Marketers love to hold up points-based loyalty programs as proof of their contribution to their company’s financial success through repeat purchase behavior.
But traditional loyalty programs are nothing more than complicated, and expensive to manage, discount programs.
Black Friday is a faux holiday devoted to the religion of discounting.
This begs the question…
Do Black Friday deals do anything to create loyalty of any kind?
The idea behind Black Friday deals is almost as old marketing – the loss leader.
By offering one or more items at a substantial discount, the company and its marketers hope that a larger than normal group of potential customers will flood the shop (physical or virtual) and buy the loss leader (aka Black Friday deal) AND many other items they may (or may not) have been intending to buy.
Whether this is how it plays out in practice is a closely-guarded secret and debatable at best. Complicating the situation is the fact that Black Friday has become a virtual arms race that companies of all shapes and sizes are almost forced to participate in.
This means that nearly every retailer is offering some sort of Black Friday deal today, resulting in consumers:
- Best Case — Your existing customers start at your shop (online or virtual) and make a transactional purchase of one of your Black Friday deals (usually unprofitable for the company) and hopefully many other products or services to make your existing customer’s overall purchase profitable, plus they tell their friends and families to shop with you
- Worst Case — Your existing customers buy nothing or only your Black Friday deals, tell none of their friends and family, and you spend a lot of money on advertisements to attract non-customers to your shop that only buy your Black Friday deals
One of my marketing professors at London Business School – Mark Ritson – recently published a very funny video on the relationship between marketers and consumers:
Bridging the Gap Between Black Friday Deals and NextGen Loyalty
Marketers have an overly optimistic perspective on customer loyalty and their implementations of customer loyalty programs.
The reality is that very few customers are loyal and much of what we speak of as customer loyalty is no more than repeat transaction behavior.
In my article Next Generation Loyalty – Part One I look at how to excavate sources of NextGen Loyalty using Loyalty Archaeology™.
True loyalty (customer or otherwise) is when someone engages in a behavior that is not in their most obvious best interest because of a higher commitment.
Very few customers will ever behave against their best interests, but engaging in Loyalty Archaeology™ you can better understand where the value comes from in your products & services and work backwards to identify potential sources of customer loyalty.
Continue reading Next Generation Loyalty – Part One here.
Image credit: Pixabay
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