Friday, August 5, 2011

Social Couponing - When Is It A Good Idea?

The social coupon craze has hit a fever pitch with companies like Google, Yelp! The Washington Post -- and every Tom, Dick and Harry getting in on it. Although the back end is expensive to build, once launched it is a pure profit phenom. Jumping on the bandwagon as a business is easy BUT, is is good for your business? 

Though it appears on the surface that these offers are FREE for your business because there is not an upfront cash outlay don't be fooled. It's NOT free.  

So, when should you consider making an offer?

When you need a loan:
If you are in need of a quick infusion of cash, you might consider running a deal of the day. You get the cash up front, which is helpful when you need it. However, your business will pay later in the form of service to your customers and product costs (we had a client that sold over 6,000 meals). Be aware you can actually lose money if your deal isn't priced to incorporate the 50% that goes to Groupon, LivingSocial or other coupon vendors... AND your 50% discount offer on top of that.  

When you want to increase your customer base
Though it is not easy to do, it is possible to increase your customer base with social "couponing". In order to increase your customer base, you need to custom tailor your coupon/promotion in such a way that it will interest potential new customers more than the general social coupon audience that is just looking for a one-time deal.

Consider your deal carefully before you create it:
1. Is your deal too appealing to bargain hunters? 

2. Does your deal cater to people who really “get”your business?
3. Does you promotion lend itself to potential customers coming back?  

If your goal is to create the most appealing offer to interest bargain hunters, then consider your deal a high interest loan.   

If your offer is crafted with options 2 or 3 in mind, then you stand a chance of growing your customer base. 

Our advice is to think about your pricing strategy -- before embarking on any coupon  promotion.

When you want to test a new product or service
Given that these services tap into large audiences with broad appeal you might consider trying out a new offering on them (think, affordable focus group). Some of these coupon services offer feedback mechanisms for the merchant so they can understand how the purchaser perceived their experience. This information can be enormously helpful in tailoring your product or service for the future. 

Final thoughts you should consider before you jump in
Will making an offer taint your current customers? Some of your customers might decide not come back until you run another special, which could melt away your loyal bread and butter clients — so, be prepared.

The key to running successful daily deal promotions is in the preparation -- before you run your social couponing deal. Goodluck!

No comments:

Post a Comment

Thank you for your comment we will post as soon as we get a chance to review it.