To sale or not to sale: Lessons for small businesses on Black Friday
Here’s what your small business can learn from these two Aussie brands and their differing strategies.
There’s no missing the fact that major sales events like Black Friday and Cyber Monday have transformed the retail landscape. Along with Christmas, Boxing Day and New Year’s sales, they’ve become key dates on the calendar for both consumers and business owners. But as large retailers dominate the space, many small businesses are facing a dilemma of whether or not to participate in these massive discount events.
Xero’s recent survey of 551* small business decision-makers found a split in sentiment: half of small businesses plan to participate, while 25% are undecided and a further 24% have made the call to opt out.
This dichotomy is well represented in two successful Aussie brands – Koh and TWOOBS – which take contrasting approaches to major sales days. While eco-cleaning brand Koh views them as a strategic opportunity for mindful growth, footwear brand TWOOBS chooses to stand by its strong environmental principles and avoids participating in the frenetic period altogether. Here’s what your small business can learn from their differing strategies.
The case for Black Friday: Koh’s strategic approach
Koh is an eco-friendly cleaning staple for one in 10 Aussie households, so it’s unsurprising that such a dominant force in the market sees Black Friday as a big part of its growth strategy.
“Black Friday is a hygiene factor of the category. We see growth year on year from the acquisitions we make during this period,” says Charli Walters, CEO at Koh, adding that the event is about more than just boosting sales. It’s also an opportunity to overcome the entry price point for its starter kits and convert new customers.
“Long-term sustainability is something that I’m very passionate about. So I’m all about mass-market reach to drive that improvement across the market. Having that ability to acquire new customers at a more achievable price point can really unlock that additional growth you might not get at other times of the year,” she says.
Koh leverages bundled discounts during Black Friday to drive higher average order values while introducing customers to more product categories, Walters says: “By bundling products, it allows us to drive a higher average order value for our customers, which then in return allows us to give them bigger discounts while improving their lifetime value over time.”
Despite the clear financial benefits, Walters says that Koh takes a measured approach to avoid a “race to the bottom”. It’s something that’s inherent to their brand – as an eco-conscious business, they understand there must be a balance between discounts and profit margins. It’s not about discounting everything – instead, their core products remain at everyday value pricing to make sure they retain brand integrity while offering compelling deals on other items.
Opting out: TWOOBS takes a stand against overconsumption
At the other end of the equation, TWOOBS, an environmentally focused footwear brand, isn’t interested in throwing their hat into the major sales events. Sister founders Jess and Stef Dadon reference their commitment to sustainability and their desire to tackle the broader issue of overconsumption.
“Discount culture like Black Friday and Cyber Monday is creating so much waste in the world,” Stef says. “It just never has made any sense for us to be involved in days like that.”
While TWOOBS acknowledges there’s revenue they miss out on by skipping sales events, they believe their approach is more sustainable – both for the planet and for their business. It’s a sentiment shared by 34% of small businesses who rarely or never discount, stating they avoid sales because it devalues their goods/services, according to Xero’s survey.
“We know that if we put on a big 60% off sale, we’d be tripling our revenue. But as a long-term strategy, it makes more sense not to run sales,” Jess says, explaining that TWOOBS is all about being upfront and transparent with their customers about how their prices reflect the best value all year round. “Rather than setting our prices high just to discount them, we give you our best price every day.”
It’s a strategy that has reshaped customer behaviours and led to steadier sales throughout the year, according to Stef: “Our sales curve has completely flattened out – we can do on a launch day what we used to do on a sale day, because customers know that we’re never going to discount.”
While their approach might be the exception rather than the rule, Jess and Stef say it’s helped give TWOOBS a level of consistency that has fostered a loyal community of customers who value quality over quantity.
Top tips for small businesses during the sales frenzy
Whether you’re mindfully approaching sales events like Koh or opting out like TWOOBS, here are some tips to help your small business thrive:
1. Focus on your most loyal customers
Sales events can attract new customers, but don’t forget about your regulars. Give them exclusive perks like early access or loyalty rewards to show they how much you value their patronage. “Retaining existing customers is much more cost-effective than acquiring new ones,” Walters says.
2. Use strategic messaging
For businesses like TWOOBS, marketing during widespread sales events isn’t about discounts – it’s about transparency on their sales-free approach. “Whatever you choose to do, talk about it,” says Jess. “Speak about it proudly and openly and authentically – that’s how you’re going to draw new people into the brand.”
3. Bundle and upsell
If you are taking part, think about the potential of bundling products to increase average order values. Just like Koh, you can give your customers more discounts over the long term while exposing them to new categories, and even open yourself up to new markets. As the Xero survey found, nearly half (48%) of those participating in Black Friday hope to reach new customers, while 42% are aiming to build loyalty with existing ones.
4. Stay true to your brand
Whether you participate or not, make sure your approach aligns with your brand values. For TWOOBS, it’s about showing customers that they’re fully committed to sustainability and always offer the best value on their footwear products year-round.
Every major sales event could be either an opportunity or a challenge for your small business. As Koh and TWOOBS show, there’s no one-size-fits-all approach. Instead, what matters most is staying true to your brand and being fully transparent with your customers.
*Total sample size was 551 Australian small business decision makers with up to 20 employees in the following industries; retail, trades, marketing, media and communications, hospitality, customer service, sales, tourism.
Read now: From phishing to deepfakes and beyond: Tips to protect your small business
Comments