Unless you've been doing your marketing under a rock lately, you've heard all about the exponential growth of group discounting sites like LivingSocial, Groupon, Facebook Deals, Google Offers. Now Amazon, AT&T, and your credit cards are getting in on the action, too.
The idea is that if enough people join a deal, the customers get a discount, and the merchant gets enough new customers to make it worthwhile, and the discount site gets a cut. Everyone wins!
But does it really work that way?
photo © 2008 Benjamin Reed | more info (via: Wylio) But doesn't this kind of thing generate customer loyalty? I'll get lots of new customers who return to my business, right?
Actually, the loyalty these discounts generate is to the discount site. That's right - LivingSocial is generating loyal LivingSocial customers, not customers loyal to your business.
But the good news is that you'll get a list of customers who purchased your deal, and now that they are your customers, you can continue to market to them and entice them to return to try your other products.
Isn't it going to be super-profitable for my business to get tons and tons of new customers?
Actually, this is heavily dependent on the nature of your product, the cost of serving your customers, and which deal site you choose - they all work differently. Carefully evaluate how much this will cost you and how much you will have to pay for this exposure. Make sure you understand exactly how many customers will see your deal. Some businesses create special products or services just for the deal sites - things that are less expensive to provide to customers so they don't take such a bite out of profits.
But the good news is that the deal sites are always looking for new businesses (and types of businesses) to try, and they are happy to talk to you about what kind of arrangement might work best. Don't be discouraged if you aren't a restaurant or salon- I've seen deal offers recently for solar panels, scuba lessons, and museum passes.
I can just post my deal on any deal site and it will bring in tons of qualified new customers, right?
Actually, no. Not all deal sites work alike and not all cater to the same clientele. Before you begin this odyssey, be sure you have an understanding of who your customers are and which customer segments you'd like to attract with your deal.
But the good news is that you can scrutinize the different sites to see which would be the best fit for you and your business. You can ask as many questions as you want about who the customers are, what they buy, and at what price.
Am I a total dork if I don't participate in the group buying party?
Actually, no. If you research the issue and determine that it won't be profitable for you, don't do it.
The good news is you can always try it later, if it makes sense another time.
Need help navigating this deal-crazy landscape? Let me know.