It’s that time of the year again, which means the entire Billsby Team would like to wish you a belated Happy Thanksgiving! But as well as being a time of good cheer, the arrival of the extended holiday season spells one thing – sales, sales, sales. Black Friday and Cyber Monday reign supreme this long weekend, and a host of other promotions are bound to be on offer in the lead-up to Christmas (and during the aftermath). But are discounts a viable option for subscription businesses?
What Are Black Friday and Cyber Monday?
Traditionally, retailers began their holiday promotions the day after Thanksgiving - which, as Thanksgiving falls on a Thursday, is always a Friday: hence the name ‘Black Friday’. This year, Black Friday takes place on Friday 27th November. However, as Black Friday has become more and more popular with bargain-obsessed shoppers, retailers are now likely to start their sales earlier, dubbing them ‘Black Friday Week’ or even ‘Black Friday Month’.
Indeed, the ‘sale season’ has been officially extended so as to give the following Monday its own special name, as nearly every retailer will also offer discounts up until (or beyond) this date. ‘Cyber Monday’ takes place on the Monday after Thanksgiving, which means that – in 2020 – it takes place on November 30th.
One of the differences between Black Friday and Cyber Monday relates to the medium of the shopping experience: whilst Black Friday traditionally covers in-person shopping (who can forget the images of shoppers queuing outside electronics stores – and sometimes even fighting each other - to get their hands on cheap TVs?!), Cyber Monday was launched to cater specifically to online shopping. However, the constraints of the pandemic – and the evolving tastes of consumers – mean that in 2020 the emphasis has moved more to online shopping.
What if you have a subscription business, though? Do discounts work – and can you make Black Friday or Cyber Monday work for you?
Discounts and Subscription Businesses: Pros and Cons
Whilst the ‘economics of Christmas’ in the English-speaking world are well documented (with spending reaching new highs each year), choosing when and how to apply discounts can be a tricky decision, particularly for subscription businesses. As you’re asking for an ongoing commitment from your customers, it’s more vital than ever to uphold the value of your offering and avoid doing anything that cheapens your brand or lessens the impact of the promotion.
Discounts: Advantages
Pushing Customers to Commit
Much changes in business, but one mantra will always hold true: customers like to feel they’re getting a good deal. Time-limited discounts create a sense of urgency, which is a great way to convert a customer who is almost there, push a new client to sign up, or encourage an existing customer to upgrade.
As an example, you could offer a 50% discount on an enrolment fee or the first month of a particular subscription – but make it clear that this discount may not ever be offered again. Spell out the expiry date (offer valid until midnight on the XX), too: this compelling call to action is hard to resist and will lead to a quick sale or decision.
Attracting New Customers
Attracting new customers in a competitive marketplace can be difficult; but ongoing promotions work really well for subscription businesses, if used correctly. Free trial periods, for example, are a great way to attract new customers – but only if your product is solid. You need to leave them wanting more so that they’re certain to commit fully after the trial period is over (because if a large percentage were to opt out following the trial, this would have a big impact on your chances of hitting key sales targets).
Our advice? Don’t rush into this one. Fine-tune your offering so that you’re sure it’s the best on the market, and then reel new customers in with a free trial or money-back guarantee.
Getting Rid of Old Stock
A small pro, but still worth mentioning: if your subscription service is product-based and you have a surplus of old stock you need to get rid of to make way for new ranges or lines, offering selective discounts is a great way to clear the decks without making a loss.
Strengthening Relationships with Existing Customers
Don’t forget about your customers once they’ve signed up: in fact, with subscription businesses, it’s often said that the hard work begins after the customer has enrolled. You can inspire them with regular communication and service updates/improvements, sure, but it’s also nice to reward them for their loyalty.
The sky’s the limit with this strategy: you could offer long-term customers discount codes, entry into a competition, discounted upgrades, or some kind of free gift. If you apply some ingenuity and time the incentive correctly, tying the reward into another year of enrolment or an upgrade, you can keep your customers happy whilst boosting sales, too – win win!
Discounts: Disadvantages
Making it All About Price
A word of caution, here: with any business – but particularly a subscription business, which by its very nature is asking for ongoing loyalty – you don’t want to get into a race to the bottom. If you focus too much on running promotions or continually slashing prices, you make the proposition all about price – rather than the fantastic service you are providing. This could cheapen your brand and pit you against competitors who will try to undercut you to stay ahead, creating a vicious cycle in which both parties battle to keep offering the lowest price. Too much of a good thing might even cause existing customers to expect products to be on offer, as well, rather than seeing a promotion as an additional bonus.
Finally: whilst an initial spike in sales following a promotion is a great thing, be wary of attracting customers who are only interested in acquiring a ‘bargain’. If you’re hoping for long-term business success, you want to build a loyal base, and that means attracting customers who will truly appreciate what you have to offer.
Cheapening the Brand
We touched on this above, but if items are discounted too often, or prices are too low, it seems too good to be true – and this can make consumers nervous. They start to wonder why your product or service is so competitive: are you desperate for sales? Or do you have to make up for some other element in the business – a poor delivery service or shoddy products, for example? Is your offering not worth paying full price for?
Slashing Profits
Discounts can be great for driving sales, but it’s still money off your bottom line. 25 customers paying full price is the same as 50 customers paying half price, after all; so it’s important not to strive for quantity over quality in all instances. Employ a careful strategy when it comes to discounts to ensure that you’re not giving away too much of your potential profit.
In conclusion: discounts can be super effective, but you must be creative! Make sure that discounts feel like a wonderful bonus and a compelling reason to give your business a try, rather than something that’s simply to be expected.
With Billsby, you can be as generous as Oprah this holiday season! Our advanced billing options allow you to reward customers with flexible discounts and coupons – with little or no software development. Sign up for your free trial today (see what we did there!) to learn more.
