If you’re here, you’re probably considering using Black Friday to clear out old stock through markdowns. It’s a great idea, but during a competitive shopping season like this, a well-planned markdown strategy can make all the difference. Effective markdowns can help you move older inventory, draw in new customers, and increase brand visibility. And the science behind successful Black Friday markdowns really comes down to four key elements: (1) understanding consumer psychology, (2) making data-driven decisions, (3) applying strategic pricing and promotions, and (4) reaching customers with efficient marketing.
1. Understanding consumer psychology
Scarcity and urgency
Scarcity is a powerful nudge in shopping. When customers know that a product is in limited supply, they’re more likely to feel compelled to purchase it before it’s gone. For clearing out old stock, this sense of scarcity is something you can honestly emphasize, especially if these items won’t be restocked.
You can amplify this by using countdowns or displaying real-time stock levels, which naturally encourage customers to act quickly. And transparency is key here. Honesty about stock levels not only builds trust but also aligns with guidelines like the Omnibus Directive, which emphasizes fair marketing practices. Informing customers of your true inventory levels when you’re selling out can actually make them feel compelled to buy before it’s too late.
Social proof
Social proof is another important element influencing Black Friday customer behaviour. Customers frequently feel more comfortable selecting things when they observe that others are enthusiastic about them. You can showcase this by highlighting customer reviews, ratings, or even how many others have purchased an item. It’s a way to share genuine feedback and build trust around your products.
Adding tags like “best-seller” or “most popular” can also help customers navigate toward items they may love, based on what’s already resonating with others. It’s not about creating a frenzy – it’s about letting people see what’s already been a great choice for others, guiding them toward products that are tried and true.
2. Data-driven decision making
Analyzing past sales data and price simulations
The most successful Black Friday markdowns are backed by data. By analyzing past sales, you can identify which products performed well, which pricing strategies resonated with customers, and which marketing channels were most effective. Even if you don’t have the exact same products as last year, comparing similar items or categories and their performance at various discount levels can offer valuable insights. For instance, if certain items sold well with deeper discounts, applying similar markdowns to comparable items this year might yield similar results.
Running price simulations also proves invaluable in this process. With pricing software, you can predict demand and determine discount levels that successfully strike a balance between sales volume and profitability by simulating various markdown levels. Read more about price forecasting and simulations in our blog post here.
Customer segmentation
Personalization is key to effective marketing, especially during high-stakes sales events. By segmenting your customer base, you can tailor markdown campaigns to specific groups. Data analytics can reveal different customer profiles, such as frequent buyers, deal-seekers, or premium shoppers, each of whom might respond to different markdown strategies and markdown products.
Sending personalized emails, offering exclusive discounts, or highlighting relevant products for each segment can drive higher engagement and conversion rates. Tailored campaigns make sure that your markdown offers reach the right people with products that feel relevant to their interests. For instance, if someone recently purchased an umbrella, they probably wouldn’t want another email promoting umbrellas on sale. But they might appreciate seeing markdowns on related items, like rain boots or rain jackets.
3. Strategic pricing and promotions
Anchoring perceptions of value
Anchoring is a pricing tactic that can help customers feel they’re getting a great deal. Displaying the higher original price alongside the markdown price gives context and can create a strong sense of value. For example, if a product originally priced at $200 is marked down to $100, customers perceive a substantial savings, often motivating them to make the purchase.
Using “compare at” pricing strategically enhances the perceived value of markdowns, making customers feel they’re genuinely saving, when you’re clearing out stock. Keep in mind that the EU’s Omnibus Directive requires retailers to show the lowest price from the past 30 days as the “compare at” price, ensuring transparency. Inflating the original price is not allowed! (P.S. – Check out our Omnibus app, which automatically calculates and displays compliant “compare at” pricing on your Shopify storefront!)
Bundling and cross-promotions
Bundling products or offering cross-promotional discounts is another effective way to increase average order value while clearing stock. For example, pairing a popular item with a complementary, marked-down product can make the bundle more attractive. Bundles help you move more inventory while giving customers a sense of added value, allowing them to get more for their money.
Again, use data-driven insights to determine which products to bundle together. If you’re marking down umbrellas, for example, check which types of rain boots have been slow to sell and might benefit from a discount. By combining products that are related or have similar markdowns, you can boost sales while effectively managing inventory.
Alternatively, pair the marked-down umbrellas with your most “popular right now” rain jackets. This strategy leverages the appeal of in-demand items to enhance the attractiveness of the bundle. Customers may be more inclined to purchase the umbrella if it’s packaged with a popular rain jacket, creating a sense of added value and making both products feel like a timely, must-have combination.
4. Efficient marketing
Omnichannel marketing
Reaching consumers wherever they are online or in-store is frequently essential to Black Friday success. A seamless purchasing experience is produced by combining offline and internet marketing. Making sure your messaging is consistent throughout social media, emails, and in-store displays is crucial because many individuals do their research online before making a purchase.
Posting sneak peeks, special offers, and Black Friday countdowns on social media and email can build excitement, driving both online and in-store traffic. An omnichannel approach ensures you’re meeting your customers where they’re already spending their time.
Collaborating with influencers and affiliates
Social media influencers can play a valuable role in amplifying your message during Black Friday. By working with influencers who genuinely align with your brand, you can gain visibility with audiences who trust those influencers’ recommendations. Genuine endorsements can go a long way in guiding people to your markdowns in an authentic way.
Affiliate marketing is also a powerful tool. Bloggers and content creators who share your deals with their followers can help extend your reach while earning a commission on the sales they generate. This kind of collaboration is a win-win, helping you reach a broader audience and offering affiliates an incentive to promote your products.
Conclusion
So, as Black Friday approaches, plan your markdown campaigns thoughtfully, and make sure to have seamless and consistent messaging across the board. Get rid of those old products to make space for the new ones, but do it in a way that gets you new customers out of it!
By making data-informed decisions, using smart pricing strategies, understanding consumer psychology, and creating an omnichannel marketing approach, you already have a head start. Happy sales season!