How small businesses should use Groupon or LivingSocial

With millions of subscribers worldwide, Groupon (51.8 million) and LivingSocial (70 million) could be great avenues for Small Businesses to find new customers and grow.  But, in order for these platforms to really help a business grow profitably, business owners will need have a well-thought out strategy on how to use them and, more importantly, how to monetize the customers that come from these sites. 

Groupon and LivingSocial are so attractive to shoppers because they offer substantial discounts -sometimes as much as 90% off goods, services, or entertainment.  In fact, these types of sites typically require a significant discount before an offer can be listed.  As such, business owners need to be smart about using these types of sites to grow because your listed deals may not deliver much profit (if any at all).  However, with some calculated planning and excellent customer relationship management, these platforms could be a great way to find new customers and can be an excellent way to market your business locally.  

In short, I see Groupon and LivingSocial as great advertising platforms for small businesses, like the Scottsdale restaurant, Twisted Rose Winery featured below.  This type of offer can be highly effective to drive revenue and profits if used as part of a bigger strategy for small and local businesses.

Have a Clear Set of Objectives

The first step to using these sites successfully is to actually think about the customers you want to attract and more importantly, how you plan to sell them related items/services, as well as how to keep them coming back to your business (even if they don’t get the luxury of a discount).  So, start by creating a plan to retain the Grouponers or LivingSocialites that respond to your offer.  This could be the difference between a successful campaign or a short-term cash grab.  A well-positioned promotional strategy that includes understanding what value-added features your target customer will appreciate will get them to spend a few more dollars when they redeem the deal coupon.

Be Prepared for an Influx of Customers

Before you make such an offer, ensure that you have sufficient inventory and staff to deliver excellent customer service – and if you run out, that you’ve also communicated with customers when they can expect to get your product or service.  Set expectations with buyers so that if your offer is very successful, you have time to order extra stock and/or add another person to the staff to handle the expected surge, among other measures. Nothing will diminish your returns and efforts more than a lack of preparedness or miss managed customer expectations. 

Negotiate. Negotiate. Negotiate.

Take charge of the process when you negotiate with these sites in order to retain as much of the deal revenue as possible.  Do not settle for any number just to get your deal on the site. Do the math and crunch the numbers to figure out what percentage you need to at least break even -- then negotiate to get as close as possible to that percentage. Be vigilant in setting your budget because sales do not always equate to profit. Think of these sites as a means to attract new customers (as opposed to spending money on advertising), and once you’ve attracted them it’s your job to keep them and/or earn more revenue from them with your great products and services.  So as you negotiate, take into consider related products, value added services and other ways that you can “upsell” or “cross sell” more of your products to customers that purchase these discounted deals for a single item or service.  It is on the upsell and cross sell where you can really drive profit and business growth.

Raise your visibility on Online

Use Groupon or Living Social to connect with potential customers and get some traction for your products or services. One of the great benefits of these sites is their intelligent use of social media platforms, such as Facebook and Twitter, to promote their deals – such as is shown below. In turn, this increases your potential for a successful deal and gives you excellent online exposure.  As such, be sure your storefront AND website are up to date, match the offer provided online and best reflect your brand message and objectives.

A big congrats to @thesoupergirl, one of our fave local merchants, on your new space in DC! #LocalLove pic.twitter.com/5jwXpcdfNd

— LivingSocial (@LivingSocial) June 19, 2014

Complement your marketing plan

An advantage of adding these promotional sites to your marketing mix is that it's free to feature your business on the sites, but remember they will take a percentage of the coupon transaction upfront.  So, don't rely solely on the daily deals to create value for your business -- continue to use your proven methods of advertising and marketing to champion your brand.  Manage your company website, leverage the social media platform that will work best for your business (such as Twitter, Facebook or LinkedIn) [insert cross link to related blow] and leverage traditional advertising such as print media, online ads, paid search and other tactics that have worked for your business in the past.

Final Thoughts

Deep discounts will always be attractive to consumers and business owners will always have to give a little more to attract customers, which in the end should spell a win for both parties.    If you are considering new avenues of advertising, exposure promotion sites such as Groupon and LivingSocial may be worth a look -- just do your homework before you start wheeling and dealing. 

Let change3 help you manage your online presence and digital marketing strategy affordably – contact us today.