MBA2390 Q&A Wednesday: Should I do a Black Friday Sale?

0:09Heyo! Welcome to the$100 MBA show, the place to be to build a business you want with our practical business lessons. I'm your host, your coach, your teacher, Omar Zinhome. I'm also the co-founder of Webinar Ninja, an independent software company I started back in 2014. And today's episode is Q &A Wednesday. On Q &A Wednesdays, we answer a question from one of you, one of our listeners. If you got a question you want to ask, go ahead and email me over at omar at 100mba.net. Today's question is from Andrew and Andrew asks, Hey Omar, I run a basketball training business. I sell online courses and materials on helping young and old basketball players.

0:46My question is, should I do a Black Friday sale? This is my first year of business, so not sure if this is something I have to do. And if I don't do it, I'd be missing out on a big opportunity to make some sales. Appreciate any advice, Andrew. Well, it's that time of year. Black Friday is almost upon us a few weeks from now, a couple weeks from now, actually. And all the businesses around the world are asking, should I do a Black Friday or Cyber Monday sale? Well, in today's episode, we're going to discuss the pros and cons as well as what I recommend, especially if you're in your first year or two in business.

1:18For some businesses, this is a no-brainer. Hell yeah, do a Black Friday deal. Some businesses, not so much. I'm going to explain which one so you can know which one you fall into, as well as the fact that how do you actually pull one off that's successful? Because you can really discount your products and still have a pretty lousy Black Friday result. So let's get into it. Let's get down to business. Black Friday is basically the biggest opportunity to make a big sale for your business, to offer amazing deals and a reason for your customers who are on the fence to buy now. A lot of people wait for Black Friday to spend all their money on deals.

1:55So a lot of us see this as business owners as a huge advantage, a huge opportunity to do a Black Friday sale. But because everybody's doing it, it's kind of hard to stand out. There's a lot of noise in Black Friday. People's inboxes are filled with Black Friday deals. It's almost to a level of overwhelm. I mean, I know myself when Black Friday rolls around, I start unsubscribing because I just cannot take all these emails and offers. So in today's lesson, we're going to talk about should you do one and then if you decide to do one, how to do it so you stand out. I'm also going to share what has worked for us in the past when it comes to this topic, as well as where we've changed our mind over the years when it comes to Black Friday sales.

2:38Right off the bat, I want to say, you've got to know your numbers. You've got to know how much profit you're making for each unit sold in your business. For example, if you sell physical items, like let's say in Andrew's case, a type of basketball. I know when I was growing up playing basketball, there were these basketballs that were the same weight as our normal basketball, but it was a little bit bigger in diameter, which helped you with your ball handling skills because it would force you to kind of open up your hand wide. So let's say Andrew's selling one of these basketballs. There is a cost to Andrew to sell this basketball, whether it's the basketball itself, whether it's the shipping, whether it's the packaging.

3:14All in all, you should know how much does it cost you to sell this item. This is called, you know, your cost or your tissue price. And then you know, OK, in order for me to make a profit, I need to have some margins. So a lot of people, they just want to throw a sale up and they forget about their margins. You got to make a profit. It's not worth you making a sale if you're not going to make a profit. You're going to lose money. It's better for you not to do a sale at all because in this case, every time you made a sale, you're losing money. So if it doesn't make any sense for you, say like your margins are thin, let's say you're only making 20%, a Black Friday sale slashes prices dramatically.

3:52So you're not really going to stand out. It's not going to be compelling for the buyer if you say, hey, 10 % off so that you can have a profit. So know your margins before you start thinking about these sales. Black Friday typically has deep, deep discounts. 25%, 50%, sometimes even more, 75%. Really, really deep discounts. So just think of it as an opportunity if you have the margins. Now, if you sell a digital asset like a course or e-book, your cost is not that much. You're spending a few pennies to keep it up on the server every month. So if you discount this product, let's say you have an e-book that's normally 40 bucks and you do 50 % off and it's 20 bucks, your margins are still pretty healthy.

4:37So it makes more sense when you have some wiggle room to do a Black Friday sale. But that doesn't mean it doesn't have an effect on your business. Let me explain. Every time you discount, every time you slash prices, you're training your audience, you're training your customers on what the real price is. So it's gonna be hard for you to sell your products later on at full price because they know you can offer it for less and they'll just wait for the next Black Friday sale or they'll wait for some sort of discount or they'll straight up email you and ask you, can I get the Black Friday discount even when it's February?

5:14So I'm a big believer in being careful with discounting. It has to make sense. It has to be profitable for you. And if it's a one-off purchase, say, for example, they're buying a course and that said they have lifetime access, it's even more of an issue because it's not a reoccurring charge. Say, for example, you have a membership and they're paying, let's say,$300 a month. Even if you're discounting this, it's not a one-off fee, meaning that you're going to get paid month after month. So there's more of an advantage for you as the business owner to incentivize them to sign up because that way they're a customer that's paying you month after month.

5:49So it's important for you to do the math. That's just the bottom line before you decide to do a sale. Now, let's say you do the math. It makes sense. Your margins are good. How do you do this right? Well, first of all, you have to stand out. You've got to do something different than what everybody else is doing. You can't just slash prices and say, these are doorbuster deals and go ahead and get it. Understand what your audience values. Give them something that they actually want and incentivize them to buy. It doesn't need to be only a discount or a discount. It could be something like time with you, a group coaching call, advisory call, a free week, being able to communicate with you directly on Voxer or WhatsApp.

