You’ve probably heard the hype surrounding Groupon, LivingSocial, DealFind, et al. You might have been told that they will give you oodles of new clients, more revenues, and at a cost much less than through usual marketing or advertising efforts. And while that might all be true, there are a lot of shortcomings you should know about if you are considering this form of promotion.
- Couponing of any kind is more than just a mass discount. It is a statement about the value of your product/service. By offering the deep discounts these online coupons typically require, you are telling the market that your product/services are not worth as much as you regularly charge.
- Mass couponing reaches a new audience for you, true. But is it the right audience for you? Coupon users are seekers of inexpensive solutions. They are not loyal customers. They are not return purchasers. Why would you create a huge incentive to attract an audience that will not support you in the future? Why not reward your loyal customers, instead, and shore up a solid client base?
- “Brand awareness can be built by reaching a large subscriber audience”. We argue that this isn’t necessarily in your best interest. Coupon subscribers will see your company name, sure. But are they people who you want to see your name (see Point 2 above)? And brand awareness is not brand recall. Brand recall means prospective customers will remember you when they have a need for your product/services. A limited offer coupon will not generate recall among an appropriate target audience. Frequency and repetition will create brand recall, and mass couponing is not altogether designed for that.
- It’s also true that you could be inundated by new customers. But are you ready to serve a large influx of new clients? Consider the damage to your brand if all you do is create a large group of disgruntled customers. This article details the sorry experiences of some businesses in Australia who were unable to meet the demand created by their online coupons.
- Clones of clones of clones of online coupons have appeared out of nowhere. Who do you register with? Are they scrupulous? How do you know? Who does the consumer register with, and why?
- You can’t force a square peg into a round hole. You have to ask yourself: Is your business suited to mass online coupons? If the answer is no, don’t try to force it. For example, if your branding is based around superior value, why would you discount it?
Mass couponing might have one big benefit, though. Companies that make money from ephemeral products/services (for example, massage therapists on hourly fees) lose money when they don’t have any clients. An astute business operator will plan bookings to ensure optimal production time and attempt to maximise revenue-generating opportunities. Inevitably, though, gaps will occur, hours will be lost, and revenues will go unrealised.
Any downtimes you might have coming up could be filled by Groupon-style coupons. For example, if a massage therapist knows there is a slow week in July, a mass coupon could be worthwhile. Even at a savage discount, enough revenue should be generated by the promotional offer to cover costs that might otherwise have eaten into profits. By keeping your production assets working, even while generating lower prices, your business will not be losing money.
Before providing a discount, and certainly before you sign up for mass coupon offers, think about the implications. Ask yourself if it’s the right choice for your business. And if in doubt, call us for some advice.
Finally, a cautionary word for consumers: Do you know who from whom you are buying the coupons? Personal experience has shown that not all companies will honour their coupon offers. A business caught unprepared for an overwhelming response might never be able to provide you with the services for which you have paid up-front.