You Can't Make Any Money With Groupon - Here's an Alternative
I have friends who own restaurants that used Groupon and all they did was dig themselves a hole. The model requires the business to deeply discount their merchandise and then give Groupon a portion of the sales. You could argue the numbers and say that the cost of acquisition per customer is lower than other advertising and in many cases you would be right. But you have to consider the customer you are acquiring and also how you are affecting your current customer base.
Customers brought in through Groupon are deep discount seeks. It doesn't mean that none of these customer's will become regular price paying customer's, but the percentage is fairly low. The other issue you have to deal with is your current customers buying the deals and expecting more. The deep discount can harm your customer base if they begin to believe that your offers are financially beneficial to you at the price being offered. Remember, many of your customers are not thinking about, or really know, your operational cost.
There are so many alternatives that you can use to bring traffic into your store and that would cost you less to acquire new customers and increase the purchase rate of your existing customers. I will share two ideas with you here. I have successfully used both of these techniques.
For new customer acquisition you should know the other business where your target audience visits. Create something or acquire something that you can offer for free. Go to the other businesses and tell them you would like to give them something to give to their customers. Many businesses will be glad to give your offering away as long as it doesn't compete with their offerings. This makes them look good to their customers. When the new people come in, over deliver on the offer and many of them will become new customers.
To retain customers and increase the rate a which they buy, offer a really good frequent buyer program. Many places don't have one at all and the ones that do usually have some offer that doesn't motivate their clientele. Reward your customers for shopping with you and make it something that they feel is worth pursuing.
Get creative and stop being a slave to social offer marketers like Groupon.
I'd like to know if anyone thinks differently about this.
Customers brought in through Groupon are deep discount seeks. It doesn't mean that none of these customer's will become regular price paying customer's, but the percentage is fairly low. The other issue you have to deal with is your current customers buying the deals and expecting more. The deep discount can harm your customer base if they begin to believe that your offers are financially beneficial to you at the price being offered. Remember, many of your customers are not thinking about, or really know, your operational cost.
There are so many alternatives that you can use to bring traffic into your store and that would cost you less to acquire new customers and increase the purchase rate of your existing customers. I will share two ideas with you here. I have successfully used both of these techniques.
For new customer acquisition you should know the other business where your target audience visits. Create something or acquire something that you can offer for free. Go to the other businesses and tell them you would like to give them something to give to their customers. Many businesses will be glad to give your offering away as long as it doesn't compete with their offerings. This makes them look good to their customers. When the new people come in, over deliver on the offer and many of them will become new customers.
To retain customers and increase the rate a which they buy, offer a really good frequent buyer program. Many places don't have one at all and the ones that do usually have some offer that doesn't motivate their clientele. Reward your customers for shopping with you and make it something that they feel is worth pursuing.
Get creative and stop being a slave to social offer marketers like Groupon.
I'd like to know if anyone thinks differently about this.