6:25For some businesses, this is highly more valuable if you say, hey, this is only offered during Black Friday. They're going to buy then despite being at full price or if the discount is not that big. Differentiation is the key in Black Friday. For example, we've done Green Friday, where we plant trees on behalf of our customers every time they sign up as a member. So people that love trees and love the idea of having a tree planted in their name are gonna say, this is a great opportunity for somebody to do this for me and go through the legwork and go through the organizations that do this while purchasing a great deal.

6:59Now, you have to know your audience. Some people don't care about this. This is something that some people value in our audience. We know that. So they go for it. But if they don't value this, then it's no advantage to you. Meaning don't just differentiate just to be different and then your customers don't care about that differentiation. So this really requires you to understand who you're serving. A lot of companies will do Black Friday sales early. So say, for example, instead of doing their deals on Black Friday, they'll do a week before and say, we're doing it early. So that way they are grabbing people's attention before the chaos begins.

7:32and they're actually grabbing dollars from their pockets before they run out of money. Now, there's one other strategy that really works well if you have a high quality product that people value, whether it's a course or a training program or a software or even physical goods. If you have a high quality brand, this really works. And this is your sale is prices go up. What? Yeah. So basically you email or you message or you advertise to your audience. Hey, on November 1st, for example, all our prices are going up. This is the current price and this is our price after November 1st or on November 1st or whatever.

8:16The point here is that this is the lowest prices I'll ever be. So after this, the price will go up. So if you ever want to buy from us, if you want to get one of our products or services or whatever it is, now's the time. because come a couple weeks from now, you're going to have to pay this new price, whether it's 10%, 20%, 30 % more. This allows you, one, to force you and your business to increase your prices constantly and keep up with your market because you've got to remember, as you're building your business, as you're growing your business, as you're improving your products and services, you're adding more value to what you're giving your customers.

8:47So the more value you add, the more you can charge. So throughout the year, you're adding value, you're improving things, you're making things better. It's not the same product anymore. It's much, much more valuable. So this is your chance to say, hey, we're raising prices because we have raised our game. But this is your opportunity to jump in at the lowest price possible. One, this positions your products and services as high value, meaning we don't discount and our prices are growing up because our demand is so high and our product is so good. And we're giving you a heads up before we do that.

9:17So it just frames the whole thing differently. The customer still perceives that they're getting a lower price. But in the meantime, you keep your margins, which is huge. Now, some advice for those who are starting out first year, second year in their business. Sales are important. Getting revenue, getting some traction, getting customers are important. And it's so important, I'll even say that if you need to do a Black Friday sale to get in more sales and more customers so you can get feedback, so you can get testimonials, so that you can get some cash flow in your business, especially if you have good margins.

9:49Remember, we have to make sure we have margins. If you don't have margins, then this is not up for discussion. But if you do have the margins for it, then it's actually recommended in my book. You should do it so that you can get some more customers, so you can get more people talking about your business, your products, your services. So you can, again, get more testimonials, get more case studies. You can get more cash flow so you can reinvest in your business, all that great stuff. So the first year or two, you need a little bit of an oomph. And this is an opportunity to get that oomph. But don't take it too far, right?

10:19Don't overly discount. Don't go 90 % off. You know, there's no reason for you to undercut yourself. If people love your product and services, they just need enough reason to buy now. Like it's gotta be just somewhat compelling. Like, okay, great. That's a great deal. That's a good deal. It's normally this price. I'm gonna get this good discount. Comes with a couple bonuses. Sounds great. Let's go for it. You don't want people that are just gonna buy because they just think it's a great deal. They want to buy because it's a good deal, but because they've always wanted this product and now there's a great opportunity to do so.

10:51Thanks so much, Andrew, for asking today's Q &A Wednesday's question. If you've got a question you want to ask, go ahead and email me over at omar at 100mba.net. I'll make sure to answer it right here on the show. If you want to keep it anonymous, just let me know in the email. But by asking a question, you help get an answer for your question, but you also help others that have a similar question. And I've been doing this for a very long time, over two decades. And trust me, if you're going through something, there's going to be somebody out there that's going through the same exact thing. I've realized our problems are not that unique.

11:21If you love the show, then hit subscribe or follow on your favorite podcast app, whether it's Spotify or Apple Podcasts, TuneIn, Himalaya, whatever it might be. By hitting follow, you get our next episode automatically, and you let the algorithm know that, hey, this show is all right. Thank you in advance for doing that for us. It means so much that you're supporting the show. Before I go, I want to leave you with this. When you're building a business or maybe even restructuring or rethinking your business, ask yourself, what type of business are you? Are you a high value, quote unquote, luxury brand where you attract people that value what you offer, that are willing to pay because they think that this is something great?

12:00Or are you a discount brand? In other words, are you Tom Ford or are you Old Navy? You can buy a t-shirt from Tom Ford, but you can also buy one from Old Navy. People that buy from Tom Ford, they buy for different reasons because they value that product for different reasons. They think it's really great and it's worth its money. Tom Ford rarely does any discounting or brands like Tom Ford. When you walk into a Louis Vuitton, you're not going to see them doing massive sales, massive discounts because they don't need to. They know that people love their product and we're going to pay full price because it's so amazing.

12:34Ask yourself, what type of business are you? Are you this one? Are you that one? Or somewhere in between? What kind of business you want to be because your actions dictate how people perceive your brand. Okay? So remember, every time you do something, market something, advertise something, it's how your customers will perceive you. You're sending a signal, hey, this is who we are. So just be mindful of that so that you're intentionally building the business you want. Thanks so much for listening. And I'll check you in Friday's episode. I'll see you then. Take care.