With the well documented growing popularity of deal-of-the-day websites, Groupon in particular, it’s getting harder to ignore the potential benefits such sites may offer local business. However, it is important to understand how Groupon works before diving in and posting a feature.
As you may be aware, Groupon offers large discounts on prices to their extensive mailing list in a particular geographical area. This is a great way to get some online word of mouth advertising about your company out to a base of users who are inclined to share and reshare deals that are of interest to them and those in their social networks.
Groupon can therefore give you a much needed spike in sales and an increased customer base – but at what cost? Ortus have pulled together a guide on when careful manipulation of Groupon can benefit your business and when it can be detrimental:
When to use Groupon:
Excess Stock
Groupon is brilliant for companies that have an excess of unsold stock for example the end of a range or during a clearing out or closing down sale. This allows you to offload product, freeing up some much needed space and maybe even making a small profit while still benefitting from the publicity generated by Groupon.
Excess Capacity
If you are running a tour business or transport company, for example, and have a few spaces left, Groupon is the perfect medium for which to fill those spaces and bring in an extra bit of cash at no extra cost.
Repeat Sales
Groupon may also be used as an introductory offer for a new product or service in the hope that people will return to pay full price following the termination of the deal having had a good experience
Add - on Sales
Groupon is a great way to get customers into your shop or café based on a particular deal. Most people who come in to make use of a coupon for a free burger, for example, will likely order a drink and maybe even a side order!
Attracting a Particular Demographic
Groupon users are mostly young women between the ages of 18 and 34. If this is your target market then Groupon is an excellent way to target this group and increase your customer base.
Online Word of Mouth Marketing
Groupon is also extremely useful in creating a buzz around your product or service. If you have a new product, or are moving into a new area, Groupon will get your first few customers through the door and encourage word of mouth marketing.
When Not To Use Groupon:
If you don’t have the capacity levels
As a business development agency, Ortus have heard an abundance of horror stories about small businesses attempting to deal with the sudden influx of customers following a Groupon feature. Shortly after your feature on Groupon, you should expect high volumes of sales. If you are unable to meet this increased demand then you need to think carefully about the parameters of the deal you offer and how you will deal with the spike in demand.
Due to the large discounts required, and commission required by Groupon, many small businesses end up running their offers at a loss. It is therefore important that Groupon is viewed as a promotional activity rather than as a sales technique. It is also important to bear in mind that no matter what happens, you will have to deliver the service/product offered to everyone who has purchased a voucher.
If you don’t get repeat Sales
If the nature of your business means you don’t often get repeat sales then it is unlikely that you will be able to use the deal to drive additional sales. Since there is such a large discount when customers use Groupon, you may be running at a loss and as such, you need to make sure the investment will be worth the cost.
For more information or advice on how to use Groupon and other online marketing techniques, contact James Scott - james@ortus.org
(Image by digitalart)
