Everybody who is anybody in the retail world shows up in earnest, we’re told, to the two premiere shopping events of the year…
Black Friday and Cyber Monday, at least according to conventional wisdom, are the places to be seen if you’re an ecommerce company vying for a piece of the holiday sales pie. But before you drastically slash prices, zealously market your sale, and eagerly wait for customers to beat down your digital doors…
The idea of competing on price in what has become one of the most cutthroat times of year for retailers is something that should be examined a bit more thoroughly than convention affords. If you’re considering a massive end-of-year sale, otherwise known as a flash sale, there are some questions I’m betting you’ve forgotten to ask yourself...
The answers, if you’re willing to probe a bit, will likely mean the difference between flash boom and bust.
The online flash sale phenomena started with with deal-of-the-day site Woot in 2004, morphed into a business model which has attracted hundreds of millions in venture capital that resulted in both boom & bust, and is now generally perceived as a “must-do” for ecommerce stores determined to make big splashes.
Or is it?
Flash sales aren’t for everyone.
In fact, they can cost you money and face if poorly executed.
That’s why your flash sale, if you even run one, must stand out, be intelligently targeted, and used as a trust builder that generates recurring revenue rather than one-off margin killing sales.
To Flash or Not?
If you haven’t stopped to ask whether you should even be considering a flash sale you likely haven’t considered the impact they can have on your brand and bottom line.
There’s no sugar coating it, flash sales can erode margins and attract bargain hunters with no intention of becoming loyal customers. In a worst-case scenario, if you fail to deliver on inventory, fulfillment, and shipping promises they can destroy your reputation.
On the flip side, a well executed flash sale that offers merchandise at a steep discount for a brief period of time can grow the top line lightning fast, increase CLTV, and earn loyalty you otherwise might not have.
So how can you tell if a flash sale is right for you?
Ultimately, the ultra-specific goal you set will determine the answer:
- Move excess inventory
- Acquire new customers
- Grow the top line
- Boost profits
But you can also figure out in a relatively short period of time whether flash sales are right for you without doubling down on a Cyber Monday or Black Friday-like effort by testing a mini-flash sale against non-flash sale results.
It’s exactly what mobile device case manufacturer Case-Mate did.
In the span of just two weeks the company ran two mini-flash sales and compared the performances against non-flash sale KPIs:
Image via: Marketing Sherpa
Results of the first flash sale include:
- 51% increase in traffic
- 50% increase in conversion rate (purchases divided by visits to the landing page)
- 236% increase in revenue
Results of the second flash sale include:
- 5% increase in traffic
- 105% increase in conversion rate
- 78% increase in revenue
On the surface these results look great and the company says it’s planning similar promotions in the future.
But notice what’s not immediately discussed in the case study; profitability.
I know what you’re thinking, “but I’m not solely concerned with whether a particular flash sale is profitable.” That’s great, but if you’re concerned about the long term, you absolutely need to be tracking flash sale customers in your analytics after the first purchase to see:
- If you’re able to cross-sell
- If you’re able to upsell
- If flash sale customers become loyal
This piece, written by Tommy Walker, will show you how to accurately calculate CLTV (among other key metrics):
Image via Conversion XL
Knowing your CLTV is key because it will help you gauge the quality of your flash sale customers:
- If flash sale customers compare (over time) unfavorably with CLTV, reconsider holding flash sales
- If flash sale customers compare favorably with CLTV, compare flash sales with costs associated with other acquisition techniques and balance with top line growth accordingly
Flash Sale Fatigue is Your Worst Enemy
Flash sale fatigue, or the mind numbing amount of bargains consumers have learned to ignore, is a headwind your next flash sale must nimbly cut through if it’s to be a success.
In this survey, 52% of respondents say they feel overwhelmed by the number of “bargain-boasting email” they receive on a daily basis.
While others argue email fatigue is a myth, more than half the email in your inbox is likely promotional in nature:
Image via Marketing Land
One reason for this is because the flash sale itself has become a business model. Cash flush daily deals sites and flash sale platforms appeared to peak during and after the recession that began in 2008 and crashed quickly amid competition, customer fatigue, and the recovery.
It prompted industry trade publications to pronounce the flash sale boom over:
- Groupon lost approximately 80% of its market cap in the year following its IPO
- Fab, a flash sale site once valued at $900 million, is now valued at $50 million
- Zulily, a flash sale site aimed at mothers and children that once had a market cap of $7 billion, is now being acquired for $2.4 billion
- Totsy, a flash sale site targeting children, liquidated after burning through $34 million
- Rue La La, a flash sale site acquired by EBay, was sold because it dragged down profits
Flash sales are all these VC-backed companies did at one time.
