Local deal websites like Groupon and LivingSocial can be a great way for consumers to snag a deal – but what do the participating businesses get out of it? If you run a local, small business of the type you often see offering these deals, you might be curious. Maybe you’re seeing dollar signs flash before your eyes as you think about all the sales. Or, maybe you’re wincing at the idea of slashing your prices that much.
What’s the Deal With These Deals, Anyway?
LivingSocial and Groupon are the two major players in the mass coupon business. These sites give businesses the opportunity to offer a limited-term promotional discount. They’re pretty popular, so participating businesses gain a lot of exposure, and usually a lot of sales too. In exchange, the deal site takes a percentage of the revenue.
There’s an obvious tradeoff here – volume and exposure in exchange for reduced (often drastically reduced) revenue. So creating a Groupon or LivingSocial deal is generally not a great bet if you’re mostly concerned with short-term profit. If you’re looking at it as a long-term investment though, it might be a good choice. You just have to know what you’re getting into.
Mass coupon deals like this are only – I repeat only – a good marketing move if you look at them as you would any advertisement. They are a marketing expense, not a way to instantly drive profits. Treat them as such, and you may be able to reap the rewards (in the long run). If you want to make quick money, this is not the way to go.
The Dos and Don’ts of Using Groupon and LivingSocial
DO use it if you’re a primarily service-based business with the potential for repeat business and you and your employees are prepared to go the extra mile for your customers using the deal. Because Groupon and LivingSocial deals primarily act as a means to interact with new customers, smaller businesses that offer services rather than goods reap the greatest benefits. You’ll be able to deliver a memorable one-on-one interaction. If you do it right, your deal customers will become your regular customers, and you’ll get some free word-of-mouth advertising too.
DON’T treat your customers differently when they’re using the coupon. That is, you should be delivering great customer service across the board, whether your customers are paying full price or nothing. And they might be paying very close to nothing when using the Groupon or LivingSocial deal. Don’t lose sight of your objective – building a larger customer base. If that’s not your objective, you probably shouldn’t be using this method in the first place.
DO offer the deal during your business’s slowest time. You don’t want a flood of people overwhelming you and your employees when you can’t handle it. That will give the opposite of the intended impression. If you extend your Groupon or LivingSocial deal into the time of week/month/year when you are normally busy, your deal customers will likely not get the amazing service that will bring them back. And they probably won’t recommend you to friends and family.
DON’T let there be any hidden stipulations. NO fine print (that isn’t obvious and isn’t included in the main text of the description). Let’s say you run a nail salon. Your Groupon is for a half-price manicure. Your customer buys it with the intention of getting a gel manicure (it’s a popular service). But they arrive and find that they have to pay $25 extra for gel. If they didn’t notice that in the Groupon’s terms, they’re going to be unhappy. Yes, you might get more buyers if you don’t clearly note the distinction, but the overall effect will be negative. You want customers to know exactly what they’re getting, and what they’ll pay if they want additional services.
DO offer a product or service that stands out from competitors. For instance, there are lots of bakery and sweets Groupon and LivingSocial deals out there. One, in particular, specializes in bundt cakes. They make tiny, single-person bundt cakes. They make medium-sized, 4- or 5-person bundt cakes, and they make very large bundt cakes for 10 or more people. You might pass that business by if you’re just in the market for a treat or birthday cake. But if you see a shop that just makes bundt cakes and offers an exceptional deal, you might stop and think. If you get the deal, go there, get amazing customer service, and get incredible cakes, there’s a good chance you’d go back. You might even tell your friends.
DO collect names and emails with confirmation to communicate directly with them. This is critical to increasing the lifetime value of each new client secured this way. The idea here is to grow your list of future regular priced business opportunity. Fail to do this, and you’ve removed a great opportunity for this strategy.
This is what these mass coupon websites are all about – getting a chance to show consumers en masse, what your business is all about. If you approach it that way, it could be a win. If you look at as a short-term dollars-and-cents proposition, you’re doomed. Deals like this only work if you refuse to lose sight of your brand’s identity and your customer focus.
