July 19, 2011
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Jesse Katz
Groupon has quickly become a lighting rod of debate among many small business owners. The issue is whether the service is good or bad for small business—the disagreement usually comes over the philosophy of deep discounting. Are you killing your profit margin in exchange for a short burst of fickle customers who will never come back to your business unless they get a similar discount? Or are you using a smart discounting method to bring new customers in the door, who you might convert into loyal customers?
The answer, it turns out, relates as much on how you choose to use Groupon as anything else. A few weeks ago at the Corporate Social Media summit, some presenters from popular website analytics firm WebTrends shared some survey results that raised the possibility that the biggest success factor might be what products or services you choose to discount. This led me to the topic for this post—which spotlights some common strategies that lead to failure on Groupon—and how you might avoid them.
1. Discount your core product or service
There are likely products and services from your business which many of your current consumers depend on. Discounting them simply offers your existing customer the same thing at a lower price—a sure recipe to fail. Instead, find products and services that have a higher margin where you can afford to lose some money initially, but will make it back if a customer gets hooked on that product.
2. Sell a longer term product or service
If yours is the kind of business or service that the average consumer might do only a couple of times a year, like hair coloring, that may not be the ideal thing to offer a deep discount on because you will have effectively lost your one chance to interact with that consumer for months.
3. Offer a forgettable discount
While the simplest thing to do may be to offer a coupon where a consumer spends $10 to get $20 of spending power with your business, the reality of a promotion like this is that it is completely forgettable. Instead, if you can tie a promotion to a part of your business—such as offering 3 rounds of golf for $81—it can be much more memorable for consumers who choose to take advantage of it.
4. Focus offer on the item and not your brand
When writing up the offer that you will present for consumers, a common mistake is to only focus on describing your offer without doing a good job of selling your brand along with it. You miss a golden opportunity for building brand recognition among local consumers—presumably a major goal of why you would do the Groupon in the first place. Instead, make sure you try to use a real photo instead of a stock image, include links to positive online reviews, include links in the body of the description of your business and generally do a better job of talking about why your business would be a great one for the consumer to choose not only for this promotion, but in the future as well.
Check your balance, review recent transactions and pay your bill on the go.
Jesse Katz 9 months ago
Groupons can not looked at as a magical marketing pill. Yet, I see tons of sob stories where owners regret running a groupon. Imagine trying to run a PPC campaign or doing a print spend with a bad message or strategy...it's equally regrettable. I am running a deal site for SMB owners (www.efbuys.com), and our partners are having an easier time justifying it because most business expenses are ongoing, or because the software we are selling costs very little to produce.Jesse