What makes you think you’ll do any better?
Here’s what goes wrong with flash sales.
What You Should Learn From Flash Sale Failures
Flash sale shoppers are afraid they might not get the deeply discounted item being offered before supplies run out.
Forty-three percent of the respondents in this survey of shoppers in India say they don’t like flash sales because they fear being disappointed by not getting the item they want due to competition.
The same survey reveals while overall satisfaction with flash sales is generally average or above, just 5% rate their flash sale experience excellent:
Image via Nandini Nelluri
Consumers who are disappointed by flash sales often vent on social media which in turn harms your brand.
Forty-four-percent of the more than 2,700 comments studied in a content analysis of flash sale site Facebook pages were negative.
That’s a lot to be up against before you’ve even started, but fortunately adding inventory quantities to your product pages and using an app like Bold Commerce’s Product Discount can eliminate some of those hesitations from the outset.
Here are 3 additional reasons flash sales fail to impress and how you can fix them:
Fail #1: Shipping
Customer perception is shaped not only before and during a flash sale but also by what happens after a purchase is made.
Shipping flash sale items quickly is paramount. More than two-thirds of the respondents in this survey say one day shipping is a priority:
Image via Walker Sands
Twenty-two percent of the Facebook comments analyzed in that content analysis mentioned earlier were related to negative shipping experiences had by customers.
It’s not uncommon for flash sale customers to complain of waiting 4-6 weeks to receive merchandise that arrives in several installments.
Fortunately, for merchants who serve New York, San Francisco, and Chicago, Shopify’s UberRUSH integration can help offset these concerns, and the “same-day shipping” option could be showcased right on the product page.
Fail #2: Inventory
Successful flash sales generally result in a large number of orders for relatively few products.
According to an ecommerce fulfillment solutions provider, 45% of flash sale items sell out faster than expected. One way to really disappoint customers is to build excitement, use scarcity to drive them to your flash sale, and then tell them the item they want is out of stock.
Not having enough inventory to satisfy expected demand or not being able to track inventory in real time can negatively impact future sales as well. Likewise, misjudging demand can leave you with excess inventory that is costly to warehouse and account for.
Alleviating this comes in two flavors:
- Do a thorough job in researching demand and prepare your supply chain accordingly.
- Be prepared to say “I’m sorry” and keep in constant communication with buyers if you mess up.
The first answer here is obviously the best. If necessary, hire an experienced consultant to hold your hand through your first flash sale, just to minimize any risk to damaging your brand.
As for the other option, mistakes & poor planning happen. What’s worse than a mistake though, is when companies don’t communicate with their customers about what’s happening. Some people are always vocal when they don’t receive their products on time, but the majority are content when you keep them in the loop and give them honest information about the status of their order.
More than anything, consumers don’t want to feel like they’re being taken for a ride, and sometimes the best way to handle that is to suck it up and simply say, “I’m sorry.”
Fail #3: Site Crash
Flash sales often result in habitual site crashes even for large brands.
If your business model relies on frequent flash sales, load testing your site is a must. The extra server capacity required of successful flash sales is likely cost prohibitive during non-flash sale times. The ability to scale on demand is necessary to prevent crashes.
Not forecasting potential flash sale traffic based on user behavior in response to email marketing, PPC campaigns, and social media traction results in having no visibility into potential peak transaction load.
Of course, the alternative here is to switch to Shopify Plus which processes over 500,000 hits per minute, has 99.99% uptime, and a team of engineers working around the clock to ensure smooth performance, even during high-traffic periods.
The Upside of Running Flash Sales
Now that you’re prepared to handle the most common hurdles, let’s define an ultra-specific goal to determine the success of your flash sale.
Only after you narrowly define why you’re holding a flash sale should you begin sorting through the mechanics of the sale itself. Are you looking to:
- Move excess inventory?
- Get new customers to sample you?
- Retarget people who have visited a specific product page?
With a clear objective in mind early, flash sales can help you grow faster than your peers.
Earlier, we outlined how companies with flash sales as business models have recently fallen on hard financial times. However, in their heydays flash sale-only sites grew at least twice as fast as other ecommerce merchants.
Separately, while the data is several years old, research suggests flash sale customers return to spend another 385% of the first purchase amount which far outpaces that of ecommerce concerns not running flash sales (94%).
Besides avoiding the flash sale fails outlined earlier, meticulously preparing for your next flash sale is the secret sauce needed to make it a success. Below are the 4 questions you must answer to make your sale a winner for you and your customers.
1. Who Is The Flash Sale For?
Defining your target market hinges on the goal you set for your flash sale.
A huge deal is what flash sale consumers are after so it’s not as important to personalize these communications as you normally would. However, the wider you cast your net the lower the your conversion rate is likely to be, the higher your CPC, and the lower your ROI.
