I recently published a post with an analysis and my views on online deals such as Groupon, Living Social, Google Deals, etc.
In that post, I gave an overview of the good and the bad aspects of running one of these deeply discounted offers for your own business.
I’d like to now touch upon some hardly mentioned negative effects that Groupon and other daily deals have on your established client base, particularly on businesses which have been running for some time and as a result have “regulars” which buy from them repeatedly.
How Offering a “Groupon type offer” Hurts Your Most Loyal Clients.
As I explained in my previous post, in order to offer a Groupon or similar deal offer, you need to cut the price of your product or service offering dramatically in order to establish “the unmissable daily deal.”
Groupon and the other services then take that offer and send it out to their vast audience of enlisted subscribers.
While it’s true that you will technically be exposing your business to millions of potential new customers… One key thing that’s not taken into consideration is that many of your current customers are also Groupon subscribers, or they are friends with people who are Groupon subscribers.
As such, they will eventually receive your half priced offer directly or have a friend who will forward them the deal.
So… Your regular customers who have come to trust you over the years, and expect to be treated in a special way as your valued, regular paying customer – all of a sudden receive an offer for a half priced version of the same service they regularly pay you twice as much for.
With one fell swoop, your customer’s perception of the value of your product or service has now been established at around 50% of what you regularly charge.
Furthermore, after these customers purchase the Groupon or other daily deal offer, they are added to the Groupon main subscriber database which means they will then receive offers from all your competitors who are running Groupons as well.
Considering that you ran a Groupon, you are now grouped in the same category as all your competitors with no “special value” for what you charge. In other words, your product or service becomes instantly commoditized and is now valued at it’s currency cost, not on the overall value you had established with your regular client.
(Note – while this “negative effect” from Groupon may not apply to all your regular clients and there are some who will let it slip by, and understand that you are simply marketing… In my experience with multiple small business owners with established clienteles who have run Groupon-like offers, there has been a negative impact on their closest customers with many leaving bad reviews on sites such as Yelp and Google Reviews.)
In the end, the main lesson to be taken from this is to keep in mind and prepare for the potential negative backlash that running this kind of daily deal can have on your loyal customers. Keep this in mind and weigh the pros and cons before running this type of marketing campaign.
Remember – Daily Deal providers such as Groupon are in business to generate a profit, and while offering a daily “deep discount offer” with one of these players can expose you to a large number of new potential buyers – they can have a negative effect on your most loyal clientele.
Three Questions to Rock Your Mind:
1- In what ways can you keep your current clients happy while you run a Groupon type offer which is bringing new customers to your business?
2- As the fourth step in the ROCK marketing framework is to “Keep Selling” to your customers, can you structure a Groupon like offer only for clients which that you can send to your own email database? (BTW, You DO have an email database don’t you?)
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