Run a Groupon Merchant deal and reap the benefits of hordes of new customers rushing to try your product, service or location and then becoming raving fans and repeat visitors.
That was the initial perception of the site until merchants began getting burned.
In fact, a 2010 study by Rice University, two years after Groupon launched, found that deal sites were much less popular with businesses than shoppers, with 40% of small businesses saying they wouldn’t run a promotion again.
But as the site matured, so too have merchants who have found new ways to drive traffic and converting new visitors into repeat customers.
While Groupon isn’t for every small business, there are ways to structure a Groupon deal to maximize success.
Here are some best practices to help you reap marketing gold from a Groupon Merchant deal.
1. Choose Your Category Wisely
Groupon Merchant offers four main categories to choose from.
- Local deals: This is what most small businesses think of when they think of Groupons…driving traffic to your product or service through a deal on the site that only reaches local clients.
- Getaways: Running an upscale bed-and-breakfast in a popular tourist destination? It can be hard to stand out from larger hotels with big advertising budgets. Running a deal on the Getaway site can help you target customers who are already planning to visit your area or can be a great way to divest of unsold rooms to adventurous sorts who just want to get away and don’t know where.
- Live: If you host it, they will come. Or will they? Using Groupon’s “Live” option allows you to sell event vouchers, whether it’s a concert or a speaker series you may be hosting at your place of business.
- Goods and retail: This category can be a good fit for when you want to expose your product to a nationwide audience, rather than just local clientele. A local pickup option is also available, which can make it the best of both worlds for many merchants. And of course, this can be a great way to get rid of languishing inventory.
2. Start Small to Test a Groupon Merchant Offer
Yes, you can set a limit on how many you sell which can be a smart strategy for testing various options. For example, if a coupon for 50% off blows out the door, you might find yourself wishing you’d made the price point a little higher or put more parameters on redemption.
By setting a relatively low coupon inventory, you can tweak those metrics to ensure the campaign is driving the right traffic.
3. Stagger Your Groupon Merchant Redemption Dates
Chances are good you’ve already imagined the “nightmare scenario.” You offer $40 for $20 at your restaurant, but, human nature being what it is, everyone waits until the last minute to come in.
As they all convene on the restaurant during the promotion’s final days, they get poor service and vow to never return.
To help avoid this, offer a more limited quantity of promotions for various times. Just be aware that when the promotion starts and ends and staff up around those times to help ensure that customers get the best possible experience.
4. Choose Your Groupon Merchant Offer Wisely
It can be tempting to want to drive traffic by offering your lowest price-point service or most popular products, but that can be a mistake.
That’s because going for quantity rather than quality is unlikely to attract your “ideal customer.” When you are faced with an onslaught of bargain shoppers, not only can you potentially lose money on the deal, but you won’t be inspiring retention, as these probably aren’t your ideal customer anyway.
A better strategy is to choose an offer that’s in the middle of your core offerings. For example, if you are a landscaper and have three tiers of service, consider offering the Groupon deal on the middle tier.
Instead of just a lawn mowing, up the price point and include tree trimming or another complementary service. If it costs the same amount to get your crew to the location in the first place, so you should make a little more money by offering that incremental service and exposing your customer to additional services you offer.
Or rather than half of a yoga session, offer a discount on a package of five lessons to have a better shot at building routine and loyalty among potential members.
5. Offer a Dollar Amount Rather Than a Specific Product or Service
If you offer half off a manicure, it’s very likely that you’ll have customers come in for a cheap nail treatment and walking out. But if you structure the deal to offer $20 off a $50 service, you’re at least making $30…and quite possibly more if clients spend over the requirement to get to the next tier of services.
You’re also more likely to attract customers who are genuinely interested in your location, not just looking for the best deal possible
6. Try to Inspire Repeat Purchases on The Spot
One of the best ways to make money on a Groupon is through the upsell. Are you cleaning a customer’s carpet? Find out if they want to have their area rugs treated as well, or if they’d like to buy a package for three future cleanings.
If you are trimming trees, offer the homeowner a small discount on bi-weekly lawn service. Someone who bought your all-natural candles at a discount might be interested in two more as gifts for a more modest discount.
The time to pitch a customer on additional purchases or a recurring service is when you are currently engaged with them.
7. Treat Your Groupon Merchant Customers With Respect
Rather than dismissing a coupon redeemer as a bargain hunter not worth attentive service, train your salespeople to engage in conversation with the Groupon customers and find out more about them.
Ask these questions about customers taking advantage of the Groupon offer: Were they already current customers taking advantage of a deal? Are they new to the area and wanted to try out your place of business at a discount the first time? Or are they just bargain hunters who will go anywhere for a deal?
The more you know about who’s redeeming your offer, the better the chance of converting the “right” customers – and the more data you have for planning your next Groupon.
While it might be tempting to skimp on service since they aren’t paying full price, it’s wise to take the opposite tactic and offer a small complimentary service or gift to stand out as more than a commodity.
A Groupon Merchant deal can become a windfall of business if you use some savvy tactics to structure the offering. And then once they’re “in,” make sure you turn those best practices to your invoicing procedures, to ensure that your cash flow is always on time…and ready for the next deal.