What can B2B companies learn from Black Friday and the Holiday Shopping frenzy?
The Holiday 2011 Shopping season got off to a strong start over the weekend. Black Friday was the biggest ever for brick-and-mortar retailers; and there was an even bigger increase for online retailers. Overall, the weekend was a huge success when compared to the start of the 2010 holiday shopping season.
The fact that Black Friday saw an increase in retail sales this year should not come as a surprise. Much research (including our own) foretold strong buying intentions, with a continued shift to online shopping. The sheer size of the increase, however, is quite a surprise. Many analysts predicted a 2-3% rise in holiday shopping activity, so the big jump this weekend has brightened the prospects for American consumers and retailers.
So, does this mean all of the Black Friday deals and hype worked? The midnight store openings? The door-buster deals? The incessant advertising and promotions? Is there any way we can do something like this in the B2B space?
Let’s put the holiday shopping activity into perspective. We are at the end of the year and consumers are looking at their bank accounts and budgets, and assessing how much is left to spend, and looking at the bare walls where the flat screen TV should be hanging. We find a great deal of pent-up demand in the US market, as US consumers have been through another difficult year and pulled back on spending. This cutting back has left people with more money to spend (whether from their bank accounts or credits cards).
So, it looks like we are finding a strong convergence of:
The Supply (retailers going out of their way to make it easy for consumers to shop and buy with longer hours and lower prices)
The Demand (a rather strong need to refresh the cupboards), and
The Financial Support (to make it all come together)
Much of the same can be said for business. Budgets have been trimmed for several years, resulting in the need for investments and purchases to lead and support growth in the future. As on the consumer side, cutting back has created strong profits for many companies, which means they have money to spend.
What is the supply in this B2B equation? Are companies making the necessary effort to match pent-up demand and the ability to spend?
First of all, B2B can’t replicate door-buster deals and midnight store openings. But, B2B firms can:
Make it easy for companies to spend: Look at the holiday deals for shoppers, and you will see promotions for items priced from $25 to $2,500 (and even higher). If for no other reason than “spend-it-or-lose it,” companies approach the end of their budgetary year with the need to purchase – when selling to other businesses, you need to be prepared with products and services in a range of prices to meet their budgets.
Address the need to invest, and communicate it repeatedly: The theme of Holiday Shopping 2011 has been the consumers’ need to purchase many of the new technologies and new fashions that they’ve been unable to buy over the past year. The same can be said for business, but instead of the latest tablet or gaming console bringing joy to the consumer and her/his family, the product or service will bring opportunity to grow and advance the business.
Know your customer’s budgetary cycle: Retailers have it easy in this area – personal budgets follow the calendar years, so December represents the rush for consumers to spend within their annual budget. However, companies have unique fiscal years, often tied to industry business cycles. If you sell to businesses, it is smart to know when your customers may be looking to spend leftover cash.
Clearly understand customer needs and wants: This should go without saying, but retailers greatly prepare for this time of year by deeply analyzing what consumers need and want. They tailor product offers, pricing and communication to meet them and remain focused on the key aspects driving purchases.
Posted by Jeff McKenna, Jeff is a Senior Consultant at CMB, and the creator and host of our Tools and Techniques Webinar Series.