Risk and reward at Black Friday with WordPress products
Black Friday is an anxiety-riddled time for WordPress product businesses. Should you do a sale? When should it start? What level of discount should you do? And what about new customers?
Rich Tabor, who sold his businesses to GoDaddy earlier this year, summed it up:
Black Friday gets its name from being the day in the calendar year when retailers finally get profitable (“in the ‘black'”). Almost certainly no WordPress businesses operate like this, and for most, it’s a great boost in sales before the end of the year. For some, though, it’s an essential event for revenue and being able to fund growth into the next year. And for a select few, it’s an art which brings a huge boost to revenue with no negative long term impact.
This post is an attempt to pull together some lessons learned from this year’s round of sales, and pull out some key insights for the future. I run a marketing agency which works almost exclusively with WordPress product businesses: I’ve thus kept a keen eye on what discounts everyone is running, and have insight into how those worked out. I also spoke to a number of store owners for this post.
You don’t have to do a sale
Rich’s anxiety wasn’t about any of the things I mentioned above — although I’m sure they would have come up later — it was about whether to do a sale in the first place. There are some very good arguments both ways.
If you do a sale:
- You risk undermining the long-term health of your business by signalling to customers they can get a better price if they wait for set times of the year.
- You’re giving new customers a better deal than existing customers, thus punishing customer loyalty.
I asked Rich to share a bit more context:
There’s always the “should I – should I not – is it worth it” around sales – especially Black Friday sales. In the short term, you can make a ton of $, though in the long term you don’t really know the effects unless you’ve carefully measured total costs of the sale, especially when it comes to customers who buy on price vs buy on value. Sales brought in via promotions tend to bring in the price conscious folks, who in my experience, lean towards being more support-heavy, though that may not always be the case.
WordPress goods are priced low already, so tossing in another 30% discount cuts into profitability big time if you’re running into higher support loads, or simply don’t have the proper mechanics in place to provide ample support to new folks. In my experience, I’ve also seen higher refund rates in these scenarios, i.e buyers remorse. So in the end, I’ve been stuck with low-value, improperly fit customers.
If I partake in Black Friday sales in the future, I’d likely only target my highest tiered plans/offerings (which I did last time) though I’m still hesitant.Rich Tabor • Founder, CoBlocks & ThemeBeans
One client told me they’d seen a slowdown in sales in November from customers expecting a discount later in the month, even though they weren’t going to do a sale. The next year they figured they may as well do the sale. This line of argument is persuasive: if the market behaves as though you’re going to do a sale, you’ll see some of the negative effects of doing the sale — postponed sales — in the run up to Black Friday whether or not you’re doing one, you may as well do the sale.
But, in the long run you may be able to train customers that you don’t do sale discounts. Kinsta are a prominent example of this in the WordPress space. They may well see a slowdown of customers in November as people expect a discount, but they are also priced at the higher end of the WordPress hosting market and refusing to do discounts let’s them maintain the integrity of those higher prices.
We are not fans of discounting the service and we don’t want to jump on the bandwagon and offer crazy deals. Instead of offering a holiday sale, our team is focused on adding long-term value to our hosting plans…
It’s just my personal opinion but huge discounts for any service where human workforce needs to be involved like customer support or there is an ongoing cost like paying the cloud servers bill is not possible. Or, it is possible but at the end of the day always the quality will be sacrifiesed as companies try to make some money to keep the business going.
And, since we provide a premium service at a higher starting price compared to the typical big shared hosting providers our customer persona and client base is different, they completely understand the value we provide and they will come to us even without a BF deal. And I have received feedback that an extra 6 months off or 70-90% off for a year deal scares them away as they know there is a catch.
We also observed that deals attract the wrong type of customer for premium hosting, they just want to test the service but not committed to move and churn among them in the first few weeks or months is 2-4x higher compared to the regular customers.Tom Zsomborgi • CFO, Kinsta
If that hasn’t disassuaded you, then the next thing to ask is “who is my sale for?”.
