Behavioural science and Black Friday

Once unique to the USA, Black Friday has since grown into a huge international promotional event. An event once illustrated by footage of crowds of people rushing like a flood through early morning shopping malls, along with demographic changes, online shopping had caused this great American tradition to wane in recent years. It is unlikely we’ll see such scenes in brick and mortar stores again.

Yet Black Friday, and it’s compatriot Cyber Monday, are still big business. A recent adobe report suggests that Black Friday 2024 in the US is expected to grow by almost 10% year on year, and Cyber week sales reached $298 billion in 2023.

Discounting is an area of retail filled with behavioural biases governing how we act and shop, and Black Friday has more than most. For example it’s status in the calendar is an illustration of a Schelling Point. The concept, made famous by the economist Thomas Schelling, suggests a focal point in time or space where members of a population coordinate without having to explicitly agreeing to do so. Over the years the retail industry has created an arbitrary narrative that has established a new social norm. In effect this means that the huge PR and marketing push around the holiday sales benefits all retailers. Spending is huge, but it’s also hyper competitive. So how can retailers cut through and use behavioural biases to win on Black Friday?

Our own past research on psychology and pricing mechanics show that the scarcity effect is one of the most powerful ways to drive demand. There is always an element of scarcity effect in any time limited promotional offers, but previously this would have been enhanced by the annual reports of queues and crowds fighting each other to grab the products with the barest consideration of how good the offer actually is. Online shopping is a more civilised event, but it does lose this heightened scarcity bias. We only see a picture of the product, and often have no idea how many of the items are left “on the shelf”. Simple adjustments like time limits with ticking clocks, or notifications on the product page communicating how many items left to sell at a discounted rate, can help replicate that in-store scarcity bias.

There are other psychological elements that online shopping also finds difficult to replicate. A trip to a bricks and mortar store can give a psychological thrill of the chase benefit. Although we often think of the main benefits of a sale as being the money you save, in reality shopping trips are for the purpose of entertainment as well as financial reasons. The psychological reward is the other side of this phenomenon: we love the feeling of a ‘win’. A saving, a once-in-a-lifetime deal, or getting the last Furby off the shelf before the next shopper grabs it – these all provide a dopamine or serotonin stimulus that keeps us motivated to push through the next crowd. That reward centre in our brains sits much deeper and is much more powerful than the ability to calculate numbers: the big red SALE sign connects straight to the amygdala (emotional centre of the brain) and bypasses the frontal cortex, which would normally be responsible for figuring out if you can afford the thing you’re buying or working out if it’s actually worth the money.

Communications and marketing that emphasise this chase combined with clever semiotic adjustments to point of sale web displays can help you use sale and promotional visual markers to potentially replicate the in-store experience. Careful changes to the design and wording of the post-sale online experience, such as positive post-sale pop-ups, confirmation pages and all the associated emails, that celebrate the ‘win’ of their purchase, can help give your customers that shot of dopamine or serotonin, and encourage them to make further purchases.

It's difficult not to win on Black Friday, but it is a hyper competitive consumer event, even marginal gains can make a huge difference for retailers, and looking to replicate the excitement and frisson of an instore experience online can help you cut through against your competition. For retailers it’s also important to note that these approaches don’t have to be limited to one month a year. Creating momentum and desire in customers is something brands should always be thinking about. Online is the perfect place try new approaches are relatively low investment through A/B testing and easy to measure through actual outcomes.