Sites like Groupon are multiplying like rabbits. Companies are jumping on board the express train to success in droves. But is couponing right for your business?
Let’s look at the facts. Your a company who wants to increase your customer base. Couponing sites are promising new customers in vast quantities. Sounds like a match made in heaven right? Perhaps, perhaps not.
Let’s start from the beginning
Coupon sites request that you offer your current product or service at an attractive price, like 50% off. Then, they have to make money too so they want 50% of your profits. (doing the math, you’re offering 50% off so your profit is 50%, the couponing site takes 50% of that leaving you with 25% total profit).
Now, that doesn’t sound like very good business and if you search Groupon on the internet, you’ll find lots of stories of unhappy companies who took part in their service. Now, you can’t blame your company’s success on anyone else. It’s your decisions that steer the company. So, you need to decide if couponing is right for you.
Here’s why I think a lot of companies are experiencing bad results and how you might be able to benefit.
Large discounts attract large numbers of consumers (think Black Friday Sales).
Oftentimes, customers (many of them first time customers) have to deal with long wait times, shortages of stock, and cranky, overworked staff. These people don’t care that you don’t have the stock or staff to accommodate them, they got a deal that you willingly offered, and they expect you to follow through with top notch customer service, and they’re not wrong!
Many businesses, trying to deal with the influx, are crying foul on the couponing sites, claiming they didn’t see this coming. What did you think offering 50% off would do? Others, like those in the spa & salon sectors are providing these new customers with junior staff to compensate the losses incurred without seeing the big picture that if they offered their top people, they’d create an exceptional customer experience and create a happy RETURNING customer. Couponing sites are meant to bring people through the door. Making them a happy returning customer is entirely up to their company.
By switching the mindset a bit,
I think we can make couponing profitable.
Start by limiting the number of available coupons to ensure that you’ve got the stock and staff to cover your new found influx of customers. Consider offering a limited number of coupons each week; not only will this allow you to accommodate them, but it will create a sense of exclusivity that always makes people want it more. People want what they can’t have (think Tickle Me Elmo, video game consoles & anything Apple releases at Christmas time! You didn’t think that was by accident did you?)
Then, if you’re in the service oriented business, ensure that every coupon redeeming customer gets your best person. This will ensure that they have the customer experience of a lifetime and will not only be a returning customer, but they may tell their friends, write a review, chat about it on social media (and you thought couponing was the best tool to grow your customer base!)
If you’re offering product, make sure you’ve got enough stock and make sure you’re offering a discount on a product that they truly need/want. A discount on toilet paper isn’t enough to make anyone a returning customer, no matter how good the service was.
All in all, any marketing effort done properly can be effective. Couponing is proven to bring the customers, it’s up to you to make them happy returning customers.