Who is the sale for?
Who is your sale for? This is one of the key questions which I don’t think most people are asking enough about.
There are four groups you could target:
Here’s how they break out:
- Current customers: the current customers are already paying you money.
- Regular new customers: the regular new customers are the sales you’d get on a regular day that buy without a discount.
- Price-sensitive possible customers: the price-sensitive possible customers are people who have been keeping an eye on your product but having been waiting for a discount.
- Bargain-hunters: the bargain-hunters are people who may not have even heard of you before but are on the lookout for bargains.
Your sale should not be for all of these groups. In most cases it should be for current customers and price-sensitive new customers. A discount of 20-30% is good for targeting those groups. If you’re targeting bargain hunters, you’ll need to go up to 50+%. We’ll come back to those figures later on.
You’ll need to work out who you want to target. You’ll need to consider your margins, pricing, and target market. Either can be good options.
What about existing customers?
You don’t have to offer existing customers a deal. This is actually one of the trickiest decisions, as the right offer here can mitigate one of the main negatives of doing a Black Friday sale: existing customers tend to be punished.
My opinion is you always want to reward existing customers, and you can do that by offering them a better deal than what’s available publicly.
You have to be careful about this, though, as not all revenue is equal. Existing customers have already shown they will give you money, and you can expect at least half of them will do so again in the future through renewals. You do not want your sale to take this money, as, unless you think you can get revenue higher than it would be from regular renewals (the mathematics of this are very difficult, so you probably can’t), you’re going to be losing money overall. You therefore don’t want existing customers to use any discount you offer to renew their licence early or similar.
The only exception to this would be if you have customers paying monthly and value getting them to switch to annual. That’s probably pretty few plugin shops, though.
What you want your existing customers to do is to give you new money that they wouldn’t have otherwise given you. This can be done by offering a steep discount on complementary products. Now we’re getting somewhere: you can reward your existing customers by giving them a slightly larger discount — another 10%, say — on purchases for new products
The very obvious downside of this is that by doing this you reduce the amount of money that existing customers — who have already shown they will pay you and trust you — will give you.
You could keep regular new customers unawares of your discounts by only mentioning the sale on specific pages, or by using terms and conditions which exclude current customers. Ellipsis spends a small fortune on SEO software — over $1,000/month — and I found one of our tools was offering a big discount for new customers, but only a discount on new revenue from existing customers. I wanted the new customer discount, but as a current customer I was told I couldn’t have it. The business logic makes sense as long as you don’t price in me going from happy customer to a-bit-less-happy customer who may churn earlier than otherwise.
Tom Zsomborgi also mentioned this when discussing why Kinsta don’t do a sale:
We don’t want to leave a bad taste in our loyal customer’s mouth, charging them for $300 for an annual plan while the other day we gave away the same plans for $50.Tom Zsomborgi • CFO, Kinsta
What discount should you do?
We’ve now heard some pretty persuasive arguments that you shouldn’t do a Black Friday sale next year, but the vast majority of stores there will be a sale. For most the revenue opportunity it brings is too good to turn down.
There are concerns with support costs and other fixed costs, but when it comes down to it most WordPress product businesses can put together a Black Friday sale which works for them. If you’re not at capacity, then a sale will probably work out. Later on, for example, we’ll hear about when store which managed to increase their average order value despite running a 50% discount.
WordPress product businesses have fixed and marginal costs. A lot of the costs are fixed: it (probably) doesn’t cost you anything extra to have 10 people download your product rather than 5. Your support costs are (marginal), though, as they will scale with the number of sales. If you have excess capacity with your marginal costs, and can handle a higher support load for a couple of weeks, you’re (probably) good to do a discount.
This is a key point, and the above is probably why you’ll do a Black Friday sale again next year.
