November 2022 | 

Black Friday Must Go: A Customer-Centric Reality Check

Black Friday Must Go: A Customer-Centric Reality Check

There are plenty of reasons to avoid shopping on Black Friday, including preservation of life and limb. Injuries and deaths are common enough to be tallied on a website, blackfridaydeathcount.com. When a few retailers do close shop for that day, we tend to view it as a social service: a way to ease the hysteria, giving customers one less reason to brave the crowds. But Wharton marketing professor Peter Fader has pointed out — for more than a few years — that refusing to participate is a smart move for those retailers too.

“One of the most important points of a customer-centric strategy is prioritization,” he says. “Black Friday is its antithesis. On that day, the people at the front of line who got there at midnight for that doorbuster sale are seen as the priority. But the reality is they're not very valuable customers. It’s so clear when you do an audit of your customer base that customers acquired during the fourth quarter of the year are not only substantially different but substantially worse in terms of ongoing repeat buying.”

Even armed with that data, though, many companies succumb to the pressure. Fader says retailers often cling to a tradition that makes no sense financially or strategically, “throwing all common sense out the window.” For those willing to rethink tradition, basing their holiday strategy on solid research rather than habit, he has some ideas:

  1. Skip it. Fader’s data-based preference is for retailers to maintain a focus on their best customers and resist any pressure to offer deep discounts and extended hours on Black Friday. “The benefits of closing on that day are greater than participating in the frenzy,” he says.
  2. Aim low. “When you’re pursuing low-value customers, play defense, not offense. You’re not going to build customer relationships, so offer deals that don’t go overboard. Take a look at the numbers and thoughtfully consider what makes sense, given the fact that most of these customers aren’t worth a long-term investment since they aren’t coming back until next year.”
  3. Aim high. “Flip Black Friday on its head by turning it into an opportunity to grow your relationships with high-value customers. Deploy your best assets and efforts — offering VIP shopping hours or extra services just for them are options,” he says.

Fader says he is “optimistic about the long run. I really do believe that today's MBA graduates and participants in programs like Analytics for Strategic Growth: AI, Smart Data, and Customer Insights [in which Fader teaches] will do better. They understand the data and how to be more accountable than current C-level leaders. I do think that we'll see changes, but they probably won’t happen any time soon.”

Customer Centricity Is the Answer

A recent discussion on the daily retail forum RetailWire focused on whether the customer is really the most important thing in retail. For Fader it was reminiscent of Black Friday, an indicator of how much work there is still to do. “We've seen a lot of companies saying that the customer is everything. But now there is some pushback.”

The problem, he says, is that while the customer “should be at the center of everything we do, a lot of companies have just given it lip service. They might check a box or throw a few dollars at an agency or a consulting firm, but they're not embracing customer centricity or committing to it in a meaningful way. We need to fix that.”

Fader’s most recent contribution to the fix is The Customer-Base Audit: The First Step in Customer Centricity (Wharton School Press). He says he and his co-authors “really stand by the subtitle. If you really want know what's going on with your customers, start with an audit. It’s an objective, rigorous, standardized way to look at your customers through different lenses and really know what you have. Then, you can make more informed ROI decisions on customer activities and be a better partner to the CFO. It’s the first step in turning the quicksand of marketing and the customer relationship into solid ground.”

An Honest Look at Customers

The idea that each customer has equal value and marketers just need to focus on the experiential and delightful aspects of buyer behavior is, according to Fader, “grossly irresponsible. There are a lot of people in marketing who are avoiding accountability by failing to take an honest look at their customers. They either don’t see or choose to ignore the fact that most customers are inconsequential (from a financial standpoint), and a small number customers are extraordinary valuable. The idea of an ‘average’ customer is a myth. Being accountable starts with accepting that fact.”

“I’m not putting down the psychology of marketing — I'm very respectful of that work,” he continues. “But it should be phase two. Start with the behavior. Do the audit. Then once you start to see vast differences across the customer base, start to bring in some of those tools to understand what makes those high-value customers different than the low-value ones so you can serve up the right products, services, and messages.”

Where to Start

Fader is one of three Wharton marketing professors who teach the Analytics for Strategic Growth: AI, Smart Data, and Customer Insights program. They are joined by practitioners from Google and NatWest Group who share real-world experience and applications. Fader says helping leaders begin or deepen their customer analytics practices is “immensely gratifying. It's great to see the quality and quantity of people taking it and the cross-fertilization that happens between the marketers and non-marketers in the program. Even better than having someone email me a week after attending is getting that email two years later, saying, ‘We're making some progress, but we need a little bit of help over here.’ I get them a lot, and it’s a great indicator that the lessons are really staying with them.”