Should your B2B SaaS offer a Black Friday deal?

Balancing short-term gains with long-term retention

If you’re a PM for a developer tool SaaS, you probably know that embracing Black Friday requires a delicate balance between short-term gains and long-term customer retention. While the prospect of increased sales is enticing, product managers must also consider the lasting impact on customer satisfaction and retention. In this article, we will delve deeper into the strategic considerations of offering Black Friday deals while emphasizing the importance of prioritizing customer retention over immediate adoption.

Here are the pros of offering a Black Friday deal for your B2B SaaS:

1. Boost in sales volume: Offering a Black Friday deal can lead to a surge in sales, providing a short-term boost in revenue. The event’s sense of urgency and excitement can prompt potential customers to make quicker purchasing decisions.

2. Competitive advantage: Participating in Black Friday can give your product a competitive edge, attracting attention in the crowded market of devtools. A well-promoted discount can attract attention and encourage users to choose your product over others, especially if your direct competitors are not used to offering a Black Friday deal.

Here are the cons I found when investigating whether or not we should offer a Black Friday deal for our Email API:

1. Perceived value decrease: One major drawback is the potential decrease in perceived value. Discounting your devtool could convey that it is not worth its regular price, leading customers to question the quality and value they are receiving.
2. Risk of attracting the wrong customer base: Black Friday attracts a wide range of customers seeking deals. Offering discounts may attract users solely motivated by the reduced price rather than the product’s inherent value, potentially cheapening the user base.

Indirectly, because you may attract the wrong crowd, this can result in deadly users who do not know how to use your product. This, in turn, generates an extensive customer support workload, worsens your reputation, and will most likely increase your churn rate.

3. Increased customer support workload: Black Friday deals often lead to a surge in customer inquiries, support tickets, and potential issues. The increased workload on the customer support team may impact their ability to provide quality service and support.

4. Misalignment with B2B target audience: Devtools typically target business professionals who operate within a more structured and complex purchasing process involving multiple departments. The Black Friday frenzy may not align with the business-oriented mindset of these customers, especially considering that many business people do not work on Black Friday in the US. Also, monetary discounts may not entice or convince professional buyers with a larger spending budget than consumers.

Focus on Customer Acquisition Costs

While the short-term benefits of a Black Friday deal are apparent, product managers must consider the long-term implications. Investing in customer retention strategies often yields more sustainable results. Here’s why:

1. Customer Acquisition Costs (CAC): Acquiring new customers usually incurs higher costs than retaining existing ones. You could use the resources spent on marketing, sales, and customer support for new customers more efficiently by fostering loyalty among the current user base.

2. Satisfied customers as advocates: Satisfied customers are likely to remain loyal and can also advocate for your product. Word-of-mouth recommendations and positive reviews can be powerful tools for attracting new customers organically.

3. Long-term revenue growth: A focus on customer retention contributes to long-term revenue growth. Loyal customers are likelier to explore additional features and services, providing a consistent revenue stream that compounds over time.

While the allure of Black Friday promotions is undeniable, product managers in the B2B SaaS space must adopt a nuanced strategy considering both short-term gains and long-term customer retention. Rather than solely focusing on increasing adoption, prioritizing customer satisfaction and loyalty can yield more sustainable results.

Instead of discounts, I recommend you consider targeted promotions for existing high-value users, initiatives that give back to the open-source community, or even co-marketing opportunities with tools with a user base similar to yours.

In the end, yes, your conversion rate will be through the roof. But your user churn will take a hit. If it does, your Retention, Referral, and Revenue metrics will do too. Do you really want that?