Win Win Promotional Strategies – A Warning to Small Businesses (Personal Experience)
I decided to post this today because of a horrible experience I had using Groupon. It was obvious that the local vendor did not know what they were getting into. The promotion had a unique and creative selling proposition, however, failed to meet expectations upon delivery. To learn more about my experience, see below or connect with me on Twitter – @kbconway1 & #socialconn. (I am excited to announce the Groupon has refunded my money. It took a few days for them to respond to me and several emails, but the transaction is complete. Thanks!)
Local discount services, social or not, are great ways for small business to generate business and interest. Groupon, is one of the most popular group buying sites. Some other local coupon services include: Valpak, deals.com, penny saver, etc… If the ROI is calculated correctly, promotional strategies can be a win win for both buyer and seller. To ensure you are choosing a promotion that is right for you make sure to follow these 4 steps:
- Plan for Volume – As a small business you may only be able to handle a certain amount of volume. If you want to be able to promote your services again with credibility, don’t get greedy. Assess how many people your business can handle and limit your promotion to the first X number of customers. If you don’t, you may make some money initially, but it will hurt your reputation and your pocket book in the long run.
- Disclose All Restrictions – If you sell a talked about item and the promotion doesn’t apply to it, or there are other restrictions like time of day, disclose these facts. Not providing the information upfront will only hurt your word of mouth reputation.
- Only Offer Discounts That You Can Legitimately Afford – It may be tempting to offer deep discounts in hopes of high volume. However, your customers don’t want to be a burden, and you don’t want to get half way through the campaign and realize that you are losing money. Calculate what a reasonable discount on your services would be and provide the best value that will benefit both you and your customers. This way you are just as excited when the promotion is used for the 100th time.
- A Customer is a Customer Promotion or Not – Whether or not a promotion or coupon is being used the person on the other end of the transaction is a customer excited and eager to purchase your product. While they are at your facility, they may purchase other products/features, or they may become a repeat customer purchasing over and over again. Don’t ever fall into the trap that a customer using a promotion is less of customer because they aren’t paying full price. If you couldn’t afford to conduct the promotion you should never have issued it to being with. (See rule 3)
It's a Social Media World 
Good “caveat emptor” post, KBC1. I haven’t used Groupon but I have used Living Social, and on one occasion had a situation in which even the fine print didn’t disclose certain prerequisite conditions. Happily, Living Social refunded my money, which means I’ll use them again!
Living social is another great example. Customer Service Win! We will see if I get a response. I will keep the post updated.
KBC – I love your suggestions for how to run a smart promotional campaign. Small and large businesses need to look to you!!! Like you said, people want to know the facts upfront. If they aren’t okay with the promotion, then get a better (or different) promotion.
Thank you Jennifer- Hopefully, I was objective enough. I was very angry. My husband and I were so excited about using our picnic Groupon. To be honest, I think it is more the local vendors fault, but Groupon should force them to make it right.
One bad apple can really ruin the bunch. I had several groupon experiences that were positive, but then 1 troublesome one and now I’m totally turned off of the whole site. I agree these local companies are obviously in over their heads, but maybe Groupon should be taking extra steps to ensure these vendors aren’t associated with them, b/c in my case, this now effects my want to do any business with them too.
Clarissa – I agree. Groupon is totally responsible for coaching and ensuring that small businesses use the promo tool correctly. Otherwise they’ll fall into the greedy category too; ultimately phasing themselves out.
This post brings to light the exact fears I’ve had about using Groupon and sites that use similar business models. I’ve wondered if some businesses offering their deals on Groupon can truly handle the increase in business in the right way.
You are so right that despite how a customer is introduced to a company, they are still a customer. And, unhappy customers are much more likely to have a negative impact on a company than happy customers having a positive one. I know this from looking at my experiences….if it is a good one, I’ll tell my close friends, etc. If it is a bad experience, I’ll tell anyone that wants to listen! 🙂
I have never used Groupon and will now think twice about the possibility of using it in the future. Thank you for your insight!
Thanks for the comment Sarah. You eloquently summed up lots of consumers’ perspectives. I know I’ll think twice before using a group buying site.
ack. so sorry to hear that you’re having trouble with Groupon… I’ve recently had a disappointing result as well. I’ve about decided they aren’t the best idea either. I do like your tips for businesses… Sean and I both have thought about doing a Groupon, however, I’ve talked him out of it every time with these points exactly… apparently most people do 50% and then Groupon keeps 50% of the profit from sales of the coupon and so you’re only left making 25% of what you’d normally make for the same service. At the volume I see some deals go at, I’m shocked that any of these companies can handle it… and I definitely think Groupon and companies like it should coach these companies not to make dumb mistakes like that… they definitely have responsibility in the matter.
Heather – I didn’t realize their fee was so steep. Thanks for sharing the info. The more discussion the more culpability Groupon appears to have in the eye of the consumer. Hopefully, they can develop a process to help small businesses make building not breaking decisions.
I’ve heard the same thing Heather said about Groupon’s fees and that LivingSocial is more business friendly.
And, I also had problems with the exact same Groupon, Kristen! I left message after message after message with no return call and no one who answered would help my directly! Luckily, my stalking abilities proved fruitful and I was able to get something scheduled.
The skydive place, who tends to offer tandem jump Groupons in November, has a deadline so that the offer expires in May, before their summer season kicks off. It helps generate business over the winter months. And brings a lot of people out.
I hope businesses continue to offer deals like this, because I’ve found some that were useful to me. But, it’s about doing so smartly, just as you’ve outlined.
Thanks for the comment Haley. Glad to know you like Living Social. I will check them out for sure!