With Groupon being surrounded by all the attention, I thought it was time to put together my own
pros and cons checklist that will help you determine if couponing is the right promotional tool for the organization. Using coupons or not depends on many factors, including your business model and that which you’re striving to accomplish. It’s not a quick fix. That might seem complex, but the simple facts are that coupons are advertising. That is, you’re paying to entice customers. Before you take the plunge think your strategy through. Here's the lowdown after reading many articles on the subject.
Click Here For
Can be expensive; be certain you comprehend what you are able to give away. Don't forget to
include the coupon service's share in your calculations. Start to see the math post referenced under Suggestions. New customers might not come back. The study also said, "Restaurants seem particularly susceptible to these negative outcomes: 42% of the restaurants in our study (20 of 48) reported unprofitable Groupon promotions." Cannibalization of existing earnings. In other words, you’re giving a reduction to all those people who'd purchase from you at regular cost anyhow. One method in order to avoid this is by restricting the offer to first time buyers or setting the geographic distribution of the coupons outside your normal target area (which may not be possible with some societal couponing services). P.O. Factor – could alienate the people who aren’t offered the reduction. As an example, faithful customers who feel they should get some good kind of reward, rather than just catering to new customers.
Click Here For http://www.meybereshit.co.il
May lessen quality of the item being offered, especially when it comes to services or products people value predicated on their price or the perceived worth. Potential negative effect on brand image – could allow you to appear cheap, especially if you are marking down things no one would want anyhow or have a luxury brand. Customers may get used to waiting for bargains, in place of paying full cost. Your employees may restrict the grade of their services should they feel they’d be tipped less based on the decreased amount of the bill.
May lead to a quick infusion of money. May attract first-time buyers, that could raise your customer base for the long term. A recent Rice
University study reported that 66% of respondents said their Groupon promotion was prosperous. These companies saw 31% returning for another purchase and 50% redemption rates. May be a rapid method to unload inventory. Like sampling, coupons remove a few of the impediments to first-time trial, which makes it simpler for folks to use before they buy (at full price). Brand switching encourages. Getting people in the door for the first offer may lead to add-on sales for items which weren't marked down. Some coupons are never redeemed, so you get some of the comprehension-building effect at no cost.
Click Here For http://www.bpr.co.il
Suggestions: Should you do determine to use coupons, contemplate the following: Competing on the true value you supply is consistently much better than competing on cost. Give attention to promoting your advantages to the customer, rather than discounting your cost (unless that’s your business model and you also expect to do a great amount of volume, such as the Dollar Store). Will they think it is precious? Will they purchase more compared to discounted thing? Will they come back without the discount incentive following the initial purchase? Will they think less of your business due to it? Gauge the effect on your own normal business and customers. Consider the cost of obtaining the customer against their lifetime worth, not just what you’re going to make on that one-shot deal. Don’t forget, when the client is clever (and please don’t underestimate this), they’re also considering what it'll cost them over the life of use. In other words, one month phone service that is free is really insignificant when compared with the long-term expense. Comprehend your profit margin on an item just before you decide on the discount amount; make sure you include overhead in your calculation. It shouldn’t just function as the expense of stuff, but of producing the thing as well. Offering coupons could mean you’re offering items at a loss known as a loss leader, if you run at rather thin profit margins. Because they expect the purchaser to buy a shopping cart filled with things at the regular cost, that may work ideal for supermarkets. You may not be able to afford that luxury. Ideally, the perceived value should exceed the specific cost of supplying the reduction to you. Establish limits when appropriate and available, such as expiration date, minimum variety of buyers required before anyone can redeem, “first time buyers only”, restrict to less expensive or easier-to-deliver services, little denominations that can’t be used on the same purchase, such as a minimum amount away per meal. Alex Salkever in his post “Is Groupon Altering What Folks Will Willingly Cover?” said it nicely, “Watered-down offers will unavoidably result in watered down interest, because customers aren't bright. But small-business owners are not either, and they're the ones who must find the balancing point between bargains good enough to lure customers in, and deals so great they make customers reconsider their idea of fair value.” A great example of this might be housecleaning, where the primary cleaning is more expensive, but return touchup visits require less work.