Small businesses across the country are increasingly looking to daily deal coupon companies like Groupon, Living Social and Bloomspot to help them reach a wider customer base online. However, getting new customers in the door on a deeply discounted item or service doesn’t always translate to repeat business from those new customers. The wide net cast by these companies has the capacity to introduce your business to a broad range of potential customers. But will those deal seekers return and pay full price?
Consumers love a bargain!
How many times have you considered purchasing an item or service you have never been interested in before simply because it is 1/2 off. “I have never tried Indian food, now’s a good time – it’s practically free.” Business owners are betting on the chance that after I get my discounted Curry and Naan, I will be won over and become a repeat customer. But more likely I will move on to the next deal of the day because unless it is a ridiculous bargain I would never opt for something outside my comfort zone, like Indian food. So now this coupon has provided a 50% off deal for the one time customer and a 40% to 50% commission to the coupon company, what is left for the business owner?
Despite the one-timers and the fees and cost of the deep discounts, the volume of business brought in will make the coupon a success, right? Maybe, if you can handle the volume. Often redeemers will trickle in over the length of the deal and as the expiration date approaches the business is flooded. Chaos ensues leaving new and existing customers disgruntled while the staff struggles to keep up and the business owner wonders, “what the heck was I thinking?”
Consider a more targeted approach to winning new customers…
Constant Contact launched a new model for online coupons called SaveLocal. This new approach offers solutions to the problems of traditional couponing deals for business owners like lack of control over price, duration and redemption restrictions. The fee percentages are also much lower then Groupon, but the most significant difference is outreach.
Instead of emailing a coupon to every deal seeker on line, SaveLocal relies on your company’s existing database of email addresses to send out deals. Customers can earn additional discounts by sharing the coupons via social networking sites. This is a more targeted and incentives based approach that may be better suited to small businesses with a sizable customer database. The deals are being offered to a smaller number of consumers initially, however, the possibility for exponential outreach in the form of personal referrals is powerful. Referral based deals are far more effective at creating loyal customers than random email blasts. SaveLocal also provides better tracking of coupon redemption and subsequent repeat sales then their traditional counterparts. SaveLocal offers webinars on how to get the most out of your deals.
Make your online marketing work for you and your business.
Online coupons can work well for some businesses but it is important to choose the right one and under terms you can meet.
• Make sure you can handle the volume of potential customers throughout the duration of the deal.
• Be sure the deal your offering allows you to cover costs, breaking even is OK if there is another benefit like new customers becoming repeat customers, otherwise you are just spinning your wheels.
• Be able to track your deal seekers to see how many return to pay full price.
• Consider what effects a coupon or daily deal scheme will have on your reputation for quality and potentially devaluing your products or services.
Are you a small business owner with a coupon tale to tell? Was it a boom or bust? Would you do it again and if so what would you do differently? Share your comments below or post on our Facebook page.