To Coupon or Not
Last week I read a news story about a business in New York that was closing its doors. Unfortunately, that happens all the time. But what was unusual about this story was that the owner blamed it on Groupon, claiming that the deep discounting that made the program work and a long delay in payment of his share from Groupon ruined his cash flow.
For businesses thinking about using online couponing to boost business, there’s a lesson to be learned from this story. First, Groupon takes a cut of your sales – and your profits. Second, the deep discounting that makes online couponing work really isn’t for everyone.
The whole premise is that by offering discounts via Groupon or other social media sites like LivingSocial and others, you’ll draw new customers into your business. Once there, they’ll ultimately like what they see and come back. But many businesses are finding it’s not as simple as it sounds.
First, many customers are only using Groupon to find spectacular discounts, and have no intention of ever coming back to pay full retail price. So you’ll need to have a realistic expectation of what the daily deal coupon results could mean to your business.
Second, many businesses forget that they have to offer some type of extreme value in order to capture the customer and keep them coming back. This value could be in a very special kind of customer service, a unique setting or shopping environment, pricing discounts or any other type of perceived value that is deemed important by your customer base.
If you do end up going the online coupon route, make sure you capture your coupon users information! Doing so can mean long-term profits to you. You’ll need to set up a lead capture system so you’ll be able to follow up with customers using regular mail, email or via text message marketing. That way, instead of giving your customer a one daily-deal coupon – and hoping they’ll come back, you’ll be able to offer them specific incentives to return to your business. This provides the opportunity to offer specials, sales offers and other incentives to a potential customer over a period of time.
We all feel sorry for the guy in New York who closed his business and blamed Groupon. But now you’ll have a program in place to capture leads and take advantage of what technology has to offer you – improving your ROI and growing your customer base along the way.