Many companies have jumped on the Groupon bandwagon in recent years. This website, which offer group discounts at participating businesses, has become an effective way to save money during difficult financial times. However, there have been numerous cases reported by various agencies including Technology Review that while these special deals may work out well for businesses in the short-term, over the long-term they may be more damaging than other methods of advertising and promotion.
Coupons and Customer Loyalty
There is evidence that suggests that new customers may try a product because they have been offered a special deal, but then never try it again. This causes customer retention rates to waver with companies who have participated in these deals. Instead of a flash-in-the-pan deal, why not have regular offers for reduced prices, special deals or promotions to encourage regular customers to try new products or services? This may be a better long-term strategy for businesses who are interested in building a solid returning customer base.
An alternate idea is to create marketing campaigns using printable coupons for a variety of products, in order to appeal to a wider audience and gain new customers. This strategy will disperse customer spending throughout your inventory, rather that highlighting one product or service at the expense of others.
Developing a good relationship with existing clients, running promotions that are specifically geared towards these customers may be more beneficial to retail outlets and specialty shops. In some instances, offering an existing customer discounts towards a new service or a discount for bringing in a new customer can be more beneficial than attracting new customers with online specials.
Social Media and Promotions
Social media sites such as Facebook, Pinterest and Twitter provide business owners an opportunity to tap into consumer markets to boost brand awareness. Oftentimes, the users of these sites will share information about products or services they find worthy with their friends and followers; this is great word-of-mouth advertising and for most businesses, it is also cost effective and can save some of the problems that can be caused by individual special deals, such as customers only coming in for one deal and leaving without perusing the rest that the given business has to offer.
Cost Versus Risk
Many popular sites that offer deals charge businesses a portion of sales to run promotions. One of the challenges with these promotions is that oftentimes, the limited nature of them will drive customers in the door and cause difficulties for regular customers. Combine that with the potential of not planning for an onslaught of new business, and the potential of doing more harm than good grows exponentially.
If you are a small business owner, sites such as Groupon may seem appealing. After all, saving money has become a way of life for many consumers, and this change in perspective has undoubtedly had an impact on businesses such as yours. However, by being aware of the possible downside to these promotions and planning accordingly, you can be sure of building a loyal customer base that will keep coming back for more. Best of luck!