This may also hurt your Quality Score if you’re advertising the sale via AdWords and harm your page rank and ad position which can be extremely detrimental to a sale that may only be lasting for a couple hours.
That’s why mini- flash sales are great ways begin and test.
Mini-flash sales aren’t characterized by extremely small audience sizes. Instead, they simply use a bit of data intended to narrow the net you cast to improve your KPIs. The more you narrow your target, the better shot you have at converting at higher rates and generating higher returns.
If the goal is to target new customers:
- Don’t overtly market the flash sale to your existing email list
- Identify consumers who have shown interest (on social media) in flash sale product or who follow a competitor with similar product
- Poach these consumers by creating a list of their Twitter handles or IDs you can upload and directly target with ads
- Run AdWords ads that are triggered by keywords associated with your flash sale item
- Ask PPC targets to opt into a separate VIP email list etc. in return for early access or some other benefit to reduce PPC costs and gain repeat access
- Be prepared to sell flash sale items to existing customers as you cannot hide the sale and don’t want to create any animosity with customers who may have paid full price
If the goal is to target existing customers:
- Target specific demos who have shown prior interest in flash sale product
- Target specific segments based on purchase history
- Target your most valuable customers
- Target your least valuable customers
- Target only inactive customers with flash deal
- Target those who have visited a specific product page
- Retarget those who have previously visited the item being flash sold with personalized ads that acknowledge so
- Be sure to suppress the segment of your customer base who has already purchased the item you are massively discounting (they won’t be happy when they see their peers are getting the same item 70% off)
Important: Know ahead of time how you’ll handle an existing customer who recently purchased the flash sale item at full price and wants to be compensated in some way.
2. What Products Are Being Flash Sold?
You may decide hold a flash sale on your marquee product and be done with it in 2-3 hours without much thought about target audience.
This might work well (and be the only option) for an ecommerce company with just a small handful of products.
However, if you’re a retailer with thousands of items- many of which aren’t moving as fast as you’d like- how do you identify the ones that might work best in a flash sale?
- Consider Google’s Keyword Planner to identify search volumes
- Identify poor or negative product reviews left by customers of your competitors & poach them with an intelligent flash sale ad (We know you had a bad experience with product X- and while we’re not our fault we’d like to make it right. How does 70% off sound? etc)
- Consider using keyword spy tools like like SEMRush & SpyFu to identify which items your competitors are focusing on and undercut them by flash selling those items
- Consider real time flash sales by connecting your products with trending content (Loving Fifty Shades of Gray? Us too! Tie up your lover with one our neckties- NOW 70% off!)
If your flash sale is to attract new customers:
- Flash sell excess high margin seasonal inventory to move it quickly and reduce accounting costs
- Start a relationship or poach a competitor’s customer by flash selling popular, low margin merchandise
- Boost brand awareness and make huge splash, flash sale your marquee item
If your flash sale is aimed at existing customers:
- Select items based on high traffic/low purchase volumes
- Flash sell items only to segments that have expressed some interest in them in the past (visited product page, clicked on an ad)
- Flash sale abandoned cart items only to those who abandoned them
- Hold a “secret” flash sale for new customers, promoted through the confirmation email for that cross-sells related items
3. When & Where Will You Sell It?
Brick and mortar stores have taught us people will forgo sleep, line up before dawn, and behave in ways they otherwise might not for a great deal.
This doesn’t mean we need to “open the doors” to our flash sales at 4 A.M. Nor does it mean we are limited to selling to those who are within the proximity of a physical store. These are obvious points but ones that can be easily overlooked and result in costly marketing and shipping mishaps.
Question: Can you profitably ship flash sale items internationally?
Answer: If not, segment your email list for U.S. consumers only and limit your PPC campaigns by geotargeting ads accordingly.
Question: How long should I run a flash sale?
Answer: Research suggests shorter is often better:
- Two hour flash sales result in email open rates 14% higher than the average for the same business
- Three hour flash sales have the best transaction to click rates (59% higher)
Question: When should I run my flash sale?
Answer: Look at your analytics and see if any purchasing patterns emerge:
- What day(s) of the week do people historically purchase flash items?
- What time of day do people historically purchase flash items?
- When are your email open rates highest?
If patterns emerge it’ll be obvious when to have your flash sale. If not, research suggests flash sale emails sent after 3 P.M. perform better than mid-day or lunch time sales:
Image via Experian
The idea is to schedule your flash sale when it’s convenient for the customer, unlike this one which is a week long, confuses people in countries not able to take part, appears to feign scarcity, and requires a schedule since sale times change daily:
Image via One Plus
Complexity is the enemy of a sale that hinges on people making emotional purchasing decisions very quickly. Don’t slow them up or make the purchase inconvenient in the least:
- Keep it short to leverage scarcity
- Keep it simple so there’s no confusion
- Make the value proposition irresistible
4. How Will You Sell It?
Regardless of who you’re targeting, you should be selling a flash sale before the actual sale window.
