Groupon Advertising offers consumers “really great deals” every day with discounts of at least 50%, and sometimes up to 90%. Then you pay a 50% commission on the deals you sell to the company, leaving you as little as 5% of your original price. Discounts like these eat up your profit, and often end up costing you money to sell.
It’s a classic “loss leader” strategy: tempt consumers to notice you, and to come into your business to get a deal, and then buy more from you at a full price. Does it work?
Groupon Advertising reaches customers
That much is true. Every day the company sends deep discount offers to their list of over 10 million people. That means that you can gain huge exposure. But Groupon’s own published research shows that 83% of Grouponers never purchase anything from you again after your promotion.
Why doesn’t Loss-Leader Advertising build future business?
Most businesses who try this discounted coupon marketing don’t have a plan for long term success with their bargain hunting customers. They simply “hope” that these new customers will return for additional sales. Failing to plan means planning to fail.
There are proven strategies for making your discount deal more profitable. Here are just a few:
- Educate your customer about more of your (full priced) products and services. The best ways are with
- For retailers: Point of Purchase Advertising, End Cap Displays, and stocking deal items with other products customers usually buy with them (eg milk and cookies)
- If your customers call you for a reservation or appointment, use marketing messages on hold to give them information about additional products and services, the value you offer, and how you help them best.
- If you offer a service: turn your “deal” into a repeat purchase: don’t just offer one spa treatment or one physical training visit. Make it two visits to your business: bringing your new customer back for a second visit gives you an additional opportunity for “add-on” sales, or up-sell opportunities
- Try deals that usually are paired with additional sales: sell two for one burgers, knowing that most customers add on fries or a soda. Don’t forget to coach employees to up-sell. McDonald’s does it perfectly with “Want Fries with That?”
Groupon Advertising: does it work?
It’s a good question, and one that you should really consider before jumping in. If you have a solid plan to sell a product or service that usually leads to “add on” sales, if you prepare your employees with “suggestive selling” training, and use the opportunity with new customers to promote additional sales with POP Advertising, product displays, and marketing messages on hold, it might.
Want to talk about it? Call to schedule your free 15-minute Strategy Session and let’s come up with ideas you can use today. Call (800) 862-8896 today.
