Cashflow maxxxing BFCM customers

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I think it is no secret that Black Friday Cyber Monday (BFCM) customers are your worst customers.

Run a cohort retention analysis on them and you will see their retention is extremely low relative to non-holiday customers.

This means these people are your marginal customers that will only consider buying your product with a discount. So after Black Friday, you generally will not see them buy again.

So that begs the question - why give your best discounts to your worst customers?

My advice: you can’t think of them using your standard LTV framework of “we’ll acquire them now and then generate LTV later.” Let’s be real. No you won’t.

You need to make money on them immediately, because most of them are not coming back (until next Black Friday).

So here are some recommendations I make behind closed doors on how to actually generate the highest cash flow from your BFCM customers:

This seems obvious to me but it never seems obvious to anyone else.

You just spent a year doing top and mid funnel marketing, building a big warm audience and tons of leads (email/social) while CPMs were reasonable.

BFCM hits and CPMs skyrocket.

Your remarketing audiences will have extremely high conversion rates and exceptionally low CACs, as you barely need to spend anything to convert them, just show them the offer.

But your prospecting audiences will have significantly lower conversion rates, and a way higher CAC, that cannot be supported by your already precarious unit economics.

It’s that simple. Instead of wasting ad spend on acquiring worthless customers, spend a tiny amount retargeting your warm audiences:

Make sure you hit them at least 3-5+ times over the promo week (measured by ad frequency on Meta) so they see the offer. I would spend no more than 5% of revenue on ads over BFCM.

When I've done this with brands, we usually still generate like 70% of the sales but make way more profit because we cut the money-losing prospecting audience.

Sounds kind of crazy but I have found it to be true.

This is representative of what I see. A brand with a 50% gross margin cuts most of its marketing and makes way more money:

But it is scary.

The people that are too scared to try this generally are the ones that do not own their company. They're compensated on hitting sales targets, not profit targets.

But if you own 100% of your company, the goal is to make money and you can make a lot more money on a lower sales number doing this.

Whatever discount you are planning to offer, BOGO, 50% off, whatever….raise all your prices 10-20% first, and then increase the “% discount”.

The only thing customers are paying attention to during Black Friday is the discount.

They won’t remember if your SKU was $60 or $69 before, can you remember what your favorite products cost? Probably not.

You’ll have far higher conversion rates.

Many eComm brands drive like 50% of their sales from 1-2 SKUs, and are constantly struggling moving the others.

These SKUs are basically worthless and costing you money renting space in a warehouse.

My suggestion would be to make the decision to permanently cut your lowest selling SKUs before BFCM. This is good annual hygiene anyway to trim the losers. Anything <1-2% of your sales, discontinue them.

Give them out as gifts (GWPs) alongside all purchases, or bundle them in outrageous offers where they’re heavily discounted to liquidate them fast and pull cash back onto your balance sheet. If you can just recover your COGS, you win.

Use scarcity messaging to make them seem exclusive “we will never have these in stock again”.

If you're selling software, especially B2C software, give people a ridiculously generous-sounding discount but make them buy 2-3 years of the product. You will make more LTV off these people if you run the math.

Here’s a cool example of this…NordVPN was offering this last year.

BFCM Offer: Prepay 2 years + 3 extra months, save 73%.

And I guarantee they were making more money on this offer than they make off a BFCM customer on a typical 40% off deal.

Why this is a genius offer:

Because B2B customers have very long lifetimes, you can create incredibly generous referral programs at extremely high LTV:CAC ratios. This is a great strategy for agencies, but also good for software.

But most are too stingy to actually consider this. It is a huge mistake because they can work very well.

Let's say your customers have, on average, a 3-year lifetime, you could easily give 3 months free to the referrer and then 3 months free to the new customer. You basically give 6 months free and earn 36 months.

But 6 free months doesn't cost you 6 months of revenue. It costs you 6 months of the COGS underneath that revenue.

So let's say you run an agency that has a 60% gross margin, and your customers are paying $2,000 a month each, that’s really $800 a month in COGS.

True cost is really 6 months × 800 = $4,800.

But the LTV of that customer would be 36 months × 2,000 × 60% = $43,200.

So at these numbers, you would acquire a customer at a 9:1 LTV:CAC ratio.

Most businesses would die to acquire customers at a 9:1 LTV:CAC ratio. And this is what I mean: you could get way more generous with your referral program, and you could push it to 5:1 if you wanted to go into hypergrowth.

Few businesses are really pushing the envelope here, but the unit economics completely support a strategy like this. And your super loyal customers will love you for this, and they'll recommend an insane amount of additional people.

And the reason why to do it over a holiday is that you can offer it for a limited time to test to see if it is a viable growth channel for you. You can say “this is a holiday special. We're just offering it for the next 30 days”, then evaluate, and if it's a great channel, then you can create an evergreen referral program.

Black Friday should be the period of the year where you generate the most cash flow, not the least.

Be strategic, play the game, build up your liquidity, H1 2027 is just around the corner.

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