This leads you to ask: what level of discount should I do? You’ll need to work this out with regards to all of the concerns I’ve raised above, and I can’t give you generalised advice on what to do. What I can do, though, is tell you what everyone is doing.
I used this spreadsheet of 167 WordPress Black Friday sales to get mass data on what sales were run, and then tallied the numbers to see the trends. Here are the answers, showing the level of discount offered over those 167 stores:
We can pull out a couple of things from this:
- The most common discount level is 30%, followed by 40% and then 50%.
- The minimum discount level is 10% and maximum is 90%.
- Pretty much every conceivable discount level is on offer here, but I suspect this leaves money “on the table”: psychologically a 33% or 35% discount feels the same as a 30% discount; a 60% discount the same as a 50% discount, and so on. There’s thus likely an opportunity for “discount optimisation”. If you reduce your discount by 5% and don’t see an affect on sales, I’ve just earned you an extra 5% revenue 😉
My personal take is if you’re going to do a Black Friday sale, either commit to a big 50% discount, or offer a 30% discount. 50% is good to attract bargain-hunters, and 30% is fine for a regular discount. Only use multiples of 10, and definitely don’t go above 50% — in most cases that’s going to signal to customers that you have huge margins!
As always, all of this needs to be taken in context and there are positives and negatives to each. Here’s Chris Badgett from LifterLMS, who have done a sale every year since they started:
We didn’t get as many sales as we could have by offering discounts as high as some WordPress companies were.
But – we believe our modest discount percentage brings in more committed customers that we can support in their growth.Chris Badgett • Co-founder, LifterLMS
When should the sale start?
I do think this one’s an easy one. Your sale should start early, and run until the Cyber Monday. The Monday before Black Friday is a good starting time, or the Friday before that is fine too.
You do see complaints that “Black Friday is starting earlier and earlier”, but I see no harm in giving your customers time to evaluate the deal and purchase during their regular working week.
This is supported by anecdotal evidence from two of the people I talked to for this article. Here’s Chris Badgett from LifterLMS again:
We have done Black Friday / Cyber Monday promotions since the beginning of our business 5+ years ago. I think it would be naive to not take advantage of the discounting and increased buying behaviors that are generally expected this time of year. What went well is how we do a bigger discount the week before Black Friday.Chris Badgett • CEO, LifterLMS
And here’s Katie Keith from Barn2, who moved the start date of their sale in response to people asking for a discount:
We were originally planning to run a short sale over the Black Friday weekend only, but made a last minute decision to start the sale a week early because so many other companies were doing the same and customers were contacting us to request earlier discounts.
Starting the sale a week before Black Friday was the right decision because 56% of the sales we received during the sale took place before Black Friday. We ended our sale on Cyber Monday. Next year, we will consider extending it until the following Friday because we noticed a lot of WordPress plugin companies doing this, so it might increase revenue even further.Katie Keith • Co-founder, Barn2
I have seen a lot of sales extend beyond the “Cyber Monday”, but I value this less. Ending on the Monday, which is when the sales traditionally end, and telling customers that will happen lets you create an urgency deadline which can drive some more sales.
As always, this needs to be viewed in context: Give, for example, extended their sale to the Tuesday, which is “Giving Tuesday”. They were able to keep the urgency, but whilst keeping the sales coming right until the end.
How do you distribute your sale?
For your Black Friday sale to be successful, it’s not sufficient just to do the sale. You must also distribute it. I’ve bolded this because there’s a fair bit of “if you build it they will come” mentality; this is absolutely not the case. You can’t expect your sale’s target audience to magically find it: you must proactively tell them about it. How you distribute your sale depends on who it’s for.
If your sale is for current customers, you should use whatever mechanisms you have available to contact them. That might be an email list, a Twitter account, or a Facebook group. If your sale is for price-sensitive potential customers, if you have email addresses for this group then email them (you might have a regular non-customer newsletter) and same goes for any social media accounts you might have. Or, if you don’t have a method for contacting this group or your sale is for bargain-hunters, then you should aim to get coverage in as many WordPress Black Friday roundups as possible.
