‘Tis the season to be silly (on pricing)

How’s your Black Friday going? Yes, I know it was last week, but in every consumer channel and at every service touchpoint I am still being inundated with promises of “up to 40% off” just about every product I can think of, or have already bought at some point in the past few years.

Black Friday and the days that follow it - so-called Cyber Week - now basically mark the start of the Christmas holiday shopping season in the western world, but did you know its origins go back to the 1950s? Apparently, the term was used by the Philadelphia police force to refer to the day after American Thanksgiving, when huge crowds would flock into the city in advance of a big football game. Officers would not only have to work extra long hours as a result, they would also have to deal with a shoplifting spree as thieves took advantage of the general chaos.

In later years it became associated with the notion of retailers turning a profit – going from the red into the black – as customers went after a full range of discounted prices, and nowadays it is more or less synonymous with the start of a festive shopping silly season.

There are some pretty funny examples of ridiculous promotions out there. For example, why try and convince me I need a barbecue and swimming pool inflatables when it is currently 1°C where I live? And why would I ever need (or want) a pillow shaped like a human torso? It’s almost enough to make you wonder if retailers are using Black Friday as an excuse to get rid of some unwanted stock…

But the mega discounts are not only being applied to weird items – they are also making an appearance in everyday products and services. Take broadband, for example. I’ve been surfing for a better internet deal and saw that I could get a 75% reduction on my current price – for life! This was for pretty much the same product: the only difference was that I would be a customer of a sub brand owned by the same supplier, which uses the same fixed network as I am on now.

This points to some of the main problems for telecom businesses when it comes to Black Friday:

1. 99 times out of 100, deals like the one I mentioned above are for new customers only, and existing customers continue to pay more heavily to keep their providers in the black… This will have the knock-on effect of driving low satisfaction and churn in the most loyal – and profitable – customer base.
2. Overall market pricing simply drops, with all competitors aligning on the “new low”. This is just not sustainable – especially in sectors like telecoms that also rely on continued heavy investment and innovation. In Switzerland, one company decided to simply give mobile products away for free! Strangely enough, it was announced that both the CEO and CMO would be leaving pretty quickly after this creative marketing move.
3. With customers becoming increasingly focused on Black Friday bargains, they shift many of their purchasing decisions to this one week or so, cutting demand during other times of the year.
4. Finally, as a major online event, Black Friday could potentially deal a self-inflicted blow to telecom companies with retail stores. Having invested so much in omnichannel experiences and the staff to provide the human touch, what does this mean for the future of the industry’s channel mix – not to mention the customer experience?

In my opinion? Let’s stick to Christmas deals.

Photo credit: Malcon Fonseca Zanco, PIxabay