You would think that a big sale that brings in a ton of customers into your store all at once might be something that your employees would look forward to.
Unfortunately that’s not always the case. In fact, if you’re not careful, your group coupon promotions could come off as doing more harm to your business than good.
The recent wave of group coupon sites like Groupon, Living Social, and the hundreds of clone sites have now made mass discounting online a popular way to promote a business to local customers who may not have otherwise heard about your business, or at least thought about it in a while.
This is especially true in an economy where the easiest thing for a business to drop is the advertising dollars that often provide results in ways that are too hard to pinpoint and measure.
Do group coupons create new business opportunity for small businesses? Absolutely! Unfortunately, you may find that your employees are essentially sabotaging your business.
When a business signs up with a site like Groupon. They usually create a promotion of 35% to 50% off of their normal rates. In some cases, a business will even give a 90% discount, which is absolutely nuts, because it destroys the credibility of that business.
In most cases, the proceeds of the coupons sold to consumers are split evenly with the group coupon company. So, if a business is offering a $100 product or service when the consumer buys a $50 coupon, then the business ends up receiving about $25 for $100 worth of products or services sold.
In order for this to be profitable for most small businesses, the new customer must ultimately buy much more than the average price of the coupon, or they must become a repeat customer and preferably one that brings in their friends and family too.
This requires the employees at a business to give amazing service, provide amazing value, and really establish a connection with their new customers.
In fact, a smart local business will eventually get their new customers to talk about them on Facebook, Twitter, review sites like Yelp, and hopefully convince their new customers and their referrals to sign up for their email list and text broadcasting.
However, some otherwise great employees may be taking pride in their work in the wrong way and actually be sabotaging your business. I’ve worked with a lot of talented and creative people over the years, and they often became conditioned to the fact that if you charge X amount, then their work is worth X amount.
When they discover that you are charging less than X amount, in many ways they feel like their work is worth less, and so they often put less effort into it. This gives the customer the feeling that your product is not so special, and not worth sharing with friends or even worth their repeat visit.
Most employees do not think about all of the other things that go into creating a successful business. Things like buzz, momentum, and word of mouth are typically dismissed by employees as things that don’t really matter.
In many cases employees take a lot for granted and actually have no concept of how much you are spending on advertising, or the “cost of acquisition” for each and every customer that comes through the door.
I’ve experienced this first hand as both a customer and as an employer.
I recently bought an oil change on Groupon for $18. They claimed that this was a $36 value, but I knew that I could easily find an oil change for $28. I bought the Groupon anyway, because it was still a good deal, regardless of the extra hassle that using a Groupon required.
I made my appointment and a few days later I showed up for my oil change. There was a piece of paper with a handwritten sign that said that all coupons must be presented before the service was provided.
I immediately felt a bit distrustful and wondered if I would receive a lower quality service because of this. Would they really replace my filter? Would they really do everything they would have normally done?
Rather than embarrass myself by asking. I simply went along with it. I told them I’d be back in an hour to pick it up. When I returned, the vehicle was exactly where I had left it. It wasn’t parked in the back. It wasn’t parked in a different location. It was exactly where I had dropped it off.
To make things more conspicuous, when I returned to pick it up. They simply handed me a receipt that said “$0, oil change.” Nobody bothered to talk to me about my vehicle which had a variety of other things that could have been fixed. Nobody bothered to build rapport with me. Nobody bothered to do anything other than hand me a piece of paper and say “here’s your keys.”
As I left, I did notice a nice sticker in the upper left corner of my window. Did I just buy an $18 sticker? To this day I have no idea whether or not I actually received an oil change.
This shop lost a chance to win me over and up-sell me. They lost the chance for me to talk about what a great deal I had received to all my friends and family. They lost the chance for me to write a positive review about them online. They lost the chance for me to come back every few thousand miles for future oil changes. They totally blew it. Why? Probably because they felt like they were doing an oil change, and only getting $9. That’s their cut of the $18 Groupon.
The owner of this business will probably tell all of his business friends and employees about how Groupon was a waste of time and money. Or worse, complain that Groupon is only for deal hunters.
This isn’t an isolated case. As a business owner I had the same type of issues with some of my employees. Long before group coupons, I would often go back to my salespeople and tell them to offer a 48-hour special to all of their leads that had not closed over the last few weeks.
Yes, they would be happy to have that boost in commission. But when it came time to provide customer service to the client, I would wonder if they were giving them the same amount of effort that they did to those who paid full price.
In more than one instance, I would have one of my creative artists tell me that since the customer only paid a fraction of what most customers paid, that they only deserved a fraction of their effort and talent. Never mind the fact that I had built in a system that created long-term repeat customers.
That’s simply unacceptable.
What is the point in running a promotion if you’re going to be sabotaged by your own employees?
It’s hard enough to run a business with all of the rules, regulations, taxes and competition that is constantly bombarding you.
I quickly learned that it was my responsibility to train up my staff so that they understood the value of creating buzz, momentum and word of mouth sales. I told them that it didn’t matter if the client paid anything at all.
If we say we’re going to do something, get it done right, regardless of what they may feel something is worth. Do it as if we’re getting paid a million bucks.
When you’re winning over new customers, you must give at least 100%, each and every time.
If you do a promotion with a group coupon company, then be sure to take the time to prepare and train yourself and your staff to do the following;
- Consider the discount and the commission to be part of your cost for customer acquisition.
- Treat re-activated customers like new customers.
- Treat new customers like your favorite old customers.
- Always over deliver, either through product, service or personality.
- Strive to build a strong rapport with each and every customer.
- Always ask for the next sale, next referral, or next testimonial.
- Realize that repeat business, one way or another, is your business.
Do these things, and you can harness the true power of group coupon advertising and just about any other form of advertising and marketing.
If you have read other blogs about Groupon and other forms of group coupon offers, you may be wondering if you are going to even come close to breaking even. A good number of articles out there can paint a pretty bleak picture.
What most fail to consider is that if you’re advertising on television, radio, yellow pages, or through pay per click ads, then your cost per customer acquisition is already likely more than the initial transactions.
Ask any business owner if they’ve ever spent $100 to create a $50 client through radio. Granted, most have no idea what their cost per acquisition is. You’ll find some that not only realize it, but they brag about it and continue to advertise successfully through media like radio to this very day.
It’s not about the cost to create a transaction, but rather the cost to create a relationship.
Keep these things in mind and you’ll find the success you’re looking for.
Have these things happened to you? Please feel free to comment and reply with your experiences.