COMMENTS
I think it's a stretch to compare Groupon to traditional advertising. Groupon is not like a billboard. A billboard creates awareness / reminds consumers of your business. It is erected without consumer consent and seeks to create interest without prior permission.
Groupon, on the other hand, is a subscription service (permission-based) that creates urgency (buy now). It's a permission-based-urgent-message that statistics show is well responded to.
Concerning the relationship with existing customers: businesses run specials all the time. The coffee house down the street from my apartment provides 15% off discount cards to the residential units in the neighborhood. I paid for lunch yesterday using a church-sponsored coupon. This is a commonly accepted practice and is part of our culture. Therefore, I don't see how reasonable customers who miss out on a Groupon discount would be any more upset than if they had missed out on any other special.
Finally, advertising is not about borrowing somebody's audience and then GIVING it back. If that's what is happening, it's not the medium or technique's fault - it's the marketer's fault for not integrating the purchased audience into his / her own audience.
Build your own audience - but do it more quickly than your competitor. If that means purchasing attention, so be it. Just make sure you adopt the purchased audience into your existing one so you can continue developing a relationship.
I think if Business are going to used coupon the coupon should be some that consumer can used.
OK, you lost cred with me with "Groupon is like a billboard." Groupon is not for everyone but has been very successful for some companies. I think it is another form of inbound marketing, these businesses are paying money for people to use their goods or services for maybe the first time so why not. I have seen stats that almost 50% of those who buy Groupon, let it expire without using it.
BTW, why don't you invest $25 and get a lav mic so your audio is better. Just askin'...
Thanks for your comment, Michael! There definitely are some success stories but our goal here is to show that coupon-based services cannot be a magic bullet for businesses that want to get found online. It is a short-term solution that cannot replace investing in a blog or doing social media marketing, or improving your site on an on-going basis.
Sorry about the audio; we are working on making it better!
Good thoughts Magdalena!
No marketing tool should be employed with magic bullet expectations. However, there is value in grabbing the attention of a mass audience - IF you can hold that attention and turn it into future purchases.
Never underestimate the power behind being first. I'll purchase a ticket to be front of the line any day. If I can steal my competition's audience and secure a relationship with them while my competition is busy "building trust" with blogs, etc. - yeah, I'll gladly pay for that opportunity.
Your blog might make you credible, but I'm stealing your customers, turning them into raving fans, and receiving referrals from them - all by purchasing a ticket at the front of the line :)
(btw, I also aggressively maintain six company blogs and engage our consumer base through social media. It works too!)
Great discussion!
Thanks, Steve! I agree that you need to be able to hold the attention of the newly acquired customers. If you decide to use these coupon-based services, definitely develop a strategy to nurture this new audience in a special way.
And here is another hypothetical situation - you are about to buy a coupon, but first want to look up the actual business online and their site. If the site looks unreliable, you might never make the purchase no matter how huge the discount was. Online research plays a big role in this buying process!
I wrote about the latest Pandora's Box method of advertising (a.k.a., Group Online Discounts) several months ago and, if anything, my opinion has solidified.
Groupon and Google Battle for the Group Online Buying Bonanza
The End Result: The Local Businesses Will Lose…Big! and
Inbound Marketing Consulting and the Group Buying Phenomenon
Group Online Buying: The Downside – Long Term The downside of this risk/reward scenario is far too great for most businesses. The very real risk of cheapening a business' image for the sake of a few quick sales, often at the expense of customer service to valued, long-term clients, is far too great. Ultimately, it is a matter of definition: How you seek to define your business long-term. A few quick sales to bargain hunters may, and often does, backfire. Ask the auto companies if they wish they could rewind the clock back to a time before gross rebates and financial incentives that all but give away the farm to bargain hunters! Or would they rather cater to clients willing to pay a bit higher margin for superior service? Think GM would at least think twice if given the opportunity to rethink that image choice?
I'm late to this discussion. Sorry for that.
Upon reflection based on these comments, I do think there is room for Groupon in an overall marketing mix. And I do agree that it is not like a Billboard. Thanks for that.
However, I still think there is a danger in relying too much on heavy discounts and focusing too much on always paying for an audience.
That being said, if you're successful with Groupon as part of the mix, that's great.
I do think that
many local businesses stand to benefit from discount sites when used properly but certainly not all, and frankly not many of the names I see in my daily deal emails.
The issue to me is not what tool is used to get customers in the door, but what rather what system exists to keep them coming back and unfortunately most companies I see running these sort of deals are unfamiliar with CRM as a concept --thus loyalty ends at “a good experience”.
Some business mdoels lend to repeat business much better than others like subscription services [gyms, recurring massage programs, car washes, etc] but almost any business can find a way to build an ongoing relationship, even if it’s a yogurt shop doing digital punch cards.
Any business looking at giving a 50% visible discount and taking a 75% budget cut has got to be thinking about how they get that customer back in the door many more times, if not at least once. The mistake I see companies making is measuring everything as one hit visits – whether you use Groupon or just go out and buy media it’s difficult to find a positive return until you look at LTV.
These days LTV isn’t just about sales either. Smart businesses are focused on remarketing but also on endorsement. If you’re new or having trouble getting customers in and you turn 500 Groupon deals into 200 Yelp reviews 4-star or higher, that’s a lot of potential value [how much must be measured for your location / business type].
Clearly Groupon like things are not for everyone. Businesses will have to make a choice between their loyal base and those who run behind deals. Customers will come to you but won't stay with you. I agree with David's idea of creating an audience.
Groupon in no way represents the couponing business. Peoplle don't get mad if they pay full price while others use a coupon. Smart businesses give out bounce back coupons to be used for the customers next visit...and the will return with a coupon. I am in the direct mail coupon magazine business and it is the only way a business owner can mail to 30,000 or more homes and have 99% not read the coupon ad but still make good money on a 1% return. Can you use 300 new scustomers today?
Great discussion! Clearly there are verticals that the coupon or deal based advertising method works best for. Cheapening your self could be an issue; however it all depends on how you market your discounted offer in combination with what the coupon company is doing for you. There are many perspectives to leveraging this medium that Groupon, et al …has overlooked especially in support of the business owners. It seems that from the Rice University report, businesses who failed with this approach did not do the math or prepare in such a way that they could deliver the goods and services effectively and engage with their new clients efficiently after the daily deal event. In some cases, I believe the discounts were way too deep and in other cases, the establishments were not geo targeted in the best way for the deal engage-rs from the suburbs to make the treck back to them for the full priced product or service… all in all, I think this medium has great potential for certain verticals and for savvy marketers who know how to socially and responsibly engage with their new found audience. Can businesses do this on their own? Yes… but I don’t see it as effective in some cases… and no nothing is a magic bullet. The Adz DR