As Black Friday approaches, I was thinking about my Canadian retail friends. Black Friday wasn’t even a thing in Canada seven years ago. Canadian Thanksgiving is in October.

The Canadian retailers needed a new reason to throw an event, so they followed their American cousins into the Black Friday frenzy.

Just another reason to give a discount to get more sales. It’s kinda funny. Canadians don’t get a Thursday vacation.

My friend Bruce owns five pizza restaurants. He believes customers only come to him because of his flyers. So he runs a flyer every three weeks. He’d do them every week, but he can’t afford the shipping costs.

The pizza business is notorious for this type of behaviour. Once upon a time, I used to work for a pizza chain. We did the same things to keep franchisees and the top brass happy.

Eventually, the marketing effort fizzled out. We chased the transactional customer, who wanted the best price. At that time, we had two people answering phones on a busy Friday night.

Do you know what the number one question was?
Yep, you got it. “What’s your special?”

Some customers ordered after hearing about the specials, while others promised to call back. We have no idea if they did.

Bruce doesn’t understand the difference between a transactional customer and a relational one. He’s dehydrating in the desert, and he doesn’t realize there is a cooler filled with fresh water to his left.

He thinks the easiest path to sales growth is chasing these low-margin, fickle customers who only want the best price.

I order six pizzas from Bruce’s restaurant every four weeks for a gathering of friends. The first time I ordered, they gave me a $40 discount. I didn’t ask for it. Didn’t know about it. Didn’t need it. But do you think I took it?

Of course. I like money. You wanna give it to me? I’ll take it.
The interesting thing is the second time I ordered the same six pizzas, I expected the discount. I asked about it.

He converted a loyal, relational customer into a transactional one at his own expense.

Bruce knows the restaurant business.
But he doesn’t understand marketing for long-term growth.
Bruce believes in short-term sales tactics.

I can’t change his mind. I’ve given up trying.

I’ve seen this re-run before.

I was thinking of Bruce while visiting a Factory Outlet store in San Marcos, just outside of Austin, Texas.

There were Bruces everywhere. 60% off. Buy one, get one Free. Buy one, get one-half price. The parking lot was full. Customers were buying stuff. Looked like a good day for transactional business.

There was one store not promoting discounts.
There was a line of customers hugging the outside of the building.
They had security managing the door and the hoards of people.

The hoard didn’t want pizza. It wanted her Italian cousin: Gucci.

The pizza industry has made itself a commodity. It’s like wheat, or salt. Sales are made on the lowest price. A special we offered at the pizza chain 15 years ago is only $3.00 more today. This means the sellers are making less money when you consider inflation.
The only way Bruce makes a living selling pizza is by selling stacks and stacks of them.

He’s playing a volume game.

Pizza is not Gucci.

The next time you run a sale to attract a customer, think about your pricing strategy.

This approach is hurting your long-term brand. Unless you’re moving old inventory or perishable stock, you’re training customers to want you for the price.

Price is the easiest to match.
Competitors will drive you out of business using this strategy when they have more money than you.
Simply by outlasting you.

That’s what Walmart did.
They’re the king of transactional sales.
Not very Gucci.

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