Groupon, LivingSocial, Angie’s List, and even Amazon offer businesses the opportunity to promote a special offer to a huge audience.
Imagine instantly increasing the visibility of your business 1000-fold or more while offering a very attractive discount. Sounds great, right? It can be if you are careful.
Here are 3 costly mistakes we see business owners making:
1. Not Doing the Math
Most of these deals require you to offer a product or service at about 50% off your normal price. That’s what gets people’s attention. It really IS a great deal.
However, you’re also going to pay about half of each sale to the promoter (Groupon, LivingSocial, Angie’s List, etc.). You wind up bringing in 25% of your normal price.
You can see why it’s important to do the math here. In order for this to make sense, you need to have at least one of these factors in play:
- a very high profit margin to begin with
- a solid plan to retain customers for full-price services. Please don’t assume that because they came once with a coupon that they’ll come back.
- a solid plan to upsell or add-on
Be careful with that last point. Many people are wise to the upsell and get suspicious when you recommend additional services. It had better be legitimate.
2. Not Ready for an Influx of Sales/Inquiries
It’s important to have the infrastructure to handle a surge in business. We’ve seen several cases where a business didn’t have the capacity they needed. Long lines, poor customer service, low quality, etc. resulted in a LOT of frustrated consumers who expressed their sentiment on social media and online review sites (Yelp, Google, etc.). That was the opposite effect they wanted.
And remember that this influx is also not generating much cash- just 25% of your normal price.
Be sure to have adequate product, staff, customer service representatives, etc. in place and ready.
3. Not Targeting Their Demographic
Hopefully, you’ve identified your ideal client. You know where they live, what they like and don’t like, what their pain points are, and why they choose you over competitors.
Be sure that the promotion of your special offer targets this specific group. Or at least include verbiage in your copy that begins to weed out the rest.
We see a lot of “coupon cutters”. These are people who simply want the cheapest deal. They are not loyal to any brand, no matter how great their experience was. It’s all about finding the lowest price. This is usually not the kind of customer base small businesses want to build.
Special promotions are a great way to get your business in front of a massive audience who didn’t even know you existed. Just do your homework and be sure it’s the right fit.
To Your Success!
-Will, StructureM Founder & CEO
Get started on simplifying your marketing & growing your business by contacting StructureM today!