to see. I think you'll get a little bit of a canary in the coal mine come actual like holiday Christmas buying season, right? If that's down year over year, then what that suggests is, yeah, everybody did just pull forward. They just pulled forward their spending. And so I think if that stays down, you're right. If that is up as well, then what this means is we need a new economic outlook.

6:45look, we're going to need interest rates to come down quick, fast and in a hurry because debt is skyrocketing right now. Consumer debt is up. Business debt is up. Government debt is up. And so if these interest rates, I think the government is going to have to lower interest rates just to keep everybody from completely going broke themselves included. Especially like the commercial real estate. There's so much of that coming due in 2024, 25, 26, that will not be able to be refinanced, that you're going to see, you're going to definitely see 2008 foreclosure rates, if not devastation. But all of that could really be avoided if they bring interest rates back down.

7:28But inflation's running, I think, at 3.5 % right now, which is too high. I think it was 3.5 and then 3.2 maybe last month, which is still more than 50 % higher than the Fed, wanting it at 2%, which I think is pretty crazy, by the way. Let's just say what the heck's wrong with 3%. But really, it will be interesting to see because the fate of so much is in the hands of the Fed with the interest rates. And it's just all teetering and so many things happening. It's going to be interesting to see. Well, I was initially encouraged when I saw it because I expected it to be down. I was like, okay, this is good consumer.

8:08Because the economy is a function of consumer confidence. If consumers are confident, then consumers spend, and then the economy turns along. Because if consumers spend, then that means businesses can spend. And so wherever you are in the economy, whether you're B2B or B2C, your ability to grow is a function of consumer confidence. And so when I saw that it was up, I was like, okay, well, maybe consumers are confident. But if it turns out that all they did was pull forward, that's bad. If it turns out that the spend stays about the same, but debt goes up, then yeah, all we're doing is pushing that further down the road.

8:47And so how many more quarters can we go without a significant reduction in interest rates to get things going again and to give people some relief from these debt payments they're going to have to make? It's going to be weird to see. I think we are, like you said, we are balancing right now on a razor's edge, and it can go either way. My barometer is how much cash does Buffett hoard? And right now, they're sitting on more cash than they've ever sat on their lives because they are absolutely opportunistic investors, and their whole philosophy beyond buy and hold forever is buy when everybody else is selling.

9:29It's indicative of their thinking that everybody's going to be selling soon for them to hold that much cash. And that's true, I think, around most of those investment funds that are value investee smart kind of people. So it'll be interesting. I believe that there's going to be a flood of amazing deals and across the board because of that. And then also because of we talked about this earlier and then I want to get back to Black Friday. But we talked about this earlier, you and I, with all of the, well, not all of, but a lot of the funding for startups has dried up. And a lot of them are in 12 to 18 month runway cycles that are about to mature.

10:14And they're going to be going back to the well in 2024. And there's not a lot of money. But one thing that's really interesting I saw today is that Blackstone and a tremendous amount of capital is going into debt funds, including debt funds for credit for small business. So I think that the investment banking world is saying that credit has been, that the equity capital's dried up, let's go into debt. And it'll be interesting to see how all that balances out because they're also looking like, where do we put our money now? And you're going to have all these companies that are potentially going out of business because they can't get their next round of funding.

10:58And then are they going to get debt? can they qualify for debt? If they do get debt, then will interest rates be so high that it's punishing and they can't afford it? And then they're going to go out of business anyway, which would then bankrupt all of the lenders. You know, it's an interesting daisy chain of things that's going on. But let's go back to Black Friday. Yeah. That is a fun, because we could hang, linger there a lot longer. Ultimately, one last thing, that may be the thing that saves it. Yeah. is the fact that there is still just so much money sitting there and they just aren't allowed to just put it in treasuries.

11:35They're going to have to deploy it. And so if they can't deploy it directly into securities because the stocks aren't moving and because they're afraid of business failure, they're going to have to deploy it into debt. That would suggest if they're deploying it into debt, that that's going to bring down the rates, which is going to bring it down to the banks, which anyway. I think what might be interesting that could happen is that effectively nothing changes except pretty much everything gets a giant devaluation that startups, companies, funded companies, public companies, commercial real estate all take a giant haircut.

12:12And then it's just a reset. Yep. It's sort of like, you know, it's like what some international, you know, what some countries have to do their currency every few years. Like we're just going a lop off a zero. This is what it is now. Yeah. Sorry about that, everyone. Yeah. And arguably, that's what should happen. And I'll tell you, if you are a, you know, if you have bootstrapped your business, this doesn't matter to you as much. You know, if you did, if you haven't gone and raised a bunch of money. Yeah. You know, it doesn't hit you as badly, but it may create some acquisition opportunities, but we're not talking about that right now.

12:43We'll do another episode on it. We're going to go back to Black Friday. So what did, what did we do that worked really well Black Friday this year? So for a couple of the companies that we've got, number one, companies that had never run Black Friday sales before ran Black Friday. And we started planning for this a couple of months out instead of, holy crap, it's Black Friday tomorrow. You know, let's spend our Thanksgiving creating an offer and get that page up and hope that something happens. So that was one thing is I think that it was much more intentional. and a lot of the companies and our friends who had never done Black Friday before were like, okay, this is something we should do.

