Dos and Don'ts for a Successful Groupon Promotion

Do: Be aware that it’s not for everyone, and it may not be right for you.

With a subscriber base that has surpassed 85 million and shows no signs of slowing, the allure of Groupon is hard to resist. The basic premise seems fail-proof: create a discount offer that’s broadcast to thousands of potential new customers, sit back and watch the dollars roll in.

However, every business model is unique, and there are many variables that determine how well your company can respond to a sudden, short-term influx of traffic or a temporary drop in profit margin.

Running a promotion is particularly risky for companies in Groupon’s bread-and-butter categories like salons, spas and restaurants, where the frequency of offers dilutes their perceived value.

If your business falls into one of these categories, you must carefully weigh the chances of being able to convert first-timers into regular customers versus the likelihood that they’ll simply wait for the next Groupon to come along. If the odds don’t stack up in your favor, you may find that the sacrifices you must make to execute the promotion won’t ultimately deliver a long-term pay-off in the strength and size of your customer pool.

Don’t: Expect Groupon to boost your bottom line.

At least not right away. While there’s no upfront cost to run a promotion, Groupon requires you to discount your products or services by at least 50 percent, and they then typically take a cut of 50 percent of the final selling price, leaving you with only 25 percent of your normal revenue. While you’ll undoubtedly see a major bump in traffic, your margins on that traffic will be slim, if they exist at all.

Playing the Groupon game is less about building profit and more about gaining mass exposure.

Do: Crunch the numbers.

When deciding whether or not Groupon a good fit, you must weigh the ROI of your promotion according to the same metrics as you would any other marketing tactic.

Examine every scenario to determine what your promotion will ultimately cost. What if 100 people jump on your deal? What if it’s more like 1,000 or 10,000? Can the potential benefits justify that level of investment? Or would your money be better spent elsewhere, such as a pay-per-click advertising campaign?

Do: Be strategic in your offer.

If you do decide that Groupon is a good fit for your business, make sure to structure your promotion so that it’s a win for you and your new customers.

Be creative and find a way to build an offer that minimizes the losses you must absorb and maximizes your ability to fulfill a short-term spike in demand. Focus on the products or services where your overhead is lowest and your profit margin is highest.

For example, let’s say you’re a personal trainer. If you offer a Groupon discount on your consultation services, you’re limiting the number of hours you have available to clients who are willing to pay your regular rate. However, let’s say you’re a personal trainer who also sells subscriptions to an online video coaching series. You can absorb an almost unlimited amount of cut-rate subscriptions without compromising your primary revenue stream.

Or, let’s say you run a beachside bed and breakfast. Executing your promotion in the off-season is a great way to reel in new visitors. If your doors are open, your operating expenses are fixed. In terms of defraying those costs, it’s better to be filled to capacity at 25 percent of your standard rate than to have only one or two guests at full price.

Don’t: Be afraid to negotiate.

A lesser-known secret of playing the Groupon game is that you can negotiate. When it comes to shaping your promotion, nothing is written in stone.

You can score a more favorable split on the take than 50/50. You can also cap how many discounts are available, which is a good way to safeguard your bottom line and make sure you don’t end up with more business than you can reasonably handle.

Groupon’s entire business model revolves around presenting great deals that people want to buy, so if you’ve got a good one, make them play ball. If they won’t agree to terms that work for you, either try another daily deals site, or pursue a different marketing strategy entirely. No amount of exposure is worth an arrangement that could potentially sink your business.

Do: Pay attention to the fine print.

Terms and restrictions can make or break your deal. Use the fine print to make sure your offer is one that your business can sustain.

Set an expiration date. Cite whether the offer includes tax and gratuity. Specify whether customers need to make an appointment or reservation in advance to use their Groupon. Determine which products or locations the Groupon applies to. Define whether the Groupon can be used in conjunction with other offers or specials. Limit how many offers can be used per customer and per visit.

Just be careful not to make the terms so restrictive that the promotion loses all value to your potential customers, or your Groupon will be a flop.

Do: Put your best foot forward.

When your Groupon lands in the inboxes of subscribers in your area, you’ll inevitably have an influx of potential new customers checking out your website, your Facebook page and your Twitter feed to find out more about you.

