Do You Have A Groupon Strategy In Your Communications Plan Yet?

Get a table of friends together and it’s likely that most of them have tried Groupon at least once. And if you’re in my circle of friends, it’s a near guarantee that at least one of those friends is addicted to a group-buying website- Groupon or otherwise.  That was definitely the case recently, when a friendly conversation turned into story after story about the lure of huge discounts, and how those discounts seem to so effectively blur the line between a want and a need.  There are a few companies that we hear about a lot – Groupon, Living Social, Capital Dish – as well as so many others who offer strikingly similar good deals and fun bargains, but not so similar levels of service.  It seems everyone has a bad story to recount about the experiences in redeeming something purchased from a group-buying site.

And it’s not just the buyers complaining. The stories on the seller side of the group-buying transaction are often the same.   I talked with the owner of a spa recently who confessed that she doesn’t get repeat business from these sites and from an owner in the food industry who remarked that he doesn’t think these “discount seekers” will become his main customers.

I have to wonder then, why customers – and business owners – feel this way and if it’s possible for both a buyer and a seller to really find group-buying sites worthwhile.  Is this Mission Impossible? Never! But there are some tips that might come in handy, learned from our experiences in working with group-buying sites for our clients here at C.Fox.

Here are five key tips for businesses to improve their group-buying strategy:

(Note: For the sake of this post, I’m using Groupon as the Kleenex of group buying sites – a specific brand which categorizes all similar products/services – so while I may only reference Groupon below, I include all group buying sites in my analysis.)

1)      Throw out the notion of “discount seeker” – the public loves a good bargain but also recognizes good service and products.  A business that thinks 50% off the price means 50% off the usual service is in big trouble.  Word of mouth spreads just as quickly via discount seekers as it does from any other customer segment and perhaps more so.

2)      Truly start a dialogue with your Grouponers and engulf them in your branded world – make sure they know how to sign-up for your newsletter, check out your blog, find you on Facebook, follow you on Twitter, etc. Make sure every interaction you have with them presents these options over and over again.  You’re using a reduced price to start a conversation – make sure you’re giving them the chance to fully engage in that conversation.

3)      Offer “best foot forward” service to each Grouponer. By providing “white glove service” to these customers you will be presenting the best your company has to offer and will increase the opportunity for a repeat customer.

4)      Have your next promotion already planned – don’t let your company fall off the radar once the Groupon deal is over.  Keep customers engaged with ongoing promotions and marketing.  Don’t worry about breaking the budget by continuing to offer deep discounts – a small offer or loyalty perk will do the trick.   My husband found a new golf course through Groupon, and was thrilled with the free tees the course offered for his next round.  It doesn’t take much. You hooked them with Groupon, gave them your best service, now keep your brand top of mind.

5)      Follow up individually – sure, add the Grouponers to your email list for regular customer communication, but first try reaching out with an individual note expressing your thanks and hope they enjoyed your service/product and that you hope to see them again soon.  It’s easy, inexpensive, and unexpected. This is also a great time for a short customer feedback survey.

PR and Marketing strategy is all about facilitating a conversation with your public to build loyalty with existing customers and finding new ones.  Group-buying sites can be a powerful vehicle if businesses make sure their strategy is focused beyond the short term and is geared toward building repeat and loyal customers through great service and communications.

Clearly these sites are doing something right, and worth watching. Groupon has become the fastest growing company in 2010 according to Forbes and Huffington Post.  Just yesterday Mashable announced Groupon is valued at about $15B for an IPO this spring.  As small businesses continue to flock to them, I wonder if companies like Groupon will start to offer coaching or a how-to guide so businesses don’t use their service in a misguided or short-sighted way.   If issues continue on both the business and consumer side, which will stop using Groupon first – the business who don’t see a long-term return on investment or customers who feel Groupons offer a subpar service level?

Have you had a client go through the experience?  Have you incorporated a Groupon strategy into your communications plan?

Tina McCormack Beaty passion is strategic communications, social media, public relations, events, branding, and entrepreneurial marketing. Currently, Tina is a senior director @CFoxComm and a freelancer with focus on Entrepreneurial PR.  She serves as the vice president of Washington Women in Public Relations as well as a guest speaker on PR for Entrepreneurs at her alma mater, Miami University’s Institute for Entrepreneurship.  You can reach Tina at @TMStrategy.

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  • http://twitter.com/AndreaGenevieve Andrea G. Michnik

    Tina,

    What if your company is a global service/experience company (without tangible product), how would you suggest they use these discount sites for marketing and promotion? For example if I worked at a University?
    I’ve been thinking about this for a while and curious to hear your thoughts

    • http://twitter.com/TMstrategy Tina McCormack

      Andrea,
      Thanks for your comment on the blog post. Even without a tangible product I think you can utilize the channel of Groupon or a similar service. It is all about using a big promotion to bring a large group of people in front of your brand. In the University setting are you looking to reach current students, donors, alumni, professors, or high school students? Your audience and goals will really determine your tactics and outreach – I can think of a couple cool ideas that you could engage people with using a platform like this. But more importantly, I think it is it is key to use the long term planning tips in the post for not only Groupon but all promotions or tactics that you run. From a communications standpoint – if we always have a short term and long term plan in place when conducting individual campaigns we will see a bigger ROI in the long run. I’d love to connect one on one about the idea of using a group buying site in a University setting – email me at tina at cfoxcommunications dot com.

  • http://prevolutionblog.com Kasey Skala

    Full disclaimer: I am not a fan of Groupon. I think it’s a waste of time and resources for the majority of businesses.

    Now that I started on such a positive note, let me share a few thoughts!

