Are Discount-Promoting Sites Right For Your Business?
Thomas Fox is president of Tech Experts, southeast Michigan’s leading small business computer support company. |
You’ve undoubtedly heard about Groupon, the Internet company that sells discount coupons for everything from spa visits to cosmetic surgery. Their IPO last November was the largest since Google, and raised about $700 million.
You might wonder if adding a Groupon or Groupon-like promotion to your marketing mix makes sense.
There are dozens of companies that provide these types of promotions (Groupon isn’t the only game in town), including our local newspaper – see http://dailydeals.monroenews.com (offered as illustration only, and not endorsement).
Personally, I’m skeptical of both the marketing value and the business model. Don’t get me wrong! As a small business owner, I’m not really a fan of discounting, but I understand that it can be a powerfully effective marketing tool. I do, however, question its viability when used on a mass scale for new customer acquisition.
The Groupon model
Groupon’s model, in particular, has some quirks that make me skeptical.
After a deal goes out and coupon buyers pay for the deal upfront, Groupon doesn’t pay out the merchant’s portion immediately.
Instead, it pays out in three equal installments over a period of up to 60 days.
In contrast, Living Social and Amazon’s Local service pay out 100% to merchants within 15 days. Google’s service, Google Offers, pays 80% within four days and the rest within 90 days.
Smaller businesses that are always concerned about cash flow can really get into a bind, since they have to honor the coupons immediately and then wait to collect their portion from Groupon.
The whole “I take your money now, and I’ll give you your cut later” thing strikes me as a bit Ponzi-like, especially since almost two months go by before the merchant is paid.
Mass discounting
It makes sense to take a step back and examine discounting and coupon in the larger context of a small business marketing plan.
The first consideration, of course, is targeting. Small companies don’t have the budgets or luxuries afforded to large companies. Food manufacturers, for example, are very effective at using coupons, the Sunday paper being a perfect example.
The reasons they’re effective are mass distribution - they print hundreds of thousands of coupons, offering untold amounts of cash discounts – and mass appeal. Their target market is essentially anyone that goes to the grocery store or buys food.
Small business promotion
Discount promotions like Groupon are quite a bit different when used by a small company. You don’t have the option to target your audience, and targeting is the most important part of a promotion when budgets are low and risks are high. I don’t think you’d argue that a 50%
discount is a potentially high risk marketing expense.
Groupon’s emails go out to everyone in a specific geographic area, and you have no ability to target your reach.
The concern, particularly for smaller, locally-based businesses, is that you attract not only customers that really aren’t right for your business, but the type of consumer that is only motivated by price slashing.
The Bottom Line
Be very careful about using daily deal mass discounting to acquire new customers.
Think about how it can downgrade the image of your company to your current clients, damage your brand, and attract a group of clients whose only interest is in a “deal.”
You can quite likely do much better with laser targeted promotions to your ideal type of customer. Easy and cheap marketing is rarely the profitable marketing.
3 Things You Need To Know About E-mail Marketing
Corey Bogedain is a network technician
and web developer with Tech Experts. |
It’s everyone’s favorite application. Since its introduction, it has revolutionized the way we communicate, both personally and professionally. It has had a major impact on how companies market themselves, communicate with vendors, send out press releases, rally employees and alert clients to their latest and greatest promotion. The ease, low-cost and speed of e-mail in marketing is the biggest reason why our inboxes are overflowing with spam.
In response to the ubiquitous outcry, “I hate spam,” governments have crafted new regulations surrounding the use of e-mail; and if you are one of the millions of companies using it for marketing, then it’s important that you familiarize yourself with these laws. But the danger doesn’t stop there...
Even if you don’t get caught by the authorities for violating the rules of e-mail usage, you can still end up on a blacklist with the major ISPs such as Yahoo!, AOL, and MSN. Once you get blacklisted, you are considered guilty until proven innocent, and ALL the e-mail you send won’t get through, even to people who want to receive it—a consequence that could end up hurting your business more than a fine.
So what are the basic guidelines of e-mail marketing?
First and foremost, make sure you are only sending e-mail campaigns to people who have solicited (requested) to be on your distribution list. This is called “opting-in” or subscribing, and e-mails sent to these folks are considered “solicited e-mail.” You are perfectly within your rights to send them messages; but if you got their e-mail address by any other means and they did NOT specifically request to be on your list, that is “unsolicited e-mail” or spam.
Sending promotional e-mails to people who have not requested it can be illegal, but certainly annoying...so don’t do it!
Next, make sure you provide directions on how a person can remove themselves from your distribution list in EVERY e-mail. The best place to put this information is at the very bottom of your message. You should also include your full company name and contact information at the bottom so no one can blame you for cloaking your identity—which is in violation of the CAN-SPAM Act.
Finally, when sending mass e-mails, we recommend using a web based service such as iContact (
www.iContact.com). These applications will help you manage your e-mail distribution list with automatic opt-out and opt-in tools and will keep your e-mail server off an ISP’s blacklist. Naturally, you want to make sure the information you are sending is interesting and relevant. No one wants more junk filling up their inbox so the better you are at marketing, the better your results will be.
Email is not a magic marketing bullet that will solve all your marketing problems, but used correctly, it can help you reach more customers and build stronger relationships with the people you already do business with.