You’ll go about building anticipation differently based on whether you’re targeting existing or new customers. The tactics that’ll be emphasized or given more weight will be different.
However, no amount of marketing can save a flash sale unless it combines:
Great Merchandise + Deep Discount
It’s really this simple and why scarcity (quantity & sales length) is a foundation on which you’ll build your marketing mix. The key, according to research from Experian, is touching people via email shortly before the sale is to begin.
This isn’t to say PPC ads aren’t important.
However, it seems that PPC might better be used in the days leading up to a flash sale to generate opt-ins that ensure you have direct last minute access to prospects. Granted, the research from Experian is a couple of years old which means it was conducted before the shift to mobile and its dismal average conversion rates became evident. However, it’s clear email, or having a direct line to prospects in the 24-hours leading up to a flash sale, is key in making it a success:
Image via Experian
The research breaks down flash sale traffic sources like this:
- Email 18%
- Social 13%
- Search 11%
In fact, this case study details how Facebook page likes, lookalike audiences, and scrolling product ads that show multiple product images per ad supercharged a recent flash sale that resulted in:
- Facebook accounted for 81% of sales the day of the flash sale
- Facebook converted at 2.9% vs. 1.45% on other channels
- Facebook’s CPA of $33 dwarfed site-wide CPA of $73
The idea here isn’t to confuse or stay on the fence when it come to how to market your flash sale. The point is to highlight how multiple strategies can work. The key in determining which channel is likely to produce the best ROI for you is, as usual, hiding in the data:
- Where do your prospects & customers spend their time?
- What percentage of your marketing mix currently goes to the various channels?
- Which of the channels generally results in higher CTRs, conversions, and lower CPMs?
Weight your spend according to where and how you’ve had past success selling the items included in your flash sale. Either way, email will likely be a part of the mix. Here’s a series of flash sale email templates that may give you some ideas on structuring your drip campaign.
Before you go, here are two twists to consider…
- Registration Flash- To better gauge demand for flash sale items and ensure you have the inventory and server capacity to withstand the deluge, consider asking people to register for your flash sale. It’s similar to a traditional auction where you have to provide contact information to receive a bidder’s card. People who want to reserve the right to purchase during the flash sale must register before the sale. Not only will you get a ballpark idea of what peak load capacity may look like on sale day and how much inventory you may need, but you’ll also position yourself to reduce your PPC spend a bit as you’ll be collecting email addresses for contact purposes as you get closer to the sale.
- VIP or Early Bird Flash- This twist achieves many of the same goals registration flash does but adds a bit of mystery to the scarcity inherent in flash sales. Not only does it ask users to register but it creates a bit of intrigue by keeping secret some or all of the items to be included in the flash sale. Stimulate user imagination by promising a mystery item to be included in the sale just for consumers like them. Or promise a first look or sneak peak at the mystery items shortly before the sale. Once again, you’ll position yourself to better gauge demand. However, you’ll also create a reason for prospects to visit your site prior to the sale- people who otherwise might not have. This provides you rich data about which products users show most interest in and can help you select which items you designate as mystery items. The data also provides you with retargeting opportunities long after the flash sale ends.
Prepare for flash sale success and you’ll increase the odds of pleasing customers and your bottom line. Flash sales are exciting; they can differentiate your brand, attract new customers, & earn trust- especially when you avoid common flash sale missteps:
- Add inventory quantities to product pages
- Use product discount applications for accurate checkout experiences
- Leverage UberRUSH where available to help alleviate logistical constraints
- Estimate demand, load test your site, & prepare your supply chain
- Be willing to apologize & communicate clearly & often
Equally important, develop a plan that clearly defines your flash sale, its objective, & how you plan to pull it off:
- Identify precisely why you’re having a flash sale (move excess inventory vs. attract new customers)
- Determine which products you’ll sell & how deep discounts & elevated volumes will impact your top & bottom lines
- Target flash sale prospects with behavior-inspired email, relevant PPC ads, or VIP/ Early Bird opt-ins to improve results & gauge demand
Whether you’re planning a mini-flash sale to test a hypothesis or the mother of all flash sales, it’s an opportunity to shine in front of customers who can’t wait to beat down your digital door.
About The Author
Nick Winkler is a contributor to the Shopify Plus blog. He helps individuals & organizations generate new leads, make more money, and ignite growth with story. Get more from Nick here.