Make sure that your website is up to date and that it showcases the products or services being featured in your promotion in such a way that makes the decision to buy an easy one.

Make sure as well that your Facebook and Twitter streams are primed with interesting content and lively dialogue to boost your chances of scoring a like or a follow from these new visitors.

If you don’t have these critical elements in place before your Groupon hits, you won’t be making the most of the opportunity you have to be in front of hundreds or thousands of people who are in the market for what you have to offer.

Do: Understand that these are Groupon’s customers, not yours.

Due to privacy laws, Groupon cannot share the email addresses or personal information of those who have bought into your deal. So while you’ve gotten great exposure to these potential new customers, you have no built-in way to make a repeat appearance in their inbox.

Make sure that when these shoppers visit your website or come into your store, they have the opportunity (and incentive) to join your mailing list. If you don’t already have a list, now is the time to start building one.

Do: Bring your A-game.

The true value of a Groupon promotion isn’t getting a tidal wave of people through your doors. It’s the opportunity to convert those one-time deal-seekers into loyal customers and fans.

In order to do that, you must wow them. They may come in looking for a bargain, but if what they find is exceptional quality, value and customer service that go above and beyond their expectations, they’ll not only be more likely to come back and pay full price but also to spread the word about you as well.

Do: Make sure everyone’s on the same page.

One sure-fire way to guarantee that your Groupon customer will never come back is to make the process of redeeming their offer a hassle.

Hold special meetings or training sessions if necessary to make sure that everyone who’s on the front lines of your business understands the terms of the offer and how to handle any questions or complaints.

This is also a good opportunity to review your customer service standards and reinforce your expectations to ensure that everyone is prepared to do whatever’s necessary to convert, convert, convert.

Don’t: Alienate your loyal customers.

You know the old saying about new friends and old friends – one is silver and the other is gold. The same applies to customers.

In your efforts to bring new customers in the door, be mindful not to alienate those who’ve been happily paying full price all along.

If you’re going to Groupon, it’s an opportune time to simultaneously execute a customer appreciation promotion to reward these customers for their loyalty and show them that their business is always valued.

Don’t: Mistake Groupon for a marketing plan.

Let’s say you run your first Groupon promotion.Groupon is no substitute for a sustainable, long-term business growth plan. You get a huge response, so you stock up and staff up to meet the demand. The wave comes; the wave goes. Suddenly you’ve got a bunch of employees standing around staring at each other and more inventory than you know what to do with.

While running another promotion seems like the obvious solution to this problem, it’s no substitute for a sustainable, long-term, diversified growth and marketing plan.

You must realize that creating one Groupon offer after another will train old and new customers alike to expect never to pay full price and will ultimately devalue your products and services. You’ll end up caught in a cycle of dependency on discount shoppers and razor-thin margins that will make it next to impossible to ever actually grow your business. And isn’t that the point of running a Groupon to begin with?

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Left in the Dark? The Pitfalls of Taco Bell’s #OnlyInTheApp Social Media Stunt

Taco Bell recently unveiled a new mobile app, available for both iOS and for Android, that “gives consumers complete access to every Taco Bell ingredient to create what they want, when they want it – all in the palm of their hand.” The app allows customers in drive-thru or in their dining room to order and pay for items directly on their mobile device. The app itself may be a great idea, but the marketing push behind this new addition from Taco Bell is certainly raising some eyebrows. The company decided to “go dark” on their social media platforms and on their website, replacing their normal content with a black background and a large message that says that “the new way to Taco Bell isn’t on the Internet, it’s #onlyintheapp”, using a hashtag that they have created for this campaign. While I can appreciate the company’s desire to focus heavily on marketing this new feature, doing so at the detriment of all their other messaging and marketing channels is short-sighed. In this article, we will take a look at the possible benefits of this “all in” approach and why Taco Bell may have done this, as well as the pitfalls of this type of campaign and putting all your eggs, or in this case all your tacos, in one basket.