Let’s break those four down a bit more:
1. Emailing customers
Emailing customers is incredibly important. I would recommend you send segmented and personalised emails (so the reader sees their most relevant discount and/or up-sell), with the following:
- Our Black Friday deal is coming soon (couple of days before sale starts)
- Our Black Friday sale is here (start of sale)
- X days left to get our Black Friday sale (X days to go)
- XX hours left to get our Black Friday sale (XX hours to go, with a countdown timer)
- Final chance to get our Black Friday sale (2-4 hours to go with a countdown timer, but only send to customers who have expressed strong interest and haven’t purchased already)
eCommerce email platform Jilt reported that each email their customers sent was worth $0.23/email. That’s not a huge number, but bear in mind that’s an average, and that’s every single email. A store with 2000 subscribers sending 5 emails over the sale period would make $2,300 directly from email.
Mailchimp reported their customers made $4.4 billion over the Black Friday period from $8.7 billion emails, with an average order value of $305.55. That does seem very high, and Mailchimp doesn’t have eCommerce analytics in the same way that Jilt does which makes me question the accuracy, but even if that is 50% out, it’s still hugely effective.
Thomas Maier from Advanced Ads told me how valuable email was:
Black Friday this year confirmed what we learned last year: that our newsletter worked best for us as we have a lot of free users on our email list. We sent out a few newsletters through the whole weekend and that brought in most sales. A significant number of users also used the deal for upgrades. We did spend a lot of time entering the deals into different websites, but that didn’t drive in significant sales [as this didn’t reach our target audience].Thomas Maier • Founder, Advanced Ads
I’d recommend all of the emails come from you personally, and that you invite customers to respond to the email to contact you directly if they have any queries. At all times, explain why the deal is good, and hype the scarcity of it (“it’s our only sale this year”). That really does work; here’s Jack from WP Fusion, who says multiple people have been waiting since August:
Black Friday does well for us because we don’t have any other sales throughout the year. I know of a few people who’d been waiting since at least August for the deal to go live.
I know some people do a February sale and/or a midsummer sale to get through seasonal lulls. It’s a lot of work to be running promotions all the time so I prefer to just get it out of the way in one go. It does make our November look very strong, but possibly at the expense of a slow February / June.Jack Arturo • Founder, WP Fusion
Email works, and you should make the most of it.
📧 By the way, we’re launching a “we take care of all your email marketing for you” addition to our serivce offering next year — if that might be a good fit for you, get in touch.
Roundups are really important, but not all roundups are equal. There’s an entire cottage industry of roundups and “best WordPress Black Friday deals 2020”. The most prolific of these will try and include every single possible deal — and then ask for payments to get the top spot. If you are targeting bargain hunters, then having a sale which can stand out with a headline discount in one of these roundups is really important. You’ll need to keep a look out for these. Look at:
- Who did one last year, or the year before?
- Who’s collecting deals on Facebook, Twitter, or Slack?
- Who’s publishing roundups?
You can find 1) through a Google search, and 3) through a Google Alert for “WordPress Black Friday”. 2) is often seen in the run-up to Thanksgiving; often deal-collectors will post in relevant Facebook groups, ask on Twitter, or ask on relevant Slack groups. Respond to as many of these as you can, as the better distribution you get, the better your sale will be.
Here’s Katie Keith from Barn2:
38 websites promoted our deal for free, not including our affiliates who also promoted it on their own sites.
[I’d recommend creating] a spreadsheet of websites that publish Black Friday WordPress deals, and use it to send your deals to as many people as possible each year. Since we have been doing Black Friday sales for a few times, we already had a big spreadsheet which saved a huge amount of time.Katie Keith • Co-founder, Barn2
The spreadsheet linked in the discount level section above would be a great place to start.
