While most people in the US are stuffing and basting the bird, preparing sweet potato casseroles, and baking pecan pies, retailers are preparing for two of the biggest days of their year. The holiday season is always the busiest time for B2C brands.
The season kicks off with Black Friday and Cyber Monday, two days that bring in massive revenues for retailers. In 2018, US retailers saw $6.22 billion in e-commerce sales on Black Friday and another $7.9 billion on Cyber Monday. And in fact, the days of discounts have expanded even further in recent years. Some now refer to the time as the Cyber Five (Thanksgiving, Black Friday, Cyber Saturday, Cyber Sunday, and Cyber Monday).
With figures like those, it’s easy to understand why B2Bs would want to get in on the action. While it’s too late to throw together a strategy for Black Friday and Cyber Monday this year, there’s still a lot that B2Bs can learn from these days about strategic pricing and apply at any time of year. In this article, we’ll explore how to create a pricing strategy around a specific event that turns prospects into clients and generates meaningful revenue for your business, without undermining your regular pricing strategy.
What’s the Most Wonderful Time of Your Year?
Every business has ups and downs throughout the year. B2Bs who work with corporates might see a slowdown in the summer months; that’s when many of the decision-makers are out of the office on vacation. The end of the year—when everyone’s back at their desks, setting budgets and investing in the tools they need for the upcoming year—might be their busy season.
Take a look back at your sales for the past few years. Are there certain months where business consistently takes off? If so, you’ve identified the best time for you to implement a strategic discount strategy: right on the cusp of your busiest time.
Retailers love participating in Black Friday because it gets the shopping momentum going at the start of their biggest months. C. Britt Beemer of America’s Research Group is quoted in the L.A. Times, noting that a strong showing at the beginning of the busy season can lead to better sales overall. When consumers spend more on day one, they’re primed to spend more throughout the following months. Plus, when they get shopping early in the season, they’re more likely to return later on for additional items they discovered on their first trip.
B2Bs can apply the exact same principle. Offer discounts at the start of your busiest season to get your audience engaged right away. If they’re unfamiliar with your brand, the offer will catch their eye. If they already know and like you, a discount might be the push they need to become a customer. And once you’ve won their business early on, you establish yourself as their go-to provider. If they decide they need other goods or services during their buying season, they’ll turn to you.
Create Urgency with Time-Sensitive Discounts
As we know, much of the draw of Black Friday and Cyber Monday is the time-sensitive element. If you get a jump on your holiday shopping during those deep discount days, you can save a lot of money at the start of an otherwise costly season!
If you sit back and wait, however, you might end up spending double or triple on the exact same items only a few days later. When you’ve got a lot of people to shop for, that hesitation can cost you.
How can you create urgency for your customers as a B2B? It goes back to thinking about the ebbs and flows in your business’s sales.
Take a food service provider, like an Aramark. A large focus of their business is on the education sector. They run and operate food service programs at colleges and universities and within K-12 schools. There’s a definite seasonality to that business. Educational clients don’t switch providers mid-semester; instead, they sign contracts for full academic years.
The window of time that they have to court new prospects and sign those contracts, then, is finite. While the institution or school district is weighing their options, providing a discount can add some pressure for them to sign on the dotted line. If the discount window ends well before the institution or district’s internal deadline, it incentivizes them to make a decision earlier—one that’s driven by Aramark rather than their own timeline.
A move like this helps you to get more signed contracts earlier in the cycle. That means you’ll get a better handle on your revenues. From there, you can understand when you need to really push your sales team and when you can rest assured that you’ll hit earnings goals for the year.
Craft Targeted Discounts for Different Personas
Part of creating effective discounts that build a sense of urgency is having a strong understanding of who you’re selling to.
One of the biggest mistakes that any business can make is offering blanket discounts to all of their prospects and customers (check out our article on discounting for a prime example of what not to do from a retailer in the home goods space). Your buyers are not a homogenous group; you shouldn’t be serving up the same offer to everyone on your mailing list. Instead, start segmenting your audience by behavioral, demographic, psychographic, or geographic factors.
So let’s return to the food service provider. Aramark doesn’t just service educational clients, they work in healthcare, government, and within sports and entertainment as well.
Each of those segments of their client population have different needs and rhythms to their industry. It makes sense to court colleges when they’re setting budgets for the upcoming academic year. But that’s likely a different time of year than when a sports stadium is revisiting their vendor contracts.
It’s incumbent upon leadership at the food service company, then, to create different deals for these different segments. They want to address the needs of each segment, while creating a sense of urgency driven by their industry’s seasonality.
Offer Discounts on Your Terms
It’s important to create discounts that are tailored to the behaviors and attributes of your most promising prospects. But what and how you choose to discount must ultimately be done on your own terms. Big, multinational B2C retailers can offer discounts on all their products at the holiday time. But smaller brands who participate in Black Friday and Cyber Monday often have to be narrower in their focus.
When it comes to seasonal pricing, you must strike a balance between what your clients want and what you can afford to give.
Of course, the kind of offers you see B2Cs make on Black Friday are not for beach umbrellas and flip flops. While that may be the kind of merchandise they’d most like to move from their warehouses during the cold winter months, they also know their customers aren’t interested in purchasing those things.
B2Bs need to take a similar approach when it comes to crafting seasonal offerings. It’s important to meet your audience halfway. You’re not going to offer a discount on your newest, hottest product. But if there are products or services that have been sitting on the shelf gathering dust, there may be a way to leverage your popular products to move those less desirable items.
Creating bundles is a great way to move less-popular items. By analyzing your sales numbers and cross-referencing this data against customer information, you can see which types of products and services are most popular with which segments of your customer base.
From there, you can create bundled offers that are most likely to get your least-popular items moving. Design an offer that serves up a neglected good or service alongside a customer favorite. Then price it so that the overall cost is less than it would be if the items were purchased separately.
While customers might be on the fence about trying the discounted product on its own, there’s no downside to giving it a whirl if it’s paired with a product they already love. This accomplishes a few things. It reduces the risk for your buyer. It allows you to move this less-popular item. And it provides the opportunity for your existing customer to come to know and love a new product.
B2C brands have learned how to make the most of Black Friday and Cyber Monday. They capitalize on seasonal trends to get their busy season off on the right foot. B2Bs can apply the same tactics to their own sales and pricing strategies, creating a seasonal buzz at any time of year. Identifying the best time to offer discounts, analyzing customer traits and behaviors, and honing in on the right products to sell or bundle can help B2B companies offer smart discounts that spur long-term growth.
About the Sterling Woods Group, LLC
The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.
We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.
About the Author
Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.
Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.
He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob lives outside Boston, MA with his wife, Kate; daughter, Leni; and black lab, Royce.