13:23And they're all happy that they did it. So that's thing one. If you didn't do Black Friday this year, that's a big opportunity for you. And remember, it's Black Friday, Thanksgiving, Small Business Saturday, Cyber Monday, all right there together over four or so days. And if you're not doing it, you're missing out on a giant opportunity that people want to buy. And the people who are in business, if you're business to business, because we have lots of business to business companies that run Black Friday specials. If you are in business, selling to businesses, those people are susceptible to the urge to buy in their private lives, bleeding over into their urge to buy in their business lives as well.

14:06So that's a good time. Like everybody's in the buying mood. You're kind of crazy to miss out on it. That's the second thing. Can I tell you something I saw this year that I've seen in past years, but this year particularly pissed me off. The anti-Black Friday virtue signaling companies. Like the people that are like, we don't participate in this. So to this, we just say, happy Thanksgiving. And, you know, we hope you're going to. It's like, we're not going to do this. It's like, who do you like, do you honestly think, do you honestly think that the people on your list open that email and they're like, oh, I mean, finally, somebody didn't give me a deal.

14:49Like, who is that for? Like, all you're doing is because you either, and some of these people, because I saw one from one person and it's like, I know for a fact, you just forgot. You just forgot to plan. You forgot to do it. And instead of coming up with something last minute, you decided to virtue signal. Okay. So if you did that this year, that's fine. We're not going to judge you. Don't do it next year. Okay? Don't do it next year. And don't say, well, because we crapped on it this year. Nobody will remember. Just like they didn't care when you told them you weren't doing it this year. They're not going to care when you do it next year.

15:25And nobody's going to say, but last year you said, we didn't care this year. They're not going to care next year. Please, love it God. Just do a Black Friday deal your people want. I like the anti-Black Friday deal that Cards Against Humanity did for several years. They filled a hole one year. They just filled a hole. That was great. Well, theirs was funny, though. Didn't they sell poop one year, too? They actually sold poop one year. One year, they doubled their price. Huh? One year, they doubled their price. Yeah. It's awesome. Black Friday. If you're going to do that, be fun, right? Yeah, but that's on brand, right?

16:04And look, Cards Against Humanity, doubling their price for Black Friday is not virtue signaling, right? It's them doing what they do, which is entertaining their list. And there's plenty of people who bought that offer at twice the price because they didn't just get a fun card game. They also got a story they could tell to their friends about how, holy crap, this company did it. And I thought it was so funny. So I went ahead and paid double for it. And now they got their own way to sort of signal that they're funny and important and rich, I guess. So don't look at Cards Against Humanity as the reason like, and not participating because they absolutely did.

16:39And they made so much freaking money when they, the year they doubled their price as a joke. And, and loyalty. Think of the brand loyalty that you get from that. It's like, we love those guys, right? Right. The other thing that we did was we did not offer discounts. We offered extra stuff, but we didn't offer discounts. I'm not a fan of discounting. I feel like you train your list to wait and not buy from you when you do that. So I think that it's nice that throughout the year, you have promotions that offer bonuses and things like that. As a matter of fact, we pretty much always have bonuses.

17:14They just change. And so we will create a bundle or a bonus or offer some combination of things we haven't offered before or introduce a new product, but not offer discounts. And so that's something to think about when you're doing this, that you don't have to take half off of what you sell. And I've seen more of a trend of that out there also with a lot of companies where you look and my son and I were talking about it as like, you know, gosh, there aren't as many great sales as there used to be. You know, those crazy discounted things that they did before, those aren't out there as much. And I think that might be some of it, especially since costs are increasing.

17:52In the companies that you're running on the portfolio side, how did that play out? So Digital Marketer absolutely did still run a discount because what we found is that it just works. You always do. Yeah. And it's, exactly. And it's this time every year, you know, do a discount. And it does really, really well. Last year, one of the things that they sought to innovate was to not do as many discounts. And it didn't work as well. And I saw some other people, the owner of Goggin Biani, I believe. He was one of the founders of Udemy, who now runs a course company called Maven. And he was talking about how, you know, he was very against it, but Udemy would go and run a bunch of discounts.

18:38And, you know, and he said, I would argue that we got way too discount heavy. And I didn't like that we were doing that, you know, too many discounts. I still think it was too much. But at the end of the day, you know, Udemy is larger than Coursera and its other largest competitor. So maybe there's something to, you know, to that. So I do think it's brand specific. I think it's market specific. digital marketer functions way more like a B2C company. And it is just, that's been the history and the pattern of that business. Because it was frankly, one of the first course companies to ever do a significant black variety participation.

19:13And if you're ever thinking that you want to change a discount culture by not doing that, I will say, look at the JC Penney's when the folks that did the Apple stores came in and they said, you know, no, we're not going to be discounting. We're going to be everyday low prices. And they stopped all of the sales. And the culture of the pennies customer was, we like those sales. They like, we're coupon clippers. We're looking for that. That's the game we want to play. And they were like, no, now you don't have to. It's just cheap. And they were like, we hate you. And so that, I think that person lasted a very, very short time and almost bankrupted the company.