I used to run WPShout, so I’ve been on the receiving end of “hey just so you know we’re running a Black Friday deal this year”. For bloggers who aren’t running a roundup this gets desperately frustrating (to the point I know of one blogger who has a filter to auto-delete emails with the phrase “Black Friday deal” in them), so keep that in mind, and keep it polite. Don’t forget about YouTube, too. Adam from WP Crafter, who has well over 100k YouTube subscribers, had 4,000 views on his Black Friday “deal or dud” video:
Adam is super-tuned-in to what people using and building with WordPress are interested in and what they respond to. It’s quite interesting to see what he characterises as a “deal” or a “dud”, and indeed what he includes in the first place.
To make the point about all roundups not being equal, here’s a counterpoint to the above success stories from Travis Lopes, who runs ForGravity:
I ran a Black Friday sale from the Monday prior to Thanksgiving through Cyber Monday. Tiered discounts of 10%/25%/50% across the three license types. I didn’t notice an uptick in sales nor did all of the purchases during that timeframe use the discount.
Discount was promoted via a newsletter blast, blog post, Twitter and Facebook mentions along with some mentions on WordPress Black Friday deal roundups.Travis Lopes • Founder, ForGravity
You should also distribute your deal to affiliates if you have them. Keep in mind that you’ll pay the affiliate on top of the discount you’re offering, and there will be a combination of those that lose you money. Your affiliate commissions are likely a % of the sale price rather than a fixed amount, so you’ll likely find you’re paying your affiliates less per sale, but still keep it in mind.
You can distribute your deal to affiliates by emailing them two or three weeks ahead of your sale starting, and then the week before too. Include all the details they could need, including the start and end date, level of discount, and a variety of promotional banners and graphics. Affiliates in WordPress are inundated with choice of different WordPress products to promote, so with this and all your other affiliate promotions, make it easy for them.
If you have especially strong personal relationships with any individual affiliates, it’s worth getting in touch with them directly. Often a quick email letting them know you’re running a sale can get you the best coverage.
These are often on a mix of mediums and platforms, and not all of them will show up in the searches mentioned above. A personal recommendation in a private Facebook group, though, is about as strong as you can get.
And then mix in your brand
Finally, take all of this, and then work out how to apply your brand to it. The best example I saw this year was Give, who ran their first Black Friday sale ever, and did so with a brilliant, attention-grabbing video, which insisted you hear about their sale:
This was our first year our company has ever done a Black Friday sale. Because of that, we wanted to do our biggest sale ever and offer everything 50% off.
This definitely helped turn some heads and turn onlookers into customers. As well, we wanted to have a unique twist when viewing the landing page.
Everyone does boring videos for Black Friday so we decided to give ours a unique and comical twist with Matt pretending to do the sale behind our backs. We’ve gotten a lot of positive responses on that direction.
I encourage others to look to unique approaches to sales to stand out from the pack. It worked for us, it should for you as well!Devin Walker • Founder, Give
Once you decide to do a sale, working out how you’ll distribute it should come next.
What specifically worked this year?
Let’s now get to the juicy numbers. The above is sound advice which you should follow for 2020, but humans are curious and we all want to know how much money people made!
Jack Arturo already told us a bit about his deal, but here are some more specifics on the success:
We were able to effectively pick up price-sensitive potential customers who wouldn’t have otherwise purchased. Our prices are quite high and a 30% discount is a pretty good deal.Jack Arturo • Founder, WP Fusion
A key takeaway from Jack’s success is that you can’t take Black Friday in isolation. To be “successful”, any discount has to be in context. WP Fusion is expensive (it starts at $250/year), but it provides a huge amount of value. By doing a modest once-a-year discount, Jack is able to pick up on price-sensitive customers whilst maintaining the integrity of the pricing the rest of the year.