Information on demand

We live in world where immediate access to information is now expected. Have a question? You can whip out your phone or open the web browser on your desktop computer and hop over to Google for the answer. The same holds true for the services we use or products we buy, including menu items and locations or contact information for restaurants. Having worked on websites for restaurants in the past, I can tell you from experience that this information, menu and locations/contact, are some of the most heavily requested pages on those sites. Taco Bell’s current marketing approach, and their decision to “take down” their normal website in favor of a marketing message and nothing BUT a marketing message, is not a customer-friendly decision because it runs contrary to the information on demand culture that our customers have come to expect from websites. Now, to be fair, Taco Bell did not actually take down their entire site. If you run a search engine query for “Taco Bell Menu”, you can find those pages still live on the Web, but you have to work for it! Their current homepage, which is where their visitors will likely go, includes no links to the other pages of the site. If a customer needs menu information, or if they are looking for something like a location’s address or phone number, they will have to go out of their way to dig that information out. That is asking a lot of a person and few customers will go to those lengths.

What they want versus what you want

Taco Bell’s current campaign is a perfect example of placing a company’s needs before their customers’ needs. The marketing message that now dominates Taco Bell’s media properties is what they want people to know about. There is nothing wrong with promoting a new service or product, but by removing easy access to the rest of the information their customers may want, they are ignoring their needs in place of their own. What if a customer comes to the site to find nutrition information, only to be greeted by a message to download this new app. Is that a good customer experience? Perhaps they do not have an iPhone or Android device. This message is lost on them and they are at a dead end. This is a lost opportunity. Saying that this information is “not on the Internet” and instead forcing them to download an app is like saying “we don’t care how you want to access this information, we want you to download an app and we won’t give you that information unless you do so.” That may sound harsh, but that is absolutely how this decision comes across. Yes, there is value in putting a marketing campaign front and center in big way like this. Taco Bell’s new app is certainly being talked about, but most of the chatter I am hearing is not about the app itself or how great or convenient it is, it is about the company’s decision to market it in this way, with the rest of their messaging and information absolutely non-existent. A better approach would have been to market this new app in a big way with a bold, prominent placement across all their media channels, but to also include easy links to the normal website and social media content. With that approach, they could still ensure that their message comes across loud and clear, which is what they want, but they would not be ignoring what their customers want because that information would still be easily accessible.

Ignoring the conversation

Another interesting (and not in a good way) aspect of Taco Bell’s “going dark” campaign is what they are doing on social media. Their Facebook page currently includes only 1 post with a message similar to their website about the new app. The Taco Bell logos and everything else have been removed. What this page does have are comments – 1,194 of them as of this writing. If you read through those comments, you will find people complaining about the removal of the website content, the lack of delivery services, and many random slams on Taco Bell in general. Bottom line, there is a lot of negativity on this page, but Taco Bell is nowhere to be found in those comments. Their “going dark” campaign also includes them removing themselves from the conversation. This is not how social media works. Social media is all about engagement and conversations. If you put something out there, especially something like a new service like this, you should be prepared to answer customers’ questions and have those conversations. Taco Bell has yet to do this. Instead, they have “gone dark” and are nowhere to be found.

A better approach

When you have an important message to convey to your audience, you want that message front and center. There may be the temptation to take the same route that Taco Bell did and remove all your other content in favor of that message. Yes, people that visit your site will see it because that is all that there is to see, but is that the end goal? No, you do not want customers to only see your message, you want them to see your message and take action. Preferably, you want them to take the action that this campaign is focused on, but if they cannot do that, you do not want them to hit a dead end. In the case of Taco Bell, someone without a mobile device that can download the app, or someone with no interest in downloading that app, has hit that aforementioned dead-end. There is nowhere else for them to go other than away from Taco Bell. That is a lost opportunity. For your own marketing campaigns, you want to ensure that if you put a message front and center, you also make other paths available for people who that message may be lost on. Bottom line, you do not focus on one message or campaign at the expense of everything else you have to say and offer – and you never take yourself out of the conversation! When customers are talking about your company and what you are doing, that is a golden opportunity to respond and start a conversation. If you instead decide to “go dark”, you miss that opportunity completely.

In closing

I expect that this campaign is a temporary one for Taco Bell. Soon enough, their website and social media will be back to normal, but in the meantime, all I see in this marketing push are missed opportunities and ill-informed decisions. When planning your own campaigns and messages, speak to your marketing team or agency and always ask yourself whether your plans focus too heavily on what you want instead of what your customers need. The key to a successful campaign is finding a way to address both of these needs and tie together your company’s goals and those of your customers.

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