    1. I know you were aiming “big picture” with this, but I want to make sure people aren’t confused and thinking they need a “Groupon communications strategy.” If you do go the discount route, it should obviously be part of a bigger plan.

    2. I don’t see Groupon lasting. I think they were foolish not to take Google’ money and run. As a small business, you can’t survive with a discount-based business model. As a large business, you don’t want to go down the path of relying on discounts. Otherwise, you’ll end up like Jos. Banks where rarely anyone pays “full price” since they constantly advertise discounts.

    3. Majority of businesses that I’ve talked to that have used Groupon will never use it again. As you mentioned, these are not the type of people that will sustain their business. It’s a hassle and often times a waste a time and resources.

    4. Bring the value-based model in-house. If you’re staff is any good at their job, they should be able to draw businesses in a more profitable way.

    5. If I sign up for Groupon, that does not mean I’ve opted in to receive newsletters, messages, or any form of communication from your business. I don’t want you to contact me unless I clearly indicated such. Be wary of using Groupon redeemers to grow your databases.

    • http://twitter.com/TMstrategy Tina McCormack

      Kasey – Thanks for sharing your thoughts on this post. While I do not agree with everything you have written, I highly value the exchange of ideas on this topic. Of course, each company needs to take individual stock of their needs and communication planning but the main idea behind the five tips presented is that small businesses do need to think past one promotion or outreach they have planned to execute. The call to action is to maximize a campaign to the best of their ability.

      #2 – It will be very interesting to watch the possible $15 billion IPO this spring for Groupon. Not only are they growing quickly but their competitors are popping up all over the place. I think they are here to stay but I do foresee a shift to more hyper-local relationship promotions rather then mass audience discounts.

      #5 – Thank you for clarifying this point. Correct, Groupon does not (and actually will not) give out contact information nor does it opt people into anything. Groupon brings new people “in your door” – at that point small businesses have the opportunity to engage them, wow them, and retain them as a customer. Then customers can interact with the brand through all of the channels/platforms available.

      To your point #3 – do you think there is anything Groupon can do to improve this service for the local business owner? I would be interested to hear your thoughts on this further.

  • Naomi

    Kasey makes some good points. You say, “Don’t worry about breaking the budget by continuing to offer deep discounts.” This assumes the restaurant or business can afford to give away free product again and again. Did you know that restaurants at least ave very low margin businesses – in the est of times achieving on average 7-8% margin? Why do you think so many fail? Employees, suppliers, landlords, electric companies and taxes all have to be paid. If the customer expects a freebie every time s/he walks in the door, there are two options: raise prices for customers that don’t groupon or cut employee hours to pay for the deficit. Is that fair? Is it realistic to raise prices in a recessionary market? Didn’t the restaurant do the groupon in the first place to get more customer in – not scare away the others?

    Second, the Deal sites assure the groupon buyers that their emails will not automatically be given to the business (Deal sites are not interested in making large numbers of email addresses available to others – since controlling this information is their bread & butter). Therefore, collecting contact information from the grouponers when they come and building a database takes added human time.

    Third, you assume that the small businesses that use groupons to get on the radar also have the human resources, time and/or money to pay someone to create emails and a regular follow-up contact plan. Solutions that sound easy and sensible become very burdensom – especially for small businesses that do not have the ching to hire a full time marketing/social media/promotions manager.

    I like the idea of Groupon employing people to help the small businesses that sign up avoid the mistakes that may do significant harm to their businesses. Do you think their sales reps are rewarded for booking sales…or for helping their customers succeed? If the incentives and analyses are right, groupon advertising can be a useful part of a small business marketing plan. But no small business should dive into this high risk form of advertising without a realistic analysis of the real costs and benefits.

    • http://twitter.com/TMstrategy Tina McCormack

      Naomi –
      Quick clarification on comment of “Don’t worry about breaking the budget by continuing to offer deep discounts.” I was referring to the fact that businesses or restaurants DO NOT need to continue offering discounts or free product. Yes, smaller promos are great but a high level of service and customer satisfaction will bring in more repeat customers any day. Groupon, or any promotion, will bring new customers in the door – that is the time to convert them with awesome service/products.

      Yes, it takes time to cultivate and maximize the new people Groupon brings to small businesses/restaurants, so it should only be entered into carefully, with planning. Aiming for the five tips I outlined is a place for business to at least start thinking through options for them! Consulting with a marcom or PR expert is a good starting point as well.

      Thanks!

      • http://twitter.com/SanctuaryRest Naomi Williamson

        Thanks for the clarification. Yes, I agree consulting with someone with the expertise you help you evaluate the size and timing of an offer can be a great add to the decision-making process – and pay for itself in the long run.

      • http://twitter.com/SanctuaryRest Naomi Williamson

        Forgort to say, thanks for starting the discussion!

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  • Mark Gomes

    I’m in the service industry and several of my friends own house cleaning companies. They all lost money.  All three of them ended up either taking out loans or dipping into their personal savings to keep their businesses from going under.  These are local companies, one located in Virginia and two that work in both Maryland and DC.
     
    Those who purchase coupons for such services are generally not interested in hiring a company at full price.  They simply have dirty homes that they want to have cleaned at an extremely cut rate.
     
    Notice that you rarely see house cleaning companies running discount coupons these days. Several of them have gone out of business or ended up in such a financial bind that they would not dare run another one.
     
    And if you follow Yelp comments, you will see that the few companies still running them are fly by night companies that don’t show up to do the work—or if they do show up, they do a shabby job or steal from customers.  So it’s actually dangerous to hire the unknown companies because you have no idea who you are bringing into your home around your children and valuables simply to save a few bucks.  The reputable companies have gotten the memo so they are no longer running cleaning coupons.
     
    I anticipate that the deal sites will have run their course within the next two years.