Black Friday is just around the corner and merchants everywhere are prepping to make the most of the biggest shopping day of the year. While more transactions mean more revenue, it also means more fees. That has many merchants wondering how they can make the most of Black Friday 2022 while keeping transaction costs down. Here are 5 ways to maximize each sale this year.
1. Offer Free Shipping
Regardless of payment method, a good way to increase the margin on a sale is to incentivize larger and more transactions. Free shipping is one of the best tools a merchant has to do just that. Here are a few stats that reveal just how powerful an incentive free shipping can be:
- Approximately 60% of shoppers will abandon their cart because of shipping charges or other fees. Offering free shipping can reduce that cart abandonment rate.
- 48% of shoppers will add extra items to their cart just to meet the free shipping threshold.
- When merchants add a free shipping offer, orders increase by as much as 90%.
- 83% of shoppers are fine waiting up to two extra days for their order to arrive if shipping is free, meaning merchants can opt for lower cost, slower deliver options as a way to compensate for having to cover shipping themselves.
While the extra revenue from the increase in sales will help, but depending on what you sell, eating those shipping fees can end up erasing those returns. The trick is to implement the free shipping offer in a way that ensures the increased profits offset the increased costs. Here are a few rules of thumb to follow as you figure out what makes sense for your business:
- Set a threshold above your current average order value to incentivize shoppers to add extra items to qualify for free shipping.
- For companies with already high margin or unique products that can’t be found elsewhere, consider raising prices slightly to cover your average shipping costs and then offer site-wide free shipping with no threshold.
- Offer faster shipping methods for a premium to offset free shipping costs. While most customers will probably opt for the free shipping option, giving them the choice to receive their order sooner if they pay for shipping will incentivize some customers to go ahead and pay for shipping. You may even be able to set that premium a little above the actual cost to you for that delivery method to offset the cost of offering free shipping.
- If it makes sense for your business, offer a free local pickup option so both you and your customers can avoid shipping costs.
2. Include a Guest Checkout Option
After shipping charges, the extra step of needing to create an account was the second most common reason shoppers abandoned their carts. So offering a guest checkout option is a quick fix that can decrease your cart abandonment rate, driving up net sales.
3. Implement a Cash Discount Program
A lesser known but very easy to implement method for maximizing sales for Black Friday 2022 and all year round is to use a cash discount program. Generally speaking, credit and debit transactions carry the highest fees while cash transactions are free. But the convenience of card payments for customers makes them an increasingly popular payment method.
The cash discount program lets merchants incentivize the cash payments they prefer and offset card processing fees all while still giving customers the flexibility to use whatever payment method they prefer.
All the merchant has to do is set two different prices for their products: the lower price for cash paying customers and a 5% higher price for customers paying with credit or debit. The higher price for credit or debit offsets the transaction fees you’re paying for those purchases so that, in the end, you pay zero credit card processing fees.
Meanwhile, clearly displaying the price difference on products also makes for a great marketing tactic. Studies show that offering even a modest discount can increase sales by more than 20%. Even though you technically didn’t discount your prices—you just added a surcharge to card purchases—it will look like a chance to score a 5% discount just by paying cash.
4. Offer Higher Discounts on Larger Orders
On Black Friday, customers expect to see dramatic discounts, but sometimes, the increase in transactions isn’t enough to offset the losses you take on larger discounts—especially if your margins are already thin.
One way to get around this is to set thresholds for steeper discounts. The “buy one, get one 50% off” sale is a classic example of this. Customers need to add to their order to qualify for the discount. From a marketing perspective, seeing the chance to get 50% off draws them in. Meanwhile, you get to minimize losses by ensuring discounts only apply to larger transactions.
In addition to “buy one, get one” sales, another discount programs you can use to offer those exciting Black Friday deals customers want without hurting your margins include bulk order discounts. Even if you don’t sell products that would normally be bought in bulk, you can apply the logic to smaller sales.
For example, if an item might normally costs $20, you can do a “3 for $50” sale to incentivize customers to buy multiple. That translates to a roughly 16% discount on those larger transactions but still allows you to charge full price on smaller orders.
5. Throw in Freebies Instead of Discounts
Merchants can skip discounts or stick to smaller discounts by using free gifts as a way to bring in customers and incentivize orders. For best results, set a purchase that threshold customers must meet to get the free gift. For example, a home goods store might give out free bathrobes to customers who spend more than $50. This way, you can increase sales while still charging full price.
Keep Margins in Mind When Choosing Sale Maximizing Strategies for Black Friday 2022
The strategy that makes the most sense for your business depends entirely on how it will impact your margins. The goal is to increase the net profit on your sales so it’s important to make sure that any discounts or freebies you offer don’t drive your costs above the increased revenue they bring in. Above all, make sure to choose a payment processing solution that doesn’t overcharge you so you can afford to offer more attractive discounts and sales to your customers.