Each year it seems that the hype around Black Friday gets a little more aggressive and a little more outrageous. Stores offer “teaser deals” to get you in early with the hopes that if you happen to get your hands on said deal, you’ll buy other higher margin items as well. After experiencing four Black Fridays (I’ve owned my Pure Barre studios for over 4 years), I’m announcing that I am done with Black Friday. Next year, I’m opting out. Here’s why…
Dollar, dollar bills.
Keeping in mind that the definition of a business is a PROFITABLE enterprise that works WITHOUT YOU, I have to call it quits on Black Friday sales.
Before you make a decision about your business, you need to ask yourself: “Will this increase my profitability?” And if the answer is “No” then why are you doing it?
During Black Friday 2016, I didn’t make any more money than a normal business day. Ok, technically I made an extra $200 after I factored in the discounts and extra time paid to my employees for preparing and executing the sale. Was it worth it to not go home to spend time with my family and wake up early for an extra $200? Nope. (After reading this, I’m pretty sure my mom is already planning my arrival for next year’s meal and I may have regained my status as most-favored daughter. Sorry Becky! Zing! Just kidding! #wearentcompetitiveatall)
I challenge you to REALLY think about whether you made a profit from Black Friday. Maybe you had a killer sales day, but did you make any money? Remember, to succeed in business, or make a profit, you have to have a margin greater than the sales price. For example, if it costs you $50 to buy an item at wholesale and you sell if for $100, you’ve made $50. But if you put that item on sale at 50% discount, then you’ve made $0 because you just got $50 selling something that cost you $50. And you’ve actually made less then $0 because you had to pay someone to work, as well as any marketing costs associated with that sale.
This was actually my most profitable Black Friday yet—and I have a whopping $200 extra to show for it. In the past, if I’ve put clothing on sale, I’ve actually lost money. This strategy is called “monetizing the asset” and simply allows me to get something…anything…for merchandise that isn’t selling, thus allowing me to free up cash to buy other items I believe will actually sell at full price.
If you need to free up cash to use for something that will be more profitable, then by all means, have a sale. Sales can make perfect sense if you can use that money to reinvest in more profitable decisions. But if you have low inventory or don’t need extra cash to increase your holiday inventory, stay strong and skip the deep discounts just because everyone else is.
It’s OK to be the best.
Look, at some point you have to just accept that your business is the best at what it does, and that’s ok. I don’t feel like a jerk for saying that. My team and I work really hard and we will never settle for being anything but the best. My Pure Barre studios are what my industry calls “boutique fitness” studios. Meaning, we offer a premium (the best) service in the Winston-Salem and Clemmons areas. We are the barre experts. Does the best have to discount? No, they do not.
If you build your business to be the best, you are attracting clients that care about quality and aren’t price sensitive. These people aren’t solely focused on chasing sales or trying to “get the best deal.” They want the very best and recognize the value associated with getting it.
Of course, you have to make sure your prices make sense—and believe me, if they don’t your sales will suffer—but it’s such a drag to have clients who only care about the lowest price. You have nothing to offer them if you’re competing on price alone.
And let me let you in on a secret. If you build your business to be the absolute best in your community, it’s fun to keep getting better. You won’t be spending time worried about how to cut prices. Instead, you’ll be trying to figure out how to invest more in training your employees to be better. You’ll be asking yourself how to make improvements to impress your clients and attract new ones as well as what you can do to innovate and “wow” everyone. Who wouldn’t prefer to be solving those “problems?”
No sale will make up for satisfied clients.
We all know that the true test of a satisfied client is whether that person would recommend your business to their friends. If your business plan doesn’t include getting referral business from your existing client base, no sale will make up for that lost revenue. The best thing you can do for your business is to earn your clients’ trust and respect so they will tell all their friends about how amazing you are.
My business goal is to get every client who purchases our introductory offer, the $99 New Client Special, to then purchase Pure Barre Platinum, which is a 12-month contract priced at $139 each month. In order to incentivize clients to continue taking class and make the commitment to purchase Pure Barre Platinum, we offer a free outfit including the client’s choice of leggings, a Pure Barre tank or tee and Pure Barre socks.
Are my clients more likely to be excited about a free outfit and tell all their friends how amazing Pure Barre is because we offer superior service and “wowed” them to keep coming into the studio multiple times a week taking the best classes? Or are they going to tell everyone how amazing our Black Friday sale was? Sorry, no question—the first one, of course!
And for those of you wondering if I lose money giving away an outfit, I’ll simply ask the question back to you. What do you think?
I’ll leave the Black Friday sales to those big box stores that have to compete on price, because it simply doesn’t make sense for my business. I will, however, start to brainstorm some more exciting post-Thanksgiving ideas that I think my clients will appreciate and more importantly tell all their friends about!
Next post is about measuring the financial performance of your business.
Until then, stay on your toes!