Earlier, we heard from Katie Keith at Barn2. Black Friday is the only sale period Barn2 do all year. They offered 25%-50% off, with 25% off before the main Friday (rising to 50% for current customers), and then 50% for everyone over the sale weekend. The promotion was via email, a website banner, roundup submissions, and their existing affiliates. Here’s Katie on the results:
November was our best month ever at $60,700 revenue for plugin sales and renewals. Bear in mind that the best day of the sale was Cyber Monday, which was actually in December and was our best single day ever, with 51 sales ($6,852 revenue), which isn’t included in the $60,700.Katie Keith • Co-founder, Barn2
And then here’s how the full 10-day sale period for 2019 compares to last year:
You can see that sales are roughly a third higher, but revenue is nearly double. That comes from a corresponding increase in the average revenue per sale. This was higher than during the regular non-sale period:
It is fascinating that the average revenue per sale was higher during the Black Friday sale than when we are charging full-price. This should reassure anyone who is concerned about how Black Friday can affect profits and support — despite charging much lower prices, we received more income per sale because people were buying more expensive options than usual, and multiple plugins!Katie Keith • Co-founder, Barn2
Katie also included lifetime licenses in the sale for the first time:
This year, we introduced lifetime licenses for the first time and decided to offer the Black Friday discounts for all license options. This was a gamble because we felt that discounting lifetime licenses was risky, and some WordPress plugin companies only discount annual licenses. In the end, 32% of people bought a lifetime license. I don’t know whether this is good or bad, or how it will impact our support workload in future – however, it is partly justified by the fact that renewal rates are lower from people who buy in the Black Friday sale, so selling more lifetime licenses helps to increase the lifetime value of each customer.Katie Keith • Co-founder, Barn2
What should you do next?
Black Friday 2020 is a long way away, but I hope it’s pretty clear from this post that the WordPress product businesses who run successful sales are able to do so because Black Friday doesn’t happen in a vacuum. Therefore, to have a successful sale next year, you can start setting it up now.
Here are a couple of specific actionables:
- Consider which premium pricing tiers you can add which you’d be able to discount in a sale period, whilst still making a healthy profit.
- Make sure you’re collecting email addresses for current customers in a segmented list, and there’s a way for potential customers to subscribe. Keep both groups engaged throughout the year with good emails.
- You can probably put your prices up, and this is as good a reason as any to experiment with higher prices at the start of 2020.
- Build and maintain relationships with effective affiliates.
- Plan your sale periods for 2020 now, so you’re proactive rather than reactive to what others are doing. Black Friday and maximum one other sale period (which should probably be run through your email list) is the way to go.
If you’ve enjoyed this post, maybe you should work with us! Our Marketing Audit and Strategy is a good place to start for most clients, but we do other things too.
We’ll also be regularly publishing this kind of content in 2020. We’re launching a newsletter, WordPress marketing monthly, to accompany the content and bring the latest marketing insights to WordPress business’ inboxes. You can be one of the first to join by subscribing below.
Many thanks to Katie Keith, Devin Walker, Jack Arturo, Thomas Maier, Tom Zsomborg, Rich Tabor, Travis Lopes, and Chris Badgett for their insights in this post.
Some fascinating insights here Alex!
Especially interested to see the insights from Katie @ Barn2 about having the discount offer on Lifetime licenses. We opted not to have a discount on our Charitable Lifetime license, but I can see the logic behind it. Maybe if this wasn’t our first Black Friday sale, we may have gone for the discount on Lifetime.
Thanks Eric, appreciate it! As always these things are very context-specific, but yes it does seem like that works. You obviously need to ensure your lifetime licence is priced at a profitable level, but as long as that’s the case (and it’s also the case with a discount), then it’s a nice way of getting the order value up.
Awesome insights Alex and contributors thanks!
Rather than discounting, we pre-publicised putting prices UP after Cyber Monday. It pulled a few people out of the woodwork but overall it was a useful trigger to make a price increase that has been overdue for many months.