Black Friday and Cyber Monday (BFCM) are known for skyrocketing sales and massive customer influxes, but the question remains: are these new customers good for your business in the long run? We’ve analysed broader data across retail clients to reveal key insights into customer acquisition during this period. Let’s dive into the details to understand how this impacts your brand—and how you can adapt your strategy.
A Surge in Customer Acquisition
Throughout November, we consistently see a significant spike in customer acquisition rates. The appeal of deals and discounts brings in new shoppers. While this influx can be exciting, it’s important to look beyond the numbers. The key question is whether these new customers will become repeat buyers or just take advantage of temporary offers?
Average Order Value (AOV) Takes a Hit
Despite the surge in new customers, initial AOV during BFCM often declines. With discounts driving sales, customers typically purchase lower-priced items or spend less overall compared to other times of the year. This decrease in AOV can have a significant impact on your profitability.
Lower Lifetime Value (LTV)
One of the biggest challenges post-BFCM is that many of these customers are less likely to return. Data shows that customers acquired during this period tend to have a lower LTV compared to those acquired during other periods. Many are one-time buyers, driven by discounts rather than loyalty.
Higher Customer Acquisition Costs
As competition increases during BFCM, customer acquisition costs tend to rise. With many brands fighting for the same digital space, the cost of acquiring customers increases.
Reduced Profit Margins
While BFCM promotions drive a high volume of sales, it can be deceiving. Sales during this period are often reliant on deep discounts which eat into your overall profit margins. The reduced margins from these heavily discounted items can undermine profitability. To address this, it’s important to evaluate whether these new customers are likely to stay loyal or if the initial profit sacrifice is worth the potential for long-term growth.
Conclusion
Black Friday and Cyber Monday bring in a lot of new customers, but they also come with challenges. While customers acquired outside of the holiday season tend to offer greater long-term value, Black Friday remains an important opportunity. Being aware of how it impacts your long-term growth is crucial. You’ll need to find the right balance between Black Friday’s short-term wins and its long-term impact, adapting your strategy accordingly. By implementing strategies that nurture customer loyalty and increase the chances of repeat purchases, you can make the most of BFCM and position your brand for long-term success.
If you need help creating a smarter BFCM strategy, we can help you with this. If you’d like to get deeper into our Black Friday analysis, feel free to reach out at hello@prospectknight.com.
The PK Team.