19:53So, you know, a cultural change is something to think of, but maybe instead of getting in a race to zero with your discounts, like ever having to do greater and greater ones, think about maybe adding some bonuses and bundles and things like that, that can increase perceived value or launch a new product that you get the choice of how you're going to price. And I will say a digital marketer, there were no discounts on the higher ticket premium products and programs. So maintained, you know, at that, I think at the premium, if you're at the premium, and definitely if you're at the luxury level, you don't discount.

20:29yeah right if you're kind of in the mid-range and if you're the low price leader discount i think you've got to know which one of these kind of quartiles you're sitting in digital marketers sits at the mid to low range of what it's looking to do it is a it's a larger aggregate type play it's not trying to be the premium provider of digital marketing training and education it's trying to be for the masses yep that that is that is where it sits now it does have premium offerings And so those were not discounted. But I can tell you a lot of sales of the premium offerings happened because they were offered as an upsell to the discounted front end offer.

21:04Absolutely. Yeah. So if you're using the discounting for effectively lead magnets, it's fantastic. Yep. So, so the other things that worked were we had good sales out of the, uh, and this is for a, you know, a, I'd say a mid tier product, 5 ,000, 10 ,000. Um, we had good sales on the first day that we launched our black Friday campaign. Then they fell off a cliff and we had nothing the entire second day. And, um, looking at what could we do to make it better? One thing was that we, we didn't have a guarantee. And so we added a guarantee and I did what I'll call the in and out guarantee because in and out has has triples and doubles and double, double burgers.

21:50And so I was like, well, what if we what if we give a guarantee that's not a refund guarantee, but a guarantee that is allows them to double the amount of time that they get with our coaches, double the, um, the end result. And if they can't double that, then they get the, they get the double time with the coaches and we'll even give them a credit that's double the investment that they come in. And so we called it the triple double and that, that really got some traction at the same time. And we got feedback that that made a difference to people, even just the curiosity of it. We also, so what was the triple double guarantee?

22:28Uh, as I recall, it was, uh, double the, it was double the actually i'm going to read it because i'll get it wrong if i don't um and i think i can find it relatively quickly yeah i feel like so was this your brainchild or did you uh it was were you inspired okay you were inspired by basically cheeseburgers i was inspired by holy crap we're not selling anything that scares me that is um and it's it's always disturbing when it starts off pretty good and then it just falls off a cliff. Oh my God. Because you're like, well, obviously something's broken. And you go and you dig into your technology and your shopping cart.

23:06And you're like, no, it's fine. Just, I guess, only three people wanted it. I was like, so our triple-double guarantee, you can't lose. Our program is so simple to follow and implement that we guarantee by the end of the program, you will double your current monetization or have three new entry points, products, AI driven assets or strategies to grow your business, or we'll double your access time to our expert support and coaching and double the value of your investment by giving you a full credit for membership into our$10 ,000 business buying accelerator. That's how confident that we are. So that was, that was the, the three doublings that you got.

23:51So, and, and that's, it was really funny because I was doing the double. And then when I wrote two of them, I was like, oh, it's kind of like double, double, double, double. That's because, you know, and then like, what if I'm going to be trouble double? So that was where that came from. That had a big impact. And then the other thing was, um, we put on the page a widget that is, we tried to sign up for service bell, which is a company that puts video on, on page video, where you can get onto a zoom call with somebody directly from your webpage. Um, we couldn't get that done in time because we had to, I think it was because we had to do one of those stupid demos that they always make you do.

24:26It's like, we just want to buy it, but I desperately want to give you money. But we had, but GoHighLevel, which is one of the CRMs that we use, had a widget like that. We put it on the webpage and then we sent out personalized text. That was the other thing is changing the text. The text that started, I'll try to do this in. So the first thing we did was we added the guarantee, the guarantee bumped sales. Then we wanted to have more conversations with people because we know if we have conversations with people, they sell better than trying to sell a$5 ,000 or$10 ,000 thing on a webpage. So we put the widget on.

25:03That increased the number of conversations because now people that were live on the webpage actually considering buying the thing could get their questions answered by a human, could get reassured that this is a good thing to do. And that made a difference. And then the next thing was redoing the texts because we were doing a lot of texting in addition to emails. So I would recommend highly that you do that as well. And just to be clear, texting out to people who are existing customers already on the list who had given permission, not just texting total strangers at random. Don't do that for a variety of reasons.

25:41Oh, really? Why not? Yeah, exactly. So here's the first texts that were going out was Black Friday deadline. The name of the product expires at midnight. Offer details here. I was like, that's terrible. I saw it. I don't even know who it's from because it comes from a number that's not in my phone, right? So the next one, when I rewrote the text was Deanna here, just spoke with Roland. You have a credit that's expiring tonight. Let's talk. Call me. That, shockingly, got a significantly higher response rate. So those conversations from the texts, we also had the link to the webpage that then took them back to a call through the widget, plus the guarantee.