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Posts Tagged ‘economy’

Groupon works – or does it?

Monday, March 14th, 2011

Over the past year and a half, a lot of the talk in our office (and at home) has revolved around Groupon. Either someone is commenting on the amazing deal of the day, someone is talking about what Groupon they just redeemed, someone is talking about buying their mom the Groupon for a gift, or a client is seeking our advice on whether or not they should jump on the bandwagon and give Groupon a try. We have talked about it strictly from a consumers stand point as well as a marketers – and there are pros and cons on both ends.

blog-20091002-164032I’ll admit it – I LOVE GROUPON. I am a Groupon-junkie! I have referred so many people to Groupon that I had over $100 in credit at one point. I have bought them as gifts. I have bought them for myself. I have bought them for my babysitter to take my daughter places. Some of the deals are just TOO good! And that is exactly where it seems that some of the problems lie – some deals CAN be too good.

We have had a few clients run deals on Groupon and overall, the experience and the return was pretty good. However, I know from talking with business owners and reading various articles and simply just paying attention to some of the deals being offered, that as good as it may look to the consumer, it is going to kill the business.

Check out this post from a small business bakery/cafe owner. After she posted this, the entry ended up going viral and I have seen at least two different articles written specifically about her experience. {When A Groupon Promotion Goes Bad} {Groupon Nightmares and How to Avoid Them}

Groupon is not for every business and the same “general” rules do not apply to all businesses that use Groupon to promote their business, services and products. Just because the business ran a deal and sold 1000 in 24 hours, doesn’t mean jack-squat to you and your business. Before you start drinking the Groupon-koolaid for your business, make sure you think about these few things that I believe are critical in having success with Groupon or any other deal-making site.

1. Read through everything on Groupon and make sure that you fully understand how the entire process is going to work.

2. Observe Groupon and the deals they are offering for a few weeks minimum. You can learn a lot just by watching what other businesses are offering and how many people are purchasing the deals.

3. Make sure, when you are creating your deal, that you crunch ALL the numbers and know exactly what you are going to make (or lose) by running the offer. Figure in your overhead – labor, products, etc. It all counts! Don’t be naive and just look at the dollar amount you will receive in a check when the deal is over.

4. Have a plan for how you are going to handle the increase in business. If you are a service business, such as salon, and you sell 1000 deals, and you have an expiration date set for 6 months from now, can you realistically fit all those appointments in – when the customer’s want them? If you are small restaurant, will your staff be able to handle in the increase in customers? Just be prepared!

5. Make sure you include disclaimers that are very specific in your deal. Do not leave it open-ended and expect people to not try and take advantage of it. Try to put yourself in the customer’s shoes and go through every scenario possible and make sure you have a response to all of them.

6. Train your employees before the deal goes live. You WILL get phone calls on that day and if your employees, the people answering the phones, don’t know how to answer the customers calls, this will leave a very bad taste in people’s mouths. Make sure everyone knows all the details and how to handle the questions.

groupon-cat7. Don’t expect that just because someone bought the Groupon and then redeemed it, that they will come back again for more. People are coupon-crazy right now – especially in this economy (including myself). We are all looking for the next best deal to come along. For example, I have bought two Groupons that allowed me to get great deals on massages. I used both of them, and they were great. However, I only went there because there was a “deal”. I haven’t been back to either, instead, I am right back at my “regular” spa until the next good discount shows up.

8. Think. Think. Think. Think inside the box. Think outside the box. Just think before you act. If you want to make your deal successful – and not just for the 24 hours it is running online – think about what you are going to need to do to make money, retain new customers and keep your current customers happy.

Happy Grouponing!

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Marketing Never Stops: The Warren Buffett Perspective

Tuesday, October 20th, 2009

The following is from October 24th, 2008 – Angling Trade
Interesting article on why you shouldn’t stop marketing even in a recession – from a fishing publication.

From KWY News Radio 1060AM Philadelphia:

Billionaire, Warren Buffett pumped $5 billion into Goldman Sachs, and then followed that up with a $3 billion investment in General Electric.

In troubled times, Warren drives a hard bargain and ends up with extraordinary value. In other words, Warren buys low and then sells high. He is a contrarian.

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While others go into the panic mode, Warren Buffett goes into the shopping mode. This same kind of thinking can be applied to marketing. While others are into a cut and run mode, the smart money looks for marketing opportunities.

Right now consumers are spending more time than ever before evaluating their daily product purchases and their long term brand loyalties. Now is not the time to cut and run out on your marketing budget…now is the time to seek out opportunities.

“A man who stops advertising to save money is like a man who stops a clock to save time.” Henry Ford

Here are some reasons why our current economic environment can spell opportunities for marketers:
Your competition is hiding. The landscape is not as crowded. That means your own marketing has a higher probability of getting noticed. In fact, in your product category, you may be the only guy out there who is in the face of the consumer! Normally we have to sit around and say “how the hell can we be different?” Now all we have to do is show up.

Now is the time you need the business! When the economy is weak, your business will only get weaker without marketing. It is a vicious cycle.

Out of sight…out of mind, and out of mind can mean out of business. If your competition is hiding, right now you can have a larger share of mind. Familiarity breed preference, and preference leads to long term customer loyalty.

Customers are hunting. When the economy dips and consumers move into a state of fear, product purchases are scrutinized, and loyalties are challenged. That means you can position your product as a need….not just a want. People are looking for value and meaning. Now is the time to be very pragmatic and honest with your marketing. People are looking for products and services they can trust. That means while they are hunting and evaluating, you need to be out there marketing and not hiding behind your desk.

Attitudes are shifting. What was important yesterday may not be so important in today’s environment. That can spell new opportunities for your product or service. Take a survey…do some focus groups…find out what is driving the emotional needs of your core customer. How has it changed? Where are the new opportunities? How must your message change?
How can you reposition the competition and make your brand more relevant for the next 12 months of economic hardship?

Marketing Never Stops. If you stop your marketing, you are wasting the brand equity you have built so far. This is not a start and then stop process.

Your customers need evidence of product performance, and a reason why your product is absolutely positively the best in the category. When a consumer makes a budget cut…you don’t want to end up on the cutting room floor. That’s why marketing doesn’t stop because the economy is bad. It is exactly the time you need to turn up the volume.

These are tough times, and they may be some of the most creative and opportunistic times in years. Put on your Warren Buffett hat and look for the bargains. Create new demands. Stay close to your core customer.
Dig deeper and look for the essential ties to your customers. And never ever stop fishing for new customers.

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2009 Holiday Season Sales Expected To Be Flat

Sunday, October 4th, 2009

42 percent of U.S. consumers expected to spend less this holiday season

With the nation seemingly emerging from recession, American consumers remain skittish about spending their money during this upcoming holiday season according to new research from The Nielsen Company.  Households continue to focus on “essential gift giving” such as staple consumables, candy, beverage/alcohol and entertaining at home, and 86 percent said that they expect to spend the same or less this year than last — with a 7 percent increase in those indicating they would spend less.  Overall, Nielsen is projecting that holiday sales will rise 0.03 percent this year, accounting for $90 billion in dollar sales. Read more…

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