What Can Black Friday Do for Your Business?

Love it or hate it, Black Friday is here to stay.

For small businesses, it’s easy to feel overwhelmed or question its value, especially when margins are tighter than for big corporations. But the thing is Black Friday isn’t one-size-fits-all. Some small businesses thrive during this period, while others may struggle to see the benefits.

Let’s break it down:

The Two Camps

Most small businesses fall into one of two categories:

1. The ones with enough margin to discount.

2. The ones without enough margin to discount.

If you’re in camp #2, it’s time to ask yourself a blunt (but important) question: Is your business scalable?

If scalability isn’t your goal, that’s perfectly fine—there’s no rule saying you have to scale. But if growth is what you’re aiming for, this is worth reflecting on. Can you grow your business in a way that allows for strategic promotions while maintaining profitability?

The Black Friday Effect

Black Friday achieves three critical things for businesses:

1. Customer Recruitment: It converts followers or email subscribers who’ve never purchased before into paying customers.

2. Customer Retention: It gives your existing customer base a reason to buy again, increasing their lifetime customer value (LCV).

3. Revenue Boost: By combining recruitment and retention, Black Friday can give your revenue an immediate and meaningful lift.

In essence, Black Friday helps with acquiring new customers and retaining existing ones—two pillars of long-term business success.

Why New Customers Matter

Customer recruitment is essential for growth. New customers are the lifeblood of your business—they feed the funnel and set you up for future sales.

Yes, acquiring them at a lower margin during Black Friday might feel counterintuitive, but think long-term. Those customers, if nurtured properly, can bring significant returns in the months and years to come.

Without new customers, you’re left relying solely on your existing audience. And while it’s great to have loyal customers, eventually you’ll hit a wall. New products or offers can only do so much to keep the same audience engaged.

The Power of Retention

Once you’ve brought customers into your business, the next step is retention. This is where you turn those first-time buyers into loyal customers who return again and again.

Retention is driven by several factors:

• Product range: Does your range encourage repeat purchases (e.g., complementary items or restockable essentials)?

• Quality and experience: Did the first product wow them enough to come back for more?

• Incentives: Are you creating reasons to return, like loyalty rewards, timely offers, or exclusive products?

Retention is about building trust and delivering consistent value so customers feel compelled to stay with your brand.

Creating a Reason to Buy

Whether recruiting or retaining, customers need a reason to buy. Black Friday provides a ready-made opportunity to give them that push:

• FOMO (Fear of Missing Out): Customers don’t want to miss out on limited-time deals.

• Social Proof: Reviews and testimonials can address their anxieties.

• Urgency: Time-sensitive offers create a “now or never” mentality.

• Discounts: The most straightforward reason—helping them justify their purchase.

Black Friday is powerful because it doesn’t require much “hype-building.” Society has already done that for us. Customers expect deals, and even those who say they dislike the event often end up purchasing something.

The Bigger Picture: Lifetime Customer Value

Here’s where Black Friday can truly shine: It’s a chance to improve your lifetime customer value (LCV).

Why does this matter? Because knowing your LCV helps you make smarter decisions about how much you can afford to spend on customer acquisition.

To calculate your LCV:

1. Take your total revenue over the past 12 months.

2. Divide it by the number of customers who purchased during that period (not the number of orders).

Let’s Put It Into Perspective

Say your average order value (AOV) is £40, but your LCV is £68. That’s a strong LCV compared to AOV, showing your customers come back to spend more over time.

Now let’s break it down further:

• You have a 50% margin on your products, meaning your cost per product is £20.

• Overheads add an additional £2 per product, leaving you with a cash margin of £18 per full-price sale.

If you run a Black Friday promotion offering 20% off, your discounted price is £32. Here’s how it plays out:

1. At the discounted price, you’ll make £14 per sale (£32 - £18 costs).

2. On a typical day, you might sell 3 full-price items, earning £54 (£18 x 3).

3. On Black Friday, you could sell 9 discounted items, earning £126 (£14 x 9).

The volume of sales drives your profit up, and more importantly, you’ve just converted 6 extra new customers who might return to buy again.

Why the Psychology of Discounts Matters

You might think: “If they love the product, they’ll buy it anyway!” But the reality is, they likely won’t.

Here’s why:

• Customers need justification for their purchase. A discount helps them feel they’ve made a smart decision.

• Urgency and exclusivity drive action. Black Friday gives them a time-sensitive reason to hit “checkout.”

Without an offer, it’s harder to nudge customers—especially first-timers—over the line.

Is Black Friday Right for You?

The key takeaway is this: Black Friday doesn’t have to be about following the crowd—it’s about understanding your own business.

If it aligns with your goals, it can be a powerful tool for growth. If it doesn’t work for you, that’s okay too. The important thing is to base your decision on strategy, not pressure.

And if you’re unsure, it might be time to revisit your business model and margins to see if there’s room for improvement or adjustment.

Final Thoughts

I hope this has given you clarity on what Black Friday can do for your business and how to approach it strategically. Remember, it’s not about doing what everyone else is doing—